Morey Engineering & Construction Co. v. St. Louis Artificial Ice Rink Co.

FERRISS, J. This is an action brought in the circuit court of the city of St. Louis by the contractor to whom the city of St. Louis issued a special taxbill, for the improvement of Cook avenue, for the sum of $721.31, against a lot of ground on said Cook avenue, charged with said special taxbill. The defendants (appellants here) are the St. Louis Artificial Ice Rink Company, owner of the equity of redemption in said lot, together with the owners and holders of certain notes secured by two deeds of trust upon the said lot, and their trustees. The first deed of trust was dated November 1, 1898, and recorded on the 5th day of November, 1898, securing the payment of fifteen thousand dollars with interest; the second deed of trust was for two thousand and sixty dollars, executed — 248 — on the 14th day of July, 1900, and duly recorded on the same date. The ordinance for the improvement of Cook avenue, for which the taxbill in question was issued, was approved April 7, 1902, and the taxbill was issued May 7, 1903. Judgment below was for plaintiff. The record ' presents a single question: Under the charter of the city of St. Louis, has the lien of a special taxbill, issued for street improvements, priority over a deed of trust which antedates the taxbill 1 Defendants contend that tax liens, whether general or special, have no priority over earlier incum-' brances, unless such priority is accorded by statute, and that this is certainly true as to special tax assessments for street improvements, which, it is claimed, are essentially different from general taxes. Defendants contend further that the charter under which the taxbill in controversy was issued does not give priority to the lien for the special tax, and that it is therefore inferior to the-lien of their deeds of trust which are earlier in point of time. On the other hand, respondent contends that in this State both general and special tax liens have priority, (a) in the absence of statutory direction to the contrary, and (b) such priority of the special tax lien is fairly inferable from the language of the statute (charter) creating the lien. We will discuss these propositions in order. Pirst, as to general taxes. Prom an early date this State has maintained the policy of impressing upon real property a lien for the taxes assessed thereon. In 1815 the Territorial laws provided that the taxes on confirmed lands should be a perpetual lien. [Territorial Laws, 1814-15, p. 89.] In 1820, a perpetual lien was declared by statute upon all lands for the taxes thereon. [Laws 1820, p. 97.] To the same effect in 1835. [R. S. 1835, p. 541.] The revisions of 1845-55-65 contain no such express provision, but — 249 — tlie revenue acts from 1835 to 1872 have been construed to recognize and reserve this lien of the State. The general revenue law enacted in March, 1872, re-introdueed the express provision reserving to the State a lien upon real property for the taxes thereon. [Wagner’s Statutes 1872, p. 1170, sec. 60.] Prom its earliest decisions on the question this court has uniformly ruled that real estate taxes are a lien upon the property against which they are assessed, and further, when the question has arisen, that they are prior to all other liens. In May, 1877, our Legislature enacted a statute (now section 11499, E. S. 1909) making the judgment for such taxes a first lien. The decisions, however presently to be referred to were upon taxes levied prior to the enactment of this statute, upon which they in nowise depend, and to which no reference is made in the cases. In 1864, in the case of Blossom v. Van Court, 34 Mo. 390, the taxes were said to be an incumbrance on the land, and covered by the covenant contained in the words “grant, bargain and sell.” McLaren v. Sheble, 45 Mo. 130, is to the same effect, and speaks of the “lien of the tax imposed ~by virtue of the assessment.” Both cases hold that the lien of the tax takes effect from the initial point of the assessment, and by virtue of the assessment. We come next to the case of Stafford v. Fizer, 82 Mo. 393. As this case is discussed fully pro and eon by appellants and respondent, we will examine it at length. This was an action in ejectment. James A. Clark, the common source of title, executed a deed of trust in 1863. In 1878 suit was filed by the State for the taxes for the years 1868 to 1876 inclusive. Sale under judgment for taxes and execution thereon October 30, 1878, to plaintiff. There was a sale under the trust deed in April, 1879, to the defendants. This suit w.as filed in 1880. In the tax proceeding, Clark, the trustee, and one of the beneficiaries in the trust deed, — 250 — were made defendants. One other beneficiary was not made a defendant. It was contended by the plaintiff that the tax sale gave a complete title as against both beneficiaries in the trust deed. The court states the question presented for adjudication thus: “Whether the deed of a purchaser at execution sale under a proceeding to enforce the State’s lien for taxes is good against the beneficiary of a deed of trust, antedating the origin of the tax lien, who has not been made a party to the proceedings.” After stating further that the question was new in this court, the opinion proceeds: “But the principles of law, as well as the decisions of this court, governing the enforcement of liens on real estate, ought to furnish a sufficient guide for us in determining it. It will be observed that we are dealing with two liens, one created by law in favor of the State which necessarily takes precedence of other prior as well as subsequent liens, on account of its peculiar character (R. S. 1879, secs. 6831, 6832; Blossom v. Van Court, 34 Mo. 390; McLaren v. Shieble, 45 Mo. 130; Dunlap v. Gallatin Co., 15 Ill. 7; Almy v. Hunt, 48 Ill. 45; Binkert v. Wabash Ry. Co., 98 Ill. 205); the other in favor of creditors, created by the act of the debtor. These two liens have been foreclosed, and the purchasers stand opposed to each other with deeds under the proceedings respectively employed for enforcing them. The lien of the State is the superior one, although subsequent in time, a superiority invariably accorded to it in the absence of some legislative declaration to the contrary. [Cadmus v. Jackson, 52 Penn. 295; Doane v. Chittenden, 25 Ga. 103; Hopper v. Malleson, 16 N. J. Eq. 382; Cooper v. Corbin, 105 Ill. 224.] No system of jurisprudence would command respect which failed to maintain and enforce the benefits of this priority by all necessary and reasonable proceedings to that end.” The holding of the court is that a beneficiary in .a prior deed of trust, who is not a party to the tax suit, — 251 — has still the right to redeem as a junior lienor by proper action in that regard. Speaking of the revenue law which required the collector to bring suit against the owner of the property, the court says: “I do not see how to escape the conclusion that a cestui que trust in a deed of trust is an owner within the meaning of this act if his interests are to be affected by the proceeding authorized.” It was concluded in that case that, in as much as <the right to redeem was not asserted, and as it was apparent that plaintiff had the superior title, she should recover. It is suggested that what the court says in the first above extract from the opinion as to the priority of the lien, and upon the general rule of priority, is ohiter. We think not. The plaintiff’s right to recover depended upon the priority of the tax lien. It is further suggested that the cases cited in the opinion do not support the text. In this we think counsel errs. It must be remembered that when the taxes involved in the case were assessed there was no statute making a judgment for taxes a first lien. Indeed, there was no express declaration in the statutes that the taxes were a lien. The court cites the Blossom and McLaren cases, above referred to, which declares that such taxes were a lien, and that such lien was impressed by virtue of the assessment. The next citation is Dunlap v. Gallatin Co., 15 Ill. 7, which says: “A tax is not an ordinary debt. It is levied for the support of the government and takes precedence of all other demands against the owner. It is a charge upon the property, without reference to the matter of ownership. The property itself may be seized and sold, although there may be prior liens or incumbrances upon it.” The next cited case, Almy v. Hunt, 48 Ill. 45, involved the question of liability for taxes as between seller and buyer. It was held that the lien attaches — 252 — when, the assessment is made, and that the property itself is liable therefor. Binkert v. Wabash Ry. Co., 98 Ill. 205, the next cited case, holds that the tax suit is “a direct proceeding against the land itself, by which judgment may be had against it as if it were a person,” and points out the distinction between real and personal taxes; the latter not authorizing a direct proceeding against personal property.' The cases of Cadmus v. Jackson, Doane v. Chittenden, and Hopper v. Malleson, cited in the opinion, hold the tax liens involved in these cases inferior to prior liens, but this upon the ground that they are made so by statute. In the Hooper (N. J.) case the ruling that the lien of the tax is inferior to that of the prior incumbrance is put upon the ground that the statute makes the tax on real estate a personal demand against the owner, to satisfy which his goods may be sold or his body arrested, and further, that the mortgagee is taxed for his interest, and the mortgagor taxed separately for the value of his equity. The opinion says: “If the tax for the whole value of the land were assessed upon the land as an entire thing, against the mortgagor, or party in possession, there would seem to be more propriety in subjecting the entire estate, including both the interest of the mortgagee and mortgagor, to the operation of the tax sale.” The last case cited in the Stafford case, Copper v. Corbin, 105 Ill. 224, holds taxes on personalty an inferior lien, but that taxes on real estate “become a charge upon the land itself, and if they are not paid the land may be sold for the taxes thereon, and the title will pass regardless of any incumbrance resting upon the land. Taxes on personal property rest upon a different principle — they are not a charge on any specific property.” — 253 — The foregoing cases sustain the proposition laid down in the Stafford case, namely, that real- estate taxes are accorded a prior lien by virtue of their peculiar character, unless there is a legislative declaration to the contrary. The Stafford case has not been criticised, but has often been approved in our later decisions. It is followed in Gitchell v. Kreidler, 84 Mo. 472, which gives priority to the lien for the taxes of 1877 (assessed August 1, 1876), -but holds, as the Stafford case did, that the beneficiary in the prior deed of trust, not being a party to the suit, did not lose his right to redeem. The case holds that all parties in interest must be made defendants in order to bind their interests. Construing the statutory requirement that suit shall be brought ’against the owner, the ■court says the word “owner” has no precise legal signification, and may be applied to any well defined interest in the estate, and further: “The lien of the State thus enforced is superior. The mortgagee certainly had the right to pay off taxes, and under the former method of making sales could have redeemed within the time prescribed by law. He has not been made a party to the tax suit, and his rights in that respect have not been foreclosed.” Williams v. Hudson, 93 Mo. 524, involved similar questions regarding the taxes for 1869 to 1879, and followed the above cases. In the course of the opinion the court says: ‘ ‘ Tax liens, whether prior in point of time or not, are superior to the lien of the deed of trust.” To the same effect is Allen v. McCabe, 93 Mo. 138, involving taxes for 1876, 1877 and 1878, wherein the court says: “It must be remembered that, although the statute makes it necessary that the owner of the property should be made a party, and this is necessary to call into activity the jurisdiction of the court over the subject-matter, yet, when this is done, the proceeding is in rem against the property to enforce the lien of the State on that property, subordinate to — 254 — which the owner holds his title; the judgment is in rein. The execution goes against, and the sheriff sells, the property, and not the interest of any particular person in it.” In Neenan v. City of St. Joseph, 126 Mo. 96, the contest was between owners of the fee, and did not involve incumbrances. The court, however, uses this significant language: * ‘ The policy of the revenue law is to charge the land and every interest therein with delinquent taxes, and not to look .to the owners, personally, for its payment.” This doctrine is quoted with approval by Graves, J., in Walker v. Mills, 210 Mo. l. c. 694, a case' involving both owner -of the equity and the incumbrancers. In Meriwether v. Overly, 228 Mo. 218, the decree ordered the successful plaintiff in an action to quiet title to refund to the defendant taxes paid by the latter, on the theory that same were a. burden upon the land. The court says: “A tax against real estate is a tax against the property, and not against the owner. If the taxes have been legally assessed they became a lien on the property prior to all other liens.” It will be perceived from the foregoing review of the cases that, under all the varying revenue laws of the State, this court has held that real estate taxes constitute ex propria vigore a prior lien against the property on which they are assessed, not depending upon any express declaration of the statute to that effect, and not depending, as it is now claimed they do, upon the provision in the statute first enacted in April, 1877 (Laws 1877, p. 387), which gives the judgment for taxes a first lien. The foregoing cases further establish the proposition that the word “owner,” in a statute which provides that suits for delinquent taxes shall be brought against the owner of the land, includes the holders of incumbrances on the land. — 255 — Our conclusion on this point rests as well upon sound reason. It is uniformly recognized that the claim of the State for the taxes necessary for its support is superior to demands created by private contract. In State of Minnesota v. Central Trust Co., 36 C. C. A. 214, Thames, J., discusses this subject fully upon authority and reason. He cites numerous cases to sustain the proposition which he enunciates thus: “It has been held frequently that a tax lawfully imposed by the State on its citizens, is not an ordinary debt, but is an obligation which by its very nature should be regarded as paramount to all other demands against the taxpayer, although the law imposing the tax does not in express terms declare such ■priority.” And then he says: “These decisions also express a thought which is generally prevalent in the public mind that «taxes levied by the State for its own support are founded upon a higher obligation than other demands. The fact has also been recognized from time immemorial that every sovereignty ought to be armed with the requisite power to enforce the. collection of taxes without fail, and to compel the prompt payment of whatever imposts it sees fit to levy for its own support. In view of that necessity it has been a common practice to provide summary remedies for enforcing such demands, which have been upheld by the courts whenever assailed, although it is quite probable that some of the remedies so provided could not have been sustained as affording due process of law, if the proceedings had related to the collection of purely private debts.” This thought is in line with what is said by the Supreme Court of Illinois in Dennis v. Maynard, 15 Ill. 477: “All the principles applicable to the prerogative priority of the crown in this respect equally apply to public dues for taxes.” It is said that even if the foregoing views as to general taxes are correct, they cannot be made to ap — 256 — ply to special taxes or assessments for improvements of the character in question in this case. The question, then, is whether the principles enunciated above apply to special as well as general taxes. Both are created by the sovereign power of the State. The distinction between thorn has been often discussed in our former opinions. Some of these opinions say that, while created by the taxing power of the State, they are not taxes. [Morrison v. Morey, 146 Mo. 564; Independence v. Gates, 110 Mo. 374.] These cases, however, have in mind the general taxes referred to in certain constitutional limitations, which limitations, however, do not refer to these special taxes for local improvements. Speaking, in the above case of Independence v. Gates, of the power to levy local assess-' ments, we say: “It is settled in Missouri, and generally elsewhere, that it is referable to the taxing power, although such assessments are not taxes in the sense that word is usually employed.” Again, in Meier v. St. Louis, 180 Mo. 408: “It is now settled law in this court that special assessments for local improvements are referable to the taxing power.” In Construction Co. v. Railroad, 206 Mo. l. c. 177, we say: “While a distinction is made between local assessments and taxes levied for general revenue purposes, in that an assessment for a local improvement is not a tax within the meaning of the constitutional provision regarding uniformity of taxation, it is in a sense a tax, not, however, for the purpose of sustaining the government, but imposed upon the individual property upon the theory that such property receives a special benefit different from the general one which the owner enjoys in common with others; in other words, an assessment for benefits.” As long ago as Garrett v. St. Louis, 25 Mo. 505, this court said: “That this assessment upon the lot-owners fronting on the street is an exercise of the taxing power seems too plain to admit of argument,” — 257 — This special tax is assessed because of special benefit to property, and yet there is also a public benefit. Indeed, it is this public benefit that justifies the exercise of the State’s sovereign power. As said by Woodson, J., in St. Louis v. Wright Contracting Co., 202 Mo. l. c. 463: “The tax is imposed for public purposes in the payment of street improvements, and not for private use. As an incident only to the public improvement the adjoining property is benefited, and because of that benefit the tax is assessed against the property and not against its owners.” So we are dealing with a tax, not a general tax to support the government, but a special tax imposed by the same general power, and for the same general purpose — the public good. General taxes are exacted for the public good. True, it is quite common to speak of them as being levied for the support of the government. This, however, is a too narrow limitation. Taxes are used for the public good in many ways other than government support, as for instance, public improvements and schools. Government exists for-the public good, and it is for the public good that streets are improved and sewers constructed. The State could not compel a man to improve a street in front of his lot for the sole purpose of benefiting his lot. There is in such improvement a special benefit to the abutting lot. Therefore, the tax for such improvement may be greater upon that lot than it is upon the general property in the city, and hence we speak of this special tax as a benefit assessment. The abutting property is not taxed for the entire cost of the improvement. Section 18, article 4, of the St. Louis charter provides: “The cost of construction of all the foregoing improvements within the city shall be apportioned as follows: The grading of new streets, alleys, and the making of crosswalks, and the repairs of all streets — 258 — and highways and cleaning of the same, and of all alleys and crosswalks, shall be paid ont of the general revenue of the city; and the paving, curbing, guttering, sidewalks, and the materials for the roadways, the repairs of all alleys and sidewalks, shall be charged upon the adjoining property as a special tax, and collected and paid as hereinafter provided.” Here we have both general and special taxes levied by the same power, and both used for the same purpose, namely, making ánd maintaining a public street. There is no essential difference between them .so far as concerns the questions under discussion. These special taxes are by section 18, above set out, charged upon the property — not against the owner. By section 25, article 6, of the charter, the taxbill is a lien upon the property charged, to be enforced by suit against the “owner of the land.” We have ruled above that as to general taxes a similar provision gives the lien priority over earlier incumbrances. We have also ruled that, as to general taxes, the word “owner” in a similar provision for suit against the owner of the land, must be construed to include incumbrancers. On principle, it would seem that the same ruling should be applied to these special taxes. The exigencies of government are as great as to. the necessity for the tax and for its prompt and certain collection. The application of the rule of priority bears less hardly on the incumbrancer. The general tax benefits the property taxed but remotely and indirectly. The special tax is of direct benefit to the property, enhancing its value in proportion to the tax, and benefits the incumbrancer by adding to the value of his security. On this point the Supreme Court of Minnesota, in Morey v. City of Duluth, 75 Minn. 221, says: ‘£ The improvement is for the benefit of all interests in the land, for that of the lien-holder as well as the fee-owner, and necessarily the lien of the assessment for the improvement must be coextensive with — 259 — the estate benefited and assessed.” And further: “It is apparent, however, from the provisions of the charter that the word ‘owner’ is not used therein in a strict sense, bnt it means persons interested in the land, which includes mortgagees.” We have decided that a judgment for special taxes ■ must be and can only be one enforcing the lien against the particular property. In Barber v. St. Joseph, 183 Mo. 451, we say: “Proceedings to enforce special taxbills are in the nature of proceedings in rem, and compulsory payment of the" judgment can only be made by a sale of the assessed property.” The law governing the tax in this case is found in the charter of the city of St. Louis, which provides : ‘ ‘ Said taxbills shall be and become a lien on the property charged therewith, and may be collected of the owner of the land and in the name of and by the contractor as any other claim in any court of competent jurisdiction.” [Sec. 25, Art. 6.] Construed in the light of the case last cited, this means that the tax is a lien on the property, to be enforced by a proceeding in rem against the property. And, as ruled above, the word “owner” includes incumbrancers. So far as concerns the method of procedure provided in the charter, namely, to sue as upon any other claim in any court of competent jurisdiction, this must mean such suit “as is adapted to . the enforcement of the lien.” [Barber v. St. Joseph, supra.] That this tax is given priority inferentially by the charter is shown by the further provision in said section 25: “ That the owner or any other person having an interest in the property charged with the taxbill may pay the same in full at any time within thirty days after notice of the taxbill without interest.” The clause, “any other person having an interest in the property,” certainly includes incumbrancers. This provision is meaningless unless it is designed — 260 — to enable incumbrancers' to protect their interests by paying, without penalty, taxes to which their interests are subordinate. If their interests are not liable for the tax, why should they be referred to in connection with its payment? The charter contains no provision making either the tax itself or the judgment a first lien; and yet we have seen that, without anything more in the general law than is found in the charter provision, general taxes have been held by this court to constitute a first lien. These views are sustained by the case of Keating v. Craig, 73 Mo. 507. That case involved a special taxbill issued under the charter of Kansas City, section 3 of article & of which provides that in suits to enforce the lien of a special taxbill, all or any of the owners of the land charged, or of any interest or estate therein, may be made defendants, and that a judgment in such suit shall bind all the right, title, interest and estate in the land the defendants and each of them owned at the time the lien of the taxbill commenced, or acquired thereafter; and further, that parties interested in the land not made defendants shall not be affected thereby, and if they claim through or under any parties defendant prior to suit brought, they may redeem from the purchaser. It was held in the Keating case that the tax lien was prior to an earlier deed of trust. It is true that reference is made in the opinion to the foregoing charter provisions as indicating the intention of the framers to give it priority, but under the law as we have construed it in this opinion, and in the light of the former rulings of this court, cited herein, this provision of the Kansas City charter is simply declaratory of the law, and is no more indicative of the intent of the lawmakers than is the provision in the St. Louis charter allowing par — 261 — ties owning interests in the property to pay the tax without penalty. The Keating case says: “The lien of the special taxbill, like the lien for general taxes, is superior to any incumbrance with which the owner may charge the land.” The opinion adds: “This is the evident meaning of that portion of section 3 above referred to, which declares the effect of a judgment in a special taxbill. ’ ’ No doubt, section 3 does mean that, and no doubt, .under our decisions, the meaning of the law would be the same without section 3. Such evidently was the construction put upon the Keating case by Norton, J., in his dissenting opinion in the case of State v. Railway, 77 Mo. l. c. 220. (In this there was no conflict with the majority opinion.) Ke quotes the above statement of the law from the Keating case in a discussion upon general taxes, and without any reference to the charter provision. In our judgment, there is as much warrant in the St. Louis charter for the rule declared in the Keating case as can be found in the Kansas City charter. That rule we approve. It is urged by respondent that we should consider the exigencies of the case; that it is essential to the proper improvement of the city streets and sewers that special taxbills shall be first liens in order to insure their prompt and certain collection; further, that we should consider the fact that under the charter adopted in 1876, special taxbills have been always enforced as first liens, without question of their priority until now. The appellants object that such considerations ought not affect our conclusions as to the law. We appreciate the force of this objection, and yet in construing the charter, in order to arrive at the intent of the framers, it is proper to consider the objects which they sought to accomplish, and the practical situation for. which they were attempting to provide. It was doubtless obvious to them that unless taxbills became first liens on property, the improvement of the — 262 — city would be seriously hampered. It is also proper to consider that, while the fact that a certain construction of the law has been usually recognized by the city authorities, the bar and the people at large does not establish its validity, still such fact is not without some persuasive force in favor of such construction. This case has been ably and exhaustively briefed and argued on both sides. Counsel have cited the decisions in other jurisdictions on the question involved both as to general and special taxes. We have examined the cases in detail. To discuss them -would extend this opinion to unreasonable length. The cases will be found in the digest of the briefs. They hold diverse views, but in our judgment the weight of authority as found in the decided cases supports the views -herein expressed. The judgment is affirmed. Brown, Woodson and Graves, JJ., concur; Kennish, J., dissents in an opinion filed, in which Valliant, G. J., and Lamm, J., concur.