Mennonite Board Of Missions v. Adams

462 U.S. 791 (1983)

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Nature of the Case

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Facts

To secure an obligation to pay $14,000, Alfred Jean Moore executed a mortgage in favor of appellant Mennonite Board of Missions (MBM) on property in Elkhart, Ind., that Moore had purchased from MBM. The mortgage was recorded in the Elkhart County Recorder's Office on March 1, 1973. Under the terms of the agreement, Moore was responsible for paying all of the property taxes. Without MBM's knowledge, however, she failed to pay taxes on the property. Indiana law provides for the annual sale of real property on which payments of property taxes have been delinquent for 15 months or longer. Prior to the sale, the county auditor must post notice in the county courthouse and publish notice once each week for three consecutive weeks. The owner of the property is entitled to notice by certified mail to his last known address. Until 1980, however, Indiana law did not provide for notice by mail or personal service to mortgagees of property that was to be sold for nonpayment of taxes. After the required notice is provided, the county treasurer holds a public auction at which the real property is sold to the highest bidder. The purchaser acquires a certificate of sale which constitutes a lien against the real property for the entire amount paid. This lien is superior to all other liens against the property which existed at the time the certificate was issued. The tax sale is followed by a 2-year redemption period during which the 'owner, occupant, lienholder, or other person who has an interest in' the property may redeem the property. To redeem the property an individual must pay the county treasurer a sum sufficient to cover the purchase price of the property at the tax sale and the amount of taxes and special assessments paid by the purchaser following the sale, plus an additional percentage specified in the statute. The county, in turn, remits the payment to the purchaser of the property at the tax sale. If no one redeems the property during the statutory redemption period, the purchaser may apply to the county auditor for a deed to the property. Before executing and delivering the deed, the county auditor must notify the former owner that he is still entitled to redeem the property. No notice to the mortgagee is required. If the property is not redeemed within 30 days, the county auditor may then execute and deliver a deed for the property to the purchaser, who thereby acquires 'an estate in fee simple absolute, free and clear of all liens and encumbrances.' After obtaining a deed, the purchaser may initiate an action to quiet his title to the property. The previous owner, lienholders, and others who claim to have an interest in the property may no longer redeem the property. They may defeat the title conveyed by the tax deed only by proving, inter alia, that the property had not been subject to, or assessed for, the taxes for which it was sold, that the taxes had been paid before the sale, or that the property was properly redeemed before the deed was executed. Elkhart County initiated proceedings to sell Moore's property for nonpayment of taxes. The county provided notice as required under the statute: it posted and published an announcement of the tax sale and mailed notice to Moore by certified mail. MBM was not informed of the pending tax sale either by the County Auditor or by Moore. The property was sold for $1,167.75 to appellee Richard Adams on August 8, 1977. Neither Moore nor MBM appeared at the sale or took steps thereafter to redeem the property. Following the sale of her property, Moore continued to make payments each month to MBM, and as a result, MBM did not realize that the property had been sold. On August 16, 1979, MBM first learned of the tax sale. By then the redemption period had run, and Moore still owed appellant $8,237.19. In November 1979, Adams filed a suit in state court seeking to quiet title to the property. In opposition to Adams' motion for summary judgment, MBM contended that it had not received constitutionally adequate notice of the pending tax sale and of the opportunity to redeem the property following the tax sale. The trial court upheld the Indiana tax sale statute against this constitutional challenge. The Indiana Court of Appeals affirmed.