Summary
Appeal from Jackson Circuit Court. — Hon. E. P. Gates, Judge.
(1) Appellant complains of the decree of the court for the reason that it is not supported by the evidence in this ease, and is erroneous. As there was no claim, or attempt to prove by respondents that John Browne knew, or had reason to believe, that plaintiff company had mistakenly assigned the certificate of purchase, it is right to assume that he believed that the New England Loan and Trust Company had voluntarily and intentionally assigned it, and if it did, he as well as any other person had the right to purchase the certificate and take a deed under it. It is true he could not purchase it for his brother who had purchased the real estate subject to plaintiff’s mortgage, and it is equally true that plaintiffs could not have taken a, deed under the certificate in fraud of defendant William H. Browne’s right, who stood in the light of a mortgagor, having purchased the property subject to plaintiffs’ mortgage. There is nothing inequitable, improper or unreasonable about John Browne’s purchase of the certificate which was legally issued and legally assigned by plaintiffs, and reassigned until it had passed into the hands of a third party, and admittedly a bona fide purchaser. It must be presumed from the evidence in the record that either the plaintiff, New England Loan and Trust Company, had taken the certificate of purchase and assigned it with intent to indirectly procure a deed thereon, and thus cut out the equity of William H. Browne, with whom they'were in litigation over the mortgage on the property, or that the plaintiffs were grossly careless and indifferent to their interests and their duty. (2) It was overlooked by the honorable court below, that the burden of proof is upon the party alleging the fraud, and that fraud must be shown by evidence. Jackson v. Wood, 88 Mo. 76. Courts are not to suspect fraud; it must be proved. Caldwell v. Smith, 88 Mo. 44; Priest v. Way, 87 Mo. 16. In the face of the law that the burden of proof was upon the plaintiffs, and that they should have proved their case by clear and distinct evidence, can it be justly held that John Browne took the tax deed for the use and benefit of his brother, and in fraud of the plaintiffs? If this decree can be upheld, in what manner could John Browne prove that he took the deed for himself and not for his brother? The nature of the ease is not susceptible of other proof on the part of defendant, John Browne, than that he has made, viz., his own word, under oath, the testimony of his brother denying knowledge of any understanding that the deed was taken for him, the testimony of John Browne’s agent, Andrew Grallagher, showing that he acted for John Browne and not for William H. Browne, the payment of his own money for the certificate of purchase, and finally, taking the tax deed in his own name. If all of this testimony is to be overthrown by the single circumstance that defendants were brothers, and lived in the same house, and had spoken together of the certificate, there could be but one‘conclusion, viz., that John Browne was precluded from the ■right to purchase and hold the certificate and deed because he. was a brQther of William H. Browne. The presumption is always against fraud; fraud must be proved and the burden of proof is on the party alleging it. Shoe-Co. v. Casebier, 53 Mo. App. 640; Jackson v. Wood, 88 Mo. 76; Thrasher v. Green Co., 105 Mo. 244-; 1 Greenleaf on Evidence (14 Ed.), secs. 14, 20, 34, 35 and 80. (3) This transaction of John Browne’s consists more with honest and fair dealing than with a fraudulent purpose, and should be referred to the better motive. Garesche v. McDonald, 103 Mo. .1; Robinson v. Dryden, 118 Mo. 534. He certainly was entitled to the legal right to purchase the certificate and take a tax deed thereunder, and enjoy the profit of the transaction as much as any other citizen; and the act was perfectly consistent and reasonable, and the court below erred in assuming that he took the deed for the use and benefit of his brother; for, while the burden of proof was upon plaintiffs, the preponderance of the testimony was with the defendants.
(1) A mortgagor, or one claiming title under him, -can not take out a tax deed against the mortgagee. Fuller v. Hogdon, 25 Me. 243; Porter v. Lafferty, 33 la. 254; Stears v. Hollenbeck, 38 la. 550; Fair v. Brown, 40 la. 209; Dayton v. Rice, 47 la. 429; Avery v. Judd, 21 Wis. 262; Ins. Co. v. Patton, 98 Ind. 209; Kezer v. Clifford, 59 N. H. 208; Montgomery v. Whitfield, 6 So. 224; Boyd v. Allen, 15 Lea (Tenn.) 81; Childers v. Shantz, 120 Mo. 305. And it makes no difference that the tax deed is taken out indirectly or in the name of another person. MeAlpine v. Zitzer, 119 111. 273; Frank v. Arnold, 35 N. W. 453. An .assignee of a tax certificate is in no better position than the original holder. Frye v. Bank, 11 111. 367; Cooper v. Jackson, 99 Ind. 566; Ellison v. Armstrong, 28 Minn. 276; Leppo v. Gilbert, 26 Kan. 138. Some authorities also hold that the same restriction, applies to mortgagees. Brown v. Simons, 44 N. H. 475; Woodbnry v. Swan, 59 N. H. 22; Moore v. Titman, 44 111. 367; Ins. Co. v. Bulte, 45 Micb. 113; Maxfield v. Willey, 46 Mich. 252. But there is a difference of opinion on this latter point. Williams v. Townsend, 31 N. Y. 411; Waterson v. Devoe, 18 Kan. 223. ’ (2) The Supreme Court will defer to the findings of the trial court on a matter of fact even in equity cases, and will not reverse such finding in case of doubt. Snell v. Harrison, 83 Mo. 651; Mathias v. O’Neil, 94 Mo. 520; Jamison v. Bagot, 106 Mo. 240; Parker v. Roberts, 116 Mo. 657; Lins v. Lenhardt, 127 Mo. 271; Short v. Taylor, 137 Mo. 517. (3) The decree of the trial court is amply supported by the evidence. (4) The tax certificate, having been indorsed by the plaintiff company by mutual mistake or through the fraud of Sexton, equity will cancel such indorsement and the tax deed taken out on the strength thereof on re-payment by the plaintiff company of the damages caused by said mistake. Light v. West, 42 la. 138,; Besore v. Dosh, 43 la. 211; Singer Manf. Co. v. Yarger, 12 Fed. 487; Horn v. Garry, 49 Wis. 464. (5) The blank indorsement of the name of the plaintiff by its assistant secretary on the back of the tax certificate in question was insufficient as an assignment of the certificate. White v. Brooklyn, 122 N. Y. 53; Territory v. Perea, 30 Pac. 928; Horn v. Garry, 49 Wis. 464. (6) Equity has jurisdiction in these cases. Ins. Co. v. Smith, 117 Mo. 262 ; Slater v. Manwell, 6 Wall. 276; Miller v. Cook, 25 N. El 756; Sneathen v. Sneathen, 104 Mo. 201.
STATEMENT.
“This is a suit in, equity to set aside and annul a tax deed. The petition was filed on the 23d day of November, 1897, in the circuit court of Jackson county, Missouri, and alleged in substance, that on the 27th day of May, 1889, Mina R. Sexton and husband gave a deed of trust to plaintiff; John C. Hall in favor of the plaintiff .New England Loan & Trust Company,, covering the land in controversy, lots 25 and 26, block 7, in Jersey Heights, an addition to the City of Kansas, Missouri, to secure their note for $1,800; that said note and deed of trust were still owned and held by said company, and were wholly unpaid; that on the 10th day of May, 1892, the defendant William H. Browne became the owner of said land subject to said deed of trust, and that as part of the consideration for said land said Browne assumed and agreed to pay said note and deed of trust; that said Browne had ever since owned said land and been in possession thereof; that under said deed of trust it was the duty of said Browne to pay the taxes levied against said land, but that notwithstanding said duty, said Browne failed to pay the city taxes of Kansas City levied for the year 1895, and that said land was put up and sold in the month of November, 1895, for said delinquent taxes; that at said sale Warren B. Sexton acted for the plaintiff company in buying in properties on which said plaintiff held deeds of trust, and at said sale bought in the property in controversy in the name of said plaintiff company; that through an error on the part of said Sexton and the assistant secretary of said plaintiff the tax certificate purchased at said sale was indorsed ‘without recourse, New England Loan & Trust Company, by J. S. Gilbert, A. Sec’y,’ and delivered to said Sexton; that said Sexton delivered said certificate so indorsed in blank to The Missouri National Bank in January, 1896, to secure an indebtedness of his to said bank; that afterwards said bank sold said certificate to one E. N. Phelps, who filled his own name into said blank indorsement; that on the 4th day of November, 1897, said Phelps delivered said certificate to defendant John Browne, indorsing thereon, ‘For value received I, this 4th day of November, 1897, assign the within certificate to---, without recourse, F. N. Phelps;’ that thereafter, said John Browne filled his name in the blank; in said indorsement; that, except as above, there were no assignments of said certificate; that on the 5th day of November, 1897, said John Browne obtained a tax deed to said land from the city treasurer; that said John Browne is a brother of defendant William H. Browne, and that they have for years done business together in the same office, and resided together as members of the same family in a house situated on said land; that said John Browne obtained said certificate and said tax deed for the use and benefit of his brother William H. Browne, and that the obtaining by said John Browne of said certificate and said tax deed was in fraud of the rights of plaintiffs; that said William H. Browne is insolvent. The petition closed with an offer to pay John Browne such sum as the court might decree to be proper, and a prayer for a decree that said tax deed was null and void, and for general relief.
“Separate demurrers were filed and overruled, after which William H. Browne filed a general denial. John Browne filed an answer denying all allegations not admitted, and admitting that William H. Browne purchased the property on the 10th day of May, 1892, and that said William H. Browne failed to pay the city taxes of 1895, and that said property was sold for said taxes to the plaintiff company; that said plaintiff ind'orsed its name on the back of the tax certificate and delivered it to said Sexton, and that by the other above-mentioned assignments it became the property of this defendant John Browne; that on the 5th day of November, 1897, a tax deed was issued to this defendant for said property, and duly recorded. A reply was filed denying all new matter in this answer.
“On the trial of the case evidence was introduced by both sides, and the court, after consideration thereof, found the issues in favor of the plaintiffs; that the matters and statements in the petition were true; that the purchase of the tax certificate by John Browne and the taking out of a tax deed by him were for the use and benefit of William EL Browne; that in the purchase of said certificate and taking out of said deed said John Browne and William EL Browne acted together in collusion and in fraud of the rights of plaintiffs, and that said certificate and deed were null and void as to said plaintiffs. The court, therefore, decreed that the certificate and deed be cancelled and adjudged null and void and of no effect, and that the defendants, J ohn Browne and William H. Browne, be enjoined from claiming under said certificate and deed and from transferring the same to a third person, and that said defendants pay the costs. Motions in arrest of judgment and for a new trial were made by defendant, John Browne, and overruled by the court, whereupon said John Browne appealed to this court.
“Several errors are assigned by appellant in general terms, but only two are urged, and they practically cover all: First, that the decree of the court below is not supported by the evidence; second, that the decree should have provided for the re-payment to defendant, John Browne, of the amount paid by him for the tax deed.
“The evidence substantially indicates that from May 10, 1892, to November 5, 1897," and afterwards, William H. Browne owned the property in controversy subject to the deed of trust held by the plaintiff company ; that he had assumed and agreed to pay said deed of trust, which provided that the party of the first part should ‘pay, before the same became delinquent, all taxes and assessments upon said premises, general or special, now existing or that may hereáfter be levied; ’ that said William H. Browne failed to pay the city taxes for the year 1895, and that in November, 1895, said property was sold for said delinquent taxes, and the tax certificate was bought for the plaintiff company; that said certificate was accidentally assigned by said company and came into the hands of F. N. Phelps, who held the same until the fall of 1897; that in November, 1897, said Phelps transferred said certificate to the defendant, John Browne, receiving therefor, between $60 and $70, including a bonus paid by said John Browne; that said John Browne took out a tax deed November' 5,1897; that the two Brownes were brothers and were occupying the same offices as partners in the real estate business and never kept any accounts between themselves, and had lived together in the house on the premises in controversy for several years, and continued to live together until two or three months after this suit was started, when John Browne moved away and left "William H. Browne in possession; that said William H. Browne was insolvent; that up to November, 1897, said John Browne had paid board to William H. Browne at the fate of $15 per month, and that after the purchase of said tax certificate by said John Browne he paid no board for three months, and then moved out and was paid $15 in cash, making in all $60 paid or credited by William H. Browne to- John Browne, as claimed for rent; that the possession of William H. Browne was never disturbed in any way; that John Browne did not deal in tax certificates or deeds and this was his only transaction in them; that William H. Browne and John Browne had discussed the matter often previously to transfer to John Browne, and that the latter knew of the outstanding deed of trust and that his brother was under obligation to pay those taxes; that there was litigation pending of which said John Browne knew, concerning the foreclosure of this deed of trust, which was being fought by said William H. Browne, although the deed of trust and the title of William H. Browne were both cut out by the tax deed, if valid, and which litigation said William H. Browne declared he intended to prosecute to completion. ’ ’
In addition to this, it was developed that an ejectment suit was then pending between appellants and respondent, William Browne, and that William Browne testified very positively that not only bad be not notified tbe plaintiffs in that case that be bad no more interest in the property, but asserted that be expected to continue tbe contest for this property.
Phelps also testified that bis best impression was that Gallagher told him, at tbe time of tbe purchase and assignment of tbe tax certificate, that John Browne wanted it for a friend of bis.
Upon tbe submission of this cause to tbe court, upon all the evidence introduced by tbe parties to this action, tbe court found tbe issues for the plaintiffs and caused to be entered tbe following decree:
“Now at this day come tbe said parties, plaintiffs and defendants, by their respective attorneys, this cause coming on for bearing and trial, tbe court doth take up the same for bearing and trial, and all and singular tbe premises being seen and beard, tbe cause being submitted to tbe court, tbe court finds tbe issues for tbe plaintiffs and that tbe matters and statements set forth in tbe petition of plaintiffs are true, and that the pur- • chase by defendant, John Browne, of tbe certificate of purchase mentioned and described in tbe petition herein, which was issued to plaintiffs by tbe city treasurer of Kansas City on tbe 12th day of November, A. D. 1895, for tbe city taxes of said last year due the City of Kansas City on lot No. twenty-five and tbe west one hundred and twenty-three and five-hundredths feet of lots twenty-six and twenty-seven, of block seven, of Jersey Heights, an addition to said city, and acknowledged by said city treasurer on tbe 27th day of November, 1895, and recorded on January 20, 1896, in Book B. No. 613, at page 365, of tbe land records in tbe office of the recorder of deeds of said Jackson county, at Kansas City, Missouri, and that tbe taking by said defendant John Browne of tbe tax deed described and recited in plaintiffs’ petition, dated -the 5th da.y of November, 1897, executed by John J. Green as city treasurer, and by him acknowledged on said 5th day of November, 1897, and recorded on said last day in the land records of said county at Kansas City, in the office of the recorder of deeds, in Book B. 652, at page 538, and following, and conveying to said defendant, J ohn Browne, lot twenty-five and the west one hundred and twenty-three and five one-hundredths feet of lots twenty-six and twenty-seven, 'in block 7, of Jersey Heights, an addition to said city, were made and taken by said defendant, "William IT. Browne, and that in the taking and acquiring of said certificate of purchase and said tax deed by said defendant, John Browne, he and his co-defendant, William H. Browne, acted together in collusion and in fraud of the rights of these plaintiffs, and that said certificate of purchase and tax deed so taken and obtained by said defendant J ohn Browne are null and void as to these plaintiffs. It is therefore considered, ordered, adjudged and decreed by the court that said certificate of purchase and said tax deed "be and the same are hereby cancelled and adjudged to be null and void and of no effect whatever, and said defendants, William H. Browne and John Browne, and each of them, are hereby perpetually enjoined and restrained from claiming either under said certificate or said tax deed, and from transferring the same to any third person, and that said defendants pay the costs of this suit, and that plaintiffs have execution therefor. ’ ’
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
