Davenport v. Gruber

BUTTLER, J.

Plaintiffs brought this action to quiet title to standing timber. The trial court granted plaintiffs’ motion for summary judgment and denied defendants’ motion for summary judgment. We affirm.

The material facts are not in dispute. In 1952, the Irishes owned the timber, as well as the underlying real property. In that year, they sold “all merchantable fir, spruce and hemlock timber” on the real property to Allen, together with the right to enter the real property and remove the timber until February 14, 1955. After that date, “all timber or logs remaining on said property” reverted to the grantor. On December 16, 1954, plaintiffs became the record owners of the real property, subject to Allen’s right to enter and remove the timber until February 14, 1955.

At some time after June 30, 1954, but before February 14, 1955, plaintiffs obtained an assignment from Allen of his interest in the timber on the real property. Although plaintiffs’ ownership of the timber by virtue of that assignment was not a matter of record, after February 14, 1955, the deed records showed that plaintiffs, by virtue of the terms of the reversion in the timber deed to Allen, owned both the underlying real property and “all timber or logs” then remaining on the property after February 14, 1955.

Real property taxes were assessed separately against the timber and the underlying real property for the tax years 1953-54 and 1954-55. ORS 308.115. During those tax years, Allen, the “owner” of the timber, failed to pay the taxes on the timber. Plaintiffs, however, paid the taxes assessed against the land. In 1958, Lincoln County filed an action to foreclose its lien on the timber for unpaid taxes. Although by that time plaintiffs owned both the land and the timber, they were neither named as parties to that foreclosure nor given notice of it and did not have actual notice of the foreclosure. Allen, who no longer had any interest in the timber and who could not have cared less about the foreclosure, was made a party as the “owner shown by the latest tax roll.” The timber was foreclosed, and the county obtained a tax deed when the statutory redemption period expired in 1960.

*283In 1966, plaintiffs sold a portion of the land to defendants. In the course of a title examination connected with the sale, defendants discovered the county’s deed to the timber on the entire parcel and purchased the county’s interest in 1967. In 1988, they announced a plan to log the timber. Plaintiffs objected and filed this action. Defendants counterclaimed to quiet title in themselves and also sought the court’s authority to enter on plaintiffs’ property to remove the timber.

A party is entitled to summary judgment if the pleadings, depositions, admissions on file and affidavits show that there are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter of law. ORCP 47C. On appeal, we review the record in the light most favorable to the party opposing the motion. Seeborg v. General Motors Corp., 284 Or 695, 699, 588 P2d 1100 (1978). In deciding the motions for summary judgment, the trial court relied on the provisions relating to the Forest Products Harvest Tax, ORS chapter 321. On appeal, both parties agree that the trial court relied on the wrong statutory scheme and that the applicable statutes are in ORS chapters 311 and 312. We agree.

At the time of the foreclosure, ORS 311.555 provided:

“Each person, firm or corporation owning real or personal property within the state, or against whom taxes upon real or personal property are chargeable, shall keep the tax collector of the county where such real or personal property is situate informed of the true and correct address of the person, firm or corporation. No person, firm or corporation who fails to keep the tax collector so informed shall be permitted to plead lack of due notice given by the tax collector in any suit, action or other proceedings commenced or prosecuted under the provisions of ORS 311.545 to 311.565 or in any matter growing out of the administration of ORS 311.545 to 311.565.”

Plaintiffs contend that, notwithstanding that statute, they were entitled to notice of the foreclosure, because they were the record owners of both the land and the timber and that to uphold the foreclosure as to them would be to deprive them of their property without the due process of law guaranteed by *284the Fourteenth Amendment to the United States Constitution. They rely on Seattle-First National Bank v. Umatilla Co., 77 Or App 283, 713 P2d 33, rev den 300 Or 704 (1986).

Defendant, on the other hand, contends that in Grant County v. Guyer, 296 Or 14, 672 P2d 702 (1983), the Supreme Court held that the statutory tax foreclosure procedures do not offend due process. Relying on Mullane v. Central Hanover Tr. Co., 339 US 306, 70 S Ct 652, 94 L Ed 865 (1950), Grant County held that publication was constitutionally sufficient notice of tax foreclosure proceedings if it is supplemental to other action which, in itself, may reasonably be expected to convey a warning. The defendant there, who was the record owner of the property, had been given written notice pursuant to ORS 311.545 each year for three years of the tax delinquency. When the defendant failed to cure the delinquencies by the end of three year period, foreclosure proceedings were commenced. ORS 312.010(1). The defendant was named as a party and was named in the published notice. That is not this case.

In Seattle-First National Bank v. Umatilla Co., supra, we held that the version of ORS 312.040(1) in effect in 1983 (the same as that in effect in 1958) was unconstitutional as applied to record lienholders. The plaintiff was the record holder, by assignment, of a beneficial interest in a trust deed relating to certain real property. The record owner (trustor) had failed to pay taxes, and the county foreclosed on the property, eventually obtaining a tax deed. The county published notice of the foreclosure proceeding, as required by ORS 312.040(1), naming the trustor. The plaintiff was not named as a party and was not otherwise given notice. The plaintiff brought an action to challenge the foreclosure. The trial court dismissed the complaint for failure to state a claim for relief. On appeal, the plaintiff argued that, because its interest was recorded, foreclosure based only on the notice provisions of ORS 312.040(1) deprived it of property without due process of law. The county argued that the procedure of ORS 312.140, under which a person holding a recorded lien may file a request for mailed notice of a foreclosure list, provided the plaintiff with all the process it was due.

Relying on Mennonite Board of Missions v. Adams, 462 US 791, 103 S Ct 2706, 77 L Ed 2d 180 (1983), we held *285that the statutory scheme, which was substantially identical to the one involved here, did not afford the plaintiff due process, because it had a recorded security interest that the county could have readily discovered from the public records. The fact that the plaintiff could have taken other steps to protect its interest did not relieve the county of its constitutional obligation to give notice. Because there is no meaningful distinction between Seattle-First and this case, plaintiffs are correct, and the trial court did not err in granting their motion for summary judgment, albeit for the wrong reason.

The dissent would distinguish this case from Seattle-First on the ground that plaintiffs failed to record their assignment of the timber from Allen to them and to inform the tax collector of their interest in the timber. After February 14,1955, plaintiffs had become the absolute owners of the timber, which had reverted to them as the owners of the underlying land under the 1952 timber deed to Allen. Recording the earlier assignment of the timber was not necessary and would have been redundant. Accordingly, as in Seattle-First, plaintiffs’ interest was a matter of public record and the fact that they could have informed the tax collector of their interest pursuant to the statute did not relieve the county of its obligation to give plaintiffs notice of the foreclosure. The dissent’s distinction does not exist.

Affirmed.