Philadelphia Mortgage & Trust Company v. City of Omaha

• Decision Date: 04 June 1902
• Docket Number: 10,735
• Citation: 90 N.W. 1005,65 Neb. 93
• Parties: PHILADELPHIA MORTGAGE & TRUST COMPANY, APPELLANT, v. CITY OF OMAHA ET AL. APPELLEES
• Court: Nebraska Supreme Court

90 N.W. 1005

65 Neb. 93

PHILADELPHIA MORTGAGE & TRUST COMPANY, APPELLANT, v. CITY OF OMAHA ET AL. APPELLEES

No. 10,735

Supreme Court of Nebraska

June 4, 1902

APPEAL from the district court for Douglas county. Heard below before FAWCETT, J. Rehearing of case reported in 63 Neb. 280. Judgment of affirmance adhered to.

AFFIRMED.

Wharton & Baird, for appellant.

E. H Scott, contra.

POUND C. BARNES and OLDHAM, CC. concur, HOLCOMB, J. concurring in the conclusion.

OPINION

POUND, C.

This is a rehearing. The facts are stated in the former opinion (Philadelphia Mortgage & Trust Co. v. City of Omaha 63 Neb. 280, 88 N.W. 523), but may be restated briefly as follows: One Bolln, city treasurer of the defendant municipality, obtained a loan of plaintiff secured by mortgage upon real property. At that time the taxes upon the property for certain years and certain instalments of special assessments thereon were marked "Paid" on the tax records of the city, as required by law when such taxes or assessments are collected. The plaintiff afterwards became owner of the property through foreclosure of its mortgage. In fact, the taxes had not been paid, and we may take it that the false entry upon the records was a fraud upon the city as well as upon the mortgagee. After plaintiff took its mortgage, the word "paid" was erased, and the taxes and assessments once more appeared as liens upon the property. Thereupon plaintiff brought this suit to quiet its title, remove the cloud thereon by reason of the taxes and assessments, and require said taxes and assessments to be noted as paid upon the records. The district court dismissed the suit, and its decree was affirmed at the former hearing.

We think the judgment of affirmance was right and should be adhered to. The taxes themselves are conceded to be regular and valid in every respect, and to be unpaid. But plaintiff asserts an estoppel by reason of the condition of the city's records when it made the loan and claims that the city should not be permitted to erase the entries and claim a lien afterwards to the prejudice of a mortgagee in good faith who took in reliance on such records. Plaintiff bought in the property under its decree of foreclosure for less than the amount found due on its lien. Hence we may treat it, with respect to other lienholders not parties to the foreclosure, as in the position of mortgagee rather than purchaser, since it paid nothing beyond the credit on the mortgage debt. Stated in general terms, plaintiff's case amounts to this: The agent of a prior lienholder falsely, but without the knowledge of his principal, represented that the lien was satisfied, whereby plaintiff was induced to loan money upon mortgage on the property. It would seem, under such circumstances, that the estoppel should extend only to postponing such prior lien to the plaintiff's mortgage lien. 2 Pomeroy, Equity Jurisprudence, secs. 731, 732. The requirements of justice would be met fully by permitting or requiring the holder of the tax lien to redeem. It is not necessary to wipe it out utterly in order to protect the mortgagee. Plaintiff might maintain a suit to foreclose against the tax lien, so long as it was not involved in the first suit, compelling its holder to redeem from the mortgage or confining its operation to any surplus that might remain after satisfaction thereof. Shaw v. Heisey, 48 Iowa 468; State Bank v. Abbott, 20 Wis. 570; Foster v. Johnson, 44 Minn. 290, 46 N.W. 350; Robinson v. Ryan, 25 N.Y. 320. Instead, plaintiff seeks to cut the tax lien off entirely. We do not think such course just or equitable, and doubt whether a suit of this character would be maintainable under the circumstances, in view of the ordinary rule that he who seeks equity must do equity.

If this objection did not exist, however, there is another and insuperable difficulty in section 144, article 1 chapter 77, Compiled Statutes. By whatever name called, any suit which has for its real end the enjoining of a tax or special assessment is within the purview of that section. Otherwise, the statute would be deprived continually of all force or efficacy by very trivial exercises of professional ingenuity....