Case Name: JACOBSEN v. NIEBOER
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1941-09-02
Citations: 299 Mich. 116
Docket Number: Docket No. 58, Calendar No. 41,557
Parties: JACOBSEN v. NIEBOER.
Judges: Bushnell, Chandler, North, Wiest, and Butzel, JJ., concurred with Boyles, J. McAllister, J., took no part in this decision.
Reporter: Michigan Reports
Volume: 299
Pages: 116–133

Head Matter:
JACOBSEN v. NIEBOER.
1. Estoppel — Mortgages—Warranty op Title.
Mortgage, securing payment of a promissory note, which expressly mortgaged and warranted title of land0 described in mortgage, would have been good as to mortgagors if they subsequently acquired title, even though they had no interest in the land at the time the mortgage was given.
2. Taxation — Notice op Sale — Mortgages.
Whether or not mortgagees and mortgagors of a parcel of real estate had actual knowledge of a tax lien or tax sale is immaterial as the public records are legal notice of the tax.
3. Estoppel — Mortgages—Warranty op Title — After-Acquired Property.
A mortgage with covenants of warranty carries with it any title to the mortgaged premises subsequently acquired by the mortgagor and he and those claiming under him are estopped from asserting title to such premises against the mortgagee and those claiming under him.
4. Taxation — Purchasers at Tax Sale.
One under a legal duty at time of sale to pay the taxes for which the land is sold or who was previously under such obligation cannot be a purchaser at the tax sale, nor subsequently acquire the tax title, with any other legal effect than simply to pay the taxes or redeem the land so far as is concerned the interests of anyone who would otherwise be injured by the purchaser’s failure to pay the taxes in accordance with his duty, as the purchaser would otherwise be taking advantage of his own wrong.
5. Mortgages — Tax Title.
One whose title is obtained from an execution purchaser is in such privity with the defendant in the execution that if the latter has mortgaged the land he cannot let it be sold for taxes and bid it in so as to cut off the mortgagee’s rights, nor can he eut them off by taking tax leases.
6. Taxation — Title of Purchaser at Tax Sale.
As between the State and the original owner, the title to land sold for nonpayment of taxes becomes absolute in the State and a third-party purchaser under a tax deed acquires a clear and unincumbered title (Act No. 155, § 9, Pub. Acts 1937).
7. Same — Mortgagor as Purchaser at Tax Sale.
Rule that as between State and original owner the title to land sold for nonpayment of taxes becomes absolute in the State and a third-party purchaser under a tax deed acquires a clear and unincumbered title does not apply as against the mortgagee when the mortgagor is the purchaser of the tax deed as the mortgagor-purchaser in effect redeems the land from tax sale and the mortgage remains in full force and effect as between him and the mortgagee (Act No. 155, § 9, Pub. Acts 1937).
8. Same — Contracts—Default—Equity.
One who is obligated by contract with another to pay taxes may not, through his own default, obtain an advantage over the other.
9. Mortgages — After-Acquired Title.
After-acquired title of mortgagor who warrants or covenants that he has title which he purports to convey will inure to the mortgagee or to his benefit by way of estoppel.
10. Same — Scavenger Sale — Mortgagors’ Redemption — Estoppel. In chancery suit to foreclose a mortgage in which mortgagors expressly mortgaged and warranted to mortgagees the title to the land described therein and mortgagors covenanted to pay all taxes, where at time the mortgage was executed there was default in the payment of taxes and the land was sold to a third party under the scavenger aet without defendants’ knowledge, defendants repurchased the property from the State land office board and asserted title in themselves was free from plaintiffs’ mortgage, equity would consider mortgagors had redeemed the land by matching highest bid at scavenger sale and they would be estopped from claiming property was not incumbered by plaintiffs’ mortgage (3 Comp. Laws 1929, § 14372; Aet No. 155, §§ 7, 9, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939).
Sharpe, C. J., dissenting.
Appeal from Ottawa; Miles (Fred T.), J.
Submitted April 11, 1941.
(Docket No. 58, Calendar No. 41,557.)
Decided September 2, 1941.
Bill by Ben Jacobsen and Alyda Jacobsen against Jacob Nieboer and Jobanna Nieboer to foreclose a mortgage. Decree for plaintiffs. Defendants appeal.
Affirmed.
Jarrett N. Clark, for plaintiffs.
Elbern Parsons, for defendants.
Brownell & Gault, amici curiae.

Opinion:
Sharpe, C. J.
(dissenting). • This is a suit in chancery to foreclose a mortgage. Tbe material facts are not in dispute. Defendants, wbo are bus-band and wife, were tbe owners of a parcel of real estate. On January 19, 1939, they executed a pro missory note for $750 secured by a real-estate mortgage. Plaintiffs are tbe mortgagees. It appears that at tbe time tbe above mortgage was executed tbe 1933 taxes were in default; and as provided in tbe general property tax law, 1 Comp. Laws 1929, § 3451 et seq. (Act No. 206, § 60 et seq., Pub. Acts 1893), as amended by Acts Nos. 91, 114, and 325, Pub. Acts 1937, tbe property was sold to tbe State of Michigan at the 1938 tax sale. Defendants bad no actual knowledge of tbe sale and did not redeem tbe property.
Tbe State sold tbe property at tbe 1940 tax sale to a third party as is provided by Act No. 155, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939 (commonly known as tbe scavenger act). When defendants bad been advised of such sale they entered into an agreement on August- 8, 1940, with tbe State land office board for tbe repurchase of tbe property. In tbe meantime, defendants bad defaulted in making payments on tbe mortgage and plaintiffs declared tbe whole amount due; and on October 14, 1940, began a suit in chancery to foreclose. Tbe trial court held plaintiffs' mortgage good and entered a' decree of foreclosure.
Defendants appeal and contend that when, on August 8, 1940, they entered into tbe contract to purchase tbe property from tbe State land office board, title to tbe property was absolute in tbe State of Michigan and not subject to any liens.
Prior to tbe adoption of tbe so-called scavenger act it was tbe rule that when a third person purchased a tax title, be acquired a fee simple title and' all incumbrances and liens were cut off. He acquired a new title and not tbe title of tbe original owner. In Robbins v. Barron, 32 Mich. 36, 39, we said: "A tax title, if valid, destroys and cuts off all liens and incumbrances previously existing against the land."
It is urged by plaintiffs that defendants, as mortgagors, warranted their title to the property and having arranged at a future date to acquire title to this property, the mortgage attached to the future acquired interest. An amicus curiae brief filed with the permission of this court contends that the mortgagor, by entering into a contract with the State land office board to purchase the premises, merely redeemed his premises from taxes and the mortgage lien remains in full force and effect, subject to the balance due the State of Michigan on its contract.
This latter brief relies upon Brown v. Avery, 119 Mich. 384, 387, where this court quoted the following from Connecticut Mutual Life Insurance Co. v. Bulte, 45 Mich. 113:
" 'It is conceded that there are a great many cases in which parties standing in particular relations to the land, or to the owner or other person interested therein, are not suffered to acquire tax titles and rely upon them as against other claimants. Some of those are very plain, and it is quite unnecessary to do more than name them. A tenant, for example, who has covenanted to pay the taxes, cannot be suffered to neglect this duty, and then acquire a tax title which shall cut off the title of his landlord. Neither shall the purchaser in possession under an executory contract be allowed to cut off the rights of his vendor by a like purchase, nor a mortgagor that of his mortgagee. A tax purchase made while such a_ relation exists is made in wrong; and the law in circumvention of dishonesty will conclusively presume that it was made in the performance of duty, and not in repudiation of it.' "
And Tyler v. Burgeson, 229 Mich. 268, 270, where we said:
"Defendant cannot defeat plaintiff's title by setting up this title wbicb be acquired in bis son's name while be was in possession of tbe premises under tbe terms of a contract by and in wbicb be bad agreed to pay tbe taxes, sucb title having come into existence solely by bis own default, wbicb default set tbe machinery of tbe State in motion resulting and ripening into tbe title be now claims. This is well settled by numerous decisions of this court but a fragment of wbicb we cite."
Tbe above authorities correctly interpret tbe tax law in effect at tbe time such opinions were rendered, but tbe answer to tbe problem in tbe case at bar must largely come from a proper interpretation of our present tax law, i.e., Act No. 155, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939.
In Stickler v. State Land Office Board, 297 Mich. 271, we held that tbe title to tax-sale lands became vested in tbe State of Michigan on November 3,1939, upon tbe expiration of tbe equity of redemption from tbe 1938 tax sale for taxes for 1935 and prior years and said:
"By virtue of said statute (Act No. 206, Pub. Acts 1893, 1 Comp. Laws 1929, § 3459, as amended by Act No. 114, Pub. Acts 1937) and decree, title to tbe parcel of land here involved became absolute in tbe State upon tbe expiration of tbe period of redemption and 'all taxes and other liens and incumbrances, of whatever bind or nature, except unpaid tax or assessment liens or city bids of any municipality collecting its own delinquent taxes and assessments upon lands for wbicb application shall have been made to tbe State land office board or tbe director of conservation as tbe case may be for tbe withholding of sucb lands from sale,' were thereby cancelled. Section 67, as amended by Act No. 114."
Section 9 of the scavenger act provides:
"Any quitclaim deed or deeds executed by the board shall convey title in fee to land vested in the board under the provisions of this' act, free from any incumbrances, except as herein otherwise provided. ' '
From the above section it must follow that a former owner of the land purchased by the State may repurchase the land and be in the same position as any other purchaser. See Grand Rapids Trust Co. v. Doctor, 222 Mich. 248. Nowhere in the act do we find any language indicating that the purchaser of the land takes anything less than that which the State owned even though such purchaser may be a former owner of the land.
In the case at bar, plaintiffs' remedy, if any, is in a court of law upon the promissory note. The decree of .the trial court should be reversed, with costs to defendants.
See Comp. Laws Supp. 1940, § 3723-7, Stat. Ann. 1940 Cum, Supp. § 7.957. — Reporter.