Thompson v. Henderson

Parke, J., delivered the opinion of the Court. Taxes are not liens unless made so by statute (Parlett v. Dugan, 85 Md. 407 ); but, by section 56 of article 81 of the Code, all state, county and municipal taxes are created liens on the real estate of the party indebted from the time of the levy of the tax (Union Trust Co. v. Belvedere, 105 Md. 507, 525 ). Since there is no statutory provision to that effect, taxes are not a lien upon personal property until made so by a levy thereon (Parlett v. Dugan, 85 Md. 409 ) ; but, by force of express enactments, the exemptions of property allowed a debtor from execution or seizure in satisfaction of a debt or claim do not apply to any levy on property for nonpayment of taxes (section 12 of article 83 of the Code) ; and whenever personal property which has been assessed as the property of any individual in any county, city or elec ⁶⁶⁷ tion district shall be removed before the tax levied thereon has been collected, the collector in whose hands the levy is may pursue said personal property and collect said tax in the same manner as if the property remained in his said county, city or district. Section 69 of article 81 of the 'Code.

Collection of taxes is enforced by an action of assumpsit or debt and by way of distress or execution to be levied upon the real or personal property of the tax debtor; or, where the property is in the control or custody of equity, through application by the tax collector to that tribunal for payment. If the estate of the taxpayer is in the orphans’ court for administration, all taxes due and in arrear, without being proved and passed, are preferred to the exclusion of all other debts. Sections 58, 59, 61-73 of article 81, and section 120 of article 93 of the Code; Prince George’s County v. Clark, 36 Md. 219 ; Appeal Tax Court v. West. Md. R. Co., 50 Md. 295 ; Baltimore v. Howard, 6 H. & J. 383 ; Duvall v. Perkins, 77 Md. 587 ; American Coal Co. v. Allegany County, 59 Md. 185 ; Ex parte Tax Sale of Lot 172, 42 Md. 196 ; Meyer v. Steuart, 48 Md. 423 ; Margraff v. Cunningham, 57 Md. 585 ; Bonaparte v. State, 63 Md. 470 ; Blakistone v. State, 117 Md. 237 ; Rouse v. Archer, 149 Md. 470 .

The collector can enforce the payment of all the taxes due upon any of the property of the tax delinquent. The fact that there is ample personal property out of which the tax might be made does not prevent a sale of the real estate for that purpose. Sections 58, 59, 60 of article 81 of the Code; Dyer v. Boswell, 39 Md. 469 . And when a sale of land is made in accordance with the requirements of the statute, and a tax deed is given, “then from the time of its delivery it clothes the purchaser, not merely with the title of the person who had •been assessed for the taxes and had neglected to pay them, but with a new and complete title in the land, under an independent grant from the sovereign authority, which bars or extinguishes all prior titles and incumbrances of private persons, and all equities arising- out of them.” Hefner v. North Western Ins.

Co., 123 U. S. 751 ; Textor v. Shipley, 86 Md. 424, 438, 439 ; McMahon v. Crean, 109 Md. 552 ; ⁶⁶⁸ Hill v. Williams, 104 Md. 604 ; Wagner v. Goodrich, 148 Md. 318, 322, 323 ; Winter v. O’Neill, 155 Md. 624 . Prior to the Act of 1892, ch. 518, whenever a sale of either real or personal property was made by any ministerial officer under judicial process or otherwise, all sums due and in arrear for taxes from the party whose property was sold had to first be paid and satisfied by the party selling paying the taxes to the collecting officer. This statutory obligation applied to taxes on both real and personal property, and whether the taxes due and in arrear were upon the particular property sold or some other belonging to the taxpayer. Section 64 of article 81 of the Oode of 1888.

It was held in Degner v. Baltimore, 74 Md. 144 , that this provision of the law was not a lien; but, in the language of the opinion, “Priority of payment is a preference in the appropriation of the proceeds of a debtor’s property. As it puts the taxes ahead of other claims it is near of kin to a lien and may be called a quasi lien. This statute provides that in all cases where an officer of the law by judicial authority takes charge of the personal property of a debtor or person, and sells the same, all taxes due on the property shall be first paid by him. It in effect makes such judicial officer the collector of the taxes in that condition of things without the intervention of proceedings by distraint.

This payment is to be made of such taxes irrespective of the question whether an actual lien has been acquired by distress or not.” It should be observed that for these taxes to be a preference they must be due and in arrear, which was fixed by statute as on and after the first day of January succeeding the date of the levy (Section 54 of article 81 of the Code; Wheeler v. Addison, 54 Md. 41, 47 ; Bamberger v. Baltimore, 125 Md. 431, 433-435 ; Findlay v. Darnall, 143 Md. 291, 294 ), and that, in addition to those made by other ministerial officers, a sale either by a trustee under deed or will or by decree of court or under a power of sale in a mortgage deed is one by a “ministerial officer under judicial process or otherwise” within the meaning of section 64 of article 81 of the Code of 1888. Parlett v. Dugan, 85 Md. 407, 413 ; ⁶⁶⁹ Gould, Trustee, v. Baltimore, 58 Md. 46 ; Hebb v. Moore, 66 Md. 167 ; Fulton v. Nicholson, 7 Md. 107 ; Rouse v. Archer, 149 Md. 470, 473 . All of these actions, liens and priorities were subject, so far as the taxes levied for county or city purposes, to the statutory bar of limitations of four years from the date of their levy, and a possible extension for two more years in the event a trustee or receiver be appointed to complete the collection. Section 93 of article 81 of the Code; Tuck v. Calvert, 33 Md. 209, 224, 225 ; Georgetown College v. Perkins, 74 Md. 72, 74, 76 ; Hebb v. Moore, 66 Md. 167, 170 ; Perkins v. Gaither, 70 Md. 134 ; Condon v. Maynard, 71 Md. 601, 606 ; Rouse v. Archer, 149 Md. 473 ; Casualty Insurance Co.'s Case, 82 Md. 535, 565 .

Through these liens, remedies, and priorities, the payment of taxes upon both realty and personalty was secured and enforced as a single claim, and without any distinction between the amount of taxes severally accruing due on the respective items of property assessed and together producing the sum total of the taxes payable by the owner. While the public benefited, hardship occasionally resulted to other claimants against the taxpayer or his property from the enforcement of the law. An illustration of this was afforded by Degner v. Baltimore, 74 Md. 144 , where a portion of a stock of goods had been seized under an attachment proceedings, and sold by order of court, and the City of Baltimore intervened to claim payment of taxes Out of the proceeds of sale, and the taxes due to State and city were directed to be paid in full out of this fund, the court holding it no defense to the full allowance of these taxes that they should be paid in whole or in proportionate part out of the proceeds of sale of the residue of said stock of goods, taken under a subsequent attachment issued out of a different court in favor of other creditors. This decision was rendered in 1891, and by the Act of 1892, ch. 518, now section 74 of article 81 of the Code, the statute was amended so as to read: “Whenever a sale of either real or personal property upon which taxes are due and payable shall be made by any ministerial officer, under judicial process or otherwise, all sums due and in ⁶⁷⁰ arrears for taxes, -upon such property, from the party whose property is sold shall be first paid aud satisfied; and the officer or person selling shall pay the same to the collector of the county or city, if any, or to the treasurer if there be no collector.” The effect of this amendment was that the party selling as a ministerial officer was only required to pay all the taxes due and in arrear on the particular property sold, as was decided in Parlett v. Dugan, 85 Md. 407, 413 (1897), where this act was construed.

The body of the law with respect to the collection of taxes was only altered to the extent indicated. As this amendment was primarily a change for the relief of those holding claims or liens against the tax debtor, and was a particular exception engrafted upon existing general methods of enforcing the payment of taxes, the effect of the statute should not be extended by construction beyond its fair intendment, or so as to prejudice in any unwarranted degree the enforcement, according to other subsisting and related legislation, of the obligation of every citizen to pay his taxes. All taxes levied continue to remain a lien upon all the real estate of the taxpayer, and this lien for all taxes is still enforceable by way of distress or execution upon any of the real or personal property of the tax debtor, and any such real or personal property so levied upon, when sold conformably with the provisions of law and conveyed, passes to the purchaser not merely the interest of the persons to whom the property had been assessed for the taxes on account of which it was sold but, freed and discharged of all prior liens, mortgages, and encumbrances, a new and complete title under an independent grant from the sovereign authority. And so, where the collector may not proceed by distress or execution because the property of the taxpayer is in the control or custody of the court, there, also, remains the duty of the collector to apply to the court in whose custody or control the property may be for the payment of all the taxes due.

Supra. These general provisions of statute and these rules of law are not to be nullified by section 74, but to be enforced with it, as they are all in pan ⁶⁷¹ ■materia. Nor is there any serious obstacle to a construction •of the several but allied provisions of the sections that will produce their intended and consistent operation. Whenever a sale is made of either real or personal property by a ministerial officer, section 74 restricts, as against all but the taxpayer, the payment by that ministerial officer to only those taxes which are ascribable to the particular property being sold; but, if any residue of the proceeds remain for distribution to the taxpayer or his personal representatives, or among or for the benefit of his general unsecured creditors, then the amount of all taxes remaining due and in arrear should be charged against and be paid out of such residue of the proceeds of sale so distributable to the taxpayer or his personal representatives or for the use or benefit of his general unsecured creditors.

The postponement of the payment of taxes, due on account of the assessment on other property than that being sold, to the payment of lienors, whether their encumbrance be general or particular, is due to the consideration that if such lienor were enforcing his claim against the property by sale, it would be through a ministerial officer, and no other taxes would be primarily payable thereout except those