Reeve v. Blatchley

• Decision Date: 13 April 1944
• Docket Number: 6640
• Citation: 147 P.2d 861,106 Utah 259
• Court: Utah Supreme Court
• Parties: REEVE et al. v. BLATCHLEY et al

147 P.2d 861

106 Utah 259

REEVE et al. v. BLATCHLEY et al

No. 6640

Supreme Court of Utah

April 13, 1944

Appeal from District Court, Second District, Weber County; L. v Trueman, Judge.

Action by W. A. Reeve and D. G. Revor (D. G. Revor, deceased substituted by Rose Revor) against E. E. Blatchley, Weber County, State of Utah, and Fred S. Miller, wherein defendant Blatchley filed a disclaimer and defendant Miller filed a cross-complaint and counterclaim. From a portion of the judgment refusing to allow a set-off, the plaintiff appeals and from the part of the judgment adjudging title to be in plaintiffs, defendant Miller cross-appeals.

Remanded, with directions.

Lewis J. Wallace and Derrah B. Van Dyke, both of Ogden, for appellants.

Parley E. Norseth and Thatcher & Young, all of Ogden, for respondents.

LARSON, Justice. McDONOUGH. J., concurs. WOLFE, Chief Justice, concurring in the result. WADE, Justice, dissenting. MOFFAT, J., participated in the hearing, but died before the publication of the opinion.

OPINION

LARSON, Justice.

Appeal on the judgment roll from the District Court of Weber County. Plaintiffs, appellants herein, commenced an action against defendants to quiet title to real property. Defendant Blatchley filed a disclaimer. The other defendant Miller, respondent and cross-complainant, answered and counterclaimed, asserting title in himself by virtue of a tax deed from Weber County, and asked that if his tax title be held void that plaintiffs be required to reimburse him for the amounts paid to Weber County for taxes assessed against the property. Plaintiffs replied alleging they held a judgment against Blatchley for $ 999, which they asked be set off against any amount found due Miller for taxes paid.

The court decreed title to be in plaintiffs subject to a lien in favor of Miller for the full amount paid to Weber County, and refused to allow plaintiff any set off. Plaintiffs appeal from that portion of the judgment refusing to allow the set off. Defendant Miller cross-appealed from that part of the judgment adjudging title to be in plaintiffs. Since this appeal was taken, our decisions in Curley v. Mills, 139 P.2d 882, and Telonis v. Staley, 144 P.2d 513 (on rehearing), has settled the questions involved in the cross-appeal adversely to cross-appellant, and it was not argued at the hearing.

The stipulation of the parties and the findings of the court established the following facts: That at all times since 1930 plaintiffs were the owners of the property; that they failed to pay the taxes assessed against said property for the year 1931, and in 1936 the property was offered for sale at the May sale. No bids were received and thereafter the Board of Commissioners of Weber County, by contract, agreed to sell the property to Blatchley; on which contract Blatchley paid the sum of $ 450. At the time Blatchley entered into the agreement to purchase the property from Weber County he was in possession of it as a tenant of plaintiffs under an oral lease. However, he had no duty to pay the taxes. Some time prior to 1937 he had defaulted in the payment of rent. For his failure to pay rent and for damages for unlawful detainer, in 1937, judgment for $ 999 was obtained against him by the plaintiffs in the city court. The judgment had not been satisfied. In 1939 Blatchley with the consent of the Board of Commissioners, assigned and quitclaimed his interest in the property involved herein to respondent Miller, who thereupon paid to Blatchley the sum of $ 450, and thereafter paid to the county for the balance due on said contract, taxes and assessments, the sum of $ 563.22. Miller took without actual knowledge of any defenses as between his assignor and appellants. The court found the tax sale to be void.

The questions calling for our decision follow: (1) Is the assignee of, or purchaser from a tax title claimant, when his tax title is voided at the suit of the owner who did not pay the taxes, entitled to reimbursement for taxes paid before the owner's title be quieted against the tax title holder, or to put it another way, is Miller, who acquired Blatchley's interest and contract in the lands and tax sale involved, entitled to recover from Reeve, the full amount of the taxes paid before Reeve's title be quieted by the court? (2) In such suit, what obligations due him from the tax title claimant can the legal owner offset against the taxes so paid?

We consider them in order. (1) The owner who seeks to have his title quieted against a void tax deed must reimburse the tax title purchaser for all taxes lawfully levied and paid by the tax title purchaser. Bolognese v. Anderson, 87 Utah 455, 49 P.2d 1034; Id., 97 Utah 136, 90 P.2d 275; Burton v. Hoover, 93 Utah 498, 74 P.2d 652; Cooley on Taxation, 4th Ed., Vol. 4, Sec. 1508. Can one who has purchased from the tax title purchaser, when sued in an action to quiet title, demand from the owner reimbursement of all taxes paid by himself or his predecessors under the tax title? The right to reimbursement for taxes paid does not exist at law, even in favor of the original tax title purchaser, Anson v. Ellison, 104 Utah 576, 140 P.2d 653; 37 Cyc. 1537; Cooley on Taxation, 4th Ed., Sec. 1553, and cases there cited. But in equity this right in the original purchaser has been recognized to a limited extent. Cases cited supra. See also Holland v. Hotchkiss, 162 Cal. 366, 123 P. 258, L. R. A. 1915C, 492, and annotation thereto. An original action will not lie in equity, any more than in law, to collect such payment or to impress a lien on the property therefor. Anson v. Ellison, supra; 26 R. C. L. p. 463; Joliet Stove Wks. v. Kiep, 230 Ill. 550, 82 N.E. 875, 12 Ann. Cas. 227 and note; Cooley on Taxation, Vol. 4, Sec. 1553 and 1556, 4th Ed., and cases cited. Greenwood v. Adams, 80 Cal. 74, 21 P. 1134. But some courts of equity, this jurisdiction among them, have held that they will not quiet the owner's title until he reimburses the other party for the taxes paid by him. Bolognese v. Anderson, supra; Anson v. Ellison, supra. This is upon the basis that he who seeks equity must do equity. If while the tax title is in the county, the title and sale be declared void, the county may reassess the property for that year (Sec. 80-5-17 and 80-10-30, U. C. A. 1943) or may the next year resell the property for such delinquent taxes (Sec. 80-10-40, U. C. A. 1943) depending on the grounds upon which the sale was voided. But when the county sells its tax title, it receives its money and its tax lien is extinguished. Anson v. Ellison, supra. Since the county has received the taxes levied upon the property, it cannot now go back and reassess it, or resell for the taxes when the tax sale is declared void by the court. The owner, in having the tax sale and tax title voided against the purchaser, takes his property back free and clear of the tax lien, and not subject to the payment to the county of such taxes as the purchaser paid. To permit this would countenance unjust enrichment at the expense of an innocent party. This a court of equity will not do. But even this rule is limited to taxes which were or could have been lawfully levied on the property. If the tax itself was an illegal one, and not merely erroneous in some respects, reimbursement need not be made. Harper v. Rowe, 53 Cal. 233; Lufkin v. City of Galveston, 73 Tex. 340, 11 S.W. 340; Chicago M. & St. P. R. Co. v. Kootenai County, 33 Idaho 234, 192 P. 562; Cooley on Taxation, 4th Ed., Sec. 1508. And if the tax be a lawful tax in part and unlawful in part, reimbursement need not be made for the unlawful part. Cases supra. Smith v. Enterprise Irrig. Dist., 160 Ore. 372, 85 P.2d 1021; Security Land & Inv. Co. v. Ranger Realty Co., 115 Fla. 640, 156 So. 23. The rule therefore as invoked by the court of equity may be stated thus: One who asks a court of equity to decree his title to be free from tax liens must pay the amounts of taxes lawfully assessed against the property before the court will decree it free and clear of such taxes.

Since the tax title claimant cannot maintain an action for the taxes, and can only assert them when action is brought against him to extinguish of record his claim, it is evident that the court of equity does not recognize in him a right in law or equity to recover what he paid to extinguish a tax lien. What the court of equity does is to impose upon the owner the duty of himself paying the amount of the taxes before it will enter a decree establishing in effect that there are no claims against the property for such taxes. This is further evidenced by the fact that if the owner refuses to reimburse the tax title claimant, the court does not quiet title in claimant, nor does it enter a judgment for the amount in his favor. The court just refuses its decree in favor of the owner, and leaves the parties where it found them.

Since the court is exercising its prerogative against the owner to make him do equity, by making whole the party who is out the money that cleared his land of taxes, it can make no difference whether such party be the original purchaser from the county, or one who takes from such purchaser. Equity imposes the obligation on the owner to make whole the party who is out the money; it does not create a claim in favor of the man who paid the county. It follows that the party who in the suit claims the tax title to the property being the one who will be out by decree in plaintiff's favor is the party to whom the owner must do equity. State ex rel Babcock v. Chisago County, 115 Minn. 6, 131 N.W. 792, Ann. Cas. 1912D, 669. Reeve therefore should be required to reimburse Miller for the total taxes paid to the county, whether by Miller directly to the county, or by him to reimburse Blatchley for...