Jones v. Black

• Decision Date: 15 February 1907
• Citation: 1907 OK 50,88 P. 1052,18 Okla. 344
• Parties: JOHN L. JONES v. C. B. BLACK.
• Court: Oklahoma Supreme Court

1907 OK 50

88 P. 1052

18 Okla. 344

JOHN L. JONES v. C. B. BLACK.

Supreme Court of Oklahoma

Decided: February 15, 1907

Syllabus

¶0 1. MORTGAGEE--Not Required to Pay Taxes. A person holding a mortgage upon real estate as security for a debt, is under no obligations to pay the taxes upon such property, unless there is some provision in the mortgage requiring him to do so.

2. MORTGAGEE--Purchaser at Tax Sale. A person holding a mortgage upon property may acquire title to the mortgaged premises by purchase at tax sale and obtaining tax deed therefor.

3. NO CAUSE OF ACTION STATED. In an action brought for an accounting and to cancel a tax deed, which in substance alleges that B, while holding a mortgage upon the real estate of J, purchased the same at tax sale, thereby defeating the title of J, and his right of redemption, and alleging a demand for settlement of their accounts, does not state a cause of action.

Error from the District Court of Logan County; before John H. Burford, Trial Judge.

Brown & Stewart and Devereux & Hildreth, for plaintiff in error.

Cotteral & Horner, for defendant in error.

PANCOAST, J.:

¶1 This case presents but one legal proposition. The issues arise upon a demurrer to the petition, which was sustained by the court below. The question presented is: Can a mortgagee acquire title to the mortgaged premises by his purchase of a tax certificate and obtaining the tax deed therefor so as to cut off the rights of the mortgagor in the premises?

¶2 The cases have been before the various courts in various forms, and, while a casual reading might indicate that there is some conflict in the authorities upon the proposition, yet, after a careful reading of the different statutes and the different cases as presented, the seeming conflict does not, in fact, exist.

¶3 Under the old rule, where the mortgagee held the legal title, he was held not to be able to acquire title through tax sale. The same rule applies to a mortgagee in possession. Under our statute, a mortgagee holds his mortgage as security for the debt only, and where there is no obligation in the contract on the part of the mortgagee to pay the taxes on the property, the authorities are uniform that he may acquire title through tax sale. In this case there was a provision in the mortgage that in case of failure on the part of the mortgagor to pay the taxes, the mortgagee should have the right to pay the same. This provision, however, simply reiterates the right which he would have had without any such provision being contained in the mortgage. The provision does not obligate him to pay the taxes, but it gives him the right to do so upon a failure of the mortgagor to pay. This right the mortgagee would have had without this condition, and it neither broadens nor limits the legal rights of the respective parties. Under the present law and the condition of the parties as they exist in this case, there is no relation of trust or confidence existing between them to preclude the mortgagee from becoming the purchaser at tax sale. The common law attributes of the mortgage have been wholly and entirely set aside. The mortgagee has a mere lien upon the property, but no title. His lien gives him no right of possession. His only remedy is by foreclosure. He is required to pay taxes upon his note and mortgage, and when he performs this obligation, it is all the law requires of him.

¶4 By loaning money to the mortgagor, the mortgagee does not covenant or promise to pay taxes upon the security given, but, on the contrary, the mortgagor is under obligations to pay the taxes, and it is his duty to protect the lien or security. To allow a mortgagor to refuse to pay taxes upon property which he has given to secure an indebtedness and, after the mortgagee has purchased the property at tax sale, to hold him as a trustee for the benefit of the mortgagor, would be to allow the mortgagor to take advantage of his own wrong. The mortgagee cannot be held liable as having any title in the land, as our statute negatives the idea of the title in a mortgagee. The fact that the mortgagee may pay the taxes and recover the same by foreclosure, does not make it obligatory upon him to do so, nor does the purchase at tax sale create any relation of trust and confidence between him and the mortgagor. "The principles in relation to dealings between trustee and cestui que trust, as adopted by the courts of equity do not apply. Dependence, and the duty of protection, are not involved in this relation, and they may deal subject only to the ordinary principles."

¶5 The authorities supporting this doctrine are: Waterson v. De Voe, 18 Kan. 223; Williams v. Townsend, 31 N.Y. 411; Smith v. Louis, 20 Wis. 369; Walthall's Exrs. v. Rives, 34 Ala. 91; Harrison v. Roberts, 6 Fla. 711; Reimer v. Newell 49 N.W. 865. Many other cases might be cited, but we deem these sufficient. It is plain that the sustaining of the demurrer to the petition by the court below was correct.

¶6 There being no error disclosed by the record, the judgment of the district court is affirmed.

¶7 Burford, C. J., who presided in the court below, not sitting; Burwell, J. and Garber J. dissenting; all the other Justices concurring.

DISSENT BY: BURWELL

¶8 DISSENT:

¶9 Dissenting opinion by

¶10 BURWELL, J.: The majority opinion in this case is placed upon the ground that a mortgagee has a lawful right, in the absence of an agreement to pay the taxes, to purchase the land covered by his mortgage at tax sale, and acquire a tax title as against the mortgagor. The opinion is based upon authorities from Kansas, Wisconsin, Alabama, New York and Michigan. We will first consider the case of Reimer et al. v. Newell, (Mich.) 49 N.W. 865, which is cited in support of the majority opinion. In that case the mortgagee had died and Newell became the administrator of the estate of the mortgagee. The land was sold at tax sale and Newell purchased it in his individual name. In considering the case, Mr. Justice Mitchell said:

"The last point made is that defendant has no right to set up a tax title against the plaintiffs. The facts are that one Abby L. Newell, deceased, of whose estate defendant was administrator, held, at the time of her death, a mortgage on the premises, executed by one Reimer, (to whose interests plaintiffs had succeeded) in which the mortgagor covenanted to pay the taxes on the premises. Neither the mortgagee nor her administrator had ever gone into possession of the mortgaged premises. Defendant purchased at the tax sale in his own name individually, and not as administrator. Conceding, in the language of counsel, 'that there is substantial identity of defendant and mortgagee in this case,' there was nothing to prevent him from acquiring against the mortgagor, or his successors in interest, a tax title on the premises. Whatever may be the rule in other jurisdictions; or whatever may be thought of the policy of permitting a mortgagee in any case to acquire, as against the mortgagor, a tax title on the mortgaged premises, there can be no doubt but that, under our statute, this may be done where, as in this case, the mortgagee is neither legally nor equitably bound to protect the property against the sale or the taxes for which the sale is made. The evidence (upon which plaintiff's counsel lays much stress) tending to show that defendant made his purchase at the tax sale as a payment of the tax, and not for the purpose of acquiring a tax title adverse to either the mortgagor or the mortgagee, was not such as to require a finding to that effect; and the court has expressly found that the purchase was not intended to operate as a payment of the tax, nor was the tax title taken by the defendant for the protection of the mortgagor or the mortgagee."

¶11 It will be seen that this decision was controlled by express statutory provision, and was not influenced by the general law on the subject. The case of Smith v. Lewis, 20 Wis. 369 is also relied upon. I cannot interpret this case as supporting the position taken by my brethren. Lewis was a junior mortgagee and foreclosed his mortgage, purchased subsequently the certificate issued at the tax sale, went into possession of the land and sought to set up the tax title thus acquired by him against the lien of the first mortgagee. In other words it was claimed that the tax-sale of the land and the obtaining of the tax deed cut off the lien of the first mortgagee. The syllabus of the case states the rule of law adopted by the court. it is as follows:

"Where a second mortgagee of land purchases on foreclosure of his mortgage, he cannot acquire an absolute title, free from the lien of the first mortgagee, through an assignment to him of an outstanding certificate, and a deed issued thereon."

¶12 Wisconsin has statutory provisions which in a measure control the payment of taxes by the mortgagor and mortgagee, but that court in express and positive language lays down the rule, for which I here insist, in the case of Burchard, et al. v. Roberts, 70 Wis. 111, 35 N.W. 286. Mr. Justice Lymon in discussing the case, said:

"The question is whether the mortgagees of the land are in any better position than Doty, the mortgagor, to acquire title thereto by purchasing at the tax sale and taking certificates of sale. We have been referred to no case decided by this court, and are not aware that there is any such case, in which it is held that a mortgagee may, in this state, cut off the mortgagor's equity of redemption by acquiring title to the mortgaged land under a tax deed. True, several cases determined by this court are cited by the learned counsel for defendant as holding that a mortgagee may thus acquire adverse title, but an examination of those cases will show that none of them so hold."

¶13 Then the learned justice expressly distinguishes all of the cases decided by that court which were cited in that case in support of the doctrine adopted by this court in the case at bar, expressly...