St. George Antiochian Orthodox Christian Church v. Aggarwal

McAULIFFE, Judge. When taxes on real property are not paid, the collector of taxes must sell the property at public auction. Before doing so, the collector must mail a final bill and notice of proposed sale to the owner at the address shown on the tax rolls and advertise the sale in a newspaper having general circulation in the county in which the property is located. Even after the sale the owner has a right to redeem the property by paying accrued taxes, interest, costs, and fees.

That right to redeem may be foreclosed by order of a circuit ⁹² court in the county in which the land is located. 1 The effect of foreclosing the right of redemption is significant — the property owner is divested of all right, title, and interest in the property. This case deals with the serious question of what steps must be taken by the tax sale purchaser to attempt to notify the property owner of the impending foreclosure of the right to redeem. Because the owner may be deprived of important property rights and state action is involved, constitutional guarantees of due process are implicated. Because the State has a significant interest in encouraging the participation of purchasers in tax sales and in the giving of marketable titles, it seeks to establish a procedure that, if carefully followed, will insulate a tax sale deed from subsequent attack.

Both interests are important; our task is to be certain they are in balance. I. On 31 July 1982, benefactors of St. George Antiochian Orthodox Christian Church (the Church) donated an unimproved parcel of land in Prince George’s County to the Church, which was located in Washington, D.C. The deed accomplishing the transfer did not contain an address for the property or an address for the Church. The address for the Church that was apparently given to the Supervisor of Assessments 2 was 3804 52nd Avenue, Bladensburg, Maryland 20710. That address, it now appears, was the address ⁹³ that someone believed corresponded to the vacant lot which was transferred to the Church. 3 Tax bills thereafter mailed to the Church at that address were not received by the Church, and property taxes were not paid.

Acting pursuant to Maryland Code (1957, 1980 Repl.Vol., 1983 Cum.Supp.) Art. 81, §§ 70 through 123C, 4 the Director of Finance for Prince George’s County sold the property at a tax sale on 14 May 1984, to the respondent, Rakshpal S. Aggarwal (Aggarwal). On 2 April 1986, Aggarwal filed a complaint to foreclose the Church’s right of redemption. He listed as the address of the Church the address given on the assessment rolls. All subsequent notices, publication, 5 and an attempt to serve process were directed to that address.

Because the address was associated only with a vacant lot, the Church received no actual notice of the tax sale or of the proceeding to foreclose its right of redemption. On 28 June 1987, the Circuit Court for Prince George’s County entered an order foreclosing the Church’s right of redemption. On 10 March 1989, the Church, having learned of the tax sale when it attempted to list the property for sale, filed a motion to set aside the tax sale. It stated, in the motion and by accompanying affidavit, that it had been continually located at 4335 16th Street in Washington, D.C. for more ⁹⁴ than 30 years; that it had received no notice from Prince George’s County or Aggarwal that it owed taxes, or of the tax sale, or of Aggarwal’s action to foreclose its right of redemption; and, that it did not believe it owed any taxes because of its status as a tax-exempt organization. 6 The Church alleged that Aggarwal had failed to comply with the requirements of the statute governing tax sales and had failed to make a reasonable investigation to obtain the Church’s address.

It alleged that the Church has been deprived of its property without due process of law. Aggarwal responded that he had followed the explicit requirements of the statute, which required no investigation beyond a search of the land records and the tax rolls. After a hearing at which no testimony was taken but the affidavits of the parties were considered, Judge Joseph S. Casula denied the Church’s motion, finding that Aggarwal had fully complied with the requirements imposed by statute and had used reasonably diligent efforts to provide actual notice. The Court of Special Appeals affirmed, holding that the Maryland statute was constitutional and that Aggarwal had complied with the requirements of that statute.

St. George Church v. Aggarwal, 83 Md.App. 599 , 576 A.2d 224 (1990).

II

The United States Supreme Court has made it clear that “state action affecting property must generally be accompanied by notification of that action____” Tulsa Professional Collection Services v. Pope, 485 U.S. 478, 484 , ⁹⁵ 108 S.Ct. 1840 , 1344, 99 L.Ed.2d 565 (1988). The requirements of due process and the need to balance the interest of the State against the individual interest sought to be protected by the Fourteenth Amendment were discussed in Mennonite Board of Missions v. Adams, 462 U.S. 791 , 103 S.Ct. 2706 , 77 L.Ed.2d 180 (1983), and in Mullane v. Central Hanover Tr. Co., 339 U.S. 306 , 70 S.Ct. 652 , 94 L.Ed. 865 (1950). In Mullane, the Court found unconstitutional a New York statute permitting trust companies to provide notice solely by publication to trust beneficiaries whose names and addresses were known.

The Court stated: An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Mullane, 339 U.S. at 314 , 70 S.Ct. at 657 . In Mennonite, the Court applied the principles of Mullane and found violative of due process an Indiana statute that permitted notice of tax sales to be given to mortgagees by publication alone. 462 U.S. at 795-800 , 103 S.Ct. at 2709-12 . The Court stated that [njotice by mail or other means as certain to ensure actual notice is a minimum constitutional precondition to a proceeding which will adversely affect the liberty or property interests of any party ... if its name and address are reasonably ascertainable.

Id. at 800 , 103 S.Ct. at 2712 (emphasis in original). In that case, the mortgagee whose notice was held to have been inadequate was identified in the records only as “MENNONITE BOARD OF MISSIONS a corporation, of Wayne County, in the State of Ohio.” Although the Court noted that the State need not make extraordinary efforts to locate an unnamed party, the assumption that the address of this known party “could have been ascertained by reasonably diligent efforts” rendered constructive notice insufficient ⁹⁶ for constitutional purposes. Id. at 798-800 , 103 S.Ct. at 2711-12 . Finally, well aware that the plaintiff often stands to benefit from failed attempts to notify the defendants), the Court has stressed that when notice is a person’s due, process which is a mere gesture is not due process.

The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. Mullane, 339 U.S. at 315 , 70 S.Ct. at 657 , quoted in part in Mennonite, 462 U.S. at 799 , 103 S.Ct. at 2711 . The Maryland statute regulating tax sales was significantly amended in 1986. House Bill 1828, enacted as ch. 825 of the Laws of 1986, was in part intended to “provide greater protection for due process by facilitating notice of tax sales of property in the State.” Summary of Committee Report, Senate Judicial Proceedings Committee, p. 3.

Chapter 825 was effective 1 July 1986, before the entry of the order foreclosing the Church’s right of redemption, and therefore applies to this case. Section 14-839 of the Tax-Property Article, which deals with notice and service of process, was completely rewritten by ch. 825. As amended, that section provides: (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. ⁹⁷ (3) On the filing of the complaint, the court shall issue a summons to procure the answer and appearance of all the defendants as in other civil actions.

(4) This paragraph does not apply if a last known address for a defendant is not obtained as provided under paragraphs (1) and (2) of this subsection. The plaintiff shall cause a copy of the order of publication to be mailed by first class mail or certified mail, postage prepaid, to each defendant at the defendant’s address as determined by the provisions of paragraphs (1) and (2) of this subsection. As to any defendant not served by summons or as provided by paragraph (5) of this section, the plaintiff shall file an affidavit in the proceedings, which affidavit: (i) shall certify that this provision has been complied with; and (ii) shall be accompanied by: 1. the receipt obtained from the post office for the mailing; or 2. the certified mail receipt. (5) Notice to a defendant may be made in any other manner that results in actual notice of the pendency of the action to the defendant.

When notice is made under this paragraph it shall be certified to by an affidavit that fairly describes the method and time of service. * * * * * * (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: (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 ⁹⁸ (2) to supersede any other requirement in other cases or civil causes generally. ****** The Church’s contention that the statute does not meet the constitutional standard for due process arises from its assertion that, although ultimately relying on notice by publication, “a purchaser may ignore a reasonable source and still be in compliance with the statute.” Yet the fact that the statute does not require the purchaser to employ all reasonable sources in an effort to notify the owner does not contradict the conclusion that using the sources required by the statute will result in notice reasonably calculated to reach the owner. The statute requires a tax sale purchaser to send notice in several forms to the last known address of a defendant, as listed in the tax rolls or title records (two reasonable and likely sources), as well as to any address known to the plaintiff or counsel. Section 14-839(a). As emphasized by the Supreme Court and by the courts of this State, notice by publication is not preferred, Mennonite, supra, 462 U.S. at 799 , 103 S.Ct. at 2711 , Bailey v. Stouter, 66 Md.App. 180,189 , 502 A.2d 1125 , cert, denied, 306 Md. 288 , 508 A.2d 488 (1986), and this statute approves of its use only as a last resort, § 14-839(a)(4). 7 The fact that actual notice did not result in this particular case does not, by itself, render unconstitutional the statute under which the notice was attempted.

Nor is it evidence that the statute generally is inadequate to satisfy the due process requirement that the provisions be reasonably cal ⁹⁹ ciliated to effect notice. See Mullane, supra, 339 U.S. at 319 , 70 S.Ct. at 660 (“The statutory notice ... is inadequate, not because in fact it fails to reach everyone, but because under the circumstances it is not reasonably calculated to reach those who could easily be informed____”); Golden Sands Club v. Waller, 313 Md. 484, 500-01 , 545 A.2d 1332 (1988) (mailed notice, whether or not received, suffices if reasonably calculated to reach the person). Aggarwal maintains he fully complied with the statutory requirements by examining the title and tax records for the property and mailing notice to the address of record. Moreover, Aggarwal notes that he took additional steps, including looking in the white pages of the telephone books and contacting the local Postmaster and the Maryland Department of Assessments and Taxation to find an address for the Church.

The Church argues that Aggarwal “did not make reasonable efforts to comply with the statute” and that “[t]he efforts of Aggarwal to actually serve the Church were unreasonable and inadequate, even when utilizing the sources listed in Section 14-839.” The Church points out, with convincing force, that Aggarwal knew the address he was using for the Church was a “bad addresss,” i.e., one that would not serve to accomplish actual notice. The address corresponds to the location of the property, which is a vacant lot. The Church notes that Aggarwal must have known the property was unimproved because: 1) the tax in arrears for the property was only $226.17; 2) Aggarwal’s search of the assessment rolls would have shown an assessment for land only; 8 and 3) in his complaint to foreclose the right of redemption, which also involved another property Aggarwal had purchased at the tax sale, Aggarwal described the Church’s property only as a parcel of land, while describing the other property as a lot “and improvements.” ¹⁰⁰ Moreover, a summons issued to the Church at that address was returned “non est” on 10 June 1986, and the sheriff included in his