Ayres v. Townsend, 138

• Decision Date: 01 September 1990
• Docket Number: No. 138,138
• Citation: 324 Md. 666,598 A.2d 470
• Parties: Diane AYRES v. John Melville TOWNSEND et al. ,
• Court: Maryland Court of Appeals

Page 666

324 Md. 666

598 A.2d 470

Diane AYRES v. John Melville TOWNSEND et al.

No. 138, Sept. Term, 1990.

Court of Appeals of Maryland.

Nov. 22, 1991.

Arthur L. Rhoads, Jr. and Andrew J. Long, III, Baltimore, for appellant.

Jeffrey H. Gray, Monkton, for appellee.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW and KARWACKI, JJ.

MURPHY, Chief Judge.

This case focuses upon Maryland Code (1986, 1991 Cum.Supp.), Title 14, Subtitle 8, Part III, entitled "Tax Sales," of the Tax-Property Article, and presents the question whether the holder of a right of first refusal in a recorded deed is entitled to actual notice of a proceeding by a tax sale purchaser to foreclose the right of redemption.

The Tax-Property Article requires, in § 14-832, that provisions relating to tax sales "shall be liberally construed as remedial legislation to encourage the foreclosure of rights of redemption by suits in the circuit courts and for the decreeing of marketable titles to property sold by the collector." Section 14-836(b)(1) provides, insofar as here pertinent, that the defendants in any action to foreclose the right of redemption shall be "(i) the record title holder of the property as disclosed by a search performed in accordance with generally accepted standards of title examination of the land records of the county, of the records of the register of wills of the county, and of the records of the circuit court for the county."

Other pertinent provisions of this section delineate, as additional parties entitled to actual notice (a) any mortgagee of the property or any assignee of the mortgagee of record, (b) the trustee under any deed of trust or any holder of a beneficial interest in a deed of trust who files notice of the interest, and (c) the county where the property is located and, if appropriate, the State. Section 14-836(b)(3) makes it unnecessary to name as a defendant "any other person that has or claims to have any right, title, interest, claim, lien or equity of redemption in the property sold by the collector." As to these persons, the subsection states that they are included as defendants by the designation:

" 'all persons that have or claim to have any interest in property ........ (giving a description of the property in substantially the same form as the description that appears on the Collector's certificate of tax sale).' Any of these persons may be designated throughout the proceeding by the above designation and the cause may proceed against them by publication under order of court as provided in this subtitle."

Section 14-839(a)(2) provides that the plaintiff need not "make any investigations or ... search any other records or sources of information other than those stated." Section 14-840 provides for notice by publication of the pending tax sale action.

I.

John Townsend acquired a parcel of ground from his mother who also conveyed an adjoining parcel to Townsend's sister, Virginia Lee Amato. A confirmatory deed was executed between John Townsend and Amato on June 25, 1982, which, inter alia, corrected certain irregularities in the description of the parcels conveyed by their mother. In the confirmatory deed, Townsend and Amato granted unto each other and their respective personal representatives and assigns the "right of first refusal in the event of the proposed sale of all or any part of any of the lands herein described."

Townsend became delinquent in the payment of taxes, and on May 19, 1986, his parcel was purchased by Diane Ayres from the Director of Finance and Collector of State and County Taxes of Baltimore County. Subsequently, Ayres instituted proceedings in the Circuit Court for Baltimore County to foreclose all rights of redemption; she named as defendants, Townsend, Baltimore County, Maryland, any unknown owner, and "all persons having or claiming to have any interest in the described property." Amato was not specifically named as a defendant, nor did she have actual notice of the sale or of the foreclosure proceedings. A notice by publication of the proceeding was published in a Baltimore County newspaper, as required by § 14-840 of the Tax-Property Article.

A decree foreclosing all rights of redemption was signed by the court on September 7, 1988 and in due course the Collector conveyed the Townsend parcel to Ayres. Upon discovering that Ayres had acquired the Townsend parcel, Amato moved to set aside the judgment foreclosing the rights of redemption and requested that the court allow her, as the holder of the first refusal right, to redeem the property.

Finding that Amato was entitled to actual notice under § 14-836(b)(1)(i), the court on August 15, 1990 ordered that the judgment foreclosing rights of redemption of the subject property be set aside and granted Amato the right to redeem. Ayres appealed. We granted certiorari before consideration of the appeal by the intermediate appellate court to address the important issue presented in the case.

II.

Ayres argues that in a proceeding by a tax sale purchaser to foreclose the equity of redemption, the owner of a right of first refusal is not required by § 14-836(b)(1) to be named as a defendant. First, she asserts that Amato was not "the record title holder of the property," as disclosed by a search of the land records, and thus was not required by the statute to be named as a defendant. She claims that the definition of record title holder should be narrowly construed to include only the owner of the fee simple interest in the subject property, namely, Townsend, who was given notice thirty days before the property was first advertised for sale in the foreclosure proceeding.

Secondly, Ayres argues that a covenant between a landowner and a holder of a right of first refusal is a personal contract between the parties. She says that the contract merely requires the landowner, when and if the landowner decides to sell, to offer the property first to the holder of the right of first refusal. Because it was not Townsend's decision to sell his property, Ayres suggests that the sale was not voluntary on his part but made simply to satisfy his tax arrearage. Thus, according to Ayres, Amato was not entitled to exercise her first refusal right to acquire the property since that right does not extend to foreclosure or other involuntary proceedings instituted to satisfy delinquent tax obligations.

Finally, Ayres argues that § 14-832, relating to tax sales, requires a liberal construction to encourage the foreclosure of rights of redemption and for the decreeing of marketable titles of property sold by the collector. As to this, she cites Thomas v. Kolker, 195 Md. 470, 73 A.2d 886 (1950), for the proposition that the legislature has declared that the public interest in marketable titles to property purchased at tax sales outweighs considerations of individual hardship, except upon a showing of lack of jurisdiction or fraud in the conduct of the foreclosure. Since there were no fraud or jurisdictional issues involved in the proceedings, Ayres asserts that Amato's right of first refusal should not be permitted to defeat the tax sale in this case.

Amato responds that the trial court acted properly when it ruled that the owner of a right of first refusal is a "record title holder" entitled to be named as a defendant within the contemplation of the statute. She urges that we give a broad interpretation to this term to include a holder of a right of first refusal because (1) her interest in the parcel was ascertainable through a search of the land records and (2) Townsend could not convey good title to the parcel without her prior assent. In support of her position, Amato relies upon Brashears v. Collison, 207 Md. 339, 115 A.2d 289 (1955), which held that a life tenant and remaindermen of property were entitled to notice of a tax sale purchaser's action to foreclose the rights of redemption. Amato contends that § 14-836(b)(1)(i) guarantees, to the extent possible, that those persons with recorded interests in the subject property, including persons holding a right of first refusal, are identified and made party defendants, thereby entitling them to summons and actual notice, as well as notice by publication.

III.

Whether the actual notice requirements of § 14-836(b)(1)(i) encompass a holder of a right of first refusal is essentially a matter of statutory construction. In interpreting the statute's provisions, our goal is to ascertain and effectuate the intention of the legislature. Our focus is, therefore, centered upon the statute's purpose or policy. Kaczorowski v. City of Baltimore, 309 Md. 505, 513, 525 A.2d 628 (1987). Where statutory language is unambiguous, and clearly consistent with the statute's apparent purpose, the words will be accorded their ordinary meaning. Prince George's County v. Burke, 321 Md. 699, 706, 584 A.2d 702 (1991).

Section 14-836(b)(1), prior to its amendment by ch. 825 of the Acts of 1986 (HB 1828), provided that, among others, the "owner" of the property was required to be given actual notice in any action to foreclose the right of redemption. The word "owner" was deleted by the 1986 amendment; in its place the term "record title holder" was used. Chapter 825 made numerous other amendments to the tax sales provisions of Title 14, Subtitle 8, Part III, of the Code.

The title to HB 1828 stated, inter alia, that it was for the purpose of altering the laws concerning tax sales, including "who may be a defendant in a suit to foreclose the right of redemption." The bill was referred to the House Committee on Ways and Means which gave it a favorable report, without amendments; the report of that committee stated that the bill alters the law concerning tax sales, including "allowing all parties with interests in properties (not only the owner of...