Cent. Wis. Trust Co. v. Swenson

• Decision Date: 02 June 1936
• Citation: 267 N.W. 307,222 Wis. 331
• Parties: CENTRAL WISCONSIN TRUST CO. v. SWENSON ET AL.
• Court: Wisconsin Supreme Court

222 Wis. 331

267 N.W. 307

CENTRAL WISCONSIN TRUST CO.

v.SWENSON ET AL.

Supreme Court of Wisconsin.

June 2, 1936.

Appeal from an order of the Circuit Court for Dane County; A. G. Zimmerman, Judge.

Reversed.

Action in equity by the Central Wisconsin Trust Company against Mary Smith Swenson and others, commenced September 14, 1935. From an order entered December 7, 1935, sustaining demurrers to the complaint, the plaintiff appeals. The facts are stated in the opinion.

Bagley, Spohn, Ross & Stevens and Arthur A. Blied, all of Madison, for appellant.

La Follette, Rogers & Roberts, and W. Wade Boardman, all of Madison, for respondent Swenson.

Jerome Fox, of Milwaukee (Clinton P. Flick, of Milwaukee, of counsel), for respondent Home Owners' Loan Corporation.

FOWLER, Justice.

The case is before the court on an appeal from an order sustaining demurrers to the complaint by defendants Swenson and Home Owners' Loan Corporation on the ground of insufficiency of facts. The complaint alleges that the plaintiff took a mortgage on premises owned by the defendant Swenson to secure notes aggregating $22,000. The notes are all assigned to divers persons for whom the plaintiff as trustee for their benefit holds the notes, and is under obligation to protect the security for their payment, and is authorized to commence actions to that end. The defendant Swenson has empowered the plaintiff to collect all the income from the mortgaged premises and apply it in payment of taxes, insurance, interest, and principal. The mortgaged premises will be referred to herein as “Tract A.” The defendant Swenson also owns another tract of land referred to herein as “Tract B,” in which neither the plaintiff nor its assignees have any interest whatsoever. The plaintiff had funds in its hands collected as income from tract A. Taxes on tract A were delinquent. In order to protect the security of said notes, the plaintiff essayed to pay said delinquent taxes, but through mistake paid to the county treasurer of the defendant Dane county delinquent taxes on tract B instead. The defendant Home Owners' Loan Corporation holds a mortgage on tract B. On discovery of its mistake, the plaintiff endeavored to correct it, and requested the defendants to transfer the payment of delinquent taxes made upon tract B to tract A, which the defendants refused to do. On these facts the plaintiff prays that it be adjudged a lien on tract B equivalent to the lien of the holder of a tax sale certificate issued on sale of the tract for said delinquent taxes, on the ground that the money paid by the plaintiff has operated to the benefit and unjust enrichment of the defendants.

The action is of the nature of the action “for money had and received.” It is true that a landowner is not personally liable for the taxes imposed upon his land. But it is manifest that, if the defendant landowner elects to keep tract B, she has received a benefit from the payment of the tax thereon which will result in her unjust enrichment. It is also manifest that, if she elects not to keep the land, the defendant mortgagee corporation has received the benefit of such payment, and that such payment will result in its unjust enrichment. It would seem that, upon the general principles of the law of “Restitution and Unjust Enrichment,” the plaintiff should have such remedy as will effect its protection.

[1][2][3] The appellant in its brief cites no adjudicated cases to the precise point that such action lies under the situation stated, but relies wholly on general principles. The respondents cite several cases to the point that under the situation the plaintiff is without remedy. However, we cannot accept the rule of these cases. It is contrary to our ideas of justice and equity, and we find ample supporting authority for the action in the adjudicated cases. The case in our opinion clearly falls within section 38 (1) of the American Law Institute's Restatement of Restitution and Unjust Enrichment (Tentative Draft No. 1), which reads:

“Section 38. Performance of another's duty or discharge of lien against another's property. (1) A person who, by payment to a third person, has discharged the duty of another or has released another's property from an adverse interest, doing so unintentionally or acting because of an erroneous belief induced by a mistake of fact that he is thereby discharging a duty of his own or releasing property of his own from a lien, is entitled to restitution from such other of the value of the benefit conferred up to the value of what is given, unless the other disclaims the transaction.”

By paying the tax on tract B, the plaintiff “released another's property from an adverse interest,” and did so “acting because of an erroneous belief induced by a mistake of fact” that it was “discharging a duty of its own,” and is therefore “entitled to restitution” from the defendants of the benefit conferred up to the value of what is given, unless the defendants “disclaim the transaction.” The defendant landowner, while not personally liable for the payment of the tax on tract B, is to be presumed to have wished and intended to pay it to protect the land from sale and the issuance of a tax deed thereon. Unless she disclaims such wish and intention, the plaintiff is entitled as against her under the rule stated to refund of the tax paid with interest thereon. And, if the landowner does disclaim, then the plaintiff will be entitled under that rule as against the mortgagee to refund of the tax, the payment of which has redounded to its benefit and unjust enrichment, unless it disclaims the transaction. Disclaimer cannot be presumed. It can only be made by answer. It is conceivable that the defendant landowner will disclaim, but it is not conceivable that the defendant mortgagee will if the landowner does. To do so it would have to abandon all rights under its mortgage. It would seem that the payment of a subsequent tax, in case the landowner did not pay it, would preclude the mortgagee from disclaiming. Likewise it would seem that a payment of a subsequent tax by the landowner would preclude a disclaimer on her part. That the situation is within the contemplation of...