Pittman v. Home Owners' Loan Corp.

Background

The Home Owners’ Loan Corporation, a federal agency created by Congress, sought a writ to force the Baltimore clerk to record a mortgage after paying only the ordinary recording charge and without attaching stamps for a Maryland recording tax. Maryland law required a tax on mortgages (charged by amount of the loan) and made it unlawful to record without stamps to show payment. Lower courts granted the writ and the Court of Appeals affirmed, and the case reached this Court.

Reasoning

The central question was whether Maryland could impose that recording tax on a mortgage held by the federal corporation. The Court relied on an earlier decision holding that a state tax tied to recording a federally related mortgage is, in effect, a tax on the mortgage and is forbidden when Congress has exempted such loans. The Court read the Home Owners’ Loan Act’s exemption for the corporation’s “loans” to cover the lending process, the resulting debts, and the mortgages securing them. Because mortgages and their recordation were essential parts of the corporation’s lending operations, applying the state tax would interfere with Congress’s protection of those federal activities.

Real world impact

The ruling means Maryland may not require the Home Owners’ Loan Corporation to pay the state recording tax or affix stamps when recording mortgages it holds. It affirms that Congress can exempt federal lending operations from state taxation when Congress so provides. The judgment of the state court was affirmed by this Court.