The Supreme Court ruled unanimously Thursday that states that seize and sell private property to recover unpaid taxes violate the Constitution’s Takings Clause if they keep more than what the taxpayer owed.
The case involved a 94-year-old Minnesota woman who had stopped paying property taxes on her condo after moving into a nursing home.
At the time Hennepin County seized the property, the woman, Geraldine Tyler, owed about $2,000 in taxes and another $13,000 in penalties and interest. The county sold the apartment at auction for $40,000, and it kept not only the $15,000 that everyone agreed was due, but also the remaining $25,000.
Keeping the entire value of a confiscated property, even when the debt owed was a small part of it, is authorized by Minnesota law.
The county argued that the Minnesota law was rooted in historical practice and urged homeowners to take steps to protect their property.
In a brief for the court, Chief Justice John G. Roberts Jr. said that “history and precedent say otherwise.”
“The county had the power to sell Tyler’s home to collect the unpaid property taxes,” he wrote, but, he added, “it could not use the tax debt to confiscate more property than it had to.”
The county’s action, the chief justice wrote, was a classic violation of the Takings Clause, which states that property cannot be “taken for public use without just compensation.”
History supported that view, Chief Justice Roberts wrote.
“The principle that a government should not take more from a taxpayer than it owes,” he wrote, “can trace its origins at least as far back as Runnymeade in 1215, when King John swore in the Magna Carta that when his sheriff or bailiff. came to recover any debt which a dead man owed him, they might remove the property until the debt which is manifest is fully paid to us; and the remainder to be left to the executors to carry out the will of the deceased.’ “
The chief justice added that “our precedent has also recognized the principle that a taxpayer is entitled to the surplus in excess of the debt owed.”
Minnesota’s approach is a relative departure, he wrote. “Thirty-six states and the federal government require that excess value be returned to taxpayers,” he wrote.
The Constitution prohibits the practice in the other states, Chief Justice Roberts wrote in his opinion in the case, Tyler v. Hennepin County, No. 22-166.
“The Takings Clause,” he wrote, citing an earlier decision, “was designed to prevent the government from compelling some people alone to bear public burdens which, in all justice and fairness, ought to be borne by the public at large.” A taxpayer who loses her $40,000 house to the state to satisfy a $15,000 tax debt has made a far greater contribution to the public purse than she owed. The tax payer must give to Caesar what is Caesar’s, but no more.”
Christina Martin, an attorney with the Pacific Legal Foundation, which represents Ms. Tyler, called the decision “a major victory for property rights in the United States.”
“The court’s decision,” she said in a statement, “makes it clear that residential burglary is not only unjust but unconstitutional.”
Justice Neil M. Gorsuch, joined by Justice Ketanji Brown Jackson, issued a joint opinion that explored another possible reason to rule in Ms. Tyler’s favor: the Eighth Amendment’s ban on “excessive fines.”
“Financial penalties imposed to deter willful noncompliance with the law are fines by any other name,” Judge Gorsuch wrote. “And the Constitution has something to say about them: They cannot be excessive.”
