From the Circuit Court of St. Louis County; Civil Appeal; Judge Richard T. Enright.
The opinion of the court was delivered by: Donnelly
Appellant Oscar Lohr brought this action to quiet title to certain property purchased by Collector's Deed at a tax sale. The sale was conducted pursuant to Chapter 140, RSMo 1969 (the Jones-Munger Act), by the Collector of Revenue of St. Louis County. Defendant Pioneer Bank & Trust Company and its trustee Powers filed a counterclaim to declare their recorded first deed of trust on the property to be in full force and effect. The trial court granted Pioneer and Powers summary judgment on Lohr's petition and their counterclaim on the ground that the notice provisions of Chapter 140 as applied in this case are unconstitutional. Because this action involves the validity of a statute, it is within the exclusive appellate jurisdiction of this Court. Mo. Const. art. V, § 3.
This is the second appeal in this case. In a prior appeal, in Lohr v. Cobur Corp., 622 S.W.2d 270 (Mo. App. 1981), the Court of Appeals, Eastern District, reversed an earlier judgment of the trial court that the sale was defective for failure strictly to comply with the requirements of Chapter 140, RSMo 1969. The case was remanded for a ruling on the constitutionality of the notice requirements prescribed by that chapter. The trial court found that §§ 140.150 and 140.170 were unconstitutional as applied in this case because they did not provide a method of giving notice in such non-judicial tax sales reasonably calculated to reach Pioneer and Powers, whose names and addresses were easily ascertainable and whose constitutionally protected interests were purportedly destroyed by the proceedings. Lohr appeals.
The facts are undisputed. At all times relevant to this proceeding, Cobur Corp. was owner of a certain tract of real property in St. Louis County. On June 1, 1971, Cobur Corp. executed and delivered a deed of trust on said property to Pioneer as security for a loan. Powers was named trustee. The deed of trust, containing the names and addresses of Pioneer and Powers, was recorded in the office of the St. Louis County Recorder of Deeds. An agreement modifying this loan was recorded later. The loan has not been repaid and the deed of trust not released.
In 1975, the Collector of Revenue of St. Louis County commenced proceedings to offer the Cobur property for sale for delinquent real estate taxes. Prior to January 1, 1970, such sales were accomplished by judicial proceedings. However, because of the expense, length, and complication of the procedures involved, the County Council of St. Louis County provided that after that date the county would operate instead under the provisions of Chapter 140, RSMo 1969. Under Chapter 140, the proceedings preliminary to any sale of real property by the collector are administrative and non-judicial. Since January 1, 1970, the Collector of Revenue in St. Louis County has operated solely under the provisions of Chapter 140.
In 1975, 1976, and 1977, the Collector had published in the St. Louis Countian a notice of the "First Offering", "Second Offering", and "Third Offering" of sale of the property for delinquent real estate taxes. The published notices of the sale were in the name of Cobur Corp. only, and did not mention either Pioneer or Powers. The property was sold by the Collector to Lohr at the tax sale held on August 26, 1977, and a Collector's Deed was issued to Lohr. At no time was any effort made by the Collector to search the title of the property or run the records in the office of the Recorder of Deeds to determine if there were any deeds of trust on the real property to be sold. Neither Pioneer nor Powers was given notice by the St. Louis County Collector or anyone else at any time prior to the purported sale that a tax sale or any other procedure was contemplated that would in any way affect the continuing validity of the lien of the recorded deed of trust.
Is the interest held by Pioneer, the deed of trust beneficiary, "property" protected by the Due Process Clause of the Fourteenth Amendment?
In Board of Regents v. Roth, 408 U.S. 564, 576-77 (1972), the United States Supreme Court said:
"The Fourteenth Amendment's procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. These interests--property interests--may take many forms.
To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims."
In Security-First Nat. Bank of Los Angeles v. Rindge Land & Navigation Co., 85 F.2d 557, 561 (9th Cir. 1936), the court said: "The right to retain a lien until the debt secured thereby is paid is a substantive property right which may not be taken from the creditor consistently with the Fifth and Fourteenth Amendments to the Constitution. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594, 55 S.Ct. 854, 79 L.Ed. 1593, 97 A.L.R. 1106."
More recently, in Mennonite Board of Missions v. Adams, 51 U.S.L.W. 4872, 4874 (U.S. June 22, 1983), the United States Supreme Court stated that "a mortgagee possesses a substantial property interest that is significantly affected by a tax sale."
We conclude that the interest of a deed of trust beneficiary is a substantive property right protected by the Due Process ...