Hawkins v. Bruno Yacht Sales, Inc., 25592.

• Decision Date: 03 February 2003
• Docket Number: No. 25592.,25592.
• Citation: 577 S.E.2d 202,353 S.C. 31
• Parties: Allen Lee HAWKINS and Gryphon Inc., Respondents, v. BRUNO YACHT SALES, INC., Beaufort County, a Political Subdivision of the State of South Carolina, and Joy Logan in the capacity of Treasurer for Beaufort County, South Carolina, Petitioners.
• Court: South Carolina Supreme Court

353 S.C. 31

577 S.E.2d 202

Allen Lee HAWKINS and Gryphon Inc., Respondents, v. BRUNO YACHT SALES, INC., Beaufort County, a Political Subdivision of the State of South Carolina, and Joy Logan in the capacity of Treasurer for Beaufort County, South Carolina, Petitioners.

No. 25592.

Supreme Court of South Carolina.

Heard November 20, 2002.

Decided February 3, 2003.

John Hughes Cooper, of John Hughes Cooper, P.C., of Sullivan's Island; Stephen P. Groves, Sr. and Stephen L. Brown, of Young, Clement, Rivers & Tisdale, L.L.P., of Charleston; Stephen P. Hughes and Mary B. Lohr, of Howell, Gibson & Hughes, P.A., of Beaufort; all for Petitioners.

Julius H. Hines, of Buist, Moore, Smythe & McGee, P.A., of Charleston, for Respondents.

Chief Justice TOAL:

This is an action by Respondents, Allen Lee Hawkins ("Hawkins") and Gryphon, Inc. ("Gryphon"), to set aside the delinquent tax sale of Hawkins's sailboat, the "LadyHawk", to Petitioner, Bruno Yacht Sales ("BYS").

FACTUAL/PROCEDURAL BACKGROUND

In December 1986, Hawkins purchased a 52-foot sailboat made by Tayana, a Tawainese company. Hawkins named the boat the LadyHawk, and registered it as a United States vessel with the Coast Guard. In total, Hawkins spent just over $300,000 to purchase the hull and to have the boat fully outfitted.

In December 1989, Hawkins sold the LadyHawk to Gryphon, a close corporation of which Hawkins was the sole shareholder, for ten dollars. In 1992, Gryphon transferred the LadyHawk back to Hawkins.¹ At the time of this sale, the address of both Hawkins and Gryphon was listed as "50 Palmetto Bay Road, Box 200, Hilton Head, South Carolina, 29928."

In 1994, Beaufort County assessed personal property taxes of $2,417.10 on the LadyHawk, and sent a tax bill to Hawkins for that amount at the Palmetto Bay address. Hawkins failed to pay the taxes and was assessed a penalty of $397.57 in addition to the taxes. Hawkins failed to pay either the taxes or the penalty by March 1995. As a result, the Beaufort County Treasurer issued a tax execution on March 17, 1995.

The Deputy Treasurer for Beaufort County ("County"), Herschel Evans ("Evans"), testified that, according to the County's normal procedure, the first notice of delinquent taxes would have been mailed on April 1, 1995, and that the second delinquent notice, a levy by distress, would have been mailed on May 1, 1995, by certified mail. Hawkins testified that he did not receive either of these notices, and there was no documentation to confirm these notices were actually mailed.²

In August 1995, the County Treasurer sent Hawkins two notices of delinquent taxes by certified mail, postmarked August 16, 1995, and August 24, 1995, respectively. The Treasurer's file does contain sender's receipts and signed receipt cards for these mailings. Delivery was not restricted to Hawkins, and he did not sign for them, but he did receive them in Florida by forwarded mail at the end of August.³ Upon receipt of these notices in August, Hawkins retained a Beaufort attorney to contest his liability for the taxes. To that end, his attorney sent a letter to the County Treasurer stating that the LadyHawk had not ever been in South Carolina for more than six months, and that Hawkins was not a South Carolina resident. Hawkins did not receive a response to the letter, and did not make any effort to pay the delinquent taxes.

On September 22, 1995, the Treasurer advertised Hawkins's boat for sale in the Beaufort Gazette. The advertisement listed Hawkins's name and his tax account number, PP550HAWALL, and the sum of taxes due, $2,814.67. A heading at the top of the advertisement indicated that account numbers beginning in "PP" related to boats.

Bruno Yacht Sales ("BYS") was the sole bidder at the October 2, 1995, tax sale. It purchased the LadyHawk for $2,814.67. In December 1995, several deputies forced Hawkins off his boat in Florida and turned possession over to BYS.

On December 19, 1995, Hawkins brought a "petitory" admiralty claim in the United States District Court for the Southern District of Florida, to arrest the LadyHawk and clear its title. Hawkins's counsel argued among other things that the tax sale should have proceeded against Gryphon as the true owner of the LadyHawk, based on the fact that the 1992 bill of sale from Gryphon to Hawkins was invalid, as the seller (Gryphon—owned solely by Hawkins) had not signed it. The District Court found it lacked jurisdiction because Hawkins was neither the current owner nor the real party in interest, and found further that it was not the proper forum to determine the validity of South Carolina taxation decisions. The District Court dismissed the action without prejudice, and noted that its dismissal was not an adjudication of title.

Hawkins brought the instant action in August 1996 to set aside the sale of the LadyHawk and to restrain BYS from selling the LadyHawk. The Master upheld the tax sale of the LadyHawk.⁴ The Court of Appeals reversed and remanded, finding the tax sale of the LadyHawk void. Hawkins v. Bruno Yacht Sales, Inc., 342 S.C. 352, 536 S.E.2d 698 (Ct.App. 2000). Petitioners raise the following issues on appeal:

I. Did the Court of Appeals err in finding the tax sale of the LadyHawk void pursuant to S.C.Code Ann. § 12-51-40 (Supp.1994) because of defects in the levy notice, in the mailing of the notice, or in the description of the LadyHawk in the advertisement?

II. Did the Court of Appeals err in failing to hold that Hawkins was judicially estopped from asserting ownership of the LadyHawk based on his argument to the contrary before the Florida District Court?

LAW/ANALYSIS

I. Tax Sale

Petitioners argue that the Court of Appeals erred in finding the tax sale of the LadyHawk void under S.C.Code Ann. § 12-51-40 (Supp.1994). The Court of Appeals found the following three errors in the tax sale: (1) the levy notice included an artificial deadline for payment; (2) the notices should have been mailed restricted delivery; and (3) the LadyHawk was not described sufficiently in the published tax sale advertisement.

A. Artificial Deadline

South Carolina Code Ann. § 12-51-40 controls the procedure for notifying delinquent taxpayers that property will be sold in order to collect delinquent taxes. This Court has held that "[t]ax sales must be conducted in strict compliance with statutory requirements." Ryan Inv. Co. v. Richland County, 335 S.C. 392, 394, 517 S.E.2d 692, 693 (1999) (citing Dibble v. Bryant, 274 S.C. 481, 265 S.E.2d 673 (1980)). Further, the fact that the defaulting taxpayer has actual notice of the impending tax sale "is insufficient to uphold a tax sale absent strict compliance with statutory requirements." Ryan, 335 S.C. at 394, 517 S.E.2d at 693 (emphasis added).⁵ Finally, failure to give the required notice of a tax sale is a fundamental defect in the tax sale proceedings that renders the proceedings absolutely void. Rives v. Bulsa, 325 S.C. 287, 478 S.E.2d 878 (Ct.App.1996). South Carolina Code Ann. § 12-51-40(a) requires the county treasurer to mail a notice as close to April 1st as possible, specifying that "if the taxes, penalties, assessments, and costs are not paid, the property must be advertised and sold to satisfy the delinquency." If the taxes remain unpaid thirty days after the mailing of the April 1 notice, the treasurer is entitled to "take exclusive possession of as much of the defaulting taxpayer's property as is necessary to satisfy the payment of taxes, assessments, penalties, and costs." S.C.Code Ann. § 12-51-40(b). For personal property, this section provides that exclusive possession is taken by mailing the notice of delinquent taxes to the address shown on the tax receipt. The statute mandates that

all delinquent notices shall specify that if the taxes, assessments, penalties, and costs are not paid on or before a subsequent sales date, the property must be duly advertised and sold for delinquent property taxes, assessments, penalties, and costs.

S.C.Code Ann. § 12-51-40(b) (emphasis added).

The first notice received by Hawkins in August showed the amount due and was stamped with the following statement:

IF NOT PAID ON OR BEFORE 31 AUGUST THIS PROPERTY WILL BE DULY ADVERTISED AND SOLD FOR DELINQUENT TAXES AS DESCRIBED ABOVE ON THE FIRST MONDAY IN OCTOBER THIS YEAR. RETURN OF THIS "CERTIFIED RECEIPT" SHALL BE DEEMED EQUIVALENT TO "LEVYING BY DISTRESS."

The second notice, dated August 24, was accompanied by a letter from the County Treasurer, Joy Logan. The letter reiterated that the taxes were delinquent, and that the property was subject to sale at the October 2, 1995, tax sale, but stated "[a]ll tax payments must be received by September 15, 1995 to avoid your name and property being advertised in The Beaufort Gazette and The Island Packet."

The Court of Appeals held that these two notices created artificial deadlines for payment before the sales date, and thereby contradicted the statutory language requiring that the notice inform the delinquent taxpayer that the taxes must be paid "before a subsequent sales date." Because the sales date in this instance was October 2, the Court of Appeals found that the August 31 and September 15 deadlines were artificial, and gave the impression that Hawkins had to pay the taxes weeks before the date of sale. We agree with the Court of Appeals' holding on this issue.

The County argues that this reading of section 12-51-40(b) conflicts with the advertising requirements of section 12-51-40(d). We disagree. Section 12-51-40(d) explains how the property must be advertised before auction, and requires that the advertising be published once a week for two consecutive weeks prior to the sale. The County's argument depends on their interpretation of section b that a specified date must pass without payment before the County's authority to advertise is triggered. At trial, however, the Deputy Treasurer, Evans, testified that Hawkins could have paid the delinquent taxes up...