TAXATION ‑- PERSONAL PROPERTY ‑- LIEN AGAINST INSURANCE UPON PROPERTY DESTROYED

TAXATION ‑- PERSONAL PROPERTY ‑- LIEN AGAINST INSURANCE UPON PROPERTY DESTROYED.

Rem. Rev. Stat. 11248, which imposes a lien for personal property taxes upon the insurance claim for property destroyed by fire, applies only to taxes which are delinquent and which are attributable to the item destroyed or have been made a lien upon the item destroyed.  Therefore, taxes not delinquent at the time of destruction, even though a lien upon the item destroyed, do not become a lien upon the insurance.  However, the construction placed upon the statute is not free from doubt, so a court test is suggested.

                                                                  - - - - - - - - - - - - -

                                                                   March 7, 1951

Honorable John Panesko
Prosecuting Attorney
Lewis County
Chehalis, Washington                                                                                                Cite as:  AGO 49-51 No. 465

Dear Sir:

            This is in answer to a request of your office for our opinion upon the following question:

            Where personal property is destroyed by fire after the attachment of the lien for taxes but before the date the taxes become delinquent, does the lien attach to insurance upon the property destroyed?

            Our conclusion may be summarized as follows:

            Rem. Rev. Stat. 11248, which imposes a lien for personal property taxes upon the insurance claim for property destroyed by fire, applies only to taxes which are delinquent and which are attributable to the item destroyed or have been made a lien upon the item destroyed; therefore, taxes not delinquent at the time of destruction, even though a lien upon the item destroyed, do not become a lien upon the insurance.

                                                                     ANALYSIS

             [[Orig. Op. Page 2]]                                                                             

            You state that in late March, 1949, after the items of personal property were assessed and listed on the books of the county assessor for 1950 taxes, the property was destroyed by fire.  There was insurance which covered this loss.  The 1949 taxes, then due, were paid.  The question is whether the 1950 personal property tax attributable to the items destroyed, the lien for which had attached to the items at the time of listing (sec. 1, ch. 34, Laws of 1943; sec. 11265 Rem. Supp. 1943) but which was not due until February 15, 1950, and not delinquent until April 30, 1950, became a lien upon the insurance claim.         

            Your request is for a construction of section 87, chapter 130, Laws of 1925, Ex. Sess., as amended by section 5, chapter 30, Laws of 1935 (Rem. Rev. Stat. 11248).  To explain the problem with which you present us, we must set out the original statute and show, by underscoring, the changes made in the 1935 amendment.  Section 87 of the 1925 Property Tax Code provided:

            "In the event of the destruction of personal property by fire after the fifteenth day of March of any year, the lien of the personal property tax shall attach to and follow any insurance that may be upon said property and the insurer shall pay to the county treasurer from the said insurance money all taxes, interest and costs that may be due, against the identical property so destroyed."

            As amended in 1935, section 87 (referred to hereafter as section 11248) now reads:

            "In the event of the destruction of personal property by fire after thedate of delinquency of any year, the lien of the personal property tax shall attach to and follow any insurance that may be upon said property and the insurer shall pay to the county treasurer from the said insurance money all taxes, interest and costs that may be due, and or are a lien against the identical property so destroyed."

            The original provision created a lien for personal property taxes upon an insurance claim for property destroyed by fire, but only where the property was destroyed "after the fifteenth day of March of any year."  By reference  [[Orig. Op. Page 3]] to the immediately preceding section of the 1925 Property Tax Code, section 86, it will be seen that March 15th is the date after which personal property taxes for a given year became delinquent.  It is apparent that the date referred to in the original section 87 is the date of delinquency; that section imposed a lien on the insurance only where the taxes were delinquent at the time the property was destroyed.

            This conclusion is fortified by the 1935 amendment to the section, for the words "date of delinquency" were substituted for "fifteenth day of March."  (The amendment was required because of amendments to sections 83 and 86 of the Code (by sections 2 and 4, chapter 30, Laws of 1935) changing the date of delinquency and providing in section 83 (now sec. 11247 Rem. Supp. 1949) for a common date of delinquency for real and personal property taxes).  Inasmuch as the property here involved was not destroyed "after the date of delinquency," no lien could attach to the insurance unless the phrase "and or are a lien" means that the lien attaches to the insurance because there was a lien for taxes on the property destroyed, even though the taxes were not delinquent.

            This requires a construction of the words "and or are a lien" in section 11248.  It is arguable that these words refer to thecondition which, if existing, cause a lien to attach the insurance.  It can be contended that if a lien for taxes has attached to the item destroyed, even though the taxes not be delinquent, or even due, a lien therefor attaches to the insurance.  However, after a thorough consideration of the matter we have come to the opposite conclusion; we believe that the added phrase pertains to the amount of the lien which will attach to the insurance.

            If the phrase were intended to refer to the conditions existing (and particularly to the time) when the property was destroyed, the words "and or are a lien" would not have been inserted at the end of the section, but would have been made a part of the first change to the section.  Section 11248 would have commenced somewhat as follows:

            "In the event of the destruction of personal property by fire after the date of delinquency and/or after a lien for taxes had attached thereto, * * *".

            The conditions which must exist are set forth in the first clause of section 11248; the attachment of the lien to the insurance is provided for in the second clause; the directions for payment and the amount to be paid (the amount of the lien on the insurance) are set forth in the last clause.

             [[Orig. Op. Page 4]]

            It is our opinion that the amendment to the last clause provided for a lien on the insurance not only for the "taxes, interest and costs" attributable to the property destroyed (as it had previously read) but also for any "taxes, interest and costs" which had prior to the destruction been made a lien (e.g. by distraint; see section 11265,supra) upon the item destroyed.  Such "taxes, interest and costs" to become a lien would have to be delinquent, for otherwise the provision that the destruction must be "after the date of delinquency of any year" would have no meaning.  Under our construction, section 11248 may be paraphrased as follows:

            In the event of the destruction of personal property by fire after the date of delinquency of any taxes, a lien shall attach to and follow any insurance upon said property in the amount of all such delinquent taxes attributable to the property destroyed, and interest and costs that may be due thereon, and in the amount of any lien for any other delinquent taxes, plus interest and costs, which may have been imposed upon the item destroyed.

            A review of sections 86 and 87 as originally enacted in the 1925 Property Tax Code makes this construction the most tenable.  At that time, under section 86, if personal property taxes had not been paid by March 15th of the year in which due, the treasurer was required to "forthwith proceed to collect the same" and to use his power of distraint.  It was the intent of section 87 to protect the treasurer if the property was destroyed by fire after March 15th, the date of delinquency.  With this in mind, the amendments of 1935 appear to have been to bring section 87 into conformance with the change in the date of delinquency and to permit the collection from the insurance, if the property was destroyed after the taxes were delinquent, of any other delinquent taxes, not attributable to the item itself, for which a lien had been impressed upon the item by the distraint.

Very truly yours,

SMITH TROY
Attorney General

C. JOHN NEWLANDS
Assistant Attorney General