Wade v. City of Oklahoma City

1994 OK CIV APP 17, 873 P.2d 1057, 65 O.B.A.J. 1656, 1994 Okla. Civ. App. LEXIS 29, 1994 WL 162098
CourtCourt of Civil Appeals of Oklahoma
DecidedFebruary 8, 1994
DocketNo. 81535
StatusPublished
Cited by1 cases

This text of 1994 OK CIV APP 17 (Wade v. City of Oklahoma City) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wade v. City of Oklahoma City, 1994 OK CIV APP 17, 873 P.2d 1057, 65 O.B.A.J. 1656, 1994 Okla. Civ. App. LEXIS 29, 1994 WL 162098 (Okla. Ct. App. 1994).

Opinions

OPINION

HUNTER, Presiding Judge:

Appellant filed an in rem proceeding against an individual for foreclosure of a purchase money first mortgage on property located in Oklahoma County. The mortgage interest was filed in OMahoma County on June 9, 1991. Appellee (City) filed a “dilapidation” lien against the property, recorded after the filing of Appellant’s lien. The facts being undisputed, the parties filed counter motions for summary judgment. Appellant claimed the statute under which City asserted priority of lien, 11 O.S.1991 § 22-112, was unconstitutional as violative of the Contracts Clause of the United States Constitution, U.S. Const., Art. 1,10, cl. 1. City responded that, in this case, the City’s duties under its Police Power rendered the prohibition of impairment of contracts subservient, and that the legislative intent expressed by the dilapidation statute, 11 O.S.1991 § 22-112 was constitutionally firm and should be enforced. The trial court granted City’s motion for summary judgment. We affirm.

CONSTITUTIONAL PROVISIONS

The Contracts Clause of the United States Constitution, Art. I, Sec. 10, cl. 1, states:

No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

Oklahoma’s Constitution contains a parallel Contracts Clause at Art. 2 § 15:

No bill of attainder, ex post facto law, nor any law impairing the obligation of contracts, shall ever be passed. No conviction shall work a corruption of blood or forfeiture of estate: Provided, that this provision shall not prohibit the imposition of pecuniary penalties.

STATUTES AT ISSUE

Appellant questions the constitutionality of 11 O.S.1991 § 22-112, the statute which authorizes a municipality to dismantle and remove dilapidated structures. The process used, which includes notice to the structure owner and mortgage holder of record, is not at issue. Appellant disputes that part of the statute which gives a municipality a lien against the property for the unpaid costs of the dismantling and removal of the building. In pertinent part, § 22-112(5), states:

Said lien shall be coequal with the lien of ad valorem taxes and all other taxes and special assessments and shall be prior and superior to all other titles and liens against the property.

There are two statutes which Appellant claims bolster his position that the dilapidation statute is unconstitutional. These are found at 42 O.S.1991 §§ 15, 16 which state:

§ 15 — Other things being equal, different liens upon the same property have priority according to the time of their creation, except in cases of bottomry and respon-dentia.
§ 16 — A mortgage given for the price of real property, at the time of its conveyance, has priority over all other liens created against the purchaser, subject to the operation of the recording laws.

DISCUSSION

The federal constitution’s prohibition on state laws which impair the obligations of contracts does not restrict the state’s police power, that is, the state’s power to protect the public health, morals and safety. New Orleans Gas-Light Co. v. Louisiana Light & Heat Producing & Manufacturing Co., 115 U.S. 650, 672, 6 S.Ct. 252, 264, 29 L.Ed. 516 (1885). Although the language of the Contracts Clause appears absolute, it must accommodate itself 'to the inherent power of the state “to safeguard the vital interests of its people.” Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 410, 103 S.Ct. 697, 704, 74 L.Ed.2d 569 (1983).

The stipulated facts reveal that the impaired obligation of contract was the result [1059]*1059of state action, that is, City, by act of state legislation, asserts a superior lien for costs for removal of dilapidated property as against a lien filed prior in time for a purchase money mortgage. Federal Land Bank of Wichita v. Story, 756 P.2d 588, 590 (Okl.1988). The questions we must then answer, according to the test found in Energy Reserves, 459 U.S. at 411, 412, 103 S.Ct. at 704, 705 and Story, 756 P.2d at 590, 591, are:

1. Has the state law operated as a substantial impairment of a contractual relationship?
2. If the state’s regulation constitutes a substantial impairment, does the State, in justification, have a significant and legitimate public purpose behind the regulation?
3. If the legitimate public purpose is identified, is the adjustment of the rights of the contracting parties based upon reasonable conditions and of a character appropriate to the public purpose justifying the adoption of the legislation?

In the instant case, we answer the first question of the test affirmatively. Under other circumstances, a purchase money mortgage holder who filed its lien before any other lienor, has a right to enforce its contract with the property owner for the full extent of the collateral. The state’s legislation allowing the lien for the costs of removing a dilapidated structure to be superior to the purchase money, prior filed lien substantially interferes with the contract right between the mortgage holder and structure owner. The statute, 11 O.S.1991 § 22-112 was effective July 1, 1978. The contract at issue was executed and the mortgage reflecting that contract filed in 1991. In Oklahoma, the right of the legislature to act under the police power of the state is a “part of the existing law at the time of the execution of every contract, and as such becomes in contemplation of law a part of that contract.” Sunray DX Oil Co. v. Cole, 461 P.2d 305, 309 (Okl.1969). We find that although there is a substantial impairment of the obligations of contract, the private parties to the contract were on notice that the state could assert a superior lien for costs of removing dilapidated structures from the property.

Having found the state law substantially impaired the parties’ obligations of contract, we ask whether the state has a significant and legitimate public purpose behind the regulation. We answer this question affirmatively also. It is unquestioned that property owners must keep their property located in urban areas at a minimum standard so as not to endanger the health and safety of themselves and their neighbors. Dilapidated structures may be fire hazards, become homes for rats and other wild animals and constitute potential for injury to humans. The state has a significant interest in regulation of the public’s health and safety without the requirement of emergency. Energy Reserves, 459 U.S. at 412, 103 S.Ct. at 705. The regulation is legitimate because the state is exercising its police power and not providing a benefit to special interests. Energy Reserves at 412, 103 S.Ct. at 705.

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Bluebook (online)
1994 OK CIV APP 17, 873 P.2d 1057, 65 O.B.A.J. 1656, 1994 Okla. Civ. App. LEXIS 29, 1994 WL 162098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wade-v-city-of-oklahoma-city-oklacivapp-1994.