Adams v. Colonial & United States Mortg. Co.

• Decision Date: 20 April 1903
• Citation: 34 So. 482,82 Miss. 263
• Court: Mississippi Supreme Court
• Parties: WIRT ADAMS, STATE REVENUE AGENT, v. COLONIAL AND UNITED STATES MORTGAGE COMPANY. TWO CASES

34 So. 482

82 Miss. 263

WIRT ADAMS, STATE REVENUE AGENT, v. COLONIAL AND UNITED STATES MORTGAGE COMPANY. TWO CASES

Supreme Court of Mississippi

April 20, 1903

One case, from the circuit court of, second district, Coahoma county. HON. SAMUEL C. COOK, Judge.

The other, from the chancery court of Copiah county. HON. HENRY C. CONN, Chancellor.

Adams State Revenue Agent, appellant in both cases, was plaintiff in the Coahoma county suit in the court below, and complainant in the Copiah county suit; the mortgage company appellee, was defendant in both cases.

The two cases were heard in the supreme court together.

The Coahoma case is an attachment suit brought in the circuit court of that county, by appellant against appellee, to recover taxes for several past years on notes and mortgages belonging to appellee, as "solvent credits," and it was tried before the judge, a jury having been waived, on the following agreed statement of facts:

"The defendant is a foreign corporation organized under the laws of Great Britain, and has its domicile at Hull, England; the trustee in all of the trust deeds is a resident of Hull England; defendant has an agency in Memphis, Tenn., but has no office or place of business in Mississippi. J. A. Glover an attorney at Clarksdale, Miss., has been for years advertising that he was prepared to make loans, and that a considerable proportion of the loans made by defendant to borrowers in Coahoma county, and secured by deeds of trust on lands in that county, were made upon applications in writing which came to defendant's office in Memphis, Tenn through said Glover, on forms furnished him by defendant, in which the lands offered as security were described; these forms could be obtained by any one who desired to make use of them, and some of said loans now in force in Coahoma county were made to the borrower upon applications which came from other attorneys or the borrowers direct; upon receiving the applications the lands are inspected by an inspector employed by defendant in Memphis for that purpose; if, upon the inspector's report, it is decided to make the loan, the applicant is notified that if, upon investigation, his title is good, the loan will be made; the applicant is requested to furnish an abstract of his title, and, if this is satisfactory, deeds are prepared by defendant in Memphis, Tenn., and forwarded to the applicant for execution, with notice that when they are executed, and the trust deed recorded, and the papers returned to defendant's office in Memphis, the amount of the loan will be paid, and the money is paid by sending the borrower a check or paying a sight draft attached to the papers when returned; when the trust deeds are received by defendant's agent in Memphis they are at once sent to defendant's home office in Hull, England, where they remain until they mature, when they are returned to the agent of defendant at Memphis, Tenn., for collection. The notes are all signed and dated in Coahoma county, Miss., and are made payable in Memphis, Tenn. The value of the lands upon which security is taken always exceeds the amount of money loaned. When the loan is consummated, defendant pays Glover, or the party from whom the application came, a commission upon the amount loaned."

From a judgment for defendant, plaintiff appealed to the supreme court.

The Copiah case is an appeal from a decree of the chancery court of that county sustaining a demurrer to complainant's bill against the same defendant. The bill alleges that defendant is a nonresident corporation, domiciled at Hull, England, and having an office and place of business in both New York and Memphis, Tenn.; that defendant owns real estate and personal property in Copiah county, Miss., which escaped taxation, to wit: the interest of defendant as mortgagee and cestui que trust in certain deeds of trust and mortgages set out in the bill; that defendant was properly and duly assessed; that the evidences of debts secured by said trust deeds and mortgages are in the possession of defendant at its domicile beyond the state, and that they represent money loaned to said several parties by defendant through its agent at Memphis, Tenn. The bill then states the amount of taxes claimed to be due. Defendant demurred, setting up the following grounds: 1. The facts stated in the bill show no liability of defendant for either the state or county taxes. 2. The defendant has no interest in the mortgages or trust deeds which are the subject of taxation. 3. To sustain the assessment would deprive defendant of its property without due process of law, and in violation of article 14 of the amendments of the constitution of the United States. The court sustained the demurrer, and dismissed the bill. Complainant appealed to the supreme court.

Affirmed.

R. N. Miller, for appellant. ^[*]

The question presented in the Copiah case is not whether the debts secured by these mortgages belonging to a nonresident are taxable, but the question here presented is whether or not the interest or estate of the mortgagee in the land in this state is taxable. The case of Wirt Adams, Revenue Agent, v. Colonial & U. S. Mortgage Co., Limited, from Coahoma county, now pending in this court, presents the question of whether the debts are taxable because of the peculiar features of the mortgages, and because they were contracted for appellee by its agent in this state.

The Copiah case presents a wholly different question: (1) Whether this estate of the mortgagee is property, separate and independent of any other interest in the land mortgaged. (2) If so, is its situs in Mississippi with the land, and therefore taxable? By sections 3755 and 3757 of the code of Mississippi of 1892, all property in this state is subject or liable to taxation, except the specific property enumerated as exempt in said section 3744. If I can demonstrate that this estate of the mortgagee is property, and that its situs is with the land in Mississippi, then I take it that I have made out my case.

The fact that the man or corporation who owns lands in Mississippi, or an interest or estate in lands in Mississippi, which is taxable, is a nonresident, makes not one particle of difference, because the situs of the land is in Mississippi, regardless of the domicile of the owner, and the land or the estate in the land must pay the taxes. For the purpose of taxation, therefore, is the estate of the mortgagee property? In the case of State v. Smith, 68 Miss. 79, 8 South., 294, this court held that a debt secured by a mortgage in this state followed the domicile of the holder, a nonresident, and was not subject to taxation here, because the evidence of the debt, following the domicile of the holder, was beyond the jurisdiction cf our taxing law. I have no quarrel with that decision. It has no sort of application in this case, because, I repeat, we are not seeking to tax the debt; but we are seeking to tax the mortgagee's estate in the land mortgaged, through the security, the situs of which abides in the land where the mortgage is recorded. It is not a question of situs, because no one would dispute that, if this estate of the mortgagee in the land is property, then its situs must be where the land is. This estate does not, like the debt, follow the residence of the owner.

Returning, now, to the main proposition: Is the estate of the mortgagee in the land property? "Because of the fact that a mortgage is regarded as of a dual character, a conveyance of an estate in land and a security for a debt, bearing one character in a court of law and another in a court of equity, a mortgage at the present day, in the absence of statutes providing otherwise, vests the legal title to the mortgaged property in the mortgagee, at any rate after condition broken." 20 Am. & Eng. Enc. Law, p. 900; Code Miss., 1892, sec. 2449. The mortgagee has at least an equitable estate, if not a legal estate, in the land; and it must be property, because it may be sold under execution. It is liable for debts. Leigh v. Harrison, 69 Miss. 923; 11 South., 604; 18 L. R. A., 49.

"For most purposes the interest of a mortgagee in the property mortgaged is looked upon as a chattel interest only, and upon his death his interest in the property passes to his representative, and not to his heirs. But the personal representative does not take it in his own right, and simply holds it in the fiduciary capacity, and in trust for the heir, who is in equity, in the absence of creditors, entitled to it. His interest, however, is considered real, in that it enables him to maintain ejectment for the possession of the land mortgaged, notwithstanding that in every other point of view it is personal property." 20 Am. & Eng. Enc. Law, p. 974; 3 Pom. Eq. Jur., p. 1187, note; Harmon v. Short, 8 Smedes, & M., 433; Hill v. Robertson, 24 Miss. 368; Buckley v. Daley, 45 Miss. 338, 345; Carpenter v. Bowen, 42 Miss. 28, 49; Buck v. Raines, 52 Miss. 271. "The interest of the mortgagee [in land] is a chattel, and is devolved on the holder of the note, passed on delivery or indorsement." Clark v. Wilson, 53 Miss. 129.

"The above authorities will show that sometimes it is called real estate, and sometimes a chattel. The equity of redemption is a distinct estate from that vested in the mortgagee before or after condition broken. It is devisable and alienable, like other interests in real property." Clark v. Reyburn 8 Wall, 322, 19 L. Ed., 354; Beverly v. Barnitz, 55 Kan. 482, 42 P. 725, 31 L. R. A., 74, 49 Am. St. Rep., 269. "For the purposes of taxation, the mortgagee's interest in the land is realty, and may be taxed where the lands lie, regardless of the domicile of the owner." Savings and Loan Society v. Multnomah County, 169 U.S. 429, 18 S.Ct. 392, 42 L....