author: MORRIS, Justice.

text:
    V. A. CORBETT, Plaintiff and Respondent, v. Alphonse A. LA BERE; Sylvia La Bere; The Federal Land Bank of Saint Paul, a body corporate; Haakon M. Hove; Evelyn L. Hove; and the First National Bank in Williston, a national banking corporation, and all persons unknown claiming any estate or interest in, or lien or encumbrance upon the property described in the complaint, Defendants, and The Federal Land Bank of Saint Paul, a body corporate, Defendant and Appellant.
    No. 7470.
    Supreme Court of North Dakota.
    Jan. 13, 1955.

      Joseph P. Stevens, Minot, for plaintiff and respondent.
    Walter O. Burk, Williston, Robert J. Barry, St. Paul, Minn., for defendant and appellant.
    ¡Michael A. Schmitt, Harold ¡W. Lee, Stanley F. Casey, St. Paul, Minn., of counsel.
   MORRIS, Justice.

This is an action to quiet title to one-eighth of one per cent royalty of all the oil and gas produced and saved from a quarter section of land in Williams1 County. The actual controversy is between the plaintiff and the Federal Land Bank of Saint Paul which claims to own fifty per cent of the oil, gas and other minerals in or under the land. The facts are not in dispute and the findings of fact of the trial court'are-not challenged. They disclose that on April 2, 1934, Julius C. Bolstad was the fee owner of thé land in question and on that day he and his wife executed and delivered a real estate mortgage thereon to the Federal Land Bank of Saint Paul and a second mortgage to the land bank commissioner. Both mortgages were recorded in the office of the register of.deeds of Williams County on April 30, 1934.

On November 23, 1935, the mortgagors executed an oil arid gas lease to Thomas W. Leach. This lease was recorded on May 28, 1937, and on April 22, 1937, it was assigned to the California Company, the assignment being recorded October 9, 1937.

On September 21, 1937, the Bolstads executed and delivered an instrument denominated “Assignment of Royalty” purporting to' convey to the Middlewest Investment Company, Inc: of Minot/ North Dakota, one per cent royalty of all the oil and gas produced and saved from the land in question. This instrument was recorded September 27, 1937.

On September 29, 1937, the Middlewest Investment Company, Inc. conveyed by an assignment of royalty to the plaintiff, V. A. Corbett, one-eighth of one per cent royalty of all the oil and gas produced and saved from the land involved. This instrument was recorded on October 1, 1937.

On May 4, 1939, the Federal Land Bank of Saint Paul commenced an action to foreclose its mortgage. The plaintiff, V. A. Corbett, was not made a party to this action. The foreclosure resulted in the issuance, on August 13, 1940, of a sheriff’s deed conveying the premises described in the mortgage to the Federal Land Bank of Saint Paul. This deed’was recorded on September 16, 1940.

On S'eptember 17," 1940, the California Company, assignee'of'the oil " and gas lease that had bée"n executed by the Bolstads, executed a surrender of the lease. The surrender was recorded October 2, 1940:

On December 4, 1943, the' Federal Land Bank of Saint Paul conveyed the premises to Alphonse A. La Bere and Sylvia La Bere, reserving unto itself fifty per cent of all the rig-ht and title in and to any and all of the oil and gas arid other minerals in or under the land. This deed was recorded December 31, 1943. On December 14, 1948, the La Beres leased their fifty per cent to A. M. Fruh and Thomas W. Leach for the purpose of mining and operating for oil and gas. This lease was recorded on December 20, 1948, and was thereafter assigned to the Amerada Petroleum Corporation.

On January 13, 1949, the Federal Land Bank leased its half interest in the oil and gas under the land to A. M. Fruh and Thomas W. Leach, who subsequently assigned the lease to Amerada Petroleum Corporation.

The trial court found in favor of the plaintiff and judgment was entered quieting title in him to one-eighth of one per cent of the royalties of all the oil and gas produced and saved from the land in question. From this judgment the Federal Land Bank of Saint Paul appeals.

The meaning and legal effect of the assignment of royalty constitutes -the heart of this controversy. It reads as follows:

“Know All Men By These Presents, That Julius C. Bolstad Sina O. Bol-stad his wife of Ray No. Dak., for and in consideration of the sum of One Dollars, and other good and valuable considerations, in hand paid .by Middle-west Investment Co. Inc of Minot N D hereinafter called assignee, the receipt of which is heréby acknowledged and confessed, do hereby sell, assign, transfer, convey, and set over unto the said assignee, all of his right, title and interest in and to One Per Cent (1%) Royalty, of all the oil and of all the gas produced and saved from the hereinafter described lands, located' in''the County of Williams, State of North Dakota, to-wit:
“SE^NW^, Lots 2-3-4 Sec. 4 Twp. 154, Range 96
and embracing 160 acres, more or less .according to the Government- official survey thereof:
“To Have and To Hold unto the said Middlewest Investment Co. Inc his heirs, administrators, arid assigns, said royalty as above set forth, the said oil and gas so produced and saved from said1 lands to be delivered free of cost to'thé royalty owner in the pipe lines serving said premises or tanks erected thereupon for the purpose of storing such products, together with the rights, privileges' and benefits to be derived therefrom, and I do hereby assign said royalty under the lease now covering said lands and agree to warrant and defend the title to the same against any of my acts and deeds 'adverse hereto.”

The subject of this instrument is a “royalty.” The appellant contends that the royalty conveyed was personal property, not an interest in real estate, was dependent entirely upon the estate of the mortgagor, Julius Bolstad, and that it was not necessary to join in the foreclosure action the owner of the royalty in order to have his interest eliminated. On the other hand, the plaintiff and respondent contends that the royalty was an interest in the real estate .which was not affected by the foreclosure action to which the plaintiff, a royalty owner, was not a party.

The lease which the Bolstads executed in favor of Thomas W. Leach on November 23, 1935, was for a period of ten years or as long as the lessee produced oil and gas, 'or either of them. It conveyed to the lessee an interest which'under such -leases is generally known as a working interest. It is an interest in real property. Petroleum Exchange, Inc., v. Poynter, N.D., 64 N.W.2d 718; Ulrich v. Amerada Petroleum Corp., N.D., 66 N.W.2d 397. The interest retained by the lessor, commonly known as a royalty interest, is also an interest in real estate. A lessor may convey in whole or in part to another his royalty under a specific lease or leases or he may convey his royalty in perpetuity, in which event the conveyance carries the royalty under present leases, if any, and leas'es made in the future. The unaccrued royalty in each of these instances is an interest in real estate entitling the royalty owner to share in the production of the minerals.

The lease on the land involved in this case covered unaccrued royalties and, because the lease might continue as long as oil or gas or either was produced, was without definite limit as to time. Such royalties when separately transferred are interests in land. Arrington v. United Royalty Co., 188 Ark. 270, 65 S.W.2d 36, 90 A.L.R. 765; Callahan v. Martin, 3 Cal.2d 110, 43 P.2d 788, 101 A.L.R. 871; Williams’ Adm’r v. Union Bank & Trust Co., 283 Ky. 644, 143 S.W.2d 297, 131 A.L.R. 1364; Palmer v. Crews, 203 Miss. 806, 35 So.2d 430, 4 A.L.R.2d 483; Summers, Oil and Gas, Permanent Edition, Vol. 3, Section 572, page 351.

In the authorities cited above we find these positive statements:

“we now announce the rule to be that royalties in gas or oil, until brought to the surface and reduced to possession, are interests in real estate and not personal property.” Arrington v. United Royalty Co. [188 Ark. 270, 65 S.W.2d 38].
“we are of the view that an operating lessee under a lease for a term of years, or for a term of years and so long as oil shall be produced in paying quantities, has an interest or estate in real property in the nature of a profit a prendre, which is an incorporeal hereditament, and that the assignee of a royalty interest in oil rights under an assignment by the landowner also has an interest or estate in real property in the nature of an incorporeal hereditament.” Callahan v. Martin [3 Cal.2d 110, 43 P.2d 792].
“Since unaccrued oil royalty is an interest in the real estate, it follows that a mortgage executed on land in which the mortgagor owns both the royalty and the real estate includes the royalty.” Williams’ Adm’r v. Union Bank & Trust Co. [283 Ky. 644, 143 S.W.2d 300].
“In the outset, it is to be conceded that a royalty is an interest in real estate, entitling the royalty owner to a share in the production of oil, gas, or other minerals therefrom.” Palmer v. Crews [203 Miss. 806, 35 So.2d 434].

In Denver Joint Stock Land Bank of Denver v. Dixon, 57 Wyo. 523, 122 P.2d 842, 848, 140 A.L.R. 1270, it is said:

“And by the great weight of authority, especially as clarified by the decisions in the last decade, a royalty interest, at least if of a permanent nature, has been held to be real and not personal property, * *

In Mark v. Bradford, 315 Mich. 50, 23 N.W.2d 201, it was held that an interest or right in accrued oil and gas royalties is personal property but that a right in unaccrued oil and gas royalties is an interest in land and therefore real property.

Some courts, particularly those of Kansas, hold that a royalty is personal property. Tegarden v. Beers, 175 Kan. 610, 265 P.2d 845; Lathrop v. Eyestone, 170 Kan. 419, 227 P.2d 136. But the great weight of authority holds that unaccrued oil and gas-royalty is an interest in real estate, especially among those courts that hold as we do that the ordinary oil and gas lease conveys an interest in real property.

Having determined that the royalty conveyed by the “Assignment of Royalty” is an interest in real estate, we now turn to-consideration of the extent of that interest. The appellant contends that the assignment. conveyed to the assignee only the royalty that would accrue to Julius C. Bolstad under the lease to Thomas W. Leach, which was in existence and of record at the time of the execution of the assignment of royalty to the Middlewest Investment Company, Inc. and that when the lease was surrendered by the assignee thereof on September 17, 1940, the royalty provided for by that lease ceased to exist, regardless of any assignments of royalty that Bolstad, the lessor, may have made. On the other hand, the plaintiff and respondent contends that the assignment of royalty conveyed to the Middlewest Investment Company, Inc. one per cent of all royalty that would accrue to the Bolstads under the lease then in existence, together with any future leases, and created an interest in the land which continued after surrender of the lease then in existence, which interest was not terminated or affected by the foreclosure.

The assignment of royalty under consideration is clearly a grant. Section 47-0905, NDRC 1943. Section 47-0911, NDRC 1943 provides:

“Grants shall be interpreted in like manner with contracts in general except so far as is otherwise provided by this chapter. If the operative words of a grant are doubtful, recourse may be had to its recitals to assist the construction, and if several parts of a grant are absolutely irreconcilable, the former part shall prevail. A clear and distinct limitation in a grant is not controlled by other words less clear and distinct.”

Section 47-0913, NDRC 1943 says:

“A grant shall be interpreted in favor of the grantee, except. that a reservation in any grant, and every grant by a public officer or body, as such, to a private party, is to be interpreted in favor of the grantor.”

These statutes state rules which have become deeply embedded in the real estate law of the country. Thompson on Real Estate Law, Permanent Edition, Sections 3188, 3189; Tiffany on Real Property, Third Edition, Sections 978, 979, 980.

An examination of the assignment of royalty at once discloses that the operative words of that instrument- which constitute the granting clause are clear and purport to convey to the Middlewest Investment Company, Inc. one per cent of all the gas and oil produced and saved from the lands therein described. The habendum clause which immediately follows the description of the land is consistent with the preceding operative words. It is only when we come to the clause “and I do hereby assign said royalty under the lease now covering said lands” that any doubt can be said to arise. This clause is subject to two constructions. It may be an assurance that the granting clause includes the royalty under the outstanding lease, or, on the other hand, it may be said to limit the granting clause to a conveyance of the royalty that would accrue under the outstanding lease.

In Dabney-Johnston Oil Corp. v. Walden, 4 Cal.2d 637, 52 P.2d 237, 245, decided by the Supreme Court of California in banc, it is said:

“Language of a grant is to be construed most strongly against the grantor. An assignment of oil royalty limited to a particular lease is precarious. Not only may the assignee’s rights be terminated where the lessee wrongfully abandons the lease, but oil leases frequently contain rather broad provisions giving the lessee the right to terminate lawfully in specified contingencies. An intent to thus limit the rights of the as-signee should be clearly and unequivocally indicated.”

In Duvall v. Stone, 54 N.M. 27, 213 P.2d 212, 216, it is said that:

“unless the intention to limit an assignment of oil royalties to a particular lease is by clear and unequivocable language, the royalty will be construed to apply to any existing or subsequent lease.”

The operative words of the .granting clause are not doubtful. They are definite in terminology and complete in scope. They convey all of the assignor’s title and interest in all the oil and gas produced and sáved without limit as to the time of production or the authority, right or identity of the producer. The position in the assignment of the clause referring to the existing lease is subsequent to that 'of the granting clause. Its meaning is ambiguous. It is conjunctively attached to the haben-dum clause and contains no words' of limitation. It does not modify or limit the granting clause.

We reach the conclusion that, the plaintiff and respondent, as assignee of the Middlewest Investment, Company, Inc. of Minot, North Dakota, acquired a royalty interest in the land involved herein which was not terminated by the surrender of the oil and gas lease given by the Bolstads on November 23, 1935, to Thomas W. Leach and was not eliminated by the foreclosure of the mortgage by the appellant. The judgment quieting title in the plaintiff is affirmed. ;

BURKE, C. J., and SATHRE, JOHNSON and GRIMSÓN, JJ., concur.


source: Caselaw Access Project

author: MORRIS, Chief Justice.

license: Public Domain

text:
    NORTHERN IMPROVEMENT COMPANY, a corporation, Plaintiff and Appellant, v. J. Arthur ENGEN, as Tax Commissioner of the State of North Dakota, and his successor in office, Defendant and Respondent.
    No. 7475.
    Supreme Court of North Dakota.
    Dec. 17, 1954.
    Rehearing Denied Feb. 21, 1955.

      Wattam, Vogel, Vogel, Bright & Peterson, Nilles, Oehlert & Nilles; Cupler, Tenneson, Serkland & Leahy, Fargo, N. D., Degnan, Hager & McElroy, Grand Forks, N. D., and' Richard P. Rausch, Bismarck, N. D., for plaintiff and appellant.
    Paul Benson, Atty. Gen., A. C. Bakken, Sp. Asst. Atty. Gen., and Kenneth M. Jakes, Estate Tax Deputy, Bismarck, N. D., for defendant and respondent.
   MORRIS, Chief Justice.

This is an appeal from an order sustaining a demurrer to plaintiff’s complaint. The complaint discloses that the plaintiff is a North Dakota corporation engaged in the contracting business and among other things constructs projects for the United States Government, the State of North Dakota, political subdivisions of the state, municipal corporations and educational institutions created and operated by the state. During the year 1953 the plaintiff purchased tangible personal property consisting of cement, steel, iron, equipment, glass, paint, lumber and other construction supplies and sundries which it incorporated in various projects and structures which became a part of the real estate of tax exempt entities upon which such projects and structures were located, all of which were within the State of North Dakota. On or about January 19, 1954, the plaintiff paid under protest a sales tax and use tax of $8,448.56 on this tangible personal property. After filing a claim for a refund of the sum so paid, which was rejected, the plaintiff brought this action to recover the amount paid.

The plaintiff contends that when it incorporates steel, cement, or other construction materials into airports, roads, streets, and structures for the government of the United States or the state or the tax exempt agencies of either, it makes a retail sale of those materials and that such sale is exempt under the sales tax law because the tax exempt contractee is the consumer. The state tax commissioner contends that in such transactions the plaintiff is the consumer and must pay a sales tax on the tangible personal property it consumes in creating the structure which is the object of the construction contract.

Our sales tax law is contained in •Chapter 57-39, NDRC 1943 and in Chapter 57-39, NDRC 1953 Supp. A tax of two per cent is imposed upon gross receipts from all sales of personal property consisting of goods, wares, or merchandise sold at retail in the state of North Dakota to consumers or users, except as otherwise provided in the act. Section 57-3902, ND RC 1953 Supp. The phrase, “goods, wares, or merchandise,” embraces some, and sometimes all, species of personal property. It never includes real estate. Culp v. Holbrook, 76 Ind.App. 272, 129 N.E. 278; Crowe v. Union Automobile Ins. Co., Tex.Civ.App., 79 S.W.2d 168.

Chapter 57-40, NDRC 1943, provides for a use tax which is declared to be supplementary to the sales tax. Section 57-4003. Section 57-4002, NDRC 1943, imposes an excise tax of two per cent on the storage, use, or consumption in this state of tangible personal property purchased at retail for storage, use, or consumption in this state. Section 57-4005 provides that this tax shall be paid in the following manner:

“1. The tax upon tangible personal property which is sold by a retailer maintaining a place of business in this state, or by such other retailer as the tax commissioner shall authorize pursuant to subsection 2 of section 57-4006, shall be collected by the retailer and remitted to the commissioner as provided by section 57-4006;
“2. The tax, when not paid in conformity with subsection 1 of this section, shall be paid to the tax commissioner directly by any person storing, using, or consuming such property within this state, pursuant to the provisions of section 57-4006.”

In Section 57-4006, NDRC 1943, we find that:

“6. Any person who uses any property upon which the said tax has not been paid, either to the retailer or directly to the tax commissioner, shall be liable therefor, and, on or before the twentieth day of the month next succeeding each quarterly period, shall pay the tax upon all such property used by him during the preceding quarterly period, in such manner and accompanied by such returns as the commissioner shall prescribe; * *

Section 57-3902, NDRC 1953 Supp., imposes a sales tax upon goods “sold at retail.” Section 57-3901, NDRC 1953 Supp., defines words and phrases used in the sales tax law and says:

“3. ‘Retail sale’ or ‘sale at retail’ means the sale to a consumer or to any person for any purpose, other than for processing or for resale, of tangible personal property * * *. The sale of an item of tangible personal property for the purpose of incorporating it in or attaching it to other real or personal property otherwise exempt from the sales tax shall be considered as a sale of tangible personal property for a purpose other than for processing ; * *

Under this definitive statutory provision, it is clear that when any person for any purpose buys an item of tangible personal property for the purpose of incorporating it in or attaching it to real property, the sale cannot be considered either for processing or for resale but is a taxable sale at retail.

The plaintiff points out that under Section 57-3903, NDRC 1943, gross receipts from the sale of tangible personal property sold to the United States, the State of North Dakota, or any of its subdivisions, departments, or institutions, including municipal corporations, are exempt from the sales tax and argues that the construction of a project for the United States or the state or any of its exempt institutions, subdivisions, or corporations, is a sale thereto of the tangible personal property incorporated in the project by the plaintiff and is exempt from the sales tax. In support of its contention the plaintiff turns to the definition of the word “retailer” contained in paragraph 5 of Section 57-3901, NDRC 1953 Supp., which provides that

“ ‘Retailer’ * * * shall include any person as herein defined who by contract or otherwise agrees to furnish for a consideration a totally or partially finished product consisting in whole or in part of tangible personal property subject to the sales tax herein provided, and all items of (of) tangible personal property entering into the performance of such contract as a component part of the product agreed to be furnished under said contract shall be subject to the sales tax herein provided; and the sales tax thereon shall be collected by the contractor from the person for whom the contract has been performed in addition to the contract price agreed upon, and shall be remitted to the state in the manner provided in this Act (chapter); * * * ft

We must determine whether one who buys tangible personal property and attaches it to real property in the course of constructing a project is a retailer who has agreed to furnish a totally or partially finished product consisting in whole or in part of tangible personal property subject to our sales tax or whether he is a person who buys personal property for the purpose of incorporating it in or attaching it to real estate. In the former instance he is a retailer under paragraph 5, in the latter he is a consumer, the purchase being a sale at retail under paragraph 3. If the transaction by which the contractor purchased his materials is a sale at retail and taxable, the plaintiff, as consumer, must pay the tax regardless of whether his construction conT tract is with a tax exempt public political subdivision or with a nonexempt con-tractee. Our sales tax is primarily a tax on the consumer. Jewel Tea Co. v. State Tax Commissioner, 70 N.D. 229, 293 N.W. 386; Voss v. Gray, 70 N.D. 727, 298 N.W. 1; Isakson v. State, 70 N.D. 505, 296 N.W. 192; Federal Land Bank v. Bismarck Lumber Co., 70 N.D. 607, 297 N.W. 42; F. W. Woolworth Co. v. Gray, 77 N.D. 757, 46 N.W.2d 295.

Legislation in the various states has produced divergent statutes with the result that decisions from other jurisdictions are seldom helpful, except to point out general principles. In Harding v. Oklahoma Tax Commission, Okl., 275 P.2d 264, the court rejected the contention of the contractor that he did not use or consume tangible personal property that he incorporated in construction projects but that he purchased it for resale.

In City of St. Louis v. Smith, 342 Mo. 317, 114 S.W.2d 1017, 1019, the question was whether, under a statute imposing a sales tax on retail sales of tangible personal property, the city was liable to pay the tax on materials used in the construction of paving, a sewer, and a hospital where the contractors agreed to furnish all work and materials and to deliver the completed work for a lump sum. The court said:

“In our judgment the contractors in this case did not buy the materials in question for the purpose of reselling such materials to the city. * * * Since the contractors used and consumed the material, they and not the city are primarily liable for the one per cent, sales tax. The sale of the materials by the dealer to the contractors was the taxable transaction, and it was the duty of the dealer to collect the tax from the contractors at the time the sale was made.”

State v. Christhilf, 170 Md. 586, 185 A. 456, 457, involved liability for an occupational tax based on gross receipts from the sale of all tangible. personal property at retail. The defendant constructed a highway .under a contract with the state. No question of tax exemption is involved. The court held that the transaction between the contractor and the state did not involve “ ‘a sale at retail’ ” of the materials used by the contractor in constructing the highway and said:

“we cannot agree with the view that there is a transfer of title to so many feet of lumber, kegs of nails, thousands of brick, perches of stone, cubic yards of concrete, or other items of materials entering into a lump sum contract, for a complete job or structure, which, when erected on the customer’s land, is as much real property as the land itself and is by no-sort of definition or reasoning ‘tangible personal property.’ ”

In Duhame v. State Tax Commission, 65 Ariz. 268, 179 P.2d 252, 260, 171 A.L.R. 684, the court said:

“the one basic principle that may be gleaned safely from the reported cases . is that when a completed structure is erected on the owner’s land, it is as much real property as the land itself. By no definition or reasoning is it tangible personal property. The constituent elements of personalty have been destroyed by a metamorphosis, i. e. by the their incorporation into the completed structure. Through the contractor’s application of skill and labor to the materials, something different has been wrought from their use and union, and the materials purchased are no longer to be distinguished as personalty. Therefore, we hold that when the contractor buys materials and supplies for use in fulfilling his contract, he does not purchase them for resale as tangible personal property, but for use in producing the completed job. He is not a trader or dealer.”

These decisions are consistent with the provision of paragraph 3, Section 57-3901, NDRC 1953 Supp., to the effect that the .sale of tangible personal property for the purpose of incorporating it in or attaching it to real property is a sale for a purpose other than processing. It is clear to us that such a sale is neither for processing nor for resale.

In apposition to the conclusion we have just expressed, the appellant would place the provision which we have quoted from paragraph 5 of Section 57-3901, ND RC 1953 Supp., which includes within the definition of retailer a person who agrees to furnish' for consideration a product consisting in whole or in part of tangible personal property subject to the sales tax and provides that all items of personal property entering into the contract as a component part of the product are subject to the sales tax. In considering this point we must not lose sight of the fact that the tax is imposed upon the sale of tangible personal property only. Section 57-3902, NDRC 1953. Supp. No tax is imposed upon the sale of real estate. Paragraph 5 does not enlarge the class of property upon which .the sales tax is imposed. If the personal property has become real estate a sale thereof is no longer subject to the sales tax.

The situation here is not unlike that involved in Acorn Iron Works v. State Board of Tax Administration, 295 Mich. 143, 294 N.W. 126, 127, 139 A.L.R. 368, from which we quote:

“In each case plaintiff’s undertaking was to furnish the labor and structural steel requisite to the performance of its contract in erecting, repairing or altering a structure in accordance with designated plans and specifications. The question presented for determination is whether such transactions either with the owners of the property or with the building contractor (including subcontractors) were of such a character that they imposed upon plaintiff the obligation to pay a sales tax on the structural steel used. * * *
“The lump sum contract transactions here involved, regardless of whether plaintiff’s undertaking was with a construction contractor or with an owner, were for a stipulated sum covering both time and material and in consideration of which plaintiff contracted to erect a designated steel structure according to plans and specifications. In plaintiff’s process of performance the materials used ceased to be personal property and became a part of the realty in which form plaintiff obligated itself to deliver the completed contract product to the party with whom it had contracted. Before title to the structural steel passed and before plaintiff’s contract was completed the subject matter of the contract had ceased to be ‘tangible personal property’. Plaintiff’s lump sum construction contract required it to perfect and deliver a structure which conclusively was realty, not personalty. .Such a transaction is not subject to the Michigan sales tax imposed on sales of tangible personal property.”

After that decision the Michigan sales tax law was amended and in the case of R. C. Mahon Co. v. Department of Revenue, 306 Mich. 660, 11 N.W.2d 280, cited by plaintiff, it was held that the contractor was liable for sales tax on materials used in its normal construction contracts but that when the contract was with an entity that was exempt from payment of the sales tax, the contractor could not be held liable for the payment of a sales tax on material used in carrying out the contract. That decision was based entirely upon an amendment of the Michigan sales tax law which bears no resemblance to the provisions of our statute under consideration.

As we construe the term “retailer” as defined in paragraph 5 of Section 57-3901 it does not include a person who sells real property and the phrase “product consisting in whole or in part of tangible personal property subject to the sales tax [herein] provided” means a product that remains personal property at the time that it is sold or transferred under the contract.

Tangible personal property purchased by a contractor for the purpose of attaching it to or incorporating it in real estate is clearly taxable under the provisions of paragraph 3 of Section 57-3901, NDRC 1953 Supp. Under the provisions of paragraph 5 of this section one who furnishes for a consideration a product consisting in whole or in part of tangible personal property is a retailer and all items of tangible personal property that become a component part of the product are subject to the sales tax unless a product is sold to a tax exempt entity. If the term product is construed to include works and structures such as roads, streets, bridges, dams, and permanent buildings that become a part of the real estate of the person or corporation, public or private, contracting therefor, we have either a conflict between the provisions of paragraphs 3' and 5 or we have double taxation of tangible personal property, neither' of which the legislature intended. If the term product is construed not to include real estate conflict is avoided. The latter construction is reasonable. It therefore becomes our duty to so construe the statute. National Farmers Union Life Ass’n v. Krueger, 76 N.D. 619, 38 N.W.2d 563; Ophaug v. Hildre, 77 N.D. 221, 42 N.W.2d 438; State for Benefit of Workmen’s Compensation Fund v. E. W. Wylie Co., N.D., 58 N.W.2d 76.

Neither the pleadings nor the briefs have attempted to make any distinction between the liability of the plaintiff under the sales tax law and under the use tax law. We make none here. The sales to the plaintiff of items of tangible personal property incorporated in or attached to real estate in carrying out its contracts on construction projects described in the complaint are taxable. As far as the complaint shows the taxes paid were based upon the value of the property involved in such sales. The complaint does not show that the plaintiff is entitled to a refund of those taxes and it therefore fails to state a cause of action. The order sustaining the demurrer is affirmed.

GRIMSON, SATHRE, and BURKE, JJ., and O. B. BURTNESS, District Judge, concur.

JOHNSON, J., did not participate.


author: MORRIS, Judge.

text:
    Cesar MEVORAH and Martin Sills, Individually and as co-partners doing business under the firm name and style of Irving’s Tractor Lug Company, Plaintiffs and Respondents, v. Irving GOODMAN and Stanley Goodman, Individually and as co-partners, Defendants and Appellants.
    No. 7478.
    Supreme Court of North Dakota.
    Feb. 4, 1955.
    Rehearing Denied Feb. 21, 1955.
    See also, N.D., 65 N.W.2d 278.

      Hyland, Foster & Conmy, Bismarck, and Sgutt & Wegner, Fargo, for plaintiffs and respondents.
    Lanier, Lanier & Knox and Aaron Aron-son, Fargo, for defendants and appellants.
   MORRIS, Judge.

This is an appeal by the defendants from a judgment rendered in an action to recover damages for the conversion of personal property. On June 23, 1950, the plaintiffs, as purchasers, and the defendants, as sellers, entered into a conditional sales contract whereby the plaintiffs purchased the business known as Irving’s Tractor Lug Company operated by the defendants. The consideration was $100,-000, of which $5,000 was paid in cash. Title to the stock of goods consisting of new, reconditioned, and used parts for tractors and agricultural implements was retained by the defendants until all the purchase price was paid. The plaintiffs took possession July !, 1950, and operated the business until February 5, 1951, when the defendants seized possession of the place of business which, was located in Fargo, North Dakota, and the supplies, goods, and equipment connected therewith and served notice on the plaintiffs that the conditional sales contract was declared breached, the sums paid thereon forfeited for liquidated damages, and the lease provisions for the premises contained in the contract terminated. At the time of seizure the unpaid balance of .the- purchase price was $83,000. On February 17, 1951, a temporary receiver was appointed. This appointment was vacated by the court on March 15, 1951, whereupon the defendants again took possession of the place of business in Fargo and the supplies and stock of goods remaining therein. Included in this stock was certain merchandise purchased by the plaintiffs from persons other than the defendants and added to the stock between July 1, 1950, and the date of seizure on February 5, 1951.

The plaintiffs’ complaint originally contained four causes of action. The third was dismissed by stipulation. A trial was had on the remaining three causes of action, resulting in a substantial verdict in favor of the plaintiffs on each. From a judgment entered pursuant to these verdicts, the defendants appealed to this court. We affirm the judgment with respect to the first cause of action. We reversed the judgment and granted a new trial on the second and fourth causes of action in an opinion set forth in N.D., 60 N.W.2d 581. Upon the trial of the second and fourth causes of action substantial verdicts were again rendered in favor of the plaintiffs. The defendants made a motion for a new trial, which was denied. From the judgment rendered on the verdicts and from the order denying a new trial, the defendants again appeal to this court.

In the second cause of action the plaintiffs seek $4,500 damages for the conversion of new merchandise which they had bought and added to the stock while they were in possession prior to the repossession of .the business by the defendants.

In the fourth cause of action the plaintiffs seek damages in the sum of $57,000 for the conversion of the goods on hand that they had purchased from the defendants under the conditional sales contract and which was seized by the defendants February 5, 1951. The unlawful seizure and conversion have been clearly established and are no longer contested by the defendants. 'The issues, now remaining arise from disputes as to the quantity and value of the new merchandise involved in the second cause of action and the old merchandise involved in the fourth cause of action.

The defendants and appellants assign twenty specifications of error. Some are not' argued in their brief and are therefore deemed abandoned. Some are wholly without merit or are insufficiently stated and require no discussion. We devote our attention to those that have been earnestly pressed and are of sufficient merit and importance to require consideration here.

The defendants objected to the admission in evidence of Exhibit 8 prepared by Sills which contains a list of the personal property that the plaintiffs contend they purchased and placed in stock between the time they took over the business on July 1, 1950, and the time of the conversion on February 5, 1951. This is the merchandise for which recovery is sought in the second cause of action. The property is itemized in this exhibit and after the items listed appears a column showing the unit price and another column showing the total. These figures, according to Sills’ testimony, represent the lowest wholesale replacement cost and show that the total replacement cost of the goods claimed to have been converted under the second cause of action amounted to $2,235.80. The witness also stated that he had available in court the price lists and catalogs from wholesalers that would show the wholesale replacement cost to be the figures in the exhibit. The admissibility of this exhibit will be further considered with that of Exhibit 9, which is another list that the plaintiffs claim shows the quantity, items, unit prices, and total cost of the merchandise which the plaintiffs contend was a part of the stock they purchased from the Good-mans and which the Goodmans also repossessed and converted on February 5, 1951. The admission of Exhibit 9 in evidence over the objection of the defendants is vigorously asserted to be prejudicial error.

Exhibit 9 is similar to 8. It is a compilation containing the quantities and names of various items of merchandise with columns indicating unit prices and totals. It pertains to merchandise that the plaintiffs claim was converted by the defendants as set forth in the fourth cause of action. It was offered in evidence during the course of the examination of the witness Sills. He testified as an owner and a person of considerable experience and knowledge as to the values involved. He stated that it was a compilation made from six other exhibits that were already in evidence, to which were added certain specific items which the witness testified had not been included in the other exhibits but which the plaintiffs claimed had been a part of the stock of merchandise wrongfully seized by the defendants. After the contents of Exhibit 9 had been thus identified and it had been explained by the witness that the prices therein contained were wholesale replacement values as of the date of conversion, the exhibit was offered in evidence and objected to on the ground that it was a self-serving conclusion, not the best evidence, and was a summary sheet totally lacking in foundation. Counsel for both parties discussed the exhibit with the court and counsel for defendants said:

“If all counsel wants is just this witness as the owner to state in his opinion the wholesale value, we have no obj ection.”

With the permission of the court and without further objection, plaintiffs’ counsel then asked the witness:

“Will you give us your opinion as an owner of the wholesale or replacement cost value of all the goods described in Plaintiffs’ Exhibit 9 ?”

To which the witness replied:

“The wholesale value would be $131,440.12.”

Counsel for defendants still pressed his objection to the admission of Exhibit 9 and said:

“My objection does not go to the quantity, only the prices listed in it.”

The court then overruled the objection to the exhibit. Thereafter a further colloquy occurred between the court and counsel for both parties, in which the following appears:

“Mr. Lanier: — I only request that counsel give me the catalogs from which he has made this compilation so I can see them, to which I am entitled.
“The Court: It is understood, that was covered in the testimony before recess that counsel would have available for examination, — I mean the witness would have available for examination by counsel the catalogs.
“Mr. Conmy: I have them right here.
“Mr. Lanier: All right. I don’t require you to put them into evidence so long as I . can see and examine them for the purposes of cross-examination.”

It is not claimed that it was error for the witness Sills to testify that the total wholesale replacement value of the merchandise involved in plaintiffs’ second cause of ac-Ron was $2,235.80 and that of the merchandise involved in the fourth cause of action was $131,440.12. No objection was made as to the quantity shown in Exhibit 9. Both Exhibits 8 and 9 are detailed listings of the quantities, items, and values making up the total testified to by Sills with respect to each of the two causes of action in dispute. According to the testimony of the witness, they are for the most part summaries of inventories which were already in evidence, together with a few items that the plaintiffs contended had been omitted from these inventories. Under the second cause of action the plaintiffs claimed the conversion of over two hundred items and under the fourth cause of action something like four thousand items. Under each item are listed quantities or units varying in number from one to several hundred. Wig-more on Evidence, Third Edition, Section 1230, states this rule:

“Where a fact could be ascertained only by the inspection of a large number of documents made up of very numerous detailed statements — as, the net balance resulting from a year’s vouchers of a treasurer or a year’s accounts in a bank-ledger — it is obvious that it would often be practically out of the question to apply the present principle by requiring the production of the entire mass of documents and entries to be perused by the jury or read aloud to them. The convenience of trials demands that other evidence be allowed to be offered, in the shape of the testimony of a competent witness who has perused the entire mass and’ will state summarily ■ the net result. Such a practice is well established to be proper.
“Most Courts require, as a' condition, that the mass thus summarily testified to shall, if the occasion seems to require it, be placed at hand in court, or at least be made accessible to the opposing party, in order that the correctness of the evidence may be tested by inspection if desired, or that the material for cross-examination may be available: * *

This was the rule followed in principle by the trial court.

A case in point is Casey v. Ballou Banking Co., 98 Iowa 107, 67 N.W. 98, which involved the conversion of a stock of merchandise. It was there held to be within the discretion of the trial court to admit in evidence an itemized schedule of the stock of goods showing the market prices of the several items making up the total amount that the witness said was the worth of the entire' stock claimed to have been converted. The rule that. we have been considering is one of practicality and the trial court has considerable discretion in its application. Under the facts here disclosed it is clear that the court did not abuse that discretion and committed no error in admitting in evidence Exhibits 8 and 9.

The defendants attempt to specify as error that “The Court erred in denying defendants’ examination and offer of proof as to Exhibit 9.” This specification is too general and indefinite to require consideration but since it refers to controversial Exhibit 9 we have examined the three pages of the transcript referred to by defendants’ counsel in connection therewith and find no offer of proof. There does appear, however, what purports to be a question asked for the purpose of impeachment, to which the trial court properly sustained an objection that a foundation for impeachment of the witness under examination had not been laid.

After instructing the jury with respect to the second cause of action to the effect that the amount of damage or detriment suffered by the plaintiffs was what it would 'have cost them to replace the converted goods, or in other words, their market value, the court said:

“That would include the price then charged by manufacturers, wholesalers or jobbers for such items of merchandise, including the cost of transporting same, if any, to plaintiffs’ place of business in Fargo, North Dakota, promptly after February 5, 1951.”

There was no evidence of the cost of transportation, nor was it mentioned in the pleadings. The defendants contend that this instruction permitted the jury to include in the damages found against the defendants an uncertain and unspecified sum based entirely upon speculation and not upon the evidence. As a statement of law usually applicable in such cases the instruction is correct. The difficulty is that the part pertaining to transportation has no application to the facts in this case. The defendants cite Swords v. McDonell, 31 N.D. 494, 154 N.W. 258, 260. That case involved personal injuries. It was there held that where special damages are neither alleged nor proved, it was prejudicial error to instruct the jury that “damages for a personal injury consist of three principal items: First, the expense which the injured person is subjected to by reason of the injury complained of.” In that case the testimony showed that the plaintiff had two doctors and was confined in the hospital for three weeks at Minot and later was removed to Rochester, Minnesota, where an operation was performed and he was confined in the hospital for an additional six weeks. There was no evidence from which the jury could determine the amount of the plaintiff’s expenses. Under those circumstances it appears that there was no way to tell to what extent, if at all, the jury speculated as to the amount of the plaintiff’s expenses or whether they were included in the verdict. The facts here are substantially different from those involved in that case. The court used the term “if any” in referring to the cost of transportation. There was no evidence whence the goods came or from whom they were purchased. Under the facts in this case there was no opportunity for the jury to speculate and there was no invitation to speculate contained in the instruction. That part of the instruction pertaining to transportation, although wholly superfluous, was not prej-udicially erroneous.

In support of their motion for a new trial, the defendants assert that the evidence is insufficient to justify the verdict of the jury and that the damages awarded were so unreasonable and excessive as to indicate that the verdict was rendered under the influence of passion and prejudice on the part of the jury. These grounds being somewhat factually interrelated will be considered together. In Hochstetler v. Graber, 78 N.D. 90, 48 N.W.2d 15, 18, we said:

“This court has many times, and in different ways, stated the rule that whether a new trial shall be granted rests largely within the sound judicial discretion of the trial court, and unless an abuse of that discretion is shown the action of the trial court will not be disturbed on appeal. Among our more recent cases supporting this rule are State v. Hummel, 73 N.D. 308, 14 N.W.2d 368; Haslam v. Babcock, 71 N.D. 363, 1 N.W.2d 335, and Froh v. Hein, 76 N.D. 701, 39 N.W.2d 11. The trial court considered the sufficiency of the evidence and, in denying a new trial, confirmed the verdict of the jury. When the verdict is attacked in this court and the evidence, though conflicting, is legally sufficient to sustain the verdict under the instructions of the trial court, the verdict and judgment will not be disturbed.”

Other recent cases to the same effect are: Haser v. Pape, 78 N.D. 481, 50 N.W.2d 240; Mann v. Policyholders’ National Life Ins. Co., 78 N.D. 724, 51 N.W.2d 853; McDermott v. Sway, 78 N.D. 521, 50 N.W.2d 235; Kohler v. Stephens, 74 N.D. 655, 24 N.W.2d 64.

There is no question in this case but that a conversion took place and that the subject of the conversion was a stock of merchandise consisting in part of new goods acquired by Mevorah and Sills after they purchased and took possession of the business and the remaining and larger portion of the stock of goods that had been originally purchased from the defendants under the conditional sales contract. The contested issues involved the quantity and value of the goods converted. The evidence on these issues is conflicting and irreconcilable. That the plaintiffs' are entitled to a recovery is certain. Uncertainty pertains only to the amount. This is a case in which Section 28-1902, paragraph 5, NDRC 1943 is particularly applicable. Under it a verdict may be vacated and a new trial granted for

‘‘excessive damages appearing to have been given under the influence of passion or prejudice, but when a new trial is asked for on this ground and it appears that the passion and prejudice affected only the amount of damages allowed and did not influence the findings of the jury on other issues in the case, the trial court, on hearing the motion, and the supreme court, on appeal, shall have power to order a reduction of the verdict in lieu of a new trial, or to order that a new trial be had unless the party in whose favor the verdict was given remits the excess of damages; * *

In Loveland v. Nieters, N.D., 54 N.W.2d 533, 539, we said:

“A motion for a new trial on such ground involves consideration of the evidence and implies a duty on the part of the court to whom the motion is addressed to weigh the evidence.”

And in Leonard v. North Dakota Co-Operative Wool Marketing Ass’n, 72 N.D. 310, 6 N.W.2d 576, 584, we said:

“The purpose of an award of damages is to compensate for an injury. It is for the jury to determine that compensation within reasonable limits. If those limits have been exceeded by the jury it is the duty of the court to make a proper reduction or grant a new trial.”

In the previous trial in this case, N.D., 60 N.W.2d 581, the jury returned a verdict on the second cause of action for $4,000 which the court reduced to $2,200. On the second trial, which is now under review, the jury returned a verdict of $1,750, which the court found not to be excessive. After a review of the evidence we have come to the conclusion that the trial court did not abuse his discretion in so finding.

At the first trial of the fourth cause of action the verdict was $33,660, which the court reduced to $19,700. Upon the second trial of the fourth cause of action the jury returned a verdict of $26,900 damages, which the court found was excessive and granted a new trial upon the fourth cause of action, unless the plaintiffs should file a remission within ten days reducing the verdict to $22,333. The court also found that it appeared affirmatively that the passion or prejudice of the jury affected only the amount of damages allowed and did not influence the jury’s findings on other issues or other causes of action. The plaintiffs’ filed the remission and judgment was entered accordingly.

Upon the first trial the jury found substantial verdicts in favor of the plaintiffs on both causes of action. The judgment was reversed and a new trial granted because of the admission of evidence of retail value unaccompanied by other evidence showing factors included in the retail value which would permit the jury to eliminate therefrom that portion which did not represent the value of the stock of goods in bulk or in conveniently salable lots. The measure of damages to be applied under the instructions of the court in both trials was the same. In the second trial there was no evidence of retail value but instead evidence was introduced of wholesale replacement values as of the date of the conversion. In other respects the evidence in both trials was substantially the same.

Upon a motion for new trial upon the ground of excessive damages appearing to have been given under the influence of passion and prejudice, it was proper for the trial court, and it is proper for this court on appeal, to consider the fact that substantial verdicts were rendered on both causes of action in the prior trial. Regenvetter v. Ball, 131 Wash. 155, 229 P. 321.

A new trial is a reexamination of the facts. Section 28-1901 NDRC 1943. Two juries have passed upon the facts and the trial court has in each instance determined that the evidence was sufficient to support the verdicts. The verdict in the second trial with respect to each cause of action was substantially less than that rendered on the former trial. The trial court in the exercise of his judicial discretion has upheld the full award of the jury as to the first cause of action. As to the second cause of action he reduced the amount but nevertheless determined that the evidence was sufficient to sustain the' verdict. In so doing he did not abuse his discretion. See In re Sperl’s Estate, 100 Minn. 198, 110 N.W. 853; Ladwig v. Supreme Assembly Equitable Fraternal Union, 125 Minn. 72, 145 N.W. 798; Abramowitz v. Continental Insurance Company, 170 Minn. 215, 212 N.W. 449; Adkins v. Philadelphia, Trenton & Chester Company, 150 A. 210, 8 N.J. Misc. 329; 39 Am.Jur., New Trial, Section 16; 66 C.J.S., New Trial, § 76e.

Our review of the record leads us to the conclusion that the trial judge was warranted in the action taken with respect to both the second and fourth causes of action. The judgment and order appealed from are affirmed.

BURKE, C. J., and SATHRE, JOHNSON and GRIMSON, JJ., concur.


text:
    FIRST NATIONAL BANK IN GRAND FORKS, a corporation, as Guardian of the Estate of Edith Mae Charon, an Incompetent Person, Plaintiff and Respondent, v. NORTH DAKOTA WORKMEN’S COMPENSATION BUREAU, Defendant and Appellant.
    No. 7490.
    Supreme Court of North Dakota.
    Feb. 23, 1955.

      Paul Benson, Atty. Gen., Paul M. Sand, Asst. Atty. Gen., for defendant and appellant.
    Day, Stokes, Vaaler & Gillig, Grand Forks, for plaintiff and respondent.
   MORRIS, Judge.

This is an appeal from a judgment directing the North Dakota Workmen’s Compensation Bureau, appellant herein, to pay to the respondent certain sums fo'r the use and benefit of Edith Mae Charon, an incompetent person.

The following facts are pertinent to the issue on appeal: John Alfred Charon died on November 16, 1946, from injuries received in the course of his employment. An action was instituted in the District Court of Grand Forks County by Hattie Charon, guardian of Edith Mae Charon, an incompetent person, against the North Dakota Workmen’s Compensation Bureau wherein the court found that Edith Mae Charon, daughter of John Alfred Charon, deceased, was born on September 3, 1925; that she was an incompetent person dependent upon the deceased, over eighteen years of age, and was incapable of self-support. On May 18, 1950, judgment was rendered in that action directing the bureau to pay the guardian of Edith Mae Charon $8.75 per week until Edith Mae Charon became competent or capable of self-support.

On July 14, 1950, a marriage was solemnized at East Grand Forks, Minnesota, between Edith Mae Charon and Joseph J. Witz. On July 24, 1950, an action was commenced in the District Court of Grand Forks County in the name of Edith Mae Witz by Hattie Charon, her guardian, to annul the marriage. In that action the court found that at the time of the marriage plaintiff was incapable of contracting marriage and was incompetent, both at the time of the marriage and the time of rendition of judgment. On August 22, 1953, it was decreed that the marriage be “in all things annulled and declared void.”

After the marriage the Workmen’s Compensation Bureau discontinued the benefit payments. Payments were resumed from the date of the annulment.

Upon the trial in this proceeding the court, with the acquiescence of counsel, stated the issue as follows :

“If I understand the situation here correctly the only issue before the Court at this time is whether or not the Workmen’s Compensation Bureau should pay the monthly installments from the time that Edith Mae Charon was married or attempted to be married to one Joseph Witz and up until the time that such marriage was annulled by the District ■ Court of Grand Forks County, North Dakota, that period being from July 15, ■ 1950 to August 22, 1953.”

The action to annul the marriage was commenced in Grand Forks County, North Dakota, ten days after the marriage was solemnized. The court found:

“that at the time of said marriage, the plaintiff was incapable of contracting marriage, was incompetent and now is an incompetent person.”

The court further found:

“That Edith Mae Witz does not, and on July 14, 1950, did not have sufficient mental capacity to consent to or understand a marriage contract into which she entered, that she did not, and now does not, have sufficient mental capacity to enter into a contract of marriage under the laws of the State of Minnesota or under the laws of the State of North Dakota.”

In support of its contention that it is not liable to pay benefits between the date of the marriage and the date of the annulment the appellant cites Section '518.02, Minnesota Statutes Annotated, which provides that when a party to a marriage is incapable of assent thereto for want of understanding, the marriage may be annulled at the suit of the injured pa'rty and shall be void from the time its nullity is adjudged.

Turning to the statutes of North Dakota we find that under Section 14-0401, NDRC 1943

“A marriage may be annulled by an action in the district court to obtain a decree of nullity for any of the following causes existing at the time of the marriage: * * *
“3. That either party was of unsound mind, unless such party, after •coming to reason, freely cohabited with' ■the other as husband or wife; * *

.Section 14-0308, NDRC 1943 provides:

“All marriages contracted outside of This state, which are valid according to the laws of the' state or country where contracted, shall be valid in this state. This section shall not apply when residents of this state contract a marriage in another state which is prohibited under the laws of North Dakota.”

We think that it may be fairly inferred from this record that at the time of the marriage the parties thereto were residents of the State of North Dakota. A feeble minded woman under the age of forty-five years is prohibited from marrying by the provisions of Section 14-0307, NDRC 1943. Edith Mae Charon was such a person and her marriage to Joseph J. Witz was a prohibited marriage.

It is the policy of this state, as expressed by Section 14-0308, supra, that the validity of marriages prohibited by the laws of this state when contracted outside of North Dakota by residents of this state will be determined according to our laws. In an annulment suit involving such a prohibited marriage, our statutes will govern, whether the marriage is void or voidable.

“In an annulment suit, questions as to the existence and validity of the marriage are to be determined by the law in effect at the time when and the place where the marriage was contracted or solemnized, except in the case of a marriage entered into in disregard of the law or in violation of a strong public policy of the state of domicile of the parties.” Nelson on Divorce, Section 31.08.

A state has the prerogative to regulate by legislation the marital status of its., own citizens domiciled therein to the extent of prohibiting certain marriages upon the ground of public policy and may give effect to such prohibition in nullifying a marriage performed in violation thereof though solemnized in another state. McDonald v. McDonald, 6 Cal.2d 457, 58 P.2d 163, 104 A.L.R. 1290.

The domicile of the parties being in this state and the marriage being prohibited by the laws of this state, our statutes will be applied and will govern the court in determining and decreeing the nullity of the marriage. Stevens v. Stevens, 304 Ill. 297, 136 N.E. 785; Ertel v. Ertel, 313 Ill.App. 326, 40 N.E.2d 85; Conflict of Laws, Beale, Section 136.1.

When Edith Mae Charon married her right to compensation from the Workmen’s Compensation Fund ceased. Section 65-0517, NDRC 1943. It is now contended in her behalf that when her marriage was annulled the effect of the annulment related back to the date of her marriage and that she is entitled to have her compensation payments reinstated as of that date.

The appellant contends that the marriage under consideration was voidable and not void. It is pointed out that under Section 14-0401, paragraph 3, NDRC 1943, the marriage of a person of unsound mind may not be annulled on behalf of a party who after coming to reason freely cohabited with the other, and that under Section 14-0402, paragraph 3, annulment of such a marriage could not be had after the death of either party. These statutory provisions indicate that the marriage is voidable. This is the view expressed by this court in Mickels v. Fennell, 15 N.D. 188, 107 N.W. 53. It has already been noted that while marriages of feeble minded persons are prohibited, Section 14-0307, NDRC 1943, such marriages are not declared void as is done in the case of incestuous marriages. Section 14-0303, NDRC 1943. A void marriage is completely invalid for every purpose. It can be attacked either directly or collaterally, while a voidable marriage can only be questioned as to its validity by a direct attack such as is provided by our annulment statute. There has been such an attack upon this marriage and it has been decreed to be “in all things annulled and declared void.”

The appellant next argues that because the marriage was voidable under North Dakota law the decree annulling it can only be effective from the date of its entry and does not relate back so as to render the marriage void from its inception. This assertion cannot be sustained. Under our statute, Section 14-0401, NDRC 1943, a decree of nullity can only be obtained for a cause existing at the time of marriage.

“If parties are declared incapable of contracting marriage, then no valid contract can be made by them.” Woodward v. Blake, 38 N.D. 38, 164 N.W. 156, 158, L.R.A.1918A, 88, Ann. Cas.1918E, 552.
“An action for annulment is predicated upon some ground existing at the time the marriage was entered' into', and the decree therein in effect declares that a valid marriage never existed.” Kawabata v. Kawabata, 48 N.D. 1160, 189 N.W. 237, 238.

It is generally held that a decree of annulment has the effect of avoiding the marriage from the beginning. Steerman v. Snow, 94 N.J.Eq. 9, 118 A. 696; Eisenberg v. Eisenberg, 105 Pa.Super. 30, 160 A. 228; Lindsay v. Lindsay, 148 Wash. 31, 267 P. 777; Anonymous v. Anonymous, 7 Terry 458, 46 Del. 458, 85 A.2d 706; Saunders v. Saunders, Sup., 63 N.Y.S.2d 880; DeRosay v. DeRosay, 162 Pa.Super. 333, 57 A.2d 685; Short v. Short, Ohio App., 102 N.E.2d 719; Southern Ry. Co. v. Baskette, 175 Tenn. 253, 133 S.W.2d 498.

California has the same statutes regarding annulment of marriage that we are here considering. Sections 82 and 83, California Civil Code. California decisions are therefore persuasive. In McDonald v. McDonald, 6 Cal.2d 457, 58 P.2d 163, 165, 104 A.L.R. 1290, it is said:

“A familiar analogy exists in the law of contracts. Thus a contract may be voidable and subject to rescission, because of some infirmity in its procurement, but, unless attacked by notice of rescission or by suit, will not be avoided, but will remain binding. Garcia v. California Truck Co., 183 Cal. 767, 192 P. 708. So with voidable marriages. The parties may or may not exercise their legal right to have them annulled, and, if they do not exercise such right, the marriages are binding; but, when annulment is sought, it can be granted only if there was some element of invalidity in the contracting of the marriage. Thus, in Millar v. Millar, 175 Cal. 797, 806, 167 P. 394, 398, L.R.A.1918B, 415, Ann.Cas.1918E, 184, it is stated: ‘Strictly speaking the word “divorce” means a dissolution of the bonds of matrimony, based upon the theory of a valid marriage, for some cause arising after the marriage, while an annulment proceeding is maintained upon the theory that, for some cause existing at the time of marriage, no valid marriage ever existed. This is true even though the marriage be only voidable at the instance of the injured party, or in the words used in In re Estate of Gregorson, 160 Cal. (21) 25, 116 P. 60, L.R.A.1916C, 697, Ann.Cas.1912D, 1124, “capable of being annulled.” And the decree of nullity in such a proceeding determines that no valid marriage ever existed.’ See, also, Goodrich, Conflict of Laws, p. 302.”

Some exceptions have been made to the rule that as to a voidable marriage a decree of annulment makes the marriage void from its inception. Both the rule and the exceptions are ably discussed in Callow v. Thomas, 322 Mass. 550, 78 N.E.2d 637, 2 A.L.R.2d 632. In most instances these exceptions are concessions to equitable'principles which have no application to this case. We follow the rule and hold that the decree of annulment made the marriage void ab initio. Edith Mae Charon is entitled to receive payment from the Workmen’s Compensation Bureau as though no marriage ceremony ever took place. The judgment appealed from is affirmed.

BURKE, C. J., and SATHRE, JOHNSON and GRIMSON, JJ., concur.


text:
    Harry O. BENSON, Plaintiff and Respondent, v. Frank SCHNEIDER, Defendant and Appellant,
    No. 7484.
    Supreme Court of North Dakota.
    Feb. 23, 1955.

      Teigen & Erickstad, Devils Lake, Paul Benson, Atty. Gen., North Dakota, and Christopher U. Sylvester, Sp. Asst. Atty. Gen., for defendant and appellant.
    Duffy & Haugland, Devils Lake, for plaintiff and respondent.
   MORRIS, Judge.

In this proceeding the plaintiff, a nonresident, seeks to recover from the Unsatisfied Judgment Fund the sum of $3,767.50 upon a judgment rendered against Frank Schneider for injuries sustained in an automobile collision on the highways of this state. The Unsatisfied Judgment Fund was created by Chapter 274, SLND 1947 which, as amended, now appears as Chapter 39-17, NDRC 1953 Supp. The fund is created by the annual exaction of $1 from the owner of each motor vehicle registered. The exaction is dispensed with in years when the amount of the fund is maintained within certain limits.

Section 39-1703, NDRC 1953 Supp. prescribes conditions under which recovery may be had from the fund as follows:

“Where any person, who is a resident of this state, recovers in any court in this state a judgment for an amount exceeding $300.00 in an action for damages resulting from bodily injury to, or the death of, any person occasioned by, or arising out of, the ownership, maintenance, operation or use of a motor vehicle by the judgment debtor in this state, upon such judgment becoming final, such judgment creditor may, in accordance with the provisions of this Act (chapter), apply to the judge of the district court in which such judgment was rendered, upon notice to the attorney general, for an order directing payment of the judgment out of said fund.”

The statute then prescribes the detailed showing that must be made to establish the right to participate, which includes the issuance of an execution and a return by the sheriff showing the amount realized thereon to be insufficient to satisfy the judgment.

The plaintiff has complied with the provisions of Section 39-1703 with one important exception. He is not a resident of the State of North Dakota. He is a citizen of the United States and a resident of the State of Illinois. The attorney general appeared in defense of the Unsatisfied Judgment Fund and resisted the plaintiff’s application upon the sole ground of nonresi-dence.

The plaintiff asserts that the statutory provision excluding nonresidents from recourse to the fund is violative of the provision of Article IV, Section 2, of the United States Constitution:

“The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.”

And also the provision of Article XIV of the amendments to the Constitution forbidding a state to deny to any person within its jurisdiction the equal protection of the laws.

The trial court determined that the statute in question was unconstitutional insofar as it excluded the plaintiff from participation in the Unsatisfied Judgment Fund and issued an order directing the state treasurer to pay plaintiff’s judgment. From this order the defendant appeals, the appeal being prosecuted by the attorney general of the State of North Dakota.

Section 2 of Article IV does not mean that the rights of nonresidents at all times must equal those of the residents of a state. In Cooley’s Constitutional Limitations, Eighth Edition, page 821, we find this general statement:

“Although the precise meaning of ‘privileges and immunities’ is not very conclusively settled as yet, it appears to be conceded that the Constitution secures in each State to the citizens of all other States the right to remove to, and carry on business therein; the right by the usual modes to acquire and hold property, and to protect and defend the same in the law; the right to the usual remedies for the collection of debts and the enforcement of other personal rights; and the right to be exempt, in property and person, from taxes or burdens which the property, or persons, of citizens of the same State are not subject to. To this extent, at least, dis-criminations could not be made by State laws against them. But it is unquestionable that many other rights and privileges may be made — as they usually are — to depend upon actual residence : such as the right to vote, to have the benefit of exemption laws, to take fish in the waters of the State, and the like.”

Discriminations against nonresidents have also been held valid with respect to statutes regulating the practice of the law, Keeley v. Evans, D.C., 271 F. 520; see also 5 Am.Jur. Attorneys at Law, Section 21; 7 C.J.S., Attorney and Client, § 7c.; hunting, In re Eberle, C.C., 98 F. 295; Cummings v. People, 211 Ill. 392, 71 N.E. 1031; State v. Gallop, 126 N.C. 979, 35 S.E. 180; requiring nonresidents to give security for costs, Haney v. Marshall, 9 Md. 194; and the right to sell intoxicating liquor, Mette v. McGuckin, 18 Neb. 323, 25 N.W. 338; Welsh v. State, 126 Ind. 71, 25 N.E. 883, 9 L.R.A. 664; DeGrazier v. Stephens, 101 Tex. 194, 105 S.W. 992, 16 L.R.A.,N.S., 1033, 16 Ann. Cas. 1059.

In Heim v. McCall, 239 U.S. 175, 36 S.Ct. 78, 60 L.Ed. 206, Ann.Cas. 1917B, 287, it was held that the provisions of a New York Labor Law that only citizens of the United States shall be employed on public works and that preference shall be given to citizens of the State of New York were not unconstitutional as violative of the privileges and immunities clause of the Constitution of the United States or the equal protection or due process clause of the Fourteenth Amendment.

City and County of Denver v. Bossie, 83 Colo. 329, 266 P. 214, 217, involved a statute that required the city to use materials purchased in Colorado. The court said:

“In the course of our consideration of this case, some of us have been in doubt as to the constitutionality of the said sections 453-455, lest they might amount to a restriction of commerce between states, and subvert or abridge the right of citizens of other states, or deny equal protection of the laws, but our doubts are set at rest by Heim v. McCall, 239 U.S. 175, 36 S.Ct. 78, 60 L.Ed. 206, which holds that the state may buy of whom it will, and that the municipalities are mere instruments of the state, and so must buy as the state directs.”

In State v. Senatobia Blank Book & Stationery Co., 115 Miss. 254, 76 So. 258, the court considered a statute prohibiting the letting by boards of supervisors of counties of contracts to furnish the county with blank books, stationery, etc. to any bidder who was not a resident of the state or who did not have a printing plant in the state or who was not a bona fide resident of the state actually engaged in the printing business. It was there held that the act in question in no way violated any provision of the federal constitution. See also Tribune Printing & Binding Co. v. Barnes, 7 N.D. 591, 75 N.W. 904.

The plaintiff in support of his contention that the exclusion of nonresidents from participating in the Unsatisfied Judgment Fund infringes on the rights of citizens of other states to the full enjoyment of the privileges and immunities guaranteed by the constitution cites and quotes from Blake v. McClung, 172 U.S. 239, 19 S.Ct. 165, 172, 43 L.Ed. 432. We do not believe that case supports the plaintiff’s position here. It held that when establishing regulations for the conduct of private business of a particular kind, a state may not give to its own citizens essential privileges connected with that business which it denies to citizens of other states and that as a consequence a state cannot constitutionally discriminate in favor of resident creditors of an insolvent as against nonresident creditors. The court makes this pertinent comment:

“The constitution forbids only such legislation affecting citizens of the respective states as will substantially or practically put a citizen of one state in a condition of alienage when he is within or when he removes to another state, or when asserting in another state the rights that commonly appertain to those who are part of the political community known as the people of the United States, by and for whom the government of the Union was ordained and established.”

The plaintiff, both on oral argument and in the brief, stressed the case of Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 1164, 92 L.Ed. 1460, in which the court held that a statute requiring nonresidents of South Carolina to pay a license fee of $2,500 for each shrimp boat and residents to pay a fee of only $25 for the privilege of catching shrimp in the marginal waters of South Carolina violated the privileges and immunities clause of Article IV, Section 2, of the federal constitution. In distinguishing McCready v. State of Virginia, 4 Otto 391, 94 U.S. 391, 24 L.Ed. 248, the majority opinion states:

“It will be noted that there are at least two factual distinctions between the present case and the McCready case. First, the McCready case related to fish which would remain in Virginia until removed by man. The present case, on the other hand, deals with free-swimming fish which migrate through the waters of several States and are off the coast of South Carolina only temporarily. Secondly, the McCready case involved regulation of fishing in inland waters, whereas the statute now questioned is directed at regulation of shrimping in the marginal sea.”

and reached this conclusion:

“Thus we hold that commercial shrimping in the marginal sea, like other common callings, is within the purview of the privileges and immunities clause.” (Italics supplied.)

Here again the court was dealing with the regulation of a business through the licensing of those engaged in it. It applied the general rule that was applied in Blake v. McClung, supra, that in regulating a private business a state cannot give its own citizens essential privileges which it denies to others, a rule which has no application to our statute under consideration. Ours is not a regulatory measure. Cases dealing with the regulation and licensing of private businesses bear but remotely, if at all, upon the problem here presented. The facts in those cases and the reasons for the legislation differ widely from those pertaining to our statute.

We now turn to a consideration of a case quoted in the trial court’s memorandum opinion and in the plaintiff’s brief, Quong Ham Wah Co. v. Industrial Accident Commission, 184 Cal. 26, 192 P. 1021, 12 A.L.R. 1190, wherein it was held that a Workmen’s Compensation Act which extended its protection to residents of California injured in other states while working under contracts entered into in California without extending the same protection to nonresidents working under similiar contracts violated the privileges and immunities clause of the federal constitution. The court further held that the result of the constitutional violation was not to render the entire act void but to automatically extend the application of the law to nonresidents. We have been unable to find where this case has been followed or favorably cited on these points in any other jurisdiction. On the other hand, it has been severely criticized in Tedars v. Savannah River Veneer Co., 202 S.C. 363, 25 S.E.2d 235, 239, 147 A.L.R. 914. The South Carolina Supreme Court makes this comment:

“The reasoning of the California Court is far from convincing and it was shortly afterward made the subj ect of an annotation in 12 A.L.R. 1207, in which the editor said: ‘It may be suggested that since the employer would have been liable either way the case was decided, it had not such an interest as would enable it to attack the constitutionality of the act. A question also arises as to the soundness of the decision in broadening the act and extending the benefits of the Compensation Act in case of injuries to a nonresident in another state who was employed under a contract made within the state. Such a construction, in view of the Legislature’s intention as evinced by the phraseology of the act, confining its operation to residents, seems to closely border on judicial legislation.’ ”

In Liggett & Meyers Tobacco Co. v. Goslin, 163 Md. 74, 160 A. 804, 807, a workmen’s compensation statute authorizing recovery for injuries received outside of the state was held not discriminatory because it restricted recovery to “citizens and residents” of the state. The court said:

“A different result was reached in the case of Quong Ham Wah Co. v. Industrial Accident Commission, 184 Cal. 26, 192 P. 1021, 12 A.L.R. 1190, by construing the word ‘resident’ as meaning ‘citizen,’ and holding that a provision which restricted the jurisdiction of the commission to controversies arising out of injuries suffered beyond the state in cases where the injured employee was a resident of the state and the contract of employment was made within the state, was an unlawful discrimination , against the citizens of other states. No authority in point was cited in support of that opinion, which is criticized in 12 A.L.R. 1207, note, and we are unable to accept the reasoning upon which the conclusion of the court was based.”

In view of these criticisms of the California decision we are not warranted in accepting its implications as persuasive authority — it is not direct authority under the facts — on the validity of our statute which differs from workmen’s compensation acts in both form and purpose.

The statute under consideration creates a special fund composed of exactions from motor vehicle registrants. From this fund are paid certain judgments for damages resulting from personal injury or death not otherwise collectable. Its benefits are confined to residents of the state. The plaintiff is neither a resident nor a motor vehicle registrant. He seeks access to the fund because he claims that the constitution gives him that right through the “Privileges and Immunities” clause. The right or privilege which he seeks is not a natural right, neither is it a right affecting his person or his business. The statute does not regulate his access to or use of the highways. It in no manner interferes with his freedom of conduct. He seeks to benefit from a fund to which he contributes neither directly nor indirectly. Should he suffer damage to either his person or property, he may have redress against the wrongdoer through the same courts, by the same processes and the same aids to enforcement of his rights as any citizen or resident of the State of North Dakota. The only privilege denied him is to have his uncollectable judgment paid out of the special fund created and administered for the benefit of residents of the state.

Whether the validity of the statute could be successfully challenged by a nonresident who had contributed to the fund by registration of a motor vehicle we need not determine. This plaintiff does not fall within that class. We note that the State of New Jersey which has a similar law has avoided the latter question by providing that recovery from the fund may be had by the owner of a motor vehicle registered in that state. N.J.R.S.Cum.Supp.1952, Section 39:6-62, N.J.S.A.

“A party attacking the constitutionality of a statute must show that it affects his rights in an unconstitutional manner. That it so affects the rights of others is no concern of his. He may champion his own, but not the rights of others.” Mesaba Loan Co. v. Sher, 203 Minn. 589, 282 N.W. 823, 827.

Also, Tooz v. State, 76 N.D. 599, 38 N.W.2d 285; Asbury Hospital v. Cass County, 72 N.D. 359, 7 N.W.2d 438.

The plaintiff has cited as applicable to this case the clause of Section 20, Article I of the North Dakota Constitution, providing that no citizen or class of citizens shall be granted privileges or immunities which upon the same terms shall not be granted to all citizens. That provision has reference to citizens of the State of North Dakota. It may not be invoked by the plaintiff who is not a citizen of this state.

Chapter 39-17, NDRC 1953 Supp. which confines to residents of North Dakota the right to participate in the fund is not by reason of such limitation unconstitutional and violative of plaintiff’s right to participate in the fund by reason of the provision of the federal constitution that citizens of each state shall be entitled to all privileges and immunities of citizens in several states or the constitutional requirements of the equal protection of the laws. The order appealed from is reversed.

BURKE, C. J., and SATHRE, JOHNSON and 'GRIiMSON, JJ., concur.