Amicus Curiae Brief — Michael Pung, Personal Representative of the Estate of Timothy Scott Pung, Petitioner v. Isabella County, Michigan

No. 25-95

In the

Supreme Court of the United States

MICHAEL PUNG, PERSONAL REPRESENTATIVE

OF THE ESTATE OF TIMOTHY PUNG,

Petitioner,

v.

ISABELLA COUNTY, MICHIGAN,

Respondent.

On Writ of Certiorari to the United States

Court of A ppeals for the Sixth Circuit

BRIEF OF THE MACKINAC CENTER

LEGAL FOUNDATION AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

Derk A. Wilcox

Counsel of Record

Mackinac Center Legal Foundation

140 West Main Street

Midland, MI 48640

(989) 631-0900

wilcox@mackinac.org

Counsel for Amicus Curiae

December 8, 2025

120806

A

(800) 274-3321 • (800) 359-6859

i

QUESTION PRESENTED

When the government takes and sells the real

property held by the taxpayer to settle a tax debt, does

due process require the government to obtain fair market

value so as to not deprive the taxpayer of his equity or

penalize the taxpayer?

ii

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . iv

INTEREST OF AMICUS CURIAE . . . . . . . . . . . . . . . . 1

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . 1

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A. Brief summary of historical foreclosure

and tax debt collection . . . . . . . . . . . . . . . . . . . . . . 2

B. Michigan’s foreclosure law for taxes and

government debts . . . . . . . . . . . . . . . . . . . . . . . . . 10

C. Michigan’s foreclosure laws for non-state

creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

i.

Foreclosure on mortgage notes . . . . . . . . . 12

ii.

Foreclosure on construction liens . . . . . . . 15

iii. Foreclosure of alimony and support

liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

iv. Fo r e c l o s u r e o f c o n d o m i n i u m

association liens . . . . . . . . . . . . . . . . . . . . . . 16

iii

Table of Contents

Page

v.

Non-foreclosure of judgment liens . . . . . . . 16

vi. Non-foreclosure of attorneys’ liens . . . . . . 17

D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

iv

TABLE OF CITED AUTHORITIES

Page

CASES:

Ark. Game and Fish Comm’n v. United States,

568 U.S. 23 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Chabut v. Chabut,

66 Mich. App. 440 (1976) . . . . . . . . . . . . . . . . . . . . . . . 14

Dobbins’s Distillery,

96 U.S. 395 (1878) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

G.M. Leasing Corp. v. United States,

338 U.S. 338 (1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

George v. Sandor M. Gelman, P.C.,

201 Mich. App. 474 (1993) . . . . . . . . . . . . . . . . . . . 17, 18

Kansas City Life Ins. Co. v. Durant,

99 Mich. App. 754 (1980) . . . . . . . . . . . . . . . . . . . . 14, 15

Kysor Industrial Corporation v. D.M.

Liquidating Co.,

11 Mich App 438 (1968) . . . . . . . . . . . . . . . . . . . . . . . . 18

Leonard v. Texas,

580 U.S. 1178, 137 S.Ct. 847 (2017) . . . . . . . . . . . . . . . 4

Michigan Trust Co. v. Cody,

264 Mich. 258 (1933) . . . . . . . . . . . . . . . . . . . . . . . . . . 13

v

Cited Authorities

Page

People ex rel. Seaman v. Hammond,

1 Doug. 276 (Mich. 1844) . . . . . . . . . . . . . . . . . . . . . . . 3

Rafaeli, LLC v. Oakland County,

505 Mich. 429 (2020) . . . . . . . . . . . . . . . . . . . . 3, 7, 8, 10

Smith v. Cliffs on the Bay Condominium Ass’n.,

245 Mich. App. 73 (2001) . . . . . . . . . . . . . . . . . . . . . . . 11

Springer v. United States,

102 U.S. 586 (1881) . . . . . . . . . . . . . . . . . . . . . . . . 2, 5, 6

Stewart v. Eaton,

287 Mich. 466 (1939) . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Stone v. Haskell,

212 Mass. 283, 98 N.E. 1032 . . . . . . . . . . . . . . . . . . . 14

Thompson v. Auditor General,

261 Mich. 624 (1933) . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Tyler v Hennepin,

598 U.S. 631 (2023) . . . . . . . . . . . . . . . . . . . . . 1, 2, 3, 20

United States v. Causby,

328 U.S. 256 (1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

United States v. Daniel Good Real Property,

510 U.S. 43 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6

vi

Cited Authorities

Page

Vahey v. Bigelow,

208 Mass. 89, 94 N.E. 249 . . . . . . . . . . . . . . . . . . . . . 14

STATUTES AND OTHER AUTHORITIES:

Act of Mar. 3, 1791, c. 15, s 23, 1 Stat. 204 . . . . . . . . . . . . 2

Frank Alexander, Tax Liens, Tax Sales, and

Due Process, 75 Ind. L.J. 747 (2000) . . . . . . . . . . . . . 10

Construction Lien Act, Act 497 of 1980 . . . . . . . . . . . . . 15

Cooley, Taxation, 302 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Harrington, Rethinking In Rem, 12 Yale L.

and Pol’y Rev. 281 (1994) . . . . . . . . . . . . . . . . . . . . . . . 4

3 Jones on Mortgages, 8th Ed., § 1583 . . . . . . . . . . . . . 14

W. McKechnie, Magna Carta, A Commentary

on the Great Charter of King John, ch. 26

(rev. 2d ed. 1914) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Mich. Comp. Laws § 78m(1) . . . . . . . . . . . . . . . . . . . . . . 11

Mich. Comp. Laws §§ 211.1 et seq. . . . . . . . . . . . . . . . . . 11

Mich. Comp. Laws § 211.78k(4) . . . . . . . . . . . . . . . . . . . . 11

Mich. Comp. Laws § 211.78m(5) . . . . . . . . . . . . . . . . . . . 11

vii

Cited Authorities

Page

Mich. Comp. Laws § 552.27 . . . . . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 552.27(a) . . . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 559.208(1) . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 559.208(2) . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 570.1101 et seq. . . . . . . . . . . . . . . . 15

Mich. Comp. Laws § 570.1118(1) . . . . . . . . . . . . . . . . . . . 15

Mich. Comp. Laws § 600.2803 . . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 600.2819 . . . . . . . . . . . . . . . . . . . . . 16

Mich. Comp. Laws § 600.3280 . . . . . . . . . . . . . . . . . . . . .12

Restatement, Judgments, 5—9 . . . . . . . . . . . . . . . . . . . . 6

Marie Reilly, The Case for the Tax Collector,

18 J. Bankr. L. & Prac. 6 Art. 2 . . . . . . . . . . . . . . . . 19

Wiltsie on Mortgage Foreclosure (4th Ed.) § 38 . . . . . .12

1

INTEREST OF AMICUS CURIAE1

The Mackinac Center for Public Policy is a Michiganbased, non-partisan research and educational institute

advancing policies fostering free markets, limited

government, personal responsibility, and respect for

private property. The Center is a 501(c)(3) organization

founded in 1987.

The Mackinac Center Legal Foundation, a subdivision

of the Mackinac Center for Public Policy, has litigated

matters similar to this one in Michigan.

SUMMARY OF THE ARGUMENT

It has long been true that the states’ statutory

laws are one source for determining the parameters of

property rights. However, as this Court held in Tyler v

Hennepin, 598 U.S. 631 (2023), deprivation of property

rights by a state under the Fifth Amendment are subject

to due process rights under the Fourteenth Amendment.

Regarding foreclosures, due process requires that equity

that exceeds the tax debt following foreclosure be returned

to the former owner of the property. This matter before

the Court seeks to define the conditions determining the

amount of this equity to return.

In matters of foreclosure, state and local governments

have been claiming for themselves the status of ‘super

creditor’ that has exceeded historic rights in the name

1. No counsel for a party authored the brief in whole or in

part, nor did any person or entity other than amicus curiae, its

members, or its counsel make a monetary contribution to the

preparation or submission of this brief.

2

of efficient debt collection by the public bodies. Despite

longstanding requirements that governments have the

same or similar duties as private creditors, lienholders,

and bailiffs, state and local governments have been holding

themselves free from the same responsibilities owed to

a debtor by private parties. Such a tilting of the scales is

not necessary and violates the property rights of those

whose real property has been foreclosed.

ARGUMENT

A. Brief summary of historical foreclosure and tax

debt collection.

The history of state tax collection described in Tyler

v Hennepin is instructive. That states have the power to

collect such tax debts is obvious, “The power to distrain

personal property for the payment of taxes is almost as

old as the common law. Cooley, Taxation, 302.” Springer

v. United States, 102 U.S. 586, 593 (1880). “[T]he First

Congress, which proposed the adoption of the Bill of

Rights, also provided that certain taxes could be ‘levied

by distress and sale of goods of the person or persons

refusing or neglecting to pay.’ Act of Mar. 3, 1791, c. 15,

s 23, 1 Stat. 204.” G.M. Leasing Corp. v. United States,

338 U.S. 338, 354 (1977).

But even at the time of the Magna Carta, there were

constraints.

The principle that a government may not take

more from a taxpayer than she owes can trace

its origins at least as far back as Runnymede in

1215, where King John swore in Magna Carta

that when his sheriff or bailiff came to collect

3

any debts owed him from a dead man, they

could remove property “until the debt which is

evident shall be fully paid to us; and the residue

shall be left to the executors to fulfil the will of

the deceased.”

Tyler, 568 US at 639, citing W. McKechnie, Magna Carta,

A Commentary on the Great Charter of King John, ch.

26, p. 322 (rev. 2d ed. 1914)

The rights of the debtor described above “became

rooted in English law” and “This principle made its

way across the Atlantic.” Tyler, 598 US at 639-640. This

particular right to constrain the amount of the debt

collected to the amount of debt that was owed continued

and was the “consensus” at the time of the ratification of

the Fourteenth Amendment. Id at 641.

Over this lengthy initial period, such tax collection

had been an act against the taxpayer—in personam,

rather than against the real property. This was evident

in Michigan. “[I]n the early years of this state, it was

commonly understood that the delinquent taxpayer, not

the foreclosing entity, continued to own the land at the time

of the tax-foreclosure sale and would have been entitled

to any surplus, which no more followed title to the land

than the former owner’s other personal property.” Rafaeli,

LLC v. Oakland County, 505 Mich. 429, 565-466 (2020),

citing People ex rel. Seaman v. Hammond, 1 Doug. 276

(Mich. 1844).

This changed following the introduction of a national

income tax during the Civil War. Actions to collect debt

wherein the real property was considered the party—in

rem actions—were coming into use to collect tax debts.

4

Originally, in rem actions were used primarily in

admiralty actions and because special problems were

posed by intercepting ships for piracy and enforcement

of the various Navigation Acts.

There have traditionally been three classes of

in rem suits: those involving “things guilty,”

“things hostile,” and “things indebted.” Suits

against things guilty arise when some act is

done by or with them in contravention of law.

Things are hostile when they are owned or

controlled by an enemy in war. Things become

indebted when they are made responsible

for the payment of a sum of money pursuant

to contract or usage. Examples of the three

classes are routinely found in maritime law. A

vessel that is used to smuggle goods into the

country becomes “guilty,” and liable to seizure

by customs officers. Enemy ships or cargo

taken in war are hostile property, subject to

condemnation in a prize proceeding. A vessel

that receives supplies or necessaries in a foreign

port is said to become indebted to the supplier

for the amounts delivered.

Harrington, Rethinking In Rem, 12 Yale L. and Pol’y

Rev. 281, 285 (1994).

“Proceeding in rem in those cases was often justified

by necessity, because the party responsible for the crime

was frequently located overseas and thus beyond the

personal jurisdiction of United States courts.” Leonard v.

Texas, 580 U.S. 1178, 137 S.Ct. 847, 849 (2017), (Statement

of Justice THOMAS respecting the denial of certiorari).

5

While the unique challenges posed by piracy and antismuggling necessity made such an unusual contrivance

necessary on the high seas, they had not been generally

applied to real property and taxpayer debts. However,

with the imposition of the Civil War wartime taxes and

increased interstate mobility, in rem proceedings for

tax debts were beneficial and cost effective to the states.

The matter came before this Court in Springer v United

States, 102 U.S. 586 (1880). Springer was accessed a

wartime income tax in 1865. Springer, 102 U.S. at 593.

For nonpayment, his property was seized via an action

against the property to collect the income tax due. The

question before this Court was whether such a tax was

an unconstitutional direct tax where, although being an

income tax debt, it was levied against his property.

The Springer court decided the government’s right

to seize the whole property for payment of taxes in the

way that it did was legitimate and cited the government’s

pressing need. “The prompt payment of taxes is always

important to the public welfare. It may be vital to the

existence of a government. The idea that every tax-payer

is entitled to the delays of litigation is unreason.” Springer,

102 U.S. at 594. While Springer did not tie this directly

to the context of the war that was going on at the time of

the tax imposition, that context has been referenced by

subsequent opinions. “[S]ince the Civil War we have upheld

statutes allowing for the civil forfeiture of real property.”

United States v. Daniel Good Real Property, 510 U.S. 43,

82 (1993) (J. Thomas concurring in part and dissenting in

part). And, in the context of other forms of in rem civil

forfeiture, it has been noticed that what was created as a

wartime exigency has become the permanent justification,

even though the government’s need for revenue was a

6

constant. Such government revenue needs (urgent or not)

ought not govern due process:

[I]t is twice puzzling for the majority to explain

cases such as Springer v. United States, 102

U.S. 586 (1881), and Dobbins’s Distillery, [96

U.S. 395 (1878)], as depending on the Federal

Government’s urgent need for revenue in the

19th century. First, it is somewhat odd that

the Court suggests that the Government’s

financial concerns might justifiably control the

due process analysis, and second, it is difficult

to believe that the prompt collection of funds

was more essential to the Government a century

ago than it is today.

Daniel Good, 510 U.S. at 83 (cleaned up).

Most states have some form of statutory in rem

foreclosure and there are differing forms as well as

multiple quasi in rem forms. This Court has used the term

“in rem” as a convenient shorthand for all of the various

forms, and Amicus Curiae will follow that standard here2 .

2. See Hanson v. Denckla, 357 U.S. 235, 246, n. 12 (1958): “A

judgment in personam imposes a personal liability or obligation on

one person in favor of another. A judgment in rem affects the interests

of all persons in designated property. A judgment quasi in rem

affects the interests of particular persons in designated property.

The latter is of two types. In one the plaintiff is seeking to secure

a pre-existing claim in the subject property and to extinguish or

establish the nonexistence of similar interests of particular persons.

In the other the plaintiff seeks to apply what he concedes to be the

property of the defendant to the satisfaction of a claim against him.

Restatement, Judgments, 5—9. For convenience of terminology this

opinion will use ‘in rem’ in lieu of ‘in rem and quasi in rem.’”

7

In addition to statutory law, other sources of law

contribute to what constitutes protected property rights

and what is protected by due process. Statutory law is just

one source of many. “Because the Constitution protects

rather than creates property interests, the existence of a

property interest is determined by reference to existing

rules or understandings that stem from an independent

source such as state law.” Rafaeli, 505 Mich. at 455. The

common law is foremost among these other sources, both

inherited from England and developed here. Similarly,

treatise writers such as Blackstone and Justice Thomas M.

Cooley are treated with respect in explaining the origins

and scope of our property rights and laws:

Like the founders of our nation, Michigan has

historically held property rights in the highest

regard. Former Michigan Supreme Court

Justice Thomas M. Cooley, one of our nation’s

preeminent jurists and learned scholars,

wrote that the “right to private property is

a sacred right; ... it was the old fundamental

law, springing from the original frame and

constitution of the realm.”

[P]roperty ... is recognized as such by the

law, and nothing else is or can be. Property

and law are born and must die together. Before

the laws, there was no property; take away the

laws, all property ceases.

Drawing on Sir William Blackstone, Justice

Cooley further recognized that the Magna

Carta “guaranteed” the protection of private

property against government overreach. Just

as the Magna Carta guaranteed property

8

owners due process of law, so too did the sacred

text limit the King’s ability to take his subject’s

property, real or personal…

***

“This state’s common law is adopted from

England, and to identify such law this Court may

consider original English cases and authorities.”

Our review of English common law supports

the notion that an owner of real or personal

property has a right to any surplus proceeds

that remain after property is sold to satisfy a

tax debt. Just as the Magna Carta protected

property owners from uncompensated takings,

it also recognized that tax collectors could only

seize property to satisfy the value of the debt

payable to the Crown, leaving the property

owner with the excess. In fact, although the

“mode of collecting the land tax in England was

by distress,” it was a well-recognized principle

that any excess property sold to satisfy a tax

debt would be paid back to the owner. Further,

Blackstone explained that in the context of

bailments, whenever the government seized

property for delinquent taxes, it did so subject

to “an implied contract in law” to either return

the property if the tax debt was paid or “to

render back the overplus” if the property was

sold to satisfy the delinquent taxes.

Rafaeli, 505 Mich at 454-455 (cleaned up and internal

citations and footnotes omitted).

9

So entwined are our real property laws with equitable

considerations, that the very term “equity,” as applied to

real estate, comes from the courts of equity:

The history of equity in real estate is particularly

illuminating because this property right formed

in response to foreclosure practices that raised

concerns like those in the present case. Until

mortgages came into widespread use, creditors

generally obtained a “gage of land” as security

in the debtor’s land, but the creditor could not

recover possession of the land from the debtor.

That defect, from the creditor’s perspective,

likely led to the creation of the predominant

form of common-law mortgage, in which the

mortgagor conveyed the land, usually in fee

simple, to the mortgagee on the condition

subsequent that it would be reconveyed to the

mortgagor when the debt was repaid at the

appointed time.

The harshness of this procedure was

evident to many at the time and is similar to

harshness involved in the present case, namely

that it automatically led to the full loss of the

mortgagor’s interest in the property no matter

how much debt was owed—no surplus was

owed or paid to the mortgagor. Equity courts

addressed these concerns—in part because

the transaction functioned as an extension

of a security interest in the property rather

than a true transfer of the fee—by creating

the “equity of redemption,” under which the

10

mortgagor could redeem the property by

paying off the debt after defaulting. The “equity

of redemption” was considered—including

by this Court—a property right and came

to represent the homeowner’s interest in the

property, known as “equity.”

Rafaeli, 505 Mich. at 476-478 (Viviano, J., concurring,

internal footnotes and citations omitted).

With that in mind, the following will discuss Michigan’s

property rights as they pertain the other forms of liens

and foreclosure in the state and show that the state has

given itself greater statutory rights to foreclose and

dispose of property than are given to other creditors who

can obtain liens.

B. Michigan’s foreclosure law for taxes and government

debts

As with most other states3, Michigan’s current tax

foreclosure procedures are a form of in rem actions:

As Michigan’s Supreme Court noted in Thompson v.

Auditor General, 261 Mich. 624, 652 (1933):

Such foreclosure is a proceeding in rem, against

the land itself,—and it is the holding of the

courts of this country that valid notice which

must describe with reasonable certainty the

3. Most states have adopted some form of in rem procedure

following the 1935 Model Real Property Tax Collection Law. See,

for example, Frank Alexander, Tax Liens, Tax Sales, and Due

Process, 75 Ind. L.J. 747, 766 (2000).

11

lands to be sold, must be given before sale, and

that any statute which provides for the sale of

lands for delinquent taxes which fails to provide

for description of the particular lands to be sold

is repugnant to the Constitution, because it may

deprive the owner of his property without due

process of law.

Smith v. Cliffs on the Bay Condominium Ass’n., 245 Mich.

App. 73, 75 (2001)

At the heart of this matter, Michigan’s General

Property Tax Act, Mich. Comp. Laws §§ 211.1 et seq.,

allows the “foreclosing governmental unit 4,” to foreclose

the property and sell it at below market value. The

governmental foreclosing unit may establish an opening

minimum bid that only covers the amount of the tax debt

and costs. Mich. Comp. Laws § 211.78m(5). It may then

sell the property at auction for either the minimum bid

“or its fair market value.” Mich. Comp. Laws § 78m(1).

The Michigan General Property Tax Act does not

gives the courts any equitable jurisdiction over the tax

foreclosure sale, with the exception where “the court

determines that the owner of the property subject to

foreclosure is a minor heir, is incompetent, is without

means of support, or is undergoing substantial hardship,

the court may withhold that property from foreclosure for

1 year or may enter an order extending the redemption

period as the court determines to be equitable.” Mich.

Comp. Laws § 211.78k(4).

4. Mich. Comp. Laws § 211.78(8)(a) defines “foreclosing

governmental unit” as either a county treasurer or the state.

12

The courts do not have any equitable authority over

the price obtained in a tax foreclosure—a power that, as

we shall see, the courts have when private parties conduct

foreclosures.

C. Michigan’s foreclosure laws for non-state creditors.

i.

Foreclosure on mortgage notes.

When non-governmental parties foreclose on a

mortgage and force the sale of a property, they must sell

at the true value or market price of the property. If not

sold for the market value, that shall be a defense to any

claims of deficiency. Michigan statutes determine that:

It shall be competent and lawful for the

defendant against whom such deficiency

judgment is sought to allege and show as

matter of defense and set-off to the extent only

of the amount of the plaintiff’s claim, that the

property sold was fairly worth the amount of

the debt secured by it at the time and place of

sale or that the amount bid was substantially

less than its true value, and such showing shall

constitute a defense to such action and shall

defeat the deficiency judgment against him.

Mich. Comp. Laws § 600.3280 (emphasis added).

It has long been held that failure to obtain fair market

value is grounds for the courts to exercise their equitable

power on behalf of the party that had owned the foreclosed

property:

13

‘The foreclosure of a mortgage is equitable in

its nature though based on legal rights, and it

is the province of the court of equity to see to

it that a party invoking its aid shall have dealt

fairly before relief is given. A court of equity

has the right to so control the proceedings as to

produce a just result and to protect the rights

of all parties.’ Wiltsie on Mortgage Foreclosure

(4th Ed.) § 38.

Michigan Trust Co. v. Cody, 264 Mich. 258, 262 (1933).

The Cody court upheld the trial court where it had

found:

‘The court finds as a matter of fact that the

mortgaged property at the time of the sale

in question was fairly worth a sum largely in

excess of the amount bid for the same by the

plaintiff, which was the only bid made at the

sale in question … and that under these and the

other conditions under which the sale was held,

to allow the plaintiff to acquire the property on

a bid far below the real value of the same, and

which would result in a very large deficiency

against the mortgagors, produces a result

which shocks the conscience of the court and

brings the case within the rule in equity that

the sale be not confirmed.’

Cody, 264 Mich. at 264.

Similarly, Michigan’s courts have looked to the law of

other jurisdictions and held:

14

In proceedings of this character, the fair

market value of the premises sold is a question

of fact, Stone v. Haskell, 212 Mass. 283, 98 N.E.

1032; 3 Jones on Mortgages, 8th Ed., § 1583,

and the burden of proving that a higher price

should have been obtained upon the sale of the

property was upon defendant. Vahey v. Bigelow,

208 Mass. 89, 94 N.E. 249; Stone v. Haskell, 212

Mass. 283, 98 N.E. 1032; 3 Jones on Mortgages,

8th Ed., § 1583.

Stewart v. Eaton, 287 Mich. 466, 485 (1939).

More recently, in a case where the bank foreclosed

on the property on a mortgage, and sold it at below fair

market value and then went after the previous owner for

a deficiency, it was again held that the below-market sale

price was a defense to collection of the deficiency:

Since the bank chose not to attempt to bid in the

property at the fair market value on the date

of the sheriff’s sale and since the trial court

found that the property was worth the entire

amount of the indebtedness at the time of the

sheriff’s sale, no deficiency existed. The absence

of a deficiency removed defendant bank’s

claim against the additional pledge collateral

and, therefore, the money it received from the

plaintiffs when they redeemed this collateral

was wrongfully obtained and the judgment of

the trial court was correct.

Chabut v. Chabut, 66 Mich. App. 440, 455 (1976). Further,

in Kansas City Life Ins. Co. v. Durant, 99 Mich. App.

754 (1980), the court looked to expert testimony to

15

determine the market value and whether the sale price

was reasonable:

The court referred to the expert testimony

offered by both parties as to the market value

of the property and held that, based upon that

evidence, the bid-in price was reasonable. The

fact that the court recognized that foreclosure

sales do not generally result in the seller

obtaining the highest possible price for the

property does not negate the fact that its

decision was based on the testimony of experts

concerning the market value of the properties.

A finding that the offer was “reasonable” clearly

indicates that the amount of the bid was not

substantially less than the true value of the

property, which is all that the statute requires.

Kansas City Life Ins. Co., 99 Mich. at 762.

ii.

Foreclosure on construction liens.

Similarly, Michigan allows for the attachment of

construction liens by contractors and mechanics who

work on real property, and authorizes subsequent

judicial foreclosure. Mich. Comp. Laws § 570.1101 et

seq., Construction Lien Act, Act 497 of 1980. This Act

determines that “An action to enforce a construction lien

through foreclosure is equitable in nature.” Mich. Comp.

Laws § 570.1118(1) (emphasis added).

As was shown regarding mortgage foreclosure,

ensuring a fair market price is obtained is an inherent

part of the equitable requirements.

16

iii. Foreclosure of alimony and support liens.

Michigan allows for the attachment of liens on real

property for nonpayment of spousal or child support after

a divorce where such support is included in the judgment

of divorce. Mich. Comp. Laws § 552.27. “Order the sale

of the property against which the lien is adjudged in the

same manner and upon the same notice as in suits for

the foreclosure of mortgage liens.” Mich. Comp. Laws

§ 552.27(a).

Once again, foreclosure of mortgage liens requires the

sale to obtain a fair market price. Therefore foreclosure

of support liens would also require this to be done “in the

same manner.” Id.

iv.

Foreclosure of condominium association liens.

Michigan allows for the attachment of liens upon

subject units for non-payment of home owner association

dues. Mich. Comp. Laws § 559.208(1). As with construction

liens and spousal support liens, foreclosure of these liens is

conducted in the same manner as mortgage foreclosures,

and therefore requires a fair price be obtained. “A

foreclosure shall be in the same manner as a foreclosure

under the laws relating to foreclosure of real estate

mortgages by advertisement or judicial action…” Mich.

Comp. Laws § 559.208(2).

v.

Non-foreclosure of judgment liens.

Michigan allows for judgment liens to attach to

real property. Mich. Comp. Laws § 600.2803. However,

Michigan does not allow foreclosure by the lienholder

17

on the real property to which a judgment lien attaches.

Rather, the lienholder must wait until a conveyance or

refinancing of the subject real property. Mich. Comp.

Laws § 600.2819.

And an attachment to real property is only allowed if

the debtor lacks sufficient personal property:

In Michigan, direct attachment of a debtor’s

real estate is disfavored. … A judgment, by

itself, does not create a lien against a debtor’s

property. Under the scheme provided [by

statute], the creditor must first obtain a

judgment for the amount owed, then execute

that judgment against the debtor’s property.

A creditor may execute against real property

owned by a debtor only after attempting to

execute against the debtor’s personalty and

determining that the personal property is

insufficient to meet the judgment amount.

George v. Sandor M. Gelman, P.C., 201 Mich. App. 474,

477 (1993).

vi. Non-foreclosure of attorneys’ liens.

Michigan recognizes two types of court-created nonstatutory rights of attorneys’ to a lien to secure payment

for their services. A “general, retaining, or possessory

lien” to hold money or documents already in the attorney’s

possession, and a “special, particular, or charging lien…an

equitable right to have the fees and costs due for services

secured out of the judgment or recovery in a particular

suit.” George, 201 Mich. App. at 476.

18

These liens are not codified by statute, but are a

common law right recognized by the courts in Michigan.

Id. “No Michigan authority, however, permits an attorneys’

charging lien to attach to real property.” George, 201 Mich.

App. at 477. “Common law established in other states does

not permit an attorneys’ charging lien to attach to the

client’s real property ‘even where the attorney’s services

result in a judgment establishing title or possession for

the client.’” George, 201 Mich. App. at 477-478 (internal

citations omitted).

‘The lien exists as part of the court’s inherent

power to oversee the relationship of attorneys,

as officers of the court, with their client. It does

provide a means of securing the legitimate

interest of the attorney in payment for his

services and expenses on behalf of the client,

but it is subject to the control of the court for

the protection of the client and third parties

as well…’

Kysor Industrial Corporation v. D.M. Liquidating Co.,

11 Mich App 438, 445 (1968).

These liens cannot attach to real property—and

therefore cannot be foreclosed—and are subject to

oversight by the court.

D. Conclusion

When acting as a creditor, governmental units have

been giving to themselves greater powers than those

given to their private counterparts. Here, in Michigan,

for instance, the government’s foreclosure on a tax lien

19

exempts it from the equitable considerations found in

other lien foreclosures. A private party creditor must

attempt to obtain a fair market price when foreclosing on

real property. Creditors holding judgment liens cannot

foreclose at all and must instead patiently wait for a

conveyance or refinancing of the property. Attorneys’

liens cannot attach to real property.

The reasons offered for granting the government

special privileges have included wartime necessity and

pleadings of other special needs of the government. “Time

and again in Takings Clause cases, the Court has heard

the prophecy that recognizing a just compensation claim

would unduly impede the government’s ability to act in

the public interest.” Ark. Game and Fish Comm’n v.

United States, 568 U.S. 23, 36 (2012), citing United States

v. Causby, 328 U.S. 256, 275 (1946) (Black, J., dissenting).

Academics have offered rationales such as “The tax

collector’s right to the surplus value is an integral part of

the tax collection process and, indeed, an integral part of

real property tax.”5 That the government needs an extra

incentive “powerful incentive for the debtor to pay the

tax. … [T]he right to obtain the surplus by foreclosure

creates an incentive for mortgagees to monitor and pay

the tax if he does not.”6

But the balance ought not be tilted so far in favor of

the government. The Takings Clause would be rendered

meaningless if governments could so easily dictate the

terms of sale in favor of depriving the former property

5. Marie Reilly, The Case for the Tax Collector, 18 J. Bankr.

L. & Prac. 6 Art. 2.

6. Id.

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owner of their equity. The due process of the citizen should

not be swept easily aside by claims of the government’s

need for procedures that favor the government more than

those allowed to private creditors who have a similar lien

claims on real property. Insufficient auction procedures

cannot dictate the worth of citizens’ property rights. As

in Tyler, 598 U.S. at 638, longstanding rights found under

common law must be taken into account as a source of

property rights. Similarly, the Court needs to look at

different sources of state law as well. Id. And in doing so it

ought to look at the state law applicable to private parties.

In doing so, it will find that the state here is trying to give

itself creditors’ rights above and beyond that of other

creditors, and abrogate its common law and equitable

duties at the same time. State and local governments, like

private parties, should be held to an equitable duty to sell

foreclosed property at a fair market price.

Respectfully submitted,

Derk A. Wilcox

Counsel of Record

Mackinac Center Legal Foundation

140 West Main Street

Midland, MI 48640

(989) 631-0900

wilcox@mackinac.org

Counsel for Amicus Curiae