Harrington v. Knuckey

714 P.2d 1299, 148 Ariz. 404, 1985 Ariz. App. LEXIS 796
CourtCourt of Appeals of Arizona
DecidedSeptember 30, 1985
DocketNo. 2 CA-CIV 5362
StatusPublished
Cited by3 cases

This text of 714 P.2d 1299 (Harrington v. Knuckey) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harrington v. Knuckey, 714 P.2d 1299, 148 Ariz. 404, 1985 Ariz. App. LEXIS 796 (Ark. Ct. App. 1985).

Opinion

OPINION

FERNANDEZ, Judge.

The only issue in this quiet title action is the validity of a treasurer’s tax deed issued by the Gila County treasurer four days after an automatic stay order was lifted in a bankruptcy proceeding. The trial court, in granting appellee Ward’s motion for summary judgment, determined that the treasurer had no jurisdiction to issue the deed and held it was null and void. We disagree and reverse.

On March 22, 1972, a certificate of purchase to Lot 105, Beaver Valley Estates # 3, Gila County, was issued to the state as the result of a sale for delinquent taxes. On June 7, 1972, an order was issued approving the Chapter X bankruptcy petition of the Great Southwest Land & Cattle Corporation, presumably the owner of record of the lot in question.1 The order also included language staying all proceedings against the debtor pursuant to what is now the automatic stay provision of 11 U.S.C. § 362(a) (1985 Supp.). On February 8, 1973, the certificate of purchase on the lot was assigned to appellant Harrington after he paid all delinquent taxes owing on the property. He has paid all subsequent taxes on the property as well.

Sometime during the bankruptcy proceeding Jack Sloan, who is not a party to this action, sued the trustee in bankruptcy. The exact nature of that suit is not clear. Apparently Sloan sued for reclamation of a number of properties. The basis of Sloan’s claim to the property in question has not been provided to us. On April 9, 1981, Sloan and the trustee entered into a stipulation for entry of judgment. The stipulation provided that the bankruptcy court “may find that the State [sic; apparently the parties meant “estate”] has no interest in and to the following properties____” Lot 105 was one of the listed properties. The stipulation also provided that Sloan would be allowed reclamation on the properties and that the trustee would convey the lots to him by quit claim deed.

Judgment pursuant to the stipulation was entered the same day. The bankruptcy court order stated that the bankruptcy estate had no interest in Lot 105 (and other properties) and provided, “In order to effectuate the reclamation, the trustee may deed to plaintiff, JACK SLOAN, or his nominee, by Quit Claim Deed, the aforesaid lots.” (Emphasis added.) The judgment also included the following language: “The stay order under Section 362(a) of the Bankruptcy Code previously in effect as to these properties is hereby declared to have been inapplicable to the properties involved and is lifted and removed to the extent it was applicable.”

An additional agreement was entered into on April 9, 1981, between Sloan, appellee Ward and others who are not parties to this lawsuit which purported to settle claims to a number of parcels of Gila County property. The agreement notes that Sloan had filed an adversary proceeding in the bankruptcy case seeking reclamation of the properties “with the exception of ... Lot 105, Unit 3.” It stated Sloan held tax certificates on all the properties except for Lot 105 and one other and provided that he would apply for treasurer’s tax deeds on them as soon as the bankruptcy stay was lifted. He then agreed to designate Wardel Properties as his nominee to receive a quit claim deed from the trustee for certain of the properties, including Lot 105.

[406]*406On April 13, 1981, after receiving a certified copy of the bankruptcy judgment which included the order lifting the stay, appellee Knuckey, the treasurer of Gila County, issued a treasurer’s tax deed to appellant Harrington for Lot 105. She also issued 20 treasurer’s tax deeds on the same day to Sloan.2 On April 14 the trustee executed a quit claim deed to appellee Ward for 13 lots listed in the agreement, including Lot 105.

In October 1982 Ward filed suit to quiet title to Lot 105, contending that the treasurer had no jurisdiction to assign the certificate of purchase to Harrington or to issue the treasurer’s deed to him. Harrington counterclaimed, asserting his right to the property. Both moved for summary judgment, and the trial court found that the bankruptcy judgment required the trustee to issue a quit claim deed in order for the property to be cleared from the bankruptcy estate. The court stated that Ward “must be given a reasonable, brief period of time in which to redeem the property.”

Harrington has appealed from that judgment, disputing the trial court’s finding that the bankruptcy judgment ordered the trustee to convey the property to Ward and contending that the treasurer had jurisdiction to issue the tax deed as soon as the bankruptcy stay was lifted.

We begin with the fact that the redemption right held by the owner of record of property that has been sold for delinquent taxes is property of the bankruptcy estate under the Bankruptcy Code. In re Bialac, 712 F.2d 426 (9th Cir.1983). During the period of redemption, the owner has the right to possession of the property and to the use and fruits thereof. Gunther & Shirley Co. v. Presbytery of Los Angeles, 85 Ariz. 56, 331 P.2d 257 (1958). During that period the purchaser of the tax sale certificate has a lien only, the certificate serving as evidence which entitles the holder to a deed when certain conditions are fulfilled. Gunther & Shirley Co., supra; Conway v. Mosher, 55 Ariz. 307, 101 P.2d 209 (1940).

The taxes owed on the property became delinquent on the first Monday of November and May, depending on which installment was unpaid under the language of the statute applicable at the time. A.R.S. § 42-381. The fact that the certificate of purchase to the state was issued in March 1972 indicates that the taxes had been unpaid for some time and that the property had been through a public sale for which notice had been given. See former A.R.S. §§ 42-385 through 42-390 (the applicable statutes since the tax sale was in 1972). The requirements for the sale were all met prior to the filing of the petition for bankruptcy. The only event in these proceedings that occurred during the period of the stay was the assignment of the certificate to Harrington. That assignment was merely a transfer of the evidence of the lien that already existed on the property and was not in violation of the automatic stay provisions of 11 U.S.C. § 362(a).

The stay order that was entered in the bankruptcy proceeding on June 7, 1972, prohibited, inter alia,

“executing or issuing ... out of any Court, of any Writ, Process, Summons, Attachment, Subpoena, Replevin, Execution or other Process for the purpose of impounding or taking possession of or interfering with or enforcing a Lien upon any property owned by or in the possession of the said Debtor ... and from continuing any out-of-court proceeding for the forfeiture or foreclosure of the interests of the Debtor____”

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Cite This Page — Counsel Stack

Bluebook (online)
714 P.2d 1299, 148 Ariz. 404, 1985 Ariz. App. LEXIS 796, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harrington-v-knuckey-arizctapp-1985.