Court Opinion

ID: 5446249
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:11:13.67032+00
Date Added: 2024-06-11T08:31:00.173794
License: Public Domain

Beatty, O. J., dissenting.
— I dissent. The case turns altogether upon the meaning of section 4 of article XIII. of the constitution, which reads as follows: —
“ Sec. 4. A mortgage, deed of trust, contract, or other obligation by which a debt is secured, shall, for the purposes of assessment and taxation, be deemed and treated as an interest in the property affected thereby. Except as to railroad and other quasi public corporations, in case of debts so secured, the value of the property affected by such mortgage, deed of trust, contract, or obligation, less the value of such security, shall be assessed and taxed to the owner of the property, and the value of such security shall be assessed and taxed to the owner thereof, in the county, city, or district in which the property affected thereby is situate. The taxes so levied shall be a lien upon the property and security, and may be paid by either party to such security; if paid by the owner of the security, the tax so levied upon the property affected thereby shall become a part of the debt so secured; if the owner of the property shall pay the tax so levied on such security, it shall constitute a payment thereon, and to the extent of such payment, a full discharge thereof; provided, that if any such security or indebtedness shall be paid by any such debtor or debtors, after assessment and before the tax levy, the amount of such levy may likewise be retained by such debtor or debtors, and shall be computed according to the tax levy for the preceding year.”
This section of the constitution not only defines the reciprocal rights and obligations of mortgagor and mortgagee with respect to the payment of the taxes assessed or assessable against their respective interests in the mortgaged premises, but was evidently intended to provide a simple and effective remedy for their enforcement. As security for the collection of the whole tax on both interests, the state reserves to itself a first lien *626upon the land, — a lien superior to the mortgage lien. To secure the mortgagee for taxes paid on the mortgagor’s interest, the effect of these provisions is a virtual transfer to him of the claim and lien of the state by tacking it to the mortgage.
But the whole section being intended mainly for the benefit of the mortgagor, we find, as we should naturally expect to find, that especial pains have been taken to secure the enforcement of his right. His land being subjected to a lien in favor of the state, not only for the tax which it is his duty to pay, but also for the tax which it is the duty of the mortgagee to pay, he must, for his own protection, see that both are discharged. It is therefore provided that he may pay the tax on the mortgagee’s interest, and that such payment shall count as a payment on and as a full discharge pro tanto of the mortgage debt. This is an ample and perfect remedy and protection to the mortgagor when he desires to pay off his mortgage at any time after the accrued taxes have become payable. He has only to pay the tax assessed to the mortgagee and deduct the sum so paid from the amount of his debt.
But there was another case to be provided for. It was foreseen that payment of mortgages would frequently be made after the taxes had accrued and become a lien, and before they were payable or their amount ascertained by the order establishing the rate and making the levy. The taxes for each fiscal year accrue on the first Monday of March preceding (Const., art. XIII. sec. 5), and when assessed, take effect and become a lien from that date (Pol. Code, sec. 3718); but the rate to be levied being dependent upon the amount of the assessment, the levy cannot be made until assessments have been equalized and the roll completed. The statute accordingly designates the first Monday of October as the date for making the levy. (Pol. Code, sec. 3714.) In other words, there is an interval of at least seven months in each year, as the law stands, after the mortgagee’s tax has accrued, and before it is payable. And this case, as I have said, was foreseen by the framers of the constitution, and ex*627press provision made in the last clause of the section above quoted for the protection of the mortgagor who pays off his mortgage during such interval. Without this provision he would, no doubt, have had another remedy in case of neglect by the mortgagee to pay the tax assessed upon the security. That is, he could have paid the tax himself, and have recovered it back in an action against the mortgagee for money paid. The authorities cited in the Commissioner’s opinion fully sustain this proposition. But this remedy would always be expensive and vexatious, and often ineffectual by reason of the insolvency of the mortgagee, and therefore the constitution gave a simpler — an entirely inexpensive and perfectly effacious — remedy, by allowing the mortgagor in such case to retain out of the amount due on the mortgage the amount of the accrued taxes, computed according to the tax levy of the previous year.
The question is, whether this remedy is exclusive,—■ whether, in other words, the new remedy, so given, has the effect of abrogating the remedy which the law would have afforded in the absence of any such constitutional or statutory provision. And this, in my opinion, depends upon whether the change of remedy also involves a change of right. If a remedy exists for the enforcement of a right, the provision of a new remedy for the enforcement of the same right by a statute permissive in its terms does not abrogate the existing remedy. But if the statute changes the right,—if it gives a new and different right in place of the old one, and at the same time provides a new remedy, perfectly adapted to the complete enforcement of such new right,—the statutory remedy then becomes exclusive. What, then, is the effect upon the rights of the parties to a mortgage of the proviso at the end of section 4 of article XIII. of the constitution? Does it or does it not change the right of the mortgagor?
It is clear, in my opinion, that it does. Without it, a mortgagor paying his debt after assessment and before levy would, in case of the failure or refusal of the *628mortgagee to pay the tax subsequently levied on his security, have the right to free his land of the lien by paying such tax himself, and could then recover the sum so paid in an action against the mortgagee. In other words, the measure of the reciprocal right and obligation of the parties would be the tax levy for the current year. But the proviso under consideration creates a different right, and necessarily a different obligation. It empowers the mortgagor to retain the amount of the mortgagee’s assessment, computed according to the rate levied the previous year. This may be more or may be less than the actual levy for the current year. It will seldom be the same, and may sometimes be very considerably greater or less. Whatever it is, however, the mortgagor may retain it, and the mortgagee must submit to the deduction. Though both parties may have the best reason to believe that the rate of levy for the current year will not be half that of the previous year, the mortgagor may nevertheless retain an amount computed according to the old rate, and it is not pretended that the mortgagee can after the new levy recover the difference.
If this is so,—if the mortgagee must submit without redress to all the burdens of a rule enacted for the advantage of the mortgagor,—it would seem that he ought also to enjoy its benefit. The mortgagor, if he can always take according to the previous year’s levy when he finds his advantage in so doing, ought not to be allowed to take according to the levy for the current year when that happens to be to his advantage. The rule, to be fair, ought to be invariable, and, in my opinion, it is. What the mortgagee must give, the mortgagor must take. It was never intended to establish two standards of compensation, to either of which the mortgagor may resort, as his interest may dictate. On the contrary, it is much more reasonable to hold that the constitution fixes one exact measure of the rights and obligations of the parties which is equally binding upon both.
If this conclusion is well founded, it follows that the mortgagor, paying his debt after assessment and be*629fore levy, cannot neglect to retain the taxes computed according to the levy of the previous year, and afterward maintain an action to recover the tax subsequently assessed and paid, —1. Because such subsequently assessed tax is not the sum which he is entitled to receive; and 2. Because the constitution has given him an exclusive remedy for the enforcement of the right (to retain an amount computed according to the previous year’s levy), which it has substituted for that which he would otherwise have had.
The reasons for this conclusion are greatly strengthened by its expediency. It is not only advantageous to the parties: it is emphatically the interest of the public to avoid and discourage unnecessary litigation. The mortgagor, having in his own hands the absolute power to protect himself, should not be allowed to deliberately disregard the constitutional provisions for his security, in order to vex the public tribunals with a gratuitous lawsuit. The mortgagor who purposely neglects to avail himself of the proviso under consideration is entitled to no more favor than one who has actually paid taxes on the mortgagee’s interest before he pays his debt, and yet deliberately omits to deduct the amount so paid for the purpose of suing to recover it back. Each case in fact stands upon precisely the same footing. In each the mortgagor, at the time of paying his debt, knows that there is a certain fixed sum which he is entitled to deduct from the total amount secured,—a sum in no way dependent as to its amount upon future contingencies. Why should he be allowed in one case, any more than in the other, after making a purely voluntary payment of such sum, to maintain an action to recover it back?
It will be observed that I speak of a voluntary and deliberate payment, and I do so for the reason that such is the case before us. If the payment of the whole amount of the debt without deduction of the taxes had been induced by any fraud, or duress, or mistake, or if the deduction had been waived in consideration of a promise *630by the appellant to pay the tax subsequently levied, the case would have been essentially different.
In the case of Blythe v. Luning, 7 Saw. 504, the mortgagor paid the whole debt under protest, and under what seems to have been regarded as a species of duress, the mortgagee refusing to satisfy the mortgage upon any other terms, and thereby preventing the mortgagor from making use of his property. The conduct of the mortgagee in that case may well have justified the decision, and I should myself be disposed to uphold an action based upon the same or analogous grounds. If the mortgagor is forced to pay by duress, if he pays in ignorance of his rights, or is induced by any fraud or promise to pay without making the deduction, I should say that he was entitled to recover, not the sum which he afterwards actually pays on account of the mortgagee’s taxes, but the sum which he overpaid by the mistake, etc., or the sum which the mortgagee has agreed to pay in consideration of his forbearance. I cannot, however, bring myself to the view that the constitution gives a double right to the mortgagor, by which he is enabled to take out a sum computed according to the levy of the previous year if he so desires, or if it appears more profitable, waive his right of deduction for the chance of recovering a larger sum by action. The constitution was not designed to encourage that kind of speculation.
These views, if correct, are decisive of the present appeal. But it will throw some additional light upon the meaning of the constitution, to consider the effect of its provisions upon the rights and duties of an assignee of the mortgage who holds it at the time of payment by assignment made subsequent to the assessment. It is plain that in such case the assignment does not impair the right of the mortgagor to deduct the tax at the time of paying his debt, and the parties to the assignment necessarily treat with reference to the known right of the mortgagor and the corresponding liability of the holder of the mortgage. The assignee *631will not pay, and the assignor cannot expect to receive, more than the amount of the debt, less the amount which the mortgagor has the right to deduct. The necessary effect of the constitution therefore is, not only to compel the person who holds the mortgage at the time of payment to submit to a deduction of his accrued tax, but also to compel each successive owner of the security to pay such tax to his assignee at the time of the transfer. This being so, it would be a manifest injustice to compel him to pay it a second time, but this is precisely what the respondent is seeking to do, if the fact is such as i n the absence of evidence to the contrary it must be presumed to be. The appellant has already paid its tax to its assignee; the assignee necessarily assumed the duty of paying it to respondent, and respondent had the absolute right and power to compel it to pay. Instead of standing on its right, it releases the assignee and seeks to compel the appellant to pay twice. Thus, upon the theory that the mortgagor may, at his option, deduct the mortgagee’s tax computed according to the levy of the previous year, or sue for the actual amount subsequently levied, a rule sufficiently unequal and unfair between the original parties to the mortgage is made to operate with still greater injustice between parties by assignment.
The only answer to this proposition is, that the assignor can protect himself by exacting a special agreement on the part of the assignee to refund the amount of the accrued tax in case the mortgagor shall not elect to deduct it at the time of payment. It is true that he might protect himself in this way, but to hold that he must do so is to assume that the framers of the constitution intended to plant in every assignment of a mortgage the seeds of future litigation. In the face of a provision evidently designed to secure absolutely the rights of the parties without litigation, it ought not to be held that a part of the scheme was to make a transaction so usual, so legitimate, and often so necessary, as *632the assignment of a mortgage impossible, except upon conditions involving a new subject of contention.
A great part of the argument of the respondent to sustain his claim against the assignor of the mortgage is devoted to the proposition that the tax levied upon the mortgagee’s interest becomes and remains a personal liability to the state. The question whether a tax is a debt or personal liability of the person assessed depends altogether upon the statutory provisions for the time being, but the question here is, not as to the construction of our revenue laws, but is wholly as to the meaning of a clause of the constitution.
It is plain that the constitution compels the holder of the mortgage to pay the accrued tax, or what is treated as its equivalent, to the mortgagor at the time the mortgage debt is paid. He is at the same time compelled to satisfy and discharge the mortgage. Can it be supposed that the framers of the constitution, while making it compulsory upon him to pay his tax to the mortgagor and surrender his security, intended, still, to hold him personally liable to the state for the same tax ? Such a conclusion is little short of absurd, and it seems equally so to suppose that such personal liability was intended to he contingent upon the choice of the mortgagor to deduct or not to deduct the accrued tax at the time of paying his debt. On the contrary, it seems to me clear, that as to this particular tax at least, the constitution intends that the state shall rely for its enforcement upon its lien on the mortgaged premises,—a security which is more than sufficient in every case.
Upon this view of the constitution, the rights of all parties, including the state, are amply secured without the necessity of any legal proceedings. Upon the opposite view,—the view that the mortgagor has an option as to the amount he shall take, and the time when and person from whom he shall take it, — all is uncertainty and confusion. There should he no hesitation in adopting the view which leads to certainty, security, and *633substantial justice, in preference to that which involves uncertainty, insecurity, and inevitable injustice.
My conclusion is, that if a mortgagor intentionally and deliberately omits to deduct the tax accrued upon the mortgagee’s interest at the time of payment, he cannot afterwards maintain an action to recover it.' If he pays his debt without deduction of the tax by mistake, or fraud, or under duress, he may have an action to recover back the over-payment, but in such case his right of action is against the party to whom the over-payment was made, in this case the State Loan and Trust Company.
The judgment and order of the superior court should be reversed.
Paterson, J., concurred in the dissenting opinion of Chief Justice Beatty.
The following is the opinion of Commissioner Vanclief, adopted by the court at the former hearing in Bank, on the 31st of March, 1892: —
Vanclief, C.
—The plaintiff, having paid the taxes, amounting to $185.12, assessed to the defendant on its mortgage interest in land, brought this action in a justice’s court to recover the sum so paid from the defendant. The cause was properly transferred to the superior court for trial, and judgment passed for plaintiff. The defendant appeals from the judgment, and from an order denying its motion for a new trial. The material facts found by the court and stipulated by the parties are as follows: One Sanborn, being the owner of 240 acres of land, situate in Los Angeles County, mortgaged the same, on the fourteenth day of March, 1887, to Hall and Stilson, to secure the payment of twenty thousand dollars, and the mortgage was duly recorded. On May 7, 1888, Hall and Stilson assigned the mortgage and debt thereby secured to the defendant, and defendant continued to own them until June 7, 1889, when it assigned them to the State Loan and Trust Company, a corporation. Be*634foie the taxes were assessed upon the land or mortgage for the year 1889, the plaintiff became the owner of the land subject to the mortgage, and divided it into blocks and lots. While the defendant was the owner of the mortgage, to wit, on March 4, 1889, the taxes in question were assessed to defendant on its mortgage interest. On July 24, 1889, the plaintiff, as successor in interest of the mortgagor, paid the mortgage debt in full to the State Loan and Trust Company, without any deduction or provision on account of the taxes on the mortgage interest assessed to defendant. On December 19, 1889, the tax collector demanded the taxes ($185.12) of the defendant by sending it a bill for the amount. On the following day, the defendant inclosed the bill in a letter to the plaintiff, stating that it (defendant) had no interest in the mortgaged premises. Thereupon the plaintiff requested the defendant to pay the taxes assessed to it, but defendant refused, and failed to pay the same, or any part thereof. On December 30, 1889, the plaintiff, to prevent the taxes from becoming delinquent, and to remove the lien thereof from its land, paid them.
1. The validity of the tax is questioned upon the ground that the description of the mortgaged land varies essentially from that contained in the mortgage. The mortgage describes it as “the northwest quarter and the west half of the northeast quarter of section thirteen (13), township one (1) south, of range twelve (12) west, of the San Bernardino meridian, containing two hundred and forty (240) acres.” As the land had been divided by plaintiff into blocks and town lots before the assessment of the taxes for 1889, it is so described in the assessment-book. It is agreed, however, that the blocks and lots assessed to the defendant constitute the identical land described in the mortgage, and no more, and that the assessment was in substantial conformity with the requirements of section 3651 of the Political Code, and in proper form for the assessment of a mortgage interest in town lots. As the taxes were paid be¿ *635fore they became delinquent, they were not increased by costs of advertisement or sale in lots. I think the assessment described the mortgaged land in accordance with the statute, and with such particularity and certainty as to afford the defendant the means of identification, and so as not to mislead him. This was sufficient-(Cooley on Taxation, 282-286.)
2. It is claimed that respondent’s exclusive remedy was to deduct the amount of the taxes from the mortgage at the time of payment, on the basis of the levy of the preceding year, in pursuance of section 3627 of the Political Code. But the statute giving that privilege is permissive, and not mandatory, in its terms. It has been expressly decided by the circuit court of the United States for the district of California that, under section 4, article XIII., of the constitution of California of 1879, it is the duty of the mortgagee, and not of the mortgagor, to pay the taxes levied on the mortgage interest; that the constitution and statute give the mortgagor the right to pay the tax, and deduct it from the debt, but that he is not bound to do so; and that if the mortgagee dispute the tax, and decline to allow it, and the whole mortgage debt is paid by the mortgagor without deduction of the tax, the mortgagor, if afterwards compelled to pay it to relieve his property of the lien, may recover the amount paid from the mortgagee, whose debt it is. (Blythe v. Luning, 7 Saw. 506, 507.) The principle of this decision is in accordance with the well-settled rule, that “ where the plaintiff, either by compulsion of law, or to relieve himself from liability, or to save himself from damage, has paid money, not officiously, which the defendant ought to have paid, a count in assumpsit for money paid will be supported.” (Bailey v. Bussing, 28 Conn. 462; Exall v. Partridge, 8 Term Bep. 310.) In such case, “the law implies a request on the defendant’s part, and a promise to repay, and the plaintiff has the same right of action as if he had paid the money at the defendant’s express request.” (Nichols v. Buchnam, 117 Mass. 491; Nutter v. Seydenstricker,11 W. Va. 535.) The *636right of contribution or reimbursement for money necessarily paid for another’s benefit does not necessarily depend upon contract, but may arise from the equity of the case. (Freeman on Cotenancy, sec. 322. See also Hay v. Hill, 65 Cal. 383.)
3. It is also insisted that there is no proof of the validity of the “road tax” or of the “ special school tax” which were included in the sum sued for. Each of these is required to be levied by the supervisors and to appear upon the assessment-book (Pol. Code, secs. 1837, 2654); and the assessment-book itself is prima facie evidence, not only of the assessment and of the amount of the unpaid taxes, but also of the fact that all the forms of law in relation to the assessment and levy have been complied with. (Pol. Code, sec. 3789; Modoc Co. v. Churchill, 75 Cal. 172.) The assessment-book in due form was in evidence, and there was no evidence tending to overcome the prima facie case proved by it.
4. It is further claimed that the liability of the defendant to pay the tax was discharged by his assignment of the mortgage before the levy of the tax. But the law required the mortgage to be assessed to the person who owned it on the first Monday of March (Pol. Code, secs. 3627, 3628); and such person could not escape the obligation to pay the tax by mere assignment of the mortgage. The personal obligation to pay taxes does not depend upon the continued ownership of the property assessed until after the levy of the tax, or until the time for payment arrives. I think the judgment and order should be affirmed.
Belcher, C., and Fitzgerald, C., concurred.
The following is the dissenting opinion of Mr. Justice Harrison, rendered on the former hearing:—■