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over the phone is competent in evidence, gages because of failure of the mortgagors why not the “reading” of a summons, when
the real estate taxes prior to de: the identity of the party is found as
a linquency, after which time plaintiff paid fact?
them, and immediately foreclosed because This system of serving summonses and because of defective descriptions of the land
of such defaults. Defendants contend that subpænas is a great saving of expense and in the assessment roll, the taxes are invalid of time. It has been much resorted to in and insufficient as a basis for any forethe courts, and now to hold it illegal may closure proceedings. Held, that the tax jeopardize the validity of many legal pro- description would be void in an action ceedings which have been based upon such wherein the tax could be assailed. service. In a practical age there is no Mortgage payment of illegal tax reason why the courts should not avail effect. themselves of the same conveniences which 2. A mortgagee is authorized to act on business men, and indeed all others, cus
the assumption that the tax is valid, where
no actual notice is had that the assessment tomarily use and have found to be safe and reliable as well as convenient. No statute to taxation, the payment made by the
was defective; and, the land being subject forbids it, and the courts in actual practice mortgagee discharged the land from liahave recognized and used it.
bility for taxation for that year, while
otherwise it would have been subject to Allen, J., concurs.
reassessment and retaxation; that the mortgagee had the right to pay taxes to preserve his security; that in an action to fore. close a mortgage because of nonpayment of
such taxes by the mortgagors, equity will NORTH DAKOTA SUPREME COURT. not allow the mortgagors, to whose benefit
the payment made by the mortgagee inured, FARMERS' SECURITY BANK OF PARK to assert the invalidity of the taxes so paid RIVER, NORTH DAKOTA, Appt.,
in good faith to protect its security. FLORENCE B. MARTIN et al., Respts.
(January 9, 1915.)
the District Court for Walsh County
dismissing an action brought to foreclose Tax insufficient description valid certain mortgages because of nonpayment ity.
of taxes on the mortgaged property. Re1. This opinion decides two appeals.
versed. Plaintiff foreclosed two mortgages, exercising power of foreclosure under the mort
The facts are stated in the opinion.
Mr. E. Smith Petersen, for appellant: Headnotes by Goss, J.
Plaintiff had the right to pay the delinNote. — Right of mortgågor or owner of no interest. The reasons for the decision
equity of redemption to contest valid- sufficiently appear in the quotation from ity of tax paid by mortgagee.
in FARMERS' SECUR. BANK v.
MARTIN. The few authorities on this question And in Weinreich v. Hensley, 121 Cal. which research has disclosed appear gen- 647, 54 Pac. 254, a mortgagee on foreclosure erally to support the decision in FARMERS' was allowed the amount of an assessment SECUR. BANK V. MARTIN.
paid by him on the property, although it In Southard v. Dorrington, 10 Neb. 119, was contended that the assessment 4 N. W. 933, the mortgagee in a foreclosure illegal because not made to the owner of action sought to have added to the amount the land. The assessment was paid at the of the mortgage debt the sum paid by him request of the mortgagor, and the case was to redeem the property from a sale for de decided under a statute providing that linquent taxes. It was held that an an- where the holder of a special lien is comswer was insufficient that the taxes claimed pelled to satisfy a prior lien for his own by the plaintiff to have been paid were protection, he may enforce payment of the wholly void; that the land was not assessed amount so paid by him as a part of the as required by law; that the assessor did claim for which his own lien exists. But not take the oath required by law, and in the decision, as indicated by the quotation fact took no oath at all; that the apparent in FARMERS' SECUR. BANK V. MARTIN, sup. levy was illegal; that no tax list and dupli- ports the conclusion reached in that case. cate were made as required by law, and Where the mortgaged property was asno warrant was issued to the treasurer of sessed with other property belonging to the the county to collect any taxes upon the mortg3.gor, and the mortgagee paid the enland as required by law; also, that the lots | tire amount of the tax, it not appearing in question were assessed in bulk with cer- what part of the tax was due on that part tain other lots in which the defendant had l of the property subject to the mortgage,
quent taxes and declare the whole debt se- Power v. Larabee, 2 N. D. 141, 49 N. W. cured by the mortgage immediately due. 724; Power v. Bowdle, 3 N. D. 120, 21
Gray v. Robertson, 174 Ill. 242, 51 N. E. L.R.A. 328, 44 Am. St. Rep. 511, 54 N. W. 248; Stancliff v. Norton, 11 Kan. 218; Hodg. 404; Beggs v. Paine, 15 N. D. 444, 109 N. don v. Davis, 6 Dak. 21, 50 N. W. 478; W. 322; Weinreich v. Hensley, 121 Cal. Washburn v. Williams, 10 Colo. App. 153, 647, 54 Pac. 254; Windett v. Union Mut. 50 Pac. 223; Northwestern Mut. L. Ins. Co. L. Ins. Co. 144 U, S. 581, 36 L. ed. 551, 12 v. Allis, 23 Minn. 337; Hoodless v. Reid, Sup. Ct. Rep. 751; Southard v. Dorrington, 112 Ill. 105, 1 N. E. 119; Fowler v. Wood- 10 Neb. 119, 4 N. W. 935. ward, 26 Minn. 347, 4 N. W. 231; Plummer Defendants are estopped to question the v. Park, 62 Neb. 665, 87 N. W. 534; Nation validity of the taxes. al L. Ins. Co. v. Butler, 61 Neb. 449, 87 Beggs v. Paine, 15 N. D. 436, 109 N. W. Am. St. Rep. 462, 85 N. W. 437; Condon 322; Nind v. Myers, 15 N. D. 400, 8 L.R.A. v. Maynard, 71 Md. 601, 18 Atl. 957; Hock- (N.S.) 157, 109 N. W. 335; Williams v. ett v. Burns, 90 Neb. 1, 132 N. W. 718. Hilton, 35 Me. 547, 58 Am. Dec. 729; Bates
The defendants were bound to know when v. People's Sav. & L. Asso. 42 Ohio St. 673; the taxes became due and delinquent, and Windett v. Union Mut. L. Ins. Co. 144 U. S. the plaintiff therefore was not required 581, 36 L. ed. 551, 12 Sup. Ct. Rep. 751; to notify the defendants that the taxes were Southard v. Dorrington, 10 Neb. 119, 4 N. due, or that it intended to pay them, before W. 935; Weinreich v. Hensley, 121 Cal. it made the payment.
647, 54 Pac. 254; American Nat. Bank v. Ellwood v. Wolcott, 32 Kan. 526, 4 Pac. Northwestern Mut. L. Ins. Co. 32 C. C. A. 1056; Washburn v. Williams, 10 Colo. App. 275, 60 U. S. App. 693, 89 Fed. 615; Almy 153, 50 Pac, 223; Hoodless v. Reid, 112 111. v. Hunt, 48 Ill. 45. 105, 1 N. E. 119; Fowler v. Woodward, 26 The taxes in question are valid taxes. Minn. 347, 4 N. W. 231.
Beggs v. Paine, 15 N. D. 444, 109 N. W. The option to declare the whole debt 322; Nind v. Myers, 15 N. D. 403, 8 L.R.A. due having once been exercised, the de- (N.S.) 157, 109 N. W, 335; Power v. Bowfault becomes fixed and established, and it dle, 3 N. D. 120, 21 L.R.A. 328, 44 Am. cannot be cured even by tender of payment St. Rep. 511, 54 N. W. 404. after commencement of the foreclosure. Messrs. Engerud, Holt, & Frame also
Plummer v. Park, 62 Neb. 665, 87 N. W. for appellant. 534; Rosche v. Kosmowski, 61 App. Div. Messrs. Gray & Myers, for respondents: 23, 70 N. Y. Supp. 216; Stancliff v. Norton, An absolutely void tax can never be prop11 Kan. 218; Hockett v. Burns, 90 Neb. 1, erly characterized as “due.” 132 N. W. 718.
Tracy v. Wheeler, 15 N. D. 248, 6 L.R.A. Defendents cannot make a collateral at. (N.S.) 516, 107 N. W. 68; Wells County v. tack upon the validity of the taxes paid by McHenry, 7 N. D. 246, 74 N. W. 241; Herthe plaintiff, as a defense to the action. riott v. Potter, 115 Iowa, 648, 89 N. W. 91; the court, in holding, on writ of entry by relations between the parties were very the mortgagee, that the amount paid for similar to those between mortgagor and taxes should be included in the conditional mortgagee. judgment, said: “It was the duty of the So, in Bates v. People's Sav. & L. Asso. mortgagor, and those holding under him, 42 Ohio St. 655, judgment was rendered to discharge all taxes thus assessed upon in favor of a mortgagee on foreclosure for the demanded premises, while they with an amount paid by him for taxes and asheld the possession from the mortgagee, and sessments appearing upon the tax duplicate in case taxes were assessed in a manner of the county as having been duly assessed which they deemed illegal, notice of this against the mortgaged property, it being fact should have been given to the mort-held that evidence for the defendant was gagee, and in case payment was to be re properly rejected tending to show that a sisted he should be indemnified against loss, portion of the taxes and assessments because it would be unreasonable to subject paid were illegally assessed against the the mortgagee to the hazard of contesting property. A statute provided that any the legality of a tax title by a suit at law, person having a lien on real estate might in which, if the final result should be in pay the taxes thereon “in so far as the favor of the validity of that title, all his same are a lien upon such real estate," and rights under his mortgage would be for- that the amount so paid should operate as ever lost." Williams v. Hilton, 35 Me. 547, a lien on the property in preference to all 58 Am. Dec. 729. The above was quoted other liens, and the money so paid might with approval in Stetson v. Day, 51 Me. I be recovered from the person liable for the 434, where, however, the relation of the tax. The court said that the record showed parties was that of life tenant and rever. that the taxes and assessments appeared sioner, the latter having redeemed the land on the duplicate to have been regularly and from a sale for taxes which it was the ten- legally assessed, and that the plaintiff had ant's duty to pay. The court said that the no knowledge or notice of any defect or
Power v. Larabee, 2 N. D. 141, 49 N. W., 318, 121 Am. St. Rep. 105, 86 Pac. 183; 724; Morrill v. Lovett, 95 Me. 105, 56 L.R.A. O'Malley v. Fricke, 104 Wis. 280, 80 N. W. 634, 49 Atl. 666; Griffith v. Speaks, 111 Ky. 436; Aldrich v. Steen, 71 Neb. 33, 98 N. W. 149, 63 S. W. 465; Barnes v. Arnold, 45 445, 100 N. W. 311; Chicago, B. & Q. R. Co. App. Div. 314, 61 N. Y. Supp. 85; Re Ray, v. Hitchcock County, 60 Neb. 722, 84 N. 2 Ben. 53, Fed. Cas. No. 11,589; Scott v.
W. 97; Jewett v. Iowa Land Co. 64 Minn. Society of Russian Israelites, 59 Neb. 571, 531, 58 Am. St. Rep. 555, 67 N. W. 639. 81 N. W. 624; Clark v. Coolidge, 8 Kan.
The validity of a tax may be collaterally 189; Leavitt v. Bell, 55 Neb. 57, 75 N. W. 524; Hartsuff v. Hall, 58 Neb. '417, 78 N. impeached, and a mortgagor is not estopped W. 716.
to contest such validity in this class of A valid assessment of land, evidenced by a record officially made, is an essential pre
9 Enc. Pl. & Pr. 436; Leavitt v. Bell, 55 requisite to a valid tax, and its omission Neb. 57, 75 N. W. 524; Hartsuff v. Hall, 58 is a jurisdictional defect fatal to the tax. Neb. 417, 78 N. W. 716; Atwater v. West,
Sheets v. Paine, 10 N. D. 106, 86 N. W. 28 N. J. Eq. 361; DeLeuw v. Neely, 71 Ill. 117; Roberts v. First Nat. Bank, 8 N. D. 473. 504, 79 N. W. 1049; Sweigle v. Gates, 9 N. The pretended tax involved herein was D. 538, 84 N. W. 481; Re Davis, 151 Cal. I based upon an insufficient description of the illegality in the assessment; that “the stat. And to a similar effect is American Nat. ute only gives a lien holder the right to Bank v. Northwestern Mut. L. Ins. Co. 32 pay taxes and thus save his security in so C. C. A. 275, 60 U. S. App. 693, 89 Fed. far as the taxes are a lien upon the real 610, petition for writ of certiorari denied estate. Hence, the question fairly arises, in 172 U. S. 650, 43 L. ed. 1184, 19 Sup. Was the plaintiff bound to inquire as to Ct. Rep. 883, where it was contended that the legality of the taxes beyond the appear a mortgagee should not, in a foreclosure ances of the duplicate, and as to defects proceeding, be allowed the amount paid by of which he had no knowledge or notice? it to redeem the mortgaged property from This question is not free from doubt. But, a sale upon an assessment for a paving tax, inasmuch as the owner of the real estate, it being contended that the sale of the propunder like circumstances, would be justi. erty for the assessment was not authorized fied in paying the taxes, and might after by statute. wards, under the statute, upon discovering But that a mortgagee who purchases and an illegality in the assessment, recover receives a deed to the property on forethem back from the county without being closure of his mortgage, and thereafter pays held to the consequences of having made illegal sewer and paving assessments, will voluntary payment, so we think the lienor not be allowed the amount so paid, in a should be justified in making the payment foreclosure suit by a junior mortgagee, who to protect his lien, although he has no right was not a party to the foreclosure of the to recover them back from the county in prior mortgage, see Atwater v. West, 28 N. case of a subsequent discovery of illegality J. Eq. 361. in the assessment. In the latter case, the And it has been held in a suit to forepayment by the lienor should be considered close a mortgage that a decree awarding the as payment by the owner, and the right to plaintiff a lien for special paving and curbrecover back would attach to the owner. ing taxes on the property, which he had Such holding does not nullify the limita paid, is error where he fails to show that tion in the statute upon the right of a the taxes were legally levied, the burden lienor to save his security by a payment of being upon him to establish their validity taxes, but leaves the same with ample scope before he is entitled to a lien on account for operation. If the owner has no knowl of their payment. Hartsutf v. Hall, 58 edge of illegality in the assessment, or if Neb. 417, 78 N. W. 716. he has such knowledge and does not com- In Leavitt v. Bell, 55 Neb, 57, 75 N. W. municate it to his mortgagee, we think 524, the court said the amount of taxes paid the statute should be so construed as to by a mortgagee to protect his lien on the authorize the latter to protect his lien by land, "so far as they were legal,” should by making payment of the taxes appearing have been included in the amount due on on the duplicate to have been regularly and the mortgage. legally assessed.”
As to right of mortgagee who has paid See also Windett v. Union Mut. L. Ins. taxes to maintain independent action Co. 144 U. S. 581, 36 L. ed. 551, 12 Sup. against mortgagor for reimburgement beCt. Rep. 751, from which the court quotes fore or after foreclosure of mortgage, see in FARMERS' SECUR. BANK V. Martin. The note to Stone v. Tilley, 10 L.R.A. (N.S.) aileged invalidity, however, was not in 679. the tax itself, but in the tax deed, the As to reimbursement of purchaser for ground on which it was contended the deed taxes paid as condition of equitable relief was invalid being lack of statutory notice against invalid tax title, see note to Holto the tenants of the tax sale. The mort land v. Hotchkiss, L.R.A.1915C, 492. gagee, it was held, was entitled to the sums
R. E. H. paid by him to extinguish the tax title,
land in the assessment roll, and was there, "pay taxes when due,"—in other words that fore void.
mortgagors were not in default in failing to Power v. Larabee, 2 N. D. 141, 49 N. W. pay the void taxes, for nonpayment of which 724; Power v. Bowdle, 3 N. D. 107, 21 | the default is claimed as the basis of the L.R.A. 328, 44 Am. St. Rep. 511, 54 N. W. right to accelerate interest instalments no: 404; Nind v. Myers, 15 N. D. 400, 8 L.R.A. otherwise matured. (N.S.) 157, 109 N. W. 335; Beggs v. Paine, There is no conflict in the testimony. De. 15 N. D. 436, 109 N. W. 322; Wright v. fendant testifies that he knew his taxes were Jones, 23 N. D. 191, 135 N. W. 1120. delinquent and unpaid, and, in response to
inquiry as to why they were allowed to beGoss, J., delivered the opinion of the come delinquent, said: “I did not have the court:
money the 1st of March, and I went to the This opinion covers two separate appeals, bank to borrow the money to pay it, and having the same record and involving the the bank explained to me where I would be
Complaints are in the usual a little ahead on interest by letting it go form, seeking foreclosure of commission until fall and paying the penalty on it, and mortgages securing a portion of interest on I came to the conclusion it would be all ten-year loans, which interest matures in right. It was not because I would not yearly instalments for ten years. Nine in- pay the taxes.” stalments were unmatured. One has been The bank referred to was not the plaintiff paid. Both commission mortgages are held bank. by plaintiff. The instalment of interest due Assuming for the present that the taxes on each mortgage prior to April, 1911, had were valid, their payment on or before debeen paid, and no payment under either linquency was stipulated for in the mortmortgage would fall due until the following gage, and the right was there given the fall of 1911. Both mortgages contain the mortgagee, should the mortgagors default in following stipulation: “First: But if de their payment on or before delinquency, to fault be made in the payment of money or
declare "the whole principal sum due and the interest, or any part thereof, or in pay. payable,” and to immediately foreclose. The ment of taxes on said real estate when due, mortgagee could also, at its election, pay then the mortgagee, its successors or assigns, said taxes and reimburse itself by using its may declare the whole principal sum due mortgage to enforce collection of the taxes and payable, and this mortgage may be fore on the property by foreclosure at once or closed at once. (2) And in case of the fail. at its pleasure. Real estate taxes are due ure of the mortgagors to pay said taxes, December 1, and delinquent March 1. Upon then the mortgagee, its successors or as- i delinquency in 1911 (and prior to chapter signs, may pay the same, and such sum paid 199, Sess. Laws 1909, becoming effective) shall become a part of this mortgage indebt- a penalty of 3 per cent attached in addition edness and draw interest at the same rate.” to the tax unpaid on March ]st, and to that
The taxes falling due December 1, 1910, extent, with additional penalty accruing and delinquent March 1, 1911, on the two from time to time on and after March 18t, quarter sections covered by the two mort- the mortgage security was gradually becomgages, had not been paid until the mort- ing impaired by nonpayment of taxes. gagee, without notice to defendants, paid Whether foreclosure could be instituted prithem on April 19, 1911, amounting to $61.- or to March 1st need not be determined, 62, for which the usual county treasurer's but any time thereafter, in the absence of tax receipt was delivered. These actions equitable reasons preventing it, defendants were begun less than a week afterwards by were in default under the terms of the mort. service of summons and complaint, basing gage, and because of which default the mortthe right of foreclosure upon the default of gage could be foreclosed under the power the mortgagors in failing to pay these taxes. granted by the mortgage, and which power Mortgagee elected to and did declare the is valid and enforceable in equity. If has full amount of both mortgages immediately but recently been held (Doolittle v. Nurndue and payable. The brief of respondents berg, 27 N. D. 521, 147 N. W. 400) that it contains but two contentions: First, that is not required that the mortgagee, before the taxes were void; and, second, "that the foreclosure and a declaration thereunder right to accelerate time of payment of an that the amount secured by the mortgage otherwise immatured obligation, and to pro- shall be immediately due and payable, shall ceed to an immediate foreclosure of the give notice thereof to the mortgagor or almortgage security, can only exist by virtue low him an opportunity to cure his defaults. of some binding contractual stipulation to Instead the mortgagee may declare the dethat effect," and hence acceleration cannot fault without notice, the declaration by be founded on failure to pay void taxes, 'un foreclosure notice being sufficient; and it der a stipulation that the mortgagors will' follows that a court of equity in which such a foreclosure is asked, the mortgagee having sessments in Iowa & D. Land Co. v. Barnes complied with the law, cannot, on that County, 6 N. D. 601-603, 72 N. W. 1019, ground alone, deem the exercise of a legal citing and following the two Power Cases. right, the declaration of default without The holding is reaffirmed as to 1890 and notice, any defense in itself to the exercise | 1894 assessments in Sheets v. Paine, 10 N. of the right of foreclosure. Hence, if the D. 103, 86 N. W. 118, and again in Lee v. tax be a valid one, without any considera- Crawford, 10 N. D. 482, SS N. W. 97, as to tion of the mortgagee's right to act upon 1888 taxes; State Finance Co. v. Beck, 15 an invalid tax as constituting a cloud on N. D. 374, 109 N. W. 357, as to assessment the title of his security, in the absence of for 1891; State Finance Co. v. Mulberger, some defense to this foreclosure cognizable 16 N. D. 214, 125 Am. St. Rep. 650, 112 in equity, the plaintiff had a right to de- N. W. 986, for tax of 1895; State Finance clare the default and to foreclose.
Co. v. Bowdle, 16 N. D. 193, 112 N. W. 76, The validity of this tax is squarely be for taxes for 1892-1896; and State Finance fore the court, and it must be determined Co. v. Trimble, 16 N. D. 199, 112 N. W. 984, wliether it is void because based upon an for taxes of 1895 and 1896. To make the invalid assessment. The assessment for list of similar taxation cases complete we 1910 is identical as to each tract of land. cite Beggs v. Paine, 15 N. D. 436, 109 N. The description is as follows, viz.: W. 322; Hodgson v. State Finance Co. 19
Cleveland township, county of Walsh, N. D. 139, 122, NW. 336; Grand Forks North Dakota. Name of owner, Florence B. County v. Frederick, 16 N. D. 118, 125 Ain. Martin; description N. W. 4, Sec. 1, Twp. St, Rep. 621, 112 N. W. 839; and Wright 155, Rng. 57.
v. Jones, 23 N. D. 191, 135 N. W. 1120. The trial court in its findings found: Our conclusion filed before rehearing was “That said printed description is insufficient had in this case was to the effect that chapto identify the northwest quarter of section ter 126, Sess, Laws, 1897, § 1600, Rev. Codes 1, township 155, range 57, as the property 1905, and § 2215, Comp. Laws 1913, operatdescribed,”—relying upon Power v. Larabee, ed to relieve recent assessments from the 2 N. D. 141, 49 N. W. 724, and Power v. rule of property announced in Power v. Bowdle, 3 N. D. 120, 21 L.R.A. 328, 44 Am. Bowdle and the earlier cases decided on asSt. Rep. 511, 54 N. W. 404, and the many sessments prior to those for 1897. This decisions of this court upon descriptions in was upon the supposition that this portion assessments and taxation matters. The of chapter 126 of the Sess. Laws 1897 was time has come when the rule must be fol new legislation. Instead this statutory prolowed under present statutes and concerning vision was earlier in force as $ 94 of chapter recent assessments, or a different rule an- | 132, Sess. Laws 1890, and in force from nounced as to taxes and assessments of March, 1890, until repealed by the taking 1897 and subsequent years, including those effect, January 1, 1896, of Rev. Codes 1895, in question. A brief résumé of the holdings and during which period the rule of propof this court on descriptions by abbrevia- erty had been reaffirmed as to 1890-94 astions is now in order. In the initial case sessments in Sheets v. Paine, 10 N. D. 103, (Power v. Larabee, supra,) the description 86 N. W. 117, and State Finance Co. v. Mulwas similar to the one before us, except that berger, 16 N. D. 214, 125 Am. St. Rep. 650, the figure intended to qualify the abbrevia- 112 N. W. 986, as to assessments of 1895. tion for the quarter section was on the line As this statute was in force during that instead of above it, and was with reference period, these assessments cannot be distinto assessments for 1886–1888. The assess guished and validated unless the rule of ment was held to be invalid as an indefinite property in question be overruled. The asdescription upon which no valid tax could sessment must be held to be one which, unbe based. The attitude of the early court der direct attack by a party in a situation is clearly apparent from a casual examina- to assail it, would be held void. tion of early tax cases, and that decision But appellant urges that, plaintiff, as but reflected such attitude. A year later mortgagee of defendants, having paid what the court was further committed along the it supposed to be a valid tax under the besame line in Power v. Bowdle, 3 N. D. 107, | lief that it was a lien or cloud upon the 21 L.R.A. 328, 44 Am. St. Rep. 511, 54 N. title of its security, and when such property W. 404. A glance at page 113 of the third was legally subject to taxation, and which volume of our State Official Reports shows tax thereon is not shown to be inequitable, the description there given to be identical and where plaintiff was authorized by its with the one before us so far as the placing mortgage contract to pay taxes and declare of the figure to the upper right of the ab- default for the nonpayment of same, plainbreviation of the description is concerned. tiff was placed in a position where, after The same description is again held void five such payment and exercise of power of deyears later with reference to the 1887 as- ' fault under the mortgage, the mortgngors