Opinion
Opinions on pages 606-625 omitted.
For Opinion on Hearing, see 159 Cal.Rptr. 231.
[153 Cal.Rptr. 282]Barry Bernstein, Los Angeles, for appellant and defendant.
Satzman & Smolen, Geffner & Satzman by Richard E. Satzman, Los Angeles, for respondents and plaintiffs.
Ronald S. Javor, and Stanley Di Orio, Venice, for amicus curiae Willia V. Moore.
BEACH, Associate Justice.
NATURE OF CASE:
The purchaser of real property sold by a city for nonpayment of improvement bond assessments, appeals from the judgment of the trial court quieting title in favor of the defaulting property owners and declaring parts of the Improvement Act of 1911 unconstitutional.
THE STATUTORY PROVISIONS:
The Improvement Act of 1911 is contained in Division 7 of the Streets and Highways Code sections 5000-6632. The parts declared unconstitutional by the trial court are embraced in part 5 and consist of sections "6400 et seq." Generally, all of the provisions relate to the issuance assessment and payment of improvement bonds. There are specific sections relating to all aspects of the improvement bond procedure including sections relating to delinquency, default, sale, redemption, and notices. Briefly the parts of the statutory scheme involved here provide that bonds may be issued by the city for improvement, the form thereof, the method of repayment, and assessment therefor (§§ 6400-6488.8 inclusive). Section 6500 to the last section 6632 provide for the procedure in cases of default, sale for deficiency, and redemption. Earlier portions provide for the method of assessment and notice and for opportunity to protest and hearing upon the original bonding and assessment for the improvement work. These provisions and their applications are not attacked by the respondent property owners and are not the subject of dispute upon appeal.
All section references, unless otherwise indicated, are to the California Streets and Highways Code.
It is only that part of chapter 6 containing sections 6500-6572 which is in dispute here. These particular sections provide the procedure for default and sale of delinquent property. At the time applicable here, they provided as follows: Upon demand of the unpaid bond holder, the city treasurer shall proceed to advertise and sell the property (§ 6500); the treasurer mails a notice to the owner that the property will be sold unless within six months the owner makes the payments due (§ 6501); failure of the owner to receive notice shall not affect the validity of the sale or invalidate any subsequent act or proceeding (§ 6502); publication of a notice of sale after six months [153 Cal.Rptr. 283] from the first notice that the property will be sold at least fifteen days after the first publication (§ 6503); redemption may be made by payment before such sale (§ 6508); the property may be sold at an actual sale (§ 6509); and the owner may redeem the property within twelve months of the sale or at any time prior to the application by the purchaser for a treasurer's deed (§ 6530). The purchaser must mail a notice to the owner 30 days before (a) the expiration of the 12 months, or (b) the application for a deed, informing the owner of the sale, date, bond number, series, amount due, and time when the right of redemption will expire or when the purchaser will apply for a deed (§ 6550); and a similar notice must be posted on the property if it is unoccupied. Until such notice is given, the owner has the indefinite right of redemption (§ 6551).
An action to contest the validity of the deed or to contest any proceedings subsequent to the issue of the certificate of sale must be brought within six months after the issuance of the deed.
FACTS OF CASE AT BENCH:
Since 1955 respondents owned a house and lot. The city made street improvements and some time in 1971 assessed owners of certain affected parcels for repayment of the improvement bond. The owners included respondents. Respondents never made any payments. The city, therefore, sent notices of foreclosure and sale and of right of redemption and published the same all in accordance with the statutory provisions. There is no claim that any of the statutory provisions relating to sale, notices, and publications and posting were not met. However, it is stipulated that respondents never received any notice and had no actual notice or knowledge of these events or of the publication. In 1975, more than six months after the property had been deeded to appellant and after the notice invoking the operation of the six months' statute of limitations of section 6571 had been given, respondents first learned of the events that had taken place.
After the time of the first notice sent under section 6501 and the publication six months later of the notice that the property would be sold (section 6503), the respondents moved from the property to another part of Los Angeles. Thereafter, on June 18, 1973, the property was sold. After more than one year expired, the purchaser sent notice and posted a copy on the then unoccupied premises pursuant to section 6550. These facts are not in dispute. The parties agree all notices required by law were properly given. Based on these facts, the trial court granted respondents' motion for summary judgment on their complaint to quiet title. The trial court held that sections 6400 et seq. were unconstitutionally inadequate as applied to respondents.
APPELLANT'S CONTENTIONS:
Appellant contends:
1. The trial court erred in finding that the code sections failed to provide due process and were therefore unconstitutional;
2. The treasurer's deed is primary evidence of regularity of proceedings and therefore conveys absolute title to the property; and, therefore, without evidence of irregularity in the proceedings, no attack on appellant's title can be pursued or succeed; and
3. Because the action was brought more than six months after the issuance of the treasurer's deed, it is barred by the provisions of section 6571 which imposes a six months' statute of limitations upon such actions.
OUR HOLDING:
We reject appellant's contentions and we affirm the judgment of the trial court. However, we do not hold that all of the applicable provisions beginning with section 6400 are unconstitutional as did the trial court. We hold that prior to the amendment of the statute in 1974, and the amendments effective August 1, 1978, the code sections were insufficient to give the kind [153 Cal.Rptr. 284] of notice that a fair sense of constitutional due process requires.
We are again presented with the question of whether the particular statutory provisions, as applied here to owners who through no fault of the city received no actual notice, meet the constitutional requirements of due process. The question is not new to us. As the parties herein are aware, in Kaufman v. Gross & Co., 81 Cal.App.3d 686, 146 Cal.Rptr. 706 (a case where notices were sent to a deceased former owner and returned to the city), we rendered an opinion that the formal compliance with the statutory requirement and subsequent sale under the same statute was insufficient to deprive the owners of their property. Thereafter, the California Supreme Court granted a hearing. Thus, our decision in that case has been vacated and is of no legal authority or consequence.
DISCUSSION:
Respondents and amicus present four basic arguments: (1) the Improvement Act of 1911 violates the due process clauses of the state and federal constitutions in that it fails to provide for notice and hearing prior to the sale of the assessed property; (2) the act is similarly unconstitutional because its provisions are not reasonably calculated to inform the property owner of the sale proceedings and of his right of redemption; (3) the procedures permit unconscionably low sales prices and thus also violate substantive due process, and (4) the six months' statute of limitations is no bar to the action where the statutory scheme violates due process of law requirements in the other three respects.
We address ourselves to appellant's second argument only and base our affirmance solely thereon.
The general rule applicable here is: ". . . a person's property may not be taken from him without due process of law and that a fundamental requisite of due process is notice, reasonably calculated, under all the circumstances, to apprise the interested parties of the pendency of proceedings which could result in a deprivation of a person's property so as to afford him an opportunity to be heard. (Citations.)" (Philbrick v. Huff, 60 Cal.App.3d 633, 641, 131 Cal.Rptr. 733, 738.) The kind of notice that due process requires is one ". . . which, according to common experience, should reasonably give notice of impending interference with ownership or right of possession. (Citation.)" (McMaster v. City of Santa Rosa, 27 Cal.App.3d 598, 602, 103 Cal.Rptr. 749, 752.) Sometimes actual notice is not received or for some reason cannot be given. Therefore, statutes provide for publication of notice. As a further general rule, publication of notice in the ordinary real property tax collection case is all of the due process notice to which a delinquent taxpayer is entitled. Additional notices of sale are not necessary before the sale. In such a case " '(a)s far as the mailing of additional notices of sale prior to the sales to and from the State, or the mailing of any additional notices at all is concerned, such notices could have been done away with or not required by the legislature in the first instance without doing violence to due process.' " (McMaster v. City of Santa Rose, supra, 27 Cal.App.3d at p. 605, 103 Cal.Rptr. at p. 754.)
In matters relating to the collection of taxes different considerations other than present at bench apply. The owner of real property can reasonably expect that his property will be taxed. Reasonably, he may expect semi-annual or other periodic notices. If he does not receive such notices, it is reasonable to charge him with constructive notice because he should be aware of the fact that the government expects periodic payment from him in the form of property taxes. The right of the government to collect general revenue taxes for the purpose of financing the day-to-day operations of the government far outweighs the need to perfect a fool-proof system of notice whereby any defaulting taxpayer will receive actual notice and administrative hearing at all stages of the proceedings. (Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 51 S.Ct. 608, 75 L.Ed. 1289.)
On the other hand, in cases such as the present the special assessment tax does not finance the operation of day-to-day [153 Cal.Rptr. 285] government but rather reimburses the bond holder for money used to finance a construction project through the issuance of bonds. A much smaller group than the entire city population is usually involved in a street improvement and the financing therefor. This difference is significant. Not all of the property owners affected by the street improvement are necessarily familiar with the method of assessment and financing for such improvements. It is not reasonable to expect that all of the property owners will understand notices of special assessment and notices of default and notices of delinquency. As evidenced by the present case, the forms of notice are such that they can be easily misunderstood or perhaps carelessly but in good faith ignored. In both kinds of cases, i. e., general tax delinquency and a special assessment delinquency, a person's property may be taken. However, notice in the latter case is not expected as a routine thing. Even when assessment is imposed and notice given, it may be subject to misunderstanding and thereby the opportunity to remedy more easily may be lost. This warrants a more adequate form of notice calling the delinquent owner's attention in much more direct and simple terms to the danger of losing his property. Therefore, in cases of assessment by a public body, district, government or other entity, for some special purpose other than general taxes, publication alone may be insufficient to meet the procedural due process requirements where such body, district, government, or entity could have notified the owner by direct mail at an address taken from the tax assessor's rolls. (Johnson v. Alma Investment Co., 47 Cal.App.3d 155, 120 Cal.Rptr. 503.) Special assessments as at bench are by their very nature unusual to many house owners. A sense of fair play simply demands that more care be given to notifying the property owner in such case.
Bearing the above principles in mind, we examine the notices given at bench. We find that they are inadequate for several reasons.
A. The notice provisions are inadequate on their face and are not reasonably calculated to clearly and fairly apprise the homeowner of the pending sale proceedings.
The notice of sale set forth in section 6501 and the actual notice of sale mailed to respondents refers only to the delinquency of "bonds." Under former section 6501 the recommended notice form states: "You are hereby notified that Bond ---, Series ----, for an improvement in the City (or County) of ------, is delinquent." The notice then states that unless the amount due is paid (no specific amount is given) by a particular date "the undersigned will institute proceedings to foreclose the lien of said bond in the manner prescribed by law." This notice is inadequate to give even a hint that a person's home will be sold. There is no reference to the homeowner's property nor a statement as to the amount owed. What will be foreclosed other than a "lien" is never identified.
The actual notice mailed to respondents followed the form suggested in section 6501 but included a very brief legal description. It read, in pertinent part, "Greetings: (P) You are hereby notified that Bond No. 329, Series No. 14, issued against LOT 6 BLK E TRACT HARVARD HGTS. for the improvement of PICO BLVD. in the City of Los Angeles is delinquent, and the holder of said bond has demanded that the Treasurer proceed to advertise and sell the lot or parcel of land described in the bond as being that upon which the assessment represented by the bond was levied." Similarly, the published notice read: "NOTICE OF SALE OF PROPERTY DELINQUENT FOR NON-PAYMENT OF BOND (P) No. 329, Series No. 14 issued for the improvement of (P) Pico Boulevard (P) Default having been made in the payment of the following named coupons, to wit: . . ." Followed by a listing of dates and money owed. The only mention of the property is a legal description placed indistinctively in the middle of a long column of small print consisting of technical legal words. In addition the statute did not provide for a notice to respondents of the actual sale of [153 Cal.Rptr. 286] their property. Instead only the bond holder was given notice of the time, date, and place of the sale.
Streets and Highways Code section 6501 was amended in 1978 (Stats.1978, ch. 483) to provide for a better form of notice. The amendment provides that the notice now include the following suggested information and on the following suggested format:
"IMPORTANT NOTICE
"Your property will soon be sold by the city (or county) unless you pay what you owe for ------ improvement made in your area. To obtain information on how to prevent the sale of your property, immediately call the foreclosure clerk at the city (or county) treasurer's office. The telephone number is ------ to arrange for payment. For more detailed information regarding this matter, read the following." (Emphasis added.)
Similar changes were made for section 6505 which provides for notice of the actual sale to the homeowner.
The changes made by Statutes 1978, chapter 483, help homeowners in the future. However, they did not apply at the time in question. The notices applicable to this case under the old law were clearly inadequate. The owners were not told in plain English that their property was to be sold. In fact the notice never mentions their property, but rather refers to a "bond" and a "lien."
B. The use of regular mail to notify a person of prospective loss of property under the circumstances is insufficient.
Under the notice of sale provisions in effect at the time, respondents were entitled to notice of sale, mailed first class, to the last known address on the tax rolls or as filed in the Office of the Clerk. (§ 6501.) This provision was also amended by urgency provision on March 12, 1974, to provide for notice of sale by Certified mail "to the owner of the property as shown on the last equalized assessment roll and to any person whose name appears as an owner on the records of the county assessor's office which the county assessor will use to prepare the next assessor's roll. . . ." (§ 6501.) The amendment clearly provides a broader scope of notice to the property owner than the original provision. Certified mail is more costly and time consuming, but weighing the equities involved it gives better assurance that the owner Is notified, and the cost can be recouped.
C. Time, place, and date of sale were not noticed.
At the time respondents' property was sold there was no provision for notice to the property owners of the time, place and date of the actual sale. The bond holder, on the other hand, was entitled to and here did receive such notice by certified mail. (§ 6505.) This section later was amended also as an urgency measure, effective March 12, 1974, to provide for notice of sale to the homeowner. Thus, the notice provisions in existence at the time respondents lost their property, in terms of content, were not "reasonably calculated, under all the circumstances, to apprise the interested parties" of the sale proceedings. (McMaster v. City of Santa Rosa, supra, 27 Cal.App.3d at p. 602, 103 Cal.Rptr. at p. 752.)
D. The notice of application for deed does not provide for adequate notice of respondents' rights to redemption.
Streets and Highways Code section 6530 provides for a 12-month redemption period following the date of purchase of the foreclosed property. The purchaser, however, was required to give notice of the right of redemption only 30 days prior to The end of the redemption period or 30 days before the application for a treasurer's deed. (§ 6650.)
It is stipulated by all parties that appellant mailed to respondents on September 24, 1974, a notice of application for deed pursuant to section 6530, informing respondents that they could redeem the property any time prior to October 25, 1974 (30 days), at which time appellant would apply for a treasurer's deed. The prior stipulation, however, is that respondents received No notices, which thus includes this one.
[153 Cal.Rptr. 287]But even if it had been received the statute was unsatisfactory because it provided only for a last-minute kind of notice, i. e., 30 days before the end of the year within which to redeem. The obvious unfairness of this situation was also corrected under chapter 483, Statutes 1978. A new section 6530.5 was added to require notice of the right to redemption within 10 days of the issuance of the certificate of sale (the start of the one-year redemption period). Section 6550 was also amended to provide for a notice by certified mail to the property owner, informing him of the purchaser's intention to apply in 60 days for a deed to the purchased property.
We find the statutory scheme defective in the particulars we have discussed above. Therefore, we must additionally conclude that the six months' statute of limitations cannot be applied to bar the instant action. The judgment of the superior court may be affirmed upon the grounds that under the meaning of due process the statutes formerly did not give sufficient notice. Accordingly, we find it unnecessary to discuss respondents' and amicus curiae's other contentions that the statute should provide for an additional hearing based on principles enunciated in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349, or that substantive due process is violated because the sale procedure permits unconscionably low sales prices.
We have not agreed with all of the suggestions of amicus curiae. However, we commend counsel for amicus curiae for the excellent presentation of the issues and arguments. The presentation was to the point, succinct and helped the court focus on those points which appeared most important and dispositive.
The judgment is affirmed.
ROTH, P. J., and COMPTON, J., concur.