Orcutt's Appeal

Mr. Justice Sterrett delivered the opinion of the court, May 2d 1881. The fund for distribution, $22,029.02, as shown by the account of the ancillary administrator, is the net proceeds of United States ten-forty bonds, which belonged to Wesley Grindle, a citizen of the state of New Jersey, and domiciled therein at the time of his decease in June 1879. The bonds deposited by the decedent with the Fidelity Insurance, Trust and Safe Deposit Company of Philadelphia for safe keeping, had been called for redemption, and being over due, wore payable on presentation at the United States Treasury. By his last will and testament the decedent gave a legacy of $2000 to his mother, and bequeathed the entire residue of his estate, in equal proportions, to his brothers and sisters, all of whom reside in the states of New Jersey and New York. The will was probated in New Jersey, and in December 1879 letters testamentary were duly granted by the surrogate to appellant, the executrix therein named. The Fidelity Company, claiming that for its protection ancillary letters should be taken out in this state, declined to deliver the bond to the executrix. Letters of administration were accordingly granted by the register of wills in Philadelphia to the accountant, who collected the bonds and filed an account showing the above balance of cash on hand. The administration under [184] these letters was purely ancillary to that of the executrix in New Jersey, and inasmuch as there appear to he no creditors, legatees or distributees in this state, the fund, after deducting all proper charges, must be awarded to her for administration according to the laws of New Jersey and the provisions of testator’s will. We are not called upon to express any opinion as to whether under the circumstances the demand of the Fidelity Company was reasonable or not. It was acquiesced in, and the single question presented by the assignments of error is, whether the residue of the fund, after deducting court costs and the legacy of $2000 to testator’s mother, is subject to collateral inheritance tax under the laws of this state. The learned president of the Orphans’ Court held that it was, and he accordingly decreed the payment of $1100.28 to the register of wills for collateral inheritance tax, and the residue to the executrix in New Jersey for administration and distribution there. The first act on the subject of collateral inheritance taxes, passed in 1826, provides that all estates, real, personal or mixed, passing from any person who may die seised or possessed of such estate, being within this Commonwealth, either by will or under the intestate laws thereof, to any person other than to father, mother, husband, wife, children or lineal descendants, shall be liable to a tax; and makes it the duty of all executors, administrators and their sureties to pay the same : Pamph. L. 227. By. the Act of 1850, the words “being within this Commonwealth,” in the Act of 1826, were construed “ to relate to all persons, who have been at the time of their decease, or may now be domiciled within this Commonwealth, as well as to estates ; and this is declared to be the true intent and meaning of said act:” Pamph. L. 170. Shortly after the passage of the latter act, it was decided in Short’s Estate, 4 Harris 63, that personalty of a citizen of Pennsylvania, derived either from within or without the state and passing to others than those named in and excepted by the terms of the original act, was liable to the tax. This position has never been questioned. Nor can there be any doubt as to real estate situated within the Commo.nwealth. Whether the person dying seised or possessed thereof be a citizen of the state or not, so much thereof as passes to collaterals is subject to the tax, because it has a situs within the state, and the title must be transmitted according to our laws governing the conveyance or descent of real estate. It is only in regard to personal property of non-residents that any question can arise. The general rule undoubtedly is, that the situs of personal property follows the domicile of the owner; but for particular purposes some species of personal property may have an actual situs distinct from the legal one. This qualification of the rule, however, cannot apply to the kind [185] of property from which the fund in this caso was realized. The bonds were simply evidences of indebtedness, not by any person or corporation within the Commonwealth, but by the general government. There is no reason why such property should, for any purpose, have a situs different from the domicile of its owner. The testator intrusted the bonds temporarily, for safe-keeping, to the Fidelity Company, but they were, constructively at least, in his possession at the time of his decease. There were no creditors, legatees, or distributees in this state claiming them or any portion of the proceeds thereof; and in the absence of creditors or other interested parties in this state claiming administration here, 1 can see no good reason for refusing to deliver the bonds to the executrix. As it is, however, the fund here is in the hands of a purely ancillary administrator, whose sole function was to receive from the United States treasury the amount called for by the bonds and transmit the same, less costs and charges, to the executrix in New Jersey for administration according to the laws of that state, and the directions of the testator. It is true that if creditors or distributees residing here had intervened and demanded distribution or payment directly from the accountant, the Orphans’ Court in its discretion might have heard them, and might also have permitted foreign creditors to present their claims; but that is a matter of judicial discretion, not of right: Dent’s Appeal, 10 Harris 514. It is also clear from the act itself, as well as from the construction it has heretofore received, that the property taxable is such only as passes to volunteers, persons not excepted by the terms of the act. The tax does not attach to the very articles of property of which the deceased died possessed. It is imposed only on what remains for distribution after expenses of administration, debts and rightful claims of third parties are paid or provided for. It is on the net succession to the beneficiaries and not on the securities in which the estate of the decedent was invested: Commonwealth’s Appeal, 10 Casey 204; Strode v. Commonwealth, 2 P. F. Smith, 181. How then is it possible to impose a tax on this fund when it has never been ascertained judicially how much, or whether any of it will go to the collateral legatees ? When the executrix charges herself with the fund received from the ancillary administrator and settles her account in New Jersey, who can tell how much of it may be successfully claimed by creditors and others as against the legatees ? The court of the testator’s domicile is the only one that can properly determine how much of it will ultimately go to the collateral legatees. Again, by the very words of the act, the tax is not only limited to such estates as have a situs within the Commonwealth, and also pass to collateral heirs or legatees, but it is further restricted by defining the mode in which they shall pass, viz., estates “being within this Commonwealth,” and “passing from any person,” &c., [186] either by will or under the intestate laws thereof,” &c. It is clear, therefore, that estates not passing by a will that is operative within the state, or under the intestate laws thereof, or by deed or grant intended to take effect after the death of the decedent, are not within the purview of the_ act. Devolution, either under the intestate laws of the Commonwealth, or under a properly executed will, is clearly made a condition of liability to the tax. To render estates liable to the tax therefore, they must in the first place have a situs within the Commonwealth, and in the second place, they must pass, in one or other of the modes prescribed, to the collateral heirs or distributees intended by the act.' We are of opinion that the fund in question lacks at least some of the ingredients of liability above referred to. Neither the bonds themselves, nor their proceeds ever had any situs other than the domicile of the testator or his executrix ; and while the will is sufficient to pass personal property in this state, it does not yet appear that upon final administration and distribution any part of the fund will go to the collateral legatees. The Act of April 10th 1849, provides in general terms that if any non-resident of the state shall die leaving real or personal estate within this Commonwealth the same shall be subject to the payment of collateral inheritance tax. It is contended that this act was repealed by the Act of April 22d 1858. Without passing on that question, we are of opinion that the act was never intended to apply to the kind of personal property from which the fund in this case was realized. It was doubtless intended to embrace only personal property of a tangible nature, actually situated or used for business purposes within the Commonwealth, and not to mere certificates of indebtedness, such as government bonds, whose situs necessarily follows the owner’s domicile. Decree reversed and it is now adjudged and decreed that the residue of the fund, viz., twenty thousand and five dollars and fifty-two cents, less the costs of this appeal, be paid to the appellant, Lydia Ann Orcutt, executrix of the last will of Wesley Grindle, deceased, for administration and distribution according to the laws of the state of New' Jersey and the provisions of said testator’s will; and it is further ordered that the costs of this appeal be paid by the appellee out of the fund in hand.