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Sheehan v. County of Suffolk

67 N.Y.2d 52 Court N.Y. Decision date 1986-02-13 English

Delivered by Titone, J.

Contents

Majority

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Donald Sheehan et al., Appellants, v County of Suffolk, Respondent. Wallace MacKechnie et al., Appellants, v County of Sullivan et al., Respondents.
Argued January 9, 1986;
decided February 13, 1986
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POINTS OF COUNSEL
Irwin Popkin and David N. Brainin for appellants in the first above-entitled action.
I. The acquisition by Suffolk County of real property for the nonpayment of real estate taxes, without giving notice to the owner, or an opportunity to be heard violates due process. (Mullane v Central Hanover Trust Co., 339 US 306 ; Kelly v Pittsburgh, 104 US 78 ; Hodge v Muscatine County, 196 US 276 ; Hagar v Reclamation Dist. No. 108, 111 US 701 ; Sniadach v Family Fin. Corp., 395 US 337 ; Fuentes v Shevin, 407 US 67 ; Mennonite Bd. of Missions v Adams, 462 US 791 ; Blye v Globe-Wernicke Realty Co., 33 NY2d 15 ; Sharrock v Dell Buick-Cadillac, 56 AD2d 446 ; Catoor v Blair, 358 F Supp 815 , 414 US 990 .) II. After acquiring the property in violation of due process, the retention by Suffolk County of the surplus upon a subsequent resale of the property constitutes a taking without just compensation. (Chapman v Zobelein, 237 US 135 ; United States v Lawton, 110 US 146 ; King v Mullins, 171 US 404 ; Kentucky Union Co. v Kentucky, 219 US 140 ; People ex rel. McColgan v Palmer, 10 App Div 395 ; People ex rel. Griffin v Mayor of Brooklyn, 4 NY 419 .)
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Martin Bradley Ashare, County Attorney (John C. Bivona of counsel), for respondent in the first above-entitled action.
I. The State Legislature enacted a constitutionally complete and exhaustive tax collection, enforcement and administrative program. (Harris v Jacobs, 69 Misc 2d 4 , 40 AD2d 677 , 32 NY2d 914 ; Heffner v Northwestern Life Ins. Co., 123 US 747 ; Devine v County of Suffolk, 71 Misc 2d 883 ; Cooke v Mulligan, 81 Misc 2d 1025 ; County of Herkimer v Village of Herkimer, 251 App Div 126 ; Oneida Indian Nation of N. Y. v County of Oneida, 434 F Supp 527 , 464 F2d 916 , 414 US 661 .) II. As to plaintiff Sheehan, his effort to redeem was an inconsequential act. (Eugene Osterhout, Inc. v Sardo, 66 AD2d 167 ; Matter of Blatnicky v Ciancimino, 1 AD2d 383 , 2 NY2d 943 ; Rogers v Jewell, 520 F Supp 243 .) III. The profit motive, if any, does not cause an impermissible erosion of constitutional rights. (Callahan v Underwood, 260 App Div 352 , 285 NY 620 ; Harris v Jacobs, 69 Misc 2d 4 ; Matter of Gould Realty Co. v Reutershan, 284 NY 540 ; Balthazar v Mari Ltd., 301 F Supp 103 , 396 US 114 .) IV. Plaintiffs received the statutory notices as prescribed under the Suffolk County Tax Act and the Real Property Tax Law. V. Dispositional auction sales are an exercise of the taxing power. (Balthazar v Mari Ltd., 301 F Supp 103 ; United States v Lawton, 110 US 146 ; Hersee v Porter, 100 NY 403 ; Matter of City of New York [801-815 E. N. Y. Ave.], 290 NY 235 ; Melahn v Hearn, 92 AD2d 319 , 60 NY2d 944 ; Lee v Farone, 261 App Div 674 , 288 NY 517 .) VI. The circumstances of this case do not present a violation of the requirements for procedural due process under the Fourteenth Amendment of the United States Constitution. (Botens v Aronauer, 32 NY2d 243 , 414 US 1059 ; Griffin v City of Syracuse, 179 Misc 250 , 266 App Div 1055 , 292 NY 639 ; City of Syracuse v Murray, 179 Misc 244 ; Matter of Municipal Lien Corp. v Gawronski, 42 Misc 2d 369 ; Harris v Jacobs, 69 Misc 2d 4 , 40 AD2d 677 ; Nelson v City of New York, 352 US 103 ; Balthazar v Mari Ltd., 301 F Supp 103 , 396 US 114 .) VII. Under the circumstances presented there is no violation of the notions of substantive due process embodied within the Fourteenth Amendment of the United States Constitution. (Hurtado v California, 110 US 516 ; Mugler v Kansas, 123 US 623 ; Treigle v Acme Homestead Assn., 297 US 189 ; Pennsylvania Coal Co. v Mahon, 260 US 393 ; Nelson v City of New York, 352 US 103 ; Chapman v Zobelein, 237 US 135 ; Balthazar v Mari Ltd., 301 F Supp 103 , 396 US 114 .)
Edward J. Meyer for appellants in the second above-entitled
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action.
Taking property having a value in excess of a tax lien to satisfy that lien without affording the owner a hearing on the value of the property or the opportunity to recover the excess value is unconstitutional. (Chapman v Zobelein, 237 US 135 ; United States v Lawton, 110 US 146 ; Nelson v City of New York, 352 US 103 ; Matter of In Rem Tax Foreclosure Action No. 37, 118 Misc 2d 1081 ; City of New York v Chapman Docks Co., 1 AD2d 895 .)
James G. Sweeney, County Attorney, for County of Orange, respondent in the second above-entitled action.
I. The complaint fails to state a cause of action under either the Fifth Amendment of the United States Constitution or NY Constitution, article I, § 7. (People ex rel. Griffin v Mayor of Brooklyn, 4 NY 419 ; Howell v City of Buffalo, 37 NY 267 .) II. The circumstances of this case do not present a violation of the requirements for due process under the Fourteenth Amendment of the United States Constitution or NY Constitution, article I, § 6. (Botens v Aronauer, 32 NY2d 243 , 414 US 1059 ; Griffin v City of Syracuse, 179 Misc 250 , 266 App Div 1055 , 292 NY 639 ; City of Syracuse v Murray, 179 Misc 244 ; Matter of Municipal Lien Corp. v Gawronski, 42 Misc 2d 369 ; Harris v Jacobs, 69 Misc 2d 4 , 40 AD2d 677 ; Nelson v City of New York, 352 US 103 ; Balthazar v Mari Ltd., 301 F Supp 103 , 396 US 114 .) III. Under the circumstances presented there is no violation of the notions of substantive due process embodied within the Fourteenth Amendment of the United States Constitution. (Hurtado v California, 110 US 516 ; Mugler v Kansas, 123 US 623 ; Treigle v Acme Homestead Assn., 297 US 189 ; Pennsylvania Coal Co. v Mahon, 260 US 393 ; Locher v New York 198 US 45 ; City of New York v Nelson, 309 NY 94 , 352 US 103 ; Chapman v Zobelein, 237 US 135 ; Balthazar v Mari Ltd., 301 F Supp 103 , 396 US 114 .) IV. Plaintiffs have no rights upon a resale of the delinquent lands by the counties. (Chapman v Zobelein, 237 US 135 ; Sussman v Escambia County, 190 F2d 809 .) V. The common-law doctrine of unjust enrichment has no applicability to the facts at hand.
Robert Abrams, Attorney-General (Michael S. Buskus, Robert Hermann and Peter H. Schiff of counsel), for State of New York, respondent in the second above-entitled action and in his statutory capacity under Executive Law § 71 in both the first and second above-entitled actions.
I. No violation of substantive due process occurs simply because a delinquent taxpayer’s failure timely to redeem his property results in a
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forfeiture. (Hersee v Porter, 100 NY 403 ; Solomon v City of New York, 94 AD2d 283 ; Matter of Elinor Homes Co. v St. Lawrence, 113 AD2d 25 ; Bull v United States, 295 US 247 ; Chapman v Zobelein, 237 US 135 ; Nelson v City of New York, 352 US 103 ; Kemmerer Coal Co. v Brigham Young Univ., 723 F2d 54 ; City of Buffalo v Cargill, Inc., 44 NY2d 7 ; Heyert v Orange & Rockland Utils., 17 NY2d 352 ; United States v Title Ins. Co., 265 US 472 .) II. There is no violation of procedural due process where, as here, notice is sent to the last known address of the property owner before a tax sale and again before expiration of the time to redeem. (North Laramie Land Co. v Hoffman, 268 US 276 ; Lily Dale Assembly v County of Chautauqua, 72 AD2d 950 , 52 NY2d 943 , cert denied sub nom. Lily Dale Assembly v Josephson, 454 US 823 ; Mullane v Central Hanover Trust Co., 339 US 306 ; Bell v Burson, 402 US 535 ; Fuentes v Shevin, 407 US 67 ; Memphis Light, Gas & Water Div. v Craft, 436 US 1 ; Vlandis v Kline, 412 US 441 ; Cleveland Bd. of Educ. v LaFleur, 414 US 632 ; Mennonite Bd. of Missions v Adams, 462 US 791 ; Tobia v Town of Rockland, 106 AD2d 827 .) III. No compensable "taking” occurred despite any future "profit” to the purchaser at a tax sale who later resells. (Texaco, Inc. v Short, 454 US 516 ; Nelson v City of New York, 352 US 103 ; Penn Cent. Transp. Co. v New York City, 438 US 104 ; Rogin v Bensalem Twp., 616 F2d 680 , cert denied sub nom. Mark-Garner Assoc. v Bensalem Twp., 450 US 1029 ; Brushaber v Union Pac. R. R. Co., 240 US 1 ; Matter of Elinor Homes Co. v St. Lawrence, 113 AD2d 25 .)

OPINION OF THE COURT

The question presented is whether a real property tax scheme which requires notice to a taxpayer of taxes due, notice of delinquent taxes, notice of a tax lien sale, a tax sale without competitive bidding, a redemption period and notice of the impending expiration of the redemption period before the resale of the property at public auction and retention of any surplus by the county, deprives a taxpayer of property without due process of law or constitutes a taking without just compensation. We hold that it does not.

I

A

In Sheehan v County of Suffolk, the named plaintiffs are

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former resident owners of real property in Suffolk County. It is undisputed that both plaintiffs failed to pay real property taxes due. Pursuant to Suffolk County Tax Act (SCTA) § 26 (2) (L 1920, ch 311, as amended), the county mailed the following notice to each plaintiff: "The records of this office indicate that you have neglected to pay the taxes levied against real property assessed to you for the current tax year. You are hereby notified that pursuant to the law the tax rolls have been returned to the county treasurer and that unless the unpaid taxes, plus interest and penalties, are paid prior to the publication of the tax sale lists which will occur soon after September 1st next, the tax lien against your real property will be advertised for sale in the following newspapers designated to publish tax sale lists this year to wit: [names of newspapers] and such tax lien will be sold pursuant to such advertisement. For further information you must communicate with the county treasurer at Riverhead, New York, giving him your name and address and a brief description of your real property including map and lot number”. Subsequently, Suffolk County purchased the tax liens at a sale at which it was the only bidder allowed (Suffolk County Legislature Resolution No. 829-1971).

At least three months prior to the end of the 36-month redemption period, a notice of unredeemed real estate was both published (SCTA § 52) and mailed to the plaintiffs (Real Property Tax Law § 1014). After the redemption period expired, the county automatically obtained deeds to the properties from the county treasurer. Following the conveyance of the deeds, the taxpayers were allowed nine additional months within which to redeem the properties. Neither taxpayer made any timely effort to redeem. Several years later, the county sold the properties at public auctions and retained the substantial differences between the lien amounts and the sale prices.

Plaintiffs then commenced this action for a determination of claims to the real property and for a judgment declaring the County’s tax scheme unconstitutional. Special Term dismissed the complaint upon cross motions for summary judgment. Plaintiffs appeal directly to this court, pursuant to CPLR 5601 (b) (2), challenging only the constitutionality of the statutory scheme, having waived all other nonconstitutional claims (Cohen and Karger, Powers of the New York Court of Appeals § 58, at 262-263 [rev ed]).

II

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B.

In MacKechnie v County of Sullivan each of the named plaintiffs failed to pay real property taxes after each received notice by mail of the tax obligation (Real Property Tax Law § 922). Proper advance notice of an impending tax sale was given (Real Property Tax Law § 1002). Pursuant to Real Property Tax Law § 1008 (3) and resolutions passed by the defendant counties, the counties purchased the properties at tax sales without competitive bidding.

The plaintiffs were permitted to redeem their properties during a three-year period (Real Property Tax Law §§ 1010, 1022, 1024). Within six months of the expiration of the redemption period, each plaintiff received notice by mail of the upcoming expiration. None of the plaintiffs redeemed. The counties took deeds to the properties pursuant to Real Property Tax Law § 1018.

The counties sold most of the properties at public auctions and retained the proceeds in excess of the taxes and penalties due. Orange County still retains the deed to one property upon which it refuses to allow redemption.

Plaintiffs’ action for a judgment declaring the statutory tax scheme unconstitutional, for damages and for injunctive relief was dismissed by Special Term for failure to state a cause of action. They have taken a direct appeal from the judgment to this court (CPLR 5601 [b] [2]).

Plaintiffs urge that the counties’ failure to inform them that the tax liens would not be sold at a competitive bidding and that they would not receive any surplus from the ultimate public auctions of the properties violated the due process clauses of the State and Federal Constitutions. They also contend that permitting the counties to purchase tax liens without competitive bidding and then ultimately to sell the properties without turning over the surplus to the owners amounts to a taking without just compensation. We disagree, and affirm both judgments.

Analysis should begin with the well-settled proposition that an owner of property is charged with knowledge of statutory provisions affecting the control or disposition of his or her property (Texaco, Inc. v Short, 454 US 516 , 531; Congregation Yetev Lev D’Satmar v County of Sullivan, 59 NY2d 418 , 423).

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So viewed, it was the plaintiffs’ failure to inform themselves of the relevant competitive bidding and forfeiture statutes that worked the arguably harsh consequences, not the statutory provisions (United States v Locke, 471 US 84 , —, 105 S Ct 1785 , 1799).

Due process does not require that every taxpayer be advised of the possible consequences attaching to a default in payment (United States v Locke, supra; Texaco, Inc. v Short, supra; North Laramie Land Co. v Hoffman, 268 US 276 ; Congregation Yetev Lev D’Satmar v County of Sullivan, supra; Lily Dale Assembly v County of Chautauqua, 52 NY2d 943 , affg 72 AD2d 950 , cert denied 454 US 823 ). Once taxpayers are provided with notice and an opportunity to be heard on the adjudicative facts concerning the valuation of properties subject to tax, as was done here, they have received all the process that is due (Mennonite Bd. of Missions v Adams, 462 US 791 , 798-800; Mullane v Central Hanover Trust Co., 339 US 306 ; Botens v Aronauer, 32 NY2d 243 , appeal dismissed 414 US 1059 ; 3 Davis, Administrative Law § 15:9 [2d ed 1980]). At this juncture, summary remedies for the collection of taxes may be invoked (Botens v Aronauer, supra).

There is no unfairness, much less a deprivation of due process, in the county’s retention of any surplus. The taxpayers in each of the statutory schemes under review are given a three-year period of redemption. During this period, plaintiffs had the opportunity to either pay the taxes and penalties due or sell the property subject to the lien and retain the surplus. This redemption period affords the taxpayer an opportunity to avoid a full forfeiture (see, Chapman v Zobelein, 237 US 135 ). Statutes which allow a State to retain the excess collected upon the public sale of property have been sustained where they provide for a lengthy redemption period (Chapman v Zobelein, supra; Turner v New York, 168 US 90 , 94; Balthazar v Mari Ltd., 301 F Supp 103 , affd 396 US 114 ).

A three-year redemption period, as set forth in the challenged statutes, gives sufficient opportunity for a taxpayer to reclaim the property. It is not unjust for a legislative body to declare that once a taxpayer has abandoned rights in property after such a period has expired, the taxing authority may take a deed in fee. At that point, the former owner can no longer claim any just compensation upon its resale (Texaco, Inc. v Short, 454 US 516 , 530, supra). Full forfeiture has already occurred upon the taxpayer’s failure to redeem the property before it has been resold.

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There is no constitutional prohibition against such a full forfeiture (Balthazar v Mari Ltd., 301 F Supp 103 , affd 396 US 114 , supra; see also, Nelson v City of New York, 352 US 103 ; Chapman v Zobelein, supra). United States v Lawton ( 110 US 146 ) did not hold to the contrary. In Lawton, the Federal statute under which the property was sold required return of any surplus. Obviously, in the face of such a statute, payment of any excess to the former owner was required and Nelson v City of New York (supra, at pp 109-110) expressly distinguished Lawton on that basis.

Finally, there is no constitutional requirement that tax liens be sold only through competitive bidding (Saranac Land & Timber Co. v Comptroller of N. Y., 177 US 318 , 326-328). Finding abuses engaged in by land speculators, the State Legislature has permitted localities to restrict tax lien sales to governmental bodies (see, Matter of Elinor Homes Co. v St. Lawrence, 113 AD2d 25 ). The localities here exercised that option, and we cannot say that in doing so they have engaged in impermissible objectives or have deprived the plaintiffs of any constitutionally protected rights.

Accordingly, the judgments of the Supreme Court in Sheehan v County of Suffolk and MacKechnie v County of Sullivan, dismissing plaintiffs’ actions should be affirmed, with costs.

Chief Judge Wachtler and Judges Meyer, Simons, Kaye, Alexander and Hancock, Jr., concur.

In each case: Judgment affirmed, with costs.

Cases cited

Statutes and regulations cited