Thursday, September 19, 2013

Court of Appeals Rules County Not Obligated to Apply Surplus of Tax Sale Payment on One Property to Tax Delinquency of Second Property Owned by Taxpayer

Excerpts of the Court of Appeals Opinion follow;

Norman Eggers appeals the sale of his real property at a tax sale. He raises three issues, which we consolidate and restate as: whether the County proved the tax sale purchaser paid all taxes, special assessments, penalties, and costs; and whether the County improperly applied the surplus from the sale. On cross-appeal, MLP Services LLP, the tax sale purchaser, argues Eggers’ appeal is frivolous and brought in bad faith, and therefore it is entitled to attorney fees for its defense of the appeal. We affirm and remand.
 

In October 2010, Jefferson County sold two parcels of Eggers’ real estate at a tax sale. MLP Services, LLC, bought a parcel on Hooten Boulevard in Madison that included Eggers’ home, and John Etherton bought a parcel on Fourth Street. Although Eggers disputed certain liens and assessments on the properties, he knew he was responsible for the taxes on them, and he knew they were being sold at the tax sale. He did not redeem the properties by the statutory deadline, and tax deeds were issued to MLP and Etherton. Each property sold for more than the amount of its tax arrearage, and the surplus from the Etherton property was returned to Eggers. At the time of the hearing on MLP’s request for issuance of a tax deed, the County had not returned the surplus from the sale to MLP.
 

1. Payment of Subsequent Taxes

Eggers asserts “there is a complete lack of evidence to support the finding by the Trial Court that all subsequent taxes had been paid as required by I.C. 6-1.1-25-4.6(b)(3)[.]” (Br. of Appellant Norman L. Eggers (hereinafter “Eggers Br.”) at 7) (bold type in original). There was ample evidence to support the finding.

Ind. Code § 6-1.1-25-4.6(b)(3) provides:  

Not later than sixty-one (61) days after the petition is filed under subsection (a), the court shall enter an order directing the county auditor (on the production of the certificate of sale and a copy of the order) to issue to the petitioner a tax deed if the court finds that the following conditions exist:

* * * * *

(3) Except with respect to a petition for the issuance of a tax deed under a sale of the certificate of sale on the property under IC 6-1.1-24-6.1 or IC 6-1.1-24-6.8, all taxes and special assessments, penalties, and costs have been paid.

MLP’s attorney submitted a verified petition that said “Purchaser has paid the real estate taxes and assessments on the parcel that are due and payable subsequent to the year of the tax sale.” (Appellee’s App. at 41.) MLP offered that verified petition into evidence, and Eggers’ trial counsel, who now represents Eggers on appeal, explicitly stated he had no objection. That evidence permitted the trial court’s finding. See, e.g., Campbell v. State, 229 Ind. 198, 205, 96 N.E.2d 876, 879 (1951) (when verified petition is introduced in evidence it becomes competent proof of the facts therein contained).

The record contained additional evidence the subsequent taxes had been paid. An employee of the Auditor’s office testified no taxes were owed on the property and “everything was current.” (Tr. at 85.) Eggers testified he was told by the Auditor’s office that MLP’s principal had “come to pay the uh . . . taxes that would have been payable and due on November the 10th.” (Id. at 35.) The trial court’s finding was supported by ample evidence.

2. Application of Surplus

Eggers next argues the County Auditor and Treasurer did not properly apply the surplus money from the tax sale. Ind. Code § 6-1.1-24-7(a)4 provides in pertinent part:

When real property is sold under this chapter, the purchaser at the sale shall immediately pay the amount of the bid to the county treasurer. The county treasurer shall apply the payment in the following manner:

(1) first, to the taxes, special assessments, penalties, and costs described in section 5(f) of this chapter;

(2) second, to other delinquent property taxes in the manner provided in IC 6-1.1-23-5(b); and

(3) third, to a separate “tax sale surplus fund.”5

Both of Eggers’ properties were sold at the same tax sale, and Eggers asserts the County did not properly apply the surplus. His reasoning appears to be that the County was obliged to apply the surplus from the property Etherton bought to pay delinquent property taxes on the separate parcel that MLP bought at the same tax sale: “In this case, rather than applying the surplus on either property to the other property’s unpaid taxes, the county chose to just hold onto the funds. Clearly, the government attempted to exercise its power to gain the most money from Mr. Eggers’ financial problems.” (Eggers Br. at 11.)

The statute cannot be read to impose an obligation on the County to apply money from the sale of one property to taxes due on some other property sold at the same time. The tax sale statutes were not designed to protect those who receive actual notice of a tax sale but do nothing further to protect their interests in the property. Green Tree Servicing, LLC v. Random Antics, LLC, 869 N.E.2d 464, 471 (Ind. Ct. App. 2007). Nor does the statute require the County, after selling one of Eggers’ properties, to determine whether he owned additional property that was sold at the same time, and then pay the taxes on that different property for him.

Eggers relies on Ind. Code § 6-1.1-24-7(c)(2), which directs the county treasurer to apply the payment at a tax sale, after paying the taxes, special assessments, penalties, and costs described in Ind. Code § 6-1.1-24-5(f),6 “to other delinquent property taxes.” But that subsection could not require the County to apply the surplus from the Etherton purchase to the MLP purchase at the same sale. When MLP bought the property at the tax sale, the statute required MLP to “immediately pay the amount of the bid to the county treasurer,” Ind. Code § 6-1.1-24-7(a), which bid must be enough to cover the delinquent taxes on the parcel. Ind. Code § 6-1.1-24-5(f). The treasurer was then required to apply the payment “first, to the taxes, special assessments, penalties, and costs” due on that parcel. Ind. Code § 6-1.1-24-7(a).

The effect of those requirements is that after the Eggers parcels were sold, there were no “delinquentproperty taxes for either parcel. The County therefore was not obliged to apply the surplus from one parcel to Eggers’ other parcel that had been sold at the same time.
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Because we find Eggers’ appeal was brought in bad faith, we remand to the trial court pursuant to Indiana Appellate Rule 66(E) for a determination of appellate damages, which may include attorney fees. Poulard v. Laporte Cnty. Election Bd., 922 N.E.2d 734, 736 (Ind. Ct. App. 2010).