Appeal, No. 19, Jan. T., 1960, from decree of Orphans' Court of Montgomery County, No. O. C. 59527, in re estate of Hortense F. Loeb, late of Montgomery County, Pennsylvania, deceased. Decree affirmed.
Ralph S. Snyder, Deputy Attorney General, with him Anne X. Alpern, Attorney General, for Commonwealth, appellant.
Paul Maloney, with him Knox Henderson, and Gordon A. Block, for appellee.
Before Jones, C. J., Bell, Jones, Cohen, Bok and Eagen, JJ.
OPINION BY MR. JUSTICE BELL,
Hortense F. Loeb died July 8, 1957, a resident of Montgomery County, leaving a will and codicil, the dates of which do to appear in this record. She made pecuniary bequests totaling approximately $412,000 to persons standing in a collateral relationship to her. These bequests were taxable at the rate of 15% under § 2 of the Transfer Inheritance Tax Act of June 20, 1919, P.L. 521, as amended. Testatrix in the 8th paragraph of her will provided: "All estate, inheritance or succession taxes on my estate and on any property passing*fn1 under this will shall be charged against and paid as and when due out of the principal of the residuary trust."*fn2
The executors computed the inheritance tax in accordance with the clear and express directions of the testatrix, and in accordance with the interpretation of the Act and the practice which admittedly has existed in this Commonwealth for 39 years, viz., 15% on
of the executors, the Commonwealth has taken this appeal.
It is important and necessary to examine the Pennsylvania Transfer Inheritance Tax Act of June 20, 1919, as amended, in order to determine its meaning. The Act pertinently provides: "Section 1. A tax... is hereby, imposed upon the transfer of any property, real or personal, or of any interest therein*fn4 to persons or corporations in the following cases:"
"Section 2. All taxes imposed by this act shall be at the rate of two per centum upon the clear value of the property subject to such tax passing to or for the use of father, mother, husband, wife, children, lineal descendants born in lawful wedlock,... [and 15% to more remote relatives]."
The Revenue Department contends that the "clear value" of a tax-free gift of $100,000 passing to a collateral pecuniary legatee is clearly not $100,000, but
is clearly $117,647.05. We are convinced that the language, meaning and intent of the Act is clear and that the Department's new interpretation is not in accordance with, but is an unreasonable distortion ...