Orange County v. Jenkins, 200 N.C. 202 (1931)

Jan. 27, 1931 · Supreme Court of North Carolina

200 N.C. 202

ORANGE COUNTY v. ANDREW JENKINS and Wife and C. P. HINSHAW.

(Filed 27 January, 1931.)

1. Taxation H a — Purchaser at tax sale acquires remedy of foreclosure of tax certificate according to statutory procedure.

Where the purchaser at a sale of lands for taxes, the county in this case, has received a tax sale certificate therefor, he has acquired an interest in or a lien upon the .land so purchased with the only remedy of foreclosure by action as in case of a mortgage.

2. Taxation H b — Statutory notice of foreclosure of tax certificates held constitutional and valid.

The State as a sovereign power has the right to prescribe by statute the notice to be given to those interested in lands to be foreclosed under tax sale certificates except where the manner of notice interferes .with the provisions of the Federal Constitution, and a statutory provision that substitutes notice by publication to be given in the newspapers as in an action in rem does not violate the “due process” clause of the Federal Constitution, and the purchaser at the judicial foreclosure sale, when fairly made in conformity with our statutory provisions acquires title free from the claims of those who may have an interest in the Toons in quo who do not appear and defend their rights. C. S., 8037; Miehie Supplement of 1929, Laws of 1927, ch. 221, Laws of 1929, chs. 204, 334.

3. Appearance A a — Party submitting himself to jurisdiction of court by filing answer is bound by court’s decree.

Where the summons against the owners of land has been returned “not to be found” in a proceeding to foreclose tax sale certificates against the land, and the owners have thereafter appeared and submitted themselves to the jurisdiction of the court by answering or otherwise, they are bound by tbe decree oí foreclosure and by tbe final adjudication regularly arrived at in tbe course of tbe procedure under tbe provisions of the statute. .

4. Taxation H lb — Foreclosure of tax certificate is proceeding in rem and attachment is not necessary to service by publication.

In proceedings to foreclose lands under tbe provisions of statute to subject them to tbe lien of a tax sale, it is not required that tbe courts should have obtained possession of the locus m qtio by attachment or actual seizure of tbe property.

5. Same — Affidavit under provisions of C. S., 484, is not required in proceedings to foreclose tax sale certificate.

Where the summons in proceedings to foreclose a tax certificate of the sale of lands in the action against the listed owner of the lands has been returned tbe defendant “not to be found,” it is not required as under the provisions of G. S., 484, that this fact be made to appear by affidavit to the satisfaction of tbe court in order for valid service by publication.

6. Same — Statutory procedure for foreclosure of tax certificate does not violate constitutional provisions relating to due process.

The State may proceed directly or by authorization to others to sell lands for taxes upon proceedings to enforce a lien for the taxes thereon, and a publication of notice to all interested in the lands to appear and defend their rights is due process of law within tbe meaning of tbe Fourteenth Amendment to the Federal Constitution, and is not a taking of property inhibited by Art. I, sec. 17, of the Constitution of North Carolina.

Appeal by C. P. Hinshaw from a judgment of Grady, Jrendered 26 September, 1930. From ObaNGe.

Tbe respondent, Andrew Jenkins, owner of tbe land in controversy, failed to pay tbe taxes assessed against it for tbe years 1926 and 1927, in consequence of wbicb tbe land was sold by tbe sheriff of Orange County on 19 September, 1927. Tbe county became tbe last and highest bidder and received from tbe sheriff and became tbe bolder of two certificates of purchase'wbicb were filed in tbe office of tbe county accountant. Tbe certificates were foreclosed and a commissioner was appointed to sell tbe land; tbe sale was confirmed and a proceeding was instituted to compel tbe purchaser to accept tbe commissioner’s deed and pay tbe purchase price. Tbe agreed facts are as follows:

Tbe said action was instituted by tbe plaintiff against the defendants under tbe provisions of C. S., 8028, 8035-8037, as amended by Laws of 1929, cbs. 204, 334, for tbe foreclosure of tbe 1927 and 1926 tax sales certificates. Tbe defendants in said action failed to file answer to tbe complaint and summons within tbe time allowed by law, and judgment by default was given against tbe said defendants in said action. R. T. Giles was appointed by tbe court as commissioner to sell tbe property involved therein, and in pursuance of said order and judgment, said R. T. Giles, commissioner, did advertise said property for sale as required by law, and offered said property for sale on 12 March, 1930, at the courthouse door in Hillsboro, N. C., and at said'sale C. P. Hinshaw became the last and highest bidder for the same "in the sum of $125. No exceptions were filed or raised bid made in the time required by law. The sale was duly reported to the clerk of the Superior Court by said commissioner, and in pursuance of said report the said clerk on 2 April, 1930, approved and confirmed said sale and authorized and instructed the said commissioner, upon payment of the purchase price, to make and deliver a deed in fee simple for the said property to the said C. P. 'Hinshaw. In pursuance of said order, said R. T. Giles, commissioner, made and executed in proper form, a commissioner’s deed for the said land to the said C. P. Hinshaw and tendered the same to him; but the said Hinshaw refused to accept said deed and refused and still refuses to make payment of the purchase price of $125 for said land, for the reasons set out in answer to the motion of the plaintiff for judgment against the respondent.

Taxes upon said property for the years 1926, 1927, 1928 and 1929, levied and assessed by the town of Chapel Hill, N. C., in the amount of $90.00, are due and unpaid. The proceeds to be derived from the sale of the said property, namely, $125, are not sufficient to pay off the above-mentioned taxes, after paying- off the unpaid county taxes assessed upon said property, and the costs of said action.

Ten days notice of this motion has been duly served on the respondent.”

The reasons set out in Hinshaw’s answer to the plaintiff’s motion are these:

1. That O. S., 8028, 8035-8037, as amended by Laws of 1929, chs. 204, 334, under which said action was instituted, is unconstitutional, and no valid or marketable title in fee simple can be conveyed thereunder.

2. That service of summons was had upon the said defendants in said action by publication, for which reason the title if conveyed to the respondent may be attacked by the said defendants in the said action at any time within one year after notice thereof, and within five years after rendition of the judgment in said action, same being by virtue of the provisions of O. S., 492.

3. That the proceeds to be derived from the sale of the said jn’operty, namely, $125, is sufficient only to pay off the unpaid county taxes assessed upon said property after the court costs of said action have been paid; that the town of Chapel Hill, N. C., has levied and assessed taxes upon the said land for the years 1926, 1927, 1928 and 1929, which said taxes are still due and owing; that due to the fact that the said commissioner will receive insufficient funds from tbe sale of tbe said property to pay off and satisfy tbe unpaid taxes due upon said property to tbe town of Cbapel Hill, as hereinbefore set out, said town taxes will remain and constitute a lien upon said property in tbe bands of tbe respondent.

Upon tbe agreed facts tbe clerk gave judgment for tbe plaintiff and upon Hinshaw’s appeal Judge Grady signed tbe following judgment:

“This cause came on for bearing upon an appeal from A. ~W. Kenion, clerk of tbe Superior Court of Orange County, and tbe parties having filed with tbe court an agreed statement of tbe facts, which is made a part of this judgment, and in addition thereto, it having been admitted in open court that due notice was given by publication commanding all persons having any interest in tbe lands referred to in tbe complaint to come in and take such action as they might be advised, and it appearing to tbe court, and being admitted by all parties, that tbe sale of said lands was conducted in all respects in conformity with tbe laws relating to sales of land for taxes, and that each and everything has been done that is required by said statutes in order to give to tbe purchaser a good and indefeasible title to said lands; and tbe court being called upon to pass upon tbe constitutionality of said statutes, and no other defense being interposed, it is now:

Ordered and adjudged that tbe commissioner, R. T. Giles, prepare and tender to said C. P. Hinsbaw, tbe purchaser of tbe lands in question, a good deed for said lands, in tbe form required by law; and it is also ordered that tbe said C. P. Hinsbaw pay to said commissioner upon tbe tender of said deed tbe sum of $125, and tbe costs of this action, tbe court being of tbe opinion, and now adjudging that said deed will convey to tbe said C. P. Hinsbaw an estate of inheritance in and to tbe lands referred to in tbe complaint, freed from any lien that may have heretofore existed in favor of tbe town of Gbapel Hill by reason of tbe tax assessment referred to in tbe respondent’s answer to tbe notice filed therein.

Tbe costs of this proceeding will be taxed against tbe said respondent, O. P. Hinsbaw, as to all expenditures made since tbe final judgment and decree of confirmation by tbe clerk of tbe Superior Court.”

Tbe respondent Hinsbaw excepted and appealed.

J. B. Qarawan for appellant.

B. T. Giles for appellee.

Adams, J.

Tbe judgment recites an admission by all tbe parties that tbe sale of tbe land in controversy was conducted in compliance with law and that everything was done which the statutes require in order to convey to the purchaser an indefeasible title. The only question for decision is whether the statutes under which the sale was conducted are in conflict with the State or Federal Constitution. This question the trial court resolved against the appellant.

It is contended that these statutes violate Article I, sec. 17, of the Constitution of North Carolina, and Article XIY, sec. 1, of the Constitution of the United States. The specific objections are (1) that the taxpayer is deprived of his property without due process of law; (2) that the law does not apply with uniformity to all persons or property, and (3) that it does not provide adequate notice to lienholders or other persons having an interest in the property.

Under section 8037, Michie’s Supplement of 1929 (Laws 1927, ch. 221, sec. 4; 1929, chs. 204 and 334) the county of Orange instituted a proceeding to foreclose two sheriff’s certificates of sale for taxes. As the holder of these certificates the county had a lien on the land as in case of a mortgage, and the right of foreclosure was its only remedy. N. C. Code of 1927, sec. 8028; Laws 1927, ch. 221, see. 4; Supplement of 1929, see. 8037. Relief could be had “only in an action in the nature of an action to foreclose a mortgage.” It is provided that the person in whose name the land was listed for taxation and the wife or husband of such person shall be made defendants and shall be served with process as in civil actions.

A summons was issued for Andrew Jenkins and his wife and was returned without service because they “were not to be found in Orange County.” Thereafter they were duly and regularly served by publication. By filing a written answer to the plaintiff’s motion Hinshaw submitted himself to the jurisdiction of the court.

The “due-process” clause of the Federal Constitution requires service of process, which may be made by actual service, or by publication in proceedings in rem, or by publication in proceedings quasi in rem. In proceedings in rem instituted, for example, to enforce a lien upon property, it is not necessary, as in proceedings quasi in rem, to acquire jurisdiction by attachment or actual seizure of the property. Bernhardt v. Brown, 118 N. C., 700; Armstrong v. Kinsell, 164 N. C., 125; Heidritter v. Oil Cloth Co., 112 U. S., 294, 28 L. Ed., 729. In Pennoyer v. Neff, 95 U. S., 714, 24 L. Ed., 565, Mr. Justice Field set forth the principle in these words: “Substituted service by publication, or in any other authorized form, may be sufficient to inform parties of the object of proceedings taken where property is once brought under the control of the court by seizure or some equivalent act. The law assumes that property is always in the possession of its owner, in person or by agent; and it proceeds upon the theory that the seizure will inform him, not only that it is taken into custody of the court, but that he must look to any proceedings authorized by law upon such seizure for the condemnation and sale. Such sendee may also be sufficient in cases where the object of the action is to reach and dispose of property in the State, or of some interest therein, by enforcing a contract or a lien respecting the same, or to partition it among different owners, or where the public is a party to condemn and appropriate it for a public purpose.” Such service is not subversive of the due-process clause. Bynum v. Bynum, 179 N. C., 14; Foster v. Allison Corporation, 191 N. C., 166.

The principle just stated applies to that part of section 8037 which provides for an advertisement “giving notice to all other persons claiming any interest in the subject-matter of the action to appear, present, and defend their respective claims, and to set them up within six months from the date of the notice” or be forever barred and foreclosed of any interest or claim in the property or the proceeds received from its sale. Service of notice by publication on interested parties in a proceeding in rem, when authorized by statute, is no less effective for the purpose intended than substituted service of process on the defendant in the action. As remarked by Cooley, “The right of the Legislature to prescribe such notice, and to give it effect as process, rests upon the necessity of the case, and has long been recognized and acted upon.” Constitutional Limitations, 605. If the person on whom a summons is to be served cannot after due diligence be found in the State, that fact must appear by affidavit to the satisfaction of the court (C. S., 484) ; but if a proceeding is instituted to foreclose a tax lien on property, unknown persons who claim an interest in the subject-matter may be notified by publication to appear and assert their interest. The “necessity of the case” is found in the fact that the plaintiff does not know whether there are outstanding claims and, if so, whether the claimants reside within or without the State. The expressed purpose of the statute is to convey the land in fee simple free from all claims whether disclosed by the records or not.

The principle was discussed and applied in Leigh v. Green, 193 U. S., 79, 48 L. Ed., 623, in which it is said: “The State has a right to adopt its own method of collecting its taxes, which can only be interfered with by Federal authority when necessary for the protection of rights guaranteed by the Federal Constitution. In authorizing the proceedings to enforce the payment of taxes upon lands sold to a purchaser at a tax sale, the State is in the exercise of its sovereign power to raise revenue essential to carry on the affairs of state and the due administration of the laws. This fact should not be overlooked in determining the nature and extent of the powers to be exercised. ‘The process of taxation does not require the same kind of notice as is required in a suit at law, or even in proceedings for taking private property under the power of eminent domain. It involves no violation of due process of law when it is executed according to customary forms and established usages, or in subordination to the principles which underlie them.’ ”

Mr. Justice Bay concludes the opinion in these words: “The principles applicable which may be deduced from the authorities we think lead to this result: Where the State seeks directly or by authorization to others to sell land for taxes upon proceedings to enforce a lien for the payment thereof, it may proceed directly against the land within the jurisdiction of the court, and a notice which permits all interested, who are “so minded,” to ascertain that it is to be subjected to sale to answer for taxes, and to appear and be heard, whether to be found within the jurisdiction or not, is due process of law within the Fourteenth Amendment to the Constitution.”

The other questions discussed in the briefs do not affect the constitutional validity of the statutes under consideration, and the judgment appealed from declares their alleged invalidity is the only defense interposed at the hearing. Judgment

Affirmed.