Opinion
14792
December 14, 1938.
Before GASTON, J., Chester, June, 1937. Affirmed.
Suit in equity by the Union Central Life Insurance Company against E.W. Crouch and another, as trustees in dissolution of the Chester Land Company, John G. White, and another, to foreclose a mortgage and set aside a tax deed to defendant White. From an order referring certain issues to a referee, defendant White appeals.
The order of Judge Gaston follows:
This is a suit in equity.
(1) To foreclose a mortgage of real estate, executed 4th March, 1927, to the plaintiff by George M. Sanders, who later conveyed the land to Chester Land Company, and —
(2) To set aside a tax deed, executed July 6, 1936, subsequently to the date of the said mortgage, by the tax collector and thereby conveying 369.8 acres, being a part of the mortgaged premises unto Mr. John G. White.
The complaint, among other things, alleges (1) that the defendant, John G. White, is made a party defendant because he claims an interest in said 369.8 acres, but that the rights of the said defendant, if any, are junior and subject to the lien of plaintiff's mortgage, and (2) that the said tax deed is null and void on the grounds; (3) that the tax collector failed to make a lawful levy upon said premises and did not enter upon the land and did not seize and take exclusive possession thereof; (4) that the tax levy was grossly excessive and did not comply with the law; (5) that the tax collector did not give plaintiff, as holder of its mortgage, thirty days' notice of the tax sale and deed, as required by Section 2855, Code 1932; (6) that the plaintiff arranged to redeem the land prior to the expiration of the time fixed by law, and instructed the tax collector to draw on plaintiff for the amount of the taxes and cost necessary to redeem the land; that the tax collector agreed to this method, and accepted same by drawing on plaintiff and did repay to defendant, John G. White, the amount bid him at the tax sale, and that he accepted the refund of the money and that all of these matters took place before the time to redeem had expired and prior thereto; that after the time to redeem had expired Mr. John G. White learned that the draft had been returned (unpaid) for the purpose of adjusting an error in it, and that Mr. White then went to the tax collector and demanded a deed to the premises and insisted on paying back to the tax collector the amount of his bid, and that the tax collector had no legal right to accept a return of the money nor to execute the deed to Mr. John G. White, and that such deed is null and void and of no effect, as to plaintiff's mortgage, which is the first lien on the said land.
Demand is made in the complaint for the foreclosure of the mortgage held by plaintiff and that the proceeds be applied on plaintiff's mortgage debt; and that the rights of John G. White under said tax deed be adjudicated, and that said deed be declared by this Court to be null and void and of no force and effect; and that Mr. White be required to account for the rents and profits collected from said premises since the date of the tax deed.
The answer of the defendant, Mr. John G. White, reserving his rights under his notice of motion to strike, among other things (1) denies that plaintiff's mortgage is a prior lien on the land deeded to this defendant by the tax collector and alleges that the defendant is the owner of the premises in fee simple by virtue of said tax deed; (2) alleges that the defendant became the purchaser of the land at the tax sale, on July 1st, 1935, for $190.00; that he received a deed thereto in due time from the tax collector; that the tax collector duly levied upon and took possession of said premises, under tax executions, for past due taxes for the years 1932, 1933, and 1934, and after due advertisement sold said lands to the defendant on 1st June 1, 1935, for $200.00, which the defendant paid to the tax collector, and that the deed to the defendant was delivered after plaintiff had been notified that upon its failure to redeem that such deed would be delivered.
The answer of John G. White further sets forth and admits that he was informed by the tax collector that plaintiff intended to redeem and for that reason permitted the tax collector to refund to him the amount of his bid, but that when he learned of plaintiff's failure to redeem within the time required by law, that defendant did ask for and received a conveyance of the land from the tax collector, upon payment of the amount of his bid.
Defendant further alleges that the said taxes and cost were $128.15 and also for 1935 were $39.56, total $167.71; and that he expended $212.31 for repairs upon the property, and that he is entitled to have these items refunded to him, with interest, and also any and all other taxes, and cost of repairs paid by him. The answer demands that the complaint be dismissed, or if the tax deed be held invalid for a refund to defendant of the amount of his bid, and that plaintiff pay him for the amount of cost and taxes and repairs and improvements paid for by defendant.
The case now comes before me on a motion by the plaintiff for an order of reference generally to determine all issues of law and fact raised by the pleadings. The defendant, John G. White, by his attorney, resists a reference as to any issues raised in regard to his claim to the land. The defendant takes the position that his answer raises an issue of legal title which is solely a jury issue, and demands a jury trial of this issue, as the first and paramount question in the case. But this is a suit to set aside the deed under which the defendant claims title. If his deed is good, he can stand on his legal title and demand a jury trial. But if his deed be attacked in equity for fraud, failure of execution and delivery by the tax collector, according to the prerequisite of the statutory law on the subject, or upon any other inequitable grounds such equitable issues must be tried by the Court and determined before a jury trial can be had and demanded. It would be very confusing to a jury to try the issues as to a proper levy and exclusive possession by the tax collector, or as to the sufficiency of the notice to the plaintiff as the holder of a mortgage on the property, or as to the compliance by the plaintiff by authorizing a draft, or as to the rescission by the defendant of his rights as a purchaser by accepting a refund of the purchase money, or taxes and repairs. I think the equitable issues should first be tried by the Court, without a jury.
A suit to set aside a tax deed for alleged invalidity is essentially one where equitable matters and questions of law are involved and should be passed upon by the Court. See the recent case of Hyman v. Arnold, 182 S.C. 490, 189 S.E., 796, where a tax deed was sustained by the Court on a demurrer. See also the case of Glymph v. Smith, 180 S.C. 382, 185 S.E., 911, 105 A.L.R., 631, where a tax deed was set aside, in a suit to foreclose a mortgage, and where a reference was held. In neither of these cases was a jury trial had, I think the usual procedure and better practice is to refer such cases.
It is, therefore, ordered and decreed that the plaintiff is entitled to a reference of all issues raised as to the amount due on plaintiff's mortgage debt, and also as to the validity of the tax deed under which Mr. John G. White claims, and also as to his right to a refund of any money expended by him for taxes or repairs. If the parties cannot agree upon a suitable person to act as Special Referee, I will appoint and constitute an impartial disinterested member of the bar of some county in the sixth circuit to serve and act in this capacity, and leave is granted the parties to apply to this Court for an order of reference in conformity with the terms of this decree on due notice of such motion.
Messrs. McDonald, Macaulay McDonald, for appellant, cite. As to order of reference: 182 S.C. 490; 189 S.E., 796; 180 S.C. 382; 185 S.E., 911; 25 S.C. 72; 52 S.C. 236; 29 S.E., 546; 23 S.C. 392; 28 S.C. 533; 6 S.E., 325; 31 S.C. 265; 9 S.E., 852; 36 S.C. 561; 15 S.E., 711; 161 S.C. 293; 159 S.E., 620.
Messrs. Finley Spratt, for respondent.
December 14, 1938. The opinion of the Court was delivered by
We think that the conclusions reached by his Honor, Judge Gaston, are correct, and we approve the result of his decree. If this is a suit in equity in all of its prominent features and purposes, as it is, "it draws within the jurisdiction in which it is heard all questions arising therein and incidental thereto." Sale v. Meggett, 25 S.C. 72.
MESSRS. JUSTICE BONHAM, BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.