Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1902-03-20
New Form of Mortgage Leaves
Him at the Post.
ANOVEL PLAN TO ESCAPE THE Law
The New Form of Mortgage Binds the
Borrower to Pay All Taxes Before
They Become Due, Thus Making the
Holder Tax Free,

Where there's will there's a way"
is rule which often proves true, and
which has been exemplified recently in
the plan which has been evolved by
persons who wish to escape the tax
ferret and find it almost impossible
when they actually have taxable hold
ings in the regular way
One result of the work of the tax fer
rets and other extraordinary means
that have been adopted or are being
devised to secure the more complete
taxation of moneys and credits, is that
lenders of money in their turn are de-
vislng new forms of securities that
shall enable them to escape the levies
which ferret methods have suddenly
forced upon them, and throwing a
double burden on the unfortunate
mortgagor A mortgage which is now
coming into use contains. among 9TH
ers, the following stipulation to which
the mortgagor is bound:
TO pay, before they become delin
quent, all taxes or assessments that
may be levied on this mortgage or on
the debt hereby secured or that may
be payable by or chargeable to the
holder hereof, or the owner of the debt
hereby secured on account of such
ownership, by the state of Iowa. or the
county Or local municipality in which
the land is located
The clause which succeeds the
above provides that in the case the
mortgagor fails to pay the tax as above
required the other party may pay it
and it will be added to the principal
with per cent interest thereon to be
collected. When this form is used it
evidently becomes a matter of indiffer-
ence to the lender of money as to how
vigilant the assessors or the tax fer
rets may be for the tax that may be
levied is not charge against him, but
against the borrower, who would not
only pay the taxes on the realty mort
gagged, but on the mortgage indebted
ness as well.
In case the stipulated interest and
the taxes levied on the debt should eN-
coed the rate of interest permitted un.
der the laws of the state there is ev-
cry reason to believe that the above
contract would be held by the courts
to be usurious and therefore invalid. If
their combined amount did not exceed
the legal rate of interest the contract
would probably hold good. These
points and others the courts may be
called upon to determine if this kind
of instrument comes into common use.
The form of mortgage from which
the above quotation is made has one
decided merit. 1t makes absolutely
clear and certain upon whom the bur
den of taxation must fall. 1t shows
| beyond cavil that it is the borrower
and not the lender that is to pay such
tax With the old form of security
| this has been a subject for dispute
The tax was assessed against the len
der-if assessed at all-and was sup,
posed to be paid by him. Neverthe
/ less, there were many who contended
with much reason that The borrower
actually paid it in the higher rate OF
| interest which the lender was bound
to exact by reason of the tax.
In spite of the strong showing that
could be made for this view of the
case there were few borrowers who
would not have been willing that notes
and evidences of debt should be eX.
empt from taxation. So long as it was
not 80 written in the bond" they
could not realize that it was really
they upon whom such taxation must
finally fall. They wanted to sec
money made to bear it's share Of the
burdens" etc, oblivious of the fact
that when money was loaned it car
rier it's share Of the burden directly tt
the man who borrowed it. The form
OF mortgage above quoted makes this
fact so clear that none can escape its
meaning.
There can be little doubt that The
universal use of such a form of mort
gage would be great stimulus to the
movements in favor of the exemption
of money and credits from taxation
, 1t would enlist in favor of such {
measure the multitude of borrower
who have always looked with dis
favor upon it before as being a move
ment in the interest of capital. III
argument would then be irresistibl
that taxation of mortgages is doubl,
taxation and that it puts doubl,
measure of the burden of supportin.
the state and it's institutions upol
the class, who, by reason of their in
debtdness, are least able to bear ever
the share that should rightfully fal
to them.