Downing v. City of Russellville

Code of 1928, Section 2202, Code 1940, Tit. 37, § 543, reads:

"§ 2202. (1387) Tax liens; relation of and effect of as to assessments. — The enforcement by the state, county, city or town of its lien for taxes on any lot upon which has been levied an assessment for any improvement authorized by this article, shall not operate to discharge, or in any manner affect the lien of the municipality for said assessment, but any purchaser at any tax sale by the State, county, city or town of any lots or parcels of land upon which an assessment has been levied shall take same subject to such assessment. (1927, p. 766.)"

This statute dates back to the Act approved March 5, 1907, dealing entirely with public improvements, including street improvements, the assessment of abutting properties for the costs thereof not exceeding the special benefits derived from the improvements, creating liens on the property for such assessments, and providing for the protection and enforcement of such liens, c. Acts of 1907, 295, § 11, p. 303.

On the next day after approval of said Act the same Legislature appointed a joint recess committee to prepare a general municipal bill or bills. Acts of 1907, p. 356.

Later in the same session the Legislature enacted a comprehensive statute: "To provide for the organization, incorporation, government and regulation of cities and towns and to define the rights, powers, duties, jurisdiction and authority of such cities and towns and of the officers thereof."

This statute was approved August 13, 1907, Acts of 1907, p. 790.

Section 11 of the Act of March 5 became section 132 of the Act of August 13 without change.

In codifying the Act of August 13 in the Code of 1907, section 132 of the statute was divided into several sections, which appear without change in the Code of 1923, as §§ 2196 (1381), 2197 (1382), 2198 (1383), 2199 (1384), 2200 (1385), 2201 (1386), 2202 (1387), 2203 (1388). See Code 1940, Tit. 37, §§ 535-538, 541-544.

The Act of September 10, 1927, Acts 1927, p. 753, therein designated "The Municipal Public Improvement Act," while purporting to amend the above sections of Code of 1923, simply re-enacts them without change, except by adding a provision to section 2199, not material here.

It thus appears that section 2202 was twice considered by the Legislature of 1907, and has been twice re-enacted without change, and has always appeared in statutes dealing with Municipal Affairs, not in General Revenue Bills.

The bill passed and approved March 5, 1907, was introduced by Honorable J. M. Foster, of Tuscaloosa. The statute has been in force for a third of a century. This court is now called upon to construe it for the first time. This argues that section 2202 has not provoked litigation.

A careful study of section 2202 in its setting, discloses, in my opinion, that the wording of the section was carefully thought out, and every clause is to be given effect in the light of the subject matter and the context. The statute declares the assessment lien subordinate to liens for State and County taxes; looks to the "enforcement" of the paramount liens by a sale of the property wherein the purchaser shall take the title and right of possession defined by law as against the owner.

But such enforcement proceedings: "Shall not operate to discharge, or in any manner affect the lien of the municipality for said assessment." (Italics supplied.) "But any purchaser at any tax sale" of city property on which an assessment lien exists "shall take same subject to such assessment." (Italics supplied.)

The result is that the paramount lien for state and county taxes is not foreclosed in the ordinary sense, cutting off all rights of the holder of the assessment liens other than a statutory right of redemption. *Page 502

The purchaser steps into the shoes of the owner, acquires his right of possession, with the same right to pay off the assessment lien at his election. If he does not so elect, the holder of the assessment may foreclose the same. But, under statutory provisions running through all our laws, such purchaser acquires the liens of state and county, as defined by § 3123, Code of 1923. In foreclosing the assessment lien in equity against such purchaser, the complainant must offer to do equity, by satisfying the paramount liens the purchaser has removed.

To my thinking, this is the meaning of the statute, well expressed by its terms.

So construed, the statute, in my opinion, expresses the justice of the situation. Why?

The lien for local assessments is a form of tax, one authorized by the State itself, for a highly important public purpose; oftentimes for the protection of the public health, or for a system of streets related to the State Highway System.

It is a betterment tax, limited to the benefits to the property itself, with ample provisions of law to assure its confinement within such limit. It represents expenditure of local tax funds by the city in making the improvements, enhancing the value of the property to the amount of the assessment tax; or else funds of persons who have financed the improvement upon the faith of securities based upon such assessments.

The original act, in order to lighten the burden of such assessments, provided for payment by instalments, running a period of ten years. Bonds, or other securities are issued, payable from the proceeds of such assessments. In smaller cities bonds are issued on these assessments as sole security. Such bonds naturally run until these instalments become payable. Wise lawmakers were naturally concerned in making these assessments desirable security. Bonds may be held by far distant people.

It is contemplated the assessments will be paid as the instalments become due. Meantime, says section 2202, the holders of these assessment liens need not concern themselves with tax records growing out of enforcement of state and county tax liens.

If and when it becomes necessary to enforce their assessment liens, the holders thereof must look into the matter of paramount tax liens, and, if the property has passed to a purchaser under enforcement proceedings, his title and possession shall not be disturbed until the paramount liens are paid off.

When the state, has, by its own authorization led to betterments of property, represented by these assessments, is there justice in the state or its vendees, taking this unearned increment, at the expense of those whose money, on the invitation of the state, has created such increment in value?

But, it is said, while an individual purchaser at a tax sale takes subject to section 2202, a different rule applies to the state.

This argument proceeds on two grounds:

1. The general doctrine that a statute defining the right of persons does not apply to the state unless such intent clearly appears.

2. The state, after the statutory right of redemption expires, is invested with and passes to a purchaser from the state a complete title, Acts 1935, p. 376, § 285; while the deed from the Judge of Probate to an individual purchaser after time for redemption has expired, passes another and lesser title. Acts 1935, p. 360, § 241, Code 1940, Tit. 51, § 276.

In answer to both these propositions; we think such view is answered by section 2202 itself. As before argued, this section declares the enforcement of these paramount liens shall in nomanner affect these assessment liens. The sale at the court house, and further enforcement proceedings, does not effect a foreclosure of a superior lien in the ordinary sense as against the assessment lien holder. He is not stripped of all rights, save the statutory right of redemption. The purchaser acquiring a deed from the Judge of Probate, or a deed from the State, is given the status of the owner prior to enforcement proceedings, with the additional rights of an assignee of the paramount liens which he has removed.

An Act, original in form, approved November 8, 1932, reads:

"All liens for public improvements which cities and towns in this state now have or may hereafter acquire under the general laws of this state shall continue until same are paid or satisfied in full." Acts 1932, p. 273, Code 1940, Tit. 37, § 543.

This Act, it seems, is to protect the lien of local assessments against the running *Page 503 of statutes of limitation, c., as well as a further assurance that the lien shall continue in force until paid. Lamar v. Rivers et al., 235 Ala. 130, 178 So. 16.

Sections 241 and 285 of the Revenue Bill of 1935, supra, were not new. The Revenue Bill of 1919, contained like provisions. Acts of 1919, p. 360, § 266, and p. 372, § 306.

These statutes, embodied in the General Revenue Laws, have run concurrently with section 2202, dealing specially with public improvement by municipalities and local assessment on abutting property limited to benefits. Both statutes have been re-enacted. There is nothing in § 285, supra, defining "owner" as therein used. Certainly nothing to indicate a purpose to deal with local assessment liens. It is elementary that, if there be an apparent conflict between general laws, and those dealing with a specific subject, the general law yields to the special. Both are given effect, so as not to conflict.

Moreover, § 285, supra, is to be construed in connection with other provisions of the same statute. We have held the right of a reversioner or remainderman is not cut off because the state has purchased at a tax sale. State v. Clarke, 240 Ala. 362,199 So. 543, 544; Gunter v. Townsend et al., 202 Ala. 160,79 So. 644; Note 75 A.L.R. 416, 420.

The notion that a purchaser from the state under § 285, supra, takes a fee simple title necessarily runs counter to this holding. Surely the protection of liens created by authority of the state, and defined by the laws of its authorization is entitled to the protection such laws provide.

If § 2202 means what it says in declaring the enforcementproceedings shall in no manner affect the assessment lien, the question of the nature of the title taken by the state, as a purchaser, or the title of a purchaser from the state, after the statutory right of redemption is lost, is immaterial. As to the holder of assessment liens the statutory right of redemption has never come into being, as we have tried to demonstrate.

The general rule that statutes dealing with persons are not to be construed to include the state unless clearly so intended applies when such construction would infringe upon the sovereignty or prerogative of the state, or runs counter to the settled public policy of the state. United States v. Knight, 14 Pet. 301, 10 L.Ed. 465; Nardone v. United States, 302 U.S. 379,58 S.Ct. 275, 82 L.Ed. 314.

In the levy and collection of the state's revenue no one questions the state is acting within its sovereign capacity, an essential function of the state.

In devising a system of taxation for general and special purposes, including enforcement legislation, the state is in the exercise of this sovereign power. The real inquiry is what has the state done in the premises.

It is not the policy of the state to become a landowner through its tax laws; its aim is to collect its revenues, leave the ownership of lands in the citizen, and on the tax rolls. The purchase of lands by the state at tax sales is purely statutory, to be exercised as a last resort; the price at which it is bid off, being limited to the taxes and lawful expenses.

Section 2202 defines the policy of the state with regard to liens for local assessments for public improvements. We repeat the essence of this statute is to prevent enforcementproceedings endangering local assessments. Who becomes the purchaser is not of consequence. The latter clause dealing with the title or interest acquired by the purchaser is to make more emphatic this policy.

The statute would fail of its purpose if the holder of the assessment lien must keep check on who is the purchaser at the tax sale. Indeed, the policy of the state might be readily evaded if the state by its purchase takes a title cutting off these local assessments. The prospective bidder at a tax sale, knowing of a local assessment on the property, could keep hands off, let the state bid off the property, then purchase from the state after time for statutory redemption had expired, and so acquire a title free of the local assessment, which he would not obtain by a deed from the Judge of Probate after time for statutory redemption expired.

GARDNER, C. J., THOMAS and LIVINGSTON, JJ., concur in the foregoing opinion.

BROWN and FOSTER, JJ., dissent.

The rehearing is granted, reversal set aside and decree of court below affirmed. *Page 504