Brandon Tp. v. Tomkow, Docket No. 154992

• Decision Date: 02 June 1995
• Docket Number: Docket No. 154992
• Citation: 535 N.W.2d 268,211 Mich.App. 275
• Parties: BRANDON TOWNSHIP, Plaintiff, Appellee, Cross-Appellant. v. Alan TOMKOW and Leo Tomkow, Defendants-Appellants, Cross-Appellees, and Michigan Department of Natural Resources, Defendant-Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 268

535 N.W.2d 268

211 Mich.App. 275

BRANDON TOWNSHIP, Plaintiff, Appellee, Cross-Appellant. v. Alan TOMKOW and Leo Tomkow, Defendants-Appellants, Cross-Appellees and Michigan Department of Natural Resources, Defendant-Cross-Appellee.

Docket No. 154992.

Court of Appeals of Michigan.

Submitted Jan. 3, 1995, at Lansing.

Decided June 2, 1995, at 9:05 a.m.

Released for Publication Aug. 3, 1995.

Frank J. Kelley, Atty. Gen., Thomas L. Casey, Sol. Gen., Thomas J. Emery, Asst. in Charge, and Kevin T. Smith, Asst. Atty. Gen., for Dept. of Natural Resources.

Campbell, Keenan, Harry, Cooney & Karlstrom by Stuart B. Cooney, Clarkston, for Brandon Tp.

Philip E. Hodgman, East Lansing, for Alan and Leo Tomkow.

Before FITZGERALD, P.J., and MARILYN J. KELLY and BASHARA, ^* JJ.

MARILYN J. KELLY, Judge.

Defendants Alan Tomkow and Leo Tomkow appeal as of right from a grant of summary disposition quieting title in plaintiff, Brandon Township. The Township cross-appeals from the judge's ruling that M.C.L. § 211.131e; M.S.A. § 7.190(3) is constitutional, naming both the Tomkows and the Michigan Department of Natural Resources (DNR) as cross-appellees. We affirm the judge's decision to quiet title in Brandon Township on the basis that the notice requirement of the statute violates due process and is unconstitutional.

I

The facts and history of this case are complicated. The property involved borders Lake Louise. A portion of it contains a dam which is the principal support for the lake and a wetland. It was originally part of a subdivision known as Belle-Anne Falls Subdivision.

A

Before 1953, the Chernick family owned the property. In 1953, the Chernicks transferred it to BAF Estates, in which they were the primary shareholders. In 1964, BAF Estates transferred it back to the Chernick family. In 1972, the Chernicks, doing business as the Detroit Construction Company, transferred it to the Glass Land Holding Company (Glass Land). Throughout the entire period involved here, Glass Land was the record title owner of the property.

The Chernick family, BAF Estates, the Detroit Construction Company and Glass Land all shared the same address. While it is not completely clear from the record or briefs, these companies and the Chernicks apparently held and developed various properties.

Beginning in 1979, the Oakland County Treasurer's Office sent notices of property tax delinquency on the Lake Louise property. They were mailed to the correct address but directed to BAF Estates rather than Glass Land. In 1980, the Treasurer's Office sent a notice to BAF that the property would be sold at a tax sale. It sent a special redemption notice to BAF in December, 1981, and a final notice in August, 1982.

Before the final notice was mailed, Brandon Township and the Chernicks entered into a consent judgment in which they agreed to divide the property into two parcels. Parcel B contained the Lake Louise dam. Parcel A was a vacant lot subject to an easement for access to an adjacent dam. Each parcel was assigned a state equalized valuation (SEV) for tax purposes of less than $1,000.

The property taxes on the land were not paid. Notice of a tax sale was again sent to the Chernicks doing business as Detroit Construction Company and to BAF Estates. No notice was sent to Glass Land. Members of the Chernick family paid taxes on parcel A for the year 1979. Either by error or oversight, and to further complicate the matter, parcel A continued to be listed by the Oakland County Treasurer as part of the original property. Consequently, when taxes on it again became delinquent, no notices were sent to any of the Chernicks' companies. Parcel B was deeded to the state due to unpaid taxes in 1982, parcel A in 1984.

The two parcels were subsequently declared surplus property by the Department of Natural Resources (DNR). In 1987, the Tomkows purchased both parcels from the state through the DNR. In 1990, the Tomkows obtained Glass Land's rights to parcel A by a quit claim deed which was never recorded.

In 1990, the state informed the Tomkows that the dam on parcel B required significant repair and ordered them to make the repairs. When they failed to do so, the water level in Lake Louise fell, exposing mud and muck on other lakefront properties. These were apparently both unsightly and unsafe.

Brandon Township condemned the parcel B property with the intention of building a new dam on the site and restoring Lake Louise to its previous level. Although the Tomkows appealed from the taking, it was upheld by the Court of Appeals in 1991.

B

The Tomkows and Brandon Township were unable to reach an agreement on an appropriate amount due them as compensation for the taking. While the Tomkows and Brandon Township were negotiating the amount, the Chernicks and Glass Land sold their redemption rights in both parcels to Brandon Township.

The Township then sought to quiet title in itself. It argued that, since Glass Land had received no notice of the 1983 tax sale, its rights of redemption were still valid. Moreover, it had purchased those rights from Glass Land and all related parties. The Township apparently sought to quiet title in itself to forestall the Tomkows from claiming any right to compensation for the taking. Brandon Township moved for summary disposition.

The judge found that notice of the original tax sale of parcel B was inadequate. He concluded that Glass Land still held an unextinguished right of redemption at the time of the condemnation and thereafter. The judge mentioned that the SEV for parcel A was less than $1,000 and notice of the tax sale was not required. The judge concluded that Glass Land had validly transferred the right of redemption to Brandon Township.

Plaintiff moved for clarification of the ruling as it pertained to parcel A, and defendant moved for reconsideration. The judge held an evidentiary hearing to determine how the SEV of each parcel had been determined. It was significant, because M.C.L. § 211.131e; M.S.A. § 7.190(3) extends the redemption period on lands deeded to the state until owners of a significant property interest have been notified. However, the statute requires notice to property holders only if the property has an SEV of more than $1,000. The notice issue was apparently pivotal to whether Glass Land retained the redemption rights which it purported to transfer to Brandon Township by quit claim deed.

The judge first found that M.C.L. § 211.131e; M.S.A. § 7.190(3) was constitutional. He held that, since the state had received information that the parcel was valued at more than $1000, it had failed to satisfy the statutory notice provision for both parcels. Therefore, Glass Land retained redemption rights following the tax sale and was free to transfer them to the Township.

Since the transfer had already occurred, the Township had redemption rights to both parcels at the time it and the Tomkows were negotiating the compensation award. As a consequence of the judge's ruling, the Tomkows were not entitled to compensation for parcel A or B.

II

Plaintiff, in its cross-appeal, challenges the constitutionality of the notice requirement of M.C.L. § 211.131e; M.S.A. § 7.190(3) on due process grounds.

We believe that plaintiff's arguments are correct and find that the notice requirement of M.C.L. § 211.131e; M.S.A. § 7.190(3) is unconstitutional. On this basis, we affirm the judge's resolution of the dispute between the Tomkows and Brandon Township in favor of the Township.

A

In 1976, our Supreme Court issued Dow v. Michigan, 396 Mich. 192, 240 N.W.2d 450 (1976). Dow was an action to quiet title in which our Supreme Court found a tax sale defective. It ruled that the state had failed to give the titleholder and the land contract purchasers adequate notice of the tax foreclosure proceeding. The state had relied on newspaper notice. Our Supreme Court found this to be a violation of the Due Process Clauses of the federal and state constitutions. U.S. Const., Am XIV; Const.1963, art. 1, § 17. In reaching its conclusion, the Dow Court wrote:

We hold that the Due Process Clause requires that an owner of a significant interest in property be given proper notice and an opportunity for a hearing at which he or she may contest the state's claim that it may take the property for nonpayment of taxes and that newspaper publication is not constitutionally adequate notice. [Dow, p. 196, 240 N.W.2d 450.]

The Court concluded that the owner of real property is entitled to claim the protection of the Due Process Clause with respect to the assessment and collection of taxes. It found that both the title holder and the land contract purchaser had a significant interest in property within the meaning of the Due Process Clause. Id., p. 204, 240 N.W.2d 450. Before they could be deprived of their property interests, the Constitution required that they be afforded an opportunity to be heard "at a meaningful time and in a meaningful manner"; they must be given notice in a manner reasonably calculated to apprise them of that opportunity. Id., pp. 206-207, 240 N.W.2d 450.

Apparently in response to Dow, the Michigan Legislature enacted M.C.L. § 211.131e; M.S.A. § 7.190(3). It provides in part:

(1) The redemption period on those lands deeded to the state pursuant to section 67a that have a state equalized valuation of $1,000.00 or more shall be extended until owners of a significant property interest in the lands have been notified of a hearing before the department of treasury. Proof of notice to those persons and notice of the hearing shall be recorded with the register of deeds in the county in...