Fed. Farm Mortg. Corp. v. Berzel, 6607.

• Citation: 291 N.W. 550,69 N.D. 760
• Decision Date: 07 March 1940
• Docket Number: No. 6607.,6607.
• Parties: FEDERAL FARM MORTG. CORPORATION v. BERZEL et al.
• Court: United States State Supreme Court of North Dakota

69 N.D. 760

291 N.W. 550

FEDERAL FARM MORTG. CORPORATION

v.BERZEL et al.

No. 6607.

Supreme Court of North Dakota.

March 7, 1940.

Syllabus by the Court.

1. Whenever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or phrase wherever it occurs, except, when a contrary intention clearly appears. Section 7279, Comp.Laws of North Dakota 1913.

2. By statutory definition the word “liens” includes “mortgages”. Section 6699, 6704, 6725, Comp.Laws of North Dakota 1913.

3. The phrase “all other judgments and liens” as used in Section 8, Chapter 162, Laws of North Dakota 1919, as amended by Chapter 315, Laws of North Dakota 1931, includes “mortgages”.

4. A regulation in aid of a proper exercise of the police power may not be manifestly arbitrary or unreasonable.

5. Section 8, Chapter 162, Laws of North Dakota 1919, as amended by Chapter 315, Laws of North Dakota 1931, would subordinate the lien of plaintiff's mortgage to the lien of the State's judgment, without notice to the plaintiff at the time he accepted his mortgage that it might be so subordinated, and insofar as it permits such a result, it deprives the plaintiff of his property without due process of law, in violation of both the Constitution of North Dakota and the Constitution of the United States.

Appeal from District Court, Stark County; Harvey J. Miller, Judge.

Action to foreclose a real estate mortgage by the Federal Farm Mortgage Corporation against George Berzel and others. From an adverse order, the plaintiff appeals.

Order reversed.

Tobias D. Casey, of Dickinson, and John Thorpe, Michael A. Schmitt, and Robert J. Barry, all of St. Paul, Minn., for appellant.

Alvin C. Strutz, Atty. Gen., and A. M. Kuhfeld, Asst. Atty. Gen., for respondent.

BURKE, Judge.

Plaintiff brought this action to foreclose a real estate mortgage executed and delivered to it by the defendants George and Mary Berzel. The mortgage was executed on May 1st, 1934, and filed for record in the office of the Register of Deeds of Stark County on May 16, 1934. The State of North Dakota was named as a party defendant in the action and it was alleged in the complaint that the State was the owner and holder of a judgment lien upon the mortgaged premises, which lien was inferior to that of plaintiff's mortgage. The prayer for relief was the usual demand of foreclosure. The defendant State answered, alleging that it was the owner of two unpaid judgments entered and docketed in its favor and against the defendant George Berzel on December 11, 1937, and March 26, 1938, respectively; that the actions in which said judgments were entered were brought pursuant to the provisions of Section 8 of Chapter 162, Laws of N.D.1919, as amended by Chapter 315, Laws of N.D. 1931, to collect premiums for Workmen's Compensation Insurance due from the defendant Berzel to the North Dakota Workmen's Compensation Bureau and the North Dakota Workmen's Compensation Fund, and that, by virtue of the provisions of said statute, the lien of said judgments is superior to that of plaintiff's mortgage. To this answer, plaintiff interposed a general demurrer which was overruled by the trial court. The appeal is from the order overruling the demurrer.

The question for decision is: Do the provisions of Section 8 of Chapter 162, Laws of N.D.1919, as amended by Chapter 315, Laws of N.D.1931, operate to clothe the liens of the State's judgments with superiority over the lien of plaintiff's mortgage, although such judgment liens are subsequent in point of time? The statutory provision in question is found in Chapter 315, supra, and reads as follows: “Any judgment obtained in any action under this act shall be a prior lien over all other judgments and liens, except those in existence prior to the original enactment of this provision, and cases arising under this section shall have precedence over all other civil cases.”

Plaintiff contends that, by the applicable rules of statutory construction, the words “all other judgments and liens”, as used in the statutory provision above quoted, do not include mortgages and (2) that if the words “all other judgments and liens” be construed to include mortgages, such construction would render the statute violative of Sections 13 and 16 of the Constitution of North Dakota, Section 10 of Article 1 of the Constitution of the United States and Section 1 of Article 14 of Amendments to the Constitution of the United States, in that, under such construction, the statute would (a) impair the obligations of plaintiff's mortgage, (b) deny to the plaintiff the equal protection of the laws, and (c) deprive the plaintiff of its liberty and property without due process of law.

The question of construction turns upon the meaning that is to be accorded to the word “liens” in the phrase “all other judgments and liens.” Plaintiff asserts that legislative practice in this State in the establishment of statutory superiority of specific liens has always been to manifest a legislative intent to include mortgages among subordinated liens by expressly naming them and that the failure to so mention mortgages in Chapter 315, supra, discloses an intent that the word “liens” as used in the statute should not include mortgages. Plaintiff cites us to statutes which sustain its premise and to authorities which support its conclusion. However, the construction which we must give to the word “liens” is governed by a statutory definition.

Section 7279, Compiled Laws of 1913, provides: “Whenever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or phrase wherever it occurs, except when a contrary intention plainly appears.”

Section 6699, Compiled Laws of 1913, defines lien. It reads: “A lien is a charge imposed upon specific property by which it is made security for the performance of an act.”

Section 6704, Compiled Laws of 1913, provides:

“A lien is created:

1. By contract of the parties; or,

2. By operation of law.”

Section 6703, Compiled Laws of 1913, declares: “Contracts of mortgage, pledge, bottomry or respondentia are subject to all the provisions of this chapter.”

The three statutes last above set forth are found in Chapter 86 of the Civil Code.

[1][2][3] In this State a mortgage conveys no title to, or estate in, the mortgaged property, it is merely “a contract by which specific property is hypothecated [as security] for the performance of an act.” Sections 6725, 6709, Compiled Laws of North Dakota 1913. Sanford v. Duluth & Dakota Elevator Co., 2 N.D. 6, 48 N.W. 434;First Nat'l Bank of Waseca v. Paulson, N.D., 288 N.W. 465, 471. Such a contract is clearly embraced within the statutory definition of a lien. By direction of section 7279, we must hold that the word “liens”, as used in Chapter 315, supra, includes mortgages, unless the contrary clearly appears. The contrary does not appear from the statute itself nor do we believe it may be inferred from the fact that the legislature in the enactment of former similar statutes has provided that favored liens should be superior to all other “liens, mortgages and encumbrances.” Redundancy is a common fault and we cannot assume that the legislature always speaks with unerring certainty. The effect of Chapter 315, therefore, is to subordinate the lien of plaintiff's mortgage to that of the defendant State's judgments unless plaintiff's challenge to this statute upon constitutional grounds can be sustained.

[4] The North Dakota Workmen's Compensation Act was enacted pursuant to the police power and is a valid exercise of that power. State ex rel. Amerland v. Hagan, 44 N.D. 306, 175 N.W. 372;State ex rel. Woods v. Hughes Oil Co., 58 N.D. 581, 226 N.W. 586. This act created the North Dakota Workmen's Compensation Fund, a monopolistic state fund to which all employers are required to contribute and out of which all claims arising under the act are paid. Chapter 162, Laws of North Dakota 1919.

[5] Quite obviously the portion of the statute which we have under consideration was enacted to protect the Compensation Fund to the end that workers injured in hazardous employments might have the sure and certain relief contemplated. It is, however, but one of many safeguards which have been provided to maintain the integrity of the fund and insure the payment of the claims of workmen. Employers are required to pay workmen's compensation premiums in advance on the basis of an estimated payroll; if they fail to pay such premiums within thirty days after the beginning of an insurance year, they are by statute declared to be in default, their insurance is suspended and they become personally liable to their employees for any claims arising under the act. The Attorney General is directed to sue employers to collect delinquent premiums within twenty days...