Story Case

When James O'Leary died, he left a skyscraper to his son "in fee simple," but stipulated that his old friend and life-long chum, Mr. Leach, was to have an estate in the property for life. Mr. Leach lived but a year, and had not paid any taxes on the building before his death, nor the interest on a first mortgage. A few weeks later, Mr. Leach's executor received a notice to pay taxes on the building, which he sent to Mr. O'Leary's son, with the following letter: "Dear Mr. O'Leary:

This notice is to you for payment of taxes on your bunding." Mr. O'Leary answered as follows:

"The taxes accrued during the year that Mr. Leach was owner; also $2,000 in interest on the mortgage accumulated during this time. These, his estate must pay." Is Mr. O'Leary correct?

Ruling Court Case. Abernethy Vs. Orton, Volume 42 Oregon Reports, Page 437

Tri Orton, the defendant herein, conveyed to his daughter, Elizabeth Abernethy, a certain tract of land. He reserved, however, to himself a life estate therein, and since the time of making the conveyance in question had had exclusive possession of the land conveyed. During the several years he occupied this land, he refused to pay any part of the state, county, school or road taxes levied upon the property. Mrs. Abernethy and her sons, in order to prevent the property from being sold for taxes, paid them, and bring this action to recover from Orton.

Orton contended that he, as life tenant, was under no obligation to pay the taxes, but that those owning the remainder in fee should pay them.

Mr. Chief Justice Moore said: "It is the duty of the tenant for life to keep the current taxes paid, if the estate is sufficient for the purpose, and when any other party, on his default, is compelled to pay such taxes to protect his own interests, he has a remedy over for the recovery of the amount so paid." Judgment was given for Abernethy.

Ruling Law. Story Case Answer

One who has a life interest in property is ordinarily under no duty to make any improvements on the property, but he is under an obligation to pay the taxes during his tenancy, and if some third person, who is interested in the property, as a reversioner or remainderman, is compelled to pay the taxes, in order to protect his interest, he may collect the same from the life tenant. Likewise, the life tenant is under an obligation to pay the interest on all incumbrances then existing on the property; as for instance, if the property is mortgaged, the life tenant is under an obligation to pay the interest upon this mortgage during his tenancy.

In the Story Case, taxes accrued during the life of Mr. Leach, the life tenant. He received the profits of the property and must pay the expenses. His executor must pay the taxes, and the interest on the mortgage accruing during his ownership.