Heberton Estate
Wе are all in complete agreement with the Auditing Judge that it would be unconscionable to permit the Commonwealth to enforce payment of the additional transfer inheritance tаx which it is now endeavoring to collect. Had the present claim been made when the original tax was assessed in 1929, the Commonwealth would have been compelled to allow full crеdit for the entire tax in its assessment of the additional tax which it received under the provisions of the Act of May 7, 1927, P. L. 859, and the net amount received by it would have been exactly the same whethеr the tax had been assessed at the 2% rate or the 10% rate now being claimed. Furthermore, the will provided that all inheritance and transfer taxes be paid out of the corpus of the estate. It would be most inequitable to permit the Commonwealth to lull the parties into an assurance that the taxes have been paid in full and then, after the passage of many years, mаke a new claim for tax long after the entire estate had been adjudicated and the corpus distributed. But, even if we disregard the overwhelming equities of the situation, we would be compelled to conclude that the additional tax claimed is uncollectible because, the Commonwealth is conclusively bound by the appraisement when the tax was assessed at the timе of the decedent‘s death.
Throughout the long history of transfer inheritance tax in this state the courts have always held that the appraisement made by the appraisers must be considеred as final and, in the absence of fraud, accident, or mistake, the only remedy for an erroneous exercise of judgment by the appraiser is an appeal in accordаnce with the provisions of the statute. A second appraisement to revise the judgment of the appraiser has always been regarded as a nullity and held to be without authority in law: Moneypenny‘s Estate, 181 Pa. 309 (1897); Rowell‘s Estate, 315 Pa. 181 (1934); Ernst‘s Estate, 317 Pa. 367 (1935); Ramsay‘s Estates, 342 Pa. 103 (1931).
This firmly intrenched principle was changed by the
In Ernst‘s Estate, supra, the decedent died March 2, 1932. He had in his lifetime donated large sums of money to various religious and charitable institutions, conditioned upon their paying him annually interest on the gifts for the remainder of his life. An appraisement was filed April 28, 1932, which became confirmed absolutely because no appeal was filed within the period allowed by the statute. Accrued intеrest due on these annuity contracts were included in this appraisement, but the principal sums were omitted. About eight months later, on December 12, 1932, the state tax appraiser filed what hе called a supplemental appraisal, in which he endeavored to value and appraise for tax purposes the principal of the various annuity contracts. Thе executors of the estate, as well as the donees, appealed. Judge APPEL, scholarly President Judge of the Orphans’ Court of Lancaster County, sustained the appeal and held the second appraisement to be a nullity. Judge APPEL said: “We find as a fact that a full disclosure of the contracts was made by the executors to the tax appraiser; that they were before the field appraiser for examination and appraisal; that he had full opportunity to and did examine them; that when he appraised the annuity on each contraсt, but not the principal, he did so in the exercise of his deliberate judgment that the principal was not liable for the tax. We find also that due report of the appraisement was madе to Taylor, the chief appraiser, adopted and filed by him with a full knowledge of all the facts. After the expiration of the time for appeal, the question was not an open one and the appraisal was conclusive on all parties. The outstanding authority on the immediate question under consideration is Moneypenny‘s Estate, 181 Pa. 309 (where it was held that), in the absence of fraud, acсident or mistake, there cannot be a second appraisement of property for the
This decision was affirmed per curiam by the Supreme Court on Judge APPEL‘S opinion.
In our opinion, it makes no difference whether the mistake of judgment applies to the taxability of an asset, as in the Ernst case, or a mistaken conclusion that the remainder will be subject to the collateral tax instead of the direct. In either case, the assessment is final and conclusive on both the taxpayer and the Commonwealth and cannot be challenged except by an appeal.
A letter dated November 7, 1929, signed by R. L. Parkinson for the Tax Department of the Pennsylvania Company, еtc., sent to the Register of Wills was offered in evidence. This letter states: “* * * the remainder of the Estate goes to direct heirs and it is the desire of the Executors to pay a flat 2% tax.” The Commоnwealth suggests that they were misled by this erroneous statement and hence entitled to collect the additional tax. This is completely without merit. The Girard Trust Company was the trustee named in the will for this particular trust. The executors were two individuals, Mary Cooke Heberton, the wife, and J. Morris Wistar, a son-in-law. The Pennsylvania Company, etc., was designated as trustee for the principal trusts created by the will, but it had nothing to do with the trust fund, which is the subject matter of the present controversy. Under these circumstances, the Commonwealth clearly had no right to place any relianсe whatsoever upon the casual statement of a clerk in the tax department of this company.
It is obvious from a study of this record that it is completely devoid of any evidencе from which fraud, accident or mistake could be inferred. As a practical
Section 3 of the
The testator‘s will was an involved instrument, disposing of an estate in excess of a million dollars. The provision with respect to the trust of $100,000.00 for decedent‘s wife was lengthy and intricаte. We must take it for granted that the taxing authorities studied the will and the circumstances existing at the time of the testator‘s death carefully before they assessed the tax. They must have known that no children were born of the marriage with the wife who survived him and that there was a strong probability that the fund would ultimately pass to collaterals. They had the right to reserve the question of the ratе of tax until the time of the widow‘s death. Instead of doing this, they chose to accept with finality both the valuation of the estate and the rate of tax. They are now conclusively bound by the assessment and cannot be heard to challenge it. Let us
We will conclude by borrowing the sentence with which our former colleague, Mr. Justice ALLEN M. STEARNE, terminated his scholarly opinion in Mellon Estate, 347 Pa. 520, 536 (1943): “In the present case we believe that the decrеe could be sustained either upon the terms of the statute or upon the broad principle of equity here discussed.”
The exceptions are dismissed, and the decree of the Hearing Judge is sustained.
Commonwealth appealed.
Addendum
All we would add to the able and comprehensive opinion of Judge KLEIN, for the learned court en banc, is that there is no question of estoppel in the case. The act of the Commonwealth in accepting payment of tax in 1929 did not estop it from collecting a further tax if such tax became legally due.
Decree affirmed on the opinion of Judge KLEIN.