85 N.Y.2d 663 (1995)
A taxpayer cannot recover a municipal fee after the statute authorizing it is invalidated unless the payment was involuntary, meaning made under duress or coercion to avoid interference with property.
Summary
Video Aid Corp. paid the Town of Wallkill $27,000 in sewer and water tap-in fees to obtain a building permit for renovations. These fees were later declared unconstitutional. Video Aid sued to recover the fees. The Court of Appeals held that Video Aid was not entitled to a refund because the payment was voluntary. The court emphasized that Video Aid failed to register a protest when paying the fees and did not demonstrate that non-payment would have interfered with their immediate possession of the property. This case clarifies the requirements for recovering illegally exacted municipal fees in New York.
Facts
Video Aid Corp. sought a building permit from the Town of Wallkill for renovations to expand its business. The town required Video Aid to pay $27,000 in sewer and water tap-in fees pursuant to town resolutions. Video Aid paid the fees without protest in order to avoid delays in obtaining the permit. The resolutions imposing the fees were subsequently declared unconstitutional. Video Aid then sued the Town to recover the illegally collected fees.
Procedural History
The Supreme Court granted Video Aid’s motion for summary judgment, declaring the resolutions unconstitutional and awarding Video Aid a judgment for the fees paid. The Appellate Division affirmed. The Court of Appeals reversed the Appellate Division’s order to the extent that it directed a refund, holding that Video Aid’s payment of the fees was voluntary, and therefore, not recoverable.
Issue(s)
Whether Video Aid established that nonpayment of the tap-in fees would have interfered with their immediate possession of the property, thus supporting a claim that the $27,000 fee was paid under duress and recoverable despite the lack of formal protest.
Holding
No, because Video Aid failed to demonstrate that non-payment of the fees would have interfered with their immediate possession of the property or business operations; therefore, their payment was considered voluntary and not recoverable.
Court’s Reasoning
The court stated that the payment of a tax or fee cannot be recovered subsequent to the invalidation of the taxing statute or rule, unless the taxpayer demonstrates that the payment was involuntary. The court stated that payment under express protest indicates that a tax is not paid voluntarily. Absent protest, the failure to formally protest will only be excused where the payment is necessary to avoid threatened interference with present liberty of person or immediate possession of property.
The court reasoned that the absence of any evidence of actual duress and the failure to register any formal protest at the time of payment was determinative of the voluntary nature of the payment. The court found that anticipating disruption of their renovation schedule was insufficient to constitute duress or coercion excusing formal protest. The court distinguished this situation from cases where a party is “wholly or partly prevented from engaging in business unless the illegal exactions were paid.” The court found no evidence that Video Aid’s business would be impaired if they challenged the tap-in fees. The court noted that “a simple payment ‘under protest’ for the taxpayer preserves its challenge and for the municipality alerts it, at the time of receipt, to the uncertainty of those revenues. Short of that simple, unequivocal step…a taxpayer may recover an illegal payment only where the taxpayer establishes that payment was made under duress, meaning more than business or economic inconvenience.”
In dissent, Judge Bellacosa argued that the Appellate Division’s order directing reimbursement was proper based on supportable findings and inferences that the payment was unlawfully exacted by the town. The dissent stated that the payment was made involuntarily and under legal duress, and that the majority’s view of the record was too narrow.