Vernon County censor. [volume] (Viroqua, Wis.) 1865-1955, 1904-02-10
MR.. PROCTOR ON MORTGAGE TAXATION.

the mortgage tax law, which was TO the
effect that tire law was imperative, and
exempted all mortgages from taxation.
Tie writer now desires TO give some OF
tho reasons upon which such opinion
wss founded: q,
First, Sec. 10, Art. ! of the United
States constitution declares, that no
state shall pass any law impairing the
obligation Of contracts. So where the
parties to mortgage have entered into
a contract as to which would pay the
taxes on the mortgaged real estate, the
payment of the tax is controlled by such
contract, the law being imperative.
This is true as to all contracts whether
made before or after the passage OF the
law. The parties TO a mortgage are not
prohibited from making such contract
in Wisconsin, Massachusetts,, Connect
cut, New Jersey, Colorado and Michi-
gan formerly. Not being prohibited,
narties to mortgages usually contract in
tie mortgage which will pay the taxes
on the mortgaged real estate, and this
practically exempts mortgages from
taxation.
Second. it is suggested in an article in
the CENSOR of February 3D., under the
title of Taxation and Official Ginger"
that the state Of Wisconsin ought to
amend her constitution by incorpola-
ting into il the same clause that the
state of California did into her cons'1-
tutiou, by an amendment thereto, which
in effect prohibits parties to mortgages
from contracting as to which Will pay
the taxes. The state of Wisconsin
would probably adopt the suggestion
had not the supreme court OF California,
in the wear 1897, decided that it's con-
stitution as amended and statutes which
is a repetition of it, do not prohibit
parties to mortgages from contracting
as to which will pay the taxes ON the
land. London and San francisco Bank
vs. Bandman, 100 Cal Ia. This brings
the California system OF taxing mort
cages into practical conformity with
the State Of Wisconsin and the other
states named. Therefore, since 1897
the California mortgage tax law has
been practically imperative, and VIII
remain 50 until she adopts another
amendment to her constitution or enRcts
a law adopting some other system Of
taxation. While the law was opera
Eve in California mortgagors were com
PEELED to pay two per cent. higher rate
Of interest than they did before the
amendment to the constitution, while
taxes average II per cent. Such would
be the effect Of the law in Wis
consin.
The mortgage tax law has not work
ed satisfactorily in states where it has
been tried In 1889 Oregon passed a
mortgage tax law almost identical with
that Of California. it was unsatisfact-
1ry and was repealed in 1893. In 1900
the state of Missouri adopted consti
tutional amendment almost identical
with that of California. So unsatisfac-
tory was the law that the next legisla
ture voted to re-submit the amendment
the supreme court declared
It unconstitutional as conflicting with
the constitution of the United States.
The state of Michigan in 1891, enacted
the mortgage tax law which was in
force but two years and was repealed by
the next legislature It was re-enactet. 4
by the legislature in 1901, but was We
t0ed by the governor with the follow
ing objections First, it would drop $40,
300 600, to 800, 900, 900 from the taxable
property of the state Second, the sim
liar law of Is01~ worked so badly that it
was erased from the statute books,
Third, IL unsecured credits are assessed,
secured credits should also be assessed.
Fourth, Notwithstanding the repeal of
the law of 1891. the rate of interest has
declined from and per cent. 10 4, 5
and Gper cent. Fifth, foreign capital
would not seek investment in the state
If the rate of interest should fall below
the going rate of interest in other states.
Sixth, loans already contracted without
an agreement that the borrower pay the
tax on the land, would be taxed unjust
ly to the creditors. The supreme court
of Massachusetts in q case where the
parties to a mortgage had contracted
that the mortgagor would pay ali the
taxes on the land, decided that the mort
gagor was bound by his contract, that
the legisls ture did not intend to inter
fere with or control the relations exist
ing by contract between mortgagors and
Hammond VS. Lowell, 1856
Mass. 1856
With decisions of the supreme court
of California. Missouri and Massa-
chusetts, all upholding and enforcing
contracts between parties TO mortgages
as TO which shall pay the taxes, 1t is
not hard to con lecture what the decision
of our supreme court will be on that
question. The writer has said all he
cares to on this subject If any party to
a mortgage contract has doubts sufficient
ly strong to warrant him in carrying a
case to the supreme court him on
ward.
The Ginger article .rges the
writer of openly Boosting . he voted
against La Toilette for go nor. The
charge is willfully false. 1ue truth is,
the writer voted for Gov. La Toilette
at the election in the fall of 1900 and
1902, and will vote for him again next
fall If he is on the ticket. The Ginger
article makes the further charge in
substance. that the writer wss sum-
moned before the board Of review of
the City of Viroqua, and another at
torney employed to cross-examine him.
and find why the $50 600 of mortgages
he had loaned in the name OF nom
resident son, which appeared of record
were not assessed The charge is also
false and malicious The truth is the
writer was not summoned before said
Board of Review and another attorney
employed to cross examine, for the rea-
son that, the board had been told and
knew these mortgages had been taken
in the course of the loaning business
and had been sold and assigned to 10
vestors long before assessing time. TIE
article referred to further charg, the
writer with chsmpioning n resolution
at the local board of trade last winter.
instructing our senator aud assembly
man not to enact any railroad legisla-
ton. The writer admits he voted for