Petak v. City of Paterson

• Decision Date: 13 June 1996
• Citation: 291 N.J.Super. 234,677 A.2d 244
• Parties: Herbert PETAK and Anita Petak, Plaintiffs-Appellants, v. CITY OF PATERSON, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 234

291 N.J.Super. 234

677 A.2d 244

Herbert PETAK and Anita Petak, Plaintiffs-Appellants, v. CITY OF PATERSON, Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued May 21, 1996.

Decided June 13, 1996.

Donald J. Maizys, Fair Lawn, for appellants (Karas, Kilstein, Hirschklau, Feitlin & Youngman, attorneys; Mr. Maizys, of counsel and on the brief).

Alan L. Stein, Paterson, for respondent (Susan E. Champion, attorney; Mr. Stein, of counsel and on the brief).

Before Judges BAIME, VILLANUEVA and KIMMELMAN.

The opinion of the court was delivered by

VILLANUEVA, J.A.D. (Retired and temporarily assigned on recall.)

Plaintiffs appeal from an order granting a cross-motion for summary judgment in favor of the City of Paterson (City) dismissing plaintiffs' complaint and denying plaintiffs' motion for summary judgment. We reverse.

After Aram Calfayan purchased two tax sale certificates for property located in Paterson, New Jersey, he assigned them to plaintiff Anita Petak and delivered the original certificates to her. When the property owner redeemed the certificates, the tax collector, who apparently had no knowledge of the assignments, paid the moneys to Calfayan but failed to procure the original tax sale certificates from him. Plaintiffs now seek to recover over $47,000 in redemption moneys from the City of Paterson.

I.

In October 1988 Calfayan paid $12,897.88 for tax sale certificate number 1988-0011 for Block CO326, Lot 5, as shown on the tax map of the City. At the same time he paid $13,976.52 for tax sale certificate number 1988-0012 for Block CO385, Lot 15, as shown on the tax map. Both certificates were recorded in the office of the Register of Deeds and Mortgages of Passaic County ("Register") on March 28, 1989. On November 1, 1988, Calfayan sold, transferred and assigned these two certificates and other certificates to Anita Petak for $29,343.37.

In March 1991 Colony Management Company, the owner of the two properties, redeemed certificate 1988-0011 by submitting to the tax collector, Kathleen J. Gibson, a certified check in the amount of $20,778.76 made payable to Calfayan. The tax collector then forwarded or delivered this check to Calfayan. In August 1992 Colony Management redeemed certificate 1988-0012 by the same procedure. A certified check in the amount of $26,290.76 made payable to Calfayan was given to the tax collector and then delivered by her to Calfayan.

In October 1992 plaintiffs' attorney notified the tax collector that Calfayan had assigned the two tax sale certificates to his clients. On December 29, 1992, the assignment was recorded in the office of the Register.

In April 1993 Colony Management's title insurance company notified the tax collector that tax certificate 1988-0012 for Block CO326, Lot 5, had not been canceled of record. The tax collector, who maintains that she never saw the letter from plaintiffs' attorney notifying her of the assignment until early 1994, ¹ advised Calfayan that he either must produce the original certificate of sale or endorse a warrant of discharge so that the lien of the tax sale certificate could be canceled of record. The tax collector prepared a warrant of discharge which Calfayan signed and which was subsequently recorded on May 13, 1993, in the office of the Register. According to the tax collector's deposition testimony, tax sale certificate 1988-0011 remains open of record.

Plaintiffs, describing themselves as assignees of two municipal tax sale certificates, filed suit against the City to recover redemption moneys which they claimed were wrongfully paid by the City to the assignor, Calfayan. ² The City filed an Answer and Third-Party Complaint against Calfayan for indemnification. Calfayan who filed for Chapter 7 bankruptcy prior to the institution of this suit, did not file an answer. ³

Following discovery, plaintiffs moved for summary judgment against the City. The City filed a cross-motion for summary judgment. On September 29, 1995, the trial court heard oral argument and entered orders denying plaintiffs' motion and granting the City's cross-motion. The City's brief indicates that by order dated February 26, 1996, their third-party complaint against Calfayan was dismissed without prejudice.

The trial court found that the tax collector, indeed, had acted negligently when she paid the redemption moneys to Calfayan. The court stated:

However, negligent or not, there is no way that the tax collector could have known that Mr. Calfayan had assigned his rights to the Plaintiffs. Even if the tax collector had made Mr. Calfayan sign the warrants of discharge at the time the redemption monies were paid out, the tax collector still would not have known that the plaintiffs were the assignees.

In conclsuion [sic], the City of Paterson implemented certain procedures to address those which NJSA 54:5-57 did not. It is clear that [the tax collector] did not follow those procedures. However, this court finds that [the tax collector] acted within her discretion, based upon prior dealings with Mr. Calfayan, when she did not require Mr. Calfayan to sign a warrant of discharge. In accordance with well established case law and NJSA 59:7-2b, we find the City of Paterson to be immune. Hence, Plaintiffs' motion for summary judgment against the defendant is denied. Defendant's cross motion for summary judgment against the plaintiffs is granted.

II.

On appeal, plaintiffs contend that the City did not comply with the statutory requirements of either N.J.S.A. 54:5-57 or N.J.S.A. 54:5-55 in paying the redemption moneys received from Colony Management to Calfayan rather than to plaintiffs when Calfayan failed to produce the tax sale certificates. In addition, the City failed to comply with its own procedures--and thus aggravated its negligence--when the tax collector did not require Calfayan to sign a warrant of discharge for cancellation of certificate 1988-0012 at the time the redemption moneys were turned over to him.

The procedure for redemption is provided in N.J.S.A. 54:5-57:

Notification of and settlement with purchaser[.]

The collecting officer shall at once, on receipt of the redemption money, mail notice thereof to the purchaser [of the tax sale certificate], if his address can be ascertained, and shall pay all redemption moneys to him or his assigns on his surrender of the certificate of sale and compliance with the provisions of sections 54:5-55 and 54:5-56 ⁴ of this title.

[Emphasis added.]

N.J.S.A. 54:5-55 provides:

The collecting officer on receiving payment in full shall ... execute and deliver to the person redeeming a certificate of redemption which may be recorded with the register ... [or] the county clerk. The county clerk or register ... shall, on request, note on the record of the original [recorded] certificate of sale a reference to the record of the certificate of redemption ... or, at the option of the person redeeming, the collecting officer shall procure and deliver to the owner the certificate of sale receipted for cancellation by indorsement in the same manner required by law to satisfy or cancel a mortgage, whereupon the record of the certificate of sale shall be canceled by the county clerk or register ... in the same manner and for the same fees as in the case of mortgages.

These statutes are neither inconsistent nor contradictory, and the latter statute does not render the surrender of the certificate of sale optional. It simply permits the tax collector alternative means by which to provide evidence, in recordable form, that payment in full has been made to the collector: the collector shall issue a certificate of redemption or "procure and deliver to the owner the certificate of sale receipted for cancellation by indorsement," N.J.S.A. 54:5-55.

Thus, in order to redeem property from the lien of a tax sale certificate, a person with an interest in the land ordinarily pays the redemption money directly to the tax collector. N.J.S.A. 54:5-54. The holder of the certificate is entitled to those moneys upon surrender of the certificate. N.J.S.A. 54:5-57. The tax collector then must deliver to the owner or person redeeming proof of receipt of full payment. N.J.S.A. 54:5-55. As one court has explained:

[T]he legislative intent was to designate the collecting officer, an official of the municipality, as agent of the purchaser, his heirs or assigns, for the purpose of redemption, authorizing the collecting officer to receive the redemption monies and directing him to pay all redemption monies to the purchaser or to his assigns on surrender of the tax sale certificate, receipted for cancellation or assigned as the circumstances may require.

[Parlo v. Van Horn, 27 N.J.Super. 64, 72, 98 A.2d 721 (Ch.Div.1953).]

Clearly, the statutory procedure for redemption of tax sale certificates is predicated on production of the original certificate. Moreover, in order that these prescriptions are adhered to, N.J.S.A. 54:5-49 prohibits a tax sale certificate from covering more than one tax parcel. See City of Newark v. Ladato, 139 N.J. Eq. 471, 474, 51 A.2d 895 (Ch.1947) (pointing out "that these statutory provisions cannot be literally followed when part only of the land is redeemed").

A plain reading of the applicable statutes mandates a reversal of the trial court's orders of September 29, 1995. There is nothing in the statutes that limits their effect to "known assigns," as contended by the City, so as to enable the collecting officer to rely solely on the municipal tax sale list, as she did here, to determine to whom the redemption moneys should be paid. ⁵ To the contrary, the right to the moneys is established by surrender of the certificate and proof of assignment, if any. Moreover although the tax collector stated that there was no reliable way for the City to determine whether a purchaser has assigned a certificate, the fact that Calfayan failed to surrender the original certificates, in and...