The doctrine declared in Tappan v. National Bank, though difficult to harmonize with prior decisions, is declared in Corry v. Baltimore to be conclusively established.50

49

§ 542. Taxation of Mortgages.

In Savings and Loan Society v. Multnomah51 the broad dicta of the court in the State Tax on Foreign-Held Bonds cases were again modified, this time with reference to the taxation of mortgages. In this case the court held that mortgages, whether held by residents or non-residents, may be taxed at their full value by the State in which the mortgaged property is located, and that this may be done either by taxing the whole value of the property to the mortgagor or by taxing to the mortgagee the interest represented by the mortgage and the remainder to the mortgagor. The court say:

a share of the net profits. His claim is a personal one against the corporation; like the bondholder he has only a chose in action, and no direct legal interest in the business."

49 196 U. S. 466; 25 Sup. Ct. Rep. 297; 49 L. ed. 556.

50" That it was rightly determined that it was within the power of the state to fix, for the purposes of taxation, the situs of stock in a domestic corporation, whether held by residents or non-residents, is so conclusively settled by the prior adjudications of this court that the subject is not open for discussion. Indeed, it was conceded in the argument at bar that no question was made on this subject. The whole contention is that, albeit the situs of the stock was in the State of Maryland for the purposes of taxation, it was nevertheless beyond the power of the State to personally tax the non-resident owner for and on account of the ownership of the stock, and to compel the corporation to pay, and confer upon it the right to proceed by a personal action against the stockholder in case the corporation did pay. Reiterated in various forms of expression, the argument is this: that as the situs of the stock within the state was the sole source of the jurisdiction of the State to tax, the taxation must be confined to an assessment in rem against the stock, with a remedy for enforcement confined to the sale of the thing taxed, and hence without the right to compel the corporation to pay, or to give it when it did pay, a personal action against the owner.

"But these contentions are also in effect long since foreclosed by decisions of this court." First National Bank v. Kentucky, 9 Wall. 353; 19 L. ed. 701; Tappan v. Merchants' National Bank, 19 Wall. 490; 22 L. ed. 189."

51 169 U. S. 421; 18 Sup. Ct. Rep. 392; 42 L. ed. 803.

"The declaration of the court in the State Tax on ForeignHeld Bonds (15 Wall. 300; 21 L. ed. 179) that a mortgage, being a mere security for the debt, confers no interest in the land, and, where held by a non-resident, is as much beyond the jurisdiction of the State as the person of its owner, 'went beyond what was required for the decision of the case and cannot be reconciled with other decisions of this court."" Concluding, the court say: The statute of Oregon, the constitutionality of which is now drawn in question, expressly forbids any taxation of the promissory note, or other instrument of writing, which is the evidence of the debt secured by the mortgage; and, with equal distinctness, provides for the taxation, as real estate, of the mortgage interest in the land. Although the right which the mortgage transfers in the land covered thereby is not the legal title, but only an equitable interest and by way of security for the debt, it appears to us to be clear upon principle, and in accordance with the weight of authority, that this interest, like any other interest, legal or equitable, may be taxed to its owner (whether resident or non-resident) in the state where the land is situated, without contravening any provision of the Constitution of the United States."

§ 543. Taxation of Credits.

In the preceding paragraphs we have seen that mortgages and shares of stock have been taken out of the broad doctrine declared in the State Tax on Foreign-Held Bonds cases, .and placed under the rule of mobilia sequuntur personam. To a very considerable extent the same rule has been applied to promissory notes and similar evidences of indebtedness. The rule has, however, not been followed when the notes have been placed in the hands of an agent for receipt of the interest or for the collection of the capital sums. In such cases the situs of the notes has in some cases been held to be that of the agent; in others, where there has been apparent a scheme to avoid the payment of taxes, the situs has been held to be at the domicile of their owner. A statement of some of the leading cases will illustrate these doctrines.

wha ja employed to invest the miners received the Loans being made payable at his choc, be reining the mortgages securing them, and the notes ti be the lane being returned to him we ever metrod for nami nena pi

ree of securi

pay the local debts before turning over the residue to be distributed, or distributing it themselves, according to the rules of the domicile. The title of the principal administrator, or of a foreign assignee in bankruptcy · - another type of universal succession is admitted in but a limited way or not at all.

To come closer to the point, no one doubts that succession to a tangible chattel may be taxed wherever the property is found, and none the less that the law of the situs accepts its rules of succession from the law of the domicile, or that by the law of the domicile the chattel is part of a universitas and is taken into account again in the succession there."

Distinguishing the doctrine of this case from that in State Tax on Foreign-Held Bonds the court say: "The taxation in that case was on the interest on bonds held out of the State. Bonds and negotiable instruments are more than merely evidences of debt. The debt is inseparable from the paper which declares and constitutes it, by a tradition which comes down from more archaic conditions. (Bacon v. Hooker, 177 Mass. 333.) Therefore, considering only the place of the property it was held that bonds held out of the State could not be reached. The decision has been cut down to its precise point by later cases."

In State Board of Assessors v. Comptoir National D'Escompte, decided in 1903, it was held that a State is not forbidden by the federal Constitution to tax credits based upon loans on collateral security made by the local agent of a foreign corporation, the collateral being retained by the agent, and the credits. being either in the form of credits on Paris or London, or simply of overdrafts, upon which the customer was charged interest.

In Buck v. Beach,61 however, the court found itself obliged to deny the power of the State of Indiana to tax certain notes which were in the hands of an agent within the State, and which, it appeared, had been placed, together with the mortgages securing their payment, in his hands to escape their taxation in Ohio, but with nothing else to connect them with the State and give them a

60 191 U. S. 388; 24 Sup. Ct. Rep. 109; 48 L. ed. 232. 61 206 U. S. 392; 27 Sup. Ct. Rep. 712; 51 L. ed. 1106.

In Kirtland v. Hotchkiss52 it is held that a State may tax one of its resident citizens for a debt held by him, due by a resident of another State, and evidenced by the bond of the debtor, secured by deed of trust or mortgage upon real estate situated in the State in which the debtor resides. In short, it is held that a debt for purposes of taxation is situated at, the domicile of the creditor although secured by a mortgage upon real estate situated in another State. The court say: "The debt in question, although a species of intangible property, may, for purposes of taxation, if not for all purposes, be regarded as situated at the domicile of the creditor. It is none the less property, because its amount and maturity are set forth in a bond. That bontl, wherever actually held or deposited, is, at best, only evidence of the debt itself. The bond may be destroyed, but the debt the right to demand the repayment of money loaned, with the stipulated interest re‐ mains. Nor is the locality of the debt, for purposes of taxation, affected by the fact that it is secured by mortgage upon real cstate situated in Illinois. The mortgage is but a security for the debt. The debt in question, then, having its situs at the creditor's residence, and constituting a portion of his estate there, both he and the debt are, for purposes of taxation, within the jurisdiction of the State."

In New Orleans v. Stempel 53 it was held that moneys collected as interest and principal of notes, mortgages, and other securities kept within the State for use or reinvestment, are subject to taxation though the owner be domiciled in another State and the moneys are deposited in a, bank to his credit. The notes are declared to be "property arising from business done in the State; they were tangible property when received by the agent of the plaintiff, and as such, subject to taxation, and their taxability was not... lost by their mere deposit in the bank."

After quoting from decisions in other of the state courts, the Supreme Court continues: "With reference to the decisions of this court it may be said that there has never been any denial of

52 100 U. S. 491; 25 L. ed. 558.

53 175 U. S. 309; 20 Sup. Ct. Rep. 110; 44 L. ed. 174.