Kritz' Estate, In re

• Citation: 127 A.2d 720,387 Pa. 223
• Parties: In re ESTATE of Florence S. KRITZ, Deceased. Appeal of the COMMONWEALTH of Pennsylvania.
• Decision Date: 29 December 1956
• Court: United States State Supreme Court of Pennsylvania

Page 720

127 A.2d 720

387 Pa. 223

In re ESTATE of Florence S. KRITZ, Deceased Appeal of the COMMONWEALTH of Pennsylvania.

Supreme Court of Pennsylvania.

Dec. 29, 1956.

Rehearing Denied Jan. 15, 1957.

Herbert B. Cohen, Atty. Gen., Ralph S. Snyder, Irvin Stander, Deputy Attys. Gen., for appellant.

H. Ober Hess, Bruce L. Castor, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, for appellee.

Before STERN, C. J., and JONES, CHIDSEY, MUSMANNO and ARNOLD, JJ.

HORACE STERN, Chief Justice.

Under the Transfer Inheritance Tax Act of June 20, 1919, P.L. 521, as amended, 72 P.S. § 2301 et seq., may a debt of the decedent be deducted in computing the tax even if it is not collectible from the testamentary estate nor enforceable against the property taxed? In our opinion the court below was correct in answering this question in the affirmative.

Florence S. Kritz, the decedent, died October 30, 1953. During her lifetime she had owned, together with her husband as tenants by the entireties, a property on Tyson Street, Philadelphia, subject to a mortgage on which, at the time of her death, there was an unpaid balance due of $1,027.32. Decedent had also owned, together with her sister, Grace L. McMullin, as joint tenants with the right of survivorship, certain real estate in Montgomery County. She left no assets subject to administration.

Under the Transfer Inheritance Tax Act, the Tyson Street property was not taxable, but the real estate in Montgomery County was taxable under Article I, § 1(e), of the Act, as amended, which provides that 'Whenever any property, real or personal, is held in the joint names of two or more persons, except as husband and wife, * * * so that upon the death of one of them the survivor or survivors have a right to the immediate ownership or possession and enjoyment of the whole property, the accrual of such right by the death of one of them shall be deemed a transfer, taxable under the provisions of this act, of a fractional portion of such property, to be determined by dividing the value of the whole property by the number of joint tenants in existence immediately preceding the death of the deceased joint tenant.' Accordingly, the Montgomery County real estate being appraised for inheritance tax purposes at $16,000, one-half thereof, or $8,000, was taxable to decedent's sister. From that amount she claimed to deduct one-half, or $538.98, of the principal and interest due on the Tyson Street mortgage, ¹ decedent and her husband having been co-obligors on the mortgage bond. The sister, of course, was under no obligation to pay that debt; it was in fact paid by decedent's husband.

Article I, § 2, of the Act, as amended, provides that all the taxes under it should be imposed 'upon the clear value of the property subject to the tax,' and that 'In ascertaining the clear value of such estates, the only deductions to be allowed from the gross values of such estates by the register of wills shall be the debts of the decedent,' and certain other prescribed items. The Commonwealth, appellant herein, contends that 'the clear value of the property' jointly owned by decedent with her sister should be held to be not less than its gross or appraised value because it was not subject to the claims of creditors or the expenses of administration, and that, in general, a decedent's debt should not be deductible unless there was testamentary property from which payment could be enforced. Accordingly the Commonwealth appeals from the court's allowance to the sister of the deduction of the one-half of the mortgage debt.

We are unable to agree with appellant's contention because the Act is wholly clear and unambiguous in its provision that, in ascertaining the clear value of the estate, there should be allowed a deduction from the gross value thereof of 'the debts of the decedent.' What the Commonwealth would have the court do would be to add to this provision the words 'excluding, however, debts for which the property subjected to tax is not liable for payment and also debts which the testamentary assets are insufficient to pay.' Decedent's liability on the bond accompanying the mortgage on the Tyson Street property was clearly a 'debt of the decedent'; had there been assets in the testamentary estate it would have been payable therefrom and clearly deductible; the fact that there were no assets there to meet it does not make it any the less a debt of the decedent. It was held in Re Mellor's Estate, 286 Pa. 149, 133 A. 29, that the funeral expenses of a deceased married woman who left a surviving husband were deductible, under the express language of the Act, in calculating the clear value of her estate for transfer inheritance tax purposes, even though the husband was primarily liable for such expenses. The court said that there could not be read into the Act an added limitation that the deduction was to be made only in the event that the husband was unable to pay.

The mandate of the Statutory Construction Act of May 28, 1937, P.L. 1019, Article IV, § 51, 46 P.S. § 551, is that 'When the words of a law are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.' As far as the question here involved is concerned the Transfer Inheritance Tax Act contains neither a patent nor a latent ambiguity; rules of statutory construction are to be resorted to only where there is such ambiguity; they are not to be used to create doubt but only to remove it. It was held in Re Cochrane's Estate, 342 Pa. 108, 20 A.2d 305, 135 A.L.R. 1058, that the Transfer Inheritance Tax Act contemplates a single appraisement of all the taxable assets of the decedent's estate, including the fractional portion of any jointly held property which passes by survivorship; from that total appraisement are then to be deducted the debts of the decedent and the other allowances prescribed in the statute; the tax...