Bosworth v. Anderson

• Decision Date: 04 June 1929
• Docket Number: 5070
• Citation: 47 Idaho 697,280 P. 227
• Parties: ROBERT G. BOSWORTH, for Himself and on Behalf of All Others Similarly Situated, Appellant, v. MRS. J. S. ANDERSON et al., PACIFIC STATES SAVINGS AND LOAN COMPANY, EQUITABLE SAVINGS AND LOAN COMPANY, PORTLAND MORTGAGE COMPANY, Respondents, and PACIFIC STATES SAVINGS AND LOAN COMPANY, Appellant
• Court: Idaho Supreme Court

280 P. 227

47 Idaho 697

ROBERT G. BOSWORTH, for Himself and on Behalf of All Others Similarly Situated, Appellant, v. MRS. J. S. ANDERSON et al., PACIFIC STATES SAVINGS AND LOAN COMPANY, EQUITABLE SAVINGS AND LOAN COMPANY, PORTLAND MORTGAGE COMPANY, Respondents, and PACIFIC STATES SAVINGS AND LOAN COMPANY, Appellant

No. 5070

Supreme Court of Idaho

June 4, 1929

MUNICIPAL CORPORATIONS-TAXATION-SPECIAL ASSESSMENT BONDS-GENERAL TAXES-PRIORITY OF LIENS-ASSESSMENT FOR TAXES-NOTICE TO LIENHOLDERS-PAYMENT OF BONDS-LIABILITY OF MUNICIPALITY-LIABILITY OF COUNTY.

1. Special assessments are not "taxes" in strict sense of word, since they are not assessed for governmental purposes and are based on theory of special benefit to property against which assessments are levied.

2. Under C. S., secs. 3097, 3211-3219, 3223, 3224, 3227, 3331 lien of county and city taxes is same as that of state taxes and they are of same priority.

3. State taxes by Const., art. 7, sec. 7, and county and city taxes under C. S., sec. 3097, are prior to special assessment for improvement.

4. Special assessments enumerated in C. S., secs. 4007, 4133 4163, do not have priority over general taxes.

5. Under C. S., secs. 4000, 4017, during life of bond issue for improvement, units of assessment on lands included in improvement district were fixed and could not be changed.

6. Where city collected sum to be applied in payment of principal of special assessment improvement bonds, but instead used sum to pay interest, city did not become liable to bondholders for such sum on ground of violation of its duty as collecting agent.

7. County collecting sum for special improvement district held liable to bondholders for amount improperly diverted to predatory animal fund.

8. City devoting to purposes other than payment of bonds sum collected by county for special improvement district held liable to bondholders.

9. County held not liable to special assessment improvement bondholders for part of sum received in sale of property for delinquent taxes, where property did not sell for more than enough to pay general taxes delinquent thereon, since county does not guarantee collection of taxes, and in first instance general state, county and city taxes are entitled to be satisfied out of sale of property.

10. Mortgagees were charged with knowledge of law to effect that after C. S., secs. 3999-4028, was complied with, lien of bonds upon lands of improvement district became fixed and paramount to any other lien excepting those of general state county and city taxes under sec. 4013, though assessment-roll was not filed, since statute does not require assessment-rolls to be filed.

APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. O. R. Baum, Judge.

Action to foreclose lien of special improvement bond. Decree for defendants. Decree affirmed in part, reversed in part.

Decree reversed with instructions. Petition for rehearing denied.

Holden & Coffin, for Appellant Bosworth.

A sovereign has the power, acting through its legislature, in the absence of a direct constitutional inhibition, to provide that the lien of certain forms of taxes and obligations shall take precedence over the lien of general taxes. (White v Thomas, 91 Minn. 395, 98 N.W. 101; Gould v. City of St. Paul, 120 Minn. 172, 139 N.W. 293; Midway Realty Co. v. St. Paul, 124 Minn. 300, 145 N.W. 21; City of Seattle v. Everett, 125 Wash. 39, 215 P. 337.)

As heretofore stated in 37 Cyc. 1143, 1144: "It is competent for the legislature to make taxes a paramount lien on the property of the taxpayer and this has been done in many states, the consequence being that the lien for taxes takes precedence of every other lien or claim upon the property of whatsoever kind, however created, and whether attaching before or after the assessment of the taxes. But this preference does not belong to the tax lien unless it is so declared by statute, and a law, for example, which merely enacts that taxes shall be a lien on real property does not make them a first lien."

The constitution of Idaho contains nothing making general taxes a paramount lien. The statutes of the state of Idaho, as we have heretofore pointed out, do nothing more than provide that the lien of general taxes can be divested only by payment.

In California the general rule respecting priority of liens and the necessity for some statutory expression, is stated by the supreme court in the case of Guinn v. McReynolds, 177 Cal. 230, 170 P. 421, in the following language: "In dealing with tax or assessment liens, as with others, our decisions have recognized that the question of priority is one of legislative intent. Where, accordingly, the tax or assessment lien is preferred to any earlier contract lien, the basis of priority is found in the statute . . . . The question, said the Court, 'depends for its determination entirely upon statutory enactment.'"

The United States district court for the northern district of Georgia in the case of In re Wyley Co., 292 F. 900, said: "A tax has such lien and priority, and only such, as is given it by statute. The common law preference of the sovereign is said not to exist in favor of the United States, save as continued by statutes."

The city has authority, without any question, to fill a particular place in matters of this character. If it has authority to make the contract, then in common with any other corporation or person, it is possible for it to break that contract; and if it breaks the contract, it is liable in the same manner that any person or corporation would be. (Chalstran v. Board of Education, 244 Ill. 470, 91 N.E. 712.)

We believe that the position we have here assumed is in accordance with the undoubted weight of authority. In fact, we question whether any well-considered decision will be found contra to this principle. One of the earliest and best considered cases upon this question is the case of Peake v. City of New Orleans, 139 U.S. 342, 11 S.Ct. 541, 35 L.Ed. 131.

The eighth circuit court of appeals had occasion to pass upon a kindred question in the case of Barber Asphalt Paving Co. v. Denver, 72 F. 336, 19 C. C. A. 139.

The supreme court of Oregon has passed upon the question in the case of Commercial Nat. Bank v. City of Portland, 24 Ore. 188, 41 Am. St. 854, 33 P. 532. We quote from the decision in that case at 33 P. 534: "In North Pacific Lumbering & Manufacturing Co. v. East Portland, 14 Ore. 3, 5, 12 P. 4, Thayer, J., says: 'The improvement is supposed to be a benefit to the lot owners referred to, and the lots affected are charged with the cost of making it. The city occupies the relation in the proceeding more of an agent than a principal. It does not undertake to pay the contract price for making the improvement out of the general funds of the city. I do not think it has any power to enter into such an engagement for the improvement of the city, but it does undertake to perform all the acts required by the charter intended to supply the requisite fund to defray the expenses attending it, and a failure to comply with any of the requirements of the charter by which the fund may be realized would subject it to a general liability.' The distinction which is sought to be made between that case and the case at bar is not tenable. The stipulation of the contractor to look to a special fund did not absolve the city from the duty of putting the necessary machinery in motion to raise and collect such fund to redeem its obligation and to pay the warrants in question. When the contractor performed his contract, the duty rested upon the city to make an active effort to discharge its obligation."

F. L. Soule and C. W. Poole, for Appellant Pacific States Sav. & Loan Co.

Liens for general taxes for state, county, school and other governmental purposes are superior to, and take precedence of all other liens, including liens of improvement assessments. The fundamental basis for this is found in our constitution, and our statutory provisions must be construed in view of the limitations fixed by the constitution, as it is never to be presumed that the legislature intended to pass a law which would be contrary to the constitution either in spirit or letter. (Const., art. 7, secs. 2, 7; Jack v. Weiennett, 115 Ill. 105, 56 Am. Rep. 129, 3 N.E. 445; C. S., secs. 3096-3098, 3253, 3256, 3263; secs. 1-3, chap. 58, Laws 1913; secs. 4, 6, 10, Laws 1917; Hunt v. St. Maries, 44 Idaho 700, 260 P. 155; Continental & Commercial Trust & Sav. Bank v. Werner, 36 Idaho 601, 215 P. 458.)

The priority of the general tax lien over all other liens of every character is inherent in the nature of the lien and its necessity to the existence of government, and the purpose for which the tax is levied. This priority is necessarily implied from and to give effect to the constitutional and statutory provisions declaring the same a perpetual lien. (Continental & Commercial Trust & Sav. Bank v. Werner, supra; Mutual Benefit Life Ins. Co. v. Siefken, 1 Neb. (Unof.) 860, 96 N.W. 603; Osterberg v. Union Trust Co., 93 U.S. 424, 23 L.Ed. 964; Parker v. Baxter, 2 Gray (Mass.), 185; Morey Engineering & C. Co. v. St. Louis Rink Co., 242 Mo. 241, Ann. Cas. 1913C, 1200, 146 S.W. 1142, 40 L. R. A., N. S., 119; Campbell v. Gawlewicz, 3 Neb. (Unof.) 321, 91 N.W. 569.)

As a result, as between the general tax and the assessment lien, the private element involved in the latter makes it yield to the general tax, but it has a sufficient public element involved to give it "precedence of all other liens," and this is the construction to be given sec. 4007, wherein that clause is found, and is the construction placed upon it by this court in the case of Hunt v. St. Maries, supra.

This court has construed this...