I am unable to agree with the conclusion reached in the majority opinion in this case. I am reluctant to continue a discussion already somewhat extended but the case is of such importance that I deem it my duty to set forth as briefly as possible some of the reasons for my disagreement.
The plaintiff contends that under § 9, chapter 292, Sess. Laws 1923 and § 176 of the Constitution of the state of North Dakota, the lien of Burleigh county for taxes is discharged as against real property acquired by the state treasurer as trustee on foreclosure under the provisions of said chapter 292 regardless of the time when such tax liens attached. On the other hand, the defendant contends that the exemption of State property from taxation under § 176 of the Constitution does not apply to property thus acquired and that the provisions of chapter 292, supra, relied upon by the plaintiff are unconstitutional and void; that if the exemption of § 176 does apply to such property it does so apply only as to taxes, the lien of which had not attached at *Page 29 the time the state treasurer acquired title, and as to all other taxes this provision of chapter 292 is unconstitutional and void in that it is in contravention of the first clause of § 176 of the Constitution providing that taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax.
Section 176 of the Constitution, as amended, reads as follows:
"Taxes shall be uniform upon the same class of property including franchises within the territorial limits of the authority levying the tax. The legislature may by law exempt any or all classes of personal property from taxation and within the meaning of this section, fixtures, buildings and improvements of every character, whatsoever, upon land shall be deemed personal property. The property of the United States and of the state, county, and municipal corporations and property used exclusively for school, religious, cemetery, charitable, or other public purposes shall be exempt from taxation. Except as restricted by this article, the legislature may provide for raising revenues and fixing the situs of all property for the purpose of taxation. Provided, that all taxes and exemptions in force when this amendment is adopted shall remain in force until otherwise provided by statute."
See chapter 90, Sess. Laws 1919. That portion of § 9, chapter 292, Sess. Laws 1923, which especially requires consideration in this case, reads as follows:
". . . In case no redemption is made from such foreclosure sale (by the manager of the Bank of North Dakota as agent of the state treasurer as trustee for the state of North Dakota on default of the mortgagor) in a manner provided for by law, a sheriff's deed shall he issued to the `state treasurer as trustee of the state of North Dakota.' Any taxes then remaining unpaid thereon shall be cancelled and abated by the board of county commissioners of the county wherein such land is situated."
Section 185 of the Constitution as amended provides:
"The state, any county or city may make internal improvements and may engage in any industry, enterprise, or business, not prohibited by article 20 of the Constitution, but neither the state nor any political subdivision thereof shall otherwise loan or give its credit or make donations to or any aid to any individual, association or corporation *Page 30 except for reasonable support of the poor, nor subscribe to or become the owner of capital stock in any association or corporation."
See Chapter 89, Sess. Laws 1919. Pursuant to § 185 of the Constitution as above quoted, the legislature enacted chapter 147, Sess. Laws 1919, establishing a bank under the name of the "Bank of North Dakota," to be operated by the state, and authorizing it to make loans to be secured by first mortgage on land. Chapter 154, Sess. Laws 1919, provides for the issuance, by the state of North Dakota, of bonds in a sum not exceeding $10,000,000, to be known as "Bonds of North Dakota, Real Estate Series," for the purpose of raising money to enable the Bank of North Dakota to make loans upon real estate mortgages as authorized by chapter 147, supra. Both chapter 147 and chapter 154 were considered by this court in the case of Green v. Frazier, 44 N.D. 395, 176 N.W. 11, and were held to be constitutional and valid enactments. That case also determined that the enterprises therein contemplated and thereby provided for and established were public purposes. Chapter 292, Sess. Laws 1923, supra, is supplementary to chapter 154, Sess. Laws 1919, as amended. Pursuant to the provisions of chapters 147 and 154, Sess. Laws 1919, the Bank of North Dakota made the Nestor Rutanen loan, out of which this controversy grew, and assigned the same to the plaintiff state treasurer as trustee for the state of North Dakota.
The Bank of North Dakota is merely the agency of the state, created for the purpose of carrying out the objects sought to be accomplished by the state. See Sargent County v. State, 47 N.D. 561, 182 N.W. 270. The bank was authorized to make loans to be secured on real estate. Sess. Laws 1919, chap. 147. The state provided funds wherewith to do this through sale of its bonds. Mortgages thus taken by the bank were to be assigned to the state treasurer, as trustee for the state, as security for such bonds. Sess. Laws 1919, chap. 147. The mortgage taken by the bank to secure the Rutanen loan consonant with these provisions was assigned to the state treasurer as trustee for the state of North Dakota. When, on default by Rutanen, this mortgage was foreclosed and sheriff's deed issued thereunder to the plaintiff state treasurer as trustee for the state, the state of North Dakota became the owner of the beneficial interest in the real property thus acquired, the naked legal title remaining in the State Treasurer as a matter of convenience. *Page 31 This ownership and condition was brought about in the manner and through the agencies appointed by legislative enactment in accomplishing purposes declared and held to be public. The Constitution, § 176, supra, expressly exempts property of the State from taxation. This exemption appears in the statute in § 2078, Comp. Laws 1913, as amended by chapter 223, Sess. Laws 1919. There is no limitation upon the exemption by restricting it to such property as may be used for public purposes. All property of the state is exempt. It has been generally held that under an exemption clause of this broad character the use to which the property may be or is put is immaterial so only that it is property of the state. See Cooley, Taxn. § 638, and cases cited. So it is clear that from the moment when the state treasurer, as trustee for the state of North Dakota, acquired title to the land here involved by virtue of the sheriff's deed issued pursuant to the foreclosure, such real estate became and was wholly exempt from taxation.
The question presented on this appeal, however, involves taxes which had attached to the land prior to the time when the trustee acquired title thereto as well as those which thereafter became due and delinquent. The contention is raised, and the majority opinion so holds, that the legislature by the enactment of the particular portion of § 9, chapter 292, Sess. Laws 1923, heretofore quoted, had in mind only taxes the lien of which had not attached at the time the trustee acquired title to the property sought to be charged. I think, however, that there is no foundation for this contention. The statute reads "Any taxes then remaining unpaid thereon shall be cancelled and abated." It seems plain that the legislature intended thereby to clear the record of all unpaid taxes without reference to the dates when the same might have been levied or might have become due. The fact that in the process of collection of taxes land charged therewith is sold to the county at tax sale does not change the character of the lien. Purchase by the county at tax sale does not result in payment of the tax. It is simply a step in the process of collection. See State ex rel. Atkins v. Lawler, 53 N.D. 278,205 N.W. 880; Hughes County v. Henry, 48 S.D. 98, 202 N.W. 286. It is argued that had the legislature here contemplated the cancellation and abatement of taxes the lien of which had attached, it would have said so in no uncertain terms, and that this is so particularly as regards taxes which had gone to sale and had been *Page 32 bid in by the county. But it seems to me that the language as used is certain and unambiguous. The legislature in other statutes has used the terms "abatement" and "delinquent taxes" respecting taxes bid in by counties at tax sale. See § 2165, Comp. Laws 1913 and chapter 227, Sess. Laws 1917, amendatory thereof. In the statute here under consideration the legislature was dealing with taxes which had not yet gone to sale as well as those which had gone to sale, and so there was no need to distinguish one from the other by particular reference. The majority opinion holds that for all practical purposes taxes are paid when the property is offered at tax sale and sold to the county, though no money is paid or received and none of the tax beneficiaries receive any fruits resulting from the sale until money is realized by the county, either through a redemption, from an assignment of the certificate, or from a sale of the land after it shall have gone to deed. In this connection it is to be noted that the statute under which property is sold and bid in by the county (Comp. Laws 1913, § 2191), also provides that such property shall not again be sold or offered for sale for subsequent taxes so long as the county holds the certificate. By inference only, the county has a lien for all unpaid subsequent taxes without sale and the same must be paid when a redemption is made. See § 2197, Comp. Laws 1913. Now under such circumstances without even the formality of a sale or the pretence of a payment, how can such subsequent taxes be said to be paid? If it be held that purchase by the county at tax sale results in a payment, how can it be held that this payment is a payment not only of the taxes for which the property is sold, but also of all subsequent taxes which are not otherwise discharged? And if it be held that it is a payment of such subsequent taxes, when is that payment made? When they are levied and assessed and become liens on the property, when they become due, when they become delinquent, or at the time of the next succeeding tax sale? Why should a tax be held to be paid at the time of sale rather than when it becomes a lien, or becomes due, or becomes delinquent? On the other hand if a tax on land is paid the moment that it becomes a lien on the land in those cases where the county holds a certificate of sale on account of a prior tax, the provision of § 9, over which this controversy has arisen, becomes futile and absurd. This result is well illustrated in the instant case. *Page 33
When the State of North Dakota took title to the land involved in October, 1924, the taxes for 1924 had been levied and assessed. They were spread against the property. The amount thereof was determined. The tax was then a lien against the land to the extent that the land was, under the circumstances, subject to tax. The 1923 taxes were in a similar case in October, 1923, when the land was sold on foreclosure and bid in by the State. These 1923 taxes became due on December 1st, 1923. They became delinquent on March 1st, 1924. The land would not have been subject to sale on account of such taxes until the first Monday in December, 1924. Now these 1923 taxes were a lien on the land when the state acquired its foreclosure certificate of sale just as much as when it acquired its deed, but no more so than the 1924 taxes were a lien on the land at the time the state acquired its deed. Yet, the majority opinion reasons that in the one case — that of the taxes of 1923 — such taxes were, in the contemplation of the legislature as expressed in § 9 of chapter 292, Sess. Laws 1919, paid at that time, but that the taxes for 1924 which were just as much a lien, were not paid, and that therefore the legislative intent was that only those taxes which were levied and assessed during the year of redemption should be cancelled and abated. Surely if the legislature intended such a remarkable distinction it would have expressed that intention in appropriate language and not have left it to tenuous inference. The whole purpose of statutory construction is to discover and apply the legislative intent. It is to be presumed that in enacting a statute the legislature acted with deliberation and intended to attain only reasonable results; that it did not intend its action should be futile or result in absurdities. It seems to me that this presumption alone justifies the construction that I am contending for. This construction is further warranted by the action of the legislature in 1925. The legislature then re-enacted the statute here under consideration. See chapter 100, Sess. Laws 1925. That same legislature refused to amend the statute (Sess. Laws 1923, § 9, chap. 292), by striking therefrom the clause providing for the abatement and cancellation of unpaid taxes. House Bill 185 — indefinitely postponed. It also refused to pass an act providing that where title is acquired by foreclosure, in cases identical with the instant case, the tax liens existing at the time when title was so acquired should be paid and discharged by the state. (Senate Bill 149 — withdrawn by its *Page 34 author with the consent of the Senate). I know that ordinarily the refusal of the legislature to enact a bill into law is not entitled to great consideration in the construction of statutes which are enacted, but I think that the circumstances in this particular case are such as to give the action of the legislature in these respects considerable significance. So it seems to me to be beyond question that § 9, chapter 292, Sess. Laws 1923, here in question, was enacted and re-enacted for the purpose of clearing the record of tax liens imposed on real property to which the state later acquired title by mortgage foreclosure in those cases where such tax liens were held by the state itself.
The defendant contends that so construed the statute is unconstitutional and void in that it is in contravention of the first clause of § 176 of the Constitution, heretofore quoted, providing that taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax. This contention so impresses the majority of the court that they on that account shrink from giving the statute an interpretation which to me seems obvious. It is urged that under the requirement that taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax, such uniformity must be determined as of the date of assessment and levy; that at the time the taxes here involved were assessed and levied this property was owned by Rutanen, and that such taxes were required to be assessed and levied against the property uniformly with those assessed and levied against real estate owned by other individuals in the same taxing district; that to now cancel and abate these taxes because subsequently the state acquired title to the land has the effect of increasing the tax burden imposed as of that time on real estate held by other individuals, and absolving that of Rutanen from all tax burden; that the revenues required to be raised by taxation as of that time were necessary for the conduct of the affairs of the various governmental units sharing therein, and that the same have been, though not collected, anticipated and spent in reliance upon the assessment and levy, and the machinery provided for the collection thereof; that to cancel and abate such taxes will disrupt the whole scheme of uniformity of taxation; that it will hamper the collection of taxes on real estate through and by means of tax sale.
When analyzed these contentions appear to be aimed at the wisdom *Page 35 of the legislature in enacting rather than at the power of the legislature to enact. The question here is not a question of legislative wisdom but one of legislative power. If the power exist this court may not hold the statute unconstitutional, even though it deem the statute unwise and inexpedient. This court must as a matter of duty sustain the statute unless it is clearly unconstitutional. While the court must, if reasonably possible, give it that construction which will render it constitutional, yet there is no obligation to distort the statute in order to avoid passing upon its constitutionality. Given that construction which it seems to me the legislature plainly intended should be given to it, I can see no sufficient reason for holding that the statute violates the uniformity clause of § 176 of the Constitution.
The legislature is the agency of the people. To it is delegated the power of taxation. It has, as such agency, the right and power to do as it will respecting matters of taxation, excepting only as it is restrained by constitutional inhibition. It is otherwise supreme. It may impose taxes or it may exempt from taxation, subject only to such restraint. In the exercise of the power thus delegated the legislature enacted the statute here challenged. It must be borne in mind that all the taxes here involved were assessed, levied, and became liens on the land subsequent to the time when the Bank of North Dakota made and assigned the Rutanen loan. The legislature, unquestionably, has the power to charge real property with a lien for the taxes imposed thereupon superior to that of any pre-existing lien, whether by mortgage or otherwise. But, on the other hand, it is equally competent for the legislature to subordinate such tax lien to pre-existing liens. See Cooley, Taxn. § 1240, and cases cited; 27 Cyc. 1176, and cases cited.
I have heretofore made reference to that part of § 176 of the the Constitution exempting from taxation property of the United States and of the state, county, and municipal corporations. As hereinbefore shown, under this broad exemption, enacted into the statute in § 2078, Comp. Laws 1913, as amended, all property of the State is exempt without distinction based on the use to which it may be put. This constitutional exemption from taxation is not peculiar to our Constitution, but is common to nearly all the state constitutions. Under it, whether reinforced by statutory enactment or not, it has generally been held that the exemption is so broad as to apply to property acquired by the state *Page 36 or its agencies even after the tax lien has passed into private ownership. See Smith v. Santa Monica, 162 Cal. 221, 121 P. 920; Webster v. University of California, 163 Cal. 705, 126 P. 974; Flanagan v. Land Development Co. 145 La. 843, 83 So. 39; Foster v. Duluth, 120 Minn. 484, 48 L.R.A.(N.S.) 707, 140 N.W. 129; Laurel v. Weems, 100 Miss. 335, 56 So. 451, Ann. Cas. 1914A, 159; Public School v. Trenton, 30 N.J. Eq. 667; State v. Locke,29 N.M. 148, 30 A.L.R. 407, 219 P. 790; Gasaway v. Seattle,52 Wash. 444, 21 L.R.A.(N.S.) 68, 100 P. 991; State v. Snohomish County, 71 Wash. 320, 128 P. 667. In none of these cases was the right of the state to avoid the lien or to resist its enforcement challenged as violating the constitutional requirement of uniformity of taxation though the several constitutions contained provisions almost identical with the uniformity clause of § 176, supra, on which the argument set out in the majority opinion is predicated.
It is urged that in the cases cited, the purposes for which the property was acquired and used were purposes distinctly public and necessary to the carrying on of the proper functions of the state. However, if that be material, the loaning of money on real estate to its citizens has been declared to be a public purpose by the people of the state of North Dakota. That it is a proper public purpose is no longer open to question. Green v. Frazier,44 N.D. 395, 176 N.W. 11. See also Paulus v. State, 52 N.D. 84,201 N.W. 867.
There is no ground for distinction between one public purpose and another; between the loaning of money and the furnishing of light or water, or the performance of any other of those functions which have come to be recognized as public and governmental. Furthermore, it seems to me that the majority opinion somewhat misconceives the situation. When the State of North Dakota received the Rutanen mortgage by assignment from the Bank of North Dakota that mortgage became a part of the bond payment fund, as much the property of the state as were any other mortgages in which any other of the state's sinking funds were invested. The loan to Rutanen was made by the Bank of North Dakota. Whether that bank was or was not synonymous with the state of North Dakota in so far as questions of sovereign attributes are concerned, is here immaterial. When that mortgage was assigned to the state treasurer as trustee it became the property of the *Page 37 state regardless of its source or origin. That same section of the Constitution, § 176, which provides that taxes shall be uniform upon the same class of property, provides for the exemption from taxation of state property. The different taxing subdivisions are merely agencies of the state erected and clothed with their various powers to effectuate the purposes of the state. I can conceive of no ground for holding that the legislature may not constitutionally provide that tax liens, subsequently created and belonging to the state, through its agencies, shall be subordinate to other liens which it has directly acquired and holds upon the same property. Indeed, it has been held under constitutional provisions almost identical with our own that such is the result independently and in the absence of legislative enactment. See Public School v. Trenton,30 N.J. Eq. 667. See also Chicago v. People, 80 Ill. 384.
Surely an enactment providing that mortgage liens on real property, owned by the state should be superior to the liens of subsequent taxes would be wholly consistent with the constitutional exemption of state property from taxation and supported by the same underlying reasons. While property on which the state has liens by way of mortgage is in private ownership it is subject uniformly with other like property to taxes imposed by and through governmental agencies, though the law may subordinate such taxes to the state's other liens thereon. And so, when such mortgage liens owned by the state are foreclosed and ripen into title in the state, we can see no reason for holding that there is any violation of the uniformity clause because the legislature enacts that the title thus acquired is superior to the tax liens held by the state. Such enactment attains exactly the same end after the state acquires title as might have been insured before when the state had only a lien by mortgage.
Much is said in the majority opinion about profit and loss to the bond fund should one construction or the other be given to the statute here under consideration. It seems to me that whether or not the operation of this statute will result in profit or loss to the fund has nothing to do with the question to be determined. Such an inquiry might be pertinent and proper in ascertaining the purposes actuating the enactment, but it is not in passing upon its constitutional propriety. *Page 38
I think that the complaint was in all respects sufficient and the demurrer should have been overruled.
On Petition for Rehearing.