City of Newark v. Yeskel

• Decision Date: 16 November 1949
• Docket Number: No. C--1417,C--1417
• Citation: 6 N.J.Super. 434,69 A.2d 355
• Parties: CITY OF NEWARK v. YESKEL.
• Court: New Jersey Superior Court

Page 434

6 N.J.Super. 434

69 A.2d 355

CITY OF NEWARK v. YESKEL.

No. C--1417.

Superior Court of New Jersey

Chancery Division.

Nov. 16, 1949.

Charles Handler, Newark, attorney for plaintiff.

Sidney Finkel and Robert Inlander, Newark, attorneys for defendant.

STEIN, J.S.C.

The plaintiff, the City of Newark, seeks specific performance of the defendant's agreement to purchase premises in the City of Newark for which the defendant was the highest bidder at a public sale conducted by the City under the provisions of the In Rem Tax Foreclosure Act (1948), R.S. 54:5--104.29, et seq. N.J.S.A. The defendant resists on the ground that the title is not marketable, in that it depends upon an antecedent foreclosure by the City of Newark of a tax sale certificate, such foreclosure having been held under the aforementioned In Rem Tax Foreclosure Act. The defendant's answer sets forth that that Act is unconstitutional in that (1) it fails to provide, by service of process or by substituted service, for notice to the owner and other persons interested in the lands affected by the foreclosure; (2) it fails to provide for service of process upon infants and incompetents through guardians or other legal representatives; (3) it was here applied to the foreclosure of a tax certificate acquired by the plaintiff prior to the enactment of the Act; (4) it impairs the obligation of contracts as existing between the City, as taxing authority, and the owner of the lands under foreclosure; (5) it deprives the owner and other parties in interest of the right of redemption. By reason of the foregoing objections the defendant claims that proceedings under the Act constitute a 'denial of due process' and is objectionable in the constitutional sense in that it impairs the obligation of contract.

The matter is before the court on plaintiff's motion for a summary judgment on the pleadings. In dealing with this motion one admitted fact need be specially mentioned. Paragraph 3 of the complaint alleges, and paragraph 3 of the answer admits, that the foreclosure proceedings here involved 'were conducted by plaintiff in full compliance with the In Rem Tax Foreclosure Act (1948), R.S. 54:5--104.29 (N.J.S.A.).' Thus it may be assumed that all the procedural requirements of the Act were complied with and that the infirmity, if any there be, rests in the statute itself, not in the proceedings taken thereunder. The defendant's objections will now be considered.

It has been quite generally held that the legislature of a state has the power to enact summary measures for the enforcement of the collection of taxes, even to the extent of selling property upon notice given only by publication to the parties in interest, and that such summary measures do not offend the 'due process' requirements of law. Gathwright v. Mayor and City Council of Baltimore, 181 Md. 362, 30 A.2d 252, 145 A.L.R. 590 (1943). The legislature may within reasonable limits prescribe the kind of notice to be given to the affected parties, and when so given the parties in interest have been afforded the due process of law. Monroe v. Douglas, 4 Sandf.Ch. 182. Every presumption exists in favor of such legislation and recognition can be denied only where it is manifestly in excess of the legislative power. Howes Bros. Co. v. Mass. Unemployment Comp. Comm., 296 Mass. 275, 5 N.E.2d 720 (1936). An important distinction not to be lost sight of is that which exists between actions in personam and actions distinctively in rem. In the former class personal service is indispensable to the validity of the judgment or decree. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. However, in 'real' actions the proceeding seeks to reach or bind the res, a result which may lawfully and properly be accomplished through notice by publication or other substituted service. Gathwright v. Mayor and City Council of Baltimore, supra. Actions which are often referred to as 'quasi in rem' differ from 'real' actions only in that the former, though brought against persons, seek only to subject the property of such persons to the satisfaction of claims. Amparo Mining Co. v. Fidelity Trust Co., 74 N.J.Eq. 197, 71 A. 605, affirmed 75 N.J.Eq. 555, 73 A. 249; Solomon v. Yudkin-Krell, 2 N.J.Super. 315, 63 A.2d 715.

The Act under consideration here expressly provides, in Section 5, R.S. 54:5--104.33, thereof, that in any proceeding thereunder no personal decree shall be entered against any person. The legislature has further provided in Section 19 of the Act, R.S. 54:5--104.47, that in the notice to be published there be included the statement that 'the proceedings are brought against the land only, and no personal judgment or decree may be entered therein.' Aside from the express declaration contained in the Act that the proceeding is against the land only (and is therefore one in rem), the uniform view concerning tax foreclosures is that they are proceedings strictly in rem. As was pointed out in Gathwright v. Mayor and City Council of Baltimore, supra, the purpose of the proceeding is to subject specific property to the payment of taxes but no personal liability flows from the foreclosure judgment or decree, and even costs of foreclosure may not be assessed against the parties in interest, since the taxes together with costs of action are collectable only out of the res. In the cited case the court rejected the claim that a tax foreclosure suit possesses the attributes of a strict foreclosure, where personal service is an indispensable requirement.

The State of New York in 1939 enacted legislation quite like our own Act, here under discussion. It is observed that that legislation was sustained by the New York courts as being constitutionally inoffensive. See City of Buffalo v. Hawkes, 266 App.Div. 480, 236 N.Y.S. 89, affirmed 251 N.Y. 588, 168 N.E. 438; City of Utica v. Priote, 178 Misc. 925, 36 N.Y.S.2d 79, affirmed 288 N.Y. 477, 41 N.E.2d 174; City of New Rochelle v. Echo Bay Water Front Corp., 182 Misc. 176, 42 N.Y.S.2d 645, affirmed 268 App.Div. 182, 49 N.Y.S.2d 673, affirmed by Court of Appeals, 294 N.Y. 678, 60 N.E.2d 809 (1945) certiorari denied by U.S. Supreme Court 326 U.S. 720, 66 S.Ct. 24, 90 L.Ed. 426 (1945). There is, however, one distinction between the New York Act and our own in respect of the requirements for service of notice. Under the New York Act notice to parties in interest is required to be given by posting, publication, and mailing. Under the New Jersey Act only posting and publication are mandatory; mailing is only permissive. It does not appear from the pleadings in the case at bar whether or not there was in fact a notice by mail to the affected parties and the query is whether notice by posting and publication alone constitutes sufficient notice within the concept of due process.

It is uniformly recognized that tax liens imposed for the benefit of municipalities and other taxing authorities may be enforced by summary proceedings. All that is required is that within reasonable limitations notice of such proceedings be given. As was said by the United States Supreme Court in North Laramie Land Co. v. Hoffman, 268 U.S. 276, 283, 45 S.Ct. 491, 494, 69 L.Ed. 953: 'All persons are charged with knowledge of the provisions of statutes and must take note of the procedure adopted by them and when that procedure is not unreasonable or arbitrary there are no constitutional limitations relieving them from conforming to it. This is especially the case with respect to those statutes relating to the taxation or condemnation of land. Such statutes are universally in force and are general in their application, facts of which the land owner must take account in providing for the management of his property and safeguarding his interest in it. Owners of real estate may so order their affairs that they may be informed of tax or condemnation proceedings of which there is published notice, and the law may be framed in recognition of that fact. In consequence, it has been uniformly held that statutes providing for taxation or condemnation of land may adopt a procedure, summary in character, and that notice of such proceedings may be indirect, provided only that the period of notice of the initiation of proceedings and the method of giving it are reasonably adapted to the nature of the proceedings and their subject matter and afford to the property owner reasonable opportunity at some stage of the proceedings to protect his property from an arbitrary or unjust appropriation.'

In Leigh v. Green, 193 U.S. 79, 24 S.Ct. 390, 392, 48 L.Ed. 623 (1904), the Supreme Court of the United States passed on a Nebraska statute which provided that in a tax foreclosure action the proceeding may be brought against the land itself where the owner is unknown. The requirement for notice was that there be publication of the fact of foreclosure, together with some identification of the property under foreclosure, the amount of taxes in arrears, and a date by which appearance may be made or answer may be filed. After pointing out that the law sanctions the most summary methods for the seizure and sale of property for the satisfaction of taxes and public dues and that such seizure and methods do not amount to a taking of property without due process of law, the court said:

'In the present case, the argument is that as the state has not seen fit to resort to the drastic remedy of summary sale of the land for delinquent taxes, but has created a lien in favor of a purchaser, at tax sale, after permitting two years to elapse in which the owner or lienholder may redeem the property, it has, in authorizing a foreclosure without actual service, taken property without due process of law, because the proceedings and sale to satisfy the tax lien do not require all lienholders within the jurisdiction of the court to be served with process. If the state may proceed summarily, we see no reason why it may not resort to such judicial proceedings...