Ritter v. Ross

• Decision Date: 13 September 1996
• Docket Number: No. 95-1941,95-1941
• Citation: 207 Wis.2d 476,558 N.W.2d 909
• Parties: Elmer RITTER, and Helen Ritter, Plaintiffs-Appellants-Cross Respondents, d ] v. Peggy S. ROSS, County Treasurer for Rock County, Wisconsin, and Rock County, a Body Politic in the State of Wisconsin, Defendants-Respondents-Cross Appellants. . Oral Argument
• Court: Wisconsin Court of Appeals

Page 909

558 N.W.2d 909

207 Wis.2d 476

Elmer RITTER, and Helen Ritter, Plaintiffs-Appellants-Cross Respondents, ^d] v. Peggy S. ROSS, County Treasurer for Rock County, Wisconsin and Rock County, a Body Politic in the State of Wisconsin, Defendants-Respondents-Cross Appellants.

No. 95-1941.

Court of Appeals of Wisconsin.

Oral Argument Sept. 13, 1996.

Opinion Released Dec. 12, 1996.

Opinion Filed Dec. 12, 1996.

For the plaintiffs-appellants-cross respondents the cause was submitted on the briefs of Joanne M. McCormack of Oliver, Close, Worden, Winkler, Greenwald & Maier of Lake Geneva. There was oral argument by Thomas E. Greenwald and Ann T. Dempsey.

For the defendants-respondents-cross appellants there were briefs and oral argument by Eugene R. Dumas, Deputy Corporation Counsel for Rock County, of Janesville.

Before EICH, C.J., DYKMAN, P.J., and VERGERONT, J.

EICH, Chief Judge.

Elmer and Helen Ritter sued Rock County and its treasurer, Peggy Ross, ¹ seeking to void a tax foreclosure and sale of a parcel of nonhomestead property they owned in the County and to recover monetary damages and attorney fees on several theories. The County began the foreclosure proceedings when a tax arrearage of $84.43 on the Ritters' property remained unpaid for several years. The Ritters did not defend the action and, after obtaining a foreclosure judgment, the County sold the property to a third party for $17,345, retaining the entire amount of the sale proceeds.

The Ritters' complaint asserted federal constitutional claims, including a claim for reasonable attorney fees, under the Federal Civil Rights Act, 42 U.S.C. §§ 1983 and 1988, a claim for violations of the Due Process and Takings Clauses of the Fifth and Fourteenth Amendments, as well as state-law damage claims for unjust enrichment--all based on the County's retention of the sale proceeds. They also sought damages for loss of future profits from the land, namely, anticipated federal agricultural subsidies.

The trial court ruled that, although the County's notice of the foreclosure proceedings met due process standards insofar as it notified them of the pendency of the in rem foreclosure action, it was constitutionally inadequate for failing to apprise them of the possibility that the County would take the entire parcel in satisfaction of a comparatively small tax lien. The court also held that the County's action amounted to a taking of the Ritters' property without just compensation in violation of the Fifth Amendment. It dismissed their claim for attorney fees under 42 U.S.C. § 1988, however, because they failed to establish that Ross or the County had intentionally or maliciously denied their constitutional rights. Finally, the court ruled that (1) the County's failure to obtain an appraisal of the Ritters' property prior to the sale violated § 75.69, STATS., which states that a county may not sell tax-delinquent property unless the sale and the "appraised value" of the property have first been advertised by publication; and (2) the Ritters did not have a valid claim for damages for loss of future profits from the land.

Having so ruled, the court concluded that the County had been unjustly enriched by retaining the sale proceeds over and above the Ritters' tax liability, and ordered that judgment be entered for the Ritters in the sum of $37,835.57, which represented the fair market value of the property at the date of the sale, less the $84.43 tax lien.

While the parties raise a variety of issues on the appeal and cross-appeal, ² we consider the constitutional issues to be dispositive: whether the Ritters are entitled to relief under the Due Process and Takings Clauses of the Constitution based on the manner in which the County proceeded in foreclosing the tax lien and selling the property. We hold that they are not. We therefore reverse the judgment and remand to the trial court with directions to enter judgment dismissing the Ritters' action. ³

I. Background

Helen Ritter, who was a licensed real estate salesperson and broker for approximately thirty years (in Illinois and Wisconsin respectively), and her husband, Elmer, purchased sixty-eight acres of undeveloped land in Rock County in 1982, selling off some and retaining approximately thirty-eight acres for themselves.

In early 1985, the Ritters received a statement of 1984 real estate taxes due on the property from the treasurer's office. The notice was in the standard form, containing information on the property and its assessment, the amount due and a warning that delinquent taxes would be subject to interest and penalties. It stated that the Ritters' bill of $710.03 could be paid in two installments of $355.02 and $355.01, on February 28 and July 31, 1985, or in full by February 28. It is undisputed that Helen Ritter paid the first installment, but the facts surrounding payment of the second are not as clear.

Helen Ritter testified that she mailed a money order for the second installment to the County in July 1985. She also stated that, several months later, she received notice from the County that the taxes had not been paid, so she purchased another money order and mailed it to the County. She corresponded with the County regarding its nonreceipt of the second installment, but she responded to the County's repeated requests for payment by simply mailing a photocopy of the purported second-installment money order to the treasurer's office. At some point in mid-1988, she also created a "ledger"-type form showing the payment, and sent that as well.

This went on for several years, until County Treasurer Peggy Ross wrote to the Ritters on December 15, 1988, as follows:

We are not sure what you are trying to tell us.... According to our records you still owe taxes back to 1984.

The County will be taking this property because of back taxes.

If your records show that they are paid, please bring to [our] office or send copies of the receipts. Our records do not show any of the payments that you have noted....

The Ritters responded by sending still more photocopies of their "ledger" and the money order. Several days later, Ross again wrote to the Ritters explaining how the payments received in the treasurer's office had been applied since 1985, ⁴ and stating that taxes remained delinquent on the property in the sum of $84.43. The letter concluded:

It is very important that you personally come in and bring your receipts showing that you have paid the 1984's. Your receipts showing copies of your money orders [are] of no help.

Elmer Ritter responded by returning the letter to Ross with a handwritten note in the margin stating: "All I have here is receipts of payments mailed Rock Cty. Treas." Then, several months later, in January 1989, Helen Ritter sent a note to Ross indicating that, in past years, she had mailed photocopies of a money order and ledger sheet to Ross, and enclosed another copy of each.

On July, 14, 1989, the County sent the Ritters a document entitled "NOTICE OF COMMENCEMENT OF PROCEEDINGS IN REM TO FORECLOSE TAX LIENS BY ROCK COUNTY." The notice, which was sent to landowners in Rock County, including the Ritters, against which tax liens had been filed, indicated the amount of each owner's lien and stated that judicial proceedings were being instituted to "foreclose" them. The notice concluded by stating that the liens could be redeemed by paying the delinquent amount to the treasurer by September 27, 1989. Attached to the notice was a copy of the petition filed with the court, stating that the County was seeking judgment "vesting title [of all such lands] in the county ... and barring any and all claims whatsoever of the former owner(s)...." The entry under the Ritters' name listed the property in question and showed a lien in the amount of $84.43 for unpaid 1984 real estate taxes.

Neither Helen Ritter--who understood that unpaid or underpaid real estate taxes could lead to foreclosure--nor Elmer Ritter responded to the notice or appeared in any way in the proceedings. In October 1989, judgment was entered vesting title to their property in the County on the basis of the unpaid 1984 taxes. As indicated, the County sold the property for $17,345. The County applied the proceeds of the sale to the taxes due, retaining the surplus, ⁵ and this action followed.

II. The Takings Clause

The trial court concluded that the County's retention of the proceeds from the Ritters' property in excess of $84.43 amounted to an unconstitutional taking of their property without just compensation in violation of the Fifth Amendment to the Constitution of the United States. We review constitutional issues de novo without deference to the trial court's decision. In re Barthel, 161 Wis.2d 587, 592, 468 N.W.2d 689, 691 (1991).

To maintain a claim under the Takings Clause, the plaintiff must have an interest in the property that the government has allegedly taken. United States v. Dow, 357 U.S. 17, 20, 78 S.Ct. 1039, 1043-44, 2 L.Ed.2d 1109 (1958). We thus consider whether the Ritters had a property interest in the excess proceeds of the foreclosure sale, because that is the "property" they claim was unconstitutionally taken by the County.

Cases considering constitutional challenges to state tax foreclosure sales generally conclude that a taxpayer has a recognizable interest in the excess proceeds from such a sale only if the state constitution or tax statutes create such an interest. In Spurgias v. Morrissette, 109 N.H. 275, 249 A.2d 685, 687 (1969), for example, the New Hampshire Supreme Court stated, "In the absence of contrary provision by statute or constitution, a municipality's title to such property is absolute so that a town is free from either legal or equitable claims by the taxpayer to any surplus realized." (Citations omitted.) In Nelson v. New York, 352 U.S. 103, 77 S.Ct. 195, 1 L.Ed.2d 171 (1956), the United States Supreme Court rejected a claim under the Takings Clause when...