In Re the Appraisal Under the Transfer Tax Act of the Estate of Hoople ( 1904 )

It is a fundamental principle of our jurisprudence that no action will lie against a sovereign state, or any of its officers, to enforce an obligation of the state without express legislative permission (People v. Dennison, 84 N.Y. 272;Lewis v. State of N.Y., 96 id. 71; Locke v. State ofN Y, 140 id. 480; Smith v. Reeves, 178 U.S. 436; Flagg v.Bradford, 181 Mass. 315); and when a state does abdicate this attribute of sovereignty and permits itself to be sued, the citizen who benefits by such an act of grace acquires no vested right thereby, but simply a privilege voluntarily granted by the state, which may be hedged about with terms and conditions, and may be withdrawn as freely as it was given. (Beers v.Arkansas, 20 How. [U.S.] 527; Parmenter v. State of N.Y.,135 N.Y. 154; Baltzer v. North Carolina, 161 U.S. 240;Railroad Co. v. Tennessee, 101 id. 337; Railroad v.Alabama, Id. 832.)

In the light of these principles it is obvious that the statutes under discussion (Ch. 399, L. 1892; ch. 284, L. 1897; ch. 382, L. 1900) invested the respondent with no absolute right, but conferred upon him a mere privilege, the extent and duration of which depended entirely upon the language conferring it.

When this tax was paid, chapter 399 of the Laws of 1892 was in force. By section 6 of that act it was provided that when a transfer tax had been erroneously paid into the state treasury, the comptroller was authorized upon satisfactory proof to require the amount of any erroneous or illegal transfer tax to be refunded to the persons who had paid the same, provided, however, that all applications for such refunding should be made within five years after the payment of the tax. Upon the codification of the Tax Law (Ch. 908, L. 1896) this provision, without change, became section 225 of the statute. In 1897, by chapter 284 of the laws of that year, this section was so amended as to confer upon the surrogate having jurisdiction of the proceedings, power to modify or reverse an order fixing a transfer tax, by directing a refund of the amount of any moneys paid in excess of the tax as fixed by the order of modification or reversal, but this new privilege was coupled with the condition that no application for such refund should be made after one year from such reversal or modification. It is to be noted that while the provision just referred to did not limit the time within which an order fixing a transfer tax could be modified or reversed, no application for a refund of the tax could be made after the lapse of a year from the time of such modification or reversal. Thus the law stood until April 11th, 1900, when chapter 382 of the statutes of that year inaugurated another change to the effect that, if within two years from the date of the entry of an order fixing a transfer tax such order should be modified or reversed by the surrogate having jurisdiction of the proceedings, any moneys paid on account of such tax in excess of the amount fixed by the order as modified or reversed, should be refunded to the persons who paid the same, but that no application for such refund should be made after one year from such reversal or modification.

The tax herein was paid in November, 1895. The law then in force (Ch. 399, L. 1892) gave the respondent five years in which to apply for a refund of any part of the transfer tax erroneously paid. This period had not expired when the amendment (Ch. 284, L. 1897) went into effect, apparently providing for an unlimited period in which to apply for a modification or reversal of the original order, but requiring the application for the refund to be made within one year after such modification or reversal. Then came the present statute which, as we have seen, limits the periods within which both the application for modification or reversal and for a refund must be made.

In October, 1903, the respondent applied to the surrogate of Queens county for an order modifying the original order which fixed the transfer tax herein. Nearly eight years had then elapsed since the entry of the order fixing the tax, and the comptroller insisted that the surrogate was without jurisdiction. This objection was overruled and the order of modification was granted. In affirming the decision of the surrogate the learned Appellate Division applied the rule that statutes of limitation are purely prospective in their effect, unless a contrary legislative intent is declared in express terms or by necessary implication. We think the rule invoked has no application to the statutes under consideration, for they are not mere statutes of limitation; but, even if it had, it would not help the respondent.

By section 6 of article 7 of the State Constitution it is provided that "neither the legislature, the canal board, nor any person or persons acting in behalf of the State, shall audit, allow, or pay any claim which, as between citizens of the state, would be barred by lapse of time." An action for the recovery of money paid by reason of an illegal or erroneous tax is regarded as an action for money had and received to which the six years' Statute of Limitations applies. (Brundage v. Village of PortChester, 102 N.Y. 494; Trimmer v. City of Rochester, 134 id. 76.) As the claim here presented was one which, as between citizens of the state, would have been barred by lapse of time, it seems clear that the comptroller could not have audited, allowed or paid it, even if the two years' limitation in the statute of 1900 did not apply. (Gates v. State of N.Y.,128 N.Y. 221.)

It is to be observed, moreover, that if the statute of 1900 with its two years' limitation is to be treated as purely prospective, the same test must be applied to the act of 1897, in which event the respondent is relegated to the statute of 1892 with its five years' limitation, which had elapsed by more than three years before he sought relief.

The case of Parmenter v. State (supra), relied upon by the respondent, does not conflict with these views. In that case the claim was presented after the state board of audit had been abolished and the state board of claims had been created. There was no limitation of time within which a claim could be presented to the board of audit, but the act creating the board of claims limited its jurisdiction to claims which had accrued within two years before they were filed. As Parmenter's claim might have been filed at any time with the board of audit, but had accrued more than two years prior to the creation of the board of claims, it was held that the change operated to deprive him of a tribunal in which his claim could be presented, and, therefore, the constitutional provision above referred to had no application.

Without further discussion of the subject we conclude that the order appealed from should be reversed and the application denied, with costs.

CULLEN, Ch. J., GRAY, O'BRIEN, MARTIN and VANN, JJ., concur; HAIGHT, J., absent.

Order reversed, etc.