Hampton Plaza Joint Venture, Inc. v. Clerk, Circuit Court

Morton, J., delivered the opinion of the Court. This is an appeal by Hampton Plaza Joint Venture, Inc. (appellant) from an order entered in the Circuit Court for Baltimore County by Judge Cullen H. Hormes affirming the decision of the Maryland Tax Court that the action of the Clerk of the Circuit Court for Baltimore County in denying appellant’s claim for a refund of recordation taxes was correct, as well as the Clerk’s assessment of appellant for additional recordation taxes. In this appeal appellant contends that the Circuit Court erred in affirming the decision of the Maryland Tax Court. The case reaches this Court on the following stipulation of facts: "1.

On August 4, 1969, three deeds of trust dated July 31, 1969, in their respective face amounts of $12,825,000.00 ('Deed of Trust No. 1’), $1,925,000.00 ('Deed of Trust No. 2’), and $175,000.00 ('Deed of Trust No. 3’) between borrower, Hampton Plaza Joint Venture (HPJV), and the Trustees designated by Maryland National Bank (MNB), were recorded in the Land Records of ⁵² Baltimore County. Recordation tax was paid on $13,000,000.00, the total amount disbursed representing the full face amounts of Deeds of Trust Nos. 2 and 3, and $10,900,000.00, the amount actually disbursed under Deed of Trust No. 1. 2. On July 21,1971, Metropolitan Life Insurance Company (Met) purchased MNB Note for $10,900,000.00, which was secured by Deed of Trust No. 1. MNB’s Note for $1,925,000.00, secured by Deed of Trust No. 2 was purchased by Westinghouse Credit Corporation (WCC) and MNB’s Note for $175,000.00, secured by Deed of Trust No. 3, was purchased by Weaver Brothers, Inc., now Chesapeake Financial Corporation (CFC). 3.

On July 25, 1972, Cousins Mortgage and Equity Investment (CMEI) purchased from WCC and CFC the Notes secured by Deeds of Trust No. 2 ($1,925,000.00) and 3 ($175,000.00) which totaled $2,100,000.00, and advanced to HPJV the' sum of $2,500,000.00, which was secured by a new Deed of Trust ('Deed of Trust No. 4’). Recordation tax was paid on $2,500,000.00 in the sum of $8,250.00 (the full face amount of Deed of Trust No. 4) making the total encumbrances of HPJV $15,500,000.00. 4. On April 4, 1974, Met disbursed to CMEI by wire the remaining $1,925,000.00 which was theretofore the undisbursed proceeds of Deed of Trust No. 1, which proceeds were applied toward the partial reduction of an indebtedness secured by three deeds of trust (Deed of Trust No. 2, Deed of Trust No. 3, and Deed of Trust No. 4) as consolidated by a Consolidation and Modification Agreement dated July 25,1972. The total indebtedness of HPJV (petitioner herein) remained unchanged.

No recordation tax was paid on the disbursement by Met. Liability for recordation tax for this disbursement is at issue in this Petition for Appeal. ⁵³ 5. On July 10, 1975, Deed of Trust No. 5 was executed and recorded. There was no change in the total indebtedness of HPJV.

At the time of recording, recordation tax of $8,827.50 was paid under protest on Deed of Trust No. 5 on the full face amount of $2,675,000.00. Said proceeds, secured by Deed of Trust No. 5, were disbursed by Met to CMEI to pay off the balance due on notes secured by Deeds of Trust Nos. 2, 3, and 4, as consolidated by a Consolidation and Modification Agreement dated July 25, 1972. The disbursement was as follows: $2,375,000.00 was paid to CMEI at the date of recording of Deed of Trust No. 5, and the balance of $300,000.00 was held in escrow and paid to CMEI after 60 days. Liability for the payment of recordation tax on Deed of Trust No. 5 is at issue in this Petition for Appeal. 6.

The parties stipulate to the genuineness and relevance of the following documents: (a) Deed of Trust No. 1, dated July 31, 1969 (b) Deed of Trust No. 2, dated July 31, 1969 (c) Deed of Trust No. 3, dated July 31, 1969 (d) Deed of Trust No. 4, dated July 25, 1972 (e) Consolidation and Modification Agreement, dated July 25, 1972 (f) Deed of Trust No. 5, dated July 10, 1975 (g) Consolidation, Modification and Extension Agreement, dated July 10, 1975.” The appellant takes the position that it is entitled to a refund of the tax it paid under protest at the time Deed of Trust No. 5 was recorded because of the provisions of Md. Code Article 81, Section 277 (h) which provides: "(H) Supplemental instruments securing debt. — No tax shall be required for the recordation of any instrument securing a debt that merely confirms, corrects, modifies or supplements an instrument previously recorded, or conveys or pledges property ⁵⁴ in addition to, or in substitution for the property originally conveyed or pledged, if such supplemental instrument does not increase the amount of the debt secured by the instrument previously recorded.” Appellant argues that Deed of Trust No. 5 "simply supplemented and confirmed the consolidated Deeds of Trust numbers 2, 3, and 4. At the time of recordation of Deed of Trust number 5, there was no increase in the amount of indebtedness previously incurred by HPJV [appellant].” The State, on the other hand, argues that Deed of Trust number 5 constituted a new transaction. It involved a new creditor, a new loan, and