Babb v. Frank

• Decision Date: 02 December 1996
• Docket Number: No. 96-C-0778-C.,96-C-0778-C.
• Citation: 947 F.Supp. 405
• Parties: Raymond C. BABB and Robin R. Babb, Plaintiffs, v. Craig FRANK and Maynard Lindvig, as power of attorney for Clifford L. Lindvig, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

Page 405

947 F.Supp. 405

Raymond C. BABB and Robin R. Babb, Plaintiffs, v. Craig FRANK and Maynard Lindvig, as power of attorney for Clifford L. Lindvig, Defendants.

No. 96-C-0778-C.

United States District Court, W.D. Wisconsin.

December 2, 1996.

Ronald S. Stadler, Stadler & Schott, S.C., Brookfield, WI, for Raymond C. Babb, Robin R. Babb.

Susan V. Kelley, Madison, WI, for Craig Frank.

Maynard Lindvig, Viroqua, WI, for Maynard Lindvig.

OPINION AND ORDER

CRABB, District Judge.

This is an action to quiet title that arises out of a tax sale of real property conducted by the Internal Revenue Service pursuant to 26 U.S.C. § 6335. Both sides have moved for summary judgment on the sole issue raised in the case: whether a delinquent taxpayer whose real property is seized and sold by the IRS can convey title in his property and assign his right of redemption before the running of the 180-day period for redemption. I conclude that he can and will grant judgment for defendants.

From the findings of fact proposed by the parties, I find that the following material facts are not in dispute. (In determining the undisputed facts, I have ignored the paragraphs in the affidavits of defendant Frank and Pamela Kern that are the subject of a motion to strike by plaintiffs. The averments are largely hearsay, as plaintiffs contend, and they are immaterial as well.)

UNDISPUTED FACTS

All of the parties are adult residents of the state of Wisconsin. Plaintiffs live in Crawford County; defendants Craig Frank and Maynard Lindvig live in Vernon County. Defendant Lindvig has power of attorney for his brother, Clifford Lindvig, who was the owner of a parcel of land in Vernon County that was seized by the Internal Revenue Service in January 1996, for nonpayment of taxes.

Pursuant to 26 U.S.C. § 6335, the IRS sold Clifford Lindvig's property by sealed bid at a public sale held on February 15, 1996. Plaintiffs and defendant Craig Frank bid on the property. Revenue Officer Neil Duresky certified plaintiffs' bid as highest and issued plaintiffs a certificate of sale on February 20, 1996, which plaintiffs recorded with the Vernon County Register of Deeds the same day.

On August 8, 1996, Clifford Lindvig executed a power of attorney in the name of his brother Maynard. Acting pursuant to that power, defendant Maynard Lindvig executed a quitclaim deed to the property on August 13, 1996, conveying Clifford Lindvig's interest to Craig Frank, and at the same time, signed a document entitled "Assignment of Right of Redemption," granting Craig Frank a right to redeem the property. The power of attorney, quitclaim deed and assignment of right to redeem were filed with the Vernon County Register of Deeds on August 20, 1996. On August 13, 1996, Craig Frank tendered to the IRS a cashier's check for $210,767.50, payable to plaintiffs, a sum equal to the amount paid by plaintiffs plus interest at the rate of 20% a year to August 13, 1996.

By letter dated August 16, 1996, plaintiffs requested a deed to the property. The Secretary of the Department of Treasury has declined to provide one and has refused to cause entry of the redemption to be made upon the record pending resolution of the parties' dispute.

OPINION

A. Statutory Interpretation of 26 U.S.C. § 6337

The applicable statute, 26 U.S.C. § 6337, makes the following provisions for redemption of real estate after sale:

(b) Redemption of real estate after sale. —

(1) Period. — The owners of any real property sold as provided in section 6335, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within 180 days after the sale thereof.

Any interpretation of a law or regulation starts with the plain meaning. Pennsylvania Dep't of Public Welfare v. Davenport, 495 U.S. 552, 557-58, 110 S.Ct. 2126, 2130-31, 109 L.Ed.2d 588 (1990); Illinois E.P.A. v. United States E.P.A., 947 F.2d 283, 289 (7th Cir.1991). In many instances, that is also the end of the inquiry. In this case, however, the meaning of the statute is not plain as it relates to the question the parties pose. It is not possible to tell from merely reading the statute whether Congress intended it to apply only to persons who have an interest in the property at the time of sale (or earlier, at the time the notice of levy is posted) or whether it would apply, as defendants urge, to persons who acquire interests in the property after sale but before the period of redemption has run. Although plaintiffs assert in their brief that "Congress chose not to allow such assignments," they cite nothing in the statutory language or in any legislative history to support their assertion. Given this uncertainty about the plain meaning of the statute, it is helpful to turn to the relevant canons of statutory construction.

An owner's right to redeem property seized by the United States for failure to pay taxes was well-established long before the passage of 26 U.S.C. § 6337. See Corbett v. Nutt, 77 U.S. (10 Wall.) 464, 19 L.Ed. 976 (1870); Bennett v. Hunter, 76 U.S. (9 Wall.) 326, 19 L.Ed. 672 (1869). Leniency to the owner in the exercise of this right has always been the rule of thumb. See Corbett, 77 U.S. at 474-75 ("It is the general rule of courts to give to statutes authorizing redemption from tax sales a construction favorable to owners ..."); Anselmo v. James, 449 F.Supp. 922, 925 (D.Mass.1978) (same); United States v. Lowe, 268 F.Supp. 190, 192 (N.D.Ga.1966), aff'd Lowe v. Monk, 379 F.2d 555 (5th Cir. 1967) (same). Courts give the benefit of the doubt to owners with respect to redemption rights because of the harsh consequences of losing one's property to the government.

To divest ownership, without personal notice and without direct compensation, is the instance in which a constitutional government approaches most nearly to an unrestrained tyranny. Whatever tends to modify this right is favorable to the citizen, and ought to be liberally construed, on the principle that remedial statutes are to be beneficially expounded.

McCampbell v. DiNuzzo, 50 Misc.2d 437, 270 N.Y.S.2d 685, 689-90 (Sup.Ct.1966) (citing 2 Cooley on Taxation, 3d Ed., pp. 1023-1024); Krassner v. Veneman, 206 Cal.App.2d 299, 23 Cal.Rptr. 673, 675 (Dist.Ct.App.1962) (citing Cooley on Taxation).

Section 6337 extends the right to redeem to "heirs, executors, or administrators, or any person having an interest [in the property], or a lien thereon, or any person in ... behalf [of the owner]." 26 U.S.C. § 6337(b)(1); see also Lowe, 268 F.Supp. at 193 (tenant in common who held quit claim deed entitled to redeem); Samet v. United States, 242 F.Supp. 214 (M.D.N.C.1965) (spouse claiming inchoate right to dower in property owned by husband and subject to tax lien had sufficient interest to permit exercise of redemption rights). Congress's inclusion of such a broad array of individuals in the list of those with redemption rights is an indication that it views redemption rights in an expansive fashion. Nonetheless, the Supreme Court has characterized the right of redemption as "a statutory right exclusively ... Courts cannot ... make any exceptions not made in the statute." Keely v. Sanders, 99 U.S. 441, 445-46, 25 L.Ed. 327 (1878); see also Krassner, 23 Cal.Rptr. at 677 ("The rule that redemption statutes are to be liberally construed does not mean their provisions can be disregarded.").

Plaintiffs contend that the court would be making an exception in § 6337 if it allowed defendant Frank to exercise redemption rights on the property, when he did not gain an interest in the property until after the tax sale. But to make an exception, there must be a specified norm from which the exception departs. No such norm is apparent in a reading of § 6337. The statute does not rule out an exercise of redemption rights by individuals in defendant's position. Keely, 99 U.S. 441, instructs courts not to violate explicit statutory language in an attempt to reach what the court believes to be the proper equitable result, as would be the case if courts extended the statutory time limits for redemption after they had expired. Id.; see also Howard v. Adle, 538 F.Supp. 504 (E.D.Mich.1982) (court lacks power to extend redemption period by even one day). Keely's warning not to violate explicit statutory provisions is of little relevance to this case, in which neither side's interpretation of § 6337 is mandated specifically by the statutory language. To the extent that any canon of construction controls the interpretation of § 6337, it can only be the one favoring the interests of the owner.

B. Property Interest Held by Clifford Lindvig After Tax Sale

Although the statutory language does not dictate a clear resolution to this case, defendant Frank's position would be nullified if the delinquent taxpayer, Clifford Lindvig, did not have a property interest to pass Frank at the time Maynard Lindvig issued the quitclaim deed and assignment of redemption rights. Accordingly, it is necessary to determine whether Clifford Lindvig retained any interest in the property after the tax sale that could be conveyed to defendant Frank.

When the government sells seized property in accordance with 26 U.S.C. § 6335, it provides the purchaser with a certificate of sale. 26 U.S.C. § 6338(a). In the case of real property, the tax sale purchaser can exchange the certificate of sale for a deed to the property after the statutory redemption period has expired. 26 U.S.C. § 6338(b). The tax sale purchaser does not receive the delinquent taxpayer's right, title and interest to the property until he obtains the deed. 26 U.S.C. § 6339(b)(2); Taylor v. United States, No. CIV 90-1929-PCT-SMM, 1993 WL 597379 at *3 (D.Ariz. Sept. 27, 1993). Possession of a certificate of sale does not pass title. United States v. Cassel Brothers, Inc., No. 79-1285, 1981 WL...