State ex rel. State Tax Commission v. Garcia

• Decision Date: 01 May 1967
• Docket Number: No. 8033,8033
• Citation: 77 N.M. 703,1967 NMSC 98,427 P.2d 230
• Parties: STATE of New Mexico ex rel. STATE TAX COMMISSION and Jesse D. Kornegay, Chief Tax Commissioner, Plaintiff-Appellant, v. Elmer N. GARCIA, Perry Wilkes and Alice G. Wilkes, his wife, Defendants- Appellees.
• Court: New Mexico Supreme Court

Page 230

427 P.2d 230

77 N.M. 703

STATE of New Mexico ex rel. STATE TAX COMMISSION and Jesse D. Kornegay, Chief Tax Commissioner Plaintiff-Appellant, v. Elmer N. GARCIA, Perry Wilkes and Alice G. Wilkes, his wife Defendants- Appellees.

No. 8033.

Supreme Court of New Mexico.

May 1, 1967.

Boston E. Witt, Atty. Gen., Thomas O. Olson, Sp. Asst. Atty. Gen., Santa Fe, for appellant

Harry O. Morris, Albuquerque, for appellees.

OPINION

MOISE, Justice.

The State appeals from summary judgments granted in favor of defendants in three cases wherein the State was seeking to set aside certain deeds issued by the State Tax Commission to one Elmer N. Garcia. In each case it was alleged that the deeds were issued because of fraudulent, false, illegal and untrue representations, documents and statements made by defendant Garcia to the State Tax Commission and relied on by it, and that Garcia knew that such right to repurchase was limited to persons who had an interest which had been extinguished by the tax deed to the State, and that he did not qualify as such a person. Defendant Garcia, in turn, conveyed by quitclaim deed to defendants Larry Wilkes and his wife Alice G. Wilkes, neither of whom had any knowledge, actual or constructive, of Garcia's fraudulent representations. Both the State and defendants Wilkes sought summary judgment and, upon the State confessing to inability to establish any knowledge by Wilkes of the alleged fraud of defendant Garcia, judgment was entered in favor of defendants Wilkes. Defendant Garcia has disclaimed any interest.

The State's position is that the deed to Garcia was made pursuant to § 72--8--31, N.M.S.A.1953, and that since Garcia was not a person entitled to redeem under the provisions of that section, he obtained no title and, consequently, his grantees obtained nothing from him. The State relies principally upon Trujillo v. Montano, 64 N.M. 259, 327 P.2d 326, wherein it was held that a person having no prior interest in property acquired nothing from the State through a deed issued pursuant to § 72--8--31, supra. This was a case wherein the owner having the statutory right to redeem had procured a deed and, thereafter, a previous owner obtained a deed based upon another tax sale, falsely claiming to be the owner. The State further argues that under the holding in Shackelford v. McGlashan, 27 N.M. 454, 202 P. 690, 23 A.L.R. 75, since the grantee in an invalid tax deed (Garcia) obtained nothing, his grantees (Wilkes) could receive nothing. That the statements in those cases relied on by the State must be restricted to the fact situations there being considered and do not apply here is demonstrated conclusively by our discussion which follows:

We also note the case of Eager v. Belmore, 53 N.M. 299, 207 P.2d 519 (1949). There a deed from the State to an employee of the State Corporation Commission, prohibited by law from purchasing, was held to be void. The action was brought by the prior owner against the purchaser and the wife and brother of a member of the State Corporation Commission to whom the property had been deeded. No question was raised as to whether the transferees were or could be bona fide purchasers. However, in the case, reliance is placed on the following language found in Waskey v. Hammer, 223 U.S. 85, 32 S.Ct. 187, 56 L.Ed. 359:

'The general rule of law is that an act done in violation of a statutory prohibition is void and confers no right upon the wrongdoer; but this rule is subject to the qualification that when, upon a survey of the statute, its subject-matter and the mischief sought to be prevented, it appears that the legislature intended otherwise, effect must be given to that intention. * * *'

In this language we perceive a recognition that 'void' does not always mean 'absolutely void' but, to the contrary, when it is clear that such a meaning was not intended, it may mean 'voidable.' In arriving at our conclusion in the instant case, we consider whether the conveyance being attacked was 'void' or 'voidable' because of fraud as alleged, which resulted in a conveyance to a purchaser not entitled to redeem from a tax sale.

The problem of when convenances are void, and when voidable has engaged the attention of this court in a number of cases. We first call attention to Gross, Kelly & Company v. Bibo, 19 N.M. 495, 145 P. 480 (1914) wherein is found a discussion as it related to a fraudulent preference to a creditor who joined in a composition agreement. That case was discussed at length in Kyle v. Chaves, 42 N.M. 21, 74 P.2d 1030 (1037), being a case we consider most instructive on the problem here being considered. Kyle v. Chaves, supra, involved the question of the validity of a tax deed issued in violation of the Tax Moratorium Act then in effect. The court held the deed 'voidable' and determined that the previous owner who had not complied with the statute by paying the taxes was in no position to complain. Of course, if the conveyance had been 'absolutely void' this result could not follow. In the course of the opinion of the court, we find the following pertinent discussion:

'* * * 'It is not contrary to public policy for the treasurer to assign tax sales certificates to those who desire to purchase them. In fact all of the previous statutes, including chap. 27, L.1934, encouraged the sale of property for delinquent taxes, the assignment of certificates and the collection of such delinquent taxes, subject only to certain moratoriums or concessions made to the taxpayers to extend his time for payment. If the treasurer practiced a fraud by assigning the tax certificate at a time when it was illegal for him to assign it, it injured the taxpayer, rather than the public, and the contract is relatively void or voidable only.'

'In effect, the defendants, by their failure to take advantage of the indulgence and protection afforded them by the Legislature, confirmed the action of the county treasurer, or at least waived any right to object thereto.

'Much of what has been said in the texts and cases cited were where the statute had 'in so many words' declared a transaction void, the courts holding that only voidable was meant.

'The case for 'voidable' is stronger where the statute has not said that the failure to observe a legislative direction or mandate renders the action void.

'Section 24 of chapter 27 of the Laws of Special Session of 1934 is in effect a legislative statement that acts of the taxing officials who are tntrusted with the collection of delinquent taxes shall not be held to render tax titles void and specifically setting forth defenses that may be interposed in controversies involving titles claimed by virtue of tax deeds.

'A very good pattern is provided by Mr. Cooley in his work on Taxation, at § 1489, 4th Ed., where he says: 'In determining the effect of the defects and irregularities in prior proceedings as affecting the title of the tax purchaser, several things must be taken into consideration. First, does the matter complained of affect the substantial rights of the taxpayer? If it is not material to his rights or is a violation of a merely directory statute, the title of the tax purchaser is not affected; but if there is any jurisdictional defect or failure to obey a mandatory statute the purchaser acquires no title. Reference must also be made to curative tax statutes.' (Italics ours.)

'The last statement is very important. There are numerous instances where delinquent taxpayers have urged in the courts of this state that the purchaser acquired no title and that the tax proceedings were void because of jurisdictional defects or failure to obey certain mandatory statutes. But for the curative provisions contained in section 24 of chapter 27 or the Laws of Special Session of 1934, (Tax Code cited supra), we would doubtless have gone in accordance with the first part of the statement made by Mr. Cooley, quoted supra. Curative provisions are so far-reaching that we have said that they mean exactly what they say, and there is no way for the delinquent taxpayer who has failed to avail himself of the right to redemption or made payment to overcome such curative provisions.

'Not only did the 1935 Legislature fail to say in chapter 133 that the act of the county treasurer in assigning the tax sale certificate during the moratorium period was void, but the earlier statute, which has not been repealed, has in effect said that no court shall say that the failure to obey a mandatory or other statute renders a tax title void. The Legislature has said what considerations or circumstances would make a tax title void and have excluded all others.

'It seems therefore that justice and the rules of construction do not require that we should say that the act of the county treasurer, in assigning this certificate during the time he was told by the Legislature not to do so, was void absolutely but was void relatively or conditionally, and that the condition has not arisen for declaring it void. * * *'

We would also note our decision in Scudder v. Hart, 45 N.M. 76, 110 P.2d 536 (1941), being a case involving an alleged fraudulent tax conveyance. We again discussed when conveyances are 'void' and when 'voidable,' and in effect concluded the deed by the county treasurer was voidable. We there said:

'We are next required to consider the meaning of the word 'void' in the phrase, 'If fraud is established, such title shall be void.' In Kyle v. Chaves, 42 N.M. 21, 74 P.2d 1030, we discussed the meaning of the word 'void' at some length, which is summarized in the syllabus as follows: 'The word 'void' is not always used in an absolute or in its literal sense but may be and often is used in the sense of 'voidable.' Where an enactment has relation only to the benefit of particular persons, 'void' will be understood as 'voidable' only at the election of the person or persons for whose protection the enactment was made, provided they are capable of...