J-S42042-16
                             2016 PA Super 218
NORTHWEST SAVINGS BANK                            IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                      v.

BARBARA A. KNAPP AND DENNIS E.
BEAVER
                v.

TRAVEL SERVICES, INC. NOW BY
ASSIGNMENT EDGEWOOD
DEVELOPMENT LLC

                             Appellant                No. 1871 WDA 2015


                Appeal from the Order Entered October 27, 2015
         in the Court of Common Pleas of Venango County Civil Division
                            at No(s): CIV 951-2014

BEFORE: SHOGAN, OTT, and FITZGERALD,* JJ.

OPINION BY FITZGERALD, J.:                      FILED SEPTEMBER 28, 2016

        Appellant, Travel Services, Inc., now by assignment Edgewood

Development LLC, appeals from the order entered in the Venango County

Court of Common Pleas.        The order denied Appellant’s exceptions to the

Proposed Schedule of Distribution submitted by the Venango County Sheriff

following a Sheriff’s sale of real property located in Oil City, Pennsylvania.

Appellant argues the trial court erred by holding that the Venango County

Sheriff’s procedure of adding realty transfer taxes to the winning bid at a

Sheriff’s sale does not violate 72 P.S. § 8104-C and 72 P.S. § 8107-D. We

hold that the Venango County Sheriff’s method of assessing realty transfer


*
    Former Justice specially assigned to the Superior Court.
J-S42042-16

tax contravenes the clear and unambiguous language of these statutes.

Thus, we reverse the trial court and remand for further proceedings.

      We summarize the factual and procedural history of this case as

gleaned from the certified record as follows. The underlying action in this

case was a mortgage foreclosure filed on August 20, 2014.              Default

judgment was ultimately entered against Barbara A. Knapp and Dennis E.

Beaver in the amount of $103,718, plus costs and interest. The property at

issue was sold at a Sheriff’s sale on July 15, 2015.

      Appellant, a third-party purchaser, won the property with a bid of

$41,300. The Sheriff assessed the value of the property at $150,440. The

Sheriff then added $3,430.04, representing 2% of the assessed value for

state transfer taxes and local transfer taxes, to the winning bid. Further, the

Sheriff added 2%      for   poundage;1   thus, Appellant owed a total of

$45,556.04.

      Appellant acknowledges that prior to the sale, he was aware that both

poundage and taxes would be added to his bid based upon the Sheriff’s sale

information sheet:

         WHAT IF I AM THE SUCCESSFUL PURCHASER OF THE
         PROPERTY?


1
  Poundage refers to a fee paid to a Sheriff based upon the “reasonable cost
of proceeding to foreclosure.” Kinder-Travel Inc. ex rel. Kid Country
Junction, Inc. v. Estill, 834 A.2d 1175, 1177 (Pa. Super. 2003) (citation
omitted); see 42 P.S. § 21107.




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         You will need to add an additional 2% to your final            bid
         amount for Sheriff Poundage, a fee collected by                the
         Sheriff’s Office. You will also be responsible for paying      the
         local & state transfer taxes. These are calculated from        the
         assessed value of the property.

Venango County Sheriff’s Office Sheriff Sale Information Real Estate.

Further, at the conclusion of the sale, Appellant was provided with a “Real

Estate Sale Calculation Sheet,” which separately listed the poundage and the

state and local transfer taxes as additions to the successful bid price.

Appellant paid the successful bid and poundage with one check for $42,126.

Appellant issued a separate check, which he indicated was under protest, for

$3,430.04 for the state and local taxes.

      On July 15, 2015, the Sheriff filed a Notice of Proposed Schedule of

Distribution   per   Pa.R.C.P.   3136.     Appellant   filed   timely    exceptions

contending that the transfer taxes should have been deducted from—and not

added to—the winning bid of $41,300. After a hearing, the trial court denied

Appellant’s exceptions on October 27, 2015.

      Appellant timely appealed on November 24, 2015, and complied with

the court’s order to file a Pa.R.A.P. 1925(b) statement of matters

complained of on appeal. The trial court issued an opinion on December 18,

2015, which held that the Sheriff’s tax collection procedure complied with

the law and that Appellant was aware of the procedure prior to participating

in the Sheriff’s sale. The trial court specifically discussed the only reported




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case regarding the statutes at issue, Sciandro v. Harner, 11 Pa. D. & C.2d

294 (C.C.P. Bucks 1957).

      In Sciandro, the Bucks County Court of Common Pleas held that the

nearly identical language of the statute there at issue,2 a predecessor to the

instant statutes, required that taxes be deducted from the winning bid

amount at a Sheriff’s sale, not subsequently added after the winning bid had

already been accepted. Id. at 295. In this case, the trial court attempted to

distinguish Sciandro by emphasizing that, in that case, the third party

purchaser might not have been aware of the tax liability whereas, here,

Appellant was informed, in writing, prior to placing a bid.

      On appeal, Appellant raises the following issue:

         Whether the trial court erred in dismissing the third party
         purchaser’s exceptions to the sheriff’s schedule of
         proposed distribution which required the third party
         purchaser to pay the transfer taxes associated with the
         sale in addition to the bid of the third party purchaser
         when the proceeds of the sheriff sale were sufficient to
         cover the cost of the realty transfer taxes?

Appellant’s Brief at 3-4.




2
  The statute at issue in Sciandro was 72 P.S. § 3285.1 (repealed 1981):
“The tax herein imposed shall be paid, and have priority out of the proceeds
of any judicial sale of real estate before any other obligation, claim, lien,
judgment, estate or costs of the sale and of the writ upon which the sale is
made, and the sheriff, or other officer, conducting said sale, shall pay the
tax herein imposed out of the first moneys paid to him in connection
therewith.” Sciandro, 11 Pa. D. & C.2d at 295.




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      Appellant argues that 72 P.S. § 8104-C and 72 P.S. § 8107-D require

state and local transfer taxes to be collected from the successful bid amount

from any judicial sale, including a Sheriff’s sale.   To this end, Appellant

contends that the term “proceeds” in the statutes refers solely to the bid

amount and not to the bid amount plus poundage and realty transfer taxes,

as asserted by Appellee, Northwest Savings Bank, and Participant, Venango

County Sheriff’s Department. Appellant acknowledges that he was aware of

the Sheriff’s policy regarding the addition of taxes at the end of the bidding

process, but avers that such knowledge is not dispositive because the policy

at issue contravenes Pennsylvania statutes.    We agree with Appellant and

conclude that the Sheriff’s method of collecting realty transfer tax violates

Pennsylvania law.

      We begin by noting that “[w]here exceptions to the distribution of the

proceeds of a foreclosure sale are filed, a court will hear and determine them

according to law and equity.” Farmers Trust Co. v. Bomberger, 523 A.2d

790, 792 (Pa. Super. 1987) (citations omitted).         However, “[b]ecause

statutory interpretation is a question of law, our standard of review is de

novo, and our scope of review is plenary.” Lenau v. Co-eXprise, Inc., 102

A.3d 423, 436 (Pa. Super. 2014) (citation omitted), appeal denied, 113 A.3d

280 (Pa. 2015).




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J-S42042-16

      At issue in this case are 72 P.S. § 8104-C and 72 P.S § 8107-D, which

respectively address state and local realty transfer tax.        Section 8104-C

states:

          § 8104-C. Proceeds of judicial sale

          The tax herein imposed shall be fully paid, and have
          priority out of the proceeds of any judicial sale of real
          estate before any other obligation, claim, lien, judgment,
          estate or costs of the sale and of the writ upon which the
          sale is made, and the sheriff, or other officer, conducting
          said sale, shall pay the tax herein imposed out of the first
          moneys paid to him in connection therewith.          If the
          proceeds of the sale are insufficient to pay the entire tax
          herein imposed, the purchaser shall be liable for the
          remaining tax.

72 P.S. § 8104-C (emphasis added).

      Section 8107-D contains substantially similar language:

          § 8107-D. Proceeds of judicial sale

          The tax imposed under this article shall be fully paid and
          have priority out of the proceeds of any judicial sale of
          real estate before any other obligation, claim, lien,
          judgment, estate or costs of the sale and of the writ upon
          which the sale is made.         The sheriff or other officer
          conducting the sale shall pay the tax imposed under this
          article out of the first moneys paid to the sheriff or officer
          in connection therewith. If the proceeds of the sale are
          insufficient to pay the entire tax imposed under this article,
          the purchaser shall be liable for the remaining tax.

72 P.S. § 8107-D (emphasis added).

      When interpreting statutes:

          we are required to follow the rules of statutory
          construction, which direct that every statute shall be
          construed, if possible, to give effect to all of its provisions
          and that when the words of a statute are clear and free


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J-S42042-16

         from all ambiguity, the letter of it is not to be disregarded
         under the pretext of pursuing its spirit.

Hearst Television, Inc. v. Norris, 54 A.3d 23, 31 (Pa. 2012) (quotation

marks and citations omitted); see 1 Pa.C.S. § 1921(a)-(b).           It is only

“[w]hen the words of the statute are not explicit,” that the intention of the

General Assembly may be considered. 1 Pa.C.S. § 1921(c).           The General

Assembly intends for the entire statute to be certain and effective, and not

for any particular words to constitute “mere surplusage.” Fish v. Twp. of

Lower Merion, 128 A.3d 764, 769 (Pa. 2015); see 1 Pa.C.S. § 1922(2);

accord Pottstown Sch. Dist. v. Petro, 94 A.3d 1102, 1107 (Pa. Commw.

2014) (en banc) (holding that the term “priority” must be effectuated when

interpreting the Municipal Claims and Tax Liens Act (“MCTLA”)).3

      It is well-settled that “[t]axing statutes generally should receive a

construction which favors the taxpayer.”    Speck v. Philips, 51 A.2d 399,

402 (Pa. Super. 1947) (citations omitted).       Accordingly, “any doubt or

ambiguity in the interpretation of their terms must, therefore, be resolved in

favor of the taxpayer.” Tech One Assocs. v. Bd. of Prop. Assessment,

53 A.3d 685, 696 (Pa. 2012); see 1 Pa.C.S. § 1928.

      We add that this Court has held that a judicial sale includes a Sheriff’s

sale: “A judicial sale is defined . . . as a sale under the judgment, order, or

3
  Although a decision of the Commonwealth Court is not binding upon this
Court, it can be considered as persuasive authority. Holland v. Marcy, 817
A.2d 1082, 1083 n.1 (Pa. Super. 2002) (en banc).




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J-S42042-16

decree of the court; a sale under judicial authority, by an officer legally

authorized for the purpose, such as a sheriff’s sale, an administrator’s

sale, etc.” City of Uniontown v. McGibbons, 174 A. 912, 915 (Pa. Super.

1934) (quotation marks omitted and emphasis added).

      Instantly, we address whether the Venango County Sheriff erred by

adding the state and local realty transfer taxes assessed under both 72 P.S.

§ 8104-C and 72 P.S. § 8107-D to the winning bid after a Sheriff’s sale.4

The specific language at issue initially requires: “The tax herein imposed

shall be fully paid, and have priority out of the proceeds of any judicial

sale of real estate before any other obligation . . . .”   72 P.S. § 8104-C

(emphasis added). Appellees argue that the term “proceeds” could refer to

either the winning bid amount only or that amount plus taxes and poundage.

While the term “proceeds” is not defined by the statute, Black’s Law

Dictionary provides that proceeds are, “[s]omething received upon selling,

exchanging, collecting, or otherwise disposing of collateral.”   Black’s Law

Dictionary 1242 (8th ed. 2004).     This definition alone, however, is not

dispositive.   Even if we conclude that the term “proceeds” is ambiguous,

interpreting the statute as a whole in a manner giving effect to all its

provisions, as required, is illuminating.   See Fish, 128 A.3d at 769.

Specifically, in order to effectuate the preceding term “priority,” the word

4
  We discuss 72 P.S. § 8104-C and 72 P.S. § 8107-D together because the
statutory language of each statute is fundamentally identical.




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J-S42042-16

“proceeds” must be understood to mean solely the winning bid amount. If

the term “proceeds” is construed to mean the winning bid plus taxes and

poundage, then the taxes would not need to be prioritized as the first to be

paid, thereby relegating the term “priority” to impermissible “surplusage.”

See id.

      For example, in Pottstown Sch. Dist., the Commonwealth Court

construed the Municipal Claims and Tax Liens Act (“MCTLA”) as follows:

              The first paragraph of section 31 of the MCTLA, the
          controlling statute herein, specifically directs that “the
          oldest tax” shall have priority when distributing the
          proceeds of a tax sale, followed by any municipal claims,
          again with the oldest lien having priority.        Thus, this
          section addresses both the type or class of a claim (tax
          claim versus municipal claim) and the order of payment
          within the class (oldest paid first). The second paragraph
          of section 31 . . . simply requires the proceeds of a free
          and clear judicial sale to be distributed “in accordance with
          the priority of such claims.” This priority is clearly set
          forth in the first paragraph of section 31. It would be
          illogical to conclude . . . that the priority language of this
          paragraph is only applicable to upset sales, and not free
          and clear judicial sales. Indeed, there is no need to
          prioritize distribution of the proceeds of an upset sale, as
          such a sale includes the payment/satisfaction of all
          outstanding taxes, municipal claims, and liens.

Pottstown Sch. Dist., 94 A.3d at 1107. Likewise, in the instant case, the

statutory language specifying the “priority” of the realty transfer tax is only

applicable in a “free and clear” Sheriff’s sale in which there is no separate

collection of the tax. See id. If the tax is separately added to the winning

bid, then—similar to an upset sale—it would be unnecessary to prioritize the

collection of the tax ahead of other obligations. Hence, the statutory term


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“priority” would constitute mere “surplusage.” See Fish, 128 A.3d at 769.

Accordingly, in order to effectuate all of the words for each statute, we

conclude that the term “proceeds” refers to the winning bid amount only,

and thus, the collection of the realty transfer tax has priority before any

other obligation. See id.

      The plain language of the last sentence of each statute—“If the

proceeds of the sale are insufficient to pay the entire tax . . . , the purchaser

shall be liable for the remaining tax”—also supports our holding. If the term

“proceeds” is construed as the winning bid plus taxes and poundage, then

the dependent clause is impermissible surplusage because the term

“proceeds” would always include the total amount of owed taxes. See id.

Therefore, in order to effectuate the plain meaning of the last sentence of

each statute, we hold the word “proceeds” refers to the winning bid amount

pledged at a Sheriff’s sale only, and if the bid amount is insufficient to pay

the taxes assessed, than the purchaser is liable for the difference. See 1

Pa.C.S. § 1921(a); Hearst Television, 54 A.3d at 31.            The dependent

clause is necessary to address the possibility that the “proceeds” could be

insufficient to pay the tax burden.       See 1 Pa.C.S. § 1921(a); Hearst

Television, 54 A.3d at 31.         Accordingly, we conclude that the plain

language of the statutes, read in full, requires that the state and local taxes

imposed be paid from the winning bid at a Sheriff’s sale.        The amount of




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J-S42042-16

state and local taxes shall not be added to the winning bid, as was

improperly done in this case.

      Our construction also benefits the taxpayer. See 1 Pa.C.S. § 1928;

Tech One Assocs., 53 A.3d at 696; Speck, 51 A.2d at 402. The taxpayer

is still liable for the entire tax amount but is not required to add the realty

transfer tax to a successful bid if the competitive bidding process yields

sufficient funds to satisfy the tax obligation set forth under the statutes.

      Moreover, we find the trial court’s attempt to distinguish Sciandro

unavailing.    The trial court determined that the dispositive factor in

Sciandro was that taxpayer’s apparent lack of prior knowledge regarding

the tax obligation to be assessed after a judicial sale.          Trial Ct. Op.,

12/18/15, at 2; see Sciandro, 11 Pa. D. & C.2d at 295. Conversely, the

trial court differentiated the instant case by finding that Appellant’s prior

written knowledge of his statutory tax obligation rendered the Sheriff’s

method of separate tax collection lawful. Trial Ct. Op. at 2. We hold that

Appellant’s prior knowledge was of no moment because the statutes at issue

require that the imposed taxes be deducted from the amount of the winning

bid and not added to the winning bid, unless the winning bid amount is

insufficient to pay the taxes. Accordingly, having discerned an error of law,

see Lenau, 102 A.3d at 436; Farmers Trust, 523 A.2d at 792, we reverse

the trial court’s order denying Appellant’s exceptions to the Venango County




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Sheriff’s procedure of adding realty transfer taxes to a winning bid at a

Sheriff’s sale.

      Order reversed. Panel jurisdiction relinquished.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/28/2016




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