Before KALODNER, STALEY and SMITH, Circuit Judges.
Is the descent of property to a state under its intestacy laws a transfer of such property within the meaning of Section 2055(a) of the Internal Revenue Code of 1954,*fn1 which provides, in effect, for the exemption from federal estate taxes "of all bequests, legacies, devises, or transfers * * * "to or for the use of * * * any State * * *"?
The District Court answered the question in the negative*fn2 and this appeal followed. The issue is one of first impression.
The relevant undisputed facts are:
Elmer J. Writer died intestate May 23, 1957, in York, Pennsylvania. He was not survived by any relative to whom his estate would descend under Pennsylvania's intestacy laws, and pursuant to the provisions of Section 3 of the Act of April 24, 1947, P.L. 80, as amended, 20 P.S. § 1.3(6), his entire estate descended to the Commonwealth of Pennsylvania. The plaintiff administrator of Writer's estate, Lavere C. Senft, paid $18,474.86 in federal estate tax and interest and when his claim for refund was disallowed he filed his complaint in the instant action, under 28 U.S.C.A. § 1346. Both in his claim for refund and in the District Court the plaintiff contended that in determining the value of the taxable estate the estate was entitled to a charitable deduction pursuant to Section 2055(a) of the 1954 Code. The District Court granted the Government's motion for summary judgment*fn3 on its view that the statutory language, the legislative history, and applicable Treasury Regulations, as well as relevant case law, compelled the conclusion that property descending to the Commonwealth under the Pennsylvania Intestate Act cannot be construed as property "'transferred by decedent during his lifetime or by will * * * to or for the use of * * * any State.'"*fn4 202 F. Supp. 840.
The thrust of the plaintiff's vigorous contention on this appeal is that the word "transfers" in Section 2055(a) "encompasses transfers by operation of law", and "the statutory purpose in permitting a deduction for transfers to public bodies is not transgressed by permitting a deduction in this case".
The sum of the Government's position is that "transfers" within the meaning of Section 2055(a) are limited to a voluntary transfer, testamentary in character, made by the decedent in his lifetime.
Section 2001 of the 1954 Code*fn5 provides for imposition of an estate tax "on the transfer of the taxable estate, determined as provided in section 2051, of every decedent * * *."
Section 2055 "Transfers for public, charitable, and religious uses", provides in relevant part:
"(a) In General. - For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers * * *
"(1) to or for the use of the United States, any State, Territory, or any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
"(2) to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, * * *." (emphasis supplied)
Treasury Regulations Sec. 20.2055-1 "Deductions for transfers for public, charitable, and religious ...