COUNTY OF MARICOPA, a Body Politic and Corporate, and THE STATE OF ARIZONA, Appellants,
ARIZONA TRACTOR AND EQUIPMENT COMPANY, a Corporation, Appellee
APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment reversed and case remanded with instructions.
Mr. Joe Conway, Attorney General, Mr. Earl Anderson, Assistant Attorney General, Mr. Richard F. Harless, County Attorney, and Mr. Leslie C. Hardy, Deputy County Attorney, for Appellants.
Mr. E. F. Thurman, for Appellee.
[56 Ariz. 519] LOCKWOOD, C.J.
Arizona Tractor and Equipment Company, a corporation, hereinafter called plaintiff, brought suit in the superior court of Maricopa [56 Ariz. 520] county against the County of Maricopa and State of Arizona, hereinafter called defendants, for a declaratory judgment to ascertain against which, if any, of the parcels of real estate described in its complaint the lien of certain taxes levied against personal property owned by the plaintiff is impressed.
The facts of the case are not in dispute and may be stated as follows: Plaintiff, during the years 1931 to 1935, inclusive, owned certain separate parcels of real estate situated in Maricopa county, Arizona, and also a large amount of personal property. During these years it became indebted to defendants in the sum of $6,968.40 by reason of delinquent personal property taxes, interest and penalties for the years 1933 and 1934. Among the real property owned by it was lot 12 of Mitchell's addition to the city of Phoenix, and by February 1, 1938, there were on it delinquent real estate taxes in the sum of $98.81. The treasurer of Maricopa county noticed and advertised lot 12, supra, for sale for the collection of delinquent taxes, under article VIII of chapter 73, Arizona Code of 1939, and on February 1, 1938, no private bid having been made therefor, the lot was struck off to the State of Arizona for the amount of $7,067.21, being the real property tax against such lot plus all of the property tax above set forth, and a certificate of purchase was duly issued to the state, under the provisions of section 73-806, Arizona Code of 1939.
Defendants claim that the personal property taxes included in the amount of $7,067.21, for which lot 12, supra, was struck off to the State of Arizona, still remained as a lien on all the other real estate specified in the complaint, for the reason that such tax has never been paid. Plaintiff, however, contends that the striking off of lot 12 to the state, as aforesaid, for all of the real and personal property taxes above set forth, released its other real estate from the tax lien of [56 Ariz. 521] the personal property taxes. The evidence showed that it was the custom of the treasurer of Maricopa county, when there were a number of pieces of real estate assessed to the owner and also certain personal property taxes due from such owner, to assess the personal property tax against certain selected pieces of such real estate only, and not against all of the real estate of the taxpayer situated within the county, and, if the taxes were delinquent, at the tax sale made under article VIII, supra, to charge the entire personal property tax against such real estate only, and that this custom was followed in regard to the particular lot and personal property taxes referred to herein.
The question is one of considerable importance to the state, involving as it does its ability to collect a large portion of its personal property taxes. If the contention of plaintiff is correct, a taxpayer owning a number of parcels of real estate, and owing to the state thousands of dollars of personal property taxes, as in the present case, may have its entire personal property tax assessed against a piece of real estate of nominal value, and by it being struck off to the state, release the personal property tax lien on all its other real estate, even though the real estate sold may not be worth one-tenth of the tax, and since personal
property taxes are not a charge against the owner, but against the property, and the proceeding to collect taxes is one in rem, the owner may thus write off nearly all of its personal property taxes. Whether this be true or not depends upon the statutes governing the assessment of taxes and their liens and the law of tax sales. Section 73-506, Arizona Code of 1939, sets forth the law in regard to the lien of taxes in Arizona, as follows:
"Lien for taxes -- Liability of Property -- Homestead exempt. Every tax levied under the authority of this chapter upon real or personal property shall [56 Ariz. 522] be a lien upon the property assessed. The lien shall attach on the first Monday in January in each year, and shall not be satisfied or removed until such taxes, penalties, charges and interest are all paid, or the property has finally vested in a purchaser under a sale for taxes. The lien shall be prior and superior to all other liens and encumbrances upon the property, except liens or encumbrances held by the state of Arizona. Personal property shall be liable for taxes levied on real property, and real property shall be liable for taxes levied on personal property, and a judgment against real property for nonpayment of taxes thereon or assessed to the personal property of the same person, shall not be prevented by showing that the owner thereof was possessed of personal property out of which the taxes could have been made; but real property occupied as a homestead shall not be charged for taxes other than the taxes due on such homestead."
Sections 73-804 and 73-806, Arizona Code of 1939, describe the method enforcing the tax lien, and they read, respectively, so far as material to this case, as follows:
"Form of notice of sale. (a) All real property upon which the taxes, including personal property taxes secured thereby, are unpaid and delinquent, shall be subject to sale as herein provided. The county treasurer shall prepare a list of all real property upon which the taxes are unpaid and delinquent,... with an accompanying notice stating that so much of each tract of real property as may by him be deemed necessary for the purpose will,... be sold by him... for the taxes, penalties, interest, and ...