On certification to the Superior Court, Appellate Division, whose opinion is reported at 230 N.J. Super. 254 (1989).
For modification and affirmance -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Pollock, J.
[120 NJ Page 445] Twenty-six years ago we condemned the business of "heir hunting" as having "no social value." Bron v. Weintraub, 42 N.J. 87, 95, 199 A.2d 625 (1964). The Legislature has since characterized heir hunting as a "questionable scheme" operated by "intermeddlers," an "iniquitous practice," and as a "'racket.'" See infra at 450-451, 577 A.2d at 135-136; Statement Accompanying Sen. No. 291, L. 1967, c. 149. This case presents a variation on the Bron theme.
Plaintiff, Gordon Wattles, instituted an action to foreclose a tax-sale certificate on a 6.21-acre parcel of vacant land, which is adjacent to other land owned by the Wattles family in Lebanon Township, Hunterdon County. After entry of a default against "unknown owners," but before the entry of judgment, an heir hunter, National Asset Recovery (National), discovered out-of-state heirs of the last record owner, Edward Plotts. National entered an agreement with the Plotts heirs. Under the agreement, if the heirs were successful in upsetting the tax foreclosure and in obtaining title, National could sell the property and divide the net profits with the heirs, after reimbursing itself for its expenses.
In the decisions below, the lower courts sustained the rights of the heirs to redeem the property. We granted Wattles' petition for certification, 117 N.J. 68, 563 A.2d 831 (1989). Although we agree that the heirs may redeem the property, we impose a constructive trust in favor of Wattles on National's interest. Accordingly, we modify the judgment of the Appellate Division, 230 N.J. Super. 254, 553 A.2d 365 (1990), and remand the matter to the Law Division.
On December 13, 1969, Elizabeth Shields and her late husband, Richard, purchased from Lebanon Township for $1,131.59 a tax-sale certificate covering a 6.21-acre parcel of vacant land described on the Township's tax map as lot 10, block 57. The last record owner, Edward Plotts, apparently had not paid taxes on the property in this century. After Richard's death, Elizabeth Shields assigned the certificate to her son, plaintiff, Gordon Wattles.
Wattles' lawyer conducted a sixty-year title search as required by N.J.S.A. 54:5-91. The lawyer also examined telephone books for Hunterdon and Warren Counties and discovered one James L. Plotts, whom he joined in the proceeding. Neither the title records nor James L. Plotts could provide any
information about the heirs of the last record owner, Edward Plotts. Consequently, Wattles instituted a tax foreclosure against "Unknown Owners" and served notice by publication in accordance with Rule 4:4-5. No one appeared in the proceeding, so Wattles took a default on July 9, 1986.
By scanning the notice of publication in the newspapers, National learned of the foreclosure action. Through the examination of early twentieth-century census data and other unrecorded documents, National learned that Edward Plotts had died in Maryland in 1899, leaving two daughters. Through the residuary clause in his will, similar clauses in the wills of his two daughters, and a series of devises and intestate successions, defendants acquired their interests in the property. Nothing in the record indicates that the daughters of Edward Plotts, the intervening heirs, or defendants had ever heard of the property. Indeed, some of the defendants had never heard of Edward Plotts, and others barely knew of him.
Having learned of the heirs, William Smith, National's president, wrote to them, soliciting their cooperation. In pertinent part, Smith's letter said:
These lands are currently the subject of a tax foreclosure suit. The taxes have not been paid for a very long while, and the situation has now reached the point where the person doing the tax foreclosure is saying: (thru the courts) pay up these taxes now or forever lose the land to him.
What National Asset Recovery offers, is quite simply, that we will advance the money to pay up those back taxes, along with the legal fees needed, as well as the costs of surveys, appraisals, documentation and genealogical research, and whatever else is needed to keep the property from being lost, and to turn it to a profit.
We look to be reimbursed our out of pocket expenses, (and these from the sale of the asset), and then to split the profit with you as an equal partner. We never ask you for any money, or to do any of the work. We take ...