1 A first mortgage executed to a Federal Land Bank is an
instrumentality of the government, and cannot be subjected to a
state recording tax. P. 261 U. S.
2. Payment of a tax made a condition to the recording of a
mortgage is not optional where, under the state law, failure to
record would override the mortgage in favor of any purchaser
without notice. P. 261 U. S.
207 Ala. 456 reversed; petition for certiorari dismissed.
Error to a judgment of the Supreme Court of Alabama which
reversed a judgment of the state Circuit Court, in mandamus,
requiring a state recording officer to record a mortgage without
exacting the statutory tax.
Page 261 U. S. 376
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
Page 261 U. S. 377
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," etc., 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
"instrumentalities 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
255 U. S. 207
255 U. S. 212
Of course, therefore, it must prevail over any inconsistent laws of
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 the 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 recorded, in favor of any
purchaser without notice. While it does so, it cannot say that it
leaves the Bank free to
Page 261 U. S. 378
record or not. The bank has a choice, it is true, but so has one
who acts under duress. The Eliza Lines, 199 U.
, 199 U. S.
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
252 U. S. 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.
. 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.
, 235 U. S. 362
St. Louis Cotton Compress Co. v. Arkansas, 260 U.
. 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 mortgage,
Page 261 U. S. 379
and that is what is forbidden by the law of the United
A petition for certiorari presented by the plaintiff in error
for greater caution will be dismissed.