Home Owners' Loan Corp. v. Wright

• Citation: 299 N.W. 860,71 N.D. 235
• Decision Date: 28 August 1941
• Docket Number: No. 6762.,6762.
• Parties: HOME OWNERS' LOAN CORPORATION v. WRIGHT, County Treasurer.
• Court: North Dakota Supreme Court

71 N.D. 235

299 N.W. 860

HOME OWNERS' LOAN CORPORATION

v.WRIGHT, County Treasurer.

No. 6762.

Supreme Court of North Dakota.

July 29, 1941.

On Rehearing Aug. 28, 1941.

On Petition for Rehearing.

Syllabus by the Court.

1. Personal property taxes extended against real estate pursuant to the provisions of chapter 242, Session Laws, N.D.1929, become a lien on such real estate as of the date of the extension and entry thereof.

2. The lien of personal property taxes extended against real estate is inferior, subsequent and subject to a mortgage placed of record against said real estate prior to the entry of the personal property tax lien.

3. A county treasurer, after the date of the entry of a personal property tax lien against real estate, is without authority to accept payment of taxes on the real estate against which such entry has been made without making collection of the personal property tax lien.

4. The priority of a mortgage lien is not affected by the statute requiring the county treasurer to make collection of extended personal property taxes at the time real estate taxes are paid.

5. Extended personal property taxes paid by the holder of a prior mortgage on the real estate may be recovered if paid under proper protest.

6. Taxes paid under protest may be recovered under the provisions and upon the conditions prescribed by chapter 286, Session Laws, N.D.1931.

7. The complaint in this case is examined and is held to set forth facts constituting a cause of action for the recovery of extended personal property taxes paid under protest by the holder of a prior real estate mortgage.

Appeal from District Court, Williams County; John C. Lowe, Judge.

Action by the Home Owners' Loan Corporation against R. L. Wright, as County Treasurer of Williams County, North Dakota, to recover personal property taxes paid under protest. From a judgment in favor of the plaintiff, the defendant appeals.

Affirmed.

Eugene A. Burdick, State's Atty., of Williston (William R. Pearce, Asst. Atty. Gen., on the brief), for appellant.

Henry E. Johnson, of Minot (Ray E. Dougherty, Mose Silverman, and Oscar G. Abern, all of Omaha, Neb., of counsel), for respondent.

MORRIS, Judge.

This is an appeal from an order overruling a demurrer to the plaintiff's complaint. The demurrer challenges the sufficiency of the complaint upon the ground that it fails to state facts sufficient to constitute a cause of action.

The pertinent facts stated in the complaint may be summarized as follows: The plaintiff took a mortgage on certain real property in the City of Williston, Williams County, North Dakota, on December 26, 1935, and caused its mortgage to be recorded in the office of the register of deeds of Williams County on December 31, 1935.

Plaintiff's mortgage provides: “That in the event the mortgagors shall fail or neglect to pay the real estate taxes levied and assessed against said premises when the same become due, the mortgagee is authorized to pay the same and add the same to the principal due under its mortgage, which sum so paid shall bear interest at the same rate that the principal sum bears.”

Certain personal property taxes of the mortgagor for the year 1938 were in 1940 certified by the proper officials as a lien upon the premises covered by the mortgage. This action was taken pursuant to chapter 242, Session Laws, N.D.1929.

On February 15, 1940, the plaintiff offered to pay real estate taxes then due upon the premises in the sum of $63.81. At that time, personal property taxes of the mortgagor had been extended and entered as a lien against the real estate amounting to $21.56. The defendant herein, County Treasurer of Williams County, refused to accept payment of the real estate taxes without payment at the same time of the personal property taxes. In order to protect its interest under the mortgage, the plaintiff paid the personal property taxes on February 20, 1940, under protest.

[1] After payment was made, the plaintiff made application for an abatement pursuant to the provisions of chapter 286, Session Laws, N.D.1931. Upon refusal of the Board of County Commissioners of Williams County to grant the abatement, this action was brought to recover the personal property taxes thus paid under protest. The plaintiff takes the position that the legislature did not intend that the provisions of subsection (e) of section 1, chapter 242, Session Laws, N.D.1929, should apply to the plaintiff so as to prevent it from paying real estate taxes without paying the mortgagors extended personal property taxes and that if construed to so apply, it impairs the obligation of plaintiff's mortgage contract and deprives the plaintiff of its property without due process of law in violation of section 13 of the Constitution of North Dakota and section 1 of article 14 of the amendments to the Constitution of the United States.

Chapter 242, Session Laws, N.D.1929, is entitled: “An Act to amend and reenact Sections 2174 and 2188 of the Compiled Laws of North Dakota, 1913, relating to collection of personal property taxes, making personal taxes a lien on real estate and relating to duties of county auditors and county treasurers.” We quote the paragraphs of this Act pertinent to the controversy with italics supplied:

“(d) Personal Taxes Made a Lien on Real Estate by Resolution of County Board.) The board of county commissioners, immediately following the cancellation of uncollectible delinquent personal property taxes at its January meeting, as provided in section 2169, shall, by formal resolution, declare that all unpaid and uncancelled personal property taxes from and after the date of the extension and entry thereof as hereinafter provided constitute a lien on any real estate owned by the tax delinquent or which may thereafter be acquired by the tax delinquent, and shall in addition to such action make said tax a specific lien on a specific description or on specific descriptions of real estate owned by the tax delinquent as of the date of the extension and entry thereof as hereinafter provided.

(e) Extension of Lien by Auditor.) The county auditor shall extend to and enter upon the tax list of the next preceding year, then in the hands of the county treasurer, in an appropriate column or columns for remarks opposite the descriptions of real estate designated by the board of county commissioners, belonging to any person, company or corporation owing such uncollected personal property tax, words showing the year or years for which the tax remains due and the principal sum of such tax. Such entry shall be made without regard to any prior payment of real estate taxes on said descriptions for the said preceding year. The county treasurer shall after the date of such entry be without authority to accept payment of the real estate tax on any such description without making collection at the same time of the said personal property tax extended as a lien against the same.”

It is well to also note the provisions of section 2186, Comp.Laws, N.D.1913 as amended by chapter 279, Session Laws, N.D.1931, which provide: “Taxes upon real property are hereby made a perpetual paramount lien thereupon against all persons, firms or corporations, except the United States and the State. All taxes shall, as between vendor and purchaser, become a lien upon real estate on and after the 31st day of December in each year. Taxes on personal property charged upon and spread against real property shall be, and they are hereby declared to be a lien upon such real property from and after the date when such personal property taxes are charged and spread against such real estate. The liens enumerated in this Section shall include all costs, penalties, interest, charges and expenses of and concerning such taxes which by the provisions of law shall accrue, attach or be incurred. The lien of personal property taxes charged against real estate shall have priority over any and every judgment, mortgage or other lien or claim whatsoever placed of record subsequent to the date when such personal property taxes are entered against such real property, except the lien for a tax for a subsequent year which shall have priority over such personal property tax liens formerly charged and spread.”

[2] The defendant concedes that the lien for personal property taxes is subsequent...