Baldwin v. Moroney

• Decision Date: 09 March 1910
• Docket Number: No. 21,323.,21,323.
• Citation: 91 N.E. 3,173 Ind. 574
• Parties: BALDWIN v. MORONEY et al.
• Court: Indiana Supreme Court

173 Ind. 574

91 N.E. 3

BALDWIN

v.MORONEY et al.

No. 21,323.

Supreme Court of Indiana.

March 9, 1910.

Appeal from Circuit Court, Cass County; Jno. S. Lairy, Judge.

Action by Daniel P. Baldwin against Matthew Moroney, treasurer, and others. From a judgment for defendants, plaintiff appeals. Affirmed.Geo. A. Gamble and McConnell, Jenkins, Jenkins & Stuart, for appellant. Myers & Yarlott, for appellees.

MONKS, J.

Suit by appellant against appellees for strict foreclosure of certain mortgages, and that they be forever barred and enjoined from asserting any lien on the real estate described in said mortgages for a ditch assessment, against the same under the ditch law approved March 7, 1891 (Acts 1891, pp. 455-467), being sections 5690-5717, Burns' 1901. After issues were formed, the case was tried by the court, a special finding of facts made, and conclusions of law stated thereon in favor of appellees, and that said ditch tax was a prior and paramount lien to the lien of said mortgages, and rendered judgment against appellant.

It appears from the special finding that a proceeding was commenced before the board of commissioners of Cass county in 1893 under the drainage law approved March 7, 1891, known as the “five-mile drainage law” (Acts 1891, pp. 455-467; sections 5690-5717, Burns' 1901). Such proceedings were had that said drain was established by said board of commissioners in all respects as provided in said act, and the same was constructed pursuant to and in conformity with said proceedings and as required by said act. That before the enactment of said “five-mile drainage law” of 1891, and before said ditch proceedings were commenced, appellant was the owner of two mortgages executed by one Hale and his wife on certain real estate in said Cass county, owned by said Hale, to secure his promissory notes calling for $7,500. The real estate described in said mortgages was assessed with benefits for the construction of said ditch. All the owners of the lots and parcels of land affected by said proposed drain were notified of said proceedings in all respects as required by said drainage law. No summons or other process was served on appellant notifying him of such proceedings, nor was he named as a party thereto, but his mortgagor, Hale, who was then in possession of the mortgaged premises, as owner thereof, after he was served with notice of said proceedings and before the day fixed for the hearing of said petition and report, personally notified appellant of the pendency of said ditch proceeding, and that said real estate was assessed with benefits. Said appellant was at that time, and ever since has been, a resident of said Cass county, and has at all times since said notice was given him by said Hale had actual notice and knowledge of said proceedings and of the assessment of benefits against said land. Bonds were sold on the strength of said assessment made for the purpose of paying for the construction of said drain, and the same was finally constructed. Afterwards, to wit, in March, 1905, a judgment and decree of foreclosure of said mortgages in favor of appellant was rendered against said Hale and wife, and afterwards, on June 7, 1905, appellant purchased said land at sheriff's sale under said decree, and on the expiration of one year from said day of sale received a sheriff's deed therefor. Afterwards this action was brought by appellant for a strict foreclosure of said mortgages against appellees.

Appellant insists that: “As said act of 1891 provides that assessments upon real estate made to pay for the construction of a ditch or drain shall be a first and paramount lien upon the real estate assessed, and does not provide in any manner for notice of any kind to be given to the holder and owners of mortgages in existence and of record at the time such ditch law went into force, it is unconstitutional and void because in conflict with section 24, art. 1, of the Constitution of Indiana, and with section 1, art. 14, of the Constitution of the United States, which provide that no person shall be deprived of his property without due process of law, and because such statute as applied to mortgage contracts executed and of record prior to its enactment impairs the obligation of such mortgage contract, and denies to the owner of such mortgage contract due process of law.” Appellant also insists that “laws enacted by the Legislature for such public improvements as the construction of public highways or drains is not an exercise of the power of taxation.”

As to the last contention, it has been held by many courts of last resort that the Legislature, in enacting such laws, exercises the sovereign power of taxation. Cooley on Taxation (2d Ed.) pp. 1181-1183; Fallbrook Irrigation Dist. v. Bradley, 164 U. S. 112, 176-178, 17 Sup. Ct. 56, 41 L. Ed. 369, and cases cited; French v. Barber Asphalt Co., 181 U. S. 324, 21 Sup. Ct. 625, 45 L. Ed. 879, and cases cited; Voris v. Pittsburgh Plate Glass Co., 163 Ind. 599, 606-609, 70 N. E. 249, and cases cited; State ex rel. v. Board, etc., 170 Ind. 595, 604, 605, 609-617, 85 N. E. 513, and cases cited; State v. Fox, 158 Ind. 126, 135, 136, 63 N. E. 19, 56 L. R. A. 893.

Section 3 of said act of 1891, being section 5692, Burns' 1901, requires that the viewers shall “make and return a schedule of all the lots and lands and private or corporate roads or railroads that will be benefited or damaged by the improvement, and the damage or benefit to each tract of land of forty acres or less,” and that they shall show the “name of the owner of each tract of land as the same appears on the tax duplicate at the time.” Section 4 of said act of 1891, being section 5693, Burns' 1901, provides that, after the filing of the report of said viewers, the auditor shall immediately fix a day for the hearing of the same and issue summons “to be served upon the owners, or the owner or agent or tenant of such owner of any lot or parcel of land affected by the proposed improvement.” Sections 4, 5, 6, and 7 of said act of 1891, being sections 5693-5696, Burns' 1901, make provision for notice and a hearing before the board of commissioners and an appeal to the circuit court as to the amount of benefits and damages assessed. Under section 12 of said act, being section 5701, Burns' 1901, the benefits assessed against the real estate in the taxing district are placed upon a special tax duplicate and are “a first and paramount lien upon the real property assessed in the same manner and form as other taxes.”

It is within the power of the Legislature to declare an assessment lien for the construction of a public drain or the improvement of a public highway shall have priority over other liens. They may be given priority over pre-existing mortgages, as does the said drainage law of 1891. State ex rel. v. Ætna Life Ins. Co., 117 Ind. 251, 20 N. E. 144;City of Bloomington v. Phelps, 149 Ind. 596, 601, 49 N. E. 581;Murphy v. Beard, 138 Ind. 560, 38 N. E. 33, and cases cited; O'Brien v. Bradley, 28 Ind. App. 487, 493, 61 N. E. 942;Morey v. City of Duluth, 75 Minn. 221, 77 N. W. 829;Chase v. Trout, 146 Cal. 350, 80 Pac. 81;German, etc., Society v. Ramish, 138 Cal. 120, 69 Pac. 89, 70 Pac. 1067;Hand v. Start-up, 38 N. J. Eq. 115;City of Richmond v. Williams, 102 Va. 733, 47 S. E. 844;Wabash, etc., R. Co. v. East Lake, etc., Drainage Dist., 134 Ill. 384, 25 N. E. 781, 10 L. R. A. 285;City of Seattle v. Hill, 14 Wash. 487, 45 Pac. 17, 35 L. R. A. 372, and note; Kirby v. Waterman, 17 S. D. 314, 96 N. W. 129;Dormeus v. Cameron, 49 N. J. Eq. 1, 22 Atl. 802;Weinerich v. Hensley, 121 Cal. 647, 54 Pac. 254;Dressman v. Bank, 100 Ky. 571, 38 S. W. 1052, 36 L. R. A. 121;Dressman v. Simonin, 104 Ky. 693, 47 S. W. 767; 2 Page & Jones, Taxation by Assessment, § 1068; Elliott, Roads & Streets (2d Ed.) § 599; Cooley on Taxation (3d Ed.) vol. 2, p. 865 et seq.; 27 Cyc. 1176, 1177, and cases cited; Hamilton's Law of Special Assessments, § 708; 25 Am. & Eng. Encycl. of Law (2d Ed.) pp. 1236, 1237, and notes.

It is said in Elliott on Roads & Streets (2d Ed.) § 599, p. 627: “Every one who acquires an interest in land takes it subject to the right of the sovereign to lay general taxes upon it and to impose upon it the burden of paying the expenses of public improvements which confer upon the land a special benefit. *** Statutes giving a lien are remedial, and are therefore liberally construed, and so construed as to accomplish the legislative purpose. In creating liens for improvement assessments, the Legislature makes secure compensation for what is in truth an industrialannexation to the land, for the road or street improved is in a sense an appurtenance of the land which increases its value. Whoever holds an interest in the land profits by the appurtenances, and ought, in justice, to be subjected to the lien which secures the assessment. It is, for these reasons, often proper to deduce from the general language of the statute giving a lien the conclusion that it gives a paramount lien to which mortgage estates or judgment liens must yield.”

As the drainage act of 1891 in controversy here provided that the assessment against the lands for the construction of the proposed drain should be “a first and paramount lien upon the real estate assessed in the same manner and form as other taxes,” the cases of State ex rel. v. Loveless, 133 Ind. 600, 33 N. E. 622,Pierce v. Ætna Life Ins. Co., 131 Ind. 284, 31 N. E. 68,State ex rel. v. Ætna Life Ins. Co., 117 Ind. 251, 20 N. E. 144, and Cook v. State, 101 Ind. 446, in which it is held that the prior mortgage is superior to the lien of the assessment, are not in point here, because they were decided under a statute which failed to provide that the assessment should be a first and paramount lien. What is said in the cases named as to the necessity of a provision for notice to the mortgagee was unnecessary to the decision of said cases and was obiter dicta.

It is expressly...