Alliance R.R. Community Credit Union v. County of Box Butte

• Decision Date: 23 July 1993
• Docket Number: No. S-91-252,S-91-252
• Citation: 243 Neb. 840,503 N.W.2d 191
• Parties: ALLIANCE RAILROAD COMMUNITY CREDIT UNION, Formerly Alliance Railroad Employees Credit Union, Appellant, v. COUNTY OF BOX BUTTE, Nebraska, Appellee.
• Court: Nebraska Supreme Court

Page 191

503 N.W.2d 191

243 Neb. 840

ALLIANCE RAILROAD COMMUNITY CREDIT UNION, Formerly Alliance Railroad Employees Credit Union, Appellant, v. COUNTY OF BOX BUTTE, Nebraska, Appellee.

No. S-91-252.

Supreme Court of Nebraska.

July 23, 1993.

Syllabus by the Court

1. Bankruptcy: Mortgages: Taxes: Statutes: Appeal and Error. Whether a mortgagee who purchases property of a bankrupt may successfully challenge taxes levied or assessed during the bankruptcy is to be determined by statutory construction. Statutory construction is a matter of law in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the determination made by the trial court.

2. Real Estate: Taxes: Liens. The lien for taxes attaches automatically without any affirmative act by taxing officials after levies are complete. Taxes upon land, whenever levied, take precedence over all other liens.

3. Real Estate: Taxes: Liability. A tax, general or special, on real estate creates no personal liability or for the payment of which a judgment in personam could be obtained. The real property thus assessed is the only property that can be resorted to and taken in satisfaction of the taxes levied against the same.

4. Bankruptcy: Property: Liens. A stay of proceedings which is afforded by the laws of bankruptcy does not act as a ban, but merely as a suspension. A discharge in bankruptcy is personal to the bankrupt and has no effect upon a valid lien existing on his or her property.

5. Bankruptcy: Property. The automatic bankruptcy stay does not stay acts against property which is neither the debtor's nor the estate's.

6. Actions: Parties: Proof. The party asserting the affirmative of an issue has the burden of proving that issue by a preponderance of the evidence.

7. Bankruptcy: Mortgages: Real Estate: Taxes: Liens. To permit mortgagees to purchase property on which they hold a lien from bankrupt mortgagors, thereby salvaging their interest, without subjecting them to the real estate tax liens would grant mortgagees a windfall that the federal Bankruptcy Code neither intended nor permits.

Terry Curtiss of Curtiss, Moravek & Curtiss, P.C., Alliance, for appellant.

M. Roger Schneekloth, Box Butte County Atty., and Laurice M. Margheim, Alliance, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

HASTINGS, Chief Justice.

The Alliance Railroad Community Credit Union (Credit Union) appeals the district court's dismissal of its petition which sought the refund of certain real estate taxes paid to the County of Box Butte, Nebraska (County). The requested relief was based on either Neb.Rev.Stat. § 77-1734.01 (Reissue 1990) or Neb.Rev.Stat. § 77-1735 (Reissue 1990). The Credit Union claims that the County is prohibited from assessing or levying general property taxes during any time after the owner of the property has filed a petition in bankruptcy during the effectiveness of the automatic stay provisions of the Bankruptcy Code and that any taxes assessed and levied in contravention of this stay are invalid and void.

It was stipulated and agreed by the parties in the district court that the matter be submitted to the court upon the pleadings, stipulations, and exhibits marked and received in evidence at the pretrial conference held on December 24, 1990. The only evidence in addition to the pleadings consisted of two exhibits showing the levy and payment of taxes for the years 1987 and 1988.

The underlying facts of this case are found for the most part in the allegations of the petition and the admissions in the County's answer. The Credit Union filed its petition in the district court for Box Butte County on April 13, 1990.

The Credit Union had loaned funds to James Gary Ward and Sandra S. Ward, on a date not appearing in the record, secured by a mortgage on the following-described real estate: "Lot 4, Block 10, Lakefield Addition to the City of Alliance, Box Butte County, Nebraska, according to the recorded plat thereof."

On July 21, 1987, the Wards had filed a petition for relief under chapter 13 of the U.S. Bankruptcy Code. The petition filed in this case alleged that as a result of the filing of the petition in bankruptcy, a stay of certain acts and proceedings against the debtors became effective as of the date of filing pursuant to 11 U.S.C. § 362(a) (1988) of the Bankruptcy Code. The Credit Union alleges that such a stay applies to the assessment, levy, and collection of taxes, and imposition of liens therefor, by governmental subdivisions. That allegation is specifically denied by the County. This forms the basic issue in this appeal.

The facts alleged by the Credit Union and admitted by the County in its answer are that the County levied upon the Ward property certain real estate taxes for 1987 and 1988 as part of the regular tax collection activities of the County; that the Wards conveyed the real estate to the Credit Union on January 19, 1988, and on September 15, the U.S. Bankruptcy Court entered an order confirming the Wards' amended plan; that no notice of assessment, change, or any other action was sent to the Credit Union or to the Wards except the notice in December 1987 for the 1988 assessment generated by the county assessor for Box Butte County; and no relief from the stay was requested or granted to the County to allow actions to assess, levy, or perfect liens for payment of the 1987 and 1988 taxes on the Ward property.

The Credit Union further alleges, and it is admitted by the County, that it paid the 1987 and 1988 real estate taxes assessed on the Ward property, together with interest in the amount of $3,471.50, then made a claim for a refund to the county treasurer by means of letters dated December 20, 1989, and January 11, 1990. The county commissioners of Box Butte County denied the Credit Union's claim at their meeting held February 6, 1990.

The Credit Union also claims that 11 U.S.C. § 362(a) of the Bankruptcy Code applies to the assessment, levy, and collection of taxes, and imposition of liens therefor, by governmental subdivisions, and therefore, because the taxes levied and assessed in the face of a bankruptcy stay were illegal and void, it was entitled to a refund of taxes, interest, and advertising paid on the Ward property for 1987 and 1988, under the premise that the tax either had been imposed by mistake, as provided by § 77-1734.01, or was altogether void and invalid, as provided by § 77-1735. These allegations were denied by the County. The Credit Union accordingly prayed for judgment against the County in the amount of $3,471.50, plus interest from December 20, 1989, and costs of the action.

On February 19, 1991, the court dismissed the Credit Union's petition at its own cost, finding that

11 U.S.C. Section 362 operates as an injunction prohibiting the creation of a lien under Section 77-203 R.R.S., 1943 while bankruptcy proceedings are pending, but it does not stay proceedings for the assessment and levy of real estate taxes; that the stay no longer applies after the property is conveyed to the Plaintiff by the bankrupt; and that the liens created by statute became effective when the stay was lifted.

The Credit Union claims that the district court erred (1) in holding that the stay of Bankruptcy Code 11 U.S.C. § 362(a) did not apply to the levy and assessment of real estate taxes by the County, (2) in finding that the stay prohibited only the creation of a lien pursuant to Neb.Rev.Stat. § 77-203 (Reissue 1990), and (3) in finding that the 1987 real estate taxes levied on the Ward real estate and the 1988 real estate taxes assessed during the pendency of the Ward bankruptcy were effective and became liens when the stay was lifted by conveyances to the Credit Union. The substance of the three claimed errors is that the trial court erred in refusing to recognize that 11 U.S.C. § 362(a) automatically stayed and therefore rendered void and invalid the assessment of taxes during those 2 years.

Whether a mortgagee who purchases property of a bankrupt may successfully challenge taxes levied or assessed during the bankruptcy is to be determined by statutory construction. Statutory construction is a matter of law in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the determination made by the trial court. First Nat. Bank v. Heiden, 241 Neb. 893, 491 N.W.2d 699 (1992). See, also, Weimer v. Amen, 235 Neb. 287, 455 N.W.2d 145 (1990); Sorenson v. City of Omaha, 230 Neb. 286, 430 N.W.2d 696 (1988).

The procedure for the levy and collection of taxes in Nebraska may be found in the statutes. On or before January 1 of each year, the county assessor or county clerk shall make up a list, ledger, or computer file of the taxable lands and lots in the county. Neb.Rev.Stat. § 77-1303 (Reissue 1990). The county assessor or county clerk shall complete his or her revision of the assessment rolls and file with the county clerk on or before April 1 of each year a certificate indicating that such revision is complete. The county clerk shall cause to be published in a paper of general circulation in the county a notice of the filing of the assessment roll. Neb.Rev.Stat. § 77-1315 (Reissue 1990). The county board of equalization shall fairly and impartially equalize the valuation of individual parcels of real estate so that all property is assessed uniformly and proportionately. Neb.Rev.Stat. § 77-1504 (Reissue 1990). The county board of equalization shall each year, on or before September 15, levy the necessary taxes for the current year. Neb.Rev.Stat. § 77-1601 (Reissue 1990). All tangible property not expressly exempt therefrom shall be subject to taxation and shall be valued at its actual value. Neb.Rev.Stat. § 77-201 (Reissue 1990). All general real property taxes levied for any county shall be due and payable on December 31 next following the date of...