Petition of Tax Claim Bureau of Westmoreland County, No. 4

• Decision Date: 15 September 2000
• Docket Number: No. 4
• Citation: 613 A.2d 634,149 Pa.Cmwlth. 532
• Parties: In re Petition of the TAX CLAIM BUREAU OF WESTMORELAND COUNTY, Pennsylvania, to Sell Free and Clear the Property of Alvin Painter Being Map
• Court: Pennsylvania Commonwealth Court

Page 634

613 A.2d 634

149 Pa.Cmwlth. 532

In re Petition of the TAX CLAIM BUREAU OF WESTMORELAND COUNTY, Pennsylvania, to Sell Free and Clear the Property of Alvin Painter Being Map No 49-15-00-0-072 Appeal of MONEY STORE FINANCIAL CO., INC., Appellant.

Commonwealth Court of Pennsylvania.

Argued May 14, 1992.

Decided Aug. 4, 1992.

Charles E. Boyle, for appellant.

Aaron M. Kress, Sol., for appellee, Tax Claim Bureau.

Harvey A. Zalevsky, for intervenor appellee, Eastern Inv. Group.

Before McGINLEY, and KELLEY, JJ., and SILVESTRI, Senior Judge.

SILVESTRI, Senior Judge.

Before us is an appeal by Money Store Financial Company, Inc. (the Money Store) from the August 19, 1991 order of the Court of Common Pleas of Westmoreland County which dismissed the Money Store's petition to set aside the judicial sale of property upon which the Money Store held a mortgage. The issue before us is whether the Money Store received notice of the judicial sale in accordance with the provisions of the Real Estate Tax Sale Law (the Law), Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101-5860.803.

The Money Store held a mortgage executed by Alvin Painter against his property. As the result of Mr. Painter's failure to pay real estate taxes for the years 1985 through 1989, the Westmoreland County Tax Claim Bureau (Bureau), on September 10, 1990, exposed the property to sale at the annual upset sale pursuant to Section 601 of the Law, 72 P.S. § 5860.601. The property was not sold at the upset sale. Thereafter, the Bureau petitioned the trial court to sell the property at a judicial sale.

Section 610 of the Law, 72 P.S. § 5860.610, provides for a tax bureau to petition the court of common pleas for a judicial sale in cases where the upset price was not bid at an upset sale, as occurred in the present case. Section 610 states what shall be set forth on the petition to the court. It further provides:

Upon the presentation of such petition, accompanied with searches, showing the state of the record and the ownership of the property and all ... mortgages ..., the court shall grant a rule upon all parties thus shown to be interested to appear and show cause why a decree should not be made that said property be sold, freed and cleared of their respective ... mortgages.... The rule shall be made returnable in not more than thirty (30) days from the date the petition was presented or as otherwise determined by the court.

Upon presentation of the petition by the Bureau to the trial court, the trial court, on October 9, 1990, entered the following Rule to Show Cause:

RULE

AND NOW, to-wit, this 9th day of October, having considered the foregoing Petition and upon motion of Aaron M. Kress, Assistant County Solicitor, a Rule is granted upon the Owners, and lienholders, if any, to appear and to show cause, if any, why a Decree should not be made that the property described in the foregoing Petition be sold free and clear of all tax and municipal claims, liens, mortgages, charges and estates, except separately taxed ground rents.

Rule returnable thirty (30) days from today's date.

In the Bureau's petition and in compliance with the Law, the Money Store was listed as having a mortgage on the property. Pursuant to the Rule entered by the trial court on October 9, 1990, the prothonotary caused the Rule to issue. The Rule issued by the prothonotary pursuant to the aforesaid order of the trial court, also dated October 9, 1990, stated, "Now, Therefore, We Command You, the said Owners and Lienholders, that you be and appear before our Judge, at Greensburg, at a Court of Common Pleas, there to be held in and for said County thirty (30) days from today's date...." (R.R. 16a.)

Section 611 of the Law, 72 P.S. § 5860.611, sets forth the manner of service of the Rule. The foregoing Rule was served on the Money Store on October 26, 1990 and the Money Store admits having been properly served. ¹ Upon being served with the Rule, the Money Store telephoned the Bureau and advised it that Mr. Painter was in bankruptcy proceedings and that the property in question was protected by an automatic stay against proceedings by any creditor. Except for that telephone call, the Money Store did nothing further.

The record before us reveals that, contrary to the command of the Rule, no hearing was held on the return day of thirty days after October 9, 1990, that is, November 8, 1990. ² Without any predicate ³ in the record, the trial court signed an order on January 8, 1991 which stated as follows:

AND NOW, to-wit, this 8th day of January, 1991, it appearing that more than thirty (30) days have elapsed since the service of the Rule(s) and Petition(s), it is hereby ORDERED that a hearing on the Rule(s) and Petition(s) be held on the 31st day of January, 1991, at 1:30 P.M., o'clock.

NOTICE to be given to all parties who have answered the Petition (s) and Rule(s) or entered an appearance on the record. (R.R. 17a.)

Significantly, the trial court directed that notice of the hearing was to be given only "to all parties who have answered the ... Rule(s) or entered an appearance...." ⁴ In Paragraph 12 of the Bureau's answer to the Money Store's Petition to Set Aside Tax Sale, it stated, "[Bureau] admits that a hearing was held without notice to [the Money Store]," that is, that the Money Store did not receive the January 8, 1991 order which set the date of hearing.

Section 612(a) of the Law, 72 P.S. § 5860.612(a), provides:

(a) If upon hearing, the court is satisfied that service of the rule has been made upon the parties named in the rule, in the manner provided by this act, and that the facts stated in the petition are true, it shall order and decree that said property be sold at a subsequent day to be fixed by the court, freed and cleared of all tax and municipal claims, mortgages, liens, charges and estates, except separately taxed ground rents, to the highest bidder, and that the purchaser at such sale shall take and thereafter have an absolute title to the property sold free and clear of all tax and municipal claims, mortgages, liens, charges and estates of whatsoever kind, except ground rents, separately taxed....

Hearing on the Rule was held on January 31, 1991. On that same date, the trial court entered an order by which it set the date of the judicial sale for February 15, 1991, and which provided that the purchaser at the sale shall take the property free and clear of all, inter alia, mortgages. The order further provided that readvertisement of the sale need not be published since the petition was presented within three months of the date of the upset sale on September 10, 1990, in accordance with Section 612(b) of the Law, ⁵ 72 P.S. § 5860.612(b). Again, in Paragraph 12 of the Bureau's answer to the Money Store's Petition, it stated, "[Bureau] admits ... that an Order of Court authorizing the sale was made [the January 31, 1991 order] and that a copy of the Order was not sent to the [Money Store]."

On February 15, 1991, the judicial sale was conducted and the property was sold to Eastern Investment Group free and clear of all tax and municipal claims, mortgages, liens and charges and estates, except for separately taxed ground rents.

Thereafter, on April 30, 1991, the Money Store filed the within "Petition to Set Aside Tax Sale," and a Rule to Show Cause was issued that day. In the petition, the Money Store alleged errors in the judicial sale in that, (1) Mr. Painter filed for Chapter 7 bankruptcy in the United States District Court for the Western District of Pennsylvania at No. 89-00288 in February, 1989 and that, until the close of the bankruptcy proceedings on October 18, 1990, a stay was in effect regarding actions against the property by any creditor, including the Bureau; (2) the Money Store had not been given notice of the September 10, 1990 upset sale; and (3) the Money Store had not been given notice of the January 8, 1991 order fixing a hearing on the Rule for January 31, 1991 and therefore it was deprived of its opportunity to object to the judicial sale and to receive notice of the date of the sale.

A hearing was held on the petition before the trial court on June 19, 1991. By opinion and order dated August 19, 1991, the trial court dismissed the petition to set aside the judicial sale. As to the issue of notice of the hearing on the Rule and date of the sale, the trial court stated:

The personal service of the rule informed the mortgagee [the Money Store] of the pending sale and when and where the mortgagee could assert any objection to the sale. No further notice was required, and since the mortgagee failed to respond to the rule, it has only itself to blame. I reject the mortgagee's contention that a telephone call to the office of the Tax Claim Bureau inquiring about the date of the sale, can be equated with an answer to the rule to show cause which directed the mortgagee to respond to the court. In addition, there is no impediment because the Tax Claim Bureau did not inform the mortgagee of the date of the sale since there is no constitutionally-protected right to redeem the real estate or to bid on the real estate. First Pennsylvania Bank v. Lancaster County Tax Claim Bureau, supra, at 140, 521 A.2d at 116. The mortgagee was apprised of how it could object to the tax sale by the rule, but instead chose to follow its own methods which proved inadequate. ⁶

(Opinion, p. 4.) (Footnote added.)

An appeal therefrom followed to this Court and the issues raised are, (1) lack of notice of the September 10, 1990 upset sale; (2) lack of notice of the January 8, 1991 order scheduling a hearing on the Rule for January 31, 1991; (3) lack of notice of the January 31, 1991 order fixing the date of the "free and clear" judicial sale for February 15, 1991; and, (4) that the judicial sale was precluded by the automatic stay in effect as a result of Mr. Painter's Chapter 7 bankruptcy proceedings. By reason of our disposition of...