State ex rel. Com'Rs of Land Office v. Nat'l Bank of Commerce of Pawhuska
| Decision Date | 04 June 1929 |
| Docket Number | Case Number: 18847 |
| Parties | STATE ex rel. COM'RS OF LAND OFFICE v. NATIONAL BANK OF COMMERCE OF PAWHUSKA et al. |
| Court | Oklahoma Supreme Court |
¶0 Taxation-Lien of Purchaser of Delinquent Tax Sale Certificate Inferior to Lien for Subsequent Taxes and Inferior to Lien of Commissioners of Land Office Arising from Loan of Trust Funds.
The purchaser of a delinquent tax sale certificate, either from the county treasurer at the time of the sale or from the county treasurer thereafter, acquires a lien on the land so purchased for the, delinquent tax, which lien is junior and inferior to the lien of the state for taxes; it is secondary to the lien of the Commissioners of the Land Office arising from the loan of trust funds, and it is junior and inferior to the lien of the holder of a delinquent tax sale certificate issued for delinquent taxes for years subsequent to that for which the certificate was issued.
Error from District Court, Osage County; Jesse J. Worten, Judge.
Action by the State on the relation of the Commissioners of the Land Office against the National Bank of Commerce of Pawhuska et al. From an adverse judgment, plaintiff brings error. Reversed.
Geo. E. Merritt, for plaintiff in error.
Gray & Palmer and Elmer J. Black, for defendants in error.
¶1 The state of Oklahoma on the relation of the Commissioners of the Land Office instituted a suit against the makers of a promissory note to recover the amount due thereon and against the makers of the note and claimants of interests in the land covered by the mortgage given to secure the payment of said note, for foreclosure of said mortgage. Among these claimants was the National Bank of Commerce of Pawhuska, Okla., which claimed an interest in the land by virtue of a tax sale certificate against said land for the 1923 ad valorem taxes against the land, and Mrs. Elmer J. Black, who claimed an interest in the land by virtue of a tax sale certificate against said land for the 1924 ad valorem taxes against the land.
¶2 The issue presented on appeal affects only the issue between the plaintiff and these two defendants, and other issues in the trial will not be discussed herein.
¶3 The evidence shows that the value of the land at the time of the trial was less than the amount due under the mortgage and under the two tax sale certificates.
¶4 The court found:
"That the liens of the National Bank of Commerce under their tax sale certificate and of Mrs. C. J. Black under her tax sale certificate are superior liens to the lien of the state of Oklahoma on relation of the Commissioners of the Land Office"
--and:
"That said plaintiff has a lien upon said land and tenements in said petition described by virtue of a first mortgage in said petition set out to secure the payment of said indebtedness, which lien is subject to the tax liens of the cross-petitioners, National Bank of Commerce and Mrs. E. J. Black"
--and ordered:
--from which findings and judgment, after motion for new trial was overruled, plaintiff appeals to this court.
¶5 For the purpose of convenience the plaintiff, state of Oklahoma, will be referred to herein as plaintiff, the defendant National Bank of Commerce, as the hank, and Mrs. Elmer J. Black, as Mrs. Black.
¶6 The contention of the plaintiff on appeal is that its lien on the property involved in the action is first and prior, and that delinquent taxes are subject at all times to the lien of the Commissioners of the Land Office, or if the lien of the Commissioners of the Land Office is inferior to that of the lien of the state for taxes, it is superior to the lien of the holder of a delinquent tax sale certificate.
¶7 The bank and Mrs. Black contend that the lien of the state for taxes is superior to that of the Commissioners of the Land Office, and that the purchaser of a delinquent tax sale certificate acquires the lien of the state for taxes and thereby acquires and holds a lien which is superior to that of the Commissioners of the Land Office.
¶8 Prior to statehood and under the provisions of the Enabling Act, certain land was granted to the state upon its admission into the Union, and in lieu of corresponding land in the Indian Territory a grant of $ 5,000,000 was made to the state upon its admission into the Union. Both grants were in trust and were conditional upon acceptance, with the trust provision, by the state.
¶9 Those grants were accepted, together with the trusteeship thereof, by the adoption of the Constitution of Oklahoma, and it was provided therein that (section 1, art. 11):
" * * * And the faith of the state is hereby pledged to preserve such lands and moneys and all moneys derived from the sale of any of said lands as a sacred trust, and to keep the same for the uses and purposes for which they were granted or donated."
¶10 It was further provided that (section 3, art. 11):
"* * * And no part of the fund shall ever be diverted from this purpose, or used for any other purpose than the support and maintenance of common schools for the equal benefit of all the people of the state."
¶11 It thereupon became the duty of the state of Oklahoma under its Constitution to preserve that fund inviolate.
¶12 That fund could be of no benefit to the state unless a revenue could be derived therefrom, and in order that there might be no question as to how the fund should be invested, it was provided in the Constitution (section 6, art. 11):
"The permanent common school and other educational funds shall be invested in first mortgages upon good and improved farm lands within the state (and in no case shall more than 50 per centum of the reasonable valuation of the lands without improvements be loaned on any tract), Oklahoma state bonds, county bonds of the counties of Oklahoma, school district bonds of the school district of Oklahoma, United States bonds; preference to be given to the securities in the order named"
--and that there might be no question as to the management of the fund, it was provided (section 6, art. 11):
"The Legislature shall provide the manner of selecting the securities aforesaid, prescribe the rules, regulations, restrictions, and conditions upon which the funds aforesaid shall be loaned or invested, and do all things necessary for the safety of the funds and permanency of the investment"
--thus placing with the Legislature the power to legislate and the duty to protect by legislation that fund. The Legislature was required thereby to prescribe the rules, regulations, restrictions, and conditions upon which the funds aforesaid should be loaned or invested and to do all things necessary for the safety of the funds and permanency of the investment. See, also, section 32, art. 6.
¶13 The Legislature, in fulfillment of its duties, at its first session, authorized the State Treasurer to receive the money from the Treasurer of the United States (article 1, chapter 76, S. L. 1907-1908), and provided for an investment of the funds by the Commissioners of the Land Office, as follows:
¶14 It was provided in section 45 of art. 5 of the Constitution that:
"The Legislature shall pass such laws as are necessary for carrying into effect the provisions of this Constitution"
--which authority was limited to some extent, as will be hereafter set forth.
¶15 The rule for construction of the Constitution is set out in section 36 of art. 5, wherein it is provided that:
"The authority of the Legislature shall extend to all rightful subjects of legislation, and any specific grant of authority in this Constitution, upon any subject whatsoever, shall not work a restriction, limitation, or exclusion of such authority upon the same or any other subject or subjects whatsoever"
--by reason of which the general rules for construction of the constitutional provisions were changed, and under that provision the various sections of the Constitution must be construed together to determine the intent of the people.
¶16 The power of the state to tax, while not specifically stated in the Constitution, is shown by implication, section 5 of art. 10, wherein it is said:
--and section 50, art. 5, as follows:
"The Legislature shall pass no law exempting any property (within) this state from taxation, except as otherwise provided in this Constitution"
--and section 2, art. 10:
"The Legislature shall provide by law for an annual tax sufficient, with other resources, to defray the estimated ordinary expenses of the state for each fiscal year."
¶17 Attention is called to the fact that though the Constitution provides for a tax (section 2, art. 10), the valuation of property for taxation (section 8, art. 10), the maximum rate...
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