White v. Prince George's County

Eldridge, J., delivered the opinion of the Court. The present case, involving disputes over certain recordation taxes in Prince George’s County, arises out of a prior decision of this Court, Prince George’s Co. v. White, 275 Md. 314 , 340 A. 2d 236 (1975), and the General Assembly’s response to that decision in Chs. 129 and 142 of the Acts of 1976. On December 20, 1971, Charles W. White, et al., T/A Penn-Silver Partnership (hereinafter referred to as “White”), had recorded among the Prince George’s County land records a deed of trust. On October 11,1972, the Kenland Corporation (“Kenland”) also had a deed of trust recorded among the land records of Prince George’s County.

Recordation taxes were assessed and paid on both deeds of trust at a rate of $1.65 for each $500.00, or fractional part, of the debts secured. White and Kenland then presented claims for partial refunds of the recordation taxes to the appropriate agency of Prince George’s County. Being unsuccessful, the taxpayers took an appeal to the Board of Appeals sitting as the Appeal Tax Court, which upheld the County Council’s decision. Upon White and Kenland’s further appeal to the Maryland Tax Court, however, they prevailed, with the Tax Court determining that the proper rate was $1.10 for each $500.00 of the debts secured.

Prince George’s County then took an appeal directly to this Court, and on June 26, 1975, we affirmed the decision of the Tax Court, Prince George’s County v. White, supra, 275 Md. 314 . 1 We held that under the provisions of Maryland Code (1957, 1975 Repl. Vol.), Art. 81, § 277 (r), applicable only in Prince George’s County, $1.10 for ⁶⁴⁴ each $500.00 debt was the correct recordation tax rate in that county. 2 In response to the decision in Prince George’s Co. v. White, supra, the General Assembly at its 1976 session passed as emergency legislation, and the Governor signed into law, Chs. 129 and 142 of the Acts of 1976. See Blumenthal v. Clerk of Cir. Ct., 278 Md. 398 , 406 n. 4, 365 A. 2d 279 , 284 n. 4 (1976). Chapter 142, which was prospective in its operation, taking effect from the date it was enacted into law, among other things amended Art. 81, § 277 (r), to provide that the recordation tax rate in Prince George’s County, absent a resolution or ordinance by the county, should be $1.65 for each $500.00 of consideration or secured debt.

Chapter 142 also amended Art. 81, § 277 (q), to make it clear that Baltimore City and all of the counties could by resolution or ordinance fix the recordation tax rate and that the rates ⁶⁴⁵ specified in various subsections of § 277 applied only in the absence of such local resolution or ordinance. Chapter 129 of the Acts of 1976, the meaning of which is at the heart of the controversy in the instant case, set forth in § 1 “the legislative intent” that since 1968, when subsection (q) of Art. 81, § 277, became effective, the recordation tax rate fixed by resolution or ordinance of a subdivision superseded the tax rate specified for that subdivision in “any other subsection” of § 277. Section 2 of Ch. 129 “ratified, confirmed, and validated” the authority to collect recordation taxes pursuant to local resolutions or ordinances on or after July 1,1968. The second paragraph of § 2 went on to state that the section was not intended to apply to actions “which are res judicata” or “whenever constitutionally protected rights would be impaired.” 3 The present litigation was instituted in 1976 when White and Kenland filed a four count declaration in the Circuit Court for Prince George’s County.

In Count I, the plaintiffs alleged that on April 30,1974, they recorded a Deed of Trust among the Prince George’s County land records and paid a recordation tax at the rate of $1.65 for every $500.00 of consideration. They asserted that the tax at the $1.65 rate was erroneously assessed and collected, as the maximum tax rate then allowed by law was $1.10 for ⁶⁴⁶ every $500.00 of consideration. The plaintiffs further stated in Count I that on December 2,1975, they filed with the Prince George’s County Office of Finance a claim for $528.00 partial refund, which amount represented the excess tax paid because of the higher rate. They stated that the Office of Finance has taken no action on the claim for a refund, neither granting or denying it.

The plaintiffs acknowledged in Count I that they had not pursued the administrative remedy provided by statute for tax refund claims. Nevertheless, the plaintiffs asserted that, because the facts and issue were identical to those involved in Prince George’s Co. v. White, supra, except for the particular instrument recorded, and because Prince George’s County has refused to make payment in that case in accordance with the decision of the Court of Appeals, they were not required to pursue and exhaust their administrative remedies. The plaintiffs demanded judgment for $528.00, the amount of tax illegally collected on the instrument recorded by them on April 30, 1974. In Count II of their declaration, the plaintiffs incorporated all of their allegations set forth in Count I, and asserted that the actions of Prince George’s County in connection with the tax on the deed recorded on April 30, 1974, deprived the' plaintiffs of their property without due process of law in violation of the Fifth and Fourteenth Amendments to the United States Constitution and Articles 14, 19 and 23 of the Maryland Declaration of Rights.

Furthermore, in both Count I and Count II, the plaintiffs claimed to be suing on behalf of all other persons similarly situated, and demanded judgment in the additional amount of $10,000,000.00 on behalf of such class of persons. Counts III and IV of the declaration related to the very same deeds and recordation taxes involved in Prince George’s County v. White, supra, i.e., the deeds recorded on December 20, 1971, and October 11,1972. In those counts, the plaintiffs recited the history of Prince George’s Co. v. White, supra, and reiterated that Prince George’s County had refused to pay the amount of the refund which the Tax Court and this Court determined in White was due them. In the White case, the Tax ⁶⁴⁷ Court had ordered that the plaintiffs “be entitled to a partial refund” in recording taxes, totaling $2,953.75.

In Counts III and IV of the declaration in the instant case, the plaintiffs sought to reduce the order of the Tax Court, affirmed by this Court in the White case, to judgment. Thereafter, the plaintiffs White and Kenland moved for summary judgment and the defendant Prince George’s County filed a demurrer to the declaration. On June 30,1976, the circuit court (Bowie, J.) filed an opinion sustaining, without leave to amend, the demurrer to Counts I and II on the ground that the plaintiffs had failed to follow the administrative and judicial remedies provided by statute for the refund of recordation taxes. The circuit court overruled, as lacking merit, Prince George’s County’s demurrer to Counts III and IV.

Following Prince George’s County’s pleas to the declaration and to the motion for summary judgment, the circuit court (Blackwell, J.) filed another opinion, granting the plaintiffs’ motion for summary judgment with respect to Counts III and IV. The plaintiffs took an appeal to the Court of Special Appeals from the circuit court’s order sustaining the demurrer to Counts I and II, and Prince George’s County filed a cross-appeal from the summary judgment in favor of the plaintiffs on Counts III and IV. Before any further proceedings in the Court of Special Appeals, this Court granted Prince George’s County’s petition for a writ of certiorari. For the reasons which follow, we uphold the rulings of the circuit court.

(1) Counts I and II— The Plaintiffs’ Appeal The Maryland Legislature has in Art. 81 of the Code, §§ 213-219, provided a comprehensive remedial scheme for the refund of taxes erroneously paid. Under § 215, if anyone erroneously or mistakenly pays to a state, county or municipal agency more for special taxes than was properly and legally payable, he is authorized to file a written claim for a refund and is entitled to a hearing. Section 216 provides ⁶⁴⁸ for the allowance or disallowance of the claim by the government entity involved after investigation and hearing. If a claim is disallowed, or if it is not acted upon within six months from the date of filing, § 217 sets forth the administrative remedy of an appeal to the Maryland Tax Court, together with judicial review of the Tax Court’s decision: “§ 217.

Same — Appeals. “The person filing a claim for refund shall be entitled to appeal from any final action taken under the provisions of § 216 of this subtitle in disallowing any claim for refund, in whole or in part, .to the Maryland Tax Court, and from the action of. the Maryland Tax Court may appeal to the courts of this State, in the same manner as appeals are permitted from any other action of the Maryland Tax Court under the provisions of this article. If a claim for refund is neither allowed nor disallowed within 6 months from the date of filing of the claim, the claim may be deemed by the person filing it to have been finally disallowed and such person may file an appeal to the Maryland Tax Court under this section.” This statutory remedy “applies to ‘any’ special tax without regard to the statute imposing it,” including a recordation tax, Latrobe v. Comptroller, 232 Md. 64, 70 , 192 A. 2d 101 (1963). See also Tax Comm. v. Power Company, 182 Md. 111 , 32 A. 2d 382 (1943). The plaintiffs in the instant case could have pursued the administrative remedy prescribed by these statutory provisions when their refund claims were not acted upon after six months from the time of filing. 4 However, the plaintiffs attempt to excuse their failure to pursue the statutory remedy by arguing that the Legislature did not ⁶⁴⁹ intend that remedy to be exclusive.

They also assert that the statutory remedy is expensive, cumbersome, burdensome and inadequate. Where there exists a special statutory remedy for the resolution of a particular matter, as well as an ordinary action at law or in equity, whether the special statutory remedy is exclusive, and preempts resort to the ordinary civil action, is basically a question of legislative intent. Maryland-National Capital Park and Planning Commission v. Washington National Arena, 282 Md. 588, 595-596 , 386 A. 2d 1216 (1978); Reiling v. Comptroller, 201 Md. 384, 387-389 , 94 A. 2d 261 (1953); Wasena Housing Corp. v. Levay, 188 Md. 383, 391 , 52 A. 2d 903 (1947); Tawes, Comptroller v. Williams, 179 Md. 224, 228 , 17 A. 2d 137 , 132 A.L.R. 1105 (1941). In ascertaining that intent, it is a settled principle of statutory construction that, absent a legislative indication to the contrary, it will usually be deemed that the Legislature intended the special statutory remedy to be exclusive.

State Dept. of A. & Tax. v. Clark, 281 Md. 385, 401 , 380 A. 2d 28 (1977); DuBois v. City of College Park, 280 Md. 525, 533 , 375 A. 2d 1098 (1977); Soley v. St. Comm’n On Human Rel., 277 Md. 521, 526 , 356 A. 2d 254 (1976); Agrarian, Inc. v. Zoning Inspector, 262 Md. 329, 332 , 277 A. 2d 591 (1971). Moreover, where the special statutory scheme for relief is exclusive and includes administrative proceedings and provisions for judicial review of the administrative decision, one must normally exhaust the administrative remedy before recourse to the courts under the judicial review provisions. Soley v. St. Comm’n On Human Rel., supra; Leatherbury v. Gaylord Fuel Corp., 276 Md. 367, 373-376 , 347 A. 2d 826 (1975), and cases there cited. 5 In light of these principles, this Court has generally viewed special statutory remedies for the determination of tax questions to be exclusive. E.g., State Dept. of A. & Tax. v. Clark, supra, 281 Md. at 401-403 ; Tanner v. McKeldin, 202 Md. 569, 578 , 97 A. 2d 449 (1953); Reiling v. Comptroller, supra, ⁶⁵⁰ 201 Md. at 387-389 ; Wasena Housing Corp. v. Levay, supra, 188 Md. at 391 ; Tawes, Comptroller v. Williams, supra, 179 Md. at 228 ; Oil Co. v. Anne Arundel Co., 168 Md. 495 , 178 A. 221 (1935); Steam Packet Co. v. Baltimore, 161 Md. 9 , 155 A. 158 (1931); Schluderberg Etc.

Co. v. Baltimore, 151 Md. 603, 613-615 , 135 A. 412 (1926). But there are exceptions, and in some situations this Court has held that statutory remedies for the resolution of tax matters are not exclusive. See State Dept. of A. & Tax. v. Clark, supra, 281 Md. at 403-405 ; Pressman v. State Tax Commission, 204 Md. 78, 83-84 , 102 A. 2d 821 (1954); Baltimore v. Gibbs, 166 Md. 364 , 171 A. 37 (1934). Cf.

Poe v. Baltimore City, 241 Md. 303, 308-315 , 216 A. 2d 707 (1966). The plaintiffs urge that the present case is one of those “exceptional” ones where the statutory remedy should not be deemed exclusive. However, there is a fundamental difference between the present case and the cases where a particular remedy provided by statute was not treated as exclusive. In those "exceptional” cases, a recognized alternate remedy under either common law principles or under some other statute had been invoked.

For example, in Pressman v. State Tax Commission, supra, the Court held that the plaintiffs were entitled to bring a declaratory judgment action as an alternative to the special remedy provided by the tax code. In other types of cases, a bill in equity could be brought as an alternative to the statutory remedy. See the review of such cases in Poe v. Baltimore City, supra, 241 Md. at 308-315 . In other words, the question of whether the Legislature intended a particular statutory remedy to be exclusive only arises where the claimant is pursuing a possible alternate remedy.

Where the type of action which the plaintiff is attempting to bring as an alternative to the special statutory remedy simply does not lie, logically no question of exclusiveness arises. In such a situation, it does not matter if the special statutory remedy is deemed inadequate or if some other exception to the general rule is present. 6 If the ⁶⁵¹ only remedy presently available to a plaintiff is the special statutory remedy, that remedy obviously must be followed. And with respect to the instant case, it is firmly established in Maryland that a common law action will not lie to recover taxes erroneously paid under a mistake of law. More than one hundred and thirty years ago, in M. & C. C. of Balt. v. Lefferman, 4 Gill. 425, 430-431 (1846), this Court, although holding unconstitutional the statute under which Baltimore City had required the plaintiff to expend a certain sum of money, went on to reverse a judgment in favor of the plaintiff and against the City for that sum of money on the ground that money demanded and voluntarily paid “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.” A year later, in Morris v. Mayor & C. C. of Balt, 5 Gill. 244, 248 (1847), the Court reaffirmed Lefferman, holding that an action in assumpsit to recover taxes paid could not be maintained “even if we had considered the tax as unconstitutional and void.” Subsequently, in Lester v. Mayor and City Council of Baltimore, 29 Md. 415 (1868), the plaintiff brought an action in assumpsit to recover tax money, alleging that he paid a certain tax to Baltimore City only to prevent the compulsory sale of his property by the City and that the Court of Appeals thereafter decided that the particular tax was illegally assessed.

This Court affirmed a judgment in favor of the City, citing Lefferman and Morris, and stating in an opinion by Judge Alvey ( 29 Md. at 418-419 , emphasis in original): “No principle is better settled than that where a person,with full knowledge of the facts, voluntarily pays a demand unjustly made upon him, though attempted or threatened to be enforced by proceedings, as appears to have been the case in this instance, it will not be considered as paid by compulsion, and the party thus paying, is not entitled to recover, though he may have protested against the unfounded claim at the time of payment made.... ⁶⁵² “There is no pretense here that the money sued for was paid under mistake of the facts, or under circumstances of fraud and extortion; nor is this a case where money has been paid as a necessary means to obtain the possession of goods wrongfully withheld from the party paying the money----In such cases, an action may be maintained for the money wrongfully exacted. But it is the naked case of a party making payment of a demand rather than resort to litigation, and under the supposition that the claim, which subsequently turned out to be unauthorized by law, was enforceable against him or his property.” These holdings have been reaffirmed in an unbroken line of cases. In point is Wasena Housing Corp. v. Levay, supra, 188 Md. 383 , where a taxpayer brought an action at law to recover taxes erroneously paid, and this Court, in affirming a judgment in favor of the defendant government officials, stated that “[a]ll refunds of State taxes are matters of grace with the Legislature” ( 188 Md. at 389 ) and that the statutory remedies were “exclusive in this type of case.” {Id. at 394.) The Court in Wasena pointed out that recovery could not be had on the theory that the tax officials made a “mistake of fact,” as “[a]t common law recovery of money paid under a mistake of fact is limited to money paid or received under a mistake [of fact] on the plaintiffs part, or a mutual mistake [of fact]...” {id. at 387). The Court also repeated the holding of the Lester case that “payment under protest, under threat and advertisement of sale, is a voluntary payment..{id. at 388).

Recently, in Rapley v. Montgomery County, 261 Md. 98 , 274 A. 2d 124 (1971), the plaintiffs paid a Montgomery County transfer tax under protest, and then brought an action in the circuit court for a refund of the tax, a declaratory judgment, and an injunction, claiming that the tax was unconstitutional. At the time, the plaintiffs had no remedy under the tax code, as Art. 81, §§ 215-217, applied only to special taxes paid to the State and did not encompass those paid to political subdivisions. In affirming a judgment for Montgomery ⁶⁵³ County, the Court in an opinion by Judge Singley, after extensively reviewing the history of the common law rule relating to tax refund actions and the special statutory provisions for relief that have been enacted from time to time, concluded ( 261 Md. at 110-111 ): “In sum, the appellants have run the full circle, and since they cannot avail themselves of the Act of 1929 and its progeny, are back to where they would