The U.S. Supreme Court on Wednesday heard its last scheduled argument of the term — a case brought by a 94-year-old widowed grandmother in Minneapolis whose condominium was seized for failure to pay property taxes. Unsurprisingly, it looked like grandma will win.
The case is important because Minnesota is one of 20 states that handle the sale of such defaulted properties without sharing the proceeds with the previous owner when the property is sold.
Geraldine Tyler bought her condo in 1999 and lived there until 2010 when, at age 81, she moved to a senior living center at the urging of her children. It is undisputed that she failed to pay property taxes on the condo for five years, despite being repeatedly notified that she risked losing it if she didn't pay up. By 2015, she owed $15,000 in unpaid taxes, interest and fees.
Finally, the county, after offering her a tax payment plan for seniors and other options, seized the condo and sold it at public auction for $40,000.
At the Supreme Court on Wednesday, Tyler's lawyer argued that the county unconstitutionally took the property by keeping the $25,000 surplus over the amount owed in back taxes. Lawyer Christina Martin said that amounts to a taking without just compensation, something that the Constitution explicitly forbids.
Chief Justice John Roberts noted that traditionally such matters are left to state laws, and that, at the founding, some states did have laws like Minnesota's.
Justice Sonia Sotomayor followed up by asking, "OK, here you have a debtor who basically doesn't want to do anything. What's the county supposed to do to protect itself?"
Justice Samuel Alito turned to a similar issue. He noted that some cities impound vehicles when the owner has unpaid car taxes or tickets, and then, if the owner doesn't pay the amount that's due, the city sells the car and keeps the proceeds, putting them into the city's general fund. "Would that be unconstitutional in your view?" he asked.
Lawyer Martin answered yes, it would be, noting that "the history of tax collection or debt collection from the government is pretty uniform on the question of personal property."
When Justice Elena Kagan asked what would happen if the property is abandoned, Martin said the owner still could have a property interest.
But if these appeared to be difficult questions, they were nothing compared to the increasingly overt hostility faced by lawyer Neal Katyal, representing Minneapolis' Hennepin County.
Pushback on the county
Katyal opened and spent a good deal of time trying to persuade the court that Tyler had no legal standing to sue because, at the time her condo was sold, she had no equity in the house. Under state law, the seizure automatically cancelled her debts on it — debts totaling $59,000 in mortgage payments and unpaid condo fees.
Katyal got nowhere and only seemed to irritate the court, even when he referred to states that had laws like Minnesota's at the time of the founding. And when he cited the Statute of Gloucester in 1278, Justice Neil Gorsuch could contain himself no longer.
"Tyler was not a vassal owing fealty to her lord but a modern-day simple owner of real property," he intoned. "I just don't understand what on Earth any of that history has to do with this case."
Katyal repeatedly pointed the justices to the court's 1956 ruling upholding a law like Minnesota's, a case in which he said that the court upheld the sale of a house for $7,000 over an unpaid $65 water bill.
"Are there any limits on that?" Justice Kagan asked. "Take a $5,000 tax debt on a $5 million house. And the state says, 'Thanks, we'll keep it.' "
That is nothing like this case, Katyal argued, noting that Tyler had affirmed that she wanted "nothing to do with the condo." That, he said, constituted an abandonment of the property.
But justices, both conservative and liberal, didn't seem to be buying the argument.
"What's the point of the takings clause?" Chief Justice Roberts asked. "I mean that was something that was pretty important to the framers. Why did they put that in there?"
Justice Brett Kavanaugh made a similar observation: "Why would we read the Constitution to disfavor real property though? That seems very counterintuitive."
Liberal Justice Ketanji Brown Jackson noted that while 19 states may have laws like Minnesota's, the majority do not.
"Most states allow for some sort of surplus or have some sort of mechanism to give the money back to homeowners," Jackson said. "So what is the big practical problem that we would face?"
If there are such problems, it appeared the justices will worry about them later, not sooner.
A decision is expected by the end of the current Supreme Court term this summer.
