Farmers' Security Bank of Park River v. Martin

• Decision Date: 09 January 1915
• Docket Number: 1905
• Citation: 150 N.W. 572,29 N.D. 269
• Court: North Dakota Supreme Court

150 N.W. 572

29 N.D. 269

FARMERS SECURITY BANK OF PARK RIVER, N. D., a Corporation, v. FLORENCE B. MARTIN and Charles B. Martin

No. 1905

Supreme Court of North Dakota

January 9, 1915

From the judgment of the District Court of Walsh County Templeton, Special Judge, dismissing these actions, plaintiff appeals.

Reversed and judgment for foreclosure ordered.

Plaintiff mortgagee entitled to a judgment of foreclosure.

Engerud Holt, & Frame, and E. Smith-Peterson, for appellant.

The plaintiff had the right to pay the delinquent taxes and declare the whole debt secured by the mortgage immediately due. The mortgages in express terms so provide. Such terms in the mortgages do not create a penalty or forfeiture. They merely accelerate the date of payment, and confer valuable rights on the mortgagee. Gray v. Robertson, 174 Ill 242, 51 N.E. 248; Stanclift v. Norton, 11 Kan. 218; Hodgdon v. Davis, 6 Dak. 21, 50 N.W. 478; Washburn v. Williams, 10 Colo.App. 153, 50 P. 223; Northwestern Mut. L. Ins. Co. v. Allis, 23 Minn. 337; Hoodless v. Reid, 112 Ill. 105, 1 N.E. 119; Fowler v. Woodward, 26 Minn. 347, 4 N.W. 231; Plummer v. Park, 62 Neb. 665, 87 N.W. 534; National L. Ins. Co. v. Butler, 61 Neb. 449, 87 Am. St. Rep. 462, 85 N.W. 437; Condon v. Maynard, 71 Md. 601, 18 A. 957; Hockett v. Burns, 90 Neb. 1, 132 N.W. 718.

The mortgagors, by necessary implication, agreed to pay the taxes on the premises. They expressly gave the mortgagee the right to pay them. Bonner Springs Lodge & Sanitarium Co. v. McClelland, 59 Kan. 778, 53 P. 866.

The personal covenant of the mortgagors to make a refund for such payments was not necessary. Rev. Codes 1905, § 6126; Foster v. Furlong, 8 N.D. 282, 78 N.W. 986; New England Mortg. Secur. Co. v. Vader, 28 F. 265; Bonner Springs Lodge & Sanitarium Co. v. McClelland, 59 Kan. 778, 53 P. 866; Beckman v. Skaggs, 59 Cal. 544; Farwell v. Bigelow, 112 Mich. 285, 70 N.W. 579.

After such payments it was not necessary for plaintiff to notify defendants. No such notice is required by the mortgages. Ellwood v. Wolcott, 32 Kan. 526, 4 P. 1056; Washburn v. Williams, 10 Colo.App. 153, 50 P. 223; Hoodless v. Reid, 112 Ill. 105, 1 N.E. 119; Fowler v. Woodward, 26 Minn. 347, 4 N.W. 231.

The option in the mortgages to declare the whole debt due having once been exercised, the default becomes fixed, and it cannot be cured by tender of payment after foreclosure is begun. Plummer v. Park, 62 Neb. 665, 87 N.W. 534; Rosche v. Kosmowski, 61 A.D. 23, 70 N.Y.S. 216; Stanclift v. Norton, 11 Kan. 218; Hockett v. Burns, 90 Neb. 1, 132 N.W. 718.

The defendant cannot make a collateral attack upon the validity of the taxes paid by the plaintiff as a defense to this action. Power v. Larabee, 2 N.D. 141, 49 N.W. 724; Power v. Bowdle, 3 N.D. 120, 21 L.R.A. 328, 44 Am. St. Rep. 511, 54 N.W. 404; Beggs v. Paine, 15 N.D. 444, 109 N.W. 322; Weinreich v. Hensley, 121 Cal. 647, 54 P. 254; Windett v. Union Mut. L. Ins. Co. 144 U.S. 581, 36 L.Ed. 551, 12 S.Ct. 751; Southard v. Dorrington, 10 Neb. 119, 4 N.W. 935.

Defendants are estopped to question the validity of these taxes in these actions. The defendants had ample opportunity to investigate the regularity and validity of the assessments and the acts of the various taxing officers, and they are presumed to know the state of these affairs. Beggs v. Paine, 15 N.D. 436, 109 N.W. 322; Nind v. Myers, 15 N.D. 400, 8 L.R.A. (N.S.) 157, 109 N.W. 335; Williams v. Hilton, 35 Me. 547, 58 Am. Dec. 729; Bates v. Peoples' Sav. & L. Asso. 42 Ohio St. 655.

Plaintiff had no actual knowledge of the defects of which complaint is made. The taxes were presumptively legal. The duplicate tax list in the treasurer's office correctly described the land. Plaintiff had the right to rely upon these records. Bates v. Peoples' Sav. & L. Asso. supra.

Such payments of taxes by mortgages to preserve their security are viewed with favor by courts of equity. Windett v. Union Mut. L. Ins. Co. 144 U.S. 581, 36 L.Ed. 551, 12 S.Ct. 751; Southerd v. Dorrington, 10 Neb. 119, 4 N.W. 935; Weinreich v. Hensley, 121 Cal. 647, 54 P. 254; Williams v. Hilton, 35 Me. 547, 58 Am. Dec. 729; American Nat. Bank v. Northwestern Mut. L. Ins. Co. 32 C. C. A. 275, 60 U.S. App. 693, 89 F. 615; Bates v. Peoples' Sav. & L. Asso. 42 Ohio St. 655; Almy v. Hunt, 48 Ill. 45.

The taxes in question are valid taxes. The test of the validity of an assessment is, Do the assessment rolls contain sufficient data to clearly identify the lands in question? Beggs v. Paine, 15 N.D. 444, 109 N.W. 322; Nind v. Myers, 15 N.D. 403, 8 L.R.A. (N.S.) 157, 109 N.W. 335; Power v. Larabee, 2 N.D. 141, 49 N.W. 724; Power v. Bowdle, 3 N.D. 120, 21 L.R.A. 328, 44 Am. St. Rep. 511, 54 N.W. 404.

Gray & Myers, for respondents.

The right to accelerate the time of payment of an otherwise immatured obligation for the payment of money only, and to proceed to an immediate foreclosure of the mortgage security, can only exist by virtue of some contractual stipulation to that effect. A stipulation which provides that the whole debt may be declared due, and authorizing foreclosure upon failure to pay taxes when due, means valid taxes,--enforceable taxes. Tracy v. Wheeler, 15 N.D. 248, 6 L.R.A. (N.S.) 516, 107 N.W. 68; Wells County v. McHenry, 7 N.D. 246, 74 N.W. 241; Herriott v. Potter, 115 Iowa 648, 89 N.W. 91.

A tax that cannot be exacted by any remedy is no tax at all. Power v. Larabee, 2 N.D. 141, 49 N.W. 724; Morrill v. Lovett, 95 Me. 165, 56 L.R.A. 634, 49 A. 666.

The word "due" has been construed to mean or imply the quality of legal enforceability. Griffith v. Speaks, 111 Ky. 149, 63 S.W. 465; Barnes v. Arnold, 45 A.D. 314, 61 N.Y.S. 85; Re Ray, 2 Ben. 53, F. Cas. No. 11,589.

An express covenant to pay taxes means legal taxes. Scott v. Society of Russian Israelites, 59 Neb. 571, 81 N.W. 624; Clark v. Coolidge, 8 Kan. 189; Leavitt v. Bell, 55 Neb. 57, 75 N.W. 524; Hartsuff v. Hall, 58 Neb. 417, 78 N.W. 716; Vermont Loan & T. Co. v. Tetzlaff, 6 Idaho 105, 53 P. 104.

In this state and in many others the rule has become a settled rule of property, that a valid assessment of land, evidenced by a record officially made, is an essential prerequisite to a valid tax. Its omission is jurisdictional, and fatal to the tax. Sheets v. Paine, 10 N.D. 106, 86 N.W. 117; Roberts v. First Nat. Bank, 8 N.D. 504, 79 N.W. 1049; Sweigle v. Gates, 9 N.D. 538, 84 N.W. 481; Re Davis, 151 Cal. 318, 121 Am. St. Rep. 105, 86 P. 183, 90 P. 711; O'Malley v. Fricke, 104 Wis. 280, 80 N.W. 436; Aldrich v. Steen, 71 Neb. 33, 98 N.W. 445, 100 N.W. 311; Chicago, B. & Q. R. Co. v. Hitchcock County, 60 Neb. 722, 84 N.W. 97; Jewett v. Iowa Land Co. 64 Minn. 531, 58 Am. St. Rep. 555, 67 N.W. 639.

The validity of a tax may be collaterally impeached; and a mortgagor is not estopped to contest such validity, in an action like the case here. 9 Enc. Pl. & Pr. 436; Leavitt v. Bell, 55 Neb. 57, 75 N.W. 524; Hartsuff v. Hall, 58 Neb. 417, 78 N.W. 716; Atwater v. West, 28 N.J.Eq. 361; De Leuw v. Neely, 71 Ill. 473.

The pretended tax here is based upon an insufficient description of the land in the assessment roll, and is void. It is indefinite and uncertain. Power v. Larabee, 2 N.D. 141, 49 N.W. 724; Power v. Bowdle, 3 N.D. 107, 21 L.R.A. 328, 44 Am. St. Rep. 511, 54 N.W. 404; Nind v. Myers, 15 N.D. 400, 8 L.R.A. (N.S.) 157, 109 N.W. 335.

By the decisions of our supreme court upon this question, a rule of property has been established in this state. Beggs v. Paine, 15 N.D. 436, 109 N.W. 322; Wright v. Jones, 23 N.D. 191, 135 N.W. 1120.

OPINION

GOSS, J.

This opinion covers two separate appeals having the same record and involving the same issues. Complaints are in the usual form, seeking foreclosure of commission mortgages securing a portion of interest on ten-year loans, which interest matures in yearly instalments for ten years. Nine instalments were unmatured. One has been paid. Both commission mortgages are held by plaintiff. The instalment of interest due on each mortgage prior to April, 1911, had been paid, and no payment under either mortgage would fall due until the following fall of 1911. Both mortgages contain the following stipulation "First: But if default be made in the payment of money or the interest or any part thereof or in payment of taxes on said real estate when due, then the mortgagee, its successors or assigns, may declare the whole principal sum due and payable, and this mortgage may be foreclosed at once. (2) And in case of the failure of the mortgagors to pay said taxes, then the mortgagee, its successors or assigns, may pay the same, and such sum paid shall become a part of this mortgage indebtedness, and draw interest at the same rate." The taxes falling due December 1, 1910, and delinquent March 1, 1911, on the two quarter sections covered by the two mortgages, had not been paid until the mortgagees, without notice to defendants, paid them on April 19, 1911, amounting to $ 61.62, for which the usual county treasurer's tax receipt was delivered. These actions were begun less than a week afterwards, by service of summons and complaint, basing the right of foreclosure upon the default of the mortgagors in failing to pay these taxes. Mortgagees elected to, and did, declare the full amount of both mortgages immediately due and payable. The brief of respondents contains but two contentions: First, that the taxes were void, and, second, "that the right to accelerate time of payment of an otherwise immatured obligation, and to proceed to an immediate foreclosure of the mortgage security, can only exist by virtue of some binding contractual stipulation to that effect," and hence acceleration cannot be founded on failure to pay void taxes, under a stipulation that the mortgagors will "pay taxes when...