Martin v. Swofford

Chalmers, C. J., delivered the opinion of the court. This is a bill filed by Mrs. Swofford to vacate and cancel a tax deed, and also a conveyance, executed by a trustee; both held by the defendant (appellant) Martin. The facts upon which she demands this relief are briefly these. Martin was her merchant, and in April, 1875, she executed a trust deed for his benefit, upon her land and crop, to secure him in the advance to her of supplies to the amount of one hundred and [331] fifty dollars. At her request, he paid the taxes on the land for the current year, and added the amount to his account against her. The account was paid off in the autumn, except about thirty-five dollars, by the proceeds of the crop, and this balance was by agreement allowed to stand over for another year. She asserts that she looked to him to pay the taxes on the land for the ensuing year, as he had those of the year preceding, and that he was aware of this expectation on her part. He denies that she had any right so to do, or that he knew of such expectation by her. However this may be, the taxes were left unpaid, and at the sale of the land made by the tax collector he became the purchaser. He avers that in so doing he had no idea of acquiring a title adverse to the trust deed, but says that he bought only for the better protection of his interests under that instrument, and that shortly after his purchase he notified her of this through her father, with whom she was living. The twelve months allowed by law for redeeming lands sold for taxes having expired, Martin sold a large portion of the land to one Varnado, and put him' in possession. He then advertised the whole tract for sale under the trust deed, and bought it at the sale for the trifling sum due on his account against her. The land was worth two thousand dollars. Varnado, who seems to have paid nothing, subsequently conveyed the land back to Martin, who now owns it. Upon these facts the Chancellor annulled the tax deed, upon the ground that a mortgagee has no right to acquire an outstanding title and set it up adversely to the equity of redemption of the mortgagor; and the unlawful acquisition of the tax deed in this case having, as he thought, operated to prevent a fair sale of the property under the trust deed, he set aside the trustee’s sale also. Whether a mortagee out of possession can acquire an outstanding title, and set it up against the mortgagor, is a question upon which the authorities are not uniform. In 1 Jones on Mortgages of Real Property, § 711, the question is answered in the affirmative in the broadest terms ; while in Blackwell on Tax Titles (4th ed.) 399, the negative of the proposition is asserted with equal confidence. Each author is able to refer to cases supporting his view. Without deciding this [332] important question (which we are reluctant to do in this case because one of our number is disqualified), we think that the Chancellor held correctly under the facts of this case. According to his own statement, Martin bought the tax title with no view whatever of acquiring an adverse claim, but for the protection of the property, in which he and Mrs. Swofford were alike interested, and for the common benefit of both; and he gave her notice to that effect. As soon, however, as the statutory period for redemption had expired, he conveyed the land to another without giving her notice of his changed intention or of his purpose to sell. We agree with the Supreme Court of Illinois in thinking that whether the mortgagee has a right to buy and set up an outstanding title or not, he cannot buy for the common good and then use the title acquired for the purpose of defeating the rights of the mortgagor. Moore v. Titman, 44 Ill. 367. In that case there was a mutual understanding between mortgagor and mortgagee before the acquisition of the outstanding title, but we think the principle equally aj>plicable where the understanding succeeds the purchase, and a change of position is thereafter effected by the act of one without notice to the other, who is thus summarily cut off from his opportunity to redeem. That the hostile assertion of the adverse title by selling the land to another, and putting that other in possession, did have the effect in this case of preventing all competition at the subsequent sale under the trust deed, is rendered probable by the grossly inadequate price obtained at that sale. This justified the Chancellor in vacating the deed made by the trustee, but we think it was error to cancel the tax deed without providing for a repayment to Martin of the amount expended in its purchase, and of all statutory damages and interest. He had a perfect right to acquire the tax title for the purpose for which he says that he did acquire it, to wit, for the better protection of his debt, and, when thus acquired, he had the right to enforce it for the reimbursement to himself of the taxes paid' off, and also under our statutes for the statutory damages and interest. There can be no reason for remitting him to a new suit for this purpose. The decree will therefore be reversed, and the cause re [333] manded, with instructions to take an account of the amount due Martin, both on his original debt and by reason of his purchase at the tax sale. He will be charged up with all the rents actually received by him from the land, and when the report shall come in stated upon this basis, the court will enter such decree as it shall show to be proper. Costs of this court will be paid by the appellee. Costs of the court below heretofore accrued will be paid by the appellant. Decree accordingly. Cooper, J., having been of counsel, took no part in this decision.