Schlereth v. Hardy

• Decision Date: 31 March 2009
• Docket Number: No. SC 89402.,SC 89402.
• Citation: Schlereth v. Hardy, 280 S.W.3d 47 (Mo. 2009)
• Parties: James SCHLERETH, Appellant/Cross-Respondent, v. Jane Tillman HARDY, Respondent/Cross-Appellant, Jefferson County Collector of Revenue, Defendant.
• Court: Missouri Supreme Court

280 S.W.3d 47

James SCHLERETH, Appellant/Cross-Respondent, v. Jane Tillman HARDY, Respondent/Cross-Appellant Jefferson County Collector of Revenue, Defendant.

No. SC 89402.

Supreme Court of Missouri, En Banc.

March 31, 2009.

Stanley D. Schnaare, Michelle L. Mellendorf, The Schnaare Law Firm, PC, Hillsboro, MO, for Appellant/ Cross-Respondent.

Earl G. Burton, III, Webster Groves, MO, for Respondent/ Cross-Appellant.

MICHAEL A. WOLFF, Judge.

Introduction

This case echoes a familiar refrain in the lore and constitutional law of notice: Due process requires notice, but what notice will do?

James Schlereth bought a piece of property that Jefferson County sold because the owner was delinquent in property taxes. Schlereth thereafter sent a notice of redemption rights to the tax-delinquent former owner by certified mail. The postal service attempted delivery twice.¹

Schlereth's notice was addressed correctly to the tax-delinquent former property owner at her residence. The former owner acknowledges that she knew of the attempts to deliver the certified mail. But, she says, a certified mail delivery attempt is not constitutionally sufficient notice—even with two delivery attempts. Even though the addressee in this quiet title proceeding admits receiving two delivery notifications, this Court is obligated to follow the decision of the United States Supreme Court in Jones v. Flowers, which holds that when certified mail is returned unclaimed, due process requires the state to take additional reasonable steps to notify the property owner. 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006).

Factual and Procedural History

Jane Tillman Hardy, who owned property in Jefferson County but did not occupy it, failed to pay property taxes in 1999, 2000 and 2001. The Jefferson County collector of revenue sold the property for taxes in August 2002 following publication of the sale. Though no issue is raised as to the notice by publication of the tax sale, there is nothing in the record to show that Hardy was made aware of the tax sale by this published notice.

Schlereth purchased the property at the tax sale and paid the county's revenue collector $9,500.75. The taxes owed on the property totaled $2,139.25.

Hardy appeared at the collector's office in March 2004—about a year and a half after the tax sale of her property—and paid the taxes due on the real estate for the years 2002 and 2003. This payment was not part of any redemption action. Hardy maintains that, at the time she paid the taxes in the collector's office, she was not aware that the property had been sold at a tax sale.

In May 2004, Schlereth sent Hardy a notice of redemption rights by certified mail. The notice was addressed to Hardy at her suburban St. Louis residence. Hardy received two delivery notifications at her residence but failed to pick up the certified mail on both occasions. Schlereth's notice to Hardy was returned to Schlereth as "unclaimed" on June 1, 2004. In this proceeding, Hardy admits she received the notifications of the attempts to deliver certified mail.

Hardy did not redeem the property within two years of the tax sale; so, in August 2004, Schlereth obtained a collector's deed to the property and recorded it. Section 140.410.² The next month, Schlereth filed this quiet title action. The collector consented to it, but Hardy answered and filed a counterclaim against Schlereth asking that the court set aside the tax sale and return the property to Hardy. Hardy requested that, if the court awarded the property to Schlereth, the court order payment to Hardy of the $1,251.70 in taxes from 2002 and 2003 that she paid in March 2004. Hardy filed a cross-claim against the collector of revenue asking that the court order the surplus held from the tax sale be paid to Hardy. Pursuant to section 140.600, Hardy offered repayment to Schlereth for the amount to be expended for the property as well as interest and costs.

The trial court entered summary judgment in favor of Schlereth on his claim for quiet title and against Hardy on her counterclaim. The court denied Hardy's motion for summary judgment on the cross-claim against the collector of revenue and the alternative counterclaim. On April 24, 2006, the collector paid the tax sale surplus to Hardy and moved to dismiss the cross-claim as moot. Hardy voluntarily dismissed her cross-claim. The trial court in November 2006 entered a consent judgment awarding Hardy the $1,251.70 she had paid in property taxes for 2002 and 2003.

Hardy filed a motion to amend the judgment and a motion for new trial claiming that the notice Schlereth sent her regarding her redemption rights violated her due process rights. The court granted the motion for new trial. Both parties then filed motions for summary judgment. The trial court granted Hardy's motion for summary judgment, citing Jones v. Flowers, and ruled that the collector's deed for the property was void and that Hardy's redemption period had not expired because of insufficient notice. Schlereth appeals to this Court.

Because this case involves a challenge to the validity of the statute prescribing certified mail notice, this Court has jurisdiction. Mo. Const. art. V, section 3. Were the notice requirements of due process met when certified mail was sent but not claimed?

Section 140.405 sets forth the notice requirements for a tax purchaser to acquire a deed to property purchased at a tax sale. Section 140.405 provides:

At least ninety days prior to the date when a purchaser is authorized to acquire the deed, the purchaser shall notify any person who holds a publicly recorded deed of trust, mortgage, lease, lien or claim upon that real estate of the latter person's right to redeem such person's publicly recorded security or claim. Notice shall be sent by certified mail to any such person, including one who was the publicly recorded owner of the property sold at the delinquent land tax auction previous to such sale, at such person's last known available address. (Emphasis added).

Hardy contends that Jones v. Flowers renders service of notice solely through unclaimed certified mail insufficient to meet the requirements of due process. Jones addressed the issue, which had not been resolved in prior cases, as to whether the government must take additional steps when a certified-mail notice of a tax sale has been returned undelivered. 547 U.S. 220, 223, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006).

In Jones, a husband and wife divorced and the husband subsequently vacated the home the two owned. The husband continued to make mortgage payments after vacating, and the mortgage company made the tax payments. After the husband paid off the mortgage in 1997, the property taxes went unpaid. The commissioner of state lands sent notice of the tax delinquency by certified mail to the husband at the home that the husband no longer occupied. The mail was returned unclaimed. The commissioner subsequently published notice of the sale. No bids were submitted, and the government negotiated a private sale to Flowers. The commissioner then sent a certified mail notice of the sale to the home where the husband no longer resided so that he would be notified of his redemption rights. That notice also was returned unclaimed, and the property was sold to Flowers. Flowers then served notice of unlawful detainer on the husband's daughter residing at the property, who notified Jones, the husband, of the tax sale. Jones filed suit, claiming that his due process rights had been violated by the failure to serve notice. Id.

The Supreme Court, in a majority opinion by Chief Justice Roberts, held "that when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so." Because additional reasonable steps were available, the state was required to take them. Id. at 225, 126 S.Ct. 1708. In Jones, the Court said if the certified mail was unclaimed, re-sending the notice by regular mail, posting the notice on the property or addressing otherwise undeliverable mail to "occupant" may suffice. Id. at 234-35, 126 S.Ct. 1708. In any event, the Supreme Court held, the state is obligated to take steps that would "increase the likelihood that an owner would be notified that he was about to lose his property, given the failure of a letter deliverable only to the owner in person." Id.

The Jones holding is a direct descendant of the seminal case about constitutional notice, Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), but with an added twist. Under Mullane, the adequacy of notice is assessed by what is known before the notice is sent. Jones, however, holds that the government must act on information received after the notice was sent, that is, that the notice was returned unclaimed.

"An elementary and fundamental requirement of due process," the Supreme Court held in Mullane, "... is notice reasonably calculated to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections." 339 U.S. at 314, 70 S.Ct. 652 (emphasis added). In this case, there is no question that Schlereth, proceeding under section 140.405, takes on the governmental obligation to give notice that satisfies due process. The redemption notice by certified mail under section 140.405 is the first and only realistic attempt actually to notify the property owner; after Mullane, no one pretends that the notice by publication of a tax sale was reasonably calculated to give notice to Hardy.

To evaluate the reasonableness of the notice, the Mullane court put forward the standard of whether "the form chosen is not substantially less likely to bring home notice than other of the feasible and customary substitutes." Id. Here, sending certified mail to Hardy's known and actual residence, which...