Jacobsen v. Nieboer , 299 Mich. 116 ( 1941 )

This is a suit in chancery to foreclose a mortgage. The material facts are not in dispute. Defendants, who are husband and wife; were the owners of a parcel of real estate. On January 19, 1939, they executed a promissory note for $750 secured by a real-estate mortgage. Plaintiffs are the mortgagees. It appears that at the time the above mortgage was executed the 1933 taxes were in default; and as provided in the general property tax law, I Comp. Laws 1929, § 3451 et seq. (Act No. 206, § 60 et seq., Pub. Acts 1893), as amended by Acts Nos. 91, 114, and 325, Pub. Acts 1937, the property was sold to the State of Michigan at the 1938 tax sale. Defendants had no actual knowledge of the sale and did not redeem the property.

The State sold the property at the 1940 tax sale to a third party as is provided by Act No. 155, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939^* (commonly known as the scavenger act). When defendants had been advised of such sale they entered into an agreement on August 8, 1940, with the State land office board for the repurchase of the property. In the meantime, defendants had defaulted in making payments on the mortgage and plaintiffs declared the whole amount due; and on October 14, 1940, began a suit in chancery to foreclose. The trial court held plaintiffs' mortgage good and entered a decree of foreclosure.

Defendants appeal and contend that when, on August 8, 1940, they entered into the contract to purchase the property from the State land office board, title to the property was absolute in the State of Michigan and not subject to any liens.

Prior to the adoption of the so-called scavenger act it was the rule that when a third person purchased a tax title, he acquired a fee simple title and all incumbrances and liens were cut off. He acquired a new title and not the title of the original owner. In Robbins v. Barron, 32 Mich. 36, 39, we said: "A tax title, if valid, destroys and cuts off all liens and incumbrances previously existing against the land."

It is urged by plaintiffs that defendants, as mortgagors, warranted their title to the property and having arranged at a future date to acquire title to this property, the mortgage attached to the future acquired interest. An amicus curiae brief filed with the permission of this court contends that the mortgagor, by entering into a contract with the State land office board to purchase the premises, merely redeemed his premises from taxes and the mortgage lien remains in full force and effect, subject to the balance due the State of Michigan on its contract.

This latter brief relies upon Brown v. Avery, 119 Mich. 384,387, where this court quoted the following from ConnecticutMutual Life Insurance Co. v. Bulte, 45 Mich. 113:

" 'It is conceded that there are a great many cases in which parties standing in particular relations to the land, or to the owner or other person interested therein, are not suffered to acquire tax titles and rely upon them as against other claimants. Some of those are very plain, and it is quite unnecessary to do more than name them. A tenant, for example, who has covenanted to pay the taxes, cannot be suffered to neglect this duty, and then acquire a tax title which shall cut off the title of his landlord. Neither shall the purchaser in possession under an executory contract be allowed to cut off the rights of his vendor by a like purchase, nor a mortgagor that of his mortgagee. A tax purchase made while such a relation exists is made in wrong; and the law in circumvention of dishonesty will conclusively presume that it was made in the performance of duty, and not in repudiation of it.' "

And Tyler v. Burgeson, 229 Mich. 268, 270, where we said:

^* See Comp. Laws Supp. 1940, § 3723-7, Stat. Ann. 1940 Cum. Supp. § 7.957. — REPORTER.

"Defendant cannot defeat plaintiff's title by setting up this title which he acquired in his son's name while he was in possession of the premises under the terms of a contract by and in which he had agreed to pay the taxes, such title having come into existence solely by his own default, which default set the machinery of the State in motion resulting and ripening into the title he now claims. This is well settled by numerous decisions of this court but a fragment of which we cite."

The above authorities correctly interpret the tax law in effect at the time such opinions were rendered, but the answer to the problem in the case at bar must largely come from a proper interpretation of our present tax law, i.e., Act No. 155, Pub. Acts 1937, as amended by Act No. 244, Pub. Acts 1939.

In Stickler v. State Land Office Board, 297 Mich. 271, we held that the title to tax-sale lands became vested in the State of Michigan on November 3, 1939, upon the expiration of the equity of redemption from the 1938 tax sale for taxes for 1935 and prior years and said:

"By virtue of said statute (Act No. 206, Pub. Acts 1893, 1 Comp. Laws 1929, § 3459, as amended by Act No. 114, Pub. Acts 1937) and decree, title to the parcel of land here involved became absolute in the State upon the expiration of the period of redemption and 'all taxes and other liens and incumbrances, of whatever kind or nature, except unpaid tax or assessment liens or city bids of any municipality collecting its own delinquent taxes and assessments upon lands for which application shall have been made to the State land office board or the director of conservation as the case may be for the withholding of such lands from sale,' were thereby cancelled. Section 67, as amended by Act No. 114."

Section 9 of the scavenger act provides:

"Any quitclaim deed or deeds executed by the board shall convey title in fee to land vested in the board under the provisions of this act, free from any incumbrances, except as herein otherwise provided."

From the above section it must follow that a former owner of the land purchased by the State may repurchase the land and be in the same position as any other purchaser. See Grand RapidsTrust Co. v. Doctor, 222 Mich. 248. Nowhere in the act do we find any language indicating that the purchaser of the land takes anything less than that which the State owned even though such purchaser may be a former owner of the land.

In the case at bar, plaintiffs' remedy, if any, is in a court of law upon the promissory note. The decree of the trial court should be reversed, with costs to defendants.