Langan v. Altmayer

• Decision Date: 23 November 1988
• Citation: 539 So.2d 173
• Parties: Michael D. LANGAN, et al. v. Jay P. ALTMAYER, et al. 86-1101.
• Court: Alabama Supreme Court

Page 173

539 So.2d 173

Michael D. LANGAN, et al. v. Jay P. ALTMAYER, et al.

86-1101.

Supreme Court of Alabama.

Nov. 23, 1988.

Rehearing Denied Jan. 13, 1989.

G. Wayne Ashbee, Mobile, for appellants.

Michael D. Langan, pro se.

Charles R. Butler, Jr., and David A. Boyett III of Hamilton, Butler, Riddick, Tarlton & Sullivan, Mobile, for appellees.

Don Siegelman, Atty. Gen., and B. Frank Loeb and Ron Bowden, Asst. Attys. Gen., for amicus curiae State Dept. of Revenue.

BEATTY, Justice.

This appeal involves the right of former owners of property, which had been purchased by the State of Alabama at a tax sale for the nonpayment of ad valorem taxes, to redeem from the tax purchaser and his assigns.

The case grows out of a "bulk sale" by the State of the subject parcel and 316 other parcels, all located in Mobile County, pursuant to the "bulk sale" policy, which was adopted by the State Department of Revenue in 1982 to dispose of property held by the State for the nonpayment of taxes.

The central question presented is whether the former owners of the property, who are seeking to exercise their statutory right of redemption, must pay to the tax purchaser at the "bulk sale" a sum equal to "all the taxes due upon such lands, or for which they were sold, and the penalties and all of the taxes that should have been under the law assessed upon the same, if they had been the property of a private citizen of the state." Code of 1975, § 40-10-135.

In order to answer that central question, we must consider another question: Does Code of 1975, § 40-10-135, which allows the purchaser from the State to be "treated as an assignee" of all the taxes due on the property, plus the amount that would have accrued while the State held title, contravene Art. IV, § 100, Constitution of Ala.1901, which generally prohibits the State from granting to a private individual the right to collect a tax?

On April 7, 1980, the Probate Court of Mobile County ordered the sale of the parcel of land involved on this appeal for the payment of taxes, fees, costs, and expenses of the state, county, and city. The land was offered for sale by the tax collector of Mobile County as provided for by law, and, no person having bid a sufficient sum to pay the taxes, fees, costs, and expenses, the land was bought by the State for the sum of the taxes, fees, costs, and expenses.

In 1985, the State conducted a "bulk sale" of 317 parcels, including the subject parcel, in accordance with a policy adopted by the State to conduct county-wide sales of property it held title to for the nonpayment of taxes. In determining the amount of consideration to put into each individual deed, the State simply took the total purchase price of $27,500 and divided it by the total number of parcels, i.e., 317, to arrive at a consideration figure, which was recited in each deed--$86.75. Admittedly, the consideration figure does not represent the sum of the delinquent taxes due or accrued while the State held title, nor does it represent the fair market value of any parcel. On January 3, 1986, the State land commissioner, with the approval of the Governor, executed a deed to Coastal Inter-City Health Services, Inc. ("Coastal"), which granted, bargained, sold, and conveyed all of the State's right and title to the subject parcel. On January 6, 1986, Coastal conveyed by a quit-claim deed all of its right, title, and interest in and to the subject property to Michael D. Langan and Mark A. Haynes, appellants, who subsequently conveyed, by quitclaim deed, a portion of the subject land to M & R Properties, Inc.

On September 3, 1986, plaintiffs, Jay P. Altmayer and 18 other individuals, in their personal or representative capacities as the original owners of the subject property, filed suit in the Mobile Circuit Court to quiet title to the property, and they also sought judicial redemption of the property. On March 30, 1987, the trial court, after having considered the pleadings and evidence presented in connection with a motion for summary judgment, summarized the positions of the parties as follows:

"Plaintiffs contend that they are proceeding under § 40-10-83, Code 1975, and that they are entitled to redemption of the property upon payment to the Defendants of such sums, and the interest thereon, as were paid by Defendants or their predecessors in title for the property and for taxes paid by them subsequent to the purchase. Defendants claim that under § 40-10-135, Code 1975, Plaintiffs must in addition pay to Defendants such sums as would be due to be paid to the Tax Collector during the time the State held title, had taxes been assessed during such time. Neither maintains that the taxes for such period should be paid to the Tax Collector. Under Plaintiffs' theory, Plaintiffs would redeem the property and escape payment of such taxes, absent the ability of the Tax Collector to 'recapture' the taxes. Under defendants theory, such sums would be paid to and retained by Defendants. The Court does not believe that either result is correct."

The trial court then entered the following order:

"Judicial interpretation of § 40-10-83 has extended its operation somewhat beyond what might be concluded from a reading of the section. William R. Justice, in Redemption of Real Property Following Tax Sales in Alabama, 11 Cum.L.Rev. 331 (1980), says that, 'The text of this statute sits, like a tip of an iceberg, atop a body of case law that transforms the section into an additional and distinct right of redemption.' That case law is summarized by Justice as follows:

" 'In summation, the Supreme Court of Alabama has evidenced its inclination to support landowners against tax-sale purchasers by creating a method of judicial redemption while purportedly following the wishes of the legislature. An owner who has failed to redeem within three years of a tax sale may still redeem by bringing suit to quiet title despite the statute's requirement that the suit be against the owners, although the strict procedural requirements of bills to quiet title observed outside the realm of taxation are ignored. This is true whether the tax sale is valid or invalid, and is available without a time limit, provided two requirements are met. First, there must be no suit pending to enforce the purchaser's claim, despite a contrary statutory requirement. Second, though not mentioned in the statute, the purchaser must not have cut off the owner's right by adverse possession.'

"The statute provides that the redemption amount is 'the amount paid by the purchaser at the sale and of the taxes subsequently paid by the purchaser, together with six percent per annum thereon.' However, the construction of § 40-10-83 requires that the redeemer also pay the taxes which would have accrued:

" 'His right to redeem under section 296, Title 51, Code [now § 40-10-83], assumes that the title passed out of complainant by the tax sale, and he is trying to reestablish it, dependent upon his possession, not necessarily peaceable possession. His right is not affected by his failure to pay the taxes while the title was in the State under the tax sale. If he can redeem at all, it is on the condition that such taxes be paid. * * * ' [Emphasis added.] Standard Contractors Supply Co. v. Scotch, 247 Ala. 517, 25 So.2d 257 (1946).

"As interpreted, § 40-10-83 requires as a condition of redemption payment not only to the tax purchaser of the amounts paid by him, but also to the State of the amounts not collected by it. Therefore, in a proceeding under this section the subrogation provisions of § 40-10-135 are not applicable.

"To the extent that § 40-10-135 requires payment of the uncollected taxes to Defendants rather than the State, then such statute, together with § 40-10-134, would appear to run afoul of Art. IV, § 100, Constitution of Ala.1901, which provides that no obligation or liability to the State shall 'be exchanged or transferred except upon payment of its face value.' However, it is not necessary to reach the constitutional question for the reasons stated above.

"In the event that in further proceedings it is held that Plaintiffs are not required to pay the uncollected taxes to the State or to Defendants, the Court notes that Plaintiffs seek equitable relief. The Court alternatively finds as an equitable condition to redemption that Plaintiffs pay to the Tax Collector such taxes and all applicable penalties and interest.

"Summary judgment is granted in favor of Plaintiffs for redemption of the property described in the complaint upon payment to the Tax Collector of all taxes which accrued, or which would have accrued had Plaintiffs retained title, for the tax years 1979 through 1986, together with the interest and penalties thereon, less the amount paid by Defendants' predecessor in title to the State as consideration for the tax deed and any amounts paid by Defendants or their predecessor in title as ad valorem taxes subsequent to the receipt of the tax deed, and further conditioned upon payment to Defendants of all sums paid by Defendants or their predecessor in title to the State as consideration for the tax deed and of all sums paid by Defendants as ad valorem taxes subsequent to receipt of the tax deed, with the interest thereon. Title will be quieted and a final decree entered upon receipt of an affidavit establishing such payments."

Because of the importance of the issues presented, this Court granted oral argument in this case and also allowed the State Department of Revenue to file an amicus brief in the case, in which the Department asserts that, if the order of the trial court is affirmed, "the effect would be to severely curtail or perhaps, even prevent altogether, 'best price' sales of properties held by the state for nonpayment of taxes."

I.

We believe it would be helpful to an understanding of the legal issues presented in this case to examine the history and procedure applicable to "best price" sales conducted...