Smith v. Potter

• Decision Date: 28 September 1912
• Docket Number: No. 16,314.,16,314.
• Citation: 137 N.W. 854,92 Neb. 39
• Parties: SMITH v. POTTER ET AL.
• Court: Nebraska Supreme Court

92 Neb. 39

137 N.W. 854

SMITH

v.POTTER ET AL.

No. 16,314.

Supreme Court of Nebraska.

Sept. 28, 1912.

Syllabus by the Court.

In a tax foreclosure proceeding by a county to recover delinquent taxes on the land without making a prior administrative sale, where service is obtained by publication, and the premises are sold under the decree of foreclosure, the purchaser at the foreclosure sale buys subject to the right of one having a valid lien upon the premises to redeem from such sale; and the party claiming the lien cannot be barred without a hearing, if he answers, setting up his defense, and demands such hearing.

Proof of publication of notice for constructive service re-examined, and, as a preponderance of the evidence tends to show that the notice was published for the time required by statute, the former opinion is modified to correspond with this view.

On rehearing. Former opinion (90 Neb. 298, 133 N. W. 437) modified, and judgment reversed.

Letton and Rose, JJ., dissenting.

HAMER, J.

This is an appeal from a judgment of the district court of Lincoln county quieting title in the plaintiff to a tract of land in that county. The plaintiff's title is derived by a sheriff's deed, which was issued in a tax foreclosure suit brought by Lincoln county against David G. Potter and his wife and others. This case was before this court at a prior term. See 90 Neb. 298, 133 N. W. 437. For a more complete statement of the facts in the case, we refer to the opinion heretofore published. The defendant in the court below, David G. Potter, received a patent to the land in controversy in 1887. Afterwards, in 1892, he executed and delivered a note and mortgage to A. D. Buckworth to secure the payment of a note for $389. This note was indorsed to the North Platte National Bank, of which Buckworth was president. That bank became insolvent, and one Doolittle, who was appointed the receiver of the bank, sold the note and mortgage as such receiver. The defendant Hoagland claims to own this note and mortgage and a decree of foreclosure based upon the same, and he now claims the right to redeem from the tax lien, because he owns this note and mortgage and the decree mentioned, and because the tax foreclosure proceedings upon which the plaintiff's title to the land depends are invalid. He filed an answer and a cross-petition. He claims in the answer and cross-petition the right to redeem. Lincoln county obtained a decree of foreclosure for the delinquent taxes on the land without making a prior administrative sale. Service was had by publication, and the land was sold to satisfy the decree. The land was purchased at sheriff's sale by the defendant Wilcox in 1902, and the plaintiff, Smith, receives his title through Wilcox. The plaintiff, Smith, denies the ownership of the decree by Hoagland and alleges that the receiver abandoned that indebtedness.

It is claimed that Potter and his wife executed and delivered to the North Platte National Bank renewals of the note executed and delivered to Buckworth. The last of these renewal notes is claimed to have been executed in January, 1894. It is claimed that the receiver of the bank, by virtue of an order of the Comptroller of the Currency, advertised all of the assets of the bank remaining in his hands to be disposed of, and that he held the sale on or about the 1st day of January, 1900, and that on or about the 18th day of January, 1900, he offered the notes and indebtedness, secured by the mortgage and covered by the decree, for sale at public auction, and sold the same to one A. H. Davis, and that he delivered the notes to Davis. There was an affidavit for service by publication in the tax foreclosure proceedings. It is claimed that no valid service by publication could be had upon Potter and his wife, because of the fact that they were all the time residents of the state of Nebraska, and that the affidavit for service by publication was untrue. Buckworth was a resident of Lincoln county until he died in the year 1894, or thereabouts. In the tax foreclosure proceedings it is alleged that no personal service of summons was had upon Potter and his wife and upon Buckworth. This court reversed the judgment of the district court quieting title in Smith. The appellees Wilcox, Dikeman, and Smith have filed a motion to vacate the judgment of reversal entered by this court, and the question is whether the judgment of this court reversing the judgment of the court below shall stand, or whether a new judgment shall be rendered.

This court bases its finding that the appellant Hoagland is the owner of the note and mortgage in controversy on the opinion in the case of McCabe v. Reed, 88 Neb. 457, 129 N. W. 1019. In the former opinion this court quotes from the opinion in McCabe v. Reed, supra, and says: “If the defendant in an action to cancel a mortgage produces the notes secured thereby, and it appears that he has controlled and had undisputed possession of the instruments for many years under a claim of title thereto, these facts will sustain a finding that he is the owner thereof, notwithstanding they are indorsed payable to the order of a third person.” This court then ventures the opinion that the testimony of the witness Davis is not sufficient to overcome Hoagland's testimony, supported and corroborated as Hoagland's testimony was by his possession and production of the papers. As Hoagland has no rights in the premises, unless he is the owner of the notes and mortgage, that is one of the first things to determine. This court said, in McCabe v. Reed, that: “The delivery of a negotiable promissory note indorsed to the order of a third person will not in itself transfer title to the note (Gaylord v. Nebraska Savings & Exchange Bank, 54 Neb. 104 [74 N. W. 415, 69 Am. St. Rep. 705]), but an equitable assignment will result from the sale and delivery of the note without an indorsement, and the equitable owner may maintain an action thereon in his own name. Greeley State Bank v. Line, 50 Neb. 434 . And the possession of an unindorsed, negotiable promissory note by some person other than the payee or indorsee may sustain a finding that the equitable title followed the possession. Cather v. Damerell, 5 Neb. (Unof.) 175 .” This court further said in that case that the original note and mortgage were produced in the tax foreclosure case by the intervener, and that they had remained in his custody for more than six years, and that no other person asserted title or ownership to the same, and that prima facie there was proof of title in the intervener in the tax case. Sanford v. Litchenberger, 62 Neb. 501, 87 N. W. 305. It would therefore seem from the evidence that Hoagland should be treated as the owner of the note, mortgage and decree.

It is next claimed that the publication was insufficient. The publication was in a semiweekly newspaper issued on Tuesdays and Fridays of each week. The first publication seems to have been on the 28th of August, 1900, and the next on the 31st of August; that would make one week. The succeeding publications are on September 4th and 7th, September 11th and 14th, and September 18th and 21st; the last making the fourth week. It would therefore seem that this objection is not well taken. In the former opinion it was held that the court acquired no jurisdiction, because the notice in the tax foreclosure proceedings was not published the required length of time. The end of the four weeks was the 22d of September, 1900. The notice published required the defendants to answer five days before that time. In other words, when the service was complete, the time within which defendants were to answer had expired five days before. If it shall be said that the time expired with the last publication, then the defendants were required to answer four days before that time, to wit, on the 17th of September, 1900. In conclusion, touching this matter, the answer day arrived when there had been publication for only three weeks. Section 79 of the Code, provides that the notice must be made four consecutive weeks, and, among other things, that it must “notify the person or persons thus to be served when they are required to answer.” Of course, this is not done in this case, because the time had expired when the answer was to be made, according to the language of the notice, before the service was complete. Because of this defect in the notice and the time of its publication, we may well doubt whether jurisdiction was acquired; but we do not decide that question, because, while it is apparent by an examination of the case, the question is not raised or discussed by counsel, and we do not have the benefit of their research and argument, and without this no appellate court should determine the question shown by the record.

The next proposition is that the affidavit for publication states that the defendants are nonresidents of the state of Nebraska, and service of summons cannot be had on them, or either of them. It is said that this is insufficient, and it is argued that the affidavit should allege that service cannot be made upon them within this state. It is claimed that Buckworth was a resident of Lincoln county until his death. It is claimed that the Potters have always been residents of the state of Nebraska, and that service of a summons could be made upon them in this state. If that is true, the tax foreclosure is without jurisdiction.

It is argued that the rule should be applied in this case which is said to have been established in Britton v. Larson, 23 Neb. 806, 37 N. W. 681. That was in an action of ejectment. There was a trial in the district court, resulting in a verdict and judgment in favor of the defendant. The record in that case showed that in April, 1875, one Harry Brownson was the owner of the real estate in question; that on March 8, 1871, he and his wife executed and delivered to the First National Bank of Omaha a mortgage on the real estate. On the 16th...