County of Harnett v. Reardon, 203 N.C. 267 (1932)

Oct. 5, 1932 · Supreme Court of North Carolina
203 N.C. 267

COUNTY OF HARNETT v. M. C. REARDON and Wife, CALLIE REARDON.

(Filed 5 October, 1932.)

1. Taxation. H c — Held: all parties in interest were made parties to the action by consent upon motion to set aside tax foreclosure sale.

Where on a motion to set aside a tax foreclosure sale the clerk orders that the mortgagees of the property be made parties to the action and on appeal to the Superior Court the judge finds as a fact that the appeal was heard by consent of all parties in interest: Held, all parties having an interest in the land were parties to the action by consent and the contention of the purchaser at the tax foreclosure sale that they were not parties cannot be sustained.

*2682. Judgments K cl: K f — Irregular judgment is oue entered contrary to usual course and practice and may be set aside by motion in cause.

An irregular judgment is one entered contrary to the usual course and practice of the courts and may be set aside in proper instances by motion in the original cause, and where the irregularity does not go to the court’s jurisdiction whether the judgment will be set aside will be determined by the promptness with which the application is made and whether the applicant was prejudiced by the irregularity.

3. Taxation H c — Tax sale in this case is set aside for irregularity.

Where, in a suit to foreclose a tax certificate, the complaint alleges that there were mortgage liens existing against the property and that the county was entitled to have the owner’s equity of redemption sold to satisfy the taxes due and prays that the equity of redemption be foreclosed, and the final judgment decrees that the sale be approved and that the commissioner make deed in fee simple to the purchaser upon payment of the purchase price, and it further appears that the land had been sold under one of the mortgages prior to the tax foreclosure sale and that the purchaser at the mortgage foreclosure sale had asked at the county auditor’s office whether there were any taxes due on the property and was informed that there were none, and that the mortgagees were not served with summons and had no actual knowledge of the tax foreclosure sale: Held, the complaint in the tax foreclosure proceedings and the decree therein were at variance and the rights of the mortgagees were not affected thereby, and the sale was ineffectual because the owner’s equity of redemption had been foreclosed prior to the tax sale foreclosure and the purchaser at the sale had record notice thereof or in the exercise of due care should have discovered the fact, and the tax sale should have been set aside and the parties put in statu quo upon motion in the original cause by the mortgagees and purchaser of the equity of redemption, the motion having been made in apt time, and the decree being irregular.

4. Courts A c — Where equitable proceeding is improvideutly brought before clerk, Superior Court may retain control on appeal to it.

Where an equitable proceeding is brought before the clerk who is without equitable jurisdiction, and the cause is appealed to the Superior Court, the latter court may retain control of the case and make all necessary orders as though the case were regularly pending.

Appeal by defendants from Cowper, Jat Special April Term, 1932, of HabNett.

Reversed.

Tbis is an action brought by plaintiff against defendants to foreclose a tax lien on defendants’ real estate assessed for tbe year 1927. Tbis was a motion in tbe cause made by M. C. Reardon and wife Oallie Reardon, W. E. Nicbols and tbe Federal Land Bank of Columbia, S. C., to vacate tbe judgment theretofore rendered on tbe ground that it was an irregular judgment rendered contrary to tbe course and practice of tbe court. Tbe clerk found tbe facts and set tbe judgment aside. An appeal was taken by G. D. Woodley, tbe purchaser at tbe tax sale, to tbe Superior Court, *269and the court below rendered judgment reversing the judgment of the clerk. The movants duly excepted and assigned error to the judgment as signed, and appealed to the Supreme Court.

B. F. McLeod and L. L. Levinson for M. G. Reardon and wife GaBie Reardon and W. F. Nichols.

J. R. Baggett for Fedwod Land Bank of Columbia, 8. G.

R. L. Godwin for G. D. Woodley, respondent.

Clarkson, J.

We think the judgment of foreclosure in the action of plaintiff against the defendant, of the lien for taxes of 1927, was irregular and contrary to the course and practice of the court, and the judgment of the court below should be reversed.

The evidence is to the effect that M. C. Eeardon and wife Gallic Eeardon owned a tract of land of about 70 acres, in Harnett County, North Carolina, worth some $3,000, or more, which was purchased under a tax foreclosure sale by G. D. Woodley for $175.20. The land was sold for 1927 tax, which was a first lien on the land. There were two other liens on this land: (1) Federal Land Bank of Columbia, S. C., for $1,500, (2) under the second lien W. E. Nichols purchased the land from E. T. Dupree, trustee at the trustee sale on 20 February, 1928, the deed to same was duly registered on 5 March, 1928, in Book 222 at p. 599 in the register of deeds office of Harnett County, North Carolina. The said Nichols took possession of the land which he rented to the defendants Eeardons. In the foreclosure action brought by plaintiff thereafter against the Eeardons to foreclose the tax liens, neither the Land Bank nor Nichols had any summons or complaint served on them, nor did they have actual notice of said action.

In this action the record discloses that the clerk made the following order, which is not excepted to: “It is further ordered, adjudged and decreed that W. E. Nichols, the Federal Land Bank of Columbia, Columbia, S. C., and G. D. Woodley, be and they are hereby made parties to this suit, to the end that they and each of them may file such pleadings as they may be advised.”

The judgment of the court below sets forth the fact that “said appeal being heard by consent of all parties in interest, who were either present in person or represented by attorneys.”

From the record it appears that all the interested parties to this controversy were before the court. They were before the clerk on the motion of the movants unexcepted to, and on appeal to the Superior Court the . matter was heard by consent of all the parties in interest. They are all parties to the action by consent, and the contention of Woodley, the *270purchaser at the tax sale, respondent, that they are not parties, cannot be sustained.

In Fowler v. Fowler, 190 N. C., at p. 539, citing numerous authorities, is the following: “An irregular judgment can be set aside by direct attack — motion in the cause by a party thereto — within any reasonable time and ordinarily showing merit.” And further: “A judgment is said to be irregular whenever it is not entered in accordance with the practice and course of proceeding where it is rendered. The irregularities which have been treated as sufficient to justify the vacations of judgments are very numerous, and it is not possible to prescribe any test by which, in all jurisdictions, to determine whether or not a particular irregularity is such as to require the vacation of a judgment. When the irregularity does not go to the jurisdiction of the court, its action will be largely controlled by the promptness with which the application is made, and by the consideration whether or not the irregularity is one which could have operated to the prejudice of the applicant.” 1 Freeman on Judgments, 5th ed., part sec. 218; Wolfe v. Davis, 74 N. C., 597; Duffer v. Brunson, 188 N. C., 789.

We think, upon a careful examination of the record, that the judgment is irregular and contrary to the course and practice of the court. From the complaint in the action we find that it was brought to foreclose a tax lien then amounting to $48.36 on the land in controversy, but the complaint alleges: “That an inspection of the public records of Harnett County discloses that the defendants other than M. C. Reardon have liens on the lands described in paragraph 2 of the complaint. . . . That the plaintiff, county of Harnett, is entitled to have the equity of redemption of the defendants in the above described lands foreclosed and forever barred, and to have a commissioner appointed to sell so much of the above mentioned lands as the court deems necessary to pay the said sums due on said certificate of sale, and the cost of this action, including one reasonable attorney’s fee. Wherefore, the plaintiff does pray judgment as follows: . . . That the equity of redemption of the defendants in the lands referred to in paragraph 2 of the complaint be foreclosed and forever barred and that a commissioner be appointed to sell so much of the said lands as the court deems necessary to pay the aforesaid sum and the cost of this action.”

The final decree, in part, reads: “It is, therefore ordered, adjudged and decreed that the said report and sale be and the same are hereby in all respects approved and confirmed and the said commissioner upon the payment of the purchase price be and he is hereby authorized and instructed to make and deliver a deed in fee simple for the said lands to G. D. Woodley, successors and assigns.”

*271A deed under this decree was duly made to G. D. "Woodley, the respondent, who now claims the land in fee simple, free and clear of all encumbrances, and a writ of assistance was issued to place Woodley in possession of the land. This was contrary to the allegations of the complaint, which only prayed that the equity of redemption of the defendants be foreclosed. It in no way affected the rights of the Federal Land Rank or Nichols, nor were they ever served with summons and complaint or had actual notice of the action. In fact, the sale is ineffectual, as the record discloses that Nichols had purchased the equity of redemption before it was sold in the action of the county of Harnett against the Reardons for tax lien. The purchaser, Woodley, either had record notice or in the exercise of due care should have discovered that he was buying a “pig in a poke.”

In Jones on Mortgages, Yol. 2, 8th ed., part sec. 1325, p. 788, we find: “Although the mortgagor had forfeited his estate at law, courts of equity allowed him to redeem his estate within a reasonable time, upon payment of the debt and all proper charges, and this right was called an equity of redemption.”

In Stevens v. Turlington, 186 N. C., at p. 194-5, Stacy, J., for the Court, says: “The decisions in this State are to the effect that, as between the mortgagor and the mortgagee, the legal title to the mortgaged premises is vested in the mortgagee, while the mortgagor is looked upon as the equitable owner of the land. This relative position continues until the land is redeemed or until the mortgage 'is foreclosed. Prior to the day of redemption, or condition broken, the mortgagor may pay the money according to the terms of his contract, and thus avoid the conveyance, at law. This is termed his legal right of redemption. After the special day of payment has passed, or default suffered, the mortgagor still has the right to redeem at any time prior to foreclosure. This is called his equity of redemption; and such right is regarded as a continuance, and not a change, of his old estate.”

Bispham’s Principles of Equity, 10th ed., part sec. 151, p. 256, has the following: “This equity of redemption existed not only in favor of the mortgagor, but also of other parties claiming under him. Thus the heir, the devisee or the alienee (even though a volunteer) of the mortgagor, may redeem. So, also, may a subsequent mortgagee, or judgment creditor, or the crown, or the lord of the fee, on forfeiture. A tenant for life or for years, a remainderman, a reversioner, a tenant by the curtesy, or by devise, and a jointress may all redeem; and, in general, it may be said that this right exists in favor of any one who has an interest in the land, and would be a loser by foreclosure. But where a party is not affected by the mortgage, there is no occasion for redeeming, and he is not allowed to do so.” To be sure plaintiff had a first lien in the land *272for tbe tax, but tbe complaint was bottomed on tbe sale of tbe equity of redemption to pay same. Tbe defendant Nicbols bought tbis equity of redemption under tbe second deed of trust subject to tbe Land Bank.

Another important fact appears of record' — that Nicbols, subsequent to taking tbe deed and about tbe time be bad it recorded, went to tbe county auditor’s office, where tbe records of all back taxes were kept, and in company with a member of tbe board of county commissioners, inquired of tbe assistant auditor in charge as to any back taxes due against M. 0. Reardon and Oallie Reardon on tbe lands in controversy; tbe said W. E. Nicbols, after tbe assistant auditor looked tbe record over, was informed by tbe officer that there were no unpaid taxes on tbe said lands in controversy for 1927, or any other year. That W. E. Nicbols was able and ready to pay any taxes which were reported to him and that that was tbe purpose of bis inquiry at tbe auditor’s office of tbe plaintiff county of Harnett. That W. E. Nicbols has paid all subsequent taxes except for 1931 upon tbe property in controversy and is now bolding said property under bis deed which be received from E. T. Dupree, trustee.

Although tbe clerk has no equitable jurisdiction, tbis action is now on appeal in tbe Superior Court, and it is held that where an equitable proceedings, brought before tbe clerk, who has no equity powers, is pending on appeal in a court having equity jurisdiction, the Supreme Court will permit tbe latter to retain control of tbe case, and make all necessary orders as though tbe case were regularly pending. Smith v. Gudger, 133 N. C., 627.

Equity: “In its broadest and most general signification, tbis term denotes tbe spirit and tbe habit of fairness, justness, and right dealing which would regulate tbe intercourse of men with men — tbe rule of doing to all others as we desire them to do to us; or, as it is expressed by Justinian, ‘to live honestly, to barm nobody, to render to every man bis due.’ Inst. 1, 1, 3. It is therefore tbe synonym of natural right or justice. But in tbis sense its obligation is ethical rather than jural, and its discussion belongs to tbe sphere of morals. It is grounded in tbe precepts of tbe conscience, not in any sanction of positive law.”

Tbe judgment is irregular, of which tbe purchaser either bad record notice or in tbe exercise of due care should have bad notice. In good conscience, from tbis record, Nicbols should not be deprived of tbe fee simple title to tbe land which be purchased subject to tbe lien of tbe Federal Land Bank, and tbe parties should be placed in statu quo. Tbe taxes for 1927, with tbe penalty, will have to be paid by Nicbols, as they are a lien on bis land, and tbe county should make restitution to Woodley, tbe respondent. Tbe judgment of tbe court below is

Reversed.