Davis v. Metropolitan Life Insurance Co.

Full title: DAVIS, tax-assessor, et al. v. METROPOLITAN LIFE INSURANCE COMPANY

Court: Supreme Court of Georgia

Date published: Jul 7, 1943

26 S.E.2d 618 (Ga. 1943)

26 S.E.2d 618

Opinion

14555.

JULY 7, 1943.

Equitable petition. Before Judge Almand. Fulton superior court. March 12, 1943.

E. H. Sheats, W. S. Northcutt, and Standish Thompson, for plaintiffs in error.

Grover Middlebrooks and W. H. Mewbourne, contra.

1. According to previous decisions by this court construing Georgia statutes, a promissory note executed by a resident of this State, but owned by a non-resident and held by him at his domicile out of this State, is to be taxed here only if it is derived from or is used as an incident of property owned or of a business conducted by the non-resident or his agent in Georgia; and this is true although the note may be secured by a mortgage on land situated in this State.

2. Where notes and mortgages are so owned and held by a non-resident, the maintenance of an office and agency in this State for the purpose merely of protecting the security and ultimate collection or liquidation of the indebtedness, the papers themselves being sent into this State only when needed for cancellation, renewal, or foreclosure, would not be using them in this State, within the rule enunciated.

3. Where a non-resident life-insurance company made loans secured by Georgia real estate, without reference to policyholder relationship, and through a channel entirely separate from that through which it issued insurance policies to Georgia residents, doing so merely as part of its general plan of investment, for protection alike to all of its policyholders, and with no other reference to its Georgia insurance business, the loans thus made by the company were not so connected with its Georgia insurance business as to render credits arising therefrom taxable here merely on the theory that they were a part of such insurance business.

4. By using intermediaries as channels for transmission of papers, relying upon their inspection of property and examination of titles, made at the borrower's instance, and forwarding the money through them also at his instance, the lender does not constitute them his agents to make the loan, and is not chargeable with the consequences of dealings between them and the borrower, whether those dealings be public or private, known or unknown.

5. Agency can not be proved by the declarations of the alleged agent.

6. The request to review and overrule the decisions in Columbus Mutual Life Insurance Co. v. Gullatt, Guardian Life Insurance Co. v. Gullatt, 189 Ga. 747 ( 8 S.E.2d 38), and National Mortgage Corporation v. Suttles, 194 Ga. 768 ( 22 S.E.2d 386), is denied.

No. 14555. JULY 7, 1943.

Justice Duckworth being disqualified, Judge Candler of the Northeastern Circuit, was designated for this case.

On October 22, 1937, Metropolitan Life Insurance Company, a New York corporation, filed its petition against the members of the board of tax-assessors of Fulton County, the tax-receiver, and the tax-collector of that county, to enjoin threatened assessment of certain of plaintiff's notes or credits for ad valorem state and county taxes for the years 1931 to 1937, inclusive, and to enjoin the tax-receiver from entering any assessments on the tax-digest, and to enjoin the tax-collector from issuing executions against the plaintiff, alleging that the intangibles in question had no tax situs in Fulton County, Georgia. The petition set out in detail the facts showing how the plaintiff acquired its notes or credits, and why they were not taxable in Fulton County, and alleged that the threatened assessments if carried out would deprive the plaintiff of its property without due process of law, contrary to the fourteenth amendment of the constitution of the United States, and to the due-process clause of the constitution of Georgia. The tax-assessors answered, admitting that they were preparing to assess the credits represented by the notes owned by the plaintiff and secured by Fulton County real estate, and alleging that the property to be taxed arose out of a business conducted by the plaintiff through a local agent in Georgia, and that it is sought to tax fall into four groups. By stipulation a sample loan was selected from each of the four, as follows:

1. Frank B. Archer loan No. 146974, made and transferred during the time that Trust Company of Georgia was loan correspondent. This Archer loan is representative of 57 loans made during the existence of a contract between Metropolitan Life Insurance Company and Trust Company of Georgia.

2. E. E. Bengston loan No. 152740, made and transferred during the time that C. D. LeBey Company was loan correspondent. This Bengston loan is representative of 43 loans made during the existence of a contract between Metropolitan Life Insurance Company and C. D. LeBey Company.

3. Isaac Sinkovitz loan No. 13621, made and transferred during the time that Adair Realty Trust Company was loan correspondent. This loan is representative of a group of six loans made during the existence of a contract between Metropolitan Life Insurance Company and Adair Realty Trust Company.

4. The fourth group differs radically from loans in the other three. It consists of thirteen loans closed at the office of Georgia Title and Guaranty Company in Fulton County; and in this group Metropolitan Life Insurance Company was the grantee and payee without transfer.

Besides others referred to in the opinion, the following undisputed facts were shown by the evidence: It was stipulated by the parties, that the plaintiff is a New York corporation organized as a life-insurance company, and is domiciled in New York; that before the filing of the petition the defendants had threatened to assess and tax for state and county ad valorem taxes in Fulton County the credits owned by the plaintiff on January 1 of each of the years 1931 to 1937, inclusive; that the plaintiff had paid taxes on its real estate located in said county, excepting the credits, notes, or mortgages referred to; that for the purpose of collecting the taxes on said credits the defendants had threatened to seize any property of the plaintiff located in said county; and that when the petition was filed and ever since the plaintiff has owned real estate in Fulton County.

The group 3 loan was made to the borrower by Adair Realty Trust Company. The note and security deed signed by Sinkovitz in favor of the Adair Company were assigned by the Adair Company to the plaintiff under the written contract between the Adair Company and the plaintiff, dated October 26, 1920, a copy of the contract being attached as exhibit A to the plaintiff's amendment filed on November 9, 1942. It was admitted that the contract remained in force from October 26, 1920, until July 1, 1927, when a similar contract was entered into between the plaintiff and Trust Company of Georgia. The contract between the Adair Company and the plaintiff under which the Sinkovitz loan was purchased by the plaintiff provides that: "It is expressly understood and agreed by and between the parties hereto that the said Adair Realty Trust Company, in consideration of the purchase by Metropolitan Life Insurance Company of said mortgages from it, does hereby covenant and agree with the Metropolitan Life Insurance Company to guarantee, protect, and indemnify the said Metropolitan Life Insurance Company from and against any loss or damage that the said Metropolitan Life Insurance Company may suffer or incur because of any default in payment of principal or interest or in any of the covenants or conditions of any such mortgages; and in case any of such mortgages shall be or become in default, the said Adair Realty and Trust Company agrees to repurchase any of such mortgages within sixty days after such default."

The Sinkovitz loan papers, which the parties admit were typical of all notes and security deeds which were transferred by the Adair Company to the plaintiff, showed that the loan was evidenced by a note signed by Sinkovitz, payable to the order of the Adair Company. It was secured by a deed signed by Sinkovitz in favor of the Adair Company, and was indorsed by the Adair Company to the order of the plaintiff. Documents and letters relating to the Sinkovitz loan were introduced in evidence, from which it appeared without dispute that the Adair Company made the loan to Sinkovitz on January 3, 1923, with its own funds, and afterwards indorsed the note and transferred the security deed to the plaintiff under the terms of the contract referred to, and delivered the papers to a bank to be submitted to plaintiff in New York for acceptance or rejection. The Sinkovitz loan was one of nine loans which had been assigned to the plaintiff by the Adair Company. On January 31, 1933, the plaintiff deposited with the Chase National Bank of New York, to the credit of the Adair Company, $38,800, the purchase-price of nine mortgage loans, including the Sinkovitz loan, which the Adair Company had assigned to it. A letter from the Metropolitan Company to the Adair Company stated that the Metropolitan Company was to receive interest on the loans from January 31, 1923, and that the Metropolitan Company's law division had not completed its examination of the papers securing the loans; and that inasmuch as the acceptance of the loans was subject to the approval of the law division, the payment was made upon the express condition that the Adair Company would repurchase any of the loans in case the papers did not meet with the approval of the law division.

The Frank B. Archer loan was made to the borrower by the Trust Company of Georgia. The note and security deed signed by Archer in favor of Trust Company of Georgia were assigned by that company to the plaintiff under the contract between them, dated July 1, 1927, a copy of the contract being attached as exhibit B to the plaintiff's amendment of November 9, 1942. It was admitted that the contract remained in force from July 1, 1927, until July 10, 1933, when a similar contract was entered into between the plaintiff and C. D. LeBey Company. The contract between the Trust Company and the plaintiff under which the Archer loan was purchased by the plaintiff provides: "Whereas the correspondent desires to submit to the company for purchase notes or bonds secured by mortgages or trust deeds of city real estate, and the company is willing to examine such securities with a view to purchasing the same upon the terms and conditions hereinafter set forth: . . All loans must be closed and all sums of money necessary for that purpose advanced by the correspondent, and the necessary papers recorded, before submitting them to the company. . . Upon the approval and acceptance of the loan the company shall send remittance to the correspondent, or deposit the same to its credit in a New York bank, if so directed by the correspondent. . . It is further agreed that the determination as to whether the loans offered, or the borrower, or the title to the real estate are satisfactory, shall be absolutely within the discretion of the company, and its determination shall not be questioned by but shall be binding and conclusive upon the correspondent."

The Archer loan papers, which the parties admit were typical of all notes and security deeds transferred by the Trust Company to the plaintiff, showed that the loan was evidenced by a note dated January 16, 1932, signed by Archer, payable to the order of the Trust Company. It was secured by a deed signed by Archer to the Trust Company, and was indorsed, without recourse, by that company to the plaintiff. Documents and letters relating to the Archer loan were introduced in evidence, from which it appeared without dispute that on January 16, 1932, the Trust Company made the loan to Archer with its own funds, and afterward indorsed the note and transferred the security deed to the plaintiff under the terms of the contract referred to. Trust Company of Georgia sent the loan papers to Guaranty Trust Company of New York, to be submitted to the plaintiff in New York for acceptance or rejection. On March 14, 1932, the plaintiff paid the purchase-price for the loan, by depositing with Guaranty Trust Company to the credit of the Trust Company $4775, representing the purchase-price of the Archer loan and the purchase-price of another loan which the plaintiff had purchased from the Trust Company. At the time of paying the purchase-price the plaintiff wrote to the Trust Company that it had deposited to the credit of the Trust Company in a New York bank $3500 "in payment of the principal of the Archer loan number 146974, which the Trust Company had assigned to Metropolitan," and further stating that the Metropolitan is to receive interest on the loan from March 14, 1932, and that the acceptance of the loan is subject to the approval of the Metropolitan's law division, and that the payment is made upon the express condition that the Trust Company will repurchase the loan in case the papers are not approved by the law division.

The E. E. Bengston loan was made to the borrower by C. D. LeBey Company. The note and security deed signed by Bengston in favor of C. D. LeBey Company were transferred by C. D. LeBey Company to the plaintiff under the contract between them, dated July 10, 1933, a copy of the contract being attached as exhibit C to the plaintiff's amendment of November 9, 1942.

The contract between C. D. LeBey Company and the plaintiff, under which the Bengston loan was purchased by the plaintiff, provides: "Whereas the correspondent desires to submit to the company for purchase notes or bonds secured by mortgages or trust deeds of city real estate, and the company is willing to examine such securities with a view to purchasing the same upon the terms and conditions hereinafter set forth: . . All loans must be closed, and all sums of money necessary for that purpose advanced by the correspondent, and the necessary papers recorded, before submitting them to the company. . . Upon the approval and acceptance of the loan, the company shall send remittance to the correspondent, or deposit same to its credit in a New York bank, if so directed by the correspondent. . . It is further agreed that the determination as to whether the loans offered, or the borrower, or the title to the real estate, are satisfactory, shall be absolutely within the discretion of the company, and its determination shall not be questioned by, but shall be binding and conclusive upon, the correspondent."

The Bengston loan papers, which the parties admit were typical of all notes and security deeds which were transferred by C. D. LeBey Company to the plaintiff, showed that the loan was evidenced by a note signed by Bengston, payable to the order of C. D. LeBey Company. It was secured by a deed signed by Bengston to C. D. LeBey Company, and was indorsed by C. D. LeBey Company to the plaintiff. The security deed was transferred to the plaintiff. Documents and letters relating to the Bengston loan were introduced in evidence, from which it appeared without dispute that on September 1, 1936, C. D. LeBey Company made the loan to Bengston with its own funds, and afterward indorsed the note and transferred the security deed to the plaintiff under the terms of the contract referred to above, and attached the loan papers to a draft drawn on the plaintiff, so that the papers could be submitted to the plaintiff in New York for acceptance or rejection. The Metropolitan on September 23, 1936, paid the purchase-price for the loan by depositing it with the Chase National Bank of New York to the credit of C. D. LeBey Company, and at the same time the company wrote to C. D. LeBey Company that its law division had not yet completed its examination of the loan papers, and that the acceptance of the loan was subject to the approval of the law division, and that the payment was made upon the express condition that C. D. LeBey Company would repurchase the loan in case the papers did not meet with the approval of the Metropolitan's law division.

The L. P. Lewis Estate loan was agreed upon as typical of loans which were not purchased by the plaintiff but were made directly to the borrowers. L. P. Lewis Estate, a corporation, employed Adams-Cates Company, a real-estate broker of Atlanta, to negotiate a loan to be secured by a deed to certain property in Fulton County. L. P. Lewis Estate, the property owner, signed an application for the loan on a printed form of the Adams-Cates Company, and it agreed "to pay Adams-Cates for negotiating the above loan a gross commission of two per cent., and to place insurance with them for the period of the loan." Adams-Cates Company, which had no connection with the plaintiff, inquired of the plaintiff at its home office in New York whether or not that company would make the loan to L. P. Lewis Estate, and obtained from the plaintiff at its home office in New York an application for the loan on the plaintiff's forms. The president of Adams-Cates Company had the application signed by the borrower, and left it in the office of the comptroller of the Metropolitan Company in New York. The application was considered by the plaintiff's real-estate committee in New York, and the loan was authorized, subject to approval of title. Notice of the action of the plaintiff's real-estate committee upon the application was given to the borrower by a letter from the plaintiff, mailed in New York, directly to the borrower in Atlanta, Georgia. The borrower was thus notified that the title to the property offered as security must be approved by Georgia Title Guaranty Company, and the borrower was requested to arrange for the title examination and for the issuance of the title policy and the preparation of the papers with Georgia Title Guaranty Company. The plaintiff later sent its check from its home office, covering the proceeds of the loan, payable to the order of the borrower; and the title company was requested to deliver the check when the loan papers were signed and when the title company could certify that the security deed was a first encumbrance.

All of the notes and security deeds owned by the plaintiff were kept at all times at its home office in New York, except when on occasions some of the papers were sent to Atlanta for collection or foreclosure or cancellation.

The contract between the plaintiff and the Adair Company provided that the Adair Company would submit notes and security deeds to the plaintiff in New York for purchase or rejection by the plaintiff, and that the Adair Company would collect the principal and interest payable on the mortgages sold to the plaintiff, and would "see to it that all buildings upon the premises covered by said mortgages are kept adequately insured." Likewise, the contract between the Trust Company of Georgia and the Metropolitan Life Insurance Company, in addition to providing for the submission of notes and security deeds to the plaintiff in New York for purchase or rejection, obligated the trust company to attend to the collection of interest and principal of the mortgages as they fell due, and to see that the buildings were kept adequately insured for the benefit of the plaintiff. The contract between the plaintiff and C. D. LeBey Company had similar provisions relating to the collection of principal and interest and looking after the fire insurance covering the buildings located on the mortgaged premises.

The testimony of Francis J. Geist, assistant comptroller of Metropolitan Life Insurance Company, was undisputed, and showed the following facts: (1) Metropolitan Life Insurance Company never had any person, firm, or corporation in its employment to solicit any application for loans in Fulton County. (2) When Metropolitan Life Insurance Company acquires a note and security deed, they are kept in the vault of the Metropolitan at number 1 Madison Avenue, New York City. Those notes and security deeds have remained there in that vault at all times, with the exception of cases where the notes were sent out for collection, legal action, foreclosure, or something of that kind. That has been true at all times. (3) Metropolitan Life Insurance Company has no person in its employment to approve an application for a loan. The only authority to decide or determine whether or not the company will purchase a note is vested in the real-estate committee of the company. That committee invariably meets at the home office of the company in New York City. That is where it has its meetings of policyholders and directors. (4) Neither C. D. LeBey Company nor Trust Company of Georgia, nor Adair Realty Trust Company has ever been permitted to pass upon the question whether or not any particular loan would be extended. No one has that authority except Metropolitan's real-estate committee. The authority of that committee is always exercised at the home office in New York. (5) Neither Georgia Title and Guaranty Company nor Atlanta Title Trust Company, nor any attorney at law or any other person in Fulton County, Georgia, has ever been permitted to fix the terms of a loan or to accept the security or solicit applications for loans. Neither have they had the right to determine whether or not any loan would be made.

A verdict for the insurance company was directed. A motion by the taxing authorities for a new trial was overruled.

Grounds 1, 2, and 3 of the motion for new trial are general grounds. Ground 4 challenges the right of the court, under the evidence, to direct the verdict. Grounds 5, 6, and 7 complain that the court directed the verdict. Grounds 8 to 14 are based upon the exclusion of certain documents offered in evidence.

Ground 8 complains of the exclusion from the evidence of three notices of maturity of interest and principal installments, prepared on printed forms by Trust Company of Georgia and sent to Frank B. Archer by Trust Company of Georgia on February 15, 1932. The Archer loan was one of the sample loans. It was made to Archer by Trust Company of Georgia on January 16, 1932, and was assigned to the plaintiff by Trust Company of Georgia under the contract between Trust Company of Georgia and the plaintiff. The notices contain the following words: "This is to notify you that the following payments on loan of $3500 made by Metropolitan Life Insurance Company . . are due." Ground 9 complains of the exclusion from evidence of similar notices prepared on printed forms by C. D. LeBey Company and directed to Frank B. Archer. The recitals in the notices on the printed forms of C. D. LeBey Company were offered to prove who made the mortgages executed to Trust Company of Georgia as grantee, and whose agent Trust Company of Georgia was, and whose agent Atlanta Title Trust Company was. Ground 10 complains of the exclusion of a printed form prepared by Trust Company of Georgia and sent by that company to Atlanta Title Trust Company, requesting the title company to examine the title to the Archer property. The words "purpose of examination" were printed, and following these words was the typewritten word "loan." The word "lender" was printed, and following that were the typewritten words "Metropolitan Life Insurance Company." Ground 10 recites that this document was offered to show "who made the mortgages which were executed to Trust Company of Georgia as grantee, and whose agent Trust Company of Georgia was, and whose agent Atlanta Title Trust Company was in making or in transferring the loan deeds."

Ground 11 recites that this report was relevant on the question as to whose agent Trust Company of Georgia was, and whose agent Atlanta Title Trust Company was. Ground 12 complains of the exclusion from evidence of a receipt given to the Atlanta Title Trust Company by Frank B. Archer, dated January 16, 1932, and acknowledging receipt from Atlanta Title Trust Company of $3500, "being the proceeds of a loan made by Metropolitan Life Insurance Company." This receipt was offered for the purpose of proving whose agent Trust Company of Georgia was, and whose agent Atlanta Title Trust Company was. Ground 13 complains of the exclusion from the evidence of a receipt signed by E. E. Bengston, delivered to Atlanta Title Trust Company, acknowledging receipt of the proceeds of a loan "this day made to the undersigned by C. D. LeBey Company (Metropolitan Life Insurance Company, transferee)." This receipt was offered to show whose agent the Title Company was, and whose agent C. D. LeBey Company was. Ground 14 complains of the exclusion from evidence of a preliminary title report signed by the title company, addressed to Metropolitan Life Insurance Company, relating to the title to the Sinkovitz property. It was offered to show whose agent Adair Realty Trust Company was, and whose agent the Atlanta Title Trust Company was. Ground 15 is based upon the contention that the property sought to be taxed accrued and is protected by and derives its value from the constitution and laws of Georgia, and that the tax sought to be collected bears fiscal relation to the protection, opportunities and benefits given by the State of Georgia, "on account of which said State and Fulton County is legally and equitably entitled to assess and collect the taxes now sought to be collected." Ground 16 is based upon the contention that the property sought to be taxed lies within the domain of the taxing power of Georgia and of Fulton County under the constitution of the United States, as interpreted by the Supreme Court in State Tax Commission v. Aldrich, 316 U.S. 174 ( 62 Sup. Ct. 1008, 86 L. ed. 1358, 139 A.L.R. 1436), and that the constitution and laws of Georgia require that the property be taxed, and a failure to do so would be contrary to the Georgia constitution providing that "all laws exempting property from taxation other than the property herein enumerated shall be void." Ground 17 is based upon the contention that the sovereign power of Georgia extends over the persons and the relationships which are the origin of the property sought to be taxed, that such power did so extend at the time of the making and of the transferring of the mortgages which evidence the property sought to be taxed, and that the property sought to be taxed is not within any class of property specially exempted from taxation by the Georgia constitution; and that being so, the property should be taxed.

The motion was overruled, and the movant excepted.

GRICE, Justice.

1. The first of the more recent cases reaching this court involving questions relating to the situs for taxation of intangible property of non-residents was Columbus Mutual Life Insurance Co. v. Gullatt, together with the related case of Guardian Life Insurance Co. v. Gullatt, 189 Ga. 747 (supra). In the opinion it was said: "It has long been settled by rulings of this court that a promissory note of a citizen of this State, owned by a non-resident and held at his domicile outside of this State, is taxable here only if it accrues out of or is an incident to property owned or a business conducted by the non-resident, or his agent, in Georgia. Armour Packing Co. v. Clark, 124 Ga. 369 ( 52 S.E. 145); Armour Packing Co. v. Augusta, 118 Ga. 552 ( 45 S.E. 424, 98 Am. St. R. 128); Armour Packing Co. v. Savannah, 115 Ga. 140 ( 41 S.E. 237); City Council of Augusta v. Dunbar, 50 Ga. 387; Cary v. Edmondson, 44 Ga. 651; Collins v. Miller, 43 Ga. 336." The foregoing was recognized as a sound proposition of law and was restated in Suttles v. Associated Mortgage Companies, 193 Ga. 78 ( 17 S.E.2d 272), and in National Mortgage Corporation v. Suttles, 194 Ga. 768 (supra). In Suttles v. Associated Mortgage Companies is to be found also the pronouncement that where notes and mortgages are so owned and held by a non-resident, the maintenance of an office and agency in this State for the purpose merely of protecting the security and ultimate collection or liquidation of the indebtedness, the papers themselves being sent into this State only when needed for cancellation, renewal, or foreclosure, would not be using them in this State, within the rule enunciated. And in Suttles v. Northwestern Mutual Life Insurance Co., 193 Ga. 495 ( 19 S.E.2d 396, 143 A.L.R. 343), it was ruled that, where a non-resident life-insurance company made loans secured by Georgia real estate, without reference to policyholder relationship, and through a channel entirely separate from that through which it issued insurance policies to Georgia residents, doing so merely as part of its general plan of investment, for protection alike to all of its policyholders, and with no other reference to its Georgia insurance business, the loans thus made by the company were not so connected with its Georgia insurance business as to render credits arising therefrom taxable here merely on the theory that they were a part of such insurance business. In that case this court decided that the credits were taxable in Georgia, because under the proofs it was shown that the company did a loan business through an agent in this State, the crux of the decision on this point being expressed as follows: "Where a non-resident corporation, a life-insurance company, employed a loan agent in Georgia for the purpose of soliciting and submitting applications for loans and making reports concerning applicants and the proffered security, the agent being employed on a salary basis and having in this State a fixed office or place of business leased in his own name, but the rent of which was paid by the company through reimbursement to him on expense account, and in all negotiations in reference to loans the company dealt with applicants by communications passing through him as its agent, the notes and security deeds though prepared in the home office being sent to him for execution by applicants in this State, and, after their return to the home office and approval there, checks being mailed to him for delivery to applicants here, so that all loan contracts were thus finally executed in Georgia, and where as many as nineteen long term loans were so made during continuous existence of such agency, the company in making such loans was conducting a loan business in Georgia, and thus came within its taxing power, as to property derived from or used in such business." While true, as stated in the opinion, that "every case of this general type must depend on its own particular facts, because situs can be determined by facts and by these only," nevertheless, in view of the exhaustive treatment heretofore given to the controlling questions involved, and with these precedents before us, we must regard the law on this subject as having been established, making it unnecessary to blaze any new trials in this field, or to even again mark out the lines. The aforementioned decisions not only point out the landmarks, but they make plain the boundaries. The blazes are fresh and are before our eyes. Our object shall be to apply the law to the undisputed facts of this record.

Of the four different groups of loans here involved, the first three may be treated together: Those made at the time when Trust Company of Georgia was loan correspondent, those when C. D. LeBey Company was, and those when Adair Realty and Trust Company was. There were written contracts between the insurance company and each of the three, not precisely identical, but in most respects alike, and in no material manner different from that between Mortgage Guaranty Company of America and National Mortgage Corporation, as shown from an examination of the record in the clerk's office in the National Mortgage Corporation case, supra. All facts relating to the manner of making the mortgages and the connection of Metropolitan Life Insurance Company therewith were developed by the defendant tax officials; but their counsel contend that these facts were not brought out in either Suttles v. Associated Mortgages, 193 Ga. 78 (supra), or in National Mortgage Corporation v. Suttles, 194 Ga. 768 (supra), for the reason that Mortgage Guarantee Company of America, which transferred mortgages to National Mortgage Corporation, had gone out of business, and it was impossible to develop with any certainty the connection between the two companies. The application for the loan in each instance was made to the correspondent. The loans were made by the correspondent out of its own funds. They were subsequently sold to the insurance company. As was observed in the opinion on the motion for rehearing in the case last referred to, the contracts created the relation of buyer and seller of commercial paper, together with the security; and it was held that "such a relation may exist without agency, on the same principle that one might contract to purchase the entire output of a mill or factory, and at the same time enter into a standing agreement touching delivery and payment, with the right of subsequent inspection, rejection, and refund, and other matters, without even approaching the relation of principal and agent."

That, contemporaneously with the closing of a loan by a correspondent, the correspondent would place a transfer on the loan deed in favor of Metropolitan, that a title policy was issued in favor of the Metropolitan, that fire-insurance policies had mortgage clauses in the Metropolitan's printed form attached thereto, in its favor, that some of the notes signed by the borrower called for interest at six per cent., of which the correspondent retained a certain per cent for "servicing" the loans, or that the title company at the time of closing paid off existing liens with the proceeds of the loan, did not convert the relationship between the correspondent and Metropolitan from that of seller and buyer to that of agent and principal. It was contemplated that these loans would be bought by Metropolitan. All the above were necessary to be done before Metropolitan would purchase, and were done in pursuance of the contract. The title company did not use funds furnished by Metropolitan with which to pay off existing liens, nor did Metropolitan pay it for the services rendered. In each instance it was employed and paid by the correspondent, the examination of the title and the recording of the papers being pursuant to one employment. In no instance did the title company have any connection with Metropolitan until the loan was closed.

The fourth group of loans were made directly by the insurance company. Typical of those was the one made to L. P. Lewis Estate, a corporation. It made application to Adams-Cates Company in Atlanta, for a loan. Adams-Cates Company inquired of the Metropolitan Company in New York whether it would be interested in considering the application. The Metropolitan Company requested Adams-Cates Company to have the application signed by the applicant on a form prepared by Metropolitan. This was done, and the application was sent to the Metropolitan in New York by Adams-Cates Company. The Metropolitan Company had no office or agent in Fulton County for the purpose of soliciting applications for loans or consummating loans. The application of the L. P. Lewis Estate was considered in New York by Metropolitan's real-estate committee, who approved it under certain conditions. Notice of its approval was given by a letter mailed to the applicant by the Metropolitan Company from New York. The applicant was thus informed that the title policy must be issued by New York Title Mortgage Company, the Atlanta representative of which was Georgia Title Guaranty Company. The applicant was requested to arrange for the title examination, the issuance of the title policy, and the preparation of the papers, with Georgia Title Guaranty Company. Metropolitan Company wrote to Georgia Title Guaranty Company the terms of the loan, and stated that its bill for services and disbursements was to be paid by the borrower. Adams-Cates Company was employed and paid by the borrower, and in no sense was it the agent of the insurance company for the purpose of making the loan. Under the authorities cited above, the maintenance of an office and agency in this State for the purpose merely of protecting the security and ultimate liquidation of the indebtedness, the papers themselves being sent into this State only when needed for collection, renewal, or foreclosure, would not be using them in this State as an incident of property owned or of a business conducted in Georgia so as to give taxable situs here. Applying the law as ruled in the decisions referred to above, it must be held that none of the three correspondents first named nor Adams-Cates Company was a loan agent of Metropolitan.

2. If neither Trust Company of Georgia, C. D. LeBey Company, Adair Realty and Trust Company, nor Adams-Cates Company was an agent of Metropolitan, nor the property sought to be taxed accrued out of or as an incident of property or of a business conducted by the latter or either of its agents as above, then there is no situs for taxation, unless the Atlanta Title Trust Company or the Georgia Title Guaranty Company was an agent of Metropolitan Life Insurance Company for the purpose of making these loans. On that subject the proof shows that neither of the two title companies had any connection with Metropolitan until after the loan was closed, except the manual delivery of the check. Neither of the two solicited applications for loans, or had the right to fix the terms of a loan, or to pass upon the value of the security. They received no compensation from Metropolitan. That in the loan to the L. P. Lewis Estate the Metropolitan sent its check covering the proceeds, it being payable to the order of both the borrower and the title company, the title company being requested to deliver the check when the loan papers were signed and when it could certify that the security deed was a first encumbrance, did not make the title company its loan agent, in view of the other evidence in the record. This loan was made "subject to the approval of title by our representative, Georgia Title Guaranty Company," and the borrower was requested to arrange for title examination and for the preparation of the papers through the title company. There is, under the circumstances, no significance to be attached to the fact that Metropolitan's check was drawn as it was. It can not be held that Atlanta Title Trust Company or Georgia Title Guaranty Company was a loan agent of the Metropolitan, so as to give any of the credits involved in this suit a taxable situs in this State. Under all the circumstances the mere reference to the title company as "our representative" did not show that it was the agent of the insurance company to lend money in Georgia. "By using intermediaries as channels of transmission for papers, relying upon their inspection of property and examination of titles, made at the borrower's instance, and forwarding the money through them also at his instance, the lender does not constitute them his agent to make the loan, and is not chargeable with the consequences of dealings between them and the borrower, whether those dealings be public or private, known or unknown. Merck v. American Freehold etc. Co., 79 Ga. 213 (2) ( 7 S.E. 265)." Equitable Life Assurance Society v. Cochran, 170 Ga. 270 ( 152 S.E. 248). See Griffith v. Federal Land Bank of Columbia, 190 Ga. 578, 580 ( 10 S.E.2d 71); Bellerby v. Goodwyn, 112 Ga. 306 ( 37 S.E. 376); McCall v. Herring, 118 Ga. 522 (3) ( 45 S.E. 442).

Counsel for the plaintiffs in error press the insistence that the contracts between the borrower and Adams-Cates Company, and the ones between Metropolitan and its three correspondents were purely colorable, and that in each instance the Metropolitan came into this State and made loans through its agents. Counsel relies on the following language in Clarke v. Havard, 111 Ga. 242 ( 36 S.E. 837, 51 L.R.A. 499): "Could not the jury have found, and ought they not, in view of all the evidence, to have found that the contract embraced in the application was purely colorable? The law cares nothing about the form of a transaction, but characterizes it according to its substance and results." The facts there were that Manda A. Clarke, asking to borrow money, applied to Barnett for a loan, supposing she was dealing exclusively with him. He had on hand money which had been sent to him by Security Investment Company through the Georgia Loan Trust Co., his coagent, to be loaned. He let the applicant have the money, taking her note payable to the Investment Company, after deducting certain commissions. She, unable to read, had signed a written application for the loan, which purported to constitute Barnett her agent to procure the loan. The opinion lays emphasis on the fact that Barnett had received this money from the Investment Company and had it on hand when she called on him, and then adds: "This case is obviously different upon its facts from that of Merck v. American Freehold etc. Mortgage Company, 79 Ga. 213 ( 7 S.E. 265), and numerous others of its class, in which the lender received the borrower's application, passed upon it for himself, and for himself decided whether or not the security was good and the terms offered satisfactory." It may be that the insurance company in investing that part of its assets in real estate mortgages in Georgia deliberately determined on the two methods shown in this record for the purpose of avoiding a tax situs in this State as to the credits arising therefrom; but if in so doing it remained within its rights, such a purpose could not make taxable that which would not otherwise be. A person may deliberately choose to make his residence near to but beyond the corporate limits for the very purpose of avoiding the payment of city taxes, but his motive in such a case would impose on him no tax liability. If the insurance company did not have an agent in Fulton County through whom it solicited or made loans, but in the one instance received an application for a loan from one who was a broker employed by the borrower, and in the others purchased commercial paper from the lenders who with their own funds had already made the loans, these facts would not authorize a finding that as a matter of fact the company thereby loaned money in Georgia through its agent.

3. Complaint is made that the court excluded from evidence various writings which it is claimed tended to show that the three correspondents and the two title companies were the agents of Metropolitan Life Insurance Company in making the loans. These writings include notices sent out as to payments being due, preliminary title report addressed to Metropolitan, a receipt given by a borrower to one of the title companies which contained the recital, "being the proceeds of a loan made by Metropolitan Life Insurance Company." None of these was signed by the Metropolitan, or by any one purporting to sign for it. There is no proof that the insurance company sent out any of these notices, or ever approved or ratified any of these documents. These were at best but declarations of those who plaintiffs contend were the agents of the insurance company. They were offered merely to show agency. Agency can not be proved by the declarations of the alleged agent. Jones v. Harrell, 110 Ga. 373 ( 35 S.E. 690); Amicalola Marble Power Co. v. Coker, 111 Ga. 872 ( 36 S.E. 950). As particularly in point, see National Building Association v. Quin, 120 Ga. 358 ( 47 S.E. 962); Georgia State Savings Association v. Wilson, 189 Ga. 21 ( 5 S.E.2d 14). No error was shown in these grounds. In other added grounds the movants present the contention that under the constitution these credits are taxable, which is but another way of insisting that the verdict was wrong. It is not deemed necessary to add further to this view of the case.

4. The request to review and overrule the decisions in Columbus Mutual Life Insurance Co. v. Gullatt, and Guardian Life Insurance Co. v. Gullatt, 189 Ga. 747, and National Mortgage Corporation v. Suttles, 194 Ga. 768 (supra), is denied.

Judgment affirmed. All the Justices concur.