Simpson v. Hopkins

• Decision Date: 31 January 1896
• Citation: 33 A. 714,82 Md. 478
• Parties: SIMPSON ET AL. v. HOPKINS, COLLECTOR.
• Court: Maryland Court of Appeals

33 A. 714

82 Md. 478

SIMPSON ET AL. v. HOPKINS, COLLECTOR.

Court of Appeals of Maryland

January 31, 1896

Appeal from Baltimore city court.

Action by Lewis N. Hopkins, collector of state and city taxes against Camilla Simpson and another. There was a judgment for plaintiff, and defendants appeal. Affirmed.

Argued before BRYAN, McSHERRY, FOWLER, ROBERTS, and BRISCOE, JJ.

J. I Donaldson and Bernard Carter, for appellants.

Thomas G. Hayes and James P. Gorter, for appellee.

BRISCOE J.

The appellee, collector of state and city taxes of Baltimore city, brought suit against the appellants to recover taxes for three years alleged to be due on certain bonds of the Consolidated Gas Company of Baltimore City, owned by the appellants. It is admitted that these bonds are secured by a mortgage upon the property of the corporation, which is wholly within this state, and that the company is a Maryland corporation. The facts are undisputed, and submitted by an agreement of facts in the record. It is contended by the appellee that the bonds in question are liable to taxation under the provisions of article 81, § 88, of the Code, which is as follows: "All bonds and certificates of debt bearing interest, issued by any railroad corporation or other corporation of this state, secured by mortgage of property wholly within this state, shall be subject to assessment and taxation to the owner or owners thereof, in the same manner as like bonds or certificates of debt bearing interest and secured by mortgage of property, partly in this state and partly in some other state or states, are now subject under the laws of this state, and it shall be the duty of the county commissioners of the several counties, and the appeal tax court of Baltimore city, to assess all such bonds and certificates of debt to the owner or owners thereof resident in their several counties or in the city of Baltimore respectively." And section 4 of the same article of the Code makes certain exemptions from taxation, by providing that the preceding sections, relating to valuation and assessment, shall not apply to mortgages upon property wholly within the state, nor to the mortgage debts secured thereby nor to such portions of the shares of homestead and building associations as shall be represented by mortgages upon real or leasehold property within this state, when such real or leasehold estate so mortgaged is subject to taxation under the laws of this state, nor to such mortgages when the real or leasehold estate so mortgaged is subject to taxation under the laws of this state. And the appellants contend that the bonds in question are not liable to taxation, for reasons which we will consider in their regular order:

First because section 88 of article 81 of the Code of Public General Laws is unconstitutional and void, by reason of its being a discrimination against a special kind of property, which is forbidden by article 15 of the declaration of rights. It appears that under the statute the bonds of a corporation, secured by mortgage, are subject to taxation in the hands of the holders, while the debt of an individual, secured by mortgage, is exempt. The first question, then, is whether, in this case, the taxation of corporate bonds secured by mortgage is such a discrimination between the same kinds of property as to be against the rule requiring uniformity of taxation, and unconstitutional, under article 15 of the declaration of rights. Now, it has been settled by repeated decisions of this court that a debt, whether secured by mortgage or not, is property in the hands of the creditor, liable to taxation, and that such debt, when secured by mortgage, may be assessed to the mortgagee, while the mortgaged property may also be assessed for taxation to the mortgagor. United States Eiectric Power & Light Co. v. State, 79 Md. 72, 28 A. 768; Allen v. Commissioners, 74 Md. 296, 22 A. 398; Mayor, etc., v. Canton Co., 63 Md. 227; Rice's Case, 50 Md. 319. There can be no question, then, as to the power of the state to tax a debt of a corporation secured by mortgage. And it has also been settled that article 15 of the declaration of rights constitutes no bar to the right of the legislature to exempt certain kinds of property from taxation, when that exemption is not an arbitrary discrimination in favor of a particular class. In Buchanan v. Commissioners, 47 Md. 293, referring to the act of 1874, c. 483, which exempted mortgage debts from taxation, this court said: "But it is equally evident it was not the intention to impose taxes upon every kind of debt. Express discrimination is made as to the character of the debt liable to taxation. The authority of the legislature to make such discrimination, and to exempt any species of property from taxation, according to its views of public policy, cannot be questioned. Its power to do so has been exercised from the origin of the government." Wells v. Commissioners, 77 Md. 139, 26 A. 357; Bank of Commerce v. New York City, 2 Black, 631. In the recent case of State v. Applegarth, 81 Md. 293, 31 A. 961, the greatest diversity existed as to the different classes upon whom license taxes were imposed. We cannot, then, assent to the proposition that the taxation of the bonds of a corporation, secured on mortgage, while the debt of an individual, so secured, is exempt, is an arbitrary discrimination against corporations, or the holders of corporate securities. An...