People ex rel. Buffalo & Lake Erie Traction Co. v. Woodbury

Betts, J. (dissenting):

I dissent. Although the petition herein is lengthy the facts are comparatively simple. The relator executed a mortgage to the New York Trust Company covering property in the States of New York and Pennsylvania to'secure an issue of bonds in the amount of $12,000,000, which mortgage was recorded December 31, 1906, in the Erie county clerk’s office. This mortgage was to cover after-acquired property. The work of this court might have been simplified if a copy of the mortgage had been returned to this court. There are perhaps obvious reasons why the relator might not care to annex a copy of it to its petition, hut it is not easy to see why the State Board of Tax Commissioners did not return a copy of it. At that time $4,500,000 had been advanced under this mortgage as was shown by a statement attached to said mortgage and the sum of $7,699.50 was then paid as the mortgage recording tax on the property stated to be in this State. On October 22, 1907, the State Board of Tax Commissioners pursuant to statute determined that the tax payable at the time of the recording was the sum of $4,508, and the difference between that sum and $7,699.50 was returned to the party paying it. Thereafter various advances were made on the said mortgage until $1,870,000 additional had been advanced, making the total amount advanced .upon the mortgage to April 21, 1909, the sum of $6,370,000. The mortgage-recording taxes were paid at the same rate as respondent had fixed originally at or about the time of these advances and, including the original $4,508, amounted to $6,401.74. Shortly thereafter, and in August, 1909, the State Board of Tax Commissioners made a new determination as of April 21, 1909, of the total amount advanced upon this mortgage taxable in this State, and determined as follows: “That the proportion of the mortgage taxable within the State of New York, based upon the relative value of the property as of April 21, 1909, is the sum of $4,633,500.00,” and it fixed the tax thereon as $23,167.50 and deducted the total amount of taxes paid on said mortgage of $6,401.74, and determined “that there is due and payable to the Recording Officer of Erie County, New York, the stun of $16,765,76.” The traction company, feeling *820aggrieved, secured a writ of certiorari, which is before us for determination.

The sections of the Tax Law, so. far as applicable to this proceeding, are as follows:

“§ 253. Recording Tax. A tax of fifty cents for each one hundred dollars and each remaining major fraction thereof of principal debt or obligation which is, or under any contingency may be secured at the date of the execution thereof or at any time thereafter by mortgage on real property situated’ within the State recorded on or after the first day of July, nineteen hundred and six, is hereby imposed on each such mortgage, and shall be collected and paid as provided in this article.”

This plainly provides for a tax- of fifty cents on each $100 of principal debt or obligation secured by mortgage on real property in this State. If nothing else were contained in .the' statute, and the property was all in this State, the recording officer would assess fifty cents for each $100 on $12,000,000, and arrive at the sum of $60,000 as the total tax to be paid upon the amount of this mortgage secured by property in this State on the day it was offered for record. That is the amount that would be paid by an ordinary individual mortgagor or mortgagee on an ordinary mortgage of that amount covering property in this State. Trust mortgages are, however, favored by the statute, and they are permitted various deferred and prorated payments, as we shall see.

Sections 259 and 260 are the apparent exceptions to the plain rule applied to ordinary mortgages by section 253.

Section 259, so far as important here, is as follows:

“Trust Mortgages. In the cáse of mortgages made by cor- ■ porations in trust to secure payment of bonds or obligations issued or to be issued thereafter, if the total amount of principal indebtedness which’ under any contingency may be advanced or accrue, or which may become secured by any such mortgage which is subject to this article has not been advanced or accrued thereon or become secured ' thereby before • such mortgage is recorded, it may contain at the end thereof a statement of the amount- which at the time of the execution and delivery thereof has been advanced or accrued thereon, or *821which is then secured hy such mortgage; thereupon the tax payable on the recording of the mortgage shall be computed on the basis of the amount so stated to have been so advanced or accrued thereon or which is stated to be secured thereby. * * * Whenever a further amount is to be advanced under the original mortgage * * * the corporation making such mortgage shall, at or before the time when such amount’ is to be advanced, accrues or becomes secured, file in the office of the recording officer where such mortgage has been * * * first recorded a statement * * * of the amount of principal indebtedness to be so advanced * * * and the tax on such amount shall become due and payable at the time of filing such statement.” Then the section provides that such additional tax shall be paid to the recording officer where such mortgage was first recorded.

Section 260, so far as material, is as follows:

“Apportionment by State Board of Tax Commissioners. * * * When the real property covered by a mortgage is located partly within the State and partly without the State it shall be the duty of the State Board of Tax Commissioners to determine what proportion shall be taxable under this article by determining the relative value of the mortgaged property within this State as compared to the total value of the entire mortgaged property, taking into consideration in so doing the amount of all prior incumbrances upon such property or any portion thereof. If a mortgage covering property located partly within the State and partly without the State is presented for record before such ■ determination has been made, then there may be presented to the recording officer with such mortgage * * * a statement in duplicate verified by the mortgagor * * *, specifying the value of the property covered by the mortgage within the State and the property covered by the mortgage without the State, stated separately. One of such statements * * * shall be transmitted by him [the recording officer] to the State Board of Tax Commissioners. The tax payable under this article before the determination by the State Board of Tax Commissioners, shall be computed upon such proportion of the principal indebtedness secured' by the mortgage or of the sum advanced thereon, as the cáse may be, *822as the value of the mortgaged property within the State shall bear to the total value of the entire mortgaged property as set forth in such statement. The State Board of Tax Commissioners-shall on receipt of the statement * * * proceed to determine what proportion of the principal indebtedness secured by the mortgage shall be used as the measure of taxation within the State under the provisions of this article.” Then follow the provisions as to the method by which the respondent shall determine these values and the reports and accounts that they shall make thereon, none of which are in issue here, nor is the correctness of their tabulation, so far as the figures themselves go, questioned by the relator.

These quotations are as the statute now is, and although the arrangement of sections has been, changed and sentences transposed greatly, I cannot see but that the law was substantially the same at the time of the two determinations by the State Board of Tax Commissioners.-

So we have in this case determined, by a board authorized by statute t'o determine, “that the proportion of the mortgage taxable within the State of New York, based upon the relative value of the property as of ■ April 21, 1909, is the sum of $4,633,500.00.” The tax is fifty cents for each $100, which upon the amount named would amount to $23,167.50. * Of this amount only $6,401.74 has been paid; the difference, amounting to $16,765.76, is unpaid. If any one representing the mortgagee or mortgagor had gone to -the recording officer with a mortgage for $4,633,500 for record upon property within this State, he would have been required, at the time of placing it upon record, to have paid to that recording officer $23,167.50, according to the provisions of section 253. Why should a trust mortgage be otherwise treated?

There is no exception or exemption anywhere in the statute as to the amount -of the recording tax upon a mortgage on property in this State. It is at all times fifty cents on each $100 of principal debt or obligation secured by mortgage on property in this State, and the only change made is a deferred payment on a trust mortgage, and when the real property covered by the mortgage is located partly within and 'partly without the State the determination or apportionment by the *823State Board of Tax Commissioners of wliat proportion shall be taxable in this State by determining the relative value of the mortgaged property within this State as compared to the total value of the entire mortgaged property taking into consideration in so doing the amount of all prior incumbrances upon such property or any portion thereof. The relator here is not contesting the amount of the tax, which would place the burden upon the officer asserting it, and it would be construed the most strongly against the authorities levying the tax and in favor of the taxpayer. The relator does not dispute that it should pay fifty cents for each $100 of principal debt or obligation, nor does it dispute the correctness, of the State Board of Tax Commissioners’ tabulation, but it claims that it is-entitled to some kind of an exemption in addition to its deferred and apportioned payments which exemption the respondents have not granted it. It is asserting an exemption from taxation and that places the burden upon the party making such an assertion, i. e., the relator, to show that in some way it comes within some exemption of the general rule or statute for the taxation of property for which it is assessed or taxed.

See People ex rel. Young Men’s Association v. Sayles (32 App. Div. 197; affd., 157 N. Y. 677 on opinion below) in which it is said : “ It is well settled that statutes exempting property from general taxation must be strictly construed against the property holder, and if the exemption is' not plainly expressed it may not be presumed.”

See People ex rel. Westchester Fire Ins. Co. v. Davenport (91 N. Y. 574, 586) which reads as follows: “The courts have, therefore, required an exemption from taxation to be described in clear and unambiguous language, and to appear to be, undisputably, within the intention of the Legislature, or they have declined to enforce it.”

The relator claims that there is no authority in the statute for a new determination by the State Board of Tax Commissioners at any time after its original determination, when the mortgage is first offered for record. While the statute does not provide for successive determinations by the State Board of Tax Commissioners, it does not provide against such determi*824nations, nor forbid them. The relator cannot be harmed, whether these determinations are one or many, so long as at any time it is not required to pay more tax than it would have to, if it were recording a new mortgage for the total amount advanced up to the time the determination by the State Board of Tax Commissioners is made. The statute'at all times provides for a recording tax on the mortgage or on' the principal debt or obligation secured by mortgage on real property situated within the State or on the amount advanced on said mortgage on real property in this State as adjusted and determined by the State Board of Tax Commissioners as required'by the provisions of said section 260. The mortgagor is not required to borrow, so far as anything appears in this record, one other cent of money on this mortgage from the trust company, nor is it required to issue any more bonds thereunder; in other words, the mortgagor may have .stopped on April 21, ’ 1909, securing any additional funds on real property in this State secured by-this mortgage. If so, the mortgage is a closed incident so 'far both as the mortgagor, the trust company, the bondholders and the State or the recording officer are concerned as far as the payment of any recording tax is concerned. If it is a closed incident and nothing farther is done between borrower and lender under it, a mortgage has been recorded, which, as adjusted by respondent according to the provisions of section 260, secures a principal debt or obligation on real property situated within this State of the value of $4,633,500 and there has been received as a tax therefor only the sum of $6,401.74, leaving a. balance unpaid of $16,765.76 for which no reason appears in anything submitted on this hearing to this court why it remains unpaid. No reason is advanced on the part of the relator why it should not be paid.

The statute here at all times speaks of the mortgage as a whole. The State Board of Tax Commissioners' have, in accordance with the statute as I construe it,- fixed the value of the property in this State secured by that mortgage as of April 21,' 1909, and the amount of tax due thereon. I can see no force, justice nor equity in the claim, of the relator why the unpaid portion of the. tax should not be paid by the relator.

*825I think the determination of the State Board of Tax Commissioners should be affirmed, with costs.

Determination of State Board of Tax Commissioners annulled, with fifty dollars costs and disbursements, and the 'matter remitted to such Board for determination in accordance with opinion.