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Petak v. City of Paterson

June 13, 1996

HERBERT PETAK AND ANITA PETAK, PLAINTIFFS-APPELLANTS,
v.
CITY OF PATERSON, DEFENDANT-RESPONDENT



On appeal from Superior Court of New Jersey, Law Division, Passaic County.

Approved for Publication June 13, 1996.

Before Judges Baime, Villanueva and Kimmelman. The opinion of the court was delivered by VILLANUEVA, J.A.D. (Retired and temporarily assigned on recall.)

The opinion of the court was delivered by: VILLANUEVA

The opinion of the court was delivered by

VILLANUEVA, J.A.D. (Retired and temporarily assigned on recall.)

Plaintiffs appeal from an order granting a cross-motion for summary judgment in favor of the City of Paterson (City) dismissing plaintiffs' complaint and denying plaintiffs' motion for summary judgment. We reverse.

After Aram Calfayan purchased two tax sale certificates for property located in Paterson, New Jersey, he assigned them to plaintiff Anita Petak and delivered the original certificates to her. When the property owner redeemed the certificates, the tax collector, who apparently had no knowledge of the assignments, paid the moneys to Calfayan but failed to procure the original tax sale certificates from him. Plaintiffs now seek to recover over $47,000 in redemption moneys from the City of Paterson.

I.

In October 1988 Calfayan paid $12,897.88 for tax sale certificate number 1988-0011 for Block CO326, Lot 5, as shown on the tax map of the City. At the same time he paid $13,976.52 for tax sale certificate number 1988-0012 for Block CO385, Lot 15, as shown on the tax map. Both certificates were recorded in the office of the Register of Deeds and Mortgages of Passaic County ("Register") on March 28, 1989. On November 1, 1988, Calfayan sold, transferred and assigned these two certificates and other certificates to Anita Petak for $29,343.37.

In March 1991 Colony Management Company, the owner of the two properties, redeemed certificate 1988-0011 by submitting to the tax collector, Kathleen J. Gibson, a certified check in the amount of $20,778.76 made payable to Calfayan. The tax collector then forwarded or delivered this check to Calfayan. In August 1992 Colony Management redeemed certificate 1988-0012 by the same procedure. A certified check in the amount of $26,290.76 made payable to Calfayan was given to the tax collector and then delivered by her to Calfayan.

In October 1992 plaintiffs' attorney notified the tax collector that Calfayan had assigned the two tax sale certificates to his clients. On December 29, 1992, the assignment was recorded in the office of the Register.

In April 1993 Colony Management's title insurance company notified the tax collector that tax certificate 1988-0012 for Block CO326, Lot 5, had not been canceled of record. The tax collector, who maintains that she never saw the letter from plaintiffs' attorney notifying her of the assignment until early 1994, *fn1 advised Calfayan that he either must produce the original certificate of sale or endorse a warrant of discharge so that the lien of the tax sale certificate could be canceled of record. The tax collector prepared a warrant of discharge which Calfayan signed and which was subsequently recorded on May 13, 1993, in the office of the Register. According to the tax collector's deposition testimony, tax sale certificate 1988-0011 remains open of record.

Plaintiffs, describing themselves as assignees of two municipal tax sale certificates, filed suit against the City to recover redemption moneys which they claimed were wrongfully paid by the City to the assignor, Calfayan. *fn2 The City filed an Answer and Third-Party Complaint against Calfayan for indemnification. Calfayan, who filed for Chapter 7 bankruptcy prior to the institution of this suit, did not file an answer. *fn3

Following discovery, plaintiffs moved for summary judgment against the City. The City filed a cross-motion for summary judgment. On September 29, 1995, the trial court heard oral argument and entered orders denying plaintiffs' motion and granting the City's cross-motion. The City's brief indicates that by order dated February 26, 1996, their third-party complaint against Calfayan was dismissed without prejudice.

The trial court found that the tax collector, indeed, had acted negligently when she paid the redemption moneys ...


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