Crosland v. Federal Land Bank of New Orleans

• Decision Date: 25 February 1922
• Docket Number: 3 Div. 552.
• Citation: 207 Ala. 456,93 So. 7
• Parties: CROSLAND, PROBATE JUDGE, v. FEDERAL LAND BANK OF NEW ORLEANS.
• Court: Alabama Supreme Court

93 So. 7

207 Ala. 456

CROSLAND, PROBATE JUDGE, v. FEDERAL LAND BANK OF NEW ORLEANS.

3 Div. 552.

Supreme Court of Alabama

February 25, 1922

Rehearing Denied May 11, 1922.

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Mandamus by the Federal Land Bank of New Orleans to require D. W Crosland, as Judge of Probate, Montgomery County, to record a certain mortgage without the payment of the usual privilege or license tax therefor. From a decree granting the writ respondent appeals. Reversed and rendered.

McClellan and Miller, JJ., dissenting.

A. A. Evans, of Montgomery, Harwell G. Davis, Atty. Gen., and James J. Mayfield, Asst. Atty. Gen., for appellant.

W. C. Dufour and John St. Paul, Jr., both of New Orleans, La., and W. A. Gunter and Ludlow Elmore, both of Montgomery (Tyler Goodwin, of Montgomery, amicus curiæ), for appellee.

ANDERSON, C.J.

The tax fixed by schedule 71 of section 361 of the Revenue Act of 1919 (Acts 1919, p. 420) is mentioned as a "privilege or license tax," and is required as a condition precedent to the recording, in the proper office of this state, of the instruments therein mentioned. Notwithstanding the amount of said tax is based or graduated upon the consideration of said instruments, it is in no sense an ad valorem or direct tax. Its payment is not compulsory, but is entirely optional with the holder, if he seeks to get the benefit or protection of our registration laws by using the public records. It was held to be a privilege, and not an ad valorem, tax in the case of Barnes v. Moragne, 145 Ala. 313, 41 So. 947, and was so designated and treated in the case of State v. Alabama Fuel Co., 188 Ala. 487, 66 So. 169, L. R. A. 1915A, 185, Ann. Cas. 1916E, 752. It is true that this last case explains and qualifies an expression in the opinion in the case of Barnes v. Moragne, supra, but not on this point, as these two cases are in thorough accord as to the kind of tax we are now dealing with.

Our tax law puts this tax on all instruments therein mentioned offered for record, and provides no exemption; so, if this appellee can get the benefit of recording the mortgage in question, it must rely upon an exemption under the federal, and not the state, law. It is true the Federal Farm Loan Act (39 U.S. Stat. § 26, p. 380 [U. S. Comp. St. § 9835q]) declares the mortgage in question to be an instrumentality of the government, and that the same shall be exempt from federal, state, municipal, and local taxation; but we think that the exemption refers to a property or ad valorem tax, and not to the tax in question. In other words, we cannot conceive of an intent on the part of the Congress to authorize this appellee to use the records of the respective states for the registration of its security and escape the payment of the record or privilege tax exacted of all others. This holding finds support in the cases of Pocahontas v. Commonwealth, 113 Va. 108, 73 S.E. 446, and in an opinion by Attorney General Garland, 18 Opinions of Atty. Gen. pp. 491, 492. Attorney General Garland said:

"The tax is upon the registration of deeds, a means provided by the state for the prevention of fraud in transactions affecting the title to real property; it is not a tax upon either the instrumentalities, agencies, or property of the general government, strictly speaking. The case here does not differ essentially from one where a tax is imposed by the state on the process of its courts and an action in one of these courts is brought by the United States. In such case, doubtless, the United States, unless exempted by the state law, would be liable to pay the tax on process sued out thereby the same as any other suitor would be under like circumstances. The United States may or may not put its deed on record in the county clerk's office, as it may or may not bring its suit in the state court; but, where it does either, it would seem to be, equally with private parties, bound to pay the fees and charges therefor imposed by the laws of the state."

True, the attorney general was dealing with a deed; but it was just as much an instrumentality of the federal government as the mortgage in question. Moreover, the Virginia statute that he was dealing with imposed a record tax in addition to the registration fees on mortgages and deeds of trust, as well as deeds. Acts Va. 1883-84, p. 561; Va. Code 1887, § 579.

We repeat that the payment of the tax in question is purely voluntary on the part of this appellee, as its mortgage cannot be taxed unless it desires to place it upon the records of the state. While section 2 of the Revenue Act of 1919 (page 283), in providing exemption from an ad valorem tax, is a little involved, as it exempts mortgages which have been filed for record and does not specifically mention unrecorded mortgages, yet the last part of the sentence exempts "all solvent credits," and counsel for the state concede in their brief that all mortgages, whether recorded or not, are exempt from an ad valorem tax under our statute. This, however, is unimportant in the present case, for, if the mortgage in question is not exempt under our statute from an ad valorem tax, it is under the federal act; so, as above stated, the payment of this tax is optional with the appellee. If it does not desire to record its mortgage, the same is not liable to a tax; but, if it wishes the benefit and protection of our registration laws, it must, like all others, pay for the privilege.

The trial court erred in awarding the mandamus; that judgment is reversed, and one is here rendered, dismissing the petition for mandamus.

Reversed and rendered.

SAYRE, SOMERVILLE, GARDNER, and THOMAS, JJ., concur.

McCLELLAN and MILLER, JJ., dissent.

On Rehearing.

ANDERSON, C.J.

It is insisted that there is a conflict between the Alabama statute and the Federal Farm Loan Act, in that the former requires this mortgage tax to be paid by the lender, whereas the latter provides that such a charge can only be paid by the borrower. (A point not made upon the previous consideration of this cause.) Whether or not such a conflict could have any material bearing upon the question in hand we need not decide, for the reason that we see no such conflict. True, subdivision (a) of schedule 71 of the Act of 1919 (Acts 1919, p. 420) levies this tax against the lender, and requires a certificate that the same has been paid by the lender before the instrument can be recorded; but the certificate in question is required only by the probate judge or his clerk. Subdivision (d), schedule 71. This simply means that the probate judge must collect the tax and so certify before recording the instrument, but our statute does not preclude the lender from contracting with the borrower as to who shall pay the same, and there is therefore no conflict between the state law and paragraph 9 of section 13 of the federal act (U. S. Comp. St. § 9835g), even if said last act requires this charge to be paid by the borrower and excludes the right of the lender to do so. In other words, there is nothing in the Alabama statute in conflict with paragraph 9 of section 13 of the federal act, or which prohibits the lender from including this charge in the preliminary expense for negotiating the mortgage loan, or from advancing the same under an agreement with the borrower, as provided by said paragraph 9 of section 13 of the federal act. The Alabama statute simply means that this tax must be paid by the lender, the owner of the mortgage, when it is tendered for record and so certified by the probate judge or his clerk before the same is recorded, but as to the source from which the lender gets the fee the state is not concerned.

SAYRE, SOMERVILLE, GARDNER, and THOMAS, JJ., concur.

McCLELLAN J. (dissenting).

The judge of probate of Montgomery county refused to receive and file for record a mortgage by Ashley to secure a loan from the Federal Land Bank; this for the reason, alone, that the sum of $4.50 was not paid as exacted or imposed by schedule 71 of section 361 of Alabama's Revenue Law of 1919. Gen. Acts Ala. 1919, p. 420. This schedule of the Revenue Law provides:

That "no mortgage *** shall be received for record unless" the privilege or license taxes stipulated therein have been paid "upon such instrument before the same shall be offered for record. ***"

It is further provided therein that these privilege or license taxes shall be-

"paid for by the lender, and no such paper shall be received for record unless there is filed therewith a certificate that the privilege tax was paid by the lender."

Manifestly the "certificate" there prescribed is a certificate made by the lender, or by some agent of the lender. The office of that certificate is to advise the judge of probate, the registration officer, of the fact that the lender has paid the privilege tax there exacted. Its design consists with the law's just-stated imposition of the tax upon the lender, excluding its exaction of the borrower.

The majority of this court declares, in response on rehearing ante, that the "certificate" required at the time of filing for record, viz. that the tax "was paid by the lender," is a duty enjoined upon the judge of probate, the registration officer. This view is wholly erroneous. A reading of schedule 71 of the Revenue Law will readily disclose the mistake. The "certificate" required of the judge of probate is that prescribed by subdivision "d" of schedule 71 (Acts 1919, pp. 420, 421), and its function is to confine the payment of the privilege tax in question to one county only where the mortgage describes property situate in more than one county. That is the "certificate" to which reference is made in the penalty provisions of subdivision "h" of schedule 71 (Acts...