Court Opinion

ID: 3842013
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:11:23.255809+00
Date Added: 2024-06-11T14:14:24.327177
License: Public Domain

In Banc.
Among other things, the petition for foreclosure recites that, on January 3, 1922, the defendants, George S. Parks, Ethel Parks, his wife, and Columbus M. Pegram borrowed $3,000 of plaintiff, and, as evidence thereof, delivered to plaintiff 21 joint and several promissory notes which were to mature serially, whereby the defendants, and each of them, promised to pay to plaintiff the whole of the principal sum in proportionate parts, as represented by the notes. The first note, numbered 1, in the amount *Page 145 
of $248.33, represented the interest on the loan from January 3, 1922, to November 1, 1922; the second and third, each in the amount of $332.38, were to mature on November 1, 1923, and November 1, 1924, respectively. These notes were paid. Those remaining, numbered 4 to 21 inclusive, were in the same form and of the same date and tenor, and each in the principal amount of $352.38; note numbered 4 maturing on November 1, 1925, and another on November 1st of each year thereafter to and including the year 1942. The plaintiff alleges that, to secure the payment of the notes above described, the defendants above named mortgaged to plaintiff certain lands situate in Malheur county, Oregon (same being described in the complaint), owned by them and in their possession, together with an alleged water right thereon. It further alleges that there was assessed against the aforesaid lands a tax, which defendants failed and refused to pay, and that, on December 5, 1924, the tax being delinquent, the sheriff and tax collectors of Malheur county issued to that county a certificate of delinquency in the amount of $131.65, being the amount of the unpaid and delinquent taxes for 1920, with interest and penalty; that, on February 28, 1925, Malheur county filed its application to foreclose the delinquent certificate, and, as a result of the foreclosure proceedings, a decree was entered on December 19, 1925, in its favor, foreclosing the lien; that, pursuant thereto, the land was purchased by Malheur county, and on January 25, 1926, the sheriff duly executed and delivered his tax deed conveying the lands to the county, which deed was duly recorded on January 25, 1926; that, on August 26, 1927, the defendants above named executed and delivered their *Page 146 
quitclaim deed conveying these lands to Luciano Uriaguereca, defendant and appellant herein, which deed was recorded on September 26, 1927; that, on September 7, 1927, pursuant to chapter 12, General Laws of Oregon, 1925, Malheur county transferred and conveyed the property to Uriaguereca by quitclaim deed, which was thereafter duly recorded. The plaintiff then alleges that whatever right, title, interest, lien or equity Uriaguereca has in the premises is subject, subsequent in time, and inferior and subordinate in right, to the lien of the plaintiff's mortgage in the complaint declared upon, and prays for a judgment against defendants George S. Parks, Ethel Parks and Columbus M. Pegram for the sum specified in the complaint, and for a decree that the mortgage is a valid, subsisting first lien on the property described therein, and that the property be ordered sold as upon execution as provided by law.
Uriaguereca, answering, alleges that, on August 26, 1927, the record owners of the land, with full right and authority so to do, conveyed to him by due deed of conveyance all their right, title and interest in the land and property, and that, on September 7, 1927, Malheur county made, executed and delivered to him its tax deed, conveying to him all of the lands involved, and that ever since these conveyances were made he "has been and now is the sole and legal owner, and in the possession of all the above-described land * * *, and any claim, title, interest or estate that the plaintiff herein may have or claim to have is inferior in both time and right to the title, estate, right and claim of this answering defendant." He further avers that he purchased the land in good faith and for a valuable consideration. *Page 147 
The plaintiff demurred to the defendant's answer, "on the ground * * * that the same fails to state a cause or defense to the matters and things alleged in plaintiff's complaint, in that said defense discloses that said defendant acquired his title to said property by quitclaim deed from the defendants, George S. Parks, Ethel Parks and Columbus M. Pegram and by operation of section 4370, Oregon Laws, as amended by chapter 175 of the Laws of 1923 and chapter 12 of the Laws of 1925, and takes such title as he acquired subject to the same conditions, restrictions, limitations and obligations as would attach in the event redemption had been made by his said grantors."
The court sustained the demurrer, and a decree was entered in accordance with the prayer of the complaint. From this decree, the named defendant appeals.
Could the appealing defendant, the owner of the land subject to a mortgage lien, clear his lands of such lien by the purchase of a tax title from Malheur county? The determination of that question is decisive of this case.
The principle of law determinative of the issue has long been settled in our jurisdiction. In the early case of Nickum v.Gaston, 24 Or. 380 (33 P. 671, 35 P. 31), this court, speaking through Mr. Justice BEAN, made the following statement with relation to the rule which governs in cases like the one under consideration:
"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 *Page 148 
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 lienholder, 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 it 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 * * *. 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 lienholder, only as a payment of the taxes, and the owner does not acquire any title to the property as against such lienholder 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."
From this doctrine our court has never departed.
In 2 Jones on Mortgages (7th Ed.), at section 680, there appears an interesting discussion, where the author, treating of the right of a mortgagor to set up a tax title in order to defeat the mortgage lien, says:
"A mortgagor or his grantee can not, by acquiring a tax title upon the land, defeat the lien of the mortgagee."
In support of this proposition, many authorities are cited under note 19. Continuing, the author says:
"The rule in these cases is based upon the obligation of the mortgagor, or the party claiming under *Page 149 
him, to pay the taxes; therefore, the act of the party acquiring title through his own default is held to be fraudulent. It is his duty to pay the taxes, and he is not allowed to acquire a title through his own default. The same obligation rests upon one who has purchased the land of the mortgagor. When the taxes are paid by one who has merely a lien upon the land, there is of course no obligation upon him to pay the taxes; and, although he may acquire the tax title for the protection of his own lien, he is not allowed to set up that title to defeat a prior lien. The land is regarded as a common fund for the payment of both liens, and equity regards it as an act of fraud for him to acquire a title to the land for an inconsiderable sum, and use it to destroy the claim of the prior mortgagee to the land."
This is the view taken in Minnesota. See Hoyt v. Lightbody,98 Minn. 189 (108 N.W. 843, 8 Ann. Cas. 984, 116 Am. St. Rep. 358, and note).
In brief, the doctrine hereinabove declared is generally recognized, and is well calculated to promote the ends of justice. Following, therefore, the governing principles which underlies the case before us, we direct the affirmance of the decree of foreclosure. *Page 150