185 N.Y. 285 | NY | 1906
The validity of the act, passed by the legislature of this state in 1905, (L. 1905, chap. 729), entitled "An act *288 to amend the Tax Law in relation to the taxation of debts secured by mortgages," is assailed by the relator upon several grounds. In the first place, it is insisted that the act is unconstitutional, because it was passed in violation of the provisions of section 20 of article III of the State Constitution; which reads that "the assent of two-thirds of the members elected to each branch of the legislature shall be requisite to every bill appropriating the public moneys or property for local or private purposes." This act amended the General Tax Law of 1896, by imposing a tax upon all debts and obligations for the payment of money, which should thereafter be secured in whole, or in part, by mortgage of real property situated within this state. Section 307 provides that "upon the first day of each month the recording officer * * * shall pay over to the county treasurer of said county, and in the counties of New York, Kings, Queens and Richmond to the chamberlain of the city of New York all moneys received during the preceding month upon account of taxes paid to him, * * * after deducting the necessary expenses of his office * * *. The county treasurer of each county and * * * the city chamberlain of the city of New York shall * * * quarterly thereafter, after having deducted the necessary expenses of his office, * * * transmit one-half of this net amount collected under the provisions of this article to the state treasurer, * * *. The remaining portion thereof in the counties of New York, Kings, Queens and Richmond shall be paid into the general fund of the city of New York and be applied to the reduction of taxation, and in the other counties of the state the remaining portion shall be held by the respective county treasurers subject to the order of the board of supervisors as hereinafter provided." In a general sense, this bill did provide for an appropriation of public moneys, inasmuch as the moneys, of which disposition was thereby made, were to be collected by taxation and the purpose, to which a portion of the moneys so collected was appropriated, was local, because relating to a political division of the state and not affecting the people of *289 the state in general. But the appropriation was not such as came within the inhibition of the clause of the Constitution, in question. That had reference to the public moneys of the state, as distinguished from public revenues from taxes levied for local purposes. The scheme of this enactment was, clearly, to provide further revenue for the state treasury and, also, for the relief of the particular political divisions of the state. An annual tax was imposed upon mortgages and the net amount, eventually, coming into the hands of the county treasurer, or of the chamberlain of the city of New York, was to belong, one-half, to the state and, one-half, to the particular locality.
The legislature is the source of the taxing power. It imposes and collects taxes for the state treasury for general governmental purposes and it authorizes taxation for local administrative purposes throughout the state. Possessing the power to tax, the right, necessarily, inheres to exercise it in any way, not objectionable upon constitutional grounds, that may be devised as suitable for the purpose in view. I cannot perceive any valid reason why the legislature could not devise a scheme for raising revenues for the general government and for the various local governments by the apportionment of the proceeds of a tax laid upon a certain species, or class, of possessions. The principle of the decision in the case of People ex rel.Einsfeld v. Murray, (
The act is assailed upon the ground that it violates the provisions of section 1 of article XIV of the Constitution of the United States; in that it denies to the relator and to other holders of mortgages, recorded after July 1st, 1905, the equal protection of the law. Section 294 of the act imposes "a regular annual tax * * * on every debt and obligation, and upon the mortgage securing the same, described in section 291, except upon mortgages recorded prior to July 1st, 1905, * * * equal to five mills on each dollar of the amount of the principal debt or obligation as the same shall be at nine o'clock ante meridian on the first day of July, 1906, and in each year thereafter," etc. The act became a law on June 3d 1905, and a date was appointed in the future, upon which the law would be operative upon property held in the form of mortgages. The argument as to the inequality of the law rests upon the proposition that "a different rule of taxation applies to mortgages recorded after July 1st, 1905, from that which applies to those recorded before that date." In the one case, it is said, the holder has not the right to make deductions for indebtedness and in the other he has, and, hence, "some mortgages * * * are not taxable, while others, under exactly the same conditions, are required to contribute to the expenses of government." The reference is to the provisions of the General Tax Law, under which a person assessed upon his personal property may deduct his just debts from the amount of the assessment.
It is true that the effect of the act, to the extent that a person's investments, after a certain date, should be made in mortgage securities, was to segregate them from his other personal property for specific taxation; but such investments were voluntary and while, conceivably, the law might act repressively, in instances, nevertheless, government has the power. It may change the methods, or rate, of taxation, and it may classify new subjects for taxation. The power of the state in its sovereign capacity to impose taxes is unlimited in *291
extent, so far as no constitutional guaranty is infringed upon, and is controlled only by the considerations of wisdom and policy, to be, reasonably, expected of a legislative body, acting upon the interests of its constituents. In the raising of revenues for the needs of government, the power may be exercised upon every occupation, every object of industry, or enjoyment, and every species of possession. The purpose of a system of taxation; the apportionment of a tax and the property, or persons, to be affected are matters within the legislative discretion. (McCulloch v. Maryland, 4 Wheat. 316; ProvidenceBank v. Billings, 4 Peters, 514; Bell's Gap R.R. Co. v.Pennsylvania,
The tax under this law is, in effect, upon the interest of the mortgagee in the real estate. The "situs" of all mortgages is fixed within this state by section 291, thus operating upon non residents, as well as residents, and their record evidences the liability to the tax. It was one way of reaching personal property through one of its visible forms and with the justice, or propriety, of the legislation the court has no concern. The tax is laid as an equal burden upon all whose property has been brought into a class for the purpose of taxation and the tax is according to a common ratio. There is no discrimination and the exaction is equal; for all persons pay the same tax upon the same value of that description of property.
The fixing of a date in the future, when the law should become operative upon that species of possessions, allowed a reasonable interval for arrangement and adjustments. Those who held such prior to the date fixed were not subject to the tax. There was no arbitrary selection from a class of property holders for taxation; but there was a date fixed after which such investments, when made, would constitute new subjects for taxation. The objection, upon the ground discussed, is, therefore, in my opinion, unsound. *293
Another ground urged by the appellant as invalidating the act is that it deprives the relator and others in his position of their property without due process of law. The provisions of the fourteenth amendment of the Federal Constitution, so frequently invoked with such irrelevance as to suggest the existence of considerable confusion of thought as to its intended scope, are appealed to and the argument is made that the mortgagee has no opportunity for a hearing upon the value of the debt and the mortgage. Taking property under the taxing power is taking it by due process of law. In such a case, due process of law does not mean some judicial proceeding. Proceedings for the assessment of taxes are, necessarily, summary and if not arbitrary, or unequal, or illegal, they are not within the constitutional provision. It is not essential to the validity of the tax that the person should have been present, or should have had the opportunity to be present, in some tribunal when assessed. Due process of law and the equal protection of the laws are secured, if the law operates alike upon all who are similarly situated and if it does not subject the person to an arbitrary exercise of the powers of government. (See McMillen v. Anderson,
Another objection is made upon the ground, in substance, that section 309 violates the same amendment of the Federal Constitution and, also, section 6 of article 1 of the State Constitution, because affecting the liberty to contract and abridging the privileges and immunities of citizens of the United States. The section declares usurious and void any contract, or agreement, in respect to any mortgage obligation, or deed of trust, by which the mortgagor shall agree to pay the tax imposed, and prohibits the recovery of any judgment upon the obligation or the mortgage in such a case. I agree with the view of the court below that this question is not presented in this case. It had no connection with the imposition of this tax. Nothing in the record suggests a controversy over the rate of interest secured by the mortgage. The only question was as to the right, as a condition of recording the mortgage, to exact from the relator the tax imposed by the law on the amount of the principal indebtedness.
No other question demands consideration and, for the reasons given, I advise the affirmance of the order appealed from, with costs.
CULLEN, Ch. J., EDWARD T. BARTLETT, HAIGHT, VANN, WILLARD BARTLETT and CHASE, JJ., concur.
Order affirmed. *295