McCann v. Scaduto

• Citation: 510 N.Y.S.2d 149,123 A.D.2d 111
• Parties: Helene E. McCANN, et al., Appellants, v. John V. SCADUTO, etc., et al., Respondents.
• Decision Date: 31 December 1986
• Court: New York Supreme Court — Appellate Division

Page 149

510 N.Y.S.2d 149

123 A.D.2d 111

Helene E. McCANN, et al., Appellants, v. John V. SCADUTO, etc., et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

Dec. 31, 1986.

Suozzi, English & Klein, P.C., Mineola (Jeffrey G. Stark, Robert N. Zausmer, Kenneth L. Gartner and Michael A. Ciaffa, of counsel), for appellant Helene E. McCann.

Edward T. O'Brien, Co. Atty., Mineola (Joshua A. Elkin, of counsel), for respondent John V. Scaduto.

Wimpfheimer & Sherman, Garden City (Steven Wimpfheimer, of counsel), for respondent Shirley Stone.

Robert Abrams, Atty. Gen., New York City (Peter Bienstock, Mary Hilgeman and Lisa H. Blitman, of counsel), amicus curiae.

Before LAZER, J.P., and RUBIN, LAWRENCE, EIBER and KOOPER, JJ.

PER CURIAM.

The primary issue presented by this appeal, upon reargument, is whether the provisions of the Nassau County Administrative Code (hereinafter NCAC) dealing with the enforcement of collection of real estate taxes are unconstitutional on the basis that the NCAC does not require that actual notice of sale of the tax lien upon the owner's property be served upon the property owner. The NCAC does, however, require that the property owner be served with actual notice, by certified mail, return receipt requested, of his right to redeem the outstanding tax lien prior to the expiration of the redemption period, after which time the lienholder is entitled to acquire absolute title to the subject premises. We conclude that the statutory scheme is constitutional and accordingly, upon reargument, adhere to this court's prior holding which affirmed the dismissal of the petition (see, McCann v. Scaduto, 118 A.D.2d 690, 499 N.Y.S.2d 892).

I.

Prior to a discussion of the facts of the case at bar, a review of the particular provisions of the NCAC applicable herein is warranted. ¹ NCAC § 5-37.0[a] requires the County Treasurer each year to compile a list of properties for which taxes have not been paid in the previous year. These outstanding taxes are designated as a "tax lien" against each of the respective properties (NCAC § 5-24.0[4] ) and the County Treasurer is then required to set a date in February of the following year for the sale of said liens (NCAC §§ 5-37.0, 5-39.0[a] ). The list, along with notice that the tax liens will be sold unless the outstanding charges are paid by that date, is required to be published three times in a newspaper of general circulation (NCAC §§ 5.37.0[a], [c] ). The tax liens for which payment has not been made by the date specified in the published notice are then sold at a public auction to the bidders who offer to accept the lowest rate of interest on the outstanding balance of the tax lien (NCAC §§ 5-39.0[a], former [b]; 5-40.0). The code provisions in question did not provide for actual notice of the sale of the tax lien upon the property owner.

A two-year redemption period begins to run once the tax lien is sold, during which time the property owner may satisfy the tax lien by making payment to the County Treasurer of the outstanding taxes, interest, penalty, and expenses regarding the lien (NCAC §§ 5-48.0; 5-50.0). Commencing no later than 21 months after the tax lien sale, the purchaser of a tax lien is required to serve a three-month notice to redeem by certified mail, return receipt requested, upon the record owner or owners, mortgagee or mortgagees, prior lienholder or lienholders, and other specified parties (NCAC § 5-51.0).

Under the provision in question, the notice essentially informed the recipient that title to the property would be conveyed to the lienholder unless the lien is redeemed by the end of the redemption period (NCAC § 5-51.0, former [b][4] ). If the property owner failed to redeem the tax lien within the specified three-month time period, the lienholder could either commence a formal real property foreclosure proceeding to obtain title or, in the alternative, apply to the County Treasurer to obtain a deed of conveyance to the property (NCAC § 5-51.0, former [b][4] ). If the lienholder chose the latter alternative, the County Treasurer, upon receipt of the three-month notice to redeem together with proof of service, issued a deed of conveyance to the lienholder (NCAC §§ 5-51.0[e]; 5-53.0). The deed of conveyance vested absolute title in fee to the lienholder and constituted presumptive evidence that all of the proceedings leading up to the conveyance (i.e., the sale of the tax lien and service of the notice to redeem) were validly performed (NCAC §§ 5-53.0; 5-54.0[b] ).

II.

The facts of this proceeding are essentially undisputed. The petitioner Helene McCann (Mrs. McCann) was the owner of real property located at 22 Clayton Avenue, Floral Park, in the County of Nassau during the period from June 1953 to June 1984. During the latter term of her period of ownership of the premises, Mrs. McCann had developed a history of failing to timely pay the taxes assessed against her property. For example, in 1973 Mrs. McCann failed to make payment of her real estate taxes and, as a result, in February 1975 a tax lien on her premises was sold to one Sadie Schwartz. That tax lien was ultimately redeemed by Mrs. McCann in June 1975. Similarly in June 1976 and again in February 1979 tax liens upon Mrs. McCann's property were sold to the respondent Shirley Stone. Both of these liens were also eventually redeemed by Mrs. McCann.

Finally in 1981 Mrs. McCann again defaulted in the payment of school taxes assessed against her property for the fiscal year 1980-1981. Pursuant to the statutory scheme set forth in NCAC § 5-37.0, the respondent Scaduto caused to be published a notice of a tax lien sale on Mrs. McCann's property in Newsday for the requisite three-week period. ² Thereafter on February 16, 1982, the tax lien on Mrs. McCann's property was sold to the respondent Stone and a certificate of sale of the tax lien was issued.

As required by NCAC § 5-51.0, on December 17, 1983, the respondent Stone sent a notice to redeem to Mrs. McCann, via certified mail, return receipt requested, informing her of the tax lien upon her property and stating that if Mrs. McCann did not redeem the tax lien on or before March 20, 1984, the respondent Stone would take a deed of conveyance to the subject premises. Mrs. McCann concedes that she received the notice to redeem on December 17, 1983. Despite her receipt of said notice, Mrs. McCann did not redeem the outstanding tax lien within the three-month period provided for in the notice. As a result, on June 20, 1984, the respondent Stone requested from the respondent Scaduto a deed of conveyance to Mrs. McCann's property. A deed was issued on June 26, 1984.

Mrs. McCann claims that she first became aware that she no longer owned the subject premises when she sent a check to the respondent Scaduto for payment of the 1983-1984 school taxes assessed against her property. The check was returned to Mrs. McCann with a letter from the respondent Scaduto informing her that the respondent Stone held title to the premises by reason of Mrs. McCann's failure to redeem the tax lien.

Mrs. McCann, together with her daughter, Teresa Rose McCann, and the petitioner William Lewis, an occupant of a portion of Mrs. McCann's property, instituted a proceeding pursuant to CPLR article 78 in January 1985 seeking, inter alia, (1) to vacate the deed of conveyance issued to the respondent Stone for the subject premises; and (2) to permit Mrs. McCann to redeem the lien upon the premises which had been purchased by the respondent Stone. Special Term found that the deed of conveyance held by the respondent Stone to the subject premises was valid and accordingly dismissed the petition. The petitioners appealed Special Term's judgment and this court affirmed (see, McCann v. Scaduto, 118 A.D.2d 690, 499 N.Y.S.2d 892, supra ). The petitioner Helene E. McCann, represented by new counsel, moves, inter alia, for reargument of the appeal, and upon reargument, seeks to challenge the constitutionality of the applicable provision of the NCAC insofar as they deal with the enforcement and collection of real estate taxes.

III.

Mrs. McCann takes the position that the provisions in question are unconstitutional on the basis that they fail to provide that a property owner receive actual notice of the sale of a tax lien levied on his property. We disagree. As the Court of Appeals recently stated, "there is no constitutional requirement that the owner receive personal notice of [a] tax sale * * * (Botens v. Aronauer, 32 N.Y.2d 243, 344 N.Y.S.2d 892, 298 N.E.2d 73, app. dsmd. 414 U.S. 1059, 94 S.Ct. 562, 38 L.Ed.2d 464; see, also, Ballard v. Hunter, 204 U.S. 241, 254-255, 27 S.Ct. 261, 265-266, 51 L.Ed. 461; Lily Dale Assembly v. County of Chautauqua, 72 A.D.2d 950, 422 N.Y.S.2d 239, aff'd. 52 N.Y.2d 943, 437 N.Y.S.2d 967, 419 N.E.2d 870, cert. denied 454 U.S. 823, 102 S.Ct. 110, 70 L.Ed.2d 96). Notification by publication is adequate" (Congregation Yetev Lev D'Satmar v. County of Sullivan, 59 N.Y.2d 418, 422, 465 N.Y.S.2d 879, 452 N.E.2d 1207).

The petitioner Helene E. McCann, however, relies heavily upon the recent United States Supreme Court case of Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180. In Mennonite, the court held that the Indiana tax statute which did not provide for actual notice to a mortgagee of a tax sale of a mortgaged premises, violated the due process rights of the mortgagee. Under the Indiana statute, as it then existed, only the record owner of the subject premises was provided with actual notice of the tax sale. The mortgagee was merely accorded notice by publication. The Mennonite court recognized, at the outset, that a mortgagee had a legally protected property interest that is significantly affected by a tax sale. The court then reaffirmed the principles set forth in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865, in holding that...