Assembly of God v. Sangster

Decision Date10 December 1955
Docket NumberNo. 39971,39971
Citation178 Kan. 678,290 P.2d 1057
PartiesASSEMBLY OF GOD, Sterling, Kansas, a Religious Corporation, Plaintiff, v. Miss Laura SANGSTER, Register od Deeds of Rice County, Kansas, Defendant.
CourtKansas Supreme Court

Syllabus by the Court.

1. The mortgage registration fee act (G.S.1949, 79-3101 et seq.) defines the term 'mortgage of real property' as including every instrument by which a lien is created or imposed upon real property.

2. In order to create a mortgage contract no particular form of instrument is necessary and no particular words are required. The form of an agreement by which security is given is unimportant if the purpose plainly appears. All that is necessary is that there be a debt and that the instrument creates a lien on real property as security for the payment of the debt.

3. Taxation is the rule--exemption the exception, and constitutional and statutory provisions relating thereto are to be construed strictly against the claimant for exemption.

4. The mortgage registration fee act does not exempt a mortgage of real property of a church from payment of the mortgage registration fee as a prerequisite to the recording thereof in the office of the register of deeds.

5. The imposition and collection of the mortgage registration fee on a mortgage of real property of a church does not constitute an interference with or restraint upon religious activity.

6. In an original proceeding in mandamus in which it is sought to compel a register of deeds to record a bond resolution without payment of the mortgage registration fee, the record is examined and it is held: The instrument in question creates and imposes a lien upon the described real property and therefore is subject to payment of the mortgage registration fee as a prerequisite to being recorded.

Mark L. Bennett, Topeka, and J. S. Bracewell, Houston, Tex., argued the cause, and John E. DuMars and Clayton M. Davis, Topeka, were with them on the briefs for plaintiff.

Thomas M. Evans, Asst. Atty. Gen., argued the cause, and Harold R. Fatzer, Atty. Gen., and Granville M. Bush, County Atty., Rice County, Lyons, were with him on the briefs for defendant.

PRICE, Justice.

This is an original proceeding in mandamus whereby it is sought to compel the register of deeds of Rice County to record a certain bond resolution upon payment of the fee required for the recording of an instrument affecting real estate, but without payment of the mortgage registration fee.

The question involved is whether the instrument is one by which a lien is created or imposed upon real property.

The case is before us on plaintiff's motion for a writ of mandamus, to which is attached a copy of the instrument, and defendant's motion to quash. In the interest of accuracy, the pleadings (omitting formal parts), together with material portions of the instrument in question, are set out in full as an appendix to this opinion.

The instrument was tendered for record under G.S.1953 Supp. 67-221, which reads in part:

'Every instrument in writing that conveys real estate, * * * or whereby any real estate may be affected, * * * may be recorded in the office of register of deeds of the county in which such real estate is situated: * * *.'

G.S.1949, 79-3101, reads in part:

'The words 'real property' and 'real estate' as used in this act, * * * shall include all property a conveyance or mortgage of which is entitled to record as real property or interest therein under the laws of this state. The words 'mortgage of real property' shall include every instrument by which a lien is created or imposed upon real property, notwithstanding that the debt secured thereby may also be secured by a lien upon personal property. * * *'

G.S.1949, 79-3102, reads in part:

'Before any mortgage of real property, or renewal or extension of the same shall be received and filed for record * * *, there shall be paid to the register of deeds of the county in which such property or any part thereof is situated, a registration fee for each one hundred dollars and major fraction thereof, of the principal debt or obligation which is secured by such mortgage, the sum of 25 cents; * * *.'

Before proceeding to a discussion of the provisions of the instrument in question a few fundamental principles should be stated.

The fee in question, commonly referred to as the mortgage registration fee, has been held to be a tax. Home Owners' Loan Corp. v. Anderson, 145 Kan. 209, 64 P.2d 14.

The mortgage registration fee act applies only to mortgages on real estate. National Bank of Tulsa v. Warren, 177 Kan. 281, 285, 279 P.2d 262.

It is an elementary rule of law that taxation is the rule--exemption the exception, and that exemption provisions are to be construed strictly against the claimant for exemption. Palmer v. State Commission of Revenue and Taxation, 156 Kan. 690, 135 P.2d 899; First Nat'l Bank & Trust Co. of Oklahoma City, Okl. v. Lovitt, 158 Kan. 535, 148 P.2d 738, and Clements v. Ljungdahl, 161 Kan. 274, 167 P.2d 603.

Notwithstanding the fact there is a statute, G.S.1949, 67-303, which sets out a 'short form' of mortgage, it has been held that in order to create a mortgage contract no particular 'form' of instrument is necessary and no particular words are required. The 'form' of an agreement by which security is given is unimportant if the purpose plainly appears. All that is necessary is that there be a debt and that the instrument creates a lien on real property as security for the payment of the debt. Charpie v. Stout, 88 Kan. 318, 128 P. 396, rehearing denied 88 Kan. 682, 129 P. 1166; Hall v. Goldsworthy, 136 Kan. 247, 249, 14 P.2d 659.

Art. 11, § 1, of our Constitution, exempts from taxation property which is used exclusively for religious purposes. See also G.S.1949, 79-201.

G.S.1949, 79-3102, supra, does not exempt a mortgage on church property from payment of the mortgage registration fee. The only exceptions are in cases where a mortgage or instrument is given solely for the purpose (1) of correcting or perfecting a previously recorded mortgage or other instrument, or (2) for the purpose of providing additional security for the same indebtedness where the registration fee has been paid on the original mortgage or instrument. Lovitt case, supra, 158 Kan. at page 540, 148 P.2d 738.

As already shown, the statute, G.S.1949, 79-3101, defines a mortgage of real property as including every instrument 'by which a lien is created or imposed upon real property'.

The word 'lien' has been variously defined as being a hold or claim which one has upon the property of another as security for a debt or charge, as a tie that binds property to a debt or claim for its satisfaction, as a right to possess and retain property until a charge attaching to it is paid or discharged, as a charge imposed upon specific property by which it is made security for the performance of an act, and as being synonymous with a charge or encumbrance upon a thing. Mendenhall v. Burnette, 58 Kan. 355, 363, 49 P. 93; Bisby v. Quinby, 92 Kan. 86, 140 P. 635; 33 Am.Jur., Liens, § 2, p. 419; 53 C.J.S., Liens, § 1, p. 826.

The question before us, therefore, resolves itself into the determination whether the instrument in question creates or imposes a 'lien' upon the described property of the church.

In our opinion it does, and therefore the mortgage registration fee must be paid before the instrument is entitled to be recorded.

It is quite true that the instrument is not in the 'form' of a mortgage, in the usual sense of the word, but, as already stated, the form of an agreement by which security is given is unimportant if the purpose plainly appears, and we think there can be no doubt as to the purpose of this instrument, notwithstanding the fact that on the printed form appears the self-serving typed-in statement (Section XV) that the instrument is not intended as a mortgage on the described real property of the church.

The preamble to the instrument states that plaintiff desires to provide for the payment of indebtedness incurred in the construction of a church. Section II earmarks the church collections for payment of the bonds. Under Section III the proceeds from the sale of bonds are to be used exclusively for payment of obligations created in erecting and equipping a church. Section IV states that the property in question is now free and clear of all encumbrances and plaintiff binds and obligates itself that the property will not be encumbered in any manner; that no further liens or claims of any character shall be permitted to attach to the property while the bonds in question, or any of them, are outstanding, and that the property will not be sold while bonds are outstanding unless the purchaser shall assume and agree to pay such outstanding and unpaid bonds. The next section recites plaintiff's obligation to keep the property insured against loss by fire to the full amount of all bonds outstanding. Section VI provides that no bonds shall be issued other than for the purposes therein authorized while any bonds of the series in question are outstanding. Section VIII provides that suit may be filed in the event of defaults therein enumerated. The form of bond states that plaintiff has covenanted that the property will not be further mortgaged or encumbered while any of the boinds in question are outstanding and unpaid; that failure to pay any bond or interest coupon when due, shall, at the option of the legal owners, mature all of such bonds outstanding, and that in case a bond is placed in the hands of an attorney for collection, or in the event suit is filed, plaintiff agrees to pay a reasonable attorney's fee. Section XIII authorizes the church official to file the instrument for record in the office of the register of deeds.

Plaintiff concedes that the instrument 'affects' real estate, for otherwise it would not be eligible for recording. From a careful reading of the entire document it...

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