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On March 16, 2012, the Chamberses entered into an agreement with
Asset Recovery, a Colorado corporation, whereby they purportedly sold to Asset
Recovery their rights to the surplus funds from the tax sale of their Indiana
property. The agreement is entitled “Bill of Sale and Assignment,” and its
terms state that for the sum of $4,479.30, $150 of which was paid in advance,
the Chamberses assigned to Asset Recovery their personal property, specifically
the “Excess Proceeds claim in the amount of $7,465.50 originating from the
9/1/2010 sale of tax defaulted property in Owen County under Map
#60-16-20-100-010.000-017.” Appellants’ App. p. 8.
This agreement between the Chamberses and Asset Recovery is
invalid pursuant to Indiana Code section 6-1.1-24-7.5(b) because it is an
agreement that has the primary purpose of paying compensation to recover money
deposited in a tax sale surplus fund with respect to property that has been the
subject of a tax sale and requires payment of compensation of more than 10% of
the amount to be collected from the tax sale surplus fund. We are unmoved by
Asset Recovery’s disingenuous argument that the agreement is a bill of sale and
assignment and nothing more. While the agreement, in form and label, is an
assignment of rights to certain personal property (i.e., tax sale funds), it is
in substance an asset recovery agreement. Substantively the agreement states
that Asset Recovery will recover the Chamberses’ funds in the amount of
$7,465.50 from Owen County’s tax sale surplus fund and give $4,479.30 to the
Chamberses. This leaves $2,986.20 for Asset Recovery. The agreement contains no
stated purpose, and we discern no other purpose for the agreement than to pay
compensation to Asset Recovery for its recovery
of the Chamberses’ money from the tax sale surplus fund. Therefore, we refuse
to accept Asset Recovery’s invitation to regard the agreement between it and
the Chamberses as a bill of sale, thereby elevating its form over its true
substance. See Citizens Action Coal. of Ind., Inc. v. N. Ind. Pub. Serv. Co.,
804 N.E.2d 289, 301 (Ind. Ct. App. 2004) (stating that this Court has indicated
its preference to place substance over form). Moreover, justice should not be
defeated by technicalities. Binninger v. Hendricks Cnty. Bd. of Zoning
Comm’rs, 668 N.E.2d 269, 272 (Ind. Ct. App. 1996) (discussing Court’s
policy not to exalt form over substance), trans. denied.
Having determined that the
primary purpose of the agreement between Asset Recovery and the Chamberses is
to pay compensation to Asset Recovery to recover money deposited in the tax
sale surplus fund, we now turn to whether the agreement requires payment of
more than 10% of the amount collected. Pursuant to its agreement with the
Chamberses, Asset Recovery would receive $2,986.20. This amount is equal to 40%
of the total amount collected from the surplus fund. In stark contrast,
pursuant to Indiana Code section 6-1.1-24-7.5(b)(1), Asset Recovery is limited
to 10% of the total amount collected from the surplus fund, which is equal to
$746.55. Thus, Asset Recovery would receive $2,239.65 more as a result of
circumventing the statute. The agreement is merely a ruse utilized by Asset
Recovery to circumvent the 10% fee cap statutorily mandated by Indiana Code
section 6-1.1-24-7.5(b)(1). See, e.g., Greenpoint Bank v. Criscione,
23 Misc.3d 1106, 885 N.Y.S.2d 711 (2009) (holding that New York Abandoned
Property Law § 1416 invalidated property recovery agreement because agreement
provided for payment of fees in excess of 15% of value of recoverable
property).
Moreover,
as a matter of public policy, the statute is designed to protect the citizens
of our state and to regulate the activities of property locator services whose
primary purpose is to locate money deposited in tax sale surplus funds by
capping the fees at 10% of the total amount collected from the surplus fund.
Certainly, elderly property owners are a particular group of the population to
be protected by this statute as their vulnerability is often preyed upon.
Therefore, it would be error for us to ignore the spirit and objectives of
Indiana Code section 6-1.1-24-7.5 by allowing Asset Recovery to be compensated
for the recovery of the funds pursuant to the terms of its agreement with the
Chamberses.
