Security First Nat. Bank v. Murchison

739 So. 2d 803, 1999 WL 142121
CourtLouisiana Court of Appeal
DecidedMarch 17, 1999
Docket98-1255
StatusPublished
Cited by4 cases

This text of 739 So. 2d 803 (Security First Nat. Bank v. Murchison) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Security First Nat. Bank v. Murchison, 739 So. 2d 803, 1999 WL 142121 (La. Ct. App. 1999).

Opinion

739 So.2d 803 (1999)

SECURITY FIRST NATIONAL BANK, Plaintiff-Appellee,
v.
John Paris MURCHISON, et ux., Defendants-Appellants.

No. 98-1255.

Court of Appeal of Louisiana, Third Circuit.

March 17, 1999.
Rehearing Denied May 12, 1999.

*804 John W. Munsterman, Alexandria, for Security First National Bank.

Charles Overton LaCroix, Alexandria, for John Paris Murchison, et al.

Ricky L. Sooter, Alexandria, for William Earl Hilton, Sheriff.

BEFORE: COOKS, SAUNDERS, and GREMILLION, Judges.

COOKS, Judge.

John Paris Murchison and Jola, Inc., appeal the trial court's decision annulling two tax sales for lack of appropriate notice to the creditor, Security First National Bank. For the reasons assigned below, we affirm.

BACKGROUND FACTS AND PROCEDURAL HISTORY

On May 6, 1983, Darrel Van Willet, Jr., executed a $1,000,000.00 collateral mortgage in favor of Security First National Bank ("Security") which was filed and recorded that same day. The mortgage encumbered several developed lots in the Woodland Heights subdivision, located in Rapides Parish.

On July 10, 1987, Willet again granted Security a collateral mortgage representing an indebtedness of $1,000,000.00. The property encumbered by this mortgage were two undeveloped tracts of land referred to as the 35 acre tract and the 65 acre tract.

*805 Willet failed to pay the 1989 property taxes on all of the mortgaged property. Subsequently, on July 18, 1990 at a tax sale, Jola, Inc., purchased both the Woodland Heights lots and the 65 acre tract. Jola purchased the Woodland Heights lots for $1,510.00 and the 65 acre tract for $162.08. Security did not receive actual notice of the two tax sales prior to or following the conveyances. The tax sales, however, were advertised in the local newspaper. Eight days after the transaction, the tax sales deeds for both properties were filed and recorded by the Sheriff. These deeds each contained a provision declaring that the owner shall have the right to redeem the property at any time within three years beginning on July 26, 1990, and, if the sales were not redeemed, the conveyance would operate as a cancellation of all conventional and judicial mortgages.

On May 8, 1991, because Jola failed to pay the 1990 property taxes, the 65 acre tract was sold again at a tax sale. The purchaser was John Paris Murchison who, at this time, with his wife owned all of Jola, Inc.'s outstanding stock. The tax sale deed evidencing this transaction was filed and recorded on May 24, 1991.

A year later, when Murchison failed to pay the 1991 property taxes, the 65 acre lot was sold at yet another tax sale. This time the purchaser was Roderick Murchison. Thereafter, Roderick Murchison neglected to pay the 1992 property taxes and the 65 acre lot was sold at a tax sale to Alvis Book on May 5, 1993.

On January 4, 1994, Security filed a foreclosure suit against all of the property described in both the May 6, 1983 and July 10, 1987 collateral mortgages. For the first time, Security discovered the various tax sales. Three months later, on March 30, 1994, the Sheriff adjudicated the 35 acre tract and the 65 acre tract to Security. At the time of the foreclosure sale, Security paid the 1993 property taxes on the 65 acre tract, which had not been paid by Book. Security also redeemed: (a) the tax sale in favor of John Murchison for the 1990 taxes, (b) the tax sale in favor of Roderick Murchison for the 1991 taxes and (c) the tax sale in favor of Book for the 1992 taxes. Security, despite their awareness of the transactions, did not attempt to redeem the July 18, 1990 tax sales. Two years later in May 1996, Security endeavored to redeem the July 18, 1990 tax sales by offering to pay the taxes, all costs and interest thereon to Murchison, whom the property had been transferred to by Jola. The impetus for Security's action was a potential buyer who agreed to purchase the property only after its title had been disencumbered. Murchison refused to accept Security's offer, noting that the three-year period for redemption had expired; and, as such, he was unwilling to acquiesce to Security's untimely offer to redeem the properties.

In response to Murchison's refusal, Security filed a Petition to Annul Tax Sale, seeking to cancel the two tax sales. Specifically, Security urged it did not receive proper notice prior to the sales. After taking the matter under advisement and after submission of post-trial memorandum, the trial court voided the two tax sales subject to payment of the funds advanced by the tax purchaser together with the required interest due on the funds. Subsequently, Murchison filed a motion for new trial. The motion was denied. This appeal now follows.

ASSIGNMENTS OF ERROR

Murchison and Jola (collectively referred to as Murchison) now assign the following errors for review:

1. Having decided that the "seizing creditor" had no constitutional duty to provide actual notice to Security Bank, the Trial Court erred in setting aside the sale because of lack of notice.
2. Having determined that Security Bank waited until at least two years after it gained knowledge of the tax sale, *806 the Trial Court erred in not holding their claim to be prescribed.

LAW AND ANALYSIS

Security's Right to Notice

In Murchison v. Marzullo, 97-815 (La.App. 3 Cir. 12/10/97); 705 So.2d 1129, this Court recognized a mortgagee's right to notice reasonably calculated to apprise him of a pending tax sale. Our holding was based on the United States Supreme Court's decision in Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). Citing its previous decision in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865(1950) the Supreme Court held:

[P]rior to an action which will affect an interest in life, liberty, or property protected by the Due Process Clause of the Fourteenth Amendment, a State must provide "notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."

Mennonite, 462 U.S. at 795, 103 S.Ct. 2706. Essentially, Mullane and Mennonite attempted to balance the interest of the state against the individual's property interest protected by the Fourteenth Amendment. Whether the notice provided by the state is reasonable depends on the circumstances of the case. Tulsa Professional Collection Services v. Pope, 485 U.S. 478, 108 S.Ct. 1340, 1344, 99 L.Ed.2d 565 (1988) Even so, the Supreme Court made clear:

When the mortgagee is identified in a mortgage that is publicly recorded, constructive notice by publication must be supplemented by notice mailed to the mortgagee's last known available address or by personal service. But unless the mortgagee is not reasonably identifiable, constructive notice alone does not satisfy the mandate of Mullane.

Mennonite 462 U.S. at 798, 103 S.Ct. 2706.

With this holding in mind, we turn to address Murchison's first contention that the Sheriff had no duty to provide actual notice to Security.

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