New York Law Review

Tag: Suffolk County Tax Act

  • Somers Central School Dist. v. Town of Somers, 77 N.Y.2d 169 (1990): Action for Money Had and Received & Interest

    Somers Central School Dist. v. Town of Somers, 77 N.Y.2d 169 (1990)

    A school district may maintain a cause of action for money had and received to recover unpaid accumulated interest on school tax moneys, even after accepting the principal sum upon which that interest became due.

    Summary

    Nineteen Suffolk County school districts sued towns for failing to disburse collected school tax money on time, as required by the Suffolk County Tax Act. Although the towns eventually paid the principal tax amounts due, the school districts sought to recover the unpaid accumulated interest. The New York Court of Appeals held that the districts could maintain a cause of action for money had and received to recover the unpaid interest, even after accepting the principal. The court reasoned that equitable principles require the towns to compensate the districts for the lost use of their money due to the delayed disbursements.

    Facts

    Plaintiffs, 19 school districts in Suffolk County, were located within the Towns of Huntington, Smithtown, and Islip. The districts challenged the towns’ disbursements of tax monies collected under the Suffolk County Tax Act. The towns disbursed sums equaling the school districts’ tax levies but allegedly violated the timing requirements of sections 13(a) and 14 of the Act. The school districts claimed the towns’ late disbursements caused them to lose interest income.

    Procedural History

    The school districts commenced consolidated actions. The defendants moved to dismiss, arguing the complaints were legally insufficient because the towns had paid the principal amounts. The Supreme Court denied the motions and granted partial summary judgment to the plaintiffs. The Appellate Division reversed, granting the defendants’ motions to dismiss for failure to state a cause of action for money had and received. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether school districts’ right to timely disbursement of collected school tax levies under sections 13(a) and 14 of the Suffolk County Tax Act can be enforced in a cause of action for money had and received when the districts, before legal action, received the principal amounts but not the accumulated interest?

    Holding

    Yes, because the school districts’ right to collect interest is not negated by receiving the principal sums. The towns were obligated to disburse the funds timely, and failure to do so created an immediate liability for both principal and interest.

    Court’s Reasoning

    The Court of Appeals emphasized that a cause of action for money had and received is based on equitable principles, arising when one party possesses money that, in equity and good conscience, belongs to another. Citing Parsa v. State of New York, 64 N.Y.2d 143, 148 (1984), the court noted it applies “in the absence of an agreement when one party possesses money that in equity and good conscience [it] ought not to retain and that belongs to another.” When towns failed to disburse school taxes on time they breached a statutory duty, thus benefiting from the use of funds belonging to the school districts.

    The court distinguished this case from Peirson v. Board of Supervisors, 155 N.Y. 105 (1898), where the town had already received and used the funds in question. Here, the dispute concerned interest on taxes improperly withheld. The court found that under the self-executing provisions of the Suffolk County Tax Act, the towns’ default triggered an immediate liability for both principal and accumulated interest. The court emphasized that plaintiffs should be made whole: “There can be little question that under any consideration of ‘right, justice and morality’…plaintiffs, in order to be made whole, should be permitted to assert a claim to recover any interest that may be due them.”

    The Court analogized this case to Davison v. Klaess, 280 N.Y. 252 (1939), where the Court held that the receipt of partial payments applied to the principal did not relieve the debtor of the obligation to pay interest. The Court concluded that to allow the towns to avoid paying interest simply by paying the principal before a lawsuit would violate the statutory scheme and equitable principles.

  • London v. Hammel, 30 N.Y.2d 729 (1972): Strict Compliance Required for Tax Redemption Notices

    London v. Hammel, 30 N.Y.2d 729 (1972)

    A tax deed is void if the County Treasurer fails to include in the published notice of unredeemed real estate the additional sum of taxes paid by the purchaser, when that payment was known to the Treasurer at the time of publication, as strict compliance with the statute is required to protect the owner’s right to redemption.

    Summary

    This case concerns a dispute over the validity of a tax deed. The plaintiff, London, sought to redeem property sold at a tax sale. The County Treasurer’s published notice of unredeemed property failed to include taxes paid by the purchaser, Hammel, a fact known to the Treasurer at the time of publication. The Court of Appeals held that this omission was a substantial deviation from the statutory mandate, rendering the tax deed void. The Court emphasized that statutory provisions for the benefit of the owner should be strictly construed in their favor, even if the owner receives correct notice through other means.

    Facts

    The case revolves around London’s attempt to redeem property sold at a tax sale. Hammel, the purchaser at the tax sale, paid additional taxes on the property that were not paid by London, the owner of record. When the County Treasurer published the notice of unredeemed real estate, as required by the Suffolk County Tax Act and the Real Property Tax Law, the notice failed to include the amount of these additional taxes paid by Hammel. The County Treasurer knew of Hammel’s payment at the time of publication.

    Procedural History

    The procedural history is not explicitly detailed in the memorandum opinion, but it can be inferred that London initially brought an action in the Supreme Court, Suffolk County, seeking to redeem the property and challenging the validity of the tax deed. The Appellate Division’s order was appealed to the New York Court of Appeals.

    Issue(s)

    Whether the County Treasurer’s failure to include the additional taxes paid by the tax sale purchaser in the published notice of unredeemed real estate constitutes a substantial deviation from the statutory requirements, rendering the tax deed void and entitling the owner to redeem the property.

    Holding

    Yes, because the failure to include the additional taxes paid by the purchaser in the published notice, when known to the Treasurer, is a substantial deviation from the statutory mandate, thus rendering the tax deed void and allowing the owner to redeem the property.

    Court’s Reasoning

    The Court of Appeals based its decision on the strict requirements of the Suffolk County Tax Act and the Real Property Tax Law regarding notice of unredeemed real estate. Section 52(1) of the Suffolk County Tax Act requires publication of a notice containing “the amount necessary to redeem the same computed to the last day in which such redemption can be made.” Section 75 allows the purchaser to pay unpaid taxes, which the owner must then pay at the time of redemption, according to § 1010(1)(a) of the Real Property Tax Law. The court found the County Treasurer’s omission to be a substantial deviation from the statutory mandate, reasoning that the statutory provision is “for the benefit of the owner” and therefore “should be strictly construed in his favor.” The court explicitly stated that this principle holds true “even if he may have eventually received notice of the correct amount by methods other than required by the statute.” The court cited prior cases such as Rogers v. Pact Realty Corp., Stebila v. Mitrany, and Clason v. Baldwin to support the proposition that strict compliance with statutory notice requirements is necessary to protect the owner’s right of redemption. The court did not elaborate on dissenting or concurring opinions, as the decision was unanimous.