
    The People ex rel. Michael H. Eisman, Relator, v. John H. J. Ronner, as Register of the County of New York, Defendant.
    (Supreme Court, New York Special Term,
    November, 1905.)
    Constitutional law — Distribution of powers — Powers of Legislature" as to appropriations; taxation; usury — Deprivation of property without due process — State Constitution, art. 3, § 20; art. 10, § 2 — Federal Constitution, fourteenth amendment — Mortgage Tax Law held constitutional.
    The provision of the Mortgage Tax Law (L. 1905, eh. 729, § 307) that, after receiving the tax moneys from the recording officer, the treasurer of the county, or chamberlain of the city, in the case of the counties embraced in New York city, shall “ transmit one-half of this net amount collected under the provisions of this article, to the state treasurer * * * And the remaining portion thereof in the counties of New York, Kings, Queens and Richmond shall be paid into the general fund of the city of New York and be applied to the reduction of taxation, and in the other counties of the state the remaining portion shall be held by the respective county treasurers subject to the order of the board of supervisors as hereinafter provided ”, does not violate the constitutional provision (Const., art. 3, § 20) that, “ The assent of two-thirds of the members elected to each branch of the Legislature shall be requisite to every bill appropriating the public moneys or property for local or private purposes ”, as the portion of the tax allowed to the several counties is retained therein and never reaches the State treasury.
    The act making no distinction between persons in the same class or condition does not violate the fourteenth amendment to the Federal Constitution in denying the equal protection of the law to the holders of mortgages recorded after July 1, 1905, although it bears unequally in the sense that it only applies to mortgages recorded after that date; but such inequality is more or less incident to any tax law and is not the form of evil at which said constitutional amendment was aimed.
    The power of the Legislature to declare what is or is not usury is unrestricted and, therefore, the provision of said act (§ 309) that, “Any contract or agreement in respect to any mortgage obligation or deed of trust, other than mortgage obligations .and deeds of trust executed by corporations, by which the mortgagor shall" agree or be bound to pay the tax or any part thereof imposed by this article, shall be usurious and void ” is not an unconstitutional interference with the freedom of contract.
    That there is no provision for notice or opportunity to be heard concerning the tax on mortgages which are offered for record for the first time, nor any provision for ascertaining the actual value of the obligation of the mortgage, does not render the act unconstitutional upon the ground that it deprives citizens of their property without due process of law.
    The power of estimating and computing the amount upon which the tax shall be paid is not a power of assessing in any correct sense; and, as whatever power there is in this respect is given to local officers, viz., the recording officers of the respective counties, said act cannot be declared violative of article 10, section 2, of the State Constitution and of the principle of home rule therein embodied, upon the contention that it withdraws from local assessors the right and power theretofore possessed and exercised by them of assessing and taxing tangible property.
    Motion for a peremptory writ of mandamus.
    Cahn & Lazansky (Edward Lazansky, Emanuel S. Calm, Louis Franklin Levy, of counsel), for motion.
    Julius M. Mayer, Attorney-General, opposed.
   Giegerich, J.

This application for a writ of peremptory mandamus requiring the defendant to record the mortgage of the relator without the payment of the tax imposed by chapter 729 of the Laws of 1905, is based upon the claim that the act referred to, commonly known as the Mortgage Tax Law,” is unconstitutional.

The first defect urged is that the act violates section 20 of article III of the State Constitution, which provides that: “ The assent of two-thirds of the members elected to each branch of the legislature shall be requisite to every bill appropriating the public moneys or property for local or private purposes.”

Section 307 of the act in question provides that after receiving the tax moneys from the recording officers of the respective counties, the treasurer of the county, or the chamberlain of the city in the case of the counties embraced in Yew York city, after deducting the necessary expenses provided for in the act, shall “ transmit one-half of this net. amount collected under the provisions of this article, to the state treasurer * * *. And the remaining portion thereof in the counties of New York, Kings, Queens, and Eichmond shall be paid into the general fund of the city of New York and be applied to the reduction of taxation, and in the other counties of the state the remaining portion shall be held by the respective county treasurers subject to the order. of the board of supervisors as hereinafter provided.”

This method of operation brings the act named, in my judgment, within the authority of the decision made by the Court of Appeals in People ex rel. Einsfeld v. Murray, 149 N. Y. 367, where precisely the same objection was raised under chapter 112 of the Laws of 1896, in regard to excise moneys and where the court said, at page 377: “ The act of 1896, also we think, appropriates to the towns and cities the two-thirds of the excise taxes which may be collected under the act. But it is an appropriation which operates on the fund at the very moment of its collection. The two-thirds so appropriated never reaches the treasury of the state and never bears the impress of state money.”

So in this case, the portion of the tax allowed to the several counties is retained in those countiés and never reaches the State treasury and never receives the impress of State moneys.

¡Neither do I think that the objection is well taken that this act violates the provisions of section 1 of article XIV of the amendments to the Constitution of the United States, in denying the equal protection of the law to the holders of mortgages recorded after July 1, 1905.

It is true that the law bears unequally in the sense that it applies to mortgages recorded after the date mentioned and not to those previously recorded; but such an inequality of operation is more or less incident to any tax law and is not the form of evil at which the constitutional amendment referred to was aimed.

The extent to which the Supreme Court of the United States has gone in upholding the taxing powers of the sovereign States, is indicated in the following cases, which are especially applicable to the point now under discussion: State Railroad Tax Cases, 92 U. S. 575; Bell’s Gap R. R. Co. v. Pennsylvania, 134 id. 232; Savings & Loan Society v. Multnomah County, 169 id. 421; New York ex rel. Metropolitan St. R. Co. v. State Bd. of Tax Comrs., 199 id. 1.

With the justice or wisdom of the act under consideration the courts have nothing to do, those being questions for the Legislature exclusively. The act makes no distinction between persons in the same class or condition, and, therefore, does not offend the constitutional provision referred to.

Neither do I think that the statute interferes with the freedom of contract. Section 309 does provide that, “Any contract or agreement in respect to any mortgage obligation or deed of trust, other than mortgage obligations and deeds of trust executed by corporations, by which the mortgagor shall agree or be bound to pay the tax or any part thereof imposed by this article, shall be usurious and void; ” and it is contended that this prohibition might result in declaring usurious a contract which, in fact, called for much less than six per cent, interest, as, for example, where the mortgage rate was four per cent., in which case with the tax added the rate paid by the borrower would be only four and one-hálf per cent. Such supposed cases are affected only in form, however, and not at all in substance, by the provision just quoted, because the agreement could equally well take the form of a rate of four and one-half per cent., instead of four per cent, and the tax. Besides, the Legislature doubless had reasons appearing sufficient to itself for the enactment of this safeguard against any evasion of the purpose of the act. Moreover, I am not aware, nor does the relator call attention to any authority restricting the power of the Legislature to declare what is or is not usury. So far as the distinction between corporations and individuals is concerned, this is one which has long existed in the statutes relating to usury and is one clearly within the power of the Legislature to make. •

Neither does this act deprive citizens of their property without due process of law. It is true that there is no provision for notice or opportunity to be heard concerning the tax on mortgages which are offered for record for the first time, nor is there any provision for ascertaining the actual value of the obligation of the mortgage. The relator argues that as the debtor upon the bond may be insolvent and the mortgage of less value than its face, an opportunity should be given of presenting such facts before the tax is levied; but, as said before, no tax law can be made perfect and Legislatures may well find that it is better to proceed on some fixed, although somewhat arbitrary, system of appraisal, than to introduce confusion and uncertainty and worse evils by leaving too much elasticity in the hope that the law can be more justly adapted to individual cases.

It is further asserted that the act is in violation of article X, section 2, of the State Constitution and of the principle of home rule therein embodied and that it withdraws from local assessors the right and power theretofore possessed and exercised by them, of assessing and taxing tangible property. The only authority cited in support of this claim is People ex rel. Metropolitan St. R. Co. v. Tax Commissioners, 174 N. Y. 417. It is not pointed out how anything said in .that case sustains the assertion that there is an infraction of the section now in question and I can discover no such infraction. Properly speaking, there is no discretion of assessing vested in any one by the act. Such power as there is, in the way of arriving at the amount on which the tax shall be paid, is not a power "of assessing, in any correct sense, but of estimating and computing, which latter are the words of the statute. Moreover, whatever power there is in this respect, is given to local officers, viz., the recording officers of the respective counties.

My conclusion is that no unconstitutionality has been shown and that the motion should be denied.

Motion denied.  