Appeal Tax Court of Baltimore City v. Gill

• Citation: 50 Md. 377
• Parties: APPEAL TAX COURT of Baltimore City v. GEORGE M. GILL, Cumberland D. Hollins and Adolphus C. Schaefer, Trustees. APPEAL TAX COURT of Baltimore City v. Harvey M. Ellicott. APPEAL TAX COURT of Baltimore City v. Margaret P. McElderry. APPEAL TAX COURT of Baltimore City v. Victoria L. Levering. APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of Victoria L. Levering. APPEAL TAX COURT of Baltimore City v. Mary C. Alricks. APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of Susan L. Fitzgerald. APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of H. D. C. Wright.
• Decision Date: 31 January 1879
• Court: Court of Appeals of Maryland

50 Md. 377

APPEAL TAX COURT of Baltimore City v. GEORGE M. GILL, Cumberland D. Hollins and Adolphus C. Schaefer, Trustees.

APPEAL TAX COURT of Baltimore City v. Harvey M. Ellicott.

APPEAL TAX COURT of Baltimore City v. Margaret P. McElderry.

APPEAL TAX COURT of Baltimore City v. Victoria L. Levering.

APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of Victoria L. Levering.

APPEAL TAX COURT of Baltimore City v. Mary C. Alricks.

APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of Susan L. Fitzgerald.

APPEAL TAX COURT of Baltimore City v. George M. Gill, Trustee of H. D. C. Wright.

Court of Appeals of Maryland

January 31, 1879

The causes were argued before BARTOL, C.J., BOWIE, ALVEY and ROBINSON, JJ.

A Leo Knott, State's Attorney for Baltimore City, and Charles J. M. Gwinn, Attorney General, for the appellant.

I. Were bonds or obligations of other States, and of municipal corporations incorporated by other States, commonly called the stock or debt of such States and municipalities, subject to valuation and assessment by this State, under the Act of 1876, ch. 260, when owned by persons or corporations having their residence in the City of Baltimore?

Bonds obligations or evidences of debt, issued by States, municipal corporations, private corporations, or individuals, are all choses in action. They show the right of the respective owners of these securities to demand payment of the interest thereon, as it accrues and becomes payable, and of the principal when it is due, according to the terms of the contract. Williams on Pers. Prop. 4. This right is a property, having a value in the market, while the interest is maturing and before the debt is due. It is a property, which because it is a right only of the holder of these securities to demand such interest and principal, as they respectively become due, is personal to the holder of these respective securities, and has, as such right, no other situs than the residence of such holder. It does not matter that by the terms of the contract, the holder of such choses in action is obliged to demand payment of such interest or principal, in a county different from that in which he resides, or in another State. It does not matter that he is required, by the terms of the contract, to assign these securities in a particular manner, or that the registry of such assignment must be made in a particular place. These conditions do not alter the right of property. Black v Zacharie, 3 How. 513; Bank v. Iglehart, 6 Gill, 56; Balt. City Pass. R. R. Co. v. Sewell, 35 Md. 252, 253.

They are only precautions intended for the greater safety of the debtor. If the debtor was an individual residing in another State, and did not pay the interest upon, or principal of, obligations which contained no such provisions, the owner of the securities would be obliged to seek payment in such other State. If he recovered judgment in a court of such other State, he must, when paid, enter satisfaction of said judgment there. Such circumstances would not change the taxable situs of the rights of action which he thus enforced. They would remain, until paid, debts which had no taxable situs except the residence of their owner. Cooley on Taxation, 65; Burroughs on Taxation, secs. 41, 134; State Tax on Foreign-held Bonds, 15 Wall. 320; Latrobe v. Baltimore, 19 Md. 22. And, when paid, the money collected would have no other situs than such residence of such creditor.

For the same reason, the obligation of a creditor of a State, or municipal corporation, to make demand of the principal or interest of the debt due to him by such State or corporation, at a particular place in such State or city, or at any particular place, does not change the situs of that right of making the demand for such interest or principal, which constitutes the taxable value of the chose in action held by the creditor.

It is true that the Supreme Court, in the case of State Tax on Foreign-held Bonds, while recognizing the rule that debts, ordinarily, have no situs, except the domicile of their owner, treated, apparently, State and municipal bonds as constituting, by general usage, an exception to this rule.

It is conceded that such general usage would create an exception in any case in which it was recognized, or in which it had not been altered by the terms of an express statute. In this State it is not believed that such usage ever obtained. Certainly, if such usage ever existed in our local system it was altered many years since by legislative enactments; and the change thus made has been steadily adhered to. The General Assessment Acts of March Session, 1841, ch. 23, sec. 1; 1852, ch. 337, secs. 1, 9; Code of 1860, Art. 81, sec. 2; the General Assessment Act of 1866, ch. 157, secs. 1, 9; the Revenue Act of 1874, ch. 483, sec. 2, and the General Assessment Act of 1876, ch. 260, secs. 1, 17, subjected, in express terms, to valuation and assessment within this State all public loans and stocks belonging to a resident of this State, except those created, or issued by the United States, and also subjected in express terms to valuation and assessment within this State, all investments in securities or stocks of other States, or of corporations incorporated by other States, belonging to a resident of this State.

Usage, where it exists, creates a local law, which may be changed in the manner in which other local laws are altered, that is to say, by the terms of positive law. Hammerton v. Honey, 24 Weekly Rep. 603, 604; Walker v. Transp. Co. 3 Wall. 155; Brown v. Jackson, 2 Wash. C. C. 25; Foley v. Mason, 6 Md. 49, 50; Appleman v. Fisher, 34 Md. 553.

The usage, therefore, to which the Supreme Court refers in the case in 15 Wall. 323, 324, has been qualified and altered by the terms of the positive law of this State and of other States. In this State, the bonds of other States and of municipal corporations incorporated by other States, owned by residents of this State, are treated, for purposes of taxation, as if they were ordinary debts due by non-resident corporations to such residents, and are properly subjected to taxation as the property of the creditors resident in this State in the same manner as if they were ordinary debts due to such residents by non-resident individuals or corporations. As to the rule in other States, see Cooley on Taxation, 65; Burroughs on Taxation, secs. 41, 134, 432; Bank v. Smith, 7 Ohio, 52, 54; Hall v. Commissioners of Middlesex, 10 Allen, 102; Webb v. Burlington, 28 Vt. 190.

II. Were the bonds, obligations, or certificates of indebtedness of corporations, other than municipal corporations, incorporated by this State, or by other States, when such bonds, obligations or certificates of indebtedness are not secured by mortgage, subject to taxation, under the Act of 1876, ch. 260, when owned by residents of this State?

Such bonds have been declared to be taxable by every General Assessment Act passed since 1841. They are evidences of debts due by such corporations to the owners of such bonds. These debts can have no locality separate from the residence of the parties to whom they are due; and, when owned by residents of this State, must be assessed to such owners in common with other personal property of which they are possessed. State Tax on Foreign-held Bonds, 15 Wall. 320.

III. Were bonds, obligations, or certificates of indebtedness of corporations, other than municipal corporations, incorporated by this State, or by any other State, secured by mortgages upon property not within this State, or not wholly within this State, subject to valuation and assessment by this State, under the Act of 1876, ch. 260, when owned by persons or corporations having their residence within this State?

Under the Act of 1876, ch. 260, sec. 1, debts secured by mortgage, due to a resident of this State, were not exempted from taxation, unless the property mortgaged to secure said debts was within this State. It is submitted that such mortgaged property must be wholly within this State to exempt such debts from taxation.

Debts, due to a resident of this State, secured by mortgage upon property in this State, or in any other State, would, unquestionably, be subject to taxation as the property of the persons to whom such debts were due, under the Act of 1876, ch. 260, except for the exemption referred to. The exemption was granted, undoubtedly, for the reason that when the mortgaged property and the mortgage debt were both taxed, contracts were made between the mortgagor and mortgagee, under which the mortgagor became chargeable with the payment of the taxes upon both the mortgaged property, within this State, and upon the mortgage debt. Such a contract was authorized by law. Code, Art. 64, sec. 4. The Legislature felt that the repeal of the provision legalizing such contracts, would not prevent such contracts from being entered into. It, therefore, met the difficulty by releasing the mortgage debt from taxation, and by contenting itself with the tax on the property covered by the mortgage; treating, in order to relieve the mortgagor, the value of the property mortgaged as the equivalent of the interest held in such property by both mortgagor and mortgagee.

It certainly, therefore, was not the intention of the Legislature to release from taxation any debt, taxable by this State, secured by a mortgage, when the property covered by such mortgage was not wholly subject to taxation by this State; for property, not subject to taxation by this State, did not constitute a basis of taxation, within this State, equivalent in value to the aggregate debts which it secured; and a mortgage on such property was not, therefore, intended by the Legislature to be exempted from taxation.

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