Court Opinion

ID: 9696119
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:37:20.872866+00
Date Added: 2024-06-11T18:20:17.085976
License: Public Domain

On Petition for Rehearing.
PER CURIAM.
Two petitions for rehearing have been filed in this case. They raise objections which, for the most part, we deem have been adequately covered by the opinion filed. It is said, however, that our decision here is contrary to our decision in Payne v. A. M. Fruh Co., N.D., 98 N.W.2d 27. We think it may be helpful therefore to set forth our view as to the distinction between Payne v. A. M. Fruh Co. and the instant case.
The root of the distinction lies in the fact that in Payne v. A. M. Fruh Co., we were dealing with a tax title, while in the instant case the title is derived from a mortgage foreclosure. The sale of land for delinquent taxes is an administrative proceeding in rem. It is ex parte in nature and it is binding upon the owners of any interest or estate in the land without any notice other than the County Auditor’s annual notice of tax sale. Chapter 57-24 NDRC 1943. Furthermore, the title which is sold at tax sale and made effective by the failure of the tax debtor to redeem is not the title of the tax debtor but a new and paramount title, derived from the state, to every interest upon which there was a lien for taxes. A tax deed issued pursuant to such a sale, even though the right of redemption of an owner of an interest in the land has not been terminated by a proper service of a notice to redeem, is evidence of a presumptively valid and paramount title to every interest in the land which was subject to the tax lien. Such title is a wholly new title from which no interest has ever been separated. The recording of the tax deed gives notice to the world of the extent of the grantees claim of title.. For these reasons we held in Payne v. A, ⅛⅞. Fruh Co. that possession under such a presumptive title was coextensive with the title and adverse to every interest upon which there had been a lien for taxes.
In states where the lien theory of mortgages prevails a mortgagor retains the right to convey valid title to the mortgaged premises, or a part thereof, subject to the mortgage lien. If a mortgagee wishes to subject such a grantee’s interest to the mortgage lien he must join the grantee as a party in an action to foreclose the mortgage. If he fails to do so the grantee’s interest is not affected in any way. A sale made pursuant to a special execution issued itpon a judgment for foreclosure, sells only the interests of the persons who were parties to the action. A grantee of record who was not made a party to the action retains more than an equity of redemption, he retains his title to the granted interest unimpaired, subject to the lien of the mortgage to the extent that such lien has not been satisfied by the foreclosure sale. Goodenow v. Ewer, 16 Cal. 461, 76 Am. Dec. 540; Berlack v. Halle, 22 Fla. 236, 1 Am.St.Rep. 185; Annotation: 1 Am.St. Rep. 189.
In the instant case, the grantees of perpetual nonparticipating royalties were not made parties to the action to foreclose. Their titles to the royalties were therefore unaffected by the foreclosure and that fact appeared upon the face of the record. The possession of the surface estate by the purchaser of their grantor’s interest at foreclosure sale was no more adverse to them *710than continued possession' by their grantor. In fact if the owners of the royalty interests had known of the foreclosure, they might well have concluded that the mortgagee considered that the mortgagor’s remaining interest in the property wa.s sufficient to satisfy the mortgage and that therefore he was proceeding against that interest alone. The petitions for rehearing are denied.
PHILIP R. BANGS, and CLIFFORD SCHNELLER, District Judges, and BURKE, MORRIS and TEIGEN, JJ., concur.
SATHRE, C. J., and STRUTZ, J., being disqualified did not participate, PHILIP R. BANGS, District Judge of the First Judicial District, and CLIFFORD SCHNEL-LER, District Judge of the Third Judicial District, sitting in their stead.