St. Paul daily globe., 1891-02-08
DoNNELLY On TAXATION.

DONNELLY ON TAXATION.
Mr.. DoNNELLY has introduced two
bills on taxation into the senate this
session, both of which have been re-
ferred to the Judiciary committee. One
is called a bill for an act to enforce the
taxation of notes, mortgages and other
instruments, evidences of indebtedness.
1t provides in general that all mort
cages, whether on real or personal
property, shall be presented to the
township assessor of the town in which
the mortgaged property is situated
whoever this officer may be-before the
same are offered for record, and that
this township assessor shall thereup0n
list them for the purposes of taxation.
1t further provides that until this has
been done and a certificate to that eff
feet has been written on the instrument
signed by the assessor it shall not be
entitled to be filed or recorded.
The other bill is called bill for an
act to eQualize taxation. 1t provides,
first, that any property owner shall be
entitled to deduct from the amount of
personal property to be listed by him
for the purposes of taxation all his bona
fide Indebtedness not secured by mort
gage. and he shall be assessed only for
the surplus over such Indebtedness. 1t
provides, in the second place, that all
mortgages shall be taxed in the name OF
the party who owns the same, wherever
he resides, and that the owner OF the
real estate shall taxed for the value
of his equity only. And it finally pro-
videS that in case the owner Of mort
gage does not pay his tax on the same,
the mortgagor, to protect his property
from sale, may pay the tax and deduct
it from the amount of his mortgage debt.
The two laws are really supplement-
ary of each other. and might, perhaps,
have been united in a single bill. The
purpose is to secure the payment of
the taxes on mortgages.
At present mortgages owned by nom
residents, and for that matter, mort
cages owned by anybody who does not
live in the county where they are re-
corded, are not taxed. If man lives
in New York he pays the treasurer of
Ramsey county nothing for the mort
cages which he holds Oh st. Paul prop
erty. If he lives in st. Paul he pays no
taxes on the mortgages he holds on
Minneapolis property, unless he chooses
to list them with the assessor. Mr..
DoNNELLY's bills aim to remedy this
state of affairs. They reduce the real
estate tax to tax Oh the value of the
property, less the incum5rance on it,
and require the owner of mortgages,
whether resident or nonresident. to pay
the tax Oh them himself. This is the
purpose of the measures, and they con-
tain very efficient machinery for accom-
plishing it.
These bills have attracted good deal
of attention, and have caused no little
CONSERVATION among people interested
in the mortgage loan business. If they
become laws. and nonresident mort
gagees have to pay taxes in Minnesota
Oh the mortgages which they own here,
it will reduce the rate of interest they
will receive by the amount of local
taxes, and will discourage capitalists
from sending money to the state for in
veStment on mortgage security. The
justice and the wisdom of this course
have been debated very generally of
late in great many quarters, and the
subject seems important enough to be
considered in the GLOBE. 1t can be dis
posed of very briefly, however, without
any argument on the merits. Mr.. DON-
NELLY'S. bills, in as far as they propose
to tax mortgages owned by non-resi-
dents, and to provide machinery for
that purpose, are unconstitutional, and
it does not make the slightest difference
whether they pass the legislature or
not. They cannot be enforced, and that
is the end of it.
According to the rulings of our SUI
preme court. the state can require as
condition precedent to allowing deed
to be recorded that the taxes on the real
property covered by it must first be
paid When this law was enacted,
WEsTCoTT WILKIN held that it was un-
constitutional, but the supreme court
reversed him. 1t is no disparagement
of the supreme court to say that VEST
CoTT WILKINS opinion was as valuable
as that of the higher court, but the mat
ter had to be adjudicated somewhere,
and the supreme court holding is final.
1t may be taken as settled, therefore,
that MIR. DoNNELLY'S first bill prOvld
ing for the listing of mortgages before
they shall be received for filing or re-
cording is good law, and will be upheld.
The second bill, providing for the taxa
tion of personal property situated in
another state, violates the most ele-
mentary principles of constitutional
law, and any boy who has advanced as
far in his legal studies as the first
page of Blackstone ought to know
it. Adebt has no corporeal residence,
of course, but it has in the view of the
courts technical residence, and that is
the place of residence of its owner. The
state of Minnesota cannot tax personal
property whose Situs is in another state
any more than it could impose a poll
tax on the inhabitants of Nova Scotia,
and hope to maintain it. 1t has no bet
ter jurisdiction in the one case than in
the other, and it is simply waste of
time to bother with bills which have no
basis of legality to apologize for them.
Mr.. DONNELLY may not believe that
this is true. Probably he does not, or
he would not be advocating these meas
ures. But this is where he displays his
amazing ignorance. His scheme has
nothing novel in it. 1t has been tried
over and over again in different states,
and always with the same result. One
would suppose that a statesman would
study up his subject in advance of pub
lie utterances on it; but, since Mr. Don
NELLY has not done this, the GLOBE
begs to refer him to some authorities
where he can get some posthumous
information ON the matter. If he
will read over the cases of Mccullough
VS.. State Of Maryland. 4 Wheaton, page
42S; Kirkland VS.. Hotchkiss, 100 Unite d
States Supreme Court Reports, page
49I, and Cleveland, Painsyille & Ashta-
bula Railroad Company VS.. State of