88 P.2d 316 | Or. | 1939
This suit was instituted by the State Land Board, as plaintiff, to foreclose a mortgage of real property given by Mary A. Lee, now Mary A. Schroetlin, on December 27, 1926, to secure a loan of $1,900 of moneys belonging to the irreducible school fund. Defendants, other than Clackamas County, made no appearance and a default decree was entered against them. The district attorney appeared for Clackamas County and demurred to the complaint upon the ground that it failed to state facts sufficient to constitute a cause of suit against the county. The trial court sustained the demurrer and the plaintiff appeals from a decree dismissing the suit as to the defendant county.
It was alleged in the complaint that, after the mortgage was given, taxes, which are now delinquent, amounting to the sum of $943.99, were imposed upon the mortgaged land by Clackamas County during the years 1930 to 1936, both inclusive, and that the tax lien therefor was subject to the lien of the mortgage, and plaintiff prayed that a decree be entered holding to that effect.
This presents the sole question for decision in this case.
By section 69-722, Oregon Code 1930, taxes assessed against real property are declared to be a lien thereon and to have priority in payment over every judgment, mortgage or lien. This language is broad enough to cover a mortgage given to the State Land Board as security for moneys loaned belonging to the irreducible school fund.
In State Land Board v. Campbell,
"* * * The state is expressly commanded by the Constitution to provide for the establishment of a uniform and general system of common schools; and, furthermore, the Constitution commands that the school funds derived from specified sources shall be irreducible and that the interest shall be applied exclusively to the support of the common schools. * * * The title to the funds is vested in the state in its sovereign capacity; the state is not a mere dry trustee, but it holds the funds in trust for the common schools of the state, and hence in trust for a public purpose; and therefore Chapter 304, Laws 1913, cannot bar the foreclosure of mortgages given to secure moneys borrowed from the irreducible school fund."
citing in support thereof, among other cases, State v.Chadwick,
Following that decision, in Eagle Point Irrigation District v.Cowden,
In State Land Board v. Campbell, supra, where the identical question presented here arose, it was held that a lien for taxes imposed subsequently to the giving of a mortgage to the State Land Board for moneys loaned from the irreducible school fund was subject to the lien of the mortgage.
In State Land Board v. Davidson,
In Umatilla County v. Bowman,
The rules deducible from these decisions are: The State Land Board, in loaning moneys belonging to *151 the irreducible school fund, is loaning moneys which the state holds in trust for the purposes mentioned in Article VIII, section 2, of the state constitution and that, in the foreclosure of mortgages given to secure such loans, the state is the real party in interest and that no part of the moneys loaned and the interest thereon, when collected, can be used for any other purpose than those provided by the constitution; that, where a tax has been levied and is delinquent at the time the State Land Board accepts a mortgage upon the lands so taxed, the lien of the tax is superior to the lien of the mortgage subsequently taken, but where taxes are later imposed after the giving of a mortgage upon lands covered by the mortgage, the tax lien is inferior to the mortgage lien and, until the mortgage is paid in full, the mortgage has priority over the tax lien as to all moneys received from the sale of the property under foreclosure proceedings brought to enforce payment of the mortgage.
Hence, it follows that the lien of the mortgage involved here is prior in time and right to the lien of any taxes subsequently levied against the mortgaged land and the action of the court in sustaining the demurrer must be reversed. It is so ordered.
BELT, BAILEY and LUSK, JJ., concur. *152