Court Opinion

ID: 5265994
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:58:08.940102+00
Date Added: 2024-06-11T08:28:08.857140
License: Public Domain

Kiley, J. (dissenting):
Section 253 of the Tax Law of this State provides as follows: “ A tax of fifty cents for each one hundred dollars and each remaining major fraction thereof of principal debt or obligation which is, or under any contingency may be secured at the date of the execution thereof or at any time thereafter by a mortgage on real property situated within the State recorded on or after the first day of July, nineteen hundred and six, is hereby imposed on each such mortgage, and shall be collected and paid as provided in this article. If the principal debt or obligation which is or by any contingency may be *57secured by such mortgage recorded on or after the first day of July, nineteen hundred and seven, is less than one hundred dollars, a tax of fifty cents is hereby imposed on such mortgage, and shall be collected and paid as provided in this article.” Defendant concedes that section 255 of the Tax Law (as amd. by Laws of 1916, chap. 323) is not applicable to this solution. If the mortgage in the first instance had been made for a sum in excess of the bond issue, then the provisions of section 256 of the Tax Law (as amd. by Laws of 1916, chap. 323, and Laws of 1920, chap. 75) would govern the assessment of the recording tax by the county clerk. This mortgage sets a limit to the amount of the obligation that may be assessed under it. The amount permitted under the mortgage, $95,601,000, was issued in the first instance, and payment made and the tax collected as provided under section 257 of said Tax Law, which reads as follows: “ The taxes imposed by this article shall be payable on the recording of each mortgage of real property subject to taxes thereunder. Such taxes shall be paid to the recording officer of any county in which the real property or any part thereof is situated. It shall be the duty of such recording officer to indorse upon each mortgage a receipt for the amount of the tax so paid. Any mortgage so indorsed may thereupon or thereafter be recorded by any recording officer and the receipt for such tax indorsed upon each mortgage shall be recorded therewith. The record of such receipt shall be conclusive proof that the amount of tax stated therein has been paid upon such mortgage.” Section 258 of the Tax Law (as amd. by Laws of 1916, chap. 323; Laws of 1920, chap. 51, and Laws of 1921, chap. 532) forbids the county clerk or register to record such mortgage unless the tax is paid. It cannot be released, discharged or assigned of record, it cannot be foreclosed. These provisions precede section 259 of the Tax Law (as amd. by Laws of 1917, chap. 573), which is entitled “ trust mortgages ” and which must govern the solution of the question here. The plaintiff contends that the refunding bonds issued to take up the outstanding bonds under the mortgage were an additional indebtedness for which the mortgage stood as security. This is the only ground which the plaintiff can urge for the construction it seeks to have upheld here. The clause in section 259, supra, “ Whenever a further amount is to be advanced under the original mortgage,” etc., must be read in the light of the language that precedes it in that section; and that language is to the effect that the amount named in the mortgage to be secured thereby is not advanced in the first instance. I do not think plaintiff’s contention is sound. The fault may be in the law itself. If its contention is to prevail, what security has the creditor who invests his money on the *58strength of a mortgage on property at a stated amount, if the corporation can double its liability under the mortgage and reduce the creditor’s security to one-half what it was when he parted with his money on the strength of the amount of the mortgage? It is conceded here that under the contention of the defendant such a condition will not obtain; that at no time wilLthe mortgage secure more than the original amount. It is better that the latter condition be recognized as such than to entertain and approve such a condition as the foregoing illustration shows possible. It is urged, in support of plaintiff’s contention, that if defendant gave a new mortgage to secure the issue of bonds to be used in retiring the bonds issued under the old mortgage, it would have to pay a recording tax; that is so because of section 252 of the Tax Law, which is peremptory, and finds no exception in the Tax Law, except section 255 (as amd. supra) which defendant concedes is not applicable here. I cannot escape the conclusion that this is double taxation.
Judgment directed in favor of the plaintiff as demanded by it in the submission, without costs.