464 



MICHIGAN. 



Nothing more was done about the matter un- 

 til July, when the Auditor-General applied to 

 the Governor for a statement of the ex-Secre- 

 tary's indebtedness to the treasury, which he 

 needed in order to balance the account in his 

 office. The Governor sent the figures, and the 

 Auditor made a demand on Mr. Soper for the 

 money, and there the case seems to have rested. 



The Mortgage Tax Law. The movement 

 to test the validity of this law, enacted in 1891, 

 resulted in a decision in its favor. The main 

 opinion was written by Justice Montgomery, and 

 concurred in by Justice McGrath and Chief Jus- 

 tice Morse, Jus'tices Grant and Long dissenting. 

 The main opinion sustains the propositions that 

 the act was properly passed ; that it applied to 

 mortgages in existence at the time of its pas- 

 sage ; that it applied to mortgages owned . by 

 nonresidents and to savings banks and insur- 

 ance companies, mortgages held by them being 

 taxed as real estate and deducted from the capi- 

 tal stock ; and that neither the tax law nor usury 

 law prohibited persons from contracting as to 

 who should pay the tax, even though tax and in- 

 terest combined exceeded 8 per cent., which is 

 the limit of interest that may be contracted un- 

 der usury law. 



Concerning the objection that so much of the 

 statute as provides for the taxation of the mort- 

 gage interest in lands, and points out the meth- 

 od of collection, is unconstitutional, the justice 

 says: 



The first criticism passed upon these provisions is 

 that the law requires the mortgageor to pay the mort- 

 gagee's tax. It should not be overlooked that the 

 statute contemplates an assessment of the entire inter- 

 ests of the land, both that of the mortgageor and 

 mortgagee, by separate assessments, it is true, but still 

 an assessment ot the entire interest. It can not be 

 doubted that it is entirely competent for the Legis- 

 lature to cause this entire value to be assessed to the 

 mortgageor. This has been the law of Michigan for 

 many years. This act is, then, for the relief of the 

 mortgageor, and it can not be held invalid, because 

 it relieves him only on condition that the owner ot 

 the mortgage interest shall within a stated time pay 

 the tax. It is said that the mortgageor would have 

 no right under the law to appear before the Board of 

 Review to ask for a correction of the assessment of 

 the mortgage interest, but I do not so read the statute. 



Regarding the claim that the provisions that 

 the mortgageor may pay the tax assessed against 

 the mortgage interest in case of the mortgagee's 

 default, and deduct the same from the amount 

 owing on the mortgage impairs the obligations 

 of contract, he says the view is untenable, and 

 that the contract between the mortgageor and 

 mortgagee remains the same. Regarding the 

 claim of the unconstitutionality of the provision 

 making the mortgageor liable, he says that the 

 relation of the owner of the fee to the property 

 is such that the right to assess the whole to him 

 is undoubted, and that it would be an unsound 

 doctrine which would deny the power of the 

 Legislature to relieve him conditionally. 



With reference to the claim that the law is un- 

 constitutional in so far as it attempts to tax 

 mortgages owned by nonresidents for the rea- 

 son that the mortgage is personal property and 

 a mere security for debt, Justice Montgomery 

 says it was competent for the Legislature to treat 

 real-estate mortgages as an interest in lands for 



the purpose of taxation, and that, even though 

 held by nonresidents, they may be given a situs 

 in the place where the mortgage property is lo- 

 cated ; that this is what the act purports to do, 

 and that it should be sustained. As to the pro- 

 visions of the act relating to mortgages held by 

 banks and insurance companies, he thought the 

 intent was clear to treat mortgages as real estate, 

 and that the interest in real estate, so taxed to 

 banks and insurance companies, might be de- 

 ducted from the shares of stock as assessed. If 

 the banks hold property subject to taxation in 

 excess of their actual capital, the case was no 

 harder for them than it is in the case of an in- 

 dividual taxed for the value of property owned 

 by him, though he may be indebted to the 

 amount of nearly or quite its full value. 



That it was not the purpose of the Legislature 

 to limit the power of parties to contract as they 

 may choose in regard to the payment of interest, 

 was shown by the fact that a clause prohibiting 

 such contracts was struck out of the bill before 

 its final passage. Such an agreement did not 

 amount to a reservation of interest, but was in 

 the nature of an agreement to preserve the 

 estate which constitutes the security, and was 

 more unlawful than an agreement to keep the 

 property insured for a similar purpose. 



The dissenting opinion holds the law to be 

 unconstitutional for several reasons : The entire 

 tax upon the lands and upon the mortgage inter- 

 est is made a lien upon the land for which it 

 can be sold, and thus the land of the mort- 

 gageor is sold to pay the debt of the mortgagee. 

 The mortgage tax may also be collected from the 

 personal property of the mortgageor by seizure 

 and sale, although the tax upon the mortgage 

 interest is against the mortgagee. Although the 

 principal and interest may not be due for five 

 years, yet the collecting officer may seize the last 

 piece of personal property of the mortgageor to 

 satisfy the tax under this act. The opinion says 

 further that an attempt is made to impair the 

 obligation of existing contracts, as applied to 

 mortgages in force at the time of the passage of 

 the law ; that the act destroys the uniformity of 

 taxation under Article XlV'of section 21 of the 

 Constitution, and that the whole scheme of taxa- 

 tion under the act was so defective that the 

 whole act should fail. In the matter of review, 

 if the mortgagee does not appear before the 

 board he will be barred from contesting the 

 amount of the tax in any court, as the oppor- 

 tunity to appear will be regarded as his day in 

 court upon the question of assessment. He must 

 therefore be upon the watch in every assessment 

 district where property upon which he holds 

 a mortgage is situated. 



The Miner Electoral Law. For the pur- 

 pose of testing the validity of this law, passed 

 by the last Legislature, which provides that 

 presidential electors should be chosen by con- 

 gressional districts, instead of on a general tick- 

 et, an application was made to the Supreme 

 Court for a mandamus compelling the Secretary 

 of State to notify the sheriff in each county be- 

 tween July 1 and Sept. 1 next that at the time 

 of the next general election electors for Presi- 

 dent and Vice-President will be chosen. Fol- 

 lowing were the reasons given for the charge 

 that the law was void : 



