Opinion
06-06-1938
ATLANTIC CITY v. GARDNER et al.
Samuel Backer, of Atlantic City, for complainant. Wm. M. & Thos. R. Clevenger, of Atlantic City, for counterclaimant.
Syllabus by the Court.
Complainant filed a bill to foreclose a tax sale certificate. Defendant, a mortgagee, counterclaimed, seeking a decree against complainant and defendants named in the counterclaim that the mortgage debt be ascertained and paid by complainant or one or more of the defendants, and failing therein, that the premises be sold to pay and satisfy complainant's tax lien and defendant's mortgage debt. Motion to strike counterclaim sustained.
Action by Atlantic City, as the owner of a tax sale certificate, against Josephine S.
Gardner, individually, etc., and others to foreclose the right of redemption against those entitled thereto, wherein the mortgagee filed a counterclaim. On motion to strike the counterclaim. Motion granted.
Samuel Backer, of Atlantic City, for complainant. Wm. M. & Thos. R. Clevenger, of Atlantic City, for counterclaimant.
SOOY, Vice Chancellor.
Complainant, the City of Atlantic City, is the owner of a tax sale certificate purchased by it at a sale under the statute. It has filed a bill to foreclose the right of redemption against those entitled thereto under the statute.
Defendant, a mortgagee, has filed an answer and counterclaim, both of which complainant moves to strike.
Insofar as the answer is concerned, it admits the tax lien and asks that the amount thereof be fixed by proof. This the answering defendant has a right to require. The answer will not be struck but complainant must proceed before a Master, on notice to defendant, and submit proof of the amount due.
The real point at issue is as stated by the answering defendant, "whether a counterclaim to foreclose defendant's mortgage may be filed in a tax foreclosure suit."
Defendant's counterclaim prays (a) that the defendants to the counterclaim, including the City of Atlantic City, answer the bill of complaint; (c) "that the defendants, or one of them, may be decreed to pay counterclaimant the amount so found due, with interest and costs, * * * and that in default of such payment they and each of them be debarred and foreclosed of all equity of redemption in said lands;" (e) "that a decree may be made for the sale of the mortgaged premises to raise and pay to the complainant and said counterclaimant the amounts so found due on its tax lien and her mortgages, with interest and costs."
It will be observed from the above that what counterclaimant wants is that her mortgage debt shall be ascertained and paid by the City of Atlantic City or some other defendant and in default of the payment thereof the City of Atlantic City and other defendants be debarred and foreclosed of its or their equity of redemption in the mortgagedpremises and that said premises be sold "to raise and pay to the said counterclaimant the amounts of their respective claims," i.e., the said tax lien and counterclaimant's mortgage debt.
The City, of course, is under no duty to redeem from defendant's mortgage and its equity as holder of a tax lien may not be foreclosed by defendant. Neither is the counterclaiming defendant entitled to a sale under a decree on the counterclaim.
The remedy of the mortgagee as against the City, the holder of the tax certificate, is that prescribed by the statute, i.e., redemption under Revised Statutes, 54:5-54, 54:5-56,
The right of the holder of the tax sale certificate is to have a strict foreclosure barring the equity of redemption, and not by judicial sale.
If counterclaimant were allowed to prevail, her decree, in effect, would destroy complainant's statutory right to have a decree barring the right of redemption to those mentioned in the statute, and substituting a decree that the lands be sold to raise money to satisfy and pay complainant's tax lien and then defendant's mortgage, and the sale of lands would be to any buyer, whether he have a right to redeem under the statute or not, and would be subjecting those having a right to redeem to the necessity of bidding at the sale to protect their rights.
Chancellor Walker, in Mitsch v. Owens, 82 N.J.Eq. 404, 89 A. 292, has clearly set forth the ineptness of the procedure attempted by defendant's counterclaim. At page 405, 89 A. at page 293, he said: "It is perfectly apparent that a repurchase of land sold for taxes can be made only by the owner or other person having an interest in the land, and not by a mere stranger at a judicial sale. It is true that the interest of the purchaser of land at a tax sale remains a mere lien on the premises during the period within which redemption is allowed to be effected (Burgin v. Rutherford, 56 N.J.Eq. 666, 38 A. 854), and it is the foreclosure of the right to redeem by which the owners' estate is cut off and extinguished and the purchaser's lien becomes an indefeasible estate in him."
The Chancellor further said, at page 406, 89 A. at page 293:
"the right to redeem is the right of the owner, and that its form is strictly prescribed.
"If, however, a sale were had on a bill to foreclose the right to redeem, redemption, in effect, might be made by one of the public—a mere stranger to the title.
"In my judgment the law does not intend to make provision that a total stranger may deprive the purchaser at a tax sale of his right to perfect his title, by strict foreclosure, on the one hand, or usurp the owner's right to redeem, by permitting the land to be bought away from him, on the other hand."
In Kurzius v. Hillside Land Co., 112 N. J.Eq. 466, 164 A. 687, Vice Chancellor Berry quoted with approval the Mitsch v. Owens Case supra, and pointed out that (page 688): "There was no merger, as a matter of law, of the lien of the tax certificate into the final decree, as there is in the case of a mortgage foreclosure. Schuster had acquired a fee by virtue of his tax certificate, section 24 of the Tax Sale Act of 1918 providing that 'such sale shall be made in fee to such person as will purchase the same, subject to redemption, etc.' True, his fee was subject to defeasance by redemption on the part of the owner or incumbrancers; but, as was pointed out by the late Chancellor Walker in Mitsch v. Owens, 82 N.J.Eq. 404, 89 A. 292, proceedings to foreclose a tax certificate are not followed by a public sale, nor by a deed from a sheriff or other official. The final decree bars rights of redemption, but does not otherwise enlarge the right, title, or interest of the certificate holder. His certificate does not become merged into the decree; it subsists as the indicia of title."
The tax lien acquired by the City was superior to that of the mortgage lien acquired by the defendant and the defendant has no right to compel the holder of the tax lien to' submit to a public sale and thus bar the tax lien holder of his statutory right to a strict foreclosure.
The motion to strike the counterclaim is granted, with costs to the complainant