257 A.D. 531 | N.Y. App. Div. | 1939
This is an appeal by the executrix of the last will and testament of John Dee from an order of the Albany Special Term of the Supreme Court denying her motion for an order directing the refund of $773.07 deposited by her as an advance payment of any inheritance tax that might be levied in excess of the transfer tax on the estate of the decedent as finally fixed by an order of the court.
John Dee died a resident of Saratoga county on May 22, 1926, leaving a last will and testament which was admitted to probate by the surrogate of that county on August 9, 1926, at which time letters testamentary were issued to petitioner. On November 12, 1926, the executrix deposited with the treasurer of Saratoga county $1,300 “ for transfer (inheritance) tax paid in advance of the entry of an order fixing same.” For some reason not disclosed in the record no proceeding was instituted to fix the amount of the transfer tax imposed by article 10 of the Tax Law upon transfers made by decedent until February 1, 1938. On February 24, 1938, an order was made by the surrogate of Saratoga county fixing the tax to which the estate was found hable at $526.93. This order constituted a final determination of the tax Lability of the estate. Thereafter the attorneys for petitioner made demands upon the State Tax Commission and the State Comptroller for a refund of the excess deposited amounting to $773.07. The State Comptroller refused to comply with the demand on April 20, 1938 and the State Tax Commission made a like refusal on June 14, 1938. Thereafter and on June 21, 1938, petitioner applied to the Supreme Court
That case is pressed upon us by respondents as a controlling authority. In the Furey case testator died in November, 1916; deposit of the estimated tax which the court held was a payment and not a deposit was made in May, 1917 and the taxing order was entered in 1932. The six-year Statute of Limitations was applied against an application for the refund of the overpayment on the ground that payment of the refund was prohibited by the Constitution of the State of New York.
Section 19 of article 3 of the Constitution of the State of New York, in effect on January 1, 1939, provides, in part, as follows: “ No claim against the State shall be audited, allowed or paid which, as between citizens of the State, would be barred by lapse of time.” The above section is the same as section 6 of article 7, as it read prior to January 1, 1939, without change, except a technical change of phraseology.
The Furey case was decided at Special Term on September 7, 1933. By chapter 434 of the Laws of 1934 there was added to section 225 of the Tax Law, effective May 8, 1934, a paragraph, the pertinent provisions of which are: “ Notwithstanding any of the foregoing provisions of this section, or any other provision or law, * * * where it appears that a tax was paid before the entry of a taxing order and such order shows that the amount of tax due is less than the amount so paid, the Tax Commission, with the approval of the Comptroller, shall refund to the persons entitled thereto the amount so paid in excess of the amount of tax fixed by the taxing order, out of funds in the custody of the Comptroller to the credit of such taxes, provided application for such refund be filed with the Tax Commission within one year from the entry of such taxing order.” This amendment was expressly made retroactive by section 2 of the act. It is to be noted that the amendment went into effect before the Statute of Limitations as applied in the Furey case had run against petitioner. Prior to the amendment to section 225 of the Tax Law by chapter 434 of the Laws of 1934,
The argument is made that the provision referred to only applies when the order is entered within six years. The answer to that is that the statute itself contains no such limitation. The provision would seem to clearly indicate the legislative intention to make the entry of the order the date from which the limitation as to refunds is to run and to make the time limited by the section itself for the application the only effective limitation. The right to a refund cannot be determined until the amount of the tax is determined. Both are a part of the taxing process. The deposit is clearly a part of the proceeding to enforce the collection of the tax. The estimated payment of $1,300 which was made in this case was neither final nor binding on either party and could not be until the surrogate made an order definitely fixing the amount of the tax which the executrix should pay. It would be a harsh construction of this statute to hold that the Statute of Limitations commences to run before it is finally and definitely ascertained by the court whether or not any tax is payable and if so the amount. It is a familiar principle that a Statute of -Limitations should not be applied to cases not clearly within its provisions; neither should it be extended by construction.
The constitutional provision invoked does not prohibit the construction of the 1934 amendment here urged. The amendment
Not only may the Legislature as a general rule establish a new limitation where none existed before and make it apply to a cause of action against which there was no such statute in existence when it was created, but it may also change an existing statute and shorten the periods of limitation, provided a reasonable time is allowed for actions to be brought. The Legislature also has power to extend the period of an existing Statute of Limitations, and lengthen the time in which suit may be brought in regard to contracts and. causes of action already existing. (17 R. C. L. 672, 673.)
In this case it is conceded that the State holds $773.07 in excess of the amount to which it is entitled under the taxing order of the court. The retention of this sum by the State seems to us to be unconscionable. Although the defense of the Statute of Limitations is a legitimate one, it seems to us that there is an element of dishonor involved in its assertion in the case before us. We appreciate the fact that long dormant claims have often more of cruelty than of justice in them and in such cases the defense of the Statute of Limitations is not only proper but meritorious.
The application of simple rules of common honesty and fair dealing between the State and one of its citizens forbids us to aid the former in retaining money which clearly is the property of the latter. To give judicial sanction to such a result stuns the moral sense and offends the dictates of natural justice.
The order appealed from should be reversed, with fifty dollars costs and disbursements, and the motion granted, with fifty dollars costs.
Hill, P. J., and Bliss, J., concur; Crapser, J., dissents and votes to affirm on the authority of Matter of Furey v. Graves (148 Misc. 785; affd., 241 App. Div. 897; affd., 266 N. Y. 415).
Order reversed on the law, with fifty dollars costs and disbursements, and motion granted, with fifty dollars costs