In re the Estate of Ueck (286 N.Y. 1, 1941)

Conway, J.

One Alfred C. Ueck had been the owner of a number of parcels of real property in the city of Buffalo, county of Erie. Taxes assessed thereon were not paid by him and from time to time, over a period extending from 1926 to 1937, the properties were sold for non-payment of taxes at tax sales conducted both by the city of, Buffalo and the county of Erie. Upon those sales, which occurred as to the same parcels year after year, the city of Buffalo and the county of Erie each obtained certificates of sale for some of the properties.

Ueck died, a resident of the city of Buffalo, county of Erie, on September 30, 1936. At that time, both in the city and the county, taxes for the year 1936 had become liens. Subsequent to his death his properties were again sold for the non-payment of taxes for the year 1936.

Section 212 of the Surrogate’s Court Act provides:

“ § 212. Payment of debts. Every executor and administrator must proceed with diligence to pay the debts of the deceased according to the following order:

“1. Debts entitled to a preference under the laws of the United States and the State of New York.

“ 2. Taxes assessed on property of the deceased previous

to his death.

(( * * *

“4. All recognizances, bonds, sealed instruments, notes, bills and unliquidated demands and accounts.”

The authorities clearly indicate that taxes, properly assessed on property of the deceased prior to his death in a tax district of which he was a resident, were his personal debts. (Smith v. Cornell, 111 N. Y. 554, 557; Matter of Gill, 199 N. Y. 155; Village of Lynbrook v. Otto, 266 N. Y. 308; Village of Massapequa Park v. Massapequa Park Villa Sites, Inc., 278 N. Y. 28, 31. Cf. Village Law [Cons. Laws, ch. 64], §§ 126, 133.)

This proceeding was commenced by the administrator de bonis non of the goods, chattels and credits of Alfred C. Ueck, deceased, to obtain a decree which would determine the amount of unpaid taxes, penalties and interest which were liens upon decedent’s property at the time of his death, and the right to priority of payment of them over claims against the estate theretofore adjudicated or allowed under subdivision 4 of section 212, supra.

A determination of those questions depends upon whether the real estate taxes upon decedent’s properties were paid or discharged, as far as decedent was concerned, when the properties were sold for non-payment of taxes and purchased at the tax sales by the city of Buffalo and the county of Erie.

The learned Surrogate decided that, despite ’the sale of the properties for non-payment of taxes and the delivery of tax sale certificates therefor, there had been no payment or discharge of the taxes when the sales were to the city of Buffalo or the county of Erie, although there was such payment and discharge when the sales were to individuals or private corporations, since then the municipalities had been “ paid in full.” In other words, the Surrogate held that the taxes were still “ assessed ” on decedent’s properties although such properties had been sold to pay the taxes, if the purchaser were the taxing municipality.

The administrator was thereupon directed to pay to the city of Buffalo and the county of Erie “ the amounts paid by them, and each of them,'” for specified certificates of sale, together with interest on the certificates at the rate of twelve per centum per annum and all additional expenses. The decree of the Surrogate was affirmed by the Appellate Division.

From this holding, curious results may ensue. For instance, there is added to real estate taxes, by reason of the enactment of subdivision 2 of section 212 of the Surrogate’s Court Act, a substantial penalty in the event of the death of an owner, where, upon a prior sale of the property affected, for non-payment of" taxes, a purchase thereof has been made by the taxing municipality, but not if made by any other person. Again, the taxing municipality may purchase real estate at tax sales year after year, await the owner’s death, without taking any step to terminate his equity of redemption or to foreclose the tax sale certificate, and then collect from his estate all the taxes assessed, with twelve per centum annual penalty, for an indefinite number of years. We find no Statute of Limitations restricting such procedure.' The duty imposed upon the executor or administrator is to pay “ taxes assessed on property of the deceased previous to his death.” In other words, whether a decedent leaves an estate for relatives or creditors beyond the first two classes mentioned in section 212 of the Surrogate’s Court Act, supra, may depend on the identity of the purchaser at a sale or sales of his realty for non-payment of taxes. Such a startling result requires a careful consideration of the policy of the State as evidenced by applicable statutes and an examination of the Buffalo City Charter (Local Law No. 4 of 1927, published in Local Laws of 1932, p. 21) and the Erie County Tax Law (L. 1884, ch. 135, as amd. L. 1909, ch. 383; L. 1933, ch. 664; L. 1934, chs. 299, 340).

The general policy of the State is to collect unpaid real estate taxes by levy upon the personalty of the owner, when that is permitted by section 71 of the Tax Law (Cons. Laws, ch. 60), or by a sale of the property. (Tax Law, arts. 6 and 7.)

We are not here concerned with the sale of tax liens upon the property of the owner. Such a sale is permitted only when the Legislature grants such power in express terms. That was pointed out in County Securities, Inc., v. Seacord (278 N. Y. 34, 39), where it was said: “ The general Tax Law of the State provides for the sale of the property in the enforcement of tax liens. (Tax Law, art. 7.) That law applies in all cases except where the Legislature by express language has provided a different method to be employed in certain subdivisions of the State.” No such grant of power has been made to the city of Buffalo or the county of Erie.

As further evidencing the general policy of the State, we find that section 50, subdivision 2, of the Tax Law provides as follows: “ The board of supervisors in any county of the state shall when examining the assessment-rolls of the several tax districts of the county, as above provided, exclude from the tax rolls of said districts, to be prepared by said board, such parcels of real property as have been struck down to the county at a tax sale and not redeemed as provided in section one hundred and fifty-two of this chapter. The county treasurer shall annually between the date of the tax sale and the first day of December next succeeding, prepare and submit to the board of supervisors a list of all such lands so struck down to the county in any year and still remaining unredeemed. No such properties shall be so excluded from said tax rolls except by a resolution of said board adopted at .an annual meeting by a vote of a majority of the members thereof. Whenever such real property is so excluded from the tax rolls by the board, the total of the assessed valuations of the real estate of the several tax districts, as the same appear on the completed tax rolls, shall be the aggregate valuation of the taxable real estate in the county.”

A tax district means, “ unless otherwise herein provided, a city or town of this state.” (Tax Law, § 2, subd. 4.)

Section 153 of the Tax Law provides:

“ § 153. Redemption of real property stricken from tax-rolls. The real property struck down to a county at said tax sale and omitted from the tax-rolls as -provided in section fifty of the chapter shall not be subject to further sale after having been once so sold for taxes. The real property so omitted from the tax-rolls may be redeemed by the owner, occupant or any other person, provided the county has not acquired a title in fee to such real property, upon the payment to the county treasurer for the use and benefit of the county of a sum equal to the gross amount of the taxes, expenses of such sale, penalty and interest thereon, together with the tax and interest thereon which would ' have been due on said real property had it been taxed during each of the years it was so omitted from the tax-rolls. The said taxes for each of the years during which said real estate is so omitted from the tax-rolls shall be computed on the basis of the assessed valuations returned on said real property by the assessors of the several tax districts and at the rate fixed by the board of supervisors as the tax rate for the tax district within which said real estate is situated. The county treasurer shall apportion the sum, including interest, so collected between the county and said tax district in the same manner as though said property had not been omitted. The amount of . taxes and interest so collected and apportioned to said tax district, including special district taxes and interest thereon, shall be forthwith paid to the said tax district.”

In addition, section 95 of the Tax Law provides: “ This article shall apply to all the cities or towns of the state, in so far as the matters herein provided for do not conflict with the special and local laws of such cities or towns.”

The article referred to is article 4, entitled “ Collection of Taxes.”

These are applicable statutes, therefore, unless they conflict with provisions of the Buffalo City Charter.

On the other hand, Tax Law, section 160, provides:

“ § 160. Article not to relate to certain cities. This or the preceding article shall not affect any law relating to the sale of real estate for taxes in any city.”

The articles of the Tax Law referred to are articles 6 and 7, which relate to the sale of lands for unpaid taxes by the State and by County Treasurers. Those articles, therefore, do not affect any provision of the Buffalo City Charter.

We turn now to the applicable statutes affecting, first, the city of Buffalo and_then the county of Erie.

Section 349' of the Charter of the City of Buffalo, prior to its amendment in 1935, read as follows:

“ § 349. Tax sale bonds. The city shall have power to issue bonds, payable in not exceeding five years, to raise money sufficient to pay for its purchase at the annual sale of unpaid city taxes and assessments, which money shall be apportioned to the credit of each tax and assessment for which sales were made. All moneys received on the redemption of lands struck off to the city at such sales or for assignments of certificates of sale shall constitute a fund for the payment of such bonds which fund shall be known as the tax loan fund. If said fund is insufficient for the payment of such bonds as they mature, refunding bonds may be issued for the deficiency or the amount of the deficiency may be provided in the budget as the council may determine.”

The section was amended by Laws of 1935, chapter 350, effective April 8, 1935, to read as follows:

“ § 349. Tax revenue bonds and certificates of indebtedness. The city shall have power to borrow sums of money, from time to time, on its credit by the issuance of certificates of indebtedness or revenue bonds in anticipation of the collection of taxes for amounts actually contained, or to be contained in the taxes for the year when such certificates of indebtedness or revenue bonds are issued, but not to exceed in amount the amount of such revenues. Such amount may be obtained by the issue and sale of such certificates of indebtedness or revenue bonds payable in not more than five years from the date of issue thereof, which certificates of indebtedness or revenue bonds shall be payable out of the proceeds of the tax levy in anticipation of the collection of which such certificates of indebtedness or revenue bonds were issued. All moneys received or collected from the tax levy in anticipation of the collection of which such certificates of indebtedness or revenue bonds were issued shall constitute a fund for the payment of such certificates or revenue bonds, which fund shall be known as the tax loan fund. Such certificates of indebtedness or revenue bonds may be renewed in whole or injpart from time to time, whenever the revenues applicable thereto are insufficient to pay the same, provided that the last maturity of any such renewal shall not be more than five years from the date of the original loan, and provided further that at the time of such renewal or renewals the aggregate amount of such certificates of indebtedness.