Granite Bituminous Paving Co. v. Parkview Realty & Improvement Co. , 168 Mo. App. 468 ( 1912 )

ON MOTION FOR REHEARING.

R. E. ROMBAUER, Special Judge.

This is a suit on a special taxbill issued in pursuance oí the Charter provisions of the city of St. Louis relating to street improvements. The suit was tried by the circuit court without the intervention of a jury, and resulted in a judgment for plaintiff in the sum of $1615.25, with interest at the rate of eight per centum per annum from date, charging the lot against which said taxbill was issued with the amount of the judgment, interest and costs, and ordering the sheriff of the city of St.' Louis to sell the same to satisfy the amount thus found to be due.

From this judgment all the defendants appealed, assigning for error that the judgment was against the law and the evidence, was excessive, as far as the interest was concerned, and was erroneous'because the taxbill was barred by limitation, as far as all defendants were concerned, save the Parkview Realty and Improvement Co., who had ceased to be an owner, its title having been divested prior to the trial of the case by foreclosure proceedings.

The appeal was heard at the last term of this court and resulted in a reversal of the judgment. Upon a motion for rehearing filed by respondent, some doubts were entertained by the court as to the correctness of that ruling, and in view of the grave importance of the question to the municipality as well as to individual owners of real property within the city, full argument on the motion for -rehearing was ordered at the present term. One of the judges being disqualified to sit, the undersigned was, with the consent of all parties, appointed special judge.

In order to pass, intelligently upon the contention of the defendants, that -the judgment is erroneous, for reasons hereinabove stated, it is -necessary to set out certain provisions of the Charter of the city of St. Louis relating to street improvement.

Section 14 of article 6 levies the tax against the property benefited.

Section 24 directs the issuance of the taxbill but does not require that any one be named therein as owner.

Section 25 provides that the taxbills shall be a lien on the property charged therewith, but does not impose any personal liability on the owner. This section further provides that suit for the enforcement of the' taxbills shall be brought in the name of the contractor against the owners of the land, and that such taxbills shall be barred by limitation after two years from their maturity, unless proceedings in law shall have been commenced to collect the same within two years from their maturity.

It was a mooted question in this state at one time whether special taxes assessed against specified property for street improvements stood, as to their superior lien over prior incumbrances, upon the same footing as general taxes assessed by the state. This question has, since the trial of the cause in the lower court, been set at rest by the opinion of the Supreme Court in the case of the Morey Engineering & Construction Company against the St. Louis Artificial Ice Rink Co., 242 Mo. 241, 146 S. W. Rep. 1142, which decides that question in the affirmative. The further question, however, which is the vital question in this case — namely, whether prior incumbrancers of the property charged with the special tax lien are necessary parties to a suit brought by the contractor against the owner, not only for the purpose of subordinating their lien to the superior lien of the special' taxbill, but also for the purpose of keeping alive the lien of the special taxbill for more than two years after its maturity — is a question which has not been decided by that case, and is one which must be determined by the rules of law defining the respective rights of the holders of senior and junior incumbrances in proceedings brought to foreclose the senior lien.

The Supreme Court, in the Morey Engineering case, supra, quoting' from Barber v. St. Joseph, 183 Mo. 451, holds that “proceedings to enforce special taxbills, are in the nature of proceedings in rem, and compulsory payment of the judgment can only be made by a sale of the assessed property,” and, quoting from the case of Keating v. Craig, 78 Mo. 507, further holds that the lien of a special taxbill, like the lien of general taxes, is superior to any incumbrance with which the owner may charge the land. If this be so, beneficiaries of prior incumbrances upon the land .hold the same right against the lien of a special taxbill as the junior mortgagee holds against the prior mortgagee. The former is a proper party to any proceeding to enforce the superior lien by foreclosure, but he is not a necessarj- party.' If not made a party, he is not confined to his right to redeem, hut may attack the validity of the'prior incumbrance, in any subsequent proceeding, because he had no day in court. ’ To use a terse definition of his rights, his right of entry is gone, but his right of action remains. His right to redeem before j oreclosure sale remains intact, even if he is made a party to the foreclosure proceedings.

Having thus stated the general rules of law applicable to a case stated, we shall apply them to the uncontroverted facts in this case.

The special taxbill sued upon was issued to the plaintiff July 1, 1905. At that time there were the following recorded liens by deed on the property: One dated April 30, 1901, in favor of Isaac H. Orr, trustee, to secure certain notes; one dated July 1, 1902, to the Lincoln Trust Company, to secure certain bonds• and one dated August 1, 1902, to the Lincoln Trust Company, to secure certain other bonds.

The Parkview Realty & Improvement Company was the legal owner of the property when these two last mortgages were made and recorded, and was also the legal owner of the property when the taxbill in question was issued. On July 19, 1905, notice of the issue of this taxbill was served on the Parkview Realty & Improvement Company, and on June 26, 1907, and within two years from the maturity of said taxbill, suit was brought against the Parkview Realty & Improvement Company, Isáac PI. Orr, trustee in the mortgage of April 30, 1901, and the Lincoln Trust Company, trustee in the two mortgages of July 1 and August 1, 1902. None of the beneficiaries in these mortgages were made parties defendant.

These mortgages are not set out in the abstract of the evidence of the appellant, nor does it appear that they were ever offered in evidence. The plaintiff’s amended petition, however, on which the cause was tried, stated that the mortgage of July 1, 1902, of the Parkview Realty & Improvement Company to the Lincoln Trust Company, as trustee for bondholders, secured 5000 bonds, and the mortgage of August 1, 1902 between the same parties secured 2000 bonds, and that the Nina Realty Company became the purchaser of the property charged with the plaintiff’s lien, on the foreclosure sale of these mortgages, subsequent to the issue to plaintiff of the taxbill in question. "While these allegations are denied by the defendants’ answers, they are admitted to be true in the briefs of counsel, and we have taken them to be true; otherwise, we cannot see how the defendants could have any standing in this court.

All of the defendants, except the Parkview Realty & Improvement Company, in their separate answers set up the fact that the taxbill, owing to the two years’ limitation of the lien contained in section 25 of the Charter of the city of St. Louis, hereinabove set out, has become invalid. During the pendency of the suit, the Nina Realty Company became purchaser of the property, under foreclosure of the mortgages to the Lincoln Trust Company, and it was made a party defendant to the suit by amended petition on November 2, 1908, when more than two years had elapsed from and after the maturity of the taxbill.

We may state at the outset that it is next to impossible to reconcile the various- conflicting decisions of the appellate courts in this State on the question whether, in proceedings for enforcement of special taxbills, incumbrancers prior in time and record are necessary parties to enforce the bill against the property. Prior to the decision in the Morey Engineering & Construction Company case, supra, the same conflict existed on the question as to whether the lien of a mortgage, prior in time and, record to the issue of a special taxbill, constituted a superior or inferior lien on the property to the lien of a taxbill. When that case decided that the lien of the taxbill was superior, it necessarily decided, by analogy to the rights of other prior and subsequent lienors, that the incumbrancer whose lien was subordinate was not a necessary party to the proceeding. This decision establishes a rule of property, which, on well-settled principles, is binding on all courts of the State in proceedings involving the same question. It logically follows from the foregoing that, under the recent decision of the Supreme Court, the owner against whom the bill has been issued and who was the legal owner at the time the lien of the taxbill attached is the only necessary party defendant in proceedings for the enforcement of its lien, and if the suit is instituted againsst him within two years after maturity of the bill, it is sufficient to preserve the lien of the bill, although parties beneficially interested in liens on the, property, prior in time, or becoming owners by the foreclosure of such liens, may never be made parties defendant.

There is another consideration equally potent which leads to the same conclusion. It is a maxim of judicial procedure, that where two conclusions are equally admissible, in construing a law, the one should be adopted by the court which will best carry out the object which the lawgivers sought to reach. The term “owner,” in its restricted sense,, means the legal owner, and, in its wider sense, any person beneficially interested in the property. The city Charter, in providing for the pay of the contractor in special taxbills, must have used the term owner in its more restricted sense, since, otherwise, the lien of the special taxbill, in preference to existing liens created by deed, would have become practically unenforceable and furnish the contractor no security whatever. Of this, the facts disclosed by the record in this case furnish the fairest illustration. The two trust deeds held by the Lincoln Trust Company, as above seen, secured seven thousand bonds. Nothing to the contrary appearing in the record, we must assume that these bonds, as all other bonds of a similar character, were negotiable by delivery, and' may have been negotiated to seven thousand different persons, each of whom, under the rule well established in this State, would have become a pro tanto beneficial owner in the property charged by the tax lien and, under the defendants’ contention of the proper construction of the law, a necessary party defendant to the foreclosure of plaintiff’s tax lien. Yet the plaintiff could not have ascertained by the greatest diligence the name of such parties, since the law requires no registry of these transfers. On the other hand, the contractor’s claim is based upon records accessible to all interested in the property, from its inception to the date of the issue of the taxbill.' The work performed by him is bound to be performed in the immediate vicinity of the property to be charged with the tax lien, and there is nothing to prevent those beneficially interested from informing themselves of its character and extent;

The law puts the onus on the contractor to ascertain who is the legal owner of the property benefited when the taxbill against it is issued, and who, hence, is a necessary party to a. suit for its enforcement against the property. Prima facie, the owner of record is the legal owner, unless the contractor is aware of an unrecorded conveyance changing the ownership; [Vance v. Corrigan, 78 Mo. 94.] The exception to this rule is ownership by descent, because the contractor can always ascertain, by reasonable inquiry, whether the apparent record owner is living or dead, and if dead who his heirs are. The case of Jaicks v. Sullivan, 128 Mo. l. c. 186, 30 S. W. 890, furnishes an apt illustration. In that case Richard L. Sullivan was sued as owner four years after his death. The plaintiff sought to amend his petition by bringing in his widow and heirs after the two-year limitation had barred the taxbill. The Supreme Court held that the lien of the taxbill had expired, because the suit against a dead man could not be considered the institution of a suit against the owner, on any principle.

The point has been made upon the argument that the taxbill is, under the Charter, prima facie evidence only against the owner, and hence if the other defendants, other than the Parkview Realty Company, were not owners within the purview of the Charter provisions, no judgment could be rendered affecting their interests, upon the evidence of the taxbill alone. That objection is not sustained by the record, which shows that the plaintiff offered in evidence the ordinance and contract under which work was done, and proved by its general manager that the plaintiff had performed the work called for by the contract.

The foregoing considerations lead to the conclusion that the judgment of the court was correct, and should be affirmed, unless the defendants’ contention, that it is excessive in interest, is borne ont by the record proper.

An argument was pressed upon us that the judgment is excessive, as far as part of the interest is concerned. It suffices to say, in disposing of this objection, that the judgment is not challenged on that ground by the motion for new trial.

Section 7179 of, the Revised Statutes provides, that creditors shall receive interest at the rate of six per cent per annum, when no other rate is agreed upon for all moneys after they become due, and demand of payment is made. Section 7181 provides that' all judgments for money shall bear six per cent interest per annum until satisfaction be made by payment, and that judgments upon contracts bearing more than six per cent interest shall bear the same interest as borne by such contracts. The eight per cent interest which the Charter provides, if default be made in the payment of a taxbill, is penal interest and not one provided by contract, .hence the judgment in this case, as far as it 'recites that the judgment rendered shall bear eight per cent interest, is excessive to that extent. This error appears by the record entry of the judgment and we are bound to take cognizance of it although the defendants’ motion for new trial does not complain of it, because the judgment, to that extent, is a judgment against the law.

It is therefore ordered that the motion for rehearing be sustained, and that so much of the judgment entry as contains the words “with interest at the rate of eight per cent per annum from the date of judgment until paid” be stricken from the record, and that the judgment as thus amended be- affirmed, and that the cause be remanded to the trial court to enter up judgment in conformity with this opinion.

Reynolds, P. J., concurs, Caulfield, J., not sitting. Nortoni, J., dissents in a separate opinion and asks that the case be certified to the Supreme Court, deeming tlie majority opinion in conflict with decisions of the Supreme Court and the Kansas City Court of Appeals referred to in his opinion.

It is accordingly ordered by the court that this case be certified to the Supreme Court.