Montville Tp. v. Block 69, Lot 10

Decision Date09 June 1977
Citation376 A.2d 909,74 N.J. 1
PartiesTOWNSHIP OF MONTVILLE, a Municipal Corporation in the County of Morris and State of New Jersey, Plaintiff-Respondent, v. BLOCK 69, LOT 10, assessed to Anton Spitz and Ida Spitz, Block 56, Lot 16, assessed to John H. Hixson, Block 98, Lot 12, assessed to Wayne P. and Sue AnnVan Duyne, Defendants, and Block 39, Lots 1, 75B, 75C, 90, 91 and 92, assessed to Montville IndustrialPark, Inc., Defendant-Appellant.
CourtNew Jersey Supreme Court

Martin M. Friedman, Rutherford, for defendant-appellant (Friedman, Kates, Uscher & Pearlman, Rutherford, attorneys).

Lawrence K. Eismeier, Boonton, for plaintiff-respondent (Young & Sears, Boonton, attorneys).

The opinion of the court was delivered by

PASHMAN, J.

This case involves the constitutionality of the notice procedures prescribed by the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 et seq. The corporate landowner, which moves to reopen a final judgment of foreclosure by the municipality, argues that the act's requirement of notice by publication and posting fall short of constitutionally guaranteed procedural due process. In doing so, it challenges the continued viability of this Court's decision in City of Newark v. Yeskel, 5 N.J. 313, 74 A.2d 883 (1950), which upheld these procedures against similar constitutional objections.

Both the trial court and the Appellate Division rejected the landowner's constitutional argument. In affirming the Law Division's denial of the taxpayer's motion, the Appellate Division noted that Yeskel was controlling and stated that any change in its holding had to be made by this Court. We granted certification, 69 N.J. 392, 354 A.2d 320 (1976). For the reasons set forth below, we reverse. We hold that the notice provisions of the In Rem Tax Foreclosure Act are unconstitutional under the State and Federal Constitutions and therefore we are constrained to overrule Yeskel.

I

This appeal originates from a complaint filed by the plaintiff Township of Montville on May 8, 1973 pursuant to the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 et seq. The complaint sought to bar all rights of redemption to various pieces of property, including six parcels of land assessed to the instant landowner, Montville Industrial Park, Inc. As required under the Act, N.J.S.A. 54:5-19 et seq., each of the parcels had previously been the subject of a tax sale: one tax sale certificate, indicating that a parcel had been sold to the municipality for unpaid taxes, was recorded on December 26, 1967; tax sale certificates for the remaining parcels, also indicating their sale to the municipality, were recorded on January 13, 1967.

Prior to instituting the foreclosure action, the municipality had given the taxpayer several warnings that taxes on the properties in question had not been paid. In compliance with requests by the corporate landowner, the township tax collector mailed statements of tax arrearages to the landowner on June 3, 1971, June 22, 1972 and March 28, 1973. The first statement advised the taxpayer that "(i)f the properties are to be redeemed, please contact this office as soon as possible as they are in the hands of our attorney and in the process of foreclosure." The second letter noted that the most heavily assessed parcel "may not be redeemable, (and) must be checked with attorney." (sic)

Neither these letters nor any other communications actually informed the taxpayer that a complaint had been filed seeking to permanently bar it from exercising its statutory right to redeem the property. Although the tax collector knew the address of the corporation, he followed the mandatory provisions of the in rem statute, which only require notice by posting and publication. 1 On August 1, 1973 a final judgment of foreclosure was entered barring the taxpayer's right of redemption. As of April 1, 1973, the total taxes, interest and other charges against the property amounted to $79,092.17. Its assessed value for 1974 was $306,100.

A timely motion to reopen the judgment was filed by the corporation on October 25, 1973. In addition to attacking the constitutionality of the Act, it also alleged various procedural irregularities. 2 Subsequently, counsel for the corporation offered to settle the matter by paying all back taxes, interest, costs and fees. This offer was informally accepted by the municipality but later rejected. On May 21, 1974 an order denying the taxpayer's motion was entered.

II

The question which this case presents is whether or not notice by publication is constitutional in a foreclosure of tax delinquent premises where the municipality possesses the name and address of the owner but fails to give notice by mail or otherwise to that address. As in other cases involving due process claims, the Court must first decide whether the Due Process Clause applies to this type of governmental action, and then determine "what process is due." Morrissey v. Brewer, 408 U.S. 471, 481-483, 92 S.Ct. 2593, 33 L.Ed.2d 484, 494-495 (1972); Dow v. State, 396 Mich. 192, 240 N.W.2d 450, 455 (1976); Note, "Specifying the Procedures Required by Due Process: Toward Limits on the Use of Interest Balancing," 88 Harv.L.Rev. 1510 (1975).

A

It can hardly be doubted that interests in real estate are protected by the Due Process Clause. The Fourteenth Amendment to the Federal Constitution provides: "No State shall make or enforce any law which shall . . . deprive any person of life, liberty or property, without due process of law." This is consistent with Article I, par. 1 of our State Constitution, which also protects a person's right to acquire, possess, and protect property. 3 That the property interests mentioned in both Constitutions refer to interests in real estate have been settled by innumerable decisions by both this Court and the United States Supreme Court. See, e. g., Bd. of Regents v. Roth, 408 U.S. 564, 571-72, 92 S.Ct. 2701, 33 L.Ed.2d 548, 557 (1972); Jones v. Haridor Realty Corp., 37 N.J. 384, 391, 181 A.2d 481, 484 (1962) ("There is no doubt that the right to acquire, own and dispose of real property is within the protective scope of the Fourteenth Amendment, or that such right is recognized by Article I, paragraph 1, of our State Constitution.")

Applicability of the Due Process Clause is not affected by the municipality's sale of the property for unpaid taxes and issuance of a certificate to the purchaser. State law, which is controlling on whether or not there is a property interest, 4 uniformly holds that a tax sale alone is not an outright conveyance of the property in question and does not constitute a final irrevocable divestiture of title. Brewer v. Porch, 53 N.J. 167, 249 A.2d 388 (1969); Newark v. Sue Corp., 124 N.J.Super. 5, 7, 304 A.2d 567 (App.Div.1973); Clark v. Jersey City, 8 N.J.Super. 33, 37, 73 A.2d 197 (App.Div.1950). Cf., Grasso v. Deiter, 126 N.J.Super. 365, 314 A.2d 608 (App.Div.1974). Thus, it has been held that a statute taking away, reducing the time for or otherwise impairing a right of redemption which has already vested, would be an unconstitutional deprivation of property rights. Harrington Co. v. Chopke, 108 N.J.Eq. 297, 301, 154 A.2d 849 (Ch.Div.1931), aff'd 110 N.J.Eq. 574, 160 A.2d 335 (E. & A.1932); Rodgers v. Cressman, 98 N.J.Eq. 209, 130 A. 17 (Ch.Div.1925).

It is beyond question that any procedure which deprives an individual of a property interest must conform to the dictates of the Due Process Clause. Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18, 32 (1976); Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971). Accordingly, the United States Supreme Court has held that procedural due process applies where state law does not entirely extinguish the taxpayers' property interest until foreclosure. See Nelson v. New York, 352 U.S. 103, 77 S.Ct. 195, 1 L.Ed.2d 171 (1956) (tax foreclosure proceeding measured against due process requirements); Covey v. Somers, 351 U.S. 141, 76 S.Ct. 724, 100 L.Ed. 1021 (1956) (same). 5 Although the Supreme Court dismissed an appeal for want of a substantial federal question where the statute in question did utilize the foreclosure procedure to terminate the landowner's interest, Botens v. Aronauer, 414 U.S. 1059, 94 S.Ct. 562, 38 L.Ed.2d 464, dismissing appeal from 32 N.Y.2d 243, 344 N.Y.S.2d 892, 298 N.E.2d 73 (1973), in that case mail notice was actually given. See Note, "The Constitutionality of Notice by Publication in Tax Sale Proceedings," 84 Yale L.J. 1505, 1510 (1975). The judge in Wager v. Lind, 389 F.Supp. 213 (S.D.N.Y.1975) correctly assessed Botens, supra, when he said: "I am not prepared to say that the Supreme Court in its summary dismissal did more than declare the lack of a substantial federal question on the precise facts Botens presented to it." Id. at 216; emphasis in original. See also, Comment, "The Precedential Weight of a Dismissal by the Supreme Court for Want of a Substantial Federal Question: Some Implications of Hicks v. Miranda," 76 Colum.L.Rev. 508 (1976). In referring to Botens, supra, and Wager, supra, the Comment states:

(W)hen the Supreme Court dismisses a challenge to a state statute, it does not necessarily mean that the statute is valid under all circumstances; it signifies only that the challenge is not a 'substantial' one in the precise circumstances of that case. (76 Colum.L.Rev. at 532)

B

Having determined that due process principles apply when the owner's right to redemption is to be terminated, we turn to the remaining question of whether or not notice by publication satisfies the requirements of that clause under state and federal guarantees. We hold that it affords insufficient protection for landowners under both constitutional provisions.

1.

The seminal case in this area is Mullane v. Central Hanover B. & T. Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). There it was stated:

An elementary and fundamental...

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