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.
The Issue Whether or not the Respondent, State of Florida, Department of Revenue, is entitled to documentary stamp tax in accordance with Section 201.02, Florida Statutes, in the amount of $326.10 and penalty in the like amount of $326.10 in accordance with Section 201.17, Florida Statutes, for a transaction between Petitioners in an assignment of interest of Gallagher's of Miami, Inc., to the Petitioners.
Findings Of Fact The Petitioners were the stockholders of Gallagher's of Miami, Inc. Among the assets of Gallagher's of Miami, Inc., were the rights under a sublease undertaken between B.G.L. Corporation and Gallagher's of Miami, Inc. dated September 25, 1976 and recorded in Official Record Book 5663, at page 261 of the Public Records of Dade County, Florida. This sublease was an amendment to a sublease which was dated June 1, 1976, recorded in Official Record Book 4768, Page 176 of the Public Records of Dade County, Florida, between B.G.L. Corporation, a Florida corporation as lessor, and KSJ Corporation, a Florida corporation as lessee. One of the conditions of Gallagher's lease obligation was responsibility for the payment of a mortgage dated May 1, 1965, recorded in Official Record Book 4592, at Page 161, of the Public Records of Dade County, Florida, from KSJ Corporation, a Florida corporation to Joseph Z. Lipsky and Evalyn Lipsky, as amended by agreement dated August 30, 1965 between KSJ Corporation and Joseph Z. Lipsky and Evalyn Lipsky. Pursuant to a plan of liquidation of Gallagher's of Miami, Inc. that corporation executed and delivered to Petitioners an assignment of the lessee's interest in the aforementioned lease to which Gallagher's of Miami, Inc. was a party. The assignment of lease can be found as Exhibit A to the Petition filed by the Petitioners. The contents of such assignment are found to be fact. By letters of July 30, 1975 and March 10, 1975, the Respondent indicated its intention to assess tax in the amount of $326.10 upon the document representing the assignment between Gallagher's of Miami, Inc. and the Petitioners. The amount of documentary stamp tax was premised on the aforementioned mortgage which at the time of the proposed assessment was valued at $108,750. In addition the Respondent indicated its intention to impose a penalty in a like amount of $326.10. The assignment was in fact executed, pursuant to a plan of liquidation, which plan is shown as Petitioners' Exhibit C attached to the petition. The Petitioners' Exhibit C is established as fact. Petitioners in receiving the assignment in liquidation of Gallagher's of Miami, Inc. received such assignment in proportion to their stock holdings in that corporation. The assessments of $326.10 for documentary stamp tax and $326.10 in penalty on such assessment, and the challenge to the assessments are the subject matter in this cause. Subsequent to the assignment of leases and agreement between Gallagher's of Miami, Inc. and the Petitioners a further assignment was made between the Petitioners and Stan-Mil, Inc. of the same property which took place on December 16, 1974.
Recommendation It is recommended that the assessment of documentary stamp tax under 201.02 F.S. in the amount of $326.10 and the penalty in the amount of $326.10, as a penalty pursuant to 201.17 F.S. be set aside. DONE and ENTERED this 28th day of February, 1977, in Tallahassee, Florida. CHARLES C. ADAMS 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 February, 1977. COPIES FURNISHED: Lewis M. Kanner, Esquire Williams, Salomon, Kanner & Damian 1003 DuPont Building 169 East Flagler Street Miami, Florida 33131 Caroline C. Mueller, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 =================================================================
Findings Of Fact Stewart executed a mortgage note dated February 3, 1972 in the amount of $2,943,400 payable to City National Bank of Miami. This note was secured by a mortgage executed by Stewart as mortgagor to City National Bank of Miami as mortgagee of same date. This mortgage was recorded on February 8, 1972 at which time documentary stamp tax and intangible taxes were paid. The note was designated a mortgage note in the face amount of $2,943,400 and taxes paid were predicated on this sum. The mortgage provided, inter alia, in item 24 thereof: "That the funds to be advanced herein are to be used in the construction of certain improvements on the land herein described, in accordance with a building loan agreement between the mortgagor and the mortgagee dated February 8, 1972, which building loan agreement (except such part or parts thereof as may be inconsistent herewith) is incorporated herein by reference to the same extent and effect as if fully set forth and made a part of this mortgage; if the construction of the improvements to be made pursuant to said building loan agreement shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than strikes or lockouts, the mortgagee, after due notice to the mortgagor or any subsequent owner, is hereby invested with full and complete authority to enter upon said premises, employ watchmen to protect such improvement from depredation or injury, and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the erection and completion of said building or buildings, to make and enter into any contracts and obligation wherever necessary, either in its own name or in the name of the mortgagor, and to pay and discharge all debts, obligations, and liabilities incurred thereby. All such sums so advanced by the mortgagee (exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this mortgage and shall be due and payable on demand with interest at the rate of the same rate as provided in the note secured hereby, but no such advances shall be insured unless same are specifically approved by the Secretary of Housing and Urban Development acting by and through the Federal Housing Commissioner prior to the making thereof. The principal sum and other charges provided for herein shall, at the option of the mortgagee or holder of this mortgage and the note secured hereby, become due and payable on the failure of the mortgagor to keep and perform any of the covenants, conditions, and agreements of said building loan agreement. This covenant shall be terminated upon the completion of the improvements to the satisfaction of the mortgagee and the making of the final advance as provided in said building loan agreement;" Prior to the completion of the project for which the note and mortgage were executed and before the full amount stated in the note had been advanced Stewart went into receivership. No advances were made under the note and mortgage subsequent to December, 1974, and only $1,935,378 had been disbursed to Stewart prior to foreclosure. On March 17, 1976 Stewart requested a refund in the amount of $1512 for documentary stamp taxes and $2016 for intangible taxes paid on the difference between $2,943,400 and $1,935,378.29. By letters dated June 16 and 17, 1976, each of the refund requests was denied by the Comptroller on the ground advanced by Department of Revenue that the claims were barred as not being timely filed. Vanguard executed a note in the amount of $2,000,000 payable to the Chase Manhattan Bank secured by a building loan mortgage from Vanguard as mortgagor to Chase as mortgagee. This mortgage was recorded and documentary stamp taxes and intangible taxes were paid on April 19, 1973. Other than the amount of the note and the total advanced prior to Vanguard going into receivership, the basic facts were the same as in Stewart. At the time of the last payment in May, 1975 Vanguard had received $1,388,008 of the $2,000,000 evidenced by the note. Vanguard's application for refund of $1224 for intangible taxes paid was denied by the Comptroller for the same reason Stewarts was denied. Here the application dated April 19, 1976 was postmarked in Miami on April 20, 1976 and received by Respondent on April 22, 1976. Worthington executed a building loan note dated October 25, 1972 in the amount of $2,750,000 payable to Trustees of C. I. Mortgage Group which was secured by a mortgage loan of same date. Worthington also went into receivership in December, 1974 after $1,962,750 had been advanced. Application for refund of documentary stamp taxes in the amount of $1180.80 and intangible taxes in the amount of $1574.50 filed March 17, 1976 was denied by the Comptroller on the grounds that the application was not timely filed. All of the above loans, for which the mortgages were recorded, were construction loans and provided for periodic payments to the mortgagor as the construction progressed. Provided the mortgagor complied with the terms of the building agreement the mortgagee was legally required to advance funds when due. In determining valuation for the purpose of computing the intangible taxes due clerks of the circuit court follow 199.122(7) F.S. which provides that obligations for payment of money secured by a mortgage shall be valued at the principal amount of indebtedness evidenced by such transactions. Accordingly in the cases at hand the clerks would have refused to record the mortgages unless the intangible taxes and documentary stamp taxes computed using the principal amount of the obligation were paid. An application for refund of the intangible tax representing the difference between the face amount of the mortgage to secure future advances, and the amount advanced, will be disapproved by the Department of Revenue so long as advances on the face amount of the loan are still being made.
Findings Of Fact Paragraph 3 of the Petitioner's petition for administrative hearing provides: "That the Petitioners accepted a conveyance of certain real property in Brevard County, Florida in lieu of foreclosure of a mortgage held by them. The Department of Revenue contends that the documentary surtax should be paid on the deeds based on the amount of the outstanding mortgage at the time of the conveyances. It has served notice of the proposed assessments against each of the Petitioners in the following amounts, to wit: Jesse Jackson Parrish, Jr., tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $379.61; Ralph Bernard Parrish, tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $379.61; J.J. Parrish & Company, Inc., tax - $374.55, penalty - $374.55, interest - $11.24, total due to date - $760.34, and Pauline Bryan, tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $760.34, and Pauline Bryan, tax - $187.00, penalty - 187.00, interest - 5.61, total due to date - $379.61. That the statutes, Florida Statutes, 201.02, does not require payment of the documentary sur tax in such a case. The condition of this statute, by the court, in Leadership Housing, Inc., a Delaware corporation vs. Department of Revenue of the State of Florida, Fla. App. 336 So 2d 1239, holds that the statute should be strictly construed in favor of the tax payer and against the Government." In its answer the Respondent admitted the allegations contained in the first three sentences of the above quoted paragraph. In response to the last sentence of Paragraph 3 of the petition, the Respondent answered as follows: "Respondent denies the following allegations contained in the fourth sentence of paragraph three, if Petitioners are refering to section 201.021 Florida Statutes, and asserts that the conveyance which is the subject of this cause is subject to the imposition of documentary surtax stamps pursuant to section 201.021, Florida Statutes. Respondent, with respect to the allegations contained in the last sentence of Paragraph 3, admits to the existence of the decision in the Leadership Housing Inc., a Delaware corporation v. Department of Revenue of the State of Florida case, but asserts that such decision is not applicable in the instant cause." Since the allegations of the first three sentences of Paragraph 3 of the petition have been admitted by the Respondent, the allegations will be accepted as facts, and are intended to be construed as findings of fact herein. In Paragraph 2 of their petition, the Petitioners alleged: "There are no issues of material fact." In its answer the Respondent did not admit this allegation, but rather asserted that it was without knowledge with respect to it. The position taken by the Respondent at the final hearing clearly indicates that the Respondent is in agreement that there are no issues of fact to be determined in this case. On or about December 23, 1975, Alexander H. Clattenberg, Jr. and John Lowndes, Trustees, executed warranty deeds granting to Jesse Jackson Parrish, Jr., Ralph Bernard Parrish, and Pauline Parrish Bryan three separate parcels of land located in Brevard County, Florida. These warranty deeds were received in evidence respectively as Respondent's Exhibits 4, 2, and 3. On or about July 8, 1976, Alexander H. Clattenberg, Jr. and John F. Lowndes, Trustees, executed a warranty deed granting to J. J. Parrish & Company, Inc., certain real property located in Brevard County, Florida. A copy of this deed was received in evidence as Respondent's Exhibit 1. On or about December 29, 1976, the Respondent issued notices of proposed assessment against Jesse Jackson Parish, Jr., Ralph Bernard Parrish, and J. J. Parrish & Company, Inc. based upon Respondent's Exhibits 4, 2, and 1. Copies of these notices of proposed assessment were received in evidence as Respondent's Exhibit 5. A copy of a proposed assessment against Pauline Parrish Bryan was neither offered into evidence nor received. It is alleged in the Petitioners' petition, and admitted in the Respondent's answer, however, that a notice of proposed assessment was served upon Pauline Bryan. Except insofar as the pleadings contain undisputed allegations respecting the consideration for the warranty deeds that were received in evidence as Respondent's Exhibits 1 through 4, there was no evidence presented at the final hearing from which any findings can be made respecting the consideration for the deeds.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Respondent assess documentary surtaxes, interest, and penalties against the Petitioners in the amounts set out in Paragraph 3 of the Petitioners' petition for administrative hearing. RECOMMENDED this 31st day of May, 1977, in Tallahassee, Florida. STEVEN PFEIFFER Assistant Director Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Mr. Harry L. Coe Executive Director Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Joe D. Matheny, Esquire Henderson, Matheny & Jones P. O. Box 6536 Titusville, Florida 32780
The Issue Whether American National can litigate its entitlement to a documentary stamp tax refund pursuant to Section 120.57, Florida Statutes (1987)? If so, whether American National is entitled to a refund of some or all of the $5,475 it paid in recording the first modification and consolidation of notes, mortgages and assignment of leases and rents executed by American National and General Electric Credit Corporation (GECC) on July 11, 1986?
Findings Of Fact Real estate in Escambia County which petitioner American National now holds as trustee (the property) once belonged to U.S.I.F. Pensacola Corporation (USIFP). On September 1, 1969, USIFP gave Town and Country Plaza, Inc. (T & P) a note for $1,500,000 and executed a mortgage on the property in favor of T & P as security for payment of the note. A separate $300,000 note was promptly repaid. On July 5, 1973, U.S.I.F Wynnewood Corporation (USIFW), USIFP's successor in title, gave U.S.I.F. Oklahoma Corporation (USIFO) a note for $625,000, and executed a mortgage on the property in favor of USIFO as security for payment of its note. On July 8, 1982, shortly after Trust No. 0008 acquired the property, Jacksonville National Bank, as trustee, gave First National Bank of Chicago (FNBC) two notes, each secured by a separate mortgage. One note was for $767,481.98, and the other was for $2,000,000. These two notes, along with the two notes originally given to T & P and USIFO, which were both subsequently assigned to FNBC, were the subject of the July 8, 1982, consolidation, modification and extension agreement. Documentary stamp tax owing on account of these notes (the consolidated notes) was eventually paid in its entirety. All four mortgages with which the property was encumbered when petitioner American National succeeded Jacksonville National as trustee were duly recorded, intangible tax having been fully paid upon recordation. In January of 1984, FNBC assigned the consolidated notes and the mortgages securing their payment to VPCO Properties, Inc., which itself assigned them later the same month to VPPI TCH, Inc. In July of 1986, GECC, the present holder of the consolidated notes acquired the notes and became the mortagee on the mortgages securing their payment. As of July 11, 1982, when American National, as trustee of Trust No. 0008, borrowed an additional $1,150,000 from GECC, the outstanding principal balance on the consolidated notes aggregated $3,650,000. On that date, GECC and American National, as trustee, executed the so- called first modification and consolidation of notes, mortgages and assignment of leases and rents, Petitioner's Exhibit No. 1, which recited the parties' understandings both with respect to the new borrowing and with regard to the existing indebtedness the consolidated notes reflected. In addition to signing Petitioner's Exhibit No. 1, American National, as trustee, also executed and delivered to GECC a promissory note in the amount of $1,500,000. This note, which was not offered in evidence, has never been recorded, nor have documentary stamps ever been affixed to it. At GECC's insistence, American National paid a documentary stamp tax of $7,920 at the time Petitioner's Exhibit No. 1 was recorded in Pensacola. Of this sum, $5,475 was paid on account of the indebtedness the consolidated notes evidenced; $1,725 was paid on account of the new borrowing; and $720 was paid because of the provisions in Petitioner's Exhibit No. 1, contemplating an increase in the principal amount of indebtedness. Under the agreement certain interest payments can be deferred, not to exceed $480,000, any such deferments being added to principal. The agreement provides: Notwithstanding the foregoing, so long as Borrower is making all payments on this Note when due, without giving effect to grace periods or requirements of notice, if any, and is otherwise not in default, taking into account, applicable grace periods, if any, under the Mortgage and other Security Documents Borrower shall be entitled to defer payment, in any month, of interest in excess of interest computed at the "Applicable Base Percentage Rate" (hereinafter defined) so long as the total interest deferred under this paragraph ("Deferred Interest"), including any and all Deferred Interest which has been added to the principal balance hereof, as hereinafter provided, does not exceed the lesser of ten percent (10 percent) of the outstanding principal balance hereof, excluding any and all Deferred Interest which has been added to the principal balance hereof, or $480,000. Such Deferred Interest, including any and all Deferred Interest which has been added to the principal balance hereof, shall be due and payable when and to the extent that, in any subsequent month, the Contract Index Rate is less than the "Applicable Base Percentage Rate", with the balance of such Deferred Interest being payable as provided below or on the maturity hereof, whether by lapse of time, prepayment or acceleration. The "Applicable Base Percentage Rate" shall mean the following per annum rates of interest, computed as aforesaid, for the periods indicated: Applicable Base Period Percentage Rate Date of This Note June 30, 1987 10.0 percent July 1, 1987-June 30, 1988 10.5 percent July 1, 1988-June 30, 1989 11.0 percent July 1, 1989-June 30, 1990 11.5 percent July 1, 1990-Maturity Date (hereinafter defined) 12.0 percent Unless previously paid by Borrower, the outstanding balance of Deferred Interest not previously added to principal in accordance herewith, if any, shall be added to the principal balance hereof on the first day of each calendar quarter beginning with October 1, 1986, and shall accrue interest thereafter at the Contract Index Rate provided for principal, which interest shall be payable in the same manner as is applicable to interest on the original principal balance hereof. Notwithstanding the foregoing, Borrower may pay Deferred Interest at any time without penalty. Of the documentary stamp tax American National paid, $720 was on account of future advances that Petitioner's Exhibit No. 1 was designed to secure, in the event GECC made them.
Findings Of Fact Ken La Pointe was predecessor in interest to Petitioner, KANAPHA MEADOWS, INC, in a number of land transactions. Mr. La Pointe sold 15 lots in "1000 Oaks Subdivision" to third parties. These sales generated 13 deeds and 15 mortgages. The deeds given by La Pointe reflect that they are subject to two prior mortgages. La Pointe sold these 15 lots without getting a release on a prior mortgage held for the same property by C. L. Brice, individually and C. L. Brice, Trustee (apparently operating in some capacity as "Kanapha Ranch"), and also without getting a release on another prior mortgage held by Peoples' Bank. However, there is no contention by the parties that La Pointe did not place the proper documentary tax stamps on these deeds. La Pointe continued collecting on the 15 mortgages generated by the 13 deeds and in turn paid interest payments on his mortgage to Peoples' Bank but did not pay anything on the mortgage to Kanapha Ranch, Inc. Accordingly, C. L. Brice (operating through Kanapha Ranch) demanded, with the leverage of threatened foreclosure, that La Pointe assign these 15 mortgages to Kanapha Ranch, Inc. for collection and that all such collections would be applied to the Kanapha Ranch, Inc. mortgage as long as La Pointe continued to owe Kanapha Ranch, Inc. Thereafter, by an Assignment of Mortgages dated June 12, 1980 La Pointe assigned these mortgages to Kanapha Ranch, Inc. for collection only. Thereafter, La Pointe and Brice negotiated a deal, this time with Brice operating through Petitioner, KANAPHA MEADOWS, INC., whereby La Pointe provided a deed to KANAPHA MEADOWS, INC. for the balance of unsold property in "1000 Oaks Subdivision" and assigning to KANAPHA MEADOWS, INC. all mortgages due La Pointe (including the ones already assigned to Kanapha Ranch for collection) and whereby KANAPHA MEADOWS, INC., was to release La Pointe from all debts regarding the "1000 Oaks Subdivision." There were 39 lots in "1000 Oaks Subdivision." Thirty three of these deeds were transferred with proper documentary stamps. Six of these lots deeded to KANAPHA MEADOWS, INC. form the fulcrum of the issue between the parties to this proceeding. La Pointe and KANAPHA MEADOWS, INC. resorted to an elaborate percentage basis formula to determine the value of the property and the debts being assumed. After applying the mortgage amount against the indebtedness, $53,529.86 of the indebtedness was calculated as applicable to the six lots conveyed. This was the amount upon which documentary stamps of $214.40 were calculated and affixed to the Warranty Deed from La Pointe to KANAPHA MEADOWS, INC. for Lots 5, 6, 15, 16, 17, and 21, which deed was dated October 15, 1980 and recorded July 17, 1981 in Official Record Book 1359, pages 522-533 of the Public Records of Alachua County, Florida. No money changed hands at that point and apparently the executed deed was not delivered to KANAPHA MEADOWS, INC. until later. When the exact data and balance due on each mortgage was collected, approximately February 21, 1981, the parties were ready to close. On February 24, 1981, La Pointe assigned all 15 mortgages (most of them third mortgages because they had not been released from La Pointe's liability of the first two mortgages to Kanapha Ranch and Peoples' Bank) to KANAPHA MEADOWS, INC. At that time, La Pointe received an Assumption Agreement with Release from KANAPHA MEADOWS, INC. assuming the Peoples' Bank mortgage and also an Assumption Agreement with Release assuming the Kanapha Ranch mortgage. The 6 lots were received then and are now indicated on the KANAPHA MEADOWS, INC. books at an evaluation of $17,600.94. The October 15, 1980 Warranty Deed, the Assignment of Mortgages, and both Assumptions/Releases were recorded July 17, 1981. Petitioner contends that the $214.40 in tax stamps affixed thereto was appropriate based on the difference between the liabilities assumed and the assets received by KANAPHA MEADOWS, INC. from La Pointe. Respondent's position is that additional tax is due in the amount of $1,199.80 based upon the mortgages to which the deed was subject, which mortgages are reflected on the face of the deed and were specifically assumed by Petitioner.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a Final Order ratifying its assessment of an additional documentary stamp tax owed by Petitioner of $1,198.80 plus appropriate penalties and interest to date of that Final Order. DONE and ENTERED this 19th day of March, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 19th day of March, 1985. COPIES FURNISHED: William Townsend, Esquire Department of Revenue Carlton Building Tallahassee, Florida 32301 C. L. Brice 6500 S. W. Archer Road Gainesville, Florida 32608 Edwin A. Bayo Assistant Attorney General Department of Legal Affairs Room LL04, The Capitol Tallahassee, Florida 32301 Randy Miller Executive Director 102 Carlton Building Tallahassee, Florida 32301
Findings Of Fact Petitioner Kenneth Blume, an unmarried man, purchased real property in his name on December 19, 1988. Petitioner Kenneth Blume obtained a mortgage on the property in his own name with PNC Mortgage Servicing Company. Petitioner Kenneth Blume married Petitioner Tina Blume on November 3, 1990. Thereafter, Petitioner Kenneth Blume contacted a title company, Advance Title, Inc. to refinance the property and transfer the property from himself, as sole owner, to himself and his wife, Petitioner Tina Blume. On June 19, 1992, as part of the refinancing transaction, Petitioner Kenneth Blume transferred his individual mortgage with PNC Mortgage Servicing Company to Foundation Financial Services, Inc. which paid off Petitioner Kenneth Blume's original mortgage. On June 19, 1992, Petitioner Kenneth Blume gave Petitioner Tina Blume a legal interest in the property by transferring half of the encumbered property to her by quit claim deed. Petitioner Kenneth Blume executed the deed in the presence of Cheryl Scott, a notary public and an employee of Advance Title, Inc. Said deed lists Petitioner Kenneth Blume as grantor and Petitioner Kenneth Blume and his wife, Petitioner Tina Blume, as grantees. On June 19, 1992, as part of the refinancing transaction, Petitioners created a new first mortgage on the subject property in favor of Foundation Financial Services, Inc. This mortgage is the obligation of both Petitioners. The quit claim deed was prepared by Advance Title, Inc. on Petitioners' behalf. The quit claim deed showed that the consideration paid for the transfer of the encumbered property was $10. On June 24, 1992, Advance Title, Inc. went to the Clerk of the Circuit Court's Office to record the quit claim deed. As a condition precedent to the recordation of any deed transferring an interest in real property, Section 201.022, Florida Statutes, requires that the grantor, grantee, or agent for the grantee, execute and file a return with the Clerk of the Circuit Court. The return is identified as a Form DR-219, Return for Transfer of Interest in Real Property. On June 24, 1992, Advance Title, Inc. filled out and signed the Form DR-219, Return for Transfer of Interest in Real Property, as the agent of Petitioners. Advance Title, Inc., as Petitioners' agent, did not disclose the full amount of consideration on Form DR-219 as required by question 3. Instead, Advance Title, Inc. wrote that the property was sold for $10. Advance Title, Inc. did not disclose the extinguished or refinanced mortgage on Form DR-219. In response to the question whether the sale was financed, Advanced Title, Inc. did not check the "yes" box on Form DR-219. Form DR-219 defines the word "consideration", in pertinent part, as follows: the purchase price of the property or the total amount paid or to be paid for the transfer of any interest in real property. Consideration includes: cash; new mortgages placed on the property to finance all or part of the purchase; existing mortgages on the property either assumed or taken subject to; mortgages that are cancelled, satisfied or rendered unenforceable, settled by the sale or transfer or in lieu or foreclosure . . . . This definition is consistent with the Legislature's definition of consideration set forth in Section 201.02(1), Florida Statutes (1991), applicable here. Advance Title, Inc., as Petitioners' agent, stated on Form DR-219 that documentary stamp tax in the amount of $.60 was due on the subject transfer of interest in real property. On June 24, 1992, Advance Title, Inc. presented the quit claim deed to the Clerk of the Circuit Court for recordation together with the Form DR-219. The Clerk recorded the quit claim deed and collected $.60 in documentary stamp tax based on information that Advance Title, Inc. provided on the Form DR-219. The Clerk did not tell Advance Title, Inc. or Petitioners that additional documentary stamp taxes were due on the transfer. Respondent conducted a routine audit of the Clerk's records and determined that additional documentary stamp taxes were due on the deed transferring an interest in the encumbered property to Petitioner Tina Blume. The record contains no competent substantial evidence to show that Petitioners fall within an exception to or exemption from paying the additional documentary stamp tax in question here. Moreover, there is no competent persuasive evidence that an agent of the state of Florida or Santa Rosa County misrepresented a material fact on which Petitioners relied to their detriment. Petitioners have not met their burden of proving by a preponderance of the evidence that they do not owe additional documentary stamp taxes on the real estate transaction at issue here.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent enter a Final Order upholding its assessments as revised in a Notice of Reconsideration dated January 9, 1995, of documentary stamp tax, plus applicable interest and penalties against Petitioners Kenneth and Tina Blume. RECOMMENDED this 23rd day of October, 1995, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD, Hearing Officer 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 23rd day of October, 1995. APPENDIX The following constitutes the undersigned's specific rulings pursuant to Section 120.59(2), Florida Statutes, on all proposed findings of fact submitted by the parties to this case. Petitioners' Proposed Findings of Fact Petitioners' proposed recommended order for the most part is a memorandum of law and does not designate proposed findings of fact. However, the undersigned rules as follows on statements of fact contained within Petitioners' memorandum: Accept that Petitioner Kenneth Blume chose to sign the quit claim deed. No competent persuasive evidence regarding the Clerk of the Circuit Court's directions to Advance Title, Inc. or Petitioners. Uncorroborated hearsay evidence. Accept that Petitioners were not aware of Respondent's hotline service at the time of the conveyance; however, irrelevant. Reject that Petitioners made prudent and reasonable attempts to learn the requirements of Section 201.02, Florida Statutes. Petitioners had constructive notice of the published statutes and rules which were in effect at the time of the conveyance. Reject that the "system" deceived Petitioners. No competent persuasive evidence to support this fact. Reject that the "system" or "state" failed to disclose the law controlling taxes on real estate transactions. Applicable statutes and rules read together with the definition of consideration set forth on the Form DR-219 constitute sufficient notice to Petitioners. The "system" or "state" did not draft the language in the quit claim deed; therefore, the state was not required to include any language relating to the cost of the transaction. The Form DR-219 included a definition of consideration which is consistent with the language in the applicable statutes and rules. Reject that the state added new terms or changed the terms of the agreement memorialized in the quit claim deed. The state was not a party to the agreement between Petitioners. Reject that the system failed to inform Petitioners of "all" the terms in the contract as "offered" by the state. Respondent's assessment does not involve a contractual relationship between Respondent and Petitioners with the Respondent as a "seller" and Petitioner Kenneth Blume as a "buyer." Respondent's Proposed Findings of Fact The undersigned accepts the substance of Respondent's Proposed Findings of Fact 1-28 as modified in Findings of Fact 1-23 of this Recommended Order. COPIES FURNISHED: Nancy Francillon, Esquire Mark T. Aliff, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, FL 32399-1050 Kenneth and Tina Blume 159 W. 29th Court Fayetteville, AR 72701 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Findings Of Fact The individual taxpayers purchased a motel giving not secured by a mortgage on the motel as a portion of the consideration paid to the grantors. The individual taxpayers subsequently conveyed an undivided one-half interest in the motel to 6804 East, Inc., a corporation wholly owned by the individual taxpayers. Although no consideration was recited in the conveyance, the corporation assumed responsibility for 50 percent of the mortgage indebtedness which was stipulated to have been $96,250. Subsequently, 6804 East, Inc. transferred the property to 6804 Motel, Inc., another corporation wholly owned by the individual taxpayers. Again, no consideration was recited in the conveyance; however, 6804 Motel, Inc. assumed responsibility from 6804 East, Inc. for 50 percent of the indebtedness on the property. The Department of Revenue asserts that documentary stamp taxes are due on both of the transfers pursuant to Section 201.02, Florida Statutes, there having been only nominal documentary stamp taxes placed on the documents. The individual taxpayers and 6804 Motel, Inc., controvert the assessment of taxes on the basis that there was no consideration because the individual taxpayers were never relieved of any responsibility for the debt because they fully owned the two corporations and because they had such an equity investment in the purchase that they could not stand aside and see the corporations default. 6804 Motel, Inc. also questions the assessment of the taxes against it as the grantee in the transfer from 6804 East, Inc. In support of their arguments, the taxpayers introduced evidence that the individual taxpayers intended, prior to purchase, to convey an interest in the motel to 6804 East, Inc., and that after the transfer to 6804 Motel, Inc., the individual taxpayers paid all deficit operating expenses for the motel.
Recommendation Based upon the foregoing findings of fact and conclusions of law the Hearing Officer recommends that the petition of the taxpayers in this case is denied and that the documentary stamp taxes, as proposed in assessments M-65 and M-66, together with a 25 percent penalty and 1 percent interest per month on the unpaid tax be assessed. DONE AND ORDERED this 3rd day of August, 1978, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1978. COPIES FURNISHED: Ralph Monroe 7211 North Dale Mabry Tampa, Florida 33614 Maxie Broome, Jr., Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304
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 =================================================================
The Issue The issue in this proceeding is whether the Petitioners are entitled to refund of documentary stamp taxes paid pursuant to Sections 201.01 and 201.08 Florida Statutes.
Findings Of Fact Both Petitioners are limited partnerships validly existing and in good standing under the laws of the State of Florida. (Petitioner's exhibits No. 1 and No. 5.) Sugar Creek Business Center Phase I, Ltd. ("Sugar Creek") As to this Petitioner, the parties have further stipulated: On or about March 27, 1986, Petitioner and First Union National Bank, a national banking association, with its principal office located in Charlotte, North Carolina (the "Lender"), entered into a certain Construction Loan Agreement (the "Loan Agreement"). Pursuant to the Loan Agreement, Lender agreed to make and Petitioner agreed to accept a loan in the amount of $6,300,000.00 (the "Loan") to be used solely for the purpose of paying for the cost of developing and constructing a commercial building in Charlotte, Mecklenberg County, North Carolina. The Lender retained the law firm of Fowler, White, Gillen, Boggs, Villareal & Banker, P. A., Post Office Box 1438, 501 E Kennedy Boulevard, Suite 1700, Tampa, Florida 33602, as its Florida counsel in connection with closing the Loan. Petitioner retained the law firm of Peirsol, Boroughs, Grimm, Bennett & Griffin, Professional Association, Post Office Box 3309, Orlando, Florida 32802, as its counsel in connection with closing the Loan. On or about March 27, 1986, the General Partners of Petitioner executed a promissory note in the amount of $6,300,000.00 payable to Lender (the "Note"), a Deed of Trust and Security Agreement securing the Note in favor of Gibson L. Smith, Jr. Trustee, and First Union National Bank, Beneficiary (the "Mortgage"), and all other loan closing documents pursuant to the Loan Agreement. The Mortgage encumbers only land and the improvements thereon located in Charlotte, Mecklenberg County, North Carolina and was filed in the Public Records of Mecklenburg County, North Carolina on March 27, 1986, subsequent to closing upon the Loan Agreement. The proceeds of the Loan evidenced by the Note and secured by the Mortgage were used solely to develop and construct a commercial building upon the land encumbered by the Mortgage in Charlotte, Mecklenburg County, North Carolina. Florida documentary stamps were purchased from the area office of the Department of Revenue located in Tampa, Florida on May 1, 1986 and affixed to the Note to evidence payment of Florida documentary stamp tax with respect to the Note in the amount of $9,450.00 pursuant to Sections 201.00 and 201.08, Florida Statutes. (Petitioner's Exhibit No. 1) John Simpson, Jr., Esquire of Peirsol, Boroughs, Grimm, Bennett and Griffin, P. A. represented Sugar Creek in the purchase of property and the acquisition and closing of construction financing for improvements. The loan documents were mailed to him. He gave them to his client in Orlando, who signed and delivered them back to him in escrow. Simpson took the documents to Charlotte, North Carolina, for the closing on or around March 27, 1986. The purchase of property and loan closed simultaneously and the funds were disbursed in Charlotte. (Testimony of John Simpson, Jr., Esquire) One Dezavala Center, Ltd. As to this Petitioner, the parties have stipulated: On or about July 30, 1985, Petitioner and the First National Bank of Chicago, a national banking association, with its principal office located in Chicago, Illinois (the "Lender"), entered into a certain Construction Loan Agreement (the "Loan Agreement"). Pursuant to the Loan Agreement, Lender agreed to make and Petitioner agreed to accept a loan in the amount of $6,600,000.00 (the "Loan") to be used solely for the purpose of paying for the cost of developing and constructing four commercial buildings located in San Antonio, Bexar County, Texas. The Lender retained the law firm of Holland & Knight, 1200 Brickel Avenue, Post Office Box 015441, Miami, Florida 33101, as its Florida counsel in connection with closing the Loan. Petitioner retained the law firm of Peirsol, Boroughs, Grimm, Bennett & Griffin, Professional Association, Post Office Box 3309, Orlando, Florida 32802, as its counsel in connection with closing the Loan. On or about July 30, 1985, the General Partners of Petitioner executed a promissory note in the amount of $6,600,000.00 payable to Lender (the "Note"), a Deed of Trust, Mortgage, and Security Agreement securing the Note in favor of Harry M. Roberts, Jr., Esquire, Trustee (the "Mortgage"), and all other loan closing documents as required under the Loan Agreement. The Mortgage encumbers only land and the improvements thereon located in San Antonio, Bexar County, Texas and was filed in the Public Records of Bexar County, Texas on August 1, 1985, subsequent to closing upon the Loan Agreement. The proceeds of the Loan evidenced by the Note and secured by the Mortgage were used solely to develop and construct four commercial buildings on the land encumbered by the Mortgage in San Antonio, Bexar County, Texas. Florida documentary stamps were purchased from the area office of the Department of Revenue located in Miami, Florida on August 5, 1985, and affixed to the Note to evidence payment of Florida documentary stamp with respect to the Note in the amount of $9,900.00 pursuant to Sections 201.00 and 201.08 Florida Statutes. John Simpson, Jr., Esquire, also represented One Dezavala in the closing for the acquisition of the property and the loan. The note and other loan documents were signed in Orlando by Petitioner's General Partners. The documents were given to the lender's Florida Counsel in escrow, who sent the documents to the lender's Texas counsel. Closing on the acquisition of property and the loan took place simultaneously in San Antonio, Texas and the funds were disbursed in San Antonio. (Testimony of John Simpson, Jr., Esquire) Photocopies of the notes and stamps were admitted as Exhibits No. 3 and No. 7. The parties, by oral stipulation at the final hearing, agreed that before the Comptroller could be compelled to issue a Final Order authorizing the refund of such money as may properly be found owing Petitioners, Petitioners would make available to the Comptroller or his representatives, for inspection, cancellation and/or obliteration, the original documentary stamps forming the basis for the request for refund.
