Jacobsen v. Nieboer

• Decision Date: 02 September 1941
• Docket Number: No. 58,April Term, 1941.,58
• Citation: 299 Mich. 116,299 N.W. 830
• Parties: JACOBSEN et al. v. NIEBOER et al.
• Court: Michigan Supreme Court

299 Mich. 116

299 N.W. 830

JACOBSEN et al.

v.NIEBOER et al.

No. 58, April Term, 1941.

Supreme Court of Michigan.

Sept. 2, 1941.

Suit to foreclose a mortgage by Ben Jacobsen and another against Jacob Nieboer and wife. From a decree for the plaintiffs, defendants appeal.

Affirmed.

SHARPE, C. J., dissenting.Appeal from Circuit Court, Ottawa County, in Chancery; Fred T. Miles, judge.

Argued before the Entire Bench.

Elbern Parsons, of Holland, for appellants.

Jarrett N. Clark, of Zeeland, for appellees.

Brownell & Gault, of Flint, for amicus curiae.

BOYLES, Justice.

I do not concur with the Chief Justice as to the effect to be given to the socalled scavenger act, Act No. 155, Pub.Acts 1937, as amended by Act No. 244, Pub.Acts 1939. The provision in this act that a State tax deed cuts off existing liens and incumbrances is substantially the same as that in previous tax laws under which we have held that a mortgagor cannot take advantage of his own default in paying taxes and defeat the mortgage lien by subsequently obtaining a tax title. When the defendants herein gave the mortgage in question they held such a title as could be mortgaged; the State's title had not become absolute, the period of redemption not having expired. However, the mortgage would have been good as to the mortgagors if they subsequently acquired title, even thoubh they had no interest in the land at the time the mortgage was given. Gray and Ferguson v. Franks, 86 Mich. 382, 49 N.W. 130;Caple v. Switzer, 122 Mich. 636, 81 N.W. 560. Whether the parties had actual knowledge of the tax lien or tax sale is immaterial. The public records were legal notice of the tax and no question is raised as to the legality of the tax, the tax sale, or the notices thereof.

By the mortgage in question, the defendants expressly mortgaged and warranted to the plaintiffs the title to the land described therein. The legality of the mortgage and the warranty is not disputed.

‘Any mortgage of lands worded in substance as follows: ‘A. B. mortgages and warrants to C. D., (here describe the premises) to secure the re-payment of’ (here recite the sum for which the mortgage is granted, or the notes or other evidence (evidences) of debt, or a description thereof, sought to be secured, also the date of the re-payment), the said mortgage being dated and duly signed, sealed and acknowledged by the grantor, shall be deemed and held to be a good and sufficient mortgage to the grantee, his heirs, assigns, executors and administrators, with warranty from the grantor and his legal representatives, of perfect title in the grantor, and against all previous incumbrances. * * *' 3 Comp.Laws 1929, § 13324 (Stat.Ann. § 26.574).

The mortgage also contained the usual covenant by the mortgagors to pay all taxes. Defendants have defaulted in both of these express covenants to warrant the title and to pay the taxes. By virtue of this default, the foundation was laid on which defendants have acquired a subsequent tax title in the land. They now seek to escape the result of their own default and gain advantage by it.

‘It is universally accepted that a mortgage with covenants of warranty carries with it any title to the mortgaged premises subsequently acquired by the mortgagor, and that he and all persons claiming under him are estopped from asserting any title to those premises against the mortgagee and those claiming under him. And the doctrine applies when the warranty is such as the law implies from the employment of words made by statute sufficient to import a warranty.’ 19 R.C.L. p. 395.

‘The general principle running through all the cases is this: One who is under a legal obligation at the time of sale to pay the taxes for which the land is sold, or who was previously under such obligation, and, though it may have ceased, yet the purchaser would be taking advantage of his own wrong, cannot be a purchaser at the tax sale, nor subsequently acquire the tax title, with any other effect than simply to pay the taxes or redeem the land so far as regards the interests of anyone who would otherwise be injured by said purchaser's failure to pay the taxes in accordance with his duty.’ 16 L.R.A., N.S., p. 122.

In Connecticut Mutual Life Ins. Co. v. Bulte, 45 Mich. 113, 7 N.W. 707, 709, Mr. Justice Cooley stated the general rule of law as follows: ‘A tax purchase made when such a relation exists is made in wrong; and the law in circumvention of dishonesty will conclusively presume that it was made in the performance of duty, and not in repudiation of it.’

One whose title is obtained from an execution purchaser is in such privity with the defendant in the execution that if the latter has mortgaged the land he cannot let it be sold for taxes and bid it in so as to cut off the mortgagee's rights; nor can he cut them off by taking tax leases. Under these circumstances, this court said: ‘It was the mortgagor's duty to pay the taxes remaining unpaid while he owned the property, and when the defendant acquired all the mortgagor's interests in the property it became his duty to discharge the unpaid taxes standing against the property, which was redeemable, and he could not, by neglecting and refusing so to do, take an assignment of the certificates of sales and hold them till redemption had expired, and thereby obtain the deed of the state upon such certificates, and thus cut off the mortgagee's rights under his mortgage.’ Fells v. Barbour, 58 Mich. 49, 24 N.W. 672, 674.

In Brown v. Avery, 119 Mich. 384, 78 N.W. 331, the mortgagee represented in good faith to one who assumed the mortgage upon purchase of the property that the taxes were paid, yet the mortgagee was held not estopped from enforcing his mortgage as against a tax title subsequently acquired by the purchaser, based upon an existing unpaid tax.

‘Where a mortgagor negotiates the purchase of a tax title, taking a conveyance to his brother-in-law under an agreement by which the latter contracts to sell to the mortgagor's wife upon the repayment of the purchase price, and which he has in large part paid, the transaction will be considered one in the interest of the mortgagor.

‘In a suit to foreclose the mortgage, the holder of the tax title cannot defend on the ground that the wife was not bound by the covenants in the mortgage, and therefore not incapacitated from purchasing the tax title.’ Dorenberg v. Ockerman, 130 Mich. 23, 89 N.W. 579, syllabi.

‘The plaintiff in this case, whether owning the legal title or not, at the time of giving this mortgage or subsequently, executed the same, therein representing that it owned the property mortgaged, embodying in the instrument a warranty of title. If plaintiff did not have the title at the time of giving the mortgage, and subsequently acquired it, under such warranty, the subsequently acquired title would redound to the benefit of the mortgagee.

“Where one assumes by his deed to convey a title and by any from of assurance obligates himself to protect the grantee in the enjoyment of that which the deed purports to give him, he will not be suffered afterward to acquire or assert a title, and turn his grantee over to a suit upon his covenants for redress. The short and effectual method of redress is to deny him the liberty of setting up his afteracquired title as against his previous conveyance.' Smith v. Williams, 44 Mich. 240, 6 N.W. 662.' West Michigan Park Association v. Pere Marquette R. Co., 172 Mich. 179, 137 N.W. 799, 803.

‘Where defendant gave to complainant a mortgage containing a warranty of title and also a warranty against previous incumbrances, and there was at the time the mortgage was given an outstanding tax on the premises which was a lien thereon, and which afterwards ripened into a title in the hands of the holders, defendant's subsequent repurchase of the premises from the holders of the tax title operated, in law, as a redemption which should inure to complainant's benefit, notwithstanding defendant's title had been cut off by mortgage foreclosure.’ Napper v. Fitzpatrick, 194 Mich. 175, 160 N.W. 400, syllabus.

A vendee may not defeat his vendor's title by setting up a tax title which he acquired in his son's name while he was in possession of the premises under a land contract requiring him to pay the taxes; his title having come into existence solely through his own default. Tyler v. Burgeson, 229 Mich. 268, 201 N.W. 185.

The justice and equity of these decisions is not a subject for dispute. Does the scavenger act require that they now be discarded? Under previous tax laws, the rights of the owner of tax delinquent land came to an end when the title of the State became absolute, but the rights of third persons were not completely ended if the owner again acquired title from the State. Section 7 of the scavenger act, Act No. 244, Pub.Acts 1939, now provides (with certain exceptions not material here) that the State shall offer such lands for sale to the highest bidder after title has become absolute in the State. The former owner may, upon application made within 30 days, meet the highest bid and thereby acquire the State's title. There is no sound reason why he should not take such title subject to his own former contractual obligations, unless the act itself requires a contrary result.

While the act has been before this court, the question in the case at bar has not been before us for decision. In Stickler v. State Land Office Board, 297 Mich. 271, 297 N.W. 488, we held that the plaintiffs could not compel the State land office board to give them a deed or land contract covering certain lands, on the ground of having the right to meet the highest bid as having an interest in the land at the time of the tax sale. The plaintiffs had no interest at the time of the tax sale and, therefore, acquired no right to meet the highest bid. In Redford Union Schools v. State Land Office Board, 297 Mich. 535, 298 N.W. 124, we held that the right to meet the highest bid at the...