*1 Wright Estate. *2 June 1957. Before
Argued J., 3, Bell, C. Jones, Jones Chidsey, JJ. Musmanno, Arnold, Cohen, Oscar M. him Hansen, Arthur Littleton, Rich- ard K. Lewis & Stevens, Morgan, Bockius and Stradley, & Stevens Ronon, for Young, residuary legatees, Outhbert H. with him Latta, William Ú. Chase and Barnes, Dechert, & Price, Myers for Rhoads, pre-resid- uary legatee devisee.
Opinion Mr. Chief Justice Jones, January 1958:
Abram K. Wright died June 15, at the age of 82. He had lived in the borough of Clearfield all of his had never life, married, and left no close rela- gross estate ex- tives Mm death. His to survive at Ms (after debts ceeded and had a net worth $2,600,000 taxes) expenses before death administration but disposed by will which the decedent $2,450,000 approximately Ms death. executed six months before testamentary object Wright’s primary The of Mr. bounty Spence, sec- is Miss Ruth him as S. who served retary years his will the last of his life. Under legacy she is to receive a cash stocks $75,000, value at the date of the decedent’s death of $33,500, a life estate in a $14,- trust of other stock worth about the decedent’s house in its furnish- Clearfield with ings, his lands. automobile and various tracts of coal largest amount, beneficiaries under the will, College are the two Princeton charities, viz., *3 University Jersey, and Pres- New and the Princeton, byterian Hospital Philadelphia, is be- each of which queathed gift pre-residuary a and stocks of $65,000 in residuary one-half of the estate as memorial to the a incidentally, college. decedent never who, went to Spence’s It was Miss contention in the court below (state federal) that the of the whole death taxes by residuary should be borne the decedent’s estate residuary whereas the charities contended that each beneficiary, whether individual or should charitable, bear his or its own state inheritance tax but that the apportioned federal estate taxes should be in accord- Apportionment ance Tax with the Estate Act 4(b)4 Avith result virtue of Section that, the entire burden of the Act, federal estate taxes avouM upon legatees fall the individual and devisee notwith- standing gen- of the federal estate Avas tax 46% gifts erated to the charities. testamentary gifts
The auditor held each of the subject deduction the state inheritance tax imposed but the federal residuary estate taxes on the Spence residuary Both Miss charities
estate. exceptions report. filed auditor’s The court report exceptions, dismissed all confirmed the accordingly a final entered decree from which Spence residuary both Miss and the charities have appealed. severally legatees apportionment
The for which the place argue would whole federal amounting upon individual $118,116.43, burden, legatees although taxes and devisee of such $54,448.72 generated gifts (pre-residuary as as well residuary) residu to the charities.* effect ary legatees’ adopted, if would be contention, Spence, Miss to whom the testator willed cash, stocks, approximate realty of a total value of $152,000, going for receive but the other $74,758, $77,903 would represents amount $30,437 of which federal es taxes, gifts. The tate tax attributable to the charitable relativity equally true of all of the same testator’s bequests person example, For to individuals. be (the queathed legacy actually will con $1,000 legacies) such would receive but tains ten net. $490 comparisons Of these do not of de themselves course, respect the testator’s intent was with termine what inequitable charge highly for death duties but the they portray, are relevant and Avhich material results, judging depicting a situation Avhich, from the Avill *4 hardly thought the decedent can be Avhole, as a to have intended.
Undoubtedly Wright
Mr.
was well aware that the
large
taxes on his estate
federal
Avould
state and
*
gift
portion of a charitable
which
for state
The
is deducted
is not an allowable deduction for federal
inheritance tax
contributes,
and, hence,
pro tanto,
purposes
to the federal es-
Company,
v. Northern Trust
taxes: Harrison
that. intent implies of the will involved an er the language to such effect. of a direction requirement
The like testamentary the burden the fed- place in order of or indication out on the estate grew estate taxes eral Act which apportionment State’s first (1937), this Estate repealed present the superseded was L. Act P. of August Apportionment Tax its had predecessor The as 1951, just 1405. Act the federal apportionment the provides done, persons prop- the interested in the among taxes estate estate but confirms to gross in the included erty the to determine how testator will his estate to be con- taxes on are borne. federal held effect this court its the Act struing con- presumption (and conception was to create a 1951) testator under the Act that a to obtain tinues Act’s es- to his provisions have the apply intends presumption pre- recognizing, however, tate, is in some “unless there the terms the will vails inconsistent with con- such provision the will is construed a whole, when struction, and, 350 38 Harvey it.” Pa. Estate, 53, 56, override will 377 Pa. A. Edwards 262; Estate, A. 2d 606, 608, 2d 312. fed- state inheritance tax, however,
Unlike
upon
is a tax
de-
tax
transmission of a
estate
eral
to others
his death:
v.
upon
property
Riggs
cedent’s
S.
98. The
317 U.
incidence of the
95, 97,
Del Drago,
upon
property
tax
the decedent:
federal
Pa.
A.
2d 749.
520, 532,
Mellon
respective
between
incidences of the two
contrast
duties
a succession
of death
(i.e.,
legacy
kinds
and a
one hand
transmission
on
estate tax
on
elucidated
learnedly
Mr. Justice
other)
(later Chief
v.
Justice)
Moore,
Knowlton
White
*6
A Mr. will reveals a donative Wright’s study inconsistent the idea that utterly with scheme which devisee pre-residuary legatees the gifts to deduction for death taxes subject to be were the decedent’s estate. in connection dispositions fall into testamentary decedent’s (1) pre-residuary gifts individuals classes, three $273,000, (2) pre-residuary approximately totaling $269,000, (3) gift aggregating to charities gifts substantially amounting to $1,918,000, of the residue, pecuniary pre-residuary are also charities which to two large legatees amounts. consecutively Items, numbered contains
The will concluding and a Items two unnumbered followed bequests specific paragraph. 55 Items make The first approximately to a number $276,000 and devises bequests aggregating char- $265,000 individuals and exempt organizations. federally tax itable and other empowered “to By his executors 56 the testator Item pay any money pay any if taxes debts or borrow decide the time not executors] [the paying be- selling [his] securities in [testator’s] *7 by quests Finally, Item he devised and debts.” equal residuary bequeathed in shares his estate and Hospital Philadelphia, Presbyterian in and University. College num- and The other Princeton 59) (57, unnumbered 58 and and the two bered Items concluding paragraph, bearing have no on and Items question testamentary intent the of relative to the payment in de- of death duties the settlement of the estate save for one of the Items cedent’s unnumbered hereinafter be made. reference will to which decedent’s an think the will evidences We pre-residuary legatees the and de- intention gifts testamentary their visee were to receive without any of the death diminution for duties incident either property of the decedent’s to transmission at his receipt or to the beneficiaries’ of it. death By Wright gave 1 of his will Mr. Item and be- queathed Spence, secretary, Miss Buth S. his to sum ($75,000.00) Seventy By Thousand Five Dollars. gave 2 he to a named bank in Item trust, shares Dye pay and Allied Chemical Co. common stock to Spence quarterly, therefrom to Miss for the dividends corpus of her with remainders life, duration over in the testa- named individuals. to tlie children of two. 47) Spence (Item his one-half Miss also tor devised (Item bequeathed to her in lands; interest certain coal specified 48) coal his in a his all of interest stock and (Item 49) coal company; his other to her devised (Item 52) County; gave his her lands Clearfield Item all house and lot Clearfield furnishings his and silverware automobile, house, of his his he directed Item ordered kinds; of all Spence period employ three Miss for a executors years work in connection with to do clerical salary management at a settlement of expenses; per he Item and, month and $200 gave lands her all his coal in Decatur and devised to Hyde, Township, County, his lots in Clearfield open question Pennsylvania. not to reasonable It is primary object Spence, that Miss was indeed, Wright’s bounty. His her Mr. concern for her and following years her faithful serv- future welfare, employment in his down the time of his death, ice although in bold stands out the will relief. Yet, Spence testamentary gifts aggregated Miss decedent’s approximately $152,000, all told charities slightly take that amount more half would than paying the state and federal -toward death-taxes includ- *8 gifts ing the taxes on to the even federal the charities. As the will not the indicates, what testator intended. among many pre-residuary instances the Items, bequeathed particular to
the testator the beneficiaries many “in stocks at the market so the dollars value at Obviously, [his] of death.” where the time this is bequest possible it would not be utilized, form for the therefrom state inheritance deduct tax or an apportionment taxes at the and, same time, quantum beneficiary give of stock which the expressly will Such was directs he shall receive. separate testamentary gift form of in no less than including legacy Items “in stocks a at $65,000 [testator’s] market value at the time of death” Presbyterian Hospital Philadelphia be- and a quest in like amount and like terms to Princeton Col- lege University. form It was, moreover, bequest by gifts pre-residuary utilized the testator in his to a number of other charities as well as in sixteen bequests ranging to individuals in amounts from $2,000 bequest many $25,000. of so dollars However, “in stocks at the market value [testator’s] at the time of gift death” was not the form exclusive used eighteen containing testator. There are Items be- quests money ranging to individuals of sums of vari- ously from in $1,000 $4,000 addition to the $75,000 bequest Spence to Miss in Item 1.
The discrimination thus exhibited the testator making bequests legatees “in stocks” to certain money sums in fortuity. to others was no mere He recognized regard well what he had done such had so intended. In the first unnumbered Item, im- mediately following expressly Item he directed that bequest every “In of stock my hereinabove contained, Executors shall have the sole to determine the nature and kind thereof to be delivered to the bene- bequests ficiaries.” It is clear, therefore, “in paid stocks” in fixed amounts were to be in stocks at a market value on a date certain. did the What, then, bequests donative scheme of “in necessarily stocks” import? example, It meant, that, case gift ($5,000.00) of “Five Thousand Dollars in stocks at the market value at the time of [testator’s] death”, actually the number of shares received the bene- ficiary appraised would be according $5,000.00 worth, price and at testamentarily the time specified, *9 for and not stock after deduction worth $4,500.00 the case (in worse the state inheritance tax even or, yet $2,400.00 some of an individual beneficiary), merely an appor- after deduction for stock, worth further taxes. tionment for federal estate charge appli- The same testamentary implication equally and Dye cable to the 200 shares Allied Chemical in placed common stock Item the testator which, by trust with for Miss Spence’s a bank enjoyment dividends therefrom for her life. There not an the testator justification for inference that slightest that the divi- contemplated Spence Miss would receive from dends shares of such is all only which stock, the trust would embrace after deduction, urged the state inheritance tax legatees, and an apportionment taxes; for federal charge nor is it to be inferred of 104 shares was corpus all that the remaindermen were to receive ultimately under testator’s carefully prescribed provision that connection.
What form the testator’s pre- donative residuary dispositions their plainly implies as to free- dom from both inheritance and estate the ordinal taxes, scheme of will confirms. fully its first 55 Items, will contained the testator’s pecuniary legacies and specific bequests and devises provisions made impossible in many instances deductions there- if the testator’s expressed benefactions were to be given effect which his plain language contemplates. Following in Item that, he correlated payment executors of his debts and any taxes. important here is thing ascription taxes to debts the testator’s After thinking. the pecuniary aud specific legacies bequests and devises had been free of segregated, impliedly taxes, the first 55 Items of the-will and payment the'estate'debté; including *10 what 56th Item, the with in been reckoned
taxes, had
property constituted
testator’s
then remained
the
bequeathed
and
devised
forthwith
the residue which he
Philadelphia
Hospital
and
Presbyterian
in
equal
If
College
University,
shares.
and
Princeton
deliberately intended,
not what
testator
that was
the
pre-residuary
bequeath
why
to
he bother
then
would
Presbyterian
legacies
to
the
“in stocks”
each
$65,000
University?
Hospital
College and
and Princeton
will
of a
that- the construction
It is fundamental
portions
nugatory
to
is not
it
renders
idle
which
operative:
every
preferred
makes
word
to one
be
If the
cost. R. Mr. Justice concurs in the re- Benjamin Jones sult. Opinion
Dissenting Bell: Mk. Justice “Hard cases the axiom: example This is another add that necessary make bad law”. It seems often desirable of a province Court, is not within it or rewrite alter, ignore sometimes be, that would conjure up or to an Act of the (or Legislature), will make in order imaginary testamentary intent, an more equitable are all convinced would be a we what of a testator’s estate. more desirable distribution at Mr. died on June testator, 15, 1951, Wright, *11 of a Avill dated November age leaving which Mr. never married probated. was duly Wright His and left no close relatives. estate amounted gross his to net estate distri- approximately $2,600,000; before of Inheritance bution, payment Federal Estate Succession taxes, and Canadian taxes, totaled taxes, approximately $2,460,000. inclusive of and administrative will, dispositive addi- contained 60 numbered and 3 items
provisions, tional items are not numbered. first 55 items he made and devises bequests specific pecuniary of to a number totaling $273,000 large approximately bequests and to charities and $269,000 individuals, In Item 60 testator gave other organizations. residue “not hereinbefore to bequeathed”, Presbyterian in equal and Princeton Hospital University, shares memorials himself. The residue approxi- to totaled mately $1,918,000. alia: provided
Testator inter 11:—I bequeath “Item to Mrs. Kerr give Emily TEN THOUSAND DOLLARS ($10,000.00) in stocks at the market value at the time of death.” my 26:—I L. bequeath
“Item to Rev. A. give Owens, a Methodist Minister, formerly Béllefoñte, Pa., of TWO THOUSAND Dollars.” ($2,000.00) sum
418 the Reedsville bequeath 27:—I to
“Item give TWO THOUSAND Pa., the sum Clearfield, Chapel, Dollars.” ($2,000.00) bequests mentioned are typical
The above exception. with this bequests made his will throughout Spence, S. Ruth to Miss gifts He also made additional $75,000 sum of in item the example his secretary —for certain interests in item one-half absolutely; stock in a coal-min- in item 48 his lands; coal shares in Penn Town- in item 49 all his coal land ing company; of $2,000; sum Clearfield in item ship, County; in item 53 all Clearfield; in item 52 his house in Miss These gifts furniture and his automobile. Spence totaled $160,008. power
Testator then “Item 56:—I provided: give Executors borrow debts or pay my money pay any taxes if decide the time is not for the they selling bequests my securities, paying my A. Executors debts. The to consult with Mr. Clinton York Lutkins of New on condition and time to sell City securities.”
It noticed will be that the will contains immediately provision no gifts pecuniary legacies, *12 or devises specific legacies, were to be free and clear of tax; Inheritance nor did it Pennsylvania contain any said taxes provision imposing upon the estate; residuary provision nor was there any whom directing by the and Federal death Pennsylvania taxes should paid. It is hornbook law that an pecu absolute of a gift in a fixed amount of niary legacy $500, money* ($100, specific or a $5,000, $50,000), or does legacy* devise, * any legal bequest It does not make difference whether the legatees $10,000 named in stocks at the market value at the time death, legacy-in $10,000 his is considered to be a the amount of- g y specific ac or a . le not to give show an intent the of the testator upon part or the bequest specific the amount of the legatee full or Inheritance property Pennsylvania Tax, free said tax estate. impose upon familiar careful even Every who is lawyer slightly if with the law knows that a pertaining wills, testator wants to the full amount give legatee his or a pecuniary legacy, specific devise, legacy clear of he Inheritance Tax, free should add such words at the end of each specifically such or he should cover it an specifically bequest, tax in a sub- all-inclusive, clearly expressed provision sequent part of will. will did con- Wright’s not tain such provision.
The Commonwealth of flat Pennsylvania imposed a collateral inheritance tax on each beneficiary, 10% based upon amount of or its her, legacy devise. The total (after inheritance taxes deduction discount) amounted to Federal $232,208. The 5% return was filed on July executors a Federal estate tax 7, 1952, of $118,116 was then paid. The Federal estate tax return was prepared and filed the executors on the theory Penn- Tax Apportionment Estate sylvania 1951 (dis- Act of cussed infra) applied computation of the tax, and that all the Federal estate tax would be appor- tioned among between the non-charitable bene- ficiaries. This accepted theory Federal au- thorities.
The Federal estate tax was assessed paid on the amount of the individual legacies, Penn- plus 10% Taw sylvania Inheritance which was paid on the chari- specific table and residuary gifts. This inwas accord Harrison v. Northern Trust Company, U. S. (in which held interpreting Section 807 of the *13 Act 1932) Revenue that bequests to charities, ewcept 420 or inheritance taxes levied legacy State succession, for Federal allowable deductions were
thereon, Federal estate tax tax other words, purposes. on the amount of all the individual leg- assessed and on the amount or value acies and bequests, the extent of bequests charitable only 10% . inheritance tax levied thereon. Pennsylvania appeals: are raised these legal questions Two chari- is each and devisee First, legatee (including the Penn- required table residuary legatees) pay his, transfer inheritance tax of on sylvania her, 10% is from or its or or this tax to be legacy paid devise, are all Federal estate taxes to residue; second, and borne the non-eharitable apportioned among paid and devisees or are to be out of the legatees they residue? Tax* Transfer Inheritance Transfer Inheritance Tax Act
The Pennsylvania 72 PS 1919, amended, June P.L. 20, 521, §2301, as its name a direct inheritance tax on implies, not, of suc- upon transfer of but property, or the inheritance, privilege receiving cession of a decedent at and is property death, payable or devisee: v. legatee ultimately** by Shugars 284 130 A. Pa. Tack’s 426; Chamberlain, Estate, A, 191 155. a testator al- However, Pa. 545, may legatee devisee the payment of ways relieve 359 Pa. 2d Spangenberg Estate, such A. tax: 208 Pa. Brown’s 57 A. Estate, 360; 103; Stadtfeld 58 A. 2d Dravo 478; Pa. 147, Estate, * applicable bar, the Act the case at for lineals Under 2% for collaterals. and 10%
** By Act, charged 16 of executors are Section this with the duty collecting paying the tax.
421 117 Pa. Estate, A. 2d 351; Youngblood’s Pa. 131 551, A. 517. 178 Ct. Superior 550, the Court supra, 359 Pa.,
In
Estate,
Spangenberg
.
: “. .
355)
(page
rule
the well established
reiterated
the legatee
payable by
an
tax is ultimately
inheritance
clear
unless the will
her,
or
of the estate passing
out
implica
or
necessary
either expressly
ly indicates,
Ander
tax:
given
free
legacy
tion,
Estate,
Pa.
167 A.
Rettew’s
329;
son’s
312
180,
Estate,
16
2d 322.”*
142 Pa.
A.
Superior Ct. 335,
contained no
or
pecuniary
specific
The testator’s will
tax-
express
clear
nor
taxes”,
any
“free and
all
gift
hence
relief from.the
clause;
payment
free
any
devisee)
(or
inheritance tax
aby
legatee
Pennsylvania
if at
all,
plain
impli-
must arise clearly,
necessary
from the will’s provisions.
cation
387
Pa.
128 A. 2d
Estate,
425,
Beisgen
52,
from Cannistra
384 Pa.
quoting
607,
Court
Estate,
605,
121 A. 2d
:
. .
432)
said
“The testator’s
157,
(page
intention must be ascertained from the
language
of his will: fit is not
he
scheme
what the Court thinks
have said in
or would
might
existing circumstances,
thinks
or even what
Court
he meant
but
say,
of his
meaning
what
words’: Britt
369
Estate,
87
Pa.
A. 2d
Sowers
[450, 454,
383 Pa.
Estate,
243]”:
”
Since no in the specific pecuniary legatees payment language taxes in the we must search whatever, necessary testator’s will which indicates implication give each his 35 individual intent bequest their free and of all taxes? beneficiaries clear only The testator’s taxes in Item 56 reference to provides repeat, of the will we follows: “Item which, power give my money *15 56:—I Executors to to borrow pay any pay any they to debts or if taxes decide the selling my time is not in securities, paying bequests my and debts. The Executors con- to City sult with Mr. A. York Clinton Lutkins of New on condition and time to sell securities.” merely gave
Item testator’s discre- executors a tionary power money purpose pay- to borrow for the ing bequests or debts or taxes. It is to worthwhile succeeding (Item 57) note that item the testator gave power the executors to sell assets and to make all necessary transfers. In neither of these items was dealing apportionment the testator the relief, or directing by they allocation of death oí' whom taxes, ultimately paid; creating should be he was ad- rather, provisions powers. impossible ministrative It is interpret to Item 56 as a clear indication or direction, expressly by necessary implication, either that all collateral inheritance taxes are paid to be out of the or that his indi- estate, legatees respec- vidual and devisees should receive their legacies tive and devises free of tax.
Generally speaking, precedents rarely are control ling interpreted in will cases because each will must be its four corners, no will has a twin brother: Newlin 367 Pa. 80 A. 2d 819. However, Youngblood’s Superior supra, Pa. Estate, 117 Ct., analogous. bequeathed In that case the testatrix abs particular of a number shares olutely* specified Supe The legatees. stock of a stated value to various : 555) rior said Court (page inis of taxes
“The reference to payment only ‘All other prop- reads: seventh item of the which will, husband, is left to my of whatsoever nature erty I him sell such authorize empower and trust, for the proper necessary pay- stocks as he thinks and costs.’ The taxes mentioned therein ment of taxes be com- the estate would referred those evidently there The testatrix no doubt knew pelled pay. independent due from the estate, would be certain taxes would be on the legacies, payable the executor would be required pay. & gave
“In Tallman’s 10 D. the testator Est., 89,C. item his sisters. sixth to each of two $1,000 ‘I he direct that all inheritance provided: will, taxes both to life estate and the upon my estate, shall paid estate in executor remainder, by my awarded the auditing judge due course.’ two *16 of tax thereon. $1,000, subject payment legacies . . . sustained Upon exceptions filed, Judge Lamorelle adjudication. the auditing judge’s think did impose “We the will not payment on the inheritance tax con- residuary estate, and, it is not liable therefor.” sequently that Miss majority opinion says Spence The was the object of testator’s bounty. primary Although we to be question consider the immaterial entirely in the we wonder how she can be case, instant so denominated bequests testator’s and devises when the to her totaled his bequests while and devises to $160,000., the Pres- * pecuniary Edwards’ D. & See also: C. where a secretary “outright” bequest subject to testator’s was held to be Pennsylvania Tax. Inheritance each University Princeton Hospital byterian dollars. one million exceeded 30 individuals over obvious that more It even could legacies small pecuniary given very who Were object as the primary be denominated not possibly primary that obvious equally testator’s bounty, inheritance them exempt could not object theory tax. demon- will of testator’s
An of the language analysis either failed, doubt testator strates beyond implication, language by necessary specific legatee individual each evidence an intent to give inheri- of the Pennsylvania or devise free legacy belief hope I express tax. venture to tance this case to be sui generis; considers majority overrule a it repudiate impliedly otherwise would Superior decisions of this Court and of the number of Orphans’ as countless decisions of Courts as well Court, which have held that this Commonwealth throughout fixed legacy absolute of a amount gift pecuniary an or devise does specific or a not show money, legacy or devisee of the legatee an intention to relieve inheritance tax. payment Tax Federal Estate or succes- Federal Estate tax is not a legacy the prop- or a tax on the privilege receiving sion tax on decedent; it is a instead, erty possessed by of) property, transmission of a decedent’s the (right which is decedent, net estate statutory i.e., Del as a v. out of the estate whole: Riggs payable S. v. St. Louis Trust 95; Co., U. Helvering Drago, Bank 39; U. S. Chase National v. United States, *17 v. S. 327; 278 S. Saltonstall 276 U. U. Saltonstall, 122 v. F. 2d 998. Pri- Clise, Commissioner 260; enactment of the Tax Pennsylvania to the Estate or
425 20 PS P. L. Act of July 2, 1937, Apportionment 2762, 1951, and the Tax Act of Apportionment Estate Federal es- P. L. PS the August 24, 1951, tate tax was of and chargeable out payable in absence of a direction residuary estate, Edwards Pa., testator contrary: Estate, supra. provid-
The Act of 1937 the basic rule changed ing: or in
“Whenever it appears upon accounting any action or execu- any appropriate an proceeding . . . has an or un- tor, paid estate levied assessed tax, der the provisions of the ... or under law act, any hereafter or es- provisions under enacted, any tate tax here- law the United States heretofore after enacted upon respect property any be required to included dece- gross estate dent under the provisions of such the amount any law, of the tax so except a case where a paid, testator otherwise directs in his shall be will, pro- equitably rated among persons interested in the whom such is or property be or to may transferred, whom benefit accrues.”
The Act of August 24, (except for changes context which are unrelated to the case) instant sub- reenacts Section 1 stantially of the Act of July 2, 1937, consequently interpretation of the 1937 Act is of' considerable importance in properly disposing of the issues here involved.
Harvey Pa., was supra, concerned with application Act of 1937. case the testator’s will provided (1) pecuniary legacies ag each gregating $235,000, “subject payment State Inheritance Tax”, (2) specific in which it legacies provided that the tax there on was to out of paid residue, (3) a residuary *18 426 trus income to be divided by in trust,
legacy The expenses. after taxes deducting legal tees legacies that since their contended legatees pecuniary payment made “subject were expressly im were tax”, they State inheritance Fed including from all other tax relieved pliedly this rejected contention, eral estate tax. Court tax, of the Federal estate an apportionment directed 56-57) said : “. . . Like the Act (pages pre supplies the Act supra, 1937, supra, expressly intention read sumption of testator’s when and, equivalent express this is the of an will, provision into in to federal subject these are pecuniary legacies in heritance taxes. Unless there is the terms [sic] provision the will some which is inconsistent* such is con when the will construction, and, strued as a will override the will shall be whole, it, construed accordance with the presumption pro vided statute.* The appellants contend we by should search intent in constru testamentary how these taxes shall be With ing paid. this conten no tion we have but the creates disagreement, statute which can presumption only overcome clear When the statute is language. applied this case, each pecuniary its requiring legacy pro rata pay share of the federal there tax, appears expression no will of intent the testator impose .the the full of the federal tax on the buiden in contravention of the statute.” legatees How clear and strong the language of a testator must be to shift the burden of the tax from an indi vidual in order that legatee charities shall their pay share of the tax —even all the though equities strongly favor the individual legatees further exemplified —is
* Estate; Psupra. See.also.Btadtfeld 417. In Wahr 370 Pa. 88 A. 2d residuary estate her a testatrix directed that case, equal parts”, shares or “shall be divided into gave relatives then 6 of such shares to named majority held A of this Court* to named charities. (1) payment that the charities relieved from the were *19 eq tax of the Federal Estate tax and the was to prorated paid quitably and the individual between (2) legatees, ex had not shown, that testatrix implication, contrary pressly by necessary or intent by providing for estate the division of equal primary “12 ob into shares”. that case, jects bounty her named of testatrix’s were individual (who residuary legatees, her named cousin i.e., (who bequeathed shares) 3 of 12 and 18 relatives such bequeathed shares). 12 3 Nevertheless, were of such required they pay re to in taxes and $4-88,000 were to equal ceive a small fraction of the share she l/12th gave specifically while the were al Charities them, equal lowed to their six shares in receive l/12th full pay in no federal taxes. case—both testa That equities mentary language stronger in in far—is exempting legatees favor of individual than is instant case. strong testamentary language
How clear and contrary must be to show a intent is further evident supra, Estate, Pa., where this Stadtfeld 152) ques- (page said : Court “We come, then, Judge tion: Did Stadtfeld ‘otherwise his direct in presumption will’? The act creates a that a testator proration intends that should be made in accordance specific pro- its unless his will with terms contains a * dissenting opinion pointed filed a Justice which he Bell equal equal that 12 shares meant 12 out shares and not a small share for each individual and a share fraction l/12th l/12th' t y . - for each chari in-full' pre- inconsistent with such clearly expressed, vision, accomplish language that sumption, and, result, not be import: must of doubtful Harvey A. 263. the 18th Pa. 2d 53, 56, 57, Only pro- will is any Stadtfeld’s there paragraph Judge para- in regard vision that payment taxes; H provides: direct all graph inheritance, estate, or similar duties taxes which shall be- succession interest payable respect come any property I passing under will or codicil which my may hereafter shall be out of paid execute, principal without diminution of my estate, be- any devises, quests or would seem too discus- legaciesIt clear for sion this is provision silent wholly regard to estate taxes on property not under the will passing broad therefore not enough cover property though subject not so which, passing, to the federal its because constituting part of the dece- *20 gross dent’s estate.”
How the very must strong language in order to be, show a intent contrary further evidenced from Dravo Pa., supra, which is sum- well in marized the syllabus: it appeared “Where that tes- tatrix created two inter vivos trusts provided which for certain distributions at her death which were sub- ject transfer taxes; inheritance and testatrix’s will H provided direct my Executors to pay all Federal State taxes, estate, succes- transfer, other taxes sion, any due on account of death my which against any property be may included a part as estate for purposes my which shall subject be provisions to of the law of the State of Pennsyl- vania relating to the payment and apportionment such taxes; provided, that however, the devises and made bequests the first six paragraphs immediate- shall ly be free preceding and clear of all such taxes deduction paid be without shall transferred (1) that contribution’; Held, it was liability incidence did not to shift normal testatrix intend the court taxes; and (2) of the transfer inheritance trans the Pennsylvania below had held properly were trusts fer inheritance taxes attributable testatrix’s and not out of out of trusts payable estate.”* it point if there doubt were on this Finally, (4) Apportionment would be removed by §4(b) exact Act 1951 which covers the situation provid- has in this case. That Act as amended arisen A tes- alia: “Powers of Testator or Settlor. inter ed, power possessor any appropriate settlor, tator, shall direct how estate tax may appointment pow- or allocated or apportioned grant discretionary er so direct. to another Apportionment— 4. Method of
“Section Apportionment Basis of “(a) Apportionment. in except provided three, the estate section tax, interested in among persons property shall be made in proportion includible gross such person interest of each bears to the value of the exemption. net estate before value of the of Deductions and Treatment Credits. “(b) shall to deduc- respect following principles apply (1) Deductions Allowed and credits allowable: tions Value Revenue Laws Determining Federal de- Net Estate. interest for which Any of Decedent’s Federal allowable under Revenue laws duction of decedent’s net the value such as determining estate, *21 in trust for a surviving spouse to or passing property similar bequests or or public gifts charitable, and * dissenting opinion B. R. filed a Justice Bell Justice joined. Jones be in- shall not extent allowed deduction, (a) computation provided
cluded in the in subsection apportion- extent no section and to that hereof, four against . . .” ment shall be made such interest, 4(b) (4) Tax Ef- “Section : Inheritance or Death property passing inor fect. To the extent that public spouse surviving any trust for or charitable, gift bequest or an al- similar does not constitute solely lowable deduction reason of an inheritance imposed upon deductible or other death tax and property, in the such it shall not be included computation provided (a) of section subsection apportionment and to that extent no hereof, four shall against property” be made such language specifically of this Act and Appeals governs adversely Nos. 254 and 255 con Spence, tentions and claim of Miss no and we have language to alter rewrite clear in order to equitable just attain we what believe is more and result.* Spence, appellee (in 255),
Miss Nos. application further contends that Section 4- (b)(4) the 1951 Act to the instant case would be because it is unconstitutional, retroactive** and there deprives rights process. fore her of vested without due provides Section 9 of the Act of 1951 that the Act shall apply apportionment of Federal estate taxes respect estate for which the Federal es- * provision 4(b) (4) wisely note that We Section subsequent amendment, viz., May 10, 1956, in a eliminated Act of 1599, §1, P.L. 20 PS §884. ** We, many people, like other believe that retroactive taxes every inequitable description, unjust, although kind are validity constitutionality their have often been sustained Supreme Supreme Court of the United States and Court Pennsylvania.
431 enactment, tate tax the date its return is filed after regardless In the instant when the decedent died. original after estate was filed return for the case, although testator date of the effective Act, prior died Act. rejected in
A similar contention was
made
Jef-
fery’s
case,
333 Pa.
393. In that
3 A. 2d
15,
Estate,
July
1937,
the Act of
whose effective date was
1937,
2,
applicable
constitutionally
es-
held
to the
to be
1935.
on November 10,
tate of a decedent who died
Pa.
83
See
same
Jewell’s
235
119,
effect
Estate,
Carpenter
543;
A.
Cahen v.
203 U. S.
610;
Brewster,
Pennsylvania,
v. Commonwealth
Miss also Apportionment supra, Tax Estate Act of is unconstitutional for the additional reason that it deprives the non-charitable beneficiaries of vested property rights process and therefore denies them due (a) of law in violation the Fourteenth Amendment (b) of the United States Constitution and of Article Pennsylvania §9 I, no Constitution. TVe find merit in this contention. settled that law well beneficiaries of a dece- (whether by descent)
dent’s estate will or have no property; or vested natural to receive such on contrary, rights pos- whatever such beneficiaries governed by sess are derived from and statute and con- sequently subject the beneficiaries take under and applicable Unfortunately, statutes. estab- it may validly lished law a State escheat all of a decedent’s net estate and such action would violate
neither
United States nor the
Con-
S.
stitutions:
Trust
v.
U.
Irving
Company
Day,
A. 155; Kirkpat-
Tack’s
325 Pa.
556;
Estate,
v.
Carpenter
rick’s
275 Pa.
In Trust v. Irving Company U. Day, S., supra, the United States Supreme Court, speaking through Mr. Justice said : suc- (page “Rights of 562) Jackson, cession to the of a whether will property deceased, are and the dead intestacy, statutory creation, hand rules succession sufferance. only by Nothing Federal the Constitution forbids the of a legislature state to or even abolish limit, condition, the power of disposition over testamentary juris- within its property diction.”
In Tack’s what this Pa., supra, Court, through Mr. later speaking Chief Justice, Justice, said is particularly apposite (pages : 548, 549) Steen, “The to transmit or to right receive will property by is not a through intestacy natural but right a crea- ture of Students of statutory grant. law that agree has the State to declare an right escheat of all the of a property decedent, therefore, price devisee or heir allowing legatee, it inherit, may appropriate to itself any portion property . . . it chooses to exact.
“. . . The court further said Strode v. Common- [in 52 Pa. wealth, passed the ‘estate into the 181] hands of the executor for and is taxed administration, every in Ms hands dece- as an estate. The law takes custody, for dent’s estate into and administers it legatees, benefit devisees creditors, heirs, discharging delivers the after remains, residue obligations, all receive entitled to distributees legal obligations every estate it. One of to which go subject, is this that is to collateral kindred per duty not And it is cent the Commonwealth. performed, that until this work administration succession attaches Carpenter Pennsylvania, 58 v. Commonwealth of question supra, the Constitution U. involved S., ality of the first Inheritance Tax. upholding validity of United States the statute the period Supreme dis said: until “But, Court decedent’s domicile tribution the law of the arrives, rights property, donee .... The attaches *24 ad the and formalities, are subordinate to conditions, prescribed by in in the ministrative state control, irrevocably public only are terests of its and order, upon at its abdication of this control, established pe during period If this of distribution. the state, and control its tribunals riod of administration impose upon appointees, tax fit thinks to their property, no obstacle in the constitution there is [Citing prevent it.* of the States to laws United cases].”
* on Tax which is a tax The Federal Estate decedent, specify tax. the burden of the failed who was to bear to by Congress to the left determination was This administrative (page Drago, Riggs In the Court said v. Del U. S. States. history clearly Congress legislative 9S) did indicates that : “Its contemplate in the be interested the Government would that not Congress paid, and after the tax was that distribution the estate the ultimate thrust should determine intended that state law the tax.” it that testamen- other settled words, may legacies gifts
tary though latter and —even prop- constitute known the law as a vested what period erty during subordinate interest or —are broadly period referred as the administration, costs debts of decedent and death administration, taxes. Spence deprived
It is clear that Miss of no rights equally vested clear she was not de- prived process. of due Orphans’
I would affirm decree of the Court County imposed as No. Clearfield which (cid:127)Pennsylvania legatee, Inheritance on each and re- as Nos. 254 verse decree held all of Federal Estate tax should be borne charities). legatees (the College Trusteeship.
Girard