Opinion by
Mr. Justice Schaffer,
Henry S. Paul, a resident of Pennsylvania, died seized of real estate situate in the states of New Jersey and Missouri. In his lifetime, he had entered into written contracts for its sale and had been paid various amounts on account of the purchase price. At the time of his death there remained due to him the sum of |42,387.25. He left his entire estate to collaterals, and the Commonwealth claimed a transfer inheritance tax of ten per cent on an appraised value of the contracts, which was less than the amount remaining due thereunder. The balance owing his estate was subsequently paid by the vendees under the articles of agreement, and deeds to them for the lands were made by his executrix. The court below, one of the judges thereof dissenting, decided that the Commonwealth is not entitled to the tax and it brings to us this appeal.
The question for determination is, whether the unpaid purchase money of real estate situate in other states, evidenced by articles of agreement executed by a decedent in his lifetime, is subject to a transfer inheritance tax under the Act of June 20, 1919, P. L. 521, where the vendor died seized of the lands, and deeds therefor, following payment of the entire purchase money, were not made until after his death by his personal representative.
There can be no question but that no tax could be collected on the lands as lands: Frick v. Pennsylvania, 268 U. S. 473; Robinson’s Est., 285 Pa. 308; Croxton’s Est., 288 Pa. 184. Is this situation altered because of the existence of the writings under which the decedent had agreed to convey the lands when the consideration therefor was paid? Is the thing sought to be taxed any the less the land, because of the writing, the vendor being still possessed of the real estate when he died?
The Commonwealth contends that the contracts of sale themselves are property, but they are, if property at all, only such because they stand for the lands. If the vendor had granted the lands in his lifetime, and had received a mortgage or a note, or other evidence of indebtedness for the part of the purchase money unpaid, the situation would be different, then the writing itself would be property, the only property growing out of the transaction which the vendor possessed, and his estate would have to respond with a tax upon it. But that is not the situation. We are asked to disregard the fact of the testator still holding title to and possession of the lands, and to indulge in the make-believe that the land had been transmuted into something else. We are not prepared to do so. The agreements of sale are not the vital factor. “They are representative and not the thing itself”: Blodgett v. Silberman, 277 U. S. 1, 15; Baldwin v. Missouri, 281 U. S. 586, 593. Taxation is a practical matter: Com. v. Pennsylvania R. R. Co., 297 Pa. 308; Greene County Coal Tax Ap
peals, 302 Pa. 179; Farmers’ Loan & Trust Co. v. Minnesota, 280 U. S. 204. As was said in tlie last named case (page 212), “Taxation is an intensely practical matter and laws in respect to it should be construed and applied with a view of avoiding as far as possible unjust arid oppressive consequences.” We said in Com. v. Pennsylvania Railroad Co. and in other cases that double taxation is never to be implied unless the implication is un- t avoidable. New Jersey and Missouri can levy a transfer inheritance tax on the lands because they are within their borders; the fact that they may not, does not alter the situation. Our rule ought to be not to subject our | citizens to the possibility and danger of a double tax. ¡ If the conversion had been worked by will no tax could be levied: Robinson’s Est., 285 Pa. 308; Com. v. Presbyterian Hospital, 287 Pa. 49; Croxton’s Est., 288 Pa. 184. It is difficult to see wherein the difference lies between conversion by will and conversion by agreement of sale. In each instance the decedent would die seized of the land, which is the reality. Taxes should be levied upon realities, not upon fictions. Passing upon a related question to the one we are considering the Supreme Judicial Court of Massachusetts, in McCurdy v. McCurdy, 197 Mass. 248, 250, thus expressed itself, “The law of equitable conversion ought not to be invoked merely to subject property to taxation, especially when the question is one of jurisdiction between different states.” Similarly the Court of Appeals of New York has given utterance to the thought in Heymann v. Viane, 252 N. Y. 159, 166, “The doctrine of equitable conversion may not be relied on to subject property to taxation or to shift the lien of the tax from the real property transferable to the fund.” And in Matter of Swift, 137 N. Y. 77, 86, that court announced the sound doctrine that, “The question of the jurisdiction of the state to tax is one of fact and cannot turn upon theories or fictions; which, as it has been observed, have no place in a well adjusted system of taxation.”
The whole modern tendency is to limit the levying of inheritance taxes to the sovereignty which is the sitns of the actual property. This is the doctrine of Frick’s Est., Farmers’ Loan & Trust Co. v. Minnesota, Bobinson’s Est. and many other cases which could be cited. A clear illustration of the thought of the Supreme Court of the United States along this line is to be found in Safe Deposit & Trust Company of Baltimore v. Virginia, 280 U. S. 83. In that case, a citizen of Virginia transferred stocks and bonds to a Maryland Trust Company in trust for his two minor sons. The income was to be accumulated, and, as each son attained the age of twenty-five, the trustee was to pay to him one-half of the principal and accumulated income. If either died before payment, his share was to go to his children, if he left any, otherwise to the surviving son. The donor died in Virginia and the sons resided there, but the trustee held the securities in Maryland and there paid taxes on them. Administration of the donor’s estate was had in Virginia, and the courts of that state sustained a tax by it upon the whole corpus of the trust. It was held by the Supreme Court of the United States, reversing the Supreme Court of Virginia, that the tax was on property beyond the jurisdiction of the state and invalid under the Fourteenth Amendment. The court laid down the proposition, that mobilia sequunter personam is a fiction intended for 1 convenience, not controlling where justice does not demand it, and not to be applied if the result would be a patent and inescapable injustice through double taxai tion or otherwise. It was said (p. 94), “It would be unfortunate, perhaps amazing, if a legal fiction originally invented to prevent personalty from escaping just taxation, should compel us to accept the irrational view that the same securities [even though intangibles] were within two states at the same instant and because of this to uphold a double and oppressive assessment.” We may well say in the instant case, that it would be
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Opinion by
Mr. Justice Schaffer,
Henry S. Paul, a resident of Pennsylvania, died seized of real estate situate in the states of New Jersey and Missouri. In his lifetime, he had entered into written contracts for its sale and had been paid various amounts on account of the purchase price. At the time of his death there remained due to him the sum of |42,387.25. He left his entire estate to collaterals, and the Commonwealth claimed a transfer inheritance tax of ten per cent on an appraised value of the contracts, which was less than the amount remaining due thereunder. The balance owing his estate was subsequently paid by the vendees under the articles of agreement, and deeds to them for the lands were made by his executrix. The court below, one of the judges thereof dissenting, decided that the Commonwealth is not entitled to the tax and it brings to us this appeal.
The question for determination is, whether the unpaid purchase money of real estate situate in other states, evidenced by articles of agreement executed by a decedent in his lifetime, is subject to a transfer inheritance tax under the Act of June 20, 1919, P. L. 521, where the vendor died seized of the lands, and deeds therefor, following payment of the entire purchase money, were not made until after his death by his personal representative.
There can be no question but that no tax could be collected on the lands as lands: Frick v. Pennsylvania, 268 U. S. 473; Robinson’s Est., 285 Pa. 308; Croxton’s Est., 288 Pa. 184. Is this situation altered because of the existence of the writings under which the decedent had agreed to convey the lands when the consideration therefor was paid? Is the thing sought to be taxed any the less the land, because of the writing, the vendor being still possessed of the real estate when he died?
The Commonwealth contends that the contracts of sale themselves are property, but they are, if property at all, only such because they stand for the lands. If the vendor had granted the lands in his lifetime, and had received a mortgage or a note, or other evidence of indebtedness for the part of the purchase money unpaid, the situation would be different, then the writing itself would be property, the only property growing out of the transaction which the vendor possessed, and his estate would have to respond with a tax upon it. But that is not the situation. We are asked to disregard the fact of the testator still holding title to and possession of the lands, and to indulge in the make-believe that the land had been transmuted into something else. We are not prepared to do so. The agreements of sale are not the vital factor. “They are representative and not the thing itself”: Blodgett v. Silberman, 277 U. S. 1, 15; Baldwin v. Missouri, 281 U. S. 586, 593. Taxation is a practical matter: Com. v. Pennsylvania R. R. Co., 297 Pa. 308; Greene County Coal Tax Ap
peals, 302 Pa. 179; Farmers’ Loan & Trust Co. v. Minnesota, 280 U. S. 204. As was said in tlie last named case (page 212), “Taxation is an intensely practical matter and laws in respect to it should be construed and applied with a view of avoiding as far as possible unjust arid oppressive consequences.” We said in Com. v. Pennsylvania Railroad Co. and in other cases that double taxation is never to be implied unless the implication is un- t avoidable. New Jersey and Missouri can levy a transfer inheritance tax on the lands because they are within their borders; the fact that they may not, does not alter the situation. Our rule ought to be not to subject our | citizens to the possibility and danger of a double tax. ¡ If the conversion had been worked by will no tax could be levied: Robinson’s Est., 285 Pa. 308; Com. v. Presbyterian Hospital, 287 Pa. 49; Croxton’s Est., 288 Pa. 184. It is difficult to see wherein the difference lies between conversion by will and conversion by agreement of sale. In each instance the decedent would die seized of the land, which is the reality. Taxes should be levied upon realities, not upon fictions. Passing upon a related question to the one we are considering the Supreme Judicial Court of Massachusetts, in McCurdy v. McCurdy, 197 Mass. 248, 250, thus expressed itself, “The law of equitable conversion ought not to be invoked merely to subject property to taxation, especially when the question is one of jurisdiction between different states.” Similarly the Court of Appeals of New York has given utterance to the thought in Heymann v. Viane, 252 N. Y. 159, 166, “The doctrine of equitable conversion may not be relied on to subject property to taxation or to shift the lien of the tax from the real property transferable to the fund.” And in Matter of Swift, 137 N. Y. 77, 86, that court announced the sound doctrine that, “The question of the jurisdiction of the state to tax is one of fact and cannot turn upon theories or fictions; which, as it has been observed, have no place in a well adjusted system of taxation.”
The whole modern tendency is to limit the levying of inheritance taxes to the sovereignty which is the sitns of the actual property. This is the doctrine of Frick’s Est., Farmers’ Loan & Trust Co. v. Minnesota, Bobinson’s Est. and many other cases which could be cited. A clear illustration of the thought of the Supreme Court of the United States along this line is to be found in Safe Deposit & Trust Company of Baltimore v. Virginia, 280 U. S. 83. In that case, a citizen of Virginia transferred stocks and bonds to a Maryland Trust Company in trust for his two minor sons. The income was to be accumulated, and, as each son attained the age of twenty-five, the trustee was to pay to him one-half of the principal and accumulated income. If either died before payment, his share was to go to his children, if he left any, otherwise to the surviving son. The donor died in Virginia and the sons resided there, but the trustee held the securities in Maryland and there paid taxes on them. Administration of the donor’s estate was had in Virginia, and the courts of that state sustained a tax by it upon the whole corpus of the trust. It was held by the Supreme Court of the United States, reversing the Supreme Court of Virginia, that the tax was on property beyond the jurisdiction of the state and invalid under the Fourteenth Amendment. The court laid down the proposition, that mobilia sequunter personam is a fiction intended for 1 convenience, not controlling where justice does not demand it, and not to be applied if the result would be a patent and inescapable injustice through double taxai tion or otherwise. It was said (p. 94), “It would be unfortunate, perhaps amazing, if a legal fiction originally invented to prevent personalty from escaping just taxation, should compel us to accept the irrational view that the same securities [even though intangibles] were within two states at the same instant and because of this to uphold a double and oppressive assessment.” We may well say in the instant case, that it would be
unfortunate, perhaps amazing, that part of the purchase money representing the value of, and arising out of lands located in other states of which a decedent died seized, may be taxed in this state, when the lands themselves may not be, under the fiction that the lands have been converted into money; or that the money, which the lands will ultimately produce, can, because a writing, be intended eventually to bring about their conveyance, may be called a chose in action, when the same money, representing part of the value of the lands may be taxed in the other states. While an agreement of sale of land, which contains a promise to pay the purchase price agreed upon, is in one sense a chose in action, it differs in essential respects from the ordinary chose. Aside from the agreement to sell, no such liability ever did exist. Its basic purpose, as a writing, is to fix the rights of the vendor and the vendee in the land; liability for the purchase price is but secondary and contingent. The fee in the land is still in the vendor, and it is the fee which is to be transferred upon payment of the balance of the purchase price. In case of default, neither the vendor, nor those standing in his shoes, are compelled to sue for that balance in order to be recompensed; they may elect to retain the land. In that event, though the written agreement is still in their possession, there would be no transfer of either land or chose in action, and hence there would be no transfer “by will or by the intestate laws” and the Act of 1919 would have no relation to the situation then existing. The uncertainty referred to is conclusive, for to doubt the existence of an intention to impose a tax, is to conclusively determine that it does not exist.
It is impossible to resist the conclusion that the situation here appearing was not contemplated by the legislature in passing the Act of 1919. It provides for taxing the estate of a decedent “whether the property is situated within the Commonwealth or elsewhere.” This language echoes the then general belief that the
whole value of tangibles, wherever existing and by whatever document of title represented, furnished a basis for taxation at the domicile of the owner, and hence it was unnecessary to consider the case of an agreement of sale of such foreign tangibles, as distinguished from the value of the tangibles themselves. In Frick v. Pennsylvania, the foreign tangibles were not taxed, but their value was taken into account in determining the amount of tax to be paid as a condition of the taking of such assets located in Pennsylvania. It was wisely held that this was not permissible. That case and those which followed it, announce the better doctrine that the value of foreign tangibles cannot be considered in whole or in part, directly or indirectly, in determining the amount of tax to be paid at the domicile of the owner. Being of opinion that our statute, properly construed, does not attempt to do this, the Commonwealth’s claim in the instant case must necessarily fail.
March 16, 1931:
The decree of the court below is affirmed and the appeal is dismissed at the cost of appellant.