Fish Market Nominee Corp. v. G.A.A., Inc.

• Decision Date: 01 September 1994
• Docket Number: No. 36,36
• Parties: FISH MARKET NOMINEE CORPORATION v. G.A.A., INC. et al. ,
• Court: Maryland Court of Appeals

Page 1

337 Md. 1

650 A.2d 705

FISH MARKET NOMINEE CORPORATION v. G.A.A., INC. et al.

No. 36, Sept. Term, 1994.

Court of Appeals of Maryland.

Dec. 16, 1994.

Eugene Hettleman, Baltimore, for petitioner.

Arnold M. Weiner (Allan P. Hillman, Weiner, Astrachan, Gunst Hillman & Allen, P.C., Henry R. Abrams, Weinberg and Green, Otho M. Thompson, Carolyn A. Espy, Michael G. Raimondi, all on brief), Baltimore, for respondent.

Andrew H. Baida, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief), Baltimore, for amicus curiae.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, BELL and RAKER, JJ.

MURPHY, Chief Judge.

This case concerns whether Maryland's General Assembly may properly authorize Baltimore City to set the redemption interest rate on a tax sale of real estate at a rate greater than the 6% rate provided in Article III, § 57 of the Maryland Constitution. ¹ We must also determine whether a circuit court, in a proceeding to foreclose the rights of redemption in two properties, can substitute the assignee of only one of the two tax sale certificates so that two plaintiffs, rather than one, are parties in the case.

I

Sections 14-808 through 14-854 of the Tax-Property Article of the Maryland Code (1985, 1994 Repl.Vol.) outline the procedure for tax sales of real estate. When taxes are in arrears on a property, the tax collector, after complying with various notice provisions, sells the property at public auction to satisfy the taxes. §§ 14-808, 14-817. The purchaser, no later than the day after the sale, must pay all taxes due on the property, plus any interest, penalties, and sale expenses. § 14-818. The remainder of the purchase price "remains on credit." Id. The purchaser then receives a certificate of sale, which is freely assignable. §§ 14-820, 14-821. If the purchaser assigns the certificate, the assignee has "all the right, title, and interest of the original purchaser." § 14-821. ²

After the tax sale, the property owner has a right of redemption, which lasts until it is foreclosed in a court proceeding. § 14-827. In order to redeem the property, the owner must pay the collector, among other things, the amount already paid by the purchaser at the tax sale, plus interest at the applicable rate provided in § 14-820(b) from the date of the tax sale to the date of redemption. § 14-828. ³ If the property is redeemed, the holder, upon surrendering the certificate, receives the redemption amount paid to the collector, excluding taxes. Id.

Section 14-820(b) provides that the redemption interest rate is the rate set by the local subdivision or, if none is set by the subdivision, the rate specified in § 14-820(b) for each subdivision. Local subdivisions often set the rate higher than rates given on ordinary investments. For example, Baltimore City has set the redemption interest rate at 24% per year. Baltimore City Code (1977, 1983 Repl.Vol, 1993 Supp.) Art. 28, § 16. ⁴ This high rate of return encourages potential tax sale purchasers to invest in the property despite the fact that the property is subject to a right of redemption. ⁵

After waiting six months from the date of the tax sale, the holder can file a complaint to foreclose the owner's right of redemption. § 14-833. If the certificate holder does not file such a complaint within two years of the tax sale, the certificate becomes void, effectively placing a statute of limitations on actions to foreclose the right of redemption.

A special joinder provision for these actions states:

"Any single holder of certificates of sale relating to several properties in the same county may include and join in 1 proceeding any number of the certificates. However, if more than 1 property owner is involved, a maximum of 10 certificates may be joined in 1 proceeding. The complaint filed in any proceeding is not subject to objection on the ground of multifariousness."

§ 14-841.

After the holder files a complaint, the court issues summonses to all defendants and an order to publicize the foreclosure proceeding. §§ 14-839, 14-840. Both the summonses and the publication state a date, no sooner than 60 days from the date of the publication order, by which anyone having an interest in the property must redeem it. § 14-840. The right of redemption continues throughout the proceeding until the court issues a final decree foreclosing the right of redemption. § 14-827. While the complaint alleges an amount necessary for redemption, the court fixes the amount if it is disputed. §§ 14-829, 14-835(a)(7).

Generally, if the owner does not redeem the property by the dates stated in the summons and the publication, the court issues a final decree foreclosing the right of redemption. § 14-844(a). Thereafter, if the holder pays the balance of the purchase price and any other amounts due, the tax collector executes and delivers a deed to the holder. § 14-818.

II

Petitioner Fish Market Nominee Corporation (Fish Market) owned two properties, 35 Market Place and 43 Market Place, located in Baltimore City, Maryland. Together, the properties are commonly known as the Fish Market. The building structure is designated 35 Market Place, while the air rights to the enclosed atrium above the structure are designated 43 Market Place.

Fish Market did not pay real estate taxes owed to the City of Baltimore on the two properties, resulting in tax arrearages of more than $640,000. On May 13, 1991, both properties were sold at tax sales to Hamilton II, a general partnership--35 Market Place for $700,000 and 43 Market Place for $70,000. Hamilton II paid the taxes and municipal liens due on the property--approximately $633,000 for 35 Market Place and approximately $8,000 for 43 Market Place. On May 14, 1991, the City issued tax sale certificates to Hamilton II. On December 18, 1992, Hamilton II assigned both tax sale certificates to G.A.A., Inc. (GAA).

On January 13, 1993, more than six months after the tax sale, GAA filed a complaint in the Circuit Court for Baltimore City to foreclose the rights of redemption in both properties. On July 23, 1993, with the foreclosure proceedings pending, GAA assigned its interest in the certificate covering 43 Market Place to H.N.R.G., Inc. (HNRG). On August 10, 1993, GAA moved to substitute HNRG for itself as to the tax sale certificate covering 43 Market Place. The court granted the substitution. Fish Market, on August 19, 1993, filed a motion for reconsideration and for an order striking the substitution.

On December 6, 1993, the court held a hearing to determine the amount required for redemption, at which it also heard arguments on the substitution issue. Fish Market argued that the substitution of HNRG was improper because it resulted in a single proceeding with two plaintiffs, which is not permitted under § 14-841 of the Tax-Property Article, authorizing proceedings involving multiple properties. It also challenged the 24% interest rate, arguing that the General Assembly could not delegate to Baltimore City the power to fix the rate.

The court rejected both the substitution argument and the interest rate challenge. On December 7, 1993, the court issued an order setting the redemption prices for both properties, including interest at 24%. On March 31, 1994, the court entered final decrees that foreclosed the right of redemption in both properties and directed the collector to execute deeds to GAA and HNRG upon their payment of the remaining sums due on the properties. Fish Market appealed to the Court of Special Appeals, but, before that court heard the case, we granted certiorari to consider the important issues there raised. 335 Md. 225, 642 A.2d 1357.

III

Fish Market argues that the General Assembly cannot delegate to Baltimore City the authority to set the redemption interest rate. It asserts that the redemption interest rate should be 6%, pursuant to Article III, § 57 of the Maryland Constitution, which fixes the legal rate of interest at 6% "unless otherwise provided by the General Assembly." Fish Market argues that the General Assembly cannot "otherwise provide" unless the members "themselves stand up and make that change." In other words, Fish Market asserts that the General Assembly must specifically designate the percentage. Accordingly, it contends that the General Assembly cannot validly provide that the redemption interest rate in Baltimore City is the rate "fixed by a law of the City Council." See § 14-820 of the Tax-Property Article.

We must first determine the meaning of the words "unless otherwise provided by the General Assembly." Generally, we apply the same principles in construing constitutional provisions as we apply in construing statutory language. Brown v. Brown, 287 Md. 273, 277, 412 A.2d 396 (1980). We have stated that "the cardinal rule of statutory interpretation is to ascertain and effectuate legislative intent." Parrison v. State, 335 Md. 554, 559, 644 A.2d 537 (1994). In applying this rule to constitutional provisions, we seek "the construction that effectuates the intent of its framers." Brown, supra, 287 Md. at 277, 412 A.2d 396. To determine intent, we first examine the language of the provision, "with each word being given its ordinary and popularly understood meaning." Id. at 278, 412 A.2d 396. If the words are not ambiguous, we generally construe the provision to effectuate the clear meaning expressed by its words. If the words are ambiguous, however, we look to other sources to determine the purpose for which the framers included the provision. In this regard, we have stated:

" '[I]t is permissible to inquire into the prior state of the law, the previous and contemporary history of the people, the circumstances attending the adoption of the organic law, as well as broad considerations of expediency. The object is to ascertain the reason which induced the framers to enact the provision in dispute and the purpose sought to be accomplished thereby, in order to construe the...