KNOKE v. SWAN (1934)

Action to quiet title to a city lot in San Francisco. Plaintiff claims title to said lot through a tax deed and by adverse possession. Defendant denies title in plaintiff, and alleges that she is the record owner of said lot, and as a separate defense sets up in her amended answer that plaintiff was estopped from asserting title to said lot by a judgment of the superior court of the county of Los Angeles duly entered on August 3, 1928, entitled, were true and that all of the allegations of tried upon the issues made by the above-mentioned pleadings. Judgment was in plaintiff's favor, and the defendant has appealed on a bill of exceptions. The court found generally that all of the allegations of the complaint were ture and that all of the allegations of the answer were untrue.

We will first discuss the defense of estoppel interposed by the defendant. If this defense be sustained, the other questions need not be further considered. Plaintiff received a tax deed to said property dated July 31, 1922. On August 8 of the same year, plaintiff instituted an action to quiet his title to said lot against a number of defendants, but the defendant in this action, Emma L. Swan, was not made a party defendant in said action. However, on February 11, 1926, Emma L. Swan filed a complaint in intervention in said action. The plaintiff filed his answer to said complaint in intervention in which he set forth that he was the owner of said lot. This action came on for trial upon said complaint in intervention and the answer thereto. The trial was terminated by the signing and filing by the trial judge of an order dismissing the case. Thereafter the clerk of the court entered the same as a judgment in the proper book kept for that purpose.

Assuming that this document is a final determination of said action, can it be held to be a judgment determining the rights of either of said parties to the real property in controversy? It does not by its terms purport to determine the ownership of said lot. In express terms it ordered the dismissal of said action. In the body of the document are certain recitals in which the court apparently gave its reason for ordering the action dismissed, that is, that neither party had proven that he was the owner of said lot. If we give effect to the recitals in the order, the plaintiff herein is estopped from claiming title to said lot through said tax deed, and the defendant is estopped from claiming title to said lot through any means. If, therefore, it is res adjudicata as to these matters of recital, both of the parties thereto (and as they are the same, both of the parties hereto) are estopped from asserting any right or title to said lot. The introduction of this order or judgment cannot avail the defendant, for the instant we give effect to it as an estoppel of the parties thereto, it msut be held to estop both the plaintiff and the defendant from claiming to be the owner of said lot. In our opinion the order cannot be given any such effect. As we construe its terms, it is at most merely a judgment of dismissal and as such does not estop either party from asserting in this action whatever title he or she may have to the lot in question. Pyle v. Piercy, 122 Cal. 383, 55 P. 141, 142. In 15 California Jurisprudence, § 185, p. 131, the rule is given by a quotation from Pyle v. Piercy as follows: ‘When there has been no adjudication of the cause upon its merits, it will only be in exceptional cases that this court will hold that a judgment of dismissal is the equivalent of a judgment of res adjudicata upon the facts.’ Defendant's plea of estoppel is not therefore sustained.

As to the tax deed under which the plaintiff claims title to said lot, defendant points out that it was sold for 2 cents less than the legal amount of taxes, penalties, and costs due at the time of said sale. In a sale where the difference between the true amount due and the amount for which the property was sold amounted to only two cents, will this discrepancy vitiate the sale? Defendant relies upon Hotchkiss v. Hansberger, 15 Cal. App. 603, 115 P. 957; Simmons v. McCarthy, 118 Cal. 622, 50 P. 761, 763; and Warden v. Broome, 9 Cal. App. 172, 174, 98 P. 252. In the last of these three cases, the facts show that the property was sold for fifty cents more than the amount due. For that reason the court held that the sale was invalid. In Hotchkiss v. Hansberger, supra, the property was sold for $1.40 in excess of the amount due. The opinion of Simmons v. McCarthy, supra, while containing language from which it might be inferred that a sale for three cents in excess of the true amount due for taxes, penalties, and costs would not be sustained, cannot be regarded as authority on that question for the reason that that part of the opinion which was a departmental opinion was concurred in by only two members of the court. Chief Justice Beatty rendered a separate concurring opinion ‘upon the ground that the affidavit did not show a proper service of the notice to redeem.’

In all of these cases, the sale was made for an excessive amount. As noted above, the property here involved was sold for less than the amount due, and not for an excessive amount. We have been unable to find any authority in this state bearing upon the question as to whether a sale for taxes in an amount less than the amount due is invalid. In Doland v. Mooney, 79 Cal. 137, 21 P. 436, 437, there was a discrepancy of 50 cents between the certificate and the tax deed. In discussing the validity of the sale, the court said: ‘We cannot say that because the certificate and deed differ in such recitals the sale was for a sum in excess of the tax and legal costs. If an excessive amount was demanded, and the property sold therefor, it would invalidate the sale, and that fact may be shown.’ Here is a clear intimation by this court that it is only in cases where the property was sold for an excessive amount that the sale would be invalidated. We find few cases in the reports where the property involved was sold for less than the amount due for taxes, penalties, and costs. In Minnesota such a case came before the Supreme Court of that state, in which it was shown that the amount for which the property was sold was 75 cents less than the true amount due. In a well-reasoned opinion the court applied the de minimis rule and sustained the sale. London & Northwest American Mtg. Co. v. Gibson, 77 Minn. 394, 80 N. W. 205, 208, 777. The Supreme Court of Iowa sustained a tax sale when the amount for which the property was sold was less than the amount due. Kessey v. Connell. 68 Iowa, 430, 27 N. W. 365. The Supreme Court of Kansas has applied the same rule. Ireland v. George, 41 Kan. 751, 755, 21 P. 776. The courts of some of the other states hold a contrary doctrine, notably the supreme judicial court of Massachusetts, which applies the rule of strictissimi juris to all tax sales whether the amount for which the property was sold was less than the amount due as well as when it exceeded that amount. Shurtleff v. Potter, 206 Mass. 286, 92 N. E. 331. In that case the difference in the two amounts was 50 cents. Of the two rules followed respectively in these different jurisdictions, we think the former appeals to us to be more reasonable and more in accordance with equitable principles. Where the sale is for less than the amount due, the owner of the property suffers no damage whatever by reason of such sale. This was the basis of the decision of the Minnesota Supreme Court in the case just cited from that court. In that case that court said: ‘The plaintiff, as owner of the lot, was not in any way injured by the sale, for it was sold for an amount less than the law required.’ Under these authorities the fact that the property herein involved was sold for slightly less than the amount of taxes, penalties, and costs due at the date of the sale, would not vitiate the tax deed issued in pursuance of such sale. Said tax deed is, therefore, valid.

It is unnecessary for us to determine whether the plaintiff, in addition to his rights under said tax deed, has also acquired title to said lot by adverse possession. At most, whatever right the plaintiff has acquired to said lot by being in possession thereof would simply strengthen his title acquired through the tax deed. As he has a valid title to said lot under the tax deed, any additional muniments of title would be of no value to him.

The judgment is affirmed.

CURTIS, Justice.

We concur: WASTE, C. J.; PRESTON, J.; SHENK, J.