Opdyke v. Crawford

Tax Lien; Pbiobity; Payment from Proceeds of Sale; Foreclosure of Mortgage. In an action on a promissory note and a real-estate mortgage, where there are taxes due on the mortgaged property, the court should, on the application of the plaintiff, in rendering the judgment on the note and mortgage, order that the taxes due on such mortgaged property be first paid out of the proceeds of the sale of such mortgaged property.

Error from Bourbon District Court. Foreclosure of mortgage, brought by Opdylce. The defendants were George A. Crawford, St. Louis Mutual Life Insurance Company, Risden Owen, Ira D. Bronson, Hap-good & Co., James Hart, and R. & J. S. McCord. The mortgage was given in July 1871, and the mortgaged property consisted of four unimproved lots in the city of Fort Scott. Crawford was the mortgagor. The other defendants were incumbrancers subsequent to the mortgage-lien in favor of Opdyke. Trial at May Term 1876. The court found the liens on the mortgaged property, and the priority thereof, as follows: 1st, the mortgage-lien in favor of Opdyke; 2d, a mortgage-lien in favor of the St. Louis Mutual Life Insurance Company; 3d, a judgment-lien in favor of Owen; 4th, a judgment-lien in favor of Bronson; 5th, judgment-liens in favor of Hapgood & Co., Hart, and McCords. The amount of Opdyke’s lien was $3,507, for which a personal judgment was entered against Crawford, and a decree made foreclosing the mortgage held by Opdyke, directing a sale of the mortgaged premises, and ordering that “out of the proceeds of said sale the costs of the action and of making sale shall be first paid, and the remainder thereof shall be applied to the payment of the plaintiff’s judgment herein, and the residue thereof, if any there be, shall be brought into court, to abide the further order of this court.” Before the final decree was entered, Opdyke asked the court to ascertain and find the amount of unpaid taxes and assessments on the mortgaged premises, and to order and direct that such taxes and assessments be first paid out of the proceeds of the sale; and to this end, plaintiff offered testimony showing that since the date of his mortgage “the property has been subjected to McAdam assessments and general and sidewalk taxes, which with penalty and interest amount to $2,510, which sum remains as a lien ■ upon said property, as shown by the books of the county treasurer; that said property could not now be appraised for over $3,800; that because of said taxes and assessments, and the mortgage and judgment-liens thereon, the mortgaged premises would not be purchased by any person other than the plaintiff,” and submitted that under the findings already made, and the proposed decree thereon, the plaintiff would be compelled to pay two-thirds the appraised value, ($2,534,) and then be compelled to pay said sum of $2,510 for taxes and assessments due thereon, to protect his title under the decree. The court refused to make any finding as to the taxes and assessments, and refused to decree that the taxes and assessments be first paid from the proceeds of the sale. Opdyke excepted to such refusal, and brings the case here. (The plaintiff in his petition for foreclosure had alleged the amount due upon the lots for taxes and assessments, and the bidding-in of the property by the county at tax sale, and prayed for general equitable relief.) The gist of this case I suppose to be contained in the following proposition: Suppose a mortgage creditor obtains judgment for $3,500, and upon a special execution levies upon the mortgaged property worth $3,000, upon which property $2,500 of taxes are due: the property must sell for not less than two-thirds of its value; consequently, if the rule of the court below is correct, first, no outsider will buy; second, the plaintiff must buy; third, he must pay at least $4,500 for the property. It is no answer to say that the plaintiff might pay off these taxes before trial, and have them included in the' judgment. A suitor has a right to justice without buying it. It is not justice to compel a plaintiff to raise money and pay his debtor’s debts, to be paid back at seven per cent, interest, when the debtor gets tired of litigation, and netting the debtor 43 per cent, profit in the .meantime, (that being the difference between the two rates of interest.) The case of Wilson v. McKenna, 52 111. 43, is in point, that a suitor is not compelled to purchase justice in such a way. The propriety and justice of paying taxes and assessments out of the proceeds of sale was recognized by Chancellor Kent in 1820; 4 Johns. Ch. 542. In 2 Edw. Ch. (N. Y.) 631, a mortgage was forclosed and land directed to be sold. It did not sell for over two years. In the meantime large amounts of taxes and assessments became due. The plaintiff paid them and was reimbursed from the proceeds. The New York rule in these cases is well illustrated in Easton v. Piclcersgill, 55 N. Y., which shows that the payment of taxes and assessments from the proceeds is a long-established custom. In Cord v. Southwell, 15 Wis. 211, the court below ordered the liens of taxes and assessments to be paid from the proceeds. The point was raised, and the supreme court decided that the order was proper. A recent case is found in Tuck v. Calvert, 33 Md. 209, which says that when land is sold under decree in equity, the taxes must-be first satisfied from the proceeds. In the, case at bar, it is evident that the property never would sell to an outside purchaser, because he would have to pay more for the property than it was worth. This fact was brought to the knowledge of the court; and the point was appreciated by the court, and commented upon by the court. Now, it is a well-known rule of equity jurisdiction, that when a court of equity takes charge of a case, it forever keeps control of it until complete justice has been done,- and draws to itself every incidental power necessary to carry out its decrees. Imagine an equity court decreeing land to be sold, and being unable to get it off its hands, although buyers stood around ready to pay the full value of the property! The creditor standing before the court, languishing for his money! the debtor, owning land subject to sale! the buyers, willing to give $3,000 for three thousand dollars worth of property; and the court powerless! All at once a bright idea strikes the court, and it suggests, “some one might buy it, and pay the taxes too.” Might pay $5,500 for three thousand dollars worth of property! Breathes there a man with soul so dead, as to think Kansas contains so phenomenal a buyer! and must we wait until he comes f The court as a court of equity had the right to make the order we asked for, and to incorporate it into the decree; and to refuse to do so was error.