The Supreme Court of the United States ruled Thursday in favor of a 94-year-old Minnesota grandmother. She claimed that state officials violated her constitutional right when they took her condo for an unpaid debt. They then sold it and kept the proceeds, which were much higher than what she owed.
Geraldine Tyler had a condo that Hennepin County took as payment of approximately $15,000 in unpaid property taxes, penalties, and interest. The house was sold for $40,000 According to state forfeiture laws the county retained the excess proceeds in this case, which amounted to $25,000.
Tyler argued the government had violated the Fifth Amendment’s “Takings Clause” by seizing property that was worth more than what the owner owed. The lower courts dismissed her case but on Thursday, the Supreme Court unanimously sided in her favor and held that her claim was valid under the Takings Clause.
Chief Justice John Roberts stated in the opinion of the court that “the taxpayer must return to Caesar what belongs to Caesar, but not more.”
“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.
It said that a taxpayer who lost her $40,000 home to the state to pay a tax debt of $15,000 had made a much greater contribution to public finances than she owed.
The opinion stated that “Minnesota’s law recognizes in other contexts, that a property owner is entitled to any surplus over her debt.”
If a bank forecloses a mortgaged home, the state law gives the homeowner the right to receive the surplus. Minnesota also protects taxpayers’ rights to surplus when collecting back taxes on personal property or income.
The report continued, “Minnesota cannot extinguish an interest in property that it recognizes elsewhere to avoid paying a just compensation when it is the state who takes the property.”
Tyler’s attorneys had argued that Minnesota’s policy, which allows the state to keep any surplus from a confiscated asset, was “home equity theft.”
Her lawyers also claimed that the state had violated the Excessive fine clause of the Eighth Amendment to the Constitution. This clause prohibits the government from imposing excessively harsh fines.
Roberts wrote: “Because Tyler has plausibly alleged a Taking under the Fifth Amendment and she agrees with the relief provided under ‘the Takings Clause’ would fully remedy her harm, we do not need to decide if she has also alleged an excessive fine under Eighth Amendment.”
In a concurring view, Justices Neal Gorsuch & Kentanji Brown argued that the law also favors Tyler on the issue of excessive fines.
They said that “economic penalties” imposed as a deterrent to willful non-compliance are simply fines. “And they cannot be excessive,” says the Constitution.
The court heard the case on April 26.
