Goldmann, Conford and Freund. The opinion of the court was delivered by Conford, J.A.D.
This is an appeal by the purchaser of certain real property at a public sale conducted to satisfy a lien of the State for unpaid hospital maintenance charges, from a judgment of the Atlantic County Court conditionally setting aside the sale and consequent deed.
A disposition of the appeal does not require recounting all of the diverse facts spread before us in the briefs and appendices. Mary E. Bryce, a mental incompetent, has been a patient at the New Jersey State Hospital at Trenton as a public charge since September 1, 1950. She owns a parcel of real property in Ventnor City. On May 5, 1957 the State caused an institutional lien claim to be filed against her property in the amount of $7,782.98 in the office of the clerk of Atlantic County, pursuant to N.J.S.A. 30:4-80.1. The filing of the claim and the arrangement of the subsequent sale to enforce the lien were apparently the result of an offer to the State by appellant, The Tax Investment Corporation of New Jersey ("T.I.C." hereinafter), to bid at such a sale the sum of $3,000, which, it was represented, would yield the State a net sum of about $1,000 over the amounts due under concededly prior liens for municipal taxes and a real property mortgage.
A writ of execution for sale of the property under the statutory declaration of the lien as the equivalent of a County Court money judgment (N.J.S.A. 30:4-80.3) was issued on May 20, 1957 pursuant to which the Sheriff of Atlantic County levied on the property and gave due notice of a public sale to be held July 25, 1957. Included in the conditions of sale was the stipulation: "3. Subject to report of Guardian ad litem that Mary Bryce has no valid defense to this sale." On July 23, 1957, pursuant to a complaint filed by the State, at the suggestion of T.I.C., reciting the facts concerning its lien and the forthcoming sale, an order was entered in the Atlantic County Court appointing George Warren guardian ad litem for Mary E. Bryce and directing him to report to the court whether she had "a valid defense"
to the proceedings for enforcement of its lien brought by the State. Mr. Warren was not advised of his appointment until after the sale. He filed a report in the County Court January 29, 1958 stating that he had not been able to protect the interests of the incompetent at the sale because he was not aware of it at the time and that he was uncertain of the authority of the County Court to appoint him in the absence of any pending action in that court.
At the public sheriff's sale July 25, 1957 T.I.C. purchased the property as highest bidder for the sum of $1,000 subject to all prior liens. It paid the purchase price and received a deed for the premises which was subsequently recorded in the office of the Atlantic County Clerk. The State was represented at the sale but no one was there to protect the pecuniary interests of the incompetent, notwithstanding the Attorney General takes the position that the presence at the sale of a state representative may be regarded as a representation of a state mental patient in the character of parens patriae.
On September 21, 1957 T.I.C. contracted to sell the property for $5,500, payable $1,500 on closing of title and $4,000 in installments over a five-year period. As of June 1958 T.I.C.'s investment in the property by way of purchase price at the sale and assumption of prior liens amounted to $3,472.84.
Pursuant to a notice by T.I.C. dated January 29, 1958 to intervene in the proceedings initiated by the aforementioned complaint filed by the State, based upon the "cloud" on its title arising from the failure of the guardian ad litem to file a report, the County Court appointed Irving I. Jacobs as substituted guardian ad litem for Mary E. Bryce in the place and stead of George Warren and directed him to file a report as to whether the incompetent had a valid defense to the proceedings for enforcement of the State's lien. Such a report was filed June 4, 1958, which, in effect, sought an invalidation of the sale for the reasons that (a) the statute did not give the State's lien the status of a judgment such
that execution could properly be issued thereon; (b) to accord the filing of the lien the status of a judgment without the prior giving of notice and holding of a hearing on the State's claim was violative of the constitutional due process requirement; (c) the issuance of execution against the incompetent and the conduct of the sale without prior appointment of a guardian ad litem was erroneous, the purchaser at the sale being bound by notice of the fact of incompetency of the owner; and (d) the sale produced an unconscionably low price.
The order presently under review eventuated from a hearing on cross-motions, one by the substituted guardian ad litem to set aside the sale and the other by T.I.C. to reject the guardian's report and to confirm the sale. The court's conclusion, embodied in an order, was that the sale to T.I.C. had resulted in an "excessive profit to said purchaser" and that the sale and sheriff's deed should be set aside unless T.I.C. deposited in court the difference between the resale contract price of $5,500 and its investment in the property of $3,472.84, same to be declared the property of the incompetent.
In our judgment the order under review should be affirmed to the extent that it sets aside and vacates the sheriff's sale and deed, but without the condition that T.I.C. refuse to make the deposit referred to. Our conclusion is based solely upon the ground that the circumstances under which the sale was conducted constituted it invalid as to the incompetent in view of the absence of an appointment of a guardian ad litem in time to permit the interests of the incompetent to be adequately protected. But since the State may wish to resell the property in ...