Wasena Housing Corp. v. Levay

• Decision Date: 14 May 1947
• Docket Number: 106.
• Citation: Wasena Housing Corp. v. Levay, 188 Md. 383, 52 A.2d 903 (Md. 1947)
• Parties: WASENA HOUSING CORPORATION v. LEVAY et al.
• Court: Maryland Court of Appeals

52 A.2d 903

188 Md. 383

WASENA HOUSING CORPORATION v. LEVAY et al.

No. 106.

Court of Appeals of Maryland

May 14, 1947

Appeal from Court of Common Pleas of Baltimore City; John T. Tucker Judge.

Action by the Wasena Housing Corporation against John J. Levay and others, constituting the Board of County Commissioners of Anne Arundel County of Maryland, and another, for the refund of taxes alleged to have been erroneously or mistakenly paid. Judgment for defendants, and plaintiff appeals.

Affirmed.

Samuel K. Dennis, of Baltimore, and M. Hampton Magruder, of Upper Marlboro, for appellant.

Roszel C. Thomsen, of Baltimore (Benjamin Michaelson, of Annapolis on the brief), for appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, HENDERSON and MARKELL, JJ.

HENDERSON Judge.

The appellant in this case brought an action at law for the refund of taxes 'erroneously or mistakenly paid.' A demurrer to the declaration, as particularized, was sustained, and judgment of non pros. was entered.

The declaration, as particularized, alleges in substance: In Anne Arundel County the 'date of finality,' that is to say, 'the date as of which taxes are to be levied for the taxable year in question and upon which assessments become final for such year, subject only to correction as herein authorized' (Art. 81, sec. 2(2); cf. secs. 11 and 26(b)) was, for the year 1944, October 1, 1943. On and before October 1, 1943, plaintiff owned a 'subdivided tract of land' known as 'Arundel Village,' which was then assessed for taxation 'as acreage' and on which 341 houses were under construction by plaintiff. None of the 341 houses were substantially completed on October 1, 1943. The Board of County Commissioners (defendant) valued and assessed and put on the assessment books for taxation for 1944, the 341 houses at $2750 each 'without giving any previous notice to the plaintiff, and prior to October 1, 1943, * * *, of its purpose and intention to do so,' and without notice 'changed from acreage to lots' and valued and assessed the 341 lots at $260 for each outside lot and $160 for each inside lot. On October 27, 1943, the Board mailed to plaintiff, care of James C. Robertson, its vice-president, a notice 'that you have been assessed for the year 1944 for purposes of taxation on the following property at the amount indicated. By attached list which has been agreed upon by Mr. Robertson. Any complaint against this assessment shall be made to the County Commissioners of Anne Arundel County on the ___ day of _____ between 10 a.m. and 2 p.m. After this date the assessment becomes final.' Robertson agreed with the Supervisor of Assessments of the county, not with the Board, 'to this effect only, that the sum of $2750, valuation and assessment for each and all of said houses, and the valuation and assessment of each of said outside lots of $260 each, and said inside lots at $160 each for the purpose aforesaid, would be acceptable, if and when it was right and proper to so value and assess the same.' On February 15, 1944, the then Treasurer (now deceased) sent plaintiff tax bills calling for payment of 1944 taxes on the lots and houses so valued and demanding payment thereof, and subsequently collected all of these taxes, aggregating $22,181.65. On March 25, 1944, plaintiff, by Robertson, its vice-president, wrote the Board stating that it had 'instructed the Title Company to pay' these taxes, that they were 'being paid under protest and without prejudice to our right to seek such means of relief as seem expedient. This position is in view of the fact that we were assessed for the full amount on all houses for the full year, whereas a great many of the houses were not completed--in fact, many of them are still not completed although practically three months of the year have passed.' On January 15, 1946, plaintiff filed its claim for refund with the Board, which marked it approved as to form only. On March 12, 1946, plaintiff presented the claim to defendant Treasurer, who in writing rejected it. Plaintiff sues for $22,181.65 and interest from date of payment.

Plaintiff contends (1) that at common law the taxes on both the houses and the land are recoverable as money paid under duress and the taxes on the houses are recoverable as money paid under a mistake of fact, and (2) that the taxes on both the houses and the land are recoverable, as taxes 'erroneously or mistakenly paid', under Code, Art. 81, sec. 162.

1. The contention as to mistake of fact is without merit. The alleged mistake of fact is the Board's 'mistake' in assessing houses that were not substantially completed. At common law recovery of money paid under a mistake of fact is limited to money paid or received under a mistake on the plaintiff's part, or a mutual mistake; it does not include money demanded and received by the defendant under an erroneous contention, without any mistake on the plaintiff's part. Poe on Pleading, 5th Ed. sec. 119.

The contention as to duress is also untenable under controlling Maryland decisions. In Magness v. Loyola Federal Savings & Loan Association, 186 Md. 569, 47 A.2d 769, 774, we said that 'the distinction between a voluntary payment and a payment under compulsion or duress has been different at different times and in different jurisdictions.' We pointed out, with respect to taxes, that for about a century the Maryland rule has been the opposite of the federal rule. 'The federal courts hold that ordinarily collection of an unlawful tax will not be prevented by injunction, because payment under protest and suit to recover is an adequate remedy at common law. Elliott v. Swartwout, 10 Pet. 137, 156, 157, 9 L.Ed. 373; Cary v. Curtis, 3 How. 236, 248-252, 254, 255, 11 L.Ed. 576. City of Philadelphia v. [Diehl,] Collector, 5 Wall. 720, 730, 732, 733, ; Graham v. DuPont, 262 U.S. 234, 254-258, 43 S.Ct. 567, 67 L.Ed.

965. This court has held that payment under protest, under threat and advertisement of sale, is a voluntary payment, because collection could be prevented by injunction. Lester v. Mayor, etc., of Baltimore, 29 Md. 415, 419, 420, 96 Am.Dec. 542; cf. Baltimore City v. Harvey, 118 Md. 275, 285, 286, 84 A. 487. With respect to taxes, the federal rule has been confirmed, and the Maryland rule frequently superseded, by statute. * * * Protest or lack of protest may constitute evidence of the compulsory or voluntary character of a payment, but if a payment is in fact voluntary, protest will not make it compulsory. Chesebrough v. United States, 192 U.S. 253, 259, 260, 24 S.Ct. 262, 48 L.Ed. 432; Walk-A-Show, Inc., v. Stanton, 182 Md. 405, 35 A.2d 121.' 186 Md. 569, 47 A.2d 774. On February 19, 1912, the Supreme Court, by Mr. Justice Holmes, said that when the state has a summary remedy to collect taxes, such as distress, and the taxpayer 'indicates by protest that he is yielding to what he cannot prevent, courts sometimes, perhaps, have been a little slow to recognize the implied duress under which payment is made.' Atchison, etc., Ry. Co. v. O'Connor, 223 U.S. 280, 285, 286, 32 S.Ct. 216, 217, 56 L.Ed. 436, Ann.Cas.1913C, 1050. Nevertheless, on June 12, 1912, this court indicated doubt whether, without express statutory authority, the City of Baltimore could 'change the common law of the state' to the extent of authorizing refund of taxes paid under a law afterwards declared invalid. The rule of strict construction of statutes in derogation of the common law was held applicable to an ordinance of 1873. Baltimore City v. Harvey, 118 Md. 275, 282, 283, 84 A. 487, 490.

Plaintiff argues that the statutory prohibition against recording, in Anne Arundel County, a deed to property subject to unpaid taxes (P.L.L. (1930), Art. 2, secs. 201-204) constituted duress by compelling payment of these taxes in order to make any sales of houses or obtain any loan secured by lien on the property. Neither in the letter of March 25, 1944, nor in the declaration is it alleged that in fact payment was made for this purpose or that any sale was effected or loan obtained thereby, or that any effort was made between October 27, 1943, and March 25, 1944, to pursue any remedy at law or in equity. It is therefore unnecessary to decide the point, but so long as the rule prevails that the direct lien of taxes, with threat of distress and sale, does not constitute duress, we could hardly ascribe such an indirect effect to the recording law.

2. All refunds of State taxes are matters of grace with the Legislature. Red Star Line v. Baughman, 153 Md. 607 611, 139 A. 291. Art. 25, sec. 11 (ch. 129, Acts of 1807; ch. 337, Acts of 1852), repealed by ch. 701 of the Acts of 1941, provided that the county commissioners 'shall, when satisfied that any error has arisen by assessing property not liable to be assessed, rectify such error and levy and pay to the proper person any money that may have been paid in consequence of such error.' In George's Creek Coal & Iron Co. v. Allegany County Commissioners, 59 Md. 255, 261, in holding that the taxpayer was not entitled to a writ of mandamus but had its remedy by ordinary action at law, the court said: 'All that it would be necessary for the plaintiff to show in such action would be that there had been error in assessing property not liable to assessment, and that the plaintiff had been required to pay taxes in consequence of that erroneous assessment;' and that the defendants had refused to levy for the money to refund the taxes; and that if the statute thus created a duty 'to repay the taxes erroneously levied and received, that statute simply operates to change or modify the common law rule that taxes paid under a mistake of law cannot be recovered back.' The court did not distinguish between error in paying and error in assessing, or...