An Indiana statute requires the county auditor to post notice in
the county courthouse of the sale of real property for nonpayment
of property taxes and to publish notice once each week for three
consecutive weeks. Notice by certified mail must be given to the
property owner, but at the time in question in this case, there was
no provision for notice by mail or personal service to mortgagees
of the property. The purchaser at a tax sale acquires a certificate
of sale that constitutes a lien against the property for the amount
paid and is superior to all prior liens. The tax sale is followed
by a 2-year period during which the owner or mortgagee may redeem
the property. If no one redeems the property during this period,
the tax sale purchaser may apply for a deed to the property, but
before the deed is executed, the county auditor must notify the
former owner that he is entitled to redeem the property. If the
property is not redeemed within 30 days, the county auditor may
then execute a deed to the purchaser who then acquires an estate in
fee simple, free and clear of all liens, and may bring an action to
quiet title. Property on which appellant held a mortgage was sold
to appellee for nonpayment of taxes. Appellant was not notified of
the pending sale and did not learn of the sale until more than two
years later, by which time the redemption period had run and the
mortgagor still owed appellant money on the mortgage. Appellee then
filed suit in state court seeking to quiet title to the property.
The court upheld the tax sale statute against appellant's
contention that it had not received constitutionally adequate
notice of the pending tax sale and of its opportunity to redeem the
property after the sale. The Indiana Court of Appeals affirmed.
Held: The manner of notice provided to appellant did
not meet the requirements of the Due Process Clause of the
Fourteenth Amendment. Pp.
462 U. S.
795-800.
(a) Prior to an action that will affect an interest in life,
liberty, or property protected by the Due Process Clause, a State
must provide
"notice reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections."
Mullane v. Central Hanover Bank & Trust Co.,
339 U. S. 306,
339 U. S. 314.
Notice by publication is not reasonably calculated to inform
interested parties who can be notified by more effective means such
as personal service or mailed notice. Pp.
462 U. S.
795-797.
Page 462 U. S. 792
(b) Since a mortgagee clearly has a legally protected property
interest, he is entitled to notice reasonably calculated to apprise
him of a pending tax sale. Constructive notice to a mortgagee who
is identified in the public record does not satisfy the due process
requirement of
Mullane. Neither notice by publication and
posting nor mailed notice to the property owner are means "such as
one desirous of actually informing the [mortgagee] might reasonably
adopt to accomplish it."
Mullane, supra, at
339 U. S. 315.
Personal service or notice by mail is required even though
sophisticated creditors have means at their disposal to discover
whether property taxes have not been paid and whether tax sale
proceedings are therefore likely to be initiated. Pp.
462 U. S.
798-800.
427
N.E.2d 686, reversed and remanded.
MARSHALL, J., delivered the opinion of the Court, in which
BURGER C.J., and BRENNAN, WHITE, BLACKMUN, and STEVENS, JJ.,
joined. O'CONNOR, J., filed a dissenting opinion, in which POWELL
and REHNQUIST, JJ., joined,
post, p.
462 U. S.
800.
JUSTICE MARSHALL delivered the opinion of the Court.
This appeal raises the question whether notice by publication
and posting provides a mortgagee of real property with adequate
notice of a proceeding to sell the mortgaged property for
nonpayment of taxes.
I
To secure an obligation to pay $14,000, Alfred Jean Moore
executed a mortgage in favor of appellant Mennonite Board of
Missions (MBM) on property in Elkhart, Ind., that Moore had
purchased from MBM. The mortgage was recorded in the Elkhart County
Recorder's Office on March 1, 1973. Under the terms of the
agreement, Moore was responsible for paying all of the property
taxes. Without MBM's knowledge, however, she failed to pay taxes on
the property.
Indiana law provides for the annual sale of real property on
which payments of property taxes have been delinquent for
Page 462 U. S. 793
15 months or longer. Ind.Code § 6-1.1-24-1
et seq.
(1982). Prior to the sale, the county auditor must post notice in
the county courthouse and publish notice once each week for three
consecutive weeks. § 6-1.1-24-3. The owner of the property is
entitled to notice by certified mail to his last known address. §
6-1.1-24-4. [
Footnote 1] Until
1980, however, Indiana law did not provide for notice by mail or
personal service to mortgagees of property that was to be sold for
nonpayment of taxes. [
Footnote
2]
After the required notice is provided, the county treasurer
holds a public auction at which the real property is sold to the
highest bidder. § 6-1.1-24-5. The purchaser acquires a certificate
of sale which constitutes a lien against the real property for the
entire amount paid. § 6-1.1-24-9. This lien is superior to all
other liens against the property which existed at the time the
certificate was issued.
Ibid.
The tax sale is followed by a 2-year redemption period during
which the "owner, occupant, lienholder, or other person who has an
interest in" the property may redeem the property. 6-1.125-1. To
redeem the property, an individual must pay the county treasurer a
sum sufficient to cover the purchase price of the property at the
tax sale and the amount of taxes and special assessments paid by
the purchaser following the sale, plus an additional percentage
specified in the statute. § 6-1.1-25-2. The county, in turn, remits
the payment to the purchaser of the property at the tax sale. §
6-1.1-25-3.
Page 462 U. S. 794
If no one redeems the property during the statutory redemption
period, the purchaser may apply to the county auditor for a deed to
the property. Before executing and delivering the deed, the county
auditor must notify the former owner that he is still entitled to
redeem the property. § 6-1.1-25-6. No notice to the mortgagee is
required. If the property is not redeemed within 30 days, the
county auditor may then execute and deliver a deed for the property
to the purchaser, § 6-1.1-25-4, who thereby acquires "an estate in
fee simple absolute, free and clear of all liens and encumbrances."
§ 6-1.1-25-4(d).
After obtaining a deed, the purchaser may initiate an action to
quiet his title to the property. § 6-1.1-25-14. The previous owner,
lienholders, and others who claim to have an interest in the
property may no longer redeem the property. They may defeat the
title conveyed by the tax deed only by proving,
inter
alia, that the property had not been subject to, or assessed
for, the taxes for which it was sold, that the taxes had been paid
before the sale, or that the property was properly redeemed before
the deed was executed. § 6-1.1-25-16.
In 1977, Elkhart County initiated proceedings to sell Moore's
property for nonpayment of taxes. The county provided notice as
required under the statute: it posted and published an announcement
of the tax sale and mailed notice to Moore by certified mail. MBM
was not informed of the pending tax sale either by the County
Auditor or by Moore. The property was sold for $1,167.75 to
appellee Richard Adams on August 8, 1977. Neither Moore nor MBM
appeared at the sale or took steps thereafter to redeem the
property. Following the sale of her property, Moore continued to
make payments each month to MBM, and as a result MBM did not
realize that the property had been sold. On August 16, 1979, MBM
first learned of the tax sale. By then the redemption period had
run and Moore still owed appellant $8,237.19.
Page 462 U. S. 795
In November, 1979, Adams filed a suit in state court seeking to
quiet title to the property. In opposition to Adams' motion for
summary judgment, MBM contended that it had not received
constitutionally adequate notice of the pending tax sale and of the
opportunity to redeem the property following the tax sale. The
trial court upheld the Indiana tax sale statute against this
constitutional challenge. The Indiana Court of Appeals affirmed.
427 N.E.2d
686 (1981). We noted probable jurisdiction, 459 U.S. 903
(1982), and we now reverse.
II
In
Mullane v. Central Hanover Bank & Trust Co.,
339 U. S. 306,
339 U. S. 314
(1950), this Court recognized that, prior 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 the circumstances, to
apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections."
Invoking this "elementary and fundamental requirement of due
process,"
ibid., the Court held that published notice of
an action to settle the accounts of a common trust fund was not
sufficient to inform beneficiaries of the trust whose names and
addresses were known. The Court explained that notice by
publication was not reasonably calculated to provide actual notice
of the pending proceeding, and was therefore inadequate to inform
those who could be notified by more effective means such as
personal service or mailed notice:
"Chance alone brings to the attention of even a local resident
an advertisement in small type inserted in the back pages of a
newspaper, and if he makes his home outside the area of the
newspaper's normal circulation the odds that the information will
never reach him are large indeed. The chance of actual notice is
further reduced when, as here, the notice required does not even
name
Page 462 U. S. 796
those whose attention it is supposed to attract, and does not
inform acquaintances who might call it to attention. In weighing
its sufficiency on the basis of equivalence with actual notice, we
are unable to regard this as more than a feint."
Id. at
339 U. S. 315.
[
Footnote 3]
Page 462 U. S. 797
In subsequent cases, this Court has adhered unwaveringly to the
principle announced in
Mullane. In
Walker v. City of
Hutchinson, 352 U. S. 112
(1956), for example, the Court held that notice of condemnation
proceedings published in a local newspaper was an inadequate means
of informing a landowner whose name was known to the city and was
on the official records. Similarly, in
Schroeder v. New York
City, 371 U. S. 208
(1962), the Court concluded that publication in a newspaper and
posted notices were inadequate to apprise a property owner of
condemnation proceedings when his name and address were readily
ascertainable from both deed records and tax rolls. Most recently,
in
Greene v. Lindsey, 456 U. S. 444
(1982), we held that posting a summons on the door of a tenant's
apartment was an inadequate means of providing notice of forcible
entry and detainer actions.
See also Memphis Light, Gas &
Water Div. v. Craft, 436 U. S. 1,
436 U. S. 13-15
(1978);
Eisen v. Carlisle & Jacquelin, 417 U.
S. 156,
417 U. S.
174-175 (1974);
Bank of Marin v. England,
385 U. S. 99,
385 U. S. 102
(1966);
Covey v. Town of Somers, 351 U.
S. 141,
351 U. S.
146-147 (1956);
New York City v. New York, N.H.
& H.R. Co., 344 U. S. 293,
344 U. S.
296-297 (1953).
Page 462 U. S. 798
This case is controlled by the analysis in
Mullane. To
begin with, a mortgagee possesses a substantial property interest
that is significantly affected by a tax sale. Under Indiana law, a
mortgagee acquires a lien on the owner's property which may be
conveyed together with the mortgagor's personal obligation to repay
the debt secured by the mortgage. Ind.Code § 32-8-11-7 (1982). A
mortgagee's security interest generally has priority over
subsequent claims or liens attaching to the property, and a
purchase money mortgage takes precedence over virtually all other
claims or liens, including those which antedate the execution of
the mortgage. § 32-8-11-4. The tax sale immediately and drastically
diminishes the value of this security interest by granting the tax
sale purchaser a lien with priority over that of all other
creditors. Ultimately, the tax sale may result in the complete
nullification of the mortgagee's interest, since the purchaser
acquires title free of all liens and other encumbrances at the
conclusion of the redemption period.
Since a mortgagee clearly has a legally protected property
interest, he is entitled to notice reasonably calculated to apprise
him of a pending tax sale.
Cf. 55 U. S.
Sampson, 14 How. 52,
55 U. S. 67
(1853). 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. [
Footnote 4]
Page 462 U. S. 799
Neither notice by publication and posting, nor mailed notice to
the property owner, are means "such as one desirous of actually
informing the [mortgagee] might reasonably adopt to accomplish it."
Mullane, 339 U.S. at
339 U. S. 315.
Because they are designed primarily to attract prospective
purchasers to the tax sale, publication and posting are unlikely to
reach those who, although they have an interest in the property, do
not make special efforts to keep abreast of such notices.
Walker v. City of Hutchinson, supra, at
352 U. S. 116;
New York City v. New York, N.H. & H.R. Co., supra, at
344 U. S. 296;
Mullane, supra, at
339 U. S. 315.
Notice to the property owner, who is not in privity with his
creditor and who has failed to take steps necessary to preserve his
own property interest, also cannot be expected to lead to actual
notice to the mortgagee.
Cf. Nelson v. New York City,
352 U. S. 103,
352 U. S.
107-109 (1956). The county's use of these less reliable
forms of notice is not reasonable where, as here, "an inexpensive
and efficient mechanism such as mail service is available."
Greene v. Lindsey, supra, at
456 U. S.
455.
Personal service or mailed notice is required even though
sophisticated creditors have means at their disposal to discover
whether property taxes have not been paid and whether tax sale
proceedings are therefore likely to be initiated. In the first
place, a mortgage need not involve a complex commercial transaction
among knowledgeable parties, and it may well be the least
sophisticated creditor whose security interest is threatened by a
tax sale. More importantly, a party's ability to take steps to
safeguard its interests does not relieve the State of its
constitutional obligation. It is true that particularly extensive
efforts to provide notice may often be required when the State is
aware of a party's inexperience or incompetence.
See, e.g.,
Memphis Light, Gas & Water Div. v. Craft, supra, at
436 U. S. 13-15;
Covey v. Town of Somers, supra. But it does not follow
that the State may
Page 462 U. S. 800
forgo even the relatively modest administrative burden of
providing notice by mail to parties who are particularly
resourceful. [
Footnote 5]
Cf. New York City v. New York, N.H. & H.R. Co., 344
U.S. at
344 U. S. 297.
Notice by mail or other means as certain to ensure actual notice is
a minimum constitutional precondition to a proceeding which will
adversely affect the liberty or property interests of any party,
whether unlettered or well versed in commercial practice, if its
name and address are reasonably ascertainable. Furthermore, a
mortgagee's knowledge of delinquency in the payment of taxes is not
equivalent to notice that a tax sale is pending. The latter
"was the information which the [county] was constitutionally
obliged . . . to give personally to the appellant -- an obligation
which the mailing of a single letter would have discharged."
Schroeder v. New York City, 371 U.S. at
371 U. S. 214.
We therefore conclude that the manner of notice provided to
appellant did not meet the requirements of the Due Process Clause
of the Fourteenth Amendment. [
Footnote 6] Accordingly, the judgment of the Indiana Court
of Appeals is reversed, and the cause is remanded for further
proceedings not inconsistent with this opinion.
It is so ordered.
[
Footnote 1]
Because a mortgagee has no title to the mortgaged property under
Indiana law, the mortgagee is not considered an "owner" for
purposes of § 6-1.1-24-4.
First Savings & Loan Assn. of
Central Indiana v. Furnish, 174 Ind.App. 265, 272, n. 14,
367 N.E.2d
596, 600, n. 14 (1977).
[
Footnote 2]
Indiana Code § 6-1.1-24-4.2 (1982), added in 1980, provides for
notice by certified mail to any mortgagee of real property which is
subject to tax sale proceedings, if the mortgagee has annually
requested such notice and has agreed to pay a fee, not to exceed
$10, to cover the cost of sending notice. Because the events in
question in this case occurred before the 1980 amendment, the
constitutionality of the amendment is not before us.
[
Footnote 3]
The decision in
Mullane rejected one of the premises
underlying this Court's previous decisions concerning the
requirements of notice in judicial proceedings: that due process
rights may vary depending on whether actions are
in rem or
in personam. 339 U.S. at
339 U. S. 312.
See Shaffer v. Heitner, 433 U. S. 186,
433 U. S. 206
(1977). Traditionally, when a state court based its jurisdiction
upon its authority over the defendant's person, personal service
was considered essential for the court to bind individuals who did
not submit to its jurisdiction.
See, e.g., Hamilton v.
Brown, 161 U. S. 256,
161 U. S. 275
(1896);
Arndt v. Griggs, 134 U. S. 316,
134 U. S. 320
(1890);
Pennoyer v. Neff, 95 U. S.
714,
95 U. S. 726,
95 U. S.
733-734 (1878) ("[D]ue process of law would require
appearance or personal service before the defendant could be
personally bound by any judgment rendered"). In
Hess v.
Pawloski, 274 U. S. 352
(1927), the Court recognized for the first time that service by
registered mail, in place of personal service, may satisfy the
requirements of due process. Constructive notice was never deemed
sufficient to bind an individual in an action
in
personam.
In contrast, in
in rem or
quasi in rem
proceedings in which jurisdiction was based on the court's power
over property within its territory,
see generally Shaffer v.
Heitner, supra, at
433 U. S.
196-205, constructive notice to nonresidents was
traditionally understood to satisfy the requirements of due
process. In order to settle questions of title to property within
its territory, a state court was generally required to proceed by
an
in rem action, since the court could not otherwise bind
nonresidents. At one time, constructive service was considered the
only means of notifying nonresidents, since it was believed that
"[p]rocess from the tribunals of one State cannot run into another
State."
Pennoyer v. Neff, supra, at
95 U. S. 727.
See Ballard v. Hunter, 204 U. S. 241,
204 U. S. 255
(1907). As a result, the nonresident acquired the duty "to take
measures that in some way he shall be represented when his property
is called into requisition."
Id. at
95 U. S. 262.
If he "fail[ed] to get notice by the ordinary publications which
have been usually required in such cases, it [was] his misfortune."
Ibid.
Rarely was a corresponding duty imposed on interested parties
who resided within the State and whose identities were reasonably
ascertainable. Even in actions
in rem, such individuals
were generally provided personal service.
See, e.g., Arndt v.
Griggs, supra, at
134 U. S.
326-327. Where the identity of interested residents
could not be ascertained after a reasonably diligent inquiry,
however, their interests in property could be affected by a
proceeding
in rem as long as constructive notice was
provided.
See Hamilton v. Brown, supra, at
161 U. S. 275;
American Land Co v. Zeiss, 219 U. S.
47,
219 U. S. 61-62,
219 U. S. 65-66
(1911).
Beginning with
Mullane, this Court has recognized,
contrary to the earlier line of cases, that "an adverse judgment
in rem directly affects the property owner by divesting
him of his rights in the property before the court."
Shaffer v.
Heitner, supra, at
433 U. S. 206.
In rejecting the traditional justification for distinguishing
between residents and nonresidents and between
in rem and
in personam actions, the Court has not left all interested
claimants to the vagaries of indirect notice. Our cases have
required the State to make efforts to provide actual notice to all
interested parties comparable to the efforts that were previously
required only in
in personam. actions.
See infra,
this page.
[
Footnote 4]
In this case, the mortgage on file with the County Recorder
identified the mortgagee only as "MENNONITE BOARD OF MISSIONS, a
corporation, of Wayne County, in the State of Ohio." We assume that
the mortgagee's address could have been ascertained by reasonably
diligent efforts.
See Mullane v. Central Hanover Bank &
Trust Co., 339 U.S. at
339 U. S. 317.
Simply mailing a letter to "Mennonite Board of Missions, Wayne
County, Ohio," quite likely would have provided actual notice,
given "the well-known skill of postal officials and employes in
making proper delivery of letters defectively addressed."
Grannis v. Ordean, 234 U. S. 385,
234 U. S.
397-398 (1914). We do not suggest, however, that a
governmental body is required to undertake extraordinary efforts to
discover the identity and whereabouts of a mortgagee whose identity
is not in the public record.
[
Footnote 5]
Indeed, notice by mail to the mortgagee may ultimately relieve
the county of a more substantial administrative burden if the
mortgagee arranges for payment of the delinquent taxes prior to the
tax sale.
[
Footnote 6]
This appeal also presents the question whether, before the
County Auditor executes and delivers a deed to the tax sale
purchaser, the mortgagee is constitutionally entitled to notice of
its right to redeem the property.
Cf. Griffin v. Griffin,
327 U. S. 220,
327 U. S. 229
(1946). Because we conclude that the failure to give adequate
notice of the tax sale proceeding deprived appellant of due process
of law, we need not reach this question.
JUSTICE O'CONNOR, with whom JUSTICE POWELL and JUSTICE REHNQUIST
join, dissenting.
Today, the Court departs significantly from its prior decisions
and holds that, before the State conducts
any proceeding
that will affect the legally protected property interests of
Page 462 U. S. 801
any party, the State must provide notice to that party
by means certain to ensure actual notice as long as the party's
identity and location are "reasonably ascertainable."
Ante
at
462 U. S. 800.
Applying this novel and unjustified principle to the present case,
the Court decides that the mortgagee involved deserved more than
the notice by publication and posting that were provided. I dissent
because the Court's approach is unwarranted both as a general rule
and as the rule of this case.
I
In
Mullane v. Central Hanover Bank & Trust Co.,
339 U. S. 306,
339 U. S. 314
(1950), the Court established that
"[a]n elementary and fundamental requirement of due process in
any proceeding which is to be accorded finality is notice
reasonably calculated, under all the circumstances, to apprise
interested parties of the pendency of the action and afford them an
opportunity to present their objections."
We emphasized that notice is constitutionally adequate when "the
practicalities and peculiarities of the case . . . are reasonably
met,"
id. at
339 U. S.
314-315.
See also Walker v. City of Hutchinson,
352 U. S. 112,
352 U. S. 115
(1956);
Schroeder v. New York City, 371 U.
S. 208,
371 U. S.
211-212 (1962);
Greene v. Lindsey, 456 U.
S. 444,
456 U. S.
449-450 (1982). The key focus is the "reasonableness" of
the means chosen by the State.
Mullane, 339 U.S. at
339 U. S. 315.
Whether a particular method of notice is reasonable depends on the
outcome of the balance between the "interest of the State" and "the
individual interest sought to be protected by the Fourteenth
Amendment."
Id. at
339 U. S. 314.
Of course, "[i]t is not our responsibility to prescribe the form of
service that the [State] should adopt."
Greene, supra, at
456 U. S. 455,
n. 9. It is the primary responsibility of the State to strike this
balance, and we will upset this process only when the State strikes
the balance in an irrational manner.
From
Mullane on, the Court has adamantly refused to
commit
"itself to any formula achieving a balance between these
interests in a particular proceeding or determining
Page 462 U. S. 802
when constructive notice may be utilized or what test it must
meet."
339 U.S. at
339 U. S. 314.
Indeed, we have recognized
"the impossibility of setting up a rigid formula as to the kind
of notice that must be given; notice required will vary with
circumstances and conditions."
Walker, supra, at
352 U. S. 115
(emphasis added). Our approach in these cases has always reflected
the general principle that "[t]he very nature of due process
negates any concept of inflexible procedures universally applicable
to every imaginable situation."
Cafeteria & Restaurant
Workers v. McElroy, 367 U. S. 886,
367 U. S. 895
(1961).
See also Mathews v. Eldridge, 424 U.
S. 319,
424 U. S.
334-335 (1976).
A
Although the Court purports to apply these settled principles in
this case, its decision today is squarely at odds with the
balancing approach that we have developed. The Court now holds
that,
whenever a party has a legally protected property
interest,
"[n]otice by mail or other means as certain to ensure actual
notice is a minimum constitutional precondition to a proceeding
which will adversely affect the liberty or property interests . . .
if [the party's] name and address are reasonably
ascertainable."
Ante at
462 U. S. 800.
Without knowing what state and individual interests will be at
stake in future cases, the Court espouses a general principle
ostensibly applicable whenever
any legally protected
property interest may be adversely affected. This is a flat
rejection of the view that no "formula" can be devised that
adequately evaluates the constitutionality of a procedure created
by a State to provide notice in a certain class of cases. Despite
the fact that
Mullane itself accepted that constructive
notice satisfied the dictates of due process in certain
circumstances, [
Footnote 2/1]
the
Page 462 U. S. 803
Court, citing
Mullane, now holds that constructive
notice can
never suffice whenever there is a legally
protected property interest at stake.
In seeking to justify this broad rule, the Court holds that,
although a party's inability to safeguard its interests may result
in imposing greater notice burdens on the State, the fact that a
party may be more able "to safeguard its interests does not relieve
the State of its constitutional obligation."
Ante at
462 U. S. 799.
Apart from ignoring the fact that it is the totality of
circumstances that determines the sufficiency of notice, the Court
also neglects to consider that the constitutional obligation
imposed upon the State may itself be defined by the party's ability
to protect its interest. As recently as last Term, the Court held
that the focus of the due process inquiry has always been the
effect of a notice procedure on "a particular class of cases."
Greene, supra, at 451 (emphasis added). In fashioning a
broad rule for "the least sophisticated creditor,"
ante at
456 U. S. 799,
the Court ignores the well-settled principle that
"procedural due process rules are shaped by the risk of error
inherent in the truthfinding process as applied to the generality
of cases, not the rare exceptions."
Mathews v. Eldridge, supra, at
424 U. S. 344;
see also Califano v. Yamasaki, 442 U.
S. 682,
442 U. S. 696
(1979). If the members of a particular class generally possess the
ability to safeguard their interests, then this fact must be taken
into account when we consider the "totality of circumstances," as
required by
Mullane. Indeed, the criterion established by
Mullane "
is not the possibility of conceivable injury,
but the just and reasonable character of the requirements, having
reference to the subject with which the statute deals.'" 339 U.S.
at 339 U. S. 315
(quoting American Land Co. v. Zeiss, 219 U. S.
47, 219 U. S. 67
(1911)).
The Court also suggests that its broad rule has really been the
law ever since
Mullane. See ante at
462 U. S.
796-797, n. 3. The Court reasons that, before
Mullane, the characterization of proceedings as
in
personam or
in rem was relevant to
Page 462 U. S. 804
determining whether the notice given was constitutionally
sufficient, [
Footnote 2/2] and
that, once
Mullane held that the "power of the State to
resort to constructive service" no longer depended upon the
"historic antithesis" of
in rem and
in personam
proceedings, 339 U.S. at
339 U. S.
312-313, constructive notice became insufficient as to
all proceedings.
The plain language of
Mullane is clear that the Court
expressly refused to reject constructive notice as
per se
insufficient.
See id. at
339 U. S.
312-314. Moreover, the Court errs in thinking that the
only justification for constructive notice is the distinction
between types of proceedings.
See ante at
462 U. S.
796-797, n. 3. The historical justification for
constructive notice was that those with an interest in property
were under an obligation to act reasonably in keeping themselves
informed of proceedings that affected that property.
See, e.g.,
North Laramie Land Co. v. Hoffman, 268 U.
S. 276,
268 U. S. 283
(1925);
Ballard v. Hunter, 204 U.
S. 241,
204 U. S. 262
(1907). As discussed in
462 U. S.
Mullane expressly acknowledged, and did not reject, the
continued vitality of the notion that property owners had some
burden to protect their property.
See 339 U.S. at
339 U. S.
316.
B
The Court also holds that the condition for receiving notice
under its new approach is that the name and address of the party
must be "reasonably ascertainable." In applying this requirement to
the mortgagee in this case, the Court holds that the State must
exercise "reasonably diligent efforts" in determining the address
of the mortgagee,
ante at
462 U. S. 798,
n. 4,
Page 462 U. S. 805
and suggests that the State is required to make some effort "to
discover the identity and whereabouts of a mortgagee whose identity
is not in the public record."
Ante at
462 U. S. 799,
n. 4. Again, the Court departs from our prior cases. In all of the
cases relied on by the Court in its analysis, the State either
actually knew the identity or incapacity of the party seeking
notice or that identity was "very easily ascertainable."
Schroeder, 371 U.S. at
371 U. S.
212-213.
See also Mullane, 339 U.S. at
339 U. S. 318;
Covey v. Town of Somers, 351 U. S. 141,
351 U. S. 146
(1956);
Walker, 352 U.S. at
352 U. S. 116;
Eisen v. Carlisle & Jacquelin, 417 U.
S. 156,
417 U. S. 175
(1974). [
Footnote 2/3] Under the
Court's decision today, it is not clear how far the State must go
in providing for reasonable efforts to ascertain the name and
address of an affected party. Indeed, despite the fact that the
recorded mortgage failed to include the appellant's address,
see ante at
462 U. S.
798-799, n. 4, the Court concludes that its whereabouts
were "reasonably identifiable."
Ante at
462 U. S. 798.
This uncertainty becomes particularly ominous in the light of the
fact that the duty to ascertain identity and location, and to
notify by mail or other similar means, exists whenever any legally
protected interest is implicated.
II
Once the Court effectively rejects
Mullane and its
progeny by accepting a
per se rule against constructive
notice, it applies its rule and holds that the mortgagee in this
case must receive personal service or mailed notice because it has
a legally protected interest at stake, and because the mortgage was
publicly recorded.
See ante at
462 U. S. 798.
If the Court had
Page 462 U. S. 806
observed its prior decisions and engaged in the balancing
required by
Mullane, it would have reached the opposite
result.
It cannot be doubted that the State has a vital interest in the
collection of its tax revenues in whatever reasonable manner that
it chooses:
"In authorizing the proceedings to enforce the payment of the
taxes upon lands sold to a purchaser at tax sale, the State is in
exercise of its sovereign power to raise revenue essential to carry
on the affairs of state and the due administration of the laws. . .
."
"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."
Leigh v. Green, 193 U. S. 79,
193 U. S. 89
(1904) (quoting
Bell's Gap R. Co. v. Pennsylvania,
134 U. S. 232,
134 U. S. 239
(1890)). The State has decided to accommodate its vital interest in
this respect through the sale of real property on which payments of
property taxes have been delinquent for a certain period of time.
[
Footnote 2/4]
The State has an equally strong interest in avoiding the burden
imposed by the requirement that it must exercise "reasonable"
efforts to ascertain the identity and location of any party with a
legally protected interest. In the instant case, that burden is not
limited to mailing notice. Rather, the State must have someone
check the records and ascertain with respect to each delinquent
taxpayer whether there is a mortgagee, perhaps whether the mortgage
has been paid off, and whether there is a dependable address.
Against these vital interests of the State, we must weigh the
interest possessed by the relevant class -- in this case,
Page 462 U. S. 807
mortgagees. [
Footnote 2/5]
Contrary to the Court's approach today, this interest may not be
evaluated simply by reference to the fact that we have frequently
found constructive notice to be inadequate since
Mullane.
Rather, such interest "must be judged in the light of its practical
application to the affairs of men as they are ordinarily
conducted."
North Laramie Land Co., 268 U.S. at
268 U. S.
283.
Chief Justice Marshall wrote long ago that
"it is the part of common prudence for all those who have any
interest in [property], to guard that interest by persons who are
in a situation to protect it."
The Mary, 9
Cranch, 126,
13 U. S. 144
(1815). We have never rejected this principle, and, indeed, we held
in
Mullane that "[a] state may indulge" the assumption
that a property owner "usually arranges means to learn of any
direct attack upon his possessory or proprietary rights." 339 U.S.
at
339 U. S. 316.
When we have found constructive notice to be inadequate, it has
always been where an owner of property is, for all purposes,
unable to protect his interest because there is no
practical way for him to learn of state action that threatens to
affect his property interest. In each case, the adverse action was
one that was completely unexpected by the owner, and the owner
would become aware of the action only by the fortuitous occasion of
reading
"an advertisement in small type inserted in the back pages of a
newspaper [that may] not even name those whose attention it is
supposed to attract, and does not inform acquaintances who might
call it to attention."
Mullane, supra, at
339 U. S. 315.
In each case, the individuals had no reason to expect that their
property interests were being affected.
This is not the case as far as tax sales and mortgagees are
concerned. Unlike condemnation or an unexpected accounting,
Page 462 U. S. 808
the assessment of taxes occurs with regularity and
predictability, and the state action in this case cannot reasonably
be characterized as unexpected in any sense. Unlike the parties in
our other cases, the Mennonite Board had a regular event, the
assessment of taxes, upon which to focus, in its effort to protect
its interest. Further, approximately 95% of the mortgage debt
outstanding in the United States is held by private institutional
lenders and federally supported agencies. U.S. Dept. of Commerce,
Bureau of the Census, Statistical Abstract of the United States:
1982-1983, p. 511 (103d ed.). [
Footnote
2/6] It is highly unlikely, if likely at all, that a
significant number of mortgagees are unaware of the consequences
that ensue when their mortgagors fail to pay taxes assessed on the
mortgaged property. Indeed, in this case, the Board itself required
that Moore pay all property taxes.
There is no doubt that the Board could have safeguarded its
interest with a minimum amount of effort. The county auctions of
property commence by statute on the second Monday of each year.
Ind.Code § 6-1.1-24-2(5) (1982). The county auditor is required to
post notice in the county courthouse at least three weeks before
the date of sale. § 6-1.1-24-3(a). The auditor is also required to
publish notice in two different newspapers once each week for three
weeks before the sale. §§ 6-1.1-24-3(a), 6-1.1-22-4(b). The Board
could have supplemented the protection offered by the State with
the additional measures suggested by the court below: the Board
could have required that Moore provide it with copies of paid tax
assessments, or could have required
Page 462 U. S. 809
that Moore deposit the tax moneys in an escrow account, or could
have itself checked the public records to determine whether the tax
assessment had been paid.
427
N.E.2d 686, 690, n. 9 (1981).
When a party is unreasonable in failing to protect its interest
despite its ability to do so, due process does not require that the
State save the party from its own lack of care. The balance
required by
Mullane clearly weighs in favor of finding
that the Indiana statutes satisfied the requirements of due
process. Accordingly, I dissent.
[
Footnote 2/1]
In
Mullane v. Central Hanover Bank & Trust Co., 339
U.S. at
339 U. S. 314,
we held that
"[p]ersonal service has not in all circumstances been regarded
as indispensable to the process due to residents, and it has more
often been held unnecessary as to nonresidents."
[
Footnote 2/2]
The Court is simply incorrect in asserting that, before
Mullane, constructive notice was rarely deemed sufficient
even as to
in rem proceedings when residents of the State
were involved,
ante at
462 U. S.
796-797, n. 3.
See, e.g., Longyear v. Toolan,
209 U. S. 414,
209 U. S.
417-418 (1908).
See also Note, The
Constitutionality of Notice by Publication in Tax Sale Proceedings,
84 Yale L.J. 1505, 1507 (1975) ("This rule [permitting constructive
notice] was . . . extended to all
in rem proceedings,
whether involving property owned by nonresidents or
residents").
[
Footnote 2/3]
In
Mullane, the Court contrasted those parties whose
identity and whereabouts are known or "at hand" with those "whose
interests or whereabouts could not with due diligence be
ascertained." 339 U.S. at
339 U. S. 318,
339 U. S. 317.
This language must be read in the light of the facts of
Mullane, in which the identity and location of certain
beneficiaries were actually known. In addition, the Court in
Mullane expressly rejected the view that a search "under
ordinary standards of diligence" was required in that case.
Id. at
339 U. S.
317.
[
Footnote 2/4]
The Court suggests that the notice that it requires
"may ultimately relieve the county of a more substantial
administrative burden if the mortgagee arranges for payment of the
delinquent taxes prior to the tax sale."
Ante at
462 U. S. 800,
n. 5. The Court neglects the fact that the State is a better judge
of how it wants to settle its tax debts than is this Court.
[
Footnote 2/5]
This is not to say that the rule espoused must cover all
conceivable mortgagees in all conceivable circumstances. The
flexibility of due process is sufficient to accommodate those
atypical members of the class of mortgagees.
[
Footnote 2/6]
The Court holds that "a mortgage need not involve a complex
commercial transaction among knowledgeable parties. . . ."
Ante at
462 U. S. 799.
This is certainly true; however, that does not change the fact
that, even if the Board is not a professional moneylender, it
voluntarily entered into a fairly sophisticated transaction with
Moore. As the court below observed: "The State cannot reasonably be
expected to assume the risk of its citizens' business ventures."
427 N. v.2d 686, 690, n. 9 (1981).