Knosp v. Shafer Props., LLC

• Decision Date: 01 May 2012
• Docket Number: No. A–11–519.,A–11–519.
• Parties: Daniel R. KNOSP, appellee, v. SHAFER PROPERTIES, LLC, appellee, Archer Cooperative Credit Union, appellant, and John Doe et al., appellees.
• Court: Nebraska Court of Appeals

19 Neb.App. 809

820 N.W.2d 68

Daniel R. KNOSP, appellee,

v.SHAFER PROPERTIES, LLC, appellee, Archer Cooperative Credit Union, appellant, and John Doe et al., appellees.

No. A–11–519.

Court of Appeals of Nebraska.

May 1, 2012.

Syllabus by the Court

[19 Neb.App. 809]1. Equity: Quiet Title. A quiet title action sounds in equity.

2. Equity: Appeal and Error. On appeal from an equity action, an appellate court decides factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the trial court's determination.

3. Summary Judgment: Appeal and Error. An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law.

4. Taxation: Real Estate: Liens. Taxes on real property shall be a first lien on the property taxed until paid or extinguished as provided by law.

5. Statutes. Construction of a statute will not be adopted which has the effect of nullifying or repealing another statute.

6. Statutes. Statutes relating to the same subject matter will be construed so as to maintain a sensible and consistent scheme and so that effect is given to every provision.

7. Statutes: Intent. It is a recognized rule of construction that statutes which effect a change in the common law or take away a common-law right should be strictly construed, and a construction which restricts or removes a common-law right should not be adopted unless the plain words of the act compel it.

8. Taxation: Real Estate: Deeds: Title: Liens. A treasurer's tax deed, issued pursuant to Neb.Rev.Stat. § 77–1837 (Reissue 2009) and in compliance with Neb.Rev.Stat. §§ 77–1801 to 77–1863 (Reissue 2009), passes title free and clear of all previous liens and encumbrances.

Patrick M. Heng and Nicholas J. Welding, of Waite, McWha & Heng, for appellant.

Martin P. Pelster and Claire M. Osborne, of Croker, Huck, Kasher, DeWitt, Anderson & Gonderinger, L.L.C., for appellee Daniel R. Knosp.

IRWIN and CASSEL, Judges.

CASSEL, Judge.

INTRODUCTION

Archer Cooperative Credit Union (Archer) appeals from the decision of the district court holding that its liens on a piece of real property were foreclosed by the issuance of a treasurer's tax deed under Neb.Rev.Stat. § 77–1837 (Reissue 2009). Archer asks us to interpret the statutes allowing for tax sales in a manner that would make Neb.Rev.Stat. § 77–1902 (Reissue 2009) the only avenue by which title to property sold at a tax sale could be obtained free and clear of previous liens. Because this interpretation would nullify other statutes that place tax liens in first priority, fails to promote a consistent statutory scheme, and conflicts with previous case law and common law, we hold that a treasurer's tax deed, issued pursuant to § 77–1837 and in compliance with Neb.Rev.Stat. §§ 77–1801 to 77–1863 (Reissue 2009), passes title free and clear of all previous liens and encumbrances. Accordingly, we affirm the decision of the district court quieting title to the relevant property free and clear of all liens held by Archer.

BACKGROUND

The property at dispute in this appeal is legally described as “Lot One (1) in Dowd Subdivision to the City of Grand Island, Hall County, Nebraska” (the property). Although Daniel R. Knosp is the current record owner of the property and is the original plaintiff in this action, the majority of the facts relevant to our analysis occurred prior to his acquisition of the property in 2010.

In July 2005, Shafer Properties, LLC, acquired the property by warranty deed. In the years following, it used the property to secure several loans from Archer. Separate deeds of trust were recorded with the Hall County register of deeds on July 22, 2005; July 17, 2007; and April 1, 2008.

In March 2007, the property was sold at a public tax sale to Helen Knosp for delinquent taxes. At that time, Helen received a certificate of tax sale which stated that “unless redemption is made of said real estate in the manner provided by law, [Helen] will be entitled to a deed therefor on and after the 8th day of March, 2010.” Accordingly, on March 19, 2010, Helen filed an application for tax deed after providing notice to Shafer Properties—record owner at the time of the tax sale—and Archer—the sole lienholder on the property. Neither Shafer Properties nor Archer redeemed the property as allowed by law, and on April 2, the Hall County treasurer issued a tax deed to Helen.

Later in April 2010, Archer notified Shafer Properties that Shafer Properties was in breach of its obligations under all three deeds of trust. In three separate notices of default, each dated April 29, 2010, Archer advised Shafer Properties that “because of such default [Archer] has elected to sell or cause to be sold the trust property to satisfy the obligations under said [d]eed of [t]rust.”

In May 2010, Daniel acquired the property from Helen by quitclaim deed. Because the register of deeds showed Shafer Properties and Archer as having interests in the property, Daniel subsequently filed a quiet title action with the district court for Hall County, Nebraska, to remove any cloud upon his title. Shafer Properties and Archer were named as defendants, along with “JOHN DOE and MARY DOE, real names unknown; and all persons having or claiming any interest in and to [the property].” Only Shafer Properties and Archer filed answers to the complaint.

In March 2011, Daniel filed a motion for summary judgment, alleging that there was no genuine issue of material fact and that he was entitled to summary judgment as a matter of law. A few weeks later, Archer also filed a motion for summary judgment, claiming it was entitled to summary judgment as a matter of law.

Both Daniel and Archer entered affidavits in support of their motions at a hearing held on March 30, 2011. Daniel offered the affidavit of Helen, in which she attested to purchasing the property at the tax sale, receiving a tax sale certificate, and obtaining the tax deed. She also testified that she sent notice of her application for tax deed to both Shafer Properties and Archer by certified mail and that she receivedsigned return receipts confirming delivery. Daniel also offered the affidavit of the attorney who had prepared the interrogatories and requests for admissions that were served on Shafer Properties and Archer. In response to the requests for admissions, both Shafer Properties and Archer admitted that they neither paid the back taxes on the property nor took any other action to redeem the property prior to issuance of the tax deed. Specifically, Archer “admit[ted] that it did not redeem the [p]roperty prior to delivery of the [t]reasurer[']s [t]ax [d]eed by the Hall County [t]reasurer, but denie[d] that it had any obligation to redeem the [p]roperty in order to protect its liens against the [p]roperty.” In support of its own motion for summary judgment, Archer offered the affidavit of its vice president of lending, who testified that Archer had three liens on the property secured by deeds of trust properly recorded with the Hall County register of deeds.

On May 19, 2011, the district court denied Archer's motion for summary judgment and sustained Daniel's motion for summary judgment, “quieting title to the property ... free and clear of the encumbrances and liens of [Shafer Properties and Archer] previously on file.” In so holding, the court noted:

[Shafer Properties and Archer] and their claim of an interest in the property were given statutory notice of the tax lien for delinquent real estate taxes on the property. [Shafer Properties and Archer] were put on notice that the purchaser of the [t]ax [s]ales [c]ertificate was going to apply for title to the real estate unless those claiming an interest in the real estate came forward and paid the delinquent real estate taxes. [Shafer Properties and Archer] chose not to do so and the [t]ax [d]eed issued thereafter was valid and foreclosed [Shafer Properties' and Archer's] interest in the real estate.

(Emphasis in original.)

Archer timely appeals.

ASSIGNMENTS OF ERROR

Archer alleges, restated, that the district court erred (1) in finding that Archer's deeds of trust were not first, paramount, and superior to the tax deed; (2) in finding that the tax deed did convey title free and clear of Archer's liens; and (3) in granting Daniel's motion for summary judgment and denying Archer's motion for summary judgment.

STANDARD OF REVIEW

A quiet title action sounds in equity. Newman v. Liebig, 282 Neb. 609, 810 N.W.2d 408 (2011). On appeal from an equity action, an appellate court decides factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the trial court's determination. Id.

An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law. Heritage Bank v. Bruha, 283 Neb. 263, 812 N.W.2d 260 (2012).

ANALYSIS

Effect of Tax Deed.

Archer's first two assignments of error effectively present the same question: whether a county treasurer's tax deed transfers property free and clear of all previously recorded liens and encumbrances.As such, we address these assignments of error together.

We begin by reviewing the statutory scheme that provides for property to be sold at a tax sale and for the resulting property rights to be enforced.

Under § 77–1801, a county treasurer can sell any real estate on which taxes have not been paid in full by the first Monday of March. Any person who offers to pay the amount of taxes due can purchase the property...