The Supreme Court on Wednesday closes its regular schedule of hearings for its current term with a single case. The hearing in a consumer rights case involves government power to take private property as a method of collecting back taxes.
The Court will broadcast “live” the audio (no video) of the hearing on its homepage, supremecourt.gov To listen, click on “Live Audio” and follow the prompt when the courtroom scene appears lower on the page. The audio also will be available, under the title of the case, on C-Span TV at this link: cspan.org/supremecourt
Wednesday’s hearing: Tyler v. Hennepin County, Minn. Starting at 10 a.m., the hearing is scheduled for 65 minutes.
Background: Two provisions of the Constitution protect owners of private property from government takeover of property. One is the provision in the Fifth Amendment that requires the government to pay compensation when it seizes property for a government use. The other is a guarantee in the Eighth Amendment that, when the government imposes a fine to penalize someone for violating a legal duty, the amount cannot be “excessive.”
Both of those provisions were put into the Constitution’s Bill of Rights for use against the federal government. In a process of interpretation that began in 1897 and continued as recently as four years ago, the Supreme Court has read most of the guarantees in the Bill of Rights to apply to state and local governments, too.
The property-seizure clause and the “excessive” fines clause are both at issue in this case, involving the actions of a county government in Minnesota.
Facts of this case: Geraldine Tyler, an elderly woman, bought a condominium unit in Minneapolis in 1999. In 2010, she was frightened by a confrontation with a neighbor, and decided to move. She took a rental apartment in a senior community elsewhere in the city. After leaving the condominium, on which she had regularly paid taxes, she stopped doing so; it is not clear why.
Two years later, the Hennepin County tax assessor took over the condominium in order to collect back taxes plus penalties and interest. Tyler had three years to redeem the property by paying the tax debt, but she took no action.
Tax records show that the amount of delinquent tax was $2,300, but penalties and interest had increased her obligation by another $12,700, for a total due of $15,000 when the redemption period ended in 2015.
Using authority it had under state law, Hennepin County foreclosed on the property. In 2016, the county sold the property for $40,000. That was a “windfall,” Tyler’s lawyers would later claim, of 67 percent. The county did not return the excess of $25,000 to Tyler but, as stay law required, sent the proceeds to state agencies.
In 2019, Tyler’s lawyers sued the county in state court, claiming that her constitutional rights had been violated. Her lawsuit relied on both the property-seizure clause and the excessive fines clause. The county shifted the case to federal law, because federal legal questions were at issue.
A federal trial court dismissed her case, ruling that the county had taken absolute title to the condominium so there was nothing left for Tyler to claim as hers under the property-seizure clause. On the excessive fines issue, the court ruled that this protection is limited to situations where the government is punishing someone for criminal behavior or a criminal conviction.
A federal appeals court agreed that Tyler had no claim. Rejecting her constitutional challenges, the appeals court relied on a 1956 Supreme Court decision, Nelson v. New York City. That case involved unpaid water utility bills totaling $65 over a four-year period. Because those were not paid, the city foreclosed on the property, sold it for $7.000, and kept all of the proceeds.
That case only involved constitutional claims of unfair procedures (lack of notice, a violation of ‘’due process”) and unequal treatment by the city assessor. The Supreme Court rejected both claims. There was no claim of an excessive fine in that case; in 1956, the Court had not yet extended that part of the Eighth Amendment to state and local government. (That extension came in 2019, in the case of Timbs v. Indiana.)
Tyler’s lawyers appealed to the Supreme Court, citing both clauses as supporting her right to claim the excess above her tax debt. The Biden Administration’s Justice Department entered the case, agreeing that Tyler had a claim under the property-seizure clause but not on the excessive fines clause. The Department said the ban on excessive fines had always related only to punishment for criminal behavior or conviction. The Court agreed to rule on both.
The questions before the Court: Is it unconstitutional for government to take and sell private property to satisfy a tax debt, if it keeps a surplus made on the sale? Is it an unconstitutional fine for the government to require forfeiture of all of a property’s value when collecting a tax debt?
Significance: Minnesota is one of 14 states that give various state and local government agencies authority to satisfy delinquent property taxes, utility bills of other debts owed to those agencies by claiming absolute title to a property, thus extinguishing all of a former owner’s interest in it, including all proceeds of sale beyond the amount of the debt.
Government power to collect taxes as a general proposition has long been understood to violate no one’s property rights, if enforcement is done even-handedly. It is a duty of citizenship to pay, through taxes, a share of the cost of operating the government.
But it has been true since the Constitution was first adopted in 1787 that tax collection must be limited to the amount actually owed so, for example, no land could be seized with a value greater than the amount necessary to satisfy a debt. Three Supreme Court rulings in the 19th Century, involving collection of debt during the Civil War, applied that rule.
That is why the Tyler appeal appears to be on solid legal ground and that is why the federal government has lined up with her on the property-seizure question.
What is more in dispute in this case is her claim regarding the excessive fine provision, which the federal government opposes. So far as state and local government tax collections are concerned, they did not have to obey that provision until the Supreme Court extended to their level in 2019. This case gives the Court a chance to look at that issue anew.
After Wednesday’s hearing, the Court plans its next round of hearings to begin on the first Monday in October, the 2d, when a new term begins. That plan might be changed if the abortion drug controversy were to return to the Court on a fast-track schedule before the Justices recess for the summer in late June or early July.
