Estate of Carlson

OPINION

MANDERINO, Justice.

Agnes L. Carlson died on March 21, 1975. In her will she named James D. Sawdy, her natural grandson, as one of the beneficiaries. Inheritance tax on the estate was assessed by the Commonwealth at $45,566.70. The executrix, appellant here, admitted tax liability in the amount of $35,789.47, and *423has paid that amount. She has appealed, however, from the assessment’s levy of the additional $9,777.23.

The court decided the matter on the basis of the following stipulated facts.

“The decedent had a son, one James Swenson, who married. He and his wife Frances had a child, James Swenson, Jr., who was the natural grandson of the decedent.
James Swenson, Sr., died and his widow Frances married one Douglas Sawdy. On December 15, 1947, Douglas Sawdy adopted James Swenson, Jr., and the latter’s name was changed to James D. Sawdy.”

Appellant contends that James D. Sawdy is a “lineal descendant” of the decedent and that therefore his share of the decedent’s estate should be taxed at a rate of six percent. See Act of June 15, 1961, P.L. 373, Art. IV, § 403, as amended, 72 P.S. § 2485-403(1), Supp.1977-78, which provides,

“Inheritance tax upon the transfer of property passing to or for the use of any of the following shall be at the rate of six (6) percent:
(1) Grandfather, grandmother, father, mother, husband, wife and lineal descendants;
(2) Wife or widow, and husband or widower of a child.” As amended 1967, Dec. 29, P.L. 915, § 1.

(Emphasis added.)

The Commonwealth, on the other hand, argues that James D. Sawdy was adopted out of the decedent’s line and his share of the estate is to be taxed at a rate of fifteen percent pursuant to the Act of June 15, 1961, P.L. 373, Art. IV, § 404 (72 P.S. § 2485-404) which provides,

“Inheritance tax upon the transfer of property passing to or for the use of all persons other than those designated in section 403, shall be at the rate of fifteen (15) percent.” (Footnote omitted.)

1961, June 15, P.L. 373, Art. IV, § 404.

*424The trial court held that because James D. Sawdy had been adopted by his mother’s second husband, he had been adopted out of the decedent’s family, and therefore the court dismissed the executrix’s appeal from the Commonwealth’s appraisal based on a fifteen percent rate of tax.

If James D. Sawdy is a “lineal descendant” of Agnes Carlson, then his share of the estate must be taxed at six percent (72 P.S. § 2485-403(1) (Supp.1977-78). As the natural grandson of testatrix, James D. Sawdy would normally be classified as her lineal descendant under the common usage of this term. However, the Commonwealth contends that the term “lineal descendant” has an artificial meaning since it is specifically defined in the “Inheritance Tax Act,” Act of June 15, 1961, P.L. 373, Art. I, § 102, as amended, 72 P.S. § 2485-102(13), as follows:

“ ‘Lineal descendants’ includes children and their descendants, adopted descendants and their descendants, stepchildren, illegitimate descendants of the mother and their descendants, and children and their descendants of the natural parent who are adopted by his spouse. It does not. include descendants of stepchildren, illegitimate children of the father and their descendants, or adopted children and their descendants in the natural family, ex-ceptas above set forth.”

Of course, we are bound by this definition. 1 Pa.C.S.A. § 1903 (Supp.1977-78). It determines who qualifies as a lineal descendant and therefore receives the benefit of the six percent tax rate. As such, it is a provision imposing a tax and therefore must be strictly construed. 1 Pa.C.S.A. § 1928(b)(5) (Supp.1977-78). A taxing statute must not only be strictly construed, but all reasonable doubt must be resolved in favor of the taxpayer. Estate of Rose, 465 Pa. 53, 348 A.2d 113 (1975). Therefore, since James D. Sawdy is the natural grandson of testatrix, unless the Commonwealth clearly shows that he is not a lineal descendant under the statute’s definition, he must be taxed at- the rate of six percent.

*425In examining the definition of lineal descendants, we cannot forget that the terms do not exist in a vacuum. That is to say, while “lineal descendants” includes “children and their descendants,” this does not mean that one qualifies as a lineal descendant because he or she is the child of anyone; rather, one qualifies as a lineal descendant because he or she is the child or descendant of a specific person. This specific person then becomes the point of reference for the definition. The testatrix, paternal grandmother, is the point of reference when we read the definition of “lineal descendants” for this case. Therefore, the definition with the point of reference added for clarity would read:

“ ‘Lineal descendants’ includes [grandmother’s] children and their descendants, . . . . It does not include [grandmother’s] . . . adopted children and their descendants in the natural family except as above set forth.” 72 P.S. § 2485-102 (Supp.1977-78).

As a descendant of the son of testatrix, James D. Sawdy is clearly a lineal descendant under the first phrase of the above definition; the last phrase, which serves to exclude individuals from the definition, does not apply to Mr. Sawdy because he was not his grandmother’s adopted son nor a descendant of his grandmother’s adopted son.

The Commonwealth also argues that this reasoning results in an individual receiving the benefit of the six percent Inheritance Tax Rate for inheritances through two paternal lines. Here the grandson would qualify for the six percent tax rate on an inheritance received from his natural paternal line and might later benefit from the lower rate on an inheritance from his adoptive paternal line. While this is true, we do not deem it to be significant. The purpose of the Inheritance Tax Act indicates the legislature wished to tax close relatives at this lower rate. There is no indication that one is restricted to one paternal and one maternal line through which one may inherit and still receive the six percent tax rate. Indeed, a daughter-in-law or a son-in-law may inherit from four lines — natural mother, natural father, mother-in-law, and father-in-law — and be taxed at six per*426cent in each case. Moreover, under the Inheritance Tax Act, if James D. Sawdy had not been adopted by his natural mother’s spouse but merely remained this spouse’s stepchild, he clearly would qualify for the six percent rate for inheritances from both paternal lines. 72 P.S. § 2485-102(3) (Supp.1977-78). We think it illogical to penalize James D. Sawdy simply because his second father chose to adopt him.

We conclude that since taxing provisions must be strictly construed in the taxpayer’s favor and we can discern no reason to preclude James D. Sawdy from being a lineal descendant of two paternal lines, he qualifies under the Inheritance Tax Act to be taxed at a rate of six percent.

The decree of the Court of Common Pleas is reversed and the case remanded for proceedings consistent with this opinion. Each party to pay its own costs.

ROBERTS, J., filed a dissenting opinion.