Court Opinion

ID: 6896399
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:50:15.391534+00
Date Added: 2024-06-11T16:06:00.979788
License: Public Domain

Mr. Justice Bean
delivered the opinion of the court:
1. The law is well settled that a mortgagor, or his successor in interest, remaining in possession of the land, cannot permit the mortgaged property to be sold for taxes, and become the purchaser thereof, either directly or through the agency of another, for the purpose of cutting off a prior lien. He is under a legal obligation to pay the taxes, and cannot, by neglecting to perform this duty, and suffering the land to be sold in consequence of such neglect, add to or strengthen his title by purchasing at the sale himself, or by subsequently buying from a stranger who purchased thereat. By such a purchase he does not acquire,-as against the lien-holder, any title or right to the property better than he had before, but the sale will operate only as a mode of paying the taxes, leaving the title in the same condition as if no .sale had been made. “This principle is universal,” says Judge Cooley, “and is so entirely reasonable as scarcely to need the support of authority. Show the existence of the duty, and the disqualification is made out in every instance”: Cooley on Taxation, 345; Blackwell on Tax Titles, §§ 566, 591; *385Christy v. Fisher, 58 Cal. 256; Lewis v. Ward, 99 Ill. 525; Ralston v. Hughes, 13 Ill. 470; Edgerton v. Schneider, 26 Wis. 385; Bassett v. Welch, 22 Wis. 175. When the purchase at such a tax sale is made by the owner directly, or when he afterwards acquires title from a stranger who purchased at the sale, it operates, as to the lien-holder, only as a payment of the taxes, and the owner does not acquire any title to the property as against such lien-holder better or stronger than what he had before the sale. It is, in effect, as if no sale had in fact been made, but as if the owner had discharged his duty by paying the taxes before the sale. But where the purchase is made by, and the deed taken in the name of, some third person, although in pursuance of a fraudulent arrangement between the owner and the purchaser to cut off some prior lien, the sale is not entirely void, but the purchaser obtains a title to the land good against the world, except those who might have equities in respect to it, and who should see fit in a proper mode to assert their equities. There is no resulting trust in favor of the owner, nor can the purchaser be lequired or compelled to convey the property to him or as he may direct: Conn. Mutual Life Ins. Co. v. Butte, 45 Mich. 113 (7 N. W. 107); Maxfield v. Willey, 46 Mich. 252 (9 N. W. 271). By his participation in the fraud, he has put it out of his power to ask the interposition of a court in his behalf, and the purchaser may withhold the title from him. Between the owner and the purchaser the sale is valid, and passes the title; but the lien-holder whose right is sought to be cut off by such a sale and purchase may insist that as to him the sale shall be treated as inoperative to affect his lien, and the purchaser should be deemed to have acquired the title to the property subject to such lien.
2. It would necessarily follow, then, that where the land is bought at the tax sale by one in possession and under obligation to pay the taxes, or is by such an one *386bought from a stranger who purchased at the tax sale, the statutory period in which a “suit or proceeding” can be maintained for the recovery of land sold for taxes would not bar the right of the lien-holder to enforce his lien, and this is the construction given to a similar statute by the supreme court of Wisconsin. In Jones v. Davis, 24 Wis. 229, which was a proceeding to enforce a judgment lien, the defendant claimed title under a tax deed which had been recorded for a time exceeding the statutory period in which an action could be maintained for the recovery of land sold for taxes, and contended that the proceeding was barred, but it was held that the lien of the judgment was not cut off or destroyed by the tax deed, the court by Cole, J., saying: “The answer shows that the tax title was obtained by the grantors of the defendant, who were in possession, and under obligation to pay the taxes. A person in possession of land, and whose duty it is to pay the taxes at the time of the assessment, cannot permit his own property to be sold for taxes, and then obtain a tax deed for the purpose of cutting off a prior lien. This point has been so decided in the cases of Smith v. Lewis, 20 Wis. 369; Bassett v. Welch, 22 Wis. 175.” And to the same effect is McMahon v. McGraw, 26 Wis. 614. In dealing with the respective rights of the lien-holder and a third party who purchased under an agreement with the owner, the transaction must be treated as if no sale had been made. The lien-holder’s rights, because of the fraud, are unaffected by the sale, and the purchaser takes the property subject to the lien. It would seem clear therefore, that the right of a lien-holder to enforce his lien against such a purchaser, or one claiming under him with notice, is not barred by the statute. A contrary doctrine would enable a party to profit by his own fraud, and this the law does not suffer or allow. The rule as announced by the court in the instruction excepted to we think, therefore, correctly stated the law as applicable to a controversy between the lien-holder *387and the purchaser at a tax sale, under the circumstances stated in the instruction, or to one claiming under him with notice.
3. But when it is remembered that the defendant claims, and gave evidence tending to prove, that in purchasing this tax title from Lucy Mason she was a bona fide purchaser for value, and without any notice, knowledge, or intimation of any fraudulent or other arrangement between Laura Bennett and Lucy Mason with reference to the sale, it will be observed that the effect of the instruction that if such combination existed the tax deed under which Lucy Mason held the only title she attempted to convey “is of no avail except to pay the taxes,” and “could not be used for any other puspose,” would be to defeat the title of the defendant, even if she was a bona fide purchaser for value, and in this view was erroneous, as applied to the facts of this case. In Van Shaack v. Robbins, 36 Iowa, 201, which was a proceeding to set aside a tax sale and title, it was conceded that there was a fraud on the part of the original purchaser at the tax sale, hut the tax title was held valid in the hands of a bona fide purchaser, notwithstanding the statute provided that if fraud in the purchaser at a tax sale is established, “such sale and title shall be void,” the court through Cole, J., saying: “ The manifest and unmistakable purpose and intent of the entire revenue act is to give value to and confidence in tax titles. This value and confidence would be destroyed and the intent defeated by a holding which would render any tax title in the hands of an innocent purchaser wholly worthlesss and void, upon the showing of a fact which might not be in his power to ascertain in advance of his purchase. The owner of the land sold for taxes has it in his power, under the rule indicated, by diligence to avoid the sale for fraud at any time within three years, and even after that if the title is made to and held by the purchaser; while under a contrary rule a purchaser would *388be entirely unable to protect himself in any case. The only sure protection a man could have under such rule would be to refuse to make any purchase of a tax title; and if all should thus act the entire purpose of the statute would be defeated. In our opinion, then, the statute is to be construed the same as if it read, ‘such sale and title shall be avoided.’” So in this case, if the owner of the land neglected to pay the taxes, it was not only the privilege, but the duty, of the mortgagee to do so before this sale, or to redeem the property within the time allowed by law therefor. She could have paid the taxes or redeemed the land, and added the amount thereof to her lien, (section 2838, Hill’s Code,) and thus prevented or defeated the sale without any injury to herself. Because she neglected to do either she was in default, and the sheriff, in consequence thereof, was required to make a deed to the purchaser; and if the defendant bought the land from the holder of the tax deed in good faith, and without notice of fraud, the mortgagee must suffer the loss “which she could have prevented by the performance of her duty or by proper diligence.”
The judgment of the court below must therefore be reversed and a new trial ordered.