Brooks v. Town of West Springfield

• Decision Date: 26 November 1906
• Citation: 193 Mass. 190,79 N.E. 337
• Parties: BROOKS v. TOWN OF WEST SPRINGFIELD.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

193 Mass. 190

79 N.E. 337

BROOKS v. TOWN OF WEST SPRINGFIELD.

Supreme Judicial Court of Massachusetts, Hampden.

November 26, 1906

COUNSEL

Chas L. Long, for complainant.

J. B Carroll and W. H. McClintock, for respondent.

OPINION

BRALEY J.

The mortgagor covenanted to pay all taxes that might be assessed and the burden of proving that under Rev. Laws, c. 12, §§ 16 17, 18, the mortgagee's interest should have been separately taxed was on the petitioner. By section 45, which re-enacted St. 1882, p. 131, c. 175, § 1, unless a statement under oath is made either by a mortgagor or mortgagee of the amount of the mortgage within the time provided by section 41 for bringing in lists of taxable property the tax shall not be invalid because not separately assessed. It was pointed out in Worcester v. Boston, 179 Mass. 41, 49, 60 N.E. 410, which construed the original act in connection with Pub. St. 1882, c. 11, §§ 14, 15, 16, now Rev. Laws, c. 12, §§ 16, 17, 18, that these provisions were not generally regarded by assessors, and where the mortgagee has not taken possession the premises are taxed to the mortgagor, and no assessment is levied on the mortgagee's interest. These various sections when construed together mean that if separate assessments have not been made by reason of the failure of either of the parties to make such request, then the tax is properly assessed solely upon the mortgaged land. The consequent exemption of the mortgagee from taxation for the debt would follow as in this indirect manner it already has been valued and taxed as real estate, except in those cases where the loan exceeds the assessed value of the security, when the excess becomes taxable as personal property. The present case is submitted upon agreed facts from which no inferences can be drawn, and unless it affirmatively appears that an assessment should have been laid in one or the other of these forms there is no just cause of complaint. Olds v. City Trust Co., 185 Mass. 500, 506, 70 N.E. 1022, 102 Am. St. Rep. 356.

The bond owned by the petitioner is one of a series issued by a foreign corporation, which to secure their payment gave a mortgage running to a domestic trustee of its real property situated in this and other states, and also of its machinery equipment, patents, trade-marks and franchises. Having been taxed for its market value, he petitioned for an abatement upon the ground that being secured by a mortgage of real estate the bonds were exempt, and that as the interest of the mortgagee was taxable, to tax them separately would be in effect the imposition of a double levy. The debt represented by the bond ordinarily would be classified and taxed as personal property at the domicile of the owner. It still remained money at interest due to the holder, and apart from our statute requiring a separate assessment of the debt as realty an abatement could not be ordered, although the land alone had been subjected to a tax for its full valuation, as the right separately to assess the debt secured, and the security to the mortgagor as owner would be unimpaired. Rev. Laws, c. 12, §§ 4, 15. It was, however, within legislative authority to provide that the interest of the mortgagee should be treated and taxed as real estate. Worcester v. Boston, ubi supra; Abbott v. Frost, 185 Mass. 398, 399, 400, 70 N.E. 478. Without reviewing previous legislation to which reference is fully made in these cases, it is provided by Rev. Laws, c. 12, § 4, cl. 2, that 'any loan on mortgage of real estate taxable as real estate' shall not be taxable as personal property, and by section 16 the interest of the mortgagee in real estate mortgaged to secure the payment of a fixed sum is to be so assessed. In theory the tax is levied on the amount of the debt outstanding, as in this way, unless the equity is valued at less than the loan, the total valuation represented by the legal and equitable estates is equalized. The earlier statute of which this is a reenactment was construed in Knight v. Boston, 159 Mass. 551, 553, 35 N.E. 86, to include negotiable bonds secured by a mortgage of real estate situated wholly in Massachusetts. Our system of taxation is purely statutory, and the conditions which underlie the exemption are plainly stated. They are, that the debt must be secured by a mortgage of realty, and that the mortgagee's interest must be taxed as real estate. Fireman's Fire Insurance Co. v. Com. 137 Mass. 80, 81. This legislation, moreover, is limited to property within this jurisdiction, and in the construction of statutes relating to taxation, if otherwise taxable, property is not exempt unless such an intention is clearly manifested by express enactment, and an exemption is not to be created by implication. Dwight v. Boston, 12 Allen, 316, 322, 90 Am. Dec. 149; State Treasurer v. Auditor General, 46 Mich. 224, 9 N.W. 258; Redemptorist Fathers v. Boston, 129 Mass. 178; Corcoran v. Boston, 185 Mass. 325, 326, 70 N.E. 197; Henderson Bridge Co. v. Henderson City, 173 U.S. 617, 19 S.Ct. 553, 43 L.Ed. 823. Under the conditions of the mortgage the outstanding indebtedness of itself as between the mortgagor and...