Meeks v. Whatley

SlMRALL, J.: The statute of 1860, under the provisions of which this bill was filed, makes the sales of tax collectors, thereafter had, valid to all intents, except for fraud or mistake in the assessment or sale, or unless the tax has been paid. We have, heretofore, construed this statute as intending to impart to the sale and deed of this officer prima facia validity, conferring a title upon the purchaser, subject to be impeached and defeated for the causes above stated. The deed to the purchaser imports prima facie that the antecedent things required by law to be done by the assessor and collector have been performed. Vitiating matter must be averred and proved by the defendant. It is not incumbent on the complainant, who seeks to confirm and establish his title, to declare in his bill a compliance by these officers with ail the directions of the revenue laws, antecedent to the sale. To defeat the relief sought by complainant, the party contesting the confirmation of the title, must show the vitiating facts enumerated in the statute. This case is like that of John T. Meeks v. E. Salter et al., just decided, except as it may be affected by the bankruptcy of M. M. Whatley, the owner of the land, and the sale of it by his assignee. The tax collector’s sale was made on the 9th of October, 1869, for the taxes of the fiscal year 1868. The sale by the assignee to Hardy and Shannon was made the 9th of December, 1868. It is argued for the defendants, in support of their demurrer, that in these circumstances the sheriff could not make a valid sale for the taxes; his remedy for the collection being to prove his claim therefor, as a lien [341] or preference creditor in the bankrupt court. The 12th article, page 74, Code of 1857, makes the tax assessed upon the land -a lien thereon after the 1st of May; and all taxes assessed shall be a lien upon all the property, real and personal, of the debtor, paramount to all other liens by judgment, execution, or any other incumbrance. The bankrupt law makes no -distinction between the different kinds of lien. If the law of the state recognizes a lien by judgment or in favor of a mechanic, or by mortgage, or in any other form, each is respec'ted in the bankrupt court according to its dignity. Within the sense of the bankrupt act, and such is the general law, whenever the creditor has the legal right to have a debt satisfied from the proceeds of property, or before the property can be otherwise disposed of, it is a lien on such property for the security of the debt. 4 B. 5. It seems there are several modes in which the assignee may deal with property incumbered with a lien. He may sell the property subject to the lien without an order of court for that purpose. Kelly v. Strange, 5 B. 2. In such sales, he transfers to the purchaser no better right than he had himself; the purchaser takes subject to such incumbrance. In re McLellan, 1 B. 91; Bump, on Bank. 161. The jurisdiction of the bankrupt court over the sales of property of the bankrupt is plenary, and large discretion is allowed. Bump, on Bank. 368. Whether this sale was made by the assignee, with or without the order of the court, whether it was sold subject to the taxes of the year 1868, or not, is not shown in the bill. When the property is incumbered it will be taken for granted that the assignee sold subject to incumbrances. Kelly v. Strange, 3 B. 2. Where the property is to any degree incumbered, the assignee is interested for the general creditors so far, and so far only,''as there may be an excess in the [342] value of the property over and above the lien debt. In order that he may bring this surplus subject to control for the creditors at large, there is a jurisdiction in the bankrupt court, at his suit, to sell the entire estate and property, free, as it is called, of the incumbrance, the lien of the creditor being transferred to the fund in court realized by the sale of the property. In re Stewart, 1 B. 42. But where proceedings are taken in the bankrupt court to sell the property, notice must be given to the lien creditor. Foster v. Ames, 2 B. 147. If such notice be not given, the rights of such creditor are not affected or concluded. The bill does not show that the title did not pass by the assignee’s sale. If made without the order of the court, it was subject to the lien of the taxes; if made under judicial decree, it did not affect the lien unless the revenue officer, or some proper representative of the same, were made a party to that application. The second section of the act of 1860 does not necessarily intend an inquiry into the validity of the contestant’s title. All persons claiming, or having an interest, either legal or equitable, in the lands, must be notified. The fourth section contemplates a “ right ” in any person “ claiming or having such interest,” or “ such other persons as may be interested therein,” to appear and contest the confirmation and establishment of the tax title. A mortgagee out of possession, the holder of a mechanic’s lien, would be entitled to contest with the complainant. / We think that the defendants, who derive title through the assignee, have such a “ claim of legal title” as entitles them to controvert with the complainant, especially so, if in possession under the title. The words of the act are, “ claiming ” or “ having ” “ an interest,” which do not mean that the “ interest ” must be a perfect, equitable or legal title. The complainant, as directed by the statute, dis [343] closed the interest which Hardy and Shannon had. That claim was enough to give them the privilege to dispute the relief sought. It was error to dismiss the hill.' Decree reversed, and judgment here overruling the demurrer, and cause remanded with permission to defendants to answer in forty days from this date.