Keenan v. City of Portland

Opinion by Mr. Justice Moore. It is contended on the part of the defendant that, conceding the plaintiffs had a remedy against the city for its failure to collect the assessment, they having voluntarily purchased the property at its sale for the delinquent assessment, and having surrendered their warrants, are without remedy if the title they bargained for fails; while the plaintiffs’ counsel maintain that their clients were creditors of the city, that they purchased the property to satisfy their claim, and that, the proceedings having been declared void, and the issuance of deeds enjoined, their claim was not satisfied by such sale, and [546] they can pursue their remedy against the city for its failure to collect the fund. The doctrine is well established that the purchaser at a city tax sale takes the whole risk, and, in the absence of any statutory remedy, can recover nothing from the city if the title proves bad. The rule of caveat emptor, in the absence of fraud, applies to prevent such purchaser from recovering his purchase money from the city unless the charter authorizes a repayment. It is thus made the duty of every person, before purchasing real property at a sale thereof for delinquent assessments or taxes, to examine the proceedings by which the authority is derived to make the sale, and if he then purchases any of the property offered for sale he does so on his own judgment, and if he gets no title thereby he has no remedy against the taxing power nor against the officer making the sale: Dowell v. Portland, 13 Or. 248 (10 Pac. 308); 2 Blackwell on Tax Titles (4th ed.) §§ 1005, 1006. The charter of Bast Portland not having any provision for the repayment of the purchase money, it follows that if the property had been purchased by a stranger to the proceedings he could have no remedy against the city upon failure of title; but the charter having provided that deeds should be executed to the purchasers if no redemption were made within three years from the date of sale, and the chief of police of Portland having been perpetually enjoined from executing deeds to the plaintiffs, their counsel contend that the execution and delivery of the deeds having been a part of the contract of purchase, they are entitled to a repayment of the purchase money upon such failure to complete the sale. In support of their contention they cite the case of Phillips v. City of Hudson, 31 N. J. L. 143, pi which it was held that so long as a contract for the sale of land is executory only the purchaser is entitled to [547] have a good title, unless the contrary is expressly or impliedly agreed upon; but where the bargain is consummated by the delivery and acceptance of a deed, the purchaser must look to the covenants he has taken care to have provided, and in the absence of fraud has no right to relief either at law or in equity for defects of title, except as such covenants affect it. Mr. Rawle, in his work on Covenants for Title, pages 42 and 565, in substance says that while the contract is executory the purchaser of real property has the right to demand a title clear of defects and incumbrances, and this right does not depend upon the terms of the contract, but is given by the law. There is no sale in a legal sense until the title has passed (Settlemire v. Newsome, 10 Or. 446), and hence the purchase of the property in the case at bar was but an executory contract. The question then arises, could the plaintiffs, after they had paid the purchase price, rescind such a contract because of a failure of the title? In State v. Inhabitants of Piscataway, 43 N. J. L. 353, the court, in an action to annul a tax sale in order to prepare the way for a suit to recover the purchase money paid on the sale, said: “The rule of law applicable to such a case is that the municipality is under no obligation to refund the purchase money because the tax title fails; the purchaser is a volunteer and buys at his own risk,” thus showing that while the rule announced in Phillips v. City of Hudson, correctly stated the law as applied to private sales between vendor and vendee, its correctness may well be doubted when applied to sales of real property for delinquent assessments or taxes. In all cases where the rule of caveat emptor applies, the purchaser, from the very nature of the transaction, necessarily buys at his own risk, and cannot detain the purchase money on account of incumbrances or defects of title: Friedly v. [548] Scheetz, 9 Serg. and R. 161. If lie cannot detain the purchase money under such circumstances, he certainly cannot recover it back after he has parted with it under the belief that he is thereby obtaining a title. If the title prove bad after the deed is executed the purchaser is without remedy, and he can be in no better condition when the discovery is made between the date of his purchase and the time when he would become entitled to a deed. His contract was to accept such title as the taxing power could give, and if no title can be given, he thereby suffers a hardship for which there is no legal remedy. But the plaintiffs contend that the rule of eaveat emptor does not apply to their purchase, and that, having credited the amount of their bid upon their claim against the city, they can vacate the apparent satisfaction and proceed anew to enforce their demand. It cannot be conceded that the plaintiffs were creditors of the city. They had accepted warrants drawn against a special fund to be raised by an assessment of the property, and the city could become liable only by its failure to put the necessary machinery in motion to raise and collect the fund: Commercial National Bank v. Portland, 24 Or. 188 (41 Am. St. Rep. 854, 44 Am. and Eng. Corp. Cas. 486, 33 Pac. 532). How then can it be said that they were creditors of the city when its liability was only an implied one, and contingent upon its neglect to put the necessary machinery in motion ? It was supposed the city had a lien upon the property by virtue of its proceedings and upon its sale, and the plaintiffs, having become the purchasers, surrendered their warrants for the certificates of sale. They were not obliged to purchase the property, and, having done so, their purchase and the surrender of their warrants must be considered voluntary. They had no judgment against the city which was apparently satisfied by [549] a levy aud sale of property. They could not have recovered money paid upon a sale of the property, and we fail to see how they can be placed in any better position because instead of paying money they exchanged their warrants for the certificates of sale. In Packard v. New Limerick, 34 Mo. 266, warrants upon a special fund had been surrendered upon the purchase of property assessed for a local improvement, and in an action to recover the value of the warrants because of a failure of the title to the lands purchased, it was held that the plaintiffs could not recover, and that to hold otherwise would, upon principle, make the town responsible to every purchaser of lands sold for the collection of its taxes, if the title should fail; and that the mode of payment by exchanging the warrants could not vary the legal rights of the parties or impose upon the town a responsibility it never assumed. The record of the council’s proceedings was public and open to inspection, and the plaintiffs are presumed to have purchased with notice of the defects which rendered the assessment void, and, having voluntarily surrendered their warrants with notice of these defects, they can have no remedy against the city for a failure of the title, and hence the judgment is reversed, and the cause remanded for such further proceeding as to the court below may seem just and proper and not inconsistent with this opinion. Reversed.