Lady v. Prince George's County

Wilner, J., delivered the opinion of the Court. The question before us is a simple one: when a taxpayer overpays his county property taxes, is he entitled to interest on the overpayment when he obtains a refund? Under the current state of the law, the answer is “no”. ¹⁰⁰ Appellant, as trustee, was the owner of a certain tract of land and improvements in Prince George’s County. On September 27, 1976, he dutifully paid $17,837.68 in property taxes to the county, this being the proper amount then levied for the 1976-77 taxable year.

Subsequent to that payment, appellant sold the property to Private Mortgage Investors Trade Association, Inc.; however, because of a computer error, the county had failed to record the tax payment, and thus showed the year’s taxes as being due and unpaid. In order to consummate the sale and have the deed recorded expeditiously, therefore, appellant was obliged to pay the taxes again. See Real Property Article, § 3-104. This he did on October 29,1976, with a check for $15,324.48 for the taxes, and a separate check for $524.89 for interest and penalty. 1 On April 20, 1977, appellant filed a claim for refund of the $17,837.68 overpayment, plus the interest and penalty of $524.89 that he had paid, plus interest on both amounts at the rate of 6% per annum.

The county denied the claim because it had already refunded the overpayment to appellant’s grantee. Appellant appealed this denial to the Maryland Tax Court, but prior to a decision by that tribunal, he filed a collateral action in the Circuit Court for Prince George’s County — a “Declaration and Prayer for Ancillary Injunctive Relief” — seeking an order compelling the county to make the refund to him. . With the county’s concurrence, proceedings in the Tax Court were stayed pending the outcome of the judicial proceeding. One of the complicating features of the case was that the grantee who had received the refund was impleaded by the county, and it maintained its right to the money by virtue of its contract with appellant.

To that extent, the county found itself in the position of admitting that it owed someone the overpayment, but not being sure who that someone was. On November 2, 1978, the court decided that issue by entering judgment in favor of appellant for $17,837.68 — the exact amount of overpayment — without interest or costs. The ¹⁰¹ county promptly paid that amount. Pursuant to appellant’s motion, the court, on November 30, 1978, entered an additional judgment in appellant’s favor for $524.89 — the interest and penalty previously paid by him — plus interest on that amount at the annual rate of 6% since its payment by appellant on October 29, 1976.

The court denied appellant’s request for interest on the $17,837.68, and that’s what this appeal is all about. The issue is not very complicated. It is a matter of statutory construction, and boils down initially to which of two statutes applies to this situation. Appellant seeks to hang his hat on Md. Anno.

Code art. 81, § 261. That statute, captioned “Refunds”, provides in relevant part that “[u]pon final determination of any appeal, any money paid by the taxpayer in excess of the amount properly chargeable under the determination, shall be refunded with interest at the rate of six per cent. (6%) per annum from the date of payment to the date of refund.” (Emphasis supplied.) Appellant construes the words “any appeal” very broadly, as including the instant proceeding, and thus argues that the county is liable for the interest at 6%. The county, on the other hand, thinks that this proceeding was not “any appeal”, and maintains that § 261 is therefore not applicable.

The relevant statute, it says, is § 214 of article 81, read in the light of § 218 of the same article. The pertinent provisions of those statutes are as follows: § 214. “Whenever any person shall claim to have erroneously or mistakenly paid to the county commissioners of any county, or to the collector for such county, or to the collector or other official of any municipality, or to the Mayor and City Council of Baltimore, or the collector for Baltimore City, more money for ordinary county or city taxes than was properly and legally chargeable to or collectible from such person, he may file with the collector in any county or municipality or the appeal tax county (sic) in Baltimore City, a written application for the refund thereof, and if approved by such collector, or the said appeal tax court the said, county ¹⁰² commissioners or the said municipal officials or the Mayor and City Council of Baltimore shall levy and pay to such person any money that was so paid. ” (Emphasis supplied.) § 218. All claims for the refund of special taxes, fees, charges, penalties or interest which may be allowed under the provisions of this subtitle shall, if no appeal is pending, be paid by the State, county or municipal agency authorized to collect the same out of any funds in the hands of such agency. Interest at the rate of six percent per annum shall be paid on such amounts refunded accounting from the date the taxes, fees, charges, penalties or interest so refunded were paid____” (Emphasis supplied.) Section 6 of article 81 classifies taxes as either “ordinary” or “special”, and includes real estate taxes as “ordinary taxes.” Thus, claims the county, in contrast to § 218, which provides for interest on the refund of “special” taxes, § 214 makes no such provision with respect to the refund of “ordinary” county taxes, but requires instead only the refund of “any money that was so paid.” The thrust of the county’s argument is that there is no common law right to the refund of taxes erroneously, but voluntarily, overpaid, much less interest thereon, that the entitlement to such refund (and the amount and conditions thereof) are based solely upon statute, and that such statutes are to be narrowly construed.

It is upon this premise that the omission in § 214 to require interest becomes, for the county, significant. A plain reading of the relevant statutes against the backdrop of their legislative history, the principles laid down by the Court of Appeals, and the rationales used to support differing decisions in other States, leads us to conclude that the county’s position is a valid one. We start with Rapley v. Montgomery County, 261 Md. 98 (1971), where the Court reviewed much of the legislative and judicial history pertaining to the refund of overpaid taxes. The Court pointed out that, in sharp contrast to the situation ¹⁰³ applicable to disputes over Federal taxes, the preferred method of challenging a State or county tax in Maryland was by an action to enjoin its collection, rather than an action to recover an overpayment.

Thus, it said at page 108, “[i]n the absence of express statutory warrant, we have laid a heavy hand on actions brought at law to recover taxes paid, even if paid under protest, when the taxpayer made payment without seeking injunctive relief to test the validity of the imposition.” Noting the impracticality of this preferred remedy — indeed to the point of quoting from Judge Markell’s dissent in Wasena Housing Corp. v. Levay, 188 Md. 383, 396 (1947), that it “amounts to a trick to tease taxpayers with an illusory remedy...” — the Court nevertheless clearly held fast to the rule that there was no right to a refund of overpaid taxes except as permitted by statute. The clearest expressions of this are seen at the beginning and at the end of the Opinion, where the Court said, respectively: “taxes voluntarily paid under a mistake of law, even though paid under protest, are not recoverable in the absence of express legislative sanction” (p. 100), and “[t]he only possible escape from this harsh rule is found in the case where the taxing statute itself provides for a refund.” (p. 111.) Although, as noted in Rapley , legislative efforts at ameliorating “this harsh rule” date back at least to 1807, the fountainhead for our purposes is Laws of Md., 1929, ch. 226, for it was there that the Legislature (in the words of the Rapley Court) “first set up a comprehensive statutory scheme for the recovery of taxes erroneously or mistakenly paid.” 261 Md. at 109 . More important, perhaps, it represents the first common enactment of what later became §§ 214 and 261 — the first enactment of both statutes in the same Act. Chapter 226 was the end product of a legislatively created Tax Revision Commission and represented a general revision and recodification of the tax laws of the State.

Because it was a comprehensive treatment and not a collection of piece-meal amendments, differences in language used in similar or analogous contexts are especially significant as an indication of legislative intent. There is, in other words, less chance of language differences — insertions here and omissions there ¹⁰⁴ — being merely the product of the draftsman’s style and whim and more chance that they are truly expressive of deliberate legislative policy. Chapter 226, as codified in the 1929 Supplement to the 1924 Code, divided article 81 into six major divisions: Rules of Construction, Classification of Taxes, Ordinary Taxes, Special Taxes, General Provisions, and Alternative Procedure as to Tax Sales. Among the “General Provisions” were §§ 152 and 153, comprising the subheading “Refund of Taxes” and §§ 182-188, comprising the subheading “Appeals”.

Section 152, a predecessor of present § 213, dealt with the refund of State taxes. It called upon the Comptroller and the Treasurer, prior to each session of the General