SUMMIT BANK, Successor By Merger to Ocean National Bank, Plaintiff-Respondent, v. DENNIS THIEL and ROSE THIEL, husband and wife, and ALLIED BUILDING PRODUCTS, INC.
Annotate this CaseThis case can also be found at 325 N.J. Super. 532.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-5500-96T2
SUMMIT BANK, Successor By Merger
to Ocean National Bank,
Plaintiff-Respondent,
v.
DENNIS THIEL and ROSE THIEL,
husband and wife, and ALLIED
BUILDING PRODUCTS, INC.,
Defendants.
_________________________________________________________________
IN THE MATTER OF
R & H PARTNERSHIP,
Appellant.
_________________________________________________________________
WEFING, J.A.D., dissenting.
My colleagues conclude that R & H Partnership is entitled to be relieved from the bid which it tendered upon property which was sold by the Sheriff of Ocean County at public sale. I am unable to agree and accordingly dissent.
From the sparse record before us, we know the following facts. The property in question, 579 Pennsylvania Avenue, Brick, New Jersey, had been owned by Dennis and Rose Ann Thiel. It was subject to at least two mortgages, a first mortgage held by Ramapo Savings and Loan Association in the principal sum of $32,000 and a second mortgage held by Summit Bank, the successor by merger to the original mortgagee, Ocean National Bank. Summit Bank commenced foreclosure proceedings on its second mortgage and obtained a judgment of approximately $73,000.
The property was advertised for public sale four times. N.J.S.A. 2A:61-1. The sale was originally scheduled to be held on January 21, 1997. The advertisement reserved the power to postpone the sale, N.J.S.A. 2A:61-5, -6, and it was actually conducted almost a month later, on February 18, 1997.
The published advertisement did not list any unpaid taxes on the property but, prior to the commencement of bidding, it was announced that the property was being sold "subject to the liens of unpaid taxes and other open municipal charges that may be outstanding against subject premises." R & H heard this announcement and had also heard it in the past for it had previously attended other such sales. In addition, the "Foreclosure Sale Information Bulletin" which is posted by the Sheriff states "Sales are subject to all outstanding liens, mortgages and encumbrances which must be satisfied in order to obtain clear title."
R & H's bid of $46,300 was the high bid. R & H then ordered a title search and learned, apparently for the first time, that there were unpaid municipal taxes on the property that totalled in excess of $23,000.
N.J.S.A. 2A:61-16 provides that a purchaser at such a sale may be entitled to relief from his bid if he can:
satisfy the court . . . of the existence of any substantial defect in . . . title . . . which would render such title unmarketable, or . . . of any lien or encumbrance thereon, unless a reasonable description of the . . . defects in title and liens or encumbrances . . . with the approximate amount of such liens and encumbrances, if any, be inserted in the notices and advertisements required by law, and in the conditions of sale . . . .
My colleagues read this statute literally and conclude that the failure of the published advertisement to list the amount of unpaid real estate taxes entitles R & H to judicial relief. I am satisfied, however, that this is an instance in which literal interpretation of a statute defeats the purpose of its enactment. I am further satisfied that this is also an instance in which consideration of the practical procedures which are routinely followed in a sheriff's sale can shed light on the underlying purpose of the statute at issue.
I note first that N.J.S.A. 2A:61-1 lists those items the Legislature has deemed essential to be included in a public notice of sale. The Legislature chose not to include the existence vel non of unpaid municipal taxes among those essential items despite the fact that it can hardly be gainsaid that a property being sold at a sheriff's auction pursuant to a mortgage foreclosure could be expected to have accrued a certain amount of unpaid real estate taxes.
The Legislature afforded a successful bidder a narrow avenue of escape through N.J.S.A. 2A:61-16 for it recognized that a title search might reveal the existence of items which could materially affect the value of the property but which a bidder might be ignorant of at the time of sale. This reflects the practical reality that, in light of the expense, a bidder would ordinarily not order a title search upon a parcel until it prevailed at auction.
Municipal taxes, however, stand in a different category than other liens which would be uncovered by a title search. Not only are they generally paramount to all other liens, N.J.S.A. 54:5-9, their existence is easily determined by checking with the local tax collector for the minimal fee of $10.00. N.J.S.A. 54:5-12,
-14. There is no necessity that a bidder travel to the office of the particular county clerk or register and search those voluminous records to determine if any unpaid municipal taxes have accrued upon the property in which the bidder is interested or hire someone else to do that task. That information should be readily available locally. I recognize, as do my colleagues, that R & H refers obliquely to an apparent unwillingness on the part of the Brick tax collector to share such information in spite of a clear statutory directive. N.J.S.A. 54:5-12. If that is the collector's practice, a bidder should seek to have the collector comply with his statutory duties, rather than subsequently seek to set aside the bid.
I note, moreover, that at no point does R & H state that it approached the collector in this instance prior to the auction and was refused the requested information. It is fairly inferable, therefore, that R & H did nothing prior to this auction to learn whether there were unpaid taxes on this property.
Neither should we ignore the fact that sheriff's sales are often not conducted on the first advertised date. Indeed, adjournments of up to one year do occur. See First Mutual Corp. v. Samojeden, 214 N.J. Super. 122 (App. Div. 1986); but see N.J.S.A. 2A:17-36 (limiting a sheriff's authority to adjourn a sale without court approval to two adjournments not exceeding fourteen days each). The amount of unpaid taxes changes with the passage of each quarter and could, by time of sale, be significantly larger than originally stated.
Finally, my colleagues rely upon dicta in a trial court opinion, Craig v. Smith, 84 N.J. Eq. 593 (Ch. 1915), as an indication of the proper construction of this statute. In doing so, they have not accorded appropriate recognition to the long-standing principle that:
public policy ordains that the power to set aside judicial sales based upon competitive bidding should be sparingly exercised. The integrity of the process, designed as it is to secure the highest and best price in cash then obtainable for the property, demands that a sale so conducted shall be vacated only when necessary to correct a plain injustice.
[Karel v. Davis, 122 N.J. Eq. 526, 529 (E. & A. 1937).]
To the same effect, see East Jersey Sav. & Loan Ass'n. v. Shatto, 226 N.J. Super. 473, 476 (Ch. Div. 1987) ("The power to set aside a foreclosure sale is to be exercised with great care and only when necessary for compelling reasons.") and Froehlich v. Walden, 66 N.J. Super. 390, 395 (Ch. Div. 1961) ("[A] purchaser at a judicial sale is not ordinarily entitled to be relieved of his bid on the ground of mistake flowing from his own culpable negligence and not induced by a false representation.")
R & H has not established on this record that "a plain injustice" will result if it is not relieved of its bid. There is, for instance, no appraisal to establish that it will be required to pay more than the property's fair market value, as in Karel v. Davis, supra, where the bidder, through a combination of errors, bid more for the property than the appraised value set by both his appraiser and defendant's appraiser. The most that can be inferred from this record is that appellant will not receive a profit as great as it had anticipated. That does not constitute a "compelling" reason to set aside this sale.
I would affirm the order entered by the trial court.
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-5500-96T2
SUMMIT BANK, Successor By Merger
to Ocean National Bank,
Plaintiff-Respondent,
v.
DENNIS THIEL and ROSE THIEL,
husband and wife, and ALLIED
BUILDING PRODUCTS, INC.,
Defendants.
_________________________________________________________________
IN THE MATTER OF
R & H PARTNERSHIP,
Appellant.
_________________________________________________________________
WEFING, J.A.D., dissenting.
My colleagues conclude that R & H Partnership is entitled to be relieved from the bid which it tendered upon property which was sold by the Sheriff of Ocean County at public sale. I am unable to agree and accordingly dissent.
From the sparse record before us, we know the following facts. The property in question, 579 Pennsylvania Avenue, Brick, New Jersey, had been owned by Dennis and Rose Ann Thiel. It was subject to at least two mortgages, a first mortgage held by Ramapo Savings and Loan Association in the principal sum of $32,000 and a second mortgage held by Summit Bank, the successor by merger to the original mortgagee, Ocean National Bank. Summit Bank commenced foreclosure proceedings on its second mortgage and obtained a judgment of approximately $73,000.
The property was advertised for public sale four times. N.J.S.A. 2A:61-1. The sale was originally scheduled to be held on January 21, 1997. The advertisement reserved the power to postpone the sale, N.J.S.A. 2A:61-5, -6, and it was actually conducted almost a month later, on February 18, 1997.
The published advertisement did not list any unpaid taxes on the property but, prior to the commencement of bidding, it was announced that the property was being sold "subject to the liens of unpaid taxes and other open municipal charges that may be outstanding against subject premises." R & H heard this announcement and had also heard it in the past for it had previously attended other such sales. In addition, the "Foreclosure Sale Information Bulletin" which is posted by the Sheriff states "Sales are subject to all outstanding liens, mortgages and encumbrances which must be satisfied in order to obtain clear title."
R & H's bid of $46,300 was the high bid. R & H then ordered a title search and learned, apparently for the first time, that there were unpaid municipal taxes on the property that totalled in excess of $23,000.
N.J.S.A. 2A:61-16 provides that a purchaser at such a sale may be entitled to relief from his bid if he can:
satisfy the court . . . of the existence of any substantial defect in . . . title . . . which would render such title unmarketable, or . . . of any lien or encumbrance thereon, unless a reasonable description of the . . . defects in title and liens or encumbrances . . . with the approximate amount of such liens and encumbrances, if any, be inserted in the notices and advertisements required by law, and in the conditions of sale . . . .
My colleagues read this statute literally and conclude that the failure of the published advertisement to list the amount of unpaid real estate taxes entitles R & H to judicial relief. I am satisfied, however, that this is an instance in which literal interpretation of a statute defeats the purpose of its enactment. I am further satisfied that this is also an instance in which consideration of the practical procedures which are routinely followed in a sheriff's sale can shed light on the underlying purpose of the statute at issue.
I note first that N.J.S.A. 2A:61-1 lists those items the Legislature has deemed essential to be included in a public notice of sale. The Legislature chose not to include the existence vel non of unpaid municipal taxes among those essential items despite the fact that it can hardly be gainsaid that a property being sold at a sheriff's auction pursuant to a mortgage foreclosure could be expected to have accrued a certain amount of unpaid real estate taxes.
The Legislature afforded a successful bidder a narrow avenue of escape through N.J.S.A. 2A:61-16 for it recognized that a title search might reveal the existence of items which could materially affect the value of the property but which a bidder might be ignorant of at the time of sale. This reflects the practical reality that, in light of the expense, a bidder would ordinarily not order a title search upon a parcel until it prevailed at auction.
Municipal taxes, however, stand in a different category than other liens which would be uncovered by a title search. Not only are they generally paramount to all other liens, N.J.S.A. 54:5-9, their existence is easily determined by checking with the local tax collector for the minimal fee of $10.00. N.J.S.A. 54:5-12,
-14. There is no necessity that a bidder travel to the office of the particular county clerk or register and search those voluminous records to determine if any unpaid municipal taxes have accrued upon the property in which the bidder is interested or hire someone else to do that task. That information should be readily available locally. I recognize, as do my colleagues, that R & H refers obliquely to an apparent unwillingness on the part of the Brick tax collector to share such information in spite of a clear statutory directive. N.J.S.A. 54:5-12. If that is the collector's practice, a bidder should seek to have the collector comply with his statutory duties, rather than subsequently seek to set aside the bid.
I note, moreover, that at no point does R & H state that it approached the collector in this instance prior to the auction and was refused the requested information. It is fairly inferable, therefore, that R & H did nothing prior to this auction to learn whether there were unpaid taxes on this property.
Neither should we ignore the fact that sheriff's sales are often not conducted on the first advertised date. Indeed, adjournments of up to one year do occur. See First Mutual Corp. v. Samojeden, 214 N.J. Super. 122 (App. Div. 1986); but see N.J.S.A. 2A:17-36 (limiting a sheriff's authority to adjourn a sale without court approval to two adjournments not exceeding fourteen days each). The amount of unpaid taxes changes with the passage of each quarter and could, by time of sale, be significantly larger than originally stated.
Finally, my colleagues rely upon dicta in a trial court opinion, Craig v. Smith, 84 N.J. Eq. 593 (Ch. 1915), as an indication of the proper construction of this statute. In doing so, they have not accorded appropriate recognition to the long-standing principle that:
public policy ordains that the power to set aside judicial sales based upon competitive bidding should be sparingly exercised. The integrity of the process, designed as it is to secure the highest and best price in cash then obtainable for the property, demands that a sale so conducted shall be vacated only when necessary to correct a plain injustice.
[Karel v. Davis, 122 N.J. Eq. 526, 529 (E. & A. 1937).]
To the same effect, see East Jersey Sav. & Loan Ass'n. v. Shatto, 226 N.J. Super. 473, 476 (Ch. Div. 1987) ("The power to set aside a foreclosure sale is to be exercised with great care and only when necessary for compelling reasons.") and Froehlich v. Walden, 66 N.J. Super. 390, 395 (Ch. Div. 1961) ("[A] purchaser at a judicial sale is not ordinarily entitled to be relieved of his bid on the ground of mistake flowing from his own culpable negligence and not induced by a false representation.")
R & H has not established on this record that "a plain injustice" will result if it is not relieved of its bid. There is, for instance, no appraisal to establish that it will be required to pay more than the property's fair market value, as in Karel v. Davis, supra, where the bidder, through a combination of errors, bid more for the property than the appraised value set by both his appraiser and defendant's appraiser. The most that can be inferred from this record is that appellant will not receive a profit as great as it had anticipated. That does not constitute a "compelling" reason to set aside this sale.
I would affirm the order entered by the trial court.
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