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Supreme Court concerned county took too much from woman who owed taxes

The front doors of the U.S. Supreme Court. (Jonathan Newton/The Washington Post)
4 min

Supreme Court justices on Wednesday seemed inclined to side with a 94-year-old woman who said a Minnesota county unfairly pocketed the surplus when it seized and sold her condominium after she failed to pay property taxes.

Hennepin County, which contains Minneapolis, foreclosed on Geraldine Tyler’s one-bedroom condo after she moved into an apartment building for the elderly and stopped paying property taxes for five years.

She owed about $15,000 in taxes and penalties. The county sold her condo for $40,000 and kept the surplus, as the law allows in Minnesota, the District of Columbia and about a dozen other states.

The Supreme Court is considering Tyler’s claim that keeping the excess money violates the Constitution’s prohibition on the taking of private property without fair compensation by the government, as well as protection against excessive fines. The Pacific Legal Foundation, a property-rights group representing Tyler, calls what Hennepin County did “equity-stealing.”

Wednesday’s lengthy oral argument touched on the Magna Carta and the 13th-century Statute of Gloucester and featured more than a dozen references to a colonial-era American judge named St. George Tucker. In the end, however, both conservative and liberal justices seemed less moved by an appeal to history and more worried that there was no limit to the county’s argument that it is entitled to the whole proceeds of a sale when it seizes property because of unpaid taxes.

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“At bottom, she’s saying the county took her property, made a profit on it with the surplus equity, and it belongs to her,” Justice Clarence Thomas said. He asked Washington lawyer Neal K. Katyal, representing Hennepin County, whether he could think of “any instance in which a creditor can . . . seize property and keep the excess profit or the excess amount over the debt that’s actually owed?”

Justice Elena Kagan similarly pushed Katyal. “Are there any limits?” she asked. “I mean, $5,000 tax debt, $5 million house. Take the house, don’t give back the rest?”

She added: “If the mind rebels at the notion that the government can seize your $100,000 bank account and not give you back the $90,000 that you don’t owe, if the mind rebels at that, you know, why should . . . what was going on in 1200 or what was going on in 1776 change anything?”

Katyal said that the Supreme Court had previously blessed a similar law in New York and that Minnesota made it even easier than that law for Tyler and others to avoid forfeiture. He said Tyler ignored five years of warnings about not paying property taxes and other offers of how to restructure payment of what she owed.

He said it is unfair to local governments to make them act as “real estate agents of last resort” — seizing the property, going through the trouble of selling it and then returning the equity to former owner. Katyal also noted that there were various liens and other claims on Tyler’s property that made it unclear whether she really had equity in the condo — and thus a claim to the disputed profit.

“Why in the world would it be that Tyler walked away from her home?” Katyal asked. “The reason, we think, is that there was no equity in the home, and that’s why she walked away.”

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Pacific Legal Foundation lawyer Christina M. Martin said the bigger picture was whether there is a limit on how much the government could keep, “and the answer is there is none.”

She said there is a Michigan case in which a $25,000 home was taken over an “$8.41 tax delinquency,” and she offered additional examples from Nebraska and elsewhere.

Kagan pressed Martin on whether it should be permitted for a state to take part — but not all — of the surplus from a sale as a penalty. What would be constitutionally allowed, Kagan asked: 10 percent? 50 percent?

Martin acknowledged that “the line-drawing gets harder” in what she said was Kagan’s “clever” idea.

“It sort of seems like a kind of obvious idea, but, okay,” Kagan responded.

Tyler has also claimed Minnesota’s law violates the constitutional provision on excessive fines. But Justice Department lawyer Erica L. Ross said the court could find that Minnesota violated the takings clause in the Constitution and have no need to decide the fine question.

A district court and the U.S. Court of Appeals for the 8th Circuit upheld Minnesota’s law. If the justices disagree, they would remand the case back for further action, including questions about Tyler’s equity in the home.

The case is Tyler v. Hennepin County.