On appeal from Superior Court, Chancery Division, Passaic County reported at 191 N.J. Super. 273 (Ch. Div. 1983).
Bischoff, Petrella and Brody. The opinion of the court was delivered by Petrella, J.A.D.
The trial court held that the Spill Act gave the State of New Jersey a paramount lien over the City of Paterson's preexisting tax lien and the interests of the assignee of a mortgage in Kessler v. Tarrats, 191 N.J. Super. 273 (Ch.Div.1983). Paterson and the holder of the mortgage appeal. We affirm.
On December 21, 1976 Carshel Realty, a partnership owned by Sheldon Kessler and his wife, bought the premises at 190 -- 16th Avenue, Paterson, New Jersey from 190 -- 16th Avenue Corporation (hereinafter 190 Corp.) and executed a note and a mortgage to 190 Corp.*fn1 On February 22, 1977 Carshel conveyed the premises to Foam Craft which assumed the mortgage owed to 190 Corp.
On November 9, 1979 Employers Insurance of Wassau obtained a judgment against Foam Craft, and obtained a lien on the subject property. On December 1, 1979 Foam Craft conveyed the premises (subject to the 1976 mortgage to 190 Corp.) to Daniel Tarrats who operated Barone Barrel and Drum Company on the premises. Contemporaneously, Tarrats executed a $27,000 mortgage to Foam Craft. On June 17, 1980 Tarrats executed a $7,000 mortgage to Irving Savings and Loan, which mortgage has apparently been satisfied.
On January 23, 1980 the Spill Fund lien provision was signed into law. Under N.J.S.A. 58:10-23.11f(f) the State was given a priority lien in all cases where the administrator of the Spill Fund is required to clean up a site pursuant to this act.
On October 31, 1980 the Paterson Tax Collector sold the tax certificate and recorded the City's lien for the unpaid taxes of $2,874.86 which accrued in 1979. On December 31, 1981 Tarrats gave a mortgage for $25,000 to Irwin, Post & Rosen, P.A., a law firm which represented Tarrats, and which did not participate in this appeal or the underlying action.
In October 1981 the State of New Jersey and the City of Paterson learned that the premises were being used for the illegal storage of toxic chemicals. The State of New Jersey Department of Environmental Protection (DEP) negotiated with Tarrats regarding cleaning up the toxic chemicals. On October 26, 1981 Tarrats entered into a consent order with the DEP in which he undertook to clean up the property. Upon Tarrats' default under the consent order, the DEP obtained an order on January 5, 1982 which permitted it to clean up the site. The DEP expended $274,581.43 in performing that task. The City of Paterson also expended a considerable, but unstated amount, in providing municipal employees to assist in the clean-up, most notably Paterson police officers and firemen.
On April 13, 1982, 190 Corp. assigned the note and mortgage to Sheldon Kessler, a partner in Carshel Realty which originally had given the 1976 mortgage. At the time Tarrats held fee title to the premises. On May 7, 1982 the State filed a certification of expenditures with the court representing the cost of the clean-up. On May 25, 1982 Kessler filed a complaint to foreclose on the property. On July 27, 1982 the State filed its lien pursuant to the Spill Act.
After Sheldon Kessler filed his foreclosure complaint, the City of Paterson filed an answer and cross-claim asserting its statutory lien for unpaid taxes, and the State of New Jersey filed an answer, cross-claim and counterclaim to enforce the lien
of the administrator of the New Jersey Spill Compensation Fund, entered pursuant to N.J.S.A. 58:10-23.11f(f). The administrator filed a motion for summary judgment, seeking an adjudication that its lien was paramount to all others.
The trial judge held that the Spill Fund created a paramount lien in the State which took priority over Paterson's lien and the lien of the mortgage now held by Kessler under the assignment.
The issues on this appeal relate primarily to the priority of the liens. Kessler also argues that his rights relate back in time to when 190 Corp. took the mortgage because he has since assumed 190 Corp.'s rights and obligations. Moreover, Kessler argues that the Spill Act is an unconstitutional impairment of contract and constitutes a taking of his property without just compensation. The DEP responds that Kessler's rights arose after the enactment of the priority lien law and that the Spill Act is a valid exercise of the police power. The City of Paterson ...