Gathwright v. Mayor of Baltimore

Grason, J., delivered the opinion of the Court. The appellants own two pieces of property in the City of Baltimore, one situated at the northwest corner of Linhill Avenue and Rockrose Avenue, and the other at the southernmost corner of Ninth and Chesapeake Avenues. On the 16th day of October, 1941, the property at Linhill Avenue and Rockrose Avenue was sold by the City Collector and the Collector of State Taxes to the Mayor and City Council of Baltimore for non-payment of state and city taxes. On the 30th day of October, 1941, the property at the corner of Ninth and Chesapeake Avenues was sold under the provisions of Chapter 540 of the Acts of the General Assembly of Maryland, 1941, by the City Collector and Collector of State Taxes to the Mayor and City Council, in fee simple, for non-payment of state and city taxes; a certificate of tax sale was issued by the Collector to the Mayor and City Council on November 5, 1941.

On the 3rd day of December, 1942, the Mayor and City Council of Baltimore, as purchaser of the aforesaid properties, filed a bill of complaint in the Circuit Court for Baltimore City for the purpose of foreclosing all rights of redemption in and to the aforesaid properties of the appellants and of all persons having or claiming to have an interest therein, to which the complainants were duly subpoenaed. Thereafter the appellants filed a bill of complaint in the Circuit Court of Baltimore City against the Mayor and City Council of Baltimore, a municipal corporation, in which the facts above stated were recited, claiming that Chapter 540 of the Acts of the General Assembly of Maryland, 1941, is unconstitutional and void in its entirety, because in violation of the Constitution of the United States and the State of Maryland. The prayers of the bill are: ³⁶⁴ (a) That said Act may be declared unconstitutional and void as an entirety. (b) That its provisions referred to in the bill be declared to be unconstitutional and void.

(c) That the city be enjoined from maintaining and completing the aforesaid proceedings referred to in the bill. (d) That the foreclosure proceedings referred to in the bill be declared invalid in so far as they relate to the property first described in said bill of complaint. (e) For general relief. To this bill a combined answer and demurrer was filed by the city.

The court decreed that the property secondly described in the bill, and particularly the prayer for an injunction, be dismissed; that as to the property firstly described, the city is enjoined and restrained from proceeding further with the case instituted against the complainants and the proceedings as to said property in said case “are hereby declared to be null and void.” The lower court held the Act constitutional, but that the city did not comply with the Act in the proceeding dealing with the property first described in the appellants’ bill of complaint. From this decree the appellants have appealed to this court and it presents the question of the property of the action of the court below in dismissing the appellants’ bill in so far as it affected the property secondly described in the bill. • It is contended by appellants that the Act in question is unconstitutional, null and void, in that its provisions are in violation of due process of law, work inequality and impair the obligation of contracts. The main point in the case is whether a proceeding initiated by a holder of a certificate of sale, authorized by the Act, is an action in rem or an action in personam. If it is an action in personam the parties to the proceedings would have to be personally summoned, but if it is an action in rem, the parties need not be summoned.

In ³⁶⁵ determining this question the provision of the Act must be considered in the light of judicial determination in similar cases. It is apparent from the terms of the Act that it is a proceeding to enforce payment of taxes due and in arrear on property by selling the property and applying so much of the proceeds as is necessary to pay all taxes and public dues and costs. It provides, among other things, notice to be given to the person appearing as owner on the tax records and warns him unless taxes due on the particular property are paid it will be sold by the Collector. If taxes are not paid after thirty days from the service of notice, as provided by the Act, the property is advertised and sold to the highest bidder, to whom the Collector gives a certificate of sale, which gives the holder a right any time after a year and a day, but within two years from the date of the sale of the property by the Collector, to institute a proceeding in an equity court in Baltimore City to foreclose the right of redemption of the owner of the property sold.

In such a case the holder of a certificate of sale is plaintiff, the owner of the property whose interest can be ascertained from public records mentioned in the Act, any mortgagee of the property or his assignee of record as disclosed by the public records, the State of Maryland may be made parties defendant and it is “not necessary to name as defendant any other person having or claiming to have any right, title, interest, claim, lien or equity of redemption in and to the property sold by the Collector. Any or all such persons may be included as defendants by the designation “all persons having or claiming to have any interest in property * * *, (giving a description of the property in substantially the same form as the description which appears on the City Collector’s tax roll).” Provision is made for summoning parties interested within the State and for an order of publication against non-residents and all persons having or claiming to have ³⁶⁶ any interest in the property and the property is described in the publication as it appears on the tax records, and in cases where a survey is necessary the description by the surveyor is used to describe the property in the order of publication. This publication warns all parties interested to appear in court within a time limited and redeem the property and in the event no one appears the court passes a decree forever foreclosing the right of the owner to redeem the. property. Thereafter, as directed by the decree of. the court, the Collector gives the deed to the holder of the certificate of sale, but only after all taxes and public charges have been paid on the property to the date of the execution of the deed by the collector to the holder of the certificate of sale.

It will thus be seen that property against which taxes are due and in arrears is first sold by the Collector at public sale, to the highest bidder, and a certificate of sale given by the Collector to the person buying the property, and such holder, or his assignee, can proceed under the terms of the Act to institute a proceeding to foreclose the owner’s right of redemption and for this purpose the courts of the city are given general equity jurisdiction, except as otherwise provided by the Act. Under this foreclosure proceeding the property is not again offered for sale to the highest bidder, but the court is given the power only in a proper case to foreclose the right of redemption and to decree that the Collector deed the property to the person or his assignee who bought the property at public sale from the Collector. It is contended that the machinery set up to foreclose the equity of redemption of a delinquent taxpayer in property sold is one in strict foreclosure and that, therefore, every person interested in the property is entitled to be named and brought in by personal process. This surely cannot be so, because in a case of strict foreclosure the property is sold to the highest bidder under a decree of court, the proceeds used to pay the mortgagee and ³⁶⁷ costs and the balance is paid to the mortgagor.

Mitsch v. Ownes, 82 N. J. Eq. 404, 89 A. 292 , page 293. We cannot accept the contention of appellants that the Act in question should be viewed and restricted in the light of the law applicable to proceedings under strict foreclosure. As suggested by appellants’ brief: “The Legislature, may provide the most summary measures for the enforcement of the collection of taxes, even to the extent of selling property for non-payment thereof by giving notive only by publication and that such measures will not divest a citizen of his property without due process of law,” and we think that the Legislature might adopt a part of the procedure in strict foreclosure in enforcing the collection of taxes, without rendering the proceeding itself one in strict foreclosure. In the instant case the subject is taxes due on certain property and the procedure to subject that property to payment of same.

We think that that is the beginning and end of this