Feitz' Estate, In re

• Decision Date: 16 January 1961
• Citation: 167 A.2d 504,402 Pa. 437
• Parties: In re ESTATE of Anna O'Donnell FEITZ, Deceased. Appeal of the COMMONWEALTH of Pennsylvania.
• Court: Pennsylvania Supreme Court

Page 504

167 A.2d 504

402 Pa. 437

In re ESTATE of Anna O'Donnell FEITZ, Deceased.

Appeal of the COMMONWEALTH of Pennsylvania.

Supreme Court of Pennsylvania.

Jan. 16, 1961.

Irvin Stander, Sp. Asst. Atty. Gen., Ralph S. Snyder, Deputy Atty. Gen., Anne X. Alpern, Atty. Gen., for appellant.

Abraham J. Levinson, Philadelphia, for appellee.

Before CHARLES ALVIN JONES, C. J., and BELL, MUSMANNO, BENJAMIN R. JONES, COHEN, BOK and EAGEN, JJ.

BENJAMIN R. JONES, Justice.

This appeal presents only one question: is the value of the statutory right to apply, after death, for the transfer of a restaurant liquor license, owned by decedent at the time of death, subject to inclusion as part of the decedent's estate taxable for inheritance tax purposes? ¹

On January 16, 1959, Anna O. Feitz died, testate, in Philadelphia. By her will she provided, inter alia: 'Second: I give, devise and bequeath to Joseph Goldman, all my right, title and interest in and to the restaurant liquor license issued for premises 177 West Girard Avenue, and in and to any other license which I hereafter may hold and issued by the Pennsylvania Liquor Control Board.' Goldman was named her executor.

As executor, Goldman, on January 26, 1959, requested the Liquor Control Board to transfer the decedent's liquor license to himself as an individual in accordance with decedent's testamentary direction. On March 4, 1959, this transfer was completed.

In the appraisement of decedent's personal estate for inheritance tax purposes, the Commonwealth included the value ($14,500) of the right to apply for a transfer of decedent's liquor license. From such appraisement, Goldman appealed to the Orphans' Court of Philadelphia County averring that such value was not part of decedent's taxable estate. Judge Saylor dismissed the appeal and held such value taxable. The court en banc, in reliance upon Ryan Estate, 375 Pa. 42, 99 A.2d 562, reversed Judge Saylor and held such value not taxable. From that decree, this appeal has been taken by the Commonwealth.

The Commonwealth's argument is two-fold: (1) that the instant factual and legal situation is distinguishable from the situation presented in Ryan; (2) that, even if it were otherwise, Ryan was erroneously decided and should be overruled.

To determine its rationale and apposition to the present situation Ryan must be examined. In Ryan, the decedent, owner of a restaurant liquor license, died intestate; upon his death, on application of his widow, as administratrix, the license was transferred by the Board to the widow as the surviving spouse under the provisions of the then applicable § 408(c) of the Liquor Control Act of 1937, P.L. 1762, ² as amended, which provided, inter alia: '* * * In the case of the death of a licensee, the board may transfer the license to the surviving spouse or personal representative or to a person designated by him.' The fact that the license transfer application had been signed by the surviving spouse in her capacity as administratrix of the estate was considered unimportant inasmuch as the Liquor Control Act, supra, gave the surviving spouse the right to have the license transferred to herself and 'this right would not have been abrogated had another individual been appointed administrator.' [375 Pa. 42, 99 A.2d 563] Ryan held that the value of the license and the value of the right to apply for a transfer thereof were not taxable. The Commonwealth contends that Ryan must be restricted to its specific factual situation and is not actually authority for the proposition that neither a liquor license per se nor the right to apply for its transfer is not taxable for inheritance tax purposes.

In Ryan, the Court distinguished Aschenbach v. Carey, 224 Pa. 303, 73 A. 435. In Aschenbach, the decedent's liquor license was transferred on application of his brother-administrator to himself as an individual. As administrator, the brother charged him self with the license and paid for the transfer and reissuances of the license from estate funds; all moneys received from operation of the business conducted under the license were deposited in the administrator's account and the eventual sale of the transferred license was under direction of the Orphans' Court. In Ryan, distinguishing Aschenbach, it was said (375 Pa. at page 46, 99 A.2d at page 563): 'In other words, the administrator in the Aschenbach case purposely treated the license as an asset of the estate and enhanced the value of the estate by the transfer to the purchaser. chaser. He never claimed the license to be his own, although it was issued to him. In the case at bar [Ryan] the license was issued to the surviving spouse, who always held it as here and never accounted for it as an asset of the estate. She sold her license so that it was transferred from place to place, thus not enhancing the value of the estate as in the Aschenbach case. The principal difference between the Aschenbach case and the instant matter is that in the Aschenabch case the individual who held the license used it for the benefit of the estate. In the instant case the surviving spouse used the assets of the estate for her own benefit as the owner of the license.' ³

Had the Court stopped at this point in its determination, Ryan would simply stand for the proposition that, when a liquor license is transferred by a decedent's widow, even though acting as personal representative, to herself as the surviving spouse, the value of such license or the value of the right to apply for a transfer of such license is not taxable for inheritance tax purposes. However, the Court went further and stated (375 Pa. at page 46, 99 A.2d at page 564): 'The claim for inheritance tax was allowed by the court below. For the reasons heretofore stated, said license so issued * * * to the surviving spouse was her individual property. In addition, it was not 'property of which the decedent was seized or possessed at the time of his death' (under the Act of 1919, as amended, 72 P.S. § 2301): McCandless Estate, 374 Pa. 551, 97 A.2d 807. Since the decedent's license terminated at his death, and was not property of which he was seized or possessed at the time of his death, it is somewhat difficult to understand at what point of time it could have become an asset of his estate.' At least by implication, Ryan thus indicated that a liquor license, terminable upon the holder's death, is not an asset of a decedent's estate taxable for inheritance tax purposes and that the value of the statutory right to apply for a transfer of the license to decedent's surviving spouse or personal representative or to a decedent-designated person likewise is not taxable.

If Ryan were restricted to its specific factual situation and Aschenbach is still the law as Ryan recognized, then the taxability for inheritance tax purposes of the value of a liquor license or the value of the right to apply for a transfer of such license to the statutorily designated persons would depend upon the status of the personal representative and the manner in which the personal representative elects to treat the transferred license, a result which would be anomalous, uncertain and clearly unsatisfactory. On the other hand, if Ryan be construed as holding that the value of a decedent's liquor license or the value of the right to apply for a transfer of the license is never subject to taxation for inheritance tax purposes, then the Commonwealth would be precluded from evaluating and taxing the transfer of a right which both common sense and realistic thinking recognize as possessive of a real and tangible value to the estate of a decedent.

In large measure, the broad language of Ryan was predicated upon Pichler v. Snavely, 366 Pa. 568, 79 A.2d 227. Pichler decided that the value of a liquor license cannot be adequately or accurately measured in an action at law and, therefore, assumpsit will not lie for damages resulting from a filure to perform an inter vivos agreement to transfer a liquor license. Pichler, although recognizing that equity will grant specific performance of a contract to sell or assign a liquor license and to that extent that a liquor license itself possesses value, stated that the liquor license itself was not a property right but a personal privilege which would not pass to a decedent's personal representatives or become an asset of a decedent's estate. With that statement there can be no quarrel and to that extent Ryan's reliance on Pichler was not in error. However, Pichler did not consider whether the right to apply for a transfer of the liquor license after the death of the holder constituted a valuabe asset of the holder's estate nor was it concerned with the taxability of the value of such right. On the other hand, as Mr. Justice Chidsey, speaking for the dissenting three justices in Ryan and after an examination of the authorities upon which Pichler was predicated, noted (375 Pa. at page 55, 99 A.2d at page 568) '* * * all of the above cases ⁴ have consistently held that the value of the opportunity of obtaining transfer of a liquor license is an asset of the estate and upon proof of the fact that the personal representative has not obtained a fair value for that asset, a surcharge is proper.'

Ryan and its application has become the source of confusion among the lower courts of the Commonwealth. Chylak Estate, 6 Fid.Rep. 192; Barry Estate, 8 Fid.Rep. 514; Imhof Estate, 7 Fid.Rep. 567. ⁵ It is encumbent upon us to reconsider Ryan; in so doing, two propositions must be considered as established: (1) no person has a constitutional or property right to a liquor license (Re Tahiti Bar, Inc., 395 Pa. 355, 361, 150 A.2d 112; Fanning's License, 23 Pa.Super. 622, 628; Cochran License, 47 Pa.Super. 376, 381; Appeal of Spankard, 138 Pa.Super. 251, 259, 10 A.2d 899) and (2) a liquor license per se--a personal privilege and not a property right--is not an asset of the estate of the deceased holder.

Dissenting...