SINGEB MANtlF'G CO. V. YAHGEB.
(Circuit Oourt, D.
1, TAX SALE-COLLU!!IVE BIDDING-CERTIFICATE VOID.
Whe;re there was a tacit agreement among the bidd,ers present at a tax yle that they were to take turns in bidding, and that they were not to bid againit each other', the sale and certificate are void. '
SUBJECT TO INFIRHITIE!!.
The assignee of such,a certificate lloldg; to all tbeinfirnuties by whicJ,1 it would ha.ve been affected in the hands of the purchaser at the. sale.
RELIEP PROM '. ·
, Where 1'raud has been committed,' a'nd by It the' complainant, lias been injured; the 'gci1eral principles of' equity jurisprudence aft'ord' a remedy. So, inthe,case of. a frimdulent combination to deprive of security : i sale of the without notice· and wlthout,competition among bidders. ., '. " . l,
Phillips, Goode .tI; Phillips, for complainant. C.J. The oomplainant is the owner ofs. mortgage !ilxeeuted by the defendant, Yarger, upon certain, lots in the city of Knoxville, in this state, given to secure a promissdry note for $9;000 and interest. The respondents McCormick;and Baker are the grantees in a certain tax, deed of the same premises, which, if valid, is prior and paramount to the complainant's mortgage. The bill alleges that the tax deed is void, and prays a decree t-o cancel the same and fora foreclosure of the mortgage. The question to be decided is whether the tax deed is a valid conveyance of the property all against the complainant's mortgage. The tax deed is attacked upon the ground that the tax sale was fraudulent and void by reason of the fact that the bidders at the sale entered into an unlawful combination, whereby each wlJ.S to take his turn in bidding, it being understood that there was to be no competition, and that they were not to , bid against each other. The evidence establishes the fact that there was, if not an express, at least a tacit agreement among the bidders present at the sale that they were to take turns in bidding, and that they were not to bid against each other. That such a combination among bidders is fraudulent, and vitiates the sale, is, as a general proposition, entirely clear. Whether this doctrine is applicable to the present case is the only matter of controversy. The respondents MoCormick and Baker, who claim under the tax title, were not the purchasers at the tax sale, but are the assignees of the ta,x certificate. It is settled as the
, FEDERAL REPORTER.
law ofthls state that the assignee of such a cerWicncte holds it suhject to all the infirmities by which it would have been affected in the hands of the tax purchaser. Light v. West, 42 Iowa, 138. It is insisted by counsel for respondents that the tax deed can be attacked on the ground of fraud in the sale only by the owner of the land, and not by a mortgagee. In support of thIs proposition section 897 of the Code of Iowa (1873) is cited. That sectio:q, among other things, provides "that in all cases where the owner of lands sold for taxes shall resist the validity of such tax title, ·such owper may prove fraud committed by the officer selling the same, or in the purchaser to defeat the same, and if frau<l'is so established such sale' and title shall be void." While this section gives a remedy only to the owner of the land, it cannot, in my judgment, be rightly held to deny a similar remedy to others. The complainant's right to recover in the comcase does not depend upon the statute'. If a fraud hag mitted, and by it the complainant has been injured, the remedy is provided by the general principles of equity jurisprudence. It cannot be presumed that the legislature of the state intended by the provision above quoted to deprive any person of a remedy for an actual' fraud which existed independently. of the statute; Suppose the case of a fraudulent combination to deprive So mortgagee of "his security by procuring a sale of the mortgaged premises for taxes without notice to the mortgagee, and without competition among bidders. Will it' be contended that in such a case the mortgagee could have no remedy, because a remedy in a similar case is given by statute to the owner? I think not. If the statute would bear such a construotion, it is more than doubtful whether it would have the effect to deprive this court of its equity jurisdiction in such cases. U. 8. v. Howland, 4: Wheat. 108; Dodge v. Woolsey, 18 How. 347; Barber v.Barber, 21 How. 583; Lawrence v. Clark, 2 McLean, 568; Boyle v. ,6 Pet. 648; Noonan v. Lee, 2 Blaok, 500. Decree for complainant.