On appeal from the Superior Court of New Jersey, Law Division, Camden County.
Approved for Publication March 28, 1996.
Before Judges Shebell, Stern and Newman. The opinion of the court was delivered by Stern, J.A.D.
The opinion of the court was delivered by: Stern
The opinion of the court was delivered by STERN, J.A.D.
In Echelon Glen Co-op, Inc. v. Voorhees Tp., 275 N.J. Super. 441, 15 N.J. Tax 145, 646 A.2d 498 (App. Div.), certif. denied, 138 N.J. 272 (1994), we held that the sale of tax sale certificates relieved the real property owner of the statutory obligation pursuant to N.J.S.A. 54:3-27 of paying the property taxes as a prerequisite to an appeal from the assessment. The tax appeal was, therefore, permitted to go forward.
Plaintiffs in this action were the purchasers of the certificates. Between 1991-1993 they paid $2,635,204.40 for seven tax sale certificates issued with respect to the property. The terms of plaintiffs' successful bids included an interest rate of 18% per annum, together with a 6% penalty on the amount of the delinquency, as fixed by the municipality on each certificate. See N.J.S.A. 54:5-32; 54:4-67. See also 54:4-58 to -69.
After our opinion was rendered, the property owner and the municipality entered into a Stipulation of Settlement of the tax appeal in the Tax Court. The Stipulation of Settlement provided for the reduction of the assessment of Echelon Glen's property from $20,400,000 to $10,400,000 for the years 1991-1994; the payment by Echelon Glen of $3,600,070 to the municipality as of September 13, 1994, constituting the "Prior Tax Payment" or the tax liability for the property for the tax years 1991, 1992 and 1993, plus estimated accrued interest; a temporary reduction in the assessments for the tax years 1995, 1996, 1997 and 1998; and the obligation of the Township to "take all steps necessary to set aside the sale of the Certificates and void the Certificates pursuant to the Tax Sale Law, N.J.S.A. 54:5-1 et seq. "
The agreement further provided for the utilization of the Prior Tax Payment by the municipality "to fund its obligation to provide a refund to holders of the Certificates, plus lawful interest thereon, pursuant to the Tax Sale Law, N.J.S.A. 54:5-1 et seq. " The agreement also provided for the indemnification of the municipality by Echelon Glen
against any and all claims which may be asserted by the holders of the Certificates against the Township with respect to additional interest which may be due or owing to such holders upon the voidance of the Certificates in excess of the amount of the Prior Tax Payment [$3,600,070], plus any and all other liability which the Township may incur to the Certificate holders as a result of the voidance of the Certificates, whether or not said claims exceed the amount in the Escrow Fund.
Finally, the agreement required the taxpayer's dismissal with prejudice of a related federal action.
Upon entry of the Stipulation of Settlement in the Tax Court and Consent Order dismissing the federal action, the Township Committee of Voorhees Township enacted a Resolution authorizing the execution of "all legal instruments necessary to effectuate the settlements."
By seven letters, dated November 7, 1994, the municipality demanded that plaintiffs surrender their tax sale certificates to the municipality in consideration of the repayment to plaintiffs of the purchase price, together with 5% per annum interest, but without penalty. Plaintiffs refused to accept the municipality's tender and filed their Complaint in Lieu of Prerogative Writ. The complaint was dismissed on defendants' motion, and plaintiffs appeal.
While the action was pending, plaintiffs accepted the municipality's tendered refund of $2,635,204.40 representing the full refund of plaintiffs' purchase price of the tax sale certificates at issue, plus interest at the post-judgment rate in effect on an annual basis from the date of the sale of the tax sale certificates through the original date of tender of November 9, 1994. *fn1 The parties agreed that acceptance of the tender was without prejudice to their respective positions in the litigation.
Plaintiffs argue that the actions of the municipality here were the equivalent of an actual or de facto redemption and that they are entitled to the redemption value of the certificates. Plaintiffs assert that Echelon Glen and the municipality, in resolving the tax assessment appeal and the federal litigation by way of the Stipulation of Settlement, "sought to circumvent the statutory redemption requirements by artificially and arbitrarily declaring all the real estate taxes (and sewer and [Camden County Municipal Utility Authority] charges) void ab initio and by equally artificially reimposing them de novo in the reduced amount, ... thereby rationalizing their declaration that the certificates were void." Plaintiffs further contend that ...