Case Name: AMERICAN BAPTIST MISSIONARY UNION v. A. W. HASTINGS and Others
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1898-06-09
Citations: 72 Minn. 484
Docket Number: Nos. 10,973-(101, 12)
Parties: AMERICAN BAPTIST MISSIONARY UNION v. A. W. HASTINGS and Others.
Judges: 
Reporter: Minnesota Reports
Volume: 72
Pages: 484–495

Head Matter:
AMERICAN BAPTIST MISSIONARY UNION v. A. W. HASTINGS and Others.
June 9, 1898.
Nos. 10,973—(101 , 12 ).
Mortgage—Covenant to Pay Taxes—Conveyance Subject to Mortgage— Second Mortgage to Mortgagor—Tax Certificate Bought by Assignee of Second Mortgage in Possession.
B. executed to plaintiff a mortgage, in which he covenanted to pay all taxes on the mortgaged premises. He then conveyed the premises to D., subject to the mortgage, which the grantee assumed and agreed to pay. D. executed a mortgage back to B., who assigned it to defendant W. The latter went into possession as mortgagee in 1890, and continued in possession as such until July, 1892, after which he continued in possession as owner, under title acquired by foreclosure of his mort gage, until December, 1895, when he surrendered possession to plaintiff, which had become owner under a foreclosure of its own mortgage. While in possession as mortgagee in 1891, defendant W. took a state assignment certificate under a sale of the mortgaged premises for the taxes of 1889. While in possession as owner, he failed to pay the taxes for the years 1893 and 1894, which plaintiff was compelled to pay after it acquired title under its foreclosure, and which amounted to more than the defendant had paid for the assignment certificate for taxes of 1889. Held, that defendant W. had no equitable right, as against plaintiff, to hold the tax assignment certificate as security to reimburse himself for the amount paid for the same.
On Reargument.
November 14, 1898.
Same—No Duty of Second Mortgagee to Pay Taxes—He May Hold Tax Title as Security for Reimbursement by First Mortgagee.
Held, reversing the former decision, that defendant W. occupied the position of a second mortgagee, and as such owed the first mortgagee no duty to pay the taxes on the mortgaged premises; that while his purchase, after he went into possession as mortgagee, of the outstanding tax title for taxes of 1889, will be treated as only a payment of the tax for the protection of both mortgages, yet, if the first mortgagee avails himself of this protection, he must reimburse him for what he paid for the tax title; and the second mortgagee may hold such title as security for his reimbursement, it appearing that he had expended more than the amount of the rents and profits received by him in payment of interest on the first mortgage, and for improvements and repairs necessary for the protection and preservation of the mortgaged premises.
Same—Failure to Pay Subsequent Taxes—Equity.
Also, that his equitable right to hold this tax title as security for his. reimbursement was not extinguished by his failure to pay the taxes on the premises which accrued after he became owner (subject to the first mortgage), it appearing that he had expended for the protection and preservation of the premises more than all the rents and profits received by him up to the time he surrendered possession to the plaintiff as purchaser at a foreclosure sale of its own mortgage, including interest paid on the first mortgage (which he was under no obligation to pay), far in excess of the amount of such taxes.
Action in the district court for Hennepin county against A. W. Hastings, as treasurer, C. R. Cooley, as auditor, of said county, and C. W. Weeks to recover the sum of $790.03 paid by plaintiff to de fendant Hastings to redeem from a tax sale. The case was tried before McGee, J., who found in favor of plaintiff. Judgment was entered that plaintiff recover of defendant Hastings, as treasurer, the sum demanded, that defendant Weeks had no right thereto, and that defendant Cooley, as auditor, be enjoined from issuing to defendant Weeks a warrant for the payment of said sum. From this judgment defendant Weeks appealed.
Reversed upon reargument.
Geo. D. Emery, for appellant.
If plaintiff would avail itself of the protection afforded by defendant’s purchase of the tax title, equity requires that it should reimburse defendant for the amount paid. American Baptist M. U. v. Hastings, 67 Minn. 303; Pratt v. Pratt, 96 Ill. 184; Hogg v. Longstreth, 97 Pa. St. 255; Silver Lake v. North, 4 Johns. Ch. 370; Roeder v. Keller, 135 Ind. 692; Connecticut v. Stinson, 62 Ill. App. 319; Connecticut v. Bulte, 45 Mich. 113; Garrettson v. Scofield, 44 Iowa, 35. If the senior mortgagee wants the benefit of the protection thus afforded, he must tender the amount of the tax and interest. Fiacre v. Chapman, 32 N. J. Eq. 463; Ten Eyck v. Craig, 2 Hun, 452; McLaughlin v. Green, 48 Miss. 175, 209; Abbott v. Union, 127 Ind. 70; Bowman v. Cockrill, 6 Kan. 311, 332; Stubble-field v. Borders, 92 111. 279. A junior mortgagee, in an accounting for rents collected by him, is allowed necessary improvements, which go to increase the value of the estate, as well as necessary repairs. He is not held strictly to prove the necessity of such improvements. Seaver v. Cobb, 98 Ill. 200; Wells v. Van Dyke, 109 Pa. St. 330; 2 Jones, Mort. §§ 1129-1134; Hubbell v. Moulson, 53 N. Y. 225; Sidenberg v. Ely, 90 N. Y. 257. If plaintiff is to have the benefit of the payment, it must do equity. Moore v. Wayman, 107 Ill. 192; Williams v. Townsend, 31 N. Y. 411.
Russell, Gray & Jamison, for respondent.
Defendant could not acquire title to the lands, or lawfully claim the money required to redeem from a tax claim held by him which he and his predecessors and grantors should have paid. Washington L. & T. Co. v. McKenzie, 64 Minn. 273; American Baptist M. U. v. Hastings, 67 Minn. 303. It was the duty of those taking under the mortgagor to pay the taxes. This is not a case for an account ing for equities between the first mortgagee and the second mortgagee and the subsequent owner thereunder. Defendant was interested as mortgagee in possession on May 26, 1891, when he took an assignment of the certificate of tax sale, and is not in a position to claim a lien for the amount so paid. Washington L. & T. Co. v. McKenzie, supra.
April, 1898, term.
October, 1898, term.

Opinion:
MITCHELL, J.
This case was here on a former appeal. 67 Minn. 303, 69 N. W. 1078. Stated according to their legal effect, the facts found on the subsequent trial on the merits were as follows:
In June, 1889, one Barber mortgaged certain premises to plaintiff, covenanting to pay all taxes. Shortly afterwards Barber conveyed the premises to one Munger, subject to the mortgage, which the grantee assumed and agreed to pay. A few days later Munger conveyed to one Duffus, subject to the mortgage, which the grantee assumed and agreed to pay. Shortly afterwards Duffus executed a mortgage to Barber, plaintiff's mortgagor. Barber assigned this mortgage to the defendant Weeks. March 27, 1890, Weeks went into possession as mortgagee. May 26, 1891, Weeks took from the state an assignment certificate for the taxes of 1889, the amount paid therefor being $492.77. July, 1891, Weeks foreclosed his mortgage by action, bid in the property for the amount of principal and interest due thereon, and the sale was confirmed. July, 1892, the redemption on Weeks' foreclosure having expired, and there having been no redemption, he became owner in fee, subject to plaintiff's mortgage. December 17, 1894, plaintiff foreclosed, and bid in the property for the amount of the principal and interest due on its mortgage. December 17, 1895, there having been no redemption from plaintiff's foreclosure, it became owner of the premises, and Weeks surrendered the possession to it.
Weeks, while in possession, did not pay the taxes for 1893 and 1894, amounting to $789.81, which plaintiff was compelled to pay after it acquired absolute title under its foreclosure. It will be noted that these taxes accrued, not while Weeks was in possession as mere mortgagee, but while he was in possession as owner from July, 1892, to December, 1895. In February, 1896, plaintiff, under protest, redeemed from the sale for taxes of 1889 (for which Weeks had an assignment certificate), and then brought this action to .recover the money. Weeks claims the right to it to reimburse himself for what he paid to the state for the certificate. What Weeks paid out, while in possession as mortgagee and as owner, for repairs, improvements, and taxes for 1890, 1891, and 1892 on the premises, amounted to as much or more than all that he received for rents and profits during the same period.
1. Conceding, without deciding, that if Weeks' mortgage had been executed by Barber, he would have had an equitable right as against plaintiff to hold the assignment certificate for the taxes of 1889 as security for what he had paid out; and conceding, without deciding, that this right would not have been affected by his going into possession as mortgagee, except to the extent that he would be compelled to account for the rents and profits,—still there are conclusive reasons why he has no such right under the facts of this case. The mortgage under which he claims was executed, not by, but to, Barber, who was plaintiff's mortgagor, and who had expressly covenanted in the mortgage to pay all taxes on the premises. In the face of his own covenant, Barber would not be allowed to hold the assignment certificate, even as security for what he had paid for it; and Barber could not, by assigning the mortgage, give his assignee any greater rights than he himself had. Weeks stands exactly in the shoes of his assignor, Barber.
2. After the redemption period on Weeks' foreclosure expired in July, 1892, he became absolute owner of the premises, and held precisely the same title and bore the same relation to them and to the parties interested in them as if he had taken an absolute deed immediately from Barber. While he may not have been personally liable to plaintiff to pay the current taxes on the premises, yet as owner in possession he equitably owed the duty to do so both to the state and to the plaintiff. During two of the years while he was thus in possession as owner he failed to pay the current taxes, which plaintiff was afterwards compelled to pay, amounting to more than Weeks had previously paid for the taxes of 1889. Therefore assuming, without deciding, that he had originally an equitable right to be reimbursed for the taxes of 1889, this equity was destroyed by his subsequent failure to pay the current taxes for 1898 and 1894. If there appears to be anything inequitable in the result to which this leads, it is but the consequence of the peculiar relation to the title which Weeks voluntarily assumed. Plaintiff is still out of pocket by reason of the default of Barber and those claiming under him.
While all of the foregoing facts may have appeared in the record on the former appeal, yet neither of the grounds upon which we now base our decision was specifically urged by counsel, nor was either brought to the attention of the court or passed upon by it. Neither was there anything decided on the former appeal, so as to become the law of the case, inconsistent with the views now expressed. The first part of the former opinion merely decided that Weeks' relationship to the property and the parties was such that he could not acquire a tax title as against the plaintiff. The second part, as we construe it, merely held that, assuming, without deciding, that Weeks might have the right to hold the tax assignment certificate as security for what he had paid out, the burden was on him first to account for the rents and profits while he was in possession of the premises.
Judgment affirmed.