Opinion
No. 5528.
Argued September 7, 1966.
Decided September 30, 1966.
1. The failure of a municipality purchasing real estate at a tax sale to give notice as required by RSA 80:28 to a banking corporation holding a mortgage thereon renders the tax sale invalid as to the bank.
2. The statutory provisions (RSA 80:28; RSA 80:50) authorizing the tax collector or selectmen to collect unpaid taxes by action in the name of the collector provides a remedy against mortgagors to whom the tax was assessed, but not against a mortgagee which had foreclosed its mortgage after a sale for the unpaid taxes of which it was not notified as required by the statute.
3. Payment of a tax at a tax sale discharges the tax lien, and where notice of the sale was not given to a mortgagee, subsequent foreclosure of its mortgage operated to extinguish any interest in the equity of redemption which a town acquired by reason of its purchase at the tax sale.
4. The statute (RSA 498:5) giving a purchaser at a tax sale a right to reimbursement for taxes paid, in proceedings in which the validity of the tax sale is contested and the sale is adjudged invalid, has no application to proceedings to enjoin collection of a tax from a mortgagee as to which the sale for taxes was concededly invalid under RSA 80:28.
Petition for declaratory judgment by a former mortgagee to determine its rights and liabilities with respect to 1962 taxes assessed by the defendant town upon the mortgaged property. On July 30, 1963 the premises in question were sold to the town for nonpayment of the 1962 taxes. No notice of the sale was thereafter given to the mortgagee bank as required by RSA 80:28, 29. On August 20, 1963 the bank commenced foreclosure of its power of sale mortgage, giving notice to the tax collector on August 22, 1963, which was before expiration of the statutory period for notice of the tax sale. RSA 80:28, supra. On September 23, 1963 the bank purchased the premises at the foreclosure sale, subject to unpaid taxes for the year 1963. The town asserts a right to collect the 1962 taxes from the bank and the bank seeks to enjoin the town from taking any action against it or the property.
Reserved and transferred without ruling by Keller, J., upon the pleadings and an agreed statement of facts.
David Sanderson (by brief and orally), for the plaintiff.
Boynton, Waldron Dill (Mr. Wyman P Boynton orally), for the defendant.
RSA 80:28 requires the purchaser of real estate sold by the tax collector to notify all persons holding mortgages of record, within thirty days from the date of such sale. It further provides that in the absence of such notice "[a]ny tax sale of such encumbered real estate shall be void as against any mortgagee and no tax collector's deed based on said sale shall be valid . . . ." The tax sale was clearly invalid as to the plaintiff bank. Salem v. Sperber, 88 N.H. 374; Rivard v. Ross, 99 N.H. 299, 302.
RSA 80:28, supra, further provides "the tax and any subsequent tax payments made . . . by the purchaser . . . shall be collectible and payment may be enforced by suit under the provisions of [RSA ch. 80] section 50." The defendant town claims a right to collect the 1962 taxes from the bank under this provision. RSA 80:50 provides in part as follows: "COLLECTION BY SUIT. The selectmen of any town, or the tax collector, by action brought in the name of the collector, may cause any tax to be collected by suit at law or bill in equity . . . ."
The premises in question were taxed in 1962 to the plaintiff's mortgagors. The remedy provided by RSA 80:50 is a remedy against them, and an action to collect the tax does not lie against the bank.
The town relies upon the provisions of RSA 498:5 in support of its claim of a right to reimbursement. See Rivard v. Ross, 99 N.H. 299, supra. This statute requires reimbursement of a purchaser at a tax sale "[w]hen the validity of a tax sale is contested . . . [i]n any case in which a tax sale is adjudged invalid . . . ." RSA 498:5, supra.
In this case, the invalidity of the tax sale as against the bank is conceded, and no decree setting the sale aside is sought. The interest acquired by the town as purchaser at the tax sale was at most only an interest in the mortgagors' equity of redemption. When the town paid the tax by purchasing at the tax sale, the tax lien was discharged. Winchester v. Stockwell, 76 N.H. 193, 195. While the town might have protected its interest by notifying the mortgagee of the tax sale, or by bidding at the foreclosure sale, it did neither. The equity of redemption was extinguished by foreclosure, and with it any interest of the town therein. Any different conclusion would rob the provisions of RSA 80:28 of significance, by imposing obligations upon the mortgagee by reason of a tax sale which the statute directs shall be void as against it. We hold that neither the mortgagee bank nor the foreclosed property is under any liability for the 1962 tax, and that no remedy by suit under RSA 80:50, is available to the town against the bank. However the remedy under RSA 80:50, is available to the town against the mortgagors who owned the property in 1962.
Judgment for the plaintiff.
All concurred.