Court Opinion

ID: 7933656
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:07:11.81841+00
Date Added: 2024-06-11T16:33:27.235777
License: Public Domain

Campbell, J.,
(dissenting). Belator asks a mandamus to compel respondents to direct the register of deeds of Sanilac county to order from the Secretary of State a set of blank books for reporting mortgages for assessment purposes, under Act No. 262 of the Laws of 1887. Bespondents deny their obligation to do so, basing the denial on the legal insufficiency of that statute to impose such an obligation on them.
The title of this act, as well as the body of it, includes-a .provision entirely distinct from any duty of county reg*30isters in preparing the books for assessment purposes, which is intended to be an amendment of the registry-laws, and which declares that mortgages not setting out the residence of the mortgagee shall not be recorded. This is a very important provision, which no one would ever think of looking for except in the recording laws, and ignorance of which may practically defeat honest mortgages. I do not think it competent to include in one statute every possible subject which may incidentally become important in connection with its subject-matter. If this could be done, the constitutional safe-guards against ■duplicity in statutes would-be of no use. There are very few subjects concerning property which do not come into consideration in taxation. The persons to be taxed, the property to be taxed, and the locality of taxation may and ■do involve the laws of inheritance and of administration, as well as many others; but certainly- it would not be competent in a tax law to change any of these rules or conditions. The formalities of mortgages are chiefly to provide means of perpetuating, in the local records, notice cf the rights of the respective parties, to warn buyers and subsequent incumbrancers, and to preserve evidences of title. A failure to comply with any requisite of the recording laws may destroy the validity of the record; and non-resident mortgagees, at least, are not bound to look at our taxing laws for any purpose outside of the land tax. It seéms to me incompetent to make an essential change in the recording laws in an obscure section, in a law relating ■only to purposes of taxation.
But I think the law, in its bearing on mortgages as ■distinct subjects of taxation, is not a valid exercise of the taxing power. I do not doubt the right of the State to tax such interests as depend upon its jurisdiction and protection. But our State Constitution itself has regulated this matter on sound and correct principles, and this law *31is a distinct departure from the constitutional provisions on the subject.
A mortgage, under our legislation, conveys no legal or equitable estate in land. It is no more and no less than a collateral security upon land, which has no value in itself, but depends entirely on some outside obligation, from which it is inseparable. If it is given to secure a debt, it belongs to the owner of that debt, and passes with it to any lawful holder without, assignment. If the debt is negotiable, it passes to any one to whom the .paper belongs. If it is given to secure several debts or several installments, it belongs ratably to as many persons as there are owners of these. It may be given by way of indemnity, and in that case it may never have any money value. It may be given for a debt amply secured by other mortgages on other property; or it may be on property already so heavily incumbered as to make it no security at all. So the mortgagee may be a mere trustee, with no interest himself in it.
This law provides for certifying, by the county register ■of any county, to the various assessors- in his own county, or, to the registers of other counties, for similar information to their local assessors, the date, amount, and parties, and other ear-marks of all mortgages appearing in his books. It gives him no means of ascertaining the amounts due, and it does not require him to report the times or •conditions of payment, the condition of the property as to other incumbrances, or the value of the land. It may be •entirely paid, or paid in part; it may be on property of no value, or incumbered already up to-its value; and the mortgage may be one which the mortgagee has assigned to some one who has not recorded his assignment, or which he has discharged.
The mortgage, thus certified by its original amount, :and in the name of the original mortgagee, whether for *32indemnity or security, and whether valuable or worthless, is in. due course to be assessed from the book by each assessing officer, under peril of punishment for misdemeanor.
This statute does not undertake to assess the creditor for his credits secured by the mortgage, and to the amount actually due on such credits; but it treats the mortgage as an interest in land taxable at its face as such, without reference to the value of the land, or the nature or value of the debt. It furnishes no means to the assessor in one county of estimating the value of the land, and it gives no protection to the supposed mortgagee against the worst kind of injustice. If we assume-that our Constitution provides for the taxation of every kind of value, — which I think it does not do in the way claimed, — that instrument is express that taxation must be uniform, and must be on an assessment based exclusively on its cash value, or else it must be a specific charge or tax, which must also be uniform.
No tax law can be valid which does not provide for securing such uniformity. Of course, it is not necessary to attempt impossibilities. Uniformity, as well as value, may involve some exercise of opinion or discretion, and cannot bo absolute. But a law which does not provide-directly for satisfying these conditions as far as practicable cannot be a valid exercise of the taxing power, and cannot be upheld as conforming to the Constitution.
The law in question is bad for violating both of these conditions. If a mortgage can be treated as a direct interest in lands, there seems to be no reason why the residence of the mortgagee should make any difference. But this law does not treat residents and non-residents-alike; and it was held by the United States Supreme Court, in the case of the State Tax on Foreign-held Bonds, 15 Wall. 300, that a state could not tax the securities of *33non-residents, and that mortgages were no more than securities, and not subject to local jurisdiction. Moreover, there is a lack of uniformity arising out of the fact that, under this law, land not incumbered can only be taxed up to the single value of the property; whereas land, mortgaged is taxed for the additional amount of the mortgage, when it cannot possibly be worth any more on that account. It has already been pointed out that the law furnishes no means whatever for getting at the cash value of the mortgage interest. Arid, furthermore, if the same debt or liability is secured by different mortgages, in the same or different counties, the danger of double taxation and of excessive valuation is multiplied.
It cannot be possible to have double taxation valid under our Constitution. It not only destroys uniformity of burdens, but in so doing involves the other considerations referred to.
Under our laws, from the beginning of the territorial and State organizations, land has always been taxed as land, upon its valuation as spch. In levying taxes, they are made to cover all the combined interests which exist in it, whether legal or equitable, freehold or not freehold, present and vested, or future and contingent. If the land tax is not paid, the whole aggregation of interests will be divested by a tax sale. This law does' not enable the mortgagee who' pays taxes on his mortgage interest to hold it discharged in case of a sale for taxes. He has no protection whatever out of his payment. And, on the other hand, if he does not pay it, the law gives the State no lien upon it for the non-payment of mortgage taxes where the land tax is paid. Any attempt to do this would have brought attention at once to the fallacy of the whole scheme. If the mortgage interest is taxable separately, then nothing else remains *34taxable but tbe legal title subject to tbe lien known as the equity of redemption. All the value that .the landowner has in mortgaged land is this residue beyond the mortgage ; and even that is fallacious, for, on the ono hand, the debt may be so secure as to need no recourse to the land, while, on the other hand, the mortgagor may have no hope of redeeming, and no object in it. By taxing the land as land, to its full unincumbered value, the public get taxes on all it can be worth to • all parties interested, and there is no other way in which this exact measure is attainable.
I think that this idea was in the mind of the framers of the Constitution when they required taxes to be assessed (except in the case of specific taxes) on property, and at its cash value. Although there is value in things in action, and they may, in a certain sense, be regarded as property, such is not their appropriate designation. Even under our present tax law, they are treated as something distinct from either realty or personalty. It is very certain that there is no wealth in a state that does not ultimately result in one or the other. A personal debt is only valuable because payment of it can be enforced out of property; and it is so enforced, not by creating new values, but by transfer of the same property from one person to another. There is nothing but tangible property out of which taxes can usually be enforced. If all persons were to pay their debts at once, it could only be done by reliance on such property. It is evident that a man who owes more than he can pay cannot fairly be taxed for the ownership of anything; but, if property is taxed as such, it can make no difference to the State who owns it, so long as but one tax is laid upon it. But if every man is taxed for what his neighbor owes him, with no regard to what he owes himself, a capital of a thousand dollars *35may stand, among .a borrowing community,, as the basis of as many thousands as there are borrowers. Such is not the meaning of our Constitution.
In my opinion, this law cannot be sustained on any principle, and respondents should not be required to obey it.