No. 95-408
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
JEFFREY SANDERS,
Plaintiff and Appellant,
<:,,*.<' ...&. i&2, -' ,i
YELLOWSTONE COUNTY (a Political Subdivision ~..,IF:-:i,;.r'i~ ,-~ t; .,~.,F gg&y*NA
i,ir 2'sl?~q';g;'iE CO"F(y
,
of the State of Montana) and GAUGERS SALES C' (2:
CORP. (a Montana corporation),
Defendants and Respondents.
*****xX*x**************
GAUGERS SALES CORP. (a Montana corporation),
Cross-Plaintiff,
v.
JEFFREY SANDERS,
Cross-Defendant.
*x***************cx*x**
GAUGERS SALES CORP. (a Montana corporation),
Cross-Plaintiff,
v.
YELLOWSTONE COUNTY (a political Subdivision
of the State of Montana),
Cross-Defendant.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Diane G. Barz, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Peter T. Stanley, Billings, Montana
For Respondent:
Dennis Paxinos, County Attorney; Brent Brooks,
Deputy County Attorney, Billings, Montana
Carol Hardy, Pedersen & Hardy, Billings, Montana
Submitted on Briefs: March 7, 1996
Decided: April 16, 1996
Filed:
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Jeffrey Sanders (Sanders) appeals from the decision of the
Thirteenth Judicial District Court, Yellowstone County, granting
Gaugers Sales Corp.'s (Gaugers) and Yellowstone County's motions
for summary judgment in this quiet title action. We reverse.
We find the following issues dispositive on appeal:
1. Did Sanders have standing to institute this quiet title
action?
2 . Did the Yellowstone County Treasurer have jurisdiction to
issue a tax deed on August 3, 1992, to Yellowstone County for Lot
7C, Block 8 in Emerald Hills Subdivision?
The subject property was sold by Emerald Hills Development
Company (EHDC) on a 1977 contract for deed. The buyers thereafter
in 1979 assigned their interest in the contract to Thomas E. Hannah
and others. The contract has never been terminated. In 1980, EHDC
quitclaimed its interest in the property, subject to the Thomas E.
Hannah buyer's interest in the 1977 contract, to Kenneth and Mary
McKenzie. Following a series of additional conveyances, the EHDC
interest was conveyed in April of 1993 to appellant Jeffrey
Sanders.
In 1989 Yellowstone County received a Tax Sale Certificate to
the subject property. On August 3, 1992, the Yellowstone County
Treasurer issued a tax deed for the property to Yellowstone County.
On December 9, 1992, Yellowstone County sold the property on
contract to Gaugers.
In April of 1993, as stated above, appellant Jeffrey Sanders
by conveyance received title to the property subject to the
interest of Thomas E. Hannah under the 1979 assignment of the
3
contract for deed. On November 30, 1993, Sanders instituted this
quiet title action, arguing that the Yellowstone County Treasurer
was without jurisdiction to issue the tax deed to Yellowstone
County because the notice requirements of §§ 15-18-111 and -212,
MCA, had not been met. Gaugers subsequently acquired and recorded
a quitclaim deed from Thomas E. Hannah
Yellowstone County properly notified Sanders' predecessor in
interest of the pending issuance of a tax deed. Yellowstone County
did not notify Thomas E. Hannah of its intent to issue a tax deed.
The published notice likewise did not list Thomas E. Hannah as an
interested party. It is undisputed that, at the time notice was
given, Thomas E. Hannah was an interested party as defined in § 15-
18-111, MCA, and was entitled to notice under 5 15-18-212, MCA.
The case was submitted to the District Court on cross-motions
for summary judgment. The court granted Yellowstone County's and
Gaugers' motions for summary judgment and denied Sanders' motion
for summary judgment. The court's decision was based on Sanders'
lack of standing to challenge the issuance of the tax deed.
Issue 1
Did Sanders have standing to institute this quiet title
action?
Section 70-28-101, MCA, provides that a quiet title action may
be brought
by any person or persons, whether in actual possession or
not, claiming title to real estate against any person or
persons, both known and unknown, who claim or may claim
any right, title, estate, or interest therein or lien or
encumbrance thereon adverse to plaintiff's ownership or
any cloud upon plaintiff's title thereto, whether such
claim or possible claim be present or contingent,
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including any claim or possible claim of dower, inchoate
or accrued, for the purpose of determining such claim or
possible claim and quieting the title to said real
estate.
Sanders meets the criteria set forth in this section, as he is a
person claiming title to real estate against another person
(Gaugers) who claims an interest adverse to his own. Sanders
alleges, in essence, that Gaugers' adverse claim of title was
acquired via tax deed proceedings which were defective and which,
as a result, divested the Yellowstone County Treasurer of jurisdic-
tion to issue the tax deed.
In addition to being a party entitled to bring a quiet title
action, however, Sanders must establish standing to challenge the
tax deed proceeding. This Court has determined that the following
criteria must be satisfied to establish standing:
(1) The complaining party must clearly allege past,
present or threatened injury to a property or civil
right; and (2) the alleged injury must be distinguishable
from the injury to the public generally, but the injury
need not be exclusive to the complaining party.
Stewart v. Bd. of Cty. Com'rs of Big Horn Cty. (1977), 175 Mont.
197, 201, 573 P.2d 184, 186.
In this quiet title action, Sanders has alleged a present
injury to a property right. Sanders maintains that Gaugers'
asserted interest, allegedly acquired via defective proceedings
which rendered Gaugers' tax deed void, is a cloud on his title.
This allegation is clearly personal to himself, as opposed to an
injury to the public in general. See Stewart, 573 P.2d at 186.
Thus, Sanders meets the standing criteria.
5
Contrary to the allegations raised in the dissent, no Montana
statute or case law requires Sanders to have an interest in the
subject property at the time of the issuance of the tax deed in
order to institute a quiet title action. The cases cited by the
dissent are clearly distinguishable in that Utah's statutory scheme
provides a clearly defined statute of limitations. The dissent's
concern over the lack of finality in tax deed cases is well taken;
however, it is not the role of this Court to create such finality
absent specific statutory authority.
Although Sanders did not have an interest in the property when
the treasurer issued the tax deed, he later received a quit claim
deed to the property. It is this purported interest Sanders now
seeks to protect.
We note that the application of the Stewart standing criteria
in this case produces a different result on the standing issue than
we reached in Bowen v. McDonald (Mont. 1995) P.2d ~, 53
St.Rep. (Cause No. 95-193, decided April 16, 1996). The
difference arises from the different natures of the two actions--in
Bowen, the sole basis for standing was the claimed statutory right
to redeem; here, the basis for standing is the quiet title statute,
§ 70-28-101, MCA. We hold that the District Court erred in
concluding that Sanders lacked standing to institute this quiet
title action.
Issue 2
Did the Yellowstone County Treasurer have jurisdiction to
issue a tax deed on August 3, 1992, to Yellowstone County for Lot
7c, Block 8 in Emerald Hills Subdivision?
6
We review a district court's grant of summary judgment using
the same standard utilized by the district court. Summary judgment
is proper only when no genuine issue of material fact exists and
the moving party is entitled to judgment as a matter of law. Rule
56(c), M.R.Civ.P.; Bruner v. Yellowstone County (1995), 272 Mont.
261, 264, 900 P.2d 901, 903.
Sanders argues that the Yellowstone County Treasurer did not
have jurisdiction to issue the tax deed. The parties in their
Statement of Agreed Facts (SAF) agreed that Thomas E. Hannah was an
interested party, entitled to notice prior to the issuance of the
tax deed. The parties in their SAF agreed that Yellowstone County
failed to notify Thomas E. Hannah. Sanders argues that because
Yellowstone County failed to notify Thomas E. Hannah of the
impending issuance of the tax deed, the treasurer was without
jurisdiction to issue a tax deed.
The notice requirements prior to the issuance of a tax deed,
§ 15-18-212, MCA, state:
(1) Not more than 60 days prior to and not more
than 60 days following the expiration of the redemption
period provided in 15-18-111, a notice must be given as
follows:
(a) for each property for which there has been
issued to the county a tax sale certificate or for which
the county is otherwise listed as the purchaser or
assignee, the county clerk shall notify all persons
considered interested parties in the property and the
current occupant of the property, if any, that a tax deed
may be issued to the county unless the property tax lien
is redeemed prior to the expiration date of the redemp-
tion period .
7
(4) The notice required under subsections (1) and
(2) must be made by certified mail, return receipt
requested, to each interested party and the current
occupant, if any, of the property. The address to which
the notice must be sent is, for each interested party,
the address disclosed by the records in the office of the
county clerk and, for the occupant, the street address or
other known address of the subject property.
Subsection (5) sets forth the specific publication requirements
when the address of the interested party is not known. Section 15-
l&212(5), MCA
Section 15-l8-111(3), MCA, defines "interested party" for use
in this part, as any
mortgagee, vendor of a contract for deed or the vendor's
successor in interest, lienholder, or other person who
has a properly recorded interest in the property.
Thomas E. Hannah was an assignee of the 1977 contract for deed to
the property and was an interested party under this section.
Yellowstone County and Gaugers agreed that Thomas E. Hannah was an
interested party in the SAF. Statement of Agreed Fact No. 18
reads:
Yellowstone County failed to send notice of its intent to
issue a tax deed to Thomas E. Hannah. The published
notice did not set forth the name of Thomas E. Hannah.
At the time the notice of issuance was given and at the
time the tax deed was issued Thomas E. Hannah was an
interested person, entitled to notice of sale. A title
report issued to the county indicated that Thomas E.
Hannah was one of the record holders of the vendees
interest in the property.
Clearly, the law required Yellowstone County to notify Thomas
E. Hannah of the impending issuance of the tax deed. The required
notice was not given in this case.
We have recently held that failure to strictly comply with the
statutory notice requirements for the issuance of a tax deed
8
results in the treasurer being without jurisdiction to issue a tax
deed. Moran v. Robbin (1993), 261 Mont. 478, 483, 863 P.2d 395,
400. In Moran, the property owners challenged the sufficiency of
notice given pursuant to 5 15-18-212, MCA. Due to the failure to
give proper notice as required by 5 15-18-212, MCA, we concluded
that the treasurer was without jurisdiction to issue a tax deed.
Moran, 863 P.Zd at 400. In reversing the district court, we
stated:
Every essential and material step required by the
tax deed statutes must be strictly followed. [Citation
om i t t e d . ]
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 qivinq
of notice is iurisdictional; if the legal requirements
with resoect to notice are not comalied with, a countv
treasurer may not leqallv issue a tax deed. [Citation
o m i t t e d . ] A tax deed issued without the required
proof of notice is void. [Citation omitted.]
[Tlhe giving of notice is jurisdictional, and
unless the statutory requirements with respect to such
notice are met, a tax deed may not issue.
Moran, 863 P.2d at 398-99 (emphasis added). We went on to hold
that because the treasurer acted without jurisdiction, the deed was
"void ab initio." MoranI 863 P.2d at 400.
-
In the present case, Yellowstone County and Gaugers admitted
in the Statement of Agreed Facts that notice was not given to
Thomas E. Hannah, an interested party, as required by 5 15-18-212,
MCA. Because the requirements of § 15-18-212, MCA, were not met,
the treasurer did not have jurisdiction to issue the deed and the
deed is therefore void ab initio.
9
We conclude that the District Court erred in determining that
Sanders did not have standing to challenge the issuance of the tax
deed. Sanders properly instituted this quiet title action. We
hold that because the notice requirements of § 15-18-212, MCA, were
not satisfied, the Yellowstone County Treasurer did not have
jurisdiction to issue a tax deed for the Thomas E. Hannah interest
in the subject property and the tax deed issued was void ab initio.
We reverse the decision of the District Court granting
Yellowstone County's and Gaugers' motions for summary judgment.
Chief Justice
We concur: I
Justices
10
Justice W. William Leaphart, dissenting.
I dissent. I would affirm the District Court's holding that
Sanders did not have the requisite standing to question the lack of
notice to Hannah. The Court voids the tax deed to Gaugers for the
reason that the County Treasurer failed to give notice to an
interested party, Hannah, as required by § 15-18-212, MCA. The
party raising this lack of notice is Sanders. Since Sanders did
not acquire an interest in the property until after the tax deed
was issued and was not the party who was deprived of the requisite
notice, the question arises: "does Sanders have standing to assert
Hannah's right to receive notice?"
Sanders does not argue that he has suffered any deprivation of
due process because of the lack of notice. Rather, he seeks to
advance his claim to the property by asserting a third party's
constitutional right to notice. " [Tl he general rule is that 'a
litigant may only assert his own constitutional rights or
immunities.'" McGowan v. Maryland (19611, 366 U.S. 420, 429, 81
S.Ct. 1101, 1107, 6 L.Ed.2d 393, 401 (quoting United States v.
Raines (1960), 362 U.S. 17, 22, 80 S.Ct. 519, 523, 4 L.Ed.2d 524);
see also Olson v. Department of Revenue (1986), 223 Mont. 464, 470,
726 P.2d 1162, 1166; Montana Human Rights v. City of Billings
(1982), 199 Mont. 434, 443, 649 P.2d 1283, 1288; State v. Kirkland
(1979), 184 Mont. 229, 235, 602 P.2d 586, 590.
The Tenth Circuit Court of Appeals addressed a similar issue
in Kemmerer Coal Co. v. Brigham Young Univ. (10th Cir. 1983), 723
F.2d 54. Kemmerer was a quiet title action filed by Brigham Young
University (B.Y.U.) to quiet title to certain property to which it
11
had obtained title through tax deeds. Under Utah's statute of
limitations, a challenge to a tax deed must be filed within four
years of the date of the tax deed. B.Y.U. contended that, in light
of this four-year limitation, Kemmerer was barred from challenging
the validity of the tax deed some 20 years after the tax sale.
Kemmerer contended that the tax deed was void for lack of due
process since Kemmerer's predecessor in interest (San Rafael)
received no notice of the tax sale even though there was no
question but that San Rafael was the true owner at the time of the
sale. The Tenth Circuit held that Kemmerer did not have standing
to assert San Rafael's deprivation of due process.
Kemmerer itself has suffered no due process injury. If a
constitutional violation occurred, it was the taking of
San Rafael's property without due process. Kemmerer thus
seeks to advance its claim by asserting a third-party's
constitutional rights. "[Tlhe general rule is that 'a
litigant may only assert his own constitutional rights or
immunities."' [Citations omitted.] This rule has been
applied to bar a grantee's assertion that its grantor's
due process rights were violated. See Hewitt v. Glaser
Land & Livestock Co., 97 Nev. 207, 626 P.2d 268 (1981);
accord United States v. Haddon, 550 F.2d 677, 681 (1st
Cir. 1977).
Kemmerer, 723 F.2d at 57. The court concluded that:
While it may have been "repugnant to fundamental
fairness," Frederiksen [v. LaFleur (Utah 1981)1, 632 P.2d
[827,1 at 831 n.14, to deprive San Rafael of its property
without proper notice, we do not believe it fundamentally
unfair to apply the statute of limitations to Kemmerer
who bought the coal lands in the face of record notice of
a rival claim to "underground rights."
Kemmerer, 723 F.2d at 57-58.
The Supreme Court of Utah, in Shelledy v. Lore (Utah 1992),
836 P.2d 786, cert. denied, 506 U.S. 1022, followed the Tenth
Circuit's reasoning in Kemmerer. In the Utah case, Shelledy had
purchased the property in question from the Small Business
12
Administration (SBA) He then filed a quiet title action against
parties who claimed title under a tax deed issued by the county at
a tax sale. Shelledy argued that the SBA, as a federal agency, was
entitled to full sovereign immunity and that this immunity barred
the county's attempt to enforce the tax lien. The court observed
that, although the SBA may have been able to avoid the tax sale on
the basis of its immunity, it did not do so and it no longer has an
interest in the property. Shelledv, 836 P.2d at 789. The court
then rejected Shelledy's attempt to assert the SBA's immunity from
taxation, concluding that:
When Shelledy purchased the property from the SBA in
1988, he was on record notice of defendants' rival claim
to the property by virtue of the 1984 tax deed.
Therefore, we hold that Shelledy lacks standing to assert
the SBA's constitutional rights and defense.
Shelledv, 836 P.2d at 790.
In the present case, Sanders' claim of standing is even less
colorable than Kemmerer's or Shelledy's. Subsequent to the 1992
tax deed, Sanders purchased the property in 1993. Thus, like
Kemmerer and Shelledy, Sanders purchased the property with notice
of a rival claim by virtue of the earlier tax deed. However,
unlike Kemmerer and Shelledy, who purported to assert the due
process rights of their predecessors in interest, Sanders attempts
to assert the due process rights of a complete stranger to his
chain of title. Hannah is not Sanders' predecessor in interest nor
are they in privity with one another. Rather, Hannah stood in the
shoes of the purchaser under a contract for deed while Sanders
traced his claim to the seller's interest.
The Court, in allowing Sanders to successfully challenge the
13
tax deed through asserting the rights of third parties, has
undermined any finality that would normally attach to a tax deed by
virtue of the statute of limitations. As the Kemmerer facts
illustrate, if parties such as Sanders or Kemmerer can successfully
argue that a tax deed is void ab initio due to lack of notice to a
third party, then the statute of limitations for such challenges
becomes meaningless.
Under the holding of this case, there is no reason why
someone, whose only connection with the property is idle curiosity,
cannot search the public records in hope of unearthing a failure to
give proper statutory notice to an interested party and threaten to
have the tax deed declared void ab initio.
Justice/ /
Justice Terry N. Trieweiler joins in the foregoing dissent of
Justice W. William Leaphart.
1 I /
Sustice
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