TAXATION--REAL ESTATE SALES TAX--MORTGAGES--ASSUMPTION OF BALANCE

TAXATION--REAL ESTATE SALES TAX--MORTGAGES--ASSUMPTION OF BALANCE

Chapter 132, Laws of 1955 excludes from the definition of the term “sale” under RCW 28.45.010 a transaction in which a grantee assumes the balance owing on an obligation which is secured by a mortgage and no other consideration passes between the grantee and the grantor.

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

                                                                 June 8, 1955
 
Honorable Don J. Clark
Prosecuting Attorney
Yakima County
Suite 120, County Courthouse
Yakima, Washington                                                                                                              Cite as:  AGO 55-57 No. 95

Dear Sir:

We have your request for our opinion as to the effect of the following provision of Chapter 132, Laws of 1955.

“The term [ sale] shall not include * * * or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage * * *

We conclude that the clause “or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage” added by Chapter 132, Laws of 1955, excludes from the term “sale” only a transaction in which a grantee in a deed assumes the balance owing on an obligation which is secured by a mortgage where no other consideration passes between the grantee and the grantor.

ANALYSIS

RCW 28.45.010 states:
 

[original page 2]
 

“ ‘Sale ’ defined.  As used in this chapter, the term ‘sale’ shall have its ordinary meaning and shall include any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title to real property, * * * or any estate or interest therein for a valuable consideration.* * *”.

The pertinent part of Chapter 132, Laws of 1955, amending RCW 28.45.010 would make the second paragraph of that section read:

“the term shall not include * * * or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage”.

RCW 28.45.050 provides:

“Levy of tax - Rate - Disposition of proceeds.  The county commissioners of any county are authorized by ordinance to levy an excise tax upon sales of real estate not exceeding 1% of the selling price. * * *”  (Underscoring ours).

RCW 28.45.030 provides:

“ ‘Selling price’ defined.  As used in this chapter, the term ‘selling price’ means the consideration, including money or anything of value, paid or delivered or contracted to be paid or delivered in return for the transfer of the real property or estate or interest in real property, and shall include the amount of any lien, mortgage, contract indebtedness, or other incumbrance, either given to secure the purchase price, or any part thereof, or remaining unpaid on such property at the time of sale. * * *”  (Underscoring ours).

 [original page 3]

This definition of the term “selling price” was unchanged by the 1955 Legislature and, therefore, to give effect to this definition and the amendment in the 1955 Act, it is necessary to look to the rules of statutory construction.

In Graffell v. Honeysuckle, 30 Wn (2d) 390, at page 399, our Supreme Court had before it the interpretation of a statute when it said:

“The fundamenta1 object or purpose of all judicial construction or interpretation is to ascertain, if possible, and to give effect to, the intention of the lawmakers in enacting the particular statute.  Layton v. Home Indemnity Co., 9 Wn. (2d) 25, 113 P. (2d) 538; Lynch v. Department of Labor & Industries, 19 Wn. (2d) 802, 145 P. (2d) 265.

“It has frequently been declared that, in the process of arriving at the intent of the legislative body, the first resort of the courts is to the context and subject matter of the legislation, because the intention of the lawmaker is to be deduced, if possible, from what is said. . .”

“In enacting legislation upon a particular subject, the lawmaking body is presumed to be familiar not only with its own prior legislation relating to that subject, but also with the court decisions construing such former legislation.  In re Levy, 23 Wn. (2d) 607, 161 P. (2d) 651, 162 A.L.R. 805.  This rule was applied in the case of Sandahl v. Department of Labor & Industries, 170 Wash. 380, 16 P. (2d) 623, wherein this court said:

‘When the legislature made the amendments in 1927, it was presumed to have in mind the existing statutory provisions and the judicial construction which had been placed upon them.  To discover the legislative intent, the original statutes, and as they read as amended, are to be taken into consideration.’”

[original page 4]

If the words, “or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage”, should be taken to exclude from the tax all transactions in which a grantee assumes a balance owing on a mortgage, part of the provisions of RCW 28.45.030 would be impliedly repealed.  Under the ordinary rules of statutory construction this result should be avoided, if another construction is possible.

“In order that effect may be given to every part of an act in accordance with the legislative intent, all the language of the act must be brought into accord.  The various provisions of an act should be read so that all may, if possible, have their due and conjoint effect without repugnancy or inconsistency, so as to render the statute a consistent and harmonious whole.  Hence where two constructions of a statute are possible, by one of which the entire act may be harmonious while the other will create discord between different provisions, the former should be adopted. * * *”  (Underscoring ours) 50 Am. Jur. 363.  See Spokane County ex rel Sullivan v. Glover, 2 Wn. (2d) 162, 97 P. 2d 628.

We cannot presume that the legislature in enacting Chapter 132 intended to repeal part of RCW 28.45.030.  Since no change was made in the definition of “selling price”, a reasonable interpretation of  the new clause in Chapter 132 which will give effect to the whole Act, including the amendment, would be that the exclusion is limited to those transactions where title is transferred to a grantee who assumes the mortgage balance with passage of no other consideration.

We point out another factor in the passage of Chapter 132, Laws of 1955, which lends weight to the above analysis and interpretation.  The exclusions added by Chapter 132 relate to credit transactions involving real estate in which either a mortgage balance or real estate contract balance is owing.  No attempt was made in the amendment to exclude from the meaning of the term “sale”, a transfer of interest by a vendee in a real estate contract under which there is a balance owing the vendor.  It is not reasonable to

[original page 5]

assume that the legislature by the phase under consideration intended to exclude from the application of the tax the balance owing on a mortgage when assumed by any grantee while leaving within the measure of the tax the balance owing on a contract when assumed by an assignee of the contract.

In conclusion it is our opinion that the portion of Chapter 132, Laws of 1955, which provides:

“or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage”

excludes from the definition of the term “sale” a transaction in which a grantee assumes the balance owing on an obligation which is secured by a mortgage and no other consideration passes between the grantee and the grantor.

Very truly yours,
 
DON EASTVOLD
Attorney General

W. DELMORE MC DOWELL
 Ass’t Attorney General