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§ 225

The Two-year Limitation.

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erty" to include property over which this State has any jurisdiction for the purposes of taxation."

No application was made for a refund in this case until October, 1903, eight years after entry of the order and the payment of the tax, when the executors petitioned the surrogate of Queens county to vacate that part of his former order which assessed a tax upon the transfer of the United States bonds. The petition was granted and the surrogate, by order, directed the State Comptroller to refund to the estate that portion of the tax which amounted to $660. The Appellate Division (93 App. Div. 486, 87 N. Y. S. 842) affirmed the surrogate's order, holding that chapter 382, Laws 1900, which provides that if within two years from the entry of an order fixing tax it should be modified or reversed, refund should be made, was not retroactive and therefore only applied to orders entered subsequent to its passage.

The Court of Appeals reversed the Appellate Division, saying:

It is a fundamental principle of our jurisprudence that no action will lie against a sovereign State, or any of its officers, to enforce an obligation of the State without express legislative permission (People v. Dennison, 84 N. Y. 272; Lewis v. State of N. Y., 96 N. Y. 71; Locke v. State of N. Y., 140 N. Y. 480; Smith v. Reeves, 178 U. S. 436; Flagg v. Bradford, 181 Mass. 315); and when a State does abdicate this attribute of sovereignty and permits itself to be sued, the citizen who benefits by such an act of grace acquires no vested right thereby, but simply a privilege voluntarily granted by the State, which may be hedged about with terms and conditions, and may be withdrawn as freely as it was given. (Beers v. Arkansas, 20 How. (U. S.) 527; Parmenter v. State of N. Y., 135 N. Y. 154; Baltzer v. North Carolina, 161 U. S.

When Proceeding Commenced within Limitation.

§ 225

240; Railroad Co. v. Tennessee, 101 U. S. 337; Railroad Co. v. Alabama, 101 U. S. 832.)

In the light of these principles it is obvious that the statutes under discussion (chap. 399, Laws 1892; chap. 284, Laws 1897; chap. 382, Laws 1900) invested the respondent with no absolute right, but conferred upon him a mere privilege, the extent and duration of which depended entirely upon the language conferring it.*

406. When Proceeding Is Commenced within the Two-year Limitation.

Application to modify a taxing order entered by the surrogate April 30, 1904, made on March 7, 1906, by notice of motion returnable on the 24th day of March, 1906, is concededly within the two-year period specified in section 225 of the statute. Matter of Willets, 51 Misc. Rep. 167; affd., 119 App. Div. 119, 190 N. Y. 527.

*The decree in the Hoople Case was entered November 29, 1895, when chapter 399, Laws 1892, was in force, which authorized the Comptroller, upon satisfactory proof, to refund tax erroneously or illegally paid, provided application for such refund was made within five years from payment

In 1897 (chap. 284) (§ 225, formerly 6), was amended so as to confer upon the surrogate the power to modify or reverse an order by directing a refund of the moneys paid, but no application for such refund should be made after one year from such reversal or modification. The provision just quoted does not limit the time within which the order could be modified or reversed, but provided that application for refund must be made within one year from such reversal or modification. April 11, 1900, chapter 382 provided that if within two years from the entry of an order fixing tax it should be modified or reversed by the proper surrogate, refund should be made if application therefor was made within one year from such reversal or modification.

The court further held that if the provisions of 1900 did not apply to this case that the respondent would be barred by section 6 of article 7 of the Constitution, which provides that "neither the Legislature, the canal board, nor any person or persons acting in behalf of the State, shall audit, allow, or pay any claim which as between citizens of the State would be barred by lapse of time." An action for the recovery of money paid by reason of an illegal or erroneous tax is regarded as an action for money had and received, to which the six years' statute of limitation applies. Brundage v. Village Port Chester, 102 N. Y. 494; Trimmer v. City of Rochester, 134 N. Y. 76.

§ 225

Application for Refund.

407. Application for Refund Must Be Made within One Year from Reversal or Modification of Order.

In the estate of Edward M. Cameron (Suffolk county) the original order was entered October 17, 1898. It was subsequently discovered that the property appraised was the proceeds of real estate, and the order was vacated March 7, 1904. From this order appeals were taken to the Appellate Division, and the Court of Appeals (97 App. Div. 436, 181 N. Y. 560), the modified order being affirmed in both courts, and final order was entered in the Surrogate's Court May 12, 1905.

Upon the application for writ of mandamus to compel the Comptroller to refund the tax paid pursuant to the order of October 17, 1898, aforesaid, the court held (Hasbrouck, J.), that the right of petitioners to a refund was determined by the order of the surrogate of Suffolk county, March 7, 1904, and that the appeals therefrom did not operate as a stay or hinder the petitioners from taking steps to compel the State Comptroller to make a refund. That the proceeding to compel the Comptroller to refund under section 225 is entirely independent of the one taken in the Surrogate's Court to fix the tax, and being so independent an appeal from such order was not effective to stay or enjoin the petitioners here from applying for a refund and a mandamus to compel payment. (D. Loernz v. Same, 78 App. Div. 578.) That under section 225 all parties are prohibited from applying for a refund unless application is made within one year from the modification or reversal of the order fixing tax, and in this case the year elapsed on March 7, 1905, and the executors' privilege became barred after that date. (Matter of Hoople, 179 N. Y. 132.) Motion denied with costs.

§ 225

When Interest Attaches.

408. When Interest Attaches to a Refund.

In the Matter of O'Berry, 179 N. Y. 285–291, the court held that the amount of transfer tax imposed upon an estate in remainder under an unconstitutional law, and paid by the executor is recoverable with interest, although section 225 makes no mention of refunding the tax with interest.

In this case a certain remainder interest, which it was conceded vested in 1884, was, upon the death of the life tenant in 1901, held taxable under the provisions of chapter 76, Laws 1899, and the tax paid. Subsequently the Court of Appeals held that a transfer tax upon remainders which vested prior to the law taxing such interests was void. Matter of Pell, 171 N. Y. 48. The application to vacate the order and direct a refund was not opposed, but objection was made to the payment of interest, and an appeal was taken only from so much of the order as directs the payment of interest upon the amount to be refunded. The Court of Appeals held that when either the State or one of its cities or political divisions, becomes liable by statute or otherwise to "refund "a tax paid which was illegal or void, the right to interest follows without any express provision on the subject. Citing Matter of Scrimgeour, 175 N. Y. 507, affg. 80 App. Div. 388, N. Y. S. 636, and 39 Misc. Rep. 128, 78 N. Y. S. 971.

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409. Mandamus Will Lie to Enforce Payment of Interest on Refund.

In the Matter of Hanford, the decedent died March 12, 1902. The surrogate of Schenectady county, on September 10, 1903, entered an order assessing a tax of $1,490.30 on the share of Laura A. Briggs, which

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sum was paid the county treasurer under protest September 12, 1903. The legatee appealed from the taxing order, claiming she had established that the mutually acknowledged relation of parent and child existed between herself and the decedent, and that her legacy was taxable at the rate of 1 per cent. instead of 5 per cent. The surrogate sustained the appeal, and on May 27, 1904, entered an order modifying his former taxing order by reducing the tax to $298.05. The Appellate Division affirmed this decision of the surrogate without opinion, 101 App. Div. 612.

On May 27, 1904, the date of entry of the amending order of the surrogate, demand was made on the State Comptroller for a refund of the difference between the amount of the tax paid and the amount of the tax as finally determined by the surrogate together with interest on said sum from September 12, 1903, the date of payment to the county treasurer. On March 21, 1905, the Comptroller refunded $1,192.25 by warrant on the county treasurer, but refused to pay any interest on such refund. On March 9, 1905, the relator (Laura A. Briggs) served a notice of motion on the Comptroller for a mandamus directing him to pay interest on the refund aforesaid, returnable before Mr. Justice Hasbrouck on a certain day, and an order was thereafter made by said justice directing a peremptory writ of mandamus to issue commanding the Comptroller to pay the said amount of interest.

The Appellate Division, 113 App. Div. 894, affirmed this order without opinion, and the Comptroller appealed to the Court of Appeals, and that court affirmed the order on the Matter of O'Berry, 179 N. Y. 285; Matter of Hanford, 186 N. Y. 547.

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