Case Name: New England Loan & Trust Company, Appellant, v. J. R. Young, Treasurer, et al., Appellees
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1890-06-27
Citations: 81 Iowa 732
Docket Number: 
Parties: New England Loan & Trust Company, Appellant, v. J. R. Young, Treasurer, et al., Appellees.
Judges: Robinsob, J., concurs in this dissent.
Reporter: Iowa Reports
Volume: 81
Pages: 732–745

Head Matter:
New England Loan & Trust Company, Appellant, v. J. R. Young, Treasurer, et al., Appellees.
Taxes on Personal Property: lien on Real estate : priority op liens. Taxes levied upon personal property subsequent tcf the foreclosure of a mortgage against real estate owned by the taxpayer, and to the sale thereof under special execution, but while the right of redemption remains m the taxpayer, become, under the provisions of Code, section 865, a lien upon such mortgaged real estate, which is entitled to priority over the rights Of the purchaser at the foreclosure sale. [Granger and Robinson, JJ., dissenting.]
Appeal from Union District Court. — Hon. Jno. W. IIaryey, Judge.
Monday, June 27, 1890.
This is an action in equity to restrain the defendant, who is treasurer of Union county, from proceeding to collect certain taxes by the sale of real estate, claimed to be owned by the plaintiff. There was a decree for the defendant, and plaintiff appeals.
E. D. Samson, for appellant:
Section 865 of the Code of Iowa provides that taxes upon real estate shall be a perpetual lien thereon against all persons except the United States and the state of Iowa, but taxes upon personalty are made by that section only a lien upon any real property owned by such person, or to which he may thereafter acquire title., The order of priority of lien is not fixed, nor is any attempt made to fix it in the statute. This must mean that taxes upon personalty are a lien upon the interest of the taxpayer in the realty, and can mean nothing more. It is against public policy to require purchasers and mortgagees of property to be subjected to contingencies which it is impossible to avoid or provide against. Cummings n. Easton, 46 Iowa, 185, 186. Taxes upon personalty do not become a lien upon the realty of the taxpayer until they are due, or at least not until they are levied. Gastle v. Anderson, 69 Iowa, 429, 430., In the case now before the court, the right of the plaintiff as mortgagee attached in June, 1886. The plaintiff, on April 23, 1887, became a purchaser at sheriff’s sale of the premises, under foreclosure of this mortgage, and the amount of the bid was determined with respect to such liens only as then' existed. The tax upon personalty for 1887 had not at the time of the execution of the said mortgage in June, 1886, nor at the time of the purchase of said premises at sheriff’s sale on April 23, 1887, been levied, nor had they become due, and under the case of Castle n. Anderson, above cited, the lien for such personal taxes had not, at either of said dates, attached. The lien of the said taxes, when they became due, certainly did attach to whatever interest the defendant Syp had in the said premises, but what was such right ? It was the right only to make redemption of the premises from sheriff’s sale within the time allowed by law therefor. Upon a failure to exercise such right, all of his interest in the premises would, by mere lapse of time, and within a year from April 23, 1887, expire and be absolutely gone. It was not the intention that the conveyance to the plaintiff should effect a merger of plaintiff’s lien under the sheriff’s certificate in the legal title. The principle is now well settled that, in case of conveyance of the legal title to realty to one who holds the lien thereon, a merger will not result if it is to the interest of the lienholder and grantee that the fact should be otherwise. Linscott v. Lamart, 46 Iowa, 314, 315, and Delaware Construction Co. v. Railway Co., 46 Iowa, 411, 412.
Enoch & Winter, for appellee :
On the tenth day of February, 1888, W. K. Syp and wife executed a deed to the appellant, conveying the lands described in their mortgage, and the foreclosure decree. By this deed the appellant, the then holder of the sheriff’s certificate under foreclosure decree, became then the absolute owner of all the lands sold on foreclosure decree. At this time the personal tax of the said W. K. Syp was due, carried on the treasurer’s books of Union county, Iowa, opposite his name, against said lands, and was a lien on the face. Taxes on personal property become a lien on real property owned, by the person owing such tax as soon as the same becomes due, which would be when they were placed in the treasurer ’ s hands for collection, and he had an opportunity to pay them, which would be in this case on January 1, 1888. Paulson v. Pule, 49 Iowa, 576 ; Garretson v. Scofield, 44 Iowa, 35 ; Cummings ». Bastón, 46 Iowa, 183. As appellant took Syp’s interest in the lands charged with the tax in question, by conveyance from Syp, subsequent to the attaching of the lien, they took it subject to the lien, and they cannot now be heard to dispute the right of the treasurer to collect said tax by the sale of said lands.
E. D. Samson with Kauffman & Guernsey, upon rehearing:
The deed to the plaintiff cuts no figure whatever in this case, for plaintiff’s rights depend, not upon the relinquishment, but upon its lien under, and by virtue of, the mortgage, and of the certificate of sale under the foreclosure, and the sheriff’s deed issued to plaintiff thereon. First, let it be noted that taxes are not a lien at common law upon the property of the taxpayer. The lien for taxes exists only by legislation. If there were no legislation in the state upon the subject no taxes levied in the state would constitute a lien upon any property whatsoever. Jaffray v. Anderson, 66 Iowa, 719. Looking now to the statute, it will be seen (Code, sec. 865) that a marked distinction is made between taxes upon realty and those upon personalty, so far as relates to the lien thereof upon .real estate. It will be noted that while the taxes upon the realty itself are made a paramount lien as against all persons, yet such is not the case so far as concerns personal taxes. A careful reading of this statute will make it impossible for it to be so construed as to give personal taxes priority over liens which had attached to the premises prior to the time when the personal taxes became liens. The rule is that statutes which give liens for taxes are not to be enlarged by construction. Cooley on Taxation [2 Ed.] 444. A mortgagee is, to the extent of his investment, entitled to as favorable consideration, and ■as high protection, as a purchaser of the mortgaged premises, as a vendee of the same would be under like circumstances. Barney v. McCarty, 15 Iowa, 514; Porter v. Greene, 4 Iowa, 571: Hewitt v. Rankin, 41 Iowa, 35; Koon «. Trammel, 71 Iowa, 137. The purchaser at an execution sale of premises is protected under the decisions of this court against all outstanding ■equities in favor of third parties, and all claims against the execution defendant to the same extent as would be a purchaser of the premises at private sale from the ■debtor himself. Gower v. Doheny, 38 Iowa, 36 ; But-terfield v. Walsh, 36 Iowa, 534. If appellant had purchased the property of this taxpayer at the time of taking its mortgage, it would have been protected under the rule in Castle v. Anderson, 69 Iowa, 429; Cummings v. Easton, 46 Iowa, 183. In the case of Parsons «. Gaslight & Colee Co., 108 Ill. 380, the doctrine is expressly held, that personal taxes cannot displace a prior trust deed. The same doctrine is held in Pennsylvania, Gormley’s Appeal, 27 Penn. St. 49; and in New Jersey, Maclcnet v. The City of Newarlc, 42 N. J. Law Eep. 38.

Opinion:
ItoTHBOCK, J.
The cause was submitted to the •court below upon an agreed statement of facts. It involves less than one hundred dollars, and the certificate of the trial judge, which is the basis of the appeal, shows the following facts in substance : ' In June, 1886, •one W. K. Syp executed to the plaintiff a mortgage upon certain real estate to secure the payment of ten thousand dollars and interest. Syp failed to pay the interest which became due January 1, 1887, and, at the March term, 1887, of the district court, plaintiff recovered a judgment against Syp for theoverdtíe interest, and a decree of foreclosure of tlie mortgage, subject to the rights of plaintiff's assignee, for the remainder of said indebtedness. The premises were sold at foreclosure sale on the twenty-third day of April, 1887, the plaintiff being the purchaser at the sale, and a certificate of purchase was issued to the plaintiff. On the tenth day of February, 1888, Syp conveyed his right of redemption to said premises. The deed contained the following recitals :
" The grantors herein are tobe released from personal liability for the payment of the mortgage upon the said premises for the sum of ten thousand dollars .to the grantee herein, dated June 22, 1886. We hereby covenant with the said New England Loan & Trust Company that we have not heretofore conveyed our interest in the said premises to anyone. The object of this deed is to make more effectual the lien of said company against the said premises by virtue of the sheriff's certificate of sale which they hold against the same."
Taxes to the amount of seventy-five dollars upon the personal property of Syp were levied for the year 1887, and were entered upon the tax books against said real estate. The question to be determined is, do the taxes for 1887 upon the personal property of Syp constitute a lien upon the land, which may be enforced by tax sale, and, if so, is such lien superior or inferior to plaintiff 's lien under said foreclosure decree and sale? The district court held that the taxes were a valid lien upon the land superior to any lien or claim of the plaintiff. If the taxes had become a lien prior to the foreclosure and sale, there can be no question that they would be prior and superior to the mortgage lien. It is a general principle that when taxes are made a lien upon real estate they are prior and superior to all mortgage or judgment liens. A mortgagee of real estate would not cut much of a figure in attempting to defeat a tax sale of the land upon the grounds that his mortgage was a lien prior to the taxes, and that his lien exceeded the valne of the land. Bub plaintiff contends that, as this tax did not become a lien until after the sale on foreclosure, Syp had nothing to sell but his right of redemption, and that as he was not then the owner of the land the taxes are not a lien as against plaintiff. It will be observed that the taxes became alien after the sale and during the period allowed by law for redemption. We are unable to see that this affects the rights of the parties. The mortgagor was not divested of the property by the foreclosure sale ; he-held the title, and the right of possession remained in him until the period of redemption expired. He was the owner of the land within the meaning of section 865 of the Gode, which, by its express provision, makes-the personal tax a lien upon the premises.
The fact that he conveyed the land to the plaintiff after the tax became a lien cannot affect the question. Plaintiff could not defeat the lien for taxes under any form of conveyance taken from Syp.
We think the court did not err in finding that the taxes were a lien upon the land. Affirmed.