Case Name: In the Matter of the Application of Gramott Corporation, Petitioner, against Mark Graves and Others, Constituting the State Tax Commission, Defendants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1938-11-02
Citations: 255 A.D. 255
Docket Number: 
Parties: In the Matter of the Application of Gramott Corporation, Petitioner, against Mark Graves and Others, Constituting the State Tax Commission, Defendants.
Judges: 
Reporter: Appellate Division Reports
Volume: 255
Pages: 255–263

Head Matter:
In the Matter of the Application of Gramott Corporation, Petitioner, against Mark Graves and Others, Constituting the State Tax Commission, Defendants.
Third Department,
November 2, 1938.
Miller, Owen, Otis & Bailly [S. Weldon O’Brien and Francis B. Delehanty, Jr., of counsel], for the petitioner.
John J. Bennett, Jr., Attorney-General, and Henry Epstein, Solicitor-General [Edward J. Gretchen, Assistant Attorney-General, of counsel], for the defendants.

Opinion:
Bliss, J.
On May 1,1935, the Gramott Corporation executed and delivered to the Continental Bank and Trust Company of New York, trustee, a real estate mortgage which was recorded in New York county register's office on August 5, 1935. A mortgage recording tax of $3,555 was paid thereon to the recording officer. This mortgage was a substitution for another mortgage as a part of and in compliance with a plan of reorganization pursuant to the provisions of section 77B of the Federal Bankruptcy Act. Section 253 of the Tax Law as it then existed imposed the tax. On May 1, 1936, section 252 of the Tax Law was amended so as to provide that mortgages such as this one " are and shall be exempt from taxes imposed by this article." Thereafter, pursuant to section 263 of the Tax Law, the petitioner, Gramott Corporation, applied to the State Tax Commission for an order directing the recording officer to refund the tax upon the ground that it had been " erroneously collected." Thus we have a tax which was in every respect valid and paid without protest, but which the taxpayer now seeks to have refunded as having been " erroneously collected " because the statute was later amended so as to exempt this class of mortgages from taxation. In support of this contention the taxpayer urges that the amendment made by chapter 373 of the Laws of 1936 to section 252 of the Tax Law is retroactive to June 7, 1934. The statute itself speaks only of the present and the future. The words " are " and " shall be " are in the present and future tenses. It indicates no retroactive effect and no disposition on the part of the State to refund taxes already paid. Had the Legislature entertained any such purposes it could very easily have said so.
Statutes dealing with matters of substance are not to be construed as retroactive unless such an intent clearly appears. (Addiss v. Selig, 264 N. Y. 274.) Even the broadest construction of the words " erroneously collected " would not entitle this taxpayer to a refund of this tax which was perfectly valid when collected. The statute makes no provision for the refund of recording taxes previously collected on this class of mortgages and it must be assumed that the Legislature knew full well that many such a tax had been collected by the State. " The tax became due and payable when the mortgage was recorded. The statute does not provide for a refund when the mortgage is canceled. Under such conditions, even if we give the broadest construction to the words ' erroneously collected/ no refund can be made." (Hill, J., in Fox Lane Corporation v. Loughman, 225 App. Div. 417.) That the Legislature has now seen fit to exempt these mortgages from the payment of a recording tax is no authority for holding that a valid and legal tax Was erroneously collected. Such construction of a statute, which is perfectly clear and plain on its face, would lead to endless confusion and great loss to the State whenever a taxing statute was repealed. This tax was not " erroneously collected."
People ex rel. Metropolitan Playhouses, Inc., v. Graves (251 App. Div. 655; affd., 275 N. Y. 621) is not decisive here. In that case the tax was not paid before the effective date of the statute which exempted the mortgage from taxation and never was paid. The determination of the State Tax Commission should be confirmed, with fifty dollars costs and disbursements.
Rhodes and Crapser, JJ., concur; Heffernan, J., dissents with an opinion, in which Hill, P. J., concurs.