Title: Board of Johnson County Comm'rs v. Roberts

State: kansas

Issuer: Kansas Supreme Court

Document:

231 Kan. 135 (1982)
643 P.2d 138
BOARD OF COUNTY COMMISSIONERS OF JOHNSON COUNTY, KANSAS, Plaintiff/Cross-Appellant,
v.
ELIZABETH I. ROBERTS, et al., Defendants. JOHN ANDERSON, JR. & DAVID CARSON, Appellees,
v.
MONTY CAMPBELL, Appellant.
No. 53,310

Supreme Court of Kansas.
Opinion filed April 3, 1982.
Fred Paoli, Jr., of Kansas City, argued the cause and was on the brief for the appellant.
James W. Bouska, assistant county counselor, argued the cause and was on the brief for the plaintiff, cross-appellant.
John Anderson, Jr., of Anderson, Granger, Nagels, Lastelic & Gordon, Chartered, of Overland Park, argued the cause and was on the brief for the appellees.
The opinion of the court was delivered by
PRAGER, J.:
This is an appeal from an order nonconfirming and setting aside a tax foreclosure sale. The appellant is Monty Campbell, the purchaser at the foreclosure sale. The cross-appellant is the Board of County Commissioners of Johnson County. The appellees are John Anderson, Jr., and David Carson, who claim to own an interest in the real estate which was the subject matter of the tax foreclosure sale.
*136 For purposes of this appeal, the facts are not in dispute and were determined by the trial court to be as follows:
The district court, on the basis of these undisputed findings of fact, nonconfirmed and set aside the foreclosure sale, holding that the sale was defective and irregular by reason of the failure of the county to join John Anderson, Jr. and David Carson as parties defendant, and by failing to have those parties served with process. The district court also ordered the clerk of the court or the sheriff to refund to Monty Campbell, the purchaser at the sale, the amount of the purchase price he paid with interest. The court further ordered the sheriff to issue a tax deed to John Anderson, Jr. and David Carson upon the payment of all taxes due.
In reaching that result the trial court made the following conclusions of law:
The purchaser at the sale, Monty Campbell, appealed, contending that the tax foreclosure sale should not have been set aside and further that Anderson and Carson should not have been allowed the right to redeem the property. The two basic issues presented for determination on the appeal are these:
(1) Whether the trial court erred in ruling that Anderson and Carson were entitled to be named parties defendant and served with process in the foreclosure proceeding under K.S.A. 79-2801 and in setting aside the foreclosure sale because they were not so named as parties or served with process?
(2) Whether the trial court erred in holding that Anderson and Carson were entitled under K.S.A. 79-2803 to redeem the property by paying the taxes before sale and, upon payment of the same, to receive a tax deed from the sheriff for the property?
We will first consider whether the district court erred in setting aside the tax foreclosure sale because of the county's failure to name Anderson and Carson as parties defendant and to serve them with process. In so holding, the trial court relied upon the provisions of K.S.A. 79-2801 which provides in part as follows:
It should be noted that K.S.A. 79-2801 states without equivocation that where there is a tax lien on unredeemed real estate bid in by the county, the county attorney or county counselor is required to institute an action in the district court, in the name of the board of county commissioners, "against the owners or supposed owners of such real estate and all persons having or claiming to have any interest therein or thereto."
We have concluded that the trial court was correct in holding that Anderson and Carson were persons having or claiming to have an interest in the real estate involved here within the meaning of K.S.A. 79-2801 and were thus necessary parties to the tax foreclosure action. It is well established that judicial foreclosures of real estate for nonpayment of taxes are creatures of statute and must be complied with to give a court jurisdiction to proceed. The entire matter of taxation, including the levy and collection of taxes, is statutory and does not exist apart from statute. See Pierce v. Board of County Commissioners, 200 Kan. 74, 434 P.2d 858 (1967); Crawford County Comm'rs v. Radley, et al., 134 Kan. 704, 8 P.2d 386 (1932). Ness County v. Light & Ice Co., 110 Kan. 501, 204 Pac. 536 (1922). The trial court correctly held that the controlling statute in this case is K.S.A. 79-2801, which is set forth in full above. Anderson and Carson were clearly persons having or claiming to have an interest in the property. Their claim to the property had been asserted in case No. 83,754, the prior foreclosure action, and Mr. Bouska, the assistant county counselor, had actual knowledge of their claim. Under the circumstances, the failure to join Anderson and Carson as parties defendant and to serve them with process was not a proper compliance with K.S.A. 79-2801; hence, the foreclosure sale was defective and the district court properly set it aside. This result is required by Board of Leavenworth County Comm'rs v. Cunningham, 5 Kan. App.2d 508, 619 P.2d 525 (1980), rev. denied 229 Kan. 669 (1981); Chapin *140 v. Aylward, 204 Kan. 448, 464 P.2d 177 (1970); and Pierce v. Board of County Commissioners, 200 Kan. 74.
The appellant, Monty Campbell, the purchaser at the foreclosure sale, maintains that the rule should not be applied in this case on the theory of waiver and estoppel. In presenting this contention, appellant Campbell points out that Anderson and Carson had actual notice of the present proceeding and the sale and should have intervened or objected prior to the foreclosure sale. They chose not to do so but, instead, appeared at the sale, raised no objection at the commencement of the proceeding, bid, and only objected when the bids exceeded their expectations. We agree with the trial court that the theory of waiver and estoppel is not applicable in this case. There was no waiver because, at all times, Anderson and Carson objected to the foreclosure sale on the basis that they had not been made parties to the litigation in violation of K.S.A. 79-2801. Furthermore, the doctrine of estoppel has no application because Campbell, the purchaser, had full knowledge of Anderson's and Carson's claim of interest before and during the sale and in no way changed his position in reliance on any representations made by Anderson and Carson. This court, on several occasions, has held that a purchaser at a tax foreclosure sale does not occupy the status of an innocent purchaser or a purchaser in good faith but is one to whom the rule of caveat emptor applies. See Montgomery County v. Wilmot, 114 Kan. 819, 823, 221 Pac. 276 (1923); and Pierce v. Board of County Commissioners, 200 Kan. at 78. Under the undisputed facts in this case, the appellees, Anderson and Carson, were not barred from asserting their right to have the tax foreclosure sale set aside on the basis of a claim of either waiver or estoppel.
Thus, the trial court was correct in holding that the sale was defective and irregular by reason of the failure of the plaintiff to make Anderson and Carson parties defendant and to have them served with process. The foreclosure sale was thus properly set aside and nonconfirmed. The trial court was also correct in holding that Monty Campbell was entitled to a refund of the money which he paid as purchaser at the foreclosure sale together with interest.
The second issue raised on the appeal presents a more difficult question. As noted above, the issue is whether the trial court erred in allowing Anderson and Carson to pay the taxes, interest, and *141 penalty in full and then ordering the delivery to them of a tax deed from the sheriff. The applicable statute, which controls the redemption of property in a tax foreclosure action by payment of the taxes after an action is filed, is K.S.A. 79-2803 which provides in part as follows:
*142 It should be noted that the proviso in the first paragraph of K.S.A. 79-2803 provides, in substance, that any person interested in the real estate as owner or holder of the record title, or any mortgagee may make redemption of the property before the sale.
The specific issue presented is whether a person other than the owner or holder of record title or a mortgagee may redeem before the day of the sale. It is important to note that in K.S.A. 79-2803 the terms "supposed owners" or "persons having or claiming to have any interest therein" as previously used in K.S.A. 79-2801 are not used in describing the parties who are entitled to redeem the property before the day of the foreclosure sale. It was the position of the plaintiff, board of county commissioners, that a person who is not the owner or holder of the record title or mortgagee has no right to redeem. To the contrary, the defendants, Anderson and Carson, contend that they are entitled to redemption simply because they were persons who claim to have an interest in the real estate.
In this regard, we note that K.S.A. 1981 Supp. 79-2901 also provides that a mortgagee may pay the taxes or redeem any land sold for taxes and is entitled to have a lien for the taxes. Likewise, we note K.S.A. 1981 Supp. 79-2902 which provides:
K.S.A. 1981 Supp. 79-2902 clearly recognizes that taxes may be paid by any party whose lands are in controversy in any of the courts of this state and the party so paying is entitled to a lien on the land.
Construing all of these statutes together, we have concluded that under K.S.A. 79-2803 only a person interested in the land as owner or holder of the record title or a mortgagee is entitled to redeem prior to the foreclosure sale. Under K.S.A. 1981 Supp. 79-2902, a party to the proceeding, other than the owner or holder of record or a mortgagee, may redeem after the tax foreclosure action has been filed and prior to the sale only where that party is a party in another action pending in a court of this state in which his claim of ownership in the property has been asserted. Thus, a mere stranger, claiming title to the property, but who has no *143 actual case pending to determine his interest therein, has no right to redeem in the tax foreclosure proceeding.
Applying this construction of the statutes to the case now before us, it is undisputed that Anderson and Carson claimed title to the property through their ownership of the platted lots which surround the dry-land lake bed which was the subject of the tax foreclosure action. Anderson and Carson were not, at the time the judgment for foreclosure was entered, parties in any proceeding then pending in a court of this state where their claim of ownership to the dry-land lake bed was being asserted against others. Under the circumstances, the trial court should not have authorized Anderson and Carson to redeem the property by payment of the taxes due thereon and to receive a tax deed from the sheriff upon the payment of the same. Since the foreclosure sale was properly set aside by the trial court, the board of county commissioners and Anderson and Carson are in the same position they were before the action was filed. To comply with K.S.A. 79-2801, the board of county commissioners must either file an amended petition or a new foreclosure action naming Anderson and Carson as parties defendant and serve them with process, since they are persons claiming to have an interest in the real estate which is subject to the delinquent taxes. To assert a right of redemption by payment of the taxes, Anderson and Carson would be required in any new proceeding to show that they are parties to an action pending in a court of this state where they have asserted their claim of title against others claiming to be the owners of the property.
The judgment of the district court is affirmed as to the court's order setting aside and nonconfirming the foreclosure sale held in this case. The trial court is affirmed in its order directing the clerk of the district court or the sheriff to return to Monty Campbell the purchase price paid in the foreclosure sale, together with interest.
The order of the district court permitting the appellees, John Anderson, Jr. and David Carson, to redeem the property by payment of the taxes due and requiring the issuance of a tax deed by the sheriff is set aside and reversed. The case is remanded to the district court with directions to cancel the tax deed and for further proceedings.