Lead Opinion
The trustees for the support of public schools of the state of New Jersey filed this bill for the foreclosure of a mortgage upon certain premises in the city of Trenton. The complainants’ mortgage was made on the 23d of April, 1861, and recorded on the 26th of the same month. It was given to secure $5,000, money belonging to the public school fund, and invested by the trustees pursuant to the statute.
Upon the same premises there was a second mortgage, bearing date April 15th, 1867, for $5,513.33, given by Taylor to the chancellor of the state of New Jersey as an investment of moneys in the court of chancery, invested in the name of the chancellor for the benefit of parties to a suit, and their representatives.
Taxes assessed against Taylor for the mortgaged premises for the years 1875, 1876 and 1877, were in arrear and are unpaid. The city of Trenton was made a party to the suit
These provisions of the charter of Trenton, making taxes the first lien on the lands for which they are imposed, are common to the cities generally in this state, but they are not contained in the general tax laws of the state. By the general statute, taxes are a lien only on the estate which the owner had at the time of the assessment, and mortgages and encumbrances prior to the assessment are unaffected by the tax, or by a sale in satisfaction thereof. Morrow v. Dows, 1 Stew. 459.
Though the priority of taxes over mortgages and other encumbrances in the city of Trenton, and in other cities where the same policy has been adopted, exists under legislation which is special and local, such legislation was not abrogated by paragraph 12, section 8, article 4, of the constitutional amendments of 1875.
The constitutional provision referred to is in the following words : “ Property shall be assessed for taxes under
The constitutional provision invoked relates only to the assessment of taxes, and in that respect it concerns only such equalization of the burdens of taxation as will result from the designation of the property which shall be the subjects of taxation, and the apportionment of the taxes thereon under general laws, by uniform rules and upon true valuations. The reasons which induced the adoption of this con
The general doctrine of the law is, that liens take precedence in the order of priority in date. The power of the legislature, in virtue of its sovereignty, to make taxes a lien upon the estate of all parties interested in the land, and to make the tax title paramount to all other and prior claims and encumbrances, is not denied. Hopper v. Malleson, 1 C. E. Gr. 386, per Green, C.; Morrow v. Dows, 1 Stew. 463, per Van Syckel, J.; Campbell v. Howland, 5 C. E Gr. 186; Parker v. Baxter, 2 Gray 185; Dale v. McEvers, 2 Cow. 118. The displacement of prior encumbrances, prejudicial to individual rights, can only be effected by the exercise of the sovereign power of taxation. It may be, and frequently is, the occasion of injustice, and therefore will not be presumed in the absence of a clear expression of legislative intent. In the city of Trenton, as we have seen, such priority is given by statutory provisions contained in its charter. Can these statutory enactments be permitted, under the ordinary rules of construction, to affect the mortgages now in question ?
The mortgage of the complainants was given to secure an investment of funds set apart for the support of public schools. By the constitution, the fund for the support of
The discussion of this case has been had upon broader grounds, and aside from this constitutional provision, with the view of obtaining the opinion of this court as to the effect of the priority of taxes under statutes upon securities in which the funds of the state generally are invested; and that question is directly involved in this case, in considering the claim of the city to priority over the mortgage given to the chancellor. The case will therefore be examined exclusively on that ground. The constitutional protection of the school fund is referred to, that no inference may be drawn from this opinion that the legislature has the capacity to impair the integrity of that fund, or the produce of its investments, by methods which are, direct or indirect^
The immunity of the property of the state, and of its political subdivisions, from taxation, does not result from a want of power in the legislature to subject such property to taxation. The state may, if it sees fit, subject its property, and the property owned by its municipal divisions, to taxation, in common with other property within its territory. But inasmuch as taxation of public property would necessarily involve other taxation for the payment of the taxes so laid, and thus the public would be taxing itself in order to raise money to pay over to itself, the inference of law is that the general language of statutes prescribing the property which shall be taxable, is not applicable to the property of the state or its municipalities. Such property is, therefore, by implication, excluded from the operation of laws imposing taxation, unless there is a clear expression of intent to include it. Cooley on Taxation 131. Hence crown lands, and the property of the state, or its political sub-divisions, are not taxable under general statutes providing for taxation. Att’y-Gen. v. Morris, 2 M. & W. 159; Mersey Docks v. Cameron, 11 H. of L. Cas. 443; Inhabitants &c. v. County Com’rs, 4 Gray 500; Worcester County v. Worcester, 116 Mass. 193; State v. Gaffney, 5 Vr. 131. Hnder the general
The common law doctrine is, that where the king has any prerogative, right, title or interest, and the statute is general, he shall not be barred of them by the general words of the act, for the king shall not be bound unless the statute is made by express words to extend to him. Magdalen College Case, 11 Co. 74; Plowden 239; Bac. Abr., Statutes (E.) Independently of any doctrine founded on the notion of prerogative, the same construction ought to prevail, founded upon the legislative intent. Where the government is not expressly, or by necessary implication, included, it ought to be clear, from the nature of the mischiefs to be reached,
The rule of construction above mentioned was adopted and enforced in this state in Den v. O’Hanlon, Spen. 31, S. C. on error, 1 Zab. 582, under circumstances which give that case the force of a direct precedent on the subject now under consideration. John G. Leake died in 1827, intestate, seized of lands in the county of Bergen, and without heirs
Speaking of the common law rule of construction, that the sovereign power is not restrained of a previous right by the general words of a statute, Justice Carpenter, in this court, said: “ It is a rule which has been adopted and
Considerations of public policy of the greatest weight require the application of this rule of construction in the case now in hand. The moneys represented by the complainants’ mortgage are not a legitimate subject of taxation by the city, for the reason that they are the property of the state, and, by implication, are excluded from the class of property over which the city’s power of taxation extends. The sections of the city charter preferring its lien for taxes over prior mortgages and other encumbrances, are simply adjuncts to its powers of taxatiou. As statutes on the same subject, or parts of the same statute relating to one subject, they are in pari materia, and should receive the same construction. If the securities of the state are subject to this priority of lien, their value is liable to be destroyed by the failure of its agents, through neglect or inadvertence, to make redemption of the premises from sale and conveyance, by the payment of the taxes; and without a legislative appropriation, no funds would be provided for that pui’pose. It is not to be supposed that the legislature intended to make the investments of the school fund and the sinking fund precarious, by subjecting them to the liability of being swept away by the summary process of 'tax sales.
The mortgage to the chancellor is entitled to stand in the same position; It was executed and delivered in 1867, long before any of these taxes were assessed. It represents property which the state, in virtue of its sovereignty, has drawn into its courts, and is invested in the name of the chancellor, as its selected agency for the investment thereof.
The decree appealed from should be affirmed.
Concurrence Opinion
I concur in the opinion of the court in this cause, except so far as it accords to the “ chancellor’s mortgage ” priority over the tax. The reason for conceding such priority to the mortgage of the school trustees is, that that is the property of the state, and the provision of the city charter constituting taxes a lien upon land superior to mortgages, does not relate to a mortgage of the state, because there are not express words or necessary implication to that effect. Indeed, it would be strange if the state should authorize its agents to impaii’ one of its pecuniary claims in order to strengthen another no more valuable. But this reason seems to me wholly inapplicable to the “ chancellor’s mortgage.” I can regard that only as private property. It secures a bond conditioned for the payment of the interest of $5,413.33 to Elizabeth Howell during her life, and of that principal sum to J. L. II., C. M. H., F. II. and L. H., in equal shares, on the death of Elizabeth. No part of the value represented by the bond is now in the keeping of the chancellor or his officers, nor will it, according to the terms of the condition, ever get there. It is to pass from private hand to private hand for private use. That the chancellor is the nominal obligee is purely formal, not in the least affecting the right of property.
The Kellinger Case, 9 Paige 61, which is the only authority cited for the notion that such property as this is not taxable, while it decides, very properly, that the court of chancery and its officers cannot be assessed for funds there deposited, clearly implies that the suitors who own those funds can be taxed therefor as for any other personal estate. Chancellor Walworth says: “ If the court of chancery, or its officers, can be taxed as the trustee of the fund in the sixth ward of the city of New York, suitors residing elsewhere must either pay a double tax upon their interests in the fund, or the town or ward where such suitors reside will be deprived of the right to tax them anything on account of that portion of their personal estate. * * * If any part of the fund in court belongs to persons residing in the city of New York, so as to render it proper that the same should he taxed in that city, the true course is to assess the same to such owner in the ward in which he resides, as a part of his personal estate.”
The doctrine that private property, in. the custody or under the management or control of the courts for the benefit or protection of the owners, is, therefore, to be relieved from the burdens of government, seems to me to lead to results utterly inadmissible.