Baird v. Fischer

Decision Date02 August 1928
Docket NumberNo. 5374.,5374.
Citation220 N.W. 892,57 N.D. 167
PartiesBAIRD v. FISCHER et al.
CourtNorth Dakota Supreme Court
Syllabus by the Court.

One who owes a duty to pay taxes on property cannot by omitting to do so purchase at a sale of the property for the nonpayment and thereby strengthen his title.

In view of section 2211, C. L. 1913, providing that one who holds a lien by mortgage or otherwise upon real property may redeem from tax sale thereof or may pay taxes thereon and any payment so made shall constitute an additional lien upon the property and shall be collected with, as a part of, and in the same manner as the amount secured by the original lien, one mortgagee may not acquire and assert title under a tax deed as against another mortgagee for taxes falling due while both mortgages were outstanding and unpaid; and this rule applies to a second mortgagee after foreclosure of the first mortgage and during the year of redemption.

The purpose and effect of section 2196, relating to tax sales, is to prohibit those who may be concerned as officers in proceedings looking toward the collection of taxes through sale of the property, from purchasing at the sale, and it does not operate to permit a mortgagee to procure and assert a tax title as against a co-mortgagee.

Christianson, J., dissenting.

Appeal from District Court, Mercer County; H. L. Berry, Judge.

Action by L. R. Baird, as receiver for the First State Bank of Beulah, against Abraham Fischer and the Provident Life Insurance Company and others to quiet title, in which only the last-named defendant answered. From a judgment for plaintiff, the last-named defendant appeals. Reversed and remanded, with directions.

Dullam, Young & Burke, of Bismarck, for appellant.

Hyland & Foster, of Bismarck, for respondent.


This is an action to quiet title. The plaintiff is the receiver of the First State Bank of Beulah, an insolvent domestic banking corporation. The complaint is in the statutory form. The Provident Life Insurance Company is the only answering defendant. It denies the allegations of the complaint, pleads title and possession in itself under a deed issued pursuant to mortgage foreclosure and sale, and asks that title be quieted in it as against the plaintiff. Plaintiff, replying, sets up a claim of superior title by virtue of a tax deed. The facts were stipulated. The trial court found for the plaintiff. Whereupon the defendant perfected this appeal.

The record discloses the following facts: In October, 1916, Fischer mortgaged the real property involved in this action to the defendant Provident Life Insurance Company to secure the payment of $1,500. In November, 1916, Fischer gave a second mortgage on the property to the First State Bank of Beulah to secure the payment of $1,000. Neither of the mortgages was ever paid. The bank at all times retained ownership of the second mortgage. In November, 1922, the defendant began proceedings to foreclose its mortgage by advertisement, and pursuant thereto the property was sold on January 29, 1923, for the amount of the mortgage indebtedness and costs; the defendant being the purchaser at the sale. There was no redemption from such sale, and sheriff's deed was issued to the defendant on February 15, 1924. The 1918 taxes on the property were not paid, and it was sold at tax sale in December, 1919, to one Seivert. There was no redemption from such sale, and on February 2, 1923, Seivert assigned the tax sale certificate to the bank. On February 10, 1923, at the instance of the bank the county auditor gave notice of expiration of the period of redemption. No redemption was made, and tax deed was issued to the bank on May 17, 1923. This deed is the deed under which plaintiff as receiver claims title. Thus the contest in this case is between the plaintiff claiming under the tax deed and the defendant Provident Life Insurance Company claiming under sheriff's deed issued pursuant to the foreclosure of its first mortgage.

On these facts the issues here for determination are: First, as to whether the bank as a junior mortgagee might acquire tax title for taxes falling due subsequent to the execution of its mortgage and assert title as against the defendant, the senior mortgagee; and, second, as to whether the tax deed is a regular and valid deed. If the first question is determined adversely to the plaintiff, it will be unnecessary to pass upon the second.

Section 2211, C. L. 1913, provides:

“Any person who has a lien by mortgage or otherwise upon any real property that has been sold for taxes or on which the taxes have not been paid, may redeem from such sale, or may pay such taxes and the interest, penalty and costs thereon, and the receipt of the county treasurer or the certificate of redemption, as the case may be, shall constitute an additional lien on such land to the amount therein stated, and the amount so paid and the interest thereon at the rate specified in the mortgage or other instrument, shall be collected with, as part of, and in the same manner as the amount secured by the original lien.”

It is appellant's contention that by virtue of this statutory provision each of the mortgagees was estopped to take tax title, either as against the other mortgagee or against their common mortgagor; that under the statute the mortgagees were permitted to pay the taxes and to resort to the security of the mortgages for the amounts so paid; that under these circumstances equity will permit neither to refrain from paying taxes as the same become due and thereafter acquire a tax deed adverse to the other; that when the bank took the assignment of the tax certificate in question it took the same as a trustee for itself and for the senior mortgagee, and while it holds the tax deed issued pursuant to this certificate as security for the amount paid for it, it cannot claim title thereunder as against the defendant; that so far as the defendant is concerned the purchase of the certificate was a payment of the tax. On the other hand, the plaintiff insists that in this state a mortgage is security only for the debt and its only effect is to impose a lien upon the property mortgaged; that there is no duty imposed upon the mortgagee to pay the taxes and that the rule that one mortgagee may not procure a tax title adverse to his mortgagor or other mortgagee applies only where there is a duty upon him to pay the taxes; that even though the rule does apply in this jurisdiction, yet it cannot in the instant case, for the reason that at the time the bank took the assignment of the tax certificate it no longer had a lien because of the foreclosure of the defendant's first mortgage on January 23, 1923; that, in any event, under the peculiar provision of our statute, secton 2196, relating to the sale and purchase of real property at tax sale, the plaintiff was not precluded from purchasing the premises on which it had the mortgage at tax sale and taking title through and under deed issued pursuant to such sale.

[1] There is no question but that one who owes a duty to pay taxes on property cannot, by omitting to do so, purchase at a sale of the property for the nonpayment, and thereby strengthen his title. See notes in 15 Am. Dec. at page 684 and in 75 Am. St. Rep. at page 229. See, also, 26 R. C. L. 412; 37 Cyc. 1345.

[2] The plaintiff concedes this to be the law but contends that it has no application to mortgagees in this state, since here a mortgage is security only for the mortgage debt and merely a lien upon the property mortgaged, and, therefore, there is no duty upon the mortgagee to pay the taxes. While there is a wide divergence in the holdings with respect to the right of a mortgagee who has only a lien, to procure and assert a tax title as against either his mortgagor or other mortgagees, nevertheless we think that the more widely accepted and the more just rule forbids a mortgagee such right. As was said by Judge Cooley in the case of Connecticut Life Insurance Co. v. Bulte, 45 Mich. 113, 7 N. W. 707:

“But it is possible for parties to have antagonistic claims in lands, which place them neither actually nor constructively in confidential relations. In some such cases no doubt either is at liberty to strengthen his title as against the other by a tax purchase. Blackwood v. Van Vleit, 30 Mich. 118. It is claimed that a second mortgagee occupies this position in respect to the first mortgagee, and if the latter does not protect his lien by payment of the taxes or by attending as purchaser at the tax sales, the former is under no obligation to do so for him. And it is no doubt true that he is under no obligation to protect the first mortgagee; but the real point in controversy is, whether, if the second mortgagee pay the taxes or bid off the land, the payment or purchase will not ipso facto constitute a protection.

It certainly cannot be said that the second mortgagee owes any duty to the first mortgagee to protect his lien as against tax sales. Neither on the other hand does the first mortgagee owe any such duty to the second mortgagee, or to the owner. To the state each one of the three may be said to owe the duty to pay the taxes; and the state will sell the interest of all if none of the three shall pay. As between themselves, the primary duty is upon the mortgagor; but if he makes default, either of the mortgagees may pay, and one of the two must do so or the land will be sold and his lien extinguished. But in such cases, where each has the same right, payment by one is allowed to increase the amount of his encumbrance; for in no other way could he have security for its repayment by the mortgagor, who ought to protect the security he has given.

When therefore each mortgagee has the same interest in making payment of the tax, and the same right to do so, and the same means of compelling repayment, it may well be held that a purchase by one shall not be suffered to cut off...

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5 cases
  • Koch v. Kiron State Bank of Kiron
    • United States
    • Iowa Supreme Court
    • April 8, 1941
    ... ... hold that the purchase is only a payment of the tax." ... The North Dakota court in Baird v. Fischer, 57 N.D ... 167, 220 N.W. 892, 894, after quoting at length from the ... foregoing Michigan opinion, refers to Judge Cooley's ... ...
  • Moore v. Crisp
    • United States
    • Oklahoma Supreme Court
    • April 23, 1963
    ...Koch v. Kiron State Bank, 230 Iowa 206, 297 N.W. 450, 140 A.L.R. 273; City of St. Louis v. Koch, (Mo.App.) 156 S.W.2d 1; Baird v. Fischer, 57 N.D. 167, 220 N.W. 892; Swope v. Jordan, 107 Tenn. 166, 64 S.W. 52; Hill v. Buffington, 106 Wis. 525, 82 N.W. 712; In re Hoyt's Estate, 246 Iowa 292,......
  • Higgins v. Trauger
    • United States
    • North Dakota Supreme Court
    • August 29, 2001 omitting to do so, purchase at a sale of the property for the nonpayment, and thereby strengthen his title." Baird v. Fischer, 57 N.D. 167, 171, 220 N.W. 892, 893-94 (1928). See also Matter of Estate of Hansen, 458 N.W.2d 264, 271 (N.D.1990); Hefty v. Aldrich, 220 N.W.2d 840, 845 (N.D.19......
  • Riley v. Bank of Commerce of Roswell, 3761.
    • United States
    • New Mexico Supreme Court
    • June 13, 1933
    ...him to set up such title against prior mortgagees.” Columbia Law Review Vol. 29, page 93, editorial note commenting on Baird v. Fischer, 57 N. D. 167, 220 N. W. 892. We observe that the principles here announced are usually discussed as appertaining where the controversy arises between a mo......
  • Request a trial to view additional results

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