Utah Oil Refining Co. v. Millard County Drainage Dist. No. 4

• Decision Date: 31 October 1935
• Docket Number: 5491
• Citation: 50 P.2d 774,90 Utah 67
• Court: Utah Supreme Court
• Parties: UTAH OIL REFINING CO. et al. v. MILLARD COUNTY DRAINAGE DIST. No. 4 et al. (UTAH REALTY CORPORATION, Intervener)

50 P.2d 774

90 Utah 67

UTAH OIL REFINING CO. et al. v. MILLARD COUNTY DRAINAGE DIST. No. 4 et al. (UTAH REALTY CORPORATION, Intervener)

No. 5491

Supreme Court of Utah

October 31, 1935

Rehearing Denied January 4, 1937.

Appeal from District Court, Fifth District, Millard County; Le Roy H. Cox, Judge.

Suit by the Utah Oil Refining Company and others against the Millard County Drainage District No. 4 and others, in which the Utah Realty Corporation intervened. Judgment for plaintiffs, and intervener appeals.

AFFIRMED.

Soule &amp Spalding and S. R. Thurman, all of Salt Lake City, for appellant.

O. A Tangren, of Delta, and Melville & Melville, of Salt Lake City, for respondents.

WOLFE, Justice. ELIAS HANSEN, C. J., and FOLLAND, J., concur. MOFFAT, Justice, EPHRAIM HANSON, Justice, dissenting.

OPINION

WOLFE, Justice.

The three plaintiffs, Utah Oil Refining Company, Intermountain Building & Loan Association, and Hadlock, as receiver for the Delta State Bank, brought this action, not to quiet title to the lands set out in the complaint, but to have canceled, annulled, and purged from the records certain purported drainage taxes levied against the lands after the title had passed to the county by auditor's deed for the unpaid general taxes for the year 1920. The complaint further prayed that drainage district No. 4 and its supervisors, the county commissioners, the county auditor, the county treasurer, and the county recorder, who were all joined as defendants, be enjoined and restrained from in any manner encumbering the plaintiffs' lands with further drainage taxes and assessments. This immediately raises the same question which was raised in the case of Henry Hanson v. Oak Burris et al., and reported in 86 Utah 424, 46 P.2d 400, as to whether the auditor's deed to the county cleanses the land from all future liens for drainage district taxes. We have held in that case that it did. The reader is referred to that case for the reasoning upon which that decision rests. In this case the Utah Realty Corporation intervened and raised the same questions which were raised in the Hanson Case.

Bonds of drainage district No. 4 in the sum of $ 310,000 were issued and sold June 1, 1919. The property described in the complaint is located within the boundaries of this drainage district. The Utah Realty Corporation as intervener set out that it was a large holder of these bonds. It contended, as it had been contended in the Hanson Case, supra, that title 26, Comp. Laws Utah 1917 (section 2040 et seq.), dealing with the formation of drainage districts and the issuance of bonds for the borrowing of money for the construction of drainage projects, and especially sections 2055 and 2058 of said title, required the drainage and the general taxes to be treated together as one lump sum for the purpose of collection of taxes and sale for delinquent taxes. In other words, the intervener contended that drainage taxes were put in the same position as general taxes for governmental purposes, i.e. state, county, city, and school district taxes.

In 1920, the first year after the bonds were issued and sold, the county treasurer, instead of placing the drainage taxes on the same tax notice with the general taxes and treating both taxes as an integral unit and including them in one total through the various steps embraced in tax collection, separated the two taxes, in that separate tax notices were sent out, one for general taxes and another for the so-called drainage district taxes. Lands delinquent in their general taxes for the year 1920, including the land described in the complaint, were sold for general taxes without including or requiring the payment of the drainage taxes. A certificate of sale was given to the purchaser for the general taxes only. An auditor's deed for the general taxes was given to the county upon the expiration of the period of redemption, and on the 5th day of May, 1925, the land was sold by the county through a quitclaim deed to the Delta State Bank. Further proceedings in the way of quieting title against the drainage district were later brought. The facts concerning this latter suit will be set out in detail later, as they bear on another question involved in this appeal. Suffice it to say now that the intervening bondholder, the Utah Realty Corporation, contends that, under the 1917 law, separate proceedings by the county treasurer could not be pursued, and that to separate them was detrimental to the rights of the bondholders. In the case of Hanson v. Burris, supra, we have already held that this was not the case. A reading of that decision will reveal the reasons. It is controlling as to the contention of the intervener in that regard in this case.

The intervening bondholder contends in this case, as was contended in the Hanson Case, that while the lien for drainage taxes already assessed against the land might be cleansed by the auditor's deed, yet the latter did not extinguish the right to levy against the property for future drainage taxes necessary to pay the principal and interest installments on the bonds, and that a lien therefor attached to the land in the hands of any private purchaser from the county. It was on that supposition that the drainage district, as alleged in the complaint, continued to levy and sell the land described in the complaint for drainage taxes, and it was for the purpose of expunging such taxes from the record and of preventing their future imposition that this complaint was filed and that the county officials, who have it in their power to levy and collect taxes, were joined as defendants. The contention of the intervener in this regard is settled by the Hanson Case. We held in that case, at least when the land went to the auditor's deed for general taxes, it did cleanse the lands from all liability for future assessment of drainage taxes.

A further interesting question, however, arises in this case and will require the statement of further facts in order intelligently to understand the rationale. It appears that after the Delta State Bank obtained its quitclaim deed from the county in 1925, Seth Pixton, as receiver for said bank brought an action against Millard County Drainage District No. 4 and the town of Delta, a municipal corporation, to quiet title to the lands described in the complaint filed in this suit, and on the 14th day of October 1930, obtained a judgment against the defendants in that case quieting title to said lands. That judgment and decree was introduced in evidence over the objection of the intervener in this case. The objection of the intervener was founded on the assertion that it was not a party to the Pixton suit and therefore not bound by it. It assigns the ruling of the court admitting the files of that case as error.

Seemingly, the contention of the intervener is that the plaintiffs have failed to prove the allegations necessary for the court to quiet title in them on the theory that the files in the Pixton Case were wrongly admitted and in no case would be binding against the intervener. It is further contended that the plaintiffs, as against this intervener, were required to prove their title to the lands described in the complaint filed in this action by showing that the proper steps were taken by the tax collecting authorities prerequisite to the issuance of a valid auditor's deed, and that the notice sent out in the year 1920 relating to the lands described in the complaint, the tax sale certificate, and the auditor's deed contained fatally defective descriptions of the property purported to be taxed and sold. The intervener contends that the plaintiffs did not offer the tax title upon which the Pixton judgment was based in evidence, but founded its complaint strictly on the Pixton judgment; that the intervener, not being a party to the Pixton Case, is not bound by it, and, therefore, the admission of the Pixton judgment could not be the foundation of a judgment against the intervener in this case.

The intervener itself introduced through the County treasurer of Millard county the description contained in the assessment notice of the general taxes for 1920 and the description contained in the tax sale notice, and the description in the tax sale certificate. The description in the auditor's tax deed was also introduced by the intervener. All of these descriptions the intervener claims were fatally defective and would defeat title in the plaintiffs. Can the intervener use these alleged defective descriptions in the notices to defeat this action by the plaintiff in view of the judgment quieting title in favor of Pixton, plaintiffs' assignor, against the drainage district? In the first place, this action is not one for the quieting of title. It is an action directed towards removing certain purported assessments from the record which would be a cloud on the title and enjoining any further assessments for drainage taxes. The intervener is a bondholder. It does not claim any adverse title to plaintiffs. It does not care who has the title as long as the land is liable for the drainage taxes. The real reason it attacked the plaintiffs' title was because it was contending that the auditor's deed was not a valid one, and hence that regardless of Hanson v. Burris, the land should still be considered as not having passed through the cleansing process and is still taxable for drainage purposes. If we had held in Hanson v. Burris that the auditor's deed did not cut off the right thereafter to hold the land liable for drainage taxes necessary to pay future installments of the principal and interest of the bonds, the intervener would have no interest in contending that the plaintiffs in this case did not get a good title because the auditor's deed to the county...