NO. 95-395
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
TAX LIEN SERVICES,
Plaintiff and Respondent,
v.
LELAND L. HALL,
Defendant and Appellant,
and
LAKE COUNTY, a political subdivision of
the State of Montana, and unknown heirs and
the unknown devisees of any defendant who may
be deceased, and ALL OTHER PERSONS, claiming
or who might claim any right, title, estate,
or interest in or lien or encumbrance upon,
the real property described in the Complaint,
or any part thereof adverse to Plaintiff's
possible claim, be it present or contingent,
including any claim or possible claim of
dower, inchoate or accrued,
Defendants.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Lake,
The Honorable C. B. McNeil, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James C. Bartlett, Hash, O'Brien & Bartlett,
Kalispell, Montana
For Respondents:
Keith W. McCurdy, McCurdy Law Firm, Poison, Montana
Deborah Kim Christopher, County Attorney, Poison,
Montana
For Intervener:
Hon. Joseph P. Mazurek, Attorney General; Clay R.
Smith, Solicitor, Helena, Montana
For Amici Curiae:
J. Cort Harrinqton, Helena, Montana (Montana County
Treasurers Association)
John Alke and Stephen M. Frankino, Hughes, Kellner,
Sullivan and Alke, Helena, Montana (Montana
Taxpayers Association)
Heard: May 21, 1996
Submitted: May 31, 1996
Decided: July 12, 1996
Filed:
-2-
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Leland L. Hall appeals a judgment of the Twentieth Judicial
District Court, Lake County. The court ruled that errors in
obtaining a tax deed to Hall's Lake County property were cured by
the publication of a Notice of Claim of Tax Title pursuant to 5 15-
18-413, MCA. We reverse and remand.
The issue is whether the applicant for the tax deed, Tax Lien
Services, Inc., may avoid having the tax deed declared null and
void by publishing notice required by § 15-18-413, MCA, to cure
defects in the notice provided pursuant to § 15-18-212, MCA.
Leland L. Hall failed to pay real property taxes on property
he owned in Lake County, Montana, for the years 1989, 1990, 1991,
and 1992. The Lake County Treasurer used the following legal
description of the property: Tr in SW l/4 NW l/4 Tr 1 COS 4012
4.815 Acres, 3-26-19.
In April 1993, Tax Lien Services, Inc. (TLS), obtained an
assignment of a Certificate of Tax Sale from the Lake County
Treasurer for the property. TLS mailed and published a notice to
all interested parties, including Hall at his Lake County address
as it appeared in the records of the Lake County Treasurer. The
County Treasurer issued a tax deed to TLS on October 29, 1993.
On November 11 and 18, 1993, TLS caused the Lake County
Leader, a newspaper in Lake County, to run a "Corrected Notice of
Claim of a Tax Title." On March 25, 1994, TLS filed this action to
quiet title to the real property. Conceding defects in the earlier
notice to obtain a tax deed, TLS relied solely on the "Corrected
Notice of Claim of a Tax Title" as a basis to obtain quiet title to
3
the real property. The complaint alleged that the "Corrected
Notice of Claim of a Tax Title" established that all defects in the
tax proceedings and any right of redemption were considered
"waived."
Hall filed an answer and a counterclaim alleging that TLS had
failed to comply with the procedures and notice requirements to
obtain a tax deed under § 15-18-212, MCA. Both parties moved for
summary judgment, Hall also arguing that 5 15-18-413, MCA, does not
meet due process requirements. The District Court held that errors
in obtaining the tax deed were cured by publication of the
"Corrected Notice of Claim of a Tax Title" pursuant to § 15-18-413,
MCA, which the court ruled did not violate the due process or equal
protection clauses of either the United States or the Montana
constitution. The court therefore entered judgment that TLS was
the owner in fee simple of the subject real property.
DISCUSSION
This action involves portions of Montana Code Annotated Title
15, Chapter 18, "Ownership interests in land sold for taxes." The
statute here at issue, § 15-18-413, MCA, was enacted in 1987 to
provide tax deed purchasers with an alternative to the quiet title
action described under § 15-18-411, MCA. Section 15-18-413, MCA,
provides:
Title conveyed by deed--defects. (1) All deeds
executed more than 3 years after the applicable tax sale
convey to the grantee absolute title to the property
described in the deed as of 3 years following the date of
sale of the property interest at the tax sale.
(2) The conveyance includes:
(a) all right, title, interest, estate, lien,
claim, and demand of the state of Montana and of the
county in and to the property; and
(b) the right, if the tax deed, tax sale, or any of
the tax proceedings upon which the deed may be based are
attacked and held irregular or void, to recover the
unpaid taxes, interest, penalties, and costs that would
accrue if the tax proceedings had been regular and it was
desired to redeem the property.
(3) The tax deed is free of all encumbrances except
as provided in 15-18-214(l) (a) through (1) (c).
(4) A tax deed is prima facie evidence of the right
of possession accruing as of the date of the expiration
of the redemption period described in 15-18-111.
(5) If any tax deed or deed purporting to be a tax
deed is issued more than 3 years and 30 days after the
date of the sale of the property interest at the applica-
ble tax sale, the grantee may publish in the official
newspaper of the county, once a week for 2 consecutive
weeks, a notice entitled "Notice of Claim of a Tax
Title". The notice must:
(a) describe all property claimed to have been
acquired by a tax deed;
ibi contain an estimate of the amount due on the
property for delinquent taxes, interest, penalties, and
costs;
Cc) contain a statement that for further specific
information, reference must be made to the records in the
office of the county treasurer;
Cd) list the name and address of record of the
person in whose name the property was assessed or taxed;
and
(e) contain a statement that demand is made that
the person assessed or taxed must, within 30 days after
the first publication of the notice, pay to the claimant
or to the county treasurer for use by the claimant the
amount of taxes, interest, penalties, and costs as the
same appear in the records of the county treasurer or
bring a suit to quiet the true owner's title or to set
aside the tax deed.
(6) A mistake in the amount or in any name speci-
fied in the notice does not invalidate the notice.
(7) (a) If within the 30-day period the taxes,
interest, penalties, and costs are not paid or a quiet
title action is not brought, all defects in the tax
proceedings and any right of redemption is considered
waived. Except as provided in subsection (71 (b), after
the 30-day period the title to the property described in
5
the notice and in the tax deed is valid and binding,
irrespective of any irregularities, defects, omissions,
or total failure to observe any of the provisions of the
laws of Montana regarding the assessment, levying of
taxes, or sale of property for taxes and the giving of
notices, whether or not such irregularities, defects,
omissions, or failures could void the proceedings.
(b) The proceedings in subsection (7) (a) are void
if the taxes were not delinquent or have been paid.
The first question before this Court is whether the above
statute violates the due process clauses of the constitutions of
the United States and of the State of Montana. As the discussion
which follows will demonstrate, the governing standards under the
Due Process Clause of the Fourteenth Amendment to the United States
Constitution are clear. We therefore conclude that we need not
determine whether the due process clause of the Montana Constitu-
tion, Article II, Section 17, provides greater protection than its
federal counterpart
Section 15-18-413(5), MCA, provides for notice by publication
of the claimed acquisition of property by tax deed to the delin-
quent taxpayer--the "person assessed." The statute then allows
the "person assessed" an opportunity within the thirty-day period
following the first publication of the notice to either reacquire
the property through payment of the outstanding taxes, interest,
penalties and costs, or to initiate a quiet title action in which
the validity of the tax deed may be attacked. Section 15-18-
413(5) (e), MCA. The first step in due process analysis is to
examine the nature of the opportunities so provided, to determine
whether a property interest is involved.
Section 15-18-413, MCA, essentially provides the "person
assessed" with a right of redemption and a right to bring a quiet
6
title action. This Court long has recognized that redemption
generally is "a vested property right . of which the owner
cannot be legally deprived except and only . by the giving of
notice." Lowery v. Garfield County (1949), 122 Mont. 571, 582, 208
P.2d 478, 484. Both the right to redemption and a right to bring
a cause of action are property interests protected under the Due
Process Clause of the Fourteenth Amendment. Tulsa Professional
Collection Services v. Pope (1988), 485 U.S. 478, 108 S.Ct. 1340,
99 L.Ed.Zd 565; Logan v. Zimmerman Brush Co. (1982), 455 U.S. 422,
102 S.Ct. 1148, 71 L.Ed.2d 265.
Where, as here, the identity of the property owner is known or
otherwise readily ascertainable, the Fourteenth Amendment requires
actual rather than constructive notice prior to a proceeding which
will adversely affect the liberty or property interests of the
party.
[Alctual notice is a minimum constitutional precondition
to a proceeding which will adversely affect the liberty
or property interests of any party, whether unlettered or
well versed in commercial practice, if its name and
address are reasonably ascertainable.
Mennonite Board of Missions v. Adams (1983), 462 U.S. 791, 800, 103
S.Ct. 2706, 2712, 77 L.Ed.Zd 180, 188. In Mennonite, the United
States Supreme Court voided an Indiana tax sale of real property.
The Court held that constructive notice of a pending tax sale by
publication must be supplemented by personal service or notice
mailed to the last known address of the mortgagee, the name of
which was identified in a mortgage which was a public record.
Mennonite, 462 U.S. at 798.
As discussed above, constructive notice is not constitu-
tionally sufficient when the name and address of a party are
reasonably ascertainable. Yet § 15-18-413(5), MCA, provides for
constructive notice in all circumstances in which the tax deed is
issued more than three years and thirty days after the tax sale.
We hold that, to the extent that it deprives delinquent taxpayers
whose names and addresses are reasonably ascertainable of repur-
chase or quiet-title-action filing rights if such rights are not
exercised within thirty days of the first notice by publication, §
15-18-413, MCA, is unconstitutional under the Fourteenth Amendment
to the United States Constitution.
Section 15-18-413, MCA, was enacted as Section 26 of Chapter
587, Laws of 1987. This legislative package "generally revis[ed]
the laws relating to property tax collections, property tax
delinquencies, and the tax deeding process." Title of Ch. 587, L.
1987.
If, when an unconstitutional part of an act is eliminated, the
remainder is complete in itself and capable of being executed in
accordance with the apparent legislative intent, it must be
sustained. Montana Auto. Ass'n v. Greely (1981), 193 Mont. 378,
399, 632 P.2d 300, 311, citing Gullickson v. Mitchell (1942), 113
Mont. 359, 375, 126 P.Zd 1106, 1114. In this case, it appears that
the remainder of Chapter 587 is complete in itself and capable of
being executed absent its Section 26, which has been codified as
§ 15-18-413, MCA.
The District Court stated that, for purposes of its ruling, it
assumed arguendo that there were errors in the tax deed proceeding.
8
In its brief to the District Court on the summary judgment motions,
TLS stated: "For purposes of the following argument, [TLSI
acknowledges technical defects in the legal description and listing
of the taxes, penalty, interest and costs in the Notice of Pending
Tax Deed Issuance." While TLS views these defects as mere
technicalities, we conclude they are fatal.
Section 15-18-212, MCA, sets forth the requirements for a
notice of an intended issuance of a tax deed to real property. One
requirement is that, in disclosing the amount of taxes due, a
separate listing must be made of the delinquent taxes, penalties,
interest and costs that must be paid for the property tax lien to
be liquidated. Section 15-18-212(6) (e), MCA. TLS acknowledges
including a cost of $35 twice in its notice and including the sum
of $311.28 as a cost, which sum TLS admits may not have been
includable. The result of these discrepancies is that TLS's notice
did not accurately reflect the elements which the statute required
to be itemized in the listing.
A notice of an intended issuance of a tax deed to real
property must also include "a description of the property on which
the taxes are or were delinquent, which must be the same as the
descriptionof the property on the tax sale certificate or in the
record described in 15-17-214(2! (b)." Section 15-l&212(6) (b),
MCA. The instruments prepared by TLS contain an erroneous legal
description. In the notice published by TLS, the portion of the
legal description of the subject real property which should have
read "Tr 1" for "Tract 1," read instead 'Tr/."
This Court long has held that procedures for obtaining a tax
deed require strict statutory compliance. Moran v. Robbin (1993)
261 Mont. 478, 863 P.2d 395, and cases cited therein. The giving
of notice is a critical element in the process, and compliance with
statutory requirements is essential for jurisdictional purposes.
A critical element in the process of applying for a
tax deed requires the giving of notice by the tax deed
applicant to the owner of the real property. The giving
of notice is jurisdictional; if the legal requirements
with respect to notice are not complied with, a county
treasurer may not legally issue a tax deed.
Moran
-r 863 P.2d at 398.
In this case, the legal requirements for notice were not met
in the process of applying for the tax deed. We conclude that
sufficient error has been demonstrated to eliminate the need for a
hearing on remand on the validity of the tax deed held by TLS. We
hold that the tax deed issued to TLS is null and void.
CONCLUSION
We hold that TLS may not avoid having the tax deed declared
null and void by publishing notice required by 5 15-18-413, MCA, in
order to cure defects in the notice provided pursuant to § 15-18-
212, MCA. We therefore reverse the decision of the District Court
granting summary judgment for TLS. We direct that summary judgment
be entered for Hall, and remand for further proceedings consistent
with this Opinion.
Chief Justice
we concur:
11