Court Opinion

ID: 9633876
Source: CourtListenerOpinion
Date Created: 2023-08-22 12:04:44.664957+00
Date Added: 2024-06-11T09:15:15.870194
License: Public Domain

McDONOUGH, Chief Justice
(dissenting).
At the outset it should be observed that if the question here were the narrow one of whether one in possession and under a duty to pay rent may neglect to pay such rent and take advantage of his default by later purchase and assertion of a new title from the sovereign in himself, I would agree that he might not do so. However that is not this case. The taxes were delinquent for four years when appellant took possession. At that time the premises were in a run down condition. Appellant reshingled the roof, replaced bricks which had fallen out, replastered two walls, painted the outside woodwork, put in cement walks, planted shrubs and flowers, put up a picket fence, put in a picture window, repapered one room, and did electrical repairing. While the trial court found that certain repairs and improvements of the property were made by appellant, no finding as to their value was made. However, it is reasonable to infer from the evidence that they were equal to the reasonable rental value of the property during occupancy until the date of sale. Under such circumstances, it cannot be said that the appellant was under a duty to pay the taxes which had accrued prior to her entry.
Nor is the prevailing opinion based on the narrow ground that she had such duty. It broadly adopts the rule stated in the annotation at 140 A.L.R. 295, 302 to be the weight of authority, viz. that a mortgagee who has merely a lien on the mortgaged property cannot, so long as the relation of mortgagor and mortgagee exists, obtain title to the property as against the mortgagor by means of a tax sale. Probably the reasoning most often followed in these cases springs from the fact that the mortgagee frequently has the power, if not the duty, either under his contract or under statute, to pay the taxes at the time due or redeem the property from tax sale to protect his mortgage interest. Typical of these cases is the decision of Ragor v. Lomax, 1887, 22 Ill.App. 628, from which an extensive quotation is employed in the court’s opinion.
Some of the cases referred to in the cited annotation applying this principle are distinguishable upon their facts from the present case. Pearce v. Montague, 209 N.C. 42, 182 S.E. 707, for instance, holds that the mortgagor’s equity of redemption cannot be *356cut off by a purchase of the title at tax sale by the mortgagee within the period of redemption. Such is not the case here, for Johnson, under our statutes, had no preferential rights as to the property at the time it was purchased by Mrs. Crofts. Inapplicable also are cases similar to Taylor v. Snyder, Walk Ch., Mich., 490, wherein one who conveyed the property, taking back a mortgage from the grantee, purchased the tax deed for taxes which were a lien upon the property at the time the deed was given.
Also included in the A.L.R. summation of weight of authority are instances where the mortgagee was agent for the mortgagor for collection of rents and payment of taxes, Wall v. Hamner, 182 La. 1049, 162 So. 769; where one beneficiary under a trust was held unable to acquire a title free from the interest of other beneficiaries by purchasing certificates of sale, Frierson v. Branch, 30 Ark. 453; where the mortgagee intended only to redeem the property and not to acquire an interest adverse to his mortgagor, Martin v. Swofford, 59 Miss. 328.
Criticism of the reasoning of the majority view is found in IV American Law of Property, Sec. 16.106J:
“Several reasons have been advanced for denying to a mortgagee the ability to acquire a new and independent title to the mortgaged property good against the mortgagor and other mortgagees. Occasionally it is said that the mortgagee is like a trustee and therefore is debarred from founding a title on the tax sale in opposition to the mortgagor or other mortgagees. But the mortgagee may buy in at even his own court foreclosure sale and, consequently, even if it were true that he is a trustee, which he is not, it is difficult to see why purchase at a tax sale would be a breach of any fiduciary obligation owed to the mortgagor, and, even more so, to other mortgagees. Sometimes the analogy of joint tennants is invoked. But each joint tenant has a duty to pay the taxes and therefore as to them the general' principle applies that one cannot profit by failing to do his duty. There is no duty on a mortgagee not in possession, in the absence of an express contract running either to the mortgagor or to another mortgagee, to pay the taxes, and therefore that reason fails. Still other courts stress the community of interest of the parties in preserving the estate by the payment of taxes, drawing the conclusion therefrom that it would be inequitable conduct to acquire and assert a tax title against the others, or that presumably it is paid for the common protection. The last is probably contrary to fact. Just why it is inequitable when there is neither a contractual duty nor one arising out of their relationship to pay the taxes is not explained. And the common *357derivation of their interests in the land does not create a common interest but rather antagonistic interests, certainly as between two mortgagees. * * *
[Citing 46 Yale L.J. 334, 338 (1936)]
“Another suggestion is expressed legalistically by arguing that the rule preventing tax title purchase by one who owes a duty to another person to pay them should be broadened out to include all who owe a duty to the public to pay taxes. Such a duty is then found in the fact that the mortgagee, if he does not pay them, will lose his entire interest in the property. Probably the same idea, but more broadly based, is expressed by saying that it is against public policy to allow the mortgagee to. purchase at the tax sale and gain an advantage by so doing in that it would encourage him to fail to take advantage of his privilege to pay taxes. It is to the interest of the state that taxes be paid promptly, and since the mortgagee is fully protected by his privilege of paying when they are due, he should not be encouraged to fail to take advantage of that privilege. But this is an argument that cuts both ways, [i. e. if there was a possibility that mortgagee could obtain clear tax title, the mortgagor would be encouraged to pay taxes more promptly] and the incentive in any event is speculative and dubious.”
The case of Hadlock v. Benjamin Drainage District, 89 Utah 94, 53 P.2d 1156, 106 A.L.R. 876, is cited by counsel as apparently in accord with the claimed majority rule. Several bases for the holding in that case are advanced by the court in the two of the four written opinions in the case which constitute the majority holding. In that case, the mortgagee received a quitclaim deed from the mortgagor and brought a tax deed to the property from the county within the time allowed under the existing statutes for redemption. Another lienholder, the Drainage District, was named defendant in a quiet title action, and this court held that the transaction between the mortgagee and the county was in fact a payment of taxes rather than a sale, which would cut off the rights of the Drainage District. Justice Elias Hansen stressed the fact that under Laws of Utah 1921, chap. 140, p. 384 (R.S. Utah 1933, 80-10-68) the county had the power, if not the duty, to permit a redemption from any sale where the property had been sold to the county, indicated that the county commissioners were without power to deliver a deed free of Drainage District taxes, and construed the deed as limited to a release of the county’s interest on redemption. That provision of the code was eliminated by Laws of Utah 1949, chap. 82 (U.C.A.1953, 59-10-64) and there is no question here but that the purchase by Mrs. Crofts took place after the time for redemption from the county had run as against Mr. *358Johnson and his mortgagee. Therefore, if the holding of the Hadlock case can be said to rest entirely upon this ground, it does not influence the reasoning in this case at all. Another basis of the reasoning is that the mortgagee was the grantee of the mortgagor and hence must take subject to the latter’s disabilities to assert a deed which would eliminate the rights of his creditors. Such, likewise, is not the case before us. Considerable emphasis was laid upon the fact that the adverse party to the quiet title suit was a lienholder affected with a public interest; in the present case, we need not determine title as between two lienholders, nor is any public corporation here involved. The sole question before us now is whether a mortgagee can acquire a title superior to his mortgagor by buying the property at tax sale.
The reason why an owner of land, or anyone — tenant, agent, or mortgagee — having a contractual or quasi-contractual duty to pay the taxes, cannot assert that he has received a new title from the sovereign free from the land’s former encumbrances is because of the principle of estoppel. The title which one so positioned receives from the county is the same as the one which the purchaser receives, but the courts will not permit the assertion of the new title as against one to whom he owed a duty of protection by the payment of taxes. Thus, an owner indebted to a mortgagee cannot permit the destruction of the security which he has pledged by failing to pay his taxes and then buying a new title from the county.
In the present case the mortgagee made no promises, express or implied, to pay the taxes upon the property. The mortgagor was not misled as to the relationship between the two; he had no right to rely upon the mortgagee’s securing his property to him by paying taxes which he allowed to become delinquent, and the record indicates that he did not so rely, and, in fact, neglected to pay either taxes or mortgage payments and did not assert any interest in the property until the complaint in the present action was served upon him. The relation between a mortgagee and mortgagor is not fiduciary. De Martin v. Phelan, 115 Cal. 538, 47 P. 356, 56 Am.St.Rep. 115. Mr. Mackelprang had neither possession nor right of possession at the time the 1947 taxes became due. Neither he nor his daughter, Mrs. Crofts, can be held liable as having any title in the land, as our statute provides that a mortgagee has only a lien upon the property. Nothing appears in the record to convince us that there was any unfair dealing upon the part of the mortgagee to which equity might attach an estoppel.
Although the authorities are split upon the question, 140 A.L.R. 294 annotation, those allowing the mortgagee to purchase the tax title as a stranger to the property, where nothing appears which should impose upon him a duty or raise an estoppel in *359favor of the person contesting his title, seem to'the writer the better reasoned.
The judgment should, in my opinion, be reversed.
WORTHEN, J., concurs in the views expressed in the dissenting opinion of McDonough, c. j.