Appeal, No. 218, Jan. T., 1956, from decree of Orphans' Court of Philadelphia County, 1954, No. 2161, in re Estate of Florence S. Kritz, deceased. Decree affirmed; reargument refused January 15, 1957.
Ralph S. Snyder, Deputy Attorney General, with him Irvin Stander, Deputy Attorney General, and Herbert B. Cohen, Attorney General, for appellant.
H. Ober Hess, with him Bruce L. Castor, and Ballard, Spahr, Andrews & Ingersoll, for appellee.
Before Stern, C.j., Jones, Chidsey, Musmanno and Arnold, JJ.
OPINION BY MR. CHIEF JUSTICE HORACE STERN
Under the Transfer Inheritance Tax Act of June 20, 1919, P.L. 521, as amended, may a debt of the decedent be deducted in computing the tax even if it is not collectible from the testamentary estate nor enforceable against the property taxed? In our opinion the court below was correct in answering this question in the affirmative.
Florence S. Kritz, the decedent, died October 30, 1953. During her lifetime she had owned, together with her husband as tenants by the entireties, a property on Tyson Street, Philadelphia, subject to a mortgage on which, at the time of her death, there was an unpaid balance due of $1,027.32. Decedent had also owned, together with her sister, Grace L. McMullin, as joint tenants with the right of survivorship, certain real estate in Montgomery County. She left no assets subject to administration.
Under the Transfer Inheritance Tax Act, the Tyson Street property was not taxable, but the real estate in Montgomery County was taxable under Article I, § 1(e), of the Act, as amended, which provides that "Whenever any property, real or personal, is held in the joint names of two or more persons, except as husband and wife, ... so that upon the death of one of them the survivor or survivors have a right to the immediate ownership or possession and enjoyment of the whole property, the accrual of such right by the death of one of them shall be deemed a transfer, taxable under the provisions of this act, of a fractional portion of such property, to be determined by dividing the value of the whole property by the number of joint tenants in existence immediately preceding the death of the deceased joint tenant." Accordingly, the Montgomery County real estate being appraised for inheritance tax purposes at $16,000, one-half thereof, or $8,000, was taxable to decedent's sister. From that amount she claimed to deduct one-half, or $538.98, of the principal and interest due on the Tyson Street mortgage,*fn* decedent and her husband having been co-obligors on the mortgage bond. The sister, of course, was under no obligation to pay that debt; it was in fact paid by decedent's husband.
Article I, § 2, of the Act, as amended, provides that all the taxes under it should be imposed "upon the clear value of the property subject to the tax," and that "In ascertaining the clear value of such estates, the only deductions to be allowed from the gross values of such estates by the register of wills shall be the debts of the decedent," and certain other prescribed items. The Commonwealth, appellant herein, contends that
"the clear value of the property" jointly owned by decedent with her sister should be held to be no less than its gross or appraised value because it was not subject to the claims of creditors or the expenses of administration, and that, in general, a decedent's debt should not be deductible unless there was testamentary property from which payment could be enforced. Accordingly the Commonwealth ...