Supreme Court Hears Tyler v Hennepin County Property Tax Case

This morning, the U.S. Supreme Court heard arguments in Tyler v. Hennepin County. The facts are outrageous: a 94-year-old woman who failed to pay property tax had her house seized, and the county kept everything, even the amounts beyond the tax owed.

The Pacific Legal Foundation represents Ms. Tyler, who is arguing that Hennepin County seizing the home's value beyond the tax owed is a taking in violation of the Fifth Amendment, and alternatively is an excessive fine under the Eighth Amendment. The Eighth Circuit Court of Appeals below held simply that Minnesota law gives the former owner no right to recover any surplus value after a tax sale, and state law defines property, so there's no constitutional violation.

The Solicitor General from the Biden Administration is arguing in Tyler's favor but splitting the difference: they concede that it is a taking in violation of the Fifth Amendment but not a punitive fine in violation of the Eighth Amendment. For the county, Neal Katyal gave three reasons the county should win: (1) Tyler had other liens so perhaps has no equity and lacks standing, (2) Tyler could have kept her property by paying, and (3) it is impractical to pay compensation before the sale.

My colleagues at NTUF’s Taxpayer Defense Center, along with the Mackinac Center for Public Policy, joined together in a brief making the case for the excessive fines clause applying in this case. 

Katyal and the county faced a tough time. Chief Justice Roberts pushed back on the lack of standing argument, saying that a lot of people might owe more on their mortgage than the value of their property, and that wouldn’t change the fact that they own it. Justice Ketanji Brown Jackson, who raised the Excessive Fines issue multiple times, asked what the limits are if a government can take property and extinguish all her property interests without compensation. Justice Clarence Thomas pushed back on Katyal’s claim that there was no evidence that the Founders opposed this practice, saying that may be because "it was never applied in the way you suggest.” Thomas added that if it had come up, Thomas Jefferson would have opposed it: "Jefferson was always money strapped and didn't think fondly of big government."

A case that came up a lot in the argument was Nelson v. City of New York (1956), where the Court allowed seizure of property for an unpaid water bill and kept the excess. The Court conceded it was "harsh" but said it was not their job to fix. The NY law at least gave the owner 20 days after the sale to recover any surplus.

One interesting question raised is whether the taking occurred (1) at the moment of seizure or (2) when the sale happened and the surplus was created. The federal government argues (1) and PLF argues (2). (The county argues it's not a taking at all.) Justice Sotomayor sounded very alarmed by (1), because if a state seizes a property and the value plummets afterward, the state would be responsible for that risk. But although Sotomayor was the friendliest toward the concern of government revenue officials, she didn’t seem to fully embrace the county’s case here.

Stay tuned.