Wood v. Schwartz

• Decision Date: 05 May 1931
• Docket Number: 40317
• Citation: 236 N.W. 491,212 Iowa 462
• Parties: MARGARET STEVENSON WOOD, Appellant, v. NANCY SCHWARTZ et al., Appellees
• Court: Iowa Supreme Court

236 N.W. 491

212 Iowa 462

MARGARET STEVENSON WOOD, Appellant, v. NANCY SCHWARTZ et al., Appellees

No. 40317

Supreme Court of Iowa, Des Moines

May 5, 1931

Appeal from Page District Court.--EARL PETERS, Judge.

Action in which the plaintiff asks judgment against the defendant Nancy Schwartz, on a promissory note, and for foreclosure of a mortgage executed by her and her husband, John W. Schwartz (now deceased), to secure said note. The plaintiff alleges that the lien of said mortgage is superior to the rights of all the parties defendant. The defendant, Nancy Schwartz answered, alleging therein, that she is the owner of the real estate in controversy, freed from the lien of said mortgage. The defendant, Home Building and Loan Association, answered alleging that it is the owner of a note and mortgage upon said real estate securing same, and that the plaintiff has no title or interest in the real estate in controversy. The remaining defendants, heirs-at-law of John W. Schwartz, deceased, and their respective spouses, made default. The trial court held that the defendant, Nancy Schwartz, is the absolute owner of said real estate, subject only to the rights of the Home Building and Loan Association under its mortgage, but rendered judgment against the defendant, Nancy Schwartz, for the amount due upon the note according to its terms. The plaintiff appeals.

Affirmed.

Keenan, Barnes & Clovis, for appellant.

Ferguson & Ferguson, for appellees.

WAGNER, J. FAVILLE, C. J., and EVANS, STEVENS, and GRIMM, JJ., concur. MORLING, DE GRAFF, ALBERT, and KINDIG, JJ., dissent.

OPINION

WAGNER, J.

The real estate in controversy is Lot 14, Wagon Works' addition to Shenandoah, Iowa. On September 15th, 1909, John W. Schwartz and his wife, Nancy, executed unto Jeremiah Tyler their promissory note for $ 450.00, and to secure the payment of the same, executed a mortgage upon the aforesaid real estate. The property in the note has been transferred to the plaintiff by indorsement and the mortgage duly assigned. The amount due upon the note at the time of trial was $ 812.95, for which amount judgment was rendered in favor of the plaintiff against the defendant, Nancy Schwartz. The plaintiff also prayed for the foreclosure of the mortgage, which requested relief was denied.

On March 14th, 1910, John W. Schwartz and George Middaugh entered into a written contract for the sale of said real estate by the former to the latter. The wife, Nancy Schwartz, did not sign said contract. It provides, in substance, that $ 50.00 is paid in cash, and that the remainder of the consideration, with interest, was to be paid in monthly installments at the First National Bank. It further provides that the purchaser, Middaugh, is "to promptly pay all taxes, assessments or impositions that may legally become a lien upon said land subsequent to the date of this contract." It further provides, that, when the payments as therein specified have been made, time being the essence of the contract, the vendor, Schwartz, shall convey to the vendee, Middaugh, the aforesaid real estate by good and sufficient warranty deed. Middaugh went into possession of the real estate under this contract and retained the same until the 1st day of November, 1926, although he was delinquent in payments required by the contract. In February, 1912, John W. Schwartz and his wife removed from Iowa to the State of Utah, where they resided until the 13th day of July, 1922, when John W. Schwartz died intestate, leaving Nancy Schwartz as his surviving widow and a son and three daughters as his sole heirs-at-law. Said heirs and their respective spouses are made parties defendant in this cause of action, but they have defaulted. There has been no administration upon the John W. Schwartz estate.

In December, 1921, the aforesaid real estate was sold at the annual tax sale to J. F. Redfield, for the taxes due thereon for the year 1920, and a certificate of said sale was issued to him. J. F. Redfield died intestate December 2d, 1924, leaving Lucy F. Redfield as his surviving widow, and his son, Duane Redfield, as his sole heir-at-law. On July 16th, 1925, a tax deed was executed to the said Lucy F. Redfield and Duane Redfield. There is no question raised as to the regularity or legality of the proceedings leading up to the execution and delivery of the tax deed, and that the Redfields acquired title thereunder is conceded.

At all times after the execution of the contract between Schwartz and Middaugh, the latter was in possession of the real estate until November 1st, 1926, when the Redfields, having demanded from him the payment of rent which he refused, served notice upon him to quit the premises, and he vacated the same.

On December 21st, 1926, more than seventeen months after the Redfields received the tax deed, they, for the consideration of $ 276.69, approximately the amount with interest and costs which they had invested in the property, conveyed the same to Nancy Schwartz, by a good and sufficient deed of conveyance.

On December 22d, 1926, Nancy Schwartz borrowed from the defendant, Home Building and Loan Association, the sum of $ 600.00, and executed unto said defendant her note or bond therefor, and to secure the payment thereof, executed unto said Association a mortgage upon the real estate.

The trial court held that the sale and conveyance of the real estate by the Redfields to Nancy Schwartz was a good faith transaction, was not a redemption of the real estate from the tax sale and that the deed from the Redfields transferred the Title to the real estate to Nancy Schwartz in fee simple, free and clear of any lien or encumbrance thereon of plaintiff's mortgage; that the plaintiff is not entitled to a foreclosure of her mortgage; that the mortgage of the defendant, Home Building and Loan Association is a first mortgage lien against the real estate; that the plaintiff is only entitled to a judgment against the defendant, Nancy Schwartz, for the amount due upon the promissory note. The court rendered judgment and decree accordingly, from which the plaintiff has appealed.

It is the appellant's contention that the transaction between Nancy Schwartz and the Redfields amounted only to a payment of the tax, or a redemption from the tax sale, and that the lien of her mortgage has not been extinguished. The validity of the tax deed executed by the County Treasurer to the Redfields is in no way questioned. The title of the Redfields, acquired by reason of the execution of the tax deed is not derivative, but the same constitutes a new title in the nature of an independent grant from the sovereign. See Petersborough Saving Bank v. Des Moines Savings Bank, 110 Iowa 519, 81 N.W. 786; Crum v. Cotting, 22 Iowa 411; Section 7286, Code, 1927. In Crum v. Cotting, 22 Iowa 411, at 420, referring to the title of one holding a tax deed, it is said:

"That is, that the tax title is held, not under or through the previous conveyances, but adverse to them. It is not incumbered by any claims or equities against the former owner, nor is it clothed with any rights or equities held by him as against third persons. The 'right, title, interest and estate of the former owner,' mentioned in the statute (now Section 7286, Code, 1927), which is vested by the deed in the purchaser, can only be the right, title, interest and estate in the land, and not equities in favor of or against the former owner, growing out of his being the 'former owner.'"

The title of the Redfields was an indefeasible title, good as against the lien of plaintiff's mortgage, and good as against the whole world. It is an axiomatic truth that one can convey as good a title as he holds. Therefore, the title acquired by Nancy Schwartz from the Redfields must prevail, unless it be, that, because of some equitable principle, the transaction between her and the Redfields re-establishes the lien of the plaintiff as between her and the plaintiff.

The appellant contends that the contractual obligations of the mortgage made it the duty of Nancy Schwartz to pay these taxes, and she cites a line of our previous cases in which we have held, that where one is under a duty to the party against whom the title is asserted to pay the taxes, he cannot be allowed to prevail, although his title was procured from a stranger who obtained the tax deed. The appellant relies upon Dayton v. Rice, 47 Iowa 429; Blumenthal Brothers and Company v. Culver, 116 Iowa 326, 89 N.W. 1116; Porter v. Lafferty, 33 Iowa 254; Cowdry v. Cuthbert, 71 Iowa 733, 29 N.W. 798; Olleman v. Kelgore, 52 Iowa 38, 2 N.W. 612; First Congregational Church of Cedar Rapids v. Terry, 130 Iowa 513, 107 N.W. 305; Crawford v. Meis, 123 Iowa 610, 99 N.W. 186. In Dayton v. Rice, 47 Iowa 429, the plaintiff held a mortgage on real estate given by Rice. Because of the failure of Rice, the mortgagor, to pay the taxes, the property was sold at tax sale, and in due time a tax deed issued to a stranger to the title. The mortgagor then procured a deed to be executed by the tax deed holder to Rice's son. The son stood in no better position than did Rice--in fact, held it for Rice. The court held that under such situation, the title procured by the mortgagor would not be allowed to prevail as against the mortgagee, saying:

"As between W. S. Rice, the mortgagor, and plaintiff, the mortgagee, the primary duty of paying this tax rested upon the mortgagor. He remained in possession of the property, and it was his duty to keep the taxes paid. So long as the relation of mortgagor and mortgagee continued, this obligation rested upon the mortgagor. * * * The duty of paying the taxes thus resting upon the mortgagor, he could not set up a title having its origin in a failure to perform this duty, as against the mortgagee."

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