United States v. Elliott/Opinion of the Court

The act of February 6, 1863 (12 Stat. 640) provided for the collection of direct taxes in insurrectionary districts within the United States, by subjecting lands on which such taxes had been assessed, and remained unpaid, to public sale to the highest bidder for a sum not less than the taxes, penalty, and costs, and 10 per centum per annum on said tax. The act contained a provision that the tax commissioners should be authorized to bid in such lands for the United States at a sum not exceeding two-thirds of the assessed value thereof, unless some person should bid a larger sum. It also gave a right of redemption to minors, nonresident aliens, loyal citizens beyond the seas, guardians, or trustees of persons under legal disabilities at any time within two years of such sale.

The land of the claimants was sold on March 3, 1863, and bid in by the United States for the sum of $1,100. Subsequently, November 1, 1866, the United States sold at public auction that portion of its land described as lot A to T. R. S. Elliott for $200, and the same was conveyed to him. Said Elliott died in 1876. During his lifetime the land was seized under execution as his property, and sold, and never afterwards came into his possession or that of the claimants.

The act of March 2, 1891 (26 Stat. 822), provided for the return to the owners of lands bid in for taxes and subsequently resold of any excess received by the United States beyond the amount of the tax assessed thereon, and also for a certain rate of compensation to the owners of property sold for direct taxes. The fourth section of that act contained the following:

'That it shall be the duty of the secretary of the treasury to pay to such persons as shall apply therefor and furnish satisfactory evidence that such applicant was at the time of the sales the legal owner, or is the heir at law or devisee of the legal owner of such lands as were sold in the parishes of St. Helena and St. Luke in the state of South Carolina, under the said acts of congress, the value of said lands, in the manner following, to wit: To the owners of the lots in the town of Beaufort, one-half of the value assessed thereon for taxation by the United States direct tax commissioners for South Carolina; to the owners of lands which were rated for taxation by the state of South Carolina as being usually cultivated, five dollars per acre for each acre thereof returned on the proper tax book; to the owners of all other lands, one dollar per acre for each acre thereof returned on said tax book: provided, that in all cases where such owners, or persons claiming under them, have redeemed or purchased said lands, or any part thereof, from the United States, they shall not receive compensation for such part so redeemed or purchased; and any sum or sums held or to be held by the said state of South Carolina in trust for any such owner under section three of this act shall be deducted from the sum due to such owner under the provisions of this section: and provided, further, that in all cases where said owners have heretofore received from the United States the surplus proceeds arising from the sale of their lands, such sums shall be deducted from the sum which they are entitled to receive under this act. * *  * '

This suit was brought by the appellees in the court of claims to assert their claim as the owners in fee simple in remainder of block 91, composed of lots A and B, to 29/30 of one-half of the value assessed for taxation on said block by the United States direct tax commissioners for South Carolina. The court of claims found, among other findings, that the claimants had not repurchased or redeemed any part of lot A from the United States, nor had any purchase been made, intended to be, on their account, and rendered judgment for the claimants in the sum of $4,709.22, being 29/30 of one-half of the assessed value of block 91, less the taxes assessed thereon under the direct tax acts. From so much of this judgment as relates to one-half of the assessed value of lot A, the United States has appealed to this court. There is no controversy as to so much of the judgment as relates to lot B.

The United States do not claim that the appellees, as remainder-men in fee, are not owners, within the meaning of the statute; but they contend that the claimants are within the exclusion of the proviso that in all cases where such owners, or persons claiming under them, have redeemed or repurchased said lands, or any part thereof, from the United States, they shall not receive compensation for such part so redeemed or purchased.

As already stated, the court of claims found, as a fact, that the claimants had not redeemed or repurchased any part of lot A, nor had any purchase thereof been made on their account. But this finding is alleged by the United States to have been based on an erroneous view of the law, that the claimants must be deemed to have repurchased lot A because T. R. S. Elliott, the life tenant, had purchased said lot A at the public sale made by the government in 1866.

The theory of the government is that the life tenant was so far a trustee or representative of the remainder-men that when he purchased at the public sale, in 1866, he acted as well for those in remainder as for himself. To sustain this view, the counsel for the United States point to the numerous cases in which it has been held that a tenant for life cannot purchase for himself at a tax sale, or acquire an interest adverse to the reversioner or remainder-man by obtaining an assignment of the tax title.

Unquestionably, those cases do declare that, as it is the duty of the life tenant to pay the taxes, he cannot, by buying the property at a tax sale, or by buying from a purchaser at such sale, take advantage of his own wrong, and set up a title so acquired against the remainder-men.

But does the principle of such decisions apply to a case like the present?

That principle is that one whose duty it is to keep the taxes paid cannot, as against those who had a right to rely on his performance of such duty, successfully assert a title originating in his dereliction of duty. In all the cases cited, the question was between the life tenant and the remaindermen. In the present case the doctrine is invoked, not in protection of the remaindermen, but to their detriment. The argument is that, because the remainder-men might, by proceeding in equity, have had it declared that the title purchased by the life tenant at the public sale inured to their benefit, it therefore follows that they must be regarded to have been purchasers at said sale, and be now precluded from the benefits of the act of 1891.

An important circumstance is that T. R. S. Elliott did not buy the property at the tax sale in 1863; nor did he buy from an agent or go-between who bought at that sale; nor did he redeem the land under the provisions of the tax law. He bought at the public sale in 1866, the time for redemption having long expired, when the United States gave a fee-simple title, free from incumbrances, to the purchaser. If any one else than the former life tenant had purchased at that sale, it is indisputable that the present claimants would have had a right to recover the money coming to them as owners under the act of 1891. T. R. S. Elliott was under no obligations to bid, and we are unable to see that his doing so changed the relations between the United States and the appellees. If the creditors of T. R. S. Elliott, instead of awaiting his action in possessing himself of the title of the United States to the property, and then seizing it in execution, had themselves bought at the sale, the substantial facts would have been just what they now are. It was found as a fact, by the court of claims, that in buying at the auction sale, T. R. S. Elliott did not act for or on account of the remainder-men, and we do not feel constrained to extend a doctrine devised for the protection of cestuis que trustent so as to operate to their injury.

As, then, the appellees were admittedly owners, as they themselves neither purchased nor redeemed the land, and as they are not held by any necessary intendment of law to have been represented by the actual purchaser, it follows that they are entitled to the benefit of the remedial statute of 1891; and the decree of the court of claims to that effect is accordingly affirmed.