PROCEEDING under article 78 of the Civil Practice Act (transferred to the Appellate Division of the Supreme Court in the third judicial department by an order of the Supreme Court at Special Term, entered in Albany County) to review a determination of respondents, constituting the State Tax Commission, which (1) annulled a determination of the Clerk of St. Lawrence County, and (2) imposed a mortgage recording tax under section 253 of the Tax Law.
Albert Jakobson for petitioners.
Nathaniel L. Goldstein, Attorney-General (George H. Roth-lauf and Wendell P. Brown of counsel), for respondents.
This is a proceeding under article 78 to review a determination by the State Tax Commission, holding that seven mortgages given by the petitioners to the Canton Savings and Loan Association were subject to a mortgage recording tax under section 253 of the Tax Law.
Between August, 1941, and May, 1950, eighteen mortgages had been given by one or both of the petitioners upon seven parcels of real estate in the village of Potsdam in St. Lawrence County. These mortgages originally totaled $345,000, but by monthly payments they had been reduced to a total of $236,132.10.
Originally, separate mortgages had been given to the Savings and Loan Association upon single parcels of property but the mortgages provided for monthly amortization so that as time went on and the installments of principal were paid, the equity of the owners in each mortgaged parcel increased and then, from time to time, the petitioners borrowed additional sums from the Savings and Loan Association, giving as security in each instance, a blanket mortgage, covering not only the additional equity in the property already mortgaged but an additional parcel or parcels as well.
The State Banking Department commented critically upon this situation, pointing out that it was difficult, if not impossible, to determine how the monthly payments received on the eighteen mortgages should be allocated among the separate parcels of property. To meet this criticism, it was agreed in February, 1951, that the amount of the mortgage indebtedness would be reallocated among the parcels and seven new mortgages would be given, each covering a single parcel. This proposal was submitted to the County Clerk of St. Lawrence County and he ruled that no mortgage recording tax would be required upon the seven new mortgages. Accordingly, the mortgages were recorded. However, upon review by the State Tax Commission, under section 251 of the Tax Law, the County Clerk's determination was annulled and it was held that a mortgage tax was payable. This proceeding is brought to review that determination.
We are constrained to uphold the Tax Commission's determination. The old mortgages were all discharged of record and new mortgages were recorded. It is true that the total
amount of the new mortgages was identical with the total amount of the discharged mortgages, but this fact does not relieve the petitioners of liability for the mortgage recording tax. A recording tax is payable under section 253, by reason of the execution and recording of the new mortgages.
The new mortgages did not constitute supplemental mortgages within the meaning of section 255, which exempts such mortgages from tax. They were not given 'for the purpose of correcting or perfecting any recorded mortgage', nor were they given 'pursuant to some provision or covenant therein'; nor were they 'additional mortgage[s] * * * ...