The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1881-12-24
E6d. tie Democratic Adrocate.
TAXATION OF MORTGAGES

we IdA CTeOltS anu ueUtS IF1hdt6
are taxable in this state. A'promissory note
is private security and it is taxable. Sup
pose it to be note of a man worth million,
and the note be for a thousand dollars only.
| That note is taxable in my hands as property;
the rich mans promise is y. private security
and is taxable. Suppose the note be on q
| poor man, not absolutely insQlvent, but barely
solvent-it is still taxable. The note in either
| case is taxable. Suppose the poor man, to
secure me from all possible loss, goes to the
rich man and gets him to endorse the note. |
am then absolutely safe, the note is secured
and is taxable as ever. My remedy is an &C
| ton against both the poor man and the rich
in order to get my money. A judgment
! will be a lien to the amount of the note and
interest and costs on the property, real and
personal, of the maker and endorser-I can
! collect from either But now suppose the
poor man, in addition to giving me the rich
mans name on his note, puts his farm on it
that Is gives me a mortgage on his farm. L
am now secured beyond the remOtest posslbll-
ity of loss. But see the magical effect. L do
not pay any more taxes on the note. It's now
u mortgage debt and exempt from taxation.
a single omission on the part of the farmer,
if he omits to pay his interest, to insure his
house, to pay his taxes, &C., makes the whole
sum due. Suppose he borrows the $1,000 Tor
five wears, and at the end of one year pays no
interest, why can fOreclose my mortgage and
sell him out. | can at the same time sue him
on his note land if get Judgment it is a
lien on all his property and can sue the man
who endorsed his note. Having given me all
these advantages by mortgage, he adds this
one more, he saves me paying any taxes on
$1,000 of my property. What does this amount
to? Let's see. Let us suppose the tax is ten
dollars on the $1,000. On my 81 600 note L
pay So ! get $50 from the maker as inter-
est. NV note property pays me, then, 500
profit Now | have all the chances of the
maker and indorser;s solvency to run. but he
says You shall be made safe, and gives me II
mortgage on his farm to secure the note.
What do get now? First, he pays me SIX
months interest in advance-S3O. At the end
of six months that has earned 80 cents-equal
to $50 80. Then $50 is paid. AT the end of
the year the $50. 80 has earned 81. SO, so have
made off Of my 81, 600, secured by Il mortgage,
S62. 10 clear, for pay no tax Oh mortgages
SO | make (supposing the tax to be $40 on a
$1,000 S12.7a clear by lending on mortgages
beyond what make lending on note, no
matter how well it is secured,
Is it not somewhat unjust to those who pay
taxes on prOmissory notes, no matter how I'M
certain their prospect of getting their money
is, that shouldbe able to make so much more
than they and have no risk of loss at all? Is
it not somewhat unjust that because the lend
err security is made unquestionable, that that
added security should convert his taxable pro-
perry, the endorsed or unendorsed note, from
a taxable into 4 non-taXable?
As matter of legal fact, the property is the
note or bond; the mortgage is only the Sc
curly for such. 1t is, in fact, endorsing the
note or bond with your farm, instead of your
rich neighb0r' name. When the money bor-
rowed Is paid back; when the note or bond is
+ln nrtCr aCrfll.
THE man who gives the mortgage) is by the
| courts looked on as the substantial owner of
| the property. He pays taxes, assessments,
! &C.. The debt due is all the mortgage (the
lender) can claim or demand. In the words
a LAWYER would use, the legal estate is in the
MORTGAGE to secure the sum loaned, and for
no other purpose; and that paid, the legal es-
tate. again vests i'll the mortgagor, which
means that for the time being the owner has
lost the ownership of his land in accordance
with and by legal rules; but i'll a court of con-
scieuce-equity-he has only lost 50 much of
it as will pay his debt. When the debt is paid
his land is free So truly is the land mort
gagged still the mortgagor 5, that it may be
taken under Judgment, or may be again
mortgaged, or may be sold or given away, or
part kept and part sold, or it may be willed
away; only it is always subject to the first re-
corded mortgage, and the man who holds that
may. sell what is necessary to pay himself.
The mortgagor may not want to lose his pro
perty, but if the Judgment creditor pays the
mortgage debt, the land must go cleared OF all
liens of the mortgagee. If you will read the
cases of Ford ct ais, VS.. Philpot, 5 H. and
j., 312; Kelleys case, 81 Md, 421; Gnatt's
case, SO Nd, lis, you will see that all have
said is good law.
If the mortgagor still retains the use and
benefit of the farm for he bOrrows the money
to improve it, it is only fair he should pay the
taxes on it at its real value, and he does. If
he is enabled to make more by using the
lenders money, it is only fair he should pay
him for its use, and he does III interest If it
is profitable to lend money on private securi-
ties it is only fair that-a man should pay a fair
tax on them, and he does. If, on mortgage
securities, man is able to make more money
and run less risk, it is only fair that he pay
. more taxes on such securities than on others.
Yet so far from this he pays no taxes. Is this
just?
The constitution requires all property to be
, taxed. 1t, the law, says debts and credits are
property. A prOmissory note or bond is. a
private security. 1t is taxed; it is property.
secured bevond all possible failure, is not
taxed. Why the constitution says property
must be taxed. The Legislature says notes
secured by mortgages are not private securi-
ties are not taxable; are not property.
The law is this: the mortgage is but the Sc
curity for the debt The promissory note is
the evidence of that debt. They go together
t as one thing Though you may proceed to fore
close the mortgage and to sue on the note at
the same time or you may proceed against the
maker and endorser of note at the same
time, though You can only collect the debt
once) therefore, if you assign the one it carries
with it the other. If you have ten notes, Sc
: cured by one mortgage, each note holds the
mortgage. The mortgage security belongs
alike to ALL A payment of the notes releases
? the mortgage. The mortgage being nothing
, more than endorsing your note with your
farm, if | feel safe enough l may release the
= mortgage and simply hold your note (which is
, then made taxable), but can not give up the
note and hold the mortgage That would be
{ as if a man said here, don't claim anything
from you on your note, and then would sue a
friend of yours who had endorsed the note he
had given up to you.
Read for this law Byles VS.. Tome, 80 Nd,
5 461, Tubman VS.. Lowkamp, 43 Nd, AIS,
, McCracken's appeal, 43 Nd, All, also %
Nd, 178, A Nd, 879.
r don't admit that credits and debts are in
accordance with a true public policy, or with
constitutional law rightly understood, taxable;
in fact, | do assert that public policy is oppo-
sed to such taxation, and especially is the
taxation of mortgages against sound public
policy; and that the taxation of credits and
t debts is of questionable legality in accordance
With sound constitutional principles. But with
your favor | will write you again on this phase
!, of the subject. The point now is, credits and
, debts are taxed. Where is the justice to be
found in exempting mortgages, the most val
liable sort of private security, the most salts
factory sort of debts, if bond on poor man
is taxable. In the name of justice why ex-
empt the bond or note of millionaire because,
forsooth. it is more absolutely secured by a
mortgage on his marble front house and city
lot.
Where is the justice of taxing the poor man
ON the $500 he has in his neighbours notes of
hand, that are not discountable in the bank,
and exenptipg the rich mans $50, 00Oin notes,
that are not only gilt-edge, but are secured by
mortgages on half the township. | ask where
laws, s'~e'F Jusr TAx4TioN.
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