New England Loan and Trust Co. v. Browne

• Citation: 76 S.W. 954,177 Mo. 412
• Parties: NEW ENGLAND LOAN AND TRUST COMPANY et al. v. BROWNE et al., Appellants
• Decision Date: 17 November 1903
• Court: United States State Supreme Court of Missouri

76 S.W. 954

177 Mo. 412

NEW ENGLAND LOAN AND TRUST COMPANY et al. v. BROWNE et al., Appellants

Supreme Court of Missouri, Second Division

November 17, 1903

Appeal from Jackson Circuit Court. -- Hon. E. P. Gates, Judge.

STATEMENT.

"This is a suit in equity to set aside and annual a tax deed. The petition was filed on the 23d day of November, 1897, in the circuit court of Jackson county, Missouri, and alleged in substance, that on the 27th day of May, 1889, Mina R. Sexton and husband gave a deed of trust to plaintiff John C. Hall in favor of the plaintiff New England Loan & Trust Company covering the land in controversy, lots 25 and 26, block 7, in Jersey Heights, an addition to the City of Kansas, Missouri to secure their note for $ 1,800; that said note and deed of trust were still owned and held by said company, and were wholly unpaid; that on the 10th day of May, 1892, the defendant William H. Browne became the owner of said land subject to said deed of trust, and that as part of the consideration for said land said Browne assumed and agreed to pay said note and deed of trust; that said Browne had ever since owned said land and been in possession thereof; that under said deed of trust it was the duty of said Browne to pay the taxes levied against said land, but that notwithstanding said duty, said Browne failed to pay the city taxes of Kansas City levied for the year 1895, and that said land was put up and sold in the month of November, 1895, for said delinquent taxes; that at said sale Warren B. Sexton acted for the plaintiff company in buying in properties on which said plaintiff held deeds of trust, and at said sale bought in the property in controversy in the name of said plaintiff company; that through an error on the part of said Sexton and the assistant secretary of said plaintiff the tax certificate purchased at said sale was indorsed 'without recourse, New England Loan & Trust Company, by J. S. Gilbert A. Sec'y,' and delivered to said Sexton; that said Sexton delivered said certificate so indorsed in blank to The Missouri National Bank in January, 1896, to secure an indebtedness of his to said bank; that afterwards said bank sold said certificate to one F. N. Phelps, who filled his own name into said blank indorsement; that on the 4th day of November, 1897, said Phelps delivered said certificate to defendant John Browne, indorsing thereon, 'For value received I, this 4th day of November, 1897, assign the within certificate to , without recourse, F. N. Phelps;' that thereafter, said John Browne filled his name in the blank in said indorsement; that, except as above, there were no assignments of said certificate; that on the 5th day of November, 1897, said John Browne obtained a tax deed to said land from the city treasurer; that said John Browne is a brother of defendant William H. Browne, and that they have for years done business together in the same office, and resided together as members of the same family in a house situated on said land; that said John Browne obtained said certificate and said tax deed for the use and benefit of his brother William H. Browne, and that the obtaining by said John Browne of said certificate and said tax deed was in fraud of the rights of plaintiffs; that said William H Browne is insolvent. The petition closed with an offer to pay John Browne such sum as the court might decree to be proper and a prayer for a decree that said tax deed was null and void, and for general relief.

"Separate demurrers were filed and overruled, after which William H. Browne filed a general denial. John Browne filed an answer denying all allegations not admitted, and admitting that William H. Browne purchased the property on the 10th day of May, 1892, and that said William H. Browne failed to pay the city taxes of 1895, and that said property was sold for said taxes to the plaintiff company; that said plaintiff indorsed its name on the back of the tax certificate and delivered it to said Sexton, and that by the other abovementioned assignments it became the property of this defendant John Browne; that on the 5th day of November, 1897, a tax deed was issued to this defendant for said property, and duly recorded. A reply was filed denying all new matter in this answer.

"On the trial of the case evidence was introduced by both sides, and the court, after consideration thereof, found the issues in favor of the plaintiffs; that the matters and statements in the petition were true; that the purchase of the tax certificate by John Browne and the taking out of a tax deed by him were for the use and benefit of William H. Browne; that in the purchase of said certificate and taking out of said deed said John Browne and William H. Browne acted together in collusion and in fraud of the rights of plaintiffs, and that said certificate and deed were null and void as to said plaintiffs. The court, therefore, decreed that the certificate and deed be cancelled and adjudged null and void and of no effect, and that the defendants, John Browne and William H. Browne, be enjoined from claiming under said certificate and deed and from transferring the same to a third person, and that said defendants pay the costs. Motions in arrest of judgment and for a new trial were made by defendant, John Browne, and overruled by the court, whereupon said John Browne appealed to this court.

"Several errors are assigned by appellant in general terms, but only two are urged, and they practically cover all: First, that the decree of the court below is not supported by the evidence; second, that the decree should have provided for the re-payment to defendant, John Browne, of the amount paid by him for the tax deed.

"The evidence substantially indicates that from May 10, 1892, to November 5, 1897, and afterwards, William H. Browne owned the property in controversy subject to the deed of trust held by the plaintiff company; that he had assumed and agreed to pay said deed of trust, which provided that the party of the first part should 'pay, before the same became delinquent, all taxes and assessments upon said premises, general or special, now existing or that may hereafter be levied;' that said William H. Browne failed to pay the city taxes for the year 1895, and that in November, 1895, said property was sold for said delinquent taxes, and the tax certificate was bought for the plaintiff company; that said certificate was accidentally assigned by said company and came into the hands of F. N. Phelps, who held the same until the fall of 1897; that in November, 1897, said Phelps transferred said certificate to the defendant, John Browne, receiving therefor, between $ 60 and $ 70, including a bonus paid by said John Browne; that said John Browne took out a tax deed November 5, 1897; that the two Brownes were brothers and were occupying the same offices as partners in the real estate business and never kept any accounts between themselves, and had lived together in the house on the premises in controversy for several years, and continued to live together until two or three months after this suit was started, when John Browne moved away and left William H. Browne in possession; that said William H. Browne was insolvent; that up to November, 1897, said John Browne had paid board to William H. Browne at the rate of $ 15 per month, and that after the purchase of said tax certificate by said John Browne he paid no board for three months, and then moved out and was paid $ 15 in cash, making in all $ 60 paid or credited by William H. Browne to John Browne, as claimed for rent; that the possession of William H. Browne was never disturbed in any way; that John Browne did not deal in tax certificates or deeds and this was his only transaction in them; that William H. Browne and John Browne had discussed the matter often previously to transfer to John Browne, and that the latter knew of the outstanding deed of trust and that his brother was under obligation to pay those taxes; that there was litigation pending of which said John Browne knew, concerning the foreclosure of this deed of trust, which was being fought by said William H. Browne, although the deed of trust and the title of William H. Browne were both cut out by the tax deed, if valid, and which litigation said William H. Browne declared he intended to prosecute to completion."

In addition to this, it was developed that an ejectment suit was then pending between appellants and respondent, William Browne, and that William Browne testified very positively that not only had he not notified the plaintiffs in that case that he had no more interest in the property, but asserted that he expected to continue the contest for this property.

Phelps also testified that his best impression was that Gallagher told him, at the time of the purchase and assignment of the tax certificate, that John Browne wanted it for a friend of his.

Upon the submission of this cause to the court, upon all the evidence introduced by the parties to this action, the court found the issues for the plaintiffs and caused to be entered the following decree:

"Now at this day come the said parties, plaintiffs and defendants by their respective attorneys, this cause coming on for hearing and trial, the court doth take up the same for hearing and trial, and all and singular the premises being seen and heard, the cause being submitted to the court, the court finds the issues for the plaintiffs and that the matters and statements set forth in the petition of plaintiffs are true, and that the purchase by defendant, John Browne, of the certificate of purchase mentioned and described in the petition herein, which was issued to plaintiffs by the city treasurer of Kansas City on the 12th day of November, A. D. 1895, for the city taxes of...