Court Opinion

ID: 3851795
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:32:49.801056+00
Date Added: 2024-06-11T14:14:37.414444
License: Public Domain

The majority of this Court has decided that acreditor of an estate is required to pay an inheritance tax
upon the amount which she receives in payment of her claim.
In Neller Estate, 356 Pa. 628, 53 A.2d 122, we decided that a spouse was a creditor under a postnuptial settlement agreement. What a spouse gives up under such an agreement represents"money or money's worth". It is true that under the Federal Estate Tax Act such a deduction is not allowable. Such an obligation is not regarded under Federal law as being based upon "money or money's worth". See citation of authorities in dissenting opinion of Mr. Justice JONES in the Neller case.
Judge Stadtfeld and his wife made a valid postnuptial agreement. After his death his executors paid a *Page 156 
Federal estate tax of $79,981.41. In the adjustment of the Federal estate tax no allowance was permitted for the payment of Judge Stadtfeld's debt. The executors applied to the orphans' court to have the tax apportioned in accordance with section 48.1 of the Pennsylvania Act of July 2, 1937, P. L. 2762, 20 PS, 844. This section is quoted in full in the majority opinion. Apportionment of the Federal tax is permitted among distributees of an estate where any "property" of a decedent is required to be included in the gross estate. The tax is "prorated among the persons interested in the estate towhom such property is or may be transferred, or to whom anybenefit accrues." "Persons interested" are defined in the act as persons who have received "any property or interest which is required to be included in the gross estate" (emphasis supplied).
The Orphans' Court of Allegheny County in an opinion by Judge BOYLE decreed apportionment. President Judge TRIMBLE dissented. This appeal followed.
Had this Court adopted the decision of the Federal Courts and held that Mrs. Stadtfeld was not a creditor the majority's view would have been correct. But we did not. We decided Mrs. Stadtfeld was a creditor. Being a creditor Mrs. Stadtfeld isnot "a person interested in the estate." She receives no "property" or "estate" of decedent. As a creditor she is only interested in the repayment of her debt. The estate — what is left for distribution — passes under testator's will in which Mrs. Stadtfeld is not interested. To require a creditor to take less than the amount of her debt impairs the obligation of a contract and is unconstitutional. Furthermore, such a construction relates to a "spouse creditor" — i. e., not toall creditors — and is thus also unconstitutional because clearly discriminatory.
I agree with the dissent of President Judge TRIMBLE and would reverse the decree of the court below.
Mr. Justice PATTERSON joins in this dissent. *Page 157