REPUBLIC BANK V GENESEE COUNTY TREASURER
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Michigan Supreme Court
Lansing, Michigan
Chief Justice:
Opinion
Justices:
Clifford W. Taylor
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED JANUARY 26, 2005
REPUBLIC BANK, also known as
D & N BANK,
Plaintiff-Appellee,
v
No. 126247
GENESEE COUNTY TREASURER,
Defendant-Appellant.
_______________________________
PER CURIAM.
This
case
concerns
the
application
of
two
notice
provisions in the General Property Tax Act, MCL 211.1 et
seq.
We must determine whether plaintiff may maintain a
claim
under
the
act
on
the
basis
of
defendant
county
treasurer’s alleged failure to adequately notify plaintiff
of
a
tax
foreclosure
on
a
plaintiff was the mortgagee.
summary
disposition
to
piece
of
property
on
which
The Court of Claims granted
plaintiff
on
a
finding
that
the
notice given was insufficient under the act, and the Court
of Appeals affirmed that decision.
We reverse the judgment
of the Court of Appeals and remand the case to the Court of
Claims.
I
On August 5, 1999, D & N Bank gave a $490,000 loan to
Karmo Flint Investment, Inc.
This loan was secured by a
mortgage on a gas station located in Grand Blanc Township
in Genesee County, Michigan.
The mortgage was recorded
with the Genesee County Register of Deeds, and it listed D
& N Bank’s headquarters address in Hancock, Michigan, as
the
proper
location
for
provision
of
any
notice.
The
summer taxes on the secured property were due on the day
the loan was closed.
D & N Bank did not deduct the amount
required to pay the then-delinquent property taxes from the
funds disbursed to the mortgagor, and those 1999 summer
taxes
were
assessments
mistakenly
never
paid.
were
by
&
paid
D
N
All
Bank
subsequent
or
by
tax
plaintiff
Republic Bank as its successor.
The
dispute
engendered
by
the
between
mailing
the
of
parties
a
in
hearing
plaintiff alleges was the wrong address.
this
case
was
notice
to
what
This question of
the proper address for the notice was a consequence of a
bank merger that occurred before the mailing.
In May 1999,
D & N Financial Corporation, the holding company of D & N
Bank, had merged with Republic Bancorp, Inc., the holding
2
company of plaintiff Republic Bank.
D & N Bank itself was
subsequently merged into Republic Bank in December 2000.
D & N Bank had its headquarters in Hancock.
has its headquarters in Lansing, Michigan.
Republic Bank
After the bank
merger, Republic Bank continued to maintain an office at
the Hancock address.
In fact, the former president and
chief executive officer of D & N Financial, who became
vice-chairman of the board of directors and one of the
largest shareholders of the merged corporation, maintained
his office at the Hancock location, as did other corporate
officers.
Karmo
Flint
Investment
ultimately
defaulted
on
its
loan from D & N Bank. On November 1, 2001, a stipulated
order was entered in a civil action filed by Republic Bank
(as D & N Bank’s successor) in Oakland Circuit Court.
The
order appointed a receiver for the secured property and
authorized the receiver to take immediate possession and to
borrow from Republic Bank the funds necessary to pay any
delinquent and future property taxes.
Neither D & N Bank nor Republic Bank availed itself of
the right granted by MCL 211.78a(4) to receive delinquent
tax notices, and the 1999 summer tax delinquency did not
come to Republic Bank’s attention.
were
never
paid,
defendant
3
Because those taxes
Genesee
County
Treasurer
commenced
foreclosure
Township property.
proceedings
on
the
Grand
Blanc
Defendant did not notify either D & N
Bank or Republic Bank of the pending forfeiture of the
property.
Defendant did send out a notice of show cause
and judicial foreclosure hearings in January 2002.
notice
was
sent
by
certified
mail,
return
The
receipt
requested, to the D & N Bank address in Hancock listed on
the
mortgage.
On
January
8,
2002,
an
employee
Hancock office signed the return receipt.
plaintiff,
the
notice
never
made
it
to
at
the
According to
the
appropriate
personnel at Republic Bank’s Lansing headquarters.
Republic Bank did not send a representative to appear
at the foreclosure hearing on February 19, 2002.
At the
hearing, the Genesee Circuit Court ordered a judgment of
foreclosure to be entered on March 1, 2002.
Pursuant to
that judgment, title in the property was to be vested in
defendant
if
all
delinquent
twenty-one days of entry.
receiver
of
the
property
taxes
were
not
paid
within
Neither Republic Bank nor the
paid
the
delinquent
taxes.
Consequently, defendant obtained title to the property on
March 23, 2002.
Upon discovery of the loss of the property, Republic
Bank filed this action seeking monetary relief in the Court
of Claims, alleging that defendant had not provided proper
4
notice of the foreclosure proceedings.
discovery,
both
disposition.
motion,
parties
The
and
Court
granted
filed
of
At the close of
motions
Claims
plaintiff’s
for
denied
motion,
summary
defendant’s
finding
that
defendant had violated two notice provisions in the General
Property Tax Act, MCL 211.78f and MCL 211.78i.
The order
granting
judgment,
because
plaintiff’s
a
hearing
motion
to
was
determine
not
a
final
plaintiff’s
damages
was
still required.
Defendant
filed
an
application
for
leave
with the Court of Appeals, which was granted.
to
appeal
The Court of
Appeals affirmed the decision of the Court of Claims.1
It
examined what it deemed the unique facts of this case and
concluded that defendant had given plaintiff insufficient
notice
of
the
foreclosure
proceedings.
The
Court
of
Appeals relied primarily on defendant’s failure to mail the
notice
Republic
of
show
Bank
at
cause
and
foreclosure
its
Lansing
proceedings
headquarters.
The
to
Court
concluded that mailing the notice to the Hancock address
listed on the mortgage was not reasonably calculated to
apprise plaintiff of the pendency of the proceedings, as
required by the General Property Tax Act, MCL 211.78i.
1
The
Unpublished opinion per curiam, issued April 27, 2004
(Docket No. 251072).
5
Court
added
that,
although
defendant’s
failure
to
give
notice of the threatened forfeiture, as required by MCL
211.78f, would not, standing alone, give rise to a due
process claim, it was an important factual consideration in
the Court’s conclusion that the foreclosure notice failed
to satisfy the requirements of due process.
II
The
General
Property
Tax
Act
authorizes
county
treasurers to seize tax-delinquent property and sell it at
auction in order to recover the delinquent taxes.
It also
imposes procedural safeguards in order to afford persons
with an interest in such property an opportunity to be
heard.
Among
requirements.
those
safeguards
are
various
notice
In this case, three provisions of the act
are particularly relevant.
As an overall principle, MCL 211.78(2) provides that
the adequacy of notice under the act is governed by state
and
federal
due
process
standards,
specific provisions of the act.
rather
than
by
The subsection states as
follows:
It is the intent of the legislature that the
provisions of this act relating to the return,
forfeiture, and foreclosure of property for
delinquent taxes satisfy the minimum requirements
of due process required under the constitution of
this state and the constitution of the United
States but that those provisions do not create
6
the
new rights beyond those required under the state
constitution of 1963 or the constitution of the
United States. The failure of this state or a
political subdivision of this state to follow a
requirement of this act relating to the return,
forfeiture,
or
foreclosure
of
property
for
delinquent taxes shall not be construed to create
a claim or cause of action against this state or
a political subdivision of this state unless the
minimum requirements of due process accorded
under the state constitution of 1963 or the
constitution of the United States are violated.
[MCL 211.78(2).]
MCL
211.78f(1)
requires
a
county
treasurer
to
send
certain parties notice of the date on which property will
be forfeited to the county treasurer for unpaid delinquent
taxes.
The subsection states in part as follows:
Except as otherwise provided in section 79
for certified abandoned property, not later than
the February 1 immediately succeeding the date
that unpaid taxes were returned to the county
treasurer for forfeiture, foreclosure, and sale
under section 60a(1) or (2) or returned to the
county treasurer as delinquent under section 78a,
the county treasurer shall send a notice by
certified mail, return receipt requested, to the
person to whom a tax bill for property returned
for delinquent taxes was last sent and, if
different, to the person identified as the owner
of property returned for delinquent taxes as
shown on the current records of the county
treasurer and to those persons identified under
section 78e(2). [MCL 211.78f(1).]
Plaintiff, as a holder of an undischarged mortgage, is
an
entity
identified
under
section
2
78e(2).2
Therefore,
MCL 211.78e(2)(b) lists (i) the owners, (ii) the
holder of any undischarged mortgage, tax certificate issued
under section 71, or other legal interest, (iii) a
7
plaintiff was entitled to notice under section 78f(1).
It
is undisputed that defendant did not provide such notice.
The lower courts focused on the notice provision of
MCL 211.78i.
In January 2002, when defendant sent out its
notice of show cause and foreclosure hearings, the section
provided in relevant part as follows:3
(1) Not later than May 1 immediately
succeeding the forfeiture of property to the
county
treasurer
under
section
78g,
the
foreclosing governmental unit shall initiate a
title search to identify the owners of a property
interest in the property who are entitled to
notice under this section of the show cause
hearing under section 78j and the foreclosure
hearing under section 78k. . . .
(2) The foreclosing governmental unit or its
authorized representative shall determine the
address reasonably calculated to apprise those
owners of a property interest of the pendency of
the show cause hearing under section 78j and the
foreclosure hearing under section 78k and shall
send notice of the show cause hearing under
section 78j and the foreclosure hearing under
section 78k to those owners, to a person entitled
to notice of the return of delinquent taxes under
section 78a(4), and to a person to whom a tax
deed for property returned for delinquent taxes
was issued pursuant to section 72 as determined
by the records of the state treasurer, by
certified mail, return receipt requested, not
less than 30 days before the show cause hearing.
The failure of the foreclosing governmental unit
to comply with any provision of this section
shall not invalidate any proceeding under this
subsequent purchaser under any land contract, and (iv) a
person entitled to notice of the return of delinquent taxes
under section 78a(5).
3
The section was substantially amended by 2003 PA 263.
8
act if the owner of a property interest or a
person to whom a tax deed was issued is accorded
the minimum due process required under the state
constitution of 1963 and the constitution of the
United States. [MCL 211.78i.]
In short, notice must be sent to an address reasonably
calculated to apprise the object of notice of the pending
proceedings, and this requirement must be evaluated in the
context
of
affording
the
object
of
notice
minimal
due
process.
III
We
provide
will
first
adequate
examine
notice
whether
under
MCL
defendant
211.78i.
failed
As
to
earlier
noted, the Court of Appeals concluded that defendant failed
to determine the address reasonably calculated to apprise
Republic Bank of the show cause and foreclosure hearings.
In reaching this conclusion, the Court noted that defendant
could
have
found
an
updated
address
in
the
local
tax
records, because plaintiff had paid the property taxes for
the winter of 1999, the year 2000, and the summer of 2001,
all before the foreclosure action.
records,
said
the
Court,
would
A search of the tax
have
easily attainable updated address.
given
defendant
an
We disagree with this
analysis.
In Dow v Michigan, 396 Mich 192; 240 NW2d 450 (1976),
this Court examined the requirements of due process in the
9
context
of
giving
notice
of
a
tax
sale.
In
Dow
the
question was whether notice by publication was sufficient.
This
Court
found
that
such
notice
did
not
meet
constitutional standards, and then went on to describe the
kind of notice that would satisfy due process requirements:
Personal service is not required. Notice by
mail is adequate. Mailed notice must be directed
to an address reasonably calculated to reach the
person entitled to notice. Mailing should be by
registered or certified mail, return receipt
requested, both because of the greater care in
delivery and because of the record of mailing and
receipt or non-receipt provided.
Such would be
the efforts one desirous of actually informing
another might reasonably employ.
If the state
exerts
reasonable
efforts,
then
failure
to
effectuate actual notice would not preclude
foreclosure
of
the
statutory
lien
and
indefeasible vesting of title on expiration of
the redemption period. [396 Mich 211.]
This analysis was acknowledged by this Court in Smith
v Cliffs on the Bay Condo Ass’n, 463 Mich 420; 617 NW2d 536
(2000), which considered a constitutional challenge to the
procedures by which tax-sale title to a piece of property
was
obtained.
211.131e.
The
notice
provision
at
issue
was
MCL
In Smith, tax notices were sent to the address
of a corporation as indicated on a quitclaim deed.
The
mailing to this last known address was returned by the post
office as not deliverable.
this
circumstance,
the
The owner contended that under
notice
was
inadequate,
and
that
additional efforts should have been undertaken to ascertain
10
the
owner’s
current
address.
This
Court
disagreed,
stating:
In this case there is nothing to indicate
that the township, county, or state had been
informed of a new address for the association.
Thus, it was appropriate for notices to be sent
to the Birmingham address stated in the deed
conveying the disputed parcel to the association.
The fact that one of the mailings was returned by
the post office as undeliverable does not impose
on the state the obligation to undertake an
investigation to see if a new address for the
association could be located. [463 Mich 429.]
This
Court
held
in
Smith
that
the
mailing
of
tax
delinquency and redemption notices to a corporation at its
tax address of record in the manner required by the General
Property Tax Act was sufficient to provide constitutionally
adequate notice.
The Court of Appeals in this case distinguished Smith
by noting that, here, the municipality had been informed of
a new address through the fact that plaintiff paid taxes on
the property under the new name and address.
find this distinction significant.
We do not
First, the record shows
that plaintiff paid at least some of the post-summer 1999
property taxes using checks with the Hancock address on
them.
due
More importantly, this Court indicated in Smith that
process
additional
does
not
impose
investigations,
an
when
obligation
an
to
address
undertake
has
been
provided on the relevant document and that document address
11
has not been changed.
We agree with defendant’s argument
that to require municipalities to keep copies of checks
that are sent to pay taxes and then compare the addresses
thereon to those already provided for all property subject
to
foreclosure
would
place
unwarranted
burdens
on
those
municipalities.
Here, where defendant relied on the address provided
in the mortgage recorded with the Genesee County Register
of Deeds, Republic Bank still operated a branch office at
that
address,
and
an
employee
of
the
bank
signed
the
certified mail receipt card at that address, defendant not
only complied with the minimum requirements of due process,
but provided plaintiff with actual notice of the hearings.
Defendant clearly sent notice to “the address reasonably
calculated to apprise” plaintiff of the hearings.
Having
requirements
found
of
MCL
that
defendant
211.78i,
we
complied
must
also
with
examine
the
the
implications of defendant’s failure to provide any notice
under MCL 211.78f.
As the Court of Appeals held, such
failure to give notice would not, standing alone, give rise
to a due process claim.
We agree.
in
458
Mudge
v
Macomb
Co,
Mich
As this Court explained
87,
102;
580
NW2d
845
(1998), the critical question for purposes of due process
is
whether
an
individual
has
12
been
given
a
“'meaningful
opportunity
to
be
heard
.
.
.
.'”
(Quoting
Boddie
v
Connecticut, 401 US 371, 379; 91 S Ct 780; 28 L Ed 2d 113
[1971].)
We
adjudication
appropriate
noted
must
to
be
the
that
deprivation
preceded
nature
of
by
of
property
by
notice
and
opportunity
case,
and
within
the
the
limits of practicability.
Here,
satisfied
the
minimal
where
requirements
Republic
Blank
of
received
due
process
were
constitutionally
adequate notice of the show cause and forfeiture hearings.
Due process does not require the advance notice of MCL
211.78f
when
a
person
is
given
adequate
notice
and
a
meaningful opportunity to be heard pursuant to MCL 211.78i.
Such a conclusion is mandated by the above-quoted language
in MCL 211.78(2).
Consequently, the Court of Appeals erred
in affirming the grant of summary disposition in favor of
plaintiff in this case.
the Court of Appeals.
of
Claims
for
We thus reverse the judgment of
This matter is remanded to the Court
further
proceedings
consistent
opinion.
Clifford W. Taylor
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
13
with
this
S T A T E
M I C H I G A N
O F
SUPREME COURT
REPUBLIC BANK, also known as
D & N BANK,
Plaintiff-Appellee,
v
No. 126247
GENESEE COUNTY TREASURER,
Defendant-Appellant.
_______________________________
KELLY, J. (concurring).
I agree with the disposition of this case. I continue
to believe that a significant question exists about the
constitutionality of the notice provisions of Michigan's
General Property Tax Act.
this
case,
the
notice
MCL 211.1 et seq.
that
defendant
However, in
provided
not
only
satisfied the act, it survives constitutional scrutiny.
A
property
owner
facing
foreclosure
must
notice that foreclosure proceedings are underway.
be
given
Mullane
v Central Hanover Bank & Trust Co, 339 US 306, 315; 70 S Ct
652; 94 L Ed 865 (1950); MCL 211.78i(2).
The property
owners may not have been given adequate notice in the case
of Smith v Cliffs on the Bay Condo Ass’n, 463 Mich 420; 617
NW2d 536 (2000) (Kelly, J., dissenting).
There, notice was
mailed to the owners but returned as undeliverable.
I
believed that the owners may have been denied due process
of law and I wrote:
When the [Department of Treasury] receives
notice
that
its
tax
bills
directed
to
a
corporation
are
undeliverable
at
a
certain
address, reasonableness may require one more
step:
an
inquiry
to
the
Corporations
and
Securities Bureau to check for a current address.
[Id. at 433.]
By contrast, in the present case, defendant Genesee
County
Treasurer
plaintiff’s
researched
correct
address
the
title
and
sent
records
the
notice
plaintiff at that address by certified mail.
for
to
Defendant
received verification that plaintiff had accepted delivery.
These actions reasonably warned plaintiff that foreclosure
of the property was about to occur.
Moreover,
plaintiff
Republic
notice of the foreclosure hearing.
Bank
received
actual
It is the successor to
D & N Bank's interest, and it continued to maintain an
office at the address listed in the title records. Its
employee accepted the notice.1
It
is
true
that
the
bank
was
not
given
required by § 78f of the act, MCL 211.78f.
1
notice
as
However, the
That the notice was misplaced after plaintiff's
employee accepted it is irrelevant to the question whether
the bank received minimal due process.
2
notice it received of the show cause hearing and judicial
forfeiture met the minimum requirements of due process.
Therefore,
I
agree
that
the
decision
of
the
Appeals should be reversed.
Marilyn Kelly
Michael F. Cavanagh
3
Court
of
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