STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GEORGE J. ELLIS, JR., )

)

Petitioner, )

)

vs. ) CASE NOS. 81-1366

) and 81-1613

OFFICE OF THE COMPTROLLER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to Notice, a formal hearing was held in the above cases before the Division of Administrative Hearings, by its duly designated Hearing Officer, DONALD R. ALEXANDER, in Jacksonville, Florida, on July 13, 1981.

APPEARANCES

For Petitioner: Jeffrey R. Ludwig, Esquire

1721 Memorial Park Drive Jacksonville, Florida 32204

For Respondent: John Browdy, III, Esquire

Department of Legal Affairs The Capitol, Room LL04 Tallahassee, Florida 32301

BACKGROUND

On April 9, 1980, Petitioner, George J. Ellis, Jr., recorded a warranty deed in Pasco County, Florida, conveying certain real property from George and Ruth Bellinger to the Administrator of Veterans Affairs. In order to record the deed, the Clerk of the Circuit Court required him to pay $194.80 for documentary stamps. Petitioner subsequently requested a refund of said amount from the Respondent, Office of the Comptroller, on the ground Petitioner was an agent of the Administrator of Veterans Affairs, and as such, was exempt from payment of the tax. This request was denied on April 3, 1981. Thereafter, Petitioner requested an administrative hearing pursuant to the provisions of Section 120.57(1), Florida Statutes. On May 11, 1981, the matter was referred to the Division of Administrative Hearings by the Respondent with a request that a hearing officer be assigned to conduct a hearing. By Notice of Hearing dated June 18, 1981, a final hearing was scheduled for July 13, 1981, in Jacksonville, Florida.

On June 23, 1980, a similar recording was made by Petitioner of a warranty deed in St. Johns County, Florida, conveying certain real property from Harold and Edna Sullivan to the Administrator of Veterans Affairs. Although Petitioner claimed he was an agent of the Administrator, he was nonetheless required by the Clerk of the Circuit Court to pay $277.20 for documentary stamps in order to record the deed. Subsequent efforts to obtain a refund from the Office of the

Comptroller were denied on May 4, 1981. Petitioner timely requested a formal hearing pursuant to Section 120.57(1), Florida Statutes, and the matter was forwarded to the Division of Administrative Hearings on June 17, 1981.

By Order dated June 26, 1981, the two matters were consolidated for hearing since they involved similar issues of law and fact and identical parties.

At the final hearing, Petitioner testified on his own behalf and called James E. Gregg as its witness and offered Petitioner's Exhibits 1-3, each of which was received into evidence. Respondent called George J. Ellis, Jr., as its witness.

Proposed findings of fact and conclusions of law were filed by the Respondent on July 22, 1981, and have been considered by the undersigned in the preparation of this order. Proposed findings of fact not included in this order were not considered relevant to the issues, were not supported by competent and substantial evidence or were considered immaterial to the results reached.

At issue4 herein is whether Petitioner is entitled to a refund of $422.00 for having improperly paid for document stamps when recording two warranty deeds for the Administration of Veterans Affairs.

Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT

1. Petitioner, George J. Ellis, Jr., is an attorney in Jacksonville, Florida. At all times relevant hereto, he provided legal services to Southeast Mortgage Company in Jacksonville, Florida, which services mortgages for both itself and outside investors.

   
   

2. Southeast is a servicing agent for the Veterans Administration (VA). As such, Southeast lends money to qualified veterans to purchase homes and is guaranteed payment by the VA in the event of default by the borrower. Two such

   loans were made by Southeast to George and Ruth Bellinger and to Harold and Edna Sullivan. The properties were located in Pasco and St. Johns Counties, respectively.

   
   

3. If a mortgagor defaults on his obligations under a VA loan, two alternatives are available to him, either of which is acceptable to the VA. First, the mortgagor may voluntarily convey the real property to the Administrator of Veterans Affairs (Administrator) in lieu of foreclosure proceedings. Second, foreclosure proceedings may be initiated in a judicial forum to sell the property that has been pledged to secure the loan. Because a deed in lieu of foreclosure is an easier and more expeditious process than a foreclosure proceeding, it is the more preferred of the tow alternatives. Under the deed in lieu of foreclosure procedure, the mortgage lender is notified by VA of the consideration being given to the acceptance of a direct deed. The lender or his agent is then instructed and authorized as agent representing the Administration of Veterans Affairs to record the deed conveying the real property from the mortgagor to the Administrator.

   
   

4. On or about April 9, 1980, Ellis, as attorney for Southeast and pursuant to written instructions from the VA, recorded a warranty deed in lieu of foreclosure proceedings in Pasco County, Florida, conveying the Bellinger's property to the Administrator. However, the Clerk of the Circuit Court required Ellis to pay $194,80 for documentary stamps as a condition precedent to

   recording the deed. A subsequent claim for a refund of this amount from the Respondent, Office of the Comptroller, was denied on April 3, 1981.

   
   

5. On or about June 23, 1980, Ellis, as attorney for Southeast and pursuant to written instructions from the VA, recorded a warranty deed in lieu of foreclosure proceedings in St. Johns County, Florida, conveying the Sullivans' property to the Administrator. Again, Ellis was required by the Clerk of the Circuit Court to pay $277.20 for documentary stamps as a condition precedent to recording the deed. A request for a refund of this amount from the Office of the Comptroller was denied on May 4, 1981.

   
   

6. In both the Bellinger and Sullivan transactions, the VA initiated the matters by requesting Petitioner to prepare a deed in lieu of foreclosure and to record the same "as an agent representing the Administrator" (Petitioner's Exhibit 3; testimony of witness Gregg). Indeed, both Petitioner and the VA considered Petitioner to be an agent of the Administrator in the transactions in question. Ellis received reimbursement for his legal services via payment from Southeast which had directly billed the VA for his fees. In neither case did Ellis appear in a representative capacity for the Bellingers or Sullivans; rather, he appeared on behalf of Southeast and the Administrator, the latter of which considered itself bound by Ellis' actions.

   
   

7. Before the controversy herein arose, Petitioner had recorded approximately 24 warranty deeds in lieu of foreclosure proceedings on behalf of Southeast and Va. He was not required to pay for documentary stamps in order to record the deed in any of those transactions.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Section 120.57(1), Florida Statutes.

   
   

9. Section 201.02(1), Florida Statutes, provides in part:

   
   

   1. On deeds . . . whereby any lands, tene- ments, or other realty . . . shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser . . . on each

      $100 of the consideration therefor the tax shall be 40 cents.

10. Rule 12B-4.02(2), , Florida Administrative Code, provides in part: (2)(a) Transactions between non-exempt parties

    and the United States, its agencies or instru-

    mentalities are taxable . . . unless such transactions are evidence by documents which have been exempted by Congress . . . or unless the United States, its agencies or instrument- alities execute the document. . . .

    (2)(b) Instrumentalities executed by non-exempt parties to the following agencies or instrument- alities of the federal government are subject

    to the tax:

    * * *

    Administrator of Veterans Affairs. . . .

11. Petitioner generally contends he was acting at the direction and control of the Administrator of Veterans Affairs, and as such, was an agent or instrumentality of the United States and was accordingly exempt from payment of the tax. Respondent contends this is incorrect, that Petitioner was acting on behalf of Southeast Mortgage Company, a non-exempt party, and if a refund is due Petitioner, he should seek the same from the grantors on the deed rather than the Comptroller.

    
    

12. Section 201.01, Florida Statutes, imposes the liability for the payment of the documentary stamp tax upon the person:

    
    

    . . .who makes, signs, executes, issues, sells, removes, consigns, assigns, or ships the [documents] or for those whose benefit or use the same are made, signed, executed, issued, sold, removed, consigned, assigned, or shipped in the state.

    
    

    Here it is clear that the grantors (Bellingers and Sullivans) occupy a non- exempt status for they were simply veterans no longer in military service who had defaulted on their federally-guaranteed mortgages. Attorney General Opinion 061-81. By the same token, Respondent concedes the grantee was not subject to taxation under Chapter 201 be virtue of it being an instrumentality of the United States. At issue is whether Petitioner, who made, executed and delivered the deeds on behalf of the Administrator, is liable for payment of the taxes.

    This question must turn on the relationship between Ellis and the Administrator, and whether Ellis can be characterized as an agent or instrumentality of the United States Government. An agency relationship is created under the following circumstances;

    
    

    [T]he minds of the parties must meet in esta- blishing the agency. The principal must intend that the agent shall act for him, and the agent must intend to accept the authority

    and act on it, and the intention of the parties must find expression either in works or con- duct between them. But it is not necessary

    that there be an express contract of appointment; agency may be inferred from the related facts

    of the case, or implied from a prior course of dealings. 2 Fla.Jur.2d Agency & Employment, Section 6.

    
    

13. he evidence discloses that Petitioner's services were requested by the Administrator of Veterans Affairs. He was given instructions to prepare, execute and deliver deeds of conveyance to the Clerk of the Circuit Court. The instructions specifically included authorization "to record the deed as an agent representing the Administrator" (Petitioner's Exhibit 3; Testimony of witness Gregg). Petitioner provided such services on behalf of the lender and the Administrator, the latter of which compensated Ellis for his services. The Administrator also acknowledged it was bound by the acts of Ellis while such transactions were being consummated. Accordingly, a sufficient factual showing has been made to establish Ellis while such transactions were begin consummated. Accordingly, a sufficient factual showing has been made to establish prima facie an agency relationship between Ellis and the Administrator. Having done so, the burden then shifted to Respondent to rebut that showing. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d778 (Fla. 1st DCA 1981). But

    Respondent offered no competent and substantial evidence to rebut the preliminary showing by Ellis that he was acting in the capacity of an agent for the Administrator. That being so, it must be concluded that Ellis' prepared, executed and delivered the deed as an agent of the Administrator, and is exempt from payment of the tax.

    
    

14. Since the Petitioner is not liable for payment of the tax, the burden must obviously fall upon the grantors, who are non-exempt parties to the transactions. Appropriate instructions for collecting the tax in situations such as this were rendered in Attorney General Opinion 065-084. As is pertinent herein, they provided:

Under these circumstances the payment of a stamp tax under Ch. 201, F.S., is not required as a condition precedent to the recording of a deed of conveyance to the U.S., or its agency,

when offered for record by the U.S., or its agency, the federal government not being liable, either directly or indirectly, for documentary stamps

upon deeds of conveyance either by them or to them.

* * *

When such a deed of conveyance is recorded without requiring documentary stamps the clerk should notify the state comptroller, giving him a short description of the deed so recorded, and advising him of its record

without the payment of stamp taxes thereof be- cause it was to the U.S., or its agency as grantee and was offered for record by or fore the U.S., or its agency. The state comptroller may take such action thereon against the grantor as he may deem advisable under the circumstances for the collection from such grantor of a docu- mentary stamp tax under Sh. 201, F.S.

Accordingly, if Respondent desires to collect the stamp tax, it should seek recovery from the grantors on the deeds, who are liable for its payment.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner's application for a refund of $422.00 from

Respondent be APPROVED.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 31st day of July, 1981.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1981.

COPIES FURNISHED:

Jeffrey R. Ludwig, Esquire 1721 Memorial Park Drive Jacksonville, Florida 32204

John Browdy, III, Esquire Department of Legal Affairs The Capitol, Room LL04 Tallahassee, Florida 32301

Shirley W. Ovletrea, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301

Docket for Case No: 81-001366

Orders for Case No: 81-001366