Osceola Land Co. v. Chicago Mill & Lumber Co. , 1907 Ark. LEXIS 139 ( 1907 )

Riddick, J.,

(after stating the facts.) This is an appeal from a decree of the Mississippi Chancery Court dismissing the complaint of the Osceola Land Company and quieting the title of the defendant, the Chicago Mill & Lumber Company, to a section of land in Mississippi County. A history of the different titles under which this land is claimed by the two parties to this action is fully set out in the statement of facts, but it will be necessary to briefly restate it here. In 1855 this land was owned by the State of Arkansas. In that year Jeptha Fowlkes sold it to A. B. Rowell. It does not appear that Fowlkes at that time had any interest in the land, though, judging from the fact that he sold it to Rozell and gave him a warranty deed for it, we think it is probable that he had made an application to purchase it from the State or intended to do so. Rozell shortly afterwards recorded the deed from Fowlkes, and, the record having after-wards' been destroyed, he had it recorded again, and it is still of record in Mississippi County. About a year after Fowlkes conveyed to Rozell, Fowlkes entered the land from the State, paid for it and received a certificate of entry therefor. Some years after this Fowlkes died, and his wife was appointed executrix of his estate. In 1870 she made an affidavit that the original certificate of entry to the land was-lost, and the State Land Commissioner issued and delivered to her a duplicate certificate. She and the heirs of Fowlkes afterwards sold and conveyed the land to the Memphis & Little Rock Railroad Company. This company sold and conveyed the land to W. H. Chatfield. Mrs. Fowlkes and the heirs of Fowlkes assigned the duplicate certificate of purchase to Chatfield, and he in that way obtained a patent from the State. The Osceola Land Company, the plaintiff in this action, holds under the Chatfield title.

The defendant, Chicago Mill & Lumber Company, holds under a tax title based on a sale of the land for non-payment of taxes in 1892. This title was confirmed in an action brought by one Boynton against L. D. Rozell and other heirs of A. B. Rozell. The decree was not appealed from, and was a final adjudication that the tax title was valid as against the Rozell heirs.

But A. B. Chatfield, under whom the plaintiff claims title, was not a party to this confirmation suit and decree; and, if he had any title to this land, it was not affected by this decree. The plaintiff, which holds under Chatfield, brings this action to set aside and cancel the tax sale under which defendant holds.

In order to question the validity of the tax title, the plaintiff must show that those under whom it holds were the owners of the land or had some interest in it at the time it was sold for taxes. Kirby’s Digest, § 7105. Rhea v. McWilliams, 73 Ark. 557. The defendant, which holds under the tax title, denies that it was void, but contends that, if it is void, the Rozell heirs, and not Chatfield, were the owners of the land, .and that by virtue of the tax sale and confirmation decree the interests of the Rozell heirs was vested in the grantor of the defendant. Our statute under which this tax sale was made provides that a tax deed duly executed by the clerk of the county court “shall vest in the purchaser all the right, title, interest and estate of the former owner in and to the land conveyed and also the right, title and claim of the State and county thereto, and shall be prima facie evidence that all of the prerequisites of the law were complied with, * * * and that all things whatsoever required by law to make a good and valid sale and to vest the title in the purchaser were done.” Kirby’s Digest, § 7104.

A valid tax sale under this statute transferred not only the title of the Rozells, in whose name the land was assessed for taxes, but the interests of all others in the land, so as to give the purchaser a complete title. Hefner v. Northwestern Life Ins. Company, 123 U. S. 751.

After considering the objections urged against the tax title by plaintiff, we are of the opinion that the sale on which the tax title rests was void for the reason that the clerk of the county court did not make on the record a certificate showing publication of notice of sale of delinquent land as required by the statute. Kirby’s Digest, § 7086.

But, though the tax sale may be void for the reasons stated,it has been confirmed, so far as the Rozell heirs are concerned, by a valid decree of a court having jurisdiction of the matter, and, so far as the interests held by these heirs, it must in this action be treated as a valid tax sale, for the defendant holds •under the party who obtained this decree. This is not in conflict with the decision in the case of Updegraff v. Marked Tree Lumber Company, 83 Ark. 154, for 'this confirmation decree confirmed the tax sale, and not. the'title of the defendant. Treating the tax sale as valid as to the Rozell heirs, then under the statute it vested the title of these heirs, whatever it was, in the purchaser at the tax sale. We do not mean by this that the purchaser at the tax sale holds under the Rozell heirs, or that he occupies the same position as if he had purchased from them. A purchaser of land from another may acquire the right to sue for breach of warranty or to bring an action for specific performance, or become vested with other legal or equitable rights foreign to the position of a purchaser at a tax sale. What we do say is that if the Rozells were the owners of this land, either in law or equity, the title that they held was, by virtue of the tax sale and confirmation decree, vested in the purchaser at the tax sale or his grantee. Plaintiff contends that this' can not be so for the reason that the tax sale was void and could not affect the title, and the decree does not purport to divest the title. What it does purport to do is to confirm the tax sale, and the tax sale and deed purport to divest the title. The decree confirming this tax sale made it as to the Rozells a valid tax sale. It being as to them a valid sale, it transferred their title, if they owned the land, to the purchaser, and, without going into any further discussion as to the nature of a title acquired by a purchaser at a tax sale, we may say that, so far as this case is concerned, we can assume that the defendants own the Rozell title. This is true for the further reason that on the plaintiff rests the burden of proof, and, if it does not claim under the Rozells, to succeed it must show a title superior both to the title of the defendant and .to that owned by the Rozells. Again, if the Rozells, and not Chatfield, were the owners of this land at the time it was assessed and sold for non-payment of taxes, then neither Chat-field nor the plaintiff was injured by that sale, and they haVe, under our statute, no standing in court to attack it. Kirby’s Digest, § 7105. It will therefore be necessary to consider whether the Rozells or the Chatfields were the owners of the land at that time.

As Fowlkes conveyed this land to A. B. Rozell by warranty deed, and afterwards purchased it from the State, paid for it and obtained a certificate of entry, the statute vested this after-acquired title in Rozell, who thus became in equity the'owner of this land, the State holding the legal title as trustee for him. Kirby’s Digest, § 734. While the title was in this condition, Fowlkes died, and his widow, who was the executor of his estate, obtained a duplicate certificate. S'he and the heirs then sold and conveyed the land to a railroad company, this company conveyed to Chatfield, and Chatfield obtained from the widow and heirs of Fowlkes an assignment of the duplicate certificate of entry, and with it procured a patent from the State.

The plaintiff contends that the railroad company and Chatfield were both bona fide purchasers for value without notice of the Rozell title, and the question is presented whether the burden to show notice was on the defendant or not. In the recent case of Steele v. Robertson, 75 Ark. 228, where parties came in as interveners and in order to obtain protection alleged affirmatively that they were bona fide purchasers for value without notice, we said that the burden was on them to make out their case, and to show, not only that they had paid for the land, but that they did so without notice of plaintiffs’ right. When in such a case there are circumstances that tend to show notice; or tend to raise an inference of notice, and the party who claims to be a bona fide purchaser fails in his testimony to deny notice, this may be, as we held in that case, a controlling circumstance against him, without regard to who- has the burden of proof. This was probably as far as we should have gone in that case, although the law as there stated is supported by a number of cases. Bell v. Pleasants, 145 Cal. 410; Beattie v. Crewdson, 124 Cal. 577; Wilhoit v. Lyons, 98 Cal. 409; Parley v. Bateman, 40 W. Va. 542; Connecticut Mut. Life Ins. Co. v. Smith, 117 Mo. 261. But a further consideration of the case has convinced us that the statement that the burden is on the party claiming to be a bona fide purchaser to show want of notice is not correct as a general rule; for, when the party relies on the defense of being a bona fide purchaser, and shows that he has paid a valuable consideration, the burden of showing that he purchased with notice is on the party alleging it or who relies on the notice to defeat the claim of bona fide purchaser. Pearce v. Foreman, 29 Ark. 563; Walter v. Brown, 115 Iowa, 360; Hodges v. Winston, 94 Ala. 576; Barton v. Barton, 75 Ala. 400; Anthony v. Wheeler, 17 Am. St. Rep. 281, and note; 2 Pomeroy’s Equity .(3 Ed.), § 759, and note, where the cases are collated. So in this case we think that the burden to show that the railroad company and Chatfield had notice of the conveyance from Eowlkes to A. B. Rozell is on the defendant, for it alleges that fact in order to defeat the title acquired through the purchase of the railroad company and Chatfield. This case is very different from the case of Steele v. Robertson, above referred to. In that case the party who alleged that he purchased without notice was a party to the action. His failure to testify that he did not have notice was a circumstance against him. But in this case one of the parties charged with notice has been dead for years, and the other is a corporation, and neither of them are parties to the suit, and whether they had notice or not is probably as well known to defendant as to plaintiff.

But was notice to these parties not shown by the fact that the deed from Eowlkes to Rozell was of record at the time that the railroad company bought from the Fowlkes heirs, and when Chatfield bought from the railroad company? In the case of Rozell v. Chicago Mill & Lumber Company, 76 Ark. 528, in speaking of the title to land affected by the same conveyances, we said that the record of the deed from Fowlkes to Rozell was not notice to the defendants who purchased from Chatfield, for the reason that such deed was not in Ah e -line of their title. Chatfield held under a patent from the State, and those who purchased from him could, in the absence of actual notice, rest upon the presumption that the officers of the State had done their duty and issued the patent to the person entitled to receive it, and for this reason such purchasers were not required to search the records for conveyances not only before the issuance of the patent, but before the State had made any sale of the land, or any contract affecting its title thereto.

Under this decision the record of the deed from Fowlkes to Rozell was not constructive notice to the Osceola Land Company, for it purchased from Chatfield. But that is of no importance now, for it was admitted that this company had actual notice of the deed from Fowlkes to Rozell before it bought from Chatfield. The question here is whether the record of this deed was notice to the railroad company and to Chatfield at the time of their purchases. In Rozell v. Chicago Mill & Lumber Company, just referred to, we said that “probably” it was not notice to these parties. But it is was unnecessary to decide the question in that case, and the language used indicates that the court did not wish to express a decided opinion as to whether the record of the deed was notice to those parties or not. But the question is brought squarely before us in this case, and after further consideration we think that the position of the railroad company and Chatfield are not the same as those who purchased from Chatfield after he acquired the patent from the State. The railroad company purchased from the Fowlkes heirs, and Chat-field purchased from it before the patent had .been issued. At the time they purchased, the deed from Fowlkes to Rozell was of- record, showing that neither Fowlkes nor his heirs had any interest in the land. It is true that the deed from Fowlkes had been executed before he purchased the land from the State, but, so soon as he purchased and paid for the land, the equitable title thus obtained passed at once by virtue of the statute from him to Rozell the grantee in his deed. Kirby’s Digest, § 734. A purchaser from Fowlkes or from his heirs should have taken notice of this statute and the fact that he might have conveyed the land before- he obtained his certificate of entry from the State, and should have searched the records for such conveyances. As this deed was of record at that time, we are of the opinion that both the railroad company and Chatfield must in this case be treated as purchasers with notice. Bernardy v. Colonial Mortgage Company, 17 S. Dak. 637, 98 N. W. 166, 106 Am. St. Rep. 791; Tefft v. Munson, 57 N. Y. 97; Warburton v. Mattox, Morris (Iowa), 367.

This brings us to a consideration of the effect of the patent issued by the State to Chatfield. There is a presumption that the State officers examined the facts and issued the patent to the proper person, and the only question here is whether the facts and circumstances in proof are sufficient to overturn that presumption. I was inclined to the opinion that those facts do show that this patent was issued to Chatfield through mistake, and that he should be treated as a trustee for the Rozell heirs; but it is unnecessary to state the reasons for this opinion, for the majority of the court have come to a different conclusion. They are sustained by the fact that, though this duplicate certificate was issued to the Fowlkes heirs in 1870, and though the heirs of Fowlkes and those holding under them have claimed the land since, there is nothing in the record to show that the Rozell heirs have ever asserted any acts of ownership over this land from that day to this, except that they resisted the action of Boynton to confirm a tax title he had acquired to the land. But their conduct in this respect was not antagonistic 'to the title asserted by those who claim under Chatfield, for, if valid, the tax title would have cut off both the Rozell and the Chatfield title. Although the duplicate certificate was issued in 1870, and the patent to Chatfield in 1883, and though defendant claims that the Rozells were the owners of the land prior to 1870, and from that time to the tax sale in 1902, yet it does not appear that during all that time they ever paid the taxes on it even for a single year, or exercised over it any acts of ownership whatever.. This conduct on their part tends to show that they had abandoned the land, or disposed of it in some way, and the majority of the court are of the opinion that these circumstances tend to support the presumption in favor of the regularity of the patent issued by the State officials. They think that, after this long delay, when W. FI. Chatfield, A. B. Rozell and most of the other parties connected with the earlier history of the title to this land are dead, the presumption which attaches to the regularity of the issuance of this patent has become conclusive, and under the facts as shown in the record the court must assume that Chat-field, by the purchase from the railroad company, the transfer of the duplicate certificate by the Fowlkes heirs, and the issuance of the patent from the State to him, acquired not only the legal but the equitable title to the land in controversy.

As Chatfield was the owner of the land at the time of the tax sale and confirmation decree, his title was not affected by either, for he was not a party’ to the confirmation suit, and was not affected by the decree against the Rozells, and as we have said the tax title was void. But the tax deed, though based on a void sale, was color of title under which the holder might acquire title by adverse possession for the statutory period, either by actual possession or by the constructive possession which the statute gives to those paying taxes under color of title on wild and unimproved lands. , But, though the land was wild and unimproved, yet defendant and those under whom it holds had not paid taxes continuously for seven years before this action was commenced, and the action is not barred. Updegraff v. Marked Tree Lumber Company, 83 Ark. 154.

The tax sale and deed was a cloud on the title of the plaintiff in this case. The majority of the court are therefore of the opinion that the Osceola Rand Company was entitled to the relief asked, and that the chancellor erred in dismissing its complaint for want of equity.

Judgment reversed and cause remanded, with an order that a decree be entered cancelling the tax deed under which the defendant holds and quieting the title of plaintiff.

Battrf and McCurroch, JJ., dissent.