Court Opinion

ID: 3626692
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:07:06.085271+00
Date Added: 2024-06-11T14:22:22.895404
License: Public Domain

This is an action to set aside as invalid tax sales and subsequent conveyances of certain property located in Albany. In 1925, several of the tenants in common who then owned the property commenced a partition action in the Supreme Court, Albany County, which resulted in the entry of a judgment of partition and sale in 1927. In 1935, a receiver was designated and, in 1940, he was succeeded by the plaintiff Johnson who was "appointed with the usual powers Receiver herein for the benefit of the Plaintiffs and Defendants in this action, of all the rents and profits now due and unpaid or to become due pending this action and issuing out of the premises" in question. Though more than twenty years have passed, the partition action is still pending.
In 1938, the property was assessed at $51,000, and — the taxes not having been paid as required — the county treasurer in 1940 sold the property to the county of Albany for 1,000 years for $2,200. There was a default also in the 1939 taxes, and in 1941 again the county treasurer sold the property to the county for a like sum of $2,200. The county assigned its rights and conveyed the property to defendant Federal Investors, Inc.; the latter subsequently conveyed to defendant New York State Realty Liquidating Corporation, which, in turn, sold to defendant Sandler, and she is now collecting the rents. *Page 170 
In 1946, five years after the last tax sale, the receiver Johnson and one of the parties to the partition proceeding commenced this present action against (1) the county treasurer of Albany County, (2) the purchaser at each of the tax sales, and (3) the subsequent grantees of the property. By the action, plaintiffs seek to set aside as "null, void and of no effect" the tax sales and the conveyances subsequently made. It is acknowledged that the county treasurer complied faithfully and completely with all applicable provisions of law — of city charter and tax statutes — but it is contended that the property was in the custody of the court through its receiver and that its sale without court permission was void.
The defendants moved to dismiss the complaint, under rule 106 of the Rules of Civil Practice, upon the ground that it failed to state a cause of action. The justice at Special Term granted the motion; the Appellate Division, however, reversed and, in granting leave to appeal, certified the question, "Does the complaint state a cause of action?" It is our opinion that it does not.
In order to function, a government must collect taxes. To assure a part of them, Constitution and statute render taxable "all real property within this State * * * unless exempt from taxation by law" (Tax Law, art. I, § 3; N.Y. Const., art. XVI, §§ 1, 2). Equality and uniformity of taxation are the aim, for, if one taxpayer escapes payment, the burden is placed — disproportionately and unfairly — on another. (See Matter ofAtlas Television Co., 273 N.Y. 51; Mabie v. Fuller, 255 N.Y. 194,201; People ex rel. Metropolitan Street Ry. Co. v. TaxComrs., 199 U.S. 1, affg. 174 N.Y. 417; People ex rel. Gould
v. Barker, 150 N.Y. 52; Security Building  Loan Assn. v.Carey, 259 App. Div. 42, 47; County of Herkimer v. Villageof Herkimer, 251 App. Div. 126.)
It is section 150 of the Tax Law which imposed upon the county treasurer the duty to sell the property here involved; in mandatory terms, it directed the sale whenever "any tax charged on real estate * * * is returned" to him and remains unpaid for a specified period. Plaintiffs point to no statutory provision which exempts from taxation or from the operation of section 150, the property held by a receiver in *Page 171 
partition, and there is none. Once a default occurs — and the other statutory conditions are met — the county treasurer must
obey the law's mandate and sell the property no matter by whom owned — whether by incompetent, infant or trustee or receiver. (See, e.g., Levy v. Newman, 130 N.Y. 11; County of Nassau
v. Day, 266 App. Div. 738, affd. 291 N.Y. 732; BondedMunicipal Corp. v. Carodix Corp., 266 App. Div. 737, affd.291 N.Y. 733.) In the two cases last cited, we rejected a contention that the failure of a county treasurer to obtain court leave and approval for a tax sale invalidated such a sale where the property was held by trustees appointed by the Supreme Court in reorganization proceedings brought pursuant to the Schackno and Mortgage Commission Acts (L. 1933, ch. 745, and L. 1935, ch. 19, respectively). Those decisions apply with equal force here; insofar as the problem before us is concerned, there is little to differentiate the receiver in a partition suit from a trustee in a Schackno or Mortgage Commission Act proceeding. (See Matter ofBond  Mortgage Guar. Co., 288 N.Y. 270, 277.) In the absence of specific statutory provision restraining tax collection agencies during the pendency of the action, or during the receivership, there is no basis for a claim that the county or its treasurer should have sought permission from the court before selling the property for unpaid taxes or delivering the tax deeds. And, in any event, it is highly questionable whether the Supreme Court would have had jurisdiction in the first instance to enjoin the county from selling or delivering the deeds.
Paramount and vital is the circumstance that, in selling the property, the county treasurer acted solely in accordance with the mandate of the statute. It may well be that court approval is required if in possession is a statutory receiver or trustee or a receiver or trustee appointed by a court pursuant to a statute — such as the Federal Bankruptcy Act — granting extremely broad powers. Quite apart from any other consideration, under the Bankruptcy Act, title to the property vests in the trustee (Bankruptcy Act, § 70; U.S. Code, tit. 11, § 110). A receiver in partition, on the other hand, obtains no title to the property (Rinehart v. Hasco Building Co., 153 App. Div. 153, affd.214 N.Y. 635); title remains vested in the owners who *Page 172 
are the parties to the partition action. As is evident from the order of appointment, the receiver is given merely the right to manage the premises on behalf of those owners until the action has been concluded. The court, by appointing a receiver in a partition, undertakes, not to preserve the rights of the parties in the property against the world, but simply to preserve their rights as against each other.
Even in cases involving private litigants — and not officials upon whom is imposed a duty of collecting taxes — it has been held that, while propriety may suggest an application to the court before selling property possessed by a receiver, the failure to obtain leave neither defeats the action brought (Pruyn v. McCreary, 105 App. Div. 302, 304; Le Fevre v.Matthews, 39 App. Div. 232) nor invalidates the sale effected. (See Chautauque County Bank v. Risley, 19 N.Y. 369, 376-377; see, also, Moore v. Potter, 155 N.Y. 481, 491; Beardslee v.Ingraham, 183 N.Y. 411, 420; Matter of Loos, 50 Hun 67, 70-71.) Thus, this court wrote in the Chautauque County Bank
case (pp. 376-377): "We have been referred to cases showing that any attempt, by a person having an outstanding right or title, to disturb the possession of a receiver, is a contempt of the Court of Chancery. * * * In all the discussion no doubt was suggested that a prior legal title would prevail against a receiver's possession. The questions considered were, whether leave must be asked and whether, in that particular case, it should be granted. If not asked, it was considered that the party might be in contempt * * *. The sale itself is but the assertion of a legal right, and it cannot be illegal and void on the ground that the leave of an equitable tribunal is not first asked and obtained."
To hold, as the Appellate Division has, that the county treasurer must obtain permission from the court before selling for nonpayment of taxes so as to permit the court to "determine whether the property should be sold or held for the benefit of parties interested and the municipality" (272 App. Div., at p. 9), is to assume the existence of a power in the court to prevent the tax sale or postpone it indefinitely. The consequence of such a decision would be the creation of tax exemption by judicial fiat in favor of receiver-held property, perhaps as to amount, certainly as to time and method of payment — *Page 173 
a result clearly contravening the constitutional provision that "Exemptions from taxation may be granted only by general laws" (N.Y. Const., art. XVI, § 1). On the other hand, if a court were under the necessity of granting leave to a county treasurer — because the statute directs him to sell — the application to the court would be but an empty and futile gesture, and it should not be required. Or if a regard for propriety does demand it — and I doubt that it does — failure to comply with such a formality should not result in voiding the sale.
The cases relied upon to support plaintiffs' position are beside the point. (Wiswall v. Sampson, 14 How. [U.S.] 52;Matter of Tyler, 149 U.S. 164; Dayton v. Pueblo County,241 U.S. 588; Walling v. Miller, 108 N.Y. 173; Central TrustCo. v. N.Y.C.  N.R.R. Co., 110 N.Y. 250.)
While the Wiswall case (supra) and the Walling case (supra) — and they did not involve a public official selling for nonpayment of taxes — indicated that a sale by a private litigant of property in the hands of a receiver would be void if sold without court permission, such is not the law in this State. Thus, in Chautauque County Bank v. Risley (supra), this court expressly declared it would not follow the Wiswall case, if it did lay down such a rule (p. 377). The Walling case was decided after the Chautauque County Bank case, but in the later case of Beardslee v. Ingraham, supra, pp. 421-422, this court again expressly disavowed the doctrine ascribed to the Wiswall
case and explicitly reaffirmed our decision in the ChautauqueCounty Bank case. (See, also, Moore v. Potter, supra, p. 490.)
No public policy is to be served by requiring the court — because of a supposed involvement of its dignity — to aid taxpayers in avoiding or delaying the payment of taxes owing by them and necessary for the carrying on of government. In the present case, the taxes were not paid, and the county treasurer, in selling the property under compulsion of the Tax Law, complied strictly with every applicable provision. The sales as well as the tax deeds and the subsequent conveyances, being valid and proper, are immune from attack. The owners of the property and the receiver were granted a privilege by statute to redeem; they chose not to avail themselves of it. *Page 174 
The order of the Appellate Division should be reversed, and that of Special Term affirmed, with costs in this court and in the Appellate Division. The question certified should be answered in the negative.