Wheeler v. Weightman

Decision Date29 June 1915
Docket Number20,064
Citation149 P. 977,96 Kan. 50
PartiesBENNETT R. WHEELER, Plaintiff, v. MATT WEIGHTMAN, Jr., as County Treasurer of Shawnee County, Defendant
CourtKansas Supreme Court

Decided. January, 1915.

Original proceeding in mandamus.

Motion quashed.



TAXATION--Registration Fees for Real-estate Mortgages--Statute Unconstitutional. Chapter 250 of the Laws of 1915, entitled, "An Act relating to registration fees for, and taxation of, real estate mortgages," contravenes section 1 of article 11 of the constitution, requiring a uniform and equal rate of assessment and taxation, and consequently is void.

Bennett R. Wheeler, and John F. Switzer, both of Topeka, for the plaintiff.

W. E Atchison, county attorney, John S. Dean, James A. Troutman, and John L. Hunt, all of Topeka, for the defendant.

Chester I. Long, A. M. Cowan, both of Wichita, S. H. Allen, Otis S. Allen, and George S. Allen, all of Topeka, as amici curiae.



The action is one of mandamus to compel the county treasurer to accept the registration fee, duly tendered, for a real-estate mortgage and to indorse on the mortgage an official certificate of the payment of such fee, under chapter 250 of the Laws of 1915. The statute is appended to this opinion.

The defendant moves to quash the alternative writ for the reason it does not state facts sufficient to entitle the plaintiff to the desired relief. The motion to quash raises the question of the validity of the statute under article 11 of the constitution, relating to finance and taxation, section 1 of which reads as follows:

"The legislature shall provide for a uniform and equal rate of assessment and taxation; but all property used exclusively for state, county, municipal, literary, educational, scientific, religious, benevolent and charitable purposes, and personal property to the amount of at least two hundred dollars for each family, shall be exempted from taxation."

The plaintiff claims the act, considered broadly, is one to exempt real-estate mortgages from taxation and to tax the civil privilege of using the public records. The defendant claims the legislature has no power to exempt real-estate mortgages generally from taxation, that the tax levied is not a license, privilege, or excise tax, and that the act embodies an attempt to classify property for purposes of taxation contrary to principles of taxation established by the fundamental law.

It is a matter of common knowledge and regret that the effort to assess and tax real-estate mortgages on the ad valorem plan as a part of the general property of the state has been neither satisfactory nor successful. The method is reprobated as involving double taxation. To what extent this criticism is economically sound is not now material. The prejudice created by the double-taxation argument against the method is widespread and deep-seated. It is certain that the method is productive of shameful tax evasion. In 1907 real-estate mortgages were listed for taxation in this state to the amount of $ 4,000,000. By 1914 the amount was brought up to approximately $ 70,000,000. It is estimated that the holdings of securities of this character by residents of Kansas are four times the amount listed, but the resources of the tax collecting officials for uncovering such holdings appear to be substantially exhausted. In one city in the state the ad valorem tax takes thirty-seven and one-half per cent of the income from a six per cent mortgage and forty-five per cent of the income from a five per cent mortgage. Mortgage holders feel they can not and should not give up such a proportion of their income. In numerous other taxing districts the tax taken is less than one-fourth of the percentages indicated. The result is inequality greater than should result from the administration of a fair and just system. The supply of capital available for farm mortgages is too limited, the interest rate is too high, and the time extended to borrowers is too short for the needs of a state the basis of whose prosperity is agriculture, and it is believed the tax law may be used to render the situation less acute.

The problem of how to deal with real-estate mortgages as subjects of taxation has embarrassed political economists generally and the legislatures of states other than this. In twenty-eight states real-estate mortgages are taxed as personal property. In six states they are taxed as an interest in real estate. In five states a so-called registry tax is imposed, which takes the place of all other taxes. (Alabama, Michigan, Minnesota, New York, Oklahoma.) In nine states real-estate mortgages are exempt. (Colorado, Idaho, Louisiana, Maine, Maryland, New Jersey, Utah, Washington, Wyoming.)

The struggle for tax reform in this state is an interesting story which need not be told here. It has long been recognized that the constitutional provision quoted has outlived its usefulness, and, as outlived restraints usually do, now bars the pathway to the establishment of an equitable system of taxation adequate to the present economic needs of the state. Notwithstanding this fact, at the election in 1914 the people refused to adopt a constitutional amendment permitting the legislature to classify subjects of taxation so far as differences justify, in order to secure a just return from each. Following the lead of New York in 1906, bills have appeared at each session of the legislature, beginning with that of 1907, for the adoption of the registration tax on real-estate mortgages in lieu of all other taxes. In 1909 and 1911 bills of this character were passed by both houses, but were vetoed by the governor. In 1915 senate bill No. 680 became a law, and the question is whether or not the constitution forbids its execution.

The court was given jurisdiction in cases of mandamus by the constitution. The case presented falls within the scope of such jurisdiction. The peremptory writ must either be issued or denied, and it must be issued or denied by the exercise of judicial functions which can not be surrendered. The writ can not be issued or denied without finding out what the constitution permits to be done and what the statute undertakes to do. That is, the court can not escape interpreting the constitution and the law. When the meaning of the constitution is ascertained the law must be interpreted in such a way as to uphold it if possible. In case of an irreconcilable conflict the constitution controls. The course of the inquiry has been well directed and defined by able briefs and oral arguments on behalf of both parties, and on behalf of large interests which favor and which are antagonistic to the law.

The constitutional command is that the legislature shall provide for a uniform and equal rate of assessment and taxation. Assessment is a prerequisite to the application of any rate of taxation, and assessment includes listing and valuation. This is fundamental and can not be evaded by any shift or device whatever.

In 1860 the legislature imposed a tax of three mills on the dollar on the taxable property of the state according to the assessment of that year, and fifty cents on every white male person between the ages of twenty-one and fifty years. These taxes were not collected in certain counties. In 1863 the legislature imposed the aggregate of the uncollected taxes on the property taxable within such counties according to the assessment of the year 1863. In an action of mandamus brought by the attorney-general to compel the officials of Leavenworth county to levy the tax this court said:

"Section 1 of Article 11 of the Constitution, provides that 'the Legislature shall provide for a uniform and equal rate of assessment and taxation,' and this clause most clearly implies that taxes shall be levied only according to such uniform and equal rate. To comply with this provision, [it is clear] that taxes must be assessed uniformly upon the property of all parts of the State, and, while it may be quite consistent with justice and with this constitutional provision that persons owing taxes imposed by the law of 1860, should be compelled to pay them; to collect such taxes of others because they now reside or have property within the same county, unless the whole State is subjected to the same burthen, seems manifestly consistent with neither.

"Reluctant as we are to differ with the legislative branch of the Government, we are compelled to conclude that the Act of 1863, in question, is inconsistent with the provisions of the constitution above cited, and therefore void." (The State ex rel. The Attorney General v. Commissioners Leavenworth Co., 2 Kan. 61, 69.)

The action of the legislature of 1863 was evidently taken through inadvertence and oversight. Its attention was fixed on the delinquency of the counties which had failed to collect the taxes imposed by the law of 1860, and it looked no further than to call upon those counties to make good to the state the taxes lost through their laches. The declaration of the court that in order to comply with the constitution taxes must be assessed uniformly upon the property of all parts of the state expressed the common thought of those who framed and those who adopted the constitution. The territorial act of 1860, to provide for the assessment and collection of taxes, passed after the constitution was adopted but before the state was admitted into the Union, was framed in accordance with the principle involved. The principle was recognized in the act of 1862 amending and supplementing the territorial act of 1860, and has been recognized in every subsequent revision of the tax law.

In the case of Hines and others v. The City of Leavenworth and others, 3 Kan. 186, decided in 1865, the court in...

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