STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HENRY & BUCHANAN, P.A., )

)

Petitioners, )

)

vs. ) CASE NO. 76-023

) STATE OF FLORIDA, DEPARTMENT ) OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

After due notice, a public hearing was held before Delphene C. Strickland, Hearing Officer, Division of Administrative Hearings, Department of Administration, on April 19, 1976, in Room 103, Collins Building, Tallahassee, Florida, at 10:00 a.m.

APPEARANCES

For Petitioner: Bryan W. Henry, Esquire

Henry Buchanan, P.A. Post Office Box 1049

Tallahassee, Florida 32302

For Respondent: Harry F.X. Purnell, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

ISSUE

Whether the modification of a promissory note and mortgage should be taxed on the full amount as modified ($157,500.00) or on the difference between the amount of the original note and mortgage and the modification.

FINDINGS OF FACT

1. Eleven individuals executed a promissory note to the Lewis State Bank in the amount of $142,500.00. Stamps were affixed thereto as required by Florida Statutes 201.08, which assess the documentary stamp tax on obligations to pay money.

   
   

2. Approximately three years later, six of the individuals who had executed the note, executed a modification of the promissory note mortgage. The later note increased the amount from $142,500.00 to $157,500.00 and the interest rate was increased from 7 1/2 to 10 percent. In addition to the increase in the face amount of the note and the increase in the interest, the note provided for the release from liability of five of the original makers.

3. At the, time of the recordation of the modification the amount of

   $22.50 was affixed which was documentary stamps for the amount of $15,000.

   
   

4. The Respondent notified the Petitioner that documentary stamps under Florida Statutes 201.08 were due on the total amount of the new obligation,

   $157,500.00.

   
   

   
   

   tax:

   CONCLUSIONS OF LAW

5. Florida Statute 201.08 levies the documentary stamp tax: "On promissory notes, nonnegotiable notes,

   written obligations to pay money,. . . made,

   executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same. "

   
   

6. Florida Statute 201.09 provides a limited exemption from the 201.08

   
   

   "Then any promissory note is given in renewal of any existing promissory note, which said renewal note only extends or continues the identical contractual obligations of the original promissory note and evidences part or all of the original indebtedness evidenced thereby, not including any accumulated interest thereon and without enlargement in any way of said original contract and obli- gation, such renewal note shall not be subject to taxation under this chapter if such renewal note has attached to it the original promissory note with canceled

   stamps affixed thereon showing full payment of the tax due thereon." (Emphasis supplied)

   
   

7. A promissory note under the law of commercial paper is a unconditional

   promise to pay a sum certain in money which note is signed by the maker and payable at a definite time. See 4A Fla. Jr. 44, Bills and Notes 20. Under such definition, the Modification agreement clearly contains am unconditional promise to pay $157,500.00 at a fixed and definite time and is signed by the six makers. It is a taxable note pursuant to Florida Statute 201.08 unless the exemption provisions of Florida Statute 201.09 apply.

   
   

8. Florida Statute 201.09 is inapplicable, because he original note has been enlarged and altered. It is provided in Florida Statute 201.09 that the new note will not qualify for the exemption if it enlarges "in any way said original contract and obligation."

RECOMMENDATION

Affirm the assessment of the Department of Revenue, Respondent.

DONE and ORDERED this 7th day of May, 1976.

DELPHENE C. STRICKLAND

Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Bryan W. Henry, Esquire Henry & Buchanan, P.A.

P. O. Box 1049

Tallahassee, Florida 32302

Harry F.X. Purnell, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304

Docket for Case No: 76-000023

Orders for Case No: 76-000023