Lippert v. Jung

CATHELL, Judge. In this very interesting case involving title to real property, Frederick and Ruth Lippert, appellants, claim title to the land in question by virtue of adverse possession allegedly extending for the statutory period. The unique aspect of this case is that almost nineteen years of the statutory period occurred prior to a tax sale of the premises at issue and a final order foreclosing the right of redemption, and the remaining portion of the statutory period occurred after the foreclosure of the ²²⁴ right of redemption. It is the appellants’ position that the adverse possession of property continues and survives successive owners, even when the last owner achieved his title through a tax sale and has properly foreclosed the equity of redemption.

Barry S. Jung, appellee, the successor in interest to the purchasers at the tax sale, contends that the statutory period begins to run anew in respect to property that has been purchased at a tax sale where the equity of redemption has been properly foreclosed. I. Facts In the mid-1970s, the Lipperts purchased a lot 1 in a subdivision in Baltimore County, Maryland. They mistakenly believed that the parcel they were buying also included two other, apparently abutting, lots. In addition to using the lot to which they had title, they also began to use the other two lots.

The other two lots were eventually sold at a tax sale on May 16, 1991. On February 12, 1992, a proper judgment foreclosing all rights of redemption was entered. The Lipperts apparently were not aware of the pendency of the tax sale, or of the proceedings to foreclose the equity of redemption. On May 13, 1998, slightly over six years after the judgment in the foreclosure proceeding was entered, ap-pellee notified the appellants to remove various improvements from the property at issue here.

In response, and almost seven years after the redemption rights were foreclosed, appellants filed an action to quiet title to the property based upon adverse possession, claiming that the tax sale proceedings did not interrupt the running of the statutory period in which adverse possession can ripen into ²²⁵ title. They claim that the statutory period ripened on July 11, 1993, eighteen months after the judgment was entered foreclosing the right of redemption relating to the tax sale. At a hearing on a Motion for Summary Judgment, the trial court found that the tax sale and foreclosure proceedings terminated the adverse possession period relying on the law of foreign jurisdictions. The appellee asserted below that: “[APPELLEE’S COUNSEL]: ...

Maryland is silent and it is surprisingly silent that this is an issue that has never presented itself especially in light of the age and the statute as far as adverse possession.... ” The appellants, addressing the trial court’s stated position based on the trial court’s review of foreign law, stated to the trial court: “[APPELLANTS’ COUNSEL]: ... [Y]ou are saying they got closed out. It was closed out February 14, 1992. They have to start another twenty years at that time? THE COURT: That’s what the case law seems to say. [APPELLANTS’ COUNSEL]: Okay.

That’s not Maryland law as it is right now. THE COURT: ... Maryland really hasn’t addressed this question.... If you do not step forward [in the foreclosure proceedings], the title that the State is going to give is going to be against everybody. ... [Everybody that needs to come forward that has a right, can come forward with a right.

Because you didn’t have a right, you had nothing. So, you still have nothing. You had nothing before in ‘92. You don’t have anything now. [APPELLANTS’ COUNSEL]: But if on February 14 you are saying that you believe that on that date because the State passed title through a tax deed, everything stopped and we start all over again?

THE COURT: That’s correct. ²²⁶ [APPELLANTS’ COUNSEL]: ... I could not find any cases in Maryland about transfer of ownership of anything. ... THE COURT: Well, what they are trying to do in the statute is they are trying to pass clear title. Therefore, everybody who has an interest has to come forward at that time.

At that time Mr. Lippert did not have an interest as you indicated because he didn’t have twenty years. THE COURT: I believe they would have a right to come in and claim if they had twenty years at that particular time. Once they did not, then the title that is passed is clear. [APPELLANTS’ COUNSEL]: What you are saying is the statute stops everything? THE COURT: That’s correct.” Later, appellants’ counsel states to the trial court: “July 9, 1993, if the Jungs had walked in and said get off our property, that’s it....

But they didn’t. They didn’t do nothing. Absolutely nothing.... I don’t believe the statute can stop aright that wasn’t there.” [ 2 ] The trial court then rendered summary judgment in favor of the appellees.

Appellants appealed to the Court of Special Appeals. On our own action, by writ, we brought the proceedings before us for our review. We note that appellants have framed the issue into a simple legal question: Whether the 20 year time requirement under the doctrine of adverse possession is tolled by a tax sale of the real property? ²²⁷ II. Standard of Review In reviewing the grant of a summary judgment motion, we are most often concerned with whether a dispute of material fact exists.

Hartford Ins. Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135, 144 , 642 A.2d 219, 224 (1994); Gross v. Sussex Inc., 332 Md. 247, 255 , 630 A.2d 1156, 1160 (1993); Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 737 , 625 A.2d 1005, 1010 (1993); Arnold Developer, Inc. v. Collins, 318 Md. 259, 262 , 567 A.2d 949, 951 (1990); Bachmann v. Glazer & Glazer, Inc., 316 Md. 405, 408 , 559 A.2d 365, 366 (1989); King v. Bankerd, 303 Md. 98, 110-11 , 492 A.2d 608, 614-15 (1985) (citations omitted). “A material fact is a fact the resolution of which will somehow affect the outcome of the case.” King, 303 Md. at 111 , 492 A.2d at 614 (citing Lynx, Inc. v. Ordnance Prods., Inc., 273 Md. 1, 8 , 327 A.2d 502, 509 (1974)). “[A] dispute as to facts relating to grounds upon which the decision is not rested is not a dispute with respect to a material fact and such dispute does not prevent the entry of summary judgment.” Salisbury Beauty Schs. v. State Bd. of Cosmetologists, 268 Md. 32, 40 , 300 A.2d 367, 374 (1973). This Court also has stated that “[t]he standard of review for a grant of summary judgment is whether the trial court was legally correct.” Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204 , 680 A.2d 1067, 1076 (1996); see Murphy v. Merzbacher, 346 Md. 525, 530-31 , 697 A.2d 861, 864 (1997); Hartford Ins. Co., 335 Md. at 144 , 642 A.2d at 224 ; Gross, 332 Md. at 255 , 630 A.2d at 1160 ; Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 592 , 578 A.2d 1202, 1206 (1990) (citations omitted).

Thus, when there is no dispute of material fact, as in this case, our review is limited to whether the trial court was legally correct. With these considerations in mind, we turn to the case sub judice.

III

Discussion As we have indicated, for the purposes of appeal there are no material facts in dispute. The dispute is purely legal in nature — was the trial court legally correct in finding that the ²²⁸ tax sale and foreclosure proceedings terminated the adverse possession period? Appellants argue that the trial judge ascribed to the majority view, but that Maryland follows, or should follow, the minority view. Appellants’ position, the minority view in other jurisdictions, is that a purchaser at a properly conducted tax sale acquires only the interest of the defaulting taxpayer/property owner, and that the interest acquired through the tax sale is thus subject to any inchoate interests then being perfected, such as the inchoate interests of an adverse possessor.

Appel-lee, not surprisingly, argues that the trial court was correct. Appellants argue that there is no Maryland case law on point. Appellee does not argue to the contrary. Both are, for the most part, wrong.

It is true that there is no adverse possession case in respect to the title passed by Maryland’s tax sale procedure. There is, however, a body of Maryland law, none of which was cited by either party, in which this Court, and most recently the Court of Special Appeals relying on our previous line of cases, has defined the scope of the title interests acquired through a proper tax sale and foreclosure of right of redemption proceedings. This line of cases supports the decision of the trial judge, albeit he also did not rely on those cases. The Court of Special Appeals, citing to our cases, which we will discuss, infra, in Bell v. Myers, 28 Md.App. 339, 343 , 345 A.2d 105, 108 (1975), in reversing the trial court, stated: “The crux of the chancellor’s holding is that the purchaser at a tax sale acquires no better title than was held by the person assessed.

This is indeed the law in some jurisdictions but, unfortunately for the appellees, it is not the law in Maryland. In 75 A.L.R. 416 , at 417, the commentator states ‘There are two opposing theories as to the effect of a tax sale and the nature or quantum of estate acquired by the purchaser’. One theory is that pronounced by the chancellor. The other theory, espoused by decisions of the Court of Appeals, is that: ²²⁹ ‘... [I]f the tax deed and the proceedings upon which it is based are valid, it clothes the purchaser not merely with the title of the person who was assessed with the taxes, but with a new and complete title in the land, under an independent grant from the sovereign authority, which bars or extinguishes all 'prior titles, interests, and encumbrances of private persons, and all equities arising out of the same 75 A.L.R. 416 , 418.” That court went on to discuss our cases in support of its holdings.

They are a line of older, but still viable, cases that we discuss more at length, infra. We have not discovered in our research, any Maryland tax sale cases specifically involving the inchoate interests of adverse possessors; however, the principles of our cases control in such instances. 3 It must be remembered that although tax sales are concerned with the payment of taxes on land, the issue in most tax sale cases, where the equity of redemption has been properly foreclosed, is almost always a matter of title. It ²³⁰ remains our view, and it is the holding of our cases, that a valid tax sale and proper foreclosure of the equities of redemption terminates the prior title, and creates a new title granted by the sovereign. Accordingly, the new title cannot be adversely possessed until the statutory period runs from the time of the creation of the new title (although, as we note later, there is a special adverse possession statute that affords some limited prospective rights to prior record holders that remain in possession after the foreclosure proceedings).

Initially, we note that Maryland Code (1985, 2001 Repl.Vol.), section 14-832 of the Tax-Property Article, “Construction of sections,” provides in relevant part: “The provisions ..'. shall be liberally construed as remedial legislation to encourage the foreclosure of rights of redemption by suits in the circuit courts and for the decreeing of marketable titles to property sold by the collector.” [ 4 ] We said in Thomas v. Kolker, 195 Md. 470, 475 , 73 A.2d 886, 888 (1950): “In other words, the legislature has declared that the public interest in marketable titles to property purchased at tax sales outweighs considerations of individual hardship in every case, except upon a showing of lack of jurisdiction or fraud in the conduct of the foreclosure.” See Hardisty v. Kay, 268 Md. 202, 208 , 299 A.2d 771, 774 (1973); Kaylor v. Wilson, 260 Md. 707, 712 , 273 A.2d 185, 187 (1971). Actions arising out of tax sales, as well as actions to clear clouds on title, are in rem or quasi in rem actions. See Sanchez v. James, 209 Md. 266, 270 , 120 A.2d 836, 837 (1956), where, referring to Leigh v. Green, 193 U.S. 79, 90 , 24 S.Ct. 390, 393 , 48 L.Ed. 623, 628 (1904), we noted: “In that case Justice Day, delivering the opinion of the Court, pointed out that tax foreclosure proceedings are not actually proceedings against parties, but the statute under ²³¹ takes to proceed in rem by making the real estate answer for the public dues, and the primary object of the statute is to reach the real estate which has been assessed.” As such, generally, tax sales, so long as they are properly conducted, relate to titles to land, as opposed to rights of persons in possession of land when such rights have not ripened into title interests. 5 In James v. Zantzinger, 202 Md. 109, 115-16 , 96 A.2d 10, 13 (1953), Zantzinger had purchased property from the owner of the record title, but forgot to record the deed. After he had purchased the property, but before he obtained a deed, the property was sold at a tax sale and the equity of redemption was foreclosed by the tax sale purchaser.

Zantzinger argued on appeal that he should have received notice of the pendency of the action to foreclose the right of redemption. The Court said: “However, in this case appellant was not under any legal or equitable duty to notify any persons who were not shown by the land records to have any interest in the property purchased at the tax sale. Code 1951, art. 81, sec. 101. ... More than a year and a half after the tax sale, and more than six months after the institution of the suit to foreclose the right of redemption, Zantzinger received a deed for the property from Jacoby [the record owner], but he failed to record it.

More than a year elapsed between the time of the institution of the suit and the final decree vesting absolute and indefeasible title in the [tax sale] purchaser. And yet Zantzinger took no action until nearly four months after the decree was entered. ... Courts of equity do not restore opportunities which have been permitted to pass by reason of the neglect of those to whom the opportunities were once presented. This ²³² is especially true in this case, since the Legislature has prescribed how and when a purchaser may obtain an absolute and indefeasible title to property which he has purchased at a tax sale....

It is the mandate of the Legislature that the decree foreclosing the right of redemption is final and conclusive and must not be set aside except for lack of jurisdiction or for fraud.” In the present case, appellants make no claim that the trial court lacked jurisdiction or that a fraud occurred, nor do they attack the validity of the sale. In essence, they ask this Court to ignore the sale and the absolute and indefeasible title such sales, with their subsequent foreclosure proceedings, produce. Appellants are essentially arguing that the adverse possession method of obtaining title overrides or survives the statutory creation of new title in land, even when the period necessary to create title by adverse possession has not elapsed at the time of the foreclosure of the equity of redemption arising out of the tax sale. In other words, appellants’ argument is that the possibility of future title through adverse possession defeats the creation of an absolute and indefeasible title created at the time of the entry of a judgment foreclosing the equity of redemption, even where there is no impropriety in the sale or foreclosure proceedings.

The argument almost answers itself. This is especially so when the status of the title that evolves from the tax sale procedures is considered. We reiterated what we had said in earlier cases in Winter v. O’Neill, 155 Md. 624, 631 , 142 A. 263, 266 (1928): “[Y]et if the tax deed and the proceedings upon which it is based are valid, then from the time of its delivery it clothes the purchaser not merely with the title of the person who had been assessed for the taxes and had neglected to pay them, but with a new and complete title in the land, under an independent grant from the sovereign authority, which bars or extinguishes all prior titles and encumbrances of private persons, and all equities arising out of them. It requires no argument to demonstrate that, when a governmental agency is empowered to levy taxes for the purpose ²³³ of producing revenue for the support of the government, it is necessary that a method be provided by which the payment thereof may be enforced.

When this method is sale at public auction to the highest bidder, it is essential, in order that there may be bidders at such sale, that the purchaser’s title be protected, in cases where the statutory essentials of the sale are substantially complied with; otherwise the collection of taxes would be seriously impaired.” [ 6 ] [Citations omitted.] See also Thompson v. Henderson, 155 Md. 665, 667 , 142 A. 525, 526 (1928). We had held twenty-two years before the Winter case, almost a hundred years ago, in Hill v. Williams, 104 Md. 595, 604 , 65 A. 413, 414-15 (1906), where it was argued that an easement on property was not extinguished by a tax sale, that: “[A]nd if the taxes were not paid it was liable to be sold, even though by such a sale the easement would be destroyed; because the purchaser at a tax sale, when the proceedings are regular, is clothed with a new and complete title in the land, under an independent grant from the sovereign authority, which bars or extinguishes all titles and encumbrances of private persons, and all equities arising out of them. These observations dispose of the three objections first mentioned....” [ 7 ] [Citation omitted.] [Emphasis added.] ²³⁴ We noted under the law that existed over a hundred years ago, that when a life-tenant fails to pay taxes, and the taxes are assessed under the life-tenant’s name, the deed arising out of a tax sale properly conducted, conveys fee simple title, including the remainder interest. Cooper v. Holmes, 71 Md. 20, 30 , 17 A. 711, 713 (1889).

Thus, our older cases, under the law then existing, 8 held that even vested interests, i.e., easements as in Hill and vested remainder interests as in Cooper , were extinguished by a validly conducted tax sale and foreclosure proceedings. We repeated the same principle in McMahon v. Crean, 109 Md. 652, 665 , 71 A. 995, 997 (1909), where we said: “In Hefner v. The Insurance Company, supra,[ 9 ] it is said: ‘If the tax deed is valid, then from the time of its delivery it clothes the purchaser, not merely with the title of the person who had been assessed for the taxes and had neglected to pay them, but with a new and complete title ... from the sovereign authority, which bars and extinguishes all prior titles and encumbrances of private persons, and all equities arising out of them.” [Citations omitted.] See Wagner v. Goodrich, 148 Md. 318, 323 , 129 A. 364, 365 (1925) (“[A]s jdie sale appears to have been valid, the grantee ²³⁵ in the tax deed became invested with ‘a new and complete title in the land, under an independent grant from the sovereign authority.’ ”); see also Textor v. Shipley, 86 Md. 424, 438-39 , 38 A. 932, 933 (1897). In LaValley v. Rock Point, 104 Md.App. 123, 127 , 655 A.2d 60, 62 (1995), the Court of Special Appeals stated: “Indeed, an owner retains his right of redemption until it has been ‘finally foreclosed’ by the trial court. If an owner fails to redeem, the purchaser acquires absolute title to the property.” (Citations omitted.) Adverse possession of land in respect to ownership or rights in the land is a concept of title.

In other words, if one adversely possesses land for the requisite time, the character of the land is not changed. Whatever its character, the land remains the same. What the adverse user achieves is title to the land-ownership. Accordingly, the nineteen years of adverse possession in the case at bar related to the prior title to the property.

That title was extinguished by the creation of a new title to the identical land through the tax sale and foreclosure proceeding, before the possession adverse to the prior title ripened. The title against which the Lipperts’ adverse possession was, at one time, running, no longer exists. It is gone. The appellee holds a completely new title.

This title has only existed since 1992. It cannot be said that adverse possession can run against a title that is not in existence, and that, in the absence of proper proceedings, may never exist. In titles derived from valid and proper tax sales and foreclosure proceedings, in order for the inchoate adverse possession to ripen into actual title by adverse possession, the period of twenty years must run from the creation of the new title. 10 Additionally, it cannot be said that the Legislature was unaware of the method of obtaining title to land through adverse possession. In respect to adverse possession, it provided, in one instance, a limited right of adverse possession ²³⁶ with a shortened period.

This special right of adverse possession applies only to the prior record owners and certain successors, whose title is terminated through a tax sale process. Maryland Code (1985, 2001 RepLVol.), section 14-852 of the Tax-Property Article provides in relevant part: “When land is sold to pay county or State taxes, or both, ... and the owner of the land at the time of the tax sale, the owner’s heirs, ... have held the land sold in adverse possession for 7 years after the final ratification of the tax sale and before action or suit is brought, and prosecuted by the purchaser at the tax sale, ... to obtain possession, ... the [adverse] possession is a bar to all right, title, claim, interest, estate, demand, right of entry, and right of action of the purchaser ... derived from the tax sale as to the land held in possession.” [Emphasis added.] See also White v. Hardisty, 220 Md. 152 , 151 A.2d 764 (1959) (discussing a prior but similar statute that apparently applied only in Prince George’s County). The language of the above section would appear to apply in those situations where the person whose rights are sold at the tax sale remains in possession for a period of seven years, after the final order foreclosing the right of redemption. (The Tax Property Article contains no section that speaks to “ratification.” It refers to “Final order” and describes it as the foreclosure of rights of redemption).

A purchaser at a tax sale or his assigns has to move by way of ejectment or other appropriate action to dispossess the former owner who has remained in possession subsequent to the sale within seven years. If not, the former owner of record may, in seven years, not twenty years, obtain title by adverse possession to the same land he formerly owned. In the present case, appellants were never record owners. Their prior adverse possession had not been twenty years in duration, so at the time of the tax sale they were not owners.

Had they been owners of record, this provision, if the appropriate facts existed, might have been applicable. ²³⁷ In any event, it is clear that the Legislature was aware of the concept of the acquisition of title