Court Opinion

ID: 9639596
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:41:16.201753+00
Date Added: 2024-06-11T18:10:20.260834
License: Public Domain

Oliphant, J.
(dissenting). I find myself in disagreement with the majority on the fundamental issues- involved in this appeal.
The action was one for specific performance to determine the validity of a title of a parcel of property purchased from the City of Newark which in turn had acquired title by foreclosure under the In Rem Foreclosure Act, P. L. 1948, Chapter 96. Like many actions in specific performance it is in the nature of a friendly suit, both parties desiring a judgment by this court to the effect that the title to be delivered under the contract of sale be a valid one. In such suits it is not unusual to find that the arguments as to invalidity are not pressed with the skill and perseverance found in the usual adversary proceeding, but rather only the arguments as to validity of the title are pressed and fully presented to the court. Such is the situation here.
*330The appellant resisted this suit on the ground the title is not marketable in that it depends upon an antecedent foreclosure by the City of the tax sale certificate under the cited statute. The brief of the appellant raised the following contentions: (1) failure to provide, by service of process or by substituted service, for notice to the owner and other persons interested in the land who by our. statute have a right of redemption; (2) failure to provide for service of process upon infants and incompetents through guardians or other legal representatives; (3) that the statute has no retroactive effect and cannot apply to the foreclosure of a tax sale certificate acquired prior to the enactment of the act; (4) that it impairs the obligation of contracts as existing between the City, as the taxing authority, and the owner of the land under foreclosure; (5) that it deprives the owner and other parties in interest of the right of redemption without duo process of law.
The majority opinion, and the respondent, rely on several opinions of the United States Supreme Court which I think are distinguishable, but the principal reliance is placed upon the decisions of the New York courts in construing the New York In Rem Foreclosure Act, and a decision of the Maryland court construing an act of somewhat similar tenor.
One, casually reading the New York decisions would come to the conclusion that all doubt as to the constitutionality of the New York statute had been resolved by these decisions, but it is surprising to find that the New York Court of Appeals in 1943, in the case of Lynbrook Gardens v. Ullmann, 37 N. Y. S. 2d 671; reversed, 291 N. Y. 472, 53 N. E. 2d 353; certiorari denied, 322 U. S. 742, 64 Sup. Ct. 1144, 88 L. Ed. 1575, stated flatly that even if they were to sustain the validity of the in rem foreclosure proceeding the United States Supreme Court might reach a different conclusion in litigation instituted in a different forum by a subsequent purchaser, a title which depended on the validity of certain sections of the act might be held to be not marketable and that therefore a judgment of specific performance under such circumstances should not be rendered. This despite the fact that in that *331ease 43 different intervenors ffled briefs and the constitutionality of the act in loto was fully and exhaustively argued.
Since I have grave doubt as to the constitutionality of this act both under the State and Federal Constitutions, I am to reverse the judgment in this case. Specific performance will not be decreed where a reasonable doubt concerning title exists though the doubt rests on debatable grounds which might visit upon the purchaser litigation, although the title might at law in the end be declared good. Casriel v. King, 141 N. J. Eq. 515 (Ch. 1948); Warner v. Giron, 141 N. J. Eq. 493 (Ch. 1948).
To doubt is to deny. Young v. Sabol, 4 N. J. 309 (1950); Epstein v. Fleck, 141 N. J. Eq. 486 (E. & A. 1948);
I have serious doubts as to the provisions of notice required by the In Rem Foreclosure Act, with respect to those who have the right of redemption under our General Tax Act. The majority opinion proceeds on the assumption that the speedy collection of taxes iinfraught with procedural complications is indispensable for the support of the government and that proceedings for the collection of taxes are in rem and require no personal service of notice upon the owners or lienors of the land, since once the taxes on the land are duly assessed in accordance with the requirements of due process the owners or lienors may be presumed to know that the land will be sold for the non-payment of taxes. I agree it is fundamental that any owner of a piece of property is chargeable with knowledge that his property is taxed and that therefore he is chargeable with notice of the remedies by which he can test the validity of the assessment and have it reviewed. But this is a very different thing from saying that in a judicial proceeding in the nature of a strict foreclosure in a court of competent jurisdiction, the purpose of which is to cut off the statutory right of redemption and to deprive him, a necessary party, of his right, title and interest in the property, and in many instances a right of inheritance, that such a proceeding can be of a summary nature with process by mere publication, particularly where by a reasonable effort personal service could be had in the jurisdiction.
*332As a former Chancellor of this State it has been my experience, and the result of observation, that in tax foreclosure cases, personal service has been obtained in the past on between 50% and 65% of the named defendants who had a right of redemption under our statute. It is true that redemptions are few and far between but this does not alter the fundamental question of due process involved in this case.
The right to review an assessment and the levy under our General Tax Act is given solely to the taxpayer or record owner. B. 8. 54:4^23; 54:4-24; 54:4-64; 54:3-21; 54:2-29. And only the owner as shown on the tax duplicate is entitled to notice of the tax sale. B. 8. 54:5-21, 25, 27. The tax sale itself is a sale of the fee subject to the right of redemption and subject to this right the lien of the municipality for taxes passes to the purchaser. B. 8. 54:5-42. Up to this point in our procedure for the collection of taxes the right of the taxpayer to seek review is before an administrative or quasi-judicial board. The type or character of notice in such proceeding is of an entirely different quality than that which is required by the due process clause in a judicial proceeding in a court of competent jurisdiction which is what the In Bern Foreclosure Act pretends to afford.
The right of redemption given by our General Tax Act is not given to the taxpayer alone. B. 8. 54:5-54 gives the right of redemption to “the owner, mortgagee, occupant or other person having an interest in land sold for municipal liens * * *” and this right of redemption heretofore was cut off by a bill in the nature of a strict foreclosure. B. 8. 2:29-77 et seq.
The In Bern Foreclosure Act abolishes the long existing practice of making inquiry to identify the persons in interest for the purpose of serving process. This is a radical departure from the requirements of due process long existing in this State. The argument to support its validity is one of expediency, namely the need for revenue. I do not think an owner’s property may be taken away because it is in the public interest that arrears of taxes be collected promptly. It is *333of the essence of due process that there be notice to the extent that it is appropriate and reasonable. Tax cases are notable exceptions but it does not seem to be sound to insist that no notice need be given where inquiry would disclose resident owners who could be served with process, and I have not found any cases in the United States Supreme Court that so hold.
The respondent relies upon Hagar v. Reclamation District, 111 U. S. 701, 4 Sup. Ct. 663, 28 L. Ed. 569; Winona and St. Peter Land Co. v. Minnesota, 159 U. S. 526, 16 Sup. Ct. 83, 40 L. Ed. 247; Pittsburgh, Cincinnati, etc., Rwy. Co. v. Marion County, Ind., 154 U. S. 421, 14 Sup. Ct. 1114, 38 L. Ed. 1031; North Laramie Land Co. v. Hoffman, 268 U. S. 276, 45 Sup. Ct. 491, 69 L. Ed. 953; Leigh v. Green, 193 U. S. 79, 24 Sup. Ct. 390, 48 L. Ed. 623.
The first four cases relate to the right of a taxpayer to notice so that he may review the assessment and levy made under the taxing act. In short, these are assessment cases and it can be conceded that a taxpayer is charged with notice of the law under which the assessment, levy and the lien for the taxes is imposed upon his property.
In the Hagar case there was a sale but the case, at page 573, clearly indicates that personal notice is required to be given to the taxpayer prior to the sale. These cases are clearly distinguishable from the questions on notice here presented.
In Leigh v. Green, supra, the court said of a Nebraska statute that undertook to proceed in rem by making the land as such answer for public dues, that the primary object of the act was to reach the land which had been assessed and that such proceedings are not the usual proceedings against the parties, nor in the case of lands or interest in lands belonging to persons unknown can they be. They are proceedings against the lands rather than against the owners of the lands and that personal notice is required only out of tenderness. But what the court had to say must be considered in relation to what the act provided, which the court carefully pointed out when it said “the evident purpose of section 4 where the owner of the land is unknown is to permit a proceeding in rem *334against the land itself with a provision for service as in the case of a nonresident.” It then pointed out that the term “owner” as used in the fourth section of the act applies only to the owner of the fee and did not include a person holding a lien on the premises. It is clear from a reading of this opinion that the statute and proceeding in question only applied to unknown owners of the fee and thus is equally consistent with what has long been the provision of our tax statute relating to the foreclosure of the rights of “unknown” owners. B. S. 54:5-88, and compare our former Chancery provisions, B. S. 2:29-35 to 2:29-41 inclusive, and our present rules of civil procedure Buie 3 :17-4 as amended, and P. L. 1948, Chapter 355.
I think these latter provisions are the minimal requirements of due process in this kind of proceeding., Against the interest of the State we must balance the individual interest sought to be protected by the Fourteenth Amendment, but with due regard to the practicalities and peculiarities of the case. The notice must be one that can be reasonably calculated under all the circumstances to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. The criterion is not the possibility of conceivable injury but the just and reasonable character of the requirements having reference to the subject with which the statute deals. Mullane v. Central Hanover Bank & Trust Co.,- U. S.-, 70 S. Ct. 652, 94 L. Ed. -, - (April 24, 1950).
As I pointed out, it has been possible in the past in the larger percentage of these cases to obtain personal service on residents of this State who had a right of redemption under B. 8. 54:5-54.
We are living in a modern day and age. Our State spends millions of dollars for the proper recordation of all instruments relating to the transfer of title and devolution of title by will or intestacy. By any reasonable effort it is possible for the attorney representing the municipality to ascertain who are the parties that have the right of redemption to the *335particular parcel under foreclosure. The right of redemption having been given to them it seems essential to me that under the due process clause reasonable notice should be given to such parties who are residents in this State and to nonresidents whose addresses are known or can be ascertained by a reasonable effort. As to “unknown owners” publication alone was in the past and always will be sufficient.
If the Legislature had seen fit, and it has the right, it could have abolished the equity of redemption or merely allowed the last known owner of record to redeem. It is within their competence and power to set up within our Tax Act a foreclosure by notice or a foreclosure by possession, but they have not done so.
The protection of a right of redemption is as old as the law itself, being found in the Hebraic, Roman and Civil Law. Leviticus XXV, lines 23-35; 1 J ones on Mortgages (8th Ed.), §8; 4 Pomeroy’s Equity Juris. (5th Ed.), § 1799 et seq. Involved in it is a right of inheritance and when a right of such stature is to be cut off by foreclosure, proper notice is a person’s due, and notice which is notice in form but a gesture in fact, is not due process.
Our In Bern Eoreclosure Act, P. L. 1948, Chapter 96, merely requires notice by publication to the last record owner shown by a 60-year search, Section 10; and notice to any person desiring to protect a right, title or interest in the described land or any parcel thereof, Section 19. No copy of the petition is required to be served on anybody, but the tax foreclosure list is published and the only description of the land set out in there is the lot and block number as shown on the tax duplicate and the book and page in the county records where the tax sale certificate is recorded. Section 7. An examination of the tax foreclosure list would not disclose to an interested party what interest, if any, he had that would make it worth his while to redeem this property, and this is peculiarly true as to tax sale certificates acquired before this act which can be foreclosed under it. Mailing of a notice to a party in interest is not mandatory, it is permissive, and *336a party in interest can receive notice if lie files a request for notice with the tax collector, but such a request will only be effective for five years. Sections 20 and 21. From a practical standpoint a notice which is as indefinite in form as this (which is only required to be published once in a newspaper, section 19, and even though it were required to be published for four weeks in a newspaper), is in effect no notice at all to a party entitled to notice and particularly to those other than the last record owner who have a right of redemption under B. S. 54:5-54.
Great reliance is placed upon New York cases construing the New York act, which is found in McKinney’s Consolidated Laws, Booh 59, §§ 165 et seq. But the New York act is considerably different from P. L. 1948, Chapter 96. In the New York act personal notice is mandatory to all those whose addresses are known or can be found and who have the right to redeem. Further, if an answer is filed in a New York proceeding the property goes to a public sale where it is sold to the highest bidder, in contradistinction to our act where there is no sale and on failure to redeem for the fixed amount the right of redemption is cut off. A foreclosure that goes to a sale and a foreclosure that merely cuts off the right of redemption if redemption is not made, are two separate and distinct things. Milsch v. Owens, 82 N. J. Eq. 404 (Ch. 1913). If a sale were had on a bill to foreclose the right of redemption the redemption, in effect would be made by the public, a mere stranger to the title. Our law does not intend to make a provision that a total stranger may deprive the purchaser at a tax sale of his right to prove his title by strict foreclosure on the one hand and usurp the owner’s right to redeem by permitting the land to be bought away from him on the other hand. The right to foreclose the right to redeem is not the right to have a sale of the premises for the purpose of obtaining a money satisfaction for the amount paid bjr the purchaser upon acquiring the land at a tax sale.
This distinction is important because when a sale is had on foreclosure what realty results is an equitable partition and *337the land of the owner, as to the excess oyer and above the lien foreclosed, is turned into money which still remains lands and which is then partitioned for the purpose of paying other lienors and giving to the owner of the right of redemption that which is due him in place and stead of his lands. Further, once such a public sale is held there is an opportunity for the owner or lienor to protect himself. Such opportunity is not given under our In Rem Foreclosure Act. I clearly think the New York statute and cases are distinguishable.
Reliance is also had on the case of Gathwright v. Baltimore, 181 Md. 362, 30 A. 2d 252, upholding the validity of the Maryland In Rem Foreclosure Act. That statute and case likewise are clearly distinguishable. Under that act notice by publication is required as to nonresident and unknown owners, but as to resident parties with an interest (including a reversionary interest) personal service is required within the state. Such a requirement is lacking in our statute; therefore my doubt is grounded in the failure to require personal notice to parties having the right to redeem where personal service could be made through any reasonable inquiry or reasonable effort or diligence.
I have some difficulty in reconciling the United States Supreme Court cases relied on by the majority, and the recent decision of that court in Mullane v. Central Hanover Bank & Trust Co., supra. I do not think that Anderson Nat. Bank v. Luckett, 321 U. S. 233, 64 Sup. Ct. 599, 88 L. Ed. 692, 151 A. L. R. 824; Security Savings Bank v. California, 263 U. S. 282, 44 Sup. Ct. 108, 68 L. Ed. 301, 31 A. L. R. 391, are applicable because those cases proceeded on the theory that the owner of the intangible property was not completely deprived of it. In those cases the owners were unknown and could not be found and personal service could not be made. What occurred under the statutes there in question was merely a change in the depository and at any time in the future on a proper showing the owner could recapture his property. Such is not the situation here. A decree of foreclosure under our act is a final decree and vests in the plaintiff an absolute *338and indefeasible estate oí inheritance in fee simple in the lands therein described, which is binding and final upon all persons having a right of redemption given by our statute. Section 36.
As to infants and incompetents it is argued that where a statute such as this makes no exception with respect to them, it applies to them with equal force as if they were sui generis. I concede they can be charged with knowledge of their taxes, and up to the point where the lien for the taxes is impressed upon their property or their property is sold subject to their right of redemption that they may be charged by statute with knowledge of the law, even though it may be difficult to understand .why in these particular instances they are suddenly considered to be sui generis when in fact we know they are not. Again the argument is one of expediency.
I have examined the cases relied on in the majority opinion, including Newman v. Levy, 130 N. Y. 11; Spitcaufsky v. Hatten, 182 S. W. 2d 86 (Sup. Ct. Mo., Sept. 5, 1944), but in these cases the action was to set aside a foreclosure for failure to appoint a guardian ad litem in the proceeding. In each case there was service of the notice upon the infant or incompetent. We have no such requirement in our act.
The provisions of the In Bern Foreclosure Act are in sharp conflict with the provisions as to notice under the rules of civil practice. Buies 3:4^4; 3:4-5; 3:17-1; 3:17-4 and 3 :55-2(b), which are applicable to all foreclosure proceedings, including tax foreclosure proceedings.
I merely pose the question, which I deem it unnecessary to answer here because of my other doubts as to the constitutionality of the statute, and the question is: Do the rules of civil procedure applicable as to service of process and notice to infants and incompetents that are found in Buies 3 :4r-4, 3:4-5, 3:17-1, 3:17-4 and 3:55-2(b) which are applicable to a foreclosure proceeding, including tax foreclosure proceedings, supersede the provisions of P. L. 1948, Chapter 96 which was enacted prior to the promulgation of these rules by the Supreme Court? This question will have to be answered when the question is directly raised.
*339Sin.ce the statute makes a material change in the type of notice to be given to a mortgagee and since the right of redemption for taxes became a part of his contract on the mortgage, this material change in his remedy of redemption may amount to an impairment of his obligation of contract. Lapp v. Belvedere, 116 N. J. L. 563 (E. & A. 1936), and the cases cited there. Cf. Wood v. Lovett, 313 U. S. 362, 61 Sup. Ct. 983, 85 L. Ed. 1404.
I consider the statute unconstitutional in its provisions as to notice relative to resident and nonresident defendants who have the right of redemption and whose names and addresses could be ascertained by a reasonable effort. I likewise consider it unconstitutional in its failure to require notice to infants and incompetents so that they may have an opportunity to be represented by guardians ad litem under the applicable rules of civil procedure.
True, the Legislature has the sole power to establish the methods for the levy and collection of taxes. It is one thing to assess, levy, and to impress a lien for taxes on the property; it is a wholly different thing to deprive a person of a right of property for failure to pay his taxes. If the Legislature can do it for four years as to “general land taxes,” it can do it for one year’s taxes.
The exercise of the taxing power is a severe exercise of the power of absolute sovereignty on behalf of the State and to divest ownership without personal notice and without direct compensation out of the excess value is the instance where constitutional government approaches most nearly to an unrestrained tyranny. Redemption is the last chance of a citizen to recover his property. Cooley on Taxation (4th Ed.), §§ 1562, 1567, 1568.
I would therefore reverse the judgment.
I am reqitested by Mr. Justice Heher to state be concurs in this dissent.
For affirmance—Chief Justice Vanderbilt, and Justices Case, Burling and Ackerson—4.
For reversal—Justices Heher and Oliphant—2.