Stanard v. Dayton

• Decision Date: 04 January 1915
• Docket Number: 4218,4223.
• Citation: 220 F. 441
• Parties: STANARD, County Treasurer, et al. v. DAYTON. DAYTON v. STANARD, County Treasurer, et al.
• Court: U.S. Court of Appeals — Eighth Circuit

220 F. 441

STANARD, County Treasurer, et al. v. DAYTON.

DAYTON v. STANARD, County Treasurer, et al.

Nos. 4218, 4223.

United States Court of Appeals, Eighth Circuit.

January 4, 1915

John F Mail, of Denver, Colo., for appellants.

Harvey Riddell, of Denver, Colo., for appellee and cross-appellant.

Before CARLAND, Circuit Judge, and T. C. MUNGER and YOUMANS District judges.

YOUMANS District Judge.

On the 16th day of January, 1908, James B. Orman and William Crook partners as Orman & Crook, were adjudged bankrupts, and on the 6th of February, 1908, William L. Dayton was appointed trustee of the bankrupt estate. Among the assets belonging to said estate were a number of lots in Pueblo, Colo. At the time of the adjudication the general taxes and certain special assessments against said lots for the years 1906 and 1907 were due. On the 9th of November, 1908, and at various times thereafter, the taxes remaining unpaid, the appellant Stanard, as county treasurer of Pueblo county, after giving the notice required by law, proceeded to sell said lots for the general taxes and special assessments of 1906 and 1907. Certificates of purchase were issued to the purchasers at such sale, some of whom are appellants.

From time to time thereafter the appellants, other than Stanard, paid certain subsequent taxes and special assessments on the same lots. Notice was given, as required by law, that tax deeds would be issued on the certificates of purchase. The trustee brought this suit: (1) To enjoin the issuance of any tax deed for default in the payment of general taxes or special assessments. (2) To have all tax sales declared void. (3) For authority to sell the property free and clear of liens for such taxes and special assessments. (4) To compel the appellants to look to the proceeds of the sales of the properties against which each of them held certificates of purchase, and to such proceeds only, for reimbursement, if they should be adjudged to have valid claims for reimbursement.

Appellants moved to dismiss the bill, and the motion was overruled. They then filed answer, which raises practically the same questions which were raised by the motion to dismiss. The decree contained the following order:

'It is further ordered that each of said respondents, who became a purchaser or assignee of a purchaser of any said real estate, or any part or parcel thereof, at said tax sale of November 9, 1908, has the right to be repaid out of the proceeds arising from the sale by the trustee in bankruptcy of that particular lot or parcel as to which said respondent or his assignor holds any such certificate of purchase, but not otherwise, for the amount of taxes assessed against said lot or parcel for the taxes of the year 1906, and for any said special assessments for paving or for storm and sanitary sewer, and for the interest or penalties that may have accrued upon any such tax or special assessment up to the 6th day of February, 1908, amounting to 10 1/4 per cent. of the tax so assessed, and also for the principal sum of any subsequent taxes that may have been paid by the holder of any such certificate of purchase, but that no said respondent be paid therefrom any interest, penalties or costs, or other sum, over or beyond the principal of said taxes and special assessments as assessed, except the interest and penalties that may have accrued up to February 6, 1908, aforesaid.'

The assignments of error in No. 4218 are substantially that the court erred: (1) In holding the tax certificates void. (2) In limiting the amount which should be refunded to each certificate holder to the taxes and special assessments, interest, and penalties which accrued up to February 6, 1908, and the principal sum paid by them after that date.

The trustee took a cross-appeal, which is No. 4223 here, and assigned as error the finding of the court that appellants should be reimbursed at all.

The bill alleges that the trustee has been in possession of all the property involved in this suit since his appointment as trustee. That allegation is not denied. This case is governed by the decision of this court in the case of In re Eppstein, 156 F. 42, 84 C.C.A. 208, 17 L.R.A. (N.S.) 465. The court there said:

'We do not mean that property in the course of administration under the Bankruptcy Act is exempt from taxation, or freed from tax liens or claims theretofore fastened upon it (Swarts v. Hammer, 194 U.S. 441, 24 Sup.Ct. 695, 48 L.Ed. 1060, and cases supra), but that it is in custodia legis, and that any act interfering with the court's possession, or with its power of control and disposal, and done without its sanction, is void. The general rule is practically conceded; but it is said that the procurement of the tax deed was not such an interference, because it merely perfected an incipient title, and did not disturb the possession. The distinction does not impress us. The issuance of the deed was the principal act connected with the sale. If effective, it extinguished the right of redemption, which was

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