Nw. Sav. Bank v. Knapp

149 A.3d 95

2016 PA Super 218

Northwest Savings Bank

v.Barbara A. Knapp and Dennis E. Beaver

v.Travel Services, Inc. now by assignment Edgewood Development LLC, Appellant.

No. 1871 WDA 2015

Superior Court of Pennsylvania.

Submitted April 25, 2016

Filed September 28, 2016

Christopher D. Ferry, Meadville, for appellant.

Brian LaManna, Philadelphia, for Northwest, appellee.

Dennis E. Beaver, appellee, pro se.

Barbara A. Knapp, appellee, pro se.

H. William White, III, Butler, for Foy, participating party.

BEFORE: SHOGAN, OTT, and FITZGERALD,^* JJ.

OPINION BY FITZGERALD, J.:

Appellant, Travel Services, Inc., now by assignment Edgewood Development LLC, appeals from the order entered in the Venango County Court of Common Pleas. The order denied Appellant's exceptions to the Proposed Schedule of Distribution submitted by the Venango County Sheriff following a Sheriff's sale of real property located in Oil City, Pennsylvania. Appellant argues the trial court erred by holding that the Venango County Sheriff's procedure of adding realty transfer taxes to the winning bid at a Sheriff's sale does not violate 72 P.S. § 8104–C and 72 P.S. § 8107–D. We hold that the Venango County Sheriff's method of assessing realty transfer tax contravenes the clear and unambiguous language of these statutes. Thus, we reverse the trial court and remand for further proceedings.

We summarize the factual and procedural history of this case as gleaned from the certified record as follows. The underlying action in this case was a mortgage foreclosure filed on August 20, 2014. Default judgment was ultimately entered against Barbara A. Knapp and Dennis E. Beaver in the amount of $103,718, plus costs and interest. The property at issue was sold at a Sheriff's sale on July 15, 2015.

Appellant, a third-party purchaser, won the property with a bid of $41,300. The Sheriff assessed the value of the property at $150,440. The Sheriff then added $3,430.04, representing 2% of the assessed value for state transfer taxes and local transfer taxes, to the winning bid. Further, the Sheriff added 2% for poundage;¹ thus, Appellant owed a total of $45,556.04.

Appellant acknowledges that prior to the sale, he was aware that both poundage and taxes would be added to his bid based upon the Sheriff's sale information sheet:

WHAT IF I AM THE SUCCESSFUL PURCHASER OF THE PROPERTY?

You will need to add an additional 2% to your final bid amount for Sheriff Poundage, a fee collected by the Sheriff's Office. You will also be responsible for paying the local & state transfer taxes. These are calculated from the assessed value of the property.

Venango County Sheriff's Office Sheriff Sale Information Real Estate. Further, at the conclusion of the sale, Appellant was provided with a “Real Estate Sale Calculation Sheet,” which separately listed the poundage and the state and local transfer taxes as additions to the successful bid price. Appellant paid the successful bid and poundage with one check for $42,126. Appellant issued a separate check, which he indicated was under protest, for $3,430.04 for the state and local taxes.

On July 15, 2015, the Sheriff filed a Notice of Proposed Schedule of Distribution per Pa.R.C.P. 3136. Appellant filed timely exceptions contending that the transfer taxes should have been deducted from—and not added to—the winning bid of $41,300. After a hearing, the trial court denied Appellant's exceptions on October 27, 2015.

Appellant timely appealed on November 24, 2015, and complied with the court's order to file a Pa.R.A.P. 1925(b) statement of matters complained of on appeal. The trial court issued an opinion on December 18, 2015, which held that the Sheriff's tax collection procedure complied with the law and that Appellant was aware of the procedure prior to participating in the Sheriff's sale. The trial court specifically discussed the only reported case regarding the statutes at issue, Sciandro v. Harner , 11 Pa. D. & C.2d 294 (C.C.P.Bucks 1957).

In Sciandro , the Bucks County Court of Common Pleas held that the nearly identical language of the statute there at issue,² a predecessor to the instant statutes, required that taxes be deducted from the winning bid amount at a Sheriff's sale, not subsequently added after the winning bid had already been accepted. Id. at 295. In this case, the trial court attempted to distinguish Sciandro by emphasizing that, in that case, the third party purchaser might not have been aware of the tax liability whereas, here, Appellant was informed, in writing, prior to placing a bid.

On appeal, Appellant raises the following issue:

Whether the trial court erred in dismissing the third party purchaser's exceptions to the sheriff's schedule of proposed distribution which required the third party purchaser to pay the transfer taxes associated with the sale in addition to the bid of the third party purchaser when the proceeds of the sheriff sale were sufficient to cover the cost of the realty transfer taxes?

Appellant's Brief at 3-4.

Appellant argues that 72 P.S. § 8104–C and 72 P.S. § 8107–D require state and local transfer taxes to be collected from the successful bid amount from any judicial sale, including a Sheriff's sale. To this end, Appellant contends that the term “proceeds” in the statutes refers solely to the bid amount and not to the bid amount plus poundage and realty transfer taxes, as asserted by Appellee, Northwest Savings Bank, and Participant, Venango County Sheriff's Department. Appellant acknowledges that he was aware of the Sheriff's policy regarding the addition of taxes at the end of the bidding process, but avers that such knowledge is not dispositivebecause the policy at issue contravenes Pennsylvania statutes. We agree with Appellant and conclude that the Sheriff's method of collecting realty transfer tax violates Pennsylvania law.

We begin by noting that “[w]here exceptions to the distribution of the proceeds of a foreclosure sale are filed, a court will hear and determine them according to law and equity.” Farmers Trust Co. v. Bomberger , 362 Pa.Super. 92, 523 A.2d 790, 792 (1987) (citations omitted). However, “[b]ecause statutory interpretation is a question of law, our standard of review is de novo , and our scope of review is plenary.” Lenau v. Co-eXprise, Inc. , 102 A.3d 423, 436 (Pa.Super.2014) (citation omitted), appeal denied, 113 A.3d 280 (Pa.2015).

At issue in this case are 72 P.S. § 8104–C and 72 P.S § 8107–D, which respectively address state and local realty transfer tax. Section 8104–C states:

§ 8104–C. Proceeds of judicial sale

The tax herein imposed shall be fully paid, and have priority out of the proceeds of any judicial sale of real estate before any other obligation, claim, lien, judgment, estate or costs of the sale and of the writ upon which the sale is made, and the sheriff, or other officer, conducting said sale, shall pay the tax herein imposed out of the first moneys paid to him in connection therewith. If the proceeds of the sale are insufficient to pay the entire tax herein imposed, the purchaser shall be liable for the remaining tax.

72 P.S. § 8104–C (emphasis added).

Section 8107–D contains substantially similar language:

§ 8107–D. Proceeds of judicial sale

The tax imposed under this article shall be fully paid and have priority out of the proceeds of any judicial sale of real estate before any other obligation, claim, lien, judgment, estate or costs of the sale and of the writ upon which the sale is made. The sheriff or other officer conducting the sale shall pay the tax imposed under this article out of the first moneys paid to the sheriff or officer in connection therewith. If the proceeds of the sale are insufficient to pay the entire tax imposed under this article, the purchaser shall be liable for the remaining tax.

72 P.S. § 8107–D (emphasis added).

When interpreting statutes:

we are required to follow the rules of statutory construction, which direct that every statute shall be construed, if possible, to give effect to all of its provisions and that when the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.

Hearst Television, Inc. v. Norris , 617 Pa. 602, 54 A.3d 23, 31 (Pa.2012) (quotation marks and citations omitted); see 1 Pa.C.S. § 1921(a) -(b). It is only “[w]hen the words of the statute are not explicit,” that the intention of the General Assembly may be considered. 1 Pa.C.S. § 1921(c). The General Assembly intends for the entire statute to be certain and effective, and not for any particular words to constitute “mere surplusage.” Fish v. Twp. of Lower Merion , 128 A.3d 764, 769 (Pa.2015) ; see 1 Pa.C.S. § 1922(2) ; accord Pottstown Sch. Dist. v. Petro , 94 A.3d 1102, 1107 (Pa.Commw.2014) (en banc ) (holding that the term “priority” must be effectuated when interpreting the Municipal Claims and Tax Liens Act (“MCTLA”)).³

It is well-settled that “[t]axing statutes generally should receive a construction which favors the taxpayer.” Speck v. Philips, 160 Pa.Super. 365, 51 A.2d 399, 402 (Pa.Super.1947) (citations omitted). Accordingly, “any doubt or ambiguity in the interpretation of their terms must, therefore, be resolved in favor of the taxpayer.”Tech One Assocs. v. Bd. of Prop. Assessment , 617 Pa. 439, 53 A.3d 685, 696 (2012) ; see 1 Pa.C.S. § 1928.

We add that this Court has held that a judicial sale includes a Sheriff's sale: “A judicial sale is defined ... as a sale under the judgment, order, or decree of the court; a sale under judicial authority, by an officer legally authorized for the purpose, such as a sheriff's sale , an administrator's sale, etc.” City of Uniontown v. McGibbons , 115 Pa.Super. 132, 174 A. 912, 915 (1934) (quotation marks omitted and emphasis added).

Instantly, we address whether the Venango County Sheriff erred by adding the state and local realty transfer taxes assessed under both 72 P.S. § 8104–C and 72 P.S. § 8107–D to the winning bid after a Sheriff's sale.⁴ The...