Republic Bank v. Genesee County Treasurer

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:

Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

FILED JANUARY 26, 2005

REPUBLIC BANK, also known as
D & N BANK,

Plaintiff-Appellee,

v No. 126247

GENESEE COUNTY TREASURER,

Defendant-Appellant.

_______________________________

PER CURIAM.

This case concerns the application of two notice

provisions in the General Property Tax Act, MCL 211.1 et

seq. We must determine whether plaintiff may maintain a

claim under the act on the basis of defendant county

treasurer’s alleged failure to adequately notify plaintiff

of a tax foreclosure on a piece of property on which

plaintiff was the mortgagee. The Court of Claims granted

summary disposition to plaintiff on a finding that the

notice given was insufficient under the act, and the Court

of Appeals affirmed that decision. We reverse the judgment
of the Court of Appeals and remand the case to the Court of

Claims.

On August 5, 1999, D & N Bank gave a $490,000 loan to

Karmo Flint Investment, Inc. This loan was secured by a

mortgage on a gas station located in Grand Blanc Township

in Genesee County, Michigan. The mortgage was recorded

with the Genesee County Register of Deeds, and it listed D

& N Bank’s headquarters address in Hancock, Michigan, as

the proper location for provision of any notice. The

summer taxes on the secured property were due on the day

the loan was closed. D & N Bank did not deduct the amount

required to pay the then-delinquent property taxes from the

funds disbursed to the mortgagor, and those 1999 summer

taxes were mistakenly never paid. All subsequent tax

assessments were paid by D & N Bank or by plaintiff

Republic Bank as its successor.

The dispute between the parties in this case was

engendered by the mailing of a hearing notice to what

plaintiff alleges was the wrong address. This question of

the proper address for the notice was a consequence of a

bank merger that occurred before the mailing. In May 1999,

D & N Financial Corporation, the holding company of D & N

Bank, had merged with Republic Bancorp, Inc., the holding

company of plaintiff Republic Bank. D & N Bank itself was

subsequently merged into Republic Bank in December 2000.

D & N Bank had its headquarters in Hancock. Republic Bank

has its headquarters in Lansing, Michigan. After the bank

merger, Republic Bank continued to maintain an office at

the Hancock address. In fact, the former president and

chief executive officer of D & N Financial, who became

vice-chairman of the board of directors and one of the

largest shareholders of the merged corporation, maintained

his office at the Hancock location, as did other corporate

officers.

Karmo Flint Investment ultimately defaulted on its

loan from D & N Bank. On November 1, 2001, a stipulated

order was entered in a civil action filed by Republic Bank

(as D & N Bank’s successor) in Oakland Circuit Court. The

order appointed a receiver for the secured property and

authorized the receiver to take immediate possession and to

borrow from Republic Bank the funds necessary to pay any

delinquent and future property taxes.

Neither D & N Bank nor Republic Bank availed itself of

the right granted by MCL 211.78a(4) to receive delinquent

tax notices, and the 1999 summer tax delinquency did not

come to Republic Bank’s attention. Because those taxes

were never paid, defendant Genesee County Treasurer

commenced foreclosure proceedings on the Grand Blanc

Township property. Defendant did not notify either D & N

Bank or Republic Bank of the pending forfeiture of the

property. Defendant did send out a notice of show cause

and judicial foreclosure hearings in January 2002. The

notice was sent by certified mail, return receipt

requested, to the D & N Bank address in Hancock listed on

the mortgage. On January 8, 2002, an employee at the

Hancock office signed the return receipt. According to

plaintiff, the notice never made it to the appropriate

personnel at Republic Bank’s Lansing headquarters.

Republic Bank did not send a representative to appear

at the foreclosure hearing on February 19, 2002. At the

hearing, the Genesee Circuit Court ordered a judgment of

foreclosure to be entered on March 1, 2002. Pursuant to

that judgment, title in the property was to be vested in

defendant if all delinquent taxes were not paid within

twenty-one days of entry. Neither Republic Bank nor the

receiver of the property paid the delinquent taxes.

Consequently, defendant obtained title to the property on

March 23, 2002.

Upon discovery of the loss of the property, Republic

Bank filed this action seeking monetary relief in the Court

of Claims, alleging that defendant had not provided proper

notice of the foreclosure proceedings. At the close of

discovery, both parties filed motions for summary

disposition. The Court of Claims denied defendant’s

motion, and granted plaintiff’s motion, finding that

defendant had violated two notice provisions in the General

Property Tax Act, MCL 211.78f and MCL 211.78i. The order

granting plaintiff’s motion was not a final judgment,

because a hearing to determine plaintiff’s damages was

still required.

Defendant filed an application for leave to appeal

with the Court of Appeals, which was granted. The Court of

Appeals affirmed the decision of the Court of Claims.1 It

examined what it deemed the unique facts of this case and

concluded that defendant had given plaintiff insufficient

notice of the foreclosure proceedings. The Court of

Appeals relied primarily on defendant’s failure to mail the

notice of show cause and foreclosure proceedings to

Republic Bank at its Lansing headquarters. The Court

concluded that mailing the notice to the Hancock address

listed on the mortgage was not reasonably calculated to

apprise plaintiff of the pendency of the proceedings, as

required by the General Property Tax Act, MCL 211.78i. The

1
Unpublished opinion per curiam, issued April 27, 2004
(Docket No. 251072).

Court added that, although defendant’s failure to give

notice of the threatened forfeiture, as required by MCL

211.78f, would not, standing alone, give rise to a due

process claim, it was an important factual consideration in

the Court’s conclusion that the foreclosure notice failed

to satisfy the requirements of due process.

The General Property Tax Act authorizes county

treasurers to seize tax-delinquent property and sell it at

auction in order to recover the delinquent taxes. It also

imposes procedural safeguards in order to afford persons

with an interest in such property an opportunity to be

heard. Among those safeguards are various notice

requirements. In this case, three provisions of the act

are particularly relevant.

As an overall principle, MCL 211.78(2) provides that

the adequacy of notice under the act is governed by state

and federal due process standards, rather than by the

specific provisions of the act. The subsection states as

follows:

It is the intent of the legislature that the
provisions of this act relating to the return,
forfeiture, and foreclosure of property for
delinquent taxes satisfy the minimum requirements
of due process required under the constitution of
this state and the constitution of the United
States but that those provisions do not create

new rights beyond those required under the state
constitution of 1963 or the constitution of the
United States. The failure of this state or a
political subdivision of this state to follow a
requirement of this act relating to the return,
forfeiture, or foreclosure of property for
delinquent taxes shall not be construed to create
a claim or cause of action against this state or
a political subdivision of this state unless the
minimum requirements of due process accorded
under the state constitution of 1963 or the
constitution of the United States are violated.
[MCL 211.78(2).]

MCL 211.78f(1) requires a county treasurer to send

certain parties notice of the date on which property will

be forfeited to the county treasurer for unpaid delinquent

taxes. The subsection states in part as follows:

Except as otherwise provided in section 79
for certified abandoned property, not later than
the February 1 immediately succeeding the date
that unpaid taxes were returned to the county
treasurer for forfeiture, foreclosure, and sale
under section 60a(1) or (2) or returned to the
county treasurer as delinquent under section 78a,
the county treasurer shall send a notice by
certified mail, return receipt requested, to the
person to whom a tax bill for property returned
for delinquent taxes was last sent and, if
different, to the person identified as the owner
of property returned for delinquent taxes as
shown on the current records of the county
treasurer and to those persons identified under
section 78e(2). [MCL 211.78f(1).]

Plaintiff, as a holder of an undischarged mortgage, is

an entity identified under section 78e(2).2 Therefore,

2
MCL 211.78e(2)(b) lists (i) the owners, (ii) the
holder of any undischarged mortgage, tax certificate issued
under section 71, or other legal interest, (iii) a

plaintiff was entitled to notice under section 78f(1). It

is undisputed that defendant did not provide such notice.

The lower courts focused on the notice provision of

MCL 211.78i. In January 2002, when defendant sent out its

notice of show cause and foreclosure hearings, the section

provided in relevant part as follows:3

(1) Not later than May 1 immediately
succeeding the forfeiture of property to the
county treasurer under section 78g, the
foreclosing governmental unit shall initiate a
title search to identify the owners of a property
interest in the property who are entitled to
notice under this section of the show cause
hearing under section 78j and the foreclosure
hearing under section 78k. . . .

(2) The foreclosing governmental unit or its
authorized representative shall determine the
address reasonably calculated to apprise those
owners of a property interest of the pendency of
the show cause hearing under section 78j and the
foreclosure hearing under section 78k and shall
send notice of the show cause hearing under
section 78j and the foreclosure hearing under
section 78k to those owners, to a person entitled
to notice of the return of delinquent taxes under
section 78a(4), and to a person to whom a tax
deed for property returned for delinquent taxes
was issued pursuant to section 72 as determined
by the records of the state treasurer, by
certified mail, return receipt requested, not
less than 30 days before the show cause hearing.
The failure of the foreclosing governmental unit
to comply with any provision of this section
shall not invalidate any proceeding under this

subsequent purchaser under any land contract, and (iv) a
person entitled to notice of the return of delinquent taxes
under section 78a(5).
3
The section was substantially amended by 2003 PA 263.

act if the owner of a property interest or a
person to whom a tax deed was issued is accorded
the minimum due process required under the state
constitution of 1963 and the constitution of the
United States. [MCL 211.78i.]

In short, notice must be sent to an address reasonably

calculated to apprise the object of notice of the pending

proceedings, and this requirement must be evaluated in the

context of affording the object of notice minimal due

process.

III

We will first examine whether defendant failed to

provide adequate notice under MCL 211.78i. As earlier

noted, the Court of Appeals concluded that defendant failed

to determine the address reasonably calculated to apprise

Republic Bank of the show cause and foreclosure hearings.

In reaching this conclusion, the Court noted that defendant

could have found an updated address in the local tax

records, because plaintiff had paid the property taxes for

the winter of 1999, the year 2000, and the summer of 2001,

all before the foreclosure action. A search of the tax

records, said the Court, would have given defendant an

easily attainable updated address. We disagree with this

analysis.

In Dow v Michigan, 396 Mich 192; 240 NW2d 450 (1976),

this Court examined the requirements of due process in the

context of giving notice of a tax sale. In Dow the

question was whether notice by publication was sufficient.

This Court found that such notice did not meet

constitutional standards, and then went on to describe the

kind of notice that would satisfy due process requirements:

Personal service is not required. Notice by
mail is adequate. Mailed notice must be directed
to an address reasonably calculated to reach the
person entitled to notice. Mailing should be by
registered or certified mail, return receipt
requested, both because of the greater care in
delivery and because of the record of mailing and
receipt or non-receipt provided. Such would be
the efforts one desirous of actually informing
another might reasonably employ. If the state
exerts reasonable efforts, then failure to
effectuate actual notice would not preclude
foreclosure of the statutory lien and
indefeasible vesting of title on expiration of
the redemption period. [396 Mich 211.]

This analysis was acknowledged by this Court in Smith

v Cliffs on the Bay Condo Ass’n, 463 Mich 420; 617 NW2d 536

(2000), which considered a constitutional challenge to the

procedures by which tax-sale title to a piece of property

was obtained. The notice provision at issue was MCL

211.131e. In Smith, tax notices were sent to the address

of a corporation as indicated on a quitclaim deed. The

mailing to this last known address was returned by the post

office as not deliverable. The owner contended that under

this circumstance, the notice was inadequate, and that

additional efforts should have been undertaken to ascertain

the owner’s current address. This Court disagreed,

stating:

In this case there is nothing to indicate
that the township, county, or state had been
informed of a new address for the association.
Thus, it was appropriate for notices to be sent
to the Birmingham address stated in the deed
conveying the disputed parcel to the association.
The fact that one of the mailings was returned by
the post office as undeliverable does not impose
on the state the obligation to undertake an
investigation to see if a new address for the
association could be located. [463 Mich 429.]

This Court held in Smith that the mailing of tax

delinquency and redemption notices to a corporation at its

tax address of record in the manner required by the General

Property Tax Act was sufficient to provide constitutionally

adequate notice.

The Court of Appeals in this case distinguished Smith

by noting that, here, the municipality had been informed of

a new address through the fact that plaintiff paid taxes on

the property under the new name and address. We do not

find this distinction significant. First, the record shows

that plaintiff paid at least some of the post-summer 1999

property taxes using checks with the Hancock address on

them. More importantly, this Court indicated in Smith that

due process does not impose an obligation to undertake

additional investigations, when an address has been

provided on the relevant document and that document address

has not been changed. We agree with defendant’s argument

that to require municipalities to keep copies of checks

that are sent to pay taxes and then compare the addresses

thereon to those already provided for all property subject

to foreclosure would place unwarranted burdens on those

municipalities.

Here, where defendant relied on the address provided

in the mortgage recorded with the Genesee County Register

of Deeds, Republic Bank still operated a branch office at

that address, and an employee of the bank signed the

certified mail receipt card at that address, defendant not

only complied with the minimum requirements of due process,

but provided plaintiff with actual notice of the hearings.

Defendant clearly sent notice to “the address reasonably

calculated to apprise” plaintiff of the hearings.

Having found that defendant complied with the

requirements of MCL 211.78i, we must also examine the

implications of defendant’s failure to provide any notice

under MCL 211.78f. As the Court of Appeals held, such

failure to give notice would not, standing alone, give rise

to a due process claim. We agree. As this Court explained

in Mudge v Macomb Co, 458 Mich 87, 102; 580 NW2d 845

(1998), the critical question for purposes of due process

is whether an individual has been given a “'meaningful

opportunity to be heard . . . .'” (Quoting Boddie v

Connecticut, 401 US 371, 379; 91 S Ct 780; 28 L Ed 2d 113

[1971].) We noted that deprivation of property by

adjudication must be preceded by notice and opportunity

appropriate to the nature of the case, and within the

limits of practicability.

Here, the minimal requirements of due process were

satisfied where Republic Blank received constitutionally

adequate notice of the show cause and forfeiture hearings.

Due process does not require the advance notice of MCL

211.78f when a person is given adequate notice and a

meaningful opportunity to be heard pursuant to MCL 211.78i.

Such a conclusion is mandated by the above-quoted language

in MCL 211.78(2). Consequently, the Court of Appeals erred

in affirming the grant of summary disposition in favor of

plaintiff in this case. We thus reverse the judgment of

the Court of Appeals. This matter is remanded to the Court

of Claims for further proceedings consistent with this

opinion.

Clifford W. Taylor
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

S T A T E O F M I C H I G A N

SUPREME COURT

REPUBLIC BANK, also known as
D & N BANK,

Plaintiff-Appellee,

v No. 126247

GENESEE COUNTY TREASURER,

Defendant-Appellant.
_______________________________

KELLY, J. (concurring).

I agree with the disposition of this case. I continue

to believe that a significant question exists about the

constitutionality of the notice provisions of Michigan's

General Property Tax Act. MCL 211.1 et seq. However, in

this case, the notice that defendant provided not only

satisfied the act, it survives constitutional scrutiny.

A property owner facing foreclosure must be given

notice that foreclosure proceedings are underway. Mullane

v Central Hanover Bank & Trust Co, 339 US 306, 315; 70 S Ct

652; 94 L Ed 865 (1950); MCL 211.78i(2). The property

owners may not have been given adequate notice in the case

of Smith v Cliffs on the Bay Condo Ass’n, 463 Mich 420; 617

NW2d 536 (2000) (Kelly, J., dissenting). There, notice was

mailed to the owners but returned as undeliverable. I
believed that the owners may have been denied due process

of law and I wrote:

When the [Department of Treasury] receives
notice that its tax bills directed to a
corporation are undeliverable at a certain
address, reasonableness may require one more
step: an inquiry to the Corporations and
Securities Bureau to check for a current address.

[Id. at 433.]

By contrast, in the present case, defendant Genesee

County Treasurer researched the title records for

plaintiff’s correct address and sent the notice to

plaintiff at that address by certified mail. Defendant

received verification that plaintiff had accepted delivery.

These actions reasonably warned plaintiff that foreclosure

of the property was about to occur.

Moreover, plaintiff Republic Bank received actual

notice of the foreclosure hearing. It is the successor to

D & N Bank's interest, and it continued to maintain an

office at the address listed in the title records. Its

employee accepted the notice.1

It is true that the bank was not given notice as

required by § 78f of the act, MCL 211.78f. However, the

1
That the notice was misplaced after plaintiff's
employee accepted it is irrelevant to the question whether
the bank received minimal due process.

notice it received of the show cause hearing and judicial

forfeiture met the minimum requirements of due process.

Therefore, I agree that the decision of the Court of

Appeals should be reversed.

Marilyn Kelly
Michael F. Cavanagh

Republic Bank v. Genesee County Treasurer

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