Scottish American Mortg. Co., Ltd. v. Minidoka County

• Decision Date: 03 December 1928
• Docket Number: 4951
• Parties: THE SCOTTISH AMERICAN MORTGAGE COMPANY, LIMITED, a Corporation, Appellant, v. MINIDOKA COUNTY, a Legal Subdivision of the State of Idaho, and CLARA B. COLWELL, as County Treasure and Ex-Officio Tax Collector of Minidoka County, a Legal Subdivision of the State of Idaho, Respondents
• Court: Idaho Supreme Court

272 P. 498

47 Idaho 33

THE SCOTTISH AMERICAN MORTGAGE COMPANY, LIMITED, a Corporation, Appellant, v. MINIDOKA COUNTY, a Legal Subdivision of the State of Idaho, and CLARA B. COLWELL, as County Treasure and Ex-Officio Tax Collector of Minidoka County, a Legal Subdivision of the State of Idaho, Respondents

No. 4951

Supreme Court of Idaho

December 3, 1928

TAXATION-PERSONAL TAX-LIEN ON REALTY-PRIORITY.

1. Under C. S., sec. 3304, taxes on migratory livestock, not having been paid, were properly extended on real property assessment-roll, and became lien on real property of owner in view of sections 3097, 3098, 3134, 3135, 3256, and 3296.

2. Legislature held to have no power to require assessor to make collection of taxes on migratory livestock out of such stock instead of extending them on real property assessment-roll under C. S., sec. 3304.

3. Lien of mortgage on land held superior to later lien of tax assessed on livestock and fixed on land, especially where mortgagee had foreclosed and received deed, since no interest in land re- mained in mortgagor, who owned livestock, and there was nothing to convey by tax deed based on assessment of such stock.

4. To mortgage one's property is within constitutional guaranty of freedom of contract, which is within protection of fourteenth amendment of federal constitution.

5. Construction rendering statute of doubtful constitutionality will not be adopted, if another is open to court.

APPEAL from the District Court of the Eleventh Judicial District for Minidoka County. Hon. William A. Babcock, Judge.

Action for injunction and to quiet title. Judgment for defendants. Reversed and remanded.

Reversed and remanded. Costs to appellant.

Richards & Haga, for Appellant.

There is an important distinction between real property taxes and personal property taxes in that the lien of the former attaches to a particular tract for the tax assessed against it, while the lien of personal property taxes extends to all personal property of the taxpayer and to his real estate to the extent that the legislature may provide. It follows that the lien of real estate taxes is a burden of definite amount capable of approximate estimation and comparatively slight, while if the legislature extends a preference to the lien of personal property taxes over existing liens on real estate, an indefinite and often excessive burden is imposed which is incapable of estimation or approximation and which may and frequently does impair and wipe out the entire security of the prior incumbrancer. (26 R. C. L., Taxation, sec. 347, pp. 388, 389; note to Minneapolis Threshing Machine Co. v. Roberts Co., 34 S.D. 498, 149 N.W. 163, L. R. A. 1915D, 886.)

It has been held with substantial unanimity that statutes making personal property taxes a lien on the real estate of the taxpayer do not give such lien priority over existing mortgages or other incumbrances in the absence of an express provision to that effect. (26 R. C. L., Taxation, sec. 347, p. 389; note to Minneapolis Threshing Machine Co. v. Roberts Co., supra; Gifford v. Callaway, 8 Colo. App. 359, 46 P. 626; Bibbins v. Clark, 90 Iowa 230, 57 N.W. 884, 59 N.W. 290, 29 L. R. A. 278; Central Trust Co. v. Third Avenue R. R. Co., 186 F. 291, 110 C. C. A. 1; Miller v. Anderson, 1 S.D. 539, 47 N.W. 957, 11 L. R. A. 317; State v. Newark, 42 N. J. Law, 38; Lobban v. State, 9 Wyo. 377, 64 P. 82; Walker v. Nogales Bldg. & Loan Assn., 28 Ariz. 484, 237 P. 1094; Scandinavian American Bank v. King County, 92 Wash. 650, 159 P. 786.)

Superiority of the personal property tax lien is not necessarily implied from the provisions found in sections 3097 and 3098 that the tax lien shall continue until the taxes are paid, canceled or rebated. (Central Trust Co. v. Third Avenue R. R. Co., supra.)

H. V. Creason, for Respondent.

Our revenue law makes all liens for taxes equal and provides that all property assessable for revenue purposes, either real or personal, shall be a first and prior lien to any and all other liens whether existing mortgages have created a lien or otherwise. (C. S., secs. 3097, 3098, 3264, 3287, 3304; Continental & Commercial Trust and Savings Bank v. Werner, 36 Idaho 601, 215 P. 458; California Loan & Trust Co. v. Weis, 118 Cal. 489, 50 P. 697; Union Central Life Ins. Co. v. Black, 67 Utah 268, 47 A. L. R. 572, 247 P. 486; Chase v. Trout, 146 Cal. 350, 80 P. 81; German Savings and Loan Society v. Ramish, 138 Cal. 120, 69 P. 89, 70 P. 1067.)

BRINCK, Commissioner. Varian, C., Wm. E. Lee, C. J., and Givens and Taylor, JJ., concurring. BUDGE, J., Dissenting. T. Bailey Lee, J., disqualified.

OPINION

BRINCK, Commissioner

Plaintiff brought suit for injunction and to quiet title to land. It had been the owner of a mortgage given by one Davidson and wife upon lands in Minidoka county, to secure a note for $ 10,500 the mortgage being executed February 7, 1919, and recorded the following day. Prior to the beginning of this action, plaintiff foreclosed the mortgage, and purchased the property at the foreclosure sale, receiving a sheriff's deed of the premises in October, 1923. It is alleged that on the second Monday of January, 1920, said Davidson was in the possession of, and claimed ownership of, migratory livestock, consisting of sheep of the approximate value of $ 15,000, and that during 1920 the Minidoka county assessor assessed the sheep to Davidson and entered the assessment on the personal property assessment-roll of said county; that Minidoka county was the home county of the migratory livestock, and was the county wherein said Davidson resided. It is further alleged that pursuant to said assessment, taxes for state, county, and general purposes were levied against the sheep in the sum of $ 279.40; that the assessor made no effort to enforce the lien of said taxes against the sheep themselves, and did not distrain or sell any of them, but permitted the same to be removed from said county, although during said year the sheep were within Minidoka county the greater portion of the time, and the taxes so levied could have been collected by distraint; that on December 5, 1920, the board of county commissioners, upon the report of the county assessor, ordered the tax upon the sheep to be, and the same was, extended against the mortgaged land upon the real property assessment-roll, without notice to plaintiff; and that plaintiff has paid and discharged all taxes levied against the land itself. It is further alleged that the defendant tax collector has given notice that she will execute a tax deed conveying the real estate involved to the county for the taxes so assessed upon said sheep. Plaintiff prays that the tax collector be enjoined from issuing the tax deed, and that it be adjudged that the said personal property tax is not a lien upon the land, and that plaintiff's title be quieted as against the lien of said tax. The trial court sustained a general demurrer to the complaint, and entered judgment of dismissal of the action, from which judgment this appeal is taken.

It is contended by appellant that migratory livestock taxes must be collected from the migratory livestock; that there is no authority of law to enter migratory livestock taxes upon the real property roll; that the lien of such migratory livestock tax, if any there were, was inferior to the lien of plaintiff's mortgage; and that even if migratory livestock taxes can be extended upon the real property roll, all remedies by distraint and sale of the property assessed must have been previously exhausted.

The statutes involved are not entirely clear. It is provided (C. S., sec. 3097) that all real and personal property subject to assessment and taxation must be assessed with reference to its value on the second Monday of January in the year in which such taxes are levied; and that all taxes levied shall be a lien upon the property assessed, and a lien upon any other property of the owner thereof, such lien to attach as of the second Monday in January of such year, and to be discharged only by the payment, cancelation, or rebate of the taxes, as provided by law. Under this section, the amount of the taxes upon the sheep was clearly a lien upon the sheep themselves, and also a lien upon any other property of the owner, Davidson.

C. S., sec. 3098, repeats these provisions specifically as to taxes levied on personal property. Under that section, such taxes are a lien upon the real property of the owner, which shall only be discharged by the payment, cancelation, or rebate of the taxes, as provided by statute. Notwithstanding a lien is thus created, the procedure for collecting taxes is more particularly prescribed by statute.

C. S., secs. 3134 and 3135, provide for the making of a real property assessment-roll, upon which shall be extended against each tract of real property assessed the value thereof, and the value of each class of personal property whereon the tax is a lien on such real property, except migratory livestock; and under C. S., sec. 3147, that roll must, when completed, be accompanied by an affidavit of the assessor that he has placed thereon all real property and all personal property whereon the tax is a lien on such real property, except migratory livestock.

Taxes which become delinquent upon the real property roll are collected by the issuance of a tax deed, under C. S., secs. 3256 to 3263, conveying the real property against which all of such taxes have been extended. C. S., sec. 3263, provides that such deed conveys to the grantee the absolute title to the land described therein, free of all incumbrances except any lien for taxes which may have attached subsequently to the assessment.

A separate assessment-roll, known as the personal property assessment-roll, is provided...