Citizens Nat. Bank of St. Albans v. Dunnaway

• Decision Date: 19 December 1990
• Docket Number: No. 19553,19553
• Citation: 400 S.E.2d 888,184 W.Va. 453
• Court: West Virginia Supreme Court
• Parties: CITIZENS NATIONAL BANK OF ST. ALBANS v. Troy E. DUNNAWAY, Constance L. Dunnaway, Glen B. Gainer, Commissioner of Forfeited and Delinquent Lands for the State of W. Va.; David L. Hill, Deputy Commissioner of Forfeited and Delinquent Lands of Putnam County; K.C. Hughes.

Page 888

400 S.E.2d 888

184 W.Va. 453

CITIZENS NATIONAL BANK OF ST. ALBANS v. Troy E. DUNNAWAY, Constance L. Dunnaway, Glen B. Gainer Commissioner of Forfeited and Delinquent Lands for the State of W. Va.; David L. Hill, Deputy Commissioner of Forfeited and Delinquent Lands of Putnam County; K.C. Hughes.

No. 19553.

Supreme Court of Appeals of West Virginia.

Dec. 19, 1990.

Syllabus by the Court

"There are certain constitutional due process requirements for notice of a tax sale of real property. Where a party having an interest in the property can reasonably be identified from public records or otherwise, due process requires that such party be provided notice by mail or other means as certain to ensure actual notice." Syllabus Point 1, Lilly v. Duke, 180 W.Va. 228, 376 S.E.2d 122 (1988).

Henry R. Glass, III, Lovett, Cooper & Glass, Charleston, for Citizens Nat. Bank of St. Albans.

Parrish McKittrick, McKittrick & Parr, St. Albans, for Troy E. Dunnaway and Constance L. Dunnaway.

Roger W. Tompkins, Atty. Gen., Jacqueline A. Hallinan, Asst. Atty. Gen., Charleston, for Glen B. Gainer and David L. Hill.

Walter L. Wagner, Jr., Dunbar, for K.C. Hughes.

PER CURIAM:

Ostensibly this case presents a choice between two innocent parties, one of whom will lose his (its) interest in real property, because the county clerk failed properly to index a recorded deed of trust; however, because the property was sold to the State for delinquent taxes, the State also has a compelling interest.

The Citizens National Bank of St. Albans, the beneficiary of a recorded but improperly indexed deed of trust, appeals the Circuit Court of Putnam County's decision holding that even though the Bank received no individual notice before the property's sale for non-payment of taxes, its lien was extinguished by the tax sale and the subsequent sale by the State of West Virginia to K.C. Hughes created a fee simple interest unencumbered by any lien. The State, with due diligence could not identify the Bank's interest in the real property and, therefore, no individual tax sale notice to the Bank was constitutionally required. Accordingly we affirm the circuit court.

I

The facts, which are undisputed, indicate that in 1975, Constance L. Persinger purchased some land along Route 3 in Putnam County. The land was entered under her name for tax purposes. After Ms. Persinger's marriage to Troy E. Dunnaway, Constance Persinger Dunnaway and Mr. Dunnaway executed a deed of trust, dated August 15, 1980, naming the Citizens National Bank as beneficiary to secure a note in the principal sum of $86,644.80. The deed of trust specified the grantors as "Troy E. Dunnaway and Constance L. Dunnaway (formerly Constance L. Persinger)." The deed of trust was recorded in the Putnam County Trust Deed Book 181, page 644. However the deed of trust was indexed only under the name of Dunnaway and not Persinger, the name used to identify the subject land for tax purposes. ¹ All parties agree that the Bank's deed of trust could only be located in the index under the name of Dunnaway, a name not used to identify the property for tax purposes.

After the Dunnaways failed to pay the 1982 taxes on the land, the property became delinquent. ² There is no dispute that the county sheriff met the posting and publishing requirements of W.Va.Code, 11A-2-13 [1983] and W.Va.Code, 11A-3-2 [1985]. ³ However, the sheriff did not send the Bank a notice of the tax delinquency because the deed of trust was not properly indexed. Because there were no bids received at the public auction held on November 14, 1983, the sheriff purchased the property for the State. ⁴

Upon the expiration of the statutory eighteen-month redemption period, the property became "irredeemable and subject to transfer or sale under the provisions of sections 3 and 4, article XIII of the Constitution." W.Va.Code, 11A-3-8 [1947]. There is no dispute that the commissioner and the deputy commissioner of forfeited and delinquent lands followed the statutory procedures found in W.Va.Code, 11A-4-1 et seq. [1971]. As required by W.Va.Code, 11A-4-12 [1967], ⁵ the deputy commissioner published in two local newspapers a notice of the suit for the sale of the tract. The deputy commissioner also attempted to notify Constance Persinger of the impending sale by registered letter addressed to the property. Mrs. Dunnaway was living at the property, but did not accept the registered letter. As required by W.Va.Code, 11A-4-23 [1967], ⁶ the deputy commissioner published a notice of sale in two local newspapers. Because the deputy commissioner did not know of the Bank's deed of trust, none of the publications named the Bank as having an interest in the property and the Bank received no other notice.

On January 27, 1986, the circuit court entered an order authorizing the sale of the property by the State for the benefit of the school fund. ⁷ Mr. Hughes, a defendant, purchased the property for $2,000 at an auction held on February 28, 1986. A tax deed was executed and delivered to Mr. Hughes by the deputy commissioner on March 4, 1986.

After the Bank filed suit to set aside the tax deed, the circuit court found that facts were not in dispute and entered summary judgment in favor of Mr. Hughes. The Bank appealed to this Court asserting that the tax deed should be set aside because the Bank did not receive the constitutionally required notice of a tax sale.

II

In Lilly v. Duke, 180 W.Va. 228, 376 S.E.2d 122 (1988), we discussed the constitutional due process requirements for notice of a tax sale of real property.

There are certain constitutional due process requirements for notice of a tax sale of real property. Where a party having an interest in the property can reasonably be identified from public records or otherwise, due process requires that such party be provided notice by mail or other means as certain to ensure actual notice.

Syllabus point 1, Lilly Id. In determining what notice is constitutionally required prior to the sale of real property for delinquent taxes, we relied upon several United States Supreme Court decisions that discussed the due process notice requirements. In Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983), a case involving a due process challenge to Indiana's tax sale statute by a mortgagee, the United States Supreme Court found that notice of a tax sale by publication and posting violated due process when the mortgagee could be reasonably identified from public records.

Where the mortgagee is identified in a mortgage that is publicly recorded, constructive notice by publication must be supplemented by notice mailed to the mortgagee's last known available address, or by personal service. But unless the mortgagee is not reasonably identifiable, constructive notice alone does not satisfy the mandate of Mullane [v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950) ].

Id. at 798, 103 S.Ct. at 2711.

Although Mennonite Board of Missions' address was not listed in the mortgage, the United States Supreme Court found that the address "could have been ascertained by reasonably diligent efforts." Mennonite Bd. of Missions, supra at 798 n. 4, 103 S.Ct. at 2711 n. 4. The United States Supreme Court then noted, "We do not suggest, however, that a governmental body is required to undertake extraordinary efforts to discover the identity and whereabouts of a mortgagee whose identity is not in the public record." Id. at 799 n. 4, 103 S.Ct. at 2711 n. 4.

A thread running through all the United States Supreme Court notice cases, beginning with Mullane, supra, is the mandate that under the due process clause a reasonable effort must be made to provide actual notice of an event that may significantly affect a legally protected property interest. In Mullane, the United States Supreme Court stated that, at a minimum, due process requires "that deprivation of life, liberty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case." Id. 339 U.S. at 313, 70 S.Ct. at 656. The United States Supreme Court further observed:

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.

Id. at 314, 70 S.Ct. at 657.

In the case of a missing or unknown person, the United States Supreme Court in Mullane allows the "employment of an indirect and even a probably futile means of notification [because it] is all the situation permits and creates no constitutional bar to a decree foreclosing their rights." Id. at 317, 70 S.Ct. at 658.

More recently the United States Supreme Court in Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988), made clear that a reviewing court must "balanc[e] the 'interest of the state' and 'the individual interest sought to be protected by the Fourteenth Amendment' ... The focus is the reasonableness of the balance, and, as Mullane itself made clear, whether a particular method of notice is reasonable depends upon the particular circumstances." Pope, supra at 484, 108 S.Ct. at 1344. The United States Supreme Court concluded, "For creditors who are not 'reasonably ascertainable,' publication notice can suffice." Id. at 490, 108 S.Ct. at 1347. See Davis Oil Co. v. Mills, 873 F.2d 774, 790 (5th Cir.1989) cert. denied, 493 U.S. 937, 110 S.Ct. 331, 107 L.Ed.2d 321 (1989) (holding that requiring "a seizing creditor to wind its way through a potentially complex maze of leases and assignments" was not required "to ensure receipt or notice"); Goldhofer Fahrzeugwerk GmbH & Co. v. U.S., 885 F.2d 858 (Fed.Cir.1989) cert. denied, 495 U.S. 918, 110 S.Ct. 1946, 109 L.Ed.2d 309 (1990) (holding that mail notice of...