Harralson v. Barrett

Paterson, J. The mortgage upon which this action was brought provides that in case-of foreclosure the mortgagee may include therein all payments made by the mortgagee “ for taxes on said premises, and the taxes of this mortgage or the money hereby secured.”

It is claimed by appellant that this provision of the mortgage is void, and that the court below erred in allowing interest on the note for the payment of which the mortgage was given as security, and this proposition we think must be sustained. Section 5, article XIII., of our constitution provides that “ every contract hereafter- made, by which a debtor is obligated to pay any tax or assessment on money loaned, or on any mortgage, deed of trust, or other lien, shall, as to any interest specified therein, and as to such tax or assessment, be null and void.” To hold that the clause of the mortgage quoted above is valid would defeat the purposes of this provision. In Hewitt v. Dean, 91 Cal. 11, Mr. Justice Harrison has clearly set forth the purposes of this provision of the constitution and the circumstances which led to its adoption. The end it attempts to accomplish is “that a portion of the taxes might be collected from the mortgagee, and that the burden upon the mortgagor might not at the same time be increased. A construction such as the respondent seeks to put upon the provision would afford the borrower no relief whatever, for under it the mortgagee could in any case make an agreement that on his payment of the mortgage tax it might be added to the indebtedness due him, and collected as a part of the same.” Marye v. Hart, 76 Cal. 291, cited and relied upon by respondent, is not in point. The contract there was entirely different from the one before us. It simply provided that the mortgagee might discharge “at maturity all taxes or assessments, liens, or other encumbrances now subsisting, or hereafter to be laid or imposed upon [609]said lot of laud or premises, and which may be in effect a charge thereupon”; and that such payments should be considered as secured by the mortgage. This provision was held to be entirely consistent with the provisions of section 4, article XIII., of the constitution, which allows the owner of the security to pay the taxes on the property, in which case they become a part of the debt, but does not allow the owner of the security to add the taxes paid by him on bis own security to the mortgage debt. It says: “The tax so levied upon the property affected thereby shall become a part of the debt.” The section provides for two assessments—one upon the property, which must be against the owner of the land, and one upon the mortgage, which must be against the owner of the mortgage. It permits the mortgagee, if he pay the tax on the land—and this is frequently done to protect himself—to add the amount thereof to the mortgage debt. Section 5 clearly intends that the tax on the security shall be the debt of the mortgagee, and provides a severe penalty in case of any attempt to put the burden upon the borrower.