Knight v. City of Boston

• Decision Date: 20 October 1893
• Parties: KNIGHT et al. v. CITY OF BOSTON.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

159 Mass. 551

35 N.E. 86

KNIGHT et al. v. CITY OF BOSTON.

Supreme Judicial Court of Massachusetts, Suffolk.

October 20, 1893

COUNSEL

Blaney & Robinson, for appellants.

Andrew J. Bailey for appellee.

OPINION

HOLMES J.

By Pub.St. c. 11, § 4, "any loan on mortgage of real estate, taxable as real estate," is not included among debts taxable as personal property. A majority of the court are of opinion that the bonds in question represent a loan on mortgage of real estate in Massachusetts, and that they are within the exception created by the foregoing words. The loan must be upon a mortgage which is taxable as real estate. This refers to sections 14-16 of the same chapter, which, with the above-mentioned exception in section 4, represent St.1881, c 304, "An act relieving property from double taxation in certain cases." By section 14, "when any person has an interest in taxable real estate as holder of a duly recorded mortgage *** the amount of his interest as mortgagee shall be assessed as real estate," etc. This seems to us to apply to the present case. It is true that the mortgage and the bonds are in different hands, the mortgage being held by a trustee. But this cannot be material. If it were, then in the case of an ordinary mortgage, if the mortgagee sold the note, and did not assign the mortgage, the note would become taxable in the hands of the purchaser. The double taxation which the act was passed to avoid is the same whether a trust intervenes or not, and we can see no legislative ground for a distinction. The act has no words which require the creditor to hold the mortgage in person. It only requires that the mortgage should be taxable as real estate. When a mortgage is made to a trustee for bondholders the mortgage interest is taxable to the trustee who represents them, as it would have been to the bondholders themselves if the mortgage had been made to them directly. In the present instance the trustees have paid the tax on the whole value of the land, which is equal to the amount of the bonds outstanding. The tax on the bonds must be abated.

Judgment for petitioners.

DISSENTING

MORTON, J., (dissenting.)

I regret that I am unable to agree with the majority of the court. As the case is an important one, I deem it advisable to state the reasons for my dissent. It is the general policy of the law that all property of the inhabitants of a state shall be taxed. Exemptions are therefore construed strictly and are not to be enlarged by construction. If a party claims that certain property is exempt, the burden is on him to show clearly that it comes within some exception. Redemptorist Fathers v. Boston, 129 Mass. 180; Appeal Tax Court v. Rice, 50 Md. 302; Cooley, Tax'n, (2d Ed.) 208. It is provided in Pub.St. c. 11, § 4, that "personal estate shall, for the purposes of taxation, include goods, chattels, money and effects, wherever they are *** money at interest, and other debts due the persons to be taxed more than they are indebted or pay interest for, but not including in such debts due any loan on mortgage of real estate, taxable as real estate, except the excess of such loan above the assessed value of the mortgaged real estate." The words "or indebtedness" have been substituted for the word "due" preceding the words "any loan on mortgage," but without affecting the meaning. St.1882, c. 76. The petitioners contend that the bonds for which they have been taxed are loans on mortgage of real estate taxable as real estate, and come within the above exemption. The subject of the exemption is mortgages, where the mortgage is taxable as real estate. The language of the exemption does not describe what mortgages are taxable as real estate. To ascertain that, resort must be had to sections 14 and 15 of the same chapter. Section 14 provides that "when any person has an interest in taxable real estate as the holder of a duly recorded mortgage given to secure the payment of money the amount of which is fixed and certain, the amount of his interest as mortgagee shall be assessed as real estate in the place where the land lies; and the mortgagor shall be assessed only for the value of said real estate after deducting the assessed value of all such mortgagee's interests therein. ***" Section 15 provides that "if any holder of such a mortgage fails to file in the assessors' office a statement under oath of all his estate liable to taxation under the preceding section, including a statement of the full amount remaining unpaid upon said mortgage and of his interest therein, the amount stated in the mortgage shall be conclusive as to the extent of such interest. ***" From these sections it appears that it is only when a person has an interest in taxable real estate as the holder of a duly-recorded mortgage thereon that his interest as mortgagor is taxable to him as real estate, and that he can be required to file a...