Long Island Lighting Co. v. State Tax Commission

• Citation: 382 N.E.2d 1337,45 N.Y.2d 529,410 N.Y.S.2d 561
• Parties: , 382 N.E.2d 1337 In the Matter of LONG ISLAND LIGHTING COMPANY, Respondent, v. STATE TAX COMMISSION et al., Respondents, and City of New York, Appellant.
• Decision Date: 02 November 1978
• Court: New York Court of Appeals

Page 561

410 N.Y.S.2d 561

45 N.Y.2d 529, 382 N.E.2d 1337

In the Matter of LONG ISLAND LIGHTING COMPANY, Respondent, v. STATE TAX COMMISSION et al., Respondents and City of New York, Appellant.

Court of Appeals of New York.

Nov. 2, 1978.

W. Bernard Richland, Corp. Counsel (Isaac C. Donner, Samuel J. Warms and Arnold Fox, New York City, of counsel), for appellant.

Herbert M. Leiman, Edward M. Barrett, Mineola, William R. Humburg, Locust Valley and Francis J. McDonough, Garden City, for Long Island Lighting Co., respondent.

Louis J. Lefkowitz, Atty. Gen. (Lawrence J. Logan and Ruth Kessler Toch, Albany, of counsel), for State Tax Commission, respondent.

OPINION OF THE COURT

JONES, Judge.

We hold that the New York City mortgage recording tax with respect to a mortgage covering real property located both within and without the city was properly determined by the State Tax Commission on the basis of the relative assessments of such property as they appeared on the respective assessment rolls, without adjustment for differences in equalization rates.

On December 23, 1971 petitioner (LILCO) recorded in the Nassau County Clerk's office a $50,000,000 supplemental indenture to a mortgage previously executed by it on its properties located in the Counties of Queens (within the City of New York), Nassau and Suffolk and paid a tax of $385,200, including $10,200 which it said represented the tax on the mortgage due to New York City under section 253-a of the Tax Law for that portion of the mortgaged premises in the city. ^* In determining this amount of the New York City mortgage recording tax, LILCO applied equalization rates to actual assessments.

Thereafter, the State Tax Commission, pursuant to sections 253-a and 260 of the Tax Law, determined that the amount due the city was $29,714.82, using a ratio which employed the Actual assessments on the last assessment rolls of the city property and of all the property covered by the mortgage. LILCO paid the deficiency of $19,514.82 thus found to be due, then applied for a refund of that amount. The State Tax Commission denied the refund. The Appellate Division annulled the commission's determination and remitted the matter for further proceedings. We granted leave to appeal under CPLR 5602 (subd. (a), par. 2).

The difference in the New York City mortgage recording tax as computed by LILCO and by the State Tax Commission was because the equalization rates (incorporated in LILCO's computations) reflect the fact that the City of New York assesses property within its borders at a substantially higher fraction of actual value (67%) than do the other tax districts in which LILCO's mortgaged property is located (varying from 14% To 31%). By applying the equalization rates to the tax roll assessments and thus theoretically eliminating the lack of uniformity in assessment practice, LILCO determined that its liability to the City of New York was 4.07% Of the total tax computed on the face amount of the mortgage. The Tax Commission's determination of the apportionment, based on the raw assessment roll figures, produced a liability on behalf of LILCO for 11.88% Of the total tax.

Anticipating the possibility that mortgages subject to New York City's recording tax might cover property situated both inside and outside the city, the Legislature provided in section 253-a of the Tax Law: "3. Where the real property covered by the mortgage subject to the tax imposed pursuant to the authority of this section is situated in this state but within and without a city imposing such tax, the amount of such tax due and payable to such city shall be determined in a manner similar to that prescribed in the first paragraph of section two hundred sixty which concerns real property situated in two or more counties." The first paragraph of section 260 of the Tax Law provides: "When the real property covered by a mortgage is situated in more than one tax district, the state tax commission shall apportion the tax paid on such mortgage between the respective tax districts upon the basis of the relative assessments of such real property as the same appear on the last assessment-rolls. If however, the whole or any part of the property covered by such a mortgage is not assessed upon the last assessment-roll or rolls of the tax district or districts in which it is situated, or is so assessed, as a part of a larger tract, that the assessed value cannot be determined, or if improvements have been made to such an extent as materially to change the value of the property so assessed, the tax commission may require the local assessors in the respective tax districts, or the mortgagor, or mortgagee, to furnish sworn appraisals of the property in each tax district, and upon such appraisals shall determine the apportionment. If such mortgage covers real property in two or more counties, the tax commission shall determine the proportion of the tax which shall be paid by the recording officer who has received the same to the recording officers of the other counties in which are situated the tax districts entitled to share therein. When any recording officer shall pay any portion of a tax to the recording officer of another county, he shall forward with such tax a description sufficient to identify the mortgage on which the tax has been paid, and the recording officer receiving such tax shall note on the margin of the record of such mortgage the fact of such payment, attested by his signature. The tax commission shall make an order of determination and apportionment in respect to each such mortgage and file a certified copy thereof with the recording officer of each county in which a part of the mortgaged real property is situated." (Emphasis added.)

The italicized sentence is the only express...