Reeder & Associates v. Locker

• Decision Date: 30 August 1989
• Docket Number: No. 71A03-8812-CV-382,71A03-8812-CV-382
• Court: Indiana Appellate Court
• Parties: REEDER & ASSOCIATES, Appellants, v. James P. LOCKER, et al., Arthur Reasor, Appellees.

Page 1371

542 N.E.2d 1371

REEDER & ASSOCIATES, Appellants, v. James P. LOCKER, et al., Arthur Reasor, Appellees.

No. 71A03-8812-CV-382.

Court of Appeals of Indiana,

Third District.

Aug. 30, 1989.

Patrick T. McFadden, South Bend, for appellants.

James R. Kuehl, South Bend, for appellees.

GARRARD, Presiding Judge.

In August of 1973 Arthur Reasor (mortgagee) sold property to James and Margaret Locker (mortgagors). This was secured through a purchase money mortgage for $178,000. The mortgage was recorded on August 15, 1973.

In July of 1981 the auditor of St. Joseph County sent a notice of tax delinquency and sale to the mortgagors at the last known address which was shown on the property transfer books. The notice was returned to the auditor because the mortgagors' forwarding address had expired. No notice was sent to the mortgagee. However, notice of sale was published in a newspaper of general circulation and was posted on the wall of the courthouse.

On August 10, 1981, Reeder & Associates (Reeder) purchased the property in question at a tax sale and was issued a tax certificate. On August 11, 1983, Reeder received a tax deed to the property. Subsequently Reeder filed suit seeking to quiet title to the property.

The mortgagors and mortgagee moved for summary judgment claiming insufficiency of notice of the tax sale. After argument was heard, the trial court denied mortgagors' motion for summary judgment but granted mortgagee's motion. The trial court found that the mortgagors' notice was sufficient ¹ but the failure to attempt to notify the mortgagee unconstitutionally deprived him of notice of an impending tax sale.

Reeder appeals the grant of summary judgment to the mortgagee and raises one issue for our review: Whether the court erred in granting mortgagee's motion for summary judgment based on failure to notify when IC 6-1.1-24-4.2 (1982) provided a vehicle by which, if complied with, the mortgagee would have received notice of the tax sale.

In 1980, the Indiana legislature adopted the statute which was in effect at the time of the present action; it has since been changed. ² IC 6-1.1-24-4.2 (1982) provided that:

Sec. 4.2(a) In addition to the notice required by sections 3 and 4 of this chapter, the county auditor shall send a notice of sale to any mortgagee of real property which is subject to sale under the provisions of this chapter, if the mortgagee, annually, on a form prescribed by the state board of accounts, has:

(1) requested that notice of sale of the real property be sent to him; and

(2) agreed to pay to [sic] a fee to the county auditor, to cover the cost of sending notice.

(b) The county auditor shall send notice of sale to the mortgagee's last known address by certified mail. The county auditor shall prepare the notice in the form prescribed by the state board of accounts, and he shall mail the notice at least twenty-one (21) days before the date of sale. (As added by Acts 1980, P.L. 45, SEC. 1, effective January 1, 1981.)

The mortgagee in the present case did not request that notice of sale of the real estate be sent to him nor did he agree to pay a fee to the county auditor. Consequently, the mortgagee received no notice of tax delinquency and subsequent sale. The trial court held that the failure of the county auditor to attempt to notify the mortgagee unconstitutionally deprived him of notice of the impending tax sale.

Reeder argues that the due process clause of the fourteenth amendment did not require the auditor to mail to the mortgagee notice of an impending tax sale when the mortgagee did not make the proper requests on the forms available in the auditor's office pursuant to IC 6-1.1-24-4.2 (1982). The mortgagee contends that notwithstanding the statute, the failure to make a reasonable attempt to notify him of the tax sale amounted to an unconstitutional deprivation of property without due process of law as defined in Mennonite Bd. of Missions v. Adams (1983), 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180. The court in Mennonite stated:

[P]rior to an action which will affect an interest in life, liberty, or property protected by the Due Process Clause of the Fourteenth Amendment, a State must provide "notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co. (1950), 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865.

462 U.S. at 796, 103 S.Ct. at 2710.

In Mennonite no notice was mailed to the mortgagee because Indiana law did not provide for notice by mail or personal service to mortgagees of property that was to be sold for nonpayment of taxes. This was changed in 1980 with the adoption of IC 6-1.1-24-4.2, the statute which is the subject of the pending action. In Mennonite, the Supreme Court held that a mortgagee has a legally protected property interest and is entitled to notice reasonably calculated to apprise him of a pending tax sale. Mennonite, 462 U.S. at 799, 103 S.Ct. at 2711.

The question before us now is whether the notice...