M & M Inv. Grp., LLC v. Ahlemeyer Farms, Inc., 03A04–1112–CC–639.

• Citation: 972 N.E.2d 889
• Case Date: July 16, 2012
• Court: Court of Appeals of Indiana

972 N.E.2d 889

M & M INVESTMENT GROUP, LLC, Appellant–Petitioner,

v.AHLEMEYER FARMS, INC. and ¹ Monroe Bank, Appellee–Respondent.

No. 03A04–1112–CC–639.

Court of Appeals of Indiana.

July 16, 2012.

Held Unconstitutional

West's A.I.C. 6–1.1–24–3

Jon Orlosky, Muncie, IN, Attorney for Appellant.

Gregory F. Zoeller, Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Tamara L. Weaver, Deputy Attorney General, Indianapolis, IN, Attorneys for Amicus Curiae State of Indiana.

Robert Delano Jones, E. Paige Freitag, Jones, McGlasson & Benckart, Bloomington, IN, Attorneys for Appellee.

OPINION

KIRSCH, Judge.

M & M Investments, LLC (“M & M”) appeals the trial court's order denying its petition for a tax deed as to property of which Monroe Bank was the mortgagee. M & M raises two issues, which we restate as:

I. Whether the trial court erred when it failed to certify Monroe Bank's challenge to the constitutionality of Indiana Code section 6–1.1–24–3(b) to the Attorney General of Indiana (“Attorney General”), which would have allowed the Attorney General to intervene in the action; and

II. Whether Indiana Code section 6–1.1–24–3(b), which governs the notice to be given a mortgagee when real property had been scheduled to be sold at tax sale, violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution when a mortgagee has a publicly recorded mortgage.

We affirm.

FACTS AND PROCEDURAL HISTORY

On September 22, 2010, M & M purchased at tax sale real property, which at the time was owned by Ahlemeyer Farms, Inc. (“Ahlemeyer Farms”) and located at 2737 Central Avenue, Columbus, Indiana. The tax sale purchase price was $95,000. Monroe Bank is the mortgagee of the property under two separate mortgages with Ahlemeyer Farms, one in the principal amount of $700,000 executed on March 30, 2006, and a second mortgage in the principal amount of $50,000 executed on November 9, 2007. Those mortgages were in full force and effect on September 22, 2010 and secured by separate promissory notes. Both mortgages, along with any modifications thereto, were recorded in the Office of the Recorder of Bartholomew County.

The Auditor of Bartholomew County gave notice of the tax sale to Ahlemeyer Farms, as record owner of the real property, and published a list of the tax sale properties. No notice of the tax sale was given to Monroe Bank prior to the actual tax sale. Monroe Bank did not request a copy of the notice of tax sale pursuant to Indiana Code section 6–1.1–24–3(b). Monroe Bank did receive the notices required by statute after M & M purchased the property at tax sale.

On September 27, 2011, M & M filed its “Petition to Direct the Auditor of Bartholomew County to Issue Tax Deed.” Appellant's App. at 8–10. On October 21, 2011, Monroe Bank filed its response to the petition, contending that Indiana Code section 6–1.1–24–3(b) violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution. On November 17, 2011, the trial court entered its order denying M & M's petition for a tax deed, finding that the “Indiana Code provisions for notice do not provide constitutionally protected due process to Monroe Bank as mortgagee.” Id. at 4–6. M & M now appeals.

DISCUSSION AND DECISION

I. Certification to Attorney General of Indiana

M & M argues that the trial court erred when it failed to certify Monroe Bank's challenge to the constitutionality of Indiana Code section 6–1.1–24–3(b) to the Attorney General, which would have allowed the Attorney General to intervene in the action. It contends that, pursuant to Indiana Code section 34–33.1–1–1, the trial court had an affirmative duty to certify the constitutional challenge to the Indiana tax sale statutes to the Attorney General, and because this was not done, the judgment should be set aside and the case remanded so that proper certification can be made.

Under Indiana Code section 34–33.1–1–1:

(a) If the constitutionality of a state statute, ordinance, or franchise affecting the public interest is called into question in an action, suit, or proceeding in any court to which any agency, officer, or employee of the state is not a party, the court shall certify this fact to the attorney general and shall permit the attorney general to intervene on behalf of the state and present:

(1) evidence that relates to the question of constitutionality, if the evidence is otherwise admissible; and

(2) arguments on the question of constitutionality.

(b) If a party to an action bases its claim or defense on:

(1) a statute or executive order administered by a state officer or agency; or

(2) a rule, order, requirement, or agreement issued or made under the statute or executive order;

the attorney general shall be permitted to intervene in the action.

In the present case, after M & M filed its petition for tax deed, Monroe Bank filed its response, which contained a due process challenge to the constitutionality of Indiana Code section 6–1.1–24–3. Because this response called into question the constitutionality of a state statute in a proceeding to which the State was not a party, the trial court was required under Indiana Code section 34–33.1–1–1 to certify this fact to the Attorney General to allow the Attorney General the opportunity to intervene on behalf of the State in the action. The trial court here failed to certify Monroe Bank's constitutional challenge to the Attorney General before it issued its order denying M & M's petition for tax deed.

Although the trial court failed to certify the constitutional challenge as required by Indiana Code section 34–33.1–1–1, we note that the Attorney General has appeared in this appeal as an amicus curiae and has filed a brief, arguing the merits of the case. Because the Attorney General has not requested that the case be remanded and has been given the opportunity to present evidence relating to the question of constitutionality and argument on the question of constitutionality, we will consider the merits of this appeal without remanding to the trial court in order to allow the Attorney General to intervene. However, we caution trial courts to follow the statutory procedure under Indiana Code section 34–33.1–1–1 when faced with constitutional challenges.

II. Constitutionality of Indiana Code Section 6–1.1–24–3

M & M argues that Indiana's statutory notice scheme pertaining to tax sales is constitutional because under that scheme there are three opportunities for a mortgagee to receive notice of the tax sale. These include: (1) notice of a tax sale is to be posted in a public place in a public county building and published in a local newspaper; (2) if the mortgagee wishes to have notice mailed by certified mail, it can request notice pursuant to Indiana Code section 6–1.1–24–3(b); and (3) notice is required to be given post-tax sale under Indiana Code sections 6–1.1–25–4.5 and –4.6. Specifically, M & M contends that Indiana Code section 6–1.1–24–3(b) is not unconstitutional because all a mortgagee has to do in order to be eligible to receive pre-tax sale notice is to send a certified letter to the Auditor annually requesting such notice. M & M asserts that such a statutory scheme, which places a burden on the mortgagee to take affirmative steps, i.e., annually request by certified mail that pre-tax sale notice be sent, is a permissible statutory notice burden and does not create an excessive burden as to render the statute unconstitutional.

We presume that state legislation is constitutional. Horseman v. Keller, 841 N.E.2d 164, 170 (Ind.2006) (citing In re Tina T., 579 N.E.2d 48, 56 (Ind.1991) (“Legislation ... is clothed in a presumption of constitutionality.”)). Thus, our standard of review where a trial court finds an Indiana statute unconstitutional is even less deferential than de novo. Id. (citing Ind. Dep't of Envtl. Mgmt. v. Chem. Waste Mgmt., 643 N.E.2d 331, 336 n. 2 (Ind.1994)). “ ‘Since statutes are presumed to be constitutional, if there are any grounds for reversing the trial court's judgment [that a statute is unconstitutional] we will do so.’ ” Id.

The statute at issue in the present case is Indiana Code section 6–1.1–24–3, which discusses notices to be given prior to a tax sale and states in pertinent part:

(a) When real property is eligible for sale under this chapter, the county auditor shall post a copy of the notice required by sections 2 and 2.2 of this chapter at a public place of posting in the county courthouse or in another public county building at least twenty-one (21) days before the earliest date of application for judgment. In addition, the county auditor shall, in accordance with IC 5–3–1–4, publish the notice required in sections 2 and 2.2 of this chapter once each week for three (3) consecutive weeks before the earliest date on which the application for judgment may be made. The expenses of this publication shall be paid out of the county general fund without prior appropriation.

(b) At least twenty-one (21) days before the application for judgment is made, the county auditor shall mail a copy of the notice required by sections 2 and 2.2 of this chapter by certified mail, return receipt requested, to any mortgagee who annually requests, by certified mail, a copy of the notice. However, the failure of the county auditor to mail this notice or its nondelivery does not affect the validity of the judgment and order.

Ind.Code § 6–1.1–24–3(a), (b). Under subsection (b), the auditor is to provide notice to any mortgagee that requests such notice before the trial court enters judgment for the taxes due and orders the property to be sold at tax sale. This notice is referred to as pre-tax sale notice, as opposed to the post-tax sale notice that mortgagees, as persons with substantial property interest of public record in the property, shall receive after the property has been sold at tax sale under Indiana Code sections 6–1.1–25–4.5 and –4.6. The pre-tax sale notice...