Federal Land Bank v. Hubard

• Decision Date: 17 January 1935
• Citation: 163 Va. 860
• Parties: THE FEDERAL LAND BANK OF BALTIMORE v. C. S. HUBARD, CLERK OF THE CIRCUIT COURT OF BUCKINGHAM COUNTY.
• Court: Virginia Supreme Court

Page 860

163 Va. 860

THE FEDERAL LAND BANK OF BALTIMORE v. C. S. HUBARD, CLERK OF THE CIRCUIT COURT OF BUCKINGHAM COUNTY.

Supreme Court of Virginia, Richmond.

January 17, 1935.

Present, All the Justices.

TAXATION — Fee of Twelve Cents on Every Hundred Dollars or Fraction Thereof for Recording a Deed — Fee a Tax. — A fee of twelve cents on every hundred dollars or fraction thereof of the consideration of a deed or the actual value of the property conveyed required by a State statute in addition to the regular fee for recording a deed is a tax on the grantees and therefore unenforceable against a Federal Land Bank in regard to deeds to land in the State acquired by mortgage foreclosure.

Held: That this additional fee is a tax and unenforceable against a Federal Land Bank. It was conceded that the bank was a Federal instrumentality, and, therefore, could only be taxed as allowed by the Federal laws; that the case was controlled by the case of Federal Land Bank of New Orleans Crosland, 261 U.S. 374, 43 S.Ct. 385, 386, 67 L.Ed. 703, 29 A.L.R. 1. 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 could not impose directly. The State attempted to disguise the tax, and in doing so, by the construction given to the statute by the Supreme Court, it has included mortgages that it is not at liberty to reach. The statute said that the lender must pay the tax, but whoever pays the tax it is a tax upon the mortgage, and that is forbidden by the law of the United States. The tax was a tax upon the grantee, and the State undertook to use the condition attached to its registration as a practical mode of collecting it. A deed is but a muniment of title. It is not land but is only evidence of the acquisition of land.

The instant case was a proceeding by a Federal Land Bank for a writ of mandamus to direct the clerk of the Circuit Court of Buckingham county to record a certain deed without the payment of the additional tax of twelve cents on every hundred dollars or fraction thereof of the consideration of a deed or the actual value of the property conveyed. From a judgment denying the writ plaintiff assigns error.

The opinion states the case.

John B. Boatwright, I. P. Whitehead, Florence L. Wheatley and Peyton G. Jefferson, for the plaintiff in error.

Abram P. Staples, Attorney-General, and W. W. Martin, Assistant Attorney-General, for the defendant in error.

BROWNING, J., delivered the opinion of the court.

The action of the Circuit Court of Buckingham county, Virginia, 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, ch. 245, sec. 26, 39 Stat. 380, Title 12, secs. 931, 933, U.S.C.A.)

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 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...