Myerson v. Sakrison, 5365

• Decision Date: 26 February 1952
• Docket Number: No. 5365,5365
• Citation: 73 Ariz. 308,240 P.2d 1198
• Parties: MYERSON et al. v. SAKRISON et al.
• Court: Arizona Supreme Court

Page 1198

240 P.2d 1198

73 Ariz. 308

MYERSON et al. v. SAKRISON et al.

No. 5365.

Supreme Court of Arizona.

Feb. 26, 1952.

Rehearing Denied March 18, 1952.

James Elliott Dunseath, of Tucson; Snell & Wilmer, and Edward Jacobson, of Phoenix, for appellants.

D. Kelly Turner, of Phoenix, for appellee.

H. S. McCluskey, of Phoenix, amicus curiae.

BLAKE, Superior Court Judge.

This is an action involving the priority of a lien, authorized by the Employment Security Act of Arizona, on the real property of a delinquent employer as against a prior recorded realty mortgage of a third person. This appeal comes to this court on an agreed statement of facts, pursuant to Section 21-1830, A.C.A.1939.

Hector C. Amado, the maker of a note and mortgage being in default, action was brought in the Superior Court of Pima County by the assignees (appellants) to secure judgment on the note and foreclose the mortgage. The Employment Security Commission was joined as a party defendant. The court first held that the appellants' realty mortgage was superior to the commission's lien but a new trial was granted and the court held that by the provisions of Section 56-1014h, A.C.A.1939, as amended, the commission's lien was prior and superior to the mortgage.

This appeal is taken from that portion of the judgment only, which found the commission's lien prior in right and superior to the mortgage lien of the appellants.

The following is a brief statement of the facts:

Hector C. Amado was an employer within the terms of the Employment Security Act, and was in default for contributions for the quarters ending September 30th and December 31st, 1946, and March 31st and June 30th, 1947.

On the 6th day of October, 1947, the commission recorded a notice of lien for the amount of the delinquent contribution, in the sum of $263.95, setting forth that a lien was claimed on all the property of Amado and particularly the real estate described as lot 7, block 5, University Home Addition, Tucson, Arizona, and setting forth that the lien claimed, dated from the 15th day of August, 1946.

On the 12th day of September, 1947, Amado and his wife, Frances G. Amado executed and delivered their promissory note in the amount of $2500 to Standard Realty Company, secured by a realty mortgage on the above lot which was recorded on the 19th day of September, 1947. On the 31st day of October, 1947, Standard Realty Company assigned the note and mortgage to the appellants herein. It will be noted that the realty mortgage lien was recorded sixteen days prior to the recording of the commission's lien.

The agreed statement of facts discloses that at the time of recordation of the mortgage on September 19, 1947, a search of the records in the recorder's office disclosed that there was no lien of any kind or character of record on said property at that time. It is further disclosed that at the time of the recording of the realty mortgage there was nothing to put any purchaser on notice that there was a lien of any kind against it, and it is admitted that the assignor had no actual knowledge, or notice from any source whatsoever, of a lien of any kind.

Appellants make the following assignment of error: 'The court erred in ordering judgment in favor of the appellees and against appellants and in finding thereby that an Employment Security Commission lien is superior to a prior recorded mortgage validly taken by persons other than the delinquent employer, for the reason that such interpretation of the Employment Security Act, (and particularly of Sections 56-1014g and 56-1014h A.C.A.1939, as amended) makes such Commission lien violative of the due process guarantees of both the Constitution of Arizona and the Constitution of the United States.'

And as a supporting proposition of law, submit: 'A statute providing for Employment Security Commission liens superior to a prior recorded valid contract lien of other than the delinquent employer, is unconstitutional as offending the due process requirements of the State and Federal Constitutions unless reasonable notice that such preferences might exist or be created is given, or the circumstances are such that a reasonable person is put on notice that such liens might exist or be created.'

It is important to note that the first installment or portion of these unpaid contributions become due and owing a full year and six days prior to the commission's filing of notice of lien. It is further important to note that the commission claimed the lien dated from August 15, 1946, being nearly a year and two months prior to the filing of its notice thereof.

The statutory provisions are as follows:

Section 56-1014g, A.C.A.1939, as amended, 'Lien for contributions.--Separate and apart from and in addition to the other provisions of article 10, chapter 56, Arizona Code of 1939, contributions, interest and penalties due under article 10, chapter 56, Arizona Code of 1939, shall be a lien, prior and superior to all other liens except taxes, prior recorded realty mortgages and unpaid wage claims, not only against the interests of any employer, but against the interests of all others, in the real estate, plant, works, equipment and buildings, improved, operated and constructed by any employer, and also upon any products or articles manufactured by such employer.' (Emphasis supplied.)

Section 56-1014h, supra, 'Effect of lien.--The lien created by this act shall attach from the date of the commencement of the labor for which the contributions, interest and penalties are due. In order to avail itself of the lien hereby created, the commission shall, within three (3) months after such employer shall have delivered to the commission all reports required by it and shall have become delinquent in the payment of contributions due thereon, file with the county recorder of the county within which such property then be situate, a statement in writing describing in general terms the property upon which a lien is claimed and stating the amount claimed, after deducting credits and offsets, and that the same is delinquent. The county recorder shall record every claim of lien filed pursuant to this section in a lien docket kept for that purpose, which record shall be indexed as deeds and other instruments. If any employer shall fail, delay or refuse to file with the commission all reports required by it, the lien hereby created shall continue in full force and effect although the amount thereof be undertermined and the three (3) months' time within which the commission shall file its claim of lien shall not begin to run until the actual receipt by the commission of all such reports. From and after the filing of such claim of lien, the commission shall be entitled to commence suit to foreclose such lien in the manner provided by law for the foreclosure of other liens on personal or real property.' (Emphasis supplied.)

The above statutes create a lien for unpaid contributions and the procedure for perfecting the same.

A summary of this Act, as it pertains to liens for unpaid contributions, is as follows:

1. The commission liens attach as the result of the failure of an employer covered by the Act to make reports and payments to the...