Duus v. Brown

Background

John Peterson was a Swedish-born man who became a U.S. citizen and lived in Iowa. He died unmarried and without a will. His Iowa property passed to nephews and nieces, some of whom were naturalized U.S. citizens living in other States and others who were native Swedish citizens living in Sweden. The Iowa estate administrator paid higher death duties on the shares for the nonresident foreign heirs than on shares for resident heirs. The heirs argued those higher charges violated a U.S.–Sweden treaty.

Reasoning

The Court examined two treaty provisions the heirs relied on. It explained that Article VI applies only to Swedish subjects and their property in the State and therefore does not prevent Iowa from taxing its own citizens’ property within the State. The Court also said the treaty’s favored-nation language applies only “in respect to commerce and navigation,” so it does not cover inheritance taxes. The opinion referenced the Court’s earlier analysis in the Petersen case and concluded that the treaty did not bar the State’s treatment. The lower court’s judgment was affirmed.

Real world impact

The decision means Iowa may collect higher inheritance taxes from nonresident foreign heirs under the challenged law, and estate administrators are required to pay those charges. It does not address other treaty questions beyond this inheritance context.