The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1856-1888, 1879-03-15
THE PACIFIC
OOmmfrtialA0OGrtis
S4TURDAY y. MARCH Is.
Sapreme Court Of the Hawaiian Islands,
January Term, 1879.
H Hieksll & Co. vs.. G. H. Lace. Tax Collector.

4fFffs Oh JnoN 0hn Nc'afgs I.S-
This Is an action 10 recover back the amour, Of a
tax CT OF taxes assessed last year on the plaintiff
Tor personal property in his possession by the Assessor
q the District Of Honolulu, and paid by them uhe
p~lnintiHsl under protest to the Collector Of the said
district.
The complaint sets forth that the defendant has
collected and received the sum Of S3,S70.93. as taxes
Tor the current year. assessed on 4" certain debts
payable to the plaintiffs, which said debts are Sc
cured By mortgages on real and personal property in
this Kingdom. on which said mOrtgaged property
taxes for the current year, were assessable and col
Ieciible BY law without deduction or allowance by
reason OF said mortgages or debts; and likewise on
certain other debts payable TO certain persons, not
resident in this Kingdom, for which non-residents
these plaintiffs are agents"
At the hearing il was made to appear that the
whole capital sum, which these plaintiffs aver has
been illegally taxed, is S5l6, 1924, divided in
the following way S434,253.2O debts due plaintiffs
on their cEu account, and SS1 ,S73.04 amounts pay
able to non-residents, for which the plaintiffs are
agents.
A. s. Hartwell for the plaintiffs
L. The statute requires Gd Uaf9rcm and certain
specific taxes on property, and certain personal taxes
on polls and for roads and schools, otherwise, there
is no personal taxation. Il does not provide for de-
Quoting mortgages from the value of mortgaged pro
perry, but expressly taxes real estate for It's full cash
value, irrespective Of any mortgage. Mortgages
have value, but only as they represent the value Of
the property mortgaged, which Is taxed, and the
soiveney and ability Of the m0rtgagor, TO pay which
is not taxable. All values, as for instance, skill in
business, are not taxable, but except the personal
aud specific taxes above referred TO, only tangible
property. A mortgage does not duplicate or create
tangible and taxable property, for if 1t did, it would
be easy 10 accumulate. The view that property
taxed in one form should not be taxed in another, is
taken by this Court in tie recent cases Of Waikiki
Sugar Co. W. Luce, and Haiku Co. rs. Luce, in
which q tax was not sustained on shares in agricul-
t1ral corporations, on the ground the. the tax on
the corporate property was substantially a tax On
the shares, and this although the statute requires
taxation Of . shares in corporations" and does lot
- g. 1o1nrFen t. - -
The inference, in cases Of doubt Is, that duplicate
taxation is not i~ntended-Cooley on Tax p. 165;
and that tax laws are not extended TO objects not
clearly expressed 10 be within heir intent-Ib. P.
20I. The statute enumerates moneys, notes Of hand
and unsecured debts, but not mortgages or secured
debts, although before the amendment Of 1876, " all
mortgages" were expressly mentioned as taxable.
Civil Code, Section 4S3. This change and omission
are significant. The maxims ezprCssio unius and
eTPTessEm facit particularly apply to legislative acts.
Broom's Max, p. Cos. If the legislature meant TO
tax mortgages, it should have expressed such inten-
tior. n mortgage may or may not be accompanied
y q prOmissOry note; il may provide for future
advances. debts due or not due, or be q second or
later mortgage. a taxable value should not be
made Of each new mortgage
An unsecured debt may be taxed, while q secured
debt is net taxed, from the view that the latter rep
rssents the tangible and taxable value Of the mort
gagged taxed property, aud indicates that money has
probably been used to purchase or improve such
taxed property; while the unsecured debt is more
likely to be for articles consumed in use for services,
or other untaxable or untaxed equivalents. The
uoTtgagor, first or last, pays the tax on the mort
gage, as well as on the mortgaged property, because
rates Of interest teud to be higher if taxes are de-
Quoted from the value OF the mortgage.
After much litigation in the California Courts,
they have finally settled that mortgages are not tax
able property. This view is strongly approved by
able writer's, and would promote industrial interests
by lessening burdens on the borrowing and produc-
ing classes-5l Cal, 24S, Arts. in Att Mon. Oct.
and Dec, 1878.
III. Alien non-residents, MARRIAGES are not taxable
for debts owing to them here, secured by mortgages
On property in this Kingdom, on the principle,
mobiIiG s~equuHtuT PeTsoHdm, as well as on the mean
ing Of the Constitution, Art IA, requiring, each
member Of society" (not foreign non-residents) to
contribute to its burdens. In Hackfeld vs.. Min.
Fin. 8 HaW. 292, this Court held that personal pro-
perty out Of the Kingdom IS not even taxable TO its
resident owners Ia State Tax on Foreign-Held
Bonds, Is Wall. 30, the Supreme Court Of the U.
s held, that alien nonresident owners Of bonds
secured by mortgage on real estate in Pennsylvania,
were not taxable therefor, and that, not solely on
constitutional grounds Of interfering with commerce,
but, as the Court said, because, debts can have no
looality-separate from the parties to whom they are
owed and, that, Z" the property mortgaged
was taxable there. II taxation is the eorrelatiye Of
protection, the taxes which it there paid were the
correlAtiye for the protection" The decisions in
Il VI, l5s. % n. Y, pa, and 81 Barb. 352, cited
IN that case in favor Of the tax, did not cause the
Court 10 sustain the tax. The Courts in Cal. Ia.
Nd. New. and N j., appear to have taken Ike
views. Cooley on Tax. P. ?: 10, 269, 81 Passim'
1llllaE4 OF i p p lDl, lJl.
Money collected in England from debts owing
there to a British-born subject, who died domiciled
abroad. and bequeathed to 1egatees in Scotland, pays
no legacy tax, on the ground that, "H a testatcr
has died out Of Great Britain with n domicile
abroad, although he may have personal property
that is in Great Britain at the time Of his death, in
contemplation of law that property Is supposed to
be situate where be was Lomiciled.' Per Lord
Campbell in Thomson vs. The Adv. General, II CL.
AID Fin. %.
OpisioH ef tie Curt By Hcg4Ts, j.
Section ASS Of the Civil Code, as amended Sept.
10Th, 1876, reads as follows AL personal pro
perry Of whatever Kind, not subject to specific taxes,
or specially exempted from taxation, shall be subject
20 an annual tax Of three quarters Of one per cent.
upou the full cash valuation thereof" and the same
section proceeds to illustrate what is personal estate
as follows The term personal property shall be
construed 10 include all household furniture, goods
and cha;teis, wares and merchandise, al ships and
vessels, whether at home or abroad, all moneys,
notes Of hand, unsecured debts, growing crops,
cubic stocks, stocks in corporations, and every spe-
cies Of property not included in real estate"
The Constitution (Artiele 14) reads as follows {:
.Eash member Of society has q right to be protected
by IL, in the enjoyment Of his life, liberty and pro-
perty according 10 law; and, therefore he shall be
obliged TO contribute his proportional share to the ex-
pense Of this protection, and give TO his personal ser
vices. OF an equivalent when necessary; but 10 part
Of the property Of any individual shall be taken
from him, or applied to public uses, without bis own
consent, or the enactment Of the legislative
Assembly"
-Ius il will he seen, that our Constitution d.
rectly asserts, that the obligation TO pay taxes IS in
consequence Of and reciprocal to the protection,
which the Individual receives from the Government
ss regards his life, liberty, and property, and in
this, il corresponds with the dietG Of text-writers
and the decisions Of the Courts upon the matter.
See Vattel Book /, Chapter 20, Cooley on Taxation,
page Il.
Il Is true, that the mere right Of a foreign creditor,
70 receive from his debtor within the State, payment
Of his demand cannot be subjected TO taxation, for
this is a right personal to the creditor, where he
resides.
The creditor cannot be taxed because be is
nOt within the jurisdiction and the debts
cannot be taxed in the debtors hands, for
they are not his property in any sense;
they are the obligations Of the debtors and possess
value only in the hands Of the creditors. See Cooley
on Taxation. p. p. 10 and 1e, and the cases cited in
the note, and more especially the case Of State Tax
on Foreign-held bonds, IS Wall. 500 TO 3l9 and 800.
Though n personal tax cannot be assessed against
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