Walton's Estate, In re

• Decision Date: 28 November 1962
• Citation: 186 A.2d 32,409 Pa. 225
• Parties: In re ESTATE of Dorothea W. WALTON, Deceased. Appeal of Dorcas S. FULTON and Fidelity-Philadelphia Trust Company, Executors of the Estate of Dorothea W. Walton, Dec'd.
• Court: Pennsylvania Supreme Court

Page 32

186 A.2d 32

409 Pa. 225

In re ESTATE of Dorothea W. WALTON, Deceased.

Appeal of Dorcas S. FULTON and Fidelity-Philadelphia Trust

Company, Executors of the Estate of Dorothea W.

Walton, Dec'd.

Supreme Court of Pennsylvania.

Nov. 28, 1962.

David H. W. Dohan, Paul C. Wagner, Philadelphia (Stanley B. Cooper, Norristown, Waters, Fleer, Cooper & Gallager, Pepper, Hamilton & Scheetz, Philadelphia, of counsel), for appellants.

Ralph S. Snyder, Deputy Atty. Gen., Harrisburg, Edward J. Ozorowski, Special Asst. Atty. Gen., David Stahl, Atty. Gen., Harrisburg, for appellee.

Before BELL, C. J., and MUSMANNO, JONES, COHEN, EAGEN, and O'BRIEN, JJ.

BELL, Chief Justice.

Dorothea Walton, daughter of S. Davis Walton, died December 19, 1957, unmarried and without issue. She disposed of her entire estate absolutely by will dated August 14, 1956. The Orphans' Court held that the Commonwealth was entitled to a collateral inheritance tax on two-thirds of the principal of her Father's residuary trust estate, because at the time of her death Dorothea had been seized and possessed of a vested remainder interest therein as a result of an intestacy. Dorothea Walton's executors appealed.

S. Davis Walton died on September 6, 1910, a resident of Philadelphia County. He left his residuary estate in trust to pay out of the net income, an annuity to his wife, Agnes W. Walton, if she remained his widow, with the balance of income to his daughter, Dorothea Walton, upon certain trusts not herein pertinent. He then provided:

'If my wife, Agnes W. Walton, should not remain my widow, then upon her remarriage, the income of my estate shall be equally divided between my wife, * * * and my daughter Dorothea Walton [who was then five years of age], for and during the term of their natural lives.

'Upon and after the death of my said wife, ¹ it is my will that the income ² from my entire estate shall be given unto my daughter, Dorothea Walton, for * * * her * * * life, and upon the death, the same to be divided equally between her children who may be living at the time of her death, share and share alike, the issue of any deceased child taking their parent's share.

'Upon the marriage of my daughter, Dorothea Walton, I authorize my trustees to pay unto her from the principal of my said estate, the sum of Twenty-five Thousand Dollars ($25,000.00) at the time of her marriage.

'If my daughter, Dorothea Walton, should die before my wife without leaving issue her surviving, then the whole income of my estate shall be given unto my wife for * * * life * * *, and upon the death of my said wife, * * * I order and direct my trustees to pay over the principal of my said estate to my sister, Jennie D. Walton, absolutely.

'If my said daughter, Dorothea Walton, should die before my wife, leaving issue her surviving, then such issue shall receive the same share of the income as would have been received by her mother had she been living.'

Walton gave his executors and impliedly his trustees a power of sale and powers of investment. He also created a spendthrift trust and a separate use trust for his wife and for Dorothea.

Upon the death of Walton's daughter Dorothea, the trustee of Walton's estate filed an account in the Orphans' Court of Philadelphia County. That Court in adjudicating the trustee's account said: ³

'The trust has now terminated in whole by reason of the death of Dorothea W. Walton, last surviving life tenant, which occurred as aforesaid on December 19, 1957.

'No Pennsylvania Transfer Inheritance Tax has been paid on the estate, in that the testator died September 6, 1910, which was before the imposition of any tax on direct heirs or lineals, and in that testator died intestate as to the remainder of his estate and those so entitled under the intestate laws were his wife and daughter * * *.

'* * * Accordingly, the balance, * * * is awarded: [under the intestate Act in effect in 1910, viz. the Intestate Act of April 8, 1833, P.L. 315, as amended by Act of April 1, 1909, P.L. 87] one-third thereof to Fidelity-Philadelphia Trust Company, surviving executor of the will of Agnes W. Good, deceased, and two-thirds thereof to Fidelity-Philadelphia Trust Company and Dorcas R. Shrader, Executors of the will of Dorothea W. Walton, deceased.'

The Commonwealth appraised Dorothea's interest in the estate of her Father at $419,133.75 and assessed a collateral inheritance tax thereon, under § 1 of the Transfer Inheritance Tax Act of June 20, 1919. ⁴ This was the inheritance tax statute in effect when Walton's daughter died in 1957. The pertinent provisions of that section are as follows:

'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:

'(a) When the transfer is by will or by the intestate laws of this Commonwealth from any person dying seized or possessed of the property while a resident of the Commonwealth, whether the property is situated within this Commonwealth or elsewhere.

* * *

* * *

'(d) When any person or corporation comes into the possession or enjoyment by a transfer * * *, of en estate in expectancy of any kind or character which is contingent or defeasibly transferred by an instrument taking effect after the passage of this act, * * *.'

We held in Good Estate, 407 Pa. 642, 182 A.2d 721, that Walton's widow did not die seized or possessed of a vested one-third interest in Walton's estate; on the contrary Walton's widow had at her death merely a contingent interest in a possible future intestacy in Walton's estate.

Two questions are presented by this appeal--(1) What was Dorothea's interest in her Father's Estate, and (2) Was it subject to inheritance tax under the Act of 1919 ⁵ supra?

Judge Taxis held that Dorothea possessed a vested remainder interest in two-thirds of her Father's residuary estate and consequently her estate was subject to an inheritance tax (collateral) thereon. Appellants (Dorothea's executors) contend that no inheritance tax is due the Commonwealth because Dorothea did not die seized or possessed of any taxable interest.

To determine Dorothea's interest in her Father's Estate we must carefully examine and analyze Walton's will.

'No rule regarding wills is more settled than the great General Rule that the testator's intent, if it is not unlawful, must prevail': Collins Estate, 393 Pa. 519, 522, 143 A.2d 45, 47. We reiterate what by now is hornbook law: "The testator's intention is the pole star in the construction of every will and that intention must be ascertained from the language and scheme of his [entire] will [together with the surrounding facts and circumstances]; it is not what the Court thinks he might or would or should have said in the existing circumstances, or even what the Court thinks he meant to say, but what is the meaning of his words. In re Kelsey's Estate, 393 Pa. 513, 143 A.2d 42; In re Britt's Estate, 369 Pa. 450, 87 A.2d 243; In re Sowers' Estate, 383 Pa. 566, 119 A.2d 60; In re Cannistra's Estate, 384 Pa. 605, 121 A.2d 157.' Saunders Estate, 393 Pa. 527, 529, 143 A.2d 367, 368. See to the same effect Althouse Estate, 404 Pa. 412, 172 A.2d 146. * * *' Woodward Estate, 407 Pa. 638, 640, 182 A.2d 732, 733.

In Dinkey Estate, 403 Pa. 179, page 182, 168 A.2d 337, 338, the Court said: 'It is by now hornbook law * * * that technical rules or canons of construction should be resorted to only if the language of the will is ambiguous or conflicting or the testator's intent is for any reason uncertain. Hope Estate, 398 Pa. 470, 159 A.2d 197, supra; McFadden Estate, 381 Pa. 464, 112 A.2d 148; Britt Estate, 369 Pa. 450, 455, 87 A.2d 243; Edmunds Estate, 374 Pa. 22, 97 A.2d 75.'

It is clear from Walton's Will (1) that he specifically gave (pertinently) all the income from his trust estate to his daughter Dorothea for her life; (2) that the gift of income to her was restricted as to time and was subject to a spendthrift trust and a separate use trust; (3) that he never gave Dorothea any principal; (4) that he never explicitly gave Dorothea's surviving children or issue any principal; (5) that he knew how to give the principal of his estate when that was his intent; and (6) that if Dorothea survived her Mother and died without leaving surviving children of issue, an intestacy would unquestionably result.

Doroghea's possible children and issue who were living at her death took, at the most, a contingent interest in the income.

Appellants, to support their contention that Dorothea did not die seized or possessed of any taxable interest, advance two ingenious arguments: (1) that Dorothea's surviving children (and issue of deceased children) were given the principal after Dorothea's death (a) under the explicit language of Walton's will, or (b) under the principle that a gift of income unlimited and unrestricted as to time, amount and conditions, with no gift over, is a bequest of the corpus of the fund from which said income is derived: Lowitz Estate, 360 Pa. 91, 61 A.2d 342; Carmany Estate, 357 Pa. 296, 53 A.2d 731, 174 A.L.R. 311; Thompson Trust, 348 Pa. 228, 35 A.2d 261; Gibbons's Estate, 317 Pa. 465, 177 A. 50; Yeager Estate, 354 Pa. 463, 47 A.2d 813.

Appellants contend that the word 'same' in the bequest '* * * the income from my entire estate shall be given unto my daughter * * * for her life, and upon her death the same to be divided equally between her children who may be living at * * * her death * * *' refers to the principal from which she was receiving the income. We are convinced that this is incorrect. We are convinced from the language of this paragraph as well as from the language of the entire will that the testator said, meant and intended 'the same' to mean 'income'; and he clearly gave to Dorothea's surviving children and issue, the income which Dorothea was receiving for her life. In view of...