City of Walla Walla v. State, 27192.

• Decision Date: 22 December 1938
• Docket Number: 27192.
• Parties: CITY OF WALLA WALLA v. STATE.
• Court: Washington Supreme Court

85 P.2d 676

197 Wash. 357

CITY OF WALLA WALLA v. STATE.

No. 27192.

Supreme Court of Washington

December 22, 1938

Department 2.

Suit by the City of Walla Walla against the State of Washington to quiet title to a city lot, against the state's claim of lien for inheritance tax. From a decree adjudging that the state had no lien upon the land, the State appeals.

Affirmed.

Appeal from Superior Court, Walla Walla County; Timothy A. Paul judge.

T. P Gose, of Walla Walla, for the State.

Robert F. Waldron, Supervisor of Inheritance Tax and Escheat Division of State of Washington, of Spokane, and John M Boyle, Jr., and Charles Snyder, both of Olympia, for respondent.

STEINERT Chief Justice.

Plaintiff brought this action to quiet title to a city lot, against the state's claim of lien for inheritance taxes. The court entered a decree adjudging that the state had no lien upon, or interest in, the land. From such decree the state has appealed.

The real estate involved herein was formerly owned by Mary F Green, who died testate in 1911. Her estate and the interests of her devisees became chargeable with inheritance taxes. Through some error, the particular land in question was not included in the inventory of Mrs. Green's estate and, to the extent of such omission, no inheritance tax has ever been paid.

Upon the death of Mrs. Green, her daughter, Orville Green Thomas, became the owner of an undivided one-fourth interest in Mrs. Green's estate. Mrs. Thomas died testate in 1929, and her estate and the interests of her devisees became chargeable with inheritance taxes. Again, through error, Mrs. Thomas' interest in the particular land was not included in the inventory of her estate and, to the extent of such omission, no inheritance tax has ever been paid.

In 1931, the City of Walla Walla became the owner of a part of the land through foreclosure of its lien for delinquent local improvement assessments levied in 1928. Later, Walla Walla County acquired title to the entire lot through foreclosure of its lien for delinquent general taxes for the year 1928. In 1937, the county, by two deeds, conveyed the lot to the city.

The sole question Before us is this: Where the state has acquired a lien upon land for inheritance taxes, does a subsequent assessment, levy, and foreclosure of lien for general taxes extinguish the state's lien for inheritance taxes?

The state, appearing and represented in this action by the supervisor of the inheritance tax and escheat division, contends that the lien for inheritance taxes has priority over the lien for general taxes subsequently levied. This contention is based upon the inheritance tax statute which provides, among other things, that: 'The inheritance tax shall be and remain a lien on such estate from the death of the decedent until paid: * * *.' Rem.Rev.Stat. (1938 Supp.) § 11201.

Respondent, on the other hand, contends that the lien for general taxes has priority over all other liens, including previously acquired inheritance tax liens. This contention is based on the statute relating to liens for general taxes, which provides, in part, that: '* * * The said lien shall have priority to and shall be fully paid and satisfied Before any recognizance, mortgage, judgment, debt, obligation or responsibility to or with which said real property may become charged or liable.' Rem.Rev.Stat. § 11260.

By repeated decisions of this court it has become settled law in this state that a general tax lien is paramount over every other lien or burden to which property may be subjected. Keene v. Seattle, 31 Wash. 202, 71 P.769; State ex rel. Craver v. McConnaughey, 31 Wash. 207, 71 P. 770; Ballard v. Way, 34 Wash. 116, 74 P. 1067, 101 Am.St.Rep. 993; Pennsylvania Co. v. Tacoma, 36 Wash. 656, 79 P. 306; Ballard v. Ross, 38 Wash. 209, 80 P. 439; Hanson v. Carr, 66 Wash. 81, 118 P. 927; Maryland Realty Co. v. Tacoma, 121 Wash. 230, 209 P. 1; Collins v. Spokane, 123 Wash. 156, 212 P. 150; State ex rel. Friendlander v. Dunning, 132 Wash. 622, 233 P. 8. Any exception to this rule must come through legislative enactment.

When, for want of other purchasers, a county acquires land at a general tax foreclosure sale, the county takes, and holds, the land, not in its proprietary capacity, but in trust for the state and the various taxing municipalities within which the land lies. Gustaveson v. Dwyer, 78 Wash. 336, 139 P. 194; Shelton v. Klickitat County, 152 Wash. 193, 277 P. 839; Sasse v. King County, Wash., 82 P.2d 536.

If the county, after purchasing the property at such foreclosure proceeding, subsequently sells it to a third party, a new title is thereby initiated and created, and the party purchasing from the county takes title free and clear of any kind or character of prior liens. Maryland Realty Co. v. Tacoma, 121 Wash. 230, 209 P. 1; Tacoma v. Fletcher Realty Co., 150 Wash. 33, 272 P. 43; Nearhoff v. Rucker, 156 Wash. 621, 287 P. 658; Moe v. Brumfield, 182 Wash. 608, 47 P.2d 847. Similarly, any exception to this result must be provided by legislative enactment.

The state concedes that, ordinarily, general taxes constitute paramount liens, but it contends that Rem.Rev.Stat. § 11260, above quoted, does not operate against the state's lien for inheritance taxes, for the reason that the state is nowhere mentioned in that statute. It relies upon the rule that the state and its agencies are not to be considered within the purview of a statute, unless an intention to include them is clearly manifest, either by express mention or by necessary implication. The following authorities are cited in support of that rule: La Mesa Lemon Grove etc. Irr. Dist. v. Hornbeck, 216 Cal. 730, 17 P.2d 143; In re Miller's Estate, 5 Cal.2d 588, 55 P.2d 491; Lossman v. City of Stockton, 6 Cal.App.2d 324, 44 P.2d 397; People v. Waukegan State Bank, 351 Ill. 548, 184 N.E. 811; People ex rel. Barrett v. Oregon State Savings Bank, 357 Ill. 545, 192 N.E. 580; State Highway Commission v. Smith, 250 Ky. 269, 62 S.W.2d 1044; Nelson v. McKenzie-Hague Co., 192 Minn. 180, 256 N.W. 96, 97 A.L.R. 196; State ex rel. Nixon v. Merrell, 126 Ohio St. 239, 185 N.E. 56; State Land Board v. Campbell, 140 Or. 196, 13 P.2d 346; Liebes v. Commissioner of Internal Revenue, 9 Cir., 63 F.2d 870, 92 A.L.R. 938; 59 C.J. 1103.

We may, in turn, concede the rule announced in those authorities, for we have heretofore expressly recognized it: Jenks v. State, 188 Wash. 472, 63 P.2d 369; State ex rel. Hamilton v. Standard Oil Co., 190 Wash. 496, 68 P.2d 1031. But that rule does not control a situation such as we have here. This is not a case involving simply a contest for priority as between the state, on the one hand, and private individuals or a political subdivision of the state, on the other. The question here presented is one of priority between two different kinds of tax liens, both of which are held by the state.

Appellant cites Berry-Shilling, Inc., v. Shuster, 122 N.J.Eq 256, 193 A. 919, as ...