FEDERAL LAND BANK OF NEW ORLEANS
v.
CROSLAND, JUDGE OF PROBATE

U.S. | 1923-03-19
No. 428
261 U.S. 374 Supreme Court of the United States (1923) Negative Treatment
Also reported at: 67 L. Ed. 703 · 43 S. Ct. 385 · SCDB 1922-131 · 1923 U.S. LEXIS 2568
Cited by 60 cases

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Synopsis

The Federal Land Bank of New Orleans sought a writ of mandamus to compel Alabama's recording officer to register a mortgage without paying an additional state tax of fifteen cents per hundred dollars of principal, which federal law exempted from state taxation as an instrumentality of the federal government. The Supreme Court reversed Alabama's decision and held that while a state may charge reasonable fees for maintaining a registry, it cannot use registration as a practical means of collecting a tax on mortgages held by federal instrumentalities, as this would indirectly accomplish what the state cannot do directly under the Federal Farm Loan Act's exemption from state taxation.

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Opinion of the Court
Mr. Justice Holmes

Mr. Justice Holmes delivered the opinion of the Court.

This is a petition for a writ of mandamus to require the recording officer of Montgomery County, Alabama, to record a first mortgage deed on receiving the fee for recording the same, without payment' of an additional sum of fifteen cents for each one hundred dollars of the principal sum secured. The General Revenue Act of the State, approved September 15, 1919, by § 361, Schedule 71, [Acts 1919, p. 420] provides that no mortgage shall be received for record “unless the following privilege or license taxes shall have been paid upon such instrument before the same shall be offered for record, to-wit: . . . upon all instruments which shall be executed to secure an indebtedness of more than one hundred dollars there shall be paid the sum of fifteen cents for each one hundred dollars of such indebtedness, or fraction thereof, which is secured by said mortgage . . . to be paid for by the lender, and no such paper shall be received for record unless there is filed therewith a certificate that the privilege tax was paid by the lender.” Any probate judge who shall receive a mortgage without collecting the “ recording or registration tax ” &c., is made guilty of a misdemeanor and punished.

On the other hand the Federal Farm Loan Act of July 17, 1916, c. 245, § 26, provides that first mortgages executed to Federal Land Banks shall be deemed “instru-mentalities of the Government of the United States, and as such they and the income derived therefrom shall be exempt from Federal, State, municipal, and local taxation.” 39 Stat. 360, 380. The validity of this provision is not questioned. Smith v. Kansas City Title & Trust Co., 255 U. S. 180, 207, 212. Of course therefore it must prevail over any inconsistent laws of a State.

The tax was sustained by the Supreme Court of the State and the petition for mandamus was ordered to be dismissed on the ground that the payment was optional; that the Federal Land Bank was not required to put its deed on record, and that if it did it must pay whatever others were required to pay for thé registration of its security. But the case is not quite so simple as that. The law of Alabama does make it' practically necessary to record such deeds, because it overrides them if not re-, corded, in favor of any purchaser without notice. While it does so it cannot say that it leaves'the Bank free to record or not. The Bank has a choice it is true, but so has one who acts under duress. The Eliza Lines, 199 U. S. 119, 131.

The State is not bound to furnish a registry, but if it sees fit to do so it cannot use its control as a means to impose a' liability that it cannot impose directly, any more than it can escape its constitutional obligations by denying jurisdiction to its Courts in cases which those Courts are otherwise competent to entertain. Kenney v. Supreme Lodge of the World, 252 U. S. 411, 415. It is not necessary to cite cases to show that an act may become unlawful when done to accomplish an unlawful end.

Of course the State is not bound to furnish its registry for nothing. It may charge a reasonable fee to meet the expenses of the institution. But in this case the Legislature has honestly distinguished between the fee and the additional requirement that it frankly recognizes as a tax. If it attempted to disguise the tax by confounding the two, the Courts would be called upon to consider how far the charge exceeded the requirement of support, as when an excessive charge is made for inspecting articles in interstate commerce. Foote v. Maryland, 232 U. S. 494. But it has made no. such attempt. It has levied "a general tax on mortgages, using the condition attached to registration as a practical mode of collecting it. In doing so, by the construction given to the statute by the Supreme Court, it has included mortgages that it is not at liberty to reach. The characterization of the act by the Supreme Court as distinguished from the interpretation' of it does not 'bind this Court. St. Louis Southwestern Ry. Co. v. Arkansas, 235 U. S. 350, 362. St. Louis Cotton Compress Co. v. Arkansas, 260 U. S. 346. It is said that the lender may collect the money in advance from the borrower. We do not perceive that this makes any difference. The statute says that the lender must' pay the tax, but whoever pays it it is a tax upon the mort gage and that is what is forbidden by the law of the United States.

A petition for certiorari presented by the plaintiff in error for greater caution will be dismissed.

Decree reversed.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By (24 total)

  • Brooks v. The Fed. Land Bank of Columbia, 106 Fla. 412 (Fla. 1932)
    …nevolent purposes? Perhaps the line is drawn at statutes1 of limitation and taxes on United States’ property and activities of Federal agencies in pursuit of a public purpose, which may be conceded. See Federal Land Bank of New Orleans v. Crosland, 261 U. S. 374, 67 L. Ed. 703, 43 Sup. Ct. Rep. 385. A statute of non-claim while partaking of the nature of a statute of limitations is not wholly such. It constitutes part of the procedure of court, the orderly, expeditious and exact settlement of the estates o…
  • Plymouth Citrus Growers Ass'n v. LEE, 157 Fla. 893 (Fla. 1946)
    …e exempt from Federal, State, or other documentary taxes. It is hardly necessary to say that, so long as the Federal Law does not forbid such a tax, the State may exercise the privilege to impose it. We have examined Federal Land Bank v. Crossland, 261 U. S. 374, 67 L. Ed. 703; Pittman v. Home Owners’ Loan Ass’n., 308 U. S. 21, 84, L. Ed. 11, and other cases relied on by appellant, but we do not think they overcome this conclusion. It is, accordingly, our view that the note in question was a promissory not…
  • State of Fla. ex rel. Seaboard AIR Line R.R. Co. v. Green, 173 So. 2d 129 (Fla. 1965)
    …o place the responsibility for payment of the tax on both parties to a transaction. Three decisions of the Supreme Court of the United States bear on the question now under consideration. In the case of Federal Land Bank of New Orleans v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, the State of Alabama imposed a tax on mortgages as a condition precedent to recording, the Statute providing that this tax was to be paid by the lender, which, in that instance, was the Federal Land Bank. The Supreme Cou…

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