715 N.E.2d 239 | Ohio Ct. App. | 1998
Defendant-appellant, Thomas H. Pliekert, appeals a decree of foreclosure issued by the Lake County Court of Common Pleas.
Plaintiff-appellee, the state of Ohio, Department of Taxation, assessed a total of $168,689.78 against Plickert for allegedly delinquent sales taxes. The parties dispute whether Plickert received proper notice of the assessments. Once the period of objections expired and the assessments became binding, the state filed the assessments with the clerk of the common pleas court, who rendered two judgments against Plickert in that aggregate amount. The state then recorded these judgments as liens on all of Plickert's real property and filed this action to foreclose on his residence. In his answer, Plickert raised the lack of proper notice as an affirmative defense. The trial court granted the state's motion for partial summary judgment on that affirmative defense, holding that R.C.
Prior to scheduling this appeal, we contacted "counsel questioning whether this court has jurisdiction in light of Plickert's statutory right to redeem the property under R.C.
It has generally been the law of Ohio that debtors may immediately appeal an order of foreclosure. Third Nati. Bank ofCireteville v. Speakman (1985),
The cases are almost devoid of legal analysis, but draw considerable support from common sense. A mistake in the foreclosure decree is more efficiently rectified by an immediate appeal. It would save the debtor a considerable amount of worry if the appeal is immediate, rather than making him wait until there is judgment confirming the sale of his property to some other person. It would save the purchaser from the uncertainty "of an appeal from the judgment confirming his bid on the foreclosed property, during which time his downpayment on the purchase price is held in escrow. It would prevent the sheriff from wasting his resources on unnecessary sale proceedings. And it would save the court from wasting its time and energy minding the matter and reviewing and approving the final sale.
R.C.
Because the decree is not self-executing, the creditor must file a praecipe with the clerk of courts for an order directing the sheriff to sell the property. Thus, the second phase of the proceedings can be understood as a separate action to enforce the decree. The debtor's statutory right of redemption may prevent the enforcement proceeding from reaching culmination, but this does not affect the finality of the underlying foreclosure decree.
For these reasons, we affirm the traditional view in Ohio that foreclosure decrees are appealable.
Turning now to the merits of the appeal, Plickert "assigns the following error to the court:
"The trial court erred in granting summary judgment to the plaintiff-appellee."
Any vendor who fails to collect or remit sales taxes can be held personally liable. R.C.
The taxpayer has thirty days from the date notice was served to object to an assessment, and if he does not do so, "the assessment shall become conclusive and the amount of the assessment shall be due and payable from the party assessed to. the treasurer of the state." R.C.
After the assessment becomes conclusive, a certified copy of the commissioner's entry making the assessment final may be filed with the clerk of the court of common pleas in the county where the taxpayer's place of business is located. R.C.
As any other judgment creditor, the state of Ohio may resort to the array of mechanisms to enforce its judgment, including attachment of personal property, R.C.
Although R.C.
"No injunction shall issue suspending or staying any order, determination, or direction of the department of taxation, or any action of the treasurer of state or attorney general required by law to be taken in pursuance of any such order, determination, or direction. This section does not affect any right or defense in any action to collect any tax or penalty."
The first sentence of the statute expressly prohibits an injunction "suspending or staying" (1) any order, determination, or direction of the department of taxation, or (2) any action the law requires the Treasurer of the state or the Attorney General to take upon such an order, determination, or direction.
An assessment is a determination by the Department of Taxation that a taxpayer is delinquent. Actions to collect on judgments for those unpaid taxes are filed by the Attorney General. Therefore, R.C.
The second sentence of R.C.
In Hakim,
Although the text of R.C.
The court's syllabus states:
"R.C.
5703.38 prohibits a Court of Common Pleas from entering an order which has the effect of suspending or staying an order, determination, or direction of the Department of Taxation. (Torbet v. Kilgore,6 Ohio St. 2d 42 [35 O.O.2d 48,215 N.E.2d 579 ], approved and followed.)"
This case stands for the specific proposition that a court has no power to entertain a complaint to vacate a judgment rendered upon a tax assessment before collection proceedings are instituted, because judgment on that complaint would amount to an injunction against future collection proceedings in violation of R.C.
However, the Hakim court was quick to note, in dictum, that the taxpayer had another method by which to raise the lack of due process in connection with the assessments:
"It also should be noted that [the taxpayer] can await the institution of collection proceedings by the Tax Commissioner and therein raise as a defense her claim of insufficient service of the assessment. As heretofore set out, the latter portion of R.C.
This dictum recognizes the trial court's general jurisdiction to enter judgment upon an affirmative defense raised in the collection proceeding, which was left undisturbed. If such a defense is raised, the state's attempt at collection is not stayed, but proceeds to final judgment, and if the defense is good, judgment will be entered for the taxpayer. While it is true that granting judgment for the debtor for defects in the service of process in this manner has the practical effect of precluding collection efforts, this is not accomplished by the court's equitable power of injunction. Therefore, neither R.C.
A subsequent case confirms this interpretation. In State v.Marysville Steel, Inc. (1997),
When the steel company learned of the judgment, it contacted the department in an effort to resolve the matter. As a result of communications from the department, the steel company sent a second check for $35,325.05 to replace the one that was lost and paid the preassessment interest and the penalty on the interest. The company did not pay the penalty on the principal, which amounted to $5,298.76. "After the partial payment, the state took no further action to collect upon the judgment, and the steel company presumed that the matter was concluded. *451
In November 1996, six years later, the state sought to enforce its 1990 judgment lien by garnishing the steel company's bank account to the extent of the unpaid penalty, pursuant to R.C.
As an affirmative defense to the action to collect upon the judgment, the steel company raised its payment by the lost check and argued that the judgment was therefore satisfied. The state argued that accepting the affirmative defense and entering judgment for the steel company in the garnishment action would have the effect of suspending or staying the collection proceedings, in violation of R.C.
The appellate court rejected the state's argument, holding that the court had the power to consider the affirmative defense of prior payment notwithstanding the statute or Hakim. Marysville Steel,
In light of the foregoing, Plickert was not precluded from raising the improper service of the assessment as an affirmative defense to the action to foreclose on his residence, pursuant to R.C.
Summary judgment for the state on Plickert's affirmative defense is reversed, and this cause is remanded for proceedings consistent with this opinion.
Judgment reversed and cause remanded.
FORD, P.J., and CHRISTLEY, J., concur.