Northwest Savings v. Knapp, B. v. Travel Services
149 A.3d 95
| Pa. Super. Ct. | 2016Background
- Mortgage foreclosure led to a sheriff’s sale of Oil City property; default judgment on mortgage exceeded sale bid.
- Travel Services, Inc. (by assignment Edgewood Development LLC) was the successful third‑party purchaser with a $41,300 bid.
- Venango County Sheriff assessed the property at $150,440 and added 2% state/local realty transfer taxes (2% of assessed value = $3,430.04) and 2% poundage to the winning bid, so purchaser paid taxes as an addition to the bid (tax paid by purchaser under protest).
- Sheriff filed a Proposed Schedule of Distribution; purchaser filed exceptions arguing transfer taxes must be deducted from the sale proceeds (the winning bid) rather than added on top of the bid.
- Trial court denied exceptions, distinguishing an earlier county court decision; Superior Court reviewed de novo and reversed, holding the Sheriff’s practice violated state statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state and local realty transfer taxes must be paid out of the “proceeds” of a judicial sale (i.e., the winning bid) rather than added to the purchaser’s bid | Taxes (72 P.S. § 8104‑C and § 8107‑D) must be paid from the proceeds — meaning the winning bid amount — so taxes should be deducted from sale proceeds, not added on top | Sheriff and mortgagee argued “proceeds” could include bid plus poundage and taxes; purchaser knew taxes would be added, so practice was lawful | Court held “proceeds” means the winning bid amount only; transfer taxes have priority and must be paid from the proceeds. Taxes may not be separately added to the winning bid unless proceeds are insufficient, in which case purchaser is liable for the shortfall. |
Key Cases Cited
- Farmers Trust Co. v. Bomberger, 523 A.2d 790 (Pa. Super. 1987) (exceptions to distribution of foreclosure sale proceeds are heard on law and equity)
- Lenau v. Co-eXprise, Inc., 102 A.3d 423 (Pa. Super. 2014) (statutory interpretation is a question of law reviewed de novo)
- Hearst Television, Inc. v. Norris, 54 A.3d 23 (Pa. 2012) (statutory language clear and unambiguous must be given effect)
- Fish v. Twp. of Lower Merion, 128 A.3d 764 (Pa. 2015) (avoid treating statutory words as surplusage)
- Pottstown Sch. Dist. v. Petro, 94 A.3d 1102 (Pa. Commw. 2014) (priority language in distribution statutes must be effectuated)
- City of Uniontown v. McGibbons, 174 A. 912 (Pa. Super. 1934) (a judicial sale includes a sheriff’s sale)