Latrobe v. Mayor and City Council of Baltimore

• Decision Date: 27 October 1862
• Citation: 19 Md. 13
• Parties: JOHN H. B. LATROBE, Trustee, v. THE MAYOR & CITY COUNCIL OF BALTIMORE.
• Court: Maryland Court of Appeals

19 Md. 13

JOHN H. B. LATROBE, Trustee, v. THE MAYOR & CITY COUNCIL OF BALTIMORE.

Court of Appeals of Maryland.

October 27, 1862

In an action for the recovery of taxes upon mortgages of real estate lying in the city of Baltimore, assessed to the trustee of said property, residing, at the time of the assessment, and of the institution of the suit, in Howard county, the cestui que trusts residing, at the same time, in said city-- HELD:

1st. That taxes assessed upon a trust estate, constitute a legal cause of action against the holder of the legal estate; for at law, the legal estate in the hands of the trustee, has the legal incidents and obligations of an absolute title, subject only to the claims in equity of the cestui que trust.

2nd. That in this case the appellant was the holder of the legal estate, upon the valuation of which the taxes sought to be recovered were imposed, and upon the construction given to the 13th Art. of the Bill of Rights, as well as upon the general rule above stated, he was the proper person to be assessed for their payment; and the assessment of the tax to the holder of the legal estate, through him, reaches and fastens upon the interest of the beneficial owner.

3rd. That a like construction should be given to the Acts of 1841 ch. 23, 1847, ch. 266, and 1852, ch. 337, requiring " all property owned by persons residents of the State, and not permanently located elsewhere within the State, to be valued to the owner in the county, district or city wherein he or she may reside."

Upon the principle that the possession of personalty follows the person owning the legal title, the mortgages on the valuation of which the assessment of the taxes in this case was made so far as they could be made the basis of an assessment, were beyond the jurisdiction of the appellee.

The recording of a mortgage in another county or district than that of the creditor's residence, cannot have the effect of locating the debt where the mortgage is recorded.

APPEAL from the Superior Court of Baltimore city.

This was an action by the appellee against the appellant, docketed by consent the 7th of October 1859, its object being the recovery of taxes due upon certain securities belonging to the estate of the late Joseph Thornburgh, deceased. The case was submitted to the Court below on a written agreement as to the facts, all of which are substantially stated in the opinion of this Court. The concluding paragraph of said agreement is as follows: " It is agreed that if the Court shall be of opinion, on the foregoing statement of facts, that the personal property of the late Joseph Thornburgh is liable to taxation where the trustee resides, there shall be a verdict for the defendant; but if they shall believe that the tax is to be levied in Baltimore, where the cestui que trusts reside, then there shall be a judgment for the plaintiff for $5,000, interests and costs." Judgment pro forma for the plaintiff was entered the same day upon which the suit was docketed, and the defendant appealed.

The cause was argued before BARTOL, GOLDSBOROUGH and COCHRAN, J.

John H. B. Latrobe, for the appellant:

The 13th Article of the Bill of Rights declares, that every person holding property in the State " ought to contribute his proportion of public taxes, for the support of government, according to his actual worth in real or personal property." Now the person holding the property in this instance, is unquestionably the trustee, for " holding" is a technical term, and expresses clearly just such an interest as the trustee has in the premises. He holds the property for the benefit of the cestui que trusts, and it is his residence which must govern in fixing the rate of taxation.

In this case, the action has been brought in a Court of Law, to enforce a claim at law under an Act of Assembly, based on the 13th Article of the Bill of Rights. Let us see how the law regards the trustee and his cestui que trust, in their relations to the property now to be brought within the scope of either city or county taxation. At law, the cestui que trust is ignored altogether; a Court of Law recognizing only the legal owner of the estate. Crabb on the Law of Real Property, 1844, 55 Law Lib., 399. 97 Law Lib., 257. At common law, the legal estate in the hands of trustees has the same incidents as if the trustees were the usufructuary owner, subject, nevertheless, to the claims in equity of the cestui que trust. Ibid., 1837. In Rivet's case, Moore, 890, it was assumed, apparently, as undisputed law, that the manorial burdens fell on the trustee, personally. The question here arose in connection with a copyhold estate. 97 Law Lib., 266. So, at common law, the right of voting for coroners, sheriffs and members of Parliament, was vested in the trustee, and thus continued until the right was taken away by the Statute of 58 Geo. III. Ibid., 1902. Lewin, 99 Law Lib., 269. Now, if the legal estate of the trustee gave him the right to vote, which, as it was purely a personal matter, could only be exercised where he was domiciled, why should not the estate be taxed according to the same domicil, unless there was a difference between real and personal estate in this particular, which we shall shew there was not. So absolutely, indeed, was the cestui que trust ignored at common law, that, before the Statute of Henry VIII, (of uses,) although there was a privity between the feoffee to uses and the cestui que use, yet to all other persons the feoffee was as much the real owner of the fee as if he did not hold it to the use of another. Even his wife was entitled to dower. See Butler's note, 2 Co. Litt., 271-- b. The feoffee being, then, as regards strangers, including the parties exercising the taxing power, the absolute owner of the estate, it is his residence, necessarily, that must determine the jurisdiction.

Had the present question arisen before the Statute of Henry VIII, the Court, then, would have had no hesitation in making the estate liable to taxation where the trustee resides. But the statute which changed the common law, does not affect cases where duties are imposed on the trustee, which makes it necessary for him to have the possession of real estate, to receive and pay over the rents and profits, & c. Willis on Trustees, 21. Law Lib., Vol. X, and cases cited. The statute of uses affected real estate only, and the estate here is personal. Does this make any difference? There is no reason why it should. The analogies of the law of real property furnish the data for decisions in regard to personal property wherever applicable. Here, all the reasons applicable to the one, are applicable to the other. It was the owner of the land, made so publicly by the feoffment, that the landlord looked to for his feudal dues. The law was for the benefit of the feudal lord; and there was no more reason why he should hunt up the owner of personal property than of real estate. It was the visible and the tangible that he sought; and he claimed his feudal rights as well with regard to the cattle in the field, as to the field itself, where the reputed owner of both was the same person, though both field and flock may have been held in trust for a third party. For authorities to show that there was no difference between real and personal property in this connection, see Willis on Trustees, 72, note c, 10 Law Lib., and authorities there cited. Lewin, 97 Law Lib., 257. Where terms of years or other chattels, real or personal, are the subjects of trust, the trustee has the complete legal ownership. Ibid., 83, and authorities cited. So much so, that no notice is taken of trusts of stock, but the trustee is considered the absolute owner. Ibid., 83, note w.

Arguing, then, from analogy, and adopting the principles here explained, it would seem that we can come to but one conclusion, which is, that the domicil of the trustee must govern, in the exercise of the taxing power, on personal property. No case in this country has been found in the books, but it seems to have been decided in England, that trustees are liable to be rated for the property vested in them, unless they are trustees exclusively for public purposes, without any profit to themselves or a particular class. Lewin on Trusts, 99 Law Lib., 265, citing Queen vs. Sterry, 4 Eng. C. L. Rep., 32; 12 Adolph. & Ellis, 84. The case before the Court falls within this ruling exactly. It is the case of a private trust, with which the public has nothing to do.

If the cestui que trust is to be regarded as the person " holding the property" to be taxed, under the 13th Art. of the Bill of Rights, the State ought to have an available remedy against him after the tax has been assessed, if it remains unpaid; otherwise, there would be a right without a remedy. And yet, what remedy could there be, except circuitously, against the cestui que trust, whose whole estate is in the income which the trustee pays him? In the present case, an action has been brought against the trustee, and in the event of a judgment against him, execution may issue, and the amount be collected; but, were the action against the cestui que trusts, and a recovery had, no execution against them would be available, and the judgment would have to be made the foundation of proceedings against the income payable by the trustee--and this, too, in another county, and before a different tribunal.

Again were the cestui que trusts to remove beyond the State of Maryland, what alternative would there be, but to adopt the...