National Surety Corp. v. Smith

• Decision Date: 10 March 1942
• Citation: 123 P.2d 203,168 Or. 265
• Parties: NATIONAL SURETY CORPORATION v. SMITH et al.
• Court: Oregon Supreme Court

123 P.2d 203

168 Or. 265

NATIONAL SURETY CORPORATION v. SMITH et al.

Supreme Court of Oregon

March 10, 1942

Appeal from Circuit Court, Marion County; L. G. Lewelling, Judge.

On rehearing.

Judgment affirmed.

For former opinion, see 114 P.2d 118.

Robin D. Day, of Salem, for appellant.

Roy Harland, of Salem (W. C. Winslow, of Salem, on the brief) for respondents Smith.

Walter H. Bell, of Stayton, and Carson & Carson, of Salem, for respondents Ogle.

Hesse &amp Franciscovich, of Astoria, amicus curiae.

Before KELLY, C.J., and BELT, BAILEY, LUSK, RAND, ROSSMAN, and BRAND, JJ.

LUSK Justice.

The case is before us on rehearing.

The facts may be thus briefly restated: The plaintiff commenced this action in ejectment to recover certain real property which had been sold for nonpayment of taxes. The action was not commenced until more than three years after the sale. The defendants Guy H. Smith and Roy E. Smith were purchasers at the tax sale and have been in possession of the lands ever since the sale. Their deed is valid on its face. The defendants Ogle occupied the lands as tenants of the Smiths during most of that period. The defendants Smith (hereinafter to be called the defendants) pleaded the short statute of limitation, which provides in part that every action to recover the possession of lands sold for taxes shall be commenced within three years from the date of the sale, § 69-845, Oregon Code 1930. It was in effect stipulated by counsel on the trial that the parcel of real property in question is one of 1100 such parcels sold for taxes in the tax foreclosure suit of Marion County v. Max Highstone et al.; that such foreclosure proceedings were held invalid in Smith v. Carlson, 160 Or. 383, 85 P.2d 1028, as to the tract of land involved in that case because of excessive costs taxed against the property; and that the same irregularities in the proceedings exist with respect to the lands which are the subject matter of this action.

The circuit court entered judgment for the defendants; this court reversed. It was held that § 69-845 is not prescriptive in character, and the opinion concludes: "The above being our construction of the statute, it follows that the defendants' rights were dependent solely upon the validity of their deed; and, of course, when they conceded that under this court's holding in Smith v. Carlson supra, the deed was void, it followed that the defendants had no title to the property." 114 P.2d 118, 125.

We are satisfied that the court was right in holding in the former opinion that this is an action of ejectment and that, as is there stated, plaintiff "had sufficient title to warrant its institution of this action".

This leaves but one question for reexamination, namely, the effect of the statute of limitation, which reads: "Every action, suit or proceeding which may be commenced for the purpose of determining the validity of a sale of lands for taxes, or to quiet the title against such sale or to remove the cloud thereof, or to recover the possession of lands so sold *** shall be commenced within three years from the date of the sale for taxes by the sheriff, and not otherwise except in cases where the assessment and taxes for which the land was sold *** had been paid before the sale, or the land redeemed after the sale, or the lands were not subject to taxation at the time the same were assessed ***." § 69-845, Oregon Code 1930.

It is entirely obvious that this case falls within the words of the statute. It is an action to recover the possession of land sold for taxes. It was not commenced within three years from the date of the sale, and it is not a case where the taxes for which the land was sold were paid before the sale, or the land was redeemed after the sale, or was not subject to taxation at the time it was assessed. Unless, therefore, some reason not disclosed by the language of the law itself prevents its application, the defendants are entitled to prevail.

The question whether the statute is one prescriptive in nature-that is, whether possession by the tax purchaser under the tax deed must accompany the running of the statutory time-may be left open. But what this court said on that subject in Martin v. White, 53 Or. 319, beginning at page 326, 100 P. 290, cannot, we believe, be justly characterized as dictum. The statute there under consideration was in substance not different from the statute applicable here, though it did not contain the exceptions found in that statute. The suit was one to remove the cloud of the defendant's tax title from the plaintiff's title. It was not commenced until after the three-year period had run. The property had never been in the actual possession of any one. The defendant pleaded the statute as a bar, but the court rejected the defense because it was a prescriptive statute, and, as stated, the property had never been in the possession of any one. The construction thus given was the reason for withholding the protection of the statute from the defendant, and on that phase of the case was the very heart of the decision. The facts of the case, the issues made by the pleading, called for a construction of the statute, and the court in construing it did not indulge in dictum, but announced a decision.

The doctrine of Martin v. White was reiterated in Dufur v. Healy, 56 Or. 49, 55, 107 P. 692, and the statute held not to bar the action because possession by the purchaser at the tax sale had existed for less than the statutory period. Martin v. White was again cited in Harter v. Cone, 59 Or. 43, 115 P. 1070, in which certain tax deeds were held to be void for want of authority on the part of the sheriff to make the sale. The action was in ejectment and the defendant, the purchaser at the tax sale, pleaded the statute of limitation among other defenses. The defendant contended that since he was in possession of the land at the time of the commencement of the action, though not for the full three-year period, he had constructive possession during all that time by virtue of his recorded tax deeds. The court answered this contention by quoting from that portion of the opinion in Martin v. White which holds that the statute is prescriptive in character. And in Smith v. Shattuck, 12 Or. 362, 369, 7 P. 335, it was directly held that possession under a defective tax deed for the three-year period was a good defense in an action of ejectment brought by the former owner of the land, the statute at the time reading: "Any suit or proceeding for the recovery of lands sold for taxes, except in cases where taxes have been paid on the land redeemed, as provided by law, shall be commenced within three years of recording the tax deed of sale, and not thereafter." General Laws of Oregon 1843-1872, p. 771, § 107.

The court cited Pillow v. Roberts, 13 How. 472, 54 U.S. 472, 477, 14 L.Ed. 228, a leading case, in which the Supreme Court adopted and applied a similar construction given by the Arkansas court to the statute of that state which prescribed a limitation of five years to actions against the purchaser for the recovery of lands sold for the nonpayment of taxes.

But, notwithstanding that the construction announced in these cases is to be regarded as a precedent, we deem it proper to indicate no opinion as to whether it should be in all respects adhered to in future cases. The question of the effect to be given the statute in a case where the purchaser at the tax sale is not in possession of the land, or where the former owner remains in possession or where the land is unoccupied, is not now before us. Therefore, "we need not inquire", as the Supreme Court of the United States said in a similar situation, "whether the legislature intended that the action should be barred, where the purchaser at the tax-sale was not in possession". Pillow v. Roberts, supra.

The argument on behalf of the plaintiff is that the tax sale under which the defendants' claim is void, that it was so declared in Smith v. Carlson, supra, and, therefore, that there is nothing upon which the statute of limitation can operate. In effect, it is said that to apply the statute in these circumstances would amount to confiscation of the plaintiff's property.

It is true that the opinion in the Carlson case used the word "void" in setting aside the sale, but the court was not there dealing with the statute of limitation. The question was whether the title of the purchaser at the tax sale could withstand an attack made before the statutory period had run and the court held that, in those circumstances, the erroneous assessment of excessive costs in the sum of 84 cents against each parcel of land was an irregularity rendering the sale void. We think that the court is not precluded by that decision from examining the question whether the plaintiff in this case may now, after the expiration of three years, impeach the sale.

The distinction between the two cases was put with great force and ability by Chief Justice Ryan, speaking for the court in Oconto Company v. Jerrard, 46 Wis. 317, 325, 50 N.W 591, 593. In that case there was an invalid assessment. The court, after referring to its previous decisions in which it had been held that where there is an invalid assessment "there is no tax", said: "Strong as this language is, it would have been true of the tax-deed in question, and would be true still, were the validity of the tax-deed an open question. But these things were said, in the one case of a tax proceeding which had not matured in a deed, and in the other of a tax-deed upon which the statute had not run. The former was a proceeding to enjoin a tax-deed, and the latter to foreclose a tax-deed. In both the validity of the tax proceeding was open to inquiry, was the precise...