Norton v. Metropolitan Life Ins. Co.

• Citation: 74 Minn. 484
• Decision Date: 07 December 1898
• Docket Number: Nos. 11,391 - (143).,s. 11,391 - (143).
• Parties: MARTHA H. NORTON and Another v. METROPOLITAN LIFE INSURANCE COMPANY and Others.
• Court: Supreme Court of Minnesota (US)

Page 484

74 Minn. 484

MARTHA H. NORTON and Another v. METROPOLITAN LIFE INSURANCE COMPANY and Others.

Nos. 11,391 - (143).

Supreme Court of Minnesota.

December 7, 1898.

Action in the district court for St. Louis county, by the executrix and executor of George W. Norton, to foreclose a real estate mortgage upon which a balance of $32,188.65 was claimed to be due, and interest thereon at 8 per cent. from January 15, 1896. The complaint contained a prayer for judgment against defendant West Duluth Land Company, grantee of the mortgagors, for the amount due, and the costs of the foreclosure, and that said defendant and all persons claiming under it be barred and foreclosed of any rights in the mortgaged premises.

The mortgage originally embraced, among other lands, a tract now described as Outlot S of Auditor's Plat of West Duluth Outlots, but this tract was not so described in the mortgage. The defendants answered separately and alleged, among other matters, that, at the time said Outlot S was conveyed by warranty deed by the West Duluth Land Company to the Minnesota Car Company, the mortgagee, George W. Norton, knowing the full extent of the contemplated conveyance and in consideration of $20,000 paid to him, agreed to discharge said outlot S from the lien of the mortgage, and that on September 4, 1888, he executed a deed of release, which was duly recorded. The deed of release, however, in terms did not include all of said outlot conveyed to the car company. A triangular portion of the southeast part of said lot was not embraced. This omitted tract was referred to in the findings of the court as tract Y. It is entirely in the waters of the Bay of St. Louis and consists of riparian rights only. The controversy between plaintiffs and defendants, Central Trust Company of New York and Metropolitan Life Insurance Company, which are subsequent mortgagees of all of Outlot S from the car company, related to tract Y. The insurance company and the trust company, by a supplemental answer, set up that they had acquired a tax title to all of this Outlot S, and sought to restrict the mortgage foreclosure so that it should not include the tract Y. The other facts are stated in the opinion.

Upon the trial, the court, Cant, J., found in favor of plaintiffs, and ordered judgment in their favor and against the defendant West Duluth Land Company, for the sum of $32,188.65, and interest thereon from January 15, 1896, at 6 per cent., and directed a sale of the mortgaged premises; also that plaintiffs recover of the last named defendant the sum of $729.45, not secured by the mortgage, being 2 per cent. additional interest, found due as the consideration for the extension of time of payment of the note in suit; also that plaintiffs have a lien on tract Y which is superior to the lien of defendants Central Trust Company and Metropolitan Life Insurance Company, and that the several defendants, other than the makers of the mortgage in action, be barred and foreclosed of all rights or equity of redemption in the mortgaged premises. The finding in respect to the tax title is given in the opinion.

From orders denying a new trial, the insurance company, the trust company, the land company and the receiver of Duluth Manufacturing Company, appealed. Modified.

Billson, Congdon & Dickinson, for appellant Metropolitan Life Insurance Company and Central Trust Company.

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McCordic & Crosby, for appellant West Duluth Land Company.

A. L. Agatin, for respondents.

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CANTY, J.

This is an action to foreclose the first mortgage on the real estate in question. The second mortgage was made to the Central Trust Company, as trustee, to secure the payment of a large number of bonds, all of which are held by the Metropolitan Insurance Company. The insurance company is in fact the holder of the second mortgage or trust deed, and claims to be the owner of the land under a tax title, which, if valid, is paramount to, and free from the lien of, plaintiffs' mortgage. Plaintiffs' mortgage was executed and recorded in January, 1887; the defendants' mortgage in September, 1888. The taxes of 1892 being unpaid, judgment was entered, the land sold for the same and bid in by the state in 1894. In May, 1896, the insurance company took an assignment from the state, and gave due notice of the time of expiration of redemption. No redemption was made.

The trial court found that the tax title is valid, and paramount to the lien of plaintiffs' mortgage, unless the insurance company "was legally precluded from acquiring such tax title by reason of having stood in the position of mortgagee junior to the said plaintiffs," and held that it is so precluded. The appellant insurance company concedes that in many states this holding would be good law, but contends that by reason of G. S. 1894, § 1599, the second mortgagee may acquire a valid tax title, as against the first mortgagee. That section provides:

"Any person * * * may become the purchaser at such [tax] sale. If the owner purchase, the sale shall have the effect to pass to him (subject to redemption as herein provided) every right, title and interest of any and every person, company or corporation, free from any claim, lien or incumbrance, except such right, title, interest, lien or incumbrance as the owner so purchasing may be legally or equitably bound to protect against such sale, or the taxes for which such sale was made."

The insurance company contends that it was neither legally nor equitably bound to protect plaintiffs' mortgage against said tax sale or said taxes, and therefore has acquired a valid tax title, as against plaintiffs. We have held that, notwithstanding section 1599, one tenant in common cannot acquire a tax title, as against his cotenant. Easton v. Scofield, 66 Minn. 425, 69 N. W. 326. It is there said at page 427:

"The decisions hold that his cotenant is one of the parties whom the purchaser is `equitably bound to protect.' It is as much the duty of one tenant in common to pay the taxes as it is of another. Equity holds that one such tenant must protect his cotenant as much as he protects himself. The duty of all is the duty of each in that respect."

So may it be said that, as between the first mortgagee and the second mortgagee, it is as much the duty of the one to pay the taxes as it is of the other. In equity it was the duty of the first mortgagee to pay the taxes for himself and the second mortgagee. It was the duty of the second mortgagee to pay the taxes for himself and the first mortgagee. The duty of both is the duty of each in this respect. The decisions that hold that the one mortgagee cannot acquire a tax title as against the other liken it to the case of tenants in common. See Connecticut v. Bulte, 45 Mich. 113, 7 N. W. 707; McLaughlin v. Green, 48 Miss. 175, 209; Garrettson v. Scofield, 44 Iowa, 35. In our opinion, the insurance company could not acquire the tax title in question, as against the plaintiffs.

2. The insurance company will be entitled to reimbursement for the amount of the taxes paid, if its right as second mortgagee is barred by the expiration of redemption under the foreclosure of the first mortgage; and in the meantime it holds a lien for such amount, superior to the lien of the first mortgage. But the court ordered judgment barring all liens and claims of the trust company and insurance company, other than the right of redemption from the foreclosure sale. This is error.

The validity of a tax title held by the second mortgagee may be litigated in a suit to foreclose the first mortgage. Wilson v. Jamison, 36 Minn. 59, 29 N. W. 887. This is merely holding that in such a suit either party may determine whether the defendant's lien or title is subject to the lien of the plaintiffs' mortgage. But whether the paramount lien of the second mortgagee for the taxes paid by him should be litigated, the amount thereof ascertained, or ordered paid, or the lien foreclosed, in such an action, we need not determine. Neither party has asked for any such relief, or introduced evidence on which it could be granted. The land in question is but a small part of the tract sold for said taxes, and there is no evidence from which it can be determined what part of these taxes the land in question should bear. The...