Commonwealth v. Investment Resource Holding, Inc. ( 2017 )

J-A09007-17
2017 PA Super 251COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
INVESTMENT RESOURCE HOLDING, INC.
Appellant No. 1142 MDA 2016
Appeal from the Judgment of Sentence June 28, 2016
In the Court of Common Pleas of Lebanon County
Criminal Division at No(s): CP-38-SA-0000091-2015
BEFORE: SHOGAN, J., OTT, J., and STABILE, J.
OPINION BY OTT, J.: FILED AUGUST 01, 2017
Investment Resource Holding, Inc. (IRH) appeals from the judgment of
sentence imposed on June 28, 2016, in the Court of Common Pleas of
Lebanon County finding it guilty of certain summary offenses regarding
property it had purchased at judicial sale. In this timely appeal, IRH raises
two issues, both regarding its attempt to rescind its purchase of the subject
property. The claims are: (1) Whether IRH held legal title to the property
prior to acknowledgment, delivery and acceptance of the deed, and (2)
whether IRH’s equitable ownership of the property ended after informing the
Tax Claim Bureau it would not accept the deed. After a thorough review of
the submissions by the parties, relevant law, and the certified record, we
affirm.
J-A09007-17
IRH has essentially presented the court with a claim of insufficient
evidence, by asserting the Commonwealth failed to prove it owned the
subject property. Therefore, IRH contends, it cannot be held culpable for
the failure to insure the safety of the property.
The standard of review for claims of insufficient evidence is well-
settled. With respect to such claims, we consider the evidence in
the light most favorable to the Commonwealth as verdict winner.
In that light, we decide if the evidence and all reasonable
inferences from that evidence are sufficient to establish the
elements of the offense beyond a reasonable doubt. We keep in
mind that it was for the trier of fact to determine the weight of
the evidence and the credibility of witnesses. The jury was free
to believe all, part or none of the evidence. This Court may not
weigh the evidence or substitute its judgment or that of the
factfinder.
Commonwealth v. Devries, 112 A.3d 663, 667 (Pa. Super. 2015)
(citations omitted).
Further, “[t]his Court's standard of review of a nonjury trial is to
determine whether the findings of the trial court are supported by competent
evidence and whether the trial judge committed error in the application of
law.” Commonwealth v. Decker, 698 A.2d 99, 100 (Pa. Super. 1997).
We quote the factual and procedural history as related by the trial
court in its Pa.R.A.P. 1925(a) opinion.
[IRH] was charged with violations of the City of Lebanon’s
Codified Ordinances, Property Maintenance Code, for its failure
to rectify damages caused by a fire at 519 North 11 th Street in
the City of Lebanon (“the Property”). [IRH] does not dispute
that it did not comply with the directives issued by the City, but
claims that it is not the owner of the Property and cannot be held
responsible for the violations alleged.
-2-
J-A09007-17
[IRH] was issued five citations at this docket. It was found
guilty of four and the magisterial district judge dismissed one.
[IRH] appealed to this Court and we conducted a summary
appeal hearing on March 17, 2016. After the parties filed post-
hearing Briefs addressing the issue of [IRH’s] ownership of the
Property, we issued an Order on May 2, 2016 in which we found
[IRH] guilty of four of the citations and not guilty of one. 1 After
Sentencing was conducted on June 28, 2016, [IRH] filed an
appeal to which this Opinion is addressed.
On September 8, 2014, the Property was listed for the 2014
Lebanon County Tax Claim Bureau Upset Sale. William Hartman,
the incorporator and president of [IRH], attended the sale to
purchase the Property on its behalf. Hartman completed a
Bidder Registration form and was designated “Bidder No. 1.” At
registration, Hartman was given a copy of the Conditions of
Upset Sale. This document stated that “[t]he Tax Claim Bureau
will issue a deed to the purchaser upon confirmation of the sale
by the Court of Common Pleas.” It also provided: “NO SALES
WILL BE CANCELED OR MONEY RETURNED AFTER THE
PROPERTY IS STRUCK DOWN BY THE AUCTIONEER.” Hartman,
acting on [IRH’s] behalf, was the winning bidder of the Property.
He executed a check in the amount of $5,300.00, and signed the
Agreement of Sale and Receipt of Payment for the Property. The
Agreement of Sale and Receipt of Payment provided that “THIS
SALE IS FINAL AND THE BUYER IS BOUND BY THE TERMS AND
CONDITIONS OF THE SALE ATTACHED HERETO.” The check
issued by Hartman indicated that it was drawn on an account in
[IRH’s] name with an address of “1912 East Pennsylvania
Avenue, Lebanon, PA 17042.”
On September 11, 2014, in response to the Motion of the County
Solicitor, this Court issued an Order finding that the upset sale
had been conducted in accordance with the Pennsylvania Real
Estate Tax Sale Law, and the sales were confirmed nisi.
____________________________________________
1
Specifically, IRH was found guilty of violating one count of failure to comply
with BOCA Property/Maintenance Code, LO 19 108.1, and three counts of
Dangerous Structure on Premises, LO 19 108.1.5. IRH was sentenced to
pay fines and restitution. Two of the citations, LO 19 108.1 and one count of
LO 108.1.5, were issued on December 2, 2014. The other two counts of LO
108.1.5 were issued on December 24, 2014 and January 19, 2015.
-3-
J-A09007-17
Pursuant to that Order, the Tax Claim Bureau published a
general notice indicating that any exceptions to the sales were
required to be filed within thirty days. No objections [sic] were
filed and the sale was confirmed absolutely on October 21, 2014.
A Tax Claim Bureau Deed, which transferred the Property from
the previous owner to [IRH], was prepared and recorded on
November 21, 2014.
On December 2, 2014, a fire resulted in extensive damage to the
Property. On December 3, 2014, the Tax Claim Bureau
forwarded the Deed to [IRH] at the East Pennsylvania Avenue
address via certified mail. On December 7, 2014, the Tax Claim
Bureau received a letter from an attorney dated December 5,
2014 which indicated that [IRH] had not received the deed and
would not accept it or be considered the owner of the Property.
The Deed was returned to the Bureau unclaimed as [IRH] had
not picked it up. The return indicated that delivery had been
attempted on December 4, 2014.
At the hearing, Terry Brown, a City Code Enforcement employee,
testified that he had contacted Hartman regarding concerns
about the Property’s condition prior to the fire after he learned
that [IRH] was the new owner. Hartman acknowledged that he
had just purchased the Property and was in the process of
getting the occupant to move out.
Belinda Spicer, the Deputy Director of the Tax Claim Bureau,
testified that she was familiar with Hartman, as he attended the
upset sale every year and was a frequent purchaser. She
explained that Hartman had called her office the morning after
the fire and asked whether the Deed had been mailed out yet;
however, she could not recall whether it had been sent. Spicer
verified that it was mailed on December 3, 2014. When the
Deed was returned to her office, she did not attempt to resend it
due to the letter she had received from [IRH’s] attorney.
Duane Trautman, the City Fire Commissioner, testified that he
had investigated and prepared a report of the fire. He explained
that when preparing the report, he usually ascertains the
owner’s identity at the scene and then verifies the information
with the County Assessment Office. After the fire he was told by
the occupants of the Property that [IRH] was the owner.
Trautman also determined [IRH’s] ownership status by locating
the Tax Claim Deed which was recorded on November 21, 2014.
-4-
J-A09007-17
In addition, he obtained [IRH’s] Articles of Incorporation from
the Pennsylvania Department of State Corporation Bureau which
identified Hartman as [IRH’s] incorporator. On December 3,
2014, Hartman called Trautman and identified himself as the
owner of the Property. During that conversation, the two
discussed the damage caused by the fire and Hartman inquired
about the necessary cleanup and repair.
Trial Court Opinion, 9/12/2016, at 1-5.
Subsequently, several citations were issued to IRH regarding the
unsafe condition of the property, which remained untended. At trial,
Hartman argued IRH had unilaterally rescinded the purchase of the property
by refusing to accept the deed. While Hartman did not challenge the facts
underlying the citations, he claimed IRH was not the owner of the property
and therefore could not be held culpable. The trial court rejected that
argument and found IRH guilty of the summary offenses as noted above.2
Although Hartman has raised two issues in this timely appeal, they are
both based on the same claim that IRH is not the owner of the property.3
____________________________________________
2
Commonwealth Court of Pennsylvania has jurisdiction over appeals from
final orders of the courts of common pleas in any case implicating the
application, interpretation or enforcement of a local ordinance. 42 Pa.C.S.A.
§ 762(a)(4)(i)(B). However, the Commonwealth has not objected to this
Court exercising jurisdiction over the instant appeal. Thus, pursuant to Rule
of Appellate Procedure 741(a), [providing that the failure of an appellee to
file an objection to the jurisdiction of an appellate court on or prior to the
last day…for the filing of the record shall, unless the appellate court shall
otherwise order, operate to perfect the appellate jurisdiction of such
appellate court…] our jurisdiction is perfected. Commonwealth v.
Asamoah, 809 A.2d 943, 945 n.1 (Pa. Super. 2003).
3
Timing is the only difference between IRH’s claims. In the first claim, IRH
argues rejection of the deed rendered the sale void ab initio, while in the
second, ownership was divested on the date the deed was rejected.
-5-
J-A09007-17
Essentially, IRH is seeking to avoid culpability by rescinding the tax sale
after the property became a liability.
IRH cites three cases for the proposition that it can totally avoid the
sale of the Property by simply refusing receipt of the recorded deed. Tate v.
Clement, 176 Pa. 550 (1896), In re Rouse, 48 B.R. 236 (Bankr.E.D.Pa.
1985), and Russell v. Equibank, 8 B.R. 342 (Bankr.W.D.Pa. 1980).4
However, none of these cases allow a purchaser of real property at a tax
sale, after complying with all terms of the sale, and after the deed has been
recorded in the purchaser’s name, to disclaim the property to avoid an
unexpected debt by refusing to accept delivery of the deed. In fact, Russell
states:
Pursuant to Pennsylvania law, a purchaser of real property at a
sheriff's sale acquires, at the fall of the hammer, a vested
interest in the property. Marx Realty & Improv. Co. v.
Boulevard Center, Inc., 398 Pa. 1, 156 A.2d 827 (1959). Cf.,
Pennsylvania S.U.R. Co. v. Cleary, 125 Pa. 442, 451, 17 A.
468, 478 (1889), which held that a purchaser acquired an
“inchoate title”; with Appeals of Roth, 159 Pa. Super. 145, 47
A.2d 716 (1946), in which the court concluded that the
purchaser acquired an “equitable interest which becomes a
complete title on complying with the terms of the sale.” Id. at
____________________________________________
4
IRH cited Conlen v. Girsch, 56 A.2d 231 (Pa. 1948) to support its claim
that it had successfully renounced its purchase after becoming the equitable
owner. Just as with the other cases cited by IRH, Conlen does not allow a
purchaser to abandon a transaction, after payment and recording of the
deed to avoid an unpleasant responsibility. In Conlen, the purchaser failed
to comply with required terms of the sale. The fact that the purchaser had
been the equitable owner did not entitle it to legal title. Even if we accepted
this argument, which we do not, IRH would still be responsible for the two
violations issued prior to its rejection of the deed.
-6-
J-A09007-17
150, 47 A.2d at 719. In Pennsylvania Co., etc. v. Broad
Street Hospital, 354 Pa. 123, 129, 47 A.2d 281, 284 (1946),
the Supreme Court of Pennsylvania stated that:
(t)he bona fide purchaser at a public sale of land, the
moment it is knocked off to him, if he complies in all
respects with the conditions of sale, instantly acquires a
vested right to the property sold. Such a purchaser would
be bound by his bargain thus made, although his bid
greatly exceeded its value. And if he purchased at a bona
fide sale, greatly below the value, the vendor would be
bound by the sale. Equality in this case at least is equity.
The vendee certainly should have the advantage of a
purchase at a price below the value, when he is bound by
a purchase at a price greatly exceeding the true value...
In substance, the purchaser’s position prior to the delivery of the
deed is that of a purchaser by the articles of a private sales
agreement. Appeals of Roth, supra, 159 Pa. Super. at 150, 47
A.2d at 719.
Russell v. Equibank, 8 B.R. at 344-45.5
Here, IRH was the bona fide purchaser of the Property and it complied
in all respects with the conditions of the sale. IRH is therefore bound by its
bargain, pursuant to the terms of sales agreement. The trial court noted
that the terms of the sale included the facts that all sales are final and no
sale will be cancelled.
Additionally, the trial court reasoned:
…[I]t is well-established law here that when the
Agreement of Sale is signed, the purchaser becomes the
equitable or beneficial owner through the doctrine of
____________________________________________
5
We recognize that Russell involved a sheriff’s sale, not a tax sale.
However, we believe the principles are equally applicable, given both involve
bona fide purchasers at a public sale of land.
-7-
J-A09007-17
equitable conversion. The vendor retains merely a security
interest for the payment of the unpaid purchase money.
…It is also the law of Pennsylvania that the purchaser of
real estate bears the risk of loss for injury occurring to the
property after execution of the Agreement of sale but
before the settlement.
DiDonato v. Reliance Standard Life Insurance Company,
249 A.2d 327, 329 (Pa. 1969) (citations omitted).
Whenever an unconditional agreement has been made for
the sale of land, such as equity will specifically enforce, T
[sic] may properly be referred to and treated as sold.
Then the vendee becomes the equitable owner, and the
vendor holds the legal title as trustee. …So much is the
vendee considered, in contemplation of equity, as actually
seised of the estate, that he must bear any loss which may
happen to the estate between the agreement and the
conveyance, and he will be entitled to any benefit which
may accrue to it in the interval, because by the contract
He is owner of the premises to every intent and purpose in
equity.
Byrne v. Kanig, 332 A.2d 472, 474 (Pa. Super. 1974) (citations
omitted)
In Pivirotto v. City of Pittsburgh, 528 A.2d 125 (Pa. 1987),
this doctrine was applied to the purchaser of property at a tax
sale. At that time the applicable law provided a one-year period
of redemption by the record owner. When there was no
redemption within that time period, the property was conveyed
to [Pivirotto] by treasury deed. One year prior to the sale, the
City had inspected the property and found various violations of
its housing code. After [Pivirotto] had purchased the property at
the tax sale, the property was reinspected and condemned.
Notice of the condemnation was [s]ent to the record owners, but
not to [Pivirotto]. After the treasury deed was recorded, the
property was demolished. [Pivirotto] then brought suit against
the City for negligent demolition.
In attempting to define the term “owner” to determine the City’s
compliance with statutory notice provisions, the court noted
“Appellee argues that as the successful bidder at the tax sale, he
has an ownership interest, to wit equitable title, and, thus, he
-8-
J-A09007-17
has a legally protected property interest which entitles him to
actual notice from the city of condemnation and demolition. We
agree.”
In addition to the benefits of ownership status, equitable owners
are responsible for liabilities resulting from the subject property
even prior to the conveyance of a deed. For example, in Byrne
v. Kanig, supra, the equitable owner of real property under an
installment-purchase arrangement was held liable for a
municipal sewer lien which was incurred prior to conveyance of
the deed.
Based on this reasoning, we believe that [IRH], as the equitable
owner of the property, is responsible for taking the action
outlined in the Notices of Violation. Its failure to comply with
those directives, as set forth in the relevant citations, resulted in
our finding it guilty of the summary charges. Acceptance of the
deed was not a necessary precursor to [IRH’s] entitlement to the
benefits, as well as the detriments, of ownership of the Property
and [IRH’s] refusal to accept the Deed did not relieve it of those
responsibilities.
Trial Court Opinion at 7-9.
We find no error in this reasoning and conclusion. The terms of sale
were clear, all sales were final and no sale could be cancelled. Once the
hammer fell on the Property, IRH became the equitable owner of the
Property. IRH further complied with all terms of sale and the deed was
recorded on November 21, 2014. Prior to delivery of the deed, the Property
was severely damaged in a fire. There is no question that IRH was the
equitable owner of the Property at the time of the fire. While the equitable
owner is entitled to any benefits that accrue prior to the delivery of the
deed, the equitable owner is equally responsible for liabilities. IRH cites no
law, and we have found none, that allows the equitable owner to avoid the
liabilities attendant to the purchase of property by refusing to accept
-9-
J-A09007-17
delivery of the deed that has been recorded. As such, IRH was properly
found guilty of violating local ordinances regarding the safe upkeep and
maintenance of real estate.
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/1/2017
- 10 -