Case ID: wis_22/html/0526-01.html
Source: Caselaw Access Project
Author: {"author": "Oole, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eaton vs. Tallmadge and others.
    Foeeceosuee: Eights of mortgagor who has paid incumbrance — What title the vendor and mortgagee of land takes, as purchaser at foreclosure sale.
    
    1. Where the vendor of land, who has taken hack a mortgage for the purchase money, purchases at the sale on foreclosure thereof, he takes the whole title of the mortgagor at the commencement of the foreclosure action, including his title under a deed to a third party for taxes which the vendor was hound to pay.
    
      2. The mortgagor in such a case (with covenant against incumbrances), may counter-claim in the foreclosure action what he was compelled to pay for the tax title, not being more than the purchase money.
    ERROR to the Circuit Court for Fond du Lac County.
    Ejectment. Eaton (plaintiff below) introduced in evidence a tax deed to one Loomis, dated April 24, 1862, founded on the tax sale of 1869; a quitclaim deed from Loomis to one Knapp, dated June 24, 1862; a warranty deed from plaintiff to Knapp, dated August 26, 1859; a mortgage from Knapp to plaintiff, of same date, without covenants of warranty — all covering the land in dispute; also the judgment roll in the cáse of the same plaintiff against Knapp and one Eoster, for the foreclosure of said mortgage^ the sheriff’s deed to him as purchaser at the foreclosure sale, and the confirmation of said sale. It appeared that'the defendants below occupied the land at the commencement of the action, and Tallmadge claimed to own it; and that Knapp occupied the land for several years commencing sometime in 1859, previous to which it was unoccupied.
    The court instructed the jury to find for defendants, because the deed to Loomis vested the title in him, and that it did not pass by the foreclosure sale and deed to the plaintiff, whose duty it was to have protected the title of Knapp. Yerdict and judgment accordingly; and Eaton took his writ of error.
    
      B. P. Eaton, in person.
    
      Edward S. Bragg, for defendant in error.
   Oole, J.

From the charge of the court to the jury, we infer that it appeared from the evidence adduced on the trial, that the title.of Loomis under the tax deed dated April 24th, 1862, became vested in Knapp before the commencement of the foreclosure suit. ‘ The court seems to assume this to be the fact, and it was doubtless so. Tbe question then arises, Would tbat title pass to tbe plaintiff by virtue of tbe foreclosure proceeding? The court instructed tbe jury tbat it would not, because it was tbe plaintiff’s duty to bave protected tbe title of Knapp, and tbat it was in consequence of tbe plaintiff’s laebes tbat tbis tax deed matured. Tbe case shows tbat tbe plaintiff conveyed tbe land to Knapp by warranty deed in August, 1859; taking back tbe mortgage wbicb was susequently foreclosed. Tbe land bad been sold for taxes before tbis conveyance. But that tax title had become vested in Knapp, tbe mortgagor, before tbe commencement of tbe foreclosure action, and, we suppose, passed to tbe purchaser at tbe sale upon tbe judgment. Now it was undoubtedly tbe duty of tbe plaintiff to remove tbis tax incumbrance existing at tbe time he made bis conveyance. And be was guilty of a breach of tbe covenant of warranty against incumbrances in not doing so. But what is tbe consequence if tbe covenantor does not remove tbe incumbrance, and it is extinguished by tbe covenantee ? Nothing is better settled than tbe doctrine tbat in such a case tbe covenantee may recover, in an action to foreclose a mortgage given for tbe consideration money, tbe amount he has paid to discharge tbe incumbrance; and in tbis way be recovers full compensation for tbe injury resulting from tbe incum-brance. Or he may under certain circumstances resort to bis remedy on tbe covenants. But there is evidently no necessity for tbe covenantee resorting to bis common law action to obtain indemnity, where there is a moi'tgage outstanding for tbe consideration money exceeding in amount what be has been compelled to pay to remove tbe incum-brance. For bis remedy in tbe foreclosure action would be ample. In tbe foreclosure suit, Knapp ■ might bave set up, by way of counter-claim, tbe amount be was compelled to pay to buy in the tax title. As the foreclosure record is not before us, we are unable to determine whether he did this or not. But certainly he might have been allowed in that action the amount of the incumbrance. Row, upon what principle can it be said that Knapp’s title, derived through the tax deed, did not pass to the purchaser at the foreclosure sale ? As a general rule, the effect of a foreclosure and sale of mortgaged property is, to transfer to the purchaser the interest of the mortgagor in the premises when the suit is instituted. "We perceive no reason why. that effect must not be given to the foreclosure suit in this case. The circuit court held that the subsequent title acquired by Knapp under the tax deed would not pass to the purchaser, because it was his duty to have redeemed the tax certificate. It was undoubtedly his duty to do this; but, although he neglected to do it, this would not preclude him from taking at the foreclosure sale whatever interest Knapp or his grantee had in the premises when the foreclosure action was commenced.

By the Court. — The judgment of the circuit court is reversed, and a new trial ordered.