Pennsylvania Co. for Insurances On Lives & Granting Annuities v. Bergson

• Decision Date: 03 February 1932
• Docket Number: 384
• Citation: 159 A. 32,307 Pa. 44
• Parties: Pennsylvania Co. for Insurances on Lives and Granting Annuities, Trustee, v. Bergson, Appellant
• Court: Pennsylvania Supreme Court

159 A. 32

307 Pa. 44

Pennsylvania Co. for Insurances on Lives and Granting Annuities, Trustee, v. Bergson, Appellant

No. 384

Supreme Court of Pennsylvania

February 3, 1932

Argued January 7, 1932

Appeal, No. 384, Jan. T., 1931, by defendant, from order of C.P. No. 1, Phila. Co., June T., 1931, No. 974, making absolute rule for judgment for want of sufficient affidavit of defense, in case of Pennsylvania Co. for Insurances on Lives and Granting Annuities, trustee for sundry trusts, v Louis J. Bergson. Affirmed.

Assumpsit to recover taxes which plaintiff was compelled to pay.

Rule for judgment for want of a sufficient affidavit of defense. KUN, J.

The opinion of the Supreme Court states the facts.

Rule absolute. Defendant appealed.

Error assigned was order, quoting it.

Judgment affirmed.

Walter B. Gibbons, with him Daniel C. Donahue, for appellant. -- The rule for judgment for want of a sufficient affidavit of defense should have been refused: King v. Building Assn., 106 Pa. 165; Rawle v. Renshaw, 15 Pa.Super. 488.

The case at bar is not ruled by the case of Meyers v. Rental Income Corporation, 101 Pa.Super. 438.

The title holder is only prima facie liable for taxes: Carbone v. Realty Co., 14 Pa. D. & C. 695; Bergdoll v. Pitts, 41 Pa.Super. 257.

Thomas P. Mikell, with him Saul, Ewing, Remick & Saul, for appellee. -- The registered owner of real estate is liable for taxes: Hogg v. Longstreth, 97 Pa. 255; Building Assn. v. Webb, 12 Pa.Super. 545.

The only case in which registered owner has not been held liable is when there is knowledge of an unrecorded declaration of trust: Caldwell v. Moore, 11 Pa. 58; Neilson v. Trust Co., 18 Pa.Super. 635; Meyers v. Income Corporation, 101 Pa.Super. 438.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY and DREW, JJ.

OPINION

MR. JUSTICE KEPHART:

Appellee was compelled to pay the taxes on the mortgaged property when it foreclosed its mortgage, and sued to recover the amount so paid from the registered owner. The affidavit of defense admits that appellant was by recorded deed the registered owner when the taxes were assessed, but it avers he was not the real owner, holding only the naked title for the accommodation of another, the General Realty Company, his grantor, which was the true owner; that the conveyance to him was without consideration and was made to enable the real owner to make certain adjustments in its corporate affairs; and that within a month thereafter title was reconveyed to the corporation. Appellant never received any income or profit from the premises, all that being received by the General Realty Company, which paid all the mortgage interest and other charges. The court below held appellant for the tax.

May a mortgagee who has paid back taxes to protect a title acquired through a sheriff's sale recover the amount paid from the record owner, though in fact such owner had no real interest in the property, being temporarily a naked title holder for the accommodation of the real owner, receiving no consideration for his act? This exact point has not heretofore been determined in this State, although some closely related questions have apparently been settled by many of our cases. The rule as to the liability of a registered owner to a mortgagee who is compelled to pay taxes is the outgrowth of another rule, namely, that the owner of land is personally liable for the taxes assessed thereon while he is the owner; both rules are now questioned.

Personal liability for taxes is an incident to ownership of land. In Shaw v. Quinn, 12 S. & R. 299, it is stated without reference to any statute: "The persons charged in the duplicate are personally liable for the tax, and their bodies may be taken in execution if no goods and chattels are to be found." See Burd v. Ramsay, 9 S. & R. 109. The Act of 1845, P.L. 496, declares in section 4, that, in order to carry out the other provisions of the act, the taxing authorities "shall have the power to bring suit . . . against the person or persons returned and registered in the register of unpaid taxes on real estate . . . and shall . . . obtain judgment in favor of the county, . . . which judgment shall have the same effect, to all intents and purposes, as judgments in other cases." By the Act of February 3, 1824, 8 Smith Laws 189, taxes had previously been declared to be a lien on the property on which they were imposed; and the Act of 1845 can be considered in no other light than imposing a personal charge against the owner. Many of our cases speak of personal liability for taxes without referring to any statute. ^[*] It is clear from the principles in these cases and the legislative declarations that the owner of land is and should be personally liable for taxes assessed while he is the owner of the property. The more serious question now before us is, who may be regarded as the owner liable for the taxes?

The Act of March 14, 1865, P.L. 320, requires the recorder of deeds to certify all conveyances to the registry bureau for the sole purpose of registering ownership for assessment of taxes. Reading into this act the Act of 1845 which provides that suit may be brought against "the person returned and registered" as the owner, it is clear personal liability attaches to a registered owner as "owner" under the Act of 1865 and he is the one against whom suit is brought. Then, the Act of June 4, 1901, P.L. 364, defines "owner" as being "the person or persons in whose name the property is registered, if registered according to law." While the Act of 1901 is a lien act, it serves to show the person regarded as owner against whom the lien is to be filed; it illustrates legislative intent as to whom the municipality should accept as owner for the purpose of collecting taxes.

Assessment for purposes of taxation should be made as the law directs. When a deed or other conveyance is duly recorded and registered in the name of a given person he, as the registered title holder, is regarded as the "owner" for purposes of assessment and taxation, and is personally liable for taxes levied on the property. This liability attaches because he holds himself out to the world through public records as owner by being registered and recorded as owner. That such a registered owner, though holding the title absolutely, is merely a dry trustee for the real owner, does not relieve him from that liability. The legislature did not intend that its governmental subdivisions should be put to the trouble and expense of looking behind the record to ascertain who is liable for taxes. When a deed, showing title in a given person, is duly registered under the Act of 1865 and subsequent acts in relation thereto, the taxing authorities need not search beyond this public record to determine if there is some other person against whom it shall levy tax. These authorities may, for the purpose of taxation, treat individuals in their several relations as they appear on the designated indices or the public records that are provided. Persons accepting such trusts must understand that they place themselves in a position where they become liable for taxes levied on the property while title is in their name.

But it is argued that such conclusion will cause a gross fraud to be practiced on the city, in that irresponsible parties may hold the title and the real owner escape personal liability. But this will not follow; through the Act of 1865, the municipality is not limited to such registered owner as the only person or source from which it may secure payment of the taxes levied or assessed on the property. The law will not permit the real owner to set up an irresponsible party, a straw man, as registered owner, and thereby escape payment of taxes. The Act of 1865 is a comprehensive system intended to include for purposes of taxation all manner of ownerships affecting real estate. Section 8 of the act provides: "It shall be the duty of every assessor whenever he shall find any property to be owned differently from the name in the proper assessment book, to report such change to the chief engineer and surveyor, without delay, and the chief engineer and surveyor, if finding such report correct, shall make the book of plans conform, by the proper entry, but without erasure of any name." The act provides a penalty for the assessor if he fails to comply with this section. The entire act requires property owners to see that their ownerships are duly assessed. Under section 8 of the Act of 1865, when the municipal authorities of Philadelphia learn, at any time after a tax has been assessed, that someone other than the registered owner is the real owner, the bureau of registry may through the assessor and chief engineer place the name of such person on the registry list along with that of the registered owner, as registered owners of such property, and such assessment will have the same force and effect as though such real owner had been originally named as the registered owner of the property at the time the taxes were assessed, and all the remedies of the municipality applicable to the collection of the taxes so levied may be enforced against the real owner as it may against the one first named as registered owner. The law in this respect has been recognized in similar manner in relation to tax sales. See Phila. v. Lukens, 22 Pa.Super. 298, 302, where it is stated: "The acts do not make invalid liens filed against property in the name of another than the registered owner. . . . When the real owner is made a party to the proceeding and service of the writ is made on him, his title becomes bound, without regard to who the registered owner may be." A municipality, therefore, has all the rights and remedies against the real or beneficial owner that it has...