Coos County v. State

• Decision Date: 07 April 1987
• Citation: 303 Or. 173,734 P.2d 1348
• Parties: COOS COUNTY, a political subdivision of the State of Oregon, Petitioner on Review, v. STATE of Oregon, Respondent on Review. TC 82-2384; CA A31234; SC S32355.
• Court: Oregon Supreme Court

Page 1348

734 P.2d 1348

303 Or. 173

COOS COUNTY, a political subdivision of the State of Oregon Petitioner on Review, v. STATE of Oregon, Respondent on Review.

TC 82-2384; CA A31234; SC S32355.

Supreme Court of Oregon,

In Banc.

Argued and Submitted April 2, 1986.

Decided April 7, 1987.

[303 Or. 174-A] John K. Knight, County Counsel, Coquille, argued the cause and filed the petition, for petitioner on review.

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

CAMPBELL, Justice.

In this case we are asked to resolve the respective interests of Coos County and the State of Oregon in a tract of forest property. The county sued to eject the state from the land, claiming title as the result of its foreclosure of a tax lien in 1935. The state responds with arguments challenging the county's capacity to bring this action against the state, seeking an equitable estoppel against the county's assertion of title, claiming title to the property by adverse possession, and asserting a right to restitution in the amount of the property's increase in value during the state's stewardship. The trial court quieted title to the tract in the state, holding that, though the county possessed the capacity to bring an action in ejectment against the state to defend its interests in tax-foreclosed realty, the county was equitably estopped in this instance from asserting its title against the state. ¹ The Court of Appeals affirmed the trial court. Coos County v. State of Oregon, 75 Or.App. 615, 707 P.2d 1243 (1985). We affirm the courts below on the issue of the county's capacity to bring this action but reverse on the issue of equitable estoppel. Because of our resolution of these and the other issues presented in this review, we remand the cause to the trial court.

The events that culminated in this controversy began nearly six decades ago. On July 31, 1930, Robert F. and Eula Richards mortgaged a 640-acre parcel of land identified as Section 34, Township 26 South, Range 12 West of the Willamette Meridian (hereinafter "Section 34") to the World War Veterans' State Aid Commission (WWVSAC) to secure a loan. The mortgage was recorded on August 7, 1930. No taxes were delinquent at that time.

In 1930 Coos County levied $69.68 in ad valorem taxes plus $22.40 in forest patrol assessments against Section 34. The forest patrol assessments were being collected for the Oregon Department of Forestry. The lien for those taxes attached March 1, 1930--before the July 31 mortgage. These taxes and assessments were never paid.

On or about April 16, 1935, Coos County filed a tax foreclosure suit against Section 34 and other properties. The complaint recited that a certificate of delinquency had been filed by the sheriff, as tax collector, with the county clerk for the delinquent taxes for the years 1927 to 1930, including the 1930 assessments on Section 34, but no such certificate was found on the record. The trial court in this case concluded as a matter of fact that the certificate was filed. The complaint named WWVSAC as a party defendant, and a copy of the complaint and summons was served upon WWVSAC. WWVSAC did not respond to the summons.

On September 17, 1935, the Coos County Circuit Court issued a judgment of foreclosure on the properties. Between October 5 and 11, 1935, the Coos County Sheriff held a sale of the foreclosed real estate, including Section 34. Because no bids were offered on that Section, it was awarded by default to the county for $111.44, the amount of unpaid taxes and forest patrol assessments for 1930, including penalties and interest. The sheriff's deed of the property to the county was properly recorded on April 6, 1936. However, this transfer was not reflected in the assessment or tax records of Coos County, so that taxes and forest patrol fees continued to be assessed to the Richardses between 1936 and 1940.

On December 30, 1940, the Richardses deeded Section 34 to the state in consideration of their release from the $6,000 WWVSAC mortgage. The state recorded this deed on January 9, 1941. A satisfaction of mortgage was executed on January 7, 1941, and recorded on January 14, 1941. An abstract of the title provided at that time to the state revealed the sheriff's deed of the land to the county. The state took possession of the property December 30, 1940. The county assessor's records were changed to reflect state ownership of the land. Since that time, the state has paid annual forest patrol assessments totalling $4,651.58 and has incurred administrative and management expenses of at least $33,210.00. ² The value of Section 34 increased from an alleged value of less than $1,000 in the 1930s to approximately $2.6 million in 1981. About $2.35 million of the current value is ascribable to timber and young growth.

In 1982 the state agreed with a private company to a land exchange involving Section 34. That company conducted a title search which disclosed the county's tax title. The state requested a quitclaim deed from the county to clear the title. The county refused and requested a quitclaim deed from the state, which refused in turn. This action ensued.

COUNTY'S CAPACITY TO SUE

We first address the state's contention that the county lacks authority to bring this action in ejectment against the state. The state bases its argument on the assertion that "[t]he county is part of state government, the state's agent, with no legally distinct interests," and that "[t]he title to the land arising out of a deed of foreclosure for delinquent taxes is vested nominally in the county in its capacity as the political agent of the state." Consequently in the state's view, a dispute between the state and a county regarding tax-foreclosed lands is not justiciable. The state further insists that, even if the county possesses the capacity to bring the action, the state has not waived its sovereign immunity to an action in ejectment brought against it by a county. The Court of Appeals held that the county was capable of maintaining this action against the state. 75 Or.App. at 623, 707 P.2d 1243. We agree.

This court recently discussed the nature of the county/state relationship as it pertains to county-owned lands in Tillamook County v. State of Oregon, 302 Or. 404, 415-16, 730 P2d 1214 (1986):

"The State asserts that the counties are 'mere instrumentalities' of the state. We need not address, as a broad proposition, the relationship of counties to the state. With regard to the narrow issue of county management of county lands, the statutes dispose of the question. Under existing statutes, counties act independently of the state with respect to management of county lands. The legislature has granted counties various powers to manage and dispose of forest land acquired by tax foreclosure or otherwise. Counties have power to sell such land while keeping it on the tax roll, ORS 275.090, 275.110; to manage the land as a county forest, ORS 275.320; to convey the land to another governmental body for consideration, ORS 275.070; and to convey the land to the state 'in consideration of the payment to such county of the percentage of the revenue derived from such lands as provided in ORS 530.110.' ORS 530.030(1).

"Counties have been given broad powers with respect to their tax-foreclosed lands. See ORS 203.035, ORS chs 271 and 275. Title to such lands is in the county, not the state. ORS 275.020. The county has the power to convey such lands 'as the county governing body may deem to be for the best interests of the county.' ORS 275.070.

"Counties hold and assert their interest in county lands as corporate bodies. Counties have existed in corporate form with the power to sue and be sued since before statehood. ORS 203.010, originally enacted in 1854, General Laws or Oregon, chapter IX, § 1, p 672 (Deady 1845-1864), provides:

'Each county is a body politic and corporate for the following purposes:

(1) To sue and be sued;

(2) To purchase and hold for the use of the county lands lying within its own limits and any personal estate;

(3) To make all necessary contracts; and

(4) To do all other necessary acts in relation to the property and concern of the county.'

"Under these statutes counties possess interests that may be asserted against the state." (Emphasis supplied.)

In Tillamook, we held that a county's statutory entitlement to a percentage of revenue derived from land transferred to the state pursuant to ORS 530.030(1) was one such interest, and that it could be asserted through a declaratory judgment action. We now hold that a county's claim of right to possession of tax-foreclosed real property is another such interest, and that it may be asserted against the state through an ejectment action under ORS 105.005.

ORS 105.005 reads:

"Any person who has a legal estate in real property and a present right to the possession thereof, may recover possession of the property, with damages for withholding possession, by an action at law. The action shall be commenced against the person in the actual possession of the property at the time, or if the property is not in the actual possession of anyone, then against the person acting as the owner thereof."

The term "any person," specifying who may bring the action, includes artificial as well as natural persons. State v. Duniway 63 Or. 555, 558, 128 P. 853 (1912). The authority granted by ORS 203.010 to sue and to perform "all other necessary acts in relation to the property * * * of the county" provides a county with the capacity to initiate actions under ORS 105.005 to assert its possessory interest, acquired through a tax lien foreclosure, in real property.

The state has waived its immunity to suits brought to determine title to real property. ORS 30.360. ³ The statute expresses the state's consent to be named a defendant and to...