(Scypre.com) – The Supreme Court issued a ruling on Thursday in favor of a 94-year-old grandmother from Minnesota, upholding her claim that the state violated her constitutional rights when it seized her condominium due to an unpaid tax debt.
The court found that the state not only took possession of her property but also sold it for an amount that far exceeded her outstanding debt.
The owner, Geraldine Tyler, had her condo seized by Hennepin County as payment for approximately $15,000 in overdue property taxes, including penalties, interest, and associated costs.
The property was subsequently sold for $40,000, and under Minnesota’s forfeiture laws, the county retained the surplus proceeds, totaling $25,000.
Tyler contended that the government’s actions violated the “Takings Clause” of the Fifth Amendment, which protects against the confiscation of property valued higher than the amount owed by the owner.
While lower courts had dismissed her case, the Supreme Court unanimously sided with her arguments, determining that she had presented a valid claim under the Takings Clause.
Chief Justice John Roberts, writing the court’s opinion, stated, “The taxpayer must render unto Caesar what is Caesar’s, but no more.”
He emphasized that the Takings Clause was designed to prevent the government from unfairly burdening specific individuals with public obligations that should be shared by the entire public.
The opinion further explained, “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 highlighted that Minnesota law recognizes the entitlement of property owners to surplus amounts exceeding their debts in various other circumstances.
The decision noted instances such as bank foreclosures, where state law entitles homeowners to surplus proceeds from the property sale. Similarly, when collecting delinquent taxes on income or personal property, Minnesota safeguards the taxpayer’s right to the surplus.
The ruling emphasized that Minnesota could not extinguish a property interest that it acknowledges in all other cases to evade providing just compensation during a governmental seizure.
Tyler’s legal team had argued that Minnesota’s policy of allowing the state to retain the surplus from a seized asset amounted to a “home equity theft scheme.”
They also contended that this practice violated the Eighth Amendment’s Excessive Fine clause, which prohibits the government from imposing unduly harsh fines for an offense.
Chief Justice Roberts clarified that since Tyler’s claim under the Takings Clause was deemed plausible and she agreed that relief through that clause would adequately address her harm, the court did not need to decide on the excessive fine allegation under the Eighth Amendment.
Justices Neil Gorsuch and Ketanji Brown Jackson, in a concurring opinion, addressed the excessive fine issue, asserting that economic penalties imposed to deter intentional noncompliance with the law are effectively fines. They emphasized that such fines must not be excessive, as explicitly stated in the Constitution.
The case was argued before the Supreme Court on April 26.