On appeal from the Superior Court, Law Division, Monmouth County.
For affirmance -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- Justices Case and Heher. The opinion of the court was delivered by Oliphant, J. Heher, J., joins in this dissent.
This is an appeal from a judgment of the Superior Court, Law Division, dismissing a complaint in an action in lieu of certiorari which sought to test the validity of a tax sale. The complaint was dismissed for failure to state a cause of action. The cause was certified here on our own motion.
On August 31, 1950, Seaside Gardens, Inc., filed a complaint to foreclose a tax certificate covering certain lots of land owned by and assessed to the Community Development Company, Inc., the appellant herein. The lands in question were sold to the Township of Matawan on November 17, 1941, for taxes due and owing for the years 1938, 1939 and 1940, and a tax sale certificate No. 41-3 was purchased by and issued to the township. Certain of the lots covered were released from the certificate by the township and the certificate was sold to the highest bidder on December 18, 1947, apparently pursuant to the provisions of R.S. 54:5-114.1 et seq. The purchaser was the Seaside Gardens, Inc. (hereinafter called Seaside).
The appellant filed an answer to the complaint in foreclosure and on October 18, 1950, the appellant filed a complaint in this cause under R.S. 54:5-101 which provides that the filing of an answer shall stay the proceedings in foreclosure for four months from the date of such filing pending an application for a writ of certiorari to review the legality of the tax or lien, the proceedings to sell or the sale, and that the foreclosure proceeding be stayed until the certiorari proceeding has terminated. The appellant sought to have the certificate of sale set aside and declared void.
The respondent, Seaside, then moved for a dismissal of the complaint for failure to state a cause of action upon which relief could be granted, and based that motion upon R.S. 54:5-52 which provides as follows:
"The certificate of sale shall be presumptive evidence in all courts in all proceedings by and against the purchaser, his representatives, heirs, and assigns, of the truth of the statements therein, of the title of the purchaser to the land therein described, and the regularity and validity of all proceedings had in reference to the sale. After two years from the record of the certificate of sale, no evidence shall be admitted in any court to rebut the presumption, unless the holder thereof shall have procured it by fraud, or had previous knowledge that it was fraudulently made or procured."
It appears from the affidavits filed in support of the motion that the certificate in question was recorded on January 17, 1948, and the complaint in this cause was not filed until October 18, 1950, which is more than two years from the time the certificate was recorded. In such a situation it is clear that the certificate is conclusive and no action can be filed pursuant to R.S. 54:5-101 unless the plaintiff alleges and can prove that the holder procured it by fraud or had previous knowledge that it was fraudulently made or procured.
The complaint in this case sets up various allegations why the sale of this certificate should be set aside but they all are based on failure to comply with the statutes regulating the sale of such certificates, and as to such allegations the provisions of R.S. 54:5-52 makes the certificate presumptive evidence of its regularity, etc., which cannot be rebutted. The
only allegation in the complaint that approximates an allegation of fraud is the charge "that the tax lien certificate is a fictitious certificate." But this allegation could be consistently construed to refer to the other technical violations of the statutes as alleged in the complaint.
In any cause of action the genesis of which is fraud, Rule 3:9-1 provides, "In all averments of * * * fraud, * * * particulars of the wrong, with dates and items if necessary, shall be stated so far as practicable. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." This rule merely restates the rule of pleading of long standing in the courts of this State and has especial application to a proceeding under R.S. 54:5-52. In Central Union Trust Company v. Willat Film Corporation, 99 N.J. Eq. 748, 755 (Ch. 1926) the court flatly held that the ...