Court Opinion

ID: 9862612
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:34:16.235084+00
Date Added: 2024-06-11T11:26:15.943788
License: Public Domain

Jacobs, J., joined by Ekancis, J.
(dissenting). The plaintiffs bid more than the taxes due in the hope that the owner would not redeem and that they would profit accordingly. The owner did redeem and the plaintiffs now seek to recover from the township the difference between the taxes paid by the owner and the amount paid by them on their bid. They admit that the public sale was conducted upon the announced condition that no bid less than the taxes due would be accepted; that no representations were being made as to area, acreage, condition and location; that the township was selling only whatever interest it had in the property; that no deed other than an assignment of the tax sale certificate would be given, and that “no claim for any refund of any part of the purchase price for any *323reason whatsoever need be recognized by the township.” Apparently this condition has been consistently used and has been indiscriminately applied by the township in its public sales of tax sale certificates during recent years and its business purpose was quite evident—the township was seeking to obtain usable cash which it could commit and disburse for proper municipal purposes without fear or danger that it might later be obliged to return it.
In the Chancery Division the parties submitted the matter on a stipulation which did not suggest that the township had not acted in good faith or that the plaintiffs were not aware of the purpose and effect of the condition. Their complaint omitted all mention of the condition but the township’s answer expressly set it forth as a separate defense upon which it would rely. In the pretrial order the plaintiffs made no attack on the condition but advanced the contention that the statute permitting the public sale is “unconstitutional insofar as no provision is made for the return of the difference between the taxes actually due and the purchase price paid on such public sale.” The opinion by Judge Wick in the Chancery Division indicates that this was the single contention advanced by the plaintiffs before him; he soundly rejected it and it has been abandoned by the plaintiffs who now urge that the condition was illegal or ultra vires. They refer to no statutory or decisional law which so declares and a fair reading of the majority’s opinion discloses that there is none. N. J. S. A. 54:5-114.2 expressly authorizes the governing body of a municipality io sell certificates of tax sale at public sale, and although it makes no reference to conditions, it seems to us that it is fairly to be construed as authorizing the municipality to announce proper conditions for its own protection. See Const. 1947, Art. IY, § 7, par. 11. In any event, the plaintiffs, acting on their own volition, chose to bid at the public sale with full knowledge of the condition; and the majority now holds that despite the good faith and reliance of the township and the voluntary participation and payment by the plaintiffs, the condition may at this late date be dis*324regarded at the plaintiffs’ behest and the township may be obliged to make repayment to them. This holding, which furnishes a precedent for the institution of similar actions by other purchasers, tends to jeopardize the municipal finances and, in the 'light of the particular circumstances, appears to be neither just to the people of the township nor consistent with the common law approach in related situations. See Manor Real Estate & Trust Co. v. City of Linden 8 N. J. Super. 114 (App. Div. 1950); Tooker v. Roe, 44 N. J. L. 591 (Sup. Ct. 1882); Casselbury v. Inhabitants of Piscataway Tp., 43 N. J. L. 353 (Sup. Ct. 1881); 16 McQuillin, Municipal Corporations (3d ed. 1950), § 44.172, p. 438.
The common law gave full recognition to the concept that purchasers of tax sale certificates are speculators who generally seek large profits upon small investments and who may fairly be treated as acting at their peril; in many instances it denied their claims for refunds even where they may have been innocently misled. Thus in Manor Real Estate & Trust Co. v. City of Linden, supra, the plaintiff purchased tax sale certificates and later learned that the property was tax exempt and that his certificates 'were valueless. He sought to recover from the city but his claim was denied in an opinion by the Appellate Division which pointed out that in the tax sale proceedings the city had made no covenants and had merely purported to assign whatever interest it had in the property and nothing more. In Casselbury v. Inhabitants of Piscataway Tp., supra, the plaintiff sought to have a tax sale set aside in order that he might thereafter obtain a refund; in rejecting his claim the former Supreme Court, through Justice Dixon, had this to say (43 N. J. L. at page 354) :
“The object of the prosecutors in seeking to have the sale annulled is to prepare the way for a suit to recover from the township the purchase money paid on the sale. It is not denied that the township had the power to tax and to sell for taxes, that the taxes were actually levied and were unpaid, that a sale was actually made, and that there was no fraud or imposition, and no warranty; it is merely alleged that there was illegality in the method of procedure. *325The rule of law applicable to such a ease is that the municipality is under no obligation to refund the purchase money because the tax title fails; the purchaser is a volunteer, and buys at his own risk. Lynde v. [Inhabitants of\ Melrose, 10 Allen 49 [92 Mass. 49] ; Cooley on Tax. 572.”
In City of Wilmington v. Merrick, 234 N. C. 46, 65 S. E. 2d 373 (1951), the purchaser at a tax foreclosure sale sought a refund from the city on the ground that there had been a failure of title; relief was denied to him in an opinion which read in part as follows:
“The principle of caveat emptor applies with all its rigor to the purchase of real estate at a tax sale. Ordinarily, the holder of a tax deed executed pursuant to an invalid commissioner’s sale in a tax foreclosure suit may not obtain reimbursement from the taxing authorities.
The fundamental fairness and soundness of this rule is apparent. One who purchases at a tax sale does so without warranty,'—and usually with the expectation of substantial profit. * * * it would seem to be unsound public policy to require local taxing units to underwrite the validity of these tax titles. Any such requirement would tend to render uncertain, if not to imperil, public finances.”
In Petters & Co. v. Nelson County, 68 N. D. 471, 281 N. W. 61 (1938), the state contracted to sell property in Nelson County, and thereupon the county levied taxes on it. Upon default in the payment of taxes the county conducted a delinquent tax sale and sold the property to the plaintiff, who received a tax sale certificate. Thereafter the state cancelled its contract of sale and the plaintiff sought a refund from the county. In denying his claim the court held that the rule of caveat emptor was applicable and that a subsequent legislative enactment which sought to allow the refund could not constitutionally be applied to the prior tax sale since that would be a donation to the plaintiff of “moneys from the public treasury to which he had neither a legal, an equitable, or a moral right.” See Atlantic Municipal Corporation v. Auditor General, 304 Mich. 616, 8 N. W. 2d 659 (1943); Anderson v. King County, 200 Wash. 354, 93 P. 2d 284 (1939); Annotations, 77 A. L. R. 824 (1932), 116 A. L. R. 1408 (1938).
*326It may well be that in the aforecited cases there were no express conditions fairly cautioning the bidders that their quest for extraordinary gains entailed commensurate risks and the bidders may have acted under misapprehensions which might under more modern concepts furnish persuasive basis for equitable relief. But in the instant matter there admittedly was a comprehensive condition which was not objected to by any of the bidders and which obviated the danger of misapprehension. Under the circumstances the plaintiffs are in no just position to disavow the adverse terms of the transaction in which they voluntarily engaged. See Taylor v. City of Haverhill, 316 Mass. 380, 55 N. E. 2d 617 (1944):
“The plaintiff contends that the condition as to future confirmation was one not contemplated by the statute, and, since it was not contained in the notice of the sale, was void. See Parrotta v. Hederson, 315 Mass. 416, 53 N. E. 2d 97. But whether the custodian had a right to make that condition one of the terms of sale or not, he actually did so, and the bids were made and received accordingly. The plaintiff, having bid upon that condition, cannot now. maintain that that condition did not exist.”
In Camden v. Green, 54 N. J. L. 591 (1892), the Court of Errors and Appeals went much further than is suggested here in barring recovery of a payment made to a municipality which acted under conditions alleged to be illegal or ultra vires. The plaintiff sought a license from the City of Camden’s excise board and tendered the sum of $300. The board in good faith claimed $500 although the proper fee was only $300. Thereupon, the plaintiff paid $500 to the city and sought recovery of $200. His claim was denied in an opinion which stressed that the plaintiff was at liberty to accept or decline the license, that his acceptance and payment were voluntary, and that policy dictates the denial of a claim for refund where the payor voluntarily makes his payment to the municipality with full knowledge of all the facts and conditions. See Rutgers Chapter, etc. v. City of New Brunswick, 129 N. J. L. 238, 239 (Sup. Ct. 1942), affirmed 130 N. J. L. 216 (E. & A. 1943); Shoemaker & Co. v. Board of Health, 83 N. J. L. 425, 427 (Sup. Ct. 1912).
*327The majority opinion seems to take the position that the granting of the plaintiffs’ claim for refund is desirable from a policy viewpoint in that it will reduce the gaming or speculative aspect of their transaction and will encourage future bidding. But on a parity of reasoning, the granting of all claims for refunds where the purchasers fail to obtain title will further reduce the gaming or speculative aspects of their transactions and encourage future bidding. It seems to us that, if for any reason the traditional quitclaim sales are ever to be converted into warranty sales with their consequent financial burdens on municipalities, the Legislature may properly be expected to do so in unequivocal terms.
We would affirm the judgment entered in the Chancery Division.
Weintraub, C. J., concurring in result.
For reversal—Chief Justice Weintraub, and Justices Heher, Burling and Proctor—4.
For affirmance—Justices Jacobs and Eranois—2.