Ketcham v. Fitch

| Ohio | Dec 15, 1862

Scott, J.-

By the assignment of errors, in this case, it is claimed that the court erred :

1. In refusing plaintiff leave to file his supplemental petition, and make said Joseph K. Secor a party.

2. In refusing to order said taxes, penalty and interest, to be paid out of said proceeds of sale.

3. In ordering the surplus of said proceeds of sale, after paying the mortgage debt, interest and costs, to be paid over to said Esther M. Fitch.

The propriety of these several rulings of the court, depends upon the same questions, to-wit: whether it was the duty of the court, without defendant’s consent, to order the payment of Secor’s claim, arising from his purchase at tax sale, out of the proceeds of the sale of the mortgaged premises.

In the case of Creps v. Baird, 3 Ohio St. Rep. 277, it was held, that a purchaser, at judicial sale, takes the land subject to ‘all the tax incumbrances existing against it at the time of sale, and not provided for in the judgment, because, such sales being without warranty, the rule of caveat emptor applies to them. But, by the act of April 5, 1859, “for the assessment and taxation of property in this state, and for levying taxes thereon according to its true value in money,” it is provided, in the close of the 77th section, that “ when any real estate shall be sold at judicial sale, * * * the court shall order the taxes and penalties, and the interest thereon, against such lands, to be discharged out of the proceeds of such sale.” S. & C. St. 1465. The question arising in this case, involves, merely, the construction of this enactment.

Being an innovation upon rules of law previously well settled, we may fairly assume that it should be construed strictly.

It is clear that such a case, as is here shown by the record, is not, in terms, provided for by the statute. It provides for the discharge of taxes, penalties,, and the interest thereon. Taxes are imposed by public authority, and for public benefit. But, in this case, the taxes had been paid to the public. The land had been sold for their payment, and the claim of the state had been thereby fully satisfied. It is true that Secor, the purchaser at tax sale, had acquired thereby an interest in or lien upon the land. But this was not, in his hands, a tax. He had bought the land, and paid the taxes. His claim, if the owner desired to redeem the premises, was not even limited'to the amount of the taxes and penalties which he had paid; but was enhanced by a.n additional penalty of fifty per cent., forming an aggregate, in this case, of nearly §800. And he had no power to compel the payment of any part of this claim. It was optional with the owner whether he would redeem within two years, or suffer the title of the purchaser at tax sale to become perfect. Secor’s claim, though arising from a purchase of the premises at tax sale, was, therefore, evidently something different from taxes. But it is argued, that as the statute provides that the taxes, penalties, and interest thereon, shall be discharged out of the proceeds of a judicial sale, and as no interest is by law chargeable on taxes until after a sale, it must be presumed that the legislature intended to provide for the extinguishment of claims arising from tax sales, as well as for the payment of taxes standing unsatisfied upon the duplicate. But this inference is very uncertain. 'We find that the same legislature, in the 82d section of the act “prescribing the duties of county auditors,” passed on the day before the statute which we are now considering, has provided that when the title of the purchaser at tax sale fails on account of irregularity in the proceedings, he “shall be entitled to receive, from the proprietor of such land or lot, the amount of taxes, interest, and penalty, legally due thereon at the time of such sale,” etc. It is easily understood how the term “ interest ” happened to be used, through inadvertence, in this connection. Prior to 1852, the statute required lands delinquent for the nonpayment of taxes to be placed on the duplicate for the next year, charged with the delinquent taxes, the interest thereon, and a penalty of twenty-five per cent. While the law stood thus, the statutes bearing upon that subject all spoke of the “taxes, interest and penalty.” In 1852, the law was changed by substituting a penalty of thirty per cent., instead of “interest and a penalty of twenty-five per cent.” But, notwithstanding this change of law, the word “ interest ” still claimed a right to a place with “ taxes and penalty,” and subsequent statutes, somewhat improvidently, acknowledged the justice of its claim. We think it more probable, that had the legislature intended to provide by the statute in question for the payment not only of taxes, but of individual claims arising from tbe purchase of the premises at tax sale, that intention would have been directly expressed.

I have found no other place in the statute booh where the sum payable in redemption of lands sold at tax sale is called taxes. So long as the claim against the owner stands unpaid upon the duplicate in favor of the public, it is always called a tax, or tax and penalty, or tax, interest and penalty; but after the public demand has been satisfied by a sale, and the claim against the owner becomes private property, it is uniformly spohen of in other appropriate terms. And if we look to the general purpose of the whole act in which this provision is found, either as disclosed by its title, or manifested throughout, in its several parts, the conviction is strengthened that, by the clause in question, the legislature meant nothing more than to provide for the payment and discharge, by the proper party, of all liens upon the premises sold, arising from the exercise of the taxing power, and still held by the state.

Thus construed, the law can be readily carried out by the court, upon motion, without making new parties.

The amount of taxes, properly so called, and penalty, due thereon, payable to the county treasurer, would be shown by the duplicate. But the amount payable to the purchaser at tax sale, would depend upon the regularity of the proceedings under which he claims. He must, therefore, be made a party, and the amount of his claim ascertained by an investigation of those proceedings. If all this can be done, after the judicial sale has been effected and confirmed, the result would be the application of the proceeds of sale not to the payment of taxes, but to the discharge of incumbrances owned and held by persons who were strangers to the whole proceeding at the time of sale, and the existence of whose claims may have prevented the land from selling at a higher price.

Prudent men, acting upon the maxim caveat emptor, would take such incumbrances into the account, and unless the law was well understood to mean what it does not say, would graduate their bids accordingly.

When creditors desire to sell lands of their debtor, free from incumbrances, justice to him requires that the incumbran-cers should be made parties to the proceedings, before the order of sale. Such has always been the law, and a majority of the court think the statute in question leaves it unchanged, except as to taxes and penalties thereon standing unpaid upon the duplicate.

The judgment of the district court is therefore affirmed.

Sutliff, O.J., and BriNKerhofe, J., concurred. Peck and GhoisoN, JJ., dissented.