State Land Board v. Lee

• Decision Date: 06 June 1917
• Citation: 84 Or. 431,165 P. 372
• Parties: STATE LAND BOARD v. LEE ET AL.
• Court: Oregon Supreme Court

165 P. 372

84 Or. 431

STATE LAND BOARD v. LEE ET AL.

Supreme Court of Oregon

June 6, 1917

In Banc.

Appeal from Circuit Court, Union County; J. W. Knowles, Judge.

Suit by the State Land Board against Mary E. Osborn Lee, formerly Mary E. Osborn, and others. From a decree awarding partial relief, the State Land Board appeals. Decree modified.

This is a suit to foreclose a note and mortgage given to the state land board by George H. Osborn and his wife, Mary E. Osborn. The note is dated October 13, 1902, recites that it is for $700 "borrowed on account of the irreducible school fund," bears interest at the rate of 6 per cent. per annum, and by its express terms became due "one year after date." The note was secured by a mortgage on 480 acres of land in sections 10 and 15 of a designated township. No payments were made on the principal of the note. Payments were made on the interest from time to time, the last payment being on March 19, 1913, when the interest was satisfied to August 5, 1912.

The land in section 15 was conveyed to E. T. Kaster and C.J Forsstrom on August 7, 1911, while the remainder of the mortgaged premises was acquired by Ed Lee and F. M. Lee prior to December 20, 1915, when this suit was commenced by the state land board. The present owners of the land purchased with notice of the mortgage; and hence, if the mortgage is enforceable against the mortgagors, it is likewise enforceable against the subsequent purchasers of the land.

The defendants resisted the attempt to foreclose the mortgage by interposing chapter 304, Laws 1913. The statute reads thus:

"Section 1. No mortgage upon real estate now, heretofore or hereafter given, shall be a lien or incumbrance, or of any effect or validity for any purpose whatsoever, after the expiration of 10 years from the date of the maturity of the obligation or indebtedness secured or evidenced by such mortgage, or from the date to which the payment thereof has been extended by agreement of record. If the date of the maturity of such obligation or indebtedness is not disclosed by the mortgage itself, then the date of the execution of such mortgage shall be deemed the date of the maturity of the obligation or indebtedness secured or evidenced by such mortgage.

"Sec 2. After 10 years have elapsed from the date of the maturity of any mortgage upon real estate, as herein provided in section 1 of this act, such mortgage shall conclusively be presumed to be paid, satisfied and discharged, and no action, suit or other proceeding shall be maintainable for the foreclosure of the same.

"Sec 3. This act shall not take effect until the first day of January, A. D. 1914; after which date the same shall be in full force."

The trial court awarded a judgment against the makers of the note for the principal and interest due, an attorney's fee and costs and disbursements; but a decree foreclosing the mortgage was refused on the theory that the lien of the mortgage was released on January 1, 1914. The state land board appealed.

Colon R. Eberhard, of La Grande, and Geo. M. Brown, Atty. Gen. (I H. Van Winkle, Asst. Atty. Gen., on the brief), for appellant. C. H. Finn, of La Grande (R. J. Kitchen, of La Grande, on the brief), for respondents.

HARRIS, J. (after stating the facts as above).

It is conceded that the payment of interest tolled the statute of limitations as against the note, and that therefore the plaintiff is entitled to a judgment for whatever sums may be due on the note. Section 25, L. O. L. The defendants contend, however, that chapter 304, Laws 1913, bars the plaintiff from enforcing the lien of the mortgage. The parties did not make any agreement of record extending the time for payment; more than 10 years expired from the date of the maturity of the note before the commencement of this suit; and hence the mortgage cannot be foreclosed if chapter 304, Laws 1913, is available to the defendants, although the note which the mortgage was designed to secure can be reduced to a money judgment. The question for final decision is whether the statute applies to mortgages given to secure moneys borrowed from the irreducible school fund. The defendants argue that chapter 304 is a statute of limitation, and that the language of the enactment is sufficiently comprehensive to embrace mortgages given to the state land board to secure money borrowed from the irreducible school fund. The plaintiff contends that this is in reality a suit by the state, and that, if chapter 304 is assumed to be a statute of limitation, it does not embrace the state for the reason that the state is neither expressly mentioned nor included by necessary implication.

Stated in broad terms, it is a rule of universal recognition that the government is not included in a general statute of limitation, unless it is expressly or by necessary implication included. This rule is said to be founded upon the legal fiction expressed in the maxim, "Nullum tempus occurrit regi." However, it is not necessary to predicate this salutary precept upon any fiction, since sound reason for the rule is found in the fact that as a matter of public policy it is necessary to preserve public rights, revenues, and property from injury and loss by the negligence of public officers. State v. Warner Valley Stock Co., 56 Or. 283, 308, 106 P. 780, 108 P. 861; United States v. Nashville, C. & St. L. Ry. Co., 118 U.S. 120, 6 S.Ct. 1006, 30 L.Ed. 81; Catlett v. People, 151 Ill. 16, 37 N.E. 855; State v. Fleming, 19 Mo. 607; Blazier v. Johnson, 11 Neb. 404, 9 N.W. 543; Gibson v. Chouteau, 13 Wall. 92, 20 L.Ed. 534; State v. School Dist., 34 Kan. 237, 8 P. 208; Buswell on Limitations and Adverse Possession,§ 97; 19 A. & E. Ency. Law (2d Ed.) 188; 25 Cyc. 1006; 36 Cyc. 1171.

For the purpose of avoiding the common-law rule exempting the government from limitation statutes, the Legislature passed a statute in 1862 which provided that:

"The limitations prescribed in this title, shall apply to actions brought in the name of the state, or any county or other public corporation therein, or for its benefit, in the same manner as to actions by private parties." Section 13, Deady's Code.

This statute remained unchanged until 1903, when the Legislature amended it so as to read thus:

"The limitation prescribed in this title shall not apply to actions brought in the name of the state, or any county, or other public corporation therein, or for its benefit. * * *" Section 13, L. O. L.

Another section provided that a suit shall only be commenced within the time limited to commence an action. Section 391, L. O. L. From 1862 until 1903 statutes of limitation applied to the state and private persons alike, for the sole reason that the state, acting through its Legislature, had expressly consented that limitation statutes be made applicable to the commonwealth.

That the Legislature recognized the existence of the common-law rule exempting the government is conclusively proved by the passage of the act of 1862, because, if the common-law rule did not at that time prevail in this jurisdiction, then the enactment of the statute of 1862, so far as made applicable to the state, was a work of supererogation; and, moreover, whenever the courts applied the bar of a statute of limitation to an action prosecuted by the state, they did so only because the limitation statute had been made applicable to the state by an express legislative enactment. State v. Baker, 24 Or. 141, 146, 33 P. 530; Schneider v. Hutchinson, 35 Or. 253, 254, 57 P. 324, 76 Am. St. Rep. 474; Wallowa County v. Wade, 43 Or. 253, 260, 72 P. 793; State v. Portland Gen. Elec. Co., 52 Or. 502, 515, 95 P. 722, 98 P. 160; State v. Warner Val. Stock Co., 56 Or. 283, 308, 106 P. 780, 108 P. 861; Silverton v. Brown, 63 Or. 418, 424, 128 P. 45; State v. Warner Val. Stock Co., 68 Or. 466, 471, 137 P. 746. Had the Legislature merely repealed section 13 in 1903, the repeal would of itself have restored the common-law rule which had been suspended since 1862 ( State ex rel. Goodman v. Halter, 149 Ind. 292, 47 N.E. 665, 49 N.E. 7); but the common-law rule was first revived and then reinforced by an express legislative declaration that statutes of limitation shall not apply to actions brought in the name of the state or for its benefit. The history of section 13 is helpful in ascertaining the legislative purpose concerning the statute of 1913. In 1862 the state adopted the policy of submitting itself to limitation statutes, but subsequently in 1903 the state concluded that a different policy would be better and accordingly declared that it would no longer submit itself to limitation statutes. Chapter 304, Laws 1913, does not contain any words expressly including the state nor does its language necessarily imply that the state is included. When viewed in the light of

the previously declared policy of the state, the act of 1913 is devoid of any suggestion whatever, and much less a necessary implication that the state is included.

Although the state is not a party plaintiff eo nomine, nevertheless if the suit is in truth for the benefit of the state, and if it is the real party in interest, a statute of limitation will not operate against the commonwealth. Even in the absence of a statute like section 13, L. O. L., the court will examine the record, and if it appears that the state is the real party in interest, a limitation statute which does not expressly or by necessary implication include the government will not be permitted to operate against the state. State Bank v. Brown, 1 Scam. (2 Ill.) 106; Commonwealth v. Baldwin, 1 Watts (Pa.) 54, 26 Am. Dec. 33; Glover v. Wilson, 6 Pa. 290; Eastern State Hospital v. Graves, 105 Va. 151, 52 S.E. 837, 3 L. R. A. (N. S.) 746, 8 Ann. Cas. 701; Black v. Chicago, B....