The Supreme Court ruled in favor Thursday of a 94-year-old Minnesota grandmother who claimed that the state violated her constitutional rights when they seized her condo over an unpaid tax debt, then sold the property and kept all the sale proceeds — which were far above what she actually owed.
Geraldine Tyler owned a condo which Hennepin County seized as payment for approximately $15,000 in outstanding property taxes, penalties, interest and costs. The home was then sold for $40,000. Under the state’s forfeiture laws, the county kept the surplus proceeds — in this case to the tune of $25,000.
Tyler argued that the government violated the Fifth Amendment’s “Takings Clause” by confiscating property worth more than the debt owed by the owner. Lower courts ruled against her and dismissed her case, but the Supreme Court on Thursday unanimously sided with her arguments and held that she brought a valid claim under the Takings Clause.
“The taxpayer must render unto Caesar what is Caesar’s, but no more,” Chief Justice John Roberts wrote in the court’s opinion.
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“The Takings Clause ‘was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,'” the opinion stated.
“A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed,” it said.
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The opinion noted that “Minnesota law itself recognizes in many other contexts that a property owner is entitled to the surplus in excess of her debt.”
“If a bank forecloses on a mortgaged property, state law entitles the homeowner to the surplus from the sale. And in collecting past due taxes on income or personal property, Minnesota protects the taxpayer’s right to surplus,” the decision stated.
“Minnesota may not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when the State does the taking,” it continued.
Tyler’s lawyers had argued in court that Minnesota’s policy that the state gets to keep the surplus of a seized asset was a “home equity theft scheme.”
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Her lawyers also argued that the state violated the Excessive Fine clause of the Eighth Amendment of the Constitution, which bans the government from imposing unduly harsh fines for a crime.
“Because we find that Tyler has plausibly alleged a taking under the Fifth Amendment, and she agrees that relief under ‘the Takings Clause would fully remedy [her] harm,’ we need not decide whether she has also alleged an excessive fine under the Eighth Amendment,” Roberts wrote.
Justices Neil Gorsuch and Ketanji Brown Jackson addressed the excessive fine issue in a concurring opinion, claiming that the law favors Tyler there as well.
“Economic penalties imposed to deter willful noncompliance with the law are fines by any other name,” they said. “And the Constitution has something to say about them: They cannot be excessive.”
The case was argued before the court on April 26.