
    [No. 4335.
    Decided December 31, 1902.]
    James Dunsmuir, Respondent, v. Port Angeles Gas, Water, Electric Light and Power Company et al., Appellants.
    
    JUDGMENTS-EES JUDICATA-DENIAL OF PLAINTIFF’S LIEN FOB TAXES-EFFECT ON EIGHT TO SUBEOGATION.
    Tbe judgment in an action to determine tbe priorities between " mortgagees of tbe same property wbicb expressly decided that plaintiff bad no lien for taxes paid by bim, because tbe property was personalty instead of realty, and tbe statute afforded tbe mortgagee a lien when be paid taxes on real estate only, is not a bar to a subsequent action between tbe same parties involving tbe same taxes, where tbe subsequent action seeks to recover tbe amount of tbe taxes paid by plaintiff as a prior mortgagee and to have tbe amount paid adjudged a lien on tbe property, and that be be subrogated to tbe rights of tbe county in tbe enforcement of such lien.
    SUBEOGATION-PAYMENT OF TAXES BY MOETGAGEE.
    Where one in good faith, in tbe belief that be has a valid lien on certain personal property, pays delinquent taxes thereon in order to protect bis supposed lien, be is entitled to be subrogated to tbe rights of the county to tbe extent of tbe taxes paid, with interest thereon at tbe legal rate, but is not entitled to collect tbe penalties provided by statute.
    Appeal from Superior Court, Pierce County. — Hon. Thad Huston, Judge.
    Affirmed.
    
      Ira Bronson, for appellants*.
    
      W. L. Marquardt and J. J. Anderson, for respondent.
   The opinion of the court was delivered by

Reavis, C. J.

Plaintiff seeks to recover from defendants the amount of certain taxes levied in the years 1892, 1893 and 1894 on a system of waterworks then owned by the two first-named defendants in Clallam county, and to have the amount so paid adjudged a lien on said property, and that he may be subrogated to the rights of the county in the enforcement of said lien. The material findings of fact by the court are as follows:

“(3) That on or about the 21st day of February, 1891, the Port Angeles Gas, Water, Electric Light & Power Company, Limited, was indebted to the plaintiff in the sum of $20,000, and executed and delivered to him its promissory note for the said sum, and secured the same by a mortgage upon all of its personal property situated in the city of Port Angeles, Clallam county, Washington, known and designated as the Tort Angeles Waterworks.’
“(4) That thereafter, and on or about the 1st day of June, 1892, the said company, then known as the Port Angeles Water Company, executed to the Seattle Safe Deposit & Trust Company a trust deed or mortgage covering the same property to secure the payment of certain bonds issued by said company in the amount, to wit, the sum of $40,000.
“(5) That at the time of execution and delivery of both of said mortgages hereinbefore set forth said corporation was not indebted for any taxes against its said property.
“(6) That on or about the 1st day of February, 1896, there was due and collectible upon said mortgaged property on account of taxes for the years 1892, 1893 and 1894 the sum of $2,969.30.
“(7) That on or about said date the treasurer of Clallam county, Washington, duly levied upon and distrained all of the property of the said defendant water companies, posted notices according to law, and advertised said property for sale to satisfy the amount due for such taxes.
“(8) That on or about the 10th day of February, 1896, for tbe'purpose of preserving said property from sucb tax sale, protecting tbe plaintiffs interest by virtue of bis said mortgage, plaintiff paid tbe said taxes to tbe said treasurer, and received bis tax receipts therefor.
“(9) Tbat thereafter tbe said Angeles Water Company duly turned over and delivered to tbe defendant A. P. Burwell tbe possession of the said waterworks plant and all tbe property of tbe said defendant corporations. Tbat thereafter tbe said safe deposit and trust company duly assigned and transferred to said defendant A. P. Burwell tbe before mentioned trust deed or mortgage.
“(10) Tbat thereafter tbe said plaintiff and tbe said defendant A. P. Burwell both instituted sucb proceedings as were necessary for tbe purpose of foreclosing their respective interests against said corporation and said property. Tbat the contention of both said plaintiff and said defendant Burwell in the litigation resulting from sucb proceedings was as to which of said parties bad tbe prior lien by virtue of said mortgage against said property. Tbat upon tbe trial of said cause in tbe superior court of said Clallam county it was adjudged and decreed tbat this plaintiff bad sucb prior lien, and judgment was entered accordingly. Tbat thereafter, upon appeal of said cause to tbe supreme court of tbe state of Washington, said judgment was reversed, and it was determined tbat said defendant Burwell’s trust deed was a prior lien to plaintiff’s mortgage.
(11) Tbat said defendant Burwell and said defendant water company have bad tbe benefit of tbe taxes so paid by plaintiff.
(12 Tbat tbe said defendant corporations are insolvent, and have no property at all out of which to realize tbe repayment of sucb taxes, and tbat plaintiff has no remedy in law to recover tbe same.
“(13) Tbat said A. P. Burwell bad full knowledge of tbe proceedings of tbe said county treasurer to sell said property to satisfy tbe taxes due thereon, and was requested by this plaintiff to pay said taxes, which request was refused, whereupon plaintiff paid the same.”

A general demurrer was interposed to the complaint, and overruled, to which ruling an exception was preserved, and thereafter the defendant Burwell answered, pleading a former adjudication of the same controversy between the same parties, reported in 24 Wash. 104 (63 Pac. 1095). A general demurrer was interposed to the answer, and sustained, when, said defendant declining to plead further, a decree was given in favor of plaintiff.

1. The plea of res adjudicata will be first considered. This case, reported in 24 Wash. 104 (63 Pac. 1095), was between the same parties. An examination of the facts of the case in the opinion shows that the plaintiff in the present case there instituted his suit to foreclose a mortgage owned by him upon the same property, the waterworks system, and in his complaint claimed the same taxes now claimed. The complaint there alleged, in substance, the priority of plaintiff’s mortgage over the claim of the defendant Burwell, a trustee, who claimed under a subsequent. trust deed or mortgage; and the taxes claimed therein were demanded by virtue of the plaintiff’s claim that his mortgage was on the system of waterworks as real property. The rights asserted were on a real mortgage. Defendant Burwell was there held to be a subsequent mortgagee for a valuable consideration, in good faith, without notice of plaintiff’s mortgage, when the trust deed was executed to him. The waterworks system was held to be personal property, and it was found that plaintiff’s mortgage was not recorded in the book required for the registration of chattel mortgages, and the mortgage of defendant Bnrwell was adjudged superior to plaintiff’s mortgage. The judgment there of the superior court was reversed. It will be observed on an examination of this case that one error alone was considered on the appeal. The court observed:

“Although the record in this case is quite voluminous, and many errors are assigned by appellant in his brief, the real points argued and relied on by appellant as grounds for a reversal of the judgment are not numerous. The material errors alleged are: (1) That plaintiff (respondent) failed to prove that he loaned or advanced any money to the first company; (2) that the note and mortgage set out in the complaint are defective •and insufficient to give constructive notice to appellant Burwell, or to any one; (3) that said mortgage was not recorded in a volume kept exclusively for the recording of mortgages of personal property, and was not indexed as required by law; and (4) that said note and mortgage were not authorized by said company through its board of trustees, or at all. It is conceded by the respondent that the trustee named in the mortgage or trust deed executed by the Angeles Water Company had no actual notice or knowledge of respondent’s mortgage, and it therefore follows that, if the said trustee was not charged with constructive notice thereof, the trust deed, having been given for a valuable consideration, must be deemed a valid and prior lien upon the property described therein. Our statute provides that a mortgage of ■ personal property is void as against creditors of the mortgagors or subsequent purchasers and incumbrancers of the property for value and in good faith, unless it is accompanied by the affidavit of the mortgagor that it is made in good faith, and without any design to hinder, delay, or defraud creditors, and is acknowledged and recorded in the same manner as is required by law in conveyance of real property. 1 Hill’s Code, § 1648; Bal. Code, § 4558. And it is further provided that such mortgage must be recorded in the office of the county auditor of the county in which the property is situated, in a book kept exclusively for that purpose. 1 Hill’s Code, § 164:9; Bal. Code, § 4559. The respondent’s mortgage, it is conceded, was recorded in the records of real estate mortgages only; and if, as appellant contends, it is a mortgage of personal property, the record imparted no notice to appellant, and it will not he necessary to determine any question other than that presented by the third assignment of error.”

It was observed of the nature of the claim by plaintiff for the taxes paid:

“It is stipulated by the parties hereto that the property involved in this controversy was assessed for the years 1892, 1893, and 1894-, pursuant to law, as personal property; that the taxes assessed thereon became delinquent; that the said property was advertised for sale by the county treasurer; and that the respondent, for the purpose of protecting his claim and lien, paid the full amount of the taxes levied upon the property. It seems that respondent also paid the taxes on the water plant for subsequent years, and the sums so paid were adjudged a lien upon the property assessed by virtue of § 109, p. 322, Laws 1891, which provides that any person who has a lien, by mortgage or otherwise, upon any real property on which the taxes have not been paid, may pay such taxes, and that the same shall constitute an additional lien. As this provision relates to liens upon real property only, the payment of the taxes by respondent created no lien in his favor; and, although it would seem that those who were benefited thereby are morally hound to repay the same to the respondent, no judgment can be rendered therefor in this proceeding.”

It plainly appears that the court only determined the priorities between plaintiff and defendant Burwell as to their respective liens upon the property, and it was determined that the mortgage held by plaintiff was upon personal property, and not recorded so as to impart notice to defendant Burwell. The court expressly decreed that the moral obligation to repay these taxes then existed, but that no decree therefor could be rendered in that action. It thus appears from the opinion and facts stated in the former case that the right to recover the taxes paid by plaintiff was not determined. The cases of Wilkes v. Hunt, 4 Wash. 100 (29 Pac. 830), and Wilkes v. Davies, 8 Wash. 112 (35 Pac. 611, 23 L. R. A. 103), show where the same parties and controversy were before the court in the former action, and the court did not determine the controversy because the remedy there was not deemed appropriate. It was held in the latter case that there was no adjudication constituting an estoppel. The rule is very well stated in Marble Savings Bank v. Williams, 23 Wash. 766 (63 Pac. 511):

“Where a judgment in a former action is pleaded as an estoppel in a subsequent action between the same parties involving the same subject-matter, and the record does not disclose upon which of several issues the case was litigated and decided, extrinsic evidence is admissible for the purpose of establishing that the former action was determined upon an issue which is not involved in the subsequent action.”

The record itself in the case pleaded in estoppel shows the claim for repayment of taxes was not determined on its merits. Plaintiff in that case claimed the repayment under a lien given by the statute for payment of delinquent taxes by a mortgagee of real estate for the protection of his lien. The court held the property was not real estate, and as against defendant Harwell plaintiff had no mortgage lien on the property, and observed, of the repayment of the taxes no decree could be made for them in the action. The plea of res adjudicata is not well taken.

2. Plaintiff believed he had a valid lien upon the system of waterworks. In good faith he paid the delinquent taxes to protect this lien. The trustee, defendant Bur-well, had full knowledge of the delinquency of the taxes and of the intention of the plaintiff to pay them unless he should pay them. Plaintiff now seeks to be. subrogated to the rights of the county, and to enforce the original lien for the taxes against the property. Subrogation peculiarly involves equitable principles. It does not depend upon contract, but is founded on principles of natural justice. It has been frequently applied to the payment of taxes made in good faith by one who deemed it necessary to protect a lien on the property where taxes were levied, although no lien existed in law. See Knighton v. Curry, 62 Ala. 404. In Fischer v. Woodruff, 25 Wash. 67 (64 Pac. 923, 87 Am. St. Rep. 742), it was held, where a subsequent mortgagee paid taxes on the mortgaged property in good faith to protect his lien, he was entitled, on his mortgage being defeated by prior incumbrances, to have the taxes so paid declared a first lien on the property. The case of Packwood v. Briggs, 25 Wash. 530 (65 Pac. 846), was where the holder of a general judgment lien paid delinquent taxes upon real property. The lien of the judgment was pronounced invalid as against a mortgagee. The taxes, however, were made a lien on the mortgaged premises. It was observed: “It follows that, if appellant is entitled to relief on account of the taxes paid, it must be based upon equitable grounds, considered with reference to the relations of the parties to the subject-matter. It must be conceded that appellant paid the taxes in good faith, relying upon what he believed to be his lien as authority for it. It cannot be assumed that the payment was made as that of a mere volunteer, or as that of one meddling with something in which he knew he had no interest. The evidence shows that the payment was made in the honest belief that appellant held a valid lien upon the land, and he was only seeking to prevent the paramount lien of the taxes from destroying the value of what he believed to be his own lien against the lands.” It may be observed here that the repayment of the taxes was adjudged in that case upon general equitable considerations. In the present casé the decree before us impressed the tax together with all penalties of delinquency under the revenue act as a lien upon the property. We think in equity the plaintiff is entitled to the principal sum paid on the settlement of the taxes, together with the legal rate of interest thereon from that date until paid. He ought not to collect the penalties provided by the statute. The measure of his recovery is the amount of money he paid and legal interest from the date of payment.

With this modification, the judgment of the superior court is affirmed. Costs to appellant.

Anders, Mount, Dunbar and Fullerton, JJ., concur.  