Case Name: Smith vs. Lewis and others
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1866-01
Citations: 20 Wis. 350
Docket Number: 
Parties: Smith vs. Lewis and others.
Judges: 
Reporter: Wisconsin Reports
Volume: 20
Pages: 350–357

Head Matter:
Smith vs. Lewis and others.
Tax title — First met second mortgagees — Finding, apart of the record.
1. Where a second mortgagee of land purchases on foreclosure of his mortgage, he cannot acquire an absolute title, free from the lien of the first mortgage, through an assignment to him of an outstanding tax certificate, and a deed issued thereupon.
2. Such assignment (whether made before or after the foreclosure sale) must be regarded, prima fade, merely as a redemption of the land from the tax sale.
3. The finding of the court is a part of the record, without a bill of exceptions; and the judgment will be reversed if not sustained by the finding.
APPEAL from the Circuit Court for Dodge County.
Foreclosure of a mortgage. The defendants Lewis and wife and. Tesch asserted by their answer a paramount title, undertax deeds. The court found the facts substantially as follows : In June, 1856, N. M. Juneau gave his note for $1000 to the La Crosse & Milwaukee Kailroad Company, secured by the mortgage in, suit, which was recorded July 5,1856; the mortgagor covenanting therein to pay all taxes, &c. Said note and mortgage were for value assigned by the company to one Luding-tpnj.as security for the payment of a bond of the company running to Ludington ;■ and afterwards plaintiff became owner thereof, in. good faith, for a valuable consideration, without notice of any defense to the same; and there was due and unpaid thereon $640 of interest. In May,. 1857, N. M. Juneau mortgaged the same premises to Paul Juneau, to secure the payment of $1500; and this mortgage was afterwards duly assigned to defendant Lewis, who paid a valuable consideration therefor without actual notice of the former mortgage. Lewis foreclosed his mortgage, and bid in the premises at the sale, December 30th, 1859. Said premises were sold for the taxes of 1858, 1859 and 1860, in April, 1859, April, 1860, and May, 1861, respectively; and deeds issued in 1862, 1863 and 1864; and Lewis took possession of the premises at the date of the first deed, and continued in undisturbed possession, claiming title under said deed more than three years before the commencement of this action, the defendant Tesch occupying the premises under a lease from him. — Upon these facts the court held that Lewis's title under the tax deed was paramount to the lien of the plaintiff, and rendered judgment accordingly; from which the plaintiff appealed.
M Mariner, for appellant:
1. The covenant to pay taxes, being for the benefit of the estate and of the equity of redemption, runs with the land, and passes with the mortgage into whosesoever hands it may come; and the owner of the equity of redemption is charged with it. Pierce v. Kneeland, 16 Wis., 672. 2. By the sheriff’s deed Lewis acquired the legal title to the land; the tax certificates were mere hens, and, as soon as he acquired them, were merged in his legal title. They are several only in equity, and will not be so treated then, unless to prevent wrong. After Lewis got title to the land, he could not, by neglecting to pay the taxes, and taking tax deeds, acquire a new title. Douglass v. Dan-gerfielcl, 10 Ohio, 152 ; Yoris v. Thomas, 12 Ill., 442; Ballance v. Forsyth, 13 How. (U. S.), 18; Glancy v. Elliot, 14 Ill., 456 ; Gardiner v. Gerrish, 23 Me., 46 ; Lacey v. Davis, 4 Mich., 140. 3. Counsel argued that Lewis’s bid at the second mortgage sale must be held to have been for the property subject to all outstanding hens, whether of mortgage or tax certificates (Mathews v. Ailán, 1 Corns., 595 ; Bussell v. Dudley, 3 Met., 147; 7. Paige, 591; 10 id., 503 ; 11 id., 28 ; Hitchcock v. M&rrich, 18-Wis., 357); and that this was true between Lewis and the plaintiff, as well as between-him and the mortgagor. Whatever ben efit or advantage a debtor bas, resting in contract, by reason or on account of tbe debtor, or whatever security or indemnity be bas against tbe debt, is a fund or means of payment, which, equity will lay bold of and divert to tbe payment of tbe debt. Curtis v. Tyler, 9 Paige, 432; Halsey v. Heed, id., 449 ; Smith v. Wydcoff, 11 Paige, 49 ; Kimball v. Noyes, 17 Wis., 695. If then tbe plaintiff bad sued Juneau on tbe note and collected tbe amount of it, Juneau could bave been subrogated to and enforced tbe mortgage. White v. Butler, 13 Ill., 109.
Lewis & Fribert, for respondent :
1. No case nor bill of exceptions having been settled, tbe judgment must be affirmed. R. S., chap. 132, sec. 20; Merwin v. O'Bay, 9 Wis., 156, and cases there cited; Conolly v. Conolly, 16 How. P. R, 224; Bidwell v. Lament, 17 id., 357. Tbe finding of tbe court and tbe exceptions thereto are no part of tbe record unless inserted into a case or bill of exceptions. Rule 2, Supreme Court Rules of 1857. 2. Tbe first tax deed was upon a sale made prior to tbe foreclosure of Lewis's mortgage. Lewis was under no obligation to pay those taxes. Even if tbe covenant to pay taxes in the first mortgage was one running with tbe land, it certainly was not so, so far as broken before Lewis foreclosed. 1 Smith’s L. C., 107, 110; 2 Wasbb. on R. P. 15, note 17, and 697, note 3. Not being bound to redeem from tbe tax sale of 1859, Lewis was not a trustee of tbe plaintiff as to said sale, but might lawfully bar him of any interest in tbe land by taking a tax deed thereon. Can a party bolding a subsequent mortgage, after foreclosing it and bidding in tbe land at tbe sale, defeat-tbe prior mortgage by purchasing at a sale upon a judgment, mortgage, mechanic’s lien or other claim which is paramount to said prior mortgage ? There can be no difference in principle, as to this question, between a purchase upon a sale for taxes and upon a sale for any other paramount lien. As to this question counsel cited Cook v. Fountain, 3 Swanst., 585 ; Tiffany & B. on Trustees, pp. 113, 119, 120, and cases there cited; Story’s Eq. Jur., §§ 331, 391, 395 ; Van Hpps v. Van Hpps, 9 Paige, 237, 241; Hawley v. Cramer, 4 Cow., 717; Torrey v. Banh of Orleans, 9 Paige, 663 ; Quctclcenbush v. Leonard, id., 333, 344; Brice v. Brice, 5 Barb., 533 ; Michoud v. Qirod, cited in. Tiffany & B., p. 143, and other cases there cited. See also Story’s Eq. Jur., § 520 ; Gardiner v. Qerrish, 23 Me., 46; Blalcéley v. Bestor, 13 Ill., 708 ; White v. Butler, 13 Ill., 109; Branson v. Yancey, 1 Dev. Eq., 77. 3. Lewis, having paid the consideration for his mortgage without actual notice of the plaintiff’s mortgage, could acquire title by tax deed, as against the plaintiff. McCammon v. Worrall, 11 Paige, 99, is directly to the point. 4. Lewis having been in possession, claiming title under the tax deed, plaintiff’s rights are barred by the statute. Laws of 1861, ch. 138, secs. 5 and 6; Howell v. Howell, 15 Wis., 55, 58; Hill v. Hriclce, 11 id., 442, 446 ; Knox v. Cleveland, 13 id., 245, 251; Tiff. & B. on Trustees, 151-2, and cases there cited.

Opinion:
Downer, J.
The respondents insist that as there is no bill of exceptions the judgment of the circuit court must be affirmed, and refer us to Merwin v. O'Day, 9 Wis., 156, and New York authorities. Section 15, ch. 264, Laws of 1860, provides that it shall be necessary to cause a bill of exceptions to be made part of the record only when the alleged errors, without the bill, would not appear upon the face of the record. The finding of the court is a part of the record, and also the judgment ; and if the facts found do not warrant the judgment, the error is apparent without a bill of exceptions.
Are the tax deeds to Lewis valid ? If he held the tax certificate for the taxes of 1858, at the time he purchased the equity of redemption at the foreclosure sale, what was the effect of such sale, and of the deed to him od the certificate ? It is plain that if any other person had purchased at such sale, he would have acquired all the title and interest of Lewis in the premises, and taken them discharged of any tax certificate Lewis then held. We think the same effect as to extinguishing tbe tax certificate must be given to tbe sale and deed to bim. If be purchased tbe certificate after tbe sale, sucb purchase was prima facia equivalent to a redemption from tbe tax sale; for when be purchased tbe equity, be purchased it subject to tbe tax liens and tbe first mortgage, and tbe premises became tbe primary fund out of which sucb liens were to be paid. As tbe owner of tbe equity, be could redeem from tbe tax sale; and tbe right of possession, and, we must presume, possession followed bis purchase of it. One who enters into possession of lands, under title, and enjoys tbe profits thereof, is under obligations to discharge tbe burdens which tbe law imposes upon tbe property for tbe support of government; and that, according to Lacey v. Davis, 4 Mich., 150, whether those burdens already existed as liens when be came into possession, or are thereafter created. This, it is said, is incident to every possession under title or color of title. To tbe same effect is Chambers v. Wilson, 2 Watts' R., 495. As a general rule, tbe law does not permit one interested in land with others, all deriving their title from a common source, to acquire an absolute title to tbe land by tax deed, and thus cut off those interested with bim. This rule has been applied to tenants in common, mortgagor and mortgagee, so as to prevent tbe former acquiring tax title to tbe injury of tbe latter; and by parity of reasoning, we think, should be extended to tbe bolder of tbe equity standing in tbe place of tbe mortgagor. See Fuller v. Hodgdon, 25 Me., 243; 23 id., 46; Blackwell on Tax Tit., 470; 1 Aik., 306; 14 Vt., 532; 11 Ill., 322, 367; Platt v. St. Clair's heirs, 6 Ohio, 93. It would be a fraud on tbe first mortgagee to permit Lewis, being in possession of tbe premises as tbe owner of tbe equity of tbe mortgagor — in possession of tbe premises which are tbe primary fund to pay tbe tax liens — through a tax deed made to bim while so in possession, to cut off tbe rights of tbe first mortgagee. If Lewis purchased tbe tax certificate for tbe taxes of 1858 after tbe foreclosure sale, and it was clearly bis intention when be purchased it, and justice required that it should be kept alive as a lieu superior to that of the first mortgage, a court of equity might perhaps so treat it on the foreclosure of the first mortgage; but he ought not to be allowed so to use it as by virtue of the tax laws to extinguish the rights of the mortgagee. If Lewis has no valid title under the deed for the taxes of 1858, it is clear that he has none under the subsequent deeds.
The judgment of the circuit court must therefore be reversed.