Mayor of Baltimore v. Harvey

Boyd, C. J., delivered the opinion of the Court. This is an action of assumpsit brought by the appellee to recover the amount of taxes erroneously paid the appellant by her for the years 1907 and 1908. The plaintiff was the owner of property located on a block of ground in the Annex to Baltimore City, bounded by Park avenue, North avenue, Bolton street and Lennox street. After the appellee had paid those taxes the Circuit Court of Baltimore City determined, in a case between Sinton et al. and the Mayor, etc., of Baltimore, that the property located in that block was only taxable for those two years at the sixty cent rate fixed by the statute for Annex property in the condition it then was, instead of at the full city rate which had been levied against it — -the claim of the appellee in this action being for the difference between those rates.

The appellant took an appeal to this Court from the decision of the Circuit Court for Baltimore City in the Sinton case but dismissed it on October 3rd, ²⁷⁷ 1910, and after that, as is stated in an agreed statement of facts in the record, “formal written demand was made by the plaintiff on the defendant through its Appeal Tax Court for a refund of the said amount overpaid by her, which demand was refused by the Appeal Tax Court after having examined the claim and found the same in their opinion not to be well founded.” There was a verdict in this case in favor of the plaintiff and this appeal is from the judgment entered thereon. The plaintiff offered five prayers, which were granted, and the defendant five, all of which were rejected, but it will not be necessary to discuss them separately. It is admitted by the appellee, that it is a recognized general rule of law that taxes voluntarily paid under a mistake of law cannot be recovered back, but it is contended that there are certain exceptions to the general rule which apply to this case. It will be well to refer to some of the principal decisions in this State on the subject, in order that it may be seen how far this Court and its predecessors have gone.

In Baltimore v. Lefferman, 4 Gill, 425 , it was said: “It is now established, by an unbroken series of adjudications in the English and American Courts, that where money is voluntarily and fairly paid, with a full knowledge of the facts and circumstances under which it is demanded, it cannot be recovered back in a Court of law, upon the ground that the payment was made under a misapprehension of the legal rights and obligations of the party.” That was an action of assumpsit to recover money paid by the plaintiff for the construction of a wall on the line of Jones Ealls in the rear of his property, which was expended by reason of a notice from the City Commissioners that unless the wall was built by it day named they would have it done at the expense of the owner. The proceeding was taken by the-City under a supposed authority of an Act of the Assembly, which was subsequently determined to be unconstitutional. That case was distinctly approved in Morris v. Baltimore, 5 Gill, 244 , which was an action of assumpsit to recover taxes paid, which ²⁷⁸ were alleged to have been illegally levied, the plaintiff having demanded the return of the money paid by him, which the City refused. In Lester v. Baltimore, 29 Md. 415 , which was an action of assumpsit to recover bach money paid by the plaintiff for a tax assessed against his lot, which in Baltimore v. Porter, 18 Md. 284 , had been held to be illegal, Judge Alvey said: “As was said in Brisbane v. Dacres, 5 Taunt, 144, and again in Elliott v. Swartwout, 10 Pet. 137 , there are many doubtful questions of law.

When they arise, the party, of whom claim is made, has an option either to litigate the question or submit to the demand and pay the money. But it would be most mischievous and unjust if he, who has acquiesced in the right by voluntary payment, should be at liberty at any time within the'Statute of Limitations to rip up the matter and recover back the money * * * Instead of paying the bill for grading, the appellant should have pursued a similar course to that pursued by Porter ( 18 Md. Rep. 284 ) in regard to a claim for grading of the same street under the same supposed authority, and by testing the validity of the claim, defeated it. Bailing to avail himself of a legal remedy for his protection, and electing to pay the demand made of him, rather than resort to litigation, he must abide his election, and be held as concluded by his conduct, with knowledge of all the facts,” and he added that the Lefferman and 'Morris cases were conclusive of the question. In case of the Potomac Coal Co. v. C. & P. R. R. Co, 38 Md. 226 , the same principle was announced in a suit in assumpsit against a railroad company to recover the amount of freight the plaintiff claimed the defendant had illegally charged.

In G. C. Coal & Iron Co. v. County Commissioners, 59 Md. 255 , which was an effort to recover back amounts paid the County Commissioners of Allegany County for taxes which were afterwards held to be illegally collected, Judge Alvey said: “It is certainly true, as a general principle, according to the decisions of this Court, that where taxes have been paid under a mistake of law, they cannot be recovered back in an action at ²⁷⁹ law.” In Baltimore v. Hussey, 67 Md. 112 , it was held that money voluntarily paid, with full knowledge of the facts and circumstances, for taxes which were afterwards held to he illegally assessed, could not be recovered back, although paid by the plaintiff through a mistake as to her legal rights. See also Monticello Co. v. Baltimore City, 90 Md. 416 , and Baker v. Baker, 94 Md. 627 . One of the exceptions relied on by the appellee is thus stated in the brief: “Where there was m> legal or moral obligation to pay and the recipient has no right in good conscience to retain.” Conceding that such an exception may exist in some cases, it has never been applied in this State to suits brought to recover taxes paid under a mistake of law. In some of the cases above cited, the parties would have been entitled to the benefit of that exception to the general rule as fully as this appellee could be, but recovery was denied.

In Lester’s Case, an action of assumpsit 'was instituted to recover money which had been paid for a tax which was wrongfully assessed, and the collection of it was unauthorized and unlawful, as had been determined before that suit was brought in the case of Baltimore v. Porter, 18 Md. 284 . Another exception stated by the appellee is, “Where the law is doubtful,” but we have seen above what Judge Advey said in reference to that. In 2 Pom. Eq.

Juris., paragraphs 841-851, the author learnedly and forcibly discusses the subject of when mistakes of law can be relieved against in equity, and points out the kind of mistakes which have generally been held in well considered decisions to entitle parties to relief. But in paragraph 851 he says, “it is settled at law, and the rule has been followed in equity, that money paid under a mistake of law, with respect to the liability to make payment, but with full knowledge or with' means of obtaining knowledge of all the circumstances, cannot be recovered back. There is an exception, as in the case of compromises, where the erroneous payment is induced or accomplished by a violation of ²⁸⁰ confidence reposed, lack of full disclosure, misrepresentation as to liability, or other similar inequitable conduct.” In this case there is nothing to show any inequitable or improper conduct on the part of the appellant in collecting the taxes, but so far as the record discloses, its contention that it had the right to collect the full rate wias bona fide, and if the Appeal Tax Court believed that the block in which the appellee’s property was situated was in a condition which made it liable to the full city rate, it was not only its right, but its duty to take steps to so assess it, and it was the privilege of the appellee to contest such an assessment not only before the Appeal Tax Court, but on appeal to the Baltimore City Court and even to this Court. Sec, 170 of Charter.

There is, however, what is called an exception, but which is in reality a modification of the common law rule which has been necognized in a number of decisions. Statutes have been passed authorizing the refunding of taxes paid in error. They vary in their terms, but their object is to change what is known as the common law rule. We have not been referred to any statute in this State which the appellee relies on, but it is claimed for her that “Ordinance Ho. 88, approved June 27, 1873, codified under Article 38, section 5, City Code, 1906,” does give her the right to recover the excess which she paid, over what was properly chargeable against her for taxes for the years 1907 and 1908.

That ordinance is as follows: “It shall be the duty of the Appeal Tax Court to examine into all claims for a return of taxes alleged to have been paid in error, and if upon examination by the Appeal Tax Court, it shall clearly appear that such claim or claims is or are well founded and that such taxes had been paid erroneously, the Court may direct ithe City Collector by order or orders in' writing to refund or repay the same, and shall reject all such claims as may be considered doubtful or not well founded; provided not more than four years have elapsed from the first day of May, in the year in which the levy was made for said taxes to the time ²⁸¹ application is made for ¡the refunding of the same. And the Appeal Tax Court shall keep a correct list or accounts of all claims for taxes presented to or examined by said Court, which shall contain the name or names of the person or persons presenting such claims, and the amount of each, including those rejected, and upon ¡the representation of any taxpayer that he or she has paid the taxes for which the collector has demanded payment, the Appeal Tax Court is hereby authorized to investigate the case; if the party shall declare his or her receipt has been destroyed or lost, and undoubtful proof or satisfactory evidence is given that the said bill has been paid, the claim shall he abated.” In the ease of G. C. Coal & Iron Co. v. County Commissioners, supra, this Court had before it a statute in force in the counties, and the appellee contends that the rule then announced should! he applied to the ordinance above