Appeal from decree of Orphans' Court of Philadelphia County, No. 713 of 1966, in re estate of Peter Super, Jr., deceased.
Charles F. Nahill, Special Assistant Attorney General, with him Francis J. Gafford, Deputy Attorney General, and William C. Sennett, Attorney General, for Commonwealth, appellant.
No argument was made nor brief submitted for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen.
The deceased died intestate leaving his estate as beneficiary of the proceeds of a National Service Life Insurance policy on his life. The Commonwealth then entered a claim for inheritance tax against these insurance proceeds. The administratrix of the estate resisted the claim and the court below, relying on Beall Estate, 384 Pa. 14, 119 A.2d 216 (1956), sustained the administratrix. We disagree.
Under 72 Stat. 1229 (1958), 38 U.S.C. § 3101 (1959),*fn1 certain attributes are accorded to veterans' benefits. This section provides in pertinent part as follows: "(a) Payments of benefits due or to become due under any law administered by the Veterans' Administration
shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. . . ."
We held in Wanzel's Estate, 295 Pa. 419, 145 Atl. 512 (1929), that War Risk Insurance installments paid to a deceased soldier's estate were not subject to state inheritance tax. Our opinion relied heavily on Ohio v. Rife, 119 Ohio S. 83, 162 N.E. 390 (1928), wherein the Ohio Supreme Court, noting that Ohio's succession tax was an excise tax upon the right to succeed to property, held that the predecessor federal statute to 38 U.S.C. § 3101 took precedence over Ohio's tax statute and exempted the insurance proceeds from taxation.
In 1939 the United States Supreme Court handed down its decision in United States Trust Company v. Helvering, 307 U.S. 57, 83 L. ed. 1104 (1939). The only question there decided was whether War Risk Insurance proceeds paid to the widow of a deceased veteran were includible in the gross estate for federal estate tax purposes. The estate relying upon the predecessor federal statute to 38 U.S.C. § 3101 contended that the proceeds were exempt. In a footnote the Supreme Court introduced its consideration of the issue as follows: ". . . State courts have differed as to whether proceeds of War Risk Insurance are subject to death duties imposed by the States. See, for example, . . . Tax Commission v. Rife, 119 Oh. St. 83; 162 N.E. 390; Wanzel's Estate, 295 Pa. 419; 145 A. 512 . . . (holding these proceeds not subject to such excises); and . . . (contra). In view of this fact and the importance of Page 479} an authoritative interpretation of the federal statutes involved, we granted certiorari. . . ." (Emphasis supplied.)
The Supreme Court concluded that the statutory exemption from taxation of War Risk Insurance does not include immunity from federal estate taxes, pointing out that the federal estate tax is not a tax upon the property of the estate but ...