Opinion
1804/03.
Decided May 5, 2004.
Joseph J. Haspel, PLLC, Attorney for the Plaintiff, Goshen, NY.
Samuel S. Yasgur, Esq., Sullivan County Attorney, By: Lynda G. Levine, Esq., Attorney for the Defendant, County of Sullivan, County Government Center, Monticello, NY.
Jeffrey S. Altbach, Esq., Attorney for the Defendants, Zoli Kleinberger and Ruth Kleinberger, Ferndale, NY.
The Plaintiff moved for an Order granting summary judgment in its favor and against the Defendant, County of Sullivan; and for an Order, pursuant to CPLR § 306-b and § 2004, extending Plaintiff's time, nunc pro tunc, for an additional 120 days from January 22, 2004 within which to serve the remaining Defendants; and, for an Order pursuant to CPLR § 308(5) for an Order authorizing alternative service on the remaining Defendants by publication pursuant to CPLR § 316, or in any such manner as the Court directs.
In response the Defendant, County of Sullivan (hereinafter the "County") cross-moved for an order pursuant to CPLR 3212 granting the Defendant summary judgment dismissing the Plaintiff's complaint.
The Defendants, Zoli and Ruth Kleinberger (hereinafter "Kleinberger") consented to an Order extending Plaintiff's time for an additional 120 days from January 22, 2004 to effect service of the Summons and Complaint.
The facts in this case are not in dispute. The Plaintiff obtained title premises identified as 8 Orchard Street, Liberty, New York, Tax Map # 112-3-5, in January of 1998. A deed, purportedly from the Plaintiff, was executed on December 17, 1998 conveying the property to Mountain View Homes, Inc. By judgment dated December 5, 2002, the deed was annulled and title was restored to the Plaintiff herein, as more fully described below.
On October 25, 1999, Mountain View Homes, Inc. conveyed their interest in 8 Orchard Street to Joseph DiStefano and John Borelli, who were principals of Mountain View Homes. On that same date, DiStefano and Borelli executed and delivered a note and mortgage encumbering the property to Defendant, Equicredit of America's assignor (Interstate Resource Corp.).
On February 29, 2000, the Defendant County of Sullivan filed the Verified List of Delinquent Taxes for 1999 and other tax liens in the Office of the Sullivan County Clerk pursuant to RPTL § 1122.
On October 3, 2001, Maple Tree commenced an action against Mountain View Homes, Inc., DiStefano and Borelli, in which it was alleged that the deed from the Plaintiff to Mountain View Homes was void due to fraud, and that the signature on the deed was a forgery. Simultaneously with the filing of the deed action, the Plaintiff filed a Notice of Pendency.
On November 1, 2001, the County Treasurer executed and filed a Petition and Notice of Foreclosure, in conformance with RPTL § 1123. The Petition and Notice of Foreclosure of Tax Liens was posted and published in the Sullivan County Democrat and the River Reporter.
The Personal Notice of the Commencement of Foreclosure Proceedings, dated November 1, 2001, was served upon Joseph DiStefano and John Borelli, at 166-56 17 Ave Whitestone New York 12446, and at 15-11 145th Place, Whitestone, NY 11357, and at the property address, by first class and certified mail (RPTL § 11125).
A judgment in the 1999 foreclosure was signed by the Hon. Frank J. Labuda on April 27, 2002, in which it was "Ordered, Adjudged and Decreed that all proceedings in this action were fully and properly taken pursuant to Article Eleven of the Real Property Tax Law of the State of New York, and in particular Section 1122, 1124, 1125, 1127, 1128, 1131 and 1136 thereof, and there has been full and due compliance with the provisions of said Article Eleven."
On July 23, 2002, the County conveyed the subject premises to the Defendants Kleinberger herein.
On December 5, 2002, by Judgment of the Sullivan County Supreme Court, Hon. Nicholas A. Clemente, record title to the premises was restored to the Plaintiff herein, in the action TMZ Enterprises, Inc., Maple Tree Homes, and Frank Ciano v. Mountain View Homes, Inc., Joseph DiStefano, a/ka John DiStefano, John Borelli, et al., Index # 2208-01.
The Plaintiff argues that the County failed to comply with the constitutional requirements for due process set forth by the United States Supreme Court in Mennonite Board of Missions v. Adams, 462 US 791, 103 S.Ct. 2706, 77 L.Ed.2d 180, and as expanded by the Court of Appeals ( McCann v. Scaduto, 71 NY2d 164, 524 NYS2d 398, Congregation Yetev Lev D'Satmar v. County of Sullivan, 59 NY2d 418, 465 NYS2d 879), which require that notice of a real estate tax foreclosure be given to all persons holding an interest in the real property, as ascertainable from the real property records, including tax records.
Section 1125(1) of the Real Property Tax Law (RPTL) is the statutory provision which establishes the procedure to provide personal notice of a tax sale proceeding. This section establishes not only who is entitled to personal notice of the commencement of foreclosure proceedings, but it also establishes the point during the tax sale proceeding that the County is obligated to identify who has a right title in the subject property as "a matter of public record." Section 1125(1) of the RPTL provides that notice shall be mailed to "each owner and any other person whose right, title or interest was a matter of public record as of the date the list of delinquent taxes was filed." Thus, under the statute, the County properly served the owner of record and all other persons whose interests were a matter of public record as of the date the list of delinquent taxes was filed. The list of delinquent taxes was filed on February 29, 2000.
The Plaintiff argues that the County was placed on notice of its interest in the property, on October 3, 2001, when it commenced the action sounding in fraud against Mountain View Homes, Inc., DiStefano and Borelli.
Under these circumstances, the Real Property Tax Law does not require that the County provide the Plaintiff with personal notice because at the relevant point in time, i.e., when the list of delinquent taxes was filed, the Plaintiff did not have an interest in the property which could be ascertained from public records.
The Plaintiff also claims any interest in property which emanates from a forged deed is void ab initio. While it has been held "a person cannot be a bona fide purchaser or encumbrancer for value through a forged deed, as it is void and conveys no title ( Public Adm'r of Kings County v. Samerson, 298 AD2d 512, 750 NYS2d 301 [2nd Dept., 2002], see also, Yin Wu v. Wu, 288 AD2d 104, 733 NYS2d 45 [1st Dept., 2001]), the issue before this Court is what effect a forgery in the chain of title has on a tax foreclosure proceeding where the Plaintiff's claim to the disputed land was not "readily ascertainable" by "diligent search" of the real property records or the tax rolls at the time that the list of delinquent taxes was filed.
It has been determined, however, that the position of a County when it obtains title to property through a tax foreclosure proceeding is not analogous to that of a "bona fide purchaser for value." In Borisenok v. Hug, 212 AD2d 282, 630 NYS2d 122 [3rd Dept., 1995] the Court held that Plaintiff's title, acquired by adverse possession prior to the tax sale, was divested by a subsequent tax proceeding. The Court rejected the argument the County could not transfer greater title than it had in the property prior to the tax foreclosure proceeding, noting that "the title conveyed in a tax sale is not simply the title of the delinquent property owner" ( id. at p. 283). The Court of Appeals in Melahn v. Hearn, 60 NY2d 944, 946, 471 NYS2d 47 provided that the "purchaser of property at a tax sale acquires a new and complete title to the land under an independent grant from the sovereign, a title free of any prior claims to the property or interests in it."
The Plaintiff argues that it was the equitable owner of the property at the time of the tax foreclosure proceeding, but it fails to demonstrate any way that the County could have ascertained its interest from the public record at the relevant time.
A tax deed is conclusive evidence that the tax sale and all proceedings were regular (RPTL § 1134), and the Plaintiff is charged with the knowledge that real estate taxes are regularly levied and that a default may result in forfeiture of the land ( Congregation Yetev Lev D'Satmar, Inc. v. Sullivan County, 59 NY2d 418, 465 NYS2d 879, Keiser v. Young, 181 AD2d 170, 585 NYS2d 880 [3rd Dept., 1992], lv. denied, 80 NY2d 761, 592 NYS2d 880).
In Congregation Yetev Lev D'Satmar, Inc. v. Sullivan County, supra. at p. 423, the Court of Appeals held that "[d]ue process requires only that the notice be appropriate to the nature of the case without creating impossible or impractical obstacles to concluding the proceedings." The Plaintiff in Congregation Yetev Lev D'Satmar, Inc. v. Sullivan County had obtained title to the property through adverse possession, and as a result, did not receive actual notice of the tax sale. The Court found that constructive notice was acceptable because the address of an n owner by adverse possession was not "reasonably identifiable" and the assessor was not required to undertake "extraordinary efforts to discover the claim of adverse possession. In Kennedy v. Mossafa, 100 NY2d 1, 759 NYS2d 429 the Court held that the owner's interests must be balanced against the State's interest in collecting delinquent taxes. A determination whether the municipality's notification procedures were reasonable when the status and conduct of the owner are taken into account.
The Plaintiff in our case, brought the fraud action without ever attempting to ascertain whether the Defendants in that action had paid the taxes thereon, even though at the commencement of the action, Mountain View Homes and its successor had been the owner of record for almost three years. At the time that the Plaintiffs commenced the fraud action, the list of delinquent taxes had already been filed by the County in accordance with Section 1122 of the RPTL. The filing of such list "shall have the same force and effect as the filing and recording in such office of an individual and separate notice of pendency pursuant to article sixty-five of the civil practice law and rules with respect to each parcel included in such list" (RPTL § 1122(7)). The Plaintiff had thus been placed on notice that the property was to be sold at tax foreclosure sale (CPLR § 6501).
The Plaintiff did not attempt to redeem the property (RPTL § 1110), which could have been accomplished until the last day for redemption, which was fixed as the 4th day of February 2002 (See, Levine Affirmation, ¶ 14). The Plaintiff did not name the County in its action to recover the property, nor did they take any step to place the County on notice of the action ( See, e.g., RPTL § 1126).
Wherefore, based upon the foregoing, where the County has properly complied with the procedure mandated by Article 11 of the Real Property Tax Law and the Plaintiff's claim to the disputed land was not "readily ascertainable" by a "diligent search" of the real property records or the tax rolls at the time the list of delinquent taxes was filed, and the Plaintiff never moved to protect their interest in the property with regard to the outstanding delinquent taxes, the Court shall deny the Plaintiff's motion for summary judgment with respect to the County of Sullivan, and shall grant the County's motion for summary judgment dismissing the complaint against it.
The application with respect to service of process on the remaining defendants is rendered moot by the determination of this Court which upholds the tax foreclosure proceeding in this case.
This memorandum shall constitute the Decision and Order of this Court. The original Decision and Order, together with the motion papers have been forwarded to the Clerk's office for filing. The filing of this Order does not relieve counsel from the obligation to serve a copy of this order, together with notice of entry, pursuant to CPLR § 5513(a)