Summit Bank v. Dennis Thiel

SYLLABUS
 

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Summit Bank v. Dennis Thiel (A-58-98)

 
(NOTE: The Court wrote no full opinion in this case. Rather, the Court's affirmance of the judgment of the Appellate Division is based substantially on the reasons expressed in the majority's per curiam opinion below.)

Argued September 14, 1999 -- Decided October 28, 1999

PER CURIAM

The issue in this appeal is whether property tax liens are "liens or encumbrances" within the meaning of N.J.S.A. 2A:61-16. That statute permits a purchaser of real estate at a sheriff's sale to be relieved of its bid if the purchaser shows that the notice of sale did not reveal a "lien or encumbrance" as well as its approximate amount.

Appellant, R&H Partnership (R&H) was the highest bidder at a foreclosure sale under a mortgage on real property. Before delivery of the deed, R&H moved to be relieved from its bid pursuant to N.J.S.A. 2A:61-16. R&H's final bid was $46,300. At the time of the sale, the property was encumbered by tax sale certificates totaling $23,647.47. The published notice advertising the sale referenced only the lien of the first mortgage in the amount of $32,000. Prior to the sale, the sheriff made the customary announcement that the sale would be "subject to the liens of unpaid taxes and other open municipal charges that may be outstanding against the subject premises." However, there was no mention of the amount of unpaid taxes.

R&H denied any knowledge of the amount of unpaid taxes prior to the sale. Summit Bank, the foreclosing mortgagee, learned of the amount of the taxes prior to the sale by inquiring of the tax office of the municipality.

The foreclosure court denied R&H's motion to be relieved from its bid. It relied on N.J.S.A. 46:15-5(c), a statute concerning affidavits of consideration. The court noted that the statute did not require liens for unpaid taxes to be included in an affidavit of consideration.

On appeal to the Appellate Division, R&H relied on the plain language of N.J.S.A. 2A:61-16. Summit Bank argued that the statute is intended to protect bidders only from undisclosed liens such as mortgages and judgment liens, which can be discovered only by a title search. According to Summit Bank, liens for unpaid taxes encumber virtually every property that is foreclosed, and a purchaser like R&H must be deemed to have known of the existence of unpaid taxes. Summit Bank further asserted that the amount of the tax liens can be easily acquired by requesting the information from the tax office of the municipality.

The Appellate Division reversed the Chancery Court in a split decision. The majority reasoned that even if R&H is deemed to have known of the existence of unpaid taxes, it must be assumed that it did not have actual knowledge of the amount. Because R&H did not have such knowledge, and because the amount of the taxes was not included in the notice of sale as required by N.J.S.A. 2A:61-16, the Appellate Division held that R&H was entitled to be relieved of its bid.

In dissent, one member expressed the opinion that given the usual procedures followed in sheriff's sales, application of the literal terms of the statute would defeat its purpose. She reasoned that R&H, which had attended such sales in the past, heard the announcement that the property was being sold "subject to the liens of unpaid taxes and other municipal charges." She also noted that the existence of a tax lien is easily determined by checking with the local tax collector.

Summit Bank filed an appeal as of right to the Supreme Court based on the dissent. R. 2:2-1(a).

HELD: With two slight modifications, the judgment of the Appellate Division is affirmed substantially for the reasons expressed in the majority opinion.

1. The Court adds that a mortgagee can satisfy the requirements of the statute by inserting in the notices and advertisements the amount of the delinquent taxes due as of a specific date. This information need not be updated in the event the date of sale is adjourned. Further, because the requirement of such notice may be a departure from the prevailing practice, the decision shall be applied to this case and to cases in which the public sale was conducted after May 19, 1999, the date the Appellate Division rendered its decision.

CHIEF JUSTICE PORITZ and JUSTICES O'HERN, STEIN, COLEMAN and VERNIERO join in this decision. JUSTICES GARIBALDI and LONG did not participate.

SUPREME COURT OF NEW JERSEY
A- 58 September Term 1998

SUMMIT BANK, Successor By
Merger to Ocean National Bank,

Plaintiff-Appellant,

v.

DENNIS THIEL and ROSE THIEL,
husband and wife, and
ALLIED BUILDING PRODUCTS, INC.,

Defendants,
 
IN THE MATTER OF

R & H PARTNERSHIP

Respondent.

Argued September 14, 1999 -- Decided October 28, 1999

On appeal from the Superior Court,
Appellate Division, whose opinion is reported at N.J. Super. (1999).

Timothy A. Kalas argued the cause for appellant (Bourne, Noll & Kenyon,
attorneys; James R. Ottobre, of counsel; Michael O'B. Boldt, on the briefs).

Lee David Medinets argued the cause for respondent.
 

PER CURIAM

The issue raised in this appeal is whether a real property tax lien constitutes a lien or encumbrance within the meaning of N.J.S.A. 2A:61-16. That statute allows a purchaser at a sheriff's sale to be relieved of a bid, before delivery of the deed, if the notice of sale fails to list any lien or encumbrance on the property. A majority in the Appellate Division concluded that a real estate tax lien falls within the scope of the statute and allowed the purchaser to withdraw its bid. The case is before us by virtue of a dissent in the Appellate Division. R. 2:2-1(a). With two slight modifications, we affirm the judgment of the Appellate Division substantially for the reasons expressed in the majority opinion, reported at N.J. Super. (App. Div. 1999).
We add that a mortgagee can give notice of any existing realty tax lien by inserting the amount of delinquent realty taxes due as of a specific date in the notices and advertisements required by law. The mortgagee shall not be obligated to update the tax lien information in the event that the first scheduled date of public sale is adjourned. Because the procedure required by this case may represent a departure from the prevailing practice, this decision shall be applied to this case and to cases in which the public sale was conducted after May 19, 1998, the date when the Appellate Division rendered its decision. See Olds v. Donnelly, 150 N.J. 424, 449-50 (1997); Crespo v. Stapf, 128 N.J. 351, 367-71 (1992).
We modify and affirm the judgment of the Appellate Division.
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, STEIN, COLEMAN, and VERNIERO join in this PER CURIAM opinion. JUSTICES GARIBALDI and LONG did not participate.

SUPREME COURT OF NEW JERSEY
 

NO. A-58

SEPTEMBER TERM 1998
ON APPEAL FROM Appellate Division, Superior Court
ON CERTIFICATION TO

SUMMIT BANK, Successor By
Merger to Ocean National Bank,

Plaintiff-Appellant,

v.

DENNIS THIEL and ROSE THIEL,
husband and wife, and
ALLIED BUILDING PRODUCTS, INC.,

Defendants,
 
IN THE MATTER OF

R & H PARTNERSHIP

Respondent.

DECIDED October 28, 1999 Chief Justice Poritz

PRESIDING
OPINION BY PER CURIAM
CONCURRING OPINION BY DISSENTING OPINION BY
CHECKLIST
AFFIRM CHIEF JUSTICE PORITZ X JUSTICE O'HERN X JUSTICE GARIBALDI ------------ ---------- ------------- JUSTICE STEIN X JUSTICE COLEMAN X JUSTICE LONG ----------- ----------- ------------- JUSTICE VERNIERO X TOTALS
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