Hawkeye Life Ins. Co. v. Valley-Des Moines Co., 42704.

• Court: United States State Supreme Court of Iowa
• Citation: 220 Iowa 556,260 N.W. 669
• Docket Number: No. 42704.,42704.
• Parties: HAWKEYE LIFE INS. CO. v. VALLEY-DES MOINES CO. et al.
• Decision Date: 07 May 1935

220 Iowa 556
260 N.W. 669

HAWKEYE LIFE INS. CO.
v.
VALLEY-DES MOINES CO. et al.^a1

No. 42704.

Supreme Court of Iowa.

May 7, 1935.

Appeal from District Court, Polk County; A. A. Herrick, Judge.

This is an action to set aside a tax deed and to confirm the lien of certain special assessments against the property. (It is not an action to redeem from the sale of real estate, but to set aside a decree of the court canceling plaintiff's lien on the ground that the plaintiff was not a party to the suit, and asking that the special assessment lien be foreclosed and the property sold.) From a decree against a part of the defendants, they appeal; and on one question the plaintiff cross-appeals.

Affirmed.

[260 N.W. 670]

Hughes, O'Brien & Faville and I. H. Tomlinson, all of Des Moines, for appellants.

Harding, Ruffcorn & Jones, H. W. Hanson, and Vernon A. Vrooman, all of Des Moines, for appellee and cross-appellant.

Carl A. Burkman, Co. Atty., of Des Moines, for Polk county and Allen Munn.

ALBERT, Justice.

The fact situation in this case is somewhat complicated, although the legal questions involved are not very numerous.

The J. Locke Macomber Company was the owner of lot 18, division 1, in Grimmell's addition to the town of Fort Des Moines (now a part of the city of Des Moines), in July, 1923, at which time a mortgage for $10,000 was executed by the company to one Blattenburg, who, on the 10th of July following, assigned said mortgage to the Valley National Bank. The mortgage and assignment were duly recorded.

At the regular tax sale in December, 1926, this property was sold, and was purchased by one E. W. Morgan, to whom the tax certificate was issued and by him duly assigned to the Valley National Bank or the Valley Investment Company. In due time a tax deed was issued, on May 20, 1932, to the Valley Investment Company. On June 30, 1931,

[260 N.W. 671]

in the district court of Iowa in and for Polk county, the aforesaid $10,000 mortgage to the Valley National Bank was foreclosed and decree entered thereon. In this proceedings, among other defendants was the city of Des Moines. In this decree it was provided, among other things, that the general taxes and special assessments “are decreed to be liens against said property prior to the plaintiff's mortgage.” Execution sale was had and the property sold for $16,742.50, but no deed was issued on said sale.

Following this an action in equity was brought to quiet title and remove tax liens. This action was entitled “Valley-Des Moines Company, Plaintiff, v. City of Des Moines, Polk County, Iowa, County of Polk in the State of Iowa, and Allen Munn, Treasurer of Polk County, Iowa, Defendants.” On final trial of said cause a decree was entered on the 19th day of May, 1933, in which it was found, among other things, “that the plaintiff is the absolute and unqualified owner in fee simple” of the property in controversy herein, and that plaintiff's title to said property was derived through, under, and by virtue of the tax deed hereinbefore referred to, and that the Valley-Des Moines Company obtained title to said property by warranty deed executed by the Valley Investment Company to it on the 10th of January, 1933. It then finds and decrees that assessment No. 1275, dated July 1, 1924, for the opening of Fifth avenue from Chesnut street to School street, assessed against lot 18, division 1, Grimmell's addition (and certain other special assessments against the property), and the liens created thereby, are “effectually barred and cut off by said tax sale and plaintiff's said tax deed, and that said special assessments should be cancelled, and the defendants, City of Des Moines and Allen Munn, Treasurer of Polk County, should be forever enjoined and restrained from enforcing or attempting to enforce the collection of said special assessments against the plaintiff's said real estate. * * * It is further hereby ordered, adjudged and decreed that all unpaid installments of the special assessments hereinbefore and hereinafter set forth be and they hereby are cancelled as liens against said property, to wit, * * * Street Opening Certificate No. 1275, dated July 1, 1924, * * * the defendants, City of Des Moines, Iowa, and Allen Munn, Treasurer of Polk County, Iowa, * * * are permanently enjoined and restrained from enforcing or attempting to enforce the collection of the unpaid installments of said special assessments against said real estate.”

On the 25th of August, 1933, a petition in equity was filed in the case at bar, in which it is pleaded that the city of Des Moines regularly and duly levied a special assessment against the property involved herein, under special assessment certificate No. 1275, and it is alleged that “there are two installments now due and delinquent which, with interest and penalty, amount to $1083.79,” and that the defendants “have or claim to have some right, title, or interest in and to said real estate, but that same is junior, inferior, and subsequent to the plaintiff's lien of the certificates declared on.” In the second count an attack is made on the tax deed first above referred to, alleging that “at and subsequent to the time of the sale the Valley National Bank was the owner and holder of the $10,000 mortgage, and that the plaintiff had no notice of the expiration of the time of redemption from said tax sale.” The third count makes counts 1 and 2 a part thereof, and alleges that the Valley Investment Company attempted to convey by warranty deed the real estate described to the Valley-Des Moines Company. In the fourth count it is alleged that the plaintiff herein had no knowledge or notice of the pendency of the action to quiet title hereinbefore referred to, and that the tax sale was a violation of law and the deed conveyed no title thereunder. The petition prays that the “special assessment certificate declared on herein be established and declared as a lien against the real estate described herein, superior and paramount to the right, title, and interest of the defendants and each of them therein”; that same be foreclosed; that the tax deed to the Valley Investment Company be vacated, set aside, and held for naught; and that the decree in the equity case to quiet title be declared null as against the plaintiff, as well as the tax deed to the Valley Investment Company. The defendant Polk county filed a cross-petition claiming a lien for unpaid personal taxes. By amendment to its petition plaintiff alleges that the original tax sale certificate issued to E. W. Morgan by the treasurer of Polk county was really assigned to the Valley National Bank, and that this assignment was changed by some unknown person to read “to the Valley Investment Company,” without the knowledge or consent of Morgan; and that at the time the said certificate was assigned by Morgan to the Valley National Bank the bank was the owner and holder of the mortgage foreclosed on, and that the purchase of said tax certificate by the bank merged the lien of the tax sale in the mortgage, and thereby the sale was canceled

[260 N.W. 672]

and the Valley Investment Company has no right to attempt to take a tax deed to the property, and that the tax deed to the Valley Investment Company was void and obtained by misrepresentation of the actual facts. The defendants answered by way of amendment, and, among other things, stated that the special assessment certificate in controversy herein is made payable to the city of Des Moines, the payee named therein; that said assessment certificate is a nonnegotiable instrument, and if the plaintiff acquired the same from the city of Des Moines, it took the same subject only to such rights as the city of Des Moines had in and to said certificate, and that it was at all times in privity with the city of Des Moines, and its rights were at no time better than or superior to the rights of said city of Des Moines under said special assessment certificate. Plaintiff failed to record the assignment of said assessment certificate from the city of Des Moines, and the defendants allege that at no time prior to the commencement of the action to quiet title by the Valley-Des Moines Company and the entry of the decree therein did they have any notice, either constructive or actual, of said assessment certificate under which the plaintiff claims, or that the Valley National Bank was or claimed to be the owner or holder of said certificate, and they knew of no other person owning or having any interest in said certificate, and believed the same to be held solely by the city of Des Moines.

The record shows that the Hawkeye Insurance Company purchased this certificate on September 3, 1930. There is nothing in the record to show that the same was duly assigned by the city of Des Moines to the purchaser, but we take it from the argument that both parties treat this certificate in the hands of the plaintiff as though it were duly assigned in writing, and we shall treat it the same way.

Defendants allege that the adjudication in the quieting title action under date of January 25, 1933, and entered on May 19, 1933, is an adjudication binding upon the plaintiff, and that the plaintiff's rights in and to said property have all been adjudicated and cut off by said decree, and the plaintiff is estopped to assert that the tax deed issued to the Valley Investment Company is void and is estopped to assert any claim that the title to the property hereinbefore described is not vested in the Valley-Des Moines Company free and clear of any claims thereon on the part of the plaintiff; and that said assessment certificate under which the plaintiff claims was not acquired by the plaintiff from the city of Des Moines until after the tax sale certificate, or tax deed, was issued by Allen Munn, county treasurer, and further alleges that no assignment of the instrument under which plaintiff claims was ever filed for record in the office of the county recorder of Polk county, and that said...