Findings Of Fact In time sequence, the following transactions took place: a. Petitioner, Myron Friedman, executed a contract with Willow Industries, Inc., a New York corporation, on August 14, 1973, for the purchase of properties located in Manatee County, Florida. Conquistador Estates, Inc., a Florida corporation, for profit, was incorporated under the laws of the State of Florida on September 25, 1973. Petitioner, Myron Friedman, borrowed $650,000 from Franklin National Bank of Long Island, New York, on October 29, 1973. Mr. Friedman executed a personal note to the Florida National Bank on October 29, 1973. Myron Friedman made a loan to Conquistador Estates, Inc. in the amount of $400,000 to purchase the Manatee County property on October 30, 1973. Conquistador Estates, Inc. purchased the properties described in the contract from Willow Industries, Inc. to Myron Friedman on October 30, 1973. Conquistador Estates, Inc. executed a mortgage to Myron Friedman in the amount of $400,000 on October 30, 1973, in exchange for the herein before mentioned loan of $400,000 on October 29, 1973. Myron Friedman assigned the herein before mentioned mortgage to Franklin National Bank as security for the personal loan of $650,000 on October 30, 1973. Conquistador Estates, Inc. deeded the properties acquired by it from Willow Industries, Inc. to Myron Friedman on May 28, 1974. Additional facts: The notes and the mortgage herein described are still in existence. Conquistador Estates, Inc. is still a viable corporation although it owns no property and Myron Friedman is the sole stockholder. There were no payments made to Petitioner, Myron Friedman, as required by the terms of the promissory note of Conquistador Estates, Inc. to Myron Friedman. In an Audit of documents recorded in the office of the Circuit Clerk in and for Manatee County, Florida, Respondent, Department of Revenue, determined that insufficient documentary stamps and documentary surtax stamps were affixed to the warranty deed dated May 28, 1974, between Conquistador Estates, Inc. and Petitioner, Myron Friedman, an individual. Subsequent to the audit, the Respondent issued a "Proposed Notice of Assessment of Tax and Penalty Under Chapter 201, Florida Statutes, documentary surtax in the amount of $439.45, pursuant to Section 201.021, Florida Statutes, and penalties in the amount of $1,639.14 pursuant to Section 201.17, Florida Statutes. Attached to the said notice was "Schedule A," an explanation of the basis for the demand for additional documentary stamp tax and documentary surtax. It explained that the warranty deed to Petitioner, Myron Friedman, individually, from Conquistador Estates, Inc., satisfied the existing mortgage and which rendered the mortgage unenforceable as to the original mortgagor, Conquistador Estates, Inc., and cited Department of Administration Rule 12A-4.13(2) Florida Administrative Code. "Defaulting Mortgagor: Where a mortgagor, in full or partial satisfaction of the mortgage indebtedness, conveys the mortgaged premises to the mortgagee, documentary stamp taxes are due on the transaction." Petitioner, Myron Friedman, contends: That Conquistador Estates, Inc. was just a nominee used for the purpose of securing a mortgage loan; That he is the sole owner of the corporation; That there was no conveyance in full or partial satisfaction of the mortgage since he is the sole owner of the corporation, and he is the grantee and that, therefore, no documentary stamp tax or surtax or penalty is due; That the mortgage itself is assigned and is still in existence. The Respondent contends: That the clear wording of statute, Section 201.02(1), F.S., controls the transaction which was a conveyance by warranty deed; That because the corporation, Conquistador Estates, Inc. has no assets and made no payments to Petitioner, the conveyance by warranty deed was in full satisfaction of the mortgage indebtedness and canceled the written obligation of the corporation to pay $400,000, the unpaid portion of the obligation secured by the mortgage. The Respondent further contends that the partial indebtness of the corporation itself to Petitioner was canceled.
Recommendation Assess the documentary stamp and the documentary surtax against Petitioner, Myron Friedman. Do not assess penalties for failure to pay tax required, inasmuch as it is apparent that the taxes which were paid were paid in good faith and that the taxes which were due and owing were not paid because of a misunderstanding of the requirements of Chapter 201, F.S. DONE and ORDERED this 28th day of May, 1976. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 1976. COPIES FURNISHED: Robert H. Carr, Esquire Post Office Box 3798 Sarasota, Florida 33578 Patricia Turner, Esquire Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact The Petitioner inherited the property which is the subject of this matter from his uncle who died on June 30, 1971. Petitioner sought to sell the property, and on February 7, 1972 a Mr. Skinner made an offer to purchase the property for $412,000. Petitioner rejected the offer. On July 23, 1973, Petitioner entered into a contract to sell the property for $915,000 to Virgil Norris and Mavis Y. Norris. The contract called for a $50,000 deposit or binder, $200,000 cash to be delivered at the time of closing, and a $665,000 purchase money mortgage. Just prior to closing the Norrises informed Petitioner that they did not have the $200,000. Petitioner assisted the Norrises in arranging a $200,000 mortgage to the Barnett Bank. Petitioner subordinated his own mortgage to the mortgage with Barnett Bank. On February 7, 1974, the Norris transaction was consummated. Joint Exhibits 1-3 were executed and recorded. The Norrises were unable to make payments on either mortgage. On January 13, 1975, the Petitioner initiated foreclosure proceedings. In lieu of foreclosure the Norrises executed a quitclaim deed to the Petitioner. The quitclaim deed and an accompanying agreement were received in evidence as Joint Exhibit 4 and 5. When the quitclaim deed was executed the Norrises had made no payments on their purchase money mortgage to the Petitioner, and had paid only interest on the purchase money mortgage to the Barnett Bank. The Norrises' mortgage to the Petitioner was satisfied through the execution of the quitclaim deed. The face amount of the mortgage, and the amount of the mortgage debt extinguished by the quitclaim deed was $665,000. Petitioner also agreed to assume the mortgage to the Barnett Bank. The face amount of that mortgage was $200,000 and the amount of debt that was extinguished through the quitclaim deed transaction was $200,000. The total amount of debt extinguished through the quitclaim deed was $865,000. When the quitclaim deed from the Norrises to the Petitioner was executed the actual market value of the subject property was $450,000. Documentary stamp tax and documentary surtax stamps were affixed to the quitclaim deed based upon the consideration for the deed being the actual market value of the property. Petitioner contends that the consideration for the quitclaim deed which was taken in lieu of a foreclosure action was the actual market value of the property. Respondent contends that the consideration for the quitclaim deed was the amount of mortgage debt extinguished as a result of execution of the deed.
The Issue Whether Documentary Stamp Taxes pursuant to Section 201.08(1), Florida Statutes, are due on that part of a written obligation to pay money which purports to renew, extend, restate, modify and consolidate the borrower's pre- existing debt to the same lender, where another part of the written obligation to pay money makes a new or additional loan to the borrower.
Findings Of Fact On October 1, 1981, a "Consolidated and Restated Revolving Loan Agreement" ("Agreement") was executed by Flagship National Bank of Miami ("Bank" or the "lender"), Petitioner (or the borrower), and Alberto Vadia and Rosario Vadia (the guarantors). The Documentary Stamp Tax consequences of this Agreement (and the obligation to pay money which it evidences) are what is at issue here. By this Agreement, the Bank extended a loan, which Petitioner promised to repay, in the principal amount of $1,900,000.00, of which $818,624.69 remained outstanding under previous loans which the Bank had extended to Petitioner under 1971, 1975, and 1978 loan agreements. The balance of the loan -$1,081,375.31 - was a new or additional loan. The Agreement, in pertinent part, provides: Bank, Borrower and Guarantors desire to enter into this Consolidated and Restated Revolving Loan Agreement and the various documents and instruments incorporated herein by reference to increase the maximum principal amount of the loan to One Million Nine Hundred Thousand Dollars ($1,900,000) and extend the term thereof, secured and guaranteed in the same manner as the prior loans and to consolidate into one document the 1971 Agreement, the 1975 Agreement and the 1978 Agreement. This Consolidated and Restated Revolving Loan Agreement and the documents and instruments incorporated herein by reference constitute a complete restatement, modification, amendment and consolidation of the prior agreements to reflect the parties present intentions and agreements regarding such existing debt and the readvance of a previously amortized portion thereof back to Borrower, and not a novation or substitution of a new debt or obligation for an existing debt or obligation. * * * Such advances as Bank shall elect to make pursuant to the credit facility herein agreed to (and all unpaid sums remaining from the 1971, 1975 and 1978 Agreements which indebtedness shall be represented and renewed by such Note) shall be evidenced by a Consolidated Master Revolving Credit Note in the form attached hereto as Exhibit "C," pursuant to which Borrower promises to pay Bank the sums set forth therein together with interest thereon in accordance with the repayment schedule set forth therein, all as more fully set forth therein, the provisions of which Note are incorporated herein by reference. (e.s.) Documentary Stamp Tax in the amount of $1,622.10 has been paid on that portion of the Agreement representing a new loan or advance. (This represents tax at a rate of $.15 per hundred dollars on $1,081,375.31.) Documentary Stamp Tax has not been paid on that portion of the Agreement which restated, renewed, modified, and consolidated the existing debt or outstanding loan balance of $818,624.69 from the previous 1971, 1975 and 1978 loan agreements. The Department claims Petitioner is obligated to pay Documentary Stamp Taxes in the amount of $1,227.90 (at the rate of $.15 per $100 of amount loaned), plus penalty and interest, on the amount of the outstanding loan balance of $818,624.69 from the 1971, 1975 and 1978 agreements. Petitioner claims that the Documentary Stamp Tax does not apply to the outstanding loan balances carried forward from the three prior agreements or notes. (Petitioner, however, no longer maintains that it is entitled to a refund of Documentary Stamp and Intangible Tax previously paid, as alleged in its initial request for hearing.)
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department enter a final order assessing Documentary Stamp Tax in the amount of $1,227.90, plus penalties and interest authorized by statute. DONE and ENTERED this 14th day of March, 1986, in Tallahassee, Florida. R. L. CALEEN, JR. 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 14th day of March, 1986. COPIES FURNISHED: Francis Marion Pohlig, Esquire 2121 Ponce de Leon Boulevard Suite 240 Coral Gables, Florida 33134 Linda S. P. Lettera, Esquire Department of Legal Affairs Tax Section, Capitol Building Tallahassee, Florida 32301 =================================================================
Findings Of Fact The stipulated facts are as follow: The Petitioners are purchasers of subleasehold interests in Ocean Club III, a condominium in Indian River County, Florida. All of the Petitioners purchased their subleasehold interests from Dye and Reeves Development Company in 1973, except the Petitioner Helen Bane, who purchased her subleasehold interest from the Petitioner Richard Long in 1974. The duration of the subleases was approximately 98 years, and they were paid for with present consideration consisting of cash and mortgages. The document included as Exhibit "A", entitled Unit Sublease, represents the conveyance by which each of the Petitioners acquired his or her subleasehold. No documentary stamp taxes or surtaxes were paid on these conveyances. Prior to closing with the Petitioners, the attorney for the Dye and Reeves Development Company requested William Stanley, Chief of the Documentary Stamp Tax Bureau, Department of Revenue, to give an opinion on whether the Unit Sublease, Exhibit "A", requires documentary stamp taxes and surtaxes. Stanley, in a letter dated July 3, 1973, stated his opinion to be that no documentary stamp taxes and surtaxes were due. A copy of this letter is attached as Exhibit "B." On November 13, 1974, the Attorney General released an official opinion, AGO 074-350, which reversed the position earlier taken by Stanley regarding taxability of conveyances of subleasehold interests. The Department of Revenue has adopted this ruling as its own. Based upon the letter from Stanley, the Dye and Reeves Development Company assured the Petitioners that no documentary stamp taxes or surtaxes would be required on the Unit Sublease. The Petitioners had knowledge of the letter or its contents at the time they closed the transaction, but at the time of closing nevertheless requested an Indemnification Agreement, Exhibit "C" herein, in which Dye and Reeves agreed to bear the cost of documentary stamp taxes due upon the Sublease. Exhibits "A," "B," and "C" represent all the relevant documents in this litigation. The Department of Revenue has issued Proposed Notices of Assessment against the Petitioners based upon an alleged documentary stamp tax and surtax liability under the Unit Sublease. The Department of Revenue has not assessed any penalties against the Petitioners. The Petitioners are unable to recover the sums alleged to be due as to taxes and surtaxes from the Dye and Reeves Development Company because the Company has no assets. Petitioners are also barred by limitations from recovering the money from the estate of Mr. Dye, who is deceased. The Petitioners and the Department of Revenue's Tax Examiner have held an informal conference, in which the two parties were unable to resolve their differences concerning the aforementioned assessment. If the Petitioners are found to be liable for documentary stamp taxes and surtaxes, the following amounts represent the proper computation of their liability: NAME TAX SURTAX TOTAL EDWARD K. HALSEY 106.50 10.45 116.95 HELEN C. BANE 117.60 43.45 161.05 W.B. WHITAKER, et ux. 165.00 16.50 181.50 JAMES N. SKINNER 115.50 11.55 127.05 MARY GLENNAN 98.40 36.30 134.70 JOHN F. McFEATTERS, et ux. 127.50 46.75 174.25 ALLEN TOUZALIN 121.50 14.85 136.35 RICHARD LONG, et ux. 117.60 11.00 128.60 HOWARD BAIN, et ux. 103.50 7.70 111.20 JOHN MYLES DEWAR, et ux. 126.00 46.20 172.20 JOHN S. STEPHENS, et ux. 99.00 7.70 106.70 PHYLLIS T. HERMAN 103.50 10.45 113.95 CHARLES W. CHRISS, et ux. 96.00 7.15 103.15 KATHRYN LOCKWOOD, et ux. 97.50 35.75 133.25 KATHRYN LOCOD, et ux. 163.50 59.95 233.45 KATHRYN LOCKWOOD, et ux. 100.50 36.85 137.35 The sums stated above do not include any interest which may have accrued on the alleged liability. Pursuant to stipulation of the parties, the testimony of Howard W. Bain, a Petitioner, was offered on behalf of all of the Petitioners in this case. He testified that he purchased a unit at Ocean Club III from Dye and Reeves Development Company in early June, 1973. Prior to the closing of that purchase, he was advised by his attorney that the latter expected to be provided by the developer's attorney a letter from the Department of Revenue that would state documentary stamps were not payable on the purchase of the condominium unit. Bain would not have closed the purchase if he had had to pay documentary stamp taxes on the transaction. It was his understanding that if any taxes did become due and payable they would be paid by the developer incident to the indemnification agreement. He was unaware at the time that Dye and Reeves Development Company might go out of business in the future. (Testimony of Bain).
Recommendation That Petitioners L.L. Lockwood and Kathryn H. Lockwood, his wife; Howard H. Bain and Mary C. Bain, his wife; Richard H. Long and J. Ann Long, his wife; Edward K. Halsey; Mary Glennan; W.B. Whitaker; Allen Touzalin; and John F. McFeatters and Emily J. McFeatters, his wife, be relieved from any liability from documentary stamp tax or surtax under Chapter 201, F.S. That Petitioners Helen C. Bane, James M. Skinner, John Myles Dewar, et ux., John S. Stephens, et ux., Phillis T. Herman, and Charles W. Chriss, et ux., be held liable for the payment of documentary stamp tax, surtax, and interest thereon, pursuant to Chapter 201, Florida Statutes, in the amounts set forth in the foregoing Findings of Fact. DONE and ORDERED this 9th day of December, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of December, 1976.
Findings Of Fact Stipulated Facts Findings contained in paragraphs 1-28, were stipulated to by the parties. Gary D. Miller and Katherine A. Miller made a note to Southeast Bank (Southeast) dated March 27, 1990, in the stated amount of $80,000 (the Note). Gary D. Miller and Katherine A. Miller (the Millers) executed a Future Advance Note, Modification and Cross-Collateralization Agreement (the Mortgage) in favor of Southeast dated March 27, 1990, and recorded in Volume 4178, page 2981, of the official records of Orange County, Florida. Southeast was doing business and in good standing on March 27, 1990. The Note was consolidated with a promissory note made by the Millers dated June 7, 1988 in the stated amount of $350,000 and replaced by a Consolidated Replacement Note dated April 9, 1991, in the stated amount of $371,250 (the Consolidated Note). The Consolidated Note was defined and secured in a Mortgage Modification Agreement between Southeast and the Millers dated April 9, 1991 and recorded at volume 4278, page 0065 of the official records of Orange County, Florida. Southeast was doing business and in good standing on April 9, 1991. First Union National Bank of Florida (First Union) is the owner and holder of the Note, the Consolidated Note and the Mortgage identified in paragraphs 1,2, and 4 above. The Department timely assessed documentary stamp taxes on the Note. The assessment covers the Consolidated Note. There is no evidence that documentary stamps are attached or affixed to the Note, the Consolidated Note or the Mortgage. No documentary stamp tax were paid on the Note, the Consolidated Note or the Mortgage. The Office of the Comptroller of the currency declared Southeast insolvent and appointed the FDIC as receiver for Southeast on September 19, 1991. The FDIC, as receiver, became the owner and holder of all of the promissory notes and mortgages formerly held by Southeast. The FDIC (as Receiver of Southeast, and corporately) and First Union entered into an Assistance Agreement dated September 19, 1991, under which the FDIC, as Receiver, sold and assigned to First Union the Consolidated Note and the Mortgage. The FDIC, as Receiver, executed an Assignment of Mortgage, subsequently filed in volume 588, page 589, of the official records of Orange County, Florida. First Union is not the same entity as Southeast (by name or otherwise). First Union purchased no portion of the stock ownership of Southeast, rather First Union purchased only those assets and liabilities of Southeast detailed in the Assistance Agreement. Under terms of the Assistance Agreement, First Union expressly assumed only certain specified liabilities. First Union did not expressly assume any liabilities of Southeast relating to payment of taxes under Chapter 201, Florida Statutes. Under the terms of the Assistance Agreement, the FDIC and First Union contractually agreed that the FDIC would indemnify First Union for "costs, losses, liabilities, expenses, judgments, fines and amounts paid in settlement reasonably incurred in connection with claims against" First Union based upon a liability of Southeast that was not expressly assumed by First Union. A claim entitling First Union to indemnification from the FDIC under the terms of the Assistance Agreement is a claim for a liability for "taxes" of Southeast. The definition of "taxes" in the Assistance Agreement includes stamp taxes imposed by states, including interest and penalty. By a Notice dated January 5, 1995, Respondent issued an Official Request for Information to "Southeast Bank, National Association, First Union Bank/Barbara H. Smith." On March 1, 1995, Respondent issued to "Southeast Bank, NA, First Union Bank, N.A." a Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit (the Notice of Audit). The Notice of Audit was received by First Union on March 22, 1995. First Union timely responded to the Notice of Audit by letter dated May 31, 1995, stating that "any transaction prior to September 19, 1991, which might precipitate liability becomes the responsibility of the FDIC." Respondent treated the May 31, 1995 letter of First Union as a protest of the audit. On June 20, 1995, Respondent issued to "Southeast Bank, N.A.-First Union Bank, N.A." a Notice of Proposed Assessment of $150.00 representing tax and interest on the original $80,000 note of March 27, 1990, or an assessment of tax and interest on the Consolidated Note. Southeast Bank remains under the receivership of the FDIC. Additional Facts FDIC's sale of the Note and Consolidated Note to First Union under terms of the September 19, 1991 Assistance Agreement imbued First Union with ownership rights inclusive of the right to receive payments of principal and interest on the Note and Consolidated Note, as well as the right to foreclose on the makers of the Note and Consolidated Note for nonpayment. Neither the Note or Consolidated Note qualify for exemption from documentary stamp taxes levied pursuant to provisions of Chapter 201, Florida Statutes. Documentary stamp taxes constitute an excise tax on documents, as opposed to a tax on the underlying transaction.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered upholding Respondent's full assessment of tax and penalty against Petitioner. DONE and ENTERED in Tallahassee, Florida, this 25th day of June, 1996. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 1996. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings Petitioner's proposed findings (other than the 28 paragraphs of stipulated findings of fact) consisted of seven paragraphs denominated by letters A-G. No citation to the record was included in these proposed findings. Accordingly, the proposed findings, while reviewed and addressed to the extent possible by the foregoing findings of fact, are rejected. Respondent's Proposed Findings 1.-28. Stipulated facts adopted. 29.-32. Adopted, although not verbatim. COPIES FURNISHED: William W. Gallogly, Esquire First Union Corporation Legal Division 225 Water Street Jacksonville, Florida 32202 Scott M. Covell, Esquire Dept. of Legal Affairs The Capitol - Tax Section Tallahassee, Florida 32314-6668 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact The parties stipulated to the facts-of the case as follows: On March 2, 1972, the petitioners, Fred W. Baggett and John S. Miller, Jr., along with one Michael W. Duggar, incorporated a Florida corporation known as Tallahassee Properties , Inc. and filed Articles of Incorporation with the Secretary of State, State of Florida. On June 29, 1972, the above described corporation took title to the property described as follows: All that part of Lot Number 176 in the Original Plan of the City of Tallahassee, in the County of Leon, State of Florida, described as follows: to-wit: Begin at the Northwest corner of said lot and run thence East along the South line of College Avenue (formerly Clinton Street) 39 feet to the wall of a brick building, thence run South along the side of said building 60 feet, thence run West 39 feet to the East line of Adams Street, thence run North along the East line of Adams Street 60 feet to the Northwest corner of said Lot 176, being the point of beginning; from LeRoy Collins and Mary Call Collins, said deed being recorded in Official Records Book 532, Page 327 of the Public Records of Leon County, Florida. On that same date, Tallahassee Properties, Inc. executed a note and mortgage in the amount of $55,000 to Leon Federal Savings and Loan Association, said mortgage being recorded in Official Records Book 532, Page 328 of the Public Records of Leon County, Florida. The said note was personally endorsed by John S. Miller, Jr., Fredric W. Baggett and Michael W. Duggar. On June 29, 1972, Tallahassee Properties, Inc. executed a note in the original principal amount of $72,405.84 to LeRoy Collins and Mary Call Collins secured by a second mortgage on the property and as recorded in Official Records Book 532, Page 376 of the Public Records of Leon County, Florida, The said note was personally endorsed by John S. Miller, Jr., Fredric W. Baggett and Michael W. Duggar. On September 8, 1972, an agreement was entered into between Michael W. Duggar and Ronald C. LaFace of Tallahassee, Florida, wherein the said Michael W. - Duggar conveyed his interest in Tallahassee Properties, Inc. to Ronald C. LaFace and the said Ronald C. LaFace agreed therein to hold Michael W. Duggar harmless and relieve him of liability and indemnifying him for any liabilities which Michael W. Duggar may or could have as a result of his interest in Tallahassee Properties, Inc. This is the reason that the said Ronald C. LaFace is the proper party petitioner in this action. On April 18, 1973, Tallahassee Properties, Inc. executed an additional note to Leon Federal Savings and Loan Association in the amount of $17,500 which said note was also secured by that certain mortgage dated June 29, 1972 and recorded June 29, 1972 in Official Records Book 532, Page 328 of the Public Records of Leon County, Florida. The said note was personally endorsed by John S. Miller, Jr., Fredric W. Baggett and Ronald C. LaFace. On April 23, 1973 by an instrument recorded in Official Records Book 584, Page 94 of the Public Records of Leon County, Florida, Tallahassee Properties, Inc. conveyed an equal one-third interest in the subject property to John S. Miller, Jr., Fred W. Baggett and 5 Ronald C. LaFace. Affixed to the said deed were documentary surtax stamps in the amount of 55 cents and State of Florida documentary stamp tax in the amount of 30 cents. By letter dated September 24, 1975, the respondent, State of Florida, Department of Revenue, informed the petitioners that they had failed to pay an additional documentary stamp tax in the amount of $434.70 due on that certain warranty deed described above as having been recorded on April 23, 1973 in the Public Records of Leon County, Florida. This proceeding was initiated by petitioners after having received said letter from the respondent for a determination that the assessment was improper in that the subject conveyance was not a taxable event. Respondent has asserted that a tax of $434.70 is due and owing from the petitioners. In addition, they have assessed an additional 100 percent penalty for a total claim of $869.40 exclusive of interest or other penalties. The assessment was determined by the Department of Revenue on the basis of adding the original principal balance of the three above described notes secured by mortgages. The original principal amount of the notes was $144,905.84. By the application of the tax imposed by Section 201.02, Florida Statutes, if the petitioners have any liability for payment of the documentary stamp tax, then the determination of $434.70 as an assessment is a correct figure. Petitioners' exhibits 1 through 4, respondent's exhibit 1 and 2, and posthearing briefs of counsel are appended to the record.
Recommendation That petitioners be, found not liable for the proposed assessment of documentary stamp tax and penalty under Chapter 201, Florida Statutes. Done and Entered this 10th day of August, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Edwin J. Stacker, Esquire Department of Legal Affairs the Capitol Tallahassee, Florida 32304 Daniel J. Wiser, Esquire Post Office Box 1752 Tallahassee, Florida 32302
Findings Of Fact The facts in this case are undisputed. On April l6, 1976, petitioner Arthur J. Coyle and his wife Katie Coyle, became the sole shareholders of Sara- Wolf, Inc., a Florida Corporation, whose assets consisted of an apartment building in Miami Beach, Florida. Thereafter, the Coyles decided to transfer the corporate assets to themselves as individuals. They were advised by their attorney that, in view of the 1975 decision of the First District Court of Appeal in Florida Department of Revenue v. DeMaria, 321 So 2d 101 (Fla. 1st DCA 1975) in a similar factual situation, no state documentary stamp tax would be due on the transaction. Therefore, relying upon that judicial decision, petitioner and his wife proceeded to execute a quit claim deed of the corporate real estate to themselves on May 13, 1976, and file the same in the public records of Dade County, Florida, on May 18, 1976, with payment of only nominal documentary stamp tax. The decision of the District Court of Appeal had been stayed by the Supreme Court on December 8, 1975. Subsequent to the decision of the Supreme Court in the DeMaria case on October 14, 1976, which quashed the lower court's decision, respondent issued a notice of proposed assessment of documentary stamp tax in the amount of $526.50 based on a taxable consideration of $175,500, less 30 cents tax paid, for a total tax due of $526.20 plus a like amount as a penalty, and $42.00 in interest, for a total asserted liability of $1,094.40. (Testimony of petitioner, Exhibits 1-3)
Recommendation That the proposed assessment of $1,094.40 against petitioner Arthur J. Coyle and Katie Coyle is valid and should be enforced. DONE and ENTERED this 31st day of May, 1977 in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Robert A. Glassman, Esquire 903 Biscayne Building 19 West Flagler Street Miami, Florida 33130 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
Findings Of Fact By Deposit Receipt dated June 12, 1975 (Exhibit 1) Kenneth H. Maxwell and Janet A. Maxwell contracted to purchase a lot for $7,000 from D & D Builders of Ft. Lauderdale, Inc. (D & D) with house to be built thereon for $29,900 in accordance with described plan. $3,690 was paid as earnest money deposit on this contract. It was intended that Maxwell would obtain a construction loan from the lending institution and before making the loan the lender required the value and plan number of the house to be included on the deposit receipt contract. The property was deeded to the Maxwells by Warranty Deed dated July 14, 1975 (Exhibit 2) and documentary stamp taxes in the amount of $21 was attached thereto. This is the correct amount for a $7,000 consideration for such a transfer. On July 15, 1975 a mortgage deed was executed by the Maxwells to the First Federal Savings and Loan Association of Highlands County to secure a loan in the amount of $33,200 and intangible taxes were paid thereon. At the time D & D and the Maxwells entered into their contract it was intended that Maxwell, who taught construction at a local junior college, would build his own house. When Maxwell attempted to get a building permit the county would not issue one because he was not a licensed contractor. He then arranged for D & D to pull the permit and for the bank to make the draws payable to D & D who would disburse the funds to the subcontractors, suppliers, and Maxwell. On July 15, 1975 the lender disbursed a check to D & D for $3,310 which, when added to the $3,690 initially paid by the Maxwells, completed the $7,000 payment for the lot to the seller D & D. Thereafter Maxwell constructed his house. D & D made the draws and disbursed the funds to suppliers, subcontractors, and to Maxwell. Exhibit 5 shows 8 checks were made payable to Maxwell totaling some $4,400. D & D did not supervise construction, received no compensations for its services, and acted only as a conduit for the construction loan.
Findings Of Fact On or about August 15, 1979, Mead Timber Company and Scott Timber Company conveyed certain property located in Suwannee County, Florida (hereinafter referred to as the "Property"), to Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch (hereinafter referred to as the "Original Conveyance"). The warranty deed for the Original Conveyance was recorded on August 15, 1979, at Official Records Book 187, page 444, of the Public Records of Suwannee County, Florida. In connection with said Original Conveyance the closing statement therefor showed a purchase price of Two Million Four Hundred Thousand Dollars ($2,400,000.00), said amount being the actual amount of the purchase and sale. In connection with the deed for said Original Conveyance, the closing statement indicated that Seven Thousand Two Hundred Dollars ($7,200.00) of documentary stamp taxes were paid based upon Thirty Cents ($.30) per One Hundred Dollars ($100.00) of consideration, and said Seven Thousand Two Hundred Dollars ($7,200.00) for documentary stamps was in fact paid. In connection with said Original Conveyance, a first mortgage and security agreement was given by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, to the Mutual Life Insurance Company of New York, said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 451, of the Public Records of Suwannee County, Florida (hereinafter referred to as "First Mortgage"). The mortgage secured a note with a face amount of Three Million Dollars ($3,000,000.00) dated August 15, 1979. The First Mortgage showed a face amount of Three Million Dollars ($3,000,000.00). In connection with the First Mortgage, pursuant to the loan commitment dated April 13, 1979, only One Million Eight Hundred Thousand Dollars ($1,800,000.00) was disbursed thereunder. The parties thereto anticipated that an additional One Million Two Hundred Thousand Dollars ($1,200,000.00) would be disbursed at some future date, subject to conditions precedent that (a) the Borrowers place all of the Property encumbered thereby into cultivation, after having first cleared and prepared same for cultivation, and (b) that the Borrowers install twenty (20) 12-inch irrigation wells which would be appropriately drilled and equipped, and (c) that the Borrowers install twenty (20) automatic center-pivot irrigation systems thereon. The aforementioned conditions precedent have not been accomplished to date. The time period during which the conditions precedent set forth in paragraph seven (7) above could be completed, and during which time period the Borrowers could require the First Mortgage lender to make the additional disbursement under the First Mortgage, has expired, and the Borrowers have no further legal right to require any additional disbursements under the First Mortgage. The Petitioner has waived any right to seek or obtain the additional One Million Two Hundred Thousand Dollars ($1,200,000.00) from the holder of the First Mortgage. In connection with the First Mortgage for the Original Conveyance, the Borrowers paid Four Thousand Five Hundred Dollars ($4,500.00) as documentary stamp taxes on the promissory note secured by the First Mortgage, and paid Six Thousand ($6,000.00) in intangible taxes. In connection with the Original Conveyance, a second mortgage was given by Tommy M. Faircloth, Sam L. Rudd and Alvin C. Futch to Mead Timber Company and Scott Timber Company in the original principal sum of Three Hundred Thousand Dollars ($300,000.00), said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 461, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Mortgage"). On or about October 1, 1980, Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveyed a portion of the Property to Timber River, Inc., a Florida corporation, by warranty deed which instrument was filed October 2, 1980, at Official Records Book 203, page 790, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Conveyance"). In connection with the deed for said Second Conveyance, only minimum documentary stamps in the amount of Forty Cents ($.40) were attached and affixed thereto. The Respondent herein has alleged that, since the Second Conveyance was subject to both the First Mortgage and the Second Mortgage, the taxable consideration should be Three Million Three Hundred Thousand Dollars ($3,300,000.00)(the face amount of the two [2] mortgages combined), and therefore the documentary stamps which should have been affixed to the deed would be Thirteen Thousand Two Hundred Dollars ($13,200.00), leaving an additional tax due in the amount of Thirteen Thousand One Hundred Ninety-nine and Sixty One-hundredths Dollars ($13,199.60). Timber River, Inc., the grantee of the Second Conveyance, is a corporation which was wholly owned by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch in equal proportions at the time of the Second Conveyance. Timber River, Inc., in consideration of Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveying to said corporation the property described in the deed of the Second Conveyance, issued its common stock to said individuals in equal proportions. Timber River, Inc., took the Property subject to the First Mortgage and second Mortgage, and did not assume or agree to assume either the First Mortgage or the second Mortgage. Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually, have at all times been or are presently liable to the mortgagee, Mutual Life Insurance Company of New York, and are personally responsible for making all payments under said mortgage. All payments under said mortgage both prior to and subsequent to the Second Conveyance have been made by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually.
