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Brinkley v. Western World

January 31, 1995

BRINKLEY, MARY ANN, PLAINTIFF,
v.
WESTERN WORLD, INC., A NEW JERSEY CORPORATION, ARTHUR PASHOW, FIRST NATIONAL BANK OF CENTRAL JERSEY, BYRAM TOWNSHIP, BYRAM TOWNE ASSOCIATES, INC., A NEW JERSEY CORPORATION, THE MONEY STORE INVESTMENT CORP., A NEW JERSEY CORPORATION, STATE OF NEW JERSEY, DEFENDANTS. BRINKLEY, MARY ANN, PLAINTIFF,
v.
CHEYENNE CORP., A NEW JERSEY CORPORATION, FIRST NATIONAL BANK OF CENTRAL JERSEY, BYRAM TOWNE ASSOCIATES, INC., A NEW JERSEY CORPORATION, THE MONEY STORE INVESTMENT CORP., A NEW JERSEY CORPORATION, BYRAM TOWNSHIP, STATE OF NEW JERSEY, DEFENDANTS.



MacKENZIE, P.J.Ch.

The opinion of the court was delivered by: Mackenzie

Civil Action

Opinion

MacKENZIE, P.J.Ch.

This is an action for a judgment in foreclosure upon two tax sale certificates. The lots which are the subject of this foreclosure action are numbered Lots 5 and 17 on Block 365 in Byram Township [hereinafter, the Township]. In 1983 and again in 1985, the Township placed tax liens on these two lots for failure to pay real estate taxes. Defendants Western World and Cheyenne Corp., the owners of the property, disputed the assessment on the lots, arguing that the property should have received a farmland assessment.

The tax liens were sold by the Township to the plaintiff, Mary Ann Brinkley, in 1986. Defendants did attempt to enjoin the sale by filing an Order to Show Cause before the vicinage Assignment Judge, who ruled that there was no irreparable harm. No Order to Show Cause was entered.

In 1988, the New Jersey Supreme Court ultimately ruled that Lots 5 and 17 were entitled to farmland assessment for 1983. Byram Township v. Western World, 111 N.J. 222, 544 A.2d 37 (1988). In 1993, the Appellate Division ruled that Lot 5, but not Lot 17, was entitled to farmland assessment for 1985. Cheyenne Corp. v. Township of Byram, 14 L. Ed. 2d 167 (App. Div. 1993).

Subsequent to these rulings, the Township tax collector credited overpayments of tax from previous years to 1983 and 1985 pursuant to N.J.S.A. 54:4-134. As a result, there were no unpaid taxes against Lots 5 and 17 for 1983 nor any against Lot 5 for 1985. It was later determined that defendants did not owe taxes on Lot 17 for 1985. Apparently, there was an overpayment of taxes on Lot 17 for the years 1983 and 1984 which was been applied by the Tax Collector against the 1985 assessed tax.

For reasons set forth in Brinkley v. Western World, Inc., 275 N.J. Super. 605, 646 A.2d 1136 (Ch. Div. 1994), this court denied plaintiff's motion for summary judgment and set aside the tax sale certificates. Almost a year later, plaintiff motioned the court for reconsideration, and the Township cross-motioned for an Order requiring plaintiff to assign the tax sale certificates to the Township. After oral argument on December 16, 1994, the court denied plaintiff's motion for reconsideration but invited further submissions from counsel for the plaintiff and the Township on the issue of the rate of interest which plaintiff should receive upon refund of the monies paid at the tax sale. The court now denies as unnecessary plaintiff's requests for further oral argument and grants the Township's cross-motion to compel assignment of the tax sale certificates.

On the issue of interest, the Township argues in favor of the post-judgment interest rate. The Township cites no law in favor of this proposition. Rather, its counsel contacted the attorney who represented the plaintiff in Tontodonati v. City of Paterson, 229 N.J. Super. 475, 551 A.2d 1046 (App. Div. 1989). The attorney for the plaintiff in Tontodonati indicated that his client agreed to accept interest calculated at the post-judgment interest rate. Counsel's agreement is immaterial to this court.

Plaintiff seeks an eighteen percent rate of interest. Plaintiff proffers several arguments in favor of this position. Plaintiff contends that the Township Tax Collector knew that the tax sale certificates purchased by plaintiff were involved in a pending appeal which could call their validity into question. Yet the tax collector never disclosed the pendency of the appeal to plaintiff. Plaintiff analogizes to the case of Simon v. Oldmans Twp., 203 N.J. Super. 365, 376, 497 A.2d 204 (Ch. Div. 1985), in which tax certificates were sold on property subject to a Spill Act claim. In Simon, the township officials represented that they had no knowledge of any environmental problems on the property. The court therein stated that if such representations were established, it would rescind the tax sale and return the parties to the status quo ante. Plaintiff herein argues that to restore her to the status quo ante, this court would have to provide her with an opportunity to select from all the other 1986 tax certificates which the Township had available at the time, certificates upon which she would have earned an eighteen percent yield. Thus, plaintiff argues that an award of eighteen percent interest is required to restore her to the status quo ante.

Plaintiff also attempts to distinguish the Tontodonati case, in which the Appellate Division held that the purchaser of a tax sale certificate which is later set aside is not entitled to 18% interest upon refund. Plaintiff argues that unlike this case, Tontodonati involved no allegations of fraudulent or wrongful conduct by the taxing municipality.

Plaintiff also asserts an implied warranty argument. Plaintiff argues that by setting aside the certificates, the court has rendered the tax sale wholly ineffectual. Plaintiff further argues that the certificates themselves were the merchandise sold at the tax sale. Kahn Pension Plan v. Moorestown Twp., 243 N.J. Super. 328, 340, 579 A.2d 366 (Ch. Div. 1990). By analogy to Article 2 of the Uniform Commercial Code [hereinafter, the UCC], plaintiff reasons that the tax sale certificate should have been reasonably fit for the general purpose for which it was sold. See N.J.S.A. 12A:2-314. Plaintiff suggests that the purpose for which a tax sale certificate is sold is its rate of interest. Again analogizing to the UCC, plaintiff argues that for a breach of warranty, she is entitled to her full expectation damages, i.e, eighteen percent interest.

As an initial matter, it is important to note that this case does not involve the "redemption" of a tax sale certificate. Plaintiff states in her brief that "she is entitled to redemption of Tax Sale Certificates # 86-28 and # 86-27 at a minimum amount [sic] 18% interest per annum." (Emphasis added.) Redemption occurs only when the property owner pays the delinquent taxes on the property. Because municipalities are permitted to charge up to eighteen percent interest on delinquent taxes pursuant to N.J.S.A. 54:4-67, tax sale certificates require the property owner to pay eighteen percent to the certificate holder to redeem. When the redeeming property owner pays the municipality directly, an assignee or a purchaser at sale may recover from the municipality the amount the property owner paid to redeem the certificate. *fn1 Dvorkin v. ...


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