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December 5, 1955

Elizabeth B. KEATING and The Pennsylvania Company for Banking and Trusts, Executors of the Estate of Edith K. Sands, Plaintiffs,
Joseph F. T. MAYER, Former Acting District Director of Internal Revenue, Defendant

The opinion of the court was delivered by: KRAFT

Edith K. Sands, a resident of Pennsylvania, died testate on July 12, 1950. At the time of her death she possessed a life interest in and a general power of appointment by will over a portion of a trust estate established by the will of her grandfather, a Pennsylvania resident, who died in 1894. His will also provided for a gift to Mrs. Sands' issue in default of her exercise of the power. Mrs. Sands had four sons all of whom survived her. Her will comprised only two paragraphs, one appointing executors and the other providing:

'1. I leave all my property to my sons who shall survive me, their heirs and assigns forever.'

 Plaintiffs, executors of Mrs. Sands' estate, did not include in her estate tax return that portion of trust principal over which she had general power of appointment. Defendant included it in decedent's gross estate and assessed a tax deficiency which plaintiffs paid with interest. Plaintiffs filed a claim for refund, and receiving no notice of allowance or disallowance, instituted this suit which defendant answered. Both plaintiffs and defendant request judgment on the undisputed facts disclosed by the pleadings and supporting affidavits.

 The next ground is that decedent exercised her appointive power by her will and in so doing commingled or blended the appointive property with her separate property so as to require inclusion of the former in her gross estate. Assuming that decedent did exercise her appointive power, her will discloses no intention to blend the appointive trust property with her own. Her will made no reference to her debts and neither expressly exercised nor even mentioned the appointive power. The property was appointed to her sons, not to her creditors or to her own estate. Huddy's Estate, 236 Pa. 276, 84 A. 909.

 Barclay v. United States, 3 Cir., 175 F.2d 48, is readily distinguishable. There decedent's will provided for payment of all her debts, made substantial specific bequests and gave the residue to her son. The decision was consistent with In re Pennsylvania Co. for Insurances on Lives & Granting Annuities Account, 264 Pa. 433, 107 A. 840, where a decedent who directed payment of all her debts and gave the residue to her husband, was held to have blended the appointive fund with her own assets for the purpose of payment of her debts. As pointed out in Miller's Trust, 313 Pa. 18, 24, 169 A. 362, 364, this decision was on the basis that 'where the will, which executes the power, directs the payment of debts, and then gives the residue of the estate to one who claims to be the appointed legatee, the latter can get only what is left after the debts are paid, for that is the necessary result of the use of the word 'residue." The decedent's will here did not direct payment of debts or use the word 'residue'. A direction to pay debts followed by an express appointment of the residue does not necessarily result in a blending of the two estates for all purposes. Valentine's Estate, 297 Pa. 99, 146 A. 453, 64 A.L.R. 737.

 In Miller's Estate, supra, decedent's will made no reference to his power of appointment or the instrument which created it, but did direct payment of debts and then gave all of his estate to his wife. The court held that the will exercised his power of appointment in favor of his wife but did not blend the two estates. The will now under consideration presents an even stronger case against the application of the blending doctrine because it, too, omits reference to the power of appointment and to the will which created the power, and gives all of the property to designated beneficiaries, making no mention of payment of debts.

 Stannert's Estate, 339 Pa. 439, 15 A.2d 360, 362 and Hagen's Estate, 85 Pa.Super. 123, affirmed 285 Pa. 326, 132 A. 175, which the former cites with approval, both clearly hold that blending is a matter of intention which 'must be plainly expressed or clearly implied from the appointment.' No expression or clear implication of an intention to blend the appointive estate with her separate property is found in this decedent's will.

 The last ground for contention that the appointive property is includible in decedent's gross estate under Section 811(a) is that there was a sufficient shifting of economic interest at decedent's death to bring the property within the provisions of that section. The law of Pennsylvania controlled the devolution of the property in question. Under that law a devisee or legatee of property appointed by exercise of a general power of appointment, who would have taken the same property under the donor's will in default of such appointment, takes the appointed property under the donor's will and not under that of the appointing donee. In re Freeman's Estate, 35 Pa.Super. 185; *fn2" Lewis v. Rothensies, 3 Cir., 138 F.2d 129. Since the property now in question was already vested in this decedent's sons by the will of the donor, their great-grandfather, and was not divested by any adverse exercise of the appointive power by the decedent's will, there was no shifting of economic interest at her death. Commissioner v. Cardeza's Estate, 3 Cir., 173 F.2d 19, 26, 9 A.L.R.2d 1368.

 It is concluded, therefore, that because of the gift over in the donor's will, the decedent did not have an ownership of the appointive property; that she did not blend that property with her own; that there was no shifting of economic interest upon her death; and that the value of the appointive property is not required by Section 811(a) to be included in her gross estate.

 Defendant also contends that the property is taxable under Section 811(f). Before 1942 property passing by exercise of a power of appointment was includible in decedent's gross estate. The Revenue Act of 1942 amended the pertinent provisions to include the value of any property with respect to which the decedent had, at the time of his death, a power of appointment. *fn3" Excepted from the amendments, inter alia, however, was any power of appointment created prior to the enactment, if decedent died before January 1, 1943 and the power was not exercised. This time limit was extended by subsequent successive enactments until superseded by the Powers of Appointment Act of 1951, *fn4" which, in the section now material, was made effective retroactively to October 21, 1942. Thus Section 811(f) so amended and effective at the date of this decedent's death provided:

 '811. The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside of the United States * * * to the extent of any property with respect to which a general power of appointment created on or before October 21, 1942, is exercised by the decedent (1) by will or (2) by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent's gross estate under subsections (c) or (d); but the failure to exercise such a power or the complete release of such a power shall not be deemed an exercise thereof.'

 It is undisputed that the appointive property in this case was property with respect to which decedent had a general power of appointment created before October 21, 1942. The substantial dispute is whether decedent exercised that power by her will within the meaning of the taxing statute.

 Section 14 of the Pennsylvania Wills Act *fn5" ...

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