McMahon v. McGraw , 26 Wis. 614 ( 1870 )

Paine, J.

There was no error in admitting the deed from Patrick McKenna to Thomas McKenna in evidence, even though the certificate of acknowledgment was defective in not indicating the county in which the justice of the peace, before whom it was taken, belonged. This is not a case where the title depends upon a valid record of the deed. And it has been held by this court that under the same statute in force when this deed was executed, the title would pass as between the parties,, by a deed otherwise sufficient, even though not executed in such manner as to entitle it to be recorded. Myrick v. McMillan, 13 Wis. 188.

Nor do we think there was error in refusing a non-suit in favor of John McGraw, Sen. It is true, there was no evidence of his personal occupation of the land in any manner at the time the suit was brought. But neither of the defendants resided upon it; and upon the whole evidence we think the jury would have been warranted in inferring collusion between the father and son, and that the latter was put forward as the nominal holder of' the title, and as performing some acts of ownership and occupation, merely because it was supposed that they could thus more effectually set up the tax title under which they claimed against the plaintiff. As against John McGraw, Sen., his statement to the witness Rogan, made after the deed to his son, that “ the land was still his as much as ever,” considered in connection with the entire circumstances of the case, would well have warranted this inference. And this being so, the acts of his son upon the land may well be regarded as those of his agent or hired man merely, so far as to render the father still responsible for detaining the possession. The court below was right, therefore, in refusing to nonsuit, and in assuming that there was evidence before the jury of such fraudulent collusion as made the second instruction applicable and proper.

It was proper also to admit the proof that McGraw, Sen., while acting as the agent in respect to this land, had cut and sold wood and timber from it, and received the proceeds. This was not done for the purpose of recovering the amount in this action, and there was no such recovery. The brief of the appellants’ counsel concedes that the proof was admitted only to show that the agent had money in his hands, which he ought to have applied to the payment of the taxes as they became due. It was precisely for this purpose that the proof was material and proper. It tended to show that the agent, in neglecting to apply these funds to the payment of the taxes, in allowing the land to be sold, and obtaining the tax title himself, acted fraudulently and in violation of his duty to his principal. ' And it would be strange indeed, if this proof, when offered for this purpose — to show a fraudulent attempt by an agent to acquire a tax title as against his principal, when as between them he had funds in his hands which he ought to have applied to the payment of the taxes — should be excluded because in a direct action to recover the amount of those proceeds, the principal, under the old system of pleading, would have been obliged to waive the tort and sue in assumpsit. The right of the principal to the proceeds of the wood and timber cut from the land coming only collaterally in question, as bearing upon the question of fraud in the agent in attempting to acquire a tax title against his principal, the proof was clearly admissible, without regard to the precise form of action necessary under the old system in a direct suit by the principal to recover the money.

The only remaining exceptions depend entirely upon the question whether the rights of the plaintiff were subject to the three years’ statute of limitations, applicable to actions brought to recover lands sold for taxes. If they were, there was perhaps error in the case. The first instruction asked by the plaintiff and given by the court, would have been objectionable, as requiring the defendants to have been in possession under the tax deed for three years after it was recorded, in order to establish the bar; whereas, the deed being valid on its face, and the land not in the actual possession of the original owner, in accordance with the decision of this court, the tax deed would have drawn after it the constructive possession, and after the expiration of three years the original owner would have- been barred.

So also it may be that if the case was governed by this statute at all, some of the instructions asked by the defendants should have been given. But we are satisfied that the plaintiff’s rights are not controlled by this statute. It is applicable to actions brought to recover lands sold for taxes, which involve the validity of the sales. But that is not the case here. The plaintiff’s claim stands upon entirely independent grounds. It assumes that the tax sale may have been entirely regular and valid. The plaintiff made no objection to its regularity. And it will be observed that the court told the jury that unless they found the fact of fraud in the plaintiff’s favor, they were bound to find in favor of the defendants’ title under the tax deed. This shows clearly that the case was not understood to depend at all upon any question of possession by the defendants, and accounts, doubtless, for the fact of the inaccuracy, of' the instruction already alluded to in that particular. The inaccuracy was not observed because it was immaterial. The real ground of the plaintiff’s right to recover, notwithstanding the tax deed, is the fraud of the defendant McOraw, Senior, in attempting to acquire a tax title against her while the fiduciary relation of principal and agent existed between them. It assumes that the tax sale may have been regular and valid, but that the defendant is estop-ped to set up a title so acquired, in fraud of the'rights of his principal. The essential question, therefore, was that of fraud. And the statute of limitations applicable to it was the one applicable to actions for relief on the ground of fraud.

In such cases the statute does not begin to run until the fraud is discovered. And for this purpose there is no constructive discovery. If an agent should fraudulently allow the lands of his principal to be sold for taxes, and take the deed himself and put it on record, this would not be notice to the principal that would set running the statute that would bar' him from an action for relief against the fraud. The three years’ statute of limitations as to lands sold for taxes, applicable to persons in general as to whom no fiduciary relation existed, would have no application as against the principal. The three years might expire before he discovered the fraud at all. And if they did, he would undoubtedly be entitled to the full time limited by law, after the discovery. But if this is so, the fact that he happened to discover it within the three years would not have the effect of changing the statute applicable to the case, as the instructions asked by the defendant seem to assume. The six years’ statute as to actions for relief against fraud would still have been applicable.

Within that time the plaintiff might, if necessary, have brought an equitable action for relief against the fraud by compelling a conveyance of the title acquired under the tax deed or otherwise. And within the same time she might, as was done in this case, estop the defendant from setting up the tax title so acquired as against her in an action to recover the possession. This view of the question what statute of limitations was applicable, shows that the inaccuracy in the instruction given was immaterial, and that the instructions asked by the defendant upon this point were properly refused.

The question of fraud was fairly submitted to the jury upon instructions the correctness of which does, not seem to be controverted. Certainly it would not be claimed that an agent in respect to lands could, without notice to his principal, allow the lands to be sold for taxes, and acquire a title under the tax deed which he could successfully assert against the principal.

That the relation once existed here was undisputed. And although the principal may have been in default in remitting the necessary funds, as was claimed for the defendants, that fact did not put an end to the relation, or place the agent in a position where he could acquire and assert a tax title against her. To do that, he should have first distinctly notified her of the dissolution of the relation of principal and agent.

The question of the account between the parties is not involved in this action. Whether, if the defendant had admitted the rights of the plaintiff and asked only for an accounting, claiming a balance due, such an accounting might have been had, and the judgment for the plaintiff been made conditional upon the payment of such balance, if any, it is unnecessary to inquire. He asked for nothing of the kind, but persisted in what, according to the verdict of the jury, was a fraudulent attempt to assert a tax title against the plaintiff acquired in violation of his obligations to her as agent.

By the Court. — The judgment is affirmed.