Court Opinion

ID: 3681597
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:27:08.330019+00
Date Added: 2024-06-11T15:29:11.611374
License: Public Domain

As I understand the majority opinion prepared by Mr. Chief Justice Nuessle, it holds that § 2211, Comp. Laws 1913, inhibits a junior mortgagee from acquiring and asserting title under a tax deed as against a senior mortgagee for taxes falling *Page 184 
due while both mortgages are outstanding and unpaid (syllabus, ¶ 2); that such inhibition is not affected by § 2196 Comp. Laws 1913; that the purpose and effect of this section is to prohibit public officers having charge of tax sales from purchasing at a tax sale and that it does not permit a junior mortgagee to procure and assert a tax title as against a senior mortgagee (Syllabus, ¶ 3).
I am unable to agree with such construction and application of these statutory provisions.
Sections 2196 and 2211 were originally enacted in this state in 1890 and formed part of a comprehensive act on revenue and taxation. See Laws 1890, chapter 132, §§ 75 and 88. As indicative of the scope and purpose of such legislative enactment it may be noted that the section immediately preceding § 2211 (Comp. Laws 1913, § 2210) also formed a part of chapter 132, Laws 1890. This section authorizes any occupant or tenant of realty to pay any tax thereon that ought to be paid by the owner, lessor or other party in interest; and further authorizes the tenant or occupant to maintain a civil action against the owner, lessor or party in interest who ought to have paid them for the amount paid with interest thereon at the rate of 12 per cent, and provides that until the tenant or occupant has been reimbursed for the taxes paid the amount thereof shall "constitute a lien upon said real property." See Laws 1890, chapter 132, § 89. These three sections, however, were all omitted from the Revised Code of 1895. The laws relating to revenue and taxation as enacted and embodied in that Code were quite different from the legislative enactment of 1890. But, apparently, the departure from the law of 1890 was, in many particulars at least, unsatisfactory and in 1897 the legislative assembly enacted an act dealing with the subject of revenue and taxation which in many, if not most, respects was quite similar to the act of 1890 and re-enacted many of the provisions contained in the latter act and which had been omitted from the Revised Codes of 1895. Among the provisions contained in the act of 1890, omitted from the Revised Codes of 1895, and re-enacted in their original or slightly changed form in 1897 were the prototypes of §§ 2196, 2210, and 2211, Comp. Laws 1913. See Laws 1890, chapter 132, §§ 75, 88 and 89; Laws 1897, chapter 126, §§ 81, 93 and 94. Since the re-enactment in 1897 these sections have remained part of the laws of this state without change. *Page 185 
The obvious purpose of §§ 2210 and 2211 was to encourage the payment of taxes and preserve to either a tenant or mortgagee who paid taxes a lien for the amount expended. The purpose of § 2196 was to extend the right to purchase at a tax sale to persons who under then existing laws were inhibited from purchasing. In a word, the purpose of §§ 2210 and 2211 was to increase the number of potential taxpayers, and the object of § 2196 was to increase the number of potential bidders at tax sales. Other provisions of chapter 126, Laws 1897, safeguarded the rights of the purchasers at tax sales to a greater degree than did any prior legislative enactment. Thus under one provision (§ 88) a purchaser at a tax sale became entitled to a refund of the amount paid with interest at 7 per cent in all cases where the sale was subsequently adjudged to be void; in cases whereby through the mistake or wrongful act of the county treasurer or auditor land was sold upon which no taxes are due, and in cases where taxes are paid on lands not subject to taxation or on lands where subsequent to payment the entry is cancelled. The entire act of 1897 indicates a somewhat studied effort on the part of the legislature to encourage not only the payment of taxes but the purchase at tax sales. The provisions of the act of 1890 looking to this end which had been omitted in the Revised Code of 1895 were either re-enacted in their original form or changed in such manner as to broaden their scope and permit and encourage the payment of taxes or purchase at tax sales to a greater extent than before. And anyone familiar with the conditions existing in the state at the time of the enactment of this legislation realizes there was ample reason for the legislative action. In a large number of counties there were practically no private bidders at tax sales, and lands on which taxes were in default were frequently, if not generally, bid in by the county with the result that needed moneys were not paid into the public treasury. The legislature found itself confronted with a condition and not a theory and chapter 126, Laws 1897, bears ample evidence that the lawmakers endeavored to meet the condition which confronted them.
In my opinion § 2211 imposes no obligation upon a mortgagee to pay taxes on the mortgaged realty; but merely grants permission to the mortgagee to make such payment (Williams v. Campion,53 N.D. 456, 206 N.W. 703) and gives to him "an additional lien on the land" *Page 186 
for the amount expended in the payment of taxes. In the absence of such statute more or less uncertainty would have existed as to the rights of a mortgagee paying taxes and this was especially so where the taxes were invalid in whole or in part. Rushton v. Burke, 6 Dak. 478, 43 N.W. 815.
Section 2211 not only definitely settles the right of a mortgagee to pay taxes, and to redeem from a tax sale, but definitely establishes the right to an additional lien on the land for the amount paid as evidenced by "the receipt of the county treasurer or the certificate of redemption, as the case may be."
Section 2196 prescribes the qualifications of a purchaser at a tax sale. It says:
"Any person except county auditors, county treasurers, and each of their deputies and clerks, may become the purchaser at such sale."
If the only purpose of this section had been to inhibit county auditors, county treasurers and their deputies and clerks from becoming purchasers the lawmakers would doubtless have used apt language to indicate this intention. The section, however, says that "any person" (except those specifically enumerated) may become a purchaser at a tax sale. The next paragraph specifically recognizes that even the owner may become such purchaser, and the concluding provision of the section is that:
"Nothing herein contained shall be so construed as to prevent any officer or his deputy or clerk from becoming the purchaser at such sale of any lands of which he may be the owner, or upon which he may have a lien." In other words, the statute says that even county auditors and county treasurers and their deputies and clerks may purchase lands which they own, or on which they hold liens.
That § 2196 was intended to effect a fundamental change in the then existing law, can hardly be questioned. Under the rule then established in this jurisdiction, and by the great weight of authority elsewhere, the owner of land was not a qualified purchaser at a tax sale. Wambole v. Foote, 2 Dak. 1, 2 N.W. 239; 37 Cyc. 1346. The owner owing a duty to pay taxes on his property, the rule had been established that he could not turn his neglect of duty to an advantage, purchase his own property at the tax sale and thereby cut off the liens or interests of others. There can be no question that § 2196 was intended *Page 187 
to change this rule and enable the owner to purchase land at a tax sale; and even though the implied exception is read into the statute (which apparently the majority opinion does), that the sale does not have the effect of passing to him any right, title, interest in, or lien or incumbrance upon such property which the owner so purchasing was legally or equitably bound to protect against the sale or the taxes for which the sale was made, still the statute would recognize the right of the owner of realty to become a purchaser at the sale of his own property; and that the effect of the sale would be to cut off every right, title, interest, lien or incumbrance which the owner was not legally or equitably bound to protect. The statute specifically says that"any person" (except those specifically enumerated) may purchase. It does not purport to qualify or restrict in any manner the right of an encumbrancer or lien holder to make purchase. So far as the statute is concerned the holder of a mortgage or other lien stands on the same footing as a perfect stranger to the title. The concluding paragraph of the section is an explicit recognition that a lien holder may purchase, as that permits even the county auditor, county treasurer or their deputies or clerks to purchase land upon which they hold a lien.
In the majority opinion considerable reliance is placed upon the decision of this court in Finlayson v. Peterson, 11 N.D. 45,89 N.W. 855. That case involved a controversy between a mortgagor and a mortgagee. The mortgage in terms permitted the mortgagee to pay taxes assessed against the land, and add the amount to his claim. The mortgagee did not pay the taxes but obtained tax deeds. That decision makes no reference to §§ 2196 or 2211. And there was good reason why no such reference was made as the tax deeds involved long antedated the enactment of these provisions. (11 N.D. 50.) It seems to me that the decision in Finlayson v. Peterson, supra, is no authority upon the question whether a junior mortgagee may purchase at a tax sale and assert rights as such purchaser against the senior mortgagee, under §§ 2196 and 2211 supra.
In the instant case, however, the junior mortgagee did not purchase at a tax sale. A stranger to all parties claiming title to or encumbrances upon the land had purchased at the tax sale and acquired a tax certificate which constituted a valid contract conferring upon the holder thereof certain specific contract rights (Fisher v. Betts, 12 N.D. 197, *Page 188 96 N.W. 132), and which contract by the express terms thereof was assignable. Comp. Laws 1913, § 2192. This contract constituted a valid lien upon the premises prior to all mortgages and was enforcible in the manner provided by the statute. The junior mortgagee purchased this contract and it was assigned to him in the manner prescribed by law.
It seems to be conceded that the junior mortgagee was under no legal obligation to pay the taxes or to redeem from the tax sale, and such indeed is the rule established by the great weight of authority. And I am unable to see that the junior mortgagee occupied any relation to the land, or to the tax, or was charged with any duty, or occupied any position of trust or confidence toward the senior mortgagee which would preclude him from purchasing the tax sale certificate and exercising the rights conferred by law upon the holder thereof. The senior mortgagee could not possibly have been misled or prejudiced by the act of the junior mortgagee. There was no concealment, no collusion, no breach of faith. The senior mortgagee was charged with notice that the land was subject to taxation; that if the taxes were not paid the land would be sold at tax sale and if no redemption was made the holder of the tax sale certificate would be entitled to a tax deed for the land free and clear of the lien of his mortgage. The senior mortgagee was not even charged with constructive notice of the existence of the junior mortgage. Sarles v. McGee, 1 N.D. 364, 26 Am. St. Rep. 633, 48 N.W. 231. If it had actual knowledge thereof it also knew that the junior mortgagee owed no duty to pay the taxes or to redeem from the tax sale.
In my opinion no valid reason exists under the laws of this state why a junior mortgagee may not purchase a tax sale certificate and enforce the same in the manner provided by law even as against a senior mortgagee.
The foregoing was written as a dissent from the principal opinion prepared by Mr. Chief Justice Nuessle. Since that decision the case has received further consideration upon a petition for re-hearing; and in a supplemental opinion in denial of the petition the majority members hold that the legislative assembly in enacting § 2196 Comp. Laws 1913, through inadvertence omitted a certain clause. Inasmuch as the foregoing dissenting opinion assumed that the original opinion of the *Page 189 
majority construed the section as though it contained the clause which the majority members say was inadvertently omitted, I deem it unnecessary to add anything to what is said in the dissenting opinion further than to say that I agree with my associates that the clause alluded to in the supplemental opinion on petition for rehearing was inadvertently omitted from § 2196. The addition of the clause does not, however, affect the application of section 2196 in the instant case or detract from what is said in the foregoing dissent as regards the purpose and effect of this section. The clause in question confessedly applies only to the owner of the land and limits his rights as a purchaser at a tax sale. This case does not involve purchase at a tax sale by the owner, nor does it involve the purchase by one who was under any legal duty to pay taxes and to protect the holder of a mortgage against the tax sale or the taxes for which the sale was made.