The opinion of the court was delivered by: BIUNNO
Mr. Flood was the sole bidder at a public auction for a vacant parcel of land in East Orange, N.J., and it was struck off to him for his bid of $50. A neighborhood group, hearing of the sale, was of the view that the property was park property which the City was not free to sell. Representatives appeared at a City Council meeting to urge that the approval of the sale (which had been approved by Council and concurred in by Mayor Cooke) be rescinded. They failed to persuade Council, and the closing was held. Flood paid the balance of the purchase price, received his deed, and promptly recorded it.
The contract of sale, signed after the successful bid, called for a bargain and sale deed, and the deed was in that form.
Under long established New Jersey law of real property a bargain and sale deed conveys whatever interest the grantor can convey. Under a contract for a bargain and sale deed, the buyer may reject the sale if the title proves to be unmarketable, but if he closes title and accepts a bargain and sale deed, he receives no more than the grantor could convey, even if it could convey nothing. The contract merges in the deed.
Absent a covenant in the deed beyond the bare conveyance, or absent a provision in the closing statement for the survival after closing of any provision in the contract, the seller is under no obligation to defend the buyer's title if it be challenged.
These are hornbook principles of New Jersey law, long established and adhered to, for which no citation of precedent is required.
After the closing, the neighborhood group filed suit in Superior Court against the City and Flood, challenging the sale. The group then filed a second suit in Superior Court to challenge the sale. Then the State of New Jersey filed suit, also against the City and Flood, in Superior Court, based on a contract made by the City with the State as a condition of receiving assistance under the State's "Green Acres" program. One of the requirements was that the City agreed not to sell or dispose of any property used for park or recreational purposes without the State's consent or approval.
When the matter first began, with the listing of the property for auction, current City records did not correctly disclose the historical background and it was assumed the City could sell the land as surplus property.
As the several suits were filed, further investigation revealed that the current records were incorrect. While the City did not attempt any defense of the three lawsuits mentioned, it did tender and make disclosure of all information in its records.
The City then filed suit against Flood, to set aside and vacate the sale and the deed, in view of the status of the land as park property (to which an entirely different statute applied) and because of its contract with the State. After a removal of one or another of the pending cases to this court, an order of remand was entered. The cases were consolidated and heard, and a judgment entered setting aside the contract and the deed as ultra vires and in violation of the contract with the State, and Flood was ordered to reconvey. After some difficulties and proceedings to enforce the order, the City repaid Flood his $50 purchase price, refunded the quarter of the 1979 taxes he had paid, and costs of $100., and a reconveyance deed was executed and delivered to the City.
The suit here is grounded on the claim that the City's action amounted to a violation of the Impairment of Contracts clause, U.S. Const., Art. I, sec. 10, cl. 1, and Due Process, Amend. 14.
In the course of a periodic review of inactive cases, the court observed that while a return of service had been filed, there had been no discovery, no answer, and no other activity. It noticed its intention to dismiss the action for lack of prosecution under Rule 30A of this District.
Flood then promptly filed a request for entry of default, F.R. Civ. P. 55(a), and a notice of motion for default judgment under Rule 55 (b)(2), seeking recovery of his demands for ...