National Surety Co. v. Walker

• Decision Date: 14 March 1910
• Citation: National Surety Co. v. Walker, 148 Iowa 157, 125 N.W. 338 (Iowa 1910)
• Parties: NATIONAL SURETY COMPANY, Appellee, v. W. WALKER, M. A. WALKER, and D. J. VAN LIEW, Appellants
• Court: Iowa Supreme Court

125 N.W. 338

148 Iowa 157

NATIONAL SURETY COMPANY, Appellee, v. W. WALKER, M. A. WALKER, and D. J. VAN LIEW, Appellants

Supreme Court of Iowa, Des Moines

March 14, 1910

Appeal from O'Brien District Court.--HON. WM. HUTCHINSON, Judge.

ACTION originally brought to foreclose a mortgage. Judgment was finally entered quieting title in plaintiff to the premises covered by the mortgage as against a claim of defendants interposed by amended answer, asking that a tax title held by plaintiff on the property covered by the mortgage be canceled, and denying relief to defendants under a counterclaim for damages. From this judgment, defendants appeal. Reversed and remanded.

Reversed and remanded.

Read & Read, for appellants.

Henry & Henry, for appellee.

DEEMER C. J. MCCLAIN, J., EVANS, J., (dissenting).

OPINION

DEEMER, C. J.

This action was originally instituted in 1902, to foreclose a mortgage on certain real estate in O'Brien county belonging to Mary A. Walker; the mortgages having been given by her and her husband, Warren Walker, to secure payment of their joint promissory note. Van Liew was made defendant as the holder of an alleged tax title. In this action a decree of foreclosure was entered by the district court of O'Brien county in which any right or interest held by defendant Van Liew in the premises was found to be subject to plaintiff's right under its mortgage. There was an appeal from this judgment, and it was reversed. See National Surety Co. v. Walker, 127 Iowa 518. In the meantime no supersedeas bond having been given, there had been a foreclosure sale of the property, and it had been bought in by plaintiff as execution creditor for $ 600, plaintiff satisfying the costs and giving the Walkers credit on the judgment against them for the balance, and a sheriff's deed had been issued to plaintiff. On a remand of the case to the lower court after reversal, Van Liew and the Walkers by amendment to their answers asked judgment against plaintiff in the amount of $ 600 as improperly received by plaintiff under its foreclosure sale, and further charged that plaintiff and its attorneys had conspired with other parties to wrong, cheat, and defraud defendants out of the mortgaged property, to the damage of defendants in a further sum. The plaintiff in reply confessed that it acquired no title under the sheriff's deed, but set up a title to the premises under a tax deed, and defendants, by further answer, attacked this tax deed, alleging that plaintiff was estopped from claiming title to the property under such deed, and that the deed was obtained by fraud and collusion. The court entered a decree setting aside the sheriff's sale under the original decree, and declaring the sheriff's deed to be null and void, but further found that plaintiff was the absolute and unqualified owner of the property in question under and by virtue of the tax deed, and quieted the title of plaintiff under such deed as against any claims of the defendants. Defendant Van Liew filed an answer in which, among other things, he claimed title to the mortgaged property under and by virtue of a tax deed, and by way of cross-petition asked that his title be quieted against the plaintiff and also against his codefendants, the Walkers.

Plaintiff's tax title was acquired through a sale for taxes made subsequent to the sale to Van Liew. Van Liew also joined with his codefendants in their claim for a restitution of the property and for damages. Upon the reversal of the original foreclosure case either the defendant Walker or Van Liew was entitled to a restitution of the property, with rents and profits secured by plaintiff, less taxes, improvements, etc unless it be held, as contended for the surety company, that its tax title gave it a prior right and title to that held by either the Walkers or Van Liew. Code, section 4145; Munson v. Plummer, 58 Iowa 736, 13 N.W. 71; Zimmerman v. Bank, 56 Iowa 133, 8 N.W. 807; Schoonover v. Osborne, 117 Iowa 427, 90 N.W. 844. The decree under which the foreclosure was had was adhered to and insisted upon down to the time of the reversal in this court, and was unquestionably valid until reversed by this court. Until reversal it was the duty of the surety company, which had acquired the legal title to the property in virtue of the sheriff's deed, to pay the taxes. The acquisition of the title through a tax sale or by the purchase of a certificate of tax sale from another was nothing more than the payment of the taxes or a redemption from the sale, and can not be made the basis of an independent title against either of the defendants. Doud v. Blood, 89 Iowa 237, 56 N.W. 452; Hunt v. Rowland, 22 Iowa 53.

In the former case it is said:

The defendants claim title to the land as against the plaintiff's mortgage because of the tax deed to Adams. It is true that the said Emeline Campbell claims title under subsequent tax sales. But these sales and deeds were made at a time when she was under a legal obligation to pay the taxes, and can not be allowed to affect her title under the tax deed to Adams and the conveyances from Blood. There is enough in this case which requires consideration without elaborating the principle just stated, which is one of the elementary doctrines pertaining to tax titles. Without stating all of the facts, it is enough to say that the defendants, when they secured tax titles subsequent to acquiring the title under Adams and the quitclaims under Blood, were merely paying their own taxes . . . A certificate of purchase at tax sale in the hands of an assignee is chargeable with all the infirmities that would affect it in the possession of the original holder. Besore v. Dosh, 43 Iowa 211. The original holders of these tax certificates had sold them to Blood, and this operated as a redemption of the land from the tax sale. Bowman v. Eckstien, 46 Iowa 583; Burns v. Byrne, 45 Iowa 285; Hunt v. Seymour, 76 Iowa 751. The certificates were of no more avail in the way of conferring a right on Clarke or Adams to a tax deed than if they had been blank paper.

In the Hunt case, this court said:

As the vendee took possession, however, and enjoyed the rents and profits, the rule settled in Miller v. Corey, 15 Iowa 166, would, as between him and his vendor, make him liable. Being thus liable, being bound upon legal and equitable principles, though not by express covenant, to keep down the incumbrances, he could not acquire a title against the vendor, by suffering the land to go to sale, and bidding it in for the taxes. Not only so, but as vendee he could not acquire a title adverse to his vendor by a purchase at tax sale. These rules are well settled, as will be seen by the following, among other cases: Voris v. Thomas, 12 Ill. 442; Glancy v. Elliott, 14 Ill. 456; Willard v. Strong, 14 Vt. 532 (39 Am. Dec. 240); Blake v. Howe, 1 Aik. 306 (15 Am. Dec. 681); Douglas v. Dangerfield, 10 Ohio 152; Ballance v. Forsyth, 54 U.S. 18, 13 HOW 18 (14 L.Ed. 32); Blackwell on Tax Titles, 470-2. The land however in this case, was bought, not in the name of the vendee, nor by one under any covenant to keep down the incumbrances. And yet the testimony satisfies us that he combined with the vendee, or those in possession, to thus acquire the title and defeat that of the vendor; or, if not to defeat his title, to get it into his hands for the benefit of the family, rather than to let it be bought in by some stranger. . . . In view of his relation to the parties and the circumstances of the purchase, we could not, consistent with principle, allow the title to prevail. It is certain that plaintiff settled with Mrs. Hopkinson after the purchase, entered into possession and procured the rescission of the contract, with the belief that she had no further claim upon the land. It is worth very largely more than the tax incumbrance. It would be paying a premium for fraud to allow plaintiff's title to be thus divested.

The settled rule for this state is that one in possession of real estate or whose duty it is to pay the taxes can not acquire by tax deed a title which will defeat a conflicting claimant or lienholder. Anson v. Anson, 20 Iowa 55; Stears v. Hollenbeck, 38 Iowa 550; Curtis v. Smith, 42 Iowa 665; Seymour v. Harrison, 85 Iowa 130, 52 N.W. 114; Hunt v. Rowland, 22 Iowa 53; Thomas v. Stickle, 32 Iowa 71; Manning v. Bonard, 87 Iowa 648, 54 N.W. 459; Fair v. Brown, 40 Iowa 209; Eck v. Swennumson, 73 Iowa 423; Dayton v. Rice, 47 Iowa 429; Lillie v. Case, 54 Iowa 177, 6 N.W. 254; Cone v. Wood, 108 Iowa 260, 79 N.W. 86; Busch v. Hall, 119 Iowa 279, 93 N.W. 356; First Con. Church v. Terry, 130 Iowa 513, 107 N.W. 305.

In Terry's case, 130 Iowa 513, it is said:

The rule that the life tenant of lands is charged with the duty of paying the taxes which accrue upon the property of which he is enjoying the use, rents and profits is elementary. Olleman v. Kelgore, 52 Iowa 38; Booth v Booth, 114 Iowa 78, 86 N.W. 51; Defreese v. Lake, 109 Mich. 415 (67 N.W. 505, 32 L.R.A. 744, 63 Am. St. Rep. 584); Trust Co. v. Mintzer, 65 Minn. 124 (67 N.W. 657, 32 L.R.A. 756, 60 Am. St. Rep. 444). It is equally well settled that with this duty resting upon him he can not cut out or destroy the estate of the remaindermen in the property by permitting it to be sold for taxes and taking to himself the title thus accruing. Cooley on Taxation (2d Ed.) 467; Crawford v. Meis, 123 Iowa 610, 99 N.W. 186. This being true, it is immaterial whether he takes the tax title direct or by conveyance from some third person who has acquired it. In neither case can he assert such title against the owners of the remainder, and his purchase will be held to operate as a mere redemption from the tax sale or payment of the taxes for which he was legally liable. Such would also be the...