Title Washing declared unconstitutional by PA court

I saw this over on another forum.  Here is the link:

Link to title washing discussion

On chance this will hold up after scrutiny in higher courts, our own "Amy with the 10,000 acres" in Tioga County, PA, is going to have a huge, watermelon smile on her face this morning.

But, sadly, many others of us could be badly hurt.  We might not own what we today believe we own.

Anyway FWIW, after reading the 14th Amendment to the Constitution of the United States of America, I have to agree with the trial court Judge.  

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Permalink Reply by Kevin Senich on April 28, 2013 at 1:51pm

Thanks, Jack Young.

I am struggling as to why the PA law would distinguish between "seated" and "unseated" lands as regards this issue.  If the surface/subsurface property rights are severed, what difference does it make if a surface owner puts a house on the property and grows a crop of hay?  Apparently the property at issue in Meske and subject to the 1968 sale was "seated".

What is it about the 1947 Act that changes prior law? 

Any light you can shine in the darkness here is appreciated.

 

 

 

Permalink Reply by Jack Young on April 28, 2013 at 2:13pm

Unseated tax sales (which only took place many years ago - there's no such thing today) were "in rem" - that effectively meant that the land owed the tax, not any individual owner. So if the property was assessed without limitation (ie, the assessment didn't say "surface only") then all the owners of surface and subsurface lost their rights if/when it went to sale. The 1947 Act changed the law, and effectively made all sales similar to the old seated sales which were in personam, so required notice to the owners before they could lose their property.

Unseated properties were defined as those that had no improvements, and on which there was no personal property that the tax collectors could go after. So if a vacant tract of woodlands went to sale, it generally was assessed and sold as unseated, while a farm would be assessed and sold as seated.

The key thing to know in terms of the case at hand is that the 1968 sale that was held not to pass the separate OGM title took place after the date when unseated tax sales were eliminated, so this decision doesn't really impact the validity of earlier wash sales that were held under different laws. It's still interesting stuff, but not anything new.

 

Permalink Reply by Kevin Senich on April 28, 2013 at 4:23pm

Again, thanks Jack Young.

As I understand your comment, before 1947 the issue depended on whether the properties were seated or unseated as to whether the title was washed.  After 1947 that distinction was immaterial. 

 

Permalink Reply by Bonefish on April 28, 2013 at 5:44pm
...nor shall any State deprive any person of life, liberty, or property, without due process of law...

Lots of legal obfuscation, but the 14th Amendment seems pretty clear to me. No notices, and, get this, there is not a single unseated mineral assessment in the Tioga - Morris/Duncan/Liberty/Delmar assessment books until the 1930's (I did my time at the Courthouse), and yet there are tons of deeds. So.....no separate unseated mineral estates existed before the 1930's? What was the purpose of a severance? What was the purpose of the mineral deed and reservation? If the State can do this, why even bother with eminent domain…just take it. Deeds are worthless. ‘You didn't pay your taxes, so we are going to sell your neighbor’s property’…..Seriously?

Jack Young, nice to meet you. You sound very experienced and knowledgeable. I mean no disrespect. I bet the Attorneys that argued this disagree with the attorneys you reference in your post. Are the folks you know involved? Are they arguing these cases one way or another? Amicus briefs? Or is this an armchair QB kind of thing? Maybe wishful thinking based in 60 years of cultural and legal group-think? I don't know about the Hoyt folks, but the Davidges sure have something.....which means all the tanning families have something, no? They are the first ones to push the issue since Burrell tried in the Swan Finch case, and he lost (the Federal Court ruled title wash illegal in the 1950's).

Your statements are confounding. You say, “(1910) is acknowledged by the court!” From the decision, “It is clear that at the time of the 1968 tax sale, S. Richard Davidge owned the Subsurface Estate via quitclaim deed dated …1924.” How is that possible? The 1910 wash extinguished the Davidges, but they owned it in 1924? What you suggest is logically difficult. In the very next paragraph, the Court goes on to say that the 1947 act is immaterial because of the 1894 severance. Again, I mean no disrespect, but read the case. Encouraging people to ignore this is not good advice because the stakes are too high for them and their families.

I will be interested to see the cases come out of Lycoming, Wyoming, Bradford, Sullivan (there are more than a dozen of these in court right now) and the appeals....the proof will be in the pudding. And right now the pudding tastes like Davidge victory.

Full disclosure: my family was "washed". My grandpa gave my father the deeds in 1976 and told him to take care of the property, he gave them to me in 2007. I come to find out in 2008 that it had been washed in 1932 and 1967. NOBODY received notice.
Permalink Reply by Jack Young on April 29, 2013 at 1:27am

I wish I could take the time to explain this to you fully, and after many years working as an oil and gas title attorney I certainly could, but that's just not feasible. To someone with experience in all this the opinion makes perfect sense. Quickly, I will point out that Davidge got the oil and gas back from the buyers at the 1910 tax sale in 1924, so didn't need (or want) to contest that wash sale. And by definition a 1947 Act would have been immaterial as regards a 1910 tax sale.

The odds of the Davidge-type claimants winning is very, very small. This aspect of the law is much more settled than even the Dunham Rule, and there's no way the courts will upset thousands of established titles a hundred years after the fact. I've seen literally hundreds of title opinions written by scores of attorneys that accept the "title wash" theory. It's not lawyers who disagree with the law that bring these modern cases - it's clients who want something that make the decision to file. Lawyers just do what their clients ask them to do, regardless of the odds.     

Permalink Reply by patricia on April 29, 2013 at 3:51am

Hi,  I know Butler County had tax sales for o/g rights.  Did any of the other counties also do so.  ie Armstrong, Washington, Green etc?

Thanks for the information.  Patricia

Permalink Reply by Lester L Greevy on April 29, 2013 at 3:53am

This opinion has nothing to do with tax sales or title washes prior to Janurary 1, 1948 the effective date of the  Tax Sale Act of 1947. It should not be read to overturn title washes before that date.

Les Greevy

Permalink Reply by patricia on April 29, 2013 at 4:52am

I think I am confused on what is being said.  In the 50/60s Butler County sent tax notices to people who owned only the m/o rights.  If the tax was not paid then the rights were sold.

Is this different than the title washes that is being discussed?  Patricia

Permalink Reply by Bonefish on April 29, 2013 at 5:11am

Jack Young:  It isn't feasible for anyone to explain it, because no-one can explain it, either here on the internet, or in Court.  They can't.  You can't.  Title Wash is illegal.  Rockwell, Day, Meske, Statute, Hutchinson, US Constitution....against what, Proctor?  The 1947 act?  The act of 1804?  Read the acts, read the cases.  Title wash as no basis in law and and is in violation of basic concepts of property and due process.

 

In terms of odds, DAVIDGE JUST WON.  Describing something that has already happened is unlikely or improbable doesn't make sense to me.  Maybe check your assumptions....

Lester L Greevy: I mean no disrespect, but did you even read the last paragraph of the opinion?  

"Lastly, a deed cannot grant a greater interest in property than the interest owned by the grantor. Wagner v. Landisville Camp Meeting Ass'n, 24 A.3d 374 (Pa.Super. 2011). To do so would constitute a taking in violation of the United States Constitution. The United States Supreme Court in Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983) held that to divest a mortgage holder's interest in a property without notice and an opportunity to present objections to the sale would violate the Due Process Clause of the Fourteenth Amendment of the United States Constitution. The Davidge's estate was recorded with the Sullivan County Recorder of Deeds and yet none of the Davidge's predecessors received notice of the 1968 tax sale."

I hope you are not telling your clients to ignore this......The court CRUSHED title wash.  Isolating the 1947 Act is just grasping at straws....there is nothing there.  The act was intended to clarify the treatments of liens.  It did not terminate the States authority to violate due process.

Again, I mean no disrespect to anyone, especially two of the more vocal OGM professionals in PA/NY, but facts are facts.  

Permalink Reply by John OBrien, landowner advocate on April 29, 2013 at 5:58am

Frank,

This is all very interesting because I have been researching the Ohio laws.  In Ohio, as I understand it, if a person wants to hold onto mineral rights without being the landowner they must file a separate mineral deed and pay taxes on said deed yearly for as long as they wish to hold them.  Kinda like I suggested in Amy's original post.  If they have value, they will be taxed as personal property.  Seems fair enough.  This also would insure that their rights are upheld since it would be in the county courthouse records.  No more fighting over who owns what in this scenario.

I'm no lawyer, and this is in Ohio.  So take it for what it is worth.  (maybe nothing in PA)

Take care all would be mineral holders.

Permalink Reply by Jack Young on April 29, 2013 at 12:06pm

Everything is state-specific in property law, so Ohio rules aren't relevant in PA. New York had something very similar to the old unseated tax sales at one time, however, so there are often parallels. But none of this has anything to do with the case at hand. There hasn't been any way to "wash" a title in PA since 1947 (as this recent case confirms) and everyone agrees on that. The law was different before that, however. Mr Greevy is completely correct in his comments.

And Patricia, a tax sale of oil and gas alone isn't a "wash sale" - that's just a regular sale of an assessed property interest. A wash sale is where an unseated (unimproved) property was sold in fee despite an earlier unassessed oil and gas severance, and the titles were reunited through the sales process despite the oil and gas owner getting no separate assessment or notice.

Permalink Reply by Bonefish on April 30, 2013 at 5:10am

Best thread ever.

Flavors of the day....the Davidges won.  Last year it was the Proctor case that supported title wash.  Then Hutchinson v. Kline, now the 1804/1824 Act...while there isn't yet a binding statewide decision (other than Rockwell, Berkey, Hutchinson, Houseknecht) the recent arguments, and cases arguing against are looking pretty convincing.  The 1947 Act has no real bearing on the legality of title wash; it is arbitrary.  The 1804 Act, the 1824 Act and the 1893 Act do not enable the State to seize property without due process or to sell unassessed unseated property.  Read the statutes and the cases for yourselves; they are the Law of the Land….and “washed title is good title?”….give me a break.  Do your own research; Day vs Johnson, Rockwell, the Statutes, Swan-Finch, Hutchinson, Powell v Lantzy.  What flavor is next?  Grasping at straws.

Another interesting case some use to support their washed title is Hutchinson v. Kline.  Hutchinson requires property owners to notify the Assessment office of their reservation/property or the property can be sold at tax sale (seems fair enough).  So what constitutes notification?  Delaware v. Hudson states that a recorded deed, "gives notice to the whole world" of the deed.  Assuming the Assessment Office is in this world, Hutchinson fails to provide a basis to terminate the separate estate when there is a properly recorded deed.  Hutchinson does enable a "title wash” when there is a lost/unrecorded deed and no notice (seems reasonable.)

I am not an attorney, but IMHO, common sense and some research tell me that titles based on wash sales are in very real danger.  They just have no basis in the law, or a place in our great Country.  This is the kind of stuff Hugo Chavez does to American oil companies.

Believe presentations given by lawyers?  Not me, I am going to have faith in the courts.  Wait and see.  In the meantime, protect yourself.  Run your title.  Let your leaseholder know about this issue so that they are not at risk.

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