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Township of Montville v. 69

Decided: June 9, 1977.


For reversal -- Chief Justice Hughes and Justices Sullivan, Pashman and Schreiber. For affirmance -- Justices Mountain and Clifford and Judge Conford. The opinion of the court was delivered by Pashman, J. Conford, P.J.A.D., Temporarily Assigned, dissenting. Justice Mountain and Justice Clifford join in this opinion.


This case involves the constitutionality of the notice procedures prescribed by the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 et seq. The corporate landowner, which moves to reopen a final judgment of foreclosure by the municipality, argues that the act's requirements of notice by publication and posting fall short of constitutionally guaranteed procedural due process. In doing so, it challenges the continued viability of this Court's decision in City of Newark v. Yeskel, 5 N.J. 313 (1950), which upheld these procedures against similar constitutional objections.

Both the trial court and the Appellate Division rejected the landowners constitutional argument. In affirming the Law Division's denial of the taxpayer's motion, the Appellate Division noted that Yeskel was controlling and stated that any change in its holding had to be made by this Court. We granted certification, 69 N.J. 392 (1976). For the reasons set forth below, we reverse. We hold that the notice provisions of the In Rem Tax Foreclosure Act are unconstitutional under the State and Federal Constitutions and therefore we are constrained to overrule Yeskel.


This appeal originates from a complaint filed by the plaintiff Township of Montville on May 8, 1973 pursuant to the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 et seq. The complaint sought to bar all rights of redemption to various pieces of property, including six parcels of land assessed to the instant landowner, Montville Industrial Park, Inc. As required under the Act, N.J.S.A. 54:5-19 et seq., each of the parcels had previously been the subject of a tax sale: one tax sale certificate, indicating that a parcel had been sold to the municipality for unpaid taxes, was recorded on December 26, 1967; tax sale certificates for the remaining parcels, also indicating their sale to the municipality, were recorded on January 13, 1967.

Prior to instituting the foreclosure action, the municipality had given the taxpayer several warnings that taxes on the properties in question had not been paid. In compliance with requests by the corporate landowner, the township tax collector mailed statements of tax arrearages to the landowner on June 3, 1971, June 22, 1972 and March 28, 1973. The first statement advised the taxpayer that "[i]f the properties are to be redeemed, please contact this office as soon as possible as they are in the hands of our attorney and in the process of foreclosure." The second letter noted that the most heavily assessed parcel "may not be redeemable, [and] must be checked with attorney." [sic]

Neither these letters nor any other communications actually informed the taxpayer that a complaint had been filed seeking to permanently bar it from exercising its statutory right to redeem the property. Although the tax collector knew the address of the corporation, he followed the mandatory provisions of the in rem statute, which only require notice by posting and publication.*fn1 On August 1, 1973

a final judgment of foreclosure was entered barring the taxpayer's right of redemption. As of April 1, 1973, the total taxes, interest and other charges against the property amounted to $79,092.17. Its assessed value for 1974 was $306,100.

A timely motion to reopen the judgment was filed by the corporation on October 25, 1973. In addition to attacking the constitutionality of the Act, it also alleged various procedural irregularities.*fn2 Subsequently, counsel for the corporation offered to settle the matter by paying all back taxes, interest, costs and fees. This offer was informally accepted by the municipality but later rejected. On May 21, 1974 an order denying the taxpayer's motion was entered.


The question which this case presents is whether or not notice by publication is constitutional in a foreclosure of tax delinquent premises where the municipality possesses the name and address of the owner but fails to give notice by mail or otherwise to that address. As in other cases involving due process claims, the Court must first decide whether the Due Process Clause applies to this type of governmental action, and then determine "what process is due." Morrissey v. Brewer, 408 U.S. 471, 481-483, 92 S. Ct. 2593, 33 L. Ed. 2d 484, 494-495 (1972); Dow v. State, 396 Mich. 192, 240 N.W. 2d 450, 455 (1976); Note, "Specifying the Procedures Required by Due Process: Toward Limits

on the Use of Interest Balancing," 88 Harv. L. Rev. 1510 (1975).


It can hardly be doubted that interests in real estate are protected by the Due Process Clause. The Fourteenth Amendment to the Federal Constitution provides: "No State shall make or enforce any law which shall . . . . deprive any person of life, liberty or property, without due process of law." This is consistent with Article I, par. 1 of our State Constitution, which also protects a person's right to acquire, possess, and protect property.*fn3 That the property interests mentioned in both Constitutions refer to interests in real estate have been settled by innumerable decisions by both this Court and the United States Supreme Court. See, e.g., Bd. of Regents v. Roth, 408 U.S. 564, 571-72, 92 S. Ct. 2701, 33 L. Ed. 2d 548, 557 (1972); Jones v. Haridor Realty Corp., 37 N.J. 384, 391 (1962) ("There is no doubt that the right to acquire, own and dispose of real property is within the protective scope of the Fourteenth Amendment, or that such right is recognized by Article I, paragraph 1, of our State Constitution.")

Applicability of the Due Process Clause is not affected by the municipality's sale of the property for unpaid taxes and issuance of a certificate to the purchaser. State law, which is controlling on whether or not there is a property interest,*fn4 uniformly holds that a tax sale alone is not an

outright conveyance of the property in question and does not constitute a final irrevocable divestiture of title. Brewer v. Porch, 53 N.J. 167 (1969); Newark v. Sue Corp., 124 N.J. Super. 5, 7 (App. Div. 1973); Clark v. Jersey City, 8 N.J. Super. 33, 37 (App. Div. 1950). Cf., Grasso v. Deiter, 126 N.J. Super. 365 (App. Div. 1974). Thus, it has been held that a statute taking away, reducing the time for or otherwise impairing a right of redemption which has already vested, would be an unconstitutional deprivation of property rights. Harrington Co. v. Chopke, 108 N.J. Eq. 297, 301 (Ch. Div. 1931), aff'd 110 N.J. Eq. 574 (E. & A. 1932); Rodgers v. Cressman, 98 N.J. Eq. 209 (Ch. Div. 1925).

It is beyond question that any procedure which deprives an individual of a property interest must conform to the dictates of the Due Process Clause. Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 47 L. Ed. 2d 18, 32 (1976); Bell v. Burson, 402 U.S. 535, 91 S. Ct. 1586, 29 L. Ed. 2d 90 (1971). Accordingly, the United States Supreme Court has held that procedural due process applies where state law does not entirely extinguish the taxpayers' property interest until foreclosure. See Nelson v. New York, 352 U.S. 103, 77 S. Ct. 195, 1 L. Ed. 2d 171 (1956) (tax foreclosure proceeding measured against due process requirements); Covey v. Somers, 351 U.S. 141, 76 S. Ct. 724, 100 L. Ed. 1021 (1956) (same).*fn5 [74 NJ Page 9] Although the Supreme Court dismissed an appeal for want of a substantial federal question where the statute in question did utilize the foreclosure procedure to terminate the landowner's interest, Botens v. Aronauer, 414 U.S. 1059, 94 S. Ct. 562, 38 L. Ed. 2d 464, dismissing appeal from 32 N.Y. 2d 243, 344 N.Y.S. 2d 892, 298 N.E. 2d 73 (1973), in that case mail notice was actually given. See Note, "The Constitutionality of Notice by Publication in Tax Sale Proceedings," 84 Yale L.J. 1505, 1510 (1975). The judge in Wager v. Lind, 389 F. Supp. 213 (S.D.N.Y. 1975) correctly assessed Botens, supra, when he said: "I am not prepared to say that the Supreme Court in its summary dismissal did more than declare the lack of a substantial federal question on the precise facts Botens presented to it." Id. at 216; emphasis in original. See also, Comment, "The Precedential Weight of a Dismissal by the Supreme Court for Want of a Substantial Federal Question: Some Implications of Hicks v. Miranda," 76 Colum. L. Rev. 508 (1976). In referring to Botens, supra, and Wager, supra, the Comment states:

[W]hen the Supreme Court dismisses a challenge to a state statute, it does not necessarily mean that the statute is valid under all circumstances; it signifies only that the challenge is not a 'substantial' one in the precise circumstances of that case.

[76 Colum. L. Rev. at 532]


Having determined that due process principles apply when the owner's right to redemption is to be terminated, we turn to the remaining question of whether or not notice by publication satisfies the requirements of that clause under state and federal guarantees. We hold that it affords insufficient protection for landowners under both constitutional provisions.


The seminal case in this area is Mullane v. Central Hanover B. & T. Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950). There it was stated:

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections, * * * The notice must be of such nature as reasonably to convey the required information, . . ., and it must afford a reasonable time for those interested to make their appearance.

[339 U.S. at 314, 70 S. Ct. at 657, 94 L. Ed. at 873; emphasis supplied.]

In that case the Court considered the sufficiency of notice by publication in a New York Statute governing the administration of trust funds. Since the statute required only notice by publication to known trust beneficiaries who might be affected by a proposed pooling of smaller trusts, the Court held the statute unconstitutional under the Fourteenth Amendment. Justice Jackson, writing for the majority, stated:

As to known beneficiaries of known place of residence, . . ., notice by publication stands on a different footing. Exceptions in the name of necessity, do not sweep away the rule that within the limits of practicability notice must be such as is reasonably calculated to reach interested parties. Where the names and post-office addresses of those affected by a proceeding are at hand, the reasons disappear for resort to means less likely than the mails to apprise them of its pendency.

[339 U.S. at 318, 70 S. Ct. at 659, 94 L. Ed. 875]

Significantly, Mullane discarded the fictional distinction between in rem and in personam actions which had been utilized as a basis for upholding notice by publication in several decisions decided at the turn of this century.*fn6 See, e.g., North Laramie Land Co. v. Hoffman, 268 U.S. 276, 45 S. Ct. 491, 69 L. Ed. 953 (1925); Ballard v. Hunter, 204 U.S. 241, 27 S. Ct. 261, 51 L. Ed. 461 (1907); Leigh v. Green, 193 U.S. 79, 24 S. Ct. 390, 48 L. Ed. 623 (1904); Huling v. Kaw Valley R. & Improv. Co., 130 U.S. 559, 9 S. Ct. 603, 32 L. Ed. 1045 (1889); Winona & St. Peter Land Co. v. Minnesota, 159 U.S. 526, 16 S. Ct. 83, 40 L. Ed. 247 (1895); Longyear v. Toolan, 209 U.S. 414, 28 S. Ct. 506, 52 L. Ed. 859 (1908). Noting that this distinction was more appropriate under the substantive law of property as it existed under the ancient Roman law, the Court foreclosed any contention that procedural due process might depend upon whether an action was technically in personam or in rem. The Court concluded:

[W]e think that the requirements of the Fourteenth Amendment to the Federal Constitution do not depend upon a classification for which the standards are so elusive and confused generally and which, being primarily for state courts to define, may and do vary from state to state.

[339 U.S. at 312, 70 S. Ct. at 656, 94 L. Ed. at 872]

Two months after the United States Supreme Court decided Mullane, this Court upheld the constitutionality of the In Rem Tax Foreclosure Act in City of Newark v. Yeskel, 5 N.J. 313 (1950). Rather than follow the Supreme Court's application of due process principles to in rem proceedings, this Court distinguished Mullane. It attempted to draw a distinction between notice required in a "proceeding by a political subdivision of the state to enforce the payment of taxes which have been regularly assessed and levied," and other proceedings which impinge less directly on governmental interests, such as the trust account procedure implicated in Mullane. 5 N.J. at 321. In light of subsequent decisions applying the general principles announced in Mullane to a wide variety of proceedings which impinge directly on governmental interests, this distinction can no longer be considered tenable. See, e.g., Robinson v. Hanrahan, 409 U.S. 38, 93 S. Ct. 30, 34 L. Ed. 2d 47 (1972) (notice by certified mail to automobile owner's home violated due process in forfeiture proceedings where the state knew that the owner was being held in the county jail); Schroeder v New York, 371 U.S. 208, 83 S. Ct. 279, 9 L. Ed. 2d 255 (1962) (posting near premises and publication insufficient notice in condemnation proceeding); Walker v. Hutchinson, 352 U.S. 112, 77 S. Ct. 200, 1 L. Ed. 2d 178 (1956) (newspaper publication alone violates due process in condemnation proceeding); New York v. New York, N.H. & H.R. Co., 344 U.S. 293, 73 S. Ct. 299, 97 L. Ed. 333 (1953) (publication insufficient notice under bankruptcy reorganization). In none of the above cases did the Court find that publication was a sufficient substitute for mail notification. Indeed, in Robinson v. Hanrahan, supra, the Court held that even mail notice under the circumstances did not meet the constitutional test of notice reasonably calculated to apprise interested parties of the pendency of proceedings.

The position adopted in Yeskel has been undercut even more dramatically by the application of the general principles in Mullane specifically to in rem procedures. For instance in

Covey v. Somers, supra, the Court held that an incompetent landowner who received only mail notification of an impending foreclosure of tax delinquent premises was denied due process. In requiring special protection for the taxpayer in that case, the Court reiterated the general rule:

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. . . . [W]hen notice is a person's due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314-315, 70 S. Ct. 652, 94 L. Ed. 865, 873, 874.

[351 U.S. at 146, 76 S. Ct. at 756, 100 L. Ed. at 1026]

In Nelson v. New York, 352 U.S. 103, 77 S. Ct. 195, 1 L. Ed. 2d 171 (1956), the Court held that a landowner was not deprived of due process where mail notification of a foreclosure was sent, but misplaced by the taxpayer's bookkeeper. However, its holding clearly indicated that Mullane ...

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