607 N.E.2d 1160 | Ohio Ct. App. | 1992
Defendant-appellant ITT Financial Services ("ITT") appeals from the trial court's denial of its motion to vacate a sale of real property sold at a sheriff's sale following an in rem foreclosure proceeding.
ITT contends that because it holds a mortgage lien upon the property sold and it did not receive notice of the date and place of sale in accordance with local custom, it was denied due process of law in violation of the Ohio and United States Constitutions. ITT further contends that the trial court abused its discretion when it set a hearing date on ITT's motion to vacate the sale just five days after the notice of the hearing was filed and mailed to ITT.
We conclude that ITT, as a lien holder, was denied due process of law in violation of Section
ITT argues that, in accordance with prevailing and accepted practice, it wrote to the county's attorney requesting notice of the tax sale date. ITT claims that it never received notice of the sale date.
Upon learning, in December 1990, that the property had been sold at a sheriff's sale in October, ITT filed a motion to vacate the sale. A hearing was scheduled by the trial court on ITT's motion; however, ITT did not receive notice of this hearing until after the hearing had occurred. From the trial court's decision denying ITT's motion to vacate the sale, ITT appeals.
"The trial court erred in failing to set aside the sheriff sale when a first mortgagee or its counsel was not sent notice of the sale date."
ITT, the mortgagee, contends that because it did not receive notice of the sale date for the property, it was denied due process of law. A mortgagee has a legally protected property interest and is entitled, under the Due Process Clause of the
The United States Supreme Court in Mennonite held: *769
"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 interest ofany party, * * * 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." Id.,
A mortgagee is required to receive actual notice of a tax sale unless the mortgagee's address is not reasonably identifiable. Constitutional due process is implicated any time an action occurs that affects a property interest protected by the Due Process Clause of the United States Constitution.
Clark County asserts that the Mennonite and Central Trust
holdings require only that a mortgagee receive notice of the pendency of proceedings regarding specific property and does not require that a mortgagee who has notice of the pendency of foreclosure proceedings must be given notice of the time and place of sale. The decree of foreclosure, which was approved by ITT, and the praecipe for order of sale were filed on the same date by the trial court. Because ITT was on notice that the property would be sold in the future, Clark County argues that it had no further duty to inform ITT of the date of sale. Relying on Myers v. Duibley (1952),
Although the lien holder in Myers argued that it could have bid on the property to protect its interest had it had notice of the time and place of the sale, it did not expressly invoke the Due Process Clause in connection with this argument.1 To the extent that Myers by implication stands for the proposition that a lien holder has no due process right to notice of the time and place of a foreclosure sale, we would note that it was decided in 1952, that the scope of rights under the Due Process Clause has been considerably extended since 1952, and we overruleMyers to that extent.
In Mennonite, it was held that a mortgagee's knowledge of delinquency in the payment of taxes is not equivalent to notice that a tax sale is pending because notice by publication, by posting or given to the property owner is not designed to reach those who have a substantial interest in the property.Mennonite, supra,
In the case before us, the fact that ITT knew that the sale of the subject property would take place some time in the future is not equivalent to notice of the time and place of sale. As a party to the foreclosure action, ITT's address was ascertainable.
Lack of notice to ITT adversely affected its ability to protect its interests. ITT did not have an opportunity to observe the sale, to verify that the statutory requirements were met, or to bid on the property to protect its interest. The value of ITT's security interest was diminished by the tax sale because the tax sale purchaser acquired a title free and clear of all liens and encumbrances, except a federal tax lien notice properly filed in accordance with R.C.
It is essential that a lien holder receive reasonable notice of the time and place of a foreclosure sale because his rights may be irrevocably adversely affected by the sale. The foreclosure sale is ordinarily one of the most important events in any foreclosure action. We conclude that because ITT, as mortgagee, did not receive reasonable notice of the time and place of the foreclosure sale, it was denied due process of law in violation of the Ohio and United States Constitutions.
ITT contends that the custom or established practice in Clark County is that when an attorney requests notice of the sale date in writing, the county gives a specific notice to the attorney of the sale date. ITT alleges that the county failed to follow the prevailing custom. Upon reviewing the record, we have found no evidence that Clark County follows such a custom or established practice. Further, the record does not contain evidence of a letter ITT allegedly wrote to Clark County specifically requesting notice of the sale date.
Clark County asserts that "[b]ecause ITT does not allege any noncompliance with the statutes and procedures governing tax foreclosure, it implicitly argues that the statute is unconstitutional as it does not require personal notification of sale dates." We do not interpret ITT's contentions to encompass a challenge to the constitutionality of Ohio's tax foreclosure statute.
R.C.
R.C.
ITT's first assignment of error is sustained.
"The trial court erred and abused its discretion by setting a hearing date five days from the date of mailing of the notice."
ITT asserts that it was prejudiced because it did not receive notice of the hearing on its motion to vacate the sale until after the hearing was held. Clark County asserts that ITT was not entitled to a hearing on its motion because all issues were raised by brief or affidavit, and that Civ.R. 6(D) permits the trial court to serve notice of a hearing in less than seven days by court order.
Ohio Civ.R. 6(D) provides, in pertinent part, as follows:
"A written motion, other than one which may be heard ex parte, and notice of the hearing thereof shall be served not later than seven days before the time fixed for the hearing, unless a different period is fixed by these rules or by order of the court. Such an order may for cause shown be made on ex parte application. * * *"
Pursuant to Civ.R. 6(D), notice of the hearing on a motion shall not be served later than seven days before the time fixed for the hearing. The court may set a time period of less than seven days for the hearing by court order. However, a party is entitled to sufficient notice and time to prepare for the hearing in order to avoid undue prejudice.
In the case before us, ITT did not receive notice of the hearing date until the hearing had concluded. The record indicates that a court order was filed on December 26, 1990, setting the hearing date for December 31, 1990. ITT claims that the notice arrived by mail on December 31, 1990. ITT was unable to attend the hearing and argue its motion. Therefore, we conclude that the *772 trial court abused its discretion in setting a hearing date on ITT's motion to vacate the sale that did not comply with the seven-day notice requirement of Civ.R. 6(D).
ITT's second assignment of error is sustained.
Judgment reversedand cause remanded.
WILSON and BROGAN, JJ., concur.