RTV, L.L.C. v. Grandote Intern. Ltd. Liability Co.

• Decision Date: 02 May 1996
• Docket Number: No. 95CA1286,95CA1286
• Citation: 937 P.2d 768
• Parties: RTV, L.L.C., a Colorado limited liability company, Plaintiff-Appellee, v. GRANDOTE INTERNATIONAL LTD. LIABILITY CO., a Colorado limited liability company, Paul D. Harrison, and Dwight A. Harrison, Defendants-Appellants. . II
• Court: Colorado Court of Appeals

Page 768

937 P.2d 768

RTV, L.L.C., a Colorado limited liability company, Plaintiff-Appellee, v. GRANDOTE INTERNATIONAL LTD. LIABILITY CO., a Colorado limited liability company, Paul D. Harrison, and Dwight A. Harrison, Defendants-Appellants.

No. 95CA1286.

Colorado Court of Appeals Div. II.

May 2, 1996. ^*

Certiorari Denied May 19, 1997.

Harry L. Simon, P.C., Harry L. Simon, Denver, Senn, Lewis, Visciano & Strahle, P.C., Mark A. Senn, Fredric J. Lewis, Laura B. Redstone, Denver, for Plaintiff-Appellee.

Gerald D. Sjaastad, Colorado Springs, for Defendants-Appellants.

Opinion by Judge CRISWELL.

Plaintiff, RTV, L.L.C., commenced this forcible entry and detainer action to obtain a judgment and order of possession with respect to numerous parcels of land, the title to all of which were derived from a series of county treasurer's deeds. Defendants, Grandote International Ltd. Liability Co., Paul D. Harrison, and Dwight Harrison, former owners of interests in the various parcels, appeal from the judgment and order of possession with respect to only four of the parcels, asserting that the trial court denied them their right to trial by jury and that the evidence demonstrated, as a matter of law, that the treasurer's deeds to the four parcels gave plaintiffs no proper title to those parcels. We disagree and affirm.

I.

First, contrary to defendants' assertion, we conclude that they had no right to have a jury pass upon any of the factual issues presented here.

In Colorado, there is no constitutional right to a trial by jury in a civil case; such right as may exist derives from either statute or court rule. Jones v. Estate of Lambourn, 159 Colo. 246, 411 P.2d 11 (1966); Husar v. Larimer County Court, 629 P.2d 1104 (Colo.App.1981).

C.R.C.P. 38(a) describes the types of "actions" in which a party is entitled to a jury, and these include those "for the recovery of specific real ... property...." This phrase describes the common law action of ejectment, which was an action at law. That action has been supplanted by the modern action for forcible entry and detainer. Hence, because it is the original complaint that establishes the character of the action for purposes of the right to jury trial, Miller v. District Court, 154 Colo. 125, 388 P.2d 763 (1964); Miller v. Carnation Co., 33 Colo.App. 62, 516 P.2d 661 (1973), such right normally exists in such an action. Baumgartner v. Schey, 143 Colo. 373, 353 P.2d 375 (1960).

However, if there are no disputed facts with respect to the plaintiff's forcible entry and detainer claim, and the factual issues to be tried relate only to equitable defenses asserted by the defendant, no jury is to be impaneled to resolve such issues. Stone v. Lerner, 118 Colo. 455, 195 P.2d 964 (1948). It is the nature of the relief sought or defense asserted, not the nature of the factual issues presented, which determines whether the right exists. Federal Deposit Insurance Corp. v. Mars, 821 P.2d 826 (Colo.App.1991).

Here, plaintiff's complaint was simple and straightforward--it alleged that plaintiff had been issued treasurer's deeds to the various parcels and was, therefore, entitled to possession of them.

In response, defendants asserted three affirmative defenses that are before us--that the deeds relied upon by plaintiff were improperly acquired because plaintiff held an interest in the parcels when the deeds were issued; that two of the deeds were void because they were not issued in compliance with the pertinent statute; and that the deeds were void because they were based upon previous improper separate assessments of the land and the improvements.

There was no issue raised with respect to the fact that treasurer's deeds had issued to plaintiff and that its claim to possession was based on those deeds. The burden was upon defendants, therefore, to demonstrate that those deeds were void. Bennett v. Shotwell, 118 Colo. 206, 194 P.2d 335 (1948).

Defendants' claim of voidness, if sustained, would have resulted in an equitable decree of the deeds' invalidity. And, to the extent that there were any factual controversies between the parties, those controversies related to defendant's equitable defenses, not to plaintiff's forcible entry and detainer claim.

We conclude, therefore, that the trial court properly refused to impanel a jury to resolve any such issues. See Stone v. Lerner, supra.

II.

Defendants next assert that the record here shows that plaintiff was the nominee of one or more entities which, at the time of the issuance of the treasurer's deeds in question, held an equitable interest in the parcels in question. Hence, they argue that plaintiff could not obtain title to those parcels through those deeds, thereby defeating defendants' rights as the owner and co-mortgagees of the parcels. We disagree.

Defendants' argument is based upon the so-called "common fund" theory, which was adopted and applied by our supreme court in such cases as Miller v. First National Bank, 164 Colo. 449, 435 P.2d 899 (1968) and Barlow v. Hitzler, 40 Colo. 109, 90 P. 90 (1907). See also Buchanan v. Hansen, 820 P.2d 908 (Utah 1991); Vulcan Materials Co. v. Bee Construction Co., 101 Ill.App.3d 30, 56 Ill.Dec. 465, 427 N.E.2d 797 (1981), rev'd on other grounds, 96 Ill.2d 159, 70 Ill.Dec. 465, 449 N.E.2d 812 (1983). See generally Annotation, Right of mortgagee or other lienor to acquire and hold tax title in his own right as against persons owning other interests in or liens upon property, 140 A.L.R. 294 (1942).

The common fund doctrine recognizes that the real property in which various persons have an interest, either of an ownership or security nature, represents a common source from which all such interests must be satisfied. It also recognizes that each of the interest holders normally has a right to pay the ad valorem taxes imposed upon the property.

Further, given the relationship of each interest holder to the res that protects that interest, there arises, at least with respect to the payment of such taxes, a quasi-fiduciary relationship among the various interest holders themselves. Hence, such an interest holder, having a right to pay ad valorem taxes, may not act as a stranger to the property and attempt to acquire a tax title that would divest the other interest holders of their interests. In such circumstances, any payment to acquire a tax title will be considered to be either a payment of the taxes or a redemption of the property from a previous tax sale, rather than a payment for the acquisition of a new title.

Fundamental to the recognition of this quasi-fiduciary obligation, however, is the existence of a right to pay ad valorem taxes at the time that the payment is made. Indeed, in Miller v. First National Bank, supra, 164 Colo. at 457-458, 435 P.2d at 902-903, it was said:

[I]t is necessary to point out also that the fiduciary relationship rule is an equitable concept which premises its validity upon a right to pay taxes co-related with an accompanying duty to pay taxes; and that this duty is breached when the fiduciary does not pay the taxes or does not redeem but instead buys a tax certificate and is issued a treasurer's deed. (emphasis supplied)

Here, even if we assume that plaintiff and its assignor, Wahatoyas, L.L.C., were both nominees for their individual common principal, the undisputed facts show that the various tax certificates which supported the later treasurer's deeds were paid for and assigned to Wahatoyas in July 1994. At that time, however, neither plaintiff nor any of the parties associated with it had any interest of either a legal or equitable nature in any of the parcels described in those certificates or in any lien encumbering the property. At the time these tax certificates were acquired, therefore, none of these parties had any right to pay the unpaid taxes or to redeem the property from any prior tax sale.

It is true that, more than three months later, in October 1994, Wahatoyas assigned these tax certificates to plaintiff and simultaneously entered into a written agreement with a third party to acquire a promissory note secured by a deed of trust upon the property. Later still, a treasurer's deed was issued to plaintiff for each of the four parcels.

In our view, however, these later events cannot impose, retroactively, a fiduciary obligation to pay taxes at a time when there existed no right to pay them. We conclude, rather, that, under the common fund theory adopted in Miller v. First National Bank, supra, the date that the payment is made is the determinative one. If there exists, at that time, a right to pay taxes, any payment made will be considered to have been made for that purpose. Conversely, if no such right to pay or to redeem then exists, no fiduciary relationship exists, and no later event will retroactively alter the effect of a payment made to acquire a tax certificate or deed.

In reaching this conclusion here, we rely upon the fact that the record contains no evidence of any agreement among any of the interested parties to acquire any interest in any of the parcels or in any lien upon them prior to October 1994. And, the trial court here found, as a fact, that there was no collusion among any of the parties.

III.

Defendants also argue that some of the four treasurer's deeds issued to plaintiff were legally insufficient to convey proper title to it because (1) while some of the deeds were supported by tax certificates issued for taxes exceeding $10,000, there was no compliance with § 39-11-122, C.R.S. (1994 Repl.Vol. 16B), and (2) in the case of each of the four parcels, the assessments for improvements existing upon each was mistakenly, but separately, assessed against a parcel not the subject of this litigation, so that the resulting taxes upon these improvements were not included within the tax certificates upon which plaintiff's treasurer's deeds are based. We reject both of these arguments.

A.

Section 39-11-122 provides that, if...