Vanuxem's Estate

212 Pa. 315 | Pa. | 1905

Lead Opinion

Opinion by

Mb. Justice Potteb,

Louis C. Vanuxem, Esq., of Springfield township, Montgomery county, made his last will and testament dated October 16, 1903. By item seven of his will he gives his executors full power and discretion to sell any or all of his real estate, whenever any such sale be necessary or expedient for any purpose of his estate, of administration, distribution or otherwise. -He was seized of certain real estate in Tennessee and Illinois, and upon this property, the appraiser of collateral inheritance tax, assessed taxes. This was done upon the ground that the directions in the will worked an equitable conversion of the lands into personal property, by authorizing the executors in their discretion to sell for distribution, and the further fact that it became necessary to sell in order to pay the pecuniary legatees.

The orphans’ court sustained the action of the appraiser. It was not pretended that the real estate in other states could be charged with collateral inheritance tax as real estate, but only by reason of the fact that it was necessary for the executors to sell it, in order to provide the money to pay the pecuniary legacies. And that being the case, the power to sell if 'necessary to make distribution, became -under the manifest intent of the testator, a direction to sell.

The judge of the orphans’ court thus reasons it out in his opinion : “ The pecuniary legacies are to be paid before those to whom the residuary is given shall receive anything, because it is only what remains of the estate, after the specific legacies are paid, that passes as residue or remainder. These legacies pass to the legatees as money. The testator intended them to be paid in cash. There is nothing in the language of the will to show they are to be paid in any other way. Their character is personalty. He must have foreseen the necessity for the sale of his real estate to carry out his scheme of dividing his estate by first bestowing gifts upon the beneficiaries in the form of pecuniary legacies, else how were they to be paid ? ”

The pecuniary legacies aggregated nearly $700,000, or very much more than the amount of the personal estate, so that we cannot see any way by which the executors can escape converting the land into money, in order to carry out the provisions of the will. We agree with the conclusion of the court below, that “ an equitable conversion is as effectually accomplished by the will, and the duties of the executors under it are the same as if it contained a positive direction to sell.” It follows as a matter of course that if sold, the proceeds of these lands must come' into the courts of Pennsylvania for distribution. The tax, therefore, falls upon the legacies themselves, rather than upon the lands which are now appraised in order to determine the amount of the tax.

The opinion of the court below has met so clearly the questions involved in this appeal and has disposed of them so fully, that further elaboration, upon our part, is both difficult and unnecessary.

The assignments of error are overruled and the decree of the orphans’ court is affirmed.

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Dissenting Opinion

Mb. Chief Justice Mitchell,

dissenting:

I would reverse this judgment. The taxation of land not within the territorial limits of the state is admittedly beyond the legislative power, and the taxation of the value or the proceeds of such land, under whatever form or disguise it is sought to be exercised, is upon the border line of questionable jurisdiction and should be scrutinized closely with every presumption against its validity.

But even if the lands in this case were within Pennsjdvania there was no proper conversion. They were devised as land to devisees named, and there is in the will no direction to sell but only a power and discretion to do so when the executors should deem it expedient. The learned court below founded its judgment on the doctrine of necessity to carry out the will. But on this point the case falls clearly within the principle of Hunt’s Appeal, 105 Pa. 128 (141), where it was held, “the most that can be said is that the testator made a mistake as to the extent of his estate, and a sale of his real estate became necessary in order to pay his debts. But this is not to the purpose. The scheme oE his will did not contemplate this, and if by reason of the depreciation of his property, or for other causes a necessity to sell the real estate arose which was not foreseen by the testator, it will not work a conversion for the obvious reason that a conversion is always a question of intent.”

The necessity to sell which effects a conversion is one which must have been contemplated by the testator in order to carry out the scheme of his will, not a necessity as a matter of fact arising out of the actual circumstances of the estate after his death. Suppose the personalty though insufficient to pay the pecuniary legacies at the time of testator’s death had so increased in value as to be sufficient before the time of payment, clearly there would have been no conversion which would require or justify an exertion of the executor’s discretion which would subject these devisees’ land to the payment of this tax; and equally so in the contrary case of a sufficiency of personalty at the death and a subsequent decline in value. Either case would come exactly within the quotation above made from Hunt’s Appeal. To attribute the necessity to sell as within the contemplation of the testator seems to me like attributing the gift of foresight to those who are wise after the event. The testator gave large pecuniary legacies, but he had personal estate of still larger nominal value, and .with this knowledge of his affairs he gave his executors not a direction but only a discretion to sell. Clearly he did not contemplate a sale as a necessity but only as a contingency to be dealt with in the discretion of his executors.

I regard the present decision as at variance with the principies of all our later decisions, particularly Hunt’s Appeal, supra; Handley’s Estate, 181 Pa. 339; Yerkes v Yerkes, 200 Pa. 419; Sauerbier’s Est., 202 Pa. 187; and Cooper’s Est., 206 Pa. 628.