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J. PIVIROTTO v. CITY PITTSBURGH (06/22/87)

decided: June 22, 1987.

J. PIVIROTTO, APPELLEE,
v.
CITY OF PITTSBURGH, APPELLANT



Appeal from the Order of Commonwealth Court dated December 19, 1985, at No. 445 C.D. 1984, affirming the Order of the Court of Common Pleas, Allegheny County, Civil Division dated January 31, 1984 at No. GD 80-14421. Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Larsen, J., files a concurring opinion. Hutchinson, J., files a concurring and dissenting opinion. Nix, C.j., files a dissenting opinion.

Author: Flaherty

[ 515 Pa. Page 248]

OPINION OF THE COURT

We granted the petition for allowance of appeal of the City of Pittsburgh (hereinafter, "the city") to determine whether the city improperly failed to give notice to appellee of its intent to demolish a building the city had sold to appellee in a tax sale fourteen months prior to the demolition.

The real property which is the subject of this dispute was a dwelling located at 5741 Pierce Street in the city. On September 12, 1977, the property was sold for taxes by the city treasurer to appellee. There was in effect, at that time, a period of one year after the sale for redemption by the record owner. There was no redemption, and the property was conveyed to appellee by Treasurer Deed dated and recorded October 27, 1978.*fn1

Approximately one year prior to the sale, on September 7, 1976, employees of the city's Bureau of Building Inspection examined the Pierce Street dwelling and found several violations of the city's housing code. In May of 1978, several months after appellee bid for and paid the upset price on the property, the city again inspected the building. Upon finding building code violations, the inspectors condemned it. Notice of condemnation was sent by the bureau to the record owners whose identities were ascertained by inspection of records in the Allegheny County Recorder of Deeds office. No notice was sent to appellee. Although there was testimony that a notice of condemnation was posted on the property in May, appellee testified he saw no such notice when he visited the property during the same

[ 515 Pa. Page 249]

    month.*fn2

The record owners, of course, took no action regarding the housing code violations, so the city solicited bids for demolition of the property on October 2, 1978. A bid was accepted on October 26, and demolition commenced sometime around November 18, 1978. A neighbor notified appellee of the demolition.

Curiously, the record shows that officials in the city's Bureau of Building Inspection, who were responsible for condemnation and demolition, had ready access to the fact that the Pierce Street property was the subject of a sale for delinquent taxes, because the treasurer's office customarily sends lists of properties sold at the treasurer's sale to the bureau. The notice to the bureau is accompanied by a request for advice whether any liens or condemnation or demolition notices are pending against the property. Outstanding liens are then assessed against the purchaser, who is expected to remit payment within 60 days. Properties which have been condemned must be promptly repaired by the purchaser. Although the list does not contain the names of the purchasers, it does indicate which properties were sold, and, thus, which are about to be conveyed to new owners.

Appellee brought an action in the Court of Common Pleas of Allegheny County for negligent demolition. Emphasizing the bureau's easy access to the treasurer's records showing properties sold for delinquent taxes, the trial court awarded appellee $10,780, plus delay damages of ten percent. Commonwealth Court affirmed, 93 Pa. Commw. 563, 502 A.2d 747.

The question presented is whether the city followed procedures adequate to afford all those having an interest in the property an opportunity to protect that interest. The notice to owners required by the fire prevention laws contained

[ 515 Pa. Page 250]

    in the second class city code is set forth at 53 P.S. § 25094.*fn3 The term "owner" as used in § 25094 is not specifically defined.

Appellee argues that as the successful bidder at the tax sale, he has an ownership interest, to wit equitable title, and, thus, he has a legally protected property interest which entitles him to actual notice from the city of condemnation and demolition. We agree.

The doctrine of equitable conversion arose out of the power of the chancellor to compel the performance which was intended by the parties. This power was grounded in the principle that equity treats as done those things that should be done, quod fieri debet facile praesumitur. It is precisely because of the equitable remedy of specific performance that fundamental real property rights are created in a purchaser of realty prior to delivery of the deed. Kerr v. Day, 14 Pa. 112 (1850). The principles applicable to sales of real property between private parties are equally applicable to sales for delinquent taxes. Once appellee's successful bid was accepted, the parties, to wit the city and appellee-purchaser, intended that the sale should be perfected subject only to the record owner's redemption as provided by law. Failing redemption by the record owner during the statutory period, the successful bidder could certainly compel conveyance by the city treasurer. Thus, the doctrine of equitable conversion is applicable to a sale for

[ 515 Pa. Page 251]

    delinquent taxes and its operation conveys equitable title to the purchaser. Defeasible that title is; but, barring redemption by the record owner during the statutory period, the successful bidder at the tax sale is entitled to compel conveyance by treasurer deed, and thus, he is the equitable owner.

Our conclusion is buttressed by the city's expectation that purchasers at tax sales make necessary repairs, thus discharging ownership responsibilities, in order to bring buildings into compliance with the housing code, supra at p. 3. There is also support for our conclusion in statutory recognition that a purchaser at a tax sale has an insurable interest, and may use the property to produce income.*fn4 See also, City of Philadelphia v. King Kai Chin, 354 Pa. Super. 115, 119, 511 A.2d 214, 216 (1986) where Superior Court held that a redeeming owner may properly be required to pay expenses incurred by the purchaser to make the property habitable. In rejecting the record owner's argument that the purchaser could only recover costs necessary to keep the property in the condition prevailing at the time of the tax sale, Superior Court noted that such a restriction would necessitate that dilapidated, uninhabitable buildings remain in that condition, and "ignore the interests of the parties, the municipality and the public." Implicit in this holding by Superior Court is recognition that the purchaser at a tax sale does acquire an ownership interest in the premises, a principle we now affirm and proclaim as law.

In rejecting the applicability of equitable conversion to tax sales, Commonwealth Court relied upon this Court's

[ 515 Pa. Page 252]

    opinion in Gault's Appeal, 33 Pa. 94 (1859). There the interest of the "legal" owner was defined as follows.

We hold him to be an owner within the statute who is such when he offers to redeem. The sale left in the former owner an equity of redemption at the least, and that might be conveyed like any other estate, and the grantee took it with all the rights and capacities of the grantor. He is therefore the "owner" who holds the title at the moment of redemption.

Id., 33 Pa. at 98. This language is not inconsistent with our holding today. It merely recognizes that, until the period for redemption of the property expires, the record owner has "legal" title and his "equity of redemption" is an interest that may be conveyed to a willing buyer. This interest in the original owner is in no way inconsistent with an equitable ownership interest in the tax sale purchaser, whose equitable interest may not be divested by governmental action without notice.

Having determined that appellee was entitled to notice prior to demolition of premises he purchased at the tax sale, the question then remaining is whether notice to appellee by ...


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