Hallenbeck v. Yuma County

• Decision Date: 11 February 1944
• Docket Number: Civil 4568
• Parties: H. D. HALLENBECK and KATHERINE HALLENBECK, Husband and Wife, Appellants, v. YUMA COUNTY, a Political Subdivision of the State of Arizona; GILA VALLEY POWER DISTRICT, a Municipal Corporation; and R. E. LEE, JR., Yuma County Treasurer and ex-officio Treasurer of Gila Valley Power District, a Municipal Corporation, Appellees. MINERS AND MERCHANTS BANK, a Corporation, and C. W. TAINTOR, Intervener-Appellees
• Court: Arizona Supreme Court

145 P.2d 837

61 Ariz. 160

H. D. HALLENBECK and KATHERINE HALLENBECK, Husband and Wife, Appellants, v. YUMA COUNTY, a Political Subdivision of the State of Arizona; GILA VALLEY POWER DISTRICT, a Municipal Corporation; and R. E. LEE, JR., Yuma County Treasurer and ex-officio Treasurer of Gila Valley Power District, a Municipal Corporation, Appellees. MINERS AND MERCHANTS BANK, a Corporation, and C. W. TAINTOR, Intervener-Appellees

Civil No. 4568

Supreme Court of Arizona

February 11, 1944

APPEAL from a judgment of the Superior Court of the County of Yuma. Henry C. Kelly, Judge. Judgment affirmed.

Mr William H. Westover, for Appellants.

Mr Peter C. Byrne, County Attorney and Mr. A. J. Eddy, Deputy County Attorney, for Appellees, Yuma County and R. E. Lee Jr., Treasurer.

Mr. R C. Bennett, for Appellee Power District.

Mr. R. N. Campbell, for Intervener-Appellee Bank.

Messrs. Gust, Rosenfeld, Divelbess, Robinette & Coolidge, for Intervener-Appellee Taintor.

OPINION

UDALL, Superior Judge.

The principal question for determination on this appeal is whether a sale of realty to the sovereignty for delinquent state, county and power district taxes prevent the land sold from being taxed for power district purposes after tax sale has been completed and the land sold has been returned to private ownership. A better understanding of the problem involved will be had by a brief recitation of the facts:

The Gila Valley Power District is a corporation organized under Chapter 173, Session Laws of Arizona 1919. (Now appearing in the Arizona Code Annotated of 1939 as Art. 10, being sections 75-1001 et seq.). In 1923 the electors of the District subjected the lands therein to a bond issue in the sum of $300,000 payable over a period of thirty years; and thereafter the Board of Supervisors of Yuma County levied against the real property of the District an assessment to retire the bonds as they became due, and pay the interest on those outstanding. State and County and Gila Valley Power District taxes were duly and regularly levied against the property of the District for the years, 1929, 1930, 1931, 1932, 1933, 1934, 1935, 1936, and 1937.

Situate within the District and against which taxes were so levied was that certain parcel of land, described as: Lot 1, Section 1, Township 9 South, Range 19 West, G. & S.R.M., Yuma County, Arizona.

The taxes and assessments for the year 1929 not being paid against this property when due, the County Treasurer, pursuant to law, sold the same on December 15, 1930, to the State of Arizona.

The property was thereafter and on December 15th of each succeeding year sold to the State by the County Treasurer for delinquent state, county and Power District taxes for the years 1931 to 1937, inclusive. No redemption was made from these tax sales by the owner of said property or any one else, and after full compliance with the statutes as to notice of application for deed, right to redemption, etc., on August 25, 1937, the County Treasurer executed and delivered to the State of Arizona his deed to this property.

On January 16, 1939, this realty was regularly sold by the Board of Supervisors of Yuma County to the appellant, H. D. Hallenbeck, and a deed issued to him.

For the fiscal year of 1941-2 the Board of Supervisors finally fixed the amount necessary to be raised by assessment against the real property in the district in the sum of $164,698.24, and a levy was made upon the lands in the district to raise said sum. Included within the above amount were three item aggregating $128,910.24 of delinquent interest and delinquent sinking funds which had been ordered included in the budget of the district by a mandate of the Superior Court of Yuma County in a mandamus action, being cause No. 10253.

The property plaintiff purchased from the State was included in the property assessed to pay said sum, and there was levied and assessed against said property for district taxes the sum of $187.12. This amount the plaintiff paid under protest and then brought this suit to recover the entire amount of power district taxes he had been forced to pay. The suit was originally filed against Yuma County; the separate applications to intervene, of the Miners and Merchants Bank, a corporation, and C. W. Taintor, were granted on the grounds they were owners of bonds of the District. Thereafter the plaintiffs filed an amended complaint bringing in the other named defendants. The defendant, Gila Valley Power District, (herein referred to as the District) and the interveners, made motions to dismiss plaintiff's complaint on the grounds that it failed to state a claim upon which relief could be granted. After full hearing had the court, on June 18, 1942, granted the motions to dismiss, and an appeal was then taken to this court.

The parties will be hereafter referred to as they were in the lower court, and inasmuch as the interveners joined with the defendants in filing appellee's brief, all will be referred to as defendants.

The question of priority of liens between State and County taxes as against power district taxes is not involved in this case. We readily agree with plaintiffs' proposition of law that State and County taxes are prior and superior to all other liens and incumbrances, except liens or incumbrances held by the State of Arizona. Section 73-506, Arizona Code Annotated 1939, expressly so provides, and that was our holding in the case of Town of Holbrook v. Koury, 50 Ariz. 526, 73 P.2d 698.

Furthermore, as to the next legal proposition, we agree that a sale by the County Treasurer of real property for delinquent State and County taxes discharges all liens and assessments, including power district taxes, theretofore levied against the property sold. Sec. 73-506. When property vests in a purchaser under a tax sale prior tax liens of all kinds are discharged. Sears, Roebuck & Co. v. Maricopa County, 41 Ariz. 304, 17 P.2d 1096; Ingraham v. Forman, 49 Ariz. 29, 63 P.2d 998; Maricopa County v. Arizona Tractor & Equipment Co., 56 Ariz. 518, 109 P.2d 618; Board of Sup'rs v. Miners, etc., Bank, 59 Ariz. 460, 130 P.2d 43.

By their fourth assignment of error the plaintiffs seek to raise the validity and legality of the district tax levies for the fiscal year 1941-2. This levy formed the basis of the tax which the plaintiff is now seeking to recover. This was not made an issue in the lower court and hence cannot now be raised for the first time in this court. City of Glendale v. Coquat, 46 Ariz. 478, 52 P.2d 1178, 102 A.L.R. 837. Furthermore, the validity of this identical levy was raised in the recent case of Board of Supr's v. Miners, etc., Bank, supra, involving the same power district and we remanded that case back to the Superior Court of Yuma County for further proceedings. We, therefore, refuse to consider this question on this appeal and express no opinion as to the merits thereof.

The plaintiffs' amended complaint alleges that as a result of the tax sale process and the ultimate vesting of the title in them, that "said property was relieved from any further liability on account of said bonded indebtedness, and that said property since January 16, 1939, (date of deed to plaintiff) has not been and is not now subject to any assessment for the payment of bonded indebtedness or interest thereon, or for any purpose on behalf of said Gila Valley Power District." The four assignments of error and conclusions of law based thereon, which form the basis of this appeal, are somewhat uncertain and do not seem to go as far as the complaint, being somewhat limited to the contention that only the taxes levied for delinquent interest, delinquent sinking fund, and for bonded indebtedness of the district were illegally collected. We shall however, necessarily determine the basic question raised by the pleadings in the lower court of whether plaintiffs' lands were rendered immune from future district levies by sale thereof for delinquent state, county and district taxes.

Upon statutes not greatly different in language from the Arizona Power District Act, and having the same general objects, the courts of various states have reached diametrically opposed conclusions upon the identical question here presented. Practically all of these district laws, usually covering irrigation, reclamation, or power, are patterned after the Wright Act of California (St. Cal. 1887, p. 29), the constitutionality of which has been established by numerous decisions of the California Court and by the decision of the Supreme Court of the United States in Fallbrook Irr. Dist. v. Bradley, 164 U.S. 112, 17 S.Ct. 56, 41 L.Ed. 369.

The Supreme Courts of Colorado, Utah and Montana (although the latter State has held both ways on the question) have held in substance, that the district indebtedness, bonded and operative, merely constitutes special assessment obligations for the payment of which each tract of land is bound to pay only its proportionate part. Some of the decisions rest largely upon the proposition that no lien, in the absence of specific legislation upon that precise point, can have the high sanction of a governmental tax for purposes of government, and that a tax sale effectually sweeps away all rights except the right of the sovereign to tax for its own governmental purposes; and that therefore the liability of any land within the district to be further subjected to a tax for district bond purposes is forever shorn away by the completion of the tax sale process. The leading cases from the above jurisdictions so holding are: Interstate Trust Co. v. Montezuma Valley Irr. Dist., 1919, 66 Colo. 219, 181 P. 123; Nelson v. Board of Com'rs of Davis County, 1923, 62 Utah 218, 218 P. 952; Hanson v. Burris, 1935, 86 Utah 424, 46 P.2d 400; ...