Decided: June 20, 1949.
JOHN STEWART, PLAINTIFF-APPELLANT,
TOWNSHIP OF DELANCO, A MUNICIPAL CORPORATION, DEFENDANT-RESPONDENT
Eastwood, Bigelow and Freund. The opinion of the court was delivered by Freund, J.s.c. Eastwood, J.A.D. (Dissenting.)
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The plaintiff appeals from a judgment of dismissal entered in favor of the defendant at the close of plaintiff's case.
The suit was brought for the recovery of payments made by plaintiff on account of the purchase of a tax sale certificate held by the defendant municipality, which it thereafter in violation of its alleged agreement with the plaintiff resold to a third person at a public sale.
The complaint alleges that the plaintiff negotiated with one Joseph C. Phile, the clerk and tax collector of the defendant
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municipality, for the purchase of a tax sale certificate; that the purchase price was to be paid in monthly installments; and that thereafter from November, 1940, for the next ensuing six years the plaintiff made monthly payments to Phile, averaging $30 per month and totaling $1,976, for which payments receipts were issued bearing the notation "Tax Lien." The complaint further alleges that in December, 1946, the defendant municipality sold to a third person the tax sale certificate which the plaintiff contends he was purchasing under his agreement and that hence he was unable to complete his purchase.
The defendant's answer is a general denial, but in its separate defenses it asserts that the plaintiff as the agent of the owner collected the rents of the premises, and that the payments made to Phile were applied on account of the taxes due on the tax sale certificate and on delinquent taxes. The defendant admits the payments were made, but denies that the plaintiff is entitled to the return of the money. The alleged agreement between the plaintiff and Phile is not specifically denied.
At the trial the plaintiff was the only witness. His testimony substantiated the allegations of the complaint. He testified that the moneys paid were his own and were paid in accordance with the alleged agreement for the purchase of the tax sale certificate.
At the close of the plaintiff's case, the defendant moved for a nonsuit "on the grounds that the action was to recover taxes paid." Nonsuits having been superseded, Rule 3:41-2, it is from the resultant judgment of dismissal that the plaintiff now appeals.
The pleadings and the testimony of the plaintiff raise many questions of fact: e.g. -- was there an agreement between the plaintiff and Phile; were the payments credited against the purchase of the tax sale certificate or against delinquent taxes; was the property sold at the tax sale for the full amount of the tax sale certificate or for the balance remaining due thereon? While such questions of fact remained in dispute, the motion for dismissal should not have been granted. It
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would seem that the plaintiff had presented sufficient evidence from which the presence of a cause of action might have been reasonably, although not necessarily, inferred.
The instant action is not to enforce an alleged agreement or to recover damages for the breach thereof, but upon repudiation by the defendant to recover the moneys paid on the agreement. It is the general rule that where a principal repudiates an agent's unauthorized act and the principal has suffered no prejudice, it becomes the principal's duty to restore the benefits it has received. 3 C.J.S. , § 237, at pp. 160 and 161. Restatement, Restitution, c. 2, §§ 15 and 47 and s annexed. Canadian Imp. Co. v. Lea , 74 N.J. Eq. 234, at p. 247.
It is a well-established principle that on a motion to dismiss, the court cannot weigh the evidence, but must take as true all evidence which supports the view of the party against whom the motion is made, and must give him the benefit of all legitimate inferences which are to be drawn therefrom in his favor. Andre v. Mertens , 88 N.J.L. 626 (E. & A. 1915); Fine & Jackson, etc., Corp. v. Lehigh Valley R.R. Co. , 110 N.J.L. 385 (E. & A. 1933); Lipschitz v. N.Y. & N.J. Produce Corp. , 111 N.J.L. 392 (E. & A. 1933); Poole v. Twentieth Century Operating Co. , 121 N.J.L. 244 (E. & A. 1938); Strutko v. Mann , 124 N.J.L. 183 (E. & A. 1939); Cropanese v. Ontell , 64 A.2d 894 (Super. Ct. App. Div. 1949), not yet officially reported. Defendant's motion is the equivalent of a demurrer to so much of the evidence as is favorable to the plaintiff; its verity in point of fact being admitted for the purpose of denying its sufficiency in law. Kozlowski v. Pavonia Fire Ins. Co. , 116 N.J.L. 194 (E. & A. 1935).
The judgment under review is reversed and a trial de novo is directed.
Judge Eastwood wishes it stated that he dissents from the foregoing opinion.
EASTWOOD, J.A.D. (Dissenting.)
My review of this case impels me to dissent from the majority opinion of my
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colleagues. The reasons for my view that the judgment of the court below should be affirmed are as follows:
Plaintiff's cause of action is grounded solely on the alleged agreement with Phile, which he contends was made by Phile as agent for the defendant township, and is binding upon the defendant.
Defendant argues that the plaintiff failed to establish a prima facie cause of action against defendant and the court, therefore, properly granted its motion for dismissal. A review of plaintiff's testimony fails to reveal that the Township Committee was at any time informed of the alleged agreement with the collector, nor was there any evidence that the agreement had ever been approved or acquiesced in by action or conduct of the governing body or, in fact, that the Township Committee had ever had notice of the several payments made by plaintiff to the tax collector. Nor is there any evidence that Phile was possessed of any authority, either in his capacity as township clerk or collector, that would impute legal sanction to such an agreement. Phile's action, under the circumstances, was clearly beyond the scope of his authority and could not be enforced against the defendant.
"A municipal corporation is not bound by a contract made in its name by one of its officers or by a person in its employ, although within the scope of its corporate powers, if the officer or employee had no authority to enter into such a contract in behalf of the corporation. The principle by which a private employer is held liable for unauthorized acts of his agents on the ground that he has impliedly held them out as having a general authority to act for him has a much more limited application to municipal corporations. It is generally held that those dealing with the officers or agents of a municipal corporation must at their peril see to it that such officers or agents are acting within their authority, the reason for the distinction being that in the case of private parties the actual extent of authority is known only to principal and agent, whereas in the case of a municipal corporation it is a matter of record in the statutes of the state or in the proceedings of the municipal council." 38 Am. Juris., Section 507, pp. 183, 184.
Mr. Justice Campbell, speaking for the Supreme Court in Potter v. Borough of Metuchen , 108 N.J.L. 447, at p. 451 (1931), emphasized the principle of law as enunciated in 38 Am. Juris. , § 507, supra , by stating:
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"Where the contract is within the corporate power but entered into through unauthorized agents and the acceptance or ratification was not by the corporate body or its duly authorized agents -- but by unauthorized agents or officers, in which event, there can be no recovery as upon a contract either expressed or implied. Car Spring Co. v. Jersey City, supra; Jersey City Supply Company v. Jersey City , 71 N.J.L. 631; Frank v. Jersey City , 90 Id. 273 (at p. 279)."
The evidence here is silent as to any acts of confirmation or assumption of the agreement by the defendant.
The only methods for sale, exchange, conveyance or transfer of municipal tax liens are found in the provisions of R.S. 54:5-112, 113, 114.1 and 2. The alleged agreement sub judice did not conform in any particular to the methods provided under the pertinent statute.
"Where the contract is not within the corporate powers there can be no ratification or acceptance, and consequently no recovery. Hackettstown v. Swackhamer , 37 N.J.L. 191." Potter v. Metuchen, supra, at p. 451.
Plaintiff having failed to establish a valid, enforceable agreement with the defendant, his cause of action necessarily fails and, in my opinion, the Law Division did not commit any error in granting the motion for dismissal.