Case Name: Ellen M. Knight & another, administrators, vs. City of Boston
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1893-10-20
Citations: 159 Mass. 551
Docket Number: 
Parties: Ellen M. Knight & another, administrators, vs. City of Boston.
Judges: 
Reporter: Massachusetts Reports
Volume: 159
Pages: 551–556

Head Matter:
Ellen M. Knight & another, administrators, vs. City of Boston.
Suffolk.
March 14, 1893.
October 20, 1893.
Present: Field, C. J., Allen, Holmes, Knowlton, Morton, Lathrop, & Barker, JJ.
Tax—Bonds of Corporation secured by Mortgage to Trustee — Double Taxation — Statute.
Under Pub. Sts. c. 11, §§ 4, 14, bonds of a corporation secured by a mortgage of its land executed to and held by a trustee for the bondholders are not taxable to the individual owners thereof as personal property, the trustee having paid a tax assessed upon the whole value of the land.equal to the amount of the bonds outstanding. Field, C. J., Allen & Morton, JJ., dissenting.
Petition, under St. 1890, e. 127, by the administrators of the estate of Samuel Knight, for an abatement of a tax. The case was submitted to the Superior Court, and, after judgment for the respondent, to this court on appeal, upon agreed facts, in substance as follows.
On Juné 4, 1890, the petitioners, as such administrators, filed with the assessors of the respondent city a list of the property of their intestate, containing the item, “ $34,000 Boston WaterPower Company Bonds,” valued at $32,300, which were returned under protest, on. the ground that they were not taxable. The assessors for the financial year beginning May 1, 1890, assessed a tax to the petitioners, including a tax of $429.59 on the bonds above named. On October 1,1890, the collector of the respondent city delivered to the petitioners a bill for the tax, and demanded payment thereof; and on November 7,1890, the petitioners filed a petition for an abatement of the tax with the assessors, who, after a hearing, made an order refusing such abatement, from which order the petitioners appealed to the Superior Court.
The petitioners, on January 31, 1891, paid the amount of the tax, with interest thereon, under a protest in writing.
The Boston Water Power Company was the owner in fee of certain lands in Boston, and on June 1,1874, duly executed and delivered an instrument in writing to Dwight Foster and others, trustees. The instrument is the same as that set forth in the ease of Foster v. Boston, 133 Mass. 143, and in the case of Shepard v. Richardson, 145 Mass. 32.
The bonds described in the instrument were delivered by the corporation to the trustees, and by them sold and delivered to sundry persons, in conformity with the trust, and the bonds owned by the petitioners’ intestate, and specified in the list above mentioned, were a portion of said bonds, and came to the intestate through the persons to whom they were delivered by the corporation.
On or about January 22, 1880, default was made in the payment of interest on the bonds by the company; and on or about November 9, 1882, the trustees or their successors entered into and took possession of the land described in the instrument by reason of such' default, and for the purposes declared in the instrument. In the years 1883,1884, and 1885, the assessors of the respondent city assessed to the trustees or their successors, as mortagees in possession, the lands specified in the instrument remaining unsold ; in the years 1886 to 1890 inclusive, the assessors assessed the lands to the trustees or their successors as owners, and the lands were assessed in the year 1890 as of a value equal to the value of the bonds then outstanding.
The case was argued at the bar in March, 1893, and after-wards was submitted on the briefs to all the judges.
Gr. A. Blaney, for the petitioners.
A. J. Bailey, for the respondent.

Opinion:
Holmes, J.
By Pub. Sts. c. 11, § 4, "Any loan on mortgage of real estate, taxable as real estate " is not included among debts taxable as personal property. A majority of the court are of opinion that the bonds in question represent a loan on mortgage of real estate in Massachusetts, and that they are within the exception created by the foregoing words. The loan must be upon a mortgage which is taxable as real estate. This refers to § 14-16 of the same chapter, which, with the above mentioned exception in § 4, represents St. 1881, c. 304, " An act relieving property from double taxation in certain cases." By § 14, " When any person has an interest in taxable real estate as holder of a duly recorded mortgage, . . . the amount of his interest as mortgagee shall be assessed as real estate," etc. This seems to us to apply to the present case. It is true that the mortgage and the bonds are in different hands," the mortgage being held by a trustee. But this cannot be material. If it were, then in the case of an ordinary mortgage, if the mortgagee sold the note and did not assign the mortgage the note would become taxable in the hands of the purchaser. The double taxation which the act was passed to avoid is the same whether a trust intervenes or not, and we can see no legislative ground for a distinction. The act has no words which require the creditor to hold the mortgage in person. It only requires that the mortgage should be taxable as real estate. When a mortgage is made to a trustee for bondholders the mortgage interest is taxable to the trustee who represents them, as it would have been to the bondholders themselves if the mortgage had been made to them directly. In the present instance the trustees have paid the tax on the whole value of the land, which is equal to the amount of the bonds outstanding. The tax on the bonds must be abated. Judgment for petitioners.