An expert with the Pacific Legal Foundation says the justices at the U.S. Supreme Court are being asked to rule that a Michigan county can’t sell a foreclosed property for $206,000 and keep all the money when the tax liability there was only about $16,000.
That would seem to implicate the Constitution’s Takings Clause, which states that the government cannot take private property without “just compensation.”
Attorney Christina Martin for the PLF explained that Michigan law “actually requires counties across the state to steal this extra money from property owners.”
“This seems like an obvious violation of the Constitution. The Fifth Amendment provides that government cannot take private property unless it pays just compensation. Logically, that would mean that government may take and sell the property and keep what it is owed, but no more,” she said.
WND reported when the dispute was at a lower court that one judge took officials in Van Buren County to task with a stunning charge.
“In some legal precincts that sort of behavior is called theft,” wrote Judge Raymond Kethledge in his dissent of a 2-1 decision Feb. 10 in favor of Van Buren County by a three-court panel of the U.S. Court of Appeals for the Sixth Circuit.
Kethledge, the ABA Journal has reported, is believed to be on President Trump’s list of potential candidates for future openings on the U.S. Supreme Court. The report said Trump and Kethledge have one thing in common – “blunt opinions.”
The case that prompted Kethledge’s criticism centers on Van Buren County’s confiscation of real estate in response to Wayside Church’s failure to pay 2011 property taxes of about $16,000.
In the 2-1 decision, Sixth Circuit Judge Eric L. Clay, joined by Judge Bernice B. Donald, determined the district court lacked jurisdiction, and the plaintiffs must pursue their claims in Michigan state court.
Kethledge contended federal jurisdiction was proper because the claims pertained to the U.S. Constitution and Michigan courts haven’t yet determined whether a local government can be sued for taking excess tax auction proceeds.
“Police State USA: How Orwell’s Nightmare Is Becoming Our Reality” chronicles how America has arrived at the point of being a de facto police state, and what led to an out-of-control government that increasingly ignores the Constitution. Order today!
The county, under state law, confiscated the church’s property and sold it for $206,000.
The county kept the $16,000 owed in property taxes.
Then it kept the rest of the sale proceeds, about $190,000, as profit.
The Michigan property was used as a camp for inner-city children by the church, a historically black congregation on the South Side of Chicago.
Kethledge wrote in his dissent: “In this case the defendant Van Buren County took property worth $206,000 to satisfy a $16,750 debt, and then refused to refund the difference. In some legal precincts that sort of behavior is called theft.
“But under the Michigan General Property Tax Act, apparently, that behavior is called tax collection. The question here is – or at least in my view should be – whether the county’s action is a taking under the federal Constitution.”
County officials denied to WND there was any profit, saying instead it was only money in excess of the amount of taxes owed.
Van Buren Treasurer Karen Makay has told WND, “We are not confiscating property.”
She explained the county confiscates property to take ownership, then sells a number of properties at one time.
Some may sell for more than the tax owed, some less, she explained.
“We have followed the law to the letter,” she said.
She admitted sometimes “there was more from the sales than were taxes owing.”
But she said: “We are not their real estate agent. We own the property. We can sell it for the taxes.”
In their own defense, county officials claimed that a small church operation, or an individual, should have the savvy to operate inside the system and sell properties, refinance, obtain loans or other tricks to prevent foreclosure.
“The owner was always free to sell the property and keep any excess value but chose not to do so,” the county’s filing charged. “When a taxpayer chooses not to act and allows title to pass to the government, the situation cannot be characterized as a taking; it is a voluntary relinquishment.”
In cases where there’s more value than the taxes owed?
“The property owner relinquished voluntarily her right to that title to the property (and, as a result, to money) by failing to take any action … ,” the county said.
Wrote Martin, “The implication of the county’s argument is that if you are not savvy enough to sell your property before the imposed deadline, then the government may ignore the protections of the Constitution and take and keep more than it is owed. But the Constitution does not only protect the clever, deserving, and the diligent; it protects the weak, poor, and the unfortunate alike from uncompensated takings.”
The PLF is pursuing the case on behalf of Wayside Church, a Chicago church that ran a youth camp in Michigan, and individuals Myron Stahl and Henderson Hodgens.
They all lost tens of thousands of dollars in equity through the county’s actions.
“The real disaster is what happens to individual citizens, like petitioners Myron Stahl and Henderson Hodgens, when the government forecloses on their property, sells it for tax collection, and then has the gall to keep tens of thousands of dollars in excess proceeds and equity that does not belong to it and which the subject property owners could have used to re-start their lives,” the PFL brief explains.
And, the filing pointed out, the court has already made clear that the government cannot escape liability “for a physical taking of property on the ground that the property owner could have made different economic or life choices that would have kept their property out of the government’s cross-hairs.”
It’s not small change, either. Overall, the filing said, “Wayne County’s treasurer has pumped an extra $382 million into the county’s general fund through delinquent tax surpluses.”
Kethledge pulled no punches in describing the situation.
“At this point one senses we have lost our constitutional bearings,” he charged. “The plaintiffs have asked us to adjudicate a claim arising under the federal Constitution, which is the most important type of claim that we can adjudicate. The claim itself is substantial: that, when a state takes fee simple to property in satisfaction of a tax obligation, the state effects a taking to the extent the property is worth more than the taxes and penalties owed.”
Other states with similar confiscation procedures include Arizona, Minnesota, Massachusetts, North Dakota and Oregon, which is why a Supreme Court precedent is needed, the petition states.
“Police State USA: How Orwell’s Nightmare Is Becoming Our Reality” chronicles how America has arrived at the point of being a de facto police state and what led to an out-of-control government that increasingly ignores the Constitution. Order today!