Request By:
Mr. Jim "Pop" Malone
Jefferson County Clerk
Courthouse
Louisville, Kentucky 40232-3033
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You raise two questions, concerning KRS 142.010, which relate to state taxes on legal processes and instruments.
Question No. 1:
"In KRS 64.012, First listing reads: Recording deed of trust or assignment for the benefit of creditors, provided the entire record thereof does not exceed three pages: should we collect three dollars ($3.00) legal process tax?"
Where a deed of trust, involving real and/or personal property, is filed with the county clerk, for record, the state tax of three dollars ($3.00) must be collected by the county clerk. KRS 142.010(1)(b) explicitly provides that such tax applies to any "conveyance of real or personal property. " (Emphasis added).
Schauberger v. Tafel, 202 Ky. 9, 258 S.W. 953 (1924);
Horn v. Horn, Ky.App., 562 S.W.2d 319 (1978); KRS 381.180; and KRS 381.190. That tax of three dollars ($3.00) must also be collected by the clerk when a deed of assignment, as a conveyance of real and/or personal property for the benefit of creditors, is filed for record with the clerk's office. See KRS 379.010 and KRS 379.020.
Question No. 2:
"Secondly, recording a deed of assignment of real estate mortgage. Should we collect three dollars ($3.00) legal process tax?"
KRS 142.010(1)(b) provides in part that a state tax of three dollars ($3.00) shall be paid on each mortgage and conveyance of real or personal property. This leads us to consider the precise legal nature of a real estate mortgage.
Under the old English law, a mortgage on real property conveyed to the mortgagee the legal title to the property and placed him in the possession thereof unless the mortgagor reserved that possession. The English rule, however, never obtained in Kentucky. The Kentucky rule is that a real estate mortgage creates only a lien on the real estate in favor of the mortgagee, the legal title being left in the mortgagor.
Watts' Adm'r v. Smith, 250 Ky. 617, 63 S.W.2d 796 (1933) 800. A mortgage is a security for a debt. There is a rule that "Once a mortgage always a mortgage. "
Newsom v. Greer, 314 Ky. 347, 235 S.W.2d 782 (1951) 785.
A mortgage requires the relationship of mortgagor and mortgagee.
Miracle v. Stone, 190 Ky. 610, 227 S.W. 1011 (1921) 1013; and
Terry v. Bellamy, 292 Ky. 102, 166 S.W.2d 60 (1942) 61. Thus the "assignment of a real estate mortgage" is not in legal reality a "mortgage" , since the assignment of the mortgage involves the mortgagee's transferring his lien or mortgage interest in the real property to a third party.
Residually, we come to the question of whether a deed of assignment of a real estate mortgage is a conveyance of real property, in the sense envisioned in KRS 142.010. It is our opinion that it is such a conveyance, since the words "any conveyance" , as used in KRS 142.010, are broad enough to cover conveyances of real and personal property that do not amount to an absolute conveyance of title or a conveyance of legal title. While the courts have been inclined to resolve any doubt about tax legislation in favor of taxpayers, we believe the wording of KRS 142.010 is free from ambiguity. Thus "any conveyance of real or personal property" was obviously designed to embrace any transfer of a property interest to another, regardless of its precise nature and legal or equitable effect. See