Court Opinion

ID: 3409835
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:27:31.797914+00
Date Added: 2024-06-11T13:50:29.597435
License: Public Domain

I am unable to concur entirely with the conclusions reached by the chief justice. I think the controlling purpose of this case is to determine the constitutionality of the Farm Mortgage Revolving Fund acts in their application to the foreclosure of the common school fund mortgages. These acts authorize, but do not require, the commissioner of finance to pay all taxes assessed against lands upon which school fund mortgages are a lien before foreclosure. These payments are to be made out of the Farm Mortgage Revolving Fund. The acts require that after foreclosure upon sale of such lands the proceeds of such sale shall be paid into the farm mortgage revolving fund, and it shall retain the sums advanced by that fund for payment of the taxes and other foreclosure expenses, and pay the residue, if any, into the common school fund.
So far as the acts authorize the payment of these taxes and charge such payments against the lands, I think they are unconstitutional. I differ mainly from the chief justice in that I do not think it necessary to pay such taxes in order to protect the mortgage as a first lien. As I understand the opinion it holds the tax lien is not prior to the mortgage lien, but that the liens are on a parity; that a *Page 474 
foreclosure sale to a third party would be subject to the tax lien and vice versa; a tax sale to a third party would be subject to the mortgage. But in case the property is not sold in the foreclosure proceedings, and a sheriff's deed issues to the state, then it is held by the state for the common school fund free of all tax liens.
Sec. 3, art. 9, provides in part:
"The public school fund of the state shall forever remain inviolate and intact. . . . . No part of this fund, principal or interest shall ever be transferred to any other fund, or used or appropriated except as herein provided. . . . . The state shall supply all losses thereof that may in any manner occur."
I think the purpose of this provision is to protect the public school fund against every other fund of the state. Its purpose is to provide that not a dollar of the capital assets of the school fund shall be subjected to or used for any governmental purpose, state or local. That is, the principal or capital assets of the fund shall forever remain intact.
It seems to me the facts of the sample case which is discussed in the opinion are quite conclusive that the farm mortgage fund acts may operate in direct violation of this section of the Constitution and did so operate in this case. In authorizing the payment of tax liens and charging such payments against the land, the tax lien was preferred by payment in full, but the principal of the mortgage was only half paid.
In this case the owner of these lands had not only failed to pay the principal and interest of the school fund mortgage to the state, but he had failed to pay taxes assessed against him by Owyhee county. The items of tax indebtedness against him with penalties which were also a lien against the lands were nearly as great as the mortgage. In this case the principal of the school fund mortgage is $4,000. The tax claimed by Owyhee county $3,793.08. The land after foreclosure sold for $6,750. This is $2,750 more than *Page 475 
the principal of the mortgage. The situation however, presented this dilemma — there must be a loss either to the tax lien or the principal of the mortgage lien. Both liens are in behalf of the state. The state in holding each of these liens is acting in its sovereign capacity. One lien is in behalf of the school fund, the principal of which the Constitution protects inviolate, the other lien is in behalf of general revenue funds. The acts in question authorize the payment of the tax lien but require that after the mortgage is foreclosed the proceeds upon sale of the lands shall be paid into the farm mortgage fund. It then provides that this fund shall retain the sums advanced in payment of the taxes and other expenses, and pay what remains, if anything, into the school fund. By this plan the general revenue funds, state and local, are absolutely protected in toto. This protection, it seems to me, to the extent of any loss, is directly and wholly at the expense of the capital assets of the common school fund. I think the plain import of the constitutional provision is to protect the common school fund in preference to all other funds of the state. This legislation, it seems to me, has the opposite effect. In the sample case presented it seems to have protected the general revenue funds of the state at the expense of the common school fund.
While C. S., sec. 3097, subordinates all private interests in or liens on real estate to the liens of taxes for general revenue purposes, I do not think its provisions extend to an interest or lienhold by the state in its sovereign capacity. I think if it was meant thereby to subject the lien of public school fund mortgages prior in time it would to that extent be in contravention of sec. 3, art. 9, of the Constitution.
No doubt the right of self-preservation gives the state broad powers in enacting revenue laws necessary in carrying out the governmental functions of the state and its subdivisions. Still, in Idaho the Constitution was adopted before statehood. Statehood was conferred and the school land grants were made by the Congress in the faith of these constitutional *Page 476 
provisions. Even if the state could not otherwise raise current expenses I am not sure it could draw upon the public school fund. Nor do I think the capital assets of the common school fund can under our Constitution be taken by taxation or otherwise for general governmental purposes any more than the cash assets of the fund.
No doubt the intent of the legislature in creating the Farm Mortgage Revolving Fund and in directing its application in the manner set forth in the acts was to protect the common school fund mortgages from tax liens which were thought by the legislature to be prior liens. It was not the purpose to make the tax liens prior. It was thought they were prior, and the acts if followed carry out that thought and result in giving the tax lien priority. Therein I think they are unconstitutional.
I think the use of the Farm Mortgage Revolving Fund in paying these tax liens and charging such payments against the lands as necessary expenses in foreclosure should be prohibited. If the legislature wishes to authorize the payment of these tax losses out of the general fund as recommended by the Constitution, that is another matter. I don't think they can lawfully be paid out of the property assets of the school fund.
I am not convinced this court should direct bymandamus the sale receipts if the land in question be not paid to and held by the farm mortgage fund until that fund is reimbursed the tax outlay. While the taxes were not a prior lien over the mortgage, and the payment may have been unnecessary, nevertheless they were paid voluntarily, and taxes thus paid cannot be recovered. (Asp v. Canyon County, 43 Idaho 560,256 P. 92.) This is so because the tax money is disbursed to many funds and to attempt recovery and re-adjustment would throw out of balance and disrupt the whole taxing machinery. Adjustment and recovery being impossible we cannot direct the loss fall upon the revolving fund. We cannot by mandamus authorize a use of funds provided by the legislature in a manner *Page 477 
different from that for which they were appropriated. We cannot use or authorize the use of the fund for paying taxes. The money was appropriated as an advancement, not as tax money or otherwise at all.