SPECIAL INSTRUCTIONS 
 
 TO ASSESSING OFFICERS 
 
 ON THE 
 
 MORTGAGE TAX LAW 
 
 (Chapter 378, 1903.) 
 
 y / 
 
 ISSUED BY THE 
 
 Wisconsin State Tax Commission, 
 1903 . 
 
 MADISON, WIS. 
 
 Democrat Printing Co., State Printer. 
 1904. 
 
33 6. 2L* 
 
 W 7 56^ 
 
 Digitized by the Internet Archive 
 in 2017 with funding from 
 
 University of Illinois Urbana-Champaign Alternates 
 
 https://archive.org/details/specialinstructiOOwisc 
 
IbH's.c.O'b ^ 
 
 The Mortgage Tax Law. 
 
 Wisconsin State Tax Commission. 
 
 Madison, June 17, 1903. 
 
 To Assessing Officers: 
 
 This office is in receipt of many inquiries from assessing offi- 
 cers and others asking an interpretation of various provisions 
 of chapter 378, laws of 1903, relating to the assessment and 
 taxation of mortgages and mortgaged real estate. While some 
 of the questions presented primarily affect only the private 
 rights of mortgagors and mortgagees they also indirectly alfect 
 assessing officers in the performance of their duties and man) 
 of such questions relate directly to the administrative duties of 
 assessing officers. 
 
 This circular is written for the purpose of explaining the 
 general features of the law so far as they seem to require ex- 
 planation, and to aid assessing officers in the administration 
 thereof, and with the view also of answering so far as practi- 
 cable the inquiries above mentioned. Inasmuch as the act in 
 question deals directly with the private, relations of mortgagors 
 and mortgagees some discussion of questions affecting their 
 rights will be unavoidable, in so far as such questions relate to 
 or affect assessing officers in the performance of their duties, 
 although it is not the province of the commission to advise pri- 
 vate individuals upon matters affecting their personal rights 
 and obligations. 
 
 For convenient reference a copy of the act is printed and 
 furnished as an appendix to this circular. 
 
 1081 
 
 5 
 
4 — 
 
 WIIAT MORTGAGES ARE AFFECTED. 
 
 Section 1 of said act provides: 
 
 “For the purposes of this act the term ‘mortgage’ shall be 
 construed to include every mortgage or other conveyance of 
 real estate and every lien thereon created by contract, given or 
 intended as security for the payment of money, and shall also 
 include the indebtedness secured to be paid by such mortgage 
 or other conveyance or lien.” 
 
 But it is not to be inferred from the above definition that 
 everything thereby declared to be a “mortgage” is to be assessed 
 by the special method provided in the act. It is expressly de- 
 clared in section 8 that, 
 
 “All provisions of law whereby mortgages of real estate held 
 by insurance companies or other persons or associations are ex- 
 empted from taxation, either expressly or by necessary implica- 
 tion shall remain unaffected by the provisions of this act.” 
 
 Under the statutes in force prior to the enactment of said 
 chapter 378, mortgages held by banks, trust companies, insur- 
 ance companies and various other associations or corporations 
 assessed by a state board of assessment or taxed by license fee 
 or other special method in lieu of direct taxation upon a valua- 
 tion made by local assessors, were not liable to assessment by 
 town, city and village assessors. As to all mortgages which 
 were thus or otherwise exempt from direct assessment and 
 taxation, the law has not been changed, but such mortgages con- 
 tinue to be exempt as heretofore. This is the necessary effect 
 of the provisions in section 8, quoted above. 
 
 Section 9 designates certain other classes of mortgages which 
 are not subject to the special method of assessment prescribed 
 by the new law, viz. : 
 
 (1) Mortgages upon lands assessed by a state board of as- 
 sessment. Under present laws the properties of railroad, ex- 
 press, sleeping car, freight line and equipment companies are 
 required to be assessed by a state board of assessment, and are 
 not liable to assessment by local officers. Such state assessr 
 
— 5 — 
 
 ment, however, covers only such property of the companies 
 named as is used in the business of such companies respectively. 
 Such of their real estate as is not so used is subject to assess- 
 ment by local officers under the general assessment laws; and 
 mortgages upon such last mentioned real estate are subject to 
 the special method provided in the new law, provided, of course 
 that the mortgages themselves are not excluded under the pro- 
 visions of section 8 explained above. 
 
 (2) Mortgages upon real estate of persons , associations or 
 corporations taxed by license fee or other special method in lieu 
 of taxation upon the mortgaged property. Under present laws, 
 street railway, telegraph and telephone companies, life and fire 
 insurance companies, trust companies and some other organiza- 
 tions are taxed by license fee or other special method in lieu of 
 direct taxation under the general assessment laws. As to some 
 of such companies the exemption from taxation by local assess- 
 ment under general laws, by reason of such special method, ex- 
 tends to all their property. As to others, such exemption ex- 
 tends to part of their property only. In cases where the real 
 estate is thus exempt, mortgages thereon are not subject to the 
 special method of assessment provided by the new act of 1903 ; 
 but if any such real estate is not so exempt such special method 
 of assessment is applicable to mortgages thereon, — provided of 
 course that the mortgages themselves are not exempt under the 
 provisions of section 8 already explained. 
 
 (3) Mortgages upon lands exempt from taxation under any 
 other provisions of law. In addition to exemptions on account 
 of some special method of taxation mentioned in the preceding 
 paragraph, there are various other exemptions of real estate 
 from taxation. These exemptions are so well known that the 
 laws granting them need not be referred to in this connection. 
 As to all mortgages upon exempt lands the special method of 
 assessment prescribed by the act of 1903 does not apply. It 
 could not apply without destroying the exemption in part at 
 least The last clause of section 9 was evidently designed to 
 
prevent such result as well as to declare the rule in the case 
 stated in this paragraph. 
 
 There are mortgages not liable to taxation under former 
 laws which are subject to assessment under the special 
 method prescribed by said chapter 378, viz. : mortgages 
 held by non-residents of the state on lands within the 
 state liable to taxation under the general assessment laws. Un- 
 der former laws, such mortgages were deemed to be and could 
 be considered as personal property only, and as such were tax- 
 able only in the district in which the owner resided, and were 
 therefore not taxable in this state when owned by a non-resi- 
 dent. State ex rel. Dwinnell vs. Gaylord, 73 Wis., 316. But 
 under the provisions of the new law, a mortgage on taxable real 
 estate in this state (except in the cases already mentioned) is 
 no longer treated as personal property, but is declared to be an 
 interest in the real estate subject to such mortgage and to be 
 taxable as such interest in the district in which the mortgaged 
 premises are located. JSTo distinction is made in this respect 
 between mortgages held by residents and mortgages held by 
 non-residents. The language of the statute is sufficiently com- 
 prehensive to apply to both classes of mortgages. The validity 
 of a statute which thus includes mortgages held by non-resi- 
 dents seems to be affirmed by the decision of the United States 
 supreme court in the case of Savings & Loan Society vs. Multi 
 nomah Oo., 169 U. S., 421, as to mortgages executed subse- 
 quent to the enactment of such statute. There is some question 
 whether the law should be construed as applicable to mortgages 
 held by non-residents which were executed before the law took 
 effect. The question, however, is one affecting the private 
 rights of the parties to the mortgage rather than the public. 
 If assessors should treat the law as applicable to such mort- 
 gages and assess them as interests in the mortgaged real estate, 
 the rights of the parties would not be concluded by such action 
 on their part. Whether assessors do this or not is not a mat- 
 ter of public importance, for the same aggregate valuation will 
 appear upon the assessment rolls in either case. This will be 
 understood more clearly later on in this discussion. 
 
— 7 — 
 
 From the foregoing it may be seen that the changes accom- 
 plished by the new law relate to mortgages on taxable real 
 estate in this state which under the former law were subject to 
 assessment as personal property in the assessment district in 
 which the mortgagee resided, and also to mortgages on such real 
 estate held by non-residents of the state, if not otherwise ex- 
 empt under former provisions of law. As to all other mort> 
 gages the former laws remain unchanged. In the discussion 
 which follows, the word “mortgage” will be understood to refer 
 to such mortgages as are subject to the special method of assess- 
 ment provided in the act of 1903 unless a contrary meaning is 
 indicated in connection with the use of the word. 
 
 CHIEF PROVISIONS OF THE LAW. 
 
 As to all mortgages coming under the provisions of the law, 
 it is provided that each such mortgage, 
 
 “shall be deemed an interest in such [the mortgaged] real 
 estate and shall be assessed as such interest in the assessment 
 district in which such real estate is located, and not otherwise, 
 and may be separately assessed and taxed as hereinafter pro- 
 vided. When so separately assessed the interest of the mort- 
 gagor in such real estate shall be assessed for only such value 
 or amount as shall remain after deducting the assessed value of 
 the interest of the mortgagee from the assessed value of the 
 entire real estate.” — (Sec. 2). 
 
 This section accomplishes some radical changes in the former 
 laws respecting the assessment of such mortgages as are subject 
 to the special method prescribed by the new statute. Instead 
 of being assessed as personal property, such mortgages are re- 
 quired to be assessed as an interest in real estate. Instead of 
 being assessed in the district in which the mortgagee resides, 
 they are to be assessed in the district in which the mortgaged 
 real estate is located. And these requirements are to be ob- 
 served when both interests are assessed together as well as when 
 the interest of the mortgagee is assessed separately. In other 
 words, such mortgages cannot in any case be assessed as per- 
 
— 8 — 
 
 sonal property, nor in the district in which the owner resides 
 if his residence is not in the district in which the mortgaged 
 real estate is located, but can be assessed only as an interest in 
 the mortgaged real estate in the district in which such real 
 estate is located. 
 
 It has been reported to thisi office that in some assessment dis- 
 tricts such mortgages have been included in the personal prop- 
 erty assessment of persons residing therein, for the year 1903, 
 and were so included before the act of 1903 was published and 
 took effect. The question is presented whether such personal 
 property assessments must be changed by deducting therefrom 
 the amounts included therein on account of such mortgages, so 
 as to bring the assessment into compliance with the law in its 
 present form. It is considered that such change is necessary 
 and must be made, and such personal property assessments must 
 be reduced accordingly. Otherwise, it is believed, such per- 
 sonal property assessments would be invalid to the extent of the 
 amount included therein on account of such mortgages. It is 
 true that (with certain exceptions which need not now be no- 
 ticed) the law required, and still requires, the assessment of 
 personal property to be made as of the first day of May; that 
 the new law was not in force until the 23rd day of May ; that 
 up to the last mentioned date the laws required such mortgages 
 to be assessed as personal property in the district in which the 
 mortgagee resided, and therefore that the inclusion of such 
 mortgages in the mortgagee’s assessment of personal property 
 prior to the 23rd day of May was lawful at the time. But the 
 new statute, in section 10, expressly declares that it a shall ap- 
 ply to the assessment to be made in the year 1903.” This lan- 
 guage is construed to refer to the entire assessment of that year 
 — to the parts of the work then already done as well as to the 
 parts thereafter to be done. It is not doubted that the legisla- 
 ture has authority to amend and change the laws and rules for 
 the assessment of property during the time an assessment is in 
 progress and to make such legislation relate back and apply to 
 such pending assessment in its entirety, provided constitutional 
 
— 9 — 
 
 restrictions are otherwise observed, even though such legisla- 
 tion should render it necessary to revise and do over some part 
 of the work already done upon such assessment. The work of 
 the assessor is always subject to revision by himself until the 
 roll is completed and submitted to the board of review and the 
 assessment itself is inchoate and subject to revision and change 
 until the work of the board of review is ended. Until the 
 assessment is completed the rights of the taxpayers have not be- 
 come fixed or vested in any legal sense so as to preclude the 
 legislature from enacting any and all laws affecting the assessr 
 ment which it had power to enact prior to the time the work of 
 assessment was begun. It is regretted that assessors should be 
 required in this way to revise work which when done was in 
 accordance with laws then in force, but the situation cannot 
 now be changed and there is no course to be pursued except to 
 revise the assessment and bring it into compliance with the law 
 as it is now enacted. 
 
 SEPARATE ASSESSMENT WHEN REQUIRED, WHEN NOT. 
 
 Section 3 of said chapter 378 provides that: 
 
 “At the option of the mortgagor both such interests may be 
 assessed and taxed together, without separate valuation, to the 
 mortgagor or occupant, the same as unincumbered real estate. 
 In such case the combined valuation of both interests shall not 
 exceed the just valuation which should be placed upon such real 
 estate if unincumbered.” 
 
 One of the questions presented under this and other provi- 
 sions of the act, is whether the interest of the mortgagee must be 
 separately assessed in every case where the mortgagor does not 
 exercise the option given him in section 3, by requesting or con- 
 senting to the assessment of both interests together. It is ob- 
 served that the provision for separate assessment in section 2 
 is permissive, not mandatory, in form, the word may instead of 
 shall being used ; also that the provision in section 3 for assess- 
 ment of both interests together is in like manner permissive and 
 not mandatory in form. It is considered, however, that this 
 
— 10 - 
 
 form of statement is not to be construed as vesting in the as- 
 sessor any discretionary authority to determine whether or not 
 a separate assessment shall be made. To do so would make it 
 possible to defeat the evident intention of the legislature to per- 
 mit the mortgagor to determine whether the two interests shall 
 be assessed separately or together. Otherwise he would have 
 no ‘‘option.” It is a well settled rule that the word may is to 
 be construed as meaning must or shall when necessary to accom- 
 plish the intent of the legislature as gathered from the pro- 
 visions of the act, all of them being considered, or when neces- 
 sary to save or secure the rights of persons which may be af- 
 fected or prejudiced under a different construction. Cutler v. 
 Howard, 9 Wis., 309. Looking to all the provisions of the act 
 it will be readily perceived that the chief ends or purposes 
 sought to be accomplished are twofold: (1) To avoid or do 
 away with the extra burden (considered by some to be double 
 taxation, in effect) resulting from the assessment of the mort- 
 gage debt to the mortgagee as personal property and the assess- 
 ment of the mortgaged premises to the mortgagor at its full 
 value, relatively with other property, without deduction on ac- 
 count of the mortgage debt; (2) To secure to the mortgagor, 
 so far as lies in the power of the legislature, the right to com- 
 pel the mortgagee to bear the burden of the tax upon his mort- 
 gage considered as an interest in the mortgaged real estate. To 
 accomplish this last mentioned purpose provision is made for 
 the assessment and taxation of the mortgagee’s interest sepa- 
 rately from the interest of the mortgagor, and the mortgagor is 
 given the right to pay the tax upon the mortgagee’s interest and 
 deduct the amount paid from the mortgage debt These pro- 
 visions being intended for the protection of the rights of the 
 mortgagor, it cannot be presumed that the legislature intended 
 to vest the assessor with authority in his discretion to jeopardize 
 or destroy such rights by omitting to make the separate assess- 
 ment of the mortgagee’s interest. It was evidently recognized 
 by the legislature that in some instances, the right of offset 
 above mentioned would not be available to the mortgagor, by 
 
— 11 - 
 
 reason of an agreement on his part to pay the tax on the mort- 
 gagee’s interest or otherwise, and that in such cases the sepa- 
 rate assessment of the interest of the mortgagee would be a 
 useless formality ; hence the provision for assessing both inter- 
 ests together in some cases. But by giving to the mortgagor 
 the option mentioned, the statute contemplates that, as between 
 him and the assessor, he is sole judge of the availability of 
 such right of offset and is not to be controlled by the assessor 
 in the matter of separate assessment. 
 
 This construction of the statute is confirmed by the legisla- 
 tive history of the act. An amendment to the original bill was 
 adopted in one branch of the legislature providing among other 
 things that the interests of the mortgagor and mortgagee should 
 be assessed together the same as if the real estate were not in- 
 cumbered, unless the mortgagor or mortgagee should request 
 that such interests be separately assessed and furnish to the as- 
 sessor such information as would enable him to make such sep- 
 arate assessment. But this amendment was rejected in the other 
 branch of the legislature and the bill was finally passed in its 
 present form. This indicates the intention of the legislature 
 to have the mortgagee’s interest separately assessed unless the 
 mortgagor should elect to have both interests assessed together. 
 
 Correspondents have asked, whether, in case a mortgage con- 
 tains a stipulation on the part of the mortgagor to pay all taxes 
 which shall be assessed on the mortgaged premises, or to pay all 
 taxes which may be assessed upon the interest of the mortgagee, 
 such stipulation may not be regarded as an election by the mort- 
 gagor to have both interests assessed together. It is considered 
 that such stipulations should not be so construed. Whether the 
 effect of such stipulations would be to take away or nullify the 
 right which the mortgagor might otherwise have to pay the tax 
 on the mortgagee’s interest and to offset the amount paid 
 against the mortgage debt, so as to make the separate assess- 
 ment of the mortgagee’s interest a useless formality, is primar- 
 ily a question between mortgagor and mortgagee which can be 
 settled only by the courts if they cannot settle it between them- 
 
selves. For an assessor to construe these stipulations, although 
 only for the purposes of his own work, would be an interference 
 on his part with the private rights of the parties, of which the 
 law has not made him the judge. Where a mortgage contains 
 an express stipulation that both interests shall be assessed to- 
 gether, such stipulation may be taken as an exercise of the right 
 of option given to the mortgagor in section three. But if the 
 mortgagor, notwithstanding such stipulation, should require 
 separate assessment, the assessor should comply with such re- 
 quirement. This would be safer practice at least. No one 
 could be injuriously affected by such course, and there might 
 be instances where the parties have so changed their stipula- 
 tions that the mortgagor would be entitled to the separate as- 
 sessment. 
 
 The conclusion upon this branch of the discussion is that the 
 interest of the mortgagee should be assessed separately in all 
 cases unless the mortgagor should request or consent to the as- 
 sessment of both interests together. 
 
 MORTGAGES PREVIOUSLY EXECUTED. 
 
 Thus far, in this circular, no distinction has been made be- 
 tween mortgages executed before the new law went into effect 
 (May 23, 1903) and those that have been executed since that 
 date. The law itself makes no such distinction, at least not in 
 the wording of its provisions, but in form is applicable to prior 
 mortgages as well as those subsequently executed. The act 
 should therefore be construed as applying to both classes of 
 mortgages so far at least as effect can be given to its various 
 provisions without bringing them into conflict with constitu- 
 tional restrictions. It is not perceived that such application 
 would bring any of the provisions of the act into such conflict, 
 except the provision in section 5, which authorizes the mort- 
 gagor after paying the tax on the interest of the mortgagee to 
 offset the amount so paid against the mortgage debt. Presum- 
 ably there are cases — there may be many — of mortgages exe- 
 cuted before chapter 378 took effect in which the mortgagor is 
 
— 13 — 
 
 under valid agreement to pay whatever tax may be imposed 
 upon the mortgage as an interest in the lands or otherwise. To 
 construe the above mentioned provision in section 5 as ap- 
 plicable to such cases so as to release the mortgagor from such 
 agreement would bring such provision into direct conflict with 
 the constitutional restriction forbidding the enactment of any 
 law impairing the obligation of contracts. But it does not fol- 
 low from this that the entire act is unconstitutional or even that 
 the provision in section 5 is void and of no effect. By familiar 
 and well settled rules of construction the statute must be so in- 
 terpreted as to give effect to all its provisions so far as may be 
 done without doing violence to the language employed and with- 
 out bringing it into conflict with constitutional restrictions. 
 The provision in section 5 giving the right of offset mentioned 
 is quite independent of the other provisions of the statute. 
 Such other provisions may therefore be given full effect and 
 held to apply to mortgages executed before the enactment of 
 chapter 378 as well as to mortgages thereafter executed, with- 
 out reference to the construction to be placed on the provision 
 in section 5, and the conclusion reached is that those provisions 
 should be construed as applying and do apply to both classes 
 of mortgages. As already observed, the provision in section 5 
 cannot be held applicable in those cases where the mortgagor is 
 under valid obligation to pay the tax imposed upon the interest 
 of the mortgagee. But this does not prevent its application to 
 all cases where the mortgagor is not under such obligation, and 
 the conclusion is reached that the provision does apply to such 
 last mentioned cases. In other words, it is to be presumed that 
 the legislature did not intend that the provision in section 5 
 should apply in cases where the mortgagor is under obligation 
 to pay the tax on the interest of the mortgagee; but that it 
 should apply, in respect to mortgages theretofore executed, only 
 in cases where such obligation does not exist — cases where the 
 exercise of the right of offset would not be in violation of the 
 obligation of the mortgagor’s contract — and as to mortgages 
 thereafter executed, only where such right of offset has not 
 been relinquished by agreement to pay the tax or otherwisa 
 
-14 — 
 
 The question has been asked whether chapter 378 is not Un- 
 constitutional and void by reason of the seeming conflict be- 
 tween the provision in section 5 and the constitutional proh- 
 ibition of laws impairing the obligation of contracts. If the 
 above stated conclusions are correct, the answer to this question 
 must be, of course, that the statute is not void on the grounds 
 stated. 
 
 COVENANTS TO PAY THE TAX. 
 
 The opinion has already been expressed, that the mortgagor’s 
 right of offset provided in section 5 is not available to him in 
 case he is under obligation to his mortgagee to pay the tax upon 
 the mortgagee’s interest. It is quite another question to deter- 
 mine what shall constitute such obligation or whether under the 
 wording of a particular covenant or stipulation on the part of 
 the mortgagor such obligation has or has not been incurred. 
 This would be purely a question of the construction or meaning 
 of the contract between mortgagor and mortgagee, to be deter- 
 mined in each case upon the wording of the contract, and per- 
 haps in some instances requiring a knowledge of the attending 
 facts and circumstances. It is primarily a question affecting 
 the private rights of the parties. As such, it is not within the 
 province of this commission to consider and one which the 
 courts only have authority to settle if the parties themselves do 
 not agree. But notwithstanding this, the commission has been 
 asked to express an opinion in numerous instances, and in a 
 sense it has become a topic of public interest. In view of this 
 and for the reason also that it is a matter indirectly affecting 
 assessing officers in the performance of their duties, some ex- 
 pression of opinion on the subject is perhaps justifiable. The 
 discussion will be confined to such cases as usually or frequently 
 occur. 
 
 Ho doubt is entertained that where the mortgagor has cove- 
 nanted or agreed in clear and unmistakable terms to pay all 
 taxes which may . be imposed upon the mortgage, or all taxes 
 which may be imposed upon the mortgagee on account of such 
 mortgage, such covenant should be construed, as requiring the 
 
— 15 — 
 
 mortgagor to pay any tax imposed under the provisions of chap- 
 ter 378 upon the interest of the mortgagee in the mortgaged 
 real estate. 
 
 Real estate mortgages as usually drawn contain a clause or 
 stipulation requiring simply that the mortgagor shall pay all 
 taxes which may be assessed on the mortgaged real estate; and 
 when drawn in the short form prescribed by Wisconsin statutes 
 they are to be construed the same as if such stipulation were 
 expressly included. (Sec. 2209, Stat. 1898.) Questions sub- 
 mitted usually relate to mortgages containing such stipulations 
 and, substantially, nothing more ; and as to these some doubt is 
 frequently indicated. The real question is whether the tax 
 which the new law imposes upon the interest of the mortgagee 
 is to be considered a tax upon the mortgaged premises xuithin 
 the meaning of the usual stipulation referred to above. The 
 law expressly declares the interest of the mortgagee to be an 
 interest in the mortgaged real estate and the tax upon such in- 
 terest to be a lien upon the entire property. In the enforce- 
 ment of the tax upon either interest by sale of the land, the two 
 interests are inseparable. (Sec. 5.) The tax upon the mort- 
 gagor’s interest and the tax upon the interest of the mortgagee 
 are for the same purposes. They are respectively nothing more 
 or less than separate parts of the same tax on the same real es- 
 tate. Together they represent precisely what would be charged 
 against the same real estate if not subject to mortgage. The 
 conclusion seems unavoidable that the tax upon one interest is 
 as much a tax upon land as the tax upon the other interest It 
 follows of course that when the stipulation of the mortgagor 
 requires him to pay all taxes assessed upon the mortgaged prem- 
 ises it must be construed as requiring him to pay that part of 
 the tax charged upon the mort.^^ee’s interest as well as that 
 part charged upon his own. In other words, he is under obli- 
 gation to pay the tax upon the interest of the mortgagee and is 
 thereby precluded from exercising the right to offset the amount 
 of the tax paid against the mortgage debt. 
 
 The views expressed above, as to the construction to be placed 
 upon the provision in section 5 giving such right of offset, and 
 
— 16 — 
 
 also in respect to the construction to be placed upon the usual 
 tax covenants in mortgages, are in accordance with the deci- 
 sions of the Supreme Court of Massachusetts. In the case of 
 Hammond vs. Lovell, reported in Vol. 136, Mass. Reports, 184, 
 a mortgager had covenanted to pay “all taxes and assessments 
 on the granted [mortgaged] premises.’’ After the execution 
 of such mortgage the Massachusetts legislature passed a mort- 
 gage tax law, substantially the same as the Wisconsin act in its 
 principal features. The mortgagor paid the mortgage debt, but 
 did not pay the taxes charged upon the interest of the mort- 
 gagee, and then sought to compel the mortgagee to pay such 
 taxes and discharge the mortgage. The court ruled that the tax 
 upon the mortgagee’s interest was a tax upon the mortgaged 
 premises^ which by the terms of the mortgagor’s covenant, he 
 was under obligation to pay; that the statute on which the 
 mortgagor based his claim, though in form applicable to all 
 cases, was not intended to apply to cases where the mortgagor 
 had placed himself under such obligation, and therefore the 
 mortgagee could not be compelled to pay the tax. Chief Justice 
 Morton, writing the opinion, says in part : 
 
 “One of the conditions of the mortgages, given in 1874 by 
 the plaintiff to the defendant, is that the mortgagor ‘shall pay 
 all taxes and assessments on the granted premises.’ The prin- 
 cipal question in this case is whether, under this stipulation, 
 the plaintiff is bound to pay the taxes assessed for the year 1882 
 upon the amount of the interest as [of the] mortgagee. 
 
 “A material change in the mode of taxing mortgaged real 
 estate was made by the Stat. of 1881, c. 304, re-enacted in the 
 Pub. Sts., c. 11, Sec. 13 et seq. Under these statutes, mort- 
 gagors and mortgagees are, for the purposes of taxatAn, to be 
 doomed to be joint owners, until the mortgagee takes possession, 
 and the assessors are required to assess upon the land the 
 amount of the mortgagee’s interest and also the amount of the 
 mortgagee’s interest after deducting the assessed value of such 
 mortgagee’s interest; and all taxes thus assessed constitute a 
 lien up'on the land for two years after they are committed* to the 
 collector, and may be enforced by sale of the land. Pub. Sts., 
 c, 12, Sec, 24. Loans on mortgage of real estate, thus taxable 
 as real estate, are not to be included for purposes of taxation 
 
in debts due to the person to be taxed. St. 1881, c. 304, Sc 2 . 
 6. Pub. Sts., c. 11, Sec. 4. 
 
 “Before the St. of 1881, mortgagors in possession were li- 
 able to be assessed for the full value of the real estate, and mort- 
 gagees were liable to be assessed for the amount of the loans 
 upon mortgage, as debts due to them; and the object of the stat- 
 ute was, as its title imports, to relieve property from the liabil- 
 ity of double taxation. But although, under these statutes, a 
 mortgagee may in some cases be relieved from taxation upon his 
 loan, as a debt due to him . . . still the. tax is a tax upon 
 
 the land. If a mortgagor, since the passage of the statute, 
 chooses to stipulate, as one of the conditions of his mortgage, 
 that he will pay all taxes upon the land, it would include taxes 
 levied upon the land under these statutes. 
 
 “The legislature did not intend to interfere with or control 
 the relations existing by contract between mortgagors and mort- 
 gagees. The plaintiff is bound by his contract, as between him 
 and the mortgagee, to pay all taxes assessed upon the premises. 
 This stipulation was designed to protect the security in the 
 mortgagee’s hands so that it should not be lessened by a lien 
 •for taxes, and the plaintiff is not excused from his obligation 
 by the new statutes changing the form of levying taxes upon 
 the land so as to prevent double taxation in certain cases.” 
 
 To substantially the same effect in respect to the application 
 of the statute, are the decisions of the same court in Co dm an 
 vs. Johnson, 104 Mass., 491, and Walker vs. Whittemore, 112 
 Mass., 187. These cases arose under leases in which the lessee 
 had covenanted to pay all taxes imposed unon the premises 
 during the term of the lease. Statutes passed subsequent to 
 the execution of such leases provided regulations between land- 
 lord and tenant in respect to such taxes more favorable to the 
 tenant than the terms of the covenant in the leases under con- 
 sideration. In each case the tenant claimed the more favor- 
 able provisions of the statute, which in form, was applicable to 
 all cases. The court held that inasmuch as it was beyond the 
 power of the legislature to relieve lessees from the obligations 
 of their contracts previously entered into, the statute must be 
 construed as not being intended to apply to such cases. • The 
 2 
 
— 18 — 
 
 reasoning of the court is stated in the opinion in Walker vs. 
 Whittemore, as follows: 
 
 “But it is not to be supposed that the legislature intended to 
 release or modify any express covenant made by the tenant in 
 the lease itself. If the tenant has covenanted to pay all taxes, 
 ordinary and extraordinary alike, it is not in the power of the 
 legislature to alter his contract and substitute another, less bur- 
 densome to the lessee, in its place, without the consent of the 
 lessor. We must therefore consider the statute as establishing 
 the rule only for cases in which the parties have not otherwise 
 provided by the terms of their lease. Whatever of hardship 
 may be in the case, it arises entirely from the terms of the writ- 
 ten covenants, and is beyond the power of the court to relieve.” 
 
 Chapter 378 differs from the Massachusetts mortgage tax law 
 in its administrative and other detail provisions, and differs 
 also somewhat in the wording of its principal provisions ; but in 
 respect to the chief objects sought to be accomplished, and the 
 methods of accomplishment, the two statutes are practically 
 identical. Under both statutes, the mortgage is deemed to be 
 an interest in the mortgaged real estate'; it is to be assessed as 
 such interest and not otherwise, in the district in which such 
 real estate is located and not elsewhere ; the mortgagee’s interest 
 may (must) be separately assessed, at least if the mortgagor so 
 requires; the valuation of the mortgagor’s interest is determined 
 by the assessable value of the entire real estate after deducting 
 the assessed valuation of the interest of the mortgagee ; the tax 
 upon the mortgagee’s interest is made a lien upon the land ; the 
 mortgager may pay such tax and is given the right .(without, 
 exception, in form) to offset the amount paid against the mort- 
 gage debt. These are in substance the chief provisions of both 
 statutes. Prior to the enactment of chapter 378, other states 
 had sought to accomplish the same general results but by quite 
 unlike methods. It may be fairly claimed therefore that the 
 Wisconsin act is virtually an adoption of the Massachusetts 
 statute, in respect to these principal provisions. So regarded, 
 by a familiar rule of construction, it is to be given the same 
 interpretation as that placed upon it by the Massachusetts court 
 
prior to its adoption in this state. But independently of this 
 consideration, the decisions of the Massachusetts Supreme 
 Court are high authority, and in respect to the questions under 
 consideration are accepted as correct expositions of the law. 
 
 It is perhaps unnecessary to add that the views herein ex- 
 pressed are advisory merely and not conclusive upon any one. 
 The commission does not assume to advise mortgagors or mort- 
 gagees in respect to their private rights and obligations. Mort- 
 gagors are asked, however, to give these questions careful con- 
 sideration and to inform themselves as to their rights under the 
 new enactment; and if satisfied in any case that the right of 
 offset is not available they are also asked to request or consent 
 that the interests of mortgagor and mortgagee be assesssed to- 
 gether. By so doing they will serve the interests of the pub- 
 lic, as every good citizen should, saving the inconvenience, labor 
 and expense of separate assessment and taxation ; and they will 
 also in many, if not most instances serve their private interests 
 as well. If a mortgagor to whom such right of offset is not 
 available should attempt to enforce his supposed right thereto, 
 or should, as a preliminary to such attempt, require the sepa- 
 rate assessment of the mortgagee’s interest, there is a possibility 
 that the mortgagee might look upon such action as hostile to 
 his rights and be disposed to bring the matter to a legal test by 
 foreclosure or other proceedings involving trouble and expense. 
 
 FAILURE TO MAKE SEPARATE ASSESSMENT. 
 
 It is realized that it is nearly i impossible, especially in the 
 present season, for the assessor to obtain the full information 
 needed to enable him to make the proper assessment of all mort- 
 gages upon lands in his district which are required by the stat- 
 ute to be separately assessed. The question is presented 
 whether the validity of the assessment will be effected if the 
 assessor should fail, through want of information or otherwise, 
 to separately assess the interest of the mortgagee in those cases 
 in which the law directs such separate assessment to be made. 
 The ruling of the courts upon such question can not be pre- 
 
— 20 — 
 
 dieted with certainty. It would seem fairly clear, however, 
 that, inasmuch as the total valuation of mortgaged real estate 
 would be the same when both interests are assessed together as 
 it would be if such interests were separately assessed, no one 
 would be injuriously affected by the failure to make such sepa- 
 rate assessment except the mortgagor; and it is not perceived 
 that he would lose any substantial right by the omission of the 
 separate assessment if by the terms of his mortgage or otherwise 
 he is under obligation to pay the tax on the interest of the mort- 
 gagee. It is presumable therefore that the courts would refuse 
 to consider the objection that the interest of the mortgagee was 
 not separately assessed except when made by a mortgagor whose 
 contract with the mortgagee is such that he may avail himself 
 of the right of offset provided in the statute. And even in such 
 case it is possible that the courts would refuse to set aside the 
 assessment or the tax on the ground that the amount of tax 
 justly chargeable to the mortgagee’s interest could be fairly ap- 
 portioned or determined by calculation without re-assessment 
 so as to. preserve the mortgagor’s right of offset in any action 
 that should arise between mortgagor and mortgagee respecting 
 the same. 
 
 By way of conclusion on this branch of the subject it may be 
 said that it is the duty of assessors, of course, to observe the law 
 and to make separate assessment of the mortgagee’s interest 
 (when not authorized by the mortgagor to assess both interests 
 together) in all cases where the assessor has information of the 
 existence of the mortgage and of the amount due thereon so 
 as to make a proper valuation of the mortgagee’s interest. It 
 seems fairly clear, however, that the validity of the entire as- 
 sessment will not be affected by a failure to make separate as- 
 sessment of the interest of mortgagees; and that such failure 
 will not affect the validity of the assessment of mortgaged real 
 estate in cases where, as between mortgagee and mortgagor, the 
 latter is under obligation to pay the tax on the mortgagee’s in- 
 terest. But in other cases the effect of such failure is involved 
 in some doubt which can be settled only by the courts, and the 
 
— • 21 — • 
 
 only safe course in such other cases is to make separate assessr 
 ment of the mortgagee’s interest. 
 
 OBTAINING INFORMATION. 
 
 Something further should he said, perhaps, as to the duty 
 of assessors and the means to be employed in obtaining infor- 
 mation for the purpose of making separate assessment of such 
 mortgages as are required to be assessed in that way. For the 
 purposes of the assessment to be made in 1903, it may be im- 
 practicable for assessors, with or without the aid of the county 
 supervisor of assessment, to secure from the records in the 
 office of the register of deeds information of all the mortgages 
 required to be assessed by the special method required by chap- 
 ter 378. And if such information were obtained, the assessor 
 would need to look elsewhere to ascertain the amount remain- 
 ing unpaid upon each mortgage to enable him to place a proper 
 valuation thereon for purposes of assessment. Ordinarily this 
 can be learned only from the parties to the mortgage, and usu- 
 ally from the mortgagor only, as the mortgagee often resides 
 in some other district. From this it may be seen that the as- 
 sessor must rely mainly on the owners of mortgaged property 
 for the information needed to make separate assessment of the 
 mortgagee’s interest. Inasmuch as the assessor will be greatly 
 pressed for time to make his assessment, especially for the pres- 
 ent season, owners of mortgaged property desiring separate as- 
 sessment of the mortgagee’s interest should bestir themselves to 
 furnish the assessor the required information; otherwise there 
 is danger of the matter being overlooked in many instances. 
 
 APPORTIONMENT OF VALUES. 
 
 Kef erring to subdivision 4 of section 4 of said chapter 378, 
 providing for the apportionment of the valuation of buildings 
 between mortgagee and mortgagor where the two interests are 
 separately assessed, correspondents have asked to be shown by 
 a concrete example how such apportionment is to be worked out. 
 
Let it be assumed that the total value of a piece of mort- 
 gaged real estate is $15,000 ; that the mortgage is worth $10,000 
 and the value of the improvements is $5,000 or one-third of the 
 whole. The mortgagee’s total interest should therefore be as- 
 sessed at $10,000 and the mortgagor’s total interest at $5,000. 
 The buildings being worth one-third of the whole property, in 
 assessing the mortgagee's interest, one-third of the value fixed 
 thereon (1-3 of $10,000 or $3,333.33) should be put down 
 under “value of improvements” and the other two-thirds (2-3 
 of $10,000 or $6,666.67) should be put down under the head 
 “value exclusive of buildings.” In assessing the mortgagor s 
 interest one-third (1-3 of $5,000, or $1,666.67) should be put 
 down under “value of improvements” and the other two-thirds 
 (2-3 of $5,000, or $3,333.33) should be put down under the 
 head “value exclusive of improvements.” Where such appor- 
 tionment works out in fractions of a dollar as in the foregoing 
 example, it would be well to omit the fraction if less than half 
 a dollar and to treat it as a whole dollar if a half dollar or more. 
 
 SOME CONSTITUTIONAL QUESTIONS. 
 
 Many inquiries have been received submitting questions in- 
 volving the validity of chapter 378 on constitutional grounds. 
 Some of these will be stated and discussed to some extent, but 
 no attempt will be made to pronounce definite opinions thereon. 
 In respect to this, as to all other assessment laws, the function 
 of the commission is administrative and not judicial in any 
 proper sense. It is considered that no administrative officer 
 should assume or pronounce any act of the legislature to be 
 nugatory unless it is so clearly in violation of constitutional 
 principles as to leave no room for doubt of its invalidity. The 
 time available for the consideration of these questions has been 
 quite limited, and the investigation has not been so thorough 
 as could be desired. So far as it has gone it has not led to any 
 clear conviction that the act is unconstitutional. There are 
 features in the statute which give rise to some questions and 
 doubts but for reasons already stated these doubts are resolved 
 
in favor of the constitutionality of the law. Authority to de- 
 termine and settle such questions is possessed only by the 
 courts ; and until there has been a final judicial decision against 
 the validity of the act assessing officers should accept it as a 
 valid enactment., 
 
 The constitutional objections urged against the statute may 
 * be roughly reduced to two propositions, viz. : 
 
 (1) That the act provides a rule for the taxation of a partic- 
 ular class of credits wholly different from the rules provided 
 for the taxation of other credits, resulting in the virtual exemp- 
 tion of mortgage credits subject to the special method of assess- 
 ment provided by the new act and leaving other classes of cred- 
 its subject to full taxation; that the classification of credits for 
 such purpose is wholly arbitrary and in violation of the provi- 
 sion in section I of article VIII of the state constitution, that 
 “the rule of taxation shall be uniform,” and perhaps also in 
 violation of the provisions in the federal constitution which 
 guarantee to every citizen the equal protection of the laws. 
 
 (2) That the act, in effect at least, grants to a certain class 
 of debtors exemptions on account of debts owing not enjoyed 
 by other classes of debtors, and that the classification for such 
 purpose is also arbitrary and in violation of the constitutional 
 provisions above mentioned. 
 
 As to the first proposition, very little discussion seems neces- 
 sary. The act is not considered as an act for the exemption of 
 the class of credits coming under its provisions, in any true or 
 legal sense. It provides for the assessment of all such credits 
 in every instance, but only by a different mode. Under such 
 act such credits are invariably assessed, as an interest in the 
 mortgaged real estate. Uo omission from assessment is per- 
 mitted by the statute, and no omission can occur except by 
 omission of the land itself. That the legislature may provide 
 for the assessment of a certain class of credits, by a different 
 method from that provided for the assessment of other credits, 
 it is not doubted, notwithstanding the fact that such different 
 method changes the place of assessment from the district in 
 
which the creditor resides to the district in which the mortgaged 
 real estate is located. State vs. Runyon, 41 N. J. Law, 08, 
 cited with approval in Wis. Cent. Ry. Co. vs. Taylor Co., 52 
 Wis., 37, 84. So far as the statute provides any exemption 
 it is an exemption, in form at least, in favor of the mortgage 
 debtor on account of the mortgage debt by him owing, accom- 
 plished by reduction in the assessment of his interest in the 
 mortgaged real estate. Such exemption and any inequalities 
 resulting therefrom come under the second proposition above 
 stated and will be discussed therewith. It may be said perhaps 
 that the same results would be accomplished by direct exemp- 
 tion of the credits subject to the special method of assessment 
 provided by chapter 378. This assertion does not seem to re- 
 quire discussion, and it is dismissed with the remark that the 
 same statement would apply as truly in respect to any statute 
 granting an exemption in favor of debtors on account of debts 
 owing. 
 
 The second proposition would seem to require more extended 
 consideration. Under the construction placed upon the above 
 mentioned constitutional provisions by the supreme court of this 
 state, the legislature is not prohibited from making classifica- 
 tions of persons or subjects of taxation and providing exemp- 
 tions or methods or rates of taxation for one class different from 
 those provided for other classes, but the classifications for such 
 purposes must “be founded upon real differences affording ra- 
 tional grounds for distinction and the treatment of each in- 
 dividual or subject of taxation in any one class must be the 
 same as the treatment of all others in the same class; in other 
 words, there must be uniformity of rule and equality for all 
 coming within the same class. Wis. Cent. Ry. Co. vs. Taylor 
 Co., 52 Wis., 37 ; Black vs. The State, 113 Wis., 205. 
 
 SAME SUBJECT CLASSIFICATION OF CREDITS. 
 
 Considered with reference to the rules now prescribed by law 
 for the assessment and taxation (or exemption) of credits, the 
 following classifications appear to be established: 
 
— 25 — 
 
 Class A. 
 
 (1) Credits taxable under former laws wbich are secured 
 by mortgage on Wisconsin real estate subject to taxation under 
 the general assessment and tax laws of the state. 
 
 (2) Credits held by non-residents (not taxable under 
 former laws) secured in the same manner. 
 
 Class B. 
 
 (1) Credits taxable under former laws, secured by mort- 
 gage on real estate in other states. 
 
 (2) Credits taxable under former laws secured by mort- 
 gage on real estate not subject to taxation under general assess- 
 ment laws. 
 
 (3) Credits taxable under former laws not secured by real 
 estate mortgage. 
 
 Class C. 
 
 (1) Credits not taxable under former laws, secured by 
 mortgage of real estate within or without the state, taxable and 
 non-taxabla 
 
 (2) Credits not taxable under former laws, not secured by 
 mortgage of real estate. 
 
 SAME SUBJECT 'TREATMENT OF THE DIFFERENT CLASSES. 
 
 . .Class A. — The credits included in this class are those which 
 are subject to the special method of assessment prescribed by 
 chapter 378. Each such credit and the mortgage by which it is 
 secured is assessed and taxed as an interest in the mortgaged 
 real estate, as the property of the creditor, in the district in 
 which such real estate is located, and not elsewhere nor other- 
 wise. The creditor is not entitled to any reduction in such as- 
 sessment on account of debts by him owning. (Sec. 7.) The 
 debtor’s interest in the same real estate is assessed for only such 
 amount as shall remain after deducting the assessed valuation 
 
— 26 — 
 
 of the mortgagee’s interest from the assessable value of the 
 whole property ; but the mortgagor is not entitled to reckon the 
 mortgage debt as among his debts owing for the purpose of re- 
 ducing his assessment for credits held by him. (Sec. 7.) Un- 
 der laws as existing prior to the enactment of chapter 378, all 
 credits included in Class A, except those held by non-residents, 
 were subject to the same method of assessment now prescribed 
 for credits included in Class B. 
 
 Class B . — The credits embraced within this class include all 
 credits subject to taxation under former laws except those now 
 included in Class A. All such credits are assessed as personal 
 property in the district in which the creditor resides. As to all 
 such credits, the creditor is entitled to an exemption or deduc- 
 tion in the assessment thereof equal to the amount of bona fide 
 unconditional debts by him owing, provided the latter do not 
 fall within Class A } and the debtor is entitled to the like exemp- 
 tion if he is the holder of other credits coming under Class B. 
 The law in respect to the taxation of credits included in Class B 
 is the same as it was before the enactment of chapter 378, ex- 
 cept that the exemption of credits on account of debts owing 
 was simply “so much of the debts due or to become due to any 
 person as shall equal the amount of bona fide and unconditional 
 debts by him owing.” 
 
 Class C . — As to all credits included in this class, they are 
 simply exempt or not subject to taxation. All these exemptions 
 were secured under laws enacted prior to chapter 378, and were 
 not affected by that act. (Sec. 8.) 
 
 From the foregoing it may be observed that the rule or 
 method for the taxation, or exemption, of each class of credits 
 is the same for all coming within the same class. The only 
 question for discussion would therefore seem to be whether such 
 classifications are “founded upon real differences affording 
 rational grounds for a distinction.” The rule or test just 
 quoted, while simple in statement and reasonable in theory, is 
 not one easy of application. In a given case there may be 
 room for diverse opinions as to whether the “differences” are 
 
— 27 — 
 
 or are not “real” or whether they do or do not afford “rational 
 grounds for a distinction.” 
 
 SAME SUBJECT REASONS FOR THE CLASSIFICATION. 
 
 As already indicated, Class A was created by chapter 378. 
 The special method for the assessment of credits included in 
 that class was prescribed by the same act. Under former laws 
 mortgage credits were subject to assessment as the personal 
 property of the creditor at their full value and the mortgaged 
 real estate was also subject to assessment at its full value with- 
 out reduction on account of the mortgage debt. This method 
 of assessment was considered by many to be double taxation in 
 substance and effect and to be a great injustice. Presumably 
 it was so considered by the legislature. It is evident at least 
 that the purpose of the legislature in enacting chapter 378 was 
 to do away with this injustice, if such it may be called, so far 
 as practicable. It is true that the rule inflicting such alleged 
 injustice was not imposed upon mortgage credits alone. All 
 taxable credits were legally subject to the same rule. But in 
 practical working, mortgage credits were the only credits which 
 had been assessed to any considerable extent. They were the 
 only class of credits easily discovered or made known to asess 
 ors. As a consequence the alleged excessive burden resulting 
 from this rule of taxation was imposed rarely except in the case 
 of credits secured by real estate mortgage. It was the parties 
 to such credits more than any others who felt the burden and 
 who complained of it as an. injustice. It is not doubted that 
 these facts were potent as inducements to the legislature to con- 
 sider and devise a remedy applicable to this class of credits 
 alone — in other words, to put them in a class by themselves. 
 
 It was impracticable for the legislature to extend the remedy 
 provided by chapter 378 to all classes of credits or to the mort- 
 gage credits included in Classes B and C — at least there seems 
 to be good grounds for such conclusion. Referring to Class B, 
 it would be impossible to app-ly the special method of assessment 
 prescribed by chapter 378 to credits “secured by mortgage on 
 
— 28 — 
 
 real estate in other states;” nor would it be possible to apply 
 such special method to credits “secured by mortgage of real es- 
 tate not subject to taxation under general assessment laws” 
 without virtual or express repeal of all the various provisions of 
 law by which such real estate was exempted or otherwise ex- 
 cepted from the operation of the general assessment laws. 
 
 To extend the provisions of chapter 378 to the credits in 
 Class C would operate to destroy the exemption of those credits 
 and necessitate the revision and reconstruction of all the laws 
 for the taxation of banks, trust, insurance and many other com- 
 panies taxed by license fee or other special method, for the 
 reason that such exemptions are chiefly created by or result 
 from the laws providing such special methods of taxation and 
 are a necessary feature or resultant of such laws. 
 
 There remains for consideration under this branch of the dis- 
 cussion the credits mentioned in the third subdivision of Class 
 B — “credits taxable under former laws no\t secured by real es- 
 tate mortgage.” All kinds of taxable personal credits are in- 
 cluded under this head. The impracticability of applying the 
 special method of assessment prescribed by chapter 378 to such 
 credits is apparent. There is grave doubt of the power of the 
 legislature to declare or make such credits an interest in the 
 debtor’s property. But if such power existed, what part, of the 
 debtor’s property would be so affected and what not? What 
 would be done if the debtor had no taxable property, as in the 
 case of a salaried person or one pursuing a professional calling, 
 whose obligation would be good without property behind it? 
 What if the debtor’s property should be without the state? 
 These and many other questions will demonstrate, or at least 
 will sufficiently indicate, the utter impossibility of extending 
 the special method of assessment prescribed by chapter 378 to 
 credits not secured by real estate mortgage. 
 
 From the foregoing it is seen that there was, in legislative 
 contemplation at least, urgent need for a measure doing away 
 with the evil complained of; the measure adopted was practi- 
 cable and efficient to that end as to the class of credits to which 
 
— 29 — 
 
 it was made applicable ; it could not be made applicable to other 
 mortgage credits without upsetting various other provisions of 
 law which sound public policy required to be continued in 
 force; it could not to be made practicable or efficient in respect 
 to credits not secured by real estate mortgage. These consid- 
 erations would seem to furnish reasonable support at least for 
 the contention that the classifications mentioned are “founded 
 upon real differences affording rational grounds for distinc- 
 tion.” 
 
 The foregoing is not put forth as a full presentation or dis- 
 cussion of constitutional objections to chapter 378, nor is it 
 claimed to be a conclusive answer to such objections as have 
 been stated. The purpose has been, primarily, to show that the 
 statute is not so clearly invalid as to warrant assessing officers 
 in disregarding it as nugatory, and incidentally to render some 
 aid to those who have occasion to study the questions involved 
 before they can be settled by the courts. 
 
 Nothing contained in this circular should be taken or con- 
 strued as indicating the opinion held by any member of this 
 commission in respect to the wisdom or desirability of chapter 
 378. There is perhaps an occasional remark, made incidentally 
 in the course of the discussion of constitutional or other ques- 
 tions considered, which upon hasty reading may seem to serve 
 as an expression of opinion on questions of mere legislative pol- 
 icy. It is believed, however, that a careful reading will remove 
 any such impression. As once before stated the discussion of 
 such questions has no proper place in this circular, and there 
 has been no intention to discuss them or to express any opinion 
 thereon. 
 
 N. S. Gilson, 
 
 Geo. Curtis, Jr., 
 
 Nils P. Haugen, 
 Commissioners of Taxation . 
 
— 30 
 
 APPENDIX. 
 
 No. 662, A.] 
 
 [Published May 23, 1903. 
 
 CHAPTER 378. 
 
 AN ACT relating to the taxation of mortgages and mortgaged real 
 
 estate. 
 
 The people of the State of Wisconsin, represented in senate and assem- 
 bly, do enact as follows: 
 
 Section 1. For the purposes of this act the term ‘ mortgage” shall 
 be construed to include every mortgage or other conveyance of real 
 estate and every lien thereon created by contract, given or intended as 
 security for the payment of money, and shall also include the indebt- 
 edness secured to be paid by such mortgage or other conveyance or lien. 
 The term “mortgagee” shall be construed to include the holder of any 
 such security, and the term “mortgagor” shall be construed to include 
 the owner of the real estate subject to such security or the person en- 
 titled to redeem therefrom. 
 
 Section 2. Whenever taxable real estate shall be subject to mort- 
 gage .such mortgage for the purposes of taxation shall be deemed an in- 
 terest in such real estate and shall be assessed and taxed as such 
 interest in the assessment district in which such real estate is located, 
 and not otherwise and may be separately assessed and taxed as herein- 
 after provided. When so separately assessed the interest of the mort- 
 gagor in such real estate shall be assessed for only such value or 
 amount as shall remain after deducting the assessed value of the in- 
 terest of the mortgagee from the assessed value of the entire real 
 estate. 
 
 Section 3. At the option of the mortgagor both such interests may 
 be assessed and taxed together, without separate valuation, to the mort- 
 gagor or occupant the same as unincumbered real estate. In such case 
 the combined valuation of both interests shall not exceed the just valu- 
 ation which should be placed upon such real estate if unincumbered. 
 
 Section 4. In case the interest of the mortgagee shall be separately 
 assessed, the following rules shall be observed: 
 
 1. The valuation of the interest of the mortgagee shall be according 
 to the true value thereof upon the same basis that other taxable prop- 
 erty is valued in the same district, and such valuation shall not ex- 
 
— 31 — 
 
 ceed the just valuation which should be placed upon the mortgaged real 
 estate if unincumbered. 
 
 2. If more than one mortgage interest in the same real estate shall 
 be required to be separately assessed and it shall be found necessary 
 to reduce the valuation of such interests in order not to exceed the just 
 value of the mortgaged real estate, such reduction shall be made upon 
 such interests in the inverse order of their priority. 
 
 3. If several parcels of real estate requiring separate valuation shall 
 be subject to one mortgage, the interest of the mortgagee shall be ap- 
 portioned among such several parcels according to the just valuation of 
 such parcels. In case such parcels shall be situated in more than one 
 assessment district the amount of the interest of the mortgagee to be 
 assessed in each district shall be in proportion to the value of such real 
 estate in such district, which proportions shall be determined by the 
 assessors of such districts, or a majority of such assessors at a meeting 
 which may be called for that purpose by one or more of them by notice 
 in writing, specifying a time and place for such meeting in one of such 
 districts, to be served personally or by leaving the same at the resi- 
 dence of the assessor to be served, in time to enable the person served 
 to be present. 
 
 4. Where the valuation of buildings as improvements is required to 
 be separately noted upon the assessment roll as provided by chapter 92 
 of the laws of 1901, the value of such improvements shall be appor- 
 tioned between the valuation of the interest of the mortgagor and .the 
 valuation of the interest of the mortgagee in proportion to the valua- 
 tion of their respective interests as entireties. 
 
 Section 5. When the interest of a mortgagee in any real estate shall 
 be separately assessed and taxed as provided in this act, the tax on 
 such interest shall constitute a lien upon such real estate the same as 
 other taxes upon real estate, and the collection thereof may be enforced 
 the same as other taxes upon real estate. Such tax, if uncollected, shall 
 be separately returned as delinquent; but at the tax sale, if unre- 
 deemed, the interest of the mortgagor and the mortgagee shall be sold 
 together for the amount of taxes on both interests, with interest and 
 charges thereon, and a single certificate of sale shall be issued thereon. 
 The mortgagor may pay the tax on the interest of the mortgagee, or 
 may redeem the land from the lien of such tax after its return as 
 delinquent. The amount so paid, with interest thereon at the rate 
 specified in the mortgage, shall be lawful offset in favor of the mort^ 
 gagor against the indebtedness secured by such mortgage and may be 
 deducted from any amount then due or thereafter to become due on 
 such indebtedness. 
 
 S'ection 6. The second clause of section 1056 of the statutes of 1898 
 is hereby amended so as to read as follows: To determine the amount 
 
— 32 — 
 
 of money and of debts due and to become due, other than debts secured 
 by mortgage or other conveyance of real estate in this state, for which 
 any person should be assessed, and the amount of bona fide and un- 
 conditional debts owing which any person may be entitled to deduct 
 from credits as exempt, such person shall be required to make a state- 
 ment thereof under oath, giving the average amount of such moneys 
 and of such debts due and to become due other than debts secured by 
 mortgage or other conveyance of real estate in this state owned or held 
 by him, and the average amount of debts by him owing which he may 
 be so entitled to deduct, for each and every month during the year end- 
 ing on the first day of May; and the average amount for such year, so 
 determined, shall be assessed for taxation. 
 
 Section 7. The exemption on account of debts owing provided in 
 subdivision 10 of section 1038 shall not be allowed in respect to any 
 mortgage required to be assessed as an interest in real estate under 
 the provisions of this act, nor in reduction of or offset to the indebted- 
 ness secured by any such mortgage. 
 
 Section 8. All provisions of law whereby mortgages of real estate 
 held by insurance companies or other persons or associations are ex- 
 empted from taxation, either expressly or by necessary implication 
 shall remain unaffected by the provisions of this act. 
 
 Section 9. The provisions of this act shall not apply to mortgages 
 upon property assessed by a state board of assessment nor to mort- 
 gages upon property of persons, associations or corporations taxed by 
 license fee or other special method in lieu of taxation upon such mort- 
 gaged property, but shall apply only to mortgages upon property sub- 
 ject to direct assessment and taxation under the general assessment 
 and tax laws of the state. 
 
 Section 10. This act shall take effect and be in force from and after 
 its passage and publication, and shall apply to the assessment to be 
 made in the year 1903. 
 
 Approved May 21, 1903. 
 
30 
 
 12 105279977 
 
 III