Palzar v. City of Tacoma

• Decision Date: 10 June 1977
• Docket Number: No. 2238-II,2238-II
• Citation: 17 Wn.App. 745,565 P.2d 1191
• Parties: Chris PALZAR and Cathy Palzar, husband and wife, Appellants, v. The CITY OF TACOMA, a Municipal Corporation, Respondent.
• Court: Washington Court of Appeals

Page 745

17 Wn.App. 745

565 P.2d 1191

Chris PALZAR and Cathy Palzar, husband and wife, Appellants, v. The CITY OF TACOMA, a Municipal Corporation, Respondent.

No. 2238-II.

Court of Appeals of Washington, Division 2.

June 10, 1977.

Anthony Schwab, Seattle, for appellants.

Robert R. Hamilton, F. H. Chapin, Jr., Michael E. Cooper, Tacoma, for respondent.

REED, Judge.

Plaintiffs Chris and Cathy Palzar appeal from a summary judgment quieting title to certain real property in defendant City of Tacoma. The facts, which are not in dispute, are as follows.

On April 9, 1973 the City of Tacoma held a public sale pursuant to a Judgment and Order of Sale which foreclosed unpaid local improvement assessments charged against various parcels of real property. When there were no bids on the parcels that are the subject of this appeal, that property was struck off to the City of Tacoma, which received a certificate of purchase.

On November 2, 1974 Pierce County conducted a general tax foreclosure sale; included among the parcels of land on which taxes were delinquent was the subject property, which the Palzars purchased for the amount of the unpaid taxes. The Palzars received tax deeds on November 29, 1974, and on January 22, 1975 they were notified by the City of Tacoma that they had until April 9, 1975 to satisfy the local improvement assessments or the property would be deeded to the holder of the certificate of purchase. The Palzars did not redeem the subject property, and the City of Tacoma, following receipt of a local improvement assessment deed on April 9, 1975, executed a real estate contract for the sale of the subject property to Regal Construction Company, Ltd. and Paul and Barbara Reed.

The Palzars subsequently commenced this suit to quiet title to the subject property in themselves, and Tacoma responded by moving for summary judgment. The trial court granted the summary judgment motion, thereby quieting title in defendant City of Tacoma. On appeal we are asked to resolve only one issue: does a municipality which holds a certificate of purchase lose its right to collect unpaid local assessments when the subject property is purchased by a private citizen at a general tax foreclosure sale? We hold that it does not, and accordingly the judgment of the trial court is affirmed.

In answering the above-propounded question it is important to distinguish two different factual situations. If property subject to assessment liens is put up for sale at a general tax foreclosure proceeding and struck off to the county for lack of other bidders, then a new title is initiated when the county subsequently resells the property, and the assessment liens are transferred to the proceeds of the resale. Thestrup v. Grays Harbor County, 12 Wash.2d 545, 122 P.2d 797 (1942); Moe v. Brumfield, 182 Wash. 608, 47 P.2d 847 (1935); Everett v. Morgan, 133 Wash. 225, 233 P. 317 (1925); Maryland Realty Co. v. Tacoma, 121 Wash. 230, 209 P. 1 (1922). RCW 35.49.160 also provides that whenever property is struck off to the county, the proceeds from the resale shall first be applied to discharge the general tax lien and the excess shall be used to pay any outstanding local improvement assessments.

On the other hand, a different rule is applied when the property is purchased by a private person at the tax foreclosure sale rather than being struck off to the county for lack of bidders. ¹ In Tacoma v. Fletcher Realty Co., 150 Wash. 33, 37, 272 P. 43, 44 (1928), the court held:

(T)he legislative intent is clearly discernible that a private person, whether he proceeds by the purchase of a certificate of delinquency and himself forecloses it, or becomes a purchaser at the county's sale, may in either event pay the local assessments or acquire title subject to them, but he has no other choice.

See also Ephrata v. Each & Every Lot, 1 Wash.App. 372, 461 P.2d 574 (1969). In reaching its decision, the Fletcher court initially discussed the apparent legislative intent of preserving local improvement assessment liens until their extinguishment becomes necessary in order to maintain the superiority of the general tax lien. Tacoma v. Fletcher Realty Co., supra at 35-36, 272 P. 43. Fletcher noted that this policy of preserving local assessment liens was earlier articulated in the Maryland Realty case, in which the court considered RRS § 9393 (now codified as RCW 35.49.160) as imposing a duty upon the county to resell property acquired in tax foreclosure sales so as to discharge not only the tax lien, but also any unpaid local assessments. Under this rationale, the superiority of the tax lien need be asserted to extinguish the local assessments only when the property is of insufficient value to satisfy both the outstanding assessments and taxes.

In announcing a different rule for those situations when a private person purchases at a tax foreclosure sale, the court in Fletcher stated:

There is no word in the statute to indicate that (a private purchaser can) defeat a lien superior to every other except the general tax lien, and we know of no reason why a private purchaser can, or should, acquire greater rights as a purchaser at a county tax sale than the county itself can acquire. Surely, if the county, which is acting for itself and the state in collecting the revenue required to maintain the general government, must still take the property charged with the duty to resell it, if possible, so as to pay both the general tax and the assessment, and that (course of action) is not extended to a private purchaser, he cannot take it freed entirely of the lien of the local assessment, but must either pay the lien or take subject to it.

Tacoma v. Fletcher Realty Co., supra at 37-38, 272 P. (43) at 44. In summation, it is evident that while the need to secure governmental revenues permits the county, in certain circumstances, to assert the primacy of its tax lien, the private purchaser at the tax sale does not occupy a similar position. The policy of preserving local assessment liens requires that he either pay that lien or take title subject thereto.

Before addressing another matter, it should be noted that we are not unmindful of the provisions contained in RCW 35.49.130-.150 inclusive. ² Those statutes, which are applicable when the assessed property is also involved in a general tax foreclosure proceeding, provide several methods by which the city may take affirmative action to protect any local improvement liens. While the argument can be made that the need for such protective measures as contained in those statutes arises only if the city's assessment lien is extinguished by the general tax foreclosure, that contention has previously been considered and rejected. In Ephrata v. Each & Every Lot, supra at 376, 461 P.2d at 576-77 the court stated:

This position was rejected in the Fletcher case.

. . . (W)e are compelled to follow the law announced by our Supreme Court in the Fletcher case. If the law is to be changed, it must be changed either through legislative action or by decision of the Supreme Court.

The Fletcher case speaks in terms of the private purchaser paying or taking subject to a local improvement assessment lien ; we now direct ourselves to the question of whether an unpaid assessment survives a tax foreclosure proceeding when the City has foreclosed the assessment lien and holds a certificate of purchase. ³ The Palzars contend that the City's foreclosure of the assessment lien converted the lien into a property interest that was extinguished by the subsequent tax foreclosure sale. We disagree.

After examining the pertinent statutes as a whole, one observation becomes readily apparent: the entire statutory scheme is geared towards insuring that delinquent local assessments will eventually be satisfied. Previously we adverted to the legislative intent of "preventing and avoiding the extinguishment of the liens of local assessments until the very last moment." Tacoma v. Fletcher Realty Co., supra at 35, 272 P. at 44. Preservation of the assessment lien is but one manifestation of the public policy...