Witt v. Jones

• Decision Date: 17 February 1925
• Docket Number: 15041.
• Parties: WITT v. JONES et al.
• Court: Oklahoma Supreme Court

233 P. 722

106 Okla. 227, 39 A.L.R. 1411, 1925 OK 149

WITT v. JONES et al.

No. 15041.

Supreme Court of Oklahoma

February 17, 1925

Syllabus by the Court.

The possession of property by a receiver is exclusive and cannot be ousted, except by order of the court having control of his actions. He acts in a fiduciary capacity, and may not lawfully do any act to favor one party to the litigation as against the other, but must act in the utmost good faith in the preservation of the property to abide the judgment and decree of the court.

Where taxes have become a lien on real estate afterwards placed in the hands of a receiver, and the holder of the tax certificates serves notice on the receiver, through his tenant in possession, of his intention to take out a tax deed, it is the duty of the receiver to pay such taxes and discharge the lien out of funds then in his hands belonging to the record owner, and his failure and neglect to do so on advice of an attorney representing the holder of the tax certificates is a breach of trust and a violation of his duty as such receiver which this court will not uphold.

In such case, where the tax deed issued and the receiver thereupon delivered possession of the property to the tax deed holder without any order or adjudication by the court, equity will treat that as done which ought to have been done, and will order the receiver to pay off and discharge the tax lien as of the date the notice was served upon him, and will thereupon cancel and vacate the tax deed so issued.

Commissioners' Opinion, Division No. 1.

Appeal from District Court, Oklahoma County; James I. Phelps, Judge.

Action by F. H. Witt against G. H. Jones and D. R. Thompson receiver, to recover possession of certain lots and for cancellation of a tax deed thereon. Judgment for defendants and plaintiff appeals. Reversed and remanded, with directions.

This action was commenced by plaintiff filing his petition in the district court of Oklahoma county June 6, 1923, having theretofore obtained an order from said district court permitting such action to be filed against its receiver. By his action plaintiff sought to recover possession of certain lots described in his petition and to cancel a tax deed issued thereon to the defendant, G. H. Jones, and to recover the rents and profits derived from said property subsequent to the appointment of the receiver, and to quiet his title thereto.

Defendants answered by general denial. Trial was had before the court October 1, 1923, and resulted in a judgment in favor of the defendants. After unsuccessful motion for new trial plaintiff has brought the case here by petition in error with case-made attached for review. The parties will be hereafter referred to as plaintiff, defendant, and receiver, as they appeared in the trial court.

Twyford & Smith, of Oklahoma City, for plaintiff in error.

Wright Blinn & Gilmer, of Oklahoma City, for defendants in error.

LOGSDON, C. (after stating the facts as above).

Plaintiff presents all assignments of error under two propositions in the brief, but in the view taken of the case here it will only be necessary to consider the first proposition, which reads:

The tax deed is void, having been taken out without consent of the court while the property was in the hands of a receiver appointed by this court.

This case is an outgrowth of cause No. 12941, Rice et al. v. Jones, 102 Okl. 30, 225 P. 958. In that case H. F. Jones commenced his action to recover judgment in the sum of $10,000 on a promissory note executed by O. J. Rice, Lola Rice, and Elizabeth Witt. Lola Rice was sued as an individual, and as administratrix of the estate of O. J. Rice, deceased. In that action foreclosure was also sought of a mortgage on certain real estate, including that involved in the instant case. Plaintiff in that foreclosure action procured the appointment of a receiver to take charge of all the real property covered by the mortgage. He recovered judgment against all of the defendants, and for foreclosure of his mortgage; but on proceeding in error to this court it was held that the note was materially altered after execution, and the judgment was reversed as to all defendants, except Lola Rice, administratrix.

During the pendency of cause No. 12941, H. F. Jones, as agent for his father, G. H. Jones, procured tax sale certificates covering the lots here involved for the taxes delinquent thereon for 1918, and, after paying the subsequent accrued taxes for the years 1919, 1920, and 1921, had a tax deed issued in the name of his father, and thereafter ousted the court's receiver from his possession and control of the property here involved, and has since been collecting and receiving the rents, claiming title to the property and its proceeds as his father's agent. The plaintiff in the instant action, after the court took his property from him and delivered it to its receiver, removed from the state.

To sustain the action of the receiver and his codefendant in disregarding and setting at naught the order and jurisdiction of the court over this property defendants cite and quote from the case of Whitehead et al. v. Farmers' Loan & Trust Co., 98 F. 10, 39 C. C. A. 34. This case does not afford the support claimed. The court dissolved an interlocutory injunction to prevent the issuance of a tax deed by the county treasurer, but said:

"If a deed should be executed by the [county] treasurer to Whitehead, and he should attempt to take possession of the property conveyed to him, the court in charge of the receiver will undoubtedly be able to protect his possession, when disturbed or threatened to be disturbed, with due consideration to the rights of all parties interested in the same. In this way the court can assert its lawful right to exclusive custody and control, and the state will not be embarrassed by any unwarranted interference with its own process for collecting its revenue."

The case of Rice, County Treasurer, et al. v. Jerome, 97 F. 719, 38 C. C. A. 388, also relied on by defendants, expressly follows the Whitehead Case.

Another case relied on by defendants is Daniel v. Reid, 114 Wash. 211, 194 P. 979, but as to that case it is sufficient to say that the order appointing the receiver had been appealed from in a separate proceeding and his appointment superseded by bond, so that he was not acting when the matters arose which that case determined.

Other cases cited by defendants are Metcalfe v. Commonwealth Land & Lumber Company's Receiver, 113 Ky. 751, 68 S.W. 1100, 24 Ky. Law Rep. 527; Flower et al. v. Beasley (La.) 25 So. 322 (this is a wrong citation [correct citation 52 La. Ann. 2054, 28 So. 322]); Soniat v. Donovon, 118 La. 847, 43 So. 462; Central Trust Co. v. Wabash R. Co., 26 F. 11. None of these support the proposition to which they are cited.

When the receiver in the instant case was appointed he took possession of the property and was in possession through his tenant, Judkins, at the time he permitted himself to be ousted by his codefendant, Jones. As to how the ouster was effected, he testified:

"A. Well, I surrendered the possession; that is, I ceased to collect any other rents.

Q. How did you happen to do that? A. Well, I was told that the rents would be paid to Mr. Jones after a certain date.

Q. To Mr. Jones? A. Yes. Q. Now, how did you learn that,

...