Court Opinion

ID: 9718076
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:16:38.012804+00
Date Added: 2024-06-11T18:23:57.235828
License: Public Domain

Opinion by
Mr. Justice Benjamin R. Jones,
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 dece*439dent’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 Saylob 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 Saylob 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 ease 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 trans*440fer 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.” 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 himself 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 (p. 46) : “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. 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 hers 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 *441case and the instant matter is that in the Aschenbach 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 (p. 46) : “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 191.9, 72 PS §2301, as amended) : 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 *442purposes and that the value of tbe statutory right to apply for a transfer of tbe 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 tbe law as Ryan recognized, then tbe taxability for inheritance tax purposes of tbe value of a liquor license or tbe value of tbe right to apply for a transfer of such license to tbe statutorily designated persons would depend upon tbe status of tbe personal representative and tbe manner in which tbe personal representative elects to treat tbe transferred license, a result which would be anomalous, uncertain and clearly unsatisfactory. On tbe other band, if Ryan be construed as bolding that tbe value of a decedent’s liquor license or the value of tbe right to apply for a transfer of tbe 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 tbe estate of a decedent.
In large measure, tbe broad language of Ryan was predicated upon Pichler v. Snavely, 366 Pa. 568, 79 A. 2d 227. Pichler decided that tbe 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 failure 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 tbe 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 *443Ryan’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 valuable 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 Cbxdset, speaking for the dissenting three justices in Ryan and after an examination of the authorities upon which Pichler was predicated, noted (p. 55) : “. . . all of the above cases4
5have 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 conrts 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 (Tahiti Bar, Inc. Liquor License Case, 395 Pa. 355, 361, 150 A. 2d 112; Fanning’s License, 23 Pa. Superior Ct. 622, 628; Cochran License, 47 Pa. Superior Ct. 376, 381; Appeal of Spankard, 138 Pa. Supe*444rior Ct. 251, 259, 10 A. 2d 899) and (2) a liqnor license per se — a personal privilege and not a property right— is not an asset of the estate of the deceased holder.
Dissenting in Ryan, Mr. Justice Chidsey distinguished between the license itself and the right granted by the statute to apply for the transfer of the license of a deceased holder (pp. 55, 56) : “The license itself does not pass to his estate. However, the valuable incident of the right to apply for a new license which the Board is authorized to grant does pass under the Liquor Control Act ... to the surviving spouse or the personal representative [or to a person designated by him]. Therefore, to the extent of the value of the right to apply for a new license in the name of the surviving spouse or the personal representative [or in the name of the person designated in the will] and the consequent right of sale and transfer, the estate is enhanced.” In Jaffe v. Pacific Brewing & Malting Co. et al., 124 p. 1122, 1123 (Wash.) it was said: “The right to conduct the business is personal to the licensee, and does not pass upon his death to his administrators or assigns. But this is true only as between the state or the licensor and the licensee, and as to third persons when the statutes do not permit transfers from one person to another. ‘But where the statute recognizes the right of transfer from one to another, and where the right is a valuable right, capable of being surrendered and reduced to money, a different rule prevails. In such cases the license or right to do business becomes a valuable property right, subject to barter and sale. It is property with value and quality/
As between the Commonwealth and the licensee of a restaurant liquor license, the license is simply a personal privilege subject to termination for cause or upon the death of the licensee; by its very nature, the license itself does not become an asset of the estate of the de*445ceased licensee. However, since, by legislative fiat, upon the death of the licensee, the board is invested with the authority to transfer the license to the licensee’s surviving spouse or personal representative or to a person designated by the licensee, the right to apply for such transfer is a right which possesses value. The legislative intent is evident; the holder of a restaurant liquor license has the right to designate the person who may apply for a transfer of such license after his death and, in the absence of such designation, the surviving spouse or personal representative may do so. The statute insures that the holder of the license, by action or inaction, may pass on the right to apply for a transfer of the license. It is this right — a valuable right— which the decedent has as distinguished from the license itself. Such a construction is not novel. In fact we have held that where a licensee bargains by contract to transfer to another Ms license, an action will lie for specific performance of that contract, a clear recognition that the right to apply for a transfer of the license is a property right: Cochrane v. Szpakowski, 355 Pa. 357, 49 A. 2d 682; Pichler v. Snavely, supra.
Annie O. ’Pei tz expressly designated Goldman as the person to whom she transferred the right to apply for a transfer of her restaurant liquor license and, upon her death, that right of which she died possessed and seized was transferred to Goldman. Such right is a valuable asset of the decedent’s estate; to hold otherwise, is to ignore the practicalities of the situation and to substitute abstract theories for the realities of the market place.
The value of the right to apply for a transfer of the decedent’s license transferred by will to Goldman is an asset of the decedent’s estate subject to taxation for inheritance tax purposes. To the extent that Ryan is in conflict, Ryan is overruled.
Decree reversed with costs on the estate.

 Under tlie Act of June 20, 1919, P. L. 521, Art. I, §1, as amended, 72 PS §2301.

 47 PS §4-408 (Public Service Liquor Licenses). Reenacted by tbe Liquor Code of 1951, (April 12, P. L. 90, art. IV, §468), as amended 1953, Aug. 22, P. L. 1340, §1; 1956, Jan. 26, P. L. (1955) 966, §1, 47 PS §4-468.

 In a well-considered comment on Ryan, it was stated: “The principal case (Ryan) is not understood to be a flat holding that in no case can a value be assigned to a Pennsylvania liquor license for estate administration and inheritance tax purposes. On the contrary, -the very bases upon which the Court distinguished Aschenbach v. Carey, 224 Pa. 303, show that the result depends very much upon who the personal representative is and how he handles the situation.” Fiduciary Review, Digest and Comment on Cases, November 1953.

 Grimm’s Estate, 181 Pa. 233, 37 A. 403; Buck’s Estate, 185 Pa. 57, 39 A. 821; Mueller’s Estate, 190 Pa. 601, 42 A. 1021.

 In Kosco v. Hachmeister, Inc., 396 Pa. 288, 293, 152 A. 2d 673, it was argued that, under Pichler, a liquor license is not a property right but only a personal privilege. We stated : “This may be admitted, but if a man has a privilege and is prevented from exercising it by another’s fault, he loses value during the running period of the privilege.” We there recognized that this privilege is “very often valuable” and that “the fact that a license may not be assigned without the permission of the State Liquor Board and that it does not become an asset of a licensee’s estate when he dies merely restricts the market but does not prevent the privilege from having value.”