Schuman v. Cherry

• Decision Date: 23 May 1949
• Docket Number: 4-8851
• Citation: 220 S.W.2d 817,215 Ark. 342
• Parties: Schuman v. Cherry
• Court: Arkansas Supreme Court

220 S.W.2d 817

215 Ark. 342

Schuman v. Cherry

No. 4-8851

Supreme Court of Arkansas

May 23, 1949

Rehearing Denied June 13, 1949.

Appeal from Pulaski Chancery Court, First Division; Frank H. Dodge Chancellor.

Reversed.

Wm J. Kirby and U. A. Gentry, for appellant.

Tilghman E. Dixon, J. H. Carmichael, Jr., and J. H. Carmichael, Sr., for appellee.

OPINION

Ed. F. McFaddin, Justice.

This appeal stems from the effort by appellees, as heirs of the original property owner, to have their title declared superior to that of appellant, Ed Pinkert, who holds by mesne conveyances from the improvement district which purchased the property at the commissioner's sale for the foreclosure of the delinquent assessments.

The three vacant lots here involved were situated in Sewer Improvement District No. 94 of Little Rock (hereinafter called district). In June, 1927, the district filed suit in the Pulaski Chancery Court to foreclose the district's lien for the delinquent assessments due on the three lots. Other properties (over 340 tracts in all) were included in the same suit, and the foreclosure decree was not rendered until November, 1937, being more than ten years after the suit had been filed. The said foreclosure decree recites, as regards service:

"And it appearing to the court that due service of process has been had upon each of the defendants, for the time and in the manner prescribed by law, . . . and that a list of all delinquent property in plaintiff improvement district, for the assessments levied for the various years from 1924 to 1934, inclusive, by warning order of notice of the pendency of this suit, has been given by publication for four consecutive weeks, listing the names of the last known owners, the lots, blocks, parcels and land and other property in said district, and the amounts due thereon, for the years against which said property is delinquent."

From the above recital it appears that there was not only (a) service on the delinquent property owners as required by the law when the suit was filed in 1927, but also (b) service by publication as required by the law when the decree was rendered; ^[1] so no question is posed in this case as to the sufficiency of the service in the foreclosure suit. The benefits on these three lots were unpaid from 1924 to 1934, inclusive; the delinquent assessments totaled $ 130.20 and the penalty was $ 26.04. In the foreclosure sale conducted by the commissioner in chancery, the district bid for the three lots the said amount of the delinquent assessments, penalty and costs; and a certificate of purchase was issued to the district.

In 1943, this certificate of purchase -- with the approval of the chancery court -- was sold to James Newsome for $ 5.50. This sale and the circumstances surrounding it will be discussed in topic II, infra. During the period allowed by law for redemption, ^[2] the said certificate of purchase was transferred by Newsome to Jack Barry, and by Barry to W. I. Stout, trustee. On October 12, 1943, the commissioner in chancery executed to W. I. Stout, trustee, the deed which described the three lots here involved; and that deed was on the same day acknowledged in open court and approved by the chancery court, and delivered to W. I. Stout, trustee. In 1944, for a valuable consideration, Stout conveyed the three lots to Ed Pinkert, one of the appellants in this court. The other appellant, here, is Manie Schuman, who claimed under a tax title now conceded to be void, so Pinkert is the real appellant and the only one with an interest. We will hereinafter refer to him as "the appellant."

On April 10, 1948, the appellees herein filed the present suit, and alleged (a) that the three lots were sold for a wholly inadequate price at the foreclosure sale; and (b) that the assignment of the certificate of purchase from the district to Newsome for $ 5.50 was wholly void, not only because of price, but also because of the intervention of a receiver appointed by the chancery court. The case was heard on oral and documentary evidence, and a decree was rendered on September 23, 1948, adjudging the title to the three lots to be in the appellees, free of all claims of appellant. This appeal challenges that decree.

From the foregoing recitals it appears that there was a long-delayed foreclosure suit by a municipal improvement district; a sale of the three lots to the district for the delinquent assessments, penalty and costs; a transfer of the certificate of purchase during the period of redemption; the expiration of the period of redemption; a deed by the commissioner in chancery to the holder of the certificate of purchase; the approval of said deed by the court; and the delivery to the grantee. The burden was on the appellees as plaintiffs in the trial court to show fatal defects in the proceedings of foreclosure. We therefore consider the contentions relied on by the appellees.

I. Amount for Which the Property was Sold at the Foreclosure Sale. The three vacant lots here involved were worth at least $ 1,800 at the time that they were sold to the district at the foreclosure sale for $ 156.24. Appellees claim that the sale was void because of this inadequacy of price; but we find this contention to be without merit. In Nash v. Delinquent Lands, 111 Ark. 158, 163 S.W. 1147 it was claimed that an improvement district foreclosure sale was void because the land was sold for an inadequate price. In denying that contention, we said:

"The law authorized the lands to be proceeded against 'for the collection of such assessments, installments, interest and fee and costs due thereon.' There was no evidence tending to show that the lands were offered for sale or sold for less than the amount owing and due thereon, as declared by the court in its decree. Where the law authorizes land to be sold for taxes, penalty, interest and costs as determined by the court in its decree to be due against the lands, if the lands, when offered at public sale upon open and free competitive bidding, bring no more than that amount, it cannot be said that the purchaser who offers such amount for the lands, and whose offer has been accepted, has paid an inadequate price."

Furthermore, section 5 of Act 207 of 1937 (as found in § 7317, Pope's Digest) says of improvement district foreclosure sales: "At such sale if there be no purchaser offering as much as the total tax or assessment, plus penalty, interest and all costs and attorney fees allowed, then said property shall be struck off to the plaintiff." The holding in the foregoing case, as well as the plain wording of the quoted statute, shows that all that a district is required to bid at a foreclosure sale is the amount of the delinquent assessment, penalty and cost. Such was the bid of the district in this case; and no fraud or collusion is alleged, so the appellees cannot now be heard to claim that the property was sold for an inadequate price at the foreclosure sale. ^[1]

II. Appellees' Claim Regarding the Receivership. After the purchase of the three lots at the foreclosure sale and pending the period of redemption, the district filed a petition in the foreclosure suit praying that the chancery court appoint a receiver to take charge of the properties sold (there were over 340 tracts involved in the sale), and to collect the rents thereon. The chancery court did appoint such a...