Williams v. The Board of County Commissioners of The County of Osage

• Decision Date: 08 April 1911
• Docket Number: 16,966
• Citation: 114 P. 858,84 Kan. 508
• Parties: THOMAS WILLIAMS, Appellee, v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF OSAGE et al., Appellants
• Court: Kansas Supreme Court

114 P. 858

84 Kan. 508

THOMAS WILLIAMS, Appellee, v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF OSAGE et al., Appellants

No. 16,966

Supreme Court of Kansas

April 8, 1911

Decided January, 1911.

Appeal from Osage district court.

Judgment reversed and case remanded.

SYLLABUS

SYLLABUS BY THE COURT.

TAXATION--Personal Property--Debt Owing to Vendor on Contract of Sale of Land. Where two parties enter into a written contract for the sale of real estate, and the purchaser makes a partial payment thereon and a definite promise to pay the remainder of the price at a certain time or times and to pay the taxes on the land, and is to receive possession thereof at a certain date, and the seller undertakes to convey the legal title to the land upon the payment in full of the amount of the purchase price, such transaction creates a debt from the purchaser to the seller, which is secured by the retention of the legal title to the land by the seller until the debt is paid. The debt is personal property and is taxable under the laws of this state, and this notwithstanding a provision in the contract that upon the failure of the purchaser to meet the conditions of the contract within a reasonable time the contract shall terminate and become void.

A. B Crum, for the appellants.

J. H. Stavely, for the appellee.

OPINION

SMITH, J.:

This action was brought by Williams to recover the sum of $ 97.50, which sum he had paid under protest, as taxes for the year 1908 upon two contracts for the sale of land and payment therefor. The contracts, which were executed by both parties and acknowledged, read:

"Exhibit A.

"AGREEMENT.

"This agreement, made this 21st day of May, 1906, by and between Thomas Williams, an unmarried man, party of the first part, and Abram Ashelford, party of the second part,

"WITNESSETH: That said Williams agrees to do as follows: To sell and convey to said second party, his heirs or assigns, half the west (1/2) of section 3, in township 17, range 15, east of the 6th P. M., in Osage county, Kansas, by general warranty deed, free from all encumbrances, and to furnish an abstract of title to said land down to the making of the deed, on payment to him of the sum of twelve thousand dollars, payable as follows: Five hundred dollars cash, on the signing and delivery of these papers, the receipt of which is hereby acknowledged, and the sum of two thousand dollars on or before March 1, 1907, and the sum of not less than two thousand dollars annually on or before March 1 of each succeeding year until all of said consideration shall have been paid in full. All deferred payments to draw interest from March 1, 1907, at the rate of four per cent per annum, interest to be paid annually on all deferred payments; possession to be given March 1, 1907.

"Williams to pay the taxes for 1906. The insurance to be transferred to Ashelford, but the loss, if any, shall be paid to Williams and applied on this contract.

"Said Ashelford agrees to do as follows: To pay said sum of twelve thousand dollars at the times and in the manner as aforesaid, and to pay the taxes on said land after the present year.

"It is agreed between the parties hereto that if the terms of this agreement are not met with and by the party of the second part within a reasonable time after the same shall become due and payable, then this contract shall cease and terminate and shall be forever void. If the said sum of $ 2000 is not paid on March 1, then this contract shall terminate and the sum of $ 500 this day [paid] shall be forfeited."

"Exhibit B.

"AGREEMENT.

"This agreement, made and entered into this 24th day of November, 1906, by and between Thomas Williams, an unmarried man, party of the first part, and Charles F. Davis, party of the second part,

"WITNESSETH: That the said party of the first part hereby covenants and agrees to sell and convey, by a good and sufficient general warranty deed, the southwest quarter of section twenty-two (22), in township seventeen (17), range sixteen (16), east of the 6th P. M., in Osage county, on payment to him, the said Thomas Williams, his executors, administrators, or assigns, the sum of forty-five hundred dollars, in payments as follow: The sum of fifteen hundred dollars cash on the signing hereof, the receipt of which is hereby acknowledged, and the balance, to wit, three thousand dollars, on or before five years after March 1, 1907, with interest thereon from March 1, 1907, at the rate of five per cent per annum, interest payable annually, with the privilege to said party of the second part to pay the sum of one hundred dollars, or any multiple thereof, at any interest-paying time, on said balance. The deed to be delivered on full payment being made of said consideration. "Said first party agrees to deliver with said deed an abstract of title down to this date showing a good merchantable title, free from all encumbrances, so far as Thomas Williams and his grantors are concerned. Said first party to pay the taxes for the present year, 1906, and preceding years, and said second party to pay the taxes and assessments for 1907 and subsequent years.

"And the second party hereby covenants and agrees to pay said sum of $ 4500 as above set forth, and the interest thereon as aforesaid, with the taxes as above provided, and in case he or his legal representatives should fail or refuse to pay said sum or sums or the interest thereon at the times and in the manner above set forth, or the taxes on said land when the same becomes due and payable, then the whole of the balance remaining due and unpaid for said land shall at once become due and payable, and such steps may be taken, as may be legal, to enforce this contract, as said first party may think best.

"The second party is to insure and keep insured the buildings on said land in the sum of five hundred dollars; loss, if any, payable to said first party. Possession to be given March 1, 1907."

The case was submitted to the court upon the pleadings and an agreed statement of facts, a jury having been waived. The petition alleged that the plaintiff was a taxpayer in the county; that the defendants named were the county commissioners, the county treasurer and the county clerk; the execution of the contracts; the assessment of the contracts as of the value of $ 12, 500, over the objection of the plaintiff; the refusal of the board of equalization to reduce the assessment, and an appeal from the decision of the board of equalization to the state tax commission to correct such erroneous assessment; the refusal of the state tax commission to allow the plaintiff any relief, and the dismissal of his appeal; that the county commissioners levied a tax, amounting to $ 97.50, on the contracts, and the county clerk entered the same upon the tax rolls and turned the same over to the county treasurer for collection; the payment of the taxes by the plaintiff, under protest, and to avoid the issuance of a tax warrant for the collection of the same; and that the taxes were illegal and void. The defendants interposed a demurrer to the petition, which was overruled by the court. Thereupon the defendants filed a general denial. The agreed statement of facts admits the substance of the allegations of the petition, except, of course, that it is not admitted that the tax is illegal, and admits that no part of the tax had been refunded to the plaintiff. The issues were found in favor of the plaintiff, and that he recover from the board of county commissioners the sum of $ 97.50. A motion for a new trial was denied, and the defendants appeal.

Only one question is presented here, viz., Were the contracts in question taxable? Section 9214 of the General Statutes of 1909 (Laws 1876, ch. 34, § 1) provides that all property in this state, real and personal, not expressly exempt therefrom, shall be subject to taxation. That the contracts in question, if taxable at all, are taxable as personal property is evident from the fact that the real estate which is the subject of the contracts continues to be independently taxed. Are these contracts, then, personal property? Section 9215 of the General Statutes of 1909 (Laws 1907, ch. 408, § 1) defines "personal property" as follows:

"The term 'personal property' shall include every tangible thing which is the subject of ownership, not forming part or parcel of real property; also," etc.

Webster's New International Dictionary gives as one definition of the word "tangible":

"Capable of being possessed or realized; readily apprehensible by the mind; real; substantial; evident."

Each of these contracts includes an unqualified promise to pay--the promise of the purchaser to pay to the seller the remainder of the purchase price of the land, and the seller of the land holds the legal title thereto as security for the fulfillment of such promise. The contract in the possession of the seller is evidence of the indebtedness. The situation, logically, is not much different than if the seller had conveyed the land to the purchaser and taken a note and mortgage back to secure the remainder of the purchase price. The contract as truly constitutes a debt and security therefor as would a note and mortgage. It is capable of being possessed or realized, is readily apprehensible by the mind, real, substantial and evident. That it is not capable of being sold and transferred, as is a note and mortgage, without a conveyance of the legal title as security, only goes to the manner of transfer. The seller holds the legal title to the land in trust for the purchaser upon his complying with the conditions of the contract, and, undoubtedly, the seller could convey the legal title and assign this contract and his grantee would assume the same relations to...