Taylor v. Morris

• Decision Date: 27 October 1948
• Docket Number: No. 146/55.,146/55.
• Citation: 61 A.2d 758
• Parties: TAYLOR v. MORRIS et al.
• Court: New Jersey Superior Court

61 A.2d 758

TAYLOR

v.MORRIS et al.

No. 146/55.

Superior Court of New Jersey, Chancery Division.

Oct. 27, 1948.

Syllabus by the Court.

1. The rights of holders of municipal liens arise out of and are fixed and determined by statute.

2. The rights and duties of a holder of a certificate of tax sale in possession of the premises affected thereby are similar to those of a mortgagee in possession. And the duties of a mortgagee in possession are those of a prundent owner.

3. A municipality, the holder of a certificate of tax sale duly recorded, which is wrongfully in possession of the premises covered thereby, is a constructive trustee of the property for the benefit of the owner. Its rights, duties and liabilities are governed by the principles applicable to such a trustee, and they are analogous to those of an administrator or executor de son tort. A trustee (constructive or otherwise) is under a duty to protect the trust property in his possession by paying taxes thereon, to keep the buildings thereon in repair and expend the trust funds or the income therefrom for such purposes. His duties are much the same as those of a mortgagee in possession.

4. The facts and circumstances considered and, Held: Where the record owner of the premises covered by the tax sale certificate held by the defendant, City of Camden, which was wrongfully in possession thereof, stood by for a number of years without taking proceedings for repossession, and without objection, while the challenged expenses for repairs were incurred by the City for the benefit of her property, she is guilty of laches and to relieve her of the obligation to reimburse the City for such expenditure would be inequitable and would unjustly enrich her at the expense of the City.

Suit by W. Lincoln Taylor against Roberta Morris, and others, to foreclose a certificate of tax sale, wherein defendant Roberta Morris filed a counter claim against the City of Camden for an accounting and redemption.

Judgment in accordance with opinion.

Isadore H. Hermann, of Camden, for plaintiff.

Wilfred B. Wolcott, of Camden, for defendants and counterclaimants Roberta Morris Rossiter, Mary Blake Lee, Guardian, et al.

John J. Crean, of Camden, for defendant City of Camden.

BERRY, Judge.

This is a suit to foreclose a certificate of tax sale. The facts have been stipulated. The property involved is known as 94 East State Street, Camden, New Jersey, and consists of a lot of land on which is erected a two-story brick dwelling house. It was sold to the City of Camden for delinquent taxes for 1928 to 1933 inclusive, amounting, with costs, to $460.39, on March 21, 1934, and the certificate of sale was duly recorded in the office of the Register of Deeds of Camden County. At that time the defendant Roberta Morris Rossiter was the record owner of the property, and she still is such owner. In July, 1936, the City of Camden entered into possession of the premises and it is stipulated that up until February 19, 1946, the City collected rents therefrom which, with interest thereon, amounts to $2,221.38, against which the City is entitled to a credit for taxes in the sum of $1,624.00 and for interest in the sum of $597.38, or a total credit of $2,221.38, the exact amount collected. While the coincidence of amounts seems strange, such is the stipulation. On the latter date, the City assigned said certificate to the plaintiff W. Lincoln Taylor, who then paid the City $1,066.24 which it claimed to be due for unpaid taxes, & c., including the first quarter of 1946. During the period that the City of Camden was in possession it expended for necessary repairs to the property the sum of $882.52. Of this sum $525.32 was expended after May 2, 1942, the effective date of Chapter 54, P.L.1942, N.J.S.A. 54:5-53.1, 53.2, which restored to municipality-purchasers at tax sale the right of possession which existed under Chapter 237, P.L.1918, Sec. 34, p. 892, but which right was abolished by Chapter 169, P.L.1929, R.S. 54:5-50, N.J.S.A. See Forster v. Davenport, 128 N.J.Eq. 385, 16 A.2d 614, 616; Taylor v. Borgfeld, 139 N.J.Eq. 177, 50 A.2d 654. Also, of this sum of $882.52, $269.65 was expended after October 10, 1939, the effective date of Chapter 362, P.L.1939, p. 870, N.J.S.A. 54:4-123 et seq. (the ‘Stout Act’) which gave a municipality the right to apply to the Court of Chancery for the appointment of a receiver to collect rents of properties on which taxes were more than six months in arrears. Under that act a receiver so appointed could, by order of the Court only, apply rents to expenses such as necessary repairs; but in the instant case no application for the appointment of such a receiver was made by the City of Camden. Consequently, the possession of the City during this period was not by statutory authority. The balance, or approximately $88.00, was expended between July, 1936, and October 10, 1939, and of course, during this period there was no statutory authority for possession or expenditures for repairs. The rights of holders of municipal liens arise solely out of and are fixed and determined by statute. Absecon Land Co. v. Keernes, 101 N.J.Eq. 227, 231, 137 A. 429; Forster v. Davenport, supra; Reconstruction Finance Corporation v. Haag, 40 A.2d 801, 803, 23 N.J.Misc. 28; Taylor v. Borgfeld, supra.

After the assignment of the certificate of tax sale to the complainant on February 19, 1946, he went into possession and collected rents up to and including March 9, 1948, to the amount of $432.00, but made no expenditures for repairs. He concedes the defendant owners right to a credit of this amount on taxes paid or assumed by him.

The defendant Roberta Morris Rossiter, the record owner of the premises here involved, answered the complaint denying that there was anything due the plaintiff, and filed a counterclaim against him and the City of Camden wherein she demanded an accounting of the rents and profits of said premises collected by them since the date of said tax sale. Such accounting is included in the stipulation of facts.

The sole issue here involved is whether or not the City of Camden is entitled to credit in its account for monies spent out of rents collected for necessary repairs. Assuming that it is entitled to such credit, the amount due it for delinquent taxes and interest on February 19, 1946, the date of the assignment to the plaintiff, was $1,066.24, which is the amount paid by him to the City for such assignment. Since that date, the plaintiff has paid for taxes and interest the sum of $183.76 and has collected $432.00 in rents, $248.24 in excess of taxes paid.

The rights and duties of a holder of a certificate of tax...