132 P.2d 443 | Colo. | 1942
THE action, in which the proceedings are here under review, was for replevin of certain tools, accessories and servicing equipment for the lubrication of automobiles, previously used by one Dwyer in the conduct of a business known as the "Ernie Dwyer Pontiac Company" in Colorado Springs. Plaintiff in error, plaintiff below, claimed under a chattel mortgage given it by Dwyer for the balance of the purchase price of the personal property in controversy. In justification of his possession the answer of defendant asserted title by purchase at a sale under a distraint warrant issued by the state treasurer for delinquent sales and service taxes theretofore collected by Dwyer from his customers for goods sold and services performed, but which he had not remitted to the state as required by pertinent statutes. By its replication the mortgagee denied certain of the new matter contained in the answer and pleaded six special defenses challenging the validity of the tax, the tax lien and sale thereunder upon constitutional grounds. Demurrers by defendant to such six special defenses were sustained and after a stipulation as to certain facts not covered by the pleadings, the court entered judgment in favor of defendant and against the plaintiff mortgagee. The latter prosecutes this proceeding in error. Because of the interest of the state in the important legal questions involved, the Attorney General in his official capacity, as amicus curiae, participated in the trial below and appears here in the same relation supporting the position of the defendant.
The taxes in concern became due the state under the 1937 sales and service tax acts (chapters 230 and 240, S.L. '37) which were in effect when the chattel mortgage here involved was given. The distraint and sales proceedings were conducted under the amendatory sales and service tax acts of 1939 (section 3, chapter 148, and section 12, chapter 158, S.L. '39, being section 25, *142 chapter 144, and section 12, chapter 148A, 1941 Cum. Supp., '35 C.S.A.), which became operative at a date subsequent to the recording of the mortgage.
There is no dispute as to the amount of tax due from Dwyer, the mortgagor, and it is conceded that at the time of the distraint levy the chattels involved were in his possession and being used by him in conducting his business. The 1937 sales tax act provides: "The tax imposed * * * shall be a first and prior lien upon the goods and property of any retailer, and shall take precedence over other liens or claims of whatsoever kind or nature; * * *." Section 24, chapter 230, S.L. 1937. The 1937 service tax act recites: "The tax imposed by this act shall be a first and prior lien upon the goods and property of any person rendering or performing services or other person liable for the payment of taxes under this act, and shall take precedence over other liens or claims of whatsoever kind or nature; * * *." (Section 11, chapter 240, S.L. 1937) If at all pertinent, which we do not determine, the 1939 acts (section 2, chapter 148, and section 11 (a), chapter 158, S.L. 1939) in continuing, inter alia, the priority of the tax lien as to the goods and business fixtures of the retailer, in which category the chattels herein involved fall, in no manner impaired the status of the lien imposed, under the 1937 acts.
[1] Notwithstanding that in Colorado, under the common-law rule here attaining, the legal title to chattels is regarded as passing to the mortgagee by a mortgage thereon, there is a right of redemption in the mortgagor until foreclosure which leaves in the latter an interest, as property, which he may sell, encumber or transfer subject to the mortgage, or which may be levied on under execution against him. Accordingly, in this jurisdiction controversies between a lien claimant and a chattel mortgage holder concerning rights in the property covered thereby, generally have been treated as contests between lien claimants with the disposition dependent upon the priority of their respective liens. *143
This theory has been followed in litigation involving the rights of a chattel mortgagee as against an agistor's lien (Rohrer v. Ross,
In the case of People v. Denver,
Recently, in the case of Denver v. Armstrong,
Concerning statutes which directly provide that the *144
lien for taxes shall be superior to all other liens and claims, as does the 1937 act herein involved, the Court of Appeals in the opinion of Gifford v. Callaway,
[2] "The legislature has power to make personal property taxes a prior lien over chattel mortgages and has done so in some cases. A statute making the tax lien superior is not in contravention of any constitutional inhibition as applied to mortgages executed after the statute took effect. As to them the statute becomes a part of the contract and the mortgage must be treated as though its provisions had been incorporated therein. * * *." 10 Am. Jur., p. 860, § 220.
In Minneapolis Threshing Machine Co. v. RobertsCounty,
In Burfiend v. Hamilton,
"It would greatly embarrass the state in the collection of its revenues if it could not, by appropriate legislation, secure to itself the payment of taxes by making them a first lien on the property of the person whose duty it is to pay the same, whether the tax be a property or a license tax. No thoughtful person, we think, would contend that the state, in a case like the one before us, should be driven to the necessity of paying off mortgages on property subject to taxation, or a lien for taxes, before it could collect its revenues. Any person situated like Hirschman in this case, who wished to avoid the payment of legal taxes, would only have to execute a *146 mortgage on the property used in his business, in order to compel the state either to pay off the mortgage or lose the taxes due.
"We cannot consent to a construction of the law that would produce such disastrous results to the state. When the mortgagees took the mortgage they rely on in this case, they knew what the law was. They will not be permitted to say that they did not know that the law made the license tax due from the mortgagor a first lien on the property he was using in his business as retail liquor dealer. The law entered into the mortgage contract. (Jones, Chat. Mortg. § 474.)
[3] "The lien fixed by the statute is different from an ordinary incumbrance. (Cooley, Tax'n (2d Ed.) p. 445; Osterberg v. Union Trust Co.,
[4] The foregoing quoted statements from the authorities demonstrate the impotency of the mortgagee's contention that the statutory lien was secret and so without validity. We fail to perceive that the provisions of section 16 (a) of the sales tax act (S.L. 1937, p. 1088) prohibiting the state treasurer or his employees from divulging "any information gained * * * from any return" filed by the taxpayer, strengthens the argument of mortgagee's counsel on this point. The mortgagee was charged with notice of the statute and its provisions, and by operation of law these became a part of the mortgage contract. In effect, the incorporation in the mortgage of a clause whereby the mortgagor agreed "to promptly pay when due all taxes, license fees or other public charges that may be levied against or upon said chattels and to satisfy any and all liens that may be assessed upon or against the same," is a strong indication that the mortgagee so recognized when the instrument was prepared. *147
[5, 6] On the premise that under both the sales and service tax law, the tax is imposed on the consumer of the goods sold or the recipient of the service rendered and is collected by the retailer as trustee for the state (section 25, chapter 230, section 12, chapter 240, S.L. 1937), the mortgagee next contends that when Dwyer collected the tax from his customers the tax was paid to the state and no lien therefor could be asserted thereafter by the state. A retailer who collects such tax by virtue of the last mentioned sections is a trustee and answerable to the state for such moneys until they are paid over to the state treasurer. See, Wade v. State,
[7] Counsel for the mortgagee further asserts that the sales and service tax acts violate due process requirements in that the tax is imposed without notice or hearing to the taxpayer. This principle has no application in the case at bar. "It has been stated by the United States Supreme Court that the right to notice and hearing does not extend to taxes of every description, but only to such as involve the exercise of quasi-judicial power in the determination of amount. This amounts *148
to the same thing as saying that notice and an opportunity to be heard are necessary to due process of law under statutes imposing a tax in cases other than those in which the tax may be computed by a simple mechanical calculation. Therefore, in the case of an excise not dependent upon the valuation of property and in which there is no discretion as to the amount, no notice of the assessment or levy of the tax is necessary." The taxes herein involved come within the latter category. 12 Am.Jur., p. 330, § 640. See, also, People, ex rel. v. Letford,
We now come to the final contentions of the mortgagee. Under the 1937 acts no specific procedure was provided for the enforcement of the liens imposed thereby. The 1939 acts, which did not become operative until after plaintiff's mortgage was recorded, provided for a summary method of enforcement by distraint and sale by the state treasurer. It is stipulated that the sale under which defendant claims was conducted in strict accord with the procedure provided by the 1939 acts. The mortgagee asserts first, that these latter acts can have no retroactive effect and that if such is accorded, the obligation of his contract is impaired; second, that in giving to the director of revenue the power of distraint, levy and sale, the legislature unconstitutionally attempted to confer judicial powers upon the executive branch of government.
[8] The first point is disposed of adversely to the contention of the mortgagee by our pronouncements inMilliken v. O'Meara,
Similarly, in the case at bar the lien involved existed under the 1937 act when the mortgage was taken and even by foreclosure, the tax not having been paid, the mortgagee could not have procured the property free from the lien.
[9] As to the second point, the mortgagee relies principally upon the case of Johnson v. Diefendorf,
In Goldsmith v. McAnally, 92, Colo. 384,
The judgment is affirmed.
MR. CHIEF JUSTICE YOUNG not participating.