Denny v. McCown

• Decision Date: 31 October 1898
• Citation: 54 P. 952,34 Or. 47
• Parties: DENNY et al. v. McCOWN.
• Court: Oregon Supreme Court

54 P. 952

34 Or. 47

DENNY et al. v. McCOWN.

Supreme Court of Oregon

October 31, 1898

Appeal from circuit court, Multnomah county; L.B. Stearns, Judge.

Foreclosure by O.N. Denny and others against Sarah M. McCown. From a judgment for plaintiffs, defendant appeals. Reversed.

This is a suit to foreclose a deed intended as a mortgage. The facts are that on October 28, 1892, the Portland Savings Bank, a corporation, loaned to defendant the sum of $5,000, and agreed to advance the further sum of $7,500, to secure the payment of which she on that day executed to H.C. Stratton in trust for said bank, a deed which purported to convey certain real property situated in the town of Sellwood, in the counties of Clackamas and Multnomah, in the state of Oregon; that on December 27, 1892, the bank also loaned to defendant the sum agreed to be advanced, whereupon she executed to it a promissory note for the sum of $12,500 payable in six months, with interest from that date at the rate of 9 per cent. per annum, no part of which has been paid, except the interest to June 27, 1893. The suit was instituted by the Portland Savings Bank and H.C. Stratton its trustee; but O.N. Denny, having been appointed receiver for the bank, was by order of the court substituted as plaintiff. The complaint is in the usual form, and its material allegations are admitted; but it is claimed in the answer that, by reason of the attempt to create a lien upon real property situated in more than one county, the trust deed is void. A trial being had upon this issue, it resulted in a decree for the plaintiffs, and the defendant appeals.

G.C. Brownell, for appellant.

Chester V. Dolph, for respondents.

MOORE J. (after stating the facts).

It is contended by defendant's counsel that section 2736, Hill's Ann.Laws Or., which was in force when the trust deed was executed, renders the instrument ineffectual to create a lien, because the real property covered by it was situated in more than one county, and that the court erred in refusing to dismiss the suit; while plaintiffs' counsel insist that, if the deed is void at all, it is only so for the purposes of assessment and taxation; that if it should be held, however, that the deed did not create a lien at the time it was executed, the legislative assembly prior to the commencement of the suit cured the defect, and afforded a remedy for the foreclosure, by repealing section 2736, supra (Laws 1893, p. 6), and also by changing the boundary of Clackamas county, so that the whole territory of Sellwood, including the premises in question, is now within Multnomah county (Laws 1893, p. 78); and that in any event, if it should be held that no lien was created by the trust deed, a court of equity, having obtained jurisdiction, had authority to render a decree for the amount demanded, which ought not to be disturbed on appeal.

The title of the act which included section 2736, supra, reads "An act to define the terms 'land' and 'real property,' for the purpose of taxation, and to provide where the same shall be assessed and taxed, and to declare what instruments whereby land and real property is made security for the payment of a debt, shall be void, and to repeal sections 2 and 7 of chapter 57 of the Miscellaneous Laws of Oregon." Laws 1882, p. 64. Section 1 of this act, after defining "real property" and "land," contains the following provision: "And a mortgage, deed of trust, contract, or other obligation, whereby land or real property situated in no more than one county in this state, is made security for the payment of a debt, shall, for the purposes of assessment and taxation, be deemed and treated as real property." It will be seen, from the title of the act and the language quoted, that the words "mortgage, deed of trust, or other instrument," etc., are, for the purpose of taxation, defined to mean "land" or "real property." The legislative assembly declared by statute that a lien was land--that the shadow was the substance--only for the purpose of assessment and taxation, and not that a mortgage embracing lands in more than one county was to be deemed void for the purpose of taxation. If such a construction of the statute had been permissible, mortgages prohibited thereby would have been taken for the purpose of avoiding the assessment and taxation of such securities. Plaintiffs' counsel argues, however, that the statute rendering a mortgage of real property situated in more than one county void is in the nature of a penalty, and, this being so, the mortgagee would be compelled to pay in each county the whole amount of taxes which might be assessed thereon in other counties. Section 2 of the act under consideration, which is incorporated in Hill's Annotated Laws of Oregon as section 2735, reads, "All land shall be assessed and taxed in the county where the same shall lie." It is evident that since a mortgage is deemed to be land, within the purview of the act, the assessor of one county would have no extra-territorial jurisdiction, and would be powerless to assess mortgages of real property situated in another county, although the mortgage may have been recorded in the former county. Section 2736, supra, so far as it applies to the case at bar, reads as follows: "All mortgages, deeds of trust, contracts, or other obligations hereafter executed, whereby land situated in more than...