First Mechanics Nat. Bank v. Martin

• Decision Date: 23 December 1935
• Docket Number: No. 4827.,4827.
• Citation: 181 A. 888
• Parties: FIRST MECHANICS NAT. BANK v. MARTIN, State Tax Commissioner. In re SWETNAM'S ESTATE.
• Court: New Jersey Supreme Court

181 A. 888

FIRST MECHANICS NAT. BANK

v. MARTIN, State Tax Commissioner.In re SWETNAM'S ESTATE.

No. 4827.

Prerogative Court of New Jersey.

Dec. 23, 1935.

Syllabus by the Court.

1. The ordinary has no power to compel the return of any amount paid by inadvertence or mistake in excess of the amount lawfully due for transfer inheritance tax.

2. The ordinary has no jurisdiction to entertain an appeal from the tax commissioner's assessment of transfer inheritance tax, after the expiration of 60 days from the date of such assessment.

3. The ordinary has no jurisdiction to entertain an appeal from the denial by the tax commissioner of an application for refund of transfer inheritance tax erroneously paid.

4. The right to apply to the tax commissioner for refund of tax erroneously paid is specifically limited by the statute to a period of 2 years after such payment; no exception is provided by the statute or otherwise for cases based on facts or evidence arising or discovered only after the expiration of that period.

5. Facts considered and held not to constitute a case of "newly discovered" facts or evidence.

Proceeding by the First Mechanics National Bank, executor, etc., of the estate of Edward T. Swetnam, deceased, against J. H. Thayer Martin, State Tax Commissioner. On petition, etc On motion to dismiss.

Motion granted.

James J. McGoogan, of Trenton, for petitioner.

David T. Wilentz, Atty. Gen., and William A. Moore, of Trenton, for respondent.

BUCHANAN, Vice Ordinary.

Edward T. Swetnam died March 10, 1929. His executor duly filed with the transfer inheritance tax bureau its return for inheritance tax purposes; and thereon the commissioner computed and assessed the tax payable by the estate, and on March 10, 1930, the executor paid to the state the amount of that tax so assessed.

Decedent at his death was contingently liable as accommodation indorser on two promissory notes, aggregating about $45,000. The executor, in its tax return aforesaid, made no claim for this amount or any part thereof, as a deductible debt under the Transfer Inheritance Act; and no allowance in that behalf was made by the tax commissioner in computing the tax assessed and paid as aforesaid.

Some 4 years later, the notes were protested and the executor was compelled to pay about $40,000 in settlement of the contingent liability. Thereafter the executor applied to the tax commissioner for a refund of so much of the tax paid as aforesaid as equals the amount by which that tax would have been lessened, if the $40,000 subsequently paid by the executor had been listed in the return, and allowed in the computation, as a deductible debt. The commissioner refused the refund on the ground that the application therefor was not made within 2 years after the tax was paid, as required by section 15 of the statute (P.L. 1909, c. 228, § 15, as amended by P.L. 1931, c. 303, § 9 [N.J.St.Annual 1931, § 208—551]).

The executor has now filed petition in this court praying an order that the tax commissioner reopen the assessment and correct the same by allowing the said payment of $40,000 as a deductible debt in the computation of the tax, and refund to the executor the excess (of the tax actually paid, over the tax due on such corrected computation).

This petition appears (on its face), therefore, not to be, and not intended to be, an appeal from the commissioner's assessment of the tax. If it be considered as such an appeal, the motion to dismiss must needs be granted, because the statutory provision which grants the right of such appeal to this court limits the time thereof to 60 days from the date of the assessment, and this court is now without jurisdiction to entertain it. P.L. 1909, a 228, § 18, as amended by P.L. 1931, c. 303, § 12 (N.J.St.Annual 1931, § 208— 554); In re Budell's Estate, 100 N.J.Eq. 273, 134 A. 552. Cf. Lapsley, Adm'x, v. Public Service Corp., 75 N.J.Law, 266, 68 A. 1113; Eldridge v. Phila. & Reading R. R. Co., 83 N.J.Law, 463, at page 466, top, 85 A. 179.

Where an appeal from the judgment or decree of a court is precluded because of the expiration of the limitation period for such appeal, application for relief may nevertheless be made by petition to the court which entered the judgment or decree by which petitioner deems himself wrongly and injuriously affected to reopen its judgment or decree and grant rehearing, Miller v. McCutcheon, 115 N.J.Eq. 459, at page 461, 170 A. 666, and cases cited, provided such petition be based on newly discovered evidence. Petition for rehearing or bill for review will not lie after expiration of time for appeal, except on the ground of newly discovered evidence or some special equity. Miller v. McCutcheon, 117 N.J.Eq. 123, at page 129, 175 A. 155, 95 A.L.R. 702. Obviously, however, the present petition is not, and cannot be considered as, a petition to reopen, because the adjudication sought to be corrected or changed was not a decree of this court, but the act of the tax commissioner. Any petition to reopen (assuming that such would lie) would have to be made to the commissioner.

From the averments in, and the prayer of, the present petition, it is obvious that a petition was made to the tax commissioner, and denied by him, and that this court is asked to reverse such denial and direct a reopening of the assessment and a refund of the excess tax collected. Essentially, therefore, it is, or includes, an appeal from the commissioner's denial of the petition made to him. That petition obviously was, or essentially included, a petition to the commissioner to reopen his assessment and correct it because of the grounds hereinbefore mentioned.

The first issue is whether this court has jurisdiction to entertain such a petition or appeal as the present, under any circumstances. These tax matters do not come within the scope of the usual and ordinary jurisdiction of this court; by the tax statute this court is designated as a statutory agent or tribunal, and has no power to make orders or decrees save as the statute confers such power.

Section 18 of the act provides that the commissioner (who has, by the amendments of 1931, taken the place of the comptroller) shall appraise the property and compute, assess, and levy the tax; and gives any party dissatisfied with such appraisal or assessment the right to appeal therefrom to the ordinary. By implication this would probably clothe this court with power to hear and determine such appeals; but it is not left to implication, for section 20 of the act (4 Comp.St. 1910, p. 5309, § 556) assuredly grants such power, in its grant of jurisdiction to hear and determine "all questions in relation to any tax levied under the provisions of this act."

At first impression this grant seems very broad indeed; but, being a taxing statute, and a statute granting jurisdiction, it must be carefully and strictly construed. Accordingly it was held by Vice Ordinary Backes, in Re Miller's Estate, 81 N.J.Eq. 476, 86 A. 944, that no jurisdiction exists prior to the actual levy of a tax; and he further points out therein that the statute does not, was not intended to, and could not (constitutionally), clothe this court with the power to decree a public official to discharge a function of his office. See, also, the opinion in Re Roebling's Estate, 91 N.J.Eq. 72, 108 A. 359, as to the legislative purpose and constitutional limitation in respect to this statute.

Again, in Re Lake's Estate, 82 N.J.Eq. 327, 88 A. 188, the same vice ordinary held that this court had no jurisdiction to hear or determine an appeal from the refusal of the comptroller (now the commissioner) to certify to the state treasurer that the tax was subject to only a certain amount of interest; that under the provisions and intent of the statute this court could have jurisdiction of that question of interest only when a proceeding for the collection of the tax, specifically authorized by section 21 of the statute (4 Comp.St. 1910, p. 5310, § 557), was brought in this court by the comptroller.

Again, in Re Budell's Estate, 100 N.J.Eq. 273, 134 A. 552, it was held that this court had no jurisdiction to entertain a petition, filed more than 60 days after the assessment and filing of the tax, which sought a decree that the comptroller had had no jurisdiction to...