Rose v. Eichhorst, 42 N.Y.2d 92 (1977)

A conflict of interest arises when a town board member purchases property within their town at a county tax sale, as this implicates the town’s role in the tax collection process.

Summary

Rose, a member of the Town of Victor’s town board, acquired property within the town at a county tax sale after the original owners, the Eichhorsts, failed to pay their property taxes. Rose then sought to evict the Eichhorsts. The court addressed whether this purchase created a prohibited conflict of interest under New York’s General Municipal Law. The Court of Appeals held that it did, emphasizing the intertwined nature of town and county functions in the tax collection process. The court reasoned that the town board’s role in the budget process and oversight of the tax collector created a sufficient connection to trigger conflict-of-interest concerns, rendering the sale voidable.

Facts

Gustav and Carmen Eichhorst owned property in the Town of Victor, Ontario County. In 1972, the property was sold by Ontario County for unpaid taxes from 1970 and 1971. The tax sale certificates were initially purchased by the petitioner’s son and then assigned to Charles G. Rose, the petitioner, who was a member of the Town of Victor’s town board. Three years later, in 1975, the county treasurer executed a tax deed for the property to Rose. Rose initiated summary proceedings to dispossess the Eichhorsts.

Procedural History

The County Court awarded possession of the premises to Rose. The Appellate Division affirmed, finding no prohibited conflict of interest because Rose dealt with the County of Ontario, not the Town of Victor, in acquiring the property. The New York Court of Appeals granted review.

Issue(s)

Whether a conflict of interest arises under General Municipal Law § 801 when a town board member purchases property located in their town at a county tax sale.

Holding

Yes, because the contract of sale, though in form concerning only the county, by implication also involves the town due to the town’s role in initiating tax collection and its oversight of the town tax collecting officer.

Court’s Reasoning

The court emphasized that counties and towns are governmental divisions of the state and are intertwined in the taxing mechanism. The town initially collects taxes, presents its annual budget to the county board of supervisors, and the county levies taxes based on the town’s assessment roll. The town collecting officer is responsible for collecting taxes and may levy on personal property for unpaid taxes. Although the county assumes responsibility for collecting delinquent taxes, the town board has a relationship with the collecting officer, including fixing their salary, designating deposit banks, and filling vacancies. The court noted that “the town board…is not a legal stranger to the collecting officer.”

The court reasoned that while the county conducts the tax sale, it is the culmination of a process initiated by the town. The court stated, “To consider solely the procedure by which delinquent taxes are collected is to focus in on only one aspect of a larger and more complex picture.” Therefore, the two municipalities have an overlap of interest. The court concluded that Rose’s actions as a town board member in preparing the town budget and his acquisition of the property created a conflict of interest. The court determined that “the sale is voidable” under General Municipal Law § 804.