Case Name: Strother v. Reilly
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1900-06-12
Citations: 105 Tenn. 48
Docket Number: 
Parties: Strother v. Reilly.
Judges: 
Reporter: Tennessee Reports
Volume: 105
Pages: 48–58

Head Matter:
Strother v. Reilly.
(Jackson.
June 12, 1900.)
1. Tax Sale. Void, when.
A tax sale of lands, which are at the time of sale subject to a deed of trust, made under a chancery proceeding after the owner’s death, is void, where his heirs are not made parties, although the trustee or his heirs and the beneficiary in the trust deed are made parties. (Post, pp. 51, 52.)
2. Saji®. Rights of purchaser upon setting aside tax sale.
A purchaser of land at a void tax sale, against whom suit has been instituted by the original owner or his heirs to recover same, may by cross-bill, if the suit is in equity, or by original bill, if the suit is at law, recover and collect by sale of the lands, the amount of the purchase price paid thereon, so far as it was applied to the owner’s benefit, and all amounts paid on subsequently accruing taxes, and all sums expended in improvements of the property to be paid out of rents received, to the extent that the value of the land was enhanced thereby, together with interest on all said amounts. (Post, pp. 52-58.)
Code construed: l 5009 (S.); § 3991 (M. & V.); § 3261 (T. & S.).
Cases cited and approved: Caldwellv. Palmer, 6 Lea, 654; Elliott v. Cochran, 2 Sneed, 468; Martin v. Turner, 2 Heis., 384; Ar-rington v. Grissom, 1 Cold., 522; Campbell v. Bryant, 1 Leg. E., 137; Jones v. McKenna, 4 Lea, 630; Trousdale v. Maxwell, 6 Lea, 161; Quinby v. Transportation Co., 2 Heis., 596; Wicks v. Sears, 4 Lea, 298.
Cited and distinguished: Eoss v. Mabry, 1 Lea, 226.
FROM SHELBY.
Appeal from Chancery Court of Shelby County. Jeto. L. T. SNeed, Chancellor.
F. H. Heiskell for Strother.
Malone & Malone for Reilly.

Opinion:
McAlister. J.
This bill in ejectment was preferred by Geo. W. Strother, his wife, Annie, and J ames Kinnaird against J ames Reilly et al. to recover possession of lot 511 on Hill Street, in Memphis. It was alleged in the bill that James Reilly was in possession of the lot and claimed title thereto by virtue of a decree of the Shelby County Chancery Court in the cause of the City of Memphis v. Austin M. Bull, hied November 5, 1874, and an amended bill hied August 30, 1883, consolidating said cause with that of the State, etc., v. Bwtler. The object of those bills was to enforce the payment of delinquent taxes on said lot due the State of Tennessee, the county of Shelby and the city of Memphis. Reilly purchased the properly at the tax sale on April 11, 1885, and on February 8, 1886, the sale to him was confirmed at the sum of $375. Reilly was awarded a writ of possession and continued to pay subsequently accruing taxes down to 1892. The theory of the present bill is that the title of Reilly acquired in those consolidated causes was void for the reason that Austin M. Bull, at the time of the rendition of the decree, was dead, and his heirs were not parties defendant. Reilly filed an answer and cross bill, in which he denied any title or right of possession in complainants, and called for proof of same. He averred that if Bull ever bad any title, it was merely equitable, and that such equitable title bad been since abandoned. Tbat, on the day be was supposed to have obtained the deed, namely, July 14, 1859, be executed a trust deed of the lot in question to Henry Wade, as trustee, to secure to William H. Oheeseman, from whom he bought the property, the payment of the purchase money, $1,349, evidenced by three notes, due at three months, ten months, and fifteen months from date, and tbat this trust deed bad never been released, nor the purchase money paid, and tbat neither Bull nor the complainants bad ever exercised any acts of ownership over the property, and if they ever bad any title, it bad been abandoned. He set up laches on the part of the complainants, and claimed tbat if they had ever been entitled to the lot, their right to the possession bad been lost by their laches.
It was further averred that Austin M. Bull and William H. Oheeseman were described as nonresident defendants in said tax proceedings, and Henry Wade, the trustee, having died, Susan Wade, Henry and Belle Wade, heirs' at law of said Henry Wade, trustee, were also made defendants. It was insisted that, if Austin M. Bull was dead at the date of the rendition of the decree in the tax cases, that the heirs of Henry Wade, trustee, who held the legal title, were be fore the Court, and that this title passed to and was vested in James Reilly.
In his cross bill Reilly averred and showed by the evidence that he paid out the following sums in good faith upon said lot:
Purchase money and interest thereon..$ 6T9 50
Taxes paid since purchase, and interest thereon. 254 80
November 14, 1889, for sidewalk, and interest thereon. Ill 65
Building house, and improvements. 300 00
Total...$1,345 90
Cross complainant prayed that in the event the Court should finally hold and decree that the Bull heirs are the owners of said lot and entitled to the possession of the same, then, as said parties are seeking equity, that they be compelled to do equity, and that he have a decree for said sum of $1,345 laid out and expended by him, and that the same be declared a lien on the lot, and that the same be sold on . a credit of at least six months, so as to bar the equity of redemption.
At a former day of the term we affirmed the decree of the Chancellor adjudging complainants' title superior and that Reilly's title was void for the reason that at the time the decree was pronounced in the tax cases Austin M. Bull was dead and his heirs at law were not made parties to said proceedings. It was further held that it was not sufficient that the heirs of Henry Wade, trustee, were made parties, the rule in this State being that the beneficiaries in the trust must be made parties to such a proceeding. Gibson's Suits in Chancery, Sec. 151. Neither the heirs of Bull nor Cheeseman were made parties defendant. . We held, however, that Reilly, under the prayer of his cross bill, was entitled to _ a lien on the lot for the purchase money and taxes paid by him down to and including the year 1892, with interest, and. also the value of the improvements erected by him to the extent they enhanced the value of the property, less rents and profits. Shannon's Code, § 5009; Caldwell v. Palmer, 6 Lea, 654.
A very earnest- petition is now presented, in which the Court is asked to reconsider its decree to the extent that a lien was declared on the' property in favor of Reilly for sums paid by him on account of purchase money, taxes, and improvements. It is insisted that the doctrine of caveat emplor applies in all cases of tax sales; that if the proceedings are void the purchaser is remediless ; that his payment is a voluntary one, and as there is no warranty at a judicial sale, the purchaser assumes all risks.
It has been held by this Court that "where an executor sold slaves under the Act of 1821 to pay debts of the estate, which sale was void for failure to make the heirs parties, it was held, on suit to recover the slaves,' that if the purchase money was in whole or in part received by the heirs, or appropriated to their use or for their benefit, they should be held bound for the same." Elliott v. Cochran, 2 Sneed, 468-71.
"So where land was sold under a void decree during the civil war, and the purchase money was paid in Confederate money, yet inasmuch as Confederate money had been used to pay the debts of the estate, it was held that upon recovery of the land the heirs must refund the value of the Confederate money used to pay debts of the estate, with interest from the time it was used, and the sum total was declared a lien on the land." Martin v. Turner, 2 Heis., 384.
"So where a slave was sold under a decree of the Circuit Court, which decree was void because the Court was without jurisdiction to hear the case, for the reason that it had not the equity-jurisdiction invoked, and hence had no jurisdiction of the subject-matter, it was held that the complainants should refund the purchase money, with interest in proportion in which it was received by the parties complaining." Arrington, v. Grissom, 1 Cold., 522-25. See, also, Campbell v. Bryant, 1 Leg. R., 137.
"The foregoing decisions have been repeatedly affirmed, the Court saying that These decisions rest upon a principle of equity so 'obvious as to commend them to our sense of justice, outside of their binding authority as precedents.' Jones v. McKenna, 4 Lea, 630-41.
"And it is equally well settled that not only the original purchaser of the land, but his vendee, may have the benefit of this equity, by way of subrogation, to the extent of the purchase money paid which came to the use of the minors." Trousdale v. Maxwell, 6 Lea, 161-4; Caldwell v. Palmer, 6 Lea, 652-56.
"In the last case cited there is an extended discussion and review of all the cases, and it is said, in reference to this equity, 'It has been enforced wherever a sale of land is rescinded for any cause, either at the instance of the vendor or vendee,' and (to quote the syllabus) it was further declared that 'neither ' the statute of limitations nor lapse of time will bar the assertion of the right, if asserted in the adjustment of ac-•eount between the parties, growing out of the recovery of the heirs.' " Caldwell v. Palmer, 6 Lea, 652-57.
"And if the land is recovered by an action of ejectment at law, equity will, upon bill filed, afford the same relief as if the heirs had filed their bill asking to be put in possession." Caldwell v. Palmer, 6 Lea, 652-57.
The principles enunciated in the foregoing cases have been applied by this Court in tax cases. In the case of Quinby & Co. v. North American Coal & Transportation Co., 2 Heis., 596, it appeared that Quinby & Oo. filed a bill in the nature of a cross bill for the purpose of setting up a title to the land in controversy and claiming to have purchased the same at tax sales, or to be the assignee of others who had purchased. The Court held that on account of certain defects in the proceedings the tax sales were absolutely void and communicated no title, either legal or equitable. "It appears, however," said the Court, "that complainant paid taxes on said land not only for the years 1856 and 1857, but for a number of other years subsequent, and as they have discharged a charge upon the land fixed by law, they are entitled to be reimbursed the sums so paid." Attention is called to the fact that the purchases in that case were not made -under a chancery proceeding, but under the old ex parte system.
In the case of Wicks v. Sears, 4 Lea, 298, it appeared that Wicks filed a bill charging that respondent had purchased the land at a sale for Federal taxes assessed during the war, and asking that said sale be declared void. This Court, constrained by decisions of the TJ. S. Supreme Court, held said sale valid, and dismissed complainant's bill. It. appeared that during the litigation Sears was in possession of the property, but neglected to pay the taxes, whereupon a receiver was appointed to collect the rents. It further appeared that prior to the appointment of a receiver and while Sears was in possession of the property, Wiclcs paid the current taxes. The Court held that Wicks was entitled to be reimbursed out of any . funds in the hands of the receiver. The only case apparently out of line with those cases is that of Ross v. Mabry, 1 Lea, 226. But as said by this Court in Wicks v. Sears, 4 Lea, that was a case where a complainant sought to have a lien on the land and a sale of it for the repayment of the taxes, interest, and penalties, on the simple allegation that he had bought it at a tax sale, without even showing that his title was defective. Neither the validity nor invalidity of the title acquired was alleged. It was re-marked in that case that the purchaser had paid money for the use of the property owner, and ought in good conscience be reimbursed, but that the rule of cav.eat emptor seems to apply to tax sales. We do not think the' precise question here was presented in Ross v. Mabry, since the bill in that case asked that the purchaser have a lien on land bought at tax sale for the taxes paid, merely because the complainant became the purchaser, and not because his title had failed or was defective. When limited to its precise facts the -authority of that case is not questioned, but so far as it is intimated therein that a purchaser whose title has been adjudged void has no remedy for his purchase money and subsequently ac cruing taxes paid by Mm, that case is not authority. It is in conflict with our own cases and the great weight of authority in the other States.
In the case of Knox v. Dunn, 22 Kansas, 883-4, Mr. Justice David J. Brewer, while a Judge of the Supreme Court of Kansas, said, viz.: "This was an action to quiet title, brought by the owner of certain lots against the holder of a tax sale certificate thereon. It was conceded that the lots were subject to taxation, levy regular, and the valuation not excessive; also that the owner had paid no part of the taxes. Several defects are alleged in the assessment and the sale proceedings. These defects, we shall concede without deciding, were sufficient to invalidate the sale; yet, notwithstanding those defects, we think the plaintiff was not entitled to the judgment in this a.ction, and for the cardinal rule of equity that he who seeks equity must first do equity. . . . Here a party, who admits that he owes an honest debt to the State, conies into a Court- of Equity, and, without paying or offering to pay the debt, asks that the proceedings which the State has taken to collect that debt be adjudged void. We have already decided that an injunction will not lie under these circumstances. City of Lawrence v. Killam, 11 Kan., 499; Challis v. Commrs. of Atchison County, 15 Kan., 49. And we now' decide that a lot owner cannot obtain any such relief by changing the action to one for quieting title." Knox v. Dunn, 22 Kan., 883, 884; 1 Pom. Eq. Jur., Sec. 393, and notes.
"When the owner seeks,, in a Court of Equity, to have a • tax deed set aside and tbe cloud created thereby removed from his title, the familiar maxim, 'He who seeks equity must do equity,' will be applied, and he will be required to pay the amount for which the land was sold and all subsequently paid taxes, with interest, as a condition to relief." 25 Am. and Eng. Enc. Law, p. 735, and authorities cited. It is hardly necessary to add that it must appear in all cases that the taxes were due and were a charge upon the land.
In view of the settled law on this subject, we adhere to our former ruling, which declared that cross complainant was entitled to bo reimbursed his purchase money and interest and all amounts paid by him on taxes subsequently accruing down to and including the year 1892. So far as the improvements are involved, that matter is regulated by § 5009, Shannon's Code, which provides, viz.:
"Persons holding possession in good faith under color of title are entitled to have the value of their permanent improvements set off against the rents and profits which the plaintiff may recover."
To the extent herein indicated, the decree of the Chancellor is reversed and the cause remanded for an account upon the principles herein stated. The costs of the appeal will be divided.