The record-union., 1895-09-27
IS A MATTER OF INTERPRETATION.
The Issue Between the Attorney-Gen-
eraI and the Equalizers.
Statement of Both Sides-The Interpre-
tatlon Each Gives to the Law
Regarding Solvent Credits.

tween the Attorney-General ana the
State Board of Equalization.
It involves a disagreement as to tho
construction of board order and Sec
tion of the Political Code. 1t Is, OF
course, an honest difference of construc-
tion. It is easily stated, so that the
reader can apply his own judgment to
the whole matter. Whether it will have
judicial determination cannot of course
be stated.
The State Board of Equalization or
dered a certain percentage OF reduction
of assessment rolls in certain counties
as it deemed it wise to do. The order OF
reduction as quoted by Attorney-General
Fitzgerald read, in the case of Tehama
County:
THAT the entire assessment roll or
book for 1895 of the county of 1ehama be
decreased by 10 per centum from the
valuation from all property listed therein.
and make the assessment conform TO the
true value in money Of the property con-
tanned on SAID roll, except money ana
Eolvent credits"
The Auditor of Tehama County asked
the Attorney General whether that means
reduction on mortgages. The chief law
officer replied that it does. The reasons
he gave he set forth as follows:
''First-That they, together with all
other secured debts, are, for the purpose
of assessment and taxation, To be deemed
and treated as an interest in the property
affected thereby.
'Second-Because mortgages and other
secured debts are not solvent credits
within the meaning OF Subdivision OF
Section 36l7 of Political Code.
"It therefore follows that as mortgages
q nt h a
in the exception money and solvent cred
it's contained in the order referred TO,
their assessed valuation must be reduced
as therein provided for.'
To this ruling the State Board of Equal
ization takes exception and holds that it
will make material difference in the tax
to be collected if the Interpretation OF the
order made by the Attorney General is
10 prevail. The board has accordingly
issued an order to County Auditors en-
bodying its views and has instructed
them to follow the rule laid down by the
board, namely:
First deduct the percentage ordered to
be taken of from the assessment OF mort
gagged property, and then the deduction
is made from the decreased assessment,
and then have the change correspond
ingly made in the total-value column.
The board adds that If this is not done
there viii he i less amount of taxes raised
than is necessary for State purposes.
In brlef, then, the Attorney-General
holds that the ordered reduction should
be made upon the assessed valuation of
mortgages, and the Board of Equaliza-
ton protests, saying No." that where
the valuation OF the property undsr
mortgage exceeds the call OF the mort
gage the reduction is TO be made upon the
assessed value of the property. But
where the mortgage interest and the
4 xruft & hn a.,
same, both are reduced, and in that case
the property-owner Is really assessed for
nothing.
The board gives this illustration TO en-
phasize Its view. Suppose a tract to be
assessed for 81, 900 and 10 be subject to q
mortgage for 500, and the order is to re-
duCe 10 per cent. That would mean to re-
duce the value of tie tract to 500, making
tho total assessment $500. Then the
mortgage interest, 500, being deducted
would leave e40O upon which taxes would
be levied on the property; but there
would be 40 reduction OF the mortgage
But II the mortgage was for $3.50, the 10
per cent. reduction would bring the
property value 10 $500, sum below the
call Of the mortgage, and consequently
the owner OF the tract would be assessed
1or nothing, and the mortgage interest in
the land would be reduced to $500.
In other words, the board holds that a
thing having a liked value is not capable
OF reduction in assessed value. For in
stance, twenIy-dollar gold piece is $50,
and cannot be reduced in assessment be-
low $50.
But the Attorney General must be
understood as saying TO ali this, as we in
terpret his letter to the Tehama Auditor,
the order OF the board is the thing con-
strued. Ii reads to decrease valuations
by 10 per eentum OF all property listed
on the rolls except money and solvent
Credits" Now, mortgages are not solvent
credits, because for assessment purposes
they are to be treated as an interest in the
property, therefore they fall within the
exception aud their assessed valuation
must be reduced. But besides the Po-
htlcal Code, Section 36l7, subdivision 8,
reads:
''The term credits means those solvent
debts not secured by mortgage or trust
deed, owing 10 the person, hrm, corpora
ton or ASSOCIATION assessed. The term
debts means those unsecured Liabilities
owing by the person, firm, corporation
or association assessed to bona tide resi-
dents OF this State, or firms, associations
or corporations doing business therein;
but credits, claims, debts and demands
due, arising or accruing for or on ac-
count OF money deposited with savings
ana loan corporations, shall, for the pur-
pose OF taxation, be deemed and treat ed
as an interest in the property OF such
corporation and shall not be assessed to
the creditor or owner thereof"
SO the letter OF the Attorney General Is
understood 10 hold that the law directs
that mortgages are not to be included in
the matter OF assessment as solvent debts.
they being an interest in the property
upon which they are a lien, and there
1ore the order OF the board excepting sol
vent credits does not except mortgages.
Ii may be here stated that the ConstItu-
ton OF the State reads: "A mortgage by
which debt is secured shall, for the
purposes OF assessment and taxation be
deemed and treated as an interest in the
property affected thereby" (Art. KILL,
See. A.
But the reply of the State Board oil
Equalization in support of its view is
TINS, 10 wit: The section Of the Political
Code quoted by the Attorney General
simply defines another class OF "credlts;N
such solvent debts as are not secured by
mortgage or trust deed, etc. But this
does not say or mean that mortgage is
hot 4 solvent credit II is on its face like
the twenty-dol!ar piece, a solvent thing
a value OF itself IL assesses itself so long
as the land does not fall IN valuation be-
low the call OF the mortgage given to Sc
cure the payment Of the note held as eyi-
deuce OF the debt secured
This states both sides of the case. i
clearly sets out the issue or difference o
opinion between the Attorney Genera
and the Board OF Equalization. And there
the matter rests.
n Long, DrRwn-Out Case.