Appeal, No. 167, Jan. T., 1949, from decree of Orphans' Court of Lancaster County, Oct. T., 1947, No. 38, in Estate of James H. Mills, Deceased. Record remitted.
George W. Keitel, Deputy Attorney General, with him Harold E. Martin and Charles J. Margiotti, Attorney General, for appellant.
Harris C. Arnold, with him Arnold, Bricker & Beyer, for appellee.
Before Drew, C.j., Stern, Stearne, Jones, Bell and Ladner, JJ.
OPINION BY MR. JUSTICE ALLEN M. STEARNE
The question raised by this appeal is whether the amount awarded to a widow under the terms of an agreement for support constitutes a debt of the husband "contracted bona fide and for an adequate and full consideration
in money or money's worth." The learned court below ruled that it did. This appeal followed.
Section one of the Act of June 24, 1939 P.L. 721, 72 PS 2302 et seq. (amending the Act of 1919, supra), as further amended, provided, inter alia, for deductions for debts of a decedent in appraising and assessing Pennsylvania Transfer Inheritance Tax: "... That the deductions herein allowed in the case of any indebtedness of the decedent shall, when founded upon a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth." (Italics supplied)
On May 17, 1946, James H. Mills and his wife, Anna Irene Mills, entered into a post-nuptial agreement, under seal, and which preceded a divorce. In the recital to the agreement it is stated: "Whereas, both the Husband and Wife have accumulated estates and the Husband wishes to make proper provision for the support, maintenance and comfort of his Wife, whether they be divorced or their marital ties continue." The consideration named was: "... the mutual undertakings of the parties here-to as hereinafter contained, and in settlement, adjustment and compromise of all property questions and rights and liability for support and maintenance and in order to end a family controversy and in consideration of the sum of One ($1.00) Dollar, in hand paid by each of the parties hereto to the other...." (Italics supplied) In the agreement the husband "admits and recognizes his legal liability to his wife for support and maintenance." He agreed: to pay his wife $300 a month while he was employed, and after his retirement $150 per month; real estate held by them in entireties could be sold after divorce and the husband's retirement and proceeds divided equally; if such real estate was not sold before his death the husband's interest therein was to go to the wife; he also agreed to make a will leaving all
his estate to the wife; policies of life insurance payable to wife were to be irrevocable. The wife agreed that real estate held by them in entireties could be sold after divorce and her husband's retirement and proceeds equally divided; in the event that the wife predeceased her husband before sale of the real estate, the husband was to receive a one third interest therein and the wife agreed to make a will leaving her husband one third of her estate. The wife by this agreement effectively surrendered all other right to support. The parties were subsequently divorced. The husband, until his death, complied with the agreement. His will was probated. The Commonwealth ...