Munson v. Marks

• Citation: 124 P. 187,52 Colo. 553
• Parties: MUNSON v. MARKS.
• Decision Date: 01 April 1912
• Court: Supreme Court of Colorado

124 P. 187

52 Colo. 553

MUNSON v. MARKS.

Supreme Court of Colorado

April 1, 1912

Rehearing Denied June 3, 1912.

Appeal from District Court, Logan County; H. P. Burke, Judge.

Action by T. E. Munson against William Marks. From a judgment for defendant on demurrer, plaintiff appeals. Reversed and remanded.

Munson & Munson, of Sterling, for appellant.

McConley & Hinkley, of Sterling, and Allen & Webster, of Denver, for appellee.

BAILEY J.

The action is to remove a cloud from title and was begun in May 1909. Plaintiff, being the owner and holder of an overdue and unpaid note with accrued interest, the payment of which is secured by deed of trust on the land in question, seeks the cancellation of a certain tax deed thereto, dated December 12, 1896, and recorded in the office of the county clerk and recorder of the proper county on the 16th day of the same month and year, which, as is alleged, casts a cloud upon the title, so that it is impossible to foreclose the deed of trust and sell the land for a price commensurate with its value, or sufficient to discharge the note in question which, but for such cloud, it is said, could be readily done. Defendant claims title, by mesne conveyances, through the grantee in the tax deed to which objection is made. There are specific averments in the complaint, which, if true, render the tax deed void. It is also alleged that tender has been made by plaintiff to defendant of all taxes interest, penalties and costs due thereunder, which the latter has refused and still does refuse to accept.

There was a general demurrer to the complaint, and also special demurrer on these grounds: First. That the action is barred by section 4072 of the Revised Statutes of 1908, which reads as follows:

'Bills for relief, on the ground of fraud, shall be filed within three years after the discovery by the aggrieved party, of the facts constituting such fraud, and not afterwards.' Second. Under section 4073 of the Revised Statutes of 1908, which reads:

'Bills of relief, in case of the existence of a trust not cognizable by the courts of common law, and in all other cases not herein provided for, shall be filed within five years after the cause thereof shall accrue, and not after,'

--and, Third. Under section 5733 of the Revised Statutes of 1908, which provides:

'No action for the recovery of land sold for taxes shall lie, unless the same be brought within five years after the execution and delivery of the deed therefor by the treasurer, any law to the contrary notwithstanding.'

The order sustaining the demurrer was general. Plaintiff elected to stand by his complaint. The action was dismissed, and plaintiff brings that judgment here for review.

If the complaint shows that plaintiff has an equitable interest in the land, such as entitles him to maintain the suit, then clearly a cause of action is stated. Under the authority of Stock-Growers' Bank v. Newton, 13 Colo. 245, 22 P. 444, Brown v. Wilson, 21 Colo. 309, 40 P. 688, 52 Am.St.Rep. 228, and Consolidated Plaster Co. v. Wild, 42 Colo. 202, 94 P. 285, it is settled that a party out of possession, but having an equitable interest in the property, may maintain a suit to remove a cloud from the title.

In the case of Stock-Growers' Bank v. Newton, supra, the court held in effect that a judgment creditor might bring suit to set aside a fraudulent deed, or to test its validity before attempting to subject the premises to execution sale, and supports this doctrine by a citation of numerous authorities. If a judgment creditor has such an interest in the real property of his judgment debtor as will entitle him to maintain a suit in equity to remove a cloud, it must be that the beneficiary under a deed of trust has equally good standing to maintain a like action. In 22 Ency. P. & P., at page 158, the author makes the following statement, citing many authorities to support it:

'The cestui que trust, as being the real party in interest, may maintain a bill in equity for the benefit of the trust estate and the protection of his interests.'

Again on page 166 of the same volume it is said:

'Under the provision of the Code that actions shall be brought in the name of the real party in interest, the cestui que trust may, in many cases, maintain an action in his own name in regard to the trust property.'

And again on page 175 of the same volume, under the head of Suit by Beneficiary, having regard to the provision of the Code authorizing the trustee of an express trust, and those acting in a representative capacity, to maintain suits, the author says:

'This provision of the Code has not changed the rule prevailing in many states, that the person for whose benefit a contract is made may sue thereon. Either party may sue, and a recovery by either will bar an action by the other.'

Undoubtedly, under our practice, either the trustee or the beneficiary may maintain an action such as this, and a recovery by either would be a bar to a like action by the other. The beneficiary is clearly the real party in interest, the trustee holding merely the naked legal title, and since this is so, the conclusion is irresistible that the cestui que trust may maintain a suit to protect his rights when invaded. In the case of Smith v. Brittenham, 109 Ill. 540, it is said:

'It is a well recognized rule that in equity the party having the beneficial interest in the subject-matter of the suit must sue in his own name for any invasion of his rights in respect thereto, although the legal title may be in another.'

The following cases support this proposition: Press v. Woodley, 160 Ill. 433, 43 N.E. 718; Hutchison v. Myers, 52 Kan. 290, 34 P. 742; First Baptist Church of San Jose v. Branham, 90 Cal. 22, 27 P. 60; Bowdoin College v. Merritt (C. C.) 54 F. 55; and Fleming v. Holt, 12 W.Va. 143. Since a cause of action is stated, and plaintiff is shown to have such an equitable interest in the land as entitles him to sue to protect it, it follows that the complaint is not subject to a general demurrer.

It is manifest that neither section 4072 nor section 4073, quoted above, has any application to this kind of an action, as neither a question of fraud nor of a trust is involved. This conclusion is amply supported by the decisions in the cases of Morgan v. King, 27 Colo. 539, 63 P. 416, and Ballard v. Golob, 34 Colo. 417, 83 P. 376, where the purpose and effect of these two sections are thoroughly considered and construed, resulting in a determination that they have no application whatever to a suit of this character.

Moreover these sections are distinctively limitations upon personal actions, and have no reference to, nor are they limitations upon, actions affecting realty only. Their history demonstrates this. Since 1861 they have been carried unchanged upon the statute books, first of the territory and later of the state, as relating to personal actions exclusively. In the General Statutes of 1883, under the title 'Limitations,' there are two subdivisions: Subdivision 1, 'Personal Actions,' under which the sections in question are placed, and Subdivision 2, 'Real Estate,' under which all statutes of limitation as to realty appear. These subdivisions have obtained ever since, and are recognized and adopted in Mills' Annotated Statutes and in the Revised Statutes of 1908. In fact up to 1874 there was no statute in this state fixing any limitation whatever upon realty actions. Then for the first time the Legislature passed an act entitled, 'An act limiting the time for bringing actions respecting real estate.' Laws 1874, p. 177. It is thus apparent that at the time of the original enactment of these sections they were considered as relating only to personal actions, and never having been changed, altered or modified, still relate...