State Tax Commission v. Potomac Electric Power Co.

Delaplaine, J., delivered the opinion of the Court. The question presented by this ease is whether the State recordation tax is payable upon the recordation of a counterpart mortgage in Charles County in 1942, after the original mortgage had been recorded in Prince George’s and Montgomery counties in 1936. On July 1, 1936, Potomac Electric Power Company, a public utility incorporated under the laws of the District of Columbia, executed a trust mortgage upon its property to Riggs National Bank of Washington, trustee, to secure a bond issue of $15,000,000. On the following day the mortgage was recorded in Prince George’s and Montgomery counties, the only Maryland counties in which property of the company was located.

In 1937 the Legislature passed the Recordation Tax Act, imposing a tax upon every instrument of writing recorded on and after June 1, 1937, and until September 30, 1939. Acts of 1937, Sp. Sess., Chap. 11, Sec. 4. In 1939 the Act was re-enacted with amendments.

Acts of 1939, Chap. 277, Sec. 6; Code, 1939, Art. 81, Secs. 220, 221. In the case of instruments securing a debt, the tax rate is 10 cents for each $100 of the principal amount of the debt secured. The Act provides, however, that the tax upon mortgages and deeds of trust conveying property lying partly within and partly without the State shall apply only to such proportion of the debt secured as the value of the property within the State bears to the value of the whole property conveyed. It is conceded in this case that the portion of the mortgaged property located within the State of Maryland had a value of not over $1,500,000.

Accordingly, when three additional mortgages, executed on December 1, 1939, December 10, 1939, and August 1, 1940, to secure an additional bond issue of $15,000,000, were offered for record in Prince George’s County, a total of $1,500 was paid for recordation stamps for the mortgages. A certificate ¹¹⁴ stating that the stamps had been purchased was affixed to the mortgages before they were recorded in Montgomery County. On July 15, 1942, a supplemental mortgage reciting after-acquired property situated in Charles County was recorded in Prince George’s and Montgomery counties. The controversy now before us arose when a counterpart of the first mortgage of July 1, 1936, was offered for record, along with the four subsequent mortgages, in the office of the Clerk of the Circuit Court for Charles County.

The clerk refused to record the counterpart unless stamps were affixed thereto. It appears from the record that the company in August, 1942, paid the sum of |1,500 under protest for the stamps, which were affixed *to the mortgage. The company thereupon filed with the State Tax Commission a claim for refund of the recordation tax. Our statute provides that whenever any person shall have paid any special taxes which were erroneously or illegally assessed or collected, he may file with the State Tax Commission a claim for the refund thereof.

If the commission determines that such claim for refund is not just and proper, it shall disallow such claim, but the person filing the claim shall be entitled to appeal from the final action of the commission in the same manner as appeals are permitted from any other action of the commission. Acts of 1941, Chap. 701, Sec. 4. On October 5, 1942, the commission disallowed the claim for refund. On appeal' the Circuit Court for Prince George’s County adjudged that the imposition of the tax of 81,500 was unlawful, and that the State Tax Commission was in error in refusing to order the payment refunded, and ordered that the proceedings be remanded to the commission for the passage of an order in conformity therewith.

This appeal has been taken from the order of the court by the commission, and by Hooper Miles, Treasurer of the State of Maryland, and J. Millard Tawes, Comptroller. It is conceded that the counterpart of the first mortgage, offered for record in Charles County, did not con ¹¹⁵ vey any property located in Charles County. It is also conceded that it did not secure any additional bonds or other indebtedness. No new consideration whatever passed under it.

The Recordation Tax Act of 1939 contains the following provision: “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 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.” The Act also provides: “Any instrument, or counterpart of any instrument, previously recorded may be recorded in any other county or in Baltimore City * * * without the payment of a tax.” Acts of 1939, Chap. 277, Sec. 6; Code, Art. 81, Sec. 220. The contention of the State Tax Commission is that the recordation tax is not a tax upon property, but an excise imposed upon the privilege of using the recordation facilities of the State, and that since no tax was payable upon the recordation of the original mortgage in 1936, its counterpart should not be allowed to escape the tax in 1942. It is urged that we should read into the statute the words “except in cases where the original instrument was recorded prior to June 1, 1937.” It is a cardinal rule of statutory construction that statutes should always be construed to effectuate the intention of the Legislature. In ascertaining that intention, the court interprets the statute according to the ordinary and natural import of its language, unless a different meaning is clearly indicated by the context, without resorting to subtle or forced interpretation for the purpose of extending or limiting its operation.

Chief Justice Marshall said that although the spirit of an instrument is