STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BAY CREST PLAZA, INC., FRANK ) JOHNSON, RUBY JOHNSON, FRANK ) SANTOS and ANIANA SANTOS, )

)

Petitioner, )

)

vs. ) CASE NO. 78-053

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Tampa, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on April 11, 1978.

APPEARANCES

For Petitioner: Frank Santos appeared in propria persona For Respondent: Patricia S. Turner, Esquire

Assistant Attorney General The Capitol

Tallahassee, Florida 32304

By revised notice of proposed assessment dated December 30, 1977, respondent's exhibit No. 6, respondent advised petitioner of an alleged documentary stamp tax deficiency and of an alleged documentary surtax deficiency, together with penalties, on account of a warranty deed recorded at page 1219 of book 777 in Pasco County in the office of the clerk of the circuit court. By petition dated December 14, 1977, petitioners contested the proposed assessment.

FINDINGS OF FACT

1. Developers Diversified Services Limited, an Ohio limited partnership (DDS) , entered into negotiations with petitioners with a view toward acquiring certain property owned by petitioners in Pasco County (the Santos tract) for use as part of a shopping center site. It was understood on all sides that the Santos tract would he unsuitable for this purpose without another, contiguous parcel which was owned by a bank.

   
   

2. As a result of these negotiations, on April 23, 1974, petitioner Bay Crest Plaza, Inc. executed a deed to the Santos tract in favor of DDS. Respondent's exhibit No. 2. Attached to this deed are stamps reflecting payment of documentary stamp tax in the amount of seventy-five dollars ($75.00) and of documentary surtax in the amount of two hundred seventeen and one half dollars ($217.50). The remaining named petitioners executed a second deed to the same

   Santos tract in favor of DDS, on April 23, 1974. Respondent's exhibit No. 1. Attached to this deed are stamps reflecting payment of documentary stamp tax in the amount of six hundred seventy-five dollars ($675.00) and of documentary surtax in the amount of two hundred forty-seven and one half dollars ($247.50). Both conveyances (of the same property) were subject to an outstanding mortgage in favor of Mr. and Mrs. James L. Stevens in the original amount of one hundred thirty-one thousand two hundred fifty dollars ($131,250.00). On April 25, 1974, DDS executed a purchase money mortgage to secure payment of a promissory note in the amount of two hundred six thousand three hundred two and sixty-nine hundredths dollars ($206,302.69) , in favor of petitioners. The mortgage provided that "there is and will be no personal liability of the mortgagor.

   Respondent's exhibit No. 3. The deeds executed by petitioners in favor of DDS anci DDS' mortgage in favor of petitioners were all recorded in Pasco County on August 12, 1974, in the office of the clerk of the circuit court. There is no issue in the present case with respect to taxes due on account of the recording of any of these instruments.

   
   

3. When it became clear that the bank was unwilling to sell the parcel DDS sought to buy from it, DDS reconveyed the Santos tract to petitioners by deed dated November 11, 1974. The deed from DDS to petitioners was filed in Pasco County in the office of the clerk of the circuit court on December 27, 1974. Attached to this deed are stamps reflecting payment of documentary stamp tax in the amount of thirty cents ($0.30) and of documentary surtax in the amount of fifty-five cents ($0.55). Thereafter, petitioners executed a satisfaction of the purchase money mortgage DDS had executed in favor of petitioners on April 25, 1974, and the satisfaction was filed in Pasco County in the office of the clerk of the circuit court on January 24, 1975.

   
   

   CONCLUSIONS OF LAW

   
   

4. Chapter 201, Florida Statutes (1977) , levies a documentary stamp tax on deeds "at the rate of 30 cents for each $100 or fractional part thereof of the consideration [for the deed)." Subsection 201.02(1), Florida Statutes (1977). In addition, a documentary surtax is levied "at the rate of 55 cents per $500 of the consideration paid . . . [excluding) amounts of existing mortgages Subsection 201.021(1), Florida Statutes (1977). Respondent's revised notice of proposed assessment proceeds on the premise that petitioners forgiveness of DDS' promissory note, as evidenced by the subsequently filed satisfaction of mortgage, constitutes consideration within the meaning of these statutes. This premise is the established law. Indian River Orange Groves, Inc. v. Dickinson, 238 So.2d 125 (Fla. 1st DCA 1970)("The mortgagee by accepting the deed in satisfaction of the debt surrendered an asset of the face value of the debt." At 127, quoting the final judgment which was affirmed.) Op. Atty. Gen. 059-203 (1959)

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That respondent's revised notice of proposed assessment be upheld.

DONE and ENTERED this 28th day of April, 1978, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

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

(904) 488-9675

COPIES FURNISHED:

Frank and Aniana Santos Frank and Ruby Johnson

36 Sandpiper Road Tampa, Florida 33609

Patricia S. Turner, Esquire Assistant Attorney General The Capitol

Tallahassee, Florida 32304

Docket for Case No: 78-000053

Orders for Case No: 78-000053