Attorney for Appellant Attorney for Appellee
Edward R. Hall David Paul Allen
Merrillville, Indiana Hammond, Indiana
Indiana Supreme Court
Lake County Auditor,
Appellant (Defendant below),
Appellee (Plaintiff below).
Appeal from the Lake Superior Court, No. 45D05-0004-CP-0258
The Honorable James Richards, Judge
On Petition To Transfer from the Indiana Court of Appeals, No. 45A03-0203-CV-78
February 4, 2004
The Lake County Auditor sold the home where Lonnie Burks lived to satisfy
delinquent taxes on the property. The property brought a price greater than
the delinquency and Burks sued for the surplus. Burks was not the
record owner. Rather, she was intestate heir and a beneficiary of the
unprobated will of the deceased record owner. We hold that a person
is not required to be the record owner of the property to claim
the surplus from a tax sale if he or she can establish ownership
of the property sold.
Factual and Procedural Background
From the time she was nine months old, Lonnie Burks lived with and
was raised by her great-aunt Ruth Johnson and Ruths husband Robert. In
1952, at age nine, she moved to a house in East Chicago, Indiana.
She lived in the house with the Johnsons and Ruths sister and
brother-in-law, Ruby and Prince Tharpe, until she married in 1964 at the age
of twenty-one. The exact chain of title to the property is murky.
However, neither party disputes Robert Johnsons status as the record owner of
the property and both refer to him as the record owner.
See footnote We
accept that assumption. Robert Johnson died in 1971 and Ruth died in
1978. Ruths sister, Ruby Tharpe, died in 1985. By that time
her husband had moved to a nursing home and is now deceased.
In 1986, Burks returned to live in the house. Mr.
Johnsons will, executed in 1960, purported to leave the property to Burks and
Ruby Tharpe. Though the will mentioned Roberts children, it made no provision
for their benefit and they are all deceased with no known heirs.
The will was never probated.
After returning to the house in 1986, Burks paid several delinquent utility bills
and put the power and water accounts for the house in her name.
She also made tax payments, including some delinquent taxes. Several of
the tax payments were by checks drawn on her account, but the name
listed on the tax assessment rolls remained Bob Johnson et. al. Burks
made both tax and utility payments until 1997, when she was unable to
continue paying the taxes. The County Auditor sold the property for the
resulting tax d
elinquency to Ironwood Acceptance Company on September 23, 1998. The
sale generated proceeds in excess of the delinquency, but the record does not
indicate the precise amount of the surplus. Burks lived in the house
until she moved out after receiving notice that the house had been sold.
On April 12, 2000, Burks filed a complaint in Lake Superior Court for
a declaratory judgment that she was the owner of the property on the
date of the tax sale and therefore entitled to the surplus. The
trial court ruled that as the only surviving heir of the record owner
of the property, Burks was entitled to the surplus. The Court of
Appeals reversed, holding that under Indiana Code section 6-1.1-24-7 (2002), only the owner
of record of property sold in a tax sale may file a claim
for the surplus. Because Burks did not record the deed, she was
precluded from claiming the surplus. This Court granted transfer.
Burks Right to the Surplus
The Lake County Auditor argues that Burks has no right to the surplus.
The County Auditor bases this argument on the fact that Burks does
not fall within the terms of the statute permitting administrative refund of the
surplus from a tax sale. The County Auditors argument proceeds from the
assumption that Burks substantive right to the surplus is governed solely by Indiana
Code section 6-1.1-24-7(b). This argument is based solely on the Auditors interpretation
of the statute and therefore presents a question of law which we review
At all times relevant to this case, the tax-sale statute provided that any
amounts from a tax sale are to be applied first to taxes, assessments,
penalties, costs, other delinquent property taxes, and any balance is to be placed
in a tax sale surplus fund. Ind. Code § 6-1.1-24-7(a) (1998).
Pursuant to Indiana Code section 6-1.1-24-7(b):
owner of record of the real property at the time the tax deed
is issued who is divested of ownership by the issuance of a tax
tax sale purchaser or purchasers assignee, upon redemption of the tract or item
of real property;
person with a substantial property interest of public record, as defined in section
1.9 of this chapter and as evidenced by the issuance of a tax
deed to a tax sale purchaser, in a county:
having a population of more than two hundred thousand (200,000) but less than
four hundred thousand (400,000)
having a consolidated city; or
in which the county auditor and the county treasurer have an agreement under
may file a verified claim for money which is deposited in the tax
sale surplus fund. If the claim is approved by the county auditor and
the county treasurer, the county auditor shall issue a warrant to the claimant
for the amount due.
Ind. Code § 6-1.1-24-7. The statute was amended in 2001 to remove
subsection (b)(3). 2001 Ind. Acts 139, Sec. 6.
The Court of Appeals agreed with the County Auditor that this statute unambiguously
provides that only the owner of record or tax-sale purchaser or his assignee
is entitled to a tax surplus. Because Burks was not the record
owner of the property, she was not entitled to the surplus. That
holding conflicted with the Court of Appeals holding in Brewer v. EMC Mortgage
Corp., 743 N.E.2d 322 (Ind. Ct. App. 2001) trans. denied. In
Brewer, a different panel of the Court of Appeals read former subsection (b)(3)
as providing one route, but not the only route, to recover a surplus.
It viewed subsection (b)(3) as allowing those with a substantial property interest
of record in the counties identified in the statute (which excluded Lake County,
population 484,000) to submit a claim to the county auditor and obtain the
surplus of a tax sale without having to resort to court. Id. at
326. The court reasoned that the statutes use of the word may
rendered it permissive, not mandatory. As a result, subsection (b)(3) merely provided
taxpayers in some counties with an administrative alternative to the remedy of a
lawsuit that remained available in all counties.
We agree with Brewer and think its rationale applies equally to subsections (b)(1)
and (b)(2). The statute does not purport to provide an exhaustive list
of persons who may claim a tax-sale surplus. Rather, it merely provides
an administrative procedure for the record owner to recover the surplus if it
is clear who that is. The statute does not in effect cause
an escheat to the County by denying those with an interest in property
the right to claim the surplus. An unrecorded interest may be the
product of inattention, as it appears to have been here, or it could
be simple administrative delay, in, for example, probating an estate or recording a
deed. We conclude that Burkss lack of record title did not preclude
The United States Supreme Court pointed out long ago that, to withhold the
surplus from the owner would be to violate the Fifth Amendment to the
Constitution and to deprive him of his property without due process of law,
to take his property for public use without just compensation. United States
v. Lawton, 110 U.S. 146, 150 (1884). We need not conclude whether
failure to record an interest can constitutionally foreclose an owners right to the
surplus because we do not read the Indiana statute as attempting to do
that. If the administrative remedy were the only means to recover a
surplus, the statute would produce severe unfairness for those who in fact have
an interest in the property, albeit unrecorded, and would give the county a
windfall. The statute does not by its terms produce this result, and
we see no reason to read it in.
Under our reading of Indiana Code section 6-1.1-24-7, anyone whose interest is of
record may pursue the less expensive and quicker administrative remedy, but others must
pursue their claims to a tax surplus in a trial court. This
result makes sense because those listed in the statute, the owner of record,
the tax sale purchaser or the purchasers assignee, or person with a substantial
property interest of public record are usually readily identifiable and there may be
no dispute as to the proper claimant. Those who, like Burks, think
they have a claim, but are not in these preferred categories must take
that claim to a trial court where the right of others potentially interested
in the surplus can be fully considered. Such a claim may require
resolution of factual issues or complex questions of law. A trial court is
therefore better suited to resolve this than a county auditor. Accordingly, we
read the administrative remedy as elective but not exclusive. Therefore, Burks was
entitled to pursue her claim for the surplus in trial court as she
We also conclude that Burks established her right to the surplus. The
trial court found that Burks was Johnsons only surviving heir. An heir
is a person who, under the laws of intestacy, is entitled to receive
an intestate decedents property. Blacks Law Dictionary 726 (7th ed. 1999).
As an intestate heir or as the only surviving residual legatee under Johnsons
will, Burks succeeded to at least a part of Johnsons interest in the
property. She thus has established a property right, and withholding the surplus would
deprive her of that right. The trial court entered a general judgment without
special findings and conclusions, so we are to affirm if it is sustainable
on any legal theory. Porter v. Bankers Trust Co. of Cal., 773
N.E.2d 901, 903-04 (Ind. Ct. App. 2002). Lake County does not dispute
Burks status as an heir or argue that anyone other than Burks has
a claim to the surplus. Rather the County asserts, there is no
real evidence that Burks is a legitimate heir. Burks points to Johnsons
will purporting to leave the house to her and the fact that Ruth
and Robert Johnson have no other known heirs. The parties agree that Robert
Johnson was the owner. Robert died in 1971 and the document identified
as his will was never probated. Even if Ruth Johnson became the
owner as a tenant by the entirety or otherwise after Robert died, the
property would still have been owned by Burks immediately before the sale because
Burks was also Ruths sole surviving heir. We find no reason to
overturn the trial courts conclusion that Burks is the only person entitled to
The judgment of the trial court is affirmed.
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ., concur.
The tax bills for the years 1986 to 1995 were made out
to Bob Johnson et al. The trial court, in co
njunction with its request
for briefs on Burkss claim to the surplus, asked the County Auditor to
provide the last recorded deed. The County Auditor provided only a quitclaim
deed that reflected the sale of the property from the tax-sale purchaser to
a third party. In her brief in the trial court, Burks asserted
that all names discovered in a title search in preparation for this suit
were joined as defendants and have either filed a disclaimer or failed to
appear. Other defendants include Burkss sons, Carl and Darnell Adams, Ruth Johnsons
sister Ruby Tharpe, Bank One National Association, and Robert and Ruth Johnson.
Based on this, it is unclear exactly who was the record owner of
the property or whether Robert owned the home alone or Robert and Ruth
Johnson owned the house in a joint tenancy, tenancy by the entirety or
tenancy in common. Although the chain of title through various intestatcies may
be labyrinthian, ultimately Burks appears to be the only survivor who has any
claim to the house. At any rate, the trial court so found.
The court took the view that it would violate the Indiana Constitutions
Privileges and I
mmunities Clause to provide a substantive right to the tax-sale surplus
to individuals in the designated counties, but preclude that right from those similarly
situated in other counties. Id. at 325-26 (citing Collins v. Day, 644
N.E.2d 72 (Ind. 1994)). This issue is mooted by the repeal of