Collector Revenue v. Parcels of Land Encumbered With Delinquent Land Tax Liens

• Decision Date: 13 January 2015
• Docket Number: No. SC 93982,SC 93982
• Citation: 453 S.W.3d 746
• Parties: In the Matter of Foreclosure Liens for Delinquent Taxes by Action in Rem: Collector of Revenue, by and through the Director of Collections for Jackson County, Missouri, Respondents, v. Parcels of Land Encumbered with Delinquent Land Tax Liens; Realty Acquisition, LLC, Appellant.
• Court: Missouri Supreme Court

453 S.W.3d 746

In the Matter of Foreclosure Liens for Delinquent Taxes by Action in Rem: Collector of Revenue, by and through the Director of Collections for Jackson County, Missouri, Respondents

v.Parcels of Land Encumbered with Delinquent Land Tax Liens; Realty Acquisition, LLC, Appellant.

No. SC 93982

Supreme Court of Missouri, en banc .

Opinion issued January 13, 2015

Michael J. Gallagher, Gallagher & Kaiser LLP, Kansas City, for Realty Acquisition.

Robert M. Pitkin, Horn Aylward & Bandy LLC, Kansas City, for Seal–O–Matic Paving Company.

Ryan T. Fry, Oswald Roam Rew & Fry LLC, Blue Springs, for Beemer Construction Company.

Opinion

Laura Denvir Stith, Judge

Realty Acquisition, LLC, appeals the circuit court's judgment sustaining motions by Beemer Construction Company and Seal–O–Matic Paving Company to set aside a tax sale of certain real property to Realty. Realty argues that the trial court erred in holding that, because Beemer and Seal–O–Matic had mechanic's liens on the property, they were entitled to personal notice by mail of the tax sale. In support, Realty notes that section 141.540, RSMo Supp. 2013, the statute governing notice of tax sales, requires only notice by publication to persons other than owners. This Court affirms.

A mechanic's lien properly filed with the clerk of the court constitutes a substantial property interest that is entitled to due process protection, including the giving of personal notice by mail of a tax sale to those mechanic's lienholders whose names and addresses are reasonably ascertainable from public records. The clerk of each circuit court maintains a book of abstracts of mechanic's lien filings that includes the name and address of each person with a mechanic's lien claim on particular property. § 429.090, RSMo 2000. This Court recognized in State ex rel. Erbs et al. v. Oliver, 361 Mo. 836, 237 S.W.2d 128, 130 (Mo. banc 1951), that the abstract is “a proper public record.” No reason is given as to why holders of properly filed mechanic's liens are not entitled to due process protection of their property interests, including personal notice by mail, other than that it would require the county collector of revenue to look in two locations rather than in a single location to determine who is entitled to personal notice. This minimal additional burden is not sufficient to outweigh the due process rights of those possessing mechanic's liens on a property whose names and addresses are reasonably ascertainable from the public records maintained by the county in its circuit clerk's office, as required by statute.

Because it is uncontested that, as required under the pertinent provisions of section 429.080,¹ Beemer and Seal–O–Matic had filed their respective mechanic's liens with the clerk of the Jackson County circuit court, the trial court did not err in setting aside the tax sale due to inadequate notice. Affirmed.

I. STATEMENT OF FACTS

Sunnypointe, LLC, an administratively dissolved Missouri limited liability company, owned a parcel of real property, commonly known as Sunny Pointe 2nd Plat, located at the southeast intersection of R.D. Mize Road and N.E. Chapman Drive in Blue Springs (the “property”). In August 2006, Beemer installed sanitary sewers, storm sewers, and water mains on the property. In January 2007, Seal–O–Matic installed curbs and asphalt for streets on the property. Sunnypointe did not pay Beemer or Seal–O–Matic for their services. Beemer, in April 2007, and Seal–O–Matic, in December 2007, filed mechanic's liens against the property with the clerk of the Jackson County circuit court. Beemer's mechanic's lien was for $164,879.76, and Seal–O–Matic's mechanic's lien was for $187,494.80. It is undisputed that both parties complied with section 429.080, which requires, in pertinent part, that a party filing a mechanic's lien:

[F]ile with the clerk of the circuit court of the proper county a just and true account of the demand due him or them after all just credits have been given, which is to be a lien upon such building or other improvements, and a true description of the property, or so near as to identify the same, upon which the lien is intended to apply, with the name of the owner or contractor, or both, if known to the person filing the lien, which shall, in all cases, be verified by the oath of himself or some credible person for him.

Sunnypointe did not pay the 2007 taxes on the property before they became delinquent, so on May 24, 2010, the Director of Collections for Jackson County (the “collector”) filed a petition² requesting: (1) foreclosure on the property under the land tax collection law for unpaid real estate taxes and (2) a court order for a public sale of the property for payment of all delinquent tax bills. On or about June 4, 2010, notice by certified mail of the foreclosure action was sent to Sunnypointe, the registered owner.³ On November 12, 2010, the trial court entered final judgment in the foreclosure action allowing the collector to sell the property at a tax sale.

The collector scheduled the tax sale for August 22, 2011. He provided publication notice of the sale as well as notice by certified mail to Sunnypointe on or about June 28, 2011. But, although Beemer and Seal–O–Matic had filed their mechanic's liens with the clerk of the circuit court and the clerk's abstract book showed these liens and the lienholders' names and addresses, no attempt was made to examine the clerk's records or otherwise identify or personally notify these mechanic's lien claimants. Therefore, neither Beemer nor Seal–O–Matic received personal notice of the tax sale, and neither was aware of the publication notice prior to the occurrence of the tax sale.

Realty purchased the property at the tax sale for $51,000. The notice of sale to Realty states that this included $341.47 in taxes, interest, penalties, attorney fees, and costs that were owed on the property at the time of the sale.

On November 9, 2011, after learning about the sale, Beemer and Seal–O–Matic entered appearances in the tax foreclosure action to oppose confirmation of the tax sale, arguing that the failure to give them prior personal notice of the tax sale violated their due process rights because of their interest in the property represented by their respective mechanic's liens. On June 4, 2012, the trial court set aside the tax sale as null and void. Realty appealed. Following an opinion by the court of appeals, this Court granted transfer. Mo. Const. art. V, § 10.⁴

II. STANDARD OF REVIEW

The trial court's judgment will be sustained unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). “If the issue to be decided is one of fact, this Court determines whether the judgment is supported by substantial evidence and whether the judgment is against the weight of the evidence.” JAS Apartments, Inc. v. Naji, 354 S.W.3d 175, 182 (Mo. banc 2011). Questions of law are subject to this Court's de novo review. Id. This appeal presents only questions of law.

III. DISCUSSION

Realty argues that the trial court erred in setting aside the tax sale simply because the collector did not give personal notice to the holders of mechanic's liens. It argues that notice had to be given only as set out in section 141.540 and that section requires only publication notice, not personal notice, to persons other than the property owner. Beemer and Seal–O–Matic agree that section 141.540 requires only publication notice to persons other than the property owner, but argue that their filing of their mechanic's liens gives them a substantial property interest entitling them to due process protection and that, under the governing law as explained by this Court and by the United States Supreme Court, this requires notice by mail or other means reasonably likely to apprise them of the tax sale.⁵

Section 141.540 sets out the statutory requirements for notice of tax sales. Section 141.540.5 states that the county collector must provide notice by certified, registered, or restricted mail of the tax sale to:

[T]he persons named in the petition as being the last known persons in whose names tax bills affecting the respective parcels of real estate described in said petition were last billed or charged on the books of the collector, or the last known owner of record, if different, and to the addresses of said persons upon said records of the collector.

Section 141.540.6 states that the county collector “may, at his or her option” provide certified, registered, or restricted mail notice to a mortgagee or security holder.⁶

Missouri statutes do not require notice by mail to any other persons, instead requiring only generalized publication notice by posting the tax sale notice in the county courthouse and on the property, and by publishing notice in certain newspapers.⁷

The fact that Missouri statutes do not specifically require mail notice of a tax sale to holders of mechanic's liens is not dispositive of whether the publication notice given here was adequate. To the contrary, it is well-established “that notice provisions prescribed in state statutes may not be constitutionally sufficient” for due process purposes. Schlereth v. Hardy, 280 S.W.3d 47, 52 (Mo. banc 2009). Indeed, as discussed in detail below, this Court has specifically held that similar statutory notice provisions requiring only publication notice to the holder of a deed of trust or mortgage are not adequate to meet due process requirements. See Anheuser–Busch Employees' Credit Union v. Davis, 899 S.W.2d 868 (Mo. banc 1995); Lohr v. Cobur Corp., 654 S.W.2d 883 (Mo. banc 1983). This Court has also recognized that certified mail may not always be adequate when the one giving notice is aware that it has not reached the addressee, even though that is all that the statute requires. See Schlereth, 280 S.W.3d at 50–53.

The question...