Equitable Trust Co. of New York v. Kelsey

The tax was assessed to the Standard Cordage Company, hereinafter called the company; and although there was a lien upon the land the primary liability was upon the company. Webber Lumber Co. v. Shaw, 189 Mass. 366. By the terms of the mortgage, as between the company and the plaintiff, it is the duty of the company to pay the tax. The tax collector can collect the tax by proving it as a preferred claim against the fund held by the receiver in this Commonwealth (R. L. c. 150, § 29), or by taking measures to enforce the lien upon the land. He threatens to take the latter course. The plaintiff therefore in order to protect its own property from an incumbrance which it is the duty of the company, as between it and the plaintiff, to pay, is compelled to pay a debt of the latter. Upon the payment of the tax the plaintiff is clearly entitled to be subrogated to the rights of the taxpayer so far as respects the lien upon the land. Eagle Fire Ins. Co. v. Pell, 2 Edw. Ch. 631, 634. Farmer v. Ward, 5 Buch. 33. Jones on Mortgages, (6th ed.) § 358. *419And to render complete justice he is also entitled to the rights of the tax collector against the fund held by the receiver in this Commonwealth. In re Moller, 8 Bened. 526. As bearing upon the general principle see In re Lord Churchill, 39 Ch. D. 174; Orem v. Wrightson, 51 Md. 34; Zell’s appeal, 111 Penn. St. 532. The fact that the tax collector may under St. 1909, c. 490, Part II. § 64, collect the tax by an action against the plaintiff is immaterial. The company is still liable as is the fund in the receiver’s hands.

There is nothing in this conclusion inconsistent with Swan v. Emerson, 129 Mass. 289, upon which the receiver relies. It is apparent that in that case the purchaser at the foreclosure sale bought subject to the taxes and that the person to whom the tax was assessed owed to the purchaser no duty in the matter.

Demurrer overruled.