Haakon County v. Brunswick Corp.

COOPER, Circuit Judge. Appellant is the vendor under a conditional sales contract dated February 20, 1963, under which bowling equipment was sold to Bowl Mor Lanes, Inc., of Philip, South Dakota. Personal property taxes assessed to Bowl Mor Lanes based on the value of the bowling equipment for the years 1966-1969, inclusive, were not paid. Appellant repossessed the bowling equipment November 23, 1969. On November 25, 1969, the county treasurer, after changing the assessment rolls to name appellant as owner of the bowling equipment, issued a distress warrant against the property to collect the delinquent taxes. By agreement of the parties, this warrant was not served upon the appellant posting bond guaranteeing payment of the taxes if it was found to be legally liable for them. On December 10, 1969, appellant conducted a public auction pursuant to the law relating to repossession of property under conditional sale, at which time appellant bid in the property. The sole issue is whether the Treasurer of Haakon County has legal authority to levy on the bowling equipment for collection of taxes assessed against such equipment. This Court, in General Motors Acceptance Corporation v. Whitfield, 62 S.D. 415, 253 N.W. 450, held that a Frigidaire, acquired under a conditional sales contract June 5, 1931, could not be levied upon in 1932 for taxes assessed for the years 1925 to 1931, inclusive, on the grounds that the conditional buyer, Bessler, “did not have on January 1, 1932, [412] or at any time prior to the attempted levy, legal title to or complete property rights in the Frigidaire in question.” It should be noted that no part of the taxes to be collected was based on the value of the Frigidaire, so the facts are substantially different from the present case. The Court went on to say, “It may very well be true that Bessler could transfer or incumber his rights (such as they actually were) and that the same could be reached by his creditors, and if apt procedure was provided by statute could be applied to his taxes; but we do not think that his rights were of such nature that they could be reached by distress and sale under the provisions of section 6775, R.C.1919.” (emphasis supplied) Section 6775 provided in part as follows: “The county treasurer shall deliver such (distress) warrant to the sheriff of his county. Such warrant shall constitute the sheriffs authority and he shall immediately proceed to execute the same, and collect the tax by seizure of personal property of such person to an amount sufficient to pay such tax, with accrued penalty and interest, if any, and all accruing costs, wherever the same may be found in the county. From such seizure no property shall be exempt except personal property absolutely exempt from execution, and the sheriff shall immediately proceed to advertise the same * * *; provided, that before making such sale, the sheriff shall ascertain from the office of the register of deeds of his county whether or not such property to be sold is encumbered by chattel mortgage and, if found incumbered, he shall mail to the mortgagee a notice of such sale The code revisors changed the wording of such section in the 1939 Code, Section 57.1016, to read as follows: “Before making seizure of any property the sheriff shall ascertain from the records in the office of the register of deeds, the amount of any rnort [413] gages, conditional sales contracts, or other liens upon the property, and also the names and addresses of the lien holders and shall also procure from the county auditor a copy of the assessment blank upon which the tax is based, if the same is then on file with such county auditor. “In making the seizure of property, the sheriff shall first seize such property as is not incumbered by any lien of record but nothing herein contained shall prevent the sheriff from seizing any property for the tax based on that specific property, nor from seizing sufficient incumbered property to exact the proportion of the whole tax to be collected, which the value of such incumbered property bears to all of the available property subject to the distress warrant, nor shall anything herein contained prevent the sheriff from resorting to incumbered property for collection of all of said tax, if the same is otherwise liable, and if the sheriff is unable after due diligence to collect the said tax as hereinbefore otherwise specified.", and in the source notes states: “Source: Part of §§ 6775 and 6776 and all of § 6777 Rev.Code 1919, revised, amplified, and combined to make jurisdiction and procedure definite, remove controversy as to rights of incumbrancers.” (Emphasis supplied) It should be noted that conditional sales were included in the named encumbrances and a definite procedure set up in the case of encumbered property, no doubt with an eye on this Court’s language in the General Motors Acceptance Corporation case emphasized above. It is the position of the Court at this time that the revision of 1939, carried forward to SDCL 1967 as Sections 10-22-14 and 10-22-15, in the exact words quoted above, does provide the procedure for levying on property under conditional sale, and effectively disposes of any questions raised by the General Motors Acceptance Corporation case. [414] It is conceded that the taxes in question here were assessed on the bowling equipment, and that the distress warrant was directed toward this same bowling equipment. Clearly, the respondent was acting within the procedures outlined by the statute in seeking to levy upon this property. The judgment of the trial court is affirmed. HANSON and WOLLMAN, JJ„ concur. BIEGELMEIER, J., dissents. RENTTO, P. J., concurs in dissent. COOPER, Circuit Judge, sitting for WINANS, J., disqualified.