Cory v. White

Background

Texas and California tax officials both claimed the right to collect inheritance taxes from the estate of Howard Hughes. The estate’s administrator filed a federal interpleader in a Texas district court asking a single court to decide Hughes’ domicile so the estate would not face duplicate state taxes. The district court dismissed for lack of statutory diversity, the Fifth Circuit reversed, and the States sought review in the Supreme Court.

Reasoning

The question was whether the Federal Interpleader Act allowed a federal court to resolve inconsistent state death-tax claims. The Court held that it did not here because the Eleventh Amendment bars suits that in substance restrain state action. Relying on Worcester County Trust Co. v. Riley, the majority concluded that naming state tax officials to adjudicate domicile would be, in effect, a suit against the States. The Court rejected the idea that Edelman or a request for only prospective relief removed the Eleventh Amendment bar.

Real world impact

Practically, the decision prevents the administrator and heirs from using federal interpleader to obtain a single federal resolution of the competing state tax claims. The estate cannot force a federal answer on Hughes’ domicile here, so heirs may face separate state proceedings and the risk of duplicate taxation. The ruling leaves available other legal paths, including state-court litigation or the Court’s original jurisdiction in limited circumstances.

Dissents or concurrances

A dissent argued that Worcester County should be overruled or limited, contending multiple domicile-based taxation is unfair and may violate due process and the right to travel, and that federal interpleader or original jurisdiction should provide relief; a concurrence urged use of original jurisdiction in narrow cases.