Simpson v. Reinman

Hart, J. (after stating the facts). The decision of this case depends upon the construction of the statute under which the tax foreclosure proceedings were had. The Legislature of 1909 passed an act for the creation of road improvement districts. Acts of 1909, page 1151. Section 20 of the act provides that, if the taxes due on the assessments made are not paid within sixty days, a penalty of 25 per cent, shall attach for such delinquencies, and the board of directors shall enforce the collection thereof by proceedings in the chancery court of the proper county, and that the court shall give judgment against the lands for the amount of taxes, penalty and costs. The section continues as follows: “Said proceedings and judgment shall be in the nature of a proceeding in rem, and it shall be immaterial that the ownership of said lands be incorrectly alleged in said proceeding, and said judgment shall be enforced wholly against said lands and not against any other property of said defendant. All or any part of said delinquent lands or real property within the district may be included in one suit instituted for the collection of said delinquent taxes, penalty and costs, as aforesaid; and notice of the pend-ency of such suit shall be given by publication weekly for four weeks before a judgment is entered for the sale of said lands, in some newspaper published in the county of said district, which published notice may be in the following form: “NOTICE. Board of Directors of Road Improvement District No. ..................of the County of.............................. ' vs. Delinquent Lands. “All persons, firms or corporations having or claiming any interest in any of the following described lands, or real property, are hereby notified that suit is pending in the chancery court of.................................county, Arkansas, to enforce the collection of certain road improvement district taxes on the subjoined list of lands and real property, each supposed owner having been set opposite his, her or its property, together with the amount severally due from each, towit: (Then shall follow a list of supposed owners with a descriptive list of said delinquent lands and the amount due thereon respectively as aforesaid), and such published list may continue in the following form: All persons, firms and corporations, interested in the said property, are hereby notified that they are required by law to appear within four weeks and make defense to said suit, or the same will be taken for confessed, and final judgment will be entered directing the sale of said lands, for the purpose of collecting said taxes, together with all of the interest, penalty and costs allowed by law. ’ ’ It is contended that the decree of the chancellor should be upheld under the authority of Cassady v. Norris, 118 Ark. 449, which was followed in the subsequent case of Cabell v. Board of Imp. of Imp. Dist. No. 10 of Texarkama, 124 Ark. 278. In those cases the court had under consideration foreclosure proceedings by a board of commissioners of an improvement district in a city when section 5694 of Kirby’s Digest was in force. That section says that the owner of the property assessed shall be made a defendant if he is known; if he is not known, that fact shall be stated in the complaint, and the suit shall proceed as a proceeding in rem against the property assessed. In each of those cases the owner of the property was in possession of it and had no knowledge that foreclosure proceedings had been instituted against his property for unpaid assessments. The owner did not even know that the improvement district had been formed and that his property was within its boundaries. The complaint in each case stated that the owner was unknown, and the general notice 'authorized by the statute in proceedings of this kind was given. The court held that the suit was a proceeding in rem, and that the general notice required by the statute concluded the owner and that the purchaser at the sale under the statute acquired the legal title. It was there contended that the proceeding was a fraud on the court, and for that reason the decree should be set aside. The court held that the allegations in the complaint that the owner was unknown were sufficient to give the court jurisdiction, and that, although the allegations were untrue, the court had the power to inquire into its own jurisdiction and to determine whether or not the allegation was true. The court then said that on collateral attack it must presume that the court made inquiry as to its jurisdiction to proceed against the property and found facts sufficient to justify its action. We do not think the decision in Cassady v. Norris, supra, concludes the present case. When the complaint in that case alleged that the owner was unknown, the statute in express terms provided that the suit should proceed as a proceeding in rem against the property assessed, and the owner was concluded because the general notice required by the statute was given. The present statute is essentially different. It provides for notice against the “supposed owner” and provides that the action shall be in the nature of a proceeding in rem. That is to say, it is a proceeding “quasi in rem.” A proceeding in rem has been defined to be a proceeding against the property, while a proceeding quasi in rem is a proceeding against the person in respect to the property. Tax sales are made exclusively under statutory power, and in order to divest the owner of his property every substantial requisite of the statute must be complied with. On this question Judge Cooley said: “Defects in the conditions to a statutory authority can not be aided by the courts; if they have not been observed, the courts can not dispense'with them, and thus bring into existence a power which the statute only permits when the conditions have been fully complied with. Neither, as a general rule, can the courts aid the defective execution of a statutory power; they may do this when the power has been created by the owner himself, and when such action would presumptively be in furtherance of his purpose in creating it; but a statutory power must be executed according to the ¡Statutory directions, and 'presumptively any other execution is opposed to the legislative will, instead of in furtherance of it. It is therefore accepted as an axiom, when tax sales are under consideration, that a fundamental condition to their validity is that there should have been a substantial compliance with the law in all the proceedings of which the sale Was the culmination. This would be the general rule in all cases in which a man is to be divested of his freehold by adversary proceedings; but special reasons make it peculiarly applicable-to the case of tax sales.” Cooley on Taxation (3 ed.), vol. 2, pp. 912-913. As we have just seen, the statute requires the notice to be given to the supposed owner. The dictionary meaning of ‘ ‘ supposed” is, “ accepted as true, or believed. ’ ’ Then the statute requires notice to be given to the person believed by the commissioners to be the owner. At the time the foreclosure proceedings were had by the commissioners in the chancery court A. E. Adams was named as the supposed owner. At that time J. C. Budd was the owner of the property and in possession of it. The property was a valuable farm of ninety acres situated on the bank of the Arkansas River and worth about $5,000. We think the facts presented by the record bring the case within the rule announced in Farmers & Merchants Bank v. Layson Lumber Co., 87 Ark. 607. In that case the commissioners of an improvement district in a city commenced proceedings against J. E. Eubanks as the owner of a lot to enforce the payment of the unpaid assessment. There was a sale of the property under the proceedings, and a deed was executed by the -commissioner-to the Farmers & Merchants Bank as the purchaser at the sale, -which was approved by .the court. Eubanks did not own the lot at the time the foreclosure proceedings were had, but had conveyed it to another. The court held that the decree in the suit .against Eu-banks did not affect the owner of the lot and those holding under him, they not being parties to the suit, and the suit not being in rem. Therefore, it was held that a proceeding against Eubanks to collect an assessment of a local improvement district under Kirby’s Digest, section 5694, is notice .only to him, and that the decree affects only his interest in the lands, and that no one else is bound by it. It seems that the holding in that case applies here. As we have already seen, the foreclosure proceedings were under the statute. It will be borne in mind that the statute does not designate the suit to foreclose as a proceeding in rem as in the case of an unknown owner, but it in express terms provides that the proceedings and judgment shall be of the nature of a proceeding in rem. It further provides that notice shall be given to the “supposed owner.” Where the proceedings are strictly in rem under the statute, all persons who have an interest in the property are bound because the land itself is brought before the court. The reason is that no persons are made parties to the suit, but the land itself is brought before the courts, and its status ascertained. In cases where the owners, real or supposed, are made parties under the statute, no one else is concluded except the party who is made a party to the proceedings. This brings us to the question of whether A. E. Adams could be sued as the ‘ supposed owner. ” It is not shown that he ever had any title to the property or that he was in possession of it, or made any claim thereto at the time the foreclosure proceedings were had. J. C. Budd at that time had the paper title to the property and was in possession of it through his tenant. He was no more bound by proceedings against A. E. Adams as the “supposed owner” than the real owner was in the case last referred to by the proceedings against Eubanks as owner, who had disposed of the property before the foreclosure proceedings were commenced. But it is claimed that such holding ignores that portion of the statute which provides that it shall be immaterial that the ownership of the lands be incorrectly alleged in the proceedings. We do not think so. If there had been any grounds for suing A. E. Adams as the supposed owner of the property, it would have been immaterial that his name was not correctly stated in the notice, or that he was not the actual owner of the property. It is true that the statute provides for a general notice to all persons interested in the property to appear within four weeks and make defense to the suit. But this does not make the suit strictly a proceeding in rent, so that all parties shall be bound by the proceedings. The reason is that the statute also provides that the “supposed owner” or the person believed to be the owner shall be a party to the proceedings. If the “supposed owner” is not made a party to the proceedings, then to take the property away from the owner without attempting to comply with this provision of the statute would be to deny him “due process of law.” The proceeding did not comply with the statutory requirements, and for that reason does not constitute “due process of law” and therefore has no binding effect on Simpson, who has the record title by a quitclaim deed from Budd. In Gilbreath v. Teufel, 15 N. Dak. 153, the Supreme Court of North Dakota held: “In an action to determine adverse claims to real property, although the proceedings may in all things comply in form with the provisions of the statute relative to the manner of obtaining jurisdiction, it is nevertheless an abuse of the statutory provisions, and is in effect a fraud upon the court and the adverse claimants to not disclose, and name as defendant, all adverse claimants whose names and places of residence could be readily ascertained.” In Scales v. Wren, 127 S. W. 164, the Supreme Court of Texas held that in a suit to quiet title where plaintiff’s deed was on record, and gave his residence as in a certain county of the State, a judgment for taxes against the “unknown owner” did not conclude plaintiff’s title, since he was entitled to service of citation if within the jurisdiction of the court, and, not being an unknown owner, he was not a party to the proceedings. In Evans v. Robberson, 1 Am. St. Rep. 701, the Supreme Court of Missouri held that a tax sale, under the Missouri statute, in order to bind the interests of the owner, must show that he was made a party, if known, and, if not known, and not m'ade a party, then his interest can only be affected by making the party appearing by the record to be the owner a party to the suit. But it is insisted that these decisions should have not control because they are contrary to the decision in the case of Cassady v. Norris, supra. If they would hold that a proceeding under a state of facts similar to the .one in the case at bar was not “due process of law” in a proceeding strictly in rem, and that- therefore the owner was not concluded by the judgment, it is readily apparent that the decisions would apply with greater force in a case where service is required to be had against the real or supposed owner, and in the proceeding’s no attempt is made to serve'such person, but a party who has no interest in the land whatever was designated as the “supposed owner,” or the man believed to be the owner. The time for redemption in the statute under consideration was one year, and it is readily seen how that time would soon pass away and that the land owner who was not familiar with land numbers would be lulled to sleep by his lands being advertised as belonging to some one who had no interest in them, and in this way his farm, however valuable, would be sold to pay a small amount of improvement taxes, as was done in the case at bar. We do not impute any bad faith in the matter to the commissioners. They had no authority to institute proceedings to sell the lands except under the statute. The statute required that the “supposed owner” be made a party to the proceedings. This the commissioners did not do, but instituted proceedings against another person whom the record shows had no interest whatever in the lands, and made no claim to them, and on that account made no defense to the action. It follows that the chancery court erred in not setting aside the sale, as it was asked to do by the petition filed by the owner in the case. Such was the relief granted in the case of Farmers & Merchants Bank v. Layson Lumber Co., 87 Ark. 607. Therefore, the decree will be reversed and the cause remanded for further proceedings not inconsistent with this opinion.