Opinion
June 21, 1928.
1. TAX LIENS: Priority. As a general rule the priority of general tax liens is in the reverse order of their accrual, the latest tax lien being paramount to a prior tax lien; and the statute (Sec. 4400, R.S. 1919) applies the same rule to special tax liens.
2. ____: Drainage Taxes: Sale: Title Subject to Later Liens. The title of land or other property acquired under a sale thereof to enforce a lien for drainage taxes is subject to the lien of all subsequent annual installments of drainage taxes, each installment being a separate lien.
3. TAX LIENS: General Taxes: Priority: District as Party. The rule that no person or corporation can be affected by a proceeding to which he or it was not made a party applies to tax suits. If the drainage district was not a party to the suit to enforce the lien of the State for state, county and school taxes, it cannot be held that such suit and the sale thereunder determined that the State's lien for such taxes was superior to the drainage district's lien on the same lands for drainage taxes.
4. ____: Drainage Taxes: Sale for General Taxes. A sale under a judgment for delinquent state, county and school taxes does not cut out or destroy the lien of the drainage district for drainage taxes, but such lien is a subsisting and continuing lien after the sale and conveyance by the sheriff.
5. ____: ____: ____: Paramount. The statute (Sec. 4399, R.S. 1919) in declaring the properly filed certificate for drainage taxes shall, until paid, constitute a lien, "to which only the lien of the State for the general state, county, school and road taxes shall be paramount," does not, by the use of the word "paramount," destroy the lien of the drainage district for drainage taxes, but only makes the special lien an inferior lien; and if the drainage district was not a party to the suit and judgment for such general taxes, and the lands were sold under such judgment, the drainage district has a right to redeem, or to enforce its special lien for each of the several years for which its assessments were made.
6. TAX SALE: Wife's Lands: Purchase by Husband. Under the Married Woman's Acts, a husband who is entrusted by his wife with the entire control and management of her lands, including the payment of taxes, is her agent, and cannot acquire title to the lands at a sale under a judgment for delinquent general taxes, without her knowledge and consent, but receives the title subject to his agency; and if he acquires it for one-tenth of its value, her consent is a badge of fraud, and if he acquires it without her consent he cannot hold it against her, her creditors or the drainage district which had a lien on it for drainage taxes.
7. ____: ____: ____: To Defeat Drainage Tax Lien. The husband and wife cannot defeat the lien of the drainage district for drainage taxes assessed against her lands, by collusively agreeing that he is to buy them in at a small price at a sale under a judgment for general taxes rendered against both of them, and take the title in his name, and particularly so where she furnishes the purchase money or a part of it.
Corpus Juris-Cyc. References: Agency, 2 C.J., Section 365, p. 709, n. 46. Husband and Wife, 30 C.J., Section 513, p. 845, n. 35. Judgments, 34 C.J., Section 1480, p. 1043, n. 14. Taxation, 37 Cyc., p. 1143, n. 27; p. 1383, n. 90; p. 1384, n. 93; p. 1478, n. 79.
Appeal from Stoddard Circuit Court. — Hon. W.S.C. Walker, Judge.
REVERSED AND REMANDED.
Oliver Oliver for appellant.
(1) The annual installments of the total tax levied subsequent to 1924 were not disturbed nor impaired by reason of the sale of land for taxes due the State for 1924 and prior years. Sec. 4394, R.S. 1919, provides for the levy of the total tax. This tax is nothing more than an estimate of the amount of money required to meet the obligations of the district during the period of its activity. The annual installment (Sec. 4395, R.S. 1919) is a yearly determination of the amount required for that or the ensuing year. Section 4399 establishes the lien. The levy of the total tax constitutes an appropriation or setting aside of a sufficient amount of the assessed benefits as will produce a sum, to be annually collected and in proportion to benefits, that will pay all the costs of the district, including bonds issued and the interest thereon. The security back of the bonds is the lien on the land. This lien dates from the levy and certification of the total tax to the Recorder and is paramount to all other liens except the lien of the State for general taxes. This lien is somewhat dormant when first levied, but has vitality put into it by the "determination, order and levy" of the amount of the annual installment and maintenance tax by the board of supervisors, as provided by Secs. 4395 and 4419, R.S. 1919. This was the holding in the case of Drainage District v. Winklemeyer, 278 Mo. 268. Hence, since the district's lien for taxes due in 1925 and subsequent years was not vitalized and did not become effective until after the State's lien for the taxes due in 1924 and prior years had been enforced, under no condition could the entire total tax due the district for the year 1925 and subsequent years be destroyed by reason of the sale of the land in question for state taxes for years 1921, 1922, 1923 and 1924, and the trial court's judgment was correct in holding the plaintiff could recover for the taxes due it for 1925, 1926 and 1927. Secs. 4394, 4395, 4399, 4400, 4419, R.S. 1919; Elsberry Drainage District v. Winklemeyer, 278 Mo. 268; Little River Dr. Dist. v. Houck, 206 Mo. App. 286; State ex rel. v. Angert, 127 Mo. 456; Excelsior Springs v. Henry, 99 Mo. App. 450. (2) The sale of the land for state taxes due for years 1921 to 1924 did not destroy the right of the district to collect its taxes for the same or prior years. Secs. 4399, 4400, R.S. 1919: State ex rel. v. Werner, 10 Mo. App. 41; Ean Claire Lumber Co. v. Anderson, 13 Mo. App. 435; Excelsior Springs v. Henry, 99 Mo. App. 450; State ex rel. v. Angert, 127 Mo. 456; State ex rel. Land v. Trimble, 2 S.W.2d 616; Good v. Johnson, 299 Mo. 186. (3) It is the duty of the landowner to pay his taxes. He cannot by conniving and collusion defeat even a mortgage lien, much less a statutory one. The acquiring of the title by E.E. Sheppard did not amount to a foreclosure of the tax lien. It constituted payment. New England Trust Co. v. Browne, 177 Mo. 412; Fuller v. Hoddon, 25 Me. 243; Porter v. Lafferty, 33 Iowa 254; Fair v. Brown, 40 Iowa 249; Avery v. Judd, 21 Wis. 262; Insurance Company v. Patton, 98 Ind. 209; Kezer v. Clifford, 59 N.H. 208; Boyd v. Allen, 15 (Lea) Tenn. 81. Wammack, Welborn Cooper and Shane Batton for respondent.
(1) The lien of the State for general taxes is paramount to the lien of Little River Drainage District for ditch taxes. This is expressly made so by Sec. 4399, R.S. 1919, which is the statute giving Little River Drainage District a lien at all for its taxes, and that section expressly provides that the State's lien for general taxes is paramount to the district's lien for drainage taxes. Even without the statute the lien of the State for general taxes would be paramount to the lien of the drainage district for ditch taxes. State ex rel. Land v. Trimble, 2 S.W.2d 617; Jaicks v. Oppenheimer, 264 Mo. 693; Morey Const. Co. v. St. Louis Co., 242 Mo. 241; Mo. Real Estate Loan Co. v. Burri, 202 Mo. App. 242. (2) Plaintiff contends that the lien of the drainage district for its taxes is a separate lien for each year's taxes, and that we cannot consider the taxes for years subsequent to the sale of the lands for the general taxes, as having been a lien at the time the general taxes were due. The statute would hardly hear this construction. It provides that the board of supervisors shall determine the total amount of the tax to be levied by the district, and that they shall then levy the total tax and file the same properly certified, in the office of the Recorder of Deeds, and from that time said tax shall be a lien on the lands, to which only the State's lien for general taxes shall be paramount. Sec. 4399, R.S. 1919. The only lien given by the statute, is a lien for the whole amount of tax levied, and that lien is given at the time the certificate is filed with the Recorder of Deeds. Thereafter the board of supervisors each year determines the amount of this tax to be paid in the particular year, and orders the same extended on the tax book for collection during the year. No new lien is provided for. It is simply a matter of providing for the payment of the lien in part each year. The only lien is the lien for the whole tax given at the time the tax record and certificate is filed with the Recorder of Deeds, and the statute expressly provides that the State's lien is paramount to that lien. (3) The controversy here is a matter of statutory construction. The statute expressly provides that the State's lien for its taxes is paramount to the lien of the drainage district for its taxes. This provision should not be ignored. If the lien is paramount, then the respondent holding title under the foreclosure of the said paramount lien, has a claim and title paramount to the plaintiff's lien for drainage taxes. This paramount lien has been foreclosed, and the only right, if any, left in appellant as the holder of the inferior lien, is the right to redeem. Valentine v. Havener, 20 Mo. 133; Stafford v. Fizer, 82 Mo. 393; Williams v. Brownlee, 101 Mo. 309. (4) Our statute relating to sheriff's deeds, in the case of sale of land for general taxes, provides that such deeds shall convey to the purchaser a title in fee. Sec. 12948, R.S. 1919. In Missouri Real Estate Loan Company v. Burri, 202 Mo. App. 242, the court has held that where land was sold for the lien of city taxes, said lien being superior to the lien of a special tax bill, suit could not thereafter be maintained upon the special tax bill. So, too, in Jaicks v. Oppenheimer, 264 Mo. 700. (5) The owner is not required to pay the drainage taxes unless he so desires, inasmuch as they have been levied in invitum. A sale of the land for the superior lien of the general taxes passed a title to the purchaser, superior to appellant's lien for its ditch taxes. The land sold at public sale, and E.E. Sheppard was the highest bidder. If the sale passed title superior to plaintiff's lien, it is not apparent how it could be any concern of appellant who bought the land in at the sale for the general taxes. It was not the purchase of the land, but it was the foreclosure of the State's paramount lien which cut off appellant's lien for its ditch taxes.
The plaintiff brings this suit to collect delinquent drainage taxes assessed for the years 1921-1927, both inclusive. The petition is in seven counts, one for each year's assessment. The answer alleges as a complete defense that the land was sold under a judgment of the circuit court for delinquent general state and county taxes due for the years 1921 to 1924, inclusive. Defendant claims under that tax title. The facts appear in an agreed statement.
The trial court found for the defendant on counts one to four, inclusive, adjudging that the sale under the judgment for state and county taxes destroyed the plaintiff's lien for the years 1921-1924, the years for which the state and county taxes were levied and the property sold; found for the plaintiff on counts five, six and seven, and enforced the lien of the district for its assessments for the years 1925, 1926 and 1927, as superior to the tax title acquired under the general tax sale. Plaintiff appealed.
The claim of the respondent is that the State's lien for state and county taxes, the judgment for the same and the sale thereunder, cut out entirely the drainage district special assessment liens, whether those liens accrued after the state lien attached, at the same time, or before.
The trial court held that it cut out the liens of assessments levied during the same years that the lien for the state taxes accrued and became payable, but did not destroy the liens of the district for subsequent years.
I. The general rule is that the priority of general tax liens is in the reverse order of their accrual. That is, the latest tax lien is paramount to a prior tax lien. In Jaicks v. Priority. Oppenheimer, 264 Mo. 693, in an interesting discussion of the principle, it was held by the Court en Banc that the same principle applied to special tax liens; that those subsequent in time enjoyed a priority over those prior in time. Section 4400, Revised Statutes 1919, makes them so in this case, as will be noted below.
It is claimed by the plaintiff that such subsequent special tax liens are paramount to prior general state tax liens. We find it unnecessary to discuss that subject, because the liens of the district affected here include special tax liens contemporaneous with the general state liens, and the parties insist that we determine the relation of these liens to each other.
The statute relating to the State's lien for general taxes, Sections 12757 and 12758, provide for the continuance of the lien until paid, and that upon a sale under a judgment for such tax the sheriff shall execute a deed and convey title in fee simple to the purchaser.
Section 4399, relating to an action to enforce the drainage district taxes, provides that the tax and costs "shall from the date of filing the certificate hereinafter described in the office of the recorder of deeds for the county wherein the lands and properties are situate, until paid, constitute a lien, to which only the lien of the State for the general state, county, school and road taxes shall be paramount, upon all the lands and other property against which such taxes shall be levied as provided in this article."
The section then provides for a certificate by the president and secretary of the district, directed to the recorder of deeds, setting out the names of the owners of the land in the district, the descriptions of said land, the amount of taxes levied on each tract of land and that the "said tax shall be payable in annual installments; the amount of each installment as well as the amount of the maintenance tax will be determined and certified to the county collector of your county not later than the first day of September of each year."
There may be some uncertainty as to whether the liens of the district for the special assessments shall date from the filing of that general certificate or from the date of the annual certificates to the county collector on the first day of September of each year.
Section 4400 of the Drainage Law says the title acquired through any sale of land or other property under the aforesaid proceedings shall be subject to the lien of all subsequent annual installments of drainage taxes; thus making each installment a separate lien. The trial court so treated it.
The part of the section (4399) for construction is that which we have put in italics, that which provides for the lien of the special taxes, "to which only the lien of the State for the general state, county, school and road taxes shall be paramount."
The lien for state and county tax shall be paramount. The statute does not say that it shall necessarily destroy the district lien for special taxes. The plaintiff district, according to the stipulation and the finding of the trial court, was not made a party to this proceeding. No person or corporation can be affected by a proceeding to which he or it is not made a party, and that applies to tax suits. For instance, the State's lien for taxes is superior to a prior mortgage lien, and a sale under such tax lien conveys title to the purchaser, but does not affect the mortgagee's right to redeem. [Gitchell v. Kreidler, 84 Mo. 472; Stafford v. Fizer, 82 Mo. 393; Watt v. Donnell, 80 Mo. 195.] Those old cases elucidate the doctrine and have been often referred to and approved in later cases. [Paxton v. Fix, 190 S.W. 328, l.c. 329; Real Estate Loan Co. v. Gibson, 282 Mo. 75, l.c. 81; State ex rel. McKinney v. Davidson, 315 Mo. l.c. 554; Keaton v. Jorndt, 259 Mo. l.c. 194.]
Under these authorities, where the mortgagee, or cestui que trust in a deed of trust, is not made a party defendant in a suit to enforce the State's lien for taxes, a sale under a judgment obtained conveys the legal title, but does not cut out and destroy the mortgagee's interest. He still may redeem. In what way can it be said that the lien for special assessments in favor of the drainage district is not at least of equal dignity and does not carry the same rights as a mortgagee's lien?
This is a suit by the drainage district in its own right to enforce its lien; its right to sue in that manner is not questioned. The suit is to enforce the specific lien or several specific liens. By the statute they are made inferior, to the State's paramount lien for State taxes. But there is nothing in the statute, nothing in the general principles governing the situation of parties, which would warrant a conclusion that the lien of the district is destroyed by the proceeding to which it was not a party. It still has a right to redeem, or it may enforce its lien by judgment for each of the several years for which the assessments are made; at a sale under such judgment the purchaser would acquire the right to redeem in an action against the holder of the tax title, by paying the judgment, interest and costs of the tax proceeding. The purchaser at the tax sale holds such title subject to the right of the plaintiff to redeem. If the district had been made a party to the proceeding with an opportunity to meet and pay the general taxes at the time, a different question would be presented for consideration.
II. A question arises on the validity and good faith of the defendant's title. The land originally was in the name of defendant, Martha Estella Sheppard. It came to her by Title of inheritance. The stipulation contains this statement: Purchaser.
"(13) That E.E. Sheppard, while taking the title to said property in his name, in fact purchased the same with joint funds belonging to E.E. Sheppard and his wife, Martha Estella Sheppard which he, in turn, paid to the sheriff at the time of the delivery of said sheriff's deed. That there was no change in the management of said land after E.E. Sheppard received his sheriff's deed; that he had always been active in the management of his wife's property, and continued to manage the property in the same manner that he had always previously done prior to acquiring his tax title."
If this had occurred before the enactment of the Married Women's Act of 1889, Sheppard, the purchaser, would have been in the position of a life tenant by reason of his courtesy initiate. [Wells v. Egger, 303 Mo. l.c. 34.] And as a life tenant it would have been his duty to pay the taxes, but since the Married Women's Act his control of the property was as her agent. He always had been in active management of this property. Since the agreed statement shows no qualification of that management it means that she entrusted to him the entire management, including the payment of taxes. Under these circumstances he could not have acquired a tax title as against her. [2 C.J. 710; Witte v. Storm, 236 Mo. l.c. 485.] An agent is prohibited from acquiring to the prejudice of its principal, directly or indirectly, any interest in property which is the subject of its agency. That principle applies to this case only if E.E. Sheppard acquired the title without his wife's knowledge or consent. The amount that he paid in the sale for taxes including costs and attorney fees was $894.98. The land comprised 406 acres, and by the stipulation it was worth $21 an acre — more than eight thousand dollars. He got it for about ten per cent of its value. No doubt he could not hold such a title against his wife if she objected. He could do it only with her consent. With her consent it was a badge of fraud. [N.E. Loan Trust Co. v. Browne, 177 Mo. l.c. 425.] Either he acquired the title without her consent and could not possibly hold it against her, against her creditors, or this plaintiff: or, he and she collusively had Sheppard buy in the property and take the title in his own name for the purpose of defeating the district lien for taxes which he knew to be existing against the property, for he was made party to the tax suit. He could not lie still, purposely allow the general taxes to accrue against the property, allow it to be sold and purchased at ten per cent of its value and acquire a title which would cut out the lien of the district for taxes. It must be noted that the stipulation does not say that the purchase at the tax sale was made in good faith; only the naked facts were stated; that he was in the management of his wife's property and continued to manage it after the sale as he managed it before. There was no change in the situation of the property after the sale. It continued exactly as it was before. Sheppard had died at the time of the suit and the defendant, Mrs. Sheppard, had acquired the title from him apparently by descent.
The trial court is in better position to determine the good faith of that transaction than we are. If that court should find the sale and purchase for general taxes was for the purpose of defeating the special tax lien, then the general taxes were paid thereby. Otherwise the plaintiff's right to redeem is unimpaired, or it may have judgment enforcing its several liens, and the purchaser at a sale under such judgment may redeem.
The judgment is reversed and the cause remanded with directions to the trial court to proceed in accordance with this opinion. All concur.