State v. Martin, Civil 4487
| Decision Date | 13 October 1942 |
| Docket Number | Civil 4487 |
| Citation | 130 P.2d 48,59 Ariz. 438 |
| Parties | STATE OF ARIZONA, Appellant and Cross-Appellee, v. RAY J. R. MARTIN and MARY LOU MARTIN, his wife, Appellees and Cross-Appellants |
| Court | Arizona Supreme Court |
APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment affirmed.
Mr. Joe Conway, Attorney General, and Mr. Albert M. Garcia, Assistant Attorney General, for Appellant and Cross-Appellee.
Mr. H S. McCluskey and Mrs. E. G. Monaghan, for Appellees and Cross-Appellants.
State of Arizona brought suit on a promissory note executed in favor of the state and secured by a mortgage on certain lands situate in Maricopa county. Ray J. R. Martin and Mary Lou Martin, his wife, were among the parties defendant to the action. All of the defendants, except the Martins and Maricopa county, defaulted. The Martins, hereinafter called defendants, set up various defenses to the action, and, in addition, filed a cross complaint for the foreclosure of certain tax certificates covering part of the same land which they had purchased at a tax sale. Judgment was rendered in favor of the state against the makers of the note, and the mortgage lien foreclosed as against the real estate. The judgment further provided that defendants Martin might redeem the property on which they held tax certificates from the mortgage foreclosure, and, in case they did not, that the state should refund to them the taxes which they had paid on that portion of the property, together with six per cent. interest.
The state has appealed from that portion of the decree which gave the Martins the option to recover the taxes paid by them, while the Martins cross-appealed from the entire judgment, in so far as it affected that portion of the property covered by their tax certificates.
We will consider the questions of law involved in what appears to be their logical order, regardless of whether they were raised by the appeal or the cross-appeal.
The facts necessary for a determination of the case are not in serious dispute, and may be stated as follows: The loan secured by the mortgage which the state sought to foreclose was made on August 7, 1917, under the state land code enacted in 1915. No renewal of the loan note and no extention thereof was ever granted. No interest was paid thereon subsequent to July, 1919. The taxes were not paid and the only credits on the note resulted from the sale of a portion of the property, which was insufficient to pay even the delinquent interest. No suit was filed to collect the note or foreclose the mortgage until June 7, 1940, nearly twenty-three years after they were made. On May 12, 1937, the county treasurer of Maricopa county sold the lands involved in this appeal to Martin for the delinquent taxes for the last half of the year 1931, and the years 1932 to 1935, inclusive, in the manner provided by law, and thereafter Martin paid the taxes subsequently levied and assessed against the said real property for the years 1937 to 1939, inclusive.
The vital question involved is whether the lien of the state mortgage above referred to is superior to the lien secured by defendants through their purchase of the property at the tax sale above referred to. We have very recently held in State v. Versluis, 58 Ariz. 368, 120 P.2d 410, that the state loan code of 1915 was valid so far as the provisions permitting the loan of certain funds of the state, and the foreclosure of mortgages for failure to repay the loan were concerned.
Section 3101, Revised Code 1928, as it existed up to 1931, provided that tax liens were prior and superior to all other liens and encumbrances upon the property, and we held in Steinfeld v. State, 37 Ariz. 389, 294 P. 834, that such lien was superior to a prior mortgage held by the state in the same manner as it was to a prior mortgage held by a private individual. If the law had remained the same there could be no question that the Martin tax lien was superior to the mortgage herein. But the legislature, at its regular session in 1931, held only a few weeks after the decision in the Steinfeld case, evidently was of the opinion that the law should be changed in this respect, and by chapter 106, section 1, of the session laws of that year, amended the tax lien statute to provide:
"The lien shall be prior and superior to all other liens and encumbrances upon the property, except liens or encumbrances held by the state of Arizona." (Italics ours.)
This was a very definite and plain declaration by the legislature that mortgages held by the state were a lien prior and superior to a tax lien. The act became effective in June of that year. It must be conceded, therefore, that so far as taxes which became a lien after the amendment of 1931 went into effect are concerned, a mortgage held by the state is superior to a tax lien. State v. Versluis, supra.
But, say defendants, the tax lien for the year 1931 had already attached at the beginning of the year. Section 3101, supra. Therefore, they claim, since chapter 106, supra, did not go into effect until June, tax liens for taxes levied during the year 1931 fall under the provisions of section 3101, supra, as it existed before the amendment, and not under chapter 106, supra, and they any attempt of the legislature to change that situation, even if it so intended, would be unconstitutional, illegal, and void. In support of this contention it is argued that when the lien once attaches it cannot be divested in any manner except by the payment of the taxes or the sale of the property for taxes, and that we have so held in the case of Maricopa County v. Bloomer, 52 Ariz. 28, 78 P.2d 993.
It is very true that we did so hold in that case, and since at that time the tax lien was superior to all other liens of every nature, the holding was correct as applied to the existing law, in view of the language of section 3101, supra, which reads, so far as material, as follows:
But after the legislature, in chapter 106, supra, expressly made the tax lien subordinate to state mortgages, it is obvious that a foreclosure of a state mortgage, which was a superior lien, would necessarily eliminate the inferior lien, notwithstanding the tax had not been paid.
We have held in Ingraham v. Forman, 49 Ariz. 29, 63 P.2d 998, 999:
"... The Legislature has plenary power over the subject of taxation and may provide for tax liens andfix the terms upon which such liens may be extinguished, and when that is done the legislative rule is binding and must be given effect...."
We think, therefore, that when the rights of third parties are not affected thereby, the state has the right at any time to change the priority of the tax lien in such manner as it sees fit. When chapter 106, supra, went into effect, so far as a tax lien which had become fixed on January 1, 1931, was concerned, no third parties had or could have had any right or interest in that lien. Even the assessment for that year had not been finally completed. No tax rate had ever been fixed and no tax levied. No taxpayer could possibly have paid his taxes had he so desired. Certainly no taxes were delinquent so that the property could have been sold and certificate of sale issued therefor. We think, therefore, that the legislature had full power to provide that the tax lien already fixed for 1931 should be subordinate to state mortgages.
Defendants lay great stress upon the federal Constitution in regard to the obligation of contracts. If, at the time chapter 106 supra, went into effect, defendants had a contract with the ...
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