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SC Administrative Law Court Decisions

CAPTION:
Thomas G. Buist vs. Charleston County Auditor

AGENCY:
Charleston County Auditor

PARTIES:
Petitioners:
Thomas G. Buist

Respondents:
Charleston County Assessor and Charleston County Auditor
 
DOCKET NUMBER:
98-ALJ-17-0573-CC

APPEARANCES:
G. Trenholm Walker, Esquire, for Petitioner

Samuel V. Howell, IV, Esquire, for Respondents
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter is before the Administrative Law Judge Division on appeal by Petitioner pursuant to S.C. Code Ann. § 12-60-2560 (Supp.1996), for a refund of interest assessed on the amount required by the County for the redemption of real property governed by S.C. Code Ann. § 12-51-90 (Supp.1996). In denying Petitioner's claim, the Respondents maintain that under the provisions of S.C. Code Ann. §12-51-90 (Supp.1996), interest is chargeable in the amount specified regardless of the date of redemption. A contested hearing on this matter was held on November 10, 1999, at the Administrative Law Judge Division in Columbia, South Carolina. For the reasons set forth below, I conclude that the interest was improperly assessed and that the Petitioner is entitled to a refund from the county of a portion of the interest paid to redeem the real property.

Any issues raised in the proceedings or hearing of this case but not addressed in this Final Order and Decision are deemed denied. Rule 29(B), ALJDRP.



FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

1. Petitioner claims he is entitled to a refund of interest paid by him to redeem real property sold at a delinquent tax sale. The property in question is located at 191 Ballybunion, Kiawah Island, Charleston County, South Carolina, and is designated as TMS # 265-13-00-036. The owners of the property are Michael G. Mayberry and Sharon H. Mayberry. Michael and Sharon Mayberry acquired the property by deed from Robert H. Rummel, Harry W. Rummel, and Thomas C. Blaska dated September 21, 1996, and recorded on September 30, 1996 in the RMC Office for Charleston County. The real estate closing was held on September 27, 1996 and was handled on behalf of the Mayberrys by the Petitioner. Through inadvertence, the Charleston County ad valorem taxes for 1995 on the property were not paid promptly after the closing. The taxes for 1995 were mailed by the Petitioner to the Charleston County Delinquent Tax Collector on October 7, 1996. On the same date, the property was sold at public auction by the Delinquent Tax Collector for payment of the 1995 property taxes. The successful bidder at the tax sale paid Ninety Thousand ($90,000.00) Dollars for the property.

The property was redeemed by the Mayberrys on January 21, 1997 upon payment by Petitioner of the 1995 taxes in the amount of Four Thousand Five Hundred Twenty and 88/hundredths ($4,520.88) Dollars, in addition to Six Hundred Seventy-Eight and 14/hundredths ($678.14) Dollars for late payment interest (at fifteen percent), a levy fee of One Hundred ($100.00) Dollars, and bidder interest in the amount of Seven Thousand Two Hundred ($7,200.00) Dollars which was based upon a calculation of eight percent of the total amount of the successful bid on the property, pursuant to S.C. Code Ann. § 12-51-90 (Supp.1996), for a total of Twelve Thousand Four Hundred Ninety-Nine and 02/hundredths ($12,499.02) Dollars. The Petitioner paid the interest under protest, asserting that the interest should be computed on a per diem basis rather than by calculating one whole year of interest at the rate of eight percent. In consideration of the Petitioner's redemption of the property, the Mayberrys assigned their cause of action for the return of any excess funds paid to redeem the property to the Petitioner.

2. Petitioner filed a claim with the Charleston County Board of Assessment Control, Office of the County Assessor on February 19, 1997 for a refund of the alleged excess interest paid on the redemption of the property, citing S.C. Code Ann. § 12-60-2560 (Supp.1996) as authority for his claim. The request for a partial refund was denied on June 22, 1998 by the Charleston County Tax Refund Committee. Petitioner appealed the decision of the Charleston County Tax Refund Committee to the Charleston County Board of Assessment Appeals on June 26, 1998. On September 24, 1998, the Charleston County Board of Assessment Appeals affirmed the decision of the Charleston County Tax Refund Committee. On October 2, 1998, Petitioner filed a notice of appeal and request for contested case hearing with the Administrative Law Judge Division.

ISSUE

Does the term "interest" within the meaning of S.C. Code Ann. § 12-51-90 (Supp.1996) require the tax-payer, upon redemption, to pay eight percent of the total delinquent tax sale bid amount without regard to the length of time that has elapsed between the tax sale and the date of redemption?

LAW / ANALYSIS

I. Jurisdiction

The South Carolina Administrative Law Judge Division has jurisdiction over this subject matter pursuant to S.C. Code Ann. § 12-60-2560 (Supp.1996).

II. Statutory Construction

This case involves the meaning of the word "interest" as used in S.C. Code Ann. § 12-51-90 (Supp. 1996). The primary rule of statutory construction requires that legislative intent prevail if it can reasonably be discovered in language used construed in light of the intended purpose. Whitner v. State, 328 S.C. 1, 6, 492 S.E.2d 777, 779 (1997); Joint Legislative Committee v. Huff, 320 S.C. 241, 464 S.E.2d 324 (1995). In fact, all rules of statutory construction are subservient to the rule that legislative intent must prevail if it can reasonably be discovered in the language used. Kiriakides v. United Artist Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1996). If possible, the legislature's intent should be ascertained from the plain language of the statute. Whitner v. State, 328 S.C. 1, 492 S.E.2d 777 (1997).

Words must be given their plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Rowe v. Hyatt, 321 S.C. 366, 367, 468 S.E.2d 649, 650 (1996). The court must apply those terms according to their literal meanings. Paschal v. State Election Comm'n, 317 S.C. 434, 454 S.E.2d 890 (1995). If a statute's language is plain and unambiguous, and conveys a clear and definite meaning, the court has no right to look for or impose another meaning by employing rules of statutory interpretation. Id. However, if the language of an act gives rise to doubt or uncertainty as to the legislative intent, the construing court may search for that intent beyond the borders of the act itself. The Lite House, Inc. v. J.C. Roy, Co., 309 S.C. 50, 419 S.E.2d 817 (Ct.App. 1992). Moreover, where the legislature elects not to define the term in the statute, courts will interpret the term in accord with its usual and customary meaning. Ex Parte Adoptive Parents v. Biological Parents, 315 S.C. 535, 446 S.E.2d 404 (1994). In making that construction, the court looks to its language as a whole in light of its manifest purpose. Adams v. Texfi Indus., 320 S.C. 213, 464 S.E.2d 109 (1995).

Construction of a statute by an agency charged with its administration will be accorded the most respectful consideration and will not be overruled absent compelling reasons. Jasper County Tax Assessor v. Westvaco Corp., 305 S.C. 346, 409 S.E.2d 333 (1991). The statute as a whole must receive practical, reasonable, and fair interpretation consonant with the purpose, design, and policy of lawmakers. Rosenbaum v. S-M-S 32, 311 S.C. 140, 427 S.E.2d 897 (1993). Statutory provision should be given reasonable and practical construction consistent with the purpose and policy of the entire act. Gilstrap, et al. v. South Carolina Budget and Control Bd., 310 S.C. 210, 423 S.E.2d 6 (1987). Any ambiguity in a statute should be decided in favor of a just, equitable, and beneficial operation of the law. Bennett v. Sullivan's Island Bd. Of Adjustment, 313 S.C. 455, 438 S.E.2d 273 (Ct.App. 1993).

A. "Interest" Defined in Accord with Usual and Customary Meaning

The Respondents argue that since the implementation of delinquent tax collection procedures, Charleston County has consistently interpreted the term "interest" in Section 12-51-90 as penal rather than compensatory. Therefore, the County assesses a flat rate (or penalty) against the whole amount of the tax sale bid. In other words, the County does not prorate the penalty based on when the defaulting taxpayer makes his redemption payment. The Respondents assert that all counties in South Carolina interpret this statute as a flat rate or penalty. Opinions from the Attorney General's office maintain that interest for redeeming property is chargeable in the amount of interest specified in the statute regardless of the date of redemption. S.C. Op. Atty. Gen. 62 (1985); 1973 WL 27635; S.C. Op. Atty. Gen. 291 (1966).

However, while an attorney general opinion may be persuasive, it is not binding precedent. See Anders v. South Carolina Parole & Community Corrections Bd., 279 S.C. 206, 305 S.E. 2d 229 (1983). Furthermore, although the construction given a statute by those charged with the duty of executing it is entitled to weight and should not be overruled without cogent reasons, Glen Falls Inc. Co. v. City of Columbia, 242 S.C. 237, 242, 130 S.E. 2d 573, 576 (1963), the principle behind executive construction is restricted to cases in which the meaning of the statute is really uncertain. If there is no uncertainty, there is no reason for resorting to the rules of statutory construction and interpretation. Id. (citing Carolina C. & O. Ry. of S.C. v. S.C. Tax Commission, 197 S.C. 529, 15 S.E. 2d 764 (1941)).

The term "interest" is not defined in S.C. Code Ann. § 12-51-90 (Supp. 1996). Since the legislature did not define the term "interest" in the statute, the court must interpret the term in accord with its usual and customary meaning. Adoptive Parents v. Biological Parents, supra. Furthermore, "[w]here a statute uses a word having a well recognized meaning in law, the presumption is that the Legislature intended to use the word in that sense." Smalls v. Weed, 293 S.C. 364, 370, 360 S.E. 2d 531, 534 (Ct. App. 1987) (citing Coakley v. Tidewater Construction Corp., 194 S.C. 284, 9 S.E. 2d 724 (1940)).

The plain, ordinary, and usual meaning of term "interest" is the "price paid for borrowing money expressed as a percentage of the amount borrowed which is paid for its use for a specified time." Merriam Webster's Collegiate Dictionary 610 (10th ed. 1993); Black's Law Dictionary 813 (6th ed. 1990). In applying the usual and customary meaning of the term "interest," the Supreme Court acknowledged that the "exact" time period between the date money becomes due and the date it is finally paid "must be determined . . . so that interest may be properly calculated." Lewis v. Carnaggio, 257 S.C. 54, 58, 183 S.E. 2d 899, 900-01 (1971). The well recognized definition of the term "interest" commands that the calculation of interest under Section 12-51-90 include the time that has elapsed between the tax sale and the date of redemption. The Respondents' interpretation of the word "interest" is not in accord with the usual and customary meaning of the term "interest" nor the purpose for awarding interest to an aggrieved party. "[T]he purpose of awarding . . . interest is compensatory, not penal . . . and should fairly compensate the aggrieved party." U.S. v. Am. Mfrs. Mut. Casualty Co., 901 F.2d 370, 373 (4th Cir.1990) (interpreting South Carolina law) (emphasis added). In this case, Section 12-51-90 provides that the bidder is entitled to be fairly compensated for the time value of his money held by the County when the property is redeemed. However, to allow the bidder to collect a flat rate of eight or twelve percent on his money regardless of the date of redemption potentially results in an exorbitant rate of interest, contrary to the concept of fair compensation. Therefore, the proper application of the term "interest" under Section 12-51-90 is that it be compensatory. Furthermore, pursuant to this application, a per diem calculation must be used which reimburses the party for the lost value of money during the time the debt is owed. FDIC v. Prince George Corp., 585 F.3d 1041, 1056 (4th Cir. 1995).

Additionally, according to the Respondents, the goal behind the eight percent (and twelve percent) interest provided in Section 12-51-90 is to bring money into the county "coffers" as quickly as possible. However, if the objective behind the statute is to bring money quickly into the county treasury, then interest as a penalty defeats this purpose. Under the Respondents' theory, there is no incentive for the taxpayer to redeem the property at the earliest possible date since he is required to pay the same amount of interest regardless of the date he redeems the property. Under this interpretation, the taxpayer would be wise to wait until the last day to redeem the property. The legislative intent cannot be construed as providing a statute that in effect delays the redemption of property because of unfavorable results. Moreover, the interest is not payed to the County but rather it benefits the successful bidder at the tax sale.

B. Title 12 References to "Interest"

While it is not conclusive, it is proper in construing a statute to consider the legislation dealing with the same subject matter as an aid in interpretation. Southern Ry. Co. v. S.C. State Highway Dept., 237 S.C. 75, 115 S.E.2d 685 (1960). Therefore, language contained in other sections of Title 12 relating to interest calculation is instructive to determine the meaning of "interest" under Section 12-51-90.

Generally, in statutes pertaining to taxation in South Carolina, references to the term "interest" relate to the interest due on the unpaid portion from the time the money is due until it is paid. In other words, it is calculated on a per diem basis and is deemed compensation for the time value of money. See S.C. Code Ann. § 12-6-1120 (1) (Supp.1996) (interest on government bonds); S.C. Code Ann. § 12-6-1220 (Supp.1996) (interest on Individual Development Accounts); S.C. Code Ann. § 12-6-1720 (1)(c) (Supp.1996) (income interest derived from certain types of property); S.C. Code Ann. § 12-6-2220 (1) (Supp.1996) (income interest derived for intangible non-business property); S.C. Code Ann. § 12-6-2810 (Supp.1996) (interest on aggregate amount of deferred tax on foreign trade receipts income, providing that rate of interest is the "base period T-bill rate"). Of particular note, is the use of the word "interest" in S.C. Code Ann. § 12-54-25 (Supp.1996) which pertains to the interest due on late taxes. Section 12-54-25 (A) provides, in pertinent part:

If any tax is not paid when due, interest is due on the unpaid portion from the time the tax was due until paid in its entirety. . . .



(Emphasis added). The use of the term "interest" in Section 12-54-25 is in accord with its usual and customary meaning.

Likewise, when a taxpayer is due a refund from the county for improperly assessed taxes, interest is paid by the county as determined by Section 12-54-25. A taxpayer is paid interest on the refund from the time the tax was due until the time the county pays the refund in its entirety. See S.C. Code Ann. § 12-60-490 (Supp.1996) (guidelines for payment of refund due to taxpayer when appeal of proposed assessment prevails); S.C. Code Ann. § 12-60-1740 (Supp.1996) (refund due for excess tax payment and any penalties imposed shall be paid with interest within thirty days of the final determination in accordance with Section 12-54-25).

While not directly applicable to this case, Section 12-51-90 is also instructive in determining the legislative intent and meaning of the term "interest" used in S.C. Code Ann. § 12-51-90 (Supp. 1996). Section 12-51-90 provides:

The defaulting taxpayer, . . . may within twelve months from the date of the delinquent tax sale redeem each item of real estate by paying to the person officially charged with the collection of delinquent taxes, assessments, penalties, and costs, together with eight percent interest on the whole amount of the delinquent tax sale bid. In case of a redemption in last six months of the redemption period, for all real property except that classified pursuant to Section 12-43-220(c) at the time of the delinquent sale, the applicable rate of interest, is twelve percent. . . .



(Emphasis added). Section 12-51-90 does not state that interest will be due on a per annum basis nor does the language of the statute imply that the term "interest" should be interpreted as anything other than its customary meaning.

C. Legislation on Assessment of Penalties

The legislature has provided for the assessment of penalties under certain situations indicating an intent to distinguish between interest and penalties. A examination of these statutes reveals legislation that very clearly on its face extends, by additional charges specified in terms of penalties and not interest, the consequences of the failure to pay taxes. These statutes specifically punish a person for not doing what is required of them. Unlike Section 12-51-90 where a person has the option to redeem his property, the penalty statutes mandate compliance. For example, Section 12-54-40 states:

In cases of failure to file a return on or before the date prescribed by law, determined with regard to any extension of time for filing, there must be added to the amount required to be shown as tax on the return, a penalty of five percent of the amount of tax if the failure is for not more than one month, with an additional five percent for each additional month or fraction of the month during which the failure continues . . . .



S.C. Code Ann. 12-54-40(C)(1) (Supp.1996) (emphasis added).(1) Under Section 12-54-40, it is clear to the taxpayer that a penalty is chargeable in the amount specified for each month the tax is delinquent regardless of the date payment is made within the month. Therefore, if a payment is made at any time within the first month of delinquency, a penalty of five percent of the tax amount will be added to the tax liability of the taxpayer. If payment is not made within the first month of delinquency, the taxpayer will be required not only to pay the initial five percent penalty but must also pay an additional five percent penalty on the delinquent amount for each additional month the delinquency continues regardless of the date of payment.

Likewise, Section 12-45-180 provides for penalties on delinquent taxes by adding a flat penalty rate on the taxes charged against property or person if the taxes are not paid within the time specified by statute. Section 12-45-180 provides:

When the taxes and assessments or any portion of the taxes and assessment charged against any property or person on the duplicate for the current fiscal year are not paid before the sixteenth day of January or thirty days after the mailing of tax notices, whichever occurs later, the county auditor shall add a penalty of three percent on the county duplicate. . . . If the taxes, assessments, and penalties are not paid before the second day of the next February, an additional penalty of seven percent must be added by the county auditor on the county duplicate. . . . If the taxes, assessments, and penalties are not paid before the seventeenth day of the next March, an additional penalty of five percent must be added by the county auditor. . . .



S.C. Code Ann. §12-45-180 (Supp.1996). Like Section 12-54-40 discussed above, this provision unequivocally states that penalties will be imposed for tax delinquency in the form of graduated payments based upon the length of the delinquency. The statute is also clear on the amount of penalties to be charged to the taxpayer.

The titles of Sections 12-54-40 and 12-45-180 are also instructive. Garner v. Houck, 312 S.C. 481, 435 S.E. 2d 847, 850 (1993). The titles identify both statutes as penalty statutes.(2) In contrast, the title of section 12-51-90 does not contain the word "penalty." (3) Furthermore, Sections 12-54-40 and 12-45-180 do not use the word "interest" in addressing the assessment of penalties or in defining the penalties. In fact, there is no statute in Title 12 which deals with the imposition of penalties that uses the term "interest" in its title or language.

CONCLUSION

The plain language of S.C. Code Ann. § 12-51-90 (Supp. 1996) clearly sets forth that the legislature intended the statutory term "interest" to be afforded its ordinary meaning of the price paid for borrowing money expressed as a percentage of the amount borrowed which is paid for its use for a specified time. Merriam Webster's Collegiate Dictionary 610 (10th ed. 1993); Black's Law Dictionary 813 (6th ed. 1990). The legislature could have worded Section 12-51-90 to provide for a penalty or flat rate calculated on the total amount of the tax sale bid without regard to how many days passed between the tax sale and the date of redemption, yet it chose not to do so, indicating an intention to avoid that result. Therefore, I find that pursuant to S.C. Code Ann. § 12-51-90 (Supp.1996), interest should be calculated on a per diem basis and, accordingly, the taxpayer is required to pay interest in the amounts stated based upon the tax sale bid from the date of the tax sale until the date of redemption.

ORDER

IT IS THEREFORE ORDERED that the County shall refund the Petitioner the difference between the amount of interest actually paid and the amount of interest calculated on a per diem basis which is determined to be the time from the date of the tax sale until the date of redemption, together with prejudgment interest from the date of redemption.

AND IT IS SO ORDERED.





________________________________

Ralph King Anderson, III

Administrative Law Judge



June 16, 2000

Columbia, South Carolina.

1. Although Section 12-54-40 was repealed on June 30, 1999, it was in effect at the time the redemption sale took place.

2. § 12-54-40. Penalties; certain acts constituting crimes; punishment; § 12-45-180. Penalties on delinquent taxes; collection; execution.

3. § 12-51-90. Redemption of real property; assignment of purchaser's interest.


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