Trustees', Executors' & Securities Ins. Corp. v. Hooton

• Decision Date: 14 December 1915
• Docket Number: 7006.
• Citation: 157 P. 293,53 Okla. 530,1915 OK 1059
• Parties: TRUSTEES', EXECUTORS' & SECURITIES INS. CORP., LIMITED, ET AL. v. HOOTON, COUNTY CLERK.
• Court: Oklahoma Supreme Court

157 P. 293

53 Okla. 530, 1915 OK 1059

TRUSTEES', EXECUTORS' & SECURITIES INS. CORP., LIMITED, ET AL. v. HOOTON, COUNTY CLERK.

No. 7006.

Supreme Court of Oklahoma

December 14, 1915

Rehearing Denied May 2, 1916.

Syllabus by the Court.

The act of July 12, 1913 (chapter 246, Sess. Laws 1913, p. 684), as amended March 11, 1915 (chapter 105, Sess. Laws 1915, p 167), levies a registration tax upon the privilege of recording the instruments therein specified, and is constitutional and valid.

(a) Said act does not contravene section 8, art. 10 Williams' Annotated Constitution, requiring that all property which may be taxed ad valorem shall be assessed for taxation at its fair cash value.

(b) Nor does said act violate section 5, art. 10, Williams' Annotated Constitution, which requires that taxes shall be uniform upon the same class of subjects.

(c) Section 20, art. 10, Williams' Annotated Constitution providing that the Legislature shall not impose taxes for the purposes of any county, city, town, or other municipal corporation, etc., does not apply to the tax imposed by this act.

Where the plain intent and meaning of the Legislature can be gathered from the context of a statute, in order to give effect to such intention the court, in construing such statute, may substitute or supply a necessary and proper word to attain this result.

Said act is not in violation of section 2, art. 4, nor of the Fourteenth Amendment of the Constitution of the United States.

Mandamus will not lie to compel a county clerk to record a mortgage upon real estate without the payment of the tax imposed by said act.

Error from District Court, Dewey County; G. A. Brown, Judge.

Application by the Trustees', Executors' & Securities Insurance Corporation, Limited, and another, as trustees, for writ of mandamus to J. E. Hooton, County Clerk of Dewey County. Judgment for defendant, and plaintiffs bring error. Affirmed.

Geo. E Black and W. A. Sipe, Jr., both of Tulsa, for plaintiffs in error.

S. P. Freeling, Atty. Gen., and J. H. Miley, Asst. Atty. Gen., for defendant in error.

HARDY J.

Plaintiffs in error, as plaintiffs below, applied to the district court of Dewey county for a writ of mandamus to the defendant in error as register of deeds of the county named, requiring him to record a mortgage to plaintiffs, and from a judgment refusing the writ this appeal is prosecuted. On January 4, 1915, pending this appeal, defendant's term of office as register of deeds expired, and as county clerk he succeeded himself, and upon suggestion of this fact by stipulation the proceedings were amended to conform therewith.

Plaintiffs allege that on the 15th day of July, 1914, the Kansas City, Mexico & Orient Railroad Company executed and delivered to plaintiffs a mortgage upon all of its railroad and other property in this state as security for the payment of $31,000,000 par value of its gold bonds, dated July 15, 1914, and payable July 1, 1964, said bonds being issued as security for the payment of $6,000,000 in promissory notes, all of the proceeds of which were used by it to purchase said railroad, and for the further purpose of raising money from the sale of said bonds to be used in the construction, improving and erection of property of said company in the counties of this state which would be subject to an ad valorem tax in the counties where situated, and that said mortgage is owned and held by nonresidents of the state of Oklahoma. On the 12th day of November, 1914, plaintiffs tendered said mortgage to defendant as register of deeds of Dewey county, to be recorded, together with the usual fees for recording other than that required by the act in question. Defendant refused to record said mortgage without payment to the county treasurer of Dewey county for the use of the counties entitled thereto the sum of 50 cents for each $100 of that portion of said mortgage which the value of said property in Oklahoma bears to the total value of said mortgaged property, as determined by the act; and plaintiffs, declining to pay this amount, brought this suit.

It is not questioned by defendant that mandamus is the proper remedy in the present case if plaintiffs are entitled to have such mortgage recorded as prayed. The question presented for our consideration is whether the act of July 12, 1913, being chapter 246, Sess. Laws 1913, p. 684, together with the amendment thereto of March 11, 1915, being chapter 105, Sess. Laws 1915, p. 167, is valid and constitutional. Section 1 of said act defines what instruments shall be embraced within the meaning of the term "real estate mortgage"; section 2 exempts all mortgages taxed by the act from ad valorem and all other taxation by the state or any local subdivision thereof, except that income taxes which may be payable in whole or in part from the interest received from such mortgage indebtedness are not affected; section 3 provides that no instrument affected by the act shall be exempt from the tax imposed thereby by reason of anything contained in any other statute or by reason of nonresidence within the state, or for any other cause; section 4 prescribes the rate of taxation; section 5 authorizes the owner of any mortgage filed prior to July 1, 1913, to take the benefits of said act by complying therewith; section 6 relates to the recording of supplemental instruments or mortgages; section 7 makes provision for mortgages where the amount thereof is indefinite, or for contract obligations; section 8 prescribes the payment of said taxes as a prerequisite to recording the said instrument, to its use as evidence, and prohibits judgment or final order for the foreclosure and enforcement of any mortgage subject to the tax imposed or of any debt or obligation secured by or which secures any such mortgage, unless the tax imposed has been paid as provided; section 9 governs the payment of taxes in cases of mortgages made by corporations in trust to secure bonds or obligations issued or to be issued thereafter; section 10 regulates the apportionment of the amount of taxes to be paid where the property covered by the mortgage is situated in more than one county, and where the property is located partly within this state and partly without the state; section 11 regulates the payment to and distribution of taxes by the county treasurer; section 12 makes provision for advances on old mortgages, and further provides that all mortgages upon which the special tax is not paid shall be taxable under existing laws; and section 13 repeals all acts and parts of acts in conflict therewith.

The first objection to the validity of the act is that it is in violation of section 8 of article 10 of the Constitution of Oklahoma, which provides that:

"Property which may be taxed ad valorem shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale."

In support of this objection it is argued that the tax imposed by the act under consideration is a tax upon property, and therefore the tax levied is an ad valorem tax, and subject to the limitations imposed by section 8 of article 10 of the Constitution. A considerable portion of the briefs of counsel for both sides are devoted to a discussion of this question. The statement is made by the Supreme Court of Kansas in the case of Wheeler v. Weightman, 96 Kan. 50, 149 P. 977, L. R. A. 1916A, 846, that in twenty-eight states of the Union real estate mortgages are taxed as personal property, while in six states they are taxed as an interest in real estate, and in five states a so-called registry tax is imposed which tax takes the place of all other taxes, and in this last class the court includes the states of Alabama, Michigan, Minnesota, New York, and Oklahoma; while in nine states such mortgages are exempt from any species of taxation.

It would serve no useful purpose to go into an extended review of the history of legislation seeking to impose a tax of this character. The reason for such taxation is well stated in Union Trust Co. v. Detroit Common Council, 170 Mich. 692, 137 N.W. 122, as follows:

"The history of the adoption of this act is a matter of common knowledge. It is well claimed by relator that mortgages and like instruments had been concealed from assessing officers by putting them in the names of nonresidents, withholding them from record, and other familiar means, and it was urged that, if a special tax could be imposed upon these instruments when they were recorded, and therefore foreclosure made dependent upon their having been recorded, and the tax made sufficiently low in amount, there would be an inducement to disclose mortgages to the assessing officers rather than to hide them as theretofore. With this end in view, the act was passed."

An additional reason sometimes given for the passage of legislation of this character is that by exempting mortgages from ordinary ad valorem taxes and placing this smaller tax in lieu of all other taxes that capital would be attracted to the state and would be induced to invest in securities of this nature. It will be noted that the title of the act itself is "An act providing for exemption from ad valorem taxes of mortgages on real estate and the indebtedness thereby secured; the payment of a registration tax when filing a mortgage for record," etc., and by section 2 it appears that all mortgages upon real property within the state covered by this act and the debts and obligations secured thereby are exempted from ad valorem and all other taxes.

It is thus seen that the Legislature has itself denominated the tax a registration tax, and has imposed the same in lieu of ad valorem and all other taxes. The authority of the Legislature to do so is contained in section 12, art. 10, of ...