State ex rel. Land Office Com'rs v. Hall
| Decision Date | 27 January 1942 |
| Docket Number | 30302. |
| Citation | 128 P.2d 838,191 Okla. 257,1942 OK 41 |
| Parties | STATE ex rel. LAND OFFICE COM'RS v. HALL et al. |
| Court | Oklahoma Supreme Court |
Rehearing Denied April 21, 1942.
Application for Leave to File Second Petition for Rehearing Denied Sept 15, 1942.
As Corrected Sept. 16, 1942.
Syllabus by the Court.
1. It is the general rule that unless the statute provides to the contrary or unless the state is necessarily included by the nature of the mischief sought to be remedied the statute of limitations does not apply to states when suing in their sovereign capacity.
2. When the State of Oklahoma on relation of the Commissioners of the Land Office seeks to recover an indebtedness created by loan from the school fund, and to foreclose a real estate mortgage securing the same, it is acting in a sovereign capacity and seeks the enforcement of a public as distinguished from a property right and is therefore immune from the operation of the statute of limitations.
3. A person who has acquired real estate encumbered by a mortgage in favor of the Commissioners of the Land Office, under a deed in which he assumes and agrees to pay the mortgage indebtedness, can not successfully plead the statute of limitations to defeat personal liability in an action instituted to foreclose the mortgage by the State of Oklahoma on relation of the Commissioners of the Land Office.
Appeal from District Court, Greer County; T. R. Wise, Judge.
Action by the State of Oklahoma, on the relation of the Commissioners of the Land Office of the state, against E. E Hall, Nannie Hall, and others to secure a personal judgment and to foreclose a mortgage. From an adverse judgment, the plaintiff appeals.
Judgment reversed, with directions.
Orlando F. Sweet, Dan Welch, and Everett H. Welborn, all of Oklahoma City, for plaintiff in error.
W. C Austin and Robert B. Harbison, both of Altus, for defendant in error Horace C. Doughty.
Can a person who has acquired real estate, encumbered by a mortgage in favor of the Commissioners of the Land Office, by a deed in which he assumed and agreed to pay the mortgage indebtedness successfully plead the statute of limitations to defeat personal liability in an action to foreclose the mortgage by the State of Oklahoma, ex rel. the Commissioners of the Land Office, in spite of the general immunity of the state from the operation of the statute when it acts in a sovereign capacity?
The trial court answered the foregoing question in the affirmative and accordingly sustained a demurrer of the grantee in the deed to the petition of the state and dismissed the action of the state in so far as the demurring defendant was concerned. The state presents the question on appeal, thus preserving the order of appearance in this court.
Our decision is that the question should have been answered in the negative. This conclusion requires a reversal of the cause.
Briefly stated, the essential facts which appear in the petition of the plaintiff are as follows:
On June 12, 1925, E. E. Hall and Nannie Hall mortgaged to the state on relation of the Commissioners of the Land Office 80 acres of land situated in Greer County, Oklahoma, to secure a principal indebtedness of $2,500, evidenced by a promissory note of even date and due on June 15, 1930. The note and mortgage also provided for the payment of accruing interest and (in the event of foreclosure) attorneys' fees.
On November 25, 1925, the Halls sold and conveyed the land to Horace C. Doughty (the successful defendant in the trial court and the active appellee herein) who in the deed agreed to assume the mortgage indebtedness. On April 29, 1930 Doughty, joined by his wife, conveyed the land to one James C. Dickey, who also by a clause in the deed "agreed to assume" the mortgage indebtedness.
No payments have been made on the indebtedness secured by the mortgage since June 15, 1930, and the defendants have been in default since that date. The petition does not reflect who made prior payments of interest.
This action, to secure a personal judgment and foreclose the mortgage, was instituted on July 24, 1937, by the state on relation of the Commissioners of the Land Office against E. E. Hall and Nannie Hall, his wife; Horace C. Doughty; James C. Dickey; and others asserted to now claim an interest in the land. In the meantime accrued interest had accumulated causing the secured indebtedness to exceed $4,000.
As previously noted, the defendant Doughty successfully invoked the statute of limitations by demurrer.
In order to understand the basis of the holding of the trial court it is necessary that we analyze the theory upon which the defendant Doughty is proceeding.
The statute of limitations applicable to indebtedness evidenced by a promissory note, secured by a real estate mortgage, is five years, and in this jurisdiction the bar of the statute against the debt operates to extinguish the lien securing the same. Sec. 10955, O.S.1931, 42 Okl.St.Ann. § 21; Rice v. Burgess, 124 Okl. 177, 254 P. 746; Smith v. Bush, 173 Okl. 172, 44 P.2d 921.
It is the general rule, however, that, unless the statutes provide to the contrary, or unless the state is necessarily included by the nature of the mischiefs to be remedied, statutes of limitation do not apply to states when suing in their sovereign capacity. In other words, states are granted immunity from the operation of the statutes. White v. State, 50 Okl. 97, 150 P. 716; White v. State, 50 Okl. 104, 150 P. 718; 34 Am.Jur. 307.
We have even extended the doctrine of sovereign immunity to actions by the bank commissioner in connection with the liquidation of insolvent banks (State v. McLaughlin, 159 Okl. 4, 12 P.2d 1106; State v. Smith, 77 Okl. 277, 188 P. 96) although in doing so we have extended the doctrine beyond the limits recognized in most jurisdictions. Annotation 122 A.L.R. 947; 34 Am.Jur. 314.
Generally speaking, the doctrine applies where the state is acting in its sovereign capacity to protect or enforce a public right as distinguished from a private right. Herndon v. Board of Com'rs of Pontotoc County, 158 Okl. 14, 11 P.2d 939; Board of Com'rs of Oklahoma County v. Good Township in Harper County, 188 Okl. 151, 107 P.2d 805. It is not, however, indispensible to invocation of the immunity that the action be instituted and maintained in the name of the state. Anderson v. Ritterbusch, 22 Okl. 761, 98 P. 1002.
The defendant, Doughty, concedes that in so far as the state seeks to enforce its claim against the Halls and foreclose its mortgage securing the same it is acting in its sovereign capacity and enforcing a public as distinguished from a private right and therefore entitled to immunity from the operation of the statutes of limitation to the extent indicated.
The importance of the basic concession and its connection with public interest has impelled us to carefully consider the matter as we would not be disposed to proceed on a false premise. The concession is well taken. The state is performing a governmental function and engaged in a public enterprise when "loaning the school fund on real estate mortgages". Board of County Com'rs of Woods County et al. v. State ex rel. Com'rs of Land Office et al., 125 Okl. 287, 257 P. 778, 781, 53 A.L.R. 1128. Notice Sec. 7 of the Enabling Act; Art. 11, sec. 1, Okl. Const.; Art. 6, sec. 32, Okl.Const., Okl.St.Ann. See, also, State Land Board v. Lee, 84 Or. 431, 165 P. 372. It follows that when foreclosing a mortgage securing a loan made from school land funds it is seeking to enforce a public as distinguished from a private right.
The defendant, Doughty, also concedes in substance that by virtue of the assumption clause in the deed from the mortgagor, the mortgagee acquired a right of action against Doughty which it could have enforced in an action instituted within the period of time prescribed by the statute of limitations.
But the defendant points out that the right of the mortgagee to proceed directly against the grantee under the assumption clause is a derivative right to avail itself in equity of the security which the mortgagors took from their grantee for their own protection. He correctly asserts that under our decisions the assumption clause, standing alone, as it does in the case, is not regarded as a third party beneficiary contract creating a direct contractual obligation between the grantee and the mortgagee. McCoy v. Spears, 186 Okl. 33, 95 P.2d 865; McBirney v. Bader, 181 Okl. 237, 73 P.2d 156; Aetna Life Ins. Co. v. Short, 180 Okl. 240, 68 P.2d 784; Page v. Hinchee, 174 Okl. 537, 51 P.2d 487; Beardsley v. Stephens, 134 Okl. 243, 273 P. 240.
Upon the foregoing basis the defendant urges that since the right of the state was and is derivative, it acquired no greater right than did the mortgagor and that the statute of limitations ran against the mortgagor, therefore it ran against the state. We will assume without deciding that the statute has run against the mortgagors in favor of the grantee.
No case precisely in point is called to our attention although it is apparent that the case was carefully briefed on both sides. Nor have we discovered such a case by our own independent research. Our decision must therefore rest upon applicable principles and appropriate analogy rather than strictly upon stare decisis.
Defendant's argument, though ingenious and persuasive, is not convincing for the reason that it overlooks certain controlling elements.
Regardless of the nature of the right which the state acquired against the defendant, Doughty, that right was at the time of its acquisition capable of enforcement in an action by the state against Doughty for that purpose. It was a right acquired by the state in its sovereign...
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