Bank of Commerce v. Waukesha County, 76-636

• Decision Date: 16 July 1979
• Docket Number: No. 76-636,76-636
• Citation: 279 N.W.2d 237,89 Wis.2d 715
• Parties: BANK OF COMMERCE, Plaintiff-Respondent, v. WAUKESHA COUNTY, Wisconsin, a Municipal Corporation, Defendant, Ginkids Investments, Inc., a/k/a Ginkids Investment, Inc., Burns Builders, Inc., and Neenon Housing Corporation, Defendants-Appellants.
• Court: Wisconsin Supreme Court

Page 237

279 N.W.2d 237

89 Wis.2d 715

BANK OF COMMERCE, Plaintiff-Respondent, v. WAUKESHA COUNTY, Wisconsin, a Municipal Corporation, Defendant Ginkids Investments, Inc., a/k/a Ginkids Investment, Inc. Burns Builders, Inc., and Neenon Housing Corporation, Defendants-Appellants.

No. 76-636.

Supreme Court of Wisconsin.

Argued May 2, 1979.

Decided May 30, 1979.

Reconsideration Denied July 16, 1979.

Thomas M. Kells, Milwaukee, argued and on brief, for defendants-appellants.

Earl L. Meixner (argued), and Petrie, Stocking, Meixner & Zeisig, S. C., Milwaukee, on brief, for plaintiff-respondent.

COFFEY, Justice.

The plaintiff-respondent, the Bank of Commerce (also referred to as the Bank), commenced this action to quiet title to a 7 1/2 acre undeveloped parcel of real estate located in the city of New Berlin, Waukesha County. This appeal is from a judgment declaring the Bank the "former owner" of the property, pursuant to a Waukesha County ordinance adopting the provisions of Wis.Stats., sec. 75.35(3). In the statute, a preference is granted to the former owner of the property over any other potential purchasers of land declared tax delinquent. The Bank's "former owner" judgment of January 18, 1977 voids an October 1, 1974 tax deed conveying the property from Waukesha County to the defendant-appellant, Ginkids Investment, Inc. Ginkids, likewise, claims to be the property's former owner under the statute. Burns Builders, Inc. and Neenon Housing Corp., defendants-appellants, claim their property interests in the tax delinquent property through the Ginkids title acquired from the Waukesha County authorities.

On February 13, 1967 the Bank of Commerce acquired a mortgage interest in the property from an assignment of Hope Acres, Inc. which had received the property transfer earlier the same day from Kind Acres, Inc. The court's decision reflects that title to the premises vested in Ginkids Investment, Inc. at a later date, but the record is void of whether this transfer was accomplished by purchase, trade, etc.

It is stipulated that on August 20, 1969 the Bank commenced a mortgage foreclosure action against Ginkids. Some three and one-half years later a judgment of mortgage foreclosure was entered in favor of the Bank on March 12, 1973 in the amount of $51,923.74. Thereafter, on March 22, 1973 the Bank of Commerce paid the delinquent Waukesha County 1968 real estate taxes.

A year later, on the 19th of March, 1974, Waukesha County commenced an action pursuant to Wis.Stats., sec. 75.521 to foreclose the tax lien on the property for the delinquent 1969 taxes. A notice of the tax foreclosure action was sent to the Bank on March 20th and receipt of the notice was acknowledged on the next day. The notice of the delinquent tax foreclosure action stated that foreclosure could be avoided by payment of the 1969 tax lien plus interest or penalties within the period of redemption, on or before May 31, 1974. The record reflects that Kenneth Johnson, an officer of the Bank, read the notice and placed it in a file, believing the outstanding taxes would be satisfied at the impending sheriff's sale resulting from the Bank's March 12, 1973 judgment of mortgage foreclosure.

The sheriff's sale was held on May 9, 1974. The Bank of Commerce purchased the property at the public auction for $51,923.74 in satisfaction of its mortgage. A representative of Burns Builders, Inc., defendant-appellant, present at the sale, did not participate in the bidding for the property. The tax redemption period expired on May 31, 1974 without either the Bank or Ginkids making an attempt to pay the delinquent taxes and thus redeem the property.

On June 3rd, three days after the expiration of the tax redemption period, the court confirmed the sheriff's sale of the New Berlin real estate to the Bank. On the same day the Bank received and recorded the sheriff's deed of sale from the court dated May 21, 1977.

The Waukesha Circuit Court, on September 30, 1974, directed entry of judgment in favor of Waukesha County pursuant to the foreclosure action for failure to pay the 1969 taxes.

On October 1, 1974, pursuant to Wis.Stats., sec. 75.35(3), the Waukesha County Clerk of Courts initially determined Ginkids to be the former owner of the property. On the same day, the real estate was sold to Ginkids as the property's former owner, although the $2,664.22 tax lien payment was tendered by Burns Builders, Inc. Later that day, Ginkids recorded the quit claim deed received from Waukesha County. The following day, Ginkids issued a warranty deed conveying the property to Burns Builders, Inc.

The findings of fact reflect that on October 6, 1974 Burns executed a mortgage in the amount of $165,000 to the defendant-appellant, Neenon Housing Corp., covering the subject real estate. The record indicates that the defendant-appellant, Neenon Housing Corp., was not incorporated at the time of the execution of the mortgage on October 6, 1974. It is interesting to note that some 2 1/2 months later, the mortgage of October 6th was recorded.

The Bank gained knowledge of the delinquent tax sale to Ginkids sometime after October 1, 1974. Thereafter, on February 3, 1975 the Bank of Commerce commenced an action to void the quit claim deed to Ginkids Investments, Inc., dated October 1, 1974, and to quiet title to the property. Burns Builders counterclaimed to quiet title in its own name.

On April 8, 1975 the Bank of Commerce tendered a check to the Waukesha County Clerk of Circuit Court in the amount of $2,664.22. This amount represented the money paid by Burns Builders on behalf of Ginkids Investments, Inc. to Waukesha County for the property. The Bank requested that this money be held by the clerk in an escrow account pending the outcome of the action to quiet title.

On January 18, 1977 the trial court reversed the action of the Waukesha County Clerk of Court's office, declaring Ginkids the "former owner" of the property and entered judgment in favor of the Bank, declaring the plaintiff-respondent Bank the property's "former owner" within the meaning and intent of Wis.Stats., sec. 75.35(3), and the Waukesha County Ordinance (adopted December 18, 1962 by the Waukesha County Board.) The judgment thus grants the Bank of Commerce the "former owner" preference and ordered the deed from Waukesha County to Ginkids void. Thus, the judgment dismissed Burns Builders' counterclaim declaring that as Ginkids successors in title, they did not acquire legal ownership from Ginkids. Additionally, the court found the Neenon-Burns mortgage void for failure of consideration. The judgment directed Waukesha County, pursuant to Wis.Stats., sec. 75.35(3), to issue a deed to the Bank upon the Bank's payment of the tax liability in addition to the reimbursement of Burns Builders, Inc. for any amounts paid to Waukesha County in the Ginkids-Burns transaction.

Issue :

Is the Bank the "former owner" of the real estate in question within the meaning and intent of Wis.Stats., sec. 75.35(3) and a Waukesha County ordinance granting preference to former owners in the repurchase of tax deeded lands?

The plaintiff-respondent Bank, as well as the defendant-appellant Ginkids each claim to be the "former owner" of the property subject to Waukesha County's foreclosure of 1969 delinquent tax liens. The Waukesha County Ordinance granting a repurchase preference to former owners of tax deeded lands recites the following "SECTION 1. At the option of the County, former owners or surviving spouses or minor children of former owners may be granted the right to repurchase lands to which Waukesha County has taken title through delinquent tax enforcement collection, by payment of (1) all delinquent taxes together with interest thereon to the date of payment, (2) a pro-rata share of the costs of the proceedings, and (3) an additional sum equal to ten percent (10%) of the foregoing total cost. Any sale made under the provisions of this Ordinance shall be exempt from all of the requirements of sec. 75.69 of the Wis.Stats."

The preference accorded by the ordinance, therefore, relies on the language recited in sec. 75.35(3), Stats., which reads:

"Sec. 75.35(3) Preference to Former Owner to Repurchase. The governing body of any municipality may, at its option, by ordinance provide that in the sale of tax deeded lands, the former owner who lost his title through delinquent...