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Filed: August 27, 1987.


APPEAL FROM THE HAMILTON CIRCUIT COURT, The Honorable Paul H. Johnson, Jr., Special Judge Presiding, No. C84-375.

Dickson, J., Shepard, C.j., and DeBRULER, Givan and Pivarnik, JJ., concur.

Author: Dickson


This direct appeal challenges the constitutionality of the statutory notice provisions in tax sale proceedings. The trial court entered summary judgment against the plaintiff, finding that the statutory notice provisions violated the requirements of the due process clause of the fourteenth amendment to the United States Constitution. We disagree and reverse.

On September 5, 1975, Park Thirty-One Corporation (Park Thirty-One) granted a mortgage upon 8.503 acres of unimproved Hamilton County land to First National Bank of Kokomo (First National). First National recorded the mortgage on September 8, 1975. Park Thirty-One then failed to pay the taxes payable during the years 1978 and 1979. Upon Park Thirty-One's default on mortgage payments, First National initiated foreclosure proceedings on September 8, 1980, and the Hamilton Circuit Court on May 15, 1981, ordered foreclosure and sale of the property to satisfy First National's judgment. However, on July 10, 1981, the Hamilton County Auditor, due to delinquent real estate taxes from 1978 and 1979, sent a notice of tax sale pursuant to Ind. Code § 6-1.1-24-4, to the owner of record, Park Thirty-One. No such notice was sent to First National, nor was such notice statutorily required under Ind. Code § 6-1.1-24-4.2 (since changed) which then provided in part:

(a) . . . [T]he county auditor shall send a notice of sale to any mortgagee of real property which is subject to sale under the provisions of this chapter, if the mortgagee, annually, on a form prescribed by the state board of accounts, has:

(1) Requested that notice of a sale of the real property be sent to him; and

(2) Agreed to pay a fee to the county auditor, to cover the cost of sending notice. * * *

First National neither requested that such notice be sent nor agreed to pay the statutory notice fee. On August 4, 1981, Rushville National Bank (Rushville National) purchased the land at the sheriff's foreclosure sale. Two relevant independent events occurred on August 10, 1981: John H. Calhoun purchased the property at the tax sale, and the sheriff executed the foreclosure sale deed to Rushville National. Two days later, Rushville National recorded the deed, conveyed the subject property to Marion J. Auman and Allene Auman, and received a mortgage from the Aumans. The deed to the Aumans and their mortgage to Rushville National were recorded August 14, 1981. Approximately twenty months later, on March 17, 1983, Rushville National initiated foreclosure proceedings due to the Aumans' default in mortgage payments. The Hamilton Circuit Court, on May 18, 1983, ordered foreclosure and sale of the property to satisfy Rushville National's judgment. Rushville National then purchased the property at the sheriff's foreclosure sale on July 15, 1983, and recorded the sheriff's deed on July 20, 1983. Throughout this entire period, Rushville National was unaware that the real estate taxes due from 1978 and 1979 remained unpaid.

Indiana law provides for the sale of real property on which payments of property taxes have been delinquent for 15 months or longer. Ind. Code § 6-1.1-24-1 et seq. The successful bidder at such a sale receives a tax sale certificate and a lien against the property for the entire amount paid. Ind. Code § 6-1.1-24-9. The tax sale is followed by a two-year redemption period during which one who has an interest in the property may redeem the property. Ind. Code § 6-1.1-25-1. If no one redeems the property during the redemption period, the purchaser may apply for a deed to the property. The county auditor is required by statute, upon receipt of the tax sale purchaser's certificate, to execute and deliver a tax deed to the purchaser. Ind. Code § 6-1.1-25-4. A separate statutory provision requires the auditor to send written notice to "the former owner of the real property" not more than 60 days nor less than 30 days before the tax deed is executed and delivered. This notice must inform the former owner that he is entitled to redeem the property, the amount required to redeem, and that the tax sale purchaser will receive a deed to the property if not redeemed by a certain date, etc. Ind. Code § 6-1.1-25-6.

Shortly before expiration of the two-year redemption period, the county auditor on July 6, 1983, sent a "Notice of Redemption or Issuance of Tax Deed" to the owners of record, the Aumans. No such notice was sent to Rushville National, nor was any such notice then required under Indiana statute. On August 31, 1983, Calhoun tendered the tax sale certificate to the county auditor and sought a tax title deed. Even though the land had not been redeemed from the tax sale, the auditor refused to give Calhoun a deed. On August 8, 1984, Calhoun tendered his tax sale certificate for a second time, and the auditor, upon advice of counsel, again refused to deliver the deed. On that same day, Calhoun initiated this litigation. Rushville National paid the redemption amount to the Hamilton County Treasurer on August 28, 1984.

Recapitulating, the significant events in chronological order are:

September 5, 1975 Park Thirty-One gives mortgage to First National

September 8, 1975 First National records mortgage

1978-1979 Real estate taxes not paid

September 8, 1980 First National files complaint to foreclose mortgage

May 15, 1981 Court orders foreclosure and sale of land at sheriff's sale

July 10, 1981 County auditor sends "Notice of Tax Sale" to owner of record, Park Thirty-One

August 4, 1981 Rushville National purchases land at foreclosure sale

August 10, 1981 Calhoun purchases land at tax sale and; Sheriff executes and delivers foreclosure sale deed to Rushville National

August 12, 1981 Rushville National records sheriff's deed and conveys to Aumans; Aumans give ...

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