Scheve v. Shudder, Inc.

CHASANOW, Judge. The issue in the instant case is whether the court may issue a final decree foreclosing a landowner’s right of ³⁶⁶ redemption and vesting title in a tax sale purchaser, under Maryland Code (1986, 1992 Cum.Supp.), Tax-Property Article, § 14-844, 1 where the tax sale purchaser has filed suit to foreclose the right of redemption and taken all necessary steps to perfect the foreclosure of the right of redemption, but thereafter changed its mind. I. On June 2, 1987, the Anne Arundel County tax collector held a public tax sale and sold ten properties located within the county, nine of the properties belonging to the defendant Bama, Inc. and one to the defendant Shudder, Inc. (collectively “the defendants”). At this tax sale, the plaintiffs, Theodore and Geraldine Scheve (the Scheves), were the highest bidders on the defendants’ properties. 2 The Scheves paid the outstanding tax on the properties, and the county tax collector issued them certificates of tax sale for each of the ten parcels. 3 The Scheves filed a complaint to foreclose Shudder’s right of redemption on March 31, 1988.

The Scheves filed two requests for the service of process and for orders of publication in the Shudder case, the first with the complaint and, after a series of miscommunications with the circuit court clerk’s office, again on November 14, 1988. After correcting the problem, the court issued the required process and published a notice of foreclosure. Both the notice and summons provided that the property should be redeemed by February 9, 1989, or a final judgment would be entered foreclosing Shudder’s rights of redemption. ³⁶⁷ On February 2, 1989, the Scheves also filed a complaint to foreclose Bama’s right of redemption. Under the terms of the summons and the published notice, the property should be redeemed by April 19,1989, or a final judgment would be entered foreclosing Bama's rights of redemption.

With both the Shudder and Bama complaints, the Scheves attached the tax sale certificates, affidavits of title search, requests to order publication of notice of sale, and requests to serve summons on the named defendants. In each case, the defendants received personal service of process, as well as published notice before any judicial action occurred. Neither Bama nor Shudder filed answers to the complaints or sought to prevent foreclosure. In November 1990, the defendants Shudder and Bama submitted to the circuit court proposed orders that would foreclose their rights of redemption.

The circuit court signed the orders on December 11, 1990, and foreclosed the defendants’ rights of redemption. 4 Immediately thereafter, the Scheves filed a motion to strike the order foreclosing redemption. The Scheves' motion was based on the grounds “that the Plaintiffs have not sought a Final Order Foreclosing Rights of Redemption^ and that] the Order appears to have been passed by the Court sua sponte without communication to Plaintiffs or their attorney.” On January 3, 1991, the judge granted the Scheves’ motion to strike the order and revived the defendants’ rights of redemption. After the court did so, however, the Scheves did not attempt to dismiss their complaint. The defendants filed a Motion for Judgment on June 24, 1991, and requested that the circuit court foreclose their rights of redemption and authorize the collector of taxes to convey to the Scheves an indefeasible fee simple title to the property.

Almost three years after filing their complaint to ³⁶⁸ foreclose the right of redemption, the Scheves apparently decided that they had overbid the property. In response to the defendants’ motion and their anticipation of potential financial loss, the Scheves filed a motion stating that they were “not interested in pursuing their Complaint to Foreclose the Equity of Redemption and request that it be dismissed____” A hearing was held September 16, 1991, to decide the defendants’ Motion for Judgment. At the hearing, the defendants argued that, once a purchaser at a tax foreclosure sale files a complaint and takes all steps necessary to foreclose the right of redemption, the court must enter a judgment foreclosing the prior owner’s right of redemption after the time period set in the order of publication and the summonses expire. For this proposition the defendants relied on § 14-844(a), which provides: “§ 14-844.

Final order. (a) Judgment. — After the time limit set in the order of publication and in the summons expires, the court shall enter judgment foreclosing the right of redemption. An interlocutory order is not necessary. The judgment is final and conclusive on the defendants, their heirs, devisees, and personal representatives and they or any of their heirs, devisees, executors, administrators, assigns, or successors in right, title, or interest, and all defendants are bound by the judgment as if they had been named in the proceedings and personally served with process.” The Scheves in turn sought to dismiss their complaint and argued that after filing the complaint the statute “doesn’t intend for a final decree unless the Plaintiff moves for it, and there is no authority to compel him to take [the property].” The Scheves also argued that the circuit court could not foreclose the right of redemption because there had been no compliance with the literal terms of the notice provisions in § 14-839, since the Scheves failed to file an affidavit of service of process.

The circuit court rejected the Scheves’ arguments and held that “once the Order of Publication and summons ³⁶⁹ requirements have been complied with, the court shall enter a judgement foreclosing the equity of redemption[, and a] specific request by the tax purchaser is not necessary.” Noting that the purpose of the statute was to improve the marketability of property sold at tax sales, the court reasoned that “[t]he purpose of § 14-808 et seq. would be defeated if the purchaser at a tax sale were allowed to file a Complaint to Foreclose the Equity of Redemption, comply with all the statutory notice and publication requirements, allow the time in the Summons and Order of Publication to pass and only then delay the entering of a Final Order by withholding from the Court a copy of a Final Order.” The circuit court then entered the final order foreclosing the defendants’ rights of redemption. The Scheves appealed to the Court of Special Appeals, and we granted certiorari before the intermediate appellate court heard the case.

II

Title 14 of the Tax-Property article provides county governments a means of collecting property taxes that are in arrears. In Simms v. Scheve, 298 Md. 1 , 467 A.2d 499 (1983), we noted that, under the tax sale statute, “for a tax sale to be effective substantial compliance with the statute is required[; i]n this regard, the prescription of the statute is clear and simple.” We then described the basic steps of the tax sale process. We said that under the tax sale statute “[u]npaid taxes on real estate constitute a lien on that property. [§ 14-804]. Generally, within two years from the date taxes become in arrears the jurisdiction’s collector must sell the land. [§ 14-808].

Notice of the proposed sale must be given to the owner at least thirty days before the property is advertised for sale and the owner is notified that if he does not pay the taxes within thirty days, the property will be sold. [§ 14-812]. After the sale is properly advertised, the property is sold at public auction. [§ 14-817]. ³⁷⁰ The purchaser of the property is given a certificate of sale which includes a description of the property, the amount for which the property was sold, and information as to the time in which an action to foreclose the owner’s right of redemption must be brought. [§ 14-820]. The owner may redeem the property at any time until the right of redemption has been finally foreclosed by paying the required sum to the collector, who transfers the money to the purchaser in exchange for the tax sale certificate. [§§ 14-827 to 14-828]. Sections [14-832.1 to 14-848] define the purchaser’s ability to foreclose the right of redemption.

These provisions are to be ‘liberally construed as remedial legislation to encourage the foreclosure of rights of redemption by suits in the [circuit] courts and for decreeing of marketable titles to property sold by the collector.’ [§ 14-832]. The holder of the certificate of sale may file [a complaint] to foreclose the owner’s right of redemption after [six months] from the date of the sale. . . . The [complaint] must be filed within two years or the certificate is void. The owner may redeem the property at any time until the right of redemption has been finally foreclosed. [§ 14-833].

The purchaser initiates the foreclosure proceeding in the [circuit] court by filing a [complaint as detailed in § 14-835] and attaching the certificate of sale issued by the collector____” Simms, 298 Md. at 3-4 , 467 A.2d at 500 (citations omitted). The tax sale statute sets out several steps that must be complied with before a circuit court may enter a final order under § 14-844. In summary, the statute requires that: (1) the purchaser must file a complaint that conforms with § 14-835(a) within two years following the sale; (2) the purchaser must attach the certificate of sale (§ 14 — 835(b)); (3) the purchaser must attach an affidavit of title search (§ 14-838); (4) the court must issue process and public notice under §§ 14-839 and 14-840, setting out the time after which the right of redemption will be foreclosed. ³⁷¹ Thereafter, assuming that due process requirements have been met, the circuit court may enter a final order under § 14-844.

III

On appeal, the Scheves object to the circuit court’s entry of an order foreclosing the defendant’s rights of redemption and seek both to reverse the circuit court’s order and to dismiss their complaint. The Scheves allege that the circuit court erred in (1) its construction of Title 14 of the Tax-Property Article; (2) its denial of the Scheves’ motion to dismiss; and (3) its entering a final judgment foreclosing the defendants’ rights of redemption before the Scheves fully complied with the notice provisions in § 14-839. A. The parties focus their arguments on the construction of § 14-844. The relevant portion of § 14-844 provides: “(a) Judgment. — After the time limit set in the order of publication and in the summons expires, the court shall enter judgment foreclosing the right of redemption----” The Scheves contend that § 14-844(a) does not permit a circuit court to enter an order foreclosing the right of redemption against “an unwilling plaintiff.” They argue that the filing of a complaint and complying with the procedural statutes is insufficient and that a tax sale purchaser must take additional steps to affirm its desire to foreclose.

The defendants simply respond that the language of § 14-844 is mandatory, and that once the suit is filed and the statutory procedures are complied with the circuit court must enter an order to foreclose the right of redemption after the expiration of the dates in both the published notice and summonses. In construing a legislative enactment the fundamental judicial task is to determine and effectuate the legislature’s intent, and indeed the very language of the statute serves as the primary source of the legislature’s ³⁷² intent. See, e.g., Revis v. Maryland Auto. Ins.

Fund, 322 Md. 683, 686 , 589 A.2d 483, 484 (1991); Privette v. State, 320 Md. 738, 744 , 580 A.2d 188, 191 (1990). To accomplish this task “the words of the statute are to be given their ordinary and natural import. . . .” Revis, 322 Md. at 686 , 589 A.2d at 484 . In addition, the language of the statute must be considered along with the statute’s stated policy that its provisions “shall be liberally construed as remedial legislation to encourage the foreclosure of rights of redemption ... and for the decreeing of marketable titles to property sold by the collector.” § 14-832. Under these principles of statutory construction and the plain language of the statute, the Scheves’ first contention must fail.

The Scheves argue that a tax sale purchaser’s filing of a complaint under § 14-833 is an insufficient basis for a circuit court to grant the relief that the complaint requests. Instead, the Scheves reason, the complaint only serves to preserve the validity of the certificate, and the court must wait until the tax sale purchaser signals the court that it is “truly” interested in receiving the relief requested in the complaint. The Scheves base this interpretation on policy arguments aimed at protecting the tax sale purchaser from hidden risks that may not surface until after a title search is performed or that may surface after the tax sale purchaser files the complaint. Such defects, the Scheves assert, include the risk that the purchaser may have overbid the property, the existence of federal tax liens, pending bankruptcy proceedings, and destruction of an improvement on the property due to fire or other unforeseen event.

According to the Scheves, requiring the reaffirmation of the tax sale purchasers’ desire to foreclose protects purchasers from these risks, thus maintaining the viability of the tax sale process. Without such protection, they argue, potential purchasers would be unwilling to purchase property at tax