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Volume 4 - Opinions of Counsel SBEA No. 107

Opinions of Counsel index

Taxes (refund) (duplicate assessment) - Real Property Tax Law, § 556:

Where taxes are paid on the basis of a duplicate assessment, which is illegal and void, and such payment was due to a material mistake of fact as to the validity of the tax, the payment is not voluntary, and taxes so paid may be refunded even though not paid under protest.

Our opinion has been requested as to the authority to cancel and refund certain town, county and school district taxes which were levied and collected on the basis of a duplicate assessment. Specifically, the owner of the real property in question has paid two identical tax bills for the same parcel of land since 1958, and he has now requested that the prior years’ tax rolls be corrected and that refunds for each year be granted to him.

It is clear that subdivisions (3) and (5) of section 556 of the Real Property Tax Law authorize the county legislative body in certain specified circumstances to make refunds of town, county and school district taxes which have been levied and collected on the basis of an illegal assessment. In the case of the duplicate assessment, the assessors, having once assessed the property, have no authority to assess the second time. A tax imposed under such conditions being without authority in law, is illegal and void (Aetna Insurance Company v. Mayor, et al., 153 N.Y. 331, 47 N.E. 593) . The extra-jurisdictional act of the assessor is clearly an illegal assessment, and payment having been made on the basis of such illegal assessment, it is appropriate to consider whether the provisions of section 556 are applicable.

A problem, however, exists in regard to the question of whether payments which have been made on the basis of the duplicate assessment have been made voluntarily. The law is well settled that where taxes are paid by one who was not under legal duress to pay the same, then such payment is considered to be voluntary and the taxes so paid cannot be refunded unless they were paid under protest (see, Mercury Machine Importing Corporation v. City of New York, 3 N.Y.2d 418, 144 N.E.2d 400, 165 N.Y.S.2d 517, and cases cited therein) . However, while payment under protest is clearly notice of involuntary payment, it is possible to show that payment was not voluntary even though it was not made under protest. Thus, where payment is made due to a material mistake of fact, namely, where it can be presumed that payment would not have been made if the facts were known at the time of the payment, such payment is not voluntary and the taxes so paid may be refunded (Adrico Realty Corp. v. City of New York, 250 N.Y. 29, 164 N.E. 732; Tripler v. Mayor et al. of New York, 125 N.Y. 617, 26 N.E. 721; Redmond v. Mayor of City of New York, 125 N.Y. 632, 26 N.E. 727; Matter of Village of Delhi, 201 N.Y. 408, 94 N.E. 874).

Thus, in Mercury Machine Importing, supra, it was held that no recovery of taxes could be made without protest, but that the menace of the tax lien with penalties added for a delay constitutes a form of duress which obviates the necessity of a formal protest. In Conklin v. Board of Supervisors of Rockland County, 284 App. Div. 965, 134 N.Y.S.2d 735, which involved a proceeding for a refund of taxes under former section 16 of the County Law and section 56-A, subdivision (1) of the Tax Law, the court stated:

The benefits of the statute extend to all persons who have paid taxes which they were not legally bound to pay, whether voluntary or under duress, provided they have an interest in the property to protect.

However, this principle has also been discussed by the courts in Matter of Cerdan (160 N.Y.L.J., No. 115, p. 17, col. 8 (12/13/68)). In discussing the issue, the court, citing Betz v. City of New York (119 App. Div. 91, 103 N.Y.S. 886), focused on the principle of mutual mistake of fact. The court stated that where neither the assessing unit nor the taxpayer had knowledge of the condemnation of the taxpayer’s land then the assessment and ensuing taxes were based upon a mutual mistake and that it was wholly unjustifiable for the assessing unit to retain taxes based on such an assessment. Continuing, the [Betz] court stated:

In the case of like payment of a tax or assessment not void on its face, knowledge at the time by the payor of facts dehors which make it void, also makes the payment a voluntary one, i.e., a payment made with knowledge that the tax or assessment is void. In each case the knowledge that the tax or assessment is void is the basis on which the payment is declared to be a voluntary one. But where the facts dehors which make it void are not known to the payor, such basis does not exist. There the payment is not voluntary for it can be such only when made with knowledge, either presumed or actual, that the levy is void. Instead of being made in the present case with knowledge of the fact that the tax was void, it was made and received under a mutual mistake of fact on which the validity of the tax depended, and money so paid is also recoverable back (Mowatt v. Wright, 1 Wend. 355; Pitcher v. Turin Plank Road Company, 10 Barb. 436; Thompson v. Otis, 42 id. 461; Kingston Bank v. Eltinge, 40 N.Y. 391; Vanderbeck v. City of Rochester, 122 id. 285; Davis v. Kling, 77 Hun, 593).

It is not clear from this inquiry whether the circumstances for a mutual mistake of fact, payment under protest or duress exist in the situation described. However, if circumstances for correction do exist, then it must also be noted that it is permissible to refund only six years of taxes which have been paid. This limitation is based upon the statute of limitations for an action to recover moneys had and received (CPLR, § 213).

November 21, 1973

NOTE: L.1974, c.177, effective September 1, 1974, enacted a new Real Property Tax Law, § 556 which is a substantial reenactment of former section 556 repealed by such act. This Opinion construes the law prior to L.1974, c.177.