Nichol v. Howard

CATHELL, Judge. John P. Nichol and Francis L. Nichol appeal from a denial of their Motion to Set Aside Final Judgment and to Fix Amount Necessary for Redemption in respect to a Complaint to Foreclose Rights of Redemption and the subsequent foreclosure of this right by the Circuit Court for Charles County. Appellee, the tax sale purchaser and complainant, is Myrel A. Howard. The Nichols present two questions: 1.

Did Howard comply with the Notice requirements of Section 14-839 of the Tax Property Article of the Annotated Code of Maryland in obtaining his Decree Foreclosing Rights of Redemption with regard to the Nichols’ property? ¹⁶⁵ 2. Even assuming the statutory requirements were met, was the notice given under the circumstance of this case sufficient to satisfy constitutional due process? They present a multifaceted argument: I. The trial court erred in denying the Nichols’ Motion to Set Aside Final Judgment and to Fix Amount Necessary for Redemption because Howard “knew” the Nichols’ address yet failed to give them notice. A. Failure to pursue reasonable leads 1.

Name and Address of Title Company 2. Name and Address of Mortgage Company 3. Rental Property Information II. The trial court erred in denying the Motion to Set Aside Final Judgment and to fix amount necessary for redemption because Howard committed constructive fraud against the Nichols in the conduct of the foreclosure proceedings.

III

The trial court erred in denying the Motion to Set Aside Final Judgment and to Fix Amount Necessary for Redemption because even if the statutory requirements were met, the notice given under these circumstances was not sufficient to satisfy constitutional due process. We are tempted to address these arguments through extensive legal analysis of the State’s notice statute and how it should be applied to the facts. We are, likewise, tempted, when addressing these arguments and the facts in the case sub judice, to review extensively the federal constitutional cases on due process and apply the facts of this case to that analysis and, as a result, affirm the trial judge. But in the vernacular of the moment, we have been there and done that.

Our prior effort at such an undertaking, St. George Antiochian Orthodox Christian Church v. Aggarwal, 83 Md.App. 599 , 576 A.2d 224 (1990), was reversed by the Court of Appeals, St. George Antiochian Orthodox Christian Church v. Aggarwal, 326 Md. 90 , 603 A.2d 484 (1992). The ¹⁶⁶ Court of Appeals’s Aggarwal, and its progeny, make clear that we must reverse. We first furnish the relevant facts, simplifying them when possible. We shall refer to appellants as “owner” and appellee, the tax sale purchaser, his attorney, and their title abstractor collectively as “purchaser.” The Facts Owner had title to property in Charles County that, at all times relevant hereto, was rented out to others.

At a prior time, owner had lived on the subject property and that address was the address contained in the various relevant tax records and rolls in Charles County. Owner moved from the property to a Manassas, Virginia address, in 1990. He refinanced the property, in 1993, with Financial Mortgage, Inc., a Virginia company, which then assigned that mortgage to Barclay’s American Mortgage Corp., a North Carolina company. 1 At the time of recordation of the mortgage documents, various rental riders, relating to permission to rent, and an assignment of rents were either contained in or attached to the documents as recorded in the Land Records of Charles County. When the taxes were not paid, purchaser bought the property (and other unrelated properties) at a tax sale.

Subsequently, as we have indicated, purchaser filed a Complaint to Foreclose the Right of Redemption of owner. He mailed the required mortgagee’s notice 2 to both financial institutions at their actual addresses. He mailed a notice required by the statute to the owner at the address contained in the tax records for the property itself. This notice was returned stamped “Return to Sender.” No attempt was made to effectuate personal service at the property’s address, nor was ¹⁶⁷ any personal inquiry made of the occupants of the property, owner’s tenants, regarding the address of the owners or as to where the tenants mailed their rent.

Moreover, no inquiry was made of the two mortgagees as to the address where they mailed payment notices, premium books, escrow accounts and other correspondence to owner. Similarly, no other efforts at personal service were made. Purchaser thereafter proceeded solely by publication. We note that we, in our Aggarwal opinion, upheld the constitutionality of the Maryland notice statute, 83 Md.App. at 611 , 576 A.2d 224 , and the Court of Appeals agreed with that portion of our opinion, see 326 Md. at 98 , 603 A.2d 484 .

We further hasten to add that appellee complied with the literal language of the statute — as did Mr. Aggarwal. Section 14-839 of the Maryland Code (1985, 1994 Repl. Vol.), Tax-Property Article, provides in relevant part: (a) Notice to defendants. — (1) The plaintiff shall show in the title of the complaint the last address known to the plaintiff or to the attorney filing the complaint of each defendant, as obtained from: (1) any records examined as part of the title examination; (ii) the tax rolls of the collector who made the sale, as to the property described in the complaint; and (iii) any other address that is known to the plaintiff or the attorney filing the complaint. (2) Paragraph (1) of this subsection does not require the plaintiff or the attorney for the plaintiff to make any investigations or to search any other records or sources of information other than those stated.

(b) Same — Declared reasonable and sufficient. — The provisions of this section as to notice to persons who may have an interest in property sold for nonpayment of taxes, coupled with the order of publication and the other publicity and notices as ordinarily accompanies the sale of such property, as well as the knowledge of the taxes and the consequences for nonpayment of the taxes is declared: ¹⁶⁸ (1) to be reasonable and sufficient under all of the circumstances involved, and necessary in light of the compelling need for the prompt collection of taxes; and (2) to supersede any other requirement in other cases or civil causes generally. [We have emphasized the word “known.”] As we have indicated, appellee complied with the stated requirements of the statute. That, however, under some circumstances, may not be enough. The Court of Appeals has defined the term “known” very broadly. We noted in our Aggarwal opinion that Aggarwal, the purchaser at the tax sale, had searched the title to the property; ... the telephone books of the jurisdiction wherein the land lies; ... contacted the Maryland Department of Assessments and Taxation for addresses; ... mailed copies of the bill and summons to the address contained in the tax records which were directed to appellant; ... mailed a notice to the address contained in the tax records directed to “occupant”; and he wrote the postmaster for an address____ While actual personal service was not obtained, appellee made diligent efforts in an attempt to effectuate such service.... 83 Md.App. at 607 , 576 A.2d 224 .

We later noted the church’s position that because its title insurer’s address was contained on the deed in the land records, the appellee could have contacted the title company and would have been able to obtain from that company the address of the Church. Id. at 615 , 576 A.2d 224 . We affirmed the trial court’s denial of the church’s motion to set aside tax sale, holding that the “alleged deficiencies in notice” neither affected the jurisdiction of the trial court to foreclose the right of redemption nor “did they constitute actual fraud.” 83 Md.App. at 618 , 576 A.2d 224 . The Court of Appeals disagreed, holding that Aggarwal’s failure to obtain the church’s address from a title company, whose name and address appeared on the binder of a deed in the chain of title, ¹⁶⁹ precluded the circuit court from having jurisdiction over the church in light of Aggarwal’s knowledge that the address to which it was sending notice was a “bad address.” 326 Md. at 103-04 , 603 A.2d 484 .

The Court of Appeals made several statements in its Aggarwal opinion of particular relevance with respect to the lengths a tax sale purchaser must now go in order to provide the owner with notice: Merely relying upon a conventional title abstract may not be sufficient, at least where a question has arisen concerning the validity of the address appearing in the tax rolls____ ... [T]he deed did not contain the Washington, D.C. address of the Church. It did, however, contain the name and address of the title company ... and that information was therefore known to Aggarwal.... Aggarwal’s attorney knew that the 52nd Avenue address ... was a “bad address” — that mail sent to that address would not reach the Church.... [U]nder the circumstances of this case there was a high probability that the title company knew the correct address of the Church, and that this information could be obtained by ... a telephone call or a letter to the title company. ... [T]he correct address of the Church ... was therefore “known” to Aggarwal’s attorney within the meaning of § 14-839(a) [the notice statute]. 326 Md. at 103-04 , 603 A.2d 484 (emphasis added; footnote omitted). By its interpretation of the word “known” in the tax sale notice context, the Aggarwal Court sent a message to those persons involved in the tax sale process.

If the tax sale purchaser or his attorney is aware that the address to which notice was sent was, or might be, “bad” and if the purchaser’s search, i.e., title examination of the records expressly required to be examined by statute, discloses an entity that might reasonably know the owner’s correct address, the purchaser is deemed to know also of that address, and failure to send notice to that address will constitute grounds for setting the ¹⁷⁰ tax sale aside. Subsequent cases have expanded, even further, the concept announced in Aggarwal. In Kennedy v. Cummings, 91 Md.App. 21, 23-24 , 603 A.2d 1251 (1992), a tax sale case based only upon the nonpayment of county taxes, the attorney for the tax sale purchasers, during foreclosure proceedings, searched the Land Records of Charles County ..., the records of the Register of Wills for Charles County, ... and the records of the District and Circuit Courts for Charles County ... both law and equity---- The notice of the right to redeem was mailed to the address for the property owner contained in the tax rolls of Charles County. It was returned with the notice “Return to Sender— Moved — Not Forwardable.” In attempting to overturn the foreclosure on constructive fraud grounds, the property owners contended that the correct address was contained in the tax records of the municipality wherein the property was situate and that, even though nonpayment of municipal taxes was not at issue, the tax sale purchasers should, nevertheless, have obtained the address when the municipality’s tax records were checked, as would be normally done in a title search in respect to the sale and transfer of property; that a normal title search would have noted that municipal taxes were, in fact, paid, and thus correct records of the property owners’ current address were available.

Failure to discover the correct address and thus to make a notice to that correct address constituted, according to the property owners, constructive fraud. We held, relying on the Court of Appeals’s Aggarwal, that failure to examine the municipal tax records was a failure on the part of the tax sale purchaser to comply with the statute’s notification requirement, 91 Md.App. at 34 , 603 A.2d 1251 , i.e., that section which requires a tax sale purchaser to examine “any records examined as part of the title examination” and requires the purchaser to utilize any addresses contained in “any records” examined. Thus, because the purchasers were required to examine the municipal tax records as a part of the ¹⁷¹ required title search, they were on notice of what was contained in those records — the correct address. We concluded: [A]ppellants knew the name of the property owner.

Moreover, they knew the address they had was a “bad address.” Had appellants completed a title search in accordance with generally accepted standards of title examination, they would have discovered appellees’ correct address. Id. at 34 , 603 A.2d 1251 . Aggarwal and Kennedy stand for the proposition that a tax sale purchaser, especially one who is on notice of a “bad address,” is charged with knowledge of a correct