Coos County v. State

• Decision Date: 13 December 1985
• Citation: 75 Or.App. 615,707 P.2d 1243
• Parties: COOS COUNTY, a political subdivision of the State of Oregon, Appellant, v. STATE of Oregon, Respondent. 82-2384; CA A31234.
• Court: Oregon Court of Appeals

Page 1243

707 P.2d 1243

75 Or.App. 615

COOS COUNTY, a political subdivision of the State of Oregon, Appellant, v. STATE of Oregon, Respondent.

82-2384; CA A31234.

Court of Appeals of Oregon.

Argued and Submitted Feb. 15, 1985.

Decided Oct. 9, 1985.

Reconsideration Denied Dec. 13, 1985.

John K. Knight, County Counsel, Coquille, argued the cause and filed the briefs for appellant.

Linda J. DeVries, Asst. Atty. Gen., Salem, argued the cause for respondent. With her on the brief were Dave Frohnmayer, Atty. Gen., and James E. Mountain, Jr., Sol. Gen., Salem.

Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.

WARREN, Judge.

This action was brought by Coos County to determine whether the county or the state holds title to a tract of forest property. The county sued in ejectment, seeking a judgment declaring that it is the owner in fee simple of the property and entitled to possession; the county did not seek damages. ¹ The state asserted three affirmative defenses, counterclaimed for the value of improvements which it made to the property and cross-complained to quiet title in itself. The court held a trial on certain facts stipulated by the parties, determined a disputed issue of fact and resolved some issues of law in each party's favor. The court granted the state judgment on its defense that the county should be equitably estopped from claiming title, quieted title in the state and enjoined the county from asserting any title, claim, lien or interest in the property. The county appeals. The state asserts alternative bases to support the judgment. Although the state did not file a cross-appeal, it may assign errors without a cross-appeal when it seeks to sustain a judgment in its favor. Artman v. Ray, 263 Or. 529, 533, 501 P.2d 63 (1972).

The county's interest in the property dates back to 1930, at least. In that year, the property was owned by Robert and Eula Richards. Coos County levied $69.68 in ad valorem taxes and $22.40 in forest patrol assessments against the property in 1930; the lien for the taxes attached on March 1, 1930. Neither the taxes nor the assessment were paid. The county levied taxes and forest patrol assessments in subsequent years, which the Richardses also did not pay. Coos County filed a suit to foreclose its lien in 1935 and in the same year obtained a judgment of foreclosure. The county was awarded the property in the sheriff's sale by default, there being no bidders for the property. The sheriff's deed to the county was recorded on April 6, 1936, in the Coos County Deed Records.

The state's interest in the property arose on July 31, 1930, when the Richardses mortgaged the property to the World War Veterans' State Aid Commission (WWVSAC) to secure a loan; the mortgage was recorded on August 7, 1930. The Richardses issued a deed in lieu of foreclosure purporting to transfer title in fee simple to the state on December 30, 1940, as consideration for release from a $6,000 debt. This deed was recorded in the Coos County Deed Records on January 9, 1941, and a satisfaction of WWVSAC's mortgage was recorded on January 14, 1941.

In its 1935 foreclosure suit, the county named WWVSAC as defendant, and it was served with a summons but did not appear. It appears that the state's lien could not have been affected by the foreclosure suit, because the state had not yet consented to have its interests in real property adjudicated by the state courts. Federal Land Bank v. Schermerhorn, 155 Or. 533, 545, 64 P.2d 1337 (1937). ²

After it received the Richardses' deed, the state managed the property as if it were the owner. WWVSAC began to pay forest patrol assessments levied by the county in 1942. ³ The State Land Board, which took over management of WWVSAC properties in 1943 and acquired its assets in 1952, continued to make those payments. The State Land Board sold and cut timber from the property and granted a mineral lease, easements, licenses and a right-of- way affecting the property. The state also undertook inventories and inspections of the property, and from 1980 to 1982 spent approximately $31,210 in intensive mapping, timber cruising, appraisals and other actions necessary to prepare for a land exchange with a private company. That company became aware of the county's interest in the property as a result of a title search, and the state requested a quitclaim deed from the county in order to effectuate the exchange. The county refused and requested a quitclaim deed from the state, which also refused. The county then commenced this action in ejectment to determine title to the property. ⁴ The county's claim of ownership is based on the recorded deed of 1936.

The state asserted three affirmative defenses. First, it claimed that, as sovereign, it is immune from suit by the county, a political subdivision of the state. Second, it asserted that the sheriff's deed to the county was void, because the county had no authority to foreclose a tax lien on property mortgaged to the state. It also claimed that the foreclosure sale was invalid, because a certificate of delinquency had not been issued. Third, it asserted that the county should be equitably estopped from claiming title by its acquiescence in the state's ownership for over 40 years. The state also asserted a counterclaim to recover the value of improvements it had made and assessments it had paid while in possession of the property in the event that title was quieted in the county's favor. It also asserted a cross-complaint to quiet title in the state and argued that it acquired title by deed or by adverse possession.

The parties entered into a pretrial stipulation in which they agreed to certain facts and presented issues of fact and law for the court to resolve. The issue of fact was whether the county had issued a certificate of delinquency for the unpaid 1930 taxes before instituting a foreclosure proceeding. The court resolved that issue in plaintiff's favor, finding that a certificate was issued. The court made the following rulings on the submitted issues:

"The Court makes the following finding[s] concerning the plaintiff's issues of law * * * :

"1. R.E. Richards had no interest in the subject property to convey to the State of Oregon in 1940.

"2. The defendant is not estopped from challenging the validity of the 1935 tax foreclosure proceeding or the validity of the deed received by the plaintiff in that proceeding.

"3. The Statute of Limitations does not apply against the State of Oregon in its claims.

"4. The plaintiff does not own the subject property by virtue of the Sheriff's Deed recorded in 1935, because the county is equitably estopped to deny title in the property to the state.

"The Court makes the following findings concerning the defendant's issues of law * * * :

"(1) The county may sue to eject the state from property possessed by the state or to try title to the property.

"(2) The county had authority in 1935 to foreclose for unpaid taxes, property mortgaged to the World War Veteran's State Aid Commission.

"(3) The foreclosure was procedurally valid.

"(4) The state cannot acquire title to property of the county by adverse possession.

"(5) The county is equitably estopped from claiming title to the property.

"(5a) If the foreclosure was valid the county took the property subject to the state's mortgage.

"(6) If the title was quieted in the county, the county must pay the state for all expenditures, plus interest, made on behalf of the owner over the last 42 years.

"The Court allows the relief prayed for by the defendant as follows:

"(a) Defendant is declared to be the owner in fee simple of the property.

"(b) The title to the real property is quieted in the defendant.

"(c) The plaintiff is enjoined from asserting any estate, title, claim, lien or interest in the real property, or any portion thereof, and

"(d) Defendant is awarded costs and disbursements."

The county assigns as errors the trial court's ruling that the county was estopped from claiming title and its granting defendant the relief requested. The state contends that these rulings were correct. The state also assigns error to the court's rulings that the county has authority to bring this action against the state and that the state cannot acquire title from the county by adverse possession.

We deal at the outset with the state's claim that the county has no authority to bring this action against the state. The argument has two facets. First, the state argues that it has not waived its immunity to a suit brought by a county to determine title to real property. Second, the state argues that a county, as a political subdivision of the state, lacks capacity to sue the state, its creator, in the absence of a specific constitutional or statutory provision authorizing such an action. This objection goes to the subject matter jurisdiction of the state courts.

We do not agree with the state's first contention. The legislature consented to the state's being sued to determine its rights and interests in real property by enacting ORS 30.360. See n. 1, supra. ORS 30.360(2) subjects the state to jurisdiction in "any suit * * * involving the title to real property where the state or a state agency has record title to contested real property * * *." The state argues that this provision does not specify who may bring such an action. We think that the phrase "any suit" is broad enough to encompass an action brought by any party. This statute expresses the state's consent to be sued to try title to real property by any party, including a county.

The state also argues that the county lacks authority to sue the state, in the absence of a constitutional or statutory prohibition specifically authorizing such an action. ⁵ This argument is based on the theory that a county is a creation of the state, functions merely as an agent of the state and is completely subject to the legislative will. The state argues that, as an agent of the state, a...