Saturday, 23 Nov 2024

Supreme Court Wary of Windfall in Seizure of Condo for Unpaid Taxes

WASHINGTON — The Supreme Court seemed united on Wednesday, in the last scheduled argument of its current term, in its distaste for how county officials in Minnesota had treated a 94-year-old woman who had stopped paying property taxes on her condominium after moving into an assisted-living center.

By the time the county seized the property, the woman, Geraldine Tyler, owed about $2,000 in taxes and another $13,000 in penalties and interest. The county sold the condo at auction for $40,000, and it kept not only the $15,000 that all agree it was due but also the remaining $25,000.

Retaining the entire value of a confiscated property, even when the debts owed amounted to a small portion of it, is authorized by Minnesota law. According to the county’s brief, about 20 other states have similar procedures.

Christina M. Martin, a lawyer for Ms. Tyler, said the county had an obligation to repay the balance under the Constitution’s takings clause, which says that property cannot “be taken for public use, without just compensation.”

“A debt collector may not take more than what’s owed,” she said.

Ms. Martin faced fairly mild questions, with the justices examining issues like when the taking happened, how to assess the relevant amounts and the role that state law should play in the analysis.

Erica L. Ross, a lawyer for the federal government who argued that the county’s action amounted to a taking as soon as it took title to the property, was met with a skeptical response from Justice Sonia Sotomayor.

“You’re throwing a bomb” into more than two centuries of history, the justice said, adding: “The state’s being forced into being the agent for the seller, and it’s going to have to take all the risk and all of the responsibility for whatever happens to that property until it’s sold. Why would any state want to do that, and why are you forcing states into that?”

Justice Sotomayor said the court should answer only the narrower question of whether Ms. Tyler is entitled to the surplus from an eventual sale.

The justices were more animated in the second half of the argument, in which Neal K. Katyal defended the county’s actions, saying they were rooted in historical practice, and encouraged homeowners to take steps to protect their property.

Justice Neil M. Gorsuch, ordinarily open to historical evidence, said that it was not instructive in the case before the court, Tyler v. Hennepin County, No. 22-166. He discussed the county’s reliance on the Statute of Gloucester, enacted in 1278 in medieval England.

“The Statute of Gloucester was about lands owned by the feudal lord and what happens when a vassal fails to provide enough wheat to his lord,” Justice Gorsuch said, adding, “I just don’t understand what on earth any of that history has to do with this case.

Several justices tested Mr. Katyal’s argument with hypothetical questions.

“Are there any limits?” Justice Elena Kagan asked. “I mean, $5,000 tax debt, $5 million house, take the house, don’t give back the rest?”

After some prodding, Mr. Katyal said that would not run afoul of the takings clause.

Justice Kagan pressed on, asking whether the government could confiscate $100,000 in a bank account to pay off a $10,000 debt.

Cash is different, Mr. Katyal said.

Justice Amy Coney Barrett asked whether a car could be seized and sold to satisfy a $20 parking ticket.

Mr. Katyal said there was no historical tradition supporting such actions.

Justice Barrett responded, “Well, there weren’t cars then.”

The series of distinctions Mr. Katyal drew did not seem to satisfy Justice Brett M. Kavanaugh.

“Why would we read the Constitution to disfavor real property, though?” he asked. “That seems very counterintuitive.”

Chief Justice John G. Roberts Jr. said Mr. Katyal may have gotten things backward.

“I think you’re right that there’s a difference between the value that our history places upon money and property,” the chief justice said, “but I think it’s the exact opposite of what you’re saying.”

In a brief rebuttal, Ms. Martin said the justices’ questions were not fanciful.

“Under the county’s theory, you can have exactly what happened in Michigan when a county took an entire home that was worth at least $25,000, at least that’s what it fetched at an auction, over an $8.41 tax delinquency,” she said. “And you can have the situation in Nebraska, where an elderly widow in a nursing home lost her million-dollar farm over a relatively small debt.”

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