Rae v. Morgan , 125 Or. 644 ( 1928 )

Rehearing denied June 12, 1928. ON PETITION FOR REHEARING. (267 P. 1072.) In their petition for a rehearing counsel for respondents earnestly urge upon our attention once more the case of Bagley v. Bloch, 83 Or. 618 (163 P. 425). This case received our careful consideration when we wrote our previous decision (267 P. 1072), but we felt that the distinction between the circumstances of that case and the one now before us was sufficiently apparent so as to need no comment. In Bagley v.Bloch it does not appear from the facts stipulated, nor from anything in the decision, that the defendant in the tax certificate foreclosure proceeding was "the person or persons appearing on the latest tax roll in the hands of the sheriff for collection at the date of the first publication of such summons"; but from the decision it appears that Bagley was the defendant; the stipulation recites that Melchior Kohrli and George H. Blyth were the persons appearing on the latest tax roll when the first publication of the summons was published. They were, therefore, the individuals whom the statute designated should be made the defendants in the delinquent tax certificate proceedings. Nothing in the decision, the stipulation, nor the abstract of record which we have examined, indicates that they were the defendants. But as previously stated Bagley was made the defendant; he, however, was not personally served with a summons. Apparently he was the actual owner of the property when the foreclosure proceedings were instituted, while in our case the respondents were not the owners, but were installment buyers. In Bagley v.Bloch we therefore have as the defendant someone other than the statutory party. In our present case the defendant was the individual who appeared on the latest tax roll in the hands of the sheriff for collection at the date of the first publication of summons; he was a nonresident of the state and substituted service upon him was therefore essential and proper. Subsequent to Bagley v. Bloch the statutory provisions setting forth the manner of foreclosure of tax delinquent certificates were amended. Thus 1923 Session Laws, Chapter 276, inserts after the words "for the purpose of this section," the following: "and in all foreclosures by a county" summons may be served and notice given exclusively by publication. In a subsequent sentence an amendment adds, "such summons or notice shall be published once a week for six consecutive weeks, and it shall not be necessary to mail any copy of such summons or application to any defendant named or any person interested in any of the property described therein in any such county foreclosure." Next, as the statute proceeds to set forth that the person or persons appearing on the latest tax roll in the hands of the sheriff for collection shall be the proper defendant, the amendments add that such individuals shall be the defendants in "all foreclosures by counties," and then in order to make clear the fact that the foreclosures are proceedings in rem the amendments insert into the previous enactments "and said proceedings shall be and be deemed and considered a proceedingin rem against the property itself." Thus since Bagley v.Bloch the statute has been amended so as to point out clearly that in all foreclosures by a county the summons shall be served by publication, and the person appearing upon the latest tax-roll shall be the defendant, and the proceedings shall be deemed inrem.

The above amendments evidently were intended among other things to set forth that the legislature was endeavoring to point out a distinction between foreclosures by counties and foreclosures by individuals. In our neighboring State of Washington, whose statutes are the source from which we obtained ours, the foregoing distinction has been recognized: Patterson v.Toler, 71 Wn. 535 (129 P. 107); Merges v. Adams,137 Wn. 208 (242 P. 43). In Noble v. Aune, 50 Wn. 73 (96 P. 688), which is referred to with approval in Merges v.Adams, supra, the Washington Supreme Court said: "We recognize a clear distinction between a foreclosure by a county and one by an individual."

We thus have as our defendant in the tax delinquency certificate proceeding the individual designated by the statute; he was a nonresident and was served in the manner provided by statute. In Coy v. Title Guaranty Trust Co., 257 Fed. 571, the District Court for the District of Oregon in referring to the Oregon statutes held:

"The statute having prescribed the rule by which interested parties shall be ascertained, the proceeding will not be rendered nugatory, if it should turn out that the tax roll in the hands of the sheriff at the date of the first publication of notice did not give the name of the true owner of the property, resulting in the true owner not having been made a party to the proceeding. Every person is deemed to have knowledge of the taxing laws. He knows that his real property is subject to assessment, and that delinquency will follow nonpayment of taxes, and subject his property to sale. He is bound, therefore, to take heed of what is being done by the taxing officers to subject his property to the payment of taxes lawfully assessed against it. This proceeding being in rem, it is sufficient if the county make those persons parties which the law directs that it shall, and it is not fatal to the proceeding, the dictates of the law having been followed, that a real owner should not have been made a party co-defendant. In any event, public notice is given for a reasonable time, and all owners are warned of the proceeding affecting their property.Wilfong v. Ontario Land Co., 171 Fed. 51 (96 C.C.A. 293).

"Now, the receiver of the Title Guaranty Trust company was not an owner, and the largest interest the trust company had or could have in the property was a lien thereon as security for the payment of money obligations. It was not such a person or concern as the statute requires to be made a party of the tax proceeding, and the proceedings instituted are not void or inoperative because the receiver was not made a party thereto."

The above represents the general rule. In Cooley on Taxation, Section 1404, the author states:

"* * But, as in all other cases of proceedings in rem, if the law makes provision for publication of notice in a form and manner reasonably calculated to bring the proceedings to the knowledge of the parties who use ordinary diligence in looking after their interests in the lands, it is all that can be required. Such notice is generally to be based upon an order of publication in some newspaper perhaps officially designated, and in most jurisdictions is required to accompany the list of delinquent taxes, with a description of the lands affected, the names of the owners, and the amount of tax charged against each parcel. The provisions of the statute concerning the manner of the notice by publication must be complied with substantially and the proof of publication must conform to the statutory requirements."

In Cooley on Taxation, Section 1405, we find:

"Proceedings of this nature are not usually proceedings against parties, nor, in the case of lands or interests in lands belonging to persons unknown, can they be. They are proceedings which have regard to the land itself rather than to the owners of the land, and if the owners are named in the proceedings and personal notice is provided for, it is rather from tenderness to their interests, and in order to make sure that the opportunity for a hearing is not lost to them, than from any necessity that the case shall assume that form."

The statutes of this state having prescribed the method, we are without power to authorize departure therefrom.

The answer of the defendant not only seeks to defeat the plaintiff's title but also to establish title in the defendant; it prays that the tax deed and the deed to the plaintiff be declared clouds upon the defendant's title, and that the plaintiff be forever enjoined from asserting any claim to the premises. This and similar relief is prayed for. Section 390, Or. L., enacts:

"* * When such an equitable matter is interposed, the proceedings at law shall be stayed and the case shall thereafter proceed until the determination of the issues thus raised as a suit in equity by which the proceedings at law may be perpetually enjoined or allowed to proceed in accordance with the final decree; or such equitable relief as is proper may be given to either party. * *"

James v. Wood, 96 Or. 667 (190 P. 1105), construes and applies the foregoing sentence taken from Section 390, Or. L. Accordingly, if the defendants desired to avail themselves of matters requiring cognizance of a court of equity, the equitable matter should first have been determined. The case will therefore be remanded for proceedings in harmony with the foregoing.

Petition for rehearing denied.

REHEARING DENIED.