#### Myers, Treas., Appellee, *v.*Wisteria Development Co. et al., Appellants.

(No. 1978

Decided November 29, 1948.)

*Mr. Matthias Ü. Heck,*prosecuting attorney, for appellee.

*Mr. Hugh 8. Jenkins,*attorney general, *Mr. Darowne B. Tate*and *Mr. Morris M. Bokolsky,*for appellant state of Ohio.

*Messrs. Landis, Ferguson, Bieser <& Greer,*for Gem City Building & Loan Association.

Wiseman, P. J.

This is an appeal on questions of law from a judgment of the Common Pleas Court of Montgomery county. The trial court found that the mortgage lien acquired by the Gem City Building & Loan Association of Dayton, Ohio, should have priority over the lien of the state of Ohio for franchise tax levied against the Wisteria Development Company.

The appellant, state of Ohio, claims the court erred: In finding that the mortgage lien was prior to the lien of the state of Ohio for franchise taxes, and in failing to distribute a portion of the proceeds of the sale to the appellant in satisfaction of its lien.

*268The sole question presented is whether the mortgage lien acquired by the Gem City Building & Loan Association on April 6, 1929, is entitled to priority over the lien of the state of Ohio for franchise tax delinquencies which first occurred in 1932. The determination of the question presented turns upon the interpretation of Section 5506, General Code, which provides:

> “Annually on the day fixed for the payment of any excise or franchise 'tax required to be paid by law, such tax, together with any penalties subsequently accruing thereon, shall become a lien on all property in this state of a public utility or corporation, whether such property is employed by the public utility or corporation in the prosecution of its business or is in the hands of an assignee, trustee or receiver for the benefit of the creditors and stockholders thereof. *Such lien shall continue until such taxes, together with any penalties subsequently accruing thereon, are paid.''*(Emphasis ours.)

That section does not expressly give priority to the franchise tax lien. The appellant contends that the last sentence in the section which provides for the indefinite continuation of the lien impliedly confers a priority over pre-existing mortgage liens. The section must be construed strictly against the taxing authority. 38 Ohio Jurisprudence, 725, Section 15.

In *George D. Harter Bank*v. *McKinley Lumber Co.,*136 Ohio St., 465, 26 N. E. (2d), 587, a dictum is found on page 468 which states: “By statute it has created tax liens on certain kinds and types of property, and has given them precedence over prior liens and encumbrances. The action taken as to real estate taxes and corporate franchise taxes is illustrative. Sections 5713 and 5506, General Code; 38 Ohio Jurisprudence, 1078, Section 276.” The court evidently referred to Section 5506, General Code, as it formerly existed. *269That section as originally enacted in 1911 (102 Ohio Laws, 224) provided that “The fees, taxes and penalties, required to be paid by this act, shall be the first and best lien on all property of the public utility or corporation,” etc. This provision was retained when the section was amended in 1927 (112 Ohio Laws, 410). The section as amended also contained a provision similar to the provision under construction, to wit: “Such lien shall continue until such fees, taxes and penalties are paid.” In 1929 (113 Ohio Laws, 705) this section was again amended and the provision that such tax lien “shall be the first and best lien” was-omitted. In the sentence providing for the indefinite-continuation of the lien were inserted the words “together with any penalties subsequently accruing thereon.” This section as amended in 1929, also, contained a provision relative to the filing in the office of the county recorder, a notice of such lien and provided that when filed such lien should not be valid against any mortgagee, pledgee, purchaser or judgment creditor whose rights attached prior to the time such notice was filed.. The section as last amended, and as it presently exists, in the form above quoted, became effective on February 23, 1935 (115 Ohio Laws, pt. 2, 269). As last, amended, such section does not contain a provision making the lien the “first and best lien.” The provision for filing a notice of the lien in the office of the county recorder was also omitted. The provision for the continuation of the lien was retained.

The rule of statutory construction applicable to the question presented is aptly stated in 38 Ohio Jurisprudence, 725, Section 15:

> “If there is any doubt as to the meaning of a tax statute, the construction must be strict, and the doubt must be resolved in favor of the citizen upon whom or property upon which the burden is sought to be im*270posed, and against the taxing power. Language employed in a taxation statute should not be extended by implication beyond its clear import, or so enlarged in its operation as to embrace subjects of taxation not specifically named. Courts will not by construction interpolate words into the statute to extend its terms.”

In *Clark Restaurant Co.*v. *Evatt, Tax Commr.,*146 Ohio St., 86, 64 N. E. (2d), 113, the court on page 91 stated:

> “If there be any doubt as to the meaning of these statutory provisions, or if any judicial construction be required, then a well established rule would be applicable, *i. e.,*in the construction and application of taxing statutes their provisions cannot be extended beyond the clear import of the language used; nor can their operation be so enlarged as to embrace subjects not specifically enumerated. A strict construction is required, and any doubt must be resolved in favor of the taxpayer and against the taxing authorities. *Watson, Jr., Exr.,*v. *Tax Commission,*135 Ohio St., 377, 21 N. E. (2d), 126, and authorities there cited.”

See, also, *McNally*v. *Evatt, Tax Commr.,*146 Ohio St., 443, 66 N. E. (2d), 633.

The legislative history of Section 5506, General Code, does not disclose any legislative intent, in the most recent enactment of this section, to extend to the state a right of priority over pre-existing liens. The provision for an indefinite continuation of the lien is not sufficiently definite in its terms and purpose to provide for such priority.

In our judgment the principle that priority in time determines priority of right is applicable. The judgment of the lower court was correct and is hereby affirmed.

*Judgment affirmed.*

Mrr.T.m and Hornbeck, JJ., concur.