Appeal from order of Orphans' Court of Erie County, Sept. T., 1963, No. 117, in the matter of estate of Katherine G. Lander, deceased.
Conrad Pearson, with him Knox, Weber, Pearson & McLaughlin, for appellants.
Frederick F. Jones, with him Gifford, Graham, MacDonald & Illig, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Chief Justice Bell. Dissenting Opinion by Mr. Justice Cohen. Mr. Justice Eagen joins in this opinion.
The question involved is narrow but important. Under the language of testatrix's will, were Pennsylvania Inheritance taxes and Federal Estate taxes on her jointly-owned property, payable out of her residuary estate or by the surviving co-tenant of the jointly-owned property? The lower Court held that none of these taxes were payable out of the residuary estate.
Katherine G. Lander died on August 8, 1960, leaving a will dated February 14, 1956. Testatrix provided: "First. I direct that all*fn* my just debts, funeral expenses, Federal Estate taxes and Pennsylvania Inheritance taxes be fully paid and satisfied by my Executors, as soon as conveniently may be, after my decease."
Testatrix left personal property which was exclusively her own, amounting to approximately $50,000. She was also a joint tenant of certain personal property, which consisted almost entirely of shares of mutual funds, with a value of over $85,000, registered in the names of herself and (1) a son, and (2) a grandson, and (3) a granddaughter, and (4) a daughter-in-law, "as joint tenants with right of survivorship."
The Pennsylvania Transfer Inheritance Tax Act of June 20, 1919, P. L. 521, as amended, 72 P.S. § 2301
et seq. (which is the pertinent statute), imposes a transfer inheritance tax upon the transfer by will or by the intestate laws of any property or of any interest therein from any person dying seized or possessed thereof, with certain exceptions not herein pertinent. It is usually denominated a legacy or succession tax on the privilege of receiving the property owned by a decedent: Pickering Estate, 410 Pa. 638, 190 A.2d 132; Hoffmann Estate, 399 Pa. 96, 160 A.2d 237; Wright Estate, 391 Pa. 405, 138 A.2d 102; Shugars v. Chamberlain Amusements Enterprises, Inc., 284 Pa. 200, 130 Atl. 426; see also, Cochrane's Estate, 342 Pa. 108, 20 A.2d 305. The tax is therefore payable by the recipient of the property unless the testatrix otherwise provides, expressly or by clear or necessary implication.*fn** Dravo Estate, 388 Pa. 551, 131 A.2d 351; Spangenberg Estate, 359 Pa. 353, 59 A.2d 103; Horn Estate, 351 Pa. 131, 40 A.2d 471; Anderson's Estate, 312 Pa. 180, 167 Atl. 329.
We must therefore determine testatrix's intent, which is the polestar in the construction of this will and in the solution of the questions here involved. Houston Estate, 414 Pa. 579, 201 A.2d 592; Burleigh Estate, 405 Pa. 373, 175 A.2d 838; Dinkey Estate, 403 Pa. 179, 168 A.2d 337.
The language of Mrs. Lander's will is a clear and express direction to her executor to pay all Federal Estate taxes and all Pennsylvania Inheritance taxes in full -- and this direction clearly includes the Pennsylvania Inheritance taxes on her jointly-owned (extra-testamentary)
property. To decide otherwise would be (a) to ignore the clear language of her will, or (b) to torture the language of her will into stating that the Pennsylvania Inheritance tax on jointly owned property -- which never passed under or by virtue of her will and never was a part of her estate under the intestate laws -- must be paid, not by her executors but by the surviving joint tenant. Cf. Cochrane's Estate, 342 Pa. supra; Horn Estate, 351 Pa. supra; Anderson's Estate, 312 Pa. supra; Spangenberg Estate, 359 Pa. supra.
Analogous cases confirm our construction.
We start with the general rule reiterated in Cochrane's Estate, 342 Pa. supra, that, absent any testamentary direction to the contrary, a personal representative is liable for the payment of the Pennsylvania Inheritance tax only upon such assets as pass through his hands. In that case, Chief Justice Schaffer, speaking for a unanimous Court, said (page 112):
". . . Who shall pay the tax depends upon who receives the property . . . . The only tax which is chargeable against the personal representative is that on the assets passing through its hands, which it is required to deduct from each distributive share. For the tax on the other assets of the estate, which do not pass ...