Background
Peter and Kristin Taunton acquired the disputed property in 2008 and transferred it to Lakota Lakes, LLC, in 2009. After Lakota Lakes failed to pay its 2015 property taxes, Pennington County purchased the property at a tax sale and later assigned the tax certificate to Emily Bialota. Bialota served notice of her intent to take a tax deed through the Minnesota Secretary of State, Lakota Lakes’ registered agent under Minnesota law. When Lakota Lakes did not redeem within the statutory period, the county issued Bialota a tax deed.
Bialota then filed a quiet-title action under SDCL chapter 21-41. The circuit court initially ruled that service on Lakota Lakes was defective, but the South Dakota Supreme Court reversed in an earlier appeal, holding that service through the Minnesota Secretary of State constituted personal service on the company. On remand, the circuit court nevertheless allowed Taunton to redeem under SDCL 21-42-10 because he was a named defendant who had not received notice. It directed the county treasurer to issue a certificate of redemption and dismissed Bialota’s complaint with prejudice.
The Court’s Holding
The Supreme Court reversed. It held that SDCL chapter 21-42, including its provision allowing any defendant in an action under that chapter to redeem, did not govern Bialota’s suit. Chapter 21-42 supplies an alternative procedure that combines obtaining a tax deed with quieting title, but Bialota instead followed the two-step procedure of obtaining a tax deed under chapter 10-25 and then bringing a conventional quiet-title action under chapter 21-41.
Because Lakota Lakes was the property’s sole owner of record, Bialota was required to give notice to Lakota Lakes—not Taunton—under SDCL 10-25-3. The Court’s earlier decision established that Lakota Lakes was properly served, and the company did not redeem within the statutory period. Taunton had no redemption right in Bialota’s chapter 21-41 action merely because she named him as a defendant. The Court therefore concluded that Bialota properly acquired the tax deed and owns the property in fee, subject to applicable taxes, liens, and encumbrances, and remanded for further proceedings.
Justice DeVaney specially concurred. She agreed that chapter 21-42’s redemption provision was inapplicable and that reversal was required, while maintaining her previously expressed view that Bialota had not properly served Lakota Lakes.
Key Takeaways
- South Dakota law provides distinct procedures for obtaining and quieting title following a tax sale, and the governing redemption rules depend on the procedure the plaintiff selected.
- The right of “any defendant” to redeem under SDCL 21-42-10 applies to actions brought under chapter 21-42, not to a conventional quiet-title action brought under chapter 21-41 after issuance of a tax deed.
- A former owner who was neither the owner of record nor otherwise within the statutory notice categories was not entitled to notice or redemption merely because he was named as a defendant in the later quiet-title action.
Why It Matters
The decision prevents courts from importing chapter 21-42’s broad defendant-redemption provision into a quiet-title action brought under chapter 21-41. Tax-certificate holders and property owners must therefore identify which statutory route governs before assessing notice obligations, redemption rights, and the effect of an issued tax deed.
The ruling also confirms the consequence of failing to redeem after valid statutory notice: once the redemption period expires, the owner’s right, title, and interest pass to the tax-certificate holder, subject to the interests preserved by statute.