Halverson v. Boehm , 76 N.W.2d 178 ( 1956 )

BURKE, Chief Justice.

The gist of this action is alleged fraud. Plaintiffs averred that, during negotiations for the purchase of certain real property from the defendants, the defendants falsely represented that the property was “free and clear of all liens and encumbrances of any nature whatsoever, save and except a certain mortgage held by the First National Bank of Mandan, when in truth and in fact “there were special assessments assessed against said described real estate by the City of Mandan for local improvements in the total amount of $1,085.95 which were a charge and encumbrance upon said described real estate”; that in reliance upon said representations, plaintiffs purchased the said property and that by reason of defendants’ fraud suffered damages in the amount of $1,085.95.

In their answer the defendants alleged that in the preliminary contract for the sale of the property they agreed with the plaintiffs that upon payment of the purchase price, they would convey to the plaintiffs by warranty deed a merchantable title to the property, free and clear of all encumbrances except a certain mortgage held by the First National Bank of Mandan; that upon payment of the purchase price they did convey the property by a deed which warranted that the property was free of all encumbrances except the mortgage to the First National Bank of Mandan; that during all the time the negotiations between the plaintiffs and the defendants were taking place, no part of the special assessments which plaintiffs alleged were an encumbrance against the property had been certified and returned in any amount by the City of Mandan to the County Auditor of Morton County and that said special assessments did not constitute liens or encumbrances upon the property sold at the time of any of the negotiations or transactions between plaintiffs and the defendants. Defendants also denied making any false representations to plaintiffs and asked that the action be dismissed. The issues in the action were tried to a jury. After both sides had rested, defendants moved for a directed verdict. This motion was denied. The jury returned a verdict in favor of the.plaintiffs. Before the entry of judgment, defendants moved for judgment notwithstanding the verdict. This motion was also denied and judgment against the defendants was entered. The defendants have appealed from the judgment. They have specified as error, the denial of the motions for a directed verdict and for judgment notwithstanding the verdict and the refusal of the trial judge to give a requested instruction.

The issue raised by the motions for a directed verdict and for judgment notwithstanding the verdict is the sufficiency of the evidence to sustain the verdict. Under the pleadings the issues were clearly defined. Plaintiffs alleged that defendants had falsely represented that there were no liens and encumbrances against the property except a certain mortgage when in truth and in fact there were outstanding unpaid special assessments which were a lien and encumbrance against the property. The defendants admitted that they represented to the plaintiffs that there were no liens or encumbrances against the property except the mentioned mortgage and so warranted in the deed they gave them. They admitted that there were uncertified unpaid special assessments in the sum alleged by the plaintiff entered upon the books of the City of Mandan but alleged that as between vendor and vendee such assessments were not a lien or encumbrance upon the property because they had not been certified to the County Auditor of Morton County.

The testimony of the plaintiffs, however, was to the effect that the defendants had represented that there were no special assessments remaining to be paid with respect to this property. The defendants denied such statements. The evidence was thus more general than the pleadings. No objection was made that the proof varied materially from the pleadings and the case was submitted to the jury upon the issues arising under the evidence. The testimony of the plaintiffs permits a legitimate inference that defendants represented to the plaintiffs that there were no unpaid special assessments, certified or uncertified, against the property and therefore it is sufficient to sustain the verdict. It follows that the motions for a directed verdict and for judgment notwithstanding the verdict were properly overruled.

Error was also specified upon the trial judge’s refusal to give a requested instruction which was as' follows:

“The court instructs you that the special assessments against the property involved in this action which had not been certified and returned to the County Auditor of Morton County, and did not appear on the books- and records of the County Auditor of Morton County, May 3, 1953, were not encumbrances against the lands sold by defendants, to the plaintiffs, and conveyed by the'defendants to.the plaintiffs by deed dated May 3rd, 1952.”

Section 40-2403 NDRC 1943 provides:

“As between a vendor and vendee, all special assessments upon real property for local improvements, from and after the first day of December after the assessments have been certified and returned to the county auditor, shall be and become a lien upon the real property upon which the same are assessed in the amount certified and returned, and no more.”

This statute was originally enacted as Chapter 35, Laws of N.D.1903. It was enacted as an emergency measure and carried an emergency clause which read as follows:

“There being, no law providing when special assessments shall become a lien on real property as between vendor and .vendee, this .act shall take effect .and be in force after its passage and approval.”

Prior to the passage of this act, the laws of this state provided:

“ * * * such assessment, with interest accruing thereon, shall be a paramount lien upon the property within the limits of the sewer improvement district, in which such improvement

is made and upon which such assessment is levied from the time such assessment list is approved by the city council,. and shall remain a lien until fully paid * * Laws of N.D. 1899, Chapter 41, § • 10, Chapter 42, § 3.

In all of the laws in force in this state prior to the enactment of Chapter 35, Laws of N.D.1903, the lien of special assessments was generally effective as to all persons from the time of the approval of the assessment list by the governing body of the assessing municipality. No exception was made with respect to the effectiveness of the lien as between vendor and vendee. In the opinion of the Legislative Assembly in 1903 this situation constituted an emergency and to meet this emergency they adopted Chapter 35, supra, which provided that special assessments should become a lien as between vendor and vendee on December 1st, following their certification to the county auditor. The language of the statute clearly implies that as between vendor and vendee, special assessments are not lien until December 1st, following such certification. Furthermore, the circumstances in which Chapter 35, supra, was adopted and the wording of the emergency clause clearly demonstrate that the intent of the legislature was to except those who stood in the relationship of vendor and vendee from the effect of the provision that special assessments should be a paramount lien from the time of their approval by the governing board of á municipality.

The question of whether uncertified special assessments constituted liens or encumbrances such as were covered by a general, warranty in a deed against encumbrances, was before this court in Murray Bros. v. Buttles, 32 N.D. 565, 156 N.W. 207. In that case it was held that as .between, vendor and vendee such assessments were not encumbrances and that therefore a vendor was not liable for uncertified assessments under a general warranty against encumbrances.

It appears therefore, that the requested instruction correctly stated the law of this state. Since the preliminary contract between the parties provided that the defendants would convey to the plaintiffs a title which was free of all encumbrances except a certain mortgage, and since the deed delivered by the defendants to the plaintiffs contained a warranty against encumbrances,, and since at the time of these transactions between the' parties, there were no unpaid special assessments against the property which had been certified to the county auditor, the instruction was pertinent to the issues in the case. The instruction should have been given and it was prejudicial error to refuse to give it. The judgment of the district court is therefore reversed and a new trial granted.

MORRIS, SATHRE and JOHNSON, JJ., concur.