Co-author Rusty Tucker
In a suit to foreclose a property tax lien, if the taxing authority does not exercise due diligence to support service of citation by a method other than by personal service can the owners, as a matter of due process, raise that defect for the first time after expiration of the statute of limitations? Heidelberg v. DOH Oil Company says “no”.
The Moore’s acquired a 1/32nd NPRI in Martin County, Texas, in 1931, but from 2009 to 2012 failed to pay ad valorem taxes. (Why? Often in these situations a past an heir or heirs forget, or never know, that they own a non-producing NPRI, or the taxing authority loses track of them.)
The taxing entities sued to foreclose on the NPRI. DOH purchased the NPRI at auction, received a sheriff’s deed confirming the sale, and recorded the deed in 2013. In 2016 the holder of the royalties attributable to the NPRI filed an interpleader action for determination of whether DOH or the Moores’ successors in interest were rightful owners of the royalties. DOH claimed the royalties by virtue of its sheriff’s deed. Heidelberg argued the tax sale and sheriff’s deed were invalid for lack of proper notice, and that the property descriptions in tax sale violated the Statute of Frauds. The trial court grantied DOH’s motion for summary judgment and denied Heidelberg’s cross motions, and ordered the funds be paid to DOH and quieted title to the NPRI in DOH.
Heidelberg’s first issue: The foreclosure judgment was void because the taxing entities failed to properly serve them with notice of the sale. They maintained that at the time the tax suit was filed, they “and/or” their predecessors in title were the record owners of the NPRI. The citation was directed to “THE UNKNOWN OWNERS OF A 0.03125 ROYALTY INTEREST IN MABEE ‘B’ LEASE NO. 37676.”
The second Issue: The sheriff’s deed was void due to lack of a sufficient legal description. In the citation, judgment and sheriff’s deed, the property was described in a way that Heidelburg found objectionable, but because of limitations it didn’t matter.
Anyone providing notice of a suit by substituted service must first make a diligent search to discover the name or residence of those for whom substitute service is sought. For purposes of the opinion the court assumed that the Heidelberg parties were deprived of their property without due process, i.e., no notice.
DOH fired back that even if Heidelberg was deprived of due process, that issue cannot be litigated in this proceeding because it is barred by the one-year statute of limitation in Texas Tax Code Section §33.54(a)(1). Therefore, unless due process considerations relative to service of process trump the one-year SOL, Heidelberg was not entitled to relief from the sale.
Judgment in favor of DOH affirmed on limitations. The statutory scheme developed by the legislature is in accordance with public policy to that there will be finality in the transfer of property at tax sales such that the purchasers receive conveyances that transfer “free and clear title.” The Heidelberg parties’ statute-of-frauds claims were also barred by limitations.