Opinion
April 17, 1939.
Action by the Mount Vernon Trust Company against the City of Mount Vernon, to remove cloud on title to realty, and cancel assessment liens, or in the alternative for money judgment. On plaintiff's motion to strike out defenses, and defendant's motion for judgment on the pleadings.
Plaintiff's motion to strike out defenses granted in part and denied in part, and defendant's motion denied.
Bleakley, Platt Walker, of White Plains, for plaintiff.
Lester D. Stickles, of Mount Vernon, Corp. Counsel of City of Mount Vernon, for defendant.
This is an action to remove a cloud on plaintiff's title to certain rea property in the City of Mount Vernon, or, in the alternative, for a money judgment. The facts alleged in the complaint may be summarized as follows:
In 1934 plaintiff was the mortgagee of the premises in question. Taxes were at that time four years in arrears, and special assessments in a large amount, levied against the premises in 1930 for a sewer installation, remained unpaid. At two separate sales held in 1934 defendan sold to the plaintiff, under the apparent authority of Article XII-A of its charter, the tax liens covering the unpaid taxes for the years 1930 to 1933. The special assessment liens were not included in the sale. Plaintiff alleges that it purchased the tax liens free and clear of the special assessment liens by reason of the provisions of sections 162-a and 162-f of Article XII-A of the city charter. These sections provide in substance that the comptroller's advertisement of a tax sale shall include all items due and unpaid, and that the transfer of tax lien shall assign the lien free of all taxes and assessments accrued before the day specified in the notice of sale. The special assessments were payable in annual instalments, but the complaint alleges that under section 242-a of the charter such assessments became a lien immediately upon their confirmation, and that in this case the assessments were confirmed in 1930 and were therefore a lien against the property prior to the tax sales in 1934.
The relief demanded by the plaintiff is either a cancellation of the special assessment liens, or judgment for the amount paid at the tax sale with interest.
Defendant has served an answer containing five affirmative defenses in substance as follows: (1) Unconstitutionality of Article XII-A of its charter; (2) unconstitutionality of the tax sales and transfers of tax lien described in the complaint; (3) postponement of the maturity of the assessment liens by making the same payable in annual instalments; (4) estoppel through plaintiff's knowledge of the assessment liens at the time of the tax sale; and (5) absence of mistake or duress. The plaintiff moves to strike out each of the five defenses, and the defendant makes a cross-motion for judgment on the pleadings.
There has been prior litigation involving the same issue. In Matter of Mount Vernon Trust Co. v. Lynn, 167 Misc. 333, 5 N.Y.S.2d 156, an application for a peremptory mandamus order requiring the comptroller to cancel one of the same special assessments was denied at Special Term. There it was held that the tax sale did not operate to discharge the assessment, but that the lien of the assessment became subordinate to the transfer of the tax lien, and might be cut off by a tax lien foreclosure. The Appellate Division affirmed. 254 App.Div. 680, 3 N.Y.S.2d 210. Shortly thereafter the plaintiff commenced this action. In the meanwhile, however, the Court of Appeals had handed down its decision in County Securities, Inc. v. Seacord, 278 N.Y. 34, 15 N.E.2d 179, which has a new and important bearing on the rights of the parties. It was held in that case that a city is without power to change by local law the method of collecting taxes established by the legislature. Under that decision Article XII-A of defendant's charter, enacted by local law in 1934, is clearly invalid if there was no express grant of authority by the legislature to collect delinquent taxes in the manner therein provided.
[2-4] The first two defenses in the answer allege that the charter amendment, the transfers of tax liens, and the tax sales described in the complaint are unconstitutional and void. The defenses are alleged in the form of legal conclusions only. There is no allegation of facts showing that no authority had been conferred upon the defendant by the legislature, either in its original charter or otherwise, to provide for the collection of unpaid taxes by the sale of tax liens. The defenses in their present form are therefore insufficient in law. (Kittinger v. Buffalo Traction.Co., 160 N.Y. 377, 54 N.E. 1081), although they might be corrected by amendment But the more important question is whether such defenses are available to this defendant, even, if they were properly alleged. The plaintiff contends that the defendant is estopped from asserting that its own ordinance is unconstitutional. Certain authorities appear to support this view unconditionally. Sweeney v. State, 251 N.Y. 417, 167 N.E. 519; Jackson v. State, 261 N.Y. 134, 184 N.E. 735; Matter of Hand Street, 55 Hun 132, 8 N.Y.S. 610; Matter of City of Syracuse, 224 N.Y. 201, 120 N.E. 203. But in others the contrary view has been taken (First Construction Co. of Brooklyn v. State, 221 N.Y. 295, 310, 116 N.E. 1020; City of New York v. Fifth Avenue Coach Co., 237 App.Div. 383, 404, 262 N.Y.S. 228, affirmed 262 N.Y. 481, 188 N.E. 29), and in my opinion it cannot be said that the question is governed by any unvarying rule of law. It is to be borne in mind that the principle for which the plaintiff contends is based upon the theory of estoppel and that estoppel is an equitable doctrine, the purpose of which is to prevent wrong and injustice. Its application to a particular case must therefore depend upon all the surrounding circumstances. In most instances it would seem to be unconscionable to permit a municipality to repudiate its own ordinance; but here the plaintiff is apparently seeking an advantage through the oversight of defendant's officials. It was said by the Appellate Division in the mandamus proceeding that "the equitable rights of petitioner are not predominant in this record". On the present record I am of the same opinion. It is therefore my conclusion that any alleged estoppel against the defenses of unconstitutionality should not be disposed of on the pleadings.
The third defense alleges that because the assessments were payable in instalments their due date was postponed and consequently the assessment liens could not have been included in the tax sale.
[5, 6] Under section 242-a of the charter the full amount of the assessment became a lien when the assessments were confirmed in 1930. But it does not follow that the comptroller was authorized to include the entire lien in the tax sale of 1934. The Appellate Division observed in the mandamus proceeding that the pertinent provisions of the charter "are not clear and admit of contradictory construction." Matter of Mount Vernon Trust Co. v. Lynn, 254 App.Div. 680, 3 NY.S.2d 210. Section 162-a of the charter provides that the advertisement of the tax sale shall include all items due and unpaid except those for the current year. The answer alleges that the tax sales held in 1934 included only the items which had matured prior to December 31, 1933. This would appear to be in conformity with section 162-a. The final instalment of the assessments was not due and payable until April 8, 1934. Consequently that instalment at least was not and could not have been included in the 1934 tax sales. The defense is therefore good, at least as to the final instalment, and may not be stricken out.
The fourth defense alleges in substance that the plaintiff knew of the assessment liens and is now estopped from denying their validity and continued existence. Mingled with the allegations of fact in this defense are numerous conclusions of fact and law. The defense in my opinion, is bad. There is no allegation that defendant acted in reliance upon anything said or done by the plaintiff in the sale of the tax liens. The elements of an equitable estoppel are lacking. Malloney v. Horan, 49 N.Y. 111, 10 Am.Rep. 335.
The fifth defense is to the effect that the payments made by the plaintiff were voluntary and were not made under duress or mistake of fact. The defense is apparently directed to plaintiff's alternative demand for a refund of the purchase money if cancellation of the assessment liens is denied. The voluntary or involuntary character of the payment is to some extent a question of proof and should not be determined on the pleadings.
Defendant's cross-motion for judgment remains to be determined. If there were no question of unconstitutionality present, the plaintiff would undoubtedly be entitled to maintain its action. Matter of Salzberg, 212 App.Div. 44, 206 N.Y.S. 837 affirmed 240 N.Y. 651, 148 N.E. 744. Since I hold that the two defenses which raise the constitutional question are bad in form, it is unnecessary to determine now what effect, if any, those defenses might have upon the plaintiff's cause of action.
The plaintiff's motion to strike out the defenses is therefore granted to the extent that the first, second and fourth defenses are stricken out, and otherwise denied. The defendant may, however, serve an amended answer within ten days alleging its first and second defenses in proper form. The defendant's motion for judgment on the pleadings is denied. Settle order on notice.