Opinion
No. 30681.
June 5, 1933.
1. TAXATION.
Where owners of land borrowed money from holder of trust deed covering land to pay taxes improperly assessed thereon, transferee of trust deed paying subsequently improperly assessed taxes and foreclosing deed held entitled only to refund of taxes paid by him, original owners being entitled to refund of taxes paid by them (Code 1930, section 3276).
2. TAXATION.
Party paying taxes improperly assessed against land is entitled to refund, regardless of who owns land when refund is made (Code 1930, section 3276).
APPEAL from Circuit Court of Claiborne County.
Anderson, Wheeless Weil, of Jackson, for appellant.
This court has had a similar case before it, that is somewhat similar, and has held that the owner was the one to recover the taxes.
McGehee v. Fitts, 4 So. 93, 65 Miss. 357.
The present statute does not direct that the refund of the tax money should be made to Spencer. In effect the law as to the proper person to whom such payment shall be made has not been altered.
If the statute was not relied upon, neither of the parties could force the county to refund because of no protest.
Schmittler v. Sunflower Co., 126 So. 39.
Acker by his amended claim sets up right to recover for the years 1926 and 1927 by reason of the assignment of the deed of trust from the Port Gibson Bank.
Some effort is made by appellees to show that there were securities on other property of the Spencers, but that cannot change the right of Acker as assignee. He has paid his money for the taxes as clearly appears from the record and should have it back.
The refund has been made under the statute. The money has been sent back to the county which is ready and willing to pay it to the party entitled, and the question is not who is entitled under section 3276 of the Code, but as between rival claimants in a suit before the court to establish a substantial right, who is entitled?
Dr. Acker holds the land upon which the taxes were paid, occupies the position of "holder under" Spencer and we have shown that both the policy of this state, expressed by statute, and the common law show him to be the proper plaintiff, since the right to have back the taxes "ran with the land," and since Dr. Acker is the party "ultimately entitled."
The evidence shows that the Port Gibson Bank held a deed in trust of the property upon which the taxes were paid. It is shown that the deed in trust contained the usual provision for future advances; that the bank advanced the money with which to pay the taxes, to Spencer under that provision, taking notes therefor; that the deed in trust, therefore, secured these loans for the payment of taxes, each loan increasing the lien of the bank upon the property of Spencer; that the said property was sold under the deed in trust to Dr. Acker, who thereby purchased any and all rights which the bank had in the property, including the lien upon the property created by the loan for taxes, so that actually and ultimately Dr. Acker paid the taxes.
E.S. J.T. Drake, of Port Gibson, for appellees.
There is a basis of equity in the idea that a man who buys from a man who sells him a void tax title should be entitled to recover back the money paid originally for the void tax title, as he, the then owner, would be a loser, but this reason fails in the case of a man who buys from one who has simply made an erroneous payment of taxes. The fact that Spencer had paid more taxes than were owing cannot affect Dr. Acker's title. It is as good as it would have been otherwise, but if Spencer had bought at a tax sale, which was void, and sold Acker, then Acker's title would be affected, and the reason for section 537, Code of 1880, will be seen. It is undisputed that neither the bank, when it made the loan, nor Dr. Acker, up to the very time he bought at his foreclosure sale, knew anything of this erroneous payment. It was not in contemplation of the parties, is not mentioned even by remote inference in the trust deed, and is not assigned by any stretch of construction. The refund should be to the man who made the payment.
The new statute did intend to and did change the law by eliminating the provision that the payment should be to the man claiming under the purchaser, and doubtless for the reasons above set out.
It will be noted that the Port Gibson Bank did not pay these taxes. It only loaned the Spencers the money out of which the taxes were paid.
Argued orally by R.B. Anderson, for appellant, and by J.T. Drake, for appellee.
Dr. George W. Acker, in 1928, bought a deed of trust from a Port Gibson bank, which had been executed in its favor by the appellees, Lillie M. and M.J. Spencer, and which conveyed land that actually lay in one district of Claiborne county, but had formerly been located in another district of said county, and owing to the change in the boundary of the district, it fell into another district. Apparently, without noting the change in the boundary, this land was assessed for local taxes in the original district where it formerly lay.
After his purchase of the deed of trust from the bank, in 1928, Dr. Acker paid the taxes for that year upon this land, and afterwards filed with the auditor and attorney-general a claim for a refund of all taxes paid on said land for local district taxes from 1923 to 1928, both inclusive. The amount of this claim was audited and approved by the auditor and attorney-general under our refund statute. Dr. Acker foreclosed the mortgage or deed of trust purchased by him at a trustee's sale in 1930, at which sale he actually bid in the land for five thousand dollars. The deed of trust called for something over ten thousand dollars, but at the time of the foreclosure there was due thereon something more than five thousand dollars, but less than six thousand dollars. Dr. Acker, at the suggestion of his attorney, had the trustee to recite the bid for the full amount on the face of the deed of trust, to-wit, ten thousand five hundred dollars.
After this land had been sold under the deed of trust, the appellees, Lillie M. and M.J. Spencer, filed a claim with the board of supervisors for a refund of taxes due them for each of said years. The board of supervisors, conceding that some one was entitled to a refund, paid the money into court and had the parties impleaded as to who was entitled to it.
On the hearing, the circuit judge decided that Dr. Acker was entitled to the taxes for 1928 alone, and that the appellees were entitled to a refund for the other years. It appeared in the hearing that for the years 1926 and 1927 the appellees had borrowed money from the bank with which to pay the taxes, giving the bank security therefor, and using the money so secured in the payment of the taxes.
We do not think that the fact that the money was borrowed from the bank cuts any figure in the right of the appellees to a refund for the years 1926 and 1927. It is true the bank had the right to pay the taxes on land secured by its deed of trust, and to foreclose in case of failure to repay the bank, but that was not done in this case. When the bank loaned the Spencers the money, taking their note and security, that money then became the property of the Spencers, and it was their property when the taxes were paid.
We think the court below was correct in deciding that the Spencers were entitled to all the taxes for all the years, except 1928, and that Dr. Acker was entitled to a refund of taxes for that year alone.
The appellant relies upon the case of McGehee v. Fitts, 65 Miss. 357, 4 So. 93, construing section 537, Revised Code of 1880, reading, in part, as follows: "If land shall be sold for taxes when no taxes are due on it, or it is not liable to be sold for taxes, the sum paid by the purchaser for the amount of his bid, and the costs of the sale and conveyance, with six per cent. interest per annum, shall be refunded to him, or to the holder under him, by descent or purchase, immediately or mediately." The court in that case held that the right to a refund on the facts there involved went with the conveyance, as seems to be expressly provided in the latter clause just quoted.
However, this statute has been changed and this clause has been eliminated. The statute, as it now exists, section 3276, Code of 1930, provides that if taxes are paid in error, the auditor, after proper proceedings, shall issue payment to be made to the proper claimant. Under this statute, there could be no rights, following from a conveyance of the land, for a refund of taxes paid which were not due or chargeable to it. A tax refund should be due to the party who paid the tax. The land was not liable to the tax, and, of course, the party paying the money is entitled to its recovery, regardless of who then owns the land.
The auditor and the attorney-general should not approve a claim for refund except to a person who has actually paid the taxes, or to those who have received a lawful assignment of the right to the refund.
The judment of the court below will be affirmed.
Affirmed.