(35 Kan. 178)

MCCROSSEN v. HARRIS and others.

Filed April 9, 1886.

TAXATION-LIEN-JUDGMENT CREDITOR.

Where a mortgage of real estate is merged into a judgment, which includes all the taxes due upon the land at the date of its rendition, the payment, by the judgment creditor, of taxes accruing on the premises after the judgment, will not constitute a separate and independest lien on the land, which can be enforced by action after the judgment debtor has satisfied the judgment, interest, and costs.

Error from Wyandotte county.

D. B. Hadley, for plaintiff in error.

N. Cree, for defendants in error.

HORTON, C. J. Edmond Harris and his wife, Maria, on June 2, 1880, executed a mortgage to R. D. McCrossen upon lots 3 and 4, in block 94, in the city of Wyandotte, in this state, to secure the payment of a note for $275, with interest. On January 3, 1883, McCrossen obtained a judgment of foreclosure of the mortgage, and in the judgment the taxes then due on the premises were decreed to be a lien thereon. It was also provided in the decree that if McCrossen should pay such taxes, he should be repaid out of the sale of the property. Appraisement having been waived in the mortgage, the sale, under the decree of foreclosure, was stayed six months. A sale was made December 3, 1883, but on account of informalities this was set aside. On December 20, 1883, McCrossen paid $41.58 for taxes upon the premises upon which the judgment was a lien. On February 15, 1884, he filed his præcipe for an alias order of sale upon the judgment, but before it was placed in the hands of the sheriff Edmond Harris paid off the judgment, interest, and costs, and all taxes, up to and including those assessed for 1882, but refused to repay plaintiff the taxes of 1883. This action was brought to recover the taxes so paid by him, and to declare the same a lien upon the premises. The premises were subsequently sold to George Gruble, and Gruble and his wife mortgaged the property to Adeline Crane to secure the sum of $500. The petition charged that George Gruble and Adeline Crane took their conveyances with full knowledge of the alleged lien of McCrossen. At the time that the plaintiff paid the taxes, the mortgage had been extinguished by being merged into the judgment; therefore the taxes were not a lien in connection with the mortgage; therefore no action can be maintained to recover these taxes upon any of the covenants of the mortgage, nor upon the provisions of section 148, c. 107, Comp. Laws 1879, permitting a mortgagee to pay taxes where the mortgagor fails or neglects so to do. Vincent v. Moore, 17 N. W. Rep. 81; Hitchcock v. Merrick, 18 Wis. 375; Johnson v. Payne, 11 Neb. 269; S. C. 9 N. W. Rep. 81.

After the judgment was rendered, the amount thereof was a specific lien upon the real estate described therein. Under some cir

cumstances, perhaps, a party might pay the taxes for the protection of his lien, and for such payment equity might give him a lien in connection with the judgment; but such a case is not presented. All of the taxes prior to 1883 were included in the judgment. For the protection of his judgment lien, it was not necessary to pay the taxes of 1883. Section 56, c. 107, Comp. Laws 1879, provides that, where any real estate is sold at judicial sale, the court shall order all taxes and penalties thereon against the land to be discharged out of the proceeds of the sale. Therefore, if the plaintiff had not paid the taxes of 1883, and if a sale had been made of the premises, the taxes would have been satisfied out of the proceeds. Section 56, c. 107, supra. If the plaintiff had not paid the taxes at the time the judg ment debtor paid the judgment and costs, the taxes would no longer have been of any concern to him. There is no allegation in the petition that the real estate was insufficient security for the judgment lien, or any other special facts set forth showing the necessity of the payment of the taxes, after judgment, to protect the judgment lien. Under the circumstances, we must regard the payment of the taxes by plaintiff as voluntary, and such payment will not support an action to constitute the taxes so paid a separate and independent lien on the land. It seems very unjust that the plaintiff should pay these taxes, and not be able to recover the amount thereof; but as the payment must be regarded as voluntary, the law does not give a remedy.

The judgment of the district court will be affirmed. (All the justices concurring.)

1. SET-OFF AND COUNTER-CLAIM-NOTE SECURED BY CHATTEL MORTGAGE-UNLIQUIDATED DAMAGES.

Unliquidated damages arising from contract may constitute a set-off against a note secured by a chattel mortgage; and if such unliquidated damages exceed the mortgage debt, the mortgagee is not entitled to the possession of the property described in the mortgage, as against the mortgagor asserting such unliquidated damages, and pleading the same in an action founded upon the note and mortgage.

When cross-demands have existed between persons under such circumstances that if one had brought an action against the other a set-off could have been set up, neither can be deprived of the benefit of such set-off by the assignment of the other. Section 100, Civil Code.

JOHNSTON, J., dissenting.

Error from Butler county.

This case was originally commenced and tried before a justice of the peace. The following is the plaintiff's bill of particulars, omit ting name of justice and title:

"Plaintiff, Israel D. Risher, complains of the defendant, John R. Gardner, and says that the plaintiff is the owner of the following described and valued property, to-wit: one red cow, with some white in the face or forehead, said cow being a little more than five years old, and being of the value of thirtyfive dollars; that said plaintiff is entitled to the immediate possession of said cow; that said property is wrongfully detained from said plaintiff by said defendant, John R. Gardner; that said property was not taken in execution, or on an order or judgment against said plaintiff, or for payment of any tax, fine, or amercement assessed against said plaintiff, or by virtue of any order issued in replevin, or any other mesne or final process; that by reason of such unlawful detention of said property by said defendant this plaintiff has sustained damages in the sum of forty-five dollars. Wherefore plaintiff sues, and prays judgment against said defendant for the return of said property, and for said damages, and for all other proper relief in the premises."

An appeal was taken to the district court, and trial had January 22, 1885, by the court, the parties waiving a jury. Upon the request of defendant, the court made and filed the following findings of fact:

"(1) On the twenty-fifth day of February, 1884, plaintiff made and delivered to Herman Litzkie two notes for fifty-five dollars, due in two and six months, respectively, and bearing interest at 12 per cent. per annum from date; and at the same time, to secure the payment of these two notes, made and delivered to said Herman Litzkie a mortgage upon the property replevied in this action, being a cow; which mortgage provided that if the said indebtedness should be paid when due the mortgage should become void; and further provided that if the indebtedness was not paid when due, the mortgagee might take the property, and sell it at public or private sale, and that until default should be made the property should remain in the possession of the plaintiff. (2) The plaintiff made payments upon said indebtedness as follows: On August 4, 1884, twenty-eight dollars; on September 29, 1884, twenty dollars; and on October 4, 1884, thirteen 68-100 dollars. (3) On or about the twentieth day of February, A. D. 1884, the plaintiff and said Herman Litzkie entered into a contract whereby Litzkie agreed to furnish to plaintiff one hundred and fifteen head of cattle, to be herded by plaintiff during the herding season of 1884; and to furnish to plaintiff a pony for herding purposes during such season, and furnish the necessary salt with which to salt said cattle during said season; and to pay plaintiff for herding said cattle the sum of fifteen cents per head per month for said season, and the plaintiff agreed to herd said cattle during said season for said compensation; that the herding season opened during the month of May, in 1884, and continued for about five months; that the plaintiff procured the use of extra pasture land, and made other necessary arrangements for the herding of said cattle for said season; that plaintiff had a son capable of herding said cattle in connection with all other cattle plaintiff was herding for said season; that plaintiff engaged in herding cattle during the herding season of 1884, and could have herded said cattle of Litzkie under said contract without additional expense; that the said Herman Litzkie wholly failed to furnish plaintiff any cattle to be herded during any part of said season under said contract, or otherwise; that the plaintiff sustained damages by reason of the breach of said contract on the part of said Litzkie in the sum of eighty-five dollars; that if said cattle had been furnished by Litzkie as agreed, the contract of herding by plaintiff would have been fulfilled before the taking of the property hereinafter stated. (4) That on or about the sixth day of October, 1884, the said Herman Litzkie took possession of said mortgaged property under, and claiming the right so to do by virtue of, said mortgage; that defendant, Gardner, was present with Litzkie at the time of such taking said property. (5) That at

the time Litzkie took said mortgaged property as aforesaid in the presence of defendant, Gardner, the plaintiff notified Litzkie that he considered said mortgage debt fully paid, and demanded the surrender of said notes and mortgage. (6) That said Litzkie, claiming to act under the provisions of said mortgage, sold said property to defendant at private sale to satisfy said mortgage debt. (7) That the said property is of the value of thirty dollars. (8) That the value of the use of said property from the commencement of this action until this trial is the sum of ten dollars. (9) That except as affected by said mortage, and the proceedings thereunder, the plaintiff was the owner of said property at the time of this action."

And thereon the court made the following conclusions of law:

"(1) That the taking of the property by said Herman Litzkie under said mortgage was unauthorized and wrongful; (2) that the sale of said property by said Herman Litskie to defendant, John R. Gardner, was unauthorized, and conveyed no title; (3) that the plaintiff is entitled to recover of the defendant in this action the property replevied, and the sum of thirty dollars, in case a return of said property cannot be had, and the plaintiff is further entitled to recover of the defendant the sum of ten dollars, his damages for the detention of said property."

The defendant excepted to the findings of fact and conclusions of law, and afterwards filed a motion for judgment upon the findings of fact, which was overruled. Subsequently he filed a motion for a new trial, which was also overruled. Judgment was entered upon the findings in favor of the plaintiff that he recover from the defendant the personal property described in the bill of particulars, and, in case a return of the property could not be had, that he recover $30 for the value of the property. It was also adjudged that the defendant pay To the rulings and judgment the defendant excepted, and

brings the case here.

T. O. Shinn, for plaintiff in error.

A. L. L. Hamilton and C. A. Leland, for defendant in error.

HORTON, C. J. This action originated in a justice's court. Subsequently it was appealed to the district court, and there, upon the trial, the parties waived a jury, and submitted the case to the court, with the request that the court find the facts specifically, and state its conclusions of law thereon. This was done. The facts found are substantially these: On February 25, 1884, Israel D. Risher, plaintiff below, executed to Herman Litzkie two notes for $55, due in two and six months, respectively, and bearing interest at 12 per cent. per annum from date. To secure the payment of these notes, Risher executed to Litzkie a mortgage upon a cow,-the property replevied in this action, which provided, among other things, that if the indebtedness was not paid when due the mortgagee might take the property and sell it at public or private sale. It was further provided therein that until default should be made the property should remain in the actual possession of the mortgagor. Risher paid $61.68 upon the notes. On February 20, 1884, Risher and Litzkie entered into a con

tract whereby Litzkie agreed to furnish to plaintiff 115 head of cattle to be herded by the plaintiff during the herding season of 1884. Litzkie wholly failed to furnish any cattle to be herded under his contract, and Risher sustained damages by reason of the breach thereof in the sum of $85. On October 6, 1884, after such damages had accrued to Risher, Litzkie took possession of the cow embraced in the mortgage, claiming the right so to do by virtue thereof. At this time Risher notified Litzkie that, on account of the damages which had accrued to him by reason of the breach of the contract before mentioned, the mortgage debt was fully satisfied; and thereupon he demanded the surrender of the notes and mortgage. Litzkie refused to assent to the claim of Risher, but sold the property, which was of the value of $30, at private sale, to John R. Gardner, the defendant below, who was present when Litzkie took the mortgaged property, and had notice from Risher that he was the owner of the cow, and that the mortgage debt was satisfied as above stated. Subsequently, Risher brought his action in replevin against Gardner to obtain possession of the cow.

The $61.68 which Risher had paid upon the notes secured by the mortgage, together with the $85 claimed by him as damages by reason of the breach of the contract upon the part of Litzkie, greatly exceeded the balance due upon the notes and mortgage. The question in the case, therefore, is whether Risher had the right to offset against the notes and mortgage the damages he claimed against Litzkie. We think he had the right to offset his damages, and that Litzkie acted at his peril in taking the cow. The only claim he had to the cow was under the mortgage, and his interest in the property depended upon the amount due him from the mortgagor, after deducting all payments and legal offsets. His claim, therefore, was founded on contract, and in this state any cause of action arising from contract, whether it be for a liquidated demand or for unliquidated damages, constitutes a set-off against any action founded on contract. Sections 94, 98, Civil Code; Stevens v. Able, 15 Kan. 584. The law relating to set-offs in this state has been broadened to embrace claims not recognized as such by the laws of many other states; hence the cases of Gates v. Smith, 2 Minn. 30, (Gil. 21;) Keightley v. Walls, 24 Ind. 205; and Warner v. Comstock, 22 N. W. Rep. 64, -do not apply.

Gardner purchased the cow with notice of Risher's rights. His defense, or rather his claim, in the action was founded upon the notes and mortgage executed by Risher to Litzkie. If nothing was due upon the notes and mortgage, or if Risher had a valid offset to the same at the time Litzkie took possession of the cow, then Gardner obtained no title or right thereto, if Risher's set-off was relied upon and pleaded by him in any action or proceeding founded upon the notes and mortgage.

Section 100 of the Civil Code provides: