48 A. 78 | Md. | 1901
Mrs. Hinchman and her husband executed a mortgage for the sum of $11,500, dated the 6th March, 1899, and therein covenanted to pay to the mortgagee, the National State Bank of Camden, New Jersey, a non-resident corporation or its assigns, interest upon the mortgage debt at the rate of six per centum per annum. The mortgagors are also non-residents, but the lands mortgaged are located in Harford County in this State. The mortgagee was duly assessed upon the assessment books of Harford County for the year 1899, upon the gross amount of the mortgage interest, and a tax of eight per centum was duly levied upon such assessment for State and county taxes for said year, and placed in the hands of Edward M. Allen, who is authorized by law to collect and receive all State and county taxes duly levied and legally collectible. The mortgagee has refused to pay the tax so levied amounting to the sum of $55.20, and this suit was brought to recover it. The mortgagee, the defendants below, pleaded the general issue, and that it is a corporation formed under the laws of the United States for the purpose of transacting a general banking business at Camden, in the State of New Jersey, and that its domicil is in said city. The case was tried before the Court without a jury, and the learned Judge below granted the defendant's prayer asking him "to rule as a matter of law that it being admitted by the pleadings that the defendant is a non-resident of the State of Maryland, it is therefore not liable in this action for taxes upon the income of the mortgage held by it upon real estate in Harford County, Maryland, and the plaintiff is not entitled to recover. *511
The clerk was directed by the Court to enter judgment for the defendant, but no judgment appears by the record to have been actually entered. However, an agreement by counsel has been filed intended to perfect the record so as to present the case as fully as though the facts therein agreed to and the ruling of the Court were embodied in a formal bill of exceptions duly signed. We will, therefore, proceed to dispose of the questions sought to be presented by this appeal without regard to the defects in the record.
The questions to be considered are, first, whether section 146A of the Act of 1896, ch. 120 (Poe's Supplement, Art. 81, § 146A, p. 551), so far as it taxes the interest covenanted to be paid in mortgages on lands in Maryland held or owned by non-resident mortgagees, citizens of other States, is a valid and constitutional exercise of the taxing power of the Legislature; and, second, if the Legislature has such power did it intend to exercise it by the passage of the Act above mentioned? No question is made as to the amount of the tax levied in this case, but the question is whether any such tax can be levied.
The provisions of sec. 146A is as follows: "All mortgagees or assignees holding mortgages of record in this State shall annually pay a tax of eight per centum upon the gross amount of interest covenanted to be paid each year to said mortgagee or his assigns by the mortgagor to be collected by the proper authorities as other taxes for county and State purposes in the several counties * * * * * and the tax hereby levied shall each year be paid in the county * * * where the greater portion of the property covered by the mortgage is located."
In the first place this Court has already held that the Act in question is valid in respect to mortgagees residing in this State, the land mortgaged being also located here. In the case ofFaust v. The Building Assn.,
I. Having, therefore, determined that the Act in question is valid so far as it applies to resident mortgagees holding mortgages on land in Maryland, is it valid as to non-resident mortgagees owning mortgages of the same character?
Upon general principles it would seems that there ought to be no difficulty in answering this question in the affirmative. It is one of the axioms of the law of taxation that the State has the right to tax all persons and all property of every kind within its jurisdiction. McCulloch v. Maryland, 4 Wheat. 316. But it is contended that the interest of the mortgagee is in the nature of a chose in action, and that according to the well-settled rule, here and elsewhere, such property must be assessed and taxed to the owner where he has his domicil. The case of the Appeal Tax Court v. Patterson,
In the case of Savings Society v. Multnomah Co.,
It is suggested by the defendant that the decision by the Supreme Court of the United States based upon the Oregon statute has no analogy to the question before us, first, because that statute in express terms "forbids any taxation of the promissory note or other evidence of debt secured by the mortgage; and with equal distinctness provides for the taxation, as real estate, of the mortgage interest in the land;" second, because that statute authorizes the amount of the *515
mortgage debt to be deducted from any assessment upon the mortgagor. Nor does our statute, the validity of which is here challenged, tax the evidences of debt secured by the mortgage for in this case there are none. The thing taxed is the interest
which, as we have said, is as much a part of the mortgage as the mortgage debt itself. Nor do we think that the fact that our statute does not in express terms tax the mortgage interest in the real estate, as land affect its validity; for personal property, as the Supreme Court of the United States "has declared again and again may be taxed, at the place where the property is situated, even if the owner is neither a citizen nor a resident."Savings Society v. Multnomah Company, supra. The situs of the mortgage interest for the purpose of taxation is fixed by our Act in Harford County where the land is located. Again, the fact that our statute makes no provision for deducting the mortgage debt from any assessment upon the mortgagor, is rather an objection to its justice and fairness than to its validity. Statutes taxing the land of the mortgagor and the mortgage debt to the mortgagee have been frequently declared valid in Maryland and other States. Appeal Tax Court of Baltimore City v. Rice,
II. We have thus far assumed that the interest of a mortgagee is a chose in action or something less than an interest in land. In this State, however, it has long been held that a mortgagee takes something more than a mere lien. Thus in Cahoon
v. Miers,
III. The only remaining question to be considered is, assuming that the Legislature has the power, did it intend by the Act of 1896, ch. 120, sec. 146A, to levy a tax upon the property of non-resident mortgagees.
Certainly nothing can be found in the language of the Act which would indicate that any exception or exemption was intended. The language is comprehensive and general and includes non-resident as well as resident mortgagees. In the construction of revenue laws it is well settled that every presumption is to be made in favor of the State, and if a freedom from taxation or an exemption is claimed the burden is upon the taxpayer to show clearly that either the one or the other exists. Inasmuch as we have held that it is within the power of the Legislature to tax the interest of non-resident mortgagees, we think it follows both from the general and comprehensive *518 terms of the statute, as well as from the result that would follow, if we should hold otherwise, that all mortgagees are included. For it is apparent that if we hold that only resident mortgagees and their resident assigns can be taxed under our present law, the law itself would be rendered nugatory, by the assignment of all mortgages to non-residents.
Judgment reversed with costs and new trial ordered.
(Decided January 23rd, 1901.)