Fed. Land Bank Of Baltimore v. Hubard

• Decision Date: 17 January 1935
• Parties: FEDERAL LAND BANK OF BALTIMORE. v. HUBARD.
• Court: Virginia Supreme Court

178 S.E. 16

FEDERAL LAND BANK OF BALTIMORE.

v.HUBARD.

Supreme Court of Appeals of Virginia.

Jan. 17, 1935.

Error to Circuit Court, Buckingham County.

Proceeding by the Federal Land Bank of Baltimore for a writ of mandamus to be directed to C. S. Hubard, clerk of the circuit court of Buckingham county, to require the respondent to record certain deed without the payment of an additional tax. Judgment was entered denying the writ, and plaintiff brings error.

Reversed and writ of mandamus directed to issue.

Argued before CAMPBELL, C. J., and HOLT, EPES, HUDGINS, GREGORY, BROWNING, and CHINN, JJ.

John B. Boatwright, of Buckingham, and I, P. Whitehead and Florence I* Wheatley, both of Baltimore, Md., for plaintiff in error.

The Attorney General, and W. W. Martin, of Richmond, for defendant in error.

BROWNING; Justice.

The action of the circuit court of Buckingham county, Va., is before us for review.

That court denied the petition for a writ of mandamus to require the clerk of the circuit court of that county to record a deed conveying certain lands to the Federal Land Bank of Baltimore, on receiving the fee for recording it, without the payment of an additional sum of "twelve cents on every hundred dollars or fraction thereof of the consideration of the deed or the actual value of the property conveyed, whichever is greater."

The above-quoted lines are from section 121 of the Tax Code of Virginia (Code Supp. 1932, Appendix p. 216) and constitutes the legal requirement of Virginia for the recordation of a deed, and which was sought to be applied in this case by the recording official.

The Federal Land Bank of Baltimore acquired the lands conveyed to it by reason of the foreclosure of one of its mortgages existing in that county.

Section 26 of the Federal Farm Loan Act, in its appropriate parts, is as follows:

"Every Federal land bank and every national farm loan association, including the capital and reserve or surplus therein and the income derived therefrom, shall be exempt from Federal, State, municipal, and local taxation, except taxes upon real estate held, purchased, or taken by said bank or association under the provisions of section 761 and section 781 of this chapter. First mortgages executed to Federal land banks, or to joint-stock land banks, and farm loan bonds issued under the provisions of this chapter, shall be deemed and held to be instrumentalities of the Government of the United States, and as such they and the income derived therefrom shall be exempt from Federal, State, municipal, and local taxation."

"Nothing herein shall be construed to exempt the real property of Federal and joint-stock land banks and national farm loan associations from either State, county, or municipal taxes, to the same extent, according to its value, as other real property is taxed." (July 17, 1916, c. 245, § 26, 39 Stat. 380, title 12, §§ 931, 933, USCA.)

The state concedes that the bank is a federal instrumentality and, therefore, can only be taxed by it as allowed by the federal laws.

This concession obviates the necessity of comment upon much of the matter in the petition and briefs.

The case, we think, is controlled, in principle, by the case of Federal Land Bank of New Orleans v. Crosland, 261 U. S. 374, 43 S. Ct. 385, 386, 67 L. Ed. 703, 29 A. L. R. 1. The only material difference between that case and this under consideration is that the offending tax was upon a first mortgage deed rather than a deed of conveyance of the land itself. We do not think this difference weakens the principles enunciated in the Crosland Case as applicable to this case.

In that case it was said by Mr. Justice Holmes:

"The tax was sustained by the Supreme Court of the State [207 Ala. 456, 93 So. 7] and the petition for mandamus was ordered to be dismissed on the ground that the payment was optional; that the Federal Land Bankwas not required to put its deed on record, and that if it did it must pay whatever others were required to pay for the registration of Its security. But the case is not quite so simple as that. The law of Alabama does make it practically necessary to record such deeds, because it overrides them if not recorded, in favor of any purchaser without notice. While it does so it cannot say that it leaves the Bank free to record or not. The Bank has a choice it is true, but so has one who acts under duress. The Eliza Lines, 199 U. S. 119, 131, 26 S. Ct. 8, 50 L. Ed. 115, 120, 4 Ann. Cas. 406.

"The State is not bound to furnish a registry, but if it sees fit to do so it cannot use its control as a means to impose a liability that it cannot impose directly, any more than it can escape its constitutional obligations by denying jurisdiction to its Courts in cases which those Courts are otherwise competent to entertain. Kenney v. Supreme Lodge, L. O. M., 252 U. S. 411, 415, 40 S. Ct. 371, 64 L. Ed. 638, 640, ...