Reed v. Welsch
| Decision Date | 07 January 1960 |
| Docket Number | Nos. 29,30,s. 29 |
| Citation | 100 N.W.2d 473,358 Mich. 579 |
| Parties | Oscar W. REED and Hannah A. Reed, Plaintiffs and Appellees, v. Lydia A. WELSCH, d/b/a Citizens Group of Port Hope, a Limited Copartnership, John B. Martin, Jr., Auditor General of the State of Michigan, The Department of Conservation of the State of Michigan, Charles M. Ziegler, State Highway Commissioner, Edward H. Seltz, Melvin H. Weeks, Fred Weeks, Ray Weeks, Cora Heath, Florence Lindke and Gertrude Foster, Defendants and Appellants. Petition of CITIZENS BANK OF STAFFORD, SMITH AND COMPANY, a Michigan Copartnership, as succeeded by Lydia A. Welsch, d/b/a Citizens Group of Port Hope, a Limited Copartnership, to Amend Decree, Respondent and Appellant. In the Matter of the Petition of the Auditor General of the State of Michigan for and in behalf of said State for the Sale of Certain Lands for Taxes Assessed Thereon for the Year 1935 and Previous Years. |
| Court | Michigan Supreme Court |
Walter Leroy Morrison, Melvindale, for defendants-appellants.
Frederick S. Beach, Bad Axe, for plaintiffs-appellees.
Before the Entire Bench except KAVANAGH, J.
As in Consumers Power Co. v. County of Muskegon, 346 Mich. 243, 78 N.W.2d 223, and Spoon-Shacket v. Oakland County, 356 Mich. 151, 97 N.W.2d 25, the present parties are in court on account of grossly negligent administration of the general property tax law by duty-charged public officials. Such negligence started in 1930 with a patently erroneous property tax assessment. It continued through the years until the state land office board issued its presently described deed to plaintiffs' grantor in July of 1940, and thereafter to the time of trial below.
The controversy comes to better understanding upon examination of exhibit 1. The exhibit follows:
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
Depicted is the agreed separate ownership of the entire subject matter as same appeared of record when the first error of tax assessment was made. The eastwest line, dividing the tracts designated respectively '16 acres (plus or minus)' and '47 acres (plus or minus),' is the northern boundary of the 'South part of Lot 2, 47A, T. 17 N., R. 15 E.' Title to such south part only is in issue.
The south part of said lot 2 (hereafter called 'the Stafford parcel') was the property of one Fred H. Stafford from 1890 until his death occurred in 1931. Stafford's title passed in succession to the Citizens Bank of Stafford, Smith & Co. and finally to defendant Lydia A. Welsch. During all these years, and continuing apparently to the time of trial below, the Stafford parcel was assessed under the general property tax law to Mr. Stafford and his successors. According to certificates of the county treasurer covering the tax years 1930 through 1953 all taxes assessed against the Stafford parcel were duly paid.
Turning now to the title history of that portion of lot 2 which lies immediately north of the Stafford parcel:
Prior to the years 1930 and 1931 the parcel described as 'the north 18 acres of said Lot 2' (less a presently unimportant 'acre or more') was owned of record by parties identified as Libka, Seltz and Weeks. For the tax years 1930 and 1931 such parcel was assessed to Libka and Seltz as ' Such assessments to Libka and Seltz were returned unpaid and, on account of such delinquency, was included in the 1938 tax sale and bid in by the State. 1 Thereafter, and at the ensuing land board sale, one Betts submitted an accepted bid for said fractional lot 2. At this point plaintiff Oscar W. Reed appeared in the picture. Reed, putting up the money for Libka, arranged for Libka's matching bid as 'owner.' The land board thereupon (July 15, 1940) deeded fractional lot 2 to Libka. January 8, 1941 Libka and wife conveyed by the same description to plaintiffs Oscar W. and Hannah A. Reed.
In 1943 defendant Welsch learned of the sale to Libka by means of correspondence with then auditor general Vernon J. Brown. Correspondence continued with the auditor general, defendant Welsch steadily insisting that the State, having erred in selling all of lot 2 at the tax sale, 2 should clear record title to the south part of lot 2. The auditor general unsuccessfully attempted so to do by letters addressed first to Libka and ultimately to plaintiff Oscar W. Reed. Writing Libka under date of February 15, 1944, the auditor general said:
'This application [for certificate of error] was submitted by the Huron county treasurer who certifies that the taxes of 1930 and 1931 had been paid to the township treasurer on the south 47 acres of Lot 2, and as evidence he enclosed copies of the township treasurer's receipts.
'Therefore, the sale of taxes should be canceled and a certificate of error issued against the deed to the State of Frl. Lot 2, Sec. 10, for the reason--Part paid township treasurer. However, it now appears that this property was deeded to you as former owner in July 1940 by the State Land Office Board.
Libka replied, referring the auditor general to plaintiff Oscar W. Reed. The auditor general thereupon (April 1, 1944) wrote Mr. Reed as follows:
'This office has now received evidence from the Huron county treasurer to the effect that the taxes for which the State acquired title on the South 47 acres of Lot 2 were properly paid to the township treasurer. As these taxes were properly paid, it is our opinion that the title given to Mr. Libka is of no consequence. Therefore, any title which he might have transferred to you would be the same.
'The bank, which is interested in this South 47 acres of Lot 2, is attempting to remove the cloud on the title, placed thereon by the deed given to Mr. Libka, and subsequent deed to you.
Reed did not reply so far as the record discloses. This brings us to the present litigation. January 24, 1952 the mentioned bank (Stafford, Smith & Co.) filed a petition, under the title of the annual Huron county tax proceeding of 1938 (chancery No. 2883), for amendment of the statutory decree of 1938 so as to exclude from operation thereof the Stafford parcel (south part of said lot 2). Such petition was thereafter consolidated for hearing with the present chancery case.
August 13, 1954 plaintiffs Reed filed this bill to quiet title, as against defendant Welsch and others, to entire fractional lot 2. The bill alleges validity of the mentioned tax sales of 1938 and 1940 and failure--stressing the one-year limitation of section 70 of the general property tax law and laches--of defendant Welsch and her predecessors to make or enter timely contest thereof. The case, consolidated as above with chancery No. 2883, came to issue and hearing in 1958 3 and resulted in an opinion and decree in favor of plaintiffs. Defendant Welsch appeals.
First: Are the purported tax sales of the Stafford parcel open to present attack?
In Farr v. Nordman, 346 Mich. 266, 78 N.W.2d 186, two dissenting members of this Court held that a bidder at tax sale acquires no title when the allegedly delinquent tax or taxes, for which the sale was made, have actually been paid or tendered prior to such sale. Our majority on that occasion, relying principally on Odgers v. Lentz, 319 Mich. 502, 30 N.W.2d 43, 45, and the 1906 parents thereof (Hayward v. O'Connor, 145 Mich. 52, 108 N.W. 366 and Shaaf v. O'Connor, 146 Mich. 504, 109 N.W. 1061), ruled that 'When the owner of land has notice--no matter how he obtains that notice--that his land has been sold for taxes, he must, if he desires to have the sale set aside by the circuit court, take proceedings within one year.' Once again we face and vote upon the same clearly drawn issue of disagreement, the chancellor below having relied on Odgers and the parental origin thereof.
These holders in succession of sound record title had no notice, recognized by equity in this equity case, that the assessing officer was double-taxing--quite unlawfully--their property by including it in and with the required assessment of the adjoining Libka lands. Being legal strangers to the 1938 delinquent tax proceedings they were under no legal duty, at least until their title was brought into direct question by plaintiffs' instant bill (or, possible, by trespass of plaintiffs), to attack this 1930 through 1940 record of wholly invalid tax proceedings. The reason is that such proceedings were, so far as same purportedly affected the Stafford parcel, void from the start. They remain so to this day. They were void because no lien for taxes attached to the Stafford parcel by force or virtue of the assessments to Libka and Seltz.
Consider Rowland v. Doty, Harrington Chancery, 3, 8, and Rayner v. Lee, 20 Mich. 384. In both cases the facts establishing invalidity of the involved tax sales were not so forceful as shown here. In Rowland the question arose on demurrer to a bill alleging that the plaintiff's premises had been sold, some years prior to filing of the bill, for delinquent taxes; whereas such taxes had been duly paid. The Court posed the litigated question thus: ...
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