Continental Resources v. Fair , 311 Neb. 184 ( 2022 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
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CONTINENTAL RESOURCES v. FAIR
Cite as 311 Neb. 184Continental Resources, appellee, v. Kevin L. Fair,
defendant and third-party plaintiff, appellant,
and Heather Hauschild, Scotts Bluff County
Treasurer, and Doug Peterson, Attorney
General for the State of Nebraska, in their
official capacities, and the County
of Scotts Bluff, third-party
defendants, appellees.
___ N.W.2d ___
Filed March 18, 2022. No. S-21-074.
1. Standing: Jurisdiction: Parties. Standing is a jurisdictional component
of a party’s case because only a party who has standing may invoke the
jurisdiction of a court.
2. Jurisdiction: Appeal and Error. The question of jurisdiction is a ques-
tion of law, upon which an appellate court reaches a conclusion indepen-
dent of the trial court.
3. Constitutional Law: Statutes: Judgments: Appeal and Error. The
constitutionality of a statute presents a question of law upon which
appellate courts have an obligation to reach an independent conclusion
irrespective of the decision of the court below.
Appeal from the District Court for Scotts Bluff County: Leo
P. Dobrovolny, Judge. Affirmed.
Michael W. Meister, Jennifer Gaughan, and Mark T. Bestul,
of Legal Aid of Nebraska, for appellant.
Gregory C. Scaglione and Casandra M. Langstaff, of Koley
Jessen, P.C., L.L.O., for appellee Continental Resources.
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CONTINENTAL RESOURCES v. FAIR
Cite as 311 Neb. 184Douglas J. Peterson, Attorney General, and James A.
Campbell, Solicitor General, for appellee Attorney General.
Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ., and Thompson, District Judge.
Papik, J.
If an owner of real property in Nebraska fails to pay prop-
erty taxes, a statute allows the county in which the property
is located to sell a tax certificate for the property to a private
party. If, after a period of time, the owner of the real property
fails to pay the taxes owed and the tax certificate purchaser
complies with certain requirements, the tax certificate pur-
chaser can obtain a deed to the property, free of any encum-
brances. This appeal presents a multipronged challenge to the
constitutionality of the statutes that authorize this process. The
appellant contends that the statutes, both facially and as applied
to him, violate the state and federal Takings Clauses; the state
and federal Due Process Clauses; the federal Excessive Fines
Clause; article I, § 25, of the Nebraska Constitution; and article
III, § 18, of the Nebraska Constitution. We hold that these
claims of unconstitutionality lack merit and, thus, affirm.
BACKGROUND
Nebraska Tax Sale Statutory Process.
Before reviewing the facts of this particular case, we believe
it beneficial to provide an overview of Nebraska’s tax certifi-
cate sale process. Because tax certificate sale proceedings are
governed by the law in effect at the time the tax sale certificate
is sold, see HBI, L.L.C. v. Barnette, 305 Neb. 457, 941 N.W.2d
158 (2020), we cite the statutes that were in effect in March
2015, when the tax certificate for the property at issue in this
case was sold.
The tax sale process has been a part of Nebraska law since
at least 1879. See 1879 Neb. Laws, §§ 1-184, pp. 276-349.
In that year, the Legislature passed an act “[t]o provide a
system of revenue” for the growing state. 1879 Neb. Laws,
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Cite as 311 Neb. 184p. 276. Located within the revenue act of 1879 was a method
of recouping unpaid property taxes—a tax sale process which
allowed investors to purchase tax certificates on tax-delinquent
properties, then to request a tax deed from the county treasurer
after a certain amount of time had passed if the property owner
had not redeemed the property. See, §§ 109-111, pp. 320-21;
§ 119, pp. 324-25; § 126, p. 327.
The process operates in largely the same manner today as
it did in 1879. See Neb. Rev. Stat. § 77-1801 et seq. (Reissue
2018). Each county has an automatic lien on property within
its boundaries for the property taxes that are due to the govern-
ment. Neb. Rev. Stat. § 77-1901 (Reissue 2018). The county
has the authority to sell its lien to a private party via a tax
certificate when the taxes on the property become delinquent.
See § 77-1818.
To facilitate the sale of the lien, the county treasurer creates
a list of all the properties in the county that have delinquent
property taxes. See § 77-1802. The list must then be published
in a local newspaper once a week for 3 consecutive weeks.
See § 77-1804. The tax certificate is then offered for sale.
See § 77-1807(2)(b), (e), and (f). A statute sets the cost of the
certificate as “the amount of taxes, interest, and cost thereon.”
§ 77-1808.
If a county sells a tax certificate on a property, the property
owner is not without recourse. The statute provides the owner
the right to redeem the property by paying the county treasurer
the amount listed in the tax certificate plus all other taxes paid
by the tax certificate purchaser, any interest, and other fees.
See § 77-1824. Interest accrues at 14 percent per year. Neb.
Rev. Stat. § 45-104.01 (Reissue 2021).
So, what happens if the property owner does not redeem the
property? The tax certificate holder can eventually apply for
a tax deed, but must first wait at least 3 years after purchas-
ing the tax certificate. See § 77-1837(1). Before applying for
the tax deed, the tax certificate holder must provide a period
of notice to the property owner of its intention to do so. See
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Cite as 311 Neb. 184§ 77-1831. If a tax deed is issued to the tax certificate pur-
chaser, title to the property passes free and clear of any encum-
brances. See SID No. 424 v. Tristar Mgmt., 288 Neb. 425, 850
N.W.2d 745 (2014).
With this statutory background established, we turn to the
facts and procedural history of this case.
Factual and Procedural History.
Kevin L. Fair and Terry A. Fair, a married couple, owned
real property in Scotts Bluff County, Nebraska. The Fairs lived
in a house on the property and owned the property free of
any encumbrances.
In 2014, the Fairs failed to pay the property taxes they owed.
In compliance with §§ 77-1801 and 77-1804, in February 2015,
the county treasurer published a list of tax-delinquent proper-
ties in an area newspaper. The list included the legal descrip-
tions of many properties, one of which was the Fairs’ home.
The list was published three times: February 5, 12, and 19.
The county treasurer sold a tax certificate for the property’s
unpaid taxes to Continental on March 11, 2015, for $588.21.
Continental then paid the subsequent property taxes as if it
were the owner of the property. Once Continental began pay-
ing the property’s taxes, the County did not send any further
communications or tax bills to the Fairs. Nor did the Fairs
attempt to make any payments to the county treasurer for the
delinquent property taxes.
Three years later, on April 13, 2018, Continental served the
Fairs a “Notice of Expiration of Right of Redemption.” The
notice informed the Fairs that they had 3 months from the date
the notice was served to redeem the property and that redemp-
tion would cost $5,268—the total value of the unpaid taxes,
fees, and interest. The notice also indicated that if the property
was not redeemed, Continental would apply for a tax deed and
the right of redemption would expire.
The Fairs did not make any payment to the county treasurer
after receiving the notice from Continental. True to its word,
in July 2018, Continental applied for a tax deed. The county
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Cite as 311 Neb. 184treasurer issued the tax deed to Continental. At the time the tax
deed was issued, the county assessed the value of the property
at $59,759.
Continental thereafter filed a quiet title action against the
Fairs. The Fairs eventually filed an amended answer, counter­
claim, and third-party complaint, which added Scotts Bluff
County and the county treasurer in her official capacity as
third-party defendants. Relevant to this appeal, the Fairs
alleged that the tax certificate sale process violated their con-
stitutional rights in a number of respects. Because the Fairs
sought to have statutes declared unconstitutional, the Nebraska
Attorney General exercised his right “to be heard” regarding
the Fairs’ constitutional claims. See Neb. Rev. Stat. § 25-21,159
(Reissue 2016).
In response to a motion filed by Continental, the district
court granted summary judgment against the Fairs and quieted
title to the property in Continental’s favor. The district court
found that the tax certificate sale statutes were not unconstitu-
tional in the manner alleged.
Terry Fair died while the lawsuit was pending in the district
court. Kevin Fair (hereinafter Fair) filed a timely appeal.
On the same day he filed his opening brief, Fair filed a
notice pursuant to Neb. Ct. R. App. § 2-109(E) (rev. 2014) that
his appeal challenged the constitutionality of Nebraska statutes.
We moved the case to our docket. The Attorney General filed
a brief on appeal defending the constitutionality of the chal-
lenged statutes.
ASSIGNMENTS OF ERROR
Fair assigns that the district court erred in granting
Continental’s summary judgment motion to quiet title because
the tax sale process set forth in § 77-1801 et seq. violates (1) the
Takings Clauses of the U.S. and Nebraska Constitutions; (2) the
Due Process Clauses of the U.S. and Nebraska Constitutions;
(3) the Excessive Fines Clause of the U.S. Constitution; (4)
article I, § 25, of the Nebraska Constitution; and (5) article III,
§ 18, of the Nebraska Constitution.
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Cite as 311 Neb. 184STANDARD OF REVIEW
Although this case comes to us as an appeal from an order
granting summary judgment, the parties do not disagree about
any of the relevant facts. The sole issues on appeal are Fair’s
standing to assert his various constitutional challenges and the
merits of those constitutional challenges.
[1,2] Standing is a jurisdictional component of a party’s case
because only a party who has standing may invoke the jurisdic-
tion of a court. Adair Holdings v. Johnson, 304 Neb. 720, 936
N.W.2d 517 (2020). The question of jurisdiction is a question
of law, upon which an appellate court reaches a conclusion
independent of the trial court. Id.[3] The constitutionality of a statute also presents a question
of law upon which appellate courts have an obligation to reach
an independent conclusion irrespective of the decision of the
court below. See State v. Boche, 294 Neb. 912, 885 N.W.2d
523 (2016).
ANALYSIS
Standing.
Before we can address the merits of Fair’s constitutional
challenges, we are confronted with a challenge to his standing.
Because standing is a jurisdictional issue, we address it first.
See Egan v. County of Lancaster, 308 Neb. 48, 952 N.W.2d
664 (2020).
The Attorney General contends that because Fair failed
to comply with § 77-1844, he lacks standing to assert cer-
tain constitutional challenges. Section 77-1844 provides that
“[n]o person shall be permitted to question the title acquired
by a treasurer’s deed without first showing that . . . all taxes
due upon the property had been paid by such person . . . .”
We have held that this statute sets forth conditions that must
be met in order to obtain standing to challenge a tax deed.
See, e.g., Wisner v. Vandelay Investments, 300 Neb. 825, 916
N.W.2d 698 (2018). See, also, Griffith v. Nebraska Dept. of
Corr. Servs., 304 Neb. 287, 297, 934 N.W.2d 169, 177 (2019)
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Cite as 311 Neb. 184(“just as the Legislature can provide for standing that is
broader than common-law standards, so too can it provide for
more specific or more restrictive standing requirements”). And
while we have held that a party may comply with the require-
ment that all taxes due must be “paid” by merely showing
that it has tendered the necessary payment to the treasurer, see
Wisner, supra, that holding is of no consequence here because
it is undisputed that Fair has neither paid nor tendered pay-
ment of the taxes due upon the property.
Fair contends that he has standing to assert his constitutional
challenges despite his failure to pay or tender payment of the
tax debt. He contends both that § 77-1844 does not apply in
this instance and that even if it does, it is unconstitutional
as applied to him. We, however, find that we may consider
the merits of Fair’s constitutional challenges to the tax sale
certificate process without resolving his arguments regarding
§ 77-1844.
Section 77-1844 sets forth conditions that must be met in
order to “question title.” See Ottaco Acceptance, Inc. v. Larkin,
273 Neb. 765, 772, 733 N.W.2d 539, 547 (2007) (emphasis
omitted). And while Fair did question Continental’s title in
this case by seeking an order declaring the deed it was issued
void, he also sought alternative relief in the event that title was
quieted with Continental. In his counterclaim and third-party
complaint, Fair sought both damages and an order directing
that either Continental or the county pay him the value of the
equity he had in the property, less the tax debt.
We need not, for purposes of our standing analysis, deter-
mine whether Fair would actually be entitled to damages or an
order directing Continental or the county to make a payment
that would return some of the equity in his property to him.
As we have previously explained, because standing focuses
“on the party” and not “the claim itself,” when considering
standing, “the legal and factual validity of the claim presented
must be assumed.” Heiden v. Norris, 300 Neb. 171, 174, 912
N.W.2d 758, 761 (2018) (internal quotation marks omitted).
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Cite as 311 Neb. 184And assuming that Fair’s constitutional claims have merit and
that he would be entitled to the alternative relief he requested,
he is the proper party to assert those claims and request such
relief. Property Fair owned is at issue, and § 77-1844 imposes
no conditions precedent to the alternative relief requested.
Accordingly, we find that we may consider the merits of Fair’s
constitutional challenges even if he lacks standing to question
Continental’s title. We turn to the merits of those constitutional
challenges now.
Procedural Due Process.
Fair first argues that the tax certificate sale violated his right
to procedural due process guaranteed by the 14th Amendment
to the U.S. Constitution and article I, § 3, of the Nebraska
Constitution. The 14th Amendment to the U.S. Constitution
prohibits the states from “depriv[ing] any person of life, lib-
erty, or property, without due process of law.” The Nebraska
Constitution states, “No person shall be deprived of life, lib-
erty, or property, without due process of law . . . .” Neb. Const.
art. I, § 3. “We have interpreted the Nebraska Constitution’s
due process and equal protection clauses to afford protec-
tions coextensive to those of the federal Constitution.” Keller
v. City of Fremont, 280 Neb. 788, 791, 790 N.W.2d 711,
713 (2010).
The parties to this case do not appear to dispute that before
a deed to the property could be conveyed to Continental pur-
suant to the tax certificate statutes, procedural due process
principles required that an attempt be made to provide Fair
with advance notice. See Jones v. Flowers, 547 U.S. 220,
223, 126 S. Ct. 1708, 164 L. Ed. 2d 415 (2006) (“[b]efore a
State may take property and sell it for unpaid taxes, the Due
Process Clause of the Fourteenth Amendment requires the
government to provide the owner notice and opportunity for
hearing appropriate to the nature of the case”) (internal quota-
tion marks omitted). See, also, HBI, L.L.C. v. Barnette, 305
Neb. 457, 941 N.W.2d 158 (2020). There is also no dispute
in this case that Fair received actual notice in April 2018 that
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Cite as 311 Neb. 184Continental had purchased a tax certificate for the property;
that Fair had 3 months to redeem the property by paying the
delinquent taxes along with interest and fees; and that if Fair
failed to redeem the property, Continental intended to apply for
a tax deed. The parties disagree, however, about whether this
notice was constitutionally sufficient.
In many instances in which a party challenges the adequacy
of notice on due process grounds, the issue is whether adequate
steps were taken to attempt to provide notice that ultimately
failed to reach its intended recipient. See Oneida Indian Nation
of New York v. Madison County, 665 F.3d 408, 432 (2d Cir.
2011) (referring to “the much more common due-process chal-
lenge in which a plaintiff contests the sufficiency of a notice
that failed to reach its intended recipient”). That was the issue
this court addressed in HBI, L.L.C., where it was held that
certified mail that did not reach a property owner was none-
theless constitutionally adequate because it was “reasonably
calculated” to provide actual notice. 305 Neb. at 470, 941
N.W.2d at 169 (internal quotation marks omitted). Fair’s chal-
lenge is different. He concedes that in April 2018, he received
actual notice his right to redeem his property would expire in 3
months, but he argues that due process required that he receive
earlier notice. Specifically, Fair contends that due process
required that he receive actual notice of the sale of the tax cer-
tificate to Continental in March 2015.
A party asserting that he or she was, as a matter of constitu-
tional due process, entitled to earlier notice than that actually
provided faces a difficult challenge. As a general matter, due
process is a “flexible” concept, Gilbert v. Homar, 520 U.S.
924, 930, 117 S. Ct. 1807, 138 L. Ed. 2d 120 (1997) (internal
quotation marks omitted), and thus resistant to an interpreta-
tion that “would impose a rigid requirement as to the precise
timing with which notice must be given,” Oneida Indian
Nation of New York, 665 F.3d at 434. Consistent with that
understanding, the U.S. Supreme Court recognized long ago
that only in a “clear case” will a notice be found inadequate
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Cite as 311 Neb. 184on due process grounds because it did not provide a party with
enough time to assert its rights. See Bellingham Bay &c. Co.
v. New Whatcom, 172 U.S. 314, 318, 19 S. Ct. 205, 43 L. Ed.
460 (1899) (“it is certain that only in a clear case will a notice
authorized by the legislature be set aside as wholly ineffectual
on account of the shortness of the time”).
As we will explain, we do not believe Fair has shown that
this is a “clear case” in which the notice was obviously pro-
vided too late. First, we disagree with Fair’s contention that
state and federal Constitutions required that he receive notice
upon the sale of the tax certificate to Continental. Fair claims
that a property owner is entitled to notice of the sale of a tax
certificate concerning his or her property because it is then
that “the property begins to be wrested from the control of
the one who owns it.” Brief for appellant at 26. Fair points to
no authority, however, that requires that notice be provided as
soon as the possibility emerges that property may be subject
to forfeiture.
Fair also, in our view, overstates the significance that the
sale of the tax certificate has on the property owner’s interests.
Prior to the sale of a tax certificate, the county already possesses
a lien on the property for the unpaid taxes. See § 77-1901. A
tax sale certificate purchaser obtains only the county’s lien
at the time the certificate is sold. Compare § 77-1818 and
§ 77-1901. See, also, HBI, L.L.C. v. Barnette, 305 Neb. 457,
461, 941 N.W.2d 158, 164 (2020) (“[t]he tax sale purchaser
acquires a lien on the property, which is represented by a tax
certificate”); John v. Connell, 61 Neb. 267, 271, 85 N.W. 82,
84 (1901), modified on rehearing 64 Neb. 233, 89 N.W. 806(1902), on rehearing, 71 Neb. 10, 98 N.W. 457 (1904) (quot-
ing Grant v. Bartholomew, 57 Neb. 673, 78 N.W. 314 (1899))
(“‘if taxes were due and delinquent against the land, then the
owner of a tax-sale certificate was declared to be the assignee
and the owner of the liens which the public had against
that land and for which the public had sold or attempted to
sell it’”).
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Cite as 311 Neb. 184A tax sale certificate purchaser has no immediate right to
enter the property, use the property, or dispossess the owner
of the property. Further, if the property is redeemed within the
subsequent statutory period, the tax sale certificate purchaser
never obtains the right to do those things. And if the tax certifi-
cate holder does not act on the right to request a deed within 3
years 9 months from the date of the tax certificate sale, he or
she loses the opportunity to do so. See § 77-1837(1). Simply
put, a property owner is not deprived of his or her property at
the time the tax certificate is issued. Rather, the property owner
is deprived of the property when the county treasurer issues the
tax deed. Consequently, we see no basis to hold that Fair was
constitutionally entitled to notice of the tax certificate sale at
the time it occurred.
Neither do we see a basis to hold that Fair was constitu-
tionally entitled to be notified more than 3 months before the
redemption period expired. “[D]ue process requires the gov-
ernment to provide ‘notice reasonably calculated, under all the
­circumstances, to apprise interested parties of the pendency of
the action and afford them an opportunity to present their objec-
tions.’” Jones v. Flowers, 547 U.S. 220, 226, 126 S. Ct. 1708,
164 L. Ed. 2d 415 (2006) (quoting Mullane v. Central Hanover
Tr. Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950)).
In this case, Fair received a notice by certified mail informing
him of Continental’s intent to apply for a tax deed to the prop-
erty in 3 months if Fair did not redeem the property. Fair was
apprised “of the pendency of” Continental’s intentions. He was
also afforded an “opportunity to” redeem the property. We see
no basis to say that this is a “clear case” in which the 3 months
Fair was provided to assert his rights was plainly inadequate.
See Bellingham Bay &c. Co. v. New Whatcom, 172 U.S. 314,
318, 19 S. Ct. 205, 43 L. Ed 460 (1899). We therefore find no
procedural due process violation.
Takings Clause.
Fair also contends that the issuance of a tax deed to Con­
tinental pursuant to the tax sale certificate statutes violated
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Cite as 311 Neb. 184the Takings Clauses of the U.S. and Nebraska Constitutions.
The Fifth Amendment to the U.S. Constitution states, “[N]or
shall private property be taken for public use, without just
compensation.” The Nebraska Constitution states, “The prop-
erty of no person shall be taken or damaged for public use
without just compensation therefor.” Neb. Const. art. I, § 21.
We have held that because Nebraska’s constitutional right to
just compensation includes just compensation where property
has been “taken or damaged,” it is broader than the corre-
sponding federal right. See Henderson v. City of Columbus,
285 Neb. 482, 827 N.W.2d 486 (2013). But aside from giving
effect to that difference in language, we have treated the fed-
eral and state rights as “coterminous.” Id. at 490, 827 N.W.2d
at 493. Because Fair does not allege any damage to his prop-
erty, we will apply the same analysis to both his federal and
state takings claims.
Fair makes two arguments regarding the Takings Clauses.
He first contends that the issuance of a tax deed to Continental
violates the Takings Clauses, because it effects a taking of his
property for a private, rather than public, purpose. Alternatively,
he argues that, at a minimum, the issuance of the tax deed
brought about a taking of the equity in his property in excess
of the tax debt and that he is entitled to compensation for that
surplus equity.
Fair’s first argument depends upon his contention that the
State’s power to impose and collect taxes is subject to the
Takings Clauses. In support of this argument, Fair relies on
a case from the U.S. Supreme Court, Cole v. La Grange, 113
U.S. 1, 5 S. Ct. 416, 28 L. Ed. 896 (1885), and a case from
this court, Bradshaw v. City of Omaha, 1 Neb. 16 (1871). Fair
argues that these cases establish that a government’s power to
tax is subject to the Takings Clauses. And, Fair continues, if
the power to tax is subject to the Takings Clauses, the county’s
sale of a tax certificate and subsequent issuance of a deed to
Continental, even if pursuant to an effort to collect a tax debt,
is subject to a takings analysis.
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Cite as 311 Neb. 184Fair’s argument, however, encounters a number of prob-
lems. First, the two 19th century cases upon which he relies
involved challenges to the use of tax revenues. In Cole, the
U.S. Supreme Court relied on the principles of the federal
Takings Clause to conclude that a municipality could not raise
revenue through taxation solely to aid a private iron and steel
corporation. The focus on the government’s use of tax revenue
in Cole is reflected in its statement that “the taking of property
by taxation requires no other compensation than the taxpayer
receives in being protected by the government to the support of
which he contributes.” 113 U.S. at 8. Similarly, in Bradshaw,
this court invoked Takings Clause language in the course of
holding that a city could not impose taxes on lands that were
previously outside the boundaries of the city and beyond “the
settled part of the town,” reasoning that the owners of that
property would not benefit from the city’s use of those taxes. 1
Neb. at 27. Fair, however, does not contend that the county is
using taxes he paid for some improper purpose. He is instead
challenging the government’s method of tax collection. Thus,
even assuming these cases remain good law, we do not read
them to shed much light on this one.
Further, more recent cases cast considerable doubt on the
notion that a government’s sale of its lien on tax-delinquent
property, or sale of the property itself, is subject to a takings
analysis. Within the last decade, the U.S. Supreme Court has
said, “It is beyond dispute that [t]axes and user fees . . . are not
takings.” Koontz v. St. Johns River Water Managegment Dist.,
570 U.S. 595, 615, 133 S. Ct. 2586, 186 L. Ed. 2d 697 (2013)
(internal quotation marks omitted).
If taxes, as the U.S. Supreme Court has held, are not takings,
we do not see how efforts to collect that tax, whether through
the sale of a lien on the property or sale of the property itself,
could be characterized as a taking. See, also, Jones v. Flowers,
547 U.S. 220, 234, 126 S. Ct. 1708, 164 L. Ed. 2d 415 (2006)
(“[p]eople must pay their taxes, and the government may
hold citizens accountable for tax delinquency by taking their
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Cite as 311 Neb. 184property”); Leigh v. Green, 64 Neb. 533, 544, 90 N.W. 255,
259 (1902) (“[t]he power of the state to levy taxes obviously
carries with it the power to collect them, and to provide all
means necessary or appropriate to insure and enforce their col-
lection”). We are far from alone in reaching that conclusion.
See, e.g., Speed v. Mills, 919 F. Supp. 2d 122, 129 (D.D.C.
2013) (holding that tax sale could not be considered a Fifth
Amendment taking because it “took place pursuant to [the
government’s] taxing power, not its power of eminent domain,
its regulatory power, or any other power enabling it to take or
encumber private property for a public purpose”); Industrial
Bank of Washington v. Sheve, 307 F. Supp. 98, 99 (D.D.C.
1969) (“[a] tax sale is not a government taking for which just
compensation must be paid under the Constitution”); In re
Murphy, 331 B.R. 107, 128 (S.D.N.Y. 2005) (“[a] tax sale is
not a taking for a public purpose because such sale is pursu-
ant to the state’s taxing power and not its power of eminent
domain”); In re Golden, 190 B.R. 52, 57 (W.D. Pa. 1995) (“[i]n
a tax sale context, the takings clause is not dispositive nor the
appropriate basis for starting an inquiry”); Fitzgerald v. Neves,
Inc., 15 Wash. App. 421, 550 P.2d 52 (1976) (holding sale of
land at tax foreclosure sale was not a taking).
Our conclusion that the county’s tax collection efforts were
not subject to the Takings Clauses undercuts any argument
by Fair that the county could not use the tax sale certificate
process to collect Fair’s undisputed tax debt. Fair’s alternative
argument, however, is that even if the county could take steps
to transfer his property to satisfy his tax debt, he is entitled
to receive as “just compensation” the difference between the
assessed value of his property and the tax debt, interest, and
fees he owes, an amount he refers to as the “surplus equity”
in his property. Brief for appellant at 34, 35. We turn to that
argument now.
Continental and the Attorney General contend that we need
not engage in any heavy lifting to address Fair’s alterna-
tive argument. They claim that binding U.S. Supreme Court
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Cite as 311 Neb. 184precedent stands in the way of Fair’s claim that he is entitled to
compensation for surplus equity. In support of their argument,
both Continental and the Attorney General direct us to Nelson
v. New York City, 352 U.S. 103, 77 S. Ct. 195, 1 L. Ed. 2d
171 (1956). In Nelson, a property owner failed to pay certain
water bills to a municipality. After the municipality notified the
property owner and the property owner failed to redeem the
property by paying the amounts owed, the municipality exer-
cised its right to sell the property. The property was sold for an
amount that significantly exceeded the property owner’s debt.
The property owner then challenged the municipality’s reten-
tion of the entire proceeds of the sale as a taking without just
compensation. The U.S. Supreme Court rejected the argument.
It distinguished prior cases in which statutes guaranteed the
property owner the right to any proceeds in excess of the debt,
and it also observed that the property owner in Nelson failed
to make use of a mechanism that would have allowed him to
recover any surplus value.
The Attorney General also claims Fair’s argument is pre-
cluded by Balthazar v. Mari Ltd., 396 U.S. 114, 90 S. Ct. 397,
24 L. Ed. 2d 307 (1969). In Balthazar, a three-judge district
court panel rejected a constitutional challenge to an Illinois tax
sale process much like the Nebraska statutory system at issue
in this case. See Balthazar v. Mari Ltd., 301 F. Supp. 103 (N.D.
Ill. 1969). The district court found no constitutional deficiency
despite the fact that the Illinois process did not guarantee that
the property owner would receive compensation in the event
the value of the property exceeded the tax debt. The U.S.
Supreme Court summarily affirmed the district court’s determi-
nation in one sentence without analysis.
Unlike Continental and the Attorney General, we have
doubts about whether Fair’s argument can be resolved with
only a cursory citation to Nelson or Balthazar. The Nelson
court appeared to rely, at least in part, on the fact that the
property owner in that case failed to take advantage of a statu-
tory mechanism that would have entitled him to the proceeds
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Cite as 311 Neb. 184of the sale in excess of the tax debt. In our case, however, all
appear to agree that there is no similar mechanism that would
have entitled Fair to the surplus equity in his property. As for
Balthazar, we hesitate to place too much reliance on a sum-
mary affirmance. The U.S. Supreme Court has explained that
its summary affirmances are a “rather slender reed” on which
to base future decisions, because the precedential effect of such
a decision extends only to “the precise issues presented and
necessarily decided by those actions.” Anderson v. Celebrezze,
460 U.S. 780, 784 n.5, 103 S. Ct. 1564, 75 L. Ed. 2d 547(1983) (internal quotation marks omitted).
Furthermore, the U.S. Supreme Court has made clear that
“[b]ecause the [Takings Clause] protects rather than creates
property interests, the existence of a property interest is deter-
mined by reference to existing rules or understandings that
stem from an independent source such as state law.” Phillips
v. Washington Legal Foundation, 524 U.S. 156, 164, 118 S.
Ct. 1925, 141 L. Ed. 2d 174 (1998) (internal quotation marks
omitted). So while the U.S. Supreme Court may have con-
cluded there was no constitutional problem in Nelson and
Balthazar when the respective property owners did not receive
the surplus equity from their property, that conclusion would
seem to partially hinge on whether the property owner had a
right under state law to the value of the property in excess of
the tax debt. And because Fair claims Nebraska law recognizes
such a property right, we will proceed to consider whether that
is the case.
Fair cannot contend that the tax certificate sale statutes he
challenges create a right to receive compensation equal to the
value of the property in excess of the tax debt. They make no
mention of such a right. Instead, Fair relies on several other
Nebraska statutes and a provision in the state constitution that
he claims recognize a property interest in the equity of his
property. In support of this argument, Fair cites the defini-
tion of property in Nebraska’s Uniform Property Act, Neb.
Rev. Stat. § 76-101 (Reissue 2018); the definition of property
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Cite as 311 Neb. 184for purposes of statutes governing revenue and taxation, Neb.
Rev. Stat. § 77-102 (Reissue 2018); Nebraska law providing
a homestead exemption, Neb. Rev. Stat. § 40-101 (Reissue
2016); and article I, § 25, of the Nebraska Constitution, which
prohibits “discrimination between citizens . . . in respect to”
property rights. These general provisions, however, do not rec-
ognize a property interest in the surplus equity value of prop-
erty after a tax certificate has been sold, the redemption period
has expired, and a tax deed is requested and issued.
Fair also asks us to recognize a common-law property right
in the value of property in excess of the tax debt when a tax
deed is issued. Here, Fair asks us to follow the lead of the
Michigan Supreme Court in Rafaeli, LLC v. Oakland County,
505 Mich. 429, 952 N.W.2d 434 (2020) (Rafaeli). In Rafaeli,
the Michigan Supreme Court held that if a tax foreclosure
sale yields proceeds in excess of the tax debt, the original
property owner has a property interest in the surplus pro-
ceeds under Michigan common law. The Michigan Supreme
Court reached this conclusion in reliance on the writings of
Sir William Blackstone and former Michigan Supreme Court
Justice Thomas M. Cooley, as well as English common-law
cases. But the Michigan Supreme Court also found that some
of its opinions in the early days of Michigan’s statehood held
that when land was sold for delinquent taxes and the pro-
ceeds exceeded the tax debt, the original property owner had
a right to the surplus proceeds under the common law. Id. at
465-66, 952 N.W.2d at 456 (“in the early years of this state,
it was commonly understood that the delinquent taxpayer, not
the foreclosing entity, continued to own the land at the time
of the tax-foreclosure sale and would have been entitled to
any surplus”).
Fair asks us to follow Rafaeli and find that if a tax deed is
issued pursuant to the tax sale certificate statutes and the value
of the property for which the tax deed is issued exceeds the tax
debt, the original owner has a common-law right to a payment
equal to the difference between the value and the tax debt.
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Cite as 311 Neb. 184We note initially that the Michigan Supreme Court recognized
a former property owner’s right to surplus proceeds generated
in a tax foreclosure sale while Continental obtained a deed to
Fair’s property by another method (contrasting tax deed proce-
dure under chapter 77, article 18, with the foreclosure process
under chapter 77, article 19). See, e.g., Neun v. Ewing, 290
Neb. 963, 863 N.W.2d 187 (2015). Further, even if that dif-
ference could be set aside, unlike the challenger in Rafaeli,
Fair cannot point us to any Nebraska cases recognizing such a
­common-law property right. In fact, this case appears to stand
in stark contrast to Rafaeli in that regard. While Rafaeli relied
on early Michigan cases recognizing a property owner’s right to
surplus proceeds from a tax foreclosure sale, the tax certificate
sale process has been a part of Nebraska law since shortly after
Nebraska became a state, see 1879 Neb. Laws, § 109, p. 320,
yet Fair has not pointed us to any authority in our case law
recognizing that the original property owner was ever entitled
to receive compensation if the value of the property transferred
to a tax certificate holder exceeded the tax debt. We thus find
no basis to conclude that Nebraska common law recognizes
the property interest that is essential for Fair’s takings claim to
succeed. See Tyler v. Hennepin County, 505 F. Supp. 3d 879(D. Minn. 2020) (finding that Minnesota common law did not
provide former owner of property forfeited to state and sold
for delinquent taxes with right to surplus proceeds), affirmed
No. 20-3730, 2022 WL 468801 (8th Cir. Feb. 16, 2022).
We have held that the Takings Clause “applies only to vested
property rights” and that “[t]o be considered a vested right, the
right must be fixed, settled, absolute, and not contingent upon
anything.” Big John’s Billiards v. State, 288 Neb. 938, 954,
852 N.W.2d 727, 741 (2014) (internal quotation marks omit-
ted). Fair, however, has not demonstrated that at the time the
tax deed was issued, he had an absolute right to the difference
between the assessed value of his property and his tax debt.
Without such a right, his claims under the Takings Clauses
cannot succeed.
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Cite as 311 Neb. 184Excessive Fines.
Fair’s third argument is under the Excessive Fines Clause
of the Eighth Amendment to the U.S. Constitution. He argues
that transferring title of his property to Continental is an exces-
sive fine prohibited by the Constitution because the value of
the property was more than 10 times the amount of money he
owed in delinquent taxes, interest, and fees.
The Eighth Amendment provides, “Excessive bail shall not
be required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted.” The right to be free from excessive
fines has been incorporated against the states through the Due
Process Clause of the 14th Amendment. See Timbs v. Indiana,
___ U.S. ___, 139 S. Ct. 682, 203 L. Ed. 2d 11 (2019).
The U.S. Supreme Court has said, “The Excessive Fines
Clause limits the government’s power to extract payments,
whether in cash or in kind, ‘as punishment for some offense.’”
Austin v. United States, 509 U.S. 602, 609-10, 113 S. Ct. 2801,
125 L. Ed. 2d 488 (1993) (emphasis in original) (quoting
Browning-Ferris Industries v. Kelco Disposal, 492 U.S. 257,
265, 109 S. Ct. 2909, 106 L. Ed. 2d 219 (1989)). As we will
explain, we find that the transfer of Fair’s title to Continental
lacks essential attributes of a “fine,” as that term has been
defined by the U.S. Supreme Court.
The U.S. Supreme Court has drawn a distinction between a
penalty or forfeiture that is purely “remedial” and one that “can
only be explained as serving in part to punish.” Id., 509 U.S.
at 610. The latter, according to the U.S. Supreme Court, is a
fine under the Eighth Amendment. A forfeiture is remedial, the
U.S. Supreme Court has explained, if it, for example, removes
dangerous or illegal items from society or compensates the
government for a loss. Browning-Ferris Industries, supra.Fair argues that the transfer of his property can only be
understood as a form of punishment. In support of this conten-
tion, he points to the fact that as a result of the transfer, he
stands to lose a property he previously owned free and clear of
any encumbrances, the assessed value of which is more than
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Cite as 311 Neb. 18410 times the amount of the tax debt. Fair argues that the magni-
tude of his loss far exceeds remediation of his tax debt and that
the transfer must be understood as punishment. We disagree for
a number of reasons.
First, in United States v. Bajakajian, 524 U.S. 321, 118 S.
Ct. 2028, 141 L. Ed. 2d 314 (1998), the U.S. Supreme Court
recognized that a penalty or forfeiture is not necessarily puni-
tive merely because of a discrepancy between the value of the
property forfeited and the government’s loss. See, also, Tyler
v. Hennepin County, 505 F. Supp. 3d 879, 896 (2020) (relying
on Bajakajian and concluding that “[t]he fact that the operation
of Minnesota’s tax-forfeiture system may result in a windfall
to the government therefore does not compel the conclusion
that the system is punitive”), affirmed No. 20-3730, 2022 WL
468801 (8th Cir. Feb. 16, 2022). Second, the forfeitures the
U.S. Supreme Court has found punitive in Austin, supra, and
Bajakajian, supra, involved the forfeiture of property involved
in criminal offenses and the U.S. Supreme Court relied heav-
ily on their connection to criminal proceedings. Here, there is
no suggestion that a property or its owner must be involved in
criminal behavior in order for the property to be transferred via
the tax certificate sale process.
In addition to those reasons, the notion that the State or
the county intended to punish Fair for not paying his property
taxes simply does not hold together. As we have noted, the
statutes Fair challenges allowed him to avoid the loss of his
property if he paid his tax debt more than 3 years after the tax
certificate was first sold. This extended opportunity to avoid
forfeiture suggests that the purpose of the tax certificate sale
system is to “collect taxes, rather than to punish delinquent
taxpayers.” Tyler, 505 F. Supp. 3d at 896.
Further, the magnitude of Fair’s loss was not dictated solely
by the statute. If no party purchases a tax certificate offered
for a particular property, a Nebraska statute provides that
the county board shall direct the county attorney to foreclose
the lien for the taxes in a tax foreclosure proceeding. See
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Cite as 311 Neb. 184§ 77-1901. Similarly, the purchaser of a tax certificate may
choose to initiate a tax foreclosure proceeding rather than
requesting a tax deed. See, Neb. Rev. Stat. § 77-1902 (Reissue
2018); Neun v. Ewing, 290 Neb. 963, 863 N.W.2d 187 (2015).
When property is sold in a tax foreclosure proceeding, how-
ever, the original owner is statutorily entitled to receive sur-
plus proceeds. See, Neb. Rev. Stat. § 77-1916 (Reissue 2018);
County of Lancaster v. Trimble, 34 Neb. 752, 52 N.W. 711(1892). It is difficult to discern an intent to punish delinquent
taxpayers on the part of the Legislature when the magnitude
of the delinquent taxpayer’s loss depends on choices made by
third parties.
Not only did the magnitude of Fair’s loss depend on a
choice made by Continental, the tax sale certificate process
resulted in the transfer of his property to Continental. This fact
highlights another way in which the tax sale certificate process
does not function as a fine under the Eighth Amendment. The
U.S. Supreme Court has held that the Excessive Fines Clause
applies only to “those fines directly imposed by, and pay-
able to, the government.” Browning-Ferris Industries v. Kelco
Disposal, 492 U.S 257, 268, 109 S. Ct. 2909, 106 L. Ed. 2d
219 (1989). Here, Fair was not ordered to pay anything to a
governmental entity as a result of his failure to pay his delin-
quent tax debt.
Because we find that there was no fine imposed for pur-
poses of the Eighth Amendment, Fair’s Excessive Fines Clause
argument lacks merit.
Article I, § 25, of Nebraska Constitution.
Next, Fair argues that the tax certificate sale process vio-
lates article I, § 25, of the Nebraska Constitution. That section
states, “There shall be no discrimination between citizens of
the United States in respect to the acquisition, ownership, pos-
session, enjoyment or descent of property. The right of aliens
in respect to the acquisition, enjoyment and descent of prop-
erty may be regulated by law.” Neb. Const. art. I, § 25. While
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Cite as 311 Neb. 184this provision regulates discrimination with regard to prop-
erty rights, see, e.g., Landon v. Pettijohn, 231 Neb. 837, 438
N.W.2d 757 (1989), Fair makes no argument that the tax sale
certificate statutes unlawfully discriminate. He instead merely
repeats the Takings Clause arguments we have already rejected.
We thus find no basis to determine that the challenged statutes
violate article I, § 25.
Article III, § 18, of Nebraska Constitution.
Finally, Fair briefly contends that the tax sale certificate
statutes create a “special class” in violation of article III, § 18,
of the Nebraska Constitution. Brief for appellant at 45. There is
no indication in our record, however, that Fair raised this argu-
ment in the district court. Accordingly, we will not address its
merits. See Linda N. v. William N., 289 Neb. 607, 856 N.W.2d
436 (2014).
CONCLUSION
In this appeal, Fair argues that Nebraska’s tax certificate
sale statutes are “harsh and unconstitutional.” Brief for appel-
lant at 45. The sole questions before us, however, are whether
the statutes are unconstitutional in the manner Fair assigns. We
find that they are not and, accordingly, affirm.
Affirmed.
Miller-Lerman, J., not participating.