State v. Towner Cnty.

• Decision Date: 13 December 1938
• Docket Number: No. 6551.,6551.
• Citation: 283 N.W. 63,68 N.D. 629
• Parties: STATE v. TOWNER COUNTY.
• Court: North Dakota Supreme Court

68 N.D. 629

283 N.W. 63

STATE

v.TOWNER COUNTY.

No. 6551.

Supreme Court of North Dakota.

Dec. 13, 1938.

Syllabus by the Court.

1. Section 176 of the Constitution of this State exempts all property of the State from taxation and this exemption applies to the lands and properties of the State obtained from the United States under a grant of land and property to the State for educational purposes, which grant was accepted by the State of North Dakota by constitutional provisions wherein the lands and proceeds are declared to be a perpetual fund, “and no part of the fund shall ever be diverted even temporarily, from this purpose or used for any other purpose whatever * * * *”, and if said land is sold, that, “No grant or patent for any such lands shall issue until payment is made for the same; provided, that the lands contracted to be sold by the state shall be subject to taxation from the date of such contract.” Sections 153 to 176 of the Constitution as amended.

2. Section 325 of the Compiled Laws, making provision for the sale of said land, provides: “The lands so contracted to be sold by the state shall be subject to taxation from the date of such contract and the taxes assessed thereon shall be collected and enforced in like manner as against other land. * * *” Such section, however, provides further that the contract of sale may be declared null and void for the nonpayment of taxes, and, further, that if not so nullified the land may be sold at tax sale, “and the purchaser at such tax sale of any such lands so sold shall only acquire, by virtue of such purchase, such rights and interests as belong to the holder and owner of the contract of sale * * * and the right to be substituted in the place of such holder * * *. But no tax deed shall be issued upon any tax certificate procured, under the provisions of this section while the legal title of said lands remain in the state of North Dakota * * *”; and, further, that “Whenever the contract for the sale * * * has been cancelled, * * * thereafter such lands shall not be listed for taxation * * *.”

3. In view of the foregoing provisions it is held that the constitutional provision making such land “subject to taxation from the date of such contract” means that the only interest in the land subject to the lien of taxes is the interest of the purchaser of the land.

4. When such contract for the sale of land is canceled, the land reverts to the State, and no interest therein is subject to taxation until a resale or redemption is made, and upon reversion of the land to the State all unpaid taxes levied thereon are canceled.

Appeal from District Court, Towner County; G. Grimson, Judge.

Action by the State against Towner County to quiet title in plaintiff to certain land and to adjudge that defendant's claims for taxes be adjudged null and void and to require defendant to cancel such taxes. From a judgment in favor of the defendant, the plaintiff appeals.

Judgment modified and as modified affirmed.

Alvin C. Strutz, Atty. Gen., and C. E. Brace, Asst. Atty. Gen., for appellant.

J. J. Kehoe, State's Atty., of Cando, for respondent.

BURR, Judge.

There is no dispute as to the facts in this case. The land involved herein is part of the permanent school fund of the State of North Dakota created by the United States grants and otherwise; and the State of North Dakota is, and at the time of the commencement of this action was, the owner in fee of said land. In November 1919 the board of university and school lands sold this land to J. F. Thomas, the purchase price being $6400. The purchaser paid $1280 on the purchase price at the time of sale and agreed to pay the remainder in four equal payments, with interest at 6%, but defaulted in the payments, and on or about January 12, 1925 the contract was duly canceled.

During the years 1920 to '24, inclusive, the defendant levied annual taxes against the land, and “no part of said taxes have been paid and the same still stands of record in the offices of the treasurer and the county auditor of the defendant.”

The complaint sets forth these facts narrated and alleges that the defendant claims a lien on the premises for the taxes assessed against the premises while they “were in the possession of the said J. F. Thomas or his assigns under and by virtue of the contract aforesaid.”

The complaint is in the statutory form for determining adverse claims and prays that title be quieted in the plaintiff and any claim made by the defendant be adjudged null and void and that defendant “be required to cancel the said taxes upon the tax lists of the said Defendant county.”

The answer admits these facts as found by the trial court and the issue is narrowed to the question of the status of the taxes levied and unpaid.

The trial court found that these taxes are valid liens against the premises, “coequal to the interest in said premises owned by the plaintiff; that both are valid coequal claims against said land and that neither party can shut out the other.” Judgment was entered in accordance with this finding and the plaintiff appeals.

While the findings are somewhat indefinite as to the origin of plaintiff's interest in the land, the defendant, in its brief, shows that the land involved was part of the United States grant given to the northern part of the Territory of Dakota under the Enabling Act organizing such portion of the Territory into the State of North Dakota, and was accepted by the State of North Dakota under the terms of the offer as part of the school fund of the new state.

The Enabling Act, Section 11, provided: “That all lands herein granted for educational purposes shall be disposed of only at public sale, * * * the proceeds to constitute a permanent school fund, the interest of which only shall be expended in the support of said schools. * * *”

The compact with the United States, as set out in Article 16, Section 205, of the State Constitution, accepted the grants under their terms, and, in addition, further safeguarded the grants by the constitutional provisions hereinafter referred to.

Section 153 of the Constitution made all proceeds of the public lands and other proceeds given for the school purposes a special fund and provided that it “shall be and remain a perpetual fund for the maintenance of the common schools of the state. It shall be deemed a trust fund, the principal of which shall forever remain inviolate and may be increased but never diminished. The state shall make good all losses thereof.”

While the term “fund” may at times be popularly supposed to refer to moneys and credits, etc., this matter is set at rest by our Constitution, as in Section 159 of the Constitution it is provided that “All land, money or other property * * * granted or received from the United States * * * for a university * * * or other educational or charitable institution or purpose * * * shall be and remain perpetual funds * * *.”

The Constitution also makes provision for adding to this fund, “and no part of the fund shall ever be diverted even temporarily, from this purpose or used for any other purpose whatever than the maintenance of common schools for the equal benefit of all the people of the state * * *.” Sec. 154 of the Const.

Section 155 of the Constitution authorizes the legislative assembly to provide for the sale of all school lands subject to the provision of the article. Section 156 of the Constitution creates the “Board of University and School Lands”, and provides that, “subject to the provisions of this article and any law that may be passed by the legislative assembly, said board shall have control of the * * * sale * * * and disposal of all school and university lands * * *” under limitations set forth in Section 160 as to the method of appraisal and keeping of accounts.

Section 158 of the Constitution as originally adopted provided that upon sale of school land to private parties, “No grant or patent for any such lands shall issue until payment is made for the same; provided, that the lands contracted to be sold by the state shall be subject to taxation from the date of such contract. In case the taxes assessed against any of said lands for any year remain unpaid until the first Monday in October of the following year, then and thereupon the contract of sale for such lands shall become null and void.”

This section was subsequently amended and with reference to cancellation provides that upon default in payment of taxes the contract of sale “shall, if the board of university and school lands so determine, become null and void. * * *” Subsequent amendments did not alter these provisions in any respect involved here and in the case at bar the board of university and school lands did determine and declare the contract with Thomas null and void.

[1] The constitutional provision contained in Section 158 and amendments, to the effect that the land sold “shall be subject to taxation from the date of such contract,” is not self-executing. It requires the action of the legislative assembly to put it into execution. This is also the clear import of the intent of Congress as shown by the Enabling Act, which, while in Section 11 requires a public sale at a minimum price, makes no attempt whatever to legislate as to the method of sale or method of the investment of the permanent school fund, and specifically prescribes that the lands may be leased, “under such regulations as the legislature shall prescribe.” In Section 17 of the Enabling Act, after making provision for a grant of 170,000 acres of land to the new states of North and South Dakota “for such other educational and charitable purposes as the legislature of said state may determine”, Congress provided: “the lands granted by this section shall be held,...