L. D. SHUMWAY, Appellant,
THE STATE OF ARIZONA, W. H. LINVILLE, County Treasurer of Maricopa County and COUNTY OF MARICOPA, a Political Subdivision of the State of Arizona, Appellees
APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge.
Messrs. Langmade & Langmade, for Appellant.
Mr. Joe Conway, Attorney General, Mr. Earl Anderson, Chief Assistant Attorney General, Mr. James A. Walsh, County Attorney, and Miss Loretta C. Savage, Deputy County Attorney, for Appellees.
LaPrade, J. Stanford, C. J., and Morgan, J., concurring.
[63 Ariz. 402] The question submitted for determination is: Does the assignment by the State of Arizona of its interest as mortgagee in a note and mortgage, the subsequent foreclosure by the state's assignee of such note and mortgage and the purchase by such assignee of the real property at the sheriff's sale extinguish the state's lien for taxes (represented by certificates of purchase) which were levied and assessed against the real property subsequent to the date when the mortgage lien attached to said property?
This proceeding grows out of the following fact situation: On July 17, 1917, A. R. and Mamie Taylor borrowed $ 4,500 from certain of the permanent funds of the state created by Sec. 28 of the Enabling Act of the Constitution of Arizona, and to secure said loan gave to the state their note and mortgage on certain real estate. Default having been made in the payment of the principal and interest, the state instituted foreclosure proceedings September 23, 1939. The complaint prayed for a foreclosure of the mortgage lien and sale of the property in satisfaction of the claim of the state. Taxes against the property had been regularly levied and assessed for the last half of the year 1931 and for the years 1932 to 1938, inclusive. Prior to the institution of the foreclosure action the property had been struck off to the state and tax certificates had been issued therefor. The state's complaint in the foreclosure alleged that the mortgage lien of the state was superior, prior, and paramount to any tax lien. This allegation of priority claim was based upon Sec. 73-506, Arizona Code Annotated 1939. This section creates the tax lien upon the property assessed. In referring to the tax lien the section in part reads as follows:
[63 Ariz. 403] ". . . 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. . . ." (Emphasis supplied.)
The words "except liens or encumbrances held by the state of Arizona" were grafted onto the section by chapter 106, Session Laws of Arizona 1931, amending Sec. 3101, Revised Code Annotated 1928. This amendment was undoubtedly prompted by the holding of this court in the case of Steinfeld v. State, 37 Ariz. 389, 294 P. 834, to the effect that tax liens were prior and superior to all other liens and incumbrances including a mortgage lien held by the state.
On March 30, 1942, the State of Arizona sold and assigned the Taylor note and mortgage to the appellant and by an instrument in writing appointed the purchaser
". . . its true and lawful attorney, irrevocable, in its name or otherwise, but at the proper costs and charges of the said party of the second part, to have, use and take all the lawful ways and means for the recovery of the said money and interest; and in case of a payment to discharge the same as fully as the said party of the first part might or could do if these presents were not made."
Such an assignment is contemplated and authorized by law in Sec. 10-311, Arizona Code Annotated ...