Moore v. Crisp

IRWIN, Justice

(dissenting).

The issue as to whether a junior mortgagee can obtain a County Treasurer’s Tax Deed and acquire title against the mortgage lien of a senior mortgagee has never been presented to or determined by this Court. However, it is well established in this jurisdiction that in the absence of an obligation or duty on the part of a mortgagee to pay taxes, such mortgagee is not disqualified to acquire a County Treasurer’s Tax Deed and assert his title acquired through such tax deed against the mortgagor. See Jones v. Black, 18 Okl. 344, 88 P. 1052, 90 P. 422; Owens v. Williams, 180 Okl. 324, 68 P.2d 836; Stith v. Gidney, 193 Okl. 175, 141 P.2d 1003; and Hearn v. Yoder, 193 Okl. 353, 143 P.2d 1009.

Although Oklahoma has followed the above rule, the general rule (see 37 Am. Jur. Mortgages, sec. 1163) and the weight of authority (see 140 A.L.R. 302) is that a mortgagee may not, as long as the relation of mortgagor and mortgagee exists, obtain title to the property by means of a tax sale, as against the mortgagor by means of a tax sale. Also, the general rule (see 37 Am. Jur. Mortgages, sec. 1165) and the weight of authority (see 140 A.L.R. 322) is that a junior mortgagee cannot cut off the rights of a senior mortgagee by purchasing the mortgaged property at a tax sale.

The State of New Mexico follows the general rule and the weight of authority announced in A.L.R. and Am.Jur., and in discussing the rights of mortgagors and mortgagees where a tax deed was involved in Riley v. Bank of Commerce of Roswell, et al., 37 N.M. 338, 23 P.2d 362, the Supreme Court held:

“Mortgagee cannot acquire tax title to mortgaged property as against prior mortgagee, but is entitled only to reimbursement of, and equitable lien for, taxes paid.”

In the opinion of the New Mexico Court, the Court said:

“In Hall v. Wescott, 15 R.I. 373, 5 A. 629, it was held: ‘A mortgagee, either in possession or out of possession, is not entitled to set up, as against the mortgagor or the other mortgagees, a tax title to the mortgaged estate purchased by him at a tax sale.’
“The court, after citing many authorities in support of its holding, remarked : ‘Other cases adopt a narrower view, and maintain that any person can become a purchaser who is not under any legal duty to pay the taxes’ — citing Williams v. Townsend, 31 N.Y. 411, Waterson v. Devoe, 18 Kan. 223, and two Arkansas cases (Bettison v. Budd, 17 Ark. 546, 65 Am.Dec. 442, and Ferguson v. Etter, 21 Ark. 160, 76 Am. Dec. 361) and we add Jones v. Black, 18 Okl. 344, 88 P. 1052, 90 P. 422, 11 Ann.Cas. 753, as being properly classified therewith. See 19 R.C.L. ‘Mortgages,’ § 174, note 4. * * * ” (emphasis ours)

In the Oregon Mortgage Co., Limited v. Leavenworth Securities Corporation, 197 Wash. 436, 86 P.2d 206, cited in the majority opinion, the Supreme Court of Washington said:

“Nor do we think there can be any doubt about the rule of law applicable. According to the text writers, the rule is universal that one interested in land with others, all deriving their interest from a common source, cannot assert an absolute title to the land through a tax deed, to the injury of such others. *2262 Jones on Mortgages (8th ed.), § 841; 3 Cooley on Taxation (4th ed.), § 1437. “This court has applied the rule in at least two cases, as between a mortgagor and mortgagee. Shepard v. Vincent, 38 Wash. 493, 80 P. 777; Maher v. Potter, 60 Wash. 443, 111 P. 453. In those cases, it was held that a mortgagee could not assert a subsequently acquired tax title against the mortgagor.
“The corollary rule is equally well established that a junior mortgagee cannot assert a tax title against a senior mortgagee. 19 R.C.L. 398; Fair v. Brown, 40 Iowa 209; Garrettson v. Scofield, 44 Iowa 35; Woodbury v. Swan, 59 N.H. 22; Smith v. Lewis, 20 Wis. 350; Middletown Savings Bank v. Bacharach, 46 Conn. 513.”

It therefore seems that in jurisdictions which hold that a mortgagee, so long as the relationship of mortgagor and mortgagee exists, cannot acquire title to the mortgaged property as against the mortgagor in tax sale proceedings, also follow the rule that a junior mortgagee cannot cut off the rights of a senior mortgagee by purchasing the mortgaged property through tax sale proceedings.

In Oklahoma, a real estate mortgage is merely to secure payment of a debt and transfers no title to, nor does it create a trust in the mortgaged property; it simply creates a lien against the property for the amount of the debt. See Pierce v. Duckett, 157 Okl. 20, 10 P.2d 697.

In Kehlier v. Smith, 112 Okl. 183, 240 P. 708, we quoted with approval the following language:

“ ‘The mortgage is not a conveyance, nor does it confer upon the mortgagee any estate in land. The right of interest of the mortgagee * * * is for all purposes and under all circumstances personal assets.’ ”

See also Abraham v. Mike, 178 Okl. 597, 63 P.2d 743.

Our statutory provisions do not expressly or impliedly provide for notice to be served upon a mortgagee when application is made for a tax deed, but if the holder of a tax certificate omits to give notice to the mortgagee, the lien of the mortgagee is not divested or in any way impaired by the execution of the tax deed by reason of Section 7, Art. 2, of the Oklahoma Constitution and the due process clause of the Fourteenth Amendment to the Federal Constitution. See Foster v. Marshall, 141 Okl. 246, 284 P. 882; Savery v. Graves Farm Loan Investment Co., 157 Okl. 173, 11 P.2d 462; and Adams v. Rogers, 158 Okl. 163, 13 P.2d 170. The mortgagee in the instant action was served with proper notice that an application for a tax deed had been made.

Title 68 O.S.1961 § 451, provides that “If no person shall redeem such lands within two years, at any time after the expiration thereof, and on production of the certificate of purchase, the treasurer of the county in which the sale of such land took place shall execute to the purchaser, his heirs or assigns, a deed for land remaining unredeemed, which shall vest in the grantee an absolute estate in fee simple in stick lands, * * (emphasis ours)

See also Title 68 O.S.1961 § 452.

In Stith v. Gidney, 193 Okl. 175, 141 P.2d 1003, we said:

“ * ⅜ * A mortgagee not in possession is neither legally nor morally bound to pay the taxes assessed against the mortgaged property and may acquire a tax sale certificate, obtain a tax deed to the property and assert the tax title against the mortgagor. A mortgagee is not disqualified to purchase the mortgaged property at tax sale and may assert such tax title against the world. * * * ” (emphasis ours)

In my judgment the case of Bereman v. Grant, 195 Okl. 330, 157 P.2d 743, is no authority for the issue involved in this action. In the Bereman case a suit was brought to foreclose a mortgage. A son of the original owner and mortgagor, who was a defendant in the action, defended on the ground that he acquired the property *227through a Commissioner’s deed and asserted title to the property. The evidence shows the son and father were occupying the property together, at the time the tax title was acquired and had been so occupying the premises together for six or seven years prior thereto; that they jointly farmed the land. There was some evidence from which a conclusion could he drawn that they jointly participated in the profits. The son looked after his father’s business. The son listed his father’s property both personal and real for taxation and paid the taxes thereon.

This court found the evidence insufficient to show there was any conspiracy or that there was any agreement between the son and father that the son should acquire title to the property for and on behalf of the father. This court did find, however, that the evidence was sufficient from which the court might have drawn the conclusion that a fiduciary relationship existed and that the son had such an interest in the property as would have precluded him from acquiring a tax deed. In that case we held that the son could not acquire a tax deed in the presence of facts indicating and showing a moral obligation upon the son to see that the taxes were paid.

The facts in that case are distinguishable from the facts in the case at bar. Here, the mother, Effie D. Crisp, was never in possession of the property; she never received any benefits from the property; she was not morally or legally obligated to pay the taxes either as a mother or as a mortgagee, nor had she ever paid the taxes except through purchasing the tax certificate. She had the legal right to purchase the tax certificate and acquire the County Treasurer’s Tax Deed.

Since the law is well established in this jurisdiction that in the absence of an obligation or duty on the part of the mortgagee to pay taxes, such mortgagee is not disqualified to acquire a County' Treasurer’s Tax Deed and assert his title acquired through such tax deed against the mortgagor; and, since our statutory provisions specially provide that a tax deed “shall vest in the grantee an absolute estate in fee simple [title] in such lands”, without qualifications; and, since the mortgagee in the instant action was given notice of the application for the tax deed and could have protected his rights; and since, in my judgment, a mortgagee owes no more duty to another mortgagee than he owes to a mortgagor, I am of the opinion that the mortgagee was a qualified purchaser of the tax deed and can assert her title against the world (see Stith v. Gidney, supra,) which would include the senior mortgagee in the instant action.

For the foregoing reasons, I dissent to the opinion promulgated by a majority of my associates.

I am authorized to state that BLACKBIRD, C. J., concurs in the views herein expressed.