Dime Sav. Bank of N.Y., FSB v. Town of Pembroke

• Citation: 698 A.2d 539,142 N.H. 235
• Decision Date: 06 August 1997
• Docket Number: No. 95–873.,95–873.
• Court: New Hampshire Supreme Court
• Parties: The DIME SAVINGS BANK OF NEW YORK, FSB v. TOWN OF PEMBROKE.

142 N.H. 235

698 A.2d 539

The DIME SAVINGS BANK OF NEW YORK, FSB

v.TOWN OF PEMBROKE.

No. 95–873.

Supreme Court of New Hampshire.

Aug. 6, 1997.

Sheehan, Phinney, Bass + Green, P.A., Manchester (Douglas G. Verge, on the brief and orally, and Thomas M. Closson on the brief), for plaintiff.

Upton, Sanders & Smith, Concord, (Barton L. Mayer on the brief and orally), for defendant.

THAYER, Justice.

The plaintiff, Dime Savings Bank of New York, FSB (bank), appeals an order of the Superior Court (Manias, J.) denying the bank's petition to invalidate tax deeds issued to the defendant, Town of Pembroke (town). On appeal, the bank argues: (1) the town failed to adequately notify the bank of the tax deedings; (2) the town failed to justly compensate the bank after the town deeded to itself the subject properties; and (3) the trial court abused its discretion in awarding the town attorney's fees. We reverse and remand.

The bank held first mortgages on two parcels of property located in Pembroke. In June 1990, the town mailed notices to the bank stating that it had executed tax liens on the subject properties for nonpayment of 1989 taxes. See RSA 80:65 (1991) (amended 1991). Two years after the attachment of the tax liens, the taxes remained unpaid.

On or about March 17, 1992, the town mailed notices via certified mail, return receipt requested, to the record owners, indicating that the town intended to execute tax deeds to itself on April 27, 1992. Photocopies of the notices were sent to the bank at the address listed on the mortgage documents at the Merrimack County Registry of Deeds. The bank denies receipt of the town's mailed notice of the tax deedings.

On April 23, 1992, four days before the scheduled deedings, the town tax collector telephoned the bank's New Hampshire attorneys regarding the impending tax deedings. The message was relayed to the bank. The taxes remained unpaid, and six days later, the town executed tax lien deedings on the subject properties. The town auctioned the properties, but the sales were never consummated. The town was unable to convey marketable title as a result of the pending litigation.

The bank filed a petition to set aside the town's deedings of the subject properties claiming, inter alia, that it did not receive adequate notice of the impending tax lien deedings. The bank subsequently amended its petition to claim that the town's tax lien deedings constituted takings without just compensation. Following a hearing on the merits based on agreed facts and arguments of counsel, the superior court granted judgment in favor of the town and awarded the town attorney's fees. The bank timely moved for reconsideration, and the court denied the same. This appeal followed.

The first issue is whether the bank received adequate notice of the tax deedings as a matter of due process under the State and Federal Constitutions. We begin by analyzing the plaintiff's claim under part I, article 15 of the New Hampshire Constitution, referring to cases interpreting the fourteenth amendment of the Federal Constitution only to aid in our analysis. See First NH Bank v. Town of Windham, 138 N.H. 319, 325, 639 A.2d 1089, 1093 (1994).

The bank argues that the notices of the tax deedings were constitutionally inadequate because: (1) the bank never received the written notices of the tax lien deedings; (2) the notices did not contain a warning that the mortgages would be eradicated by the tax lien deedings if the properties were not redeemed; (3) the notices did not expressly state the expiration dates of the right of redemption; and (4) the inadequate notices were not cured by a telephone call made to the bank's attorneys four days before the scheduled tax lien deedings. In addition, the bank argues that the notices were constitutionally inadequate because they were not sent by certified mail, return receipt requested as RSA 80:77 (1991) required for similarly situated owners. We begin with the bank's contention that the notices did not contain a warning that the mortgages would be eradicated by the tax deedings.

In Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950), the United States Supreme Court set forth a general standard for notice:

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice 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 notice must be of such nature as reasonably to convey the required information and it must afford a reasonable time for those interested to make their appearance.

(Citations omitted.) Relying on Mullane , the Supreme Court subsequently held: "Since a mortgagee clearly has a legally protected property interest, he is entitled to notice reasonably calculated to apprise him of a pending tax sale." Mennonite Board of Missions v. Adams, 462 U.S. 791, 798, 103 S.Ct. 2706, 2711, 77 L.Ed.2d 180 (1983). The Court explained: "Ultimately, the tax sale may result in the complete nullification of the mortgagee's interest, since the purchaser acquires title free of all liens and other encumbrances at the conclusion of the redemption period." Id.

In First NH Bank , a majority of this court held that under part I, article 15 of the New Hampshire Constitution, a known mortgagee is entitled to actual notice of a tax deeding. First NH Bank, 138 N.H. at 327, 639 A.2d at 1094; see Federal Nat'l Mortgage Assoc. v. Town of Fremont, 141 N.H. 156, 157, 679 A.2d 585, 586 (1996). The court reasoned that "the execution of a tax deed ha[s] much greater significance to interested parties than...