State v. Salt Lake County

• Decision Date: 28 December 1938
• Docket Number: 5994
• Citation: 85 P.2d 851,96 Utah 464
• Court: Utah Supreme Court
• Parties: STATE v. SALT LAKE COUNTY et al

85 P.2d 851

96 Utah 464

STATE v. SALT LAKE COUNTY et al

No. 5994

Supreme Court of Utah

December 28, 1938

Rehearing denied April 5, 1939.

Appeal from District Court, Third District, Salt Lake County; James W. McKinney, Judge.

Action by the State of Utah, by and through the State Land Board against Salt Lake County and others to quiet title to tract of farm land. From an adverse Judgment, the defendants appeal.

REVERESED AND REMANDED with instructions to dismiss the complaint.

Harold E. Wallace, Co. Atty., and Brigham E. Roberts, Deputy Co. Atty., both of Salt Lake City, for appellants.

Joseph Chez, Atty. Gen., and S.D. Huffaker, Deputy Atty. Gen., for respondent.

OPINION

PER CURIAM.

The state of Utah sued the defendants in an action to quiet its title to a tract of farm land situated within the Jordan School District, Salt Lake County, Utah. Defendants both demurred and answered. The trial court gave judgment for plaintiff, quieting its title, and the defendants appeal. The errors assigned present the question of the existence and ranking priority of a tax title claimed by defendants under a sale of the property for delinquent taxes on the property as against the State's title by deed from the tax debtor in satisfaction of a mortgage held by the State as security for money borrowed from the State through the State Land Board. The admissions of the respective parties and the findings of the trial court establish the following facts:

On June 2, 1924, one Lawrence L. Rindlisbach, owner of the property, borrowed from the State $ 2,800 and mortgaged the land as security for its payment. After part payment the note and mortgage were renewed on March 10, 1930, in the sum of $ 1,800. On December 16, 1936, the mortgagor being in default for nonpayment of a number of installments of principal and interest, and threatened with foreclosure, executed a warranty deed conveying the mortgaged property to the State of Utah. In consideration thereof the State cancelled and satisfied the note and mortgage.

Meantime the property was assessed and sold for taxes of 1932 and bid in by Salt Lake County for $ 76.44. Taxes for 1933 to 1936 inclusive accrued and were added and, upon failure to redeem, the County Auditor on April 15, 1937, deeded the property to the County in satisfaction of the taxes. The amount of the taxes for the added years is not shown in the findings, but on the basis of the 1932 taxes would be about $ 305.76, plus interest and penalties. On the basis of the tax rates averaged through the years, the share of the State of Utah in the whole would be about 45 1/2%, Salt Lake County 25 1/2%, and Jordan School District 29%.

The money loaned to Rindlisbach on his note and mortgage was part of the proceeds of the sale of lands granted to the State of Utah by the Enabling Act for the use and benefit of the University of Utah, the principal to remain a permanent fund, and the interest only to be used for maintenance of the University.

The court also found, on the basis of the June 30, 1926, report of the State Land Board, that 120,071.85 acres of land in Utah were being held under mortgages taken by the Board, all first class farm lands. This finding is not of controlling importance.

The controlling questions for decision are: (1) Whether taxes levied upon land after it is mortgaged to the State to secure a loan of State money and prior to default or foreclosure are valid and lawful tax claims; (2) if valid, whether such taxes are a lawful and valid lien on the mortgaged premises from the time they are levied; (3) if such lien exists from the time the statute imposes it, whether the lien survives the acquisition of title by the State on foreclosure of its mortgage or by voluntary deed from the mortgagor in lieu of foreclosure; and (4) whether an auditor's tax deed to the County for delinquent taxes vests title in the County as against the State's acquisition of title by deed from the mortgagor and tax debtor.

Section 8 of the Enabling Act, 28 Stat. 109, by which Utah was admitted into the Union, grants various large bodies of land to the State for the use of its University with the provision that:

"The proceeds of the sale of said lands, or any portion thereof, shall constitute permanent funds, to be safely invested and held by said State; and the income thereof to be used exclusively for the purposes of such university * * *."

Section 5, article 10 of the State Constitution contains the same identical provision as above quoted from the Enabling Act. And section 7 of said article 10 further provides that

"All public School Funds shall be guaranteed by the State against loss or diversion."

By statute at an early date the State Land Board was authorized to:

"* * * Make the necessary orders for the investment or disposal of the funds in the state treasury derived from the sale of public lands of this state. Such funds shall be invested for and on account of the specific purposes for which the lands were granted, in * * * first mortgages on improved farm lands within the state, * * * but no loan secured by mortgage on such improved lands shall exceed one-half of the value of such lands, plus twenty per cent of the value of the substantial buildings thereon; [buildings to be insured, etc.].

"Nothing in this section shall be construed to prevent the board from advancing necessary funds to pay taxes and assessments, or to pay costs and expenses and a reasonable attorneys' fee, in case foreclosure becomes necessary in order to protect the state's rights in any property upon which a mortgage has been taken as provided herein." Utah Compiled Laws of 1907, Sec. 2357; Utah Compiled Laws 1917, Sec. 5607, as amended by Laws of 1925, Chap. 31, page 66; Utah Revised Statutes 1933, 86-1-50.

The following provisions of our State Constitution are also pertinent:

"All property in the State, not exempt under the laws of the United States, or under this Constitution, shall be taxed in proportion to its value, to be ascertained as provided by law." Clause 1, Sec. 2, Art. 13, Utah Constitution.

"The property of the United States, of the State, counties, cities, towns, school districts, * * * shall be exempt from taxation." Clause 2, Sec. 2, Article 13, Utah Constitution.

"The Legislature shall provide by law a uniform and equal rate of assessment and taxation on all tangible property in the State, according to its value in money, and shall prescribe by law such regulations as shall secure a just valuation for taxation of such property, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its tangible property * * *." Sec. 3, Art. 13.

"All corporations or persons in this State, or doing business herein, shall be subject to taxation for State, County, School, Municipal or other purposes, on the real and personal property owned or used by them within the Territorial limits of the authority levying the tax." Sec. 10, Art. 13.

Referring now to Clause 1 in Section 2, Article 13 of the Constitution (above quoted), we said in State ex rel. Richards v. Armstrong, 17 Utah 166, 53 P. 981, 982, 41 L.R.A. 407:

"This provision is clear and explicit, and, under its command, no property within this state, except such as is exempt by virtue of the laws of the United States, or of the constitution of this state, can escape the burden of taxation."

And in the same case, referring to Sec. 3, Article 13 of the Constitution, we said:

"This provision made it incumbent upon the legislature to provide a uniform system of taxation by which every species of property within the state * * * should equally and ratably bear its due proportion of the public burden, and the legislature had no power to exempt property not exempt under the constitution. The intention manifest from the several provisions of that instrument relating to taxation and revenue is * * * that no power should exist in the state government to grant exemptions other than those mentioned in the constitution.' * * * 'The presumption is that all exemptions intended to be granted were granted in express terms. In such cases the rule of strict construction applies, and, in order to relieve any species of property from its due and just proportion of the burdens of the government, the language relied on as creating the exemption should be so clear as not to admit of reasonable controversy about its meaning, for all doubts must be resolved against the exemption.' Judge v. Spencer [15 Utah 242, 48 P. 1097."]

The only provision of our state constitution exempting any class of property from taxation is that found in clause 2 of Section 2, Article 13 (quoted above, so far as relevant). And the question presented is whether the exemption therein of "state property" can be made to cover property in private ownership that was not "state property" at the time it was assessed for taxation, the tax levied, the tax lien attached, or the property sold for unpaid taxes. In this case the tax sale certificate was recorded January 3, 1933, and of course all the steps to levy the tax occurred before that date. But the State did not acquire title thereto by deed from the tax debtor until December 16th, 1936. If the property was private property of Rindlisbach, as it had to be in order that he might mortgage it to the State in 1930, and in order that he might deed it to the State in December, 1936, then it was not also property of the State during any of the period of time prior to December, 1936, so as to acquire the status of property exempt from taxation as state property. No one will seriously contend that it is unlawful for a county to assess and levy taxes on private property solely because the State has a mortgage on it. The very fact...