State v. Divide County
| Decision Date | 31 December 1938 |
| Docket Number | 6556 |
| Citation | 283 N.W. 184,68 N.D. 708 |
| Court | North Dakota Supreme Court |
Syllabus by the Court.
1. A real estate mortgage, executed to the State to secure a loan made from the permanent school fund, conveys no title to the land, is merely a pledge of the land as security for the debt, and does not differ in nature from the ordinary real estate mortgage.
2. When a real estate mortgage is executed and delivered to the State, all of its subdivisions are charged with notice thereof.
3. Section 2186 of the Compiled Laws makes taxes upon real estate a perpetual paramount lien thereupon against all persons and bodies corporate except the United States and the State. The term " paramount" means superior pre-eminent, the highest in nature and rank, and establishes a rule of precedence between the State, in its levy of taxes and private individuals. It lays down no rule to determine priority of liens held by the State itself.
4. Under the provisions of Section 6714 of the Compiled Laws " Other things being equal, different liens upon the same property have priority according to the time of their creation * * *" the question of paramountcy, precedence, and priority of liens against the same real estate held by the State, is determined by the time of the creation of the liens, unless otherwise provided by statute, and taxes on the real estate becoming due after the mortgage lien of the State is created are subordinate to the lien of the mortgage.
5. Where real estate is sold at tax sale and, owing to the lack of private bidders, is bid in by the county and a tax certificate issued to the county, the property may not again be sold to the county for delinquent taxes, but as taxes become delinquent, the lien of the county, evidenced by the certificate, is augmented by operation of law.
6. Real estate, mortgaged to the State to secure the repayment of a loan from the permanent school fund of the State, is subject to taxation during the period the lien of the mortgage exists.
7. Though a tax lien held by the county is subordinate to a mortgage lien of the State, the county is not precluded from assigning the certificate of sale or from taking and assigning a tax deed during the time the mortgage lien remains unforeclosed; but the interest conveyed by such assignment or deed remains subject to the lien of the mortgage.
8. Where the State is given a mortgage lien upon real estate, and thereafter taxes are levied against said real estate and become due after the mortgage lien is created, the tax lien and the mortgage lien are not of equal rank. However, the legislature is not precluded from establishing such rule of priority it deems best.
9. When a mortgage given to the State is foreclosed and a sheriff's deed for the land is issued to the State, such land is no longer subject to taxation so long as it is owned by the State.
10. When the State obtains title to the land involved in this case, upon foreclosure of its mortgage lien, all liens for taxes levied subsequent to the giving of the mortgage, and held by the State, are extinguished- State of North Dakota v. County of Burleigh, 55 N.D. 1, 212 N.W. 217, distinguished as being decided under the provisions of a statute governing the loans made by the Bank of North Dakota and having no application to the case at bar.
Appeal from District Court, Divide County; John C. Lowe, Judge.
Suit by the State of North Dakota against Divide County to obtain a declaratory judgment determining the validity and priority of the liens of the parties against land located in Divide County, which had bid the lands in at tax sales. From an adverse judgment, the plaintiff appeals.
Judgment modified and rendered as modified.
Alvin C. Strutz, Attorney General, and C. E. Brace, Assistant Attorney General, for appellant.
R. H. Points, State's Attorney, for respondent.
BURR
On February 20, 1919, the state, through the Board of University and School Lands, loaned $ 2100.00 from the permanent school fund to James McLaughlin on his promissory note due December 1, 1930, McLaughlin agreeing to pay annual interest at the rate of 5%. As security McLaughlin gave to the state a mortgage upon the northeast quarter of section 24 in township 161, range 98, in Divide county.
The state still owns the note and mortgage, the mortgage has not been foreclosed, and the sum of $ 2,998.42 was due thereon at the time of the commencement of the action.
The taxes levied on the land for each of the years 1931 to 1936 inclusive were unpaid, and at the annual tax sales -- there being no private bidders -- the land was bid in by Divide county. The county is now the holder of a tax certificate issued for each sale and asserts liens thereby aggregating $ 242.00 and penalties and interest. The pleadings show these and other pertinent facts, without dispute.
The matter was submitted to the district court for a declaratory judgment "determining the validity and priority of the liens of the parties and their respective rights in the premises. . . ." The district court granted the application for a declaratory judgment, made findings of fact as hereinbefore set forth, and concluded therefrom that the plaintiff has a first mortgage lien upon the premises by reason of its mortgage; that the defendant has liens upon the premises by reason of the tax sale certificates issued for the delinquent taxes; that all of these liens are of equal rank; that the plaintiff was not required to pay the taxes upon which the defendant's liens are predicated and is not required to redeem from the tax sales certificates issued; that the plaintiff may foreclose its mortgage lien, but that the foreclosure will not affect the liens of the defendant; "and the defendant may not foreclose its liens so long as the plaintiff's mortgage lien subsists or so long as the plaintiff may hold title to the said mortgaged premises by reason of its purchase thereof upon foreclosure."
Judgment in conformity therewith was entered and from this judgment the plaintiff appeals, specifying as error that the court erred in holding all liens of equal rank, "and any tax deed issued upon defendant's liens would be issued subject to plaintiff's lien, and sale of the mortgaged premises by the plaintiff would be subject to the liens of the defendant;" in failing to hold that the first mortgage lien of the plaintiff was prior to and superior to the liens of the county for taxes, and that any tax deed issued upon the defendant's liens would be issued subject to plaintiff's lien; in holding that the sale of premises by the plaintiff would be subject to the lien of the defendant; in failing to hold that the mortgage lien of the plaintiff was prior to and superior to the liens of the defendant and "in not concluding as a matter of law and adjudging that, if plaintiff obtains title to the premises described in the judgment herein by purchase upon foreclosure of its mortgage described in the judgment herein, plaintiff would hold such title free and clear of any lien or liens claimed by defendants as set forth in the judgment herein, providing only that if said mortgagor, his heirs or assigns, acquire title to said premises subsequent to such foreclosure, then and in such case the liens of defendant would reattach to said premises."
So far as the facts are concerned this case differs in some respects from the case of State v. Burleigh County, 55 N.D. 1, 212 N.W. 217, but it is urged that this case at bar is controlled in principle by the case cited.
Here, the money loaned to the mortgagor was part of the permanent school fund of the state of North Dakota, and the loan was made through the Board of University and School Lands; whereas in the Burleigh county case the money was secured from the Bank of North Dakota under the "comprehensive act governing the loaning of money upon farm mortgage security by the Bank of North Dakota and the issuance of bonds to procure funds to replace those employed by the bank in the enterprise." However, the source from which the money came has no bearing upon the issues here, so far as the mere lien is concerned.
Again, in the Burleigh county case the mortgage held by the state was foreclosed, the property bid in by the State Treasurer as trustee, and, no redemption having been made, a sheriff's deed was issued to the State Treasurer as such trustee, whereas in this case the mortgage has not been foreclosed.
In this action a declaratory judgment is sought from a court of record, and as it is clear such judgment would terminate the uncertainty or controversy giving rise to the proceeding, the lower court, as provided by §§ 7712a1 and 7712a6, entertained the application, and proceeded to set forth all of the rights and legal relations of the contending parties necessary to determine the controversy finally. Having exercised his discretion to grant the application, it became necessary to determine the matter fully. The appeal is taken by the one asking for the declaratory judgment, no question is raised as to extent of review, and we pass upon all of the issues raised.
Under the provisions of § 153 of the Constitution this school fund remains "a perpetual fund for the maintenance of the common schools of the state." This, however, merely shows the source of the money loaned.
Under the provisions of § 156 of the Constitution the Board of University and School Lands is empowered to direct the investment of these funds "subject to the provisions of this article and any law that may...
To continue reading
Request your trial