Crosland v. Federal Land Bank of New Orleans

ANDERSON, C. J. [1,2] The tax fixed by schedule 71 of section 361 of the Revenue Act of 1919 (Acts 1919, p. 420) is mentioned as a “privilege or license tax,” and is required as a condition precedent to the recording, in the proper office of this state, of the instruments therein mentioned. Notwithstanding the amount of said tax is based or graduated upon the consideration of said instruments, it is in no sense an ad valorem or direct tax. Its payment is not compulsory, but is entirely optional with the holder, if he seeks to get the benefit or protection of our registration laws by using the public records. It was held to be a privilege, and not an ad valorem, tax in the ease of Barnes v. Moragne, 145 Ala. 313, 41 South. 947, and was so designated and treated in the case of State v. Alabama Fuel Co., 188 Ala. 487, 66 South. 109, L. R. A. 1915A, 185, Ann. Cas. 1916E, 752. It is true that this last case explains and qualifies an expression in the opinion in the case of Barnes v. Moragne, supra, but not on this point, as these two cases are in thorough accord as to the kind of tax we are now dealing with. Our tax law puts this tax on all instruments therein mentioned offered for record, and provides no exemption; so, if this ap-pellee can ■ get the benefit of recording the mortgage in question, it must rely upon an exemption under the federal, and not the state, law. It is true the Federal Farm Loan Act (39 U. S. Stat. § 26, p. 3S0 [U. S. Comp. St. § 9835ql) declares the mortgage in question to be an instrumentality of the government, and that the same shall be exempt from federal, state, municipal, and local taxation; but we think that the exemption refers to a property or ad valorem tax, and not to the tax in question. In other words, we cannot conceive of an intent on the part of the Congress to authorize this appellee to use the records of the respective states for the registration of its security and escape the payment of the record or privilege tax exacted of all others. This holding finds support in the cases of Pocahontas v. Commonwealth, 113 Va. 108, 73 S. E. 440, and in an opinion by Attorney General Garland, 18 Opinions of Atty. Gen. pp. 491, 492. Attorney General Garland said: “The tax is upon the registration of deeds, a means provided by the state for the prevention of fraud in transactions affecting the title to real property; it is not a tax upon either the instrumentalities, agencies, or property of the general government, strictly speaking. The case here does not differ essentially .from one where a tax is imposed by the state on the process of its courts and an action in one of these courts is brought by the United States. In such case, doubtless, the United States, unless exempted by the state law, would be liable to pay the tax on process sued out thereby the same as any other suitor would be under like circumstances. The United States 'may or may not put its deed on record in the county clerk’s office, as it may ,or may not bring its suit in the state court; but, where it does either, it would seem to be, equally with private parties, bound to pay the fees and charges therefor imposed by the laws of the state.” True, the attorney general was dealing with a deed; but it was just as much an instrumentality of the federal government as the mortgage in question. Moreover, the Virginia statute that he was dealing with imposed a record tax in addition to the registration fees on mortgages and deeds of trust, as well as deeds. Acts Ya. 1883-84, p. 561; Ya. Code. 1887, § 579. We repeat that the payment of the tax in question is purely voluntary on the part of this appellee, as its mortgage cannot be taxed unless it desires to place it upon the records of the state. While section 2 of the Revenue Act of 1919 (page 283), in providing exemption from an ad valorem tax, is a little involved, as it exempts mortgages which have been filed for record and does not specifically mention unrecorded mortgages, yet the last part of the sentence exempts “all solvent credits,” and counsel for the state concede in their brief that all mortgages, whether recorded or not, are exempt from an ad valorem tax under our statute. This, however, is unimportant in the present case, for, if the mortgage in question is not exempt under our statute from an ad valorem tax, it is under the federal act; so, as above stated, the payment of this tax is optional with the appellee. If it does not desire to record its mortgage, the same is not liable to a tax; but, if it wishes the benefit and protection of our registration laws, it must, like all others, pay for the privilege. The trial court erred in awarding the mandamus; that judgment is reversed, and one is here rendered, dismissing the petition for mandamus. Reversed and rendered. SAYRE, SOMERVILLE, GARDNER, and THOMAS, JJ., concur. McOLELLAN and MILLER, JJ., dissent.