Appeal from order of Court of Common Pleas, Orphans' Court Division, of Lawrence County, June T., 1967, No. 39, in re estate of Frank E. Moore, also known as F. E. Moore, deceased.
Philip A. Bregy, with him Thomas F. Nelson, Roland Fleer, William J. Ramage and Kirkpatrick, Lockhart, Johnson & Hutchison, for appellant.
Eugene J. Anastasio, Deputy Attorney General, with him Vincent X. Yakowicz, Francis J. Gafford, Edward T. Baker, Deputy Attorney Generals, Perry L. Reeher, Counsel, and J. Shane Creamer, Attorney General, for Commonwealth, appellee.
Bell, C. J., Jones, Eagen, O'Brien, Roberts and Barbieri, JJ. Opinion by Mr. Justice Roberts. Mr. Justice Pomeroy took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Eagen. Mr. Justice O'Brien joins in this dissenting opinion.
The Act of May 28, 1956, P. L. (1955) 1757, as amended, 72 P.S. § 2301.1, provides that no inheritance tax shall be imposed upon charitable transfers. At issue in this appeal is the applicability of this statutory exemption to a charitable transfer pursuant to a general testamentary power of appointment created before but exercised after the effective date of the statute. We hold that this chronology qualifies the instant transfer for exemption. In so concluding, we reverse an orphans' court decree holding the transfer taxable.*fn*
The facts have been stipulated and are as follows: Frank Moore died testate on February 6, 1954, a resident of Ellwood City, Lawrence County. By his will he left his residuary estate to Edith Moore, Thomas Johnson and the Lawrence Savings Company, as trustees, and directed them to divide the trust estate into two parts. In "Part I" of the trust the trustees were directed to pay the net income to decedent's wife, Edith Moore, for life and upon her death distribute the principal to such parties as she might appoint by her last will.
Edith Moore died testate on December 24, 1965. By her will she appointed the principal of Part I to the
Lawrence Savings and Trust Company to be held in trust for the benefit of the First Presbyterian Church of Ellwood City, Pennsylvania (now Christ Church United Presbyterian) and the Ellwood City Hospital. Shortly thereafter the surviving trustees filed appropriate accounts with the Register of Wills listing the assets of Part I as of the date of Edith's death, together with a claim for charitable exemption from inheritance tax.
The Commonwealth denied the claim for tax exemption, and the trustees appealed to the Court of Common Pleas of Lawrence County, Orphans' Court Division. Their appeal was dismissed on July 11, 1969, and this appeal followed.
Section 1(d) of the Transfer Inheritance Tax Act of 1919, P. L. 521, as amended, 72 P.S. § 2301(d) states in pertinent part: "A tax shall be, and is hereby, imposed upon the transfer of any property, real or personal, or of any interest therein or income therefrom in trust or otherwise, to persons or corporations in the following cases: . . . (d) When any person or corporation comes into the possession or enjoyment by a transfer from a resident . . . of any property transferred pursuant to a power of appointment contained in any instrument taking effect after the passage of this act. . . . Provided, That property transferred pursuant to powers of appointment shall, in all cases where the power is hereafter exercised, be taxed as the estate of the donor, notwithstanding any blending of such property of the donee."
Section 45 of the same act defines "transfer" ". . . to include the passing of property, or any interest therein, in possession or enjoyment, present or future, by distribution, by statute, descent, devise, bequest, grant, deed, bargain, sale or gift."
The Transfer Inheritance Tax Act of 1919 is limited, however, by the Act of May 28, 1956, P. L. (1955) 1757,
as amended, 72 P.S. § 2301.1, which provides: "No transfer inheritance tax shall be imposed upon the transfer of any property . . . to persons, corporations and organization where the transfer is by will . . . (a) To or for the use of any corporation, unincorporated association, or society, organized and operated, exclusively, for religious, charitable, scientific, literary or education purposes . . ."
The respective positions of the parties in this appeal may be briefly summarized: The Commonwealth concedes that the institutions appointed by the will of Edith Moore are statutorily exempt organizations but argues that the exemption is not available here because the power of appointment was created prior to June 1, 1957, the effective date of the exemption statute. Appellants agree, as indeed they must, that the act is prospective, that the donor of the power of appointment is regarded as the transferor for inheritance tax purposes, and that the time of the appointees' enjoyment is not controlling. They nevertheless contend that there was no "transfer . . . to" the church and hospital until Edith Moore's death in 1965.
In assessing these competing arguments, it is important to bear in mind that this appeal poses a single, albeit important issue of statutory construction, to wit: when did the "transfer . . . to" the appointees take place. In answering this question we must of course be guided by the text of the charitable exemption statute and by a consideration of the public policies which it seeks to foster.
As set out above, Section 1(d) of the Transfer Inheritance Tax Act of 1919 provides that property transferred pursuant to powers of appointment shall "be taxed as the estate of the donor", and Section 45 of the same act assigns a specific statutory ...