
    City of Rochester, Respondent, v. Rochester Railway Company, Appellant, Impleaded with the Security Trust Company of Rochester, as Trustee, Defendant.
    Fourth Department,
    November, 1905.
    Local assessments in city of Rochester—when lands sold for assessment liable for further assessment — deficiency judgment against owner of lands in action to bar equity of redemption — tax provisions in city charter construed.
    The charter of the city of Rochester (§ 206) makes taxes assessed for local improvements a personal obligation against the owner of the land, and (§ 209) provides that if such assessment remain unpaid the assessors may insert the same in the next roll for general city taxes, The charter further provides (§ 104; as amd. by Laws of 1890, chap. 561) that when lands are sold for taxes and bid in by the city and the.notice to redeem shall have been served for more than thirty days and such lands .have-not been redeemed, -the mayor shall execute a certificate of the fact of such sale, which certificate shall he recorded in the clerk’s office. Dpon the recording of said certificate the city or its assigns shall acquire an "absolute title to such lands in fee,” but the owner’s equity of redemption may thereafter be foreclosed in, an action in which the proceeding shall be as nearly as possible “ as on the foreclosure of real estate mortgages.”
    
      Held, that the lands of a street railroad having been sold for assessments and thereafter included in the general tax roll and bid in by the city on a sale, the railroad was liable for further assessments-on. said lands made prior to foreclosure to bar the equity of redemption under said section 104;
    That though said section 104 provided that under the certificate of sale the city acquired “an absolute title to such lands in fee,” the city may levy' further assessments against such lands because the equity of redemption was-not barred under said section until foreclosure, and thus until such foreclosure the city’s title was not absolute. Though after the sale the city had a right under the . charter, to exclusive possession of the lands, such possession does not bar assessments against the owner while his equity of redemption continues.
    
      jHeld, further, that in a subsequent action of foreclosure under said section 10 to bar the owner’s equity of redemption, a deficiency judgment could b entered, although the assessments had been inserted in the general tax rol under the provisions of said section 209, for the personal liability for assess ments provided in said section 206 was not lost by the insertion of the unpai assessment in the general tax roll.
    Moreover, the Laws of 1903, chapter 522, section 3, providing that all assessment “heretofore” spread' on the assessment rolls of the city of Rochester can b collected by action or supplementary proceedings, "authorizes such deficienc judgment, although said statute was enacted after the commencement of the foreclosure action. A court of equity having taken jurisdiction should give that relief to which the parties are entitled at the time of judgment. McLennan, P. J., and Nash, J., dissented, with opinion.
    Appeal by tbe defendant, the Rochester Railway Company, from certain portions of a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Monroe on the 31st day of December, 1903, upon the decision of the court rendered after a trial at the Monroe Special Term, and also from portions of a judgment in favor of plaintiff, entered' in said clerk’s office on the 2d day of April, 1904.
    
      P. M. French, for the appellant.
    
      B. B. Cunningham and William W. Webb, for the respondent.
   Hiscock, J.:

This action was brought upon certain unpaid taxes assessed by the plaintiff both for general and local purposes, to foreclose and cut off defendant’s right and title in a small strip of land, and also to recover a judgment against the appellant for any deficiency remaining after application of the proceeds of the sale of said property to the payment of said taxes. The judgments appealed from awarded the relief sought, the later one adjudging the recovery of $833.66 from the appellant, of which amount $731.47 was deficiency and the balance costs and expenses of sale and interest.

The appellant does not complain of said judgments in so far as they decree a foreclosure and sale of the premises in question, but of those portions which in effect adjudge it personally responsible or the deficiency in payment of the taxes in' question after the pplication of the proceeds of the land sold. Various reasons are ssigned why such provisions are erroneous and should be reversed, ut we think that none of them are well founded and that, subject o slight modification, the judgments appealed from should be ffirmed.

As stated, the taxes, for non-payment of which plaintiff has Sought nd secured relief in this, action, were assessed both for general urposes and local improvements,, and in order to appreciate the ature and effect of the acts which were done in connection therewith and to properly understand and solve the questions presented by appellant’s contentions herein, it will be necessary to refer somewhat at length to "the charter provisions governing the assessment and collection of taxes, both general and local, in the city of Rochester.

Section 206 of said charter (Laws of 1880, chap. 14) makes an assessment for local improvements a personal obligation against the owner of land and provides for the maintenance by the city of an action for the collection thereof “ in addition to any other remedies.”

Section 209 thereof provides that in case such an assessment remains due and unpaid after certain steps have been taken for" the collection thereof, the assessors in preparing the next roll for general city taxes shall insert therein against the property assessed the amount of such unpaid assessment, with interest, and that upon the confirmation of such assessment roll such amount shall be added to the general city tax and the entire amount shall be collected as hereinbefore provided in reference.to general city taxes, and if such-amount is not paid the land shall be sold therefor as hereinbefore provided.” '

In the case "of general city taxes certain sections provide- that after a specified default in payment the lands assessed shall be exposed for sale and" Sold “ for the shortest time -any bidder will" take such premises and pay the said tax- or assessment with said " charges and expenses,” and that if no bid be made for the amount of the taxes and expenses the land shall be struck off to the city.. The owner of the same may redeem at any time within two years after the sale, and after said two years provision is made for the service within ‘ the next year of a notice requiring redemption within.thirty days.

Section 104, as "amended by chapter 561 of the Laws - of 1890 which becomés especially important in this action, provides tha ■whenever any lands in said city shall have been sold for taxes o assessments and bid in by or struck off to the city" and the notice t redeem shall have, been served for more than thirty days and sue lands have not been redeemed, the mayor shall execute a certifica of the fact of such sale, etc., which certificate shall be recorded i the county clerk’s office and is made “prima facie evidence th the tax or assessment was legally imposed, and of the regularity and legality of all proceedings prior to -such sale,” etc. Such section then further provides as follows: Upon the recording of such certificate the said city or its assigns shall acquire, an absolute title to such lands in- fee, with the right to immediate possession and may enjoy and hold such lands free and clear from all claim or demand of any owner thereof, or any person having any lien thereon or interest therein, but the equity of redemption in said lands struck off' to the city shall only be barred as hereinafter provided. At any time after such certificate is executed and recorded and the tax or assessment mentioned therein has been at any time thereafter paid, the treasurer of said city may execute, acknowledge and 'deliver to the owner of such lands so sold a certificate to the effect' that such tax or assessment has been paid, and upon the recording of the same in the Monroe county clerk’s office the said clerk shall discharge the former certificate of record in his office by a proper entry. * * At any time after such certificate is executed the equity of redemption of all persons having any lien or interest in said lands may be foreclosed by an action to be brought by said' city in the Supreme Court * * * in which action the same proceedings shall be had, as nearly as may be, as on the foreclosure of real estate mortgages, and judgment of strict foreclosure or of foreclosure and sale may be had therein as the court may direct. * * * Where an action commenced under this section has been settled and the táx lien paid, an order may be made and entered * * * directing the said county clerk to make a suitable and proper' entry * * * and upon such record being so made the premises mentioned therein shall be discharged of such tax lien.”'

The premises described in the complaint Were sold to the respondent in 1894, 1897 (twice), 1898, 1899; 1900, 1901 and 1902. r Following .the sale in 1897 for the general takes of that year, and in the month of July, 1901, after the expiration of two years and after service of notice to redeem, the mayor executed the certificate provided in section 104 of the charter (supra), which was 'duly acknowledged and recorded. " . ' . ■ ■■ •

Based upon these pro visions' áñd ‘facts; the appellant contends that by the sale aforesaid and the execution and recording of the mayor’s certificate, upon failure to redeem, the defendant became absolutely divested of its title to the premises and the same vested absolutely in fee in the city, and that from that time it was improper to assess the remaining taxes against the defendant and that the only further step or remedy remaining for plaintiff was a strict foreclosure.

This court is not impressed 'with the last proposition. The language of the statute interpreted in its ordinary meaning is broad enough to authorize the action of foreclosure which was instituted.

The more interesting claim is that .of a complete title vested in the city which prevented future assessments against defendant. Although this affects only a very small portion of the amount involved it fairly calls for a construction of the statute.

Section 104, which is relied upon to carry the burden of this theory, does not fulfill the purpose. While the first part of it does in terms provide that, upon the recording of the certificate after failure to redeem, the city and its assigns shall acquire an “ absolute ” title to, and “hold such lands free and clear from all claim or demand of any owner thereof,” etc., such provisions are by what follows most clearly and effectively modified and stripped of the broad , meaning urged by defendant. These following clauses unmistakably provide that, notwithstanding what has been said about an absolute title based upon the certificate, the owner shall have an equity of redemption which can only be barred in the manner provided, viz., by foreclosure proceedings, and that upon payment ’of the taxes or assessments after the certificate to the city has beén executed, another certificate of payment shall be executed which, upon recording, shall compel a discharge of the first one and thus cancel all evidence of proceedings by the city against, or interest in, the property. It is said in behalf of defendant that these last provisions leave payment by the owner and execution of a certificate of payment after the original failure to redeem optional with the city, and contemplate only a case where by consent such payment has been made and the,premises redeemed after a strict right thereto had lapsed. We do not, however, accept that interpretation. We think that it. was not the intention of the statute to invest a city official with the discretion to permit or reject such payment and redemption, but that the language is to be construed most strongly against forfeiture of title and in favor of a fixed right upon the part of the property owner to redeem. If it be said that under this construction the owner has an indefinite time within which to finally redeem, it may be answered that this can be cut off by foreclosure, and if the Legislature desired to make any simpler self-acting limitation, it was easy to do it.

When we thus examine and construe the entire section, it seems clear beyond any reasonable doubt that the city did not acquire an absolute and complete title to appellant’s premises which prevented the assessment of taxes; that it had no deed, which is the usual evidence of title, and that its certificate of interest was subject to a distinct right of redemption in the owner, which could only be cut off by foreclosure proceedings.

While the city has proceeded further in enforcing collection of appellant’s taxes than had been done in Matter of Elsner (8.6 App. Div. 207), the reasoning of that case, nevertheless, tends to overrule appellant’s claim that it had been absolutely divested of its title.

But stress is laid upon the fact that under the certificate to it the city had the right of possession pending redemption or foreclosure, and that this, as furnishing proof of an absolute title or merely as an equitable consideration, was a bar to the assessment of taxes against the owner being out of possession. If the conclusion is correct that the city did not acquire absolute legal title by the certificate, the right to a qualified and possibly temporary possession under it should not change such conclusion.- Possession by a mortgagee does not destroy the legal title and right of redemption otherwise resting in the mortgagor. Possession by plaintiff of the lands involved in this case seems to be assumed rather than proved. If it existed it was technical and of no value. We are not called upon to decide any equitable questions incident to possession by a creditor, as whether the city could be made to account in any way for profits arising from its temporary possession of lands which it continued to assess the owner. The naked question is whether posses-ion bars assessment against the owner while his equity of redemption ontinues. No controlling authority has been cited to the effect hat it does. The familiar rule is to the contrary, that assessment ay be made, against the owner until he has been completely divested of his title, and no- particular hardship appears in the. application here of that rule. It is said that the city may take possession ' of premises and then, while enjoying the profits thereof, compel the owner to sustain the burdens of taxation. . If we áre right as to the latter’s privilege of redemption, he may relieve himself from this situation whenever lie desires by payment of his taxes. Upon the other-hand, if the city is deprived of the power ’of taxation by reason of mere possession, the owner of undesirable or unproductive property so possessed may lie by as long as possible, or .until the property -has improved, and then redeem it free from taxation for the intervening period.

It also may be said that the city, having a certificate of undesirable lands, in defiance of the wishes of the owner might elect not to cut off the equity of redemption, in order to continue indefinitely its assessments which, under the statutes in force, Would become a personal liability. This, however, is not a deciding argument. If the city desired to accomplish this purpose it could do so, béyond question, by refraining from acquiring a certificate in the first instance. Under the statutes relating to the city of Rochester and independent of any tax -sales, any owner of undesirable lands, so long as he holds title, is subject to personal liability for assessments from year to year.

The case of Wells v. Johnston (171 N. Y. 324) hot only does not appear to sustain the claim made in behalf of appellant, but rather. the opposite. There was no feature of a qualified right to possession in that case as in this; but. the broad general rule is laid down that intermediate the sale for taxes and the execution off the deed whereby title in the Staté is made/ complete'and perfect, assessment should be made against the original owner. (See, also, Armstrong v. County of Nassau, 101 App. Div. 116.)

The important claim of appellant next, to be. considered is tha there was no personal liability upon the part of appellant for th payment of taxes and that the judgment for deficiency, therefore was erroneous. ■

While it is conceded that originally it was ■ personally liable fo the payment of local assessments, it is urged that- after these latt had been carried into the assessments for general taxes as was'don' plaintiff was.thenceforth, limited to the remedies provided for tl collection of general taxes and the right of action originally prescribed for local assessments was lost. If we are right in the views subsequently to be expressed, that plaintiff could recover a judgment of deficiency even for general taxes, then this question is immaterial. But, independent of that, we think that the right of action for local assessments was not lost when the latter were carried into general taxes, and that this question likewise was settled by Matter of Elsner (supra).

We pass then to the consideration of the question whether appellant was personally liable for the general taxes involved in this action, because concededly such liability must exist as a basis for most of the money judgment which has been awarded against it.

Plaintiff urges that independent of any express statutory provision to that effect, the tax is a personal liability which may be enforced by action and judgment as any other contractual obligation. I do not agree with this proposition. Incidentally that view was urged upon our consideration in the case of City of Rochester v. Bloss, No. 1 (100 App. Div. 125), and while the point was not expressly decided whatever was there said was said against it and it does not seem necessary in this case to review the authorities and reasons cited and advanced by plaintiff’s counsel, for there is another reason which, in our opinion, permits plaintiff to have the judgment in this case. After the action was commenced, but before it was tried, chapter 522 of the Laws of 1903 took effect providing in section 3 that “ all taxes heretofore spread upon the assessment rolls of the various wards in the city of Rochester may be collected by the corporation counsel either by action or by supplementary proceedings or by foreclosure of tax liens.” It has been held that this statute gives the city of Rochester the right to collect by action taxes previously levied. (City of Rochester v. Bloss, No. 1, supra.)

The only dispute which the facts in this case precipitate is whether plaintiff may obtain the benefit of said act in an action which was commenced before the act took effect. We think it may.

Plaintiff’s complaint, although framed before the act was passed, included all of the facts and sought all of the relief involved in and granted by the judgment which was finally rendered. It came into a court of equity seeking relief by foreclosure of its liens, as we .have held it might properly do. The court acquired jurisdiction of the matters and controversies involved between it and the appellant. Plaintiff certainly had a right tó so much of the judgment as adjudged foreclosure and sale^ bi'it at the time when'the action was tried and the judgment' rendered it had acquired, as we. hold, an undoubted right tó maintain an action against appellant for the recovery of the taxes involved in that very action and' upon which it was seeking foreclosure. The only question under the circumstances is whether it should be compelled to institute another action against the appellant simply for the. purpose of commencing it after the statute was passed or whether, a court of equity, having acquired jurisdiction, should take cognizance of the rights of the parties and render a judgment in the action already pending "which should finally and completely settle and .protect them. ' We think it is well settled that the court will pursue the latter course .and,that it. will render a judgment" adapted tó the law and. the facts as they existed at the time of judgment rather than as they happened tó be at the time of the commencement of the action. (_Madison Avenue Baptist Church v. Oliver Street Baptist Church, 73 N. Y. 82, 95 ;. Kilbourne v. Supervisors, etc,, 137 id. 170, 178 ; Van Allen v. N. Y. E. R. R. Co,, 144 id. 174; Town of Duanesburgh v.. Tenkins, 57 id. 177; Wárnier v. Boessneck, 5 App. Div. 240.)

Some minor criticisms are directed at the judgment which may be briefly considered. . .

It is - claimed that the premises in question were dedicated for highway purposes before the levying of any of the taxes find assessments, and that such - taxes an.d .assessments are, therefore, void, We.do not find any sufficient evidence that the city appropriated for street purposes the property assessed, and .no such .issue as that was raised either by appellant’s answer or upon the trial..

. .The assessment for paving ThrUsh street was payable in installments, and as only three of those had become due before the commencement of the action it is claimed that the judgment should not have- included the entire ■ amount. While the judgment did include the amount of installments not yet due, it is • expressly provided that no execution 1 should issue for. such future installments until due. By analogy with judgments in foreclosure- actions covering installments still to become due, this form of judgment seems to have been proper. (Brewer v. Longnecker, 40 N. Y. St. Repr. 614.)

. The West Side sewer tax complained of is not included in the deficiency judgment. It is admitted, however, that the tax for the •year 1893, amounting to six dollars and forty-five cents, was improperly assessed and should not be included, and that the judgment should be reduced by this amount, with interest to the date of entry, of the-judgment, aggregating six dollars and fifty-seven cents.

The judgment as above modified should be affirmed, with costs.

All concurred, except McLennan, P. J., and Nash, J., who dissented in an opinion.

Nash, J. (dissenting):

I dissent upon the ground that after the tax sale by the city treasurer, and the issuing and recording of the mayor’s certificate, the title and right of possession of the land became vested in the city and taxes thereon were' not thereafter legally assessable to the appellant. The assessment of land to a person who is ■ neither owner nor occupant is void. ( Whitney v. Thomas, 23 N. Y. 281.)

The charter of the city (Laws of 1880, chap. 14, § 104, as amd. by Laws of 1890, chap. 561) provides that whenever any lands shall have been sold for taxes or assessments and bid in by or struck off to the city, and notice to redeem "shall'have been served for more than thirty days, and such lands have hot been redeemed, the ■ mayor of the city shall execute a certificate of the'fact of such sale having been made áhd ¡the lands struck off to the city, and that;the same have hot been • redeemed, which certificate shall be acknowledged as deeds to be entitled to be recorded, and shall be recorded in the. Monroe county clerk’s office.

The section further provides: Such certificate, or the record thereof, or a copy of such record ‘duly authenticated, shall, in all courts and places, be prima facie evidence that the tax or assess- ■ ment was legally imposed, and of the regularity and legality of all proceedings prior to such sale and of such, sale, and that notice has •been duly given to redeem, and that such lands have not been redeemed. Upon the recording of such certificate, the said city or its assigns shall acquire an absolute title to such lands, in fee, with the right to immediate possession, and may enjoy and hold such lands free and clear from all claim or demand of any owner thereof, or any person having any lien thereon, or interest therein, but the equity of redemption in said lands struck off to the city shall only be barred as hereinafter provided.; ^ * * At any time after such certificate is. executed, the equity of redemption of all persons having any lien or interest in said lands may be foreclosed .by an action to be brought by" said city in'the Supreme Court, County Court of Monroe County, or the Municipal Court of said city, which are. hereby given jurisdiction over the same, and in which action the same proceedings shall be had,.as nearly as may be, as on the fore-. closure of real estate mortgages, and judgment of strict foreclosure, or- of foreclosure and sale, may be had therein, as the court may direct;”

A further provision "was inserted in the section by the amendment of 1890, at the place indicated by the asterisk, as follows: At any time after such certificate is executed and recorded, and the tax or assessment mentioned therein lias been.at any time thereafter paid, the treasurer of "said city may execute, acknowledge and deliver to the owner of such lands, so sold, a certificate to the effect that such tax or assessment has been paid, and upon the recording , of the same in the Monroe county clerk’s office, the said clerk shall discharge the former certificate of record in his office by a proper entry upon the page containing such record, the same as in cases of discharge of real estate mortgage's by him.” -

In Wells v. Johnston (171 N. Y. 324) the question arose as to whether the treasurer of Oneida county was authorized to sell "lands for unpaid taxes, although such taxes were assessed and levied thereon before the lands had been conveyed to the State by the Comptroller in pursuance of a salé thereof made under the Tax Law of 1855. (Laws of 1855, chap. 427.) By that act it'Was made the duty of the Comptroller to‘advertise and sell lands for returned unpaid taxes, and if not redeemed within' two years, to execute to the purchaser,- liis. heirs or assigns, a conveyance which would vest in the grantee an absolute estate in fee simple, subject to all the claims which the People of the State might have thereon for-taxes or Other liens or incumbrances. Where upon such sale no" person offered to bid, it was the duty of the Comptroller to bid in ■the lands for the State, and make a certiñcaté specifying the time when the People of the State would be entitled to a deed; such purchase was subject to the same right of redemption as purchases by individuals, and if the lands sold were not redeemed, the Comptroller executed a release to the People of the State, or their assignees, which had the same effect, and became absolute in the same time and on the performance of the like conditions, as in the case of sales and conveyances to individuals. It was held that the sale by the county treasurer for the non-payment of taxes was void. The ground of the decision was that, when the State took title to the lands the outstanding lien for taxes previously assessed merged in the deed, and it became the duty of the Comptroller to refund to the county of Oneida the money which it had paid to the State, if any, by. reason of such assessment, and to pay over to the county its proportion of the tax levied'upon the lands, but the county thereafter, or its treasurer, had no power to sell the lands to reimburse itself. In the opinion of the court it is said: “ It is contended on behalf of the plaintiff that these lands were assessed from year to year after the sale of 1877 down to and including the year 1880, and that by the special act for Oneida county of that year, to which we have referred, the county treasurer was authorized to sell the lands for the non-payment of such taxes. We think that the lands were properly assessed for these years, for the title of the State did not become perfect until the deed was executed. The owner still liad the right to redeem during the period fixed by the statute, and during such period the premises were properly assessed so that the owner, upon redemption, could not escape taxation for the intervening years; but after the title of the State had become fully vested through the deed of the Comptroller the lands were no longer assessable and no sale could be made thereof except in accordance with the express provisions of the statute.” In that case the owner remained in possession, and had the use and enjoyment of his lands until the deed to the State was executed. Here upon the recording of the mayor’s certificate the city and its assigns acquired the absolute title in fee with the right of immediate possession and to enjoy and hold the lands free and clear of all claim or demand of the owner.

If taxes may thereafter be assessed-the result is-that the city audits assigns, by .virtue. of its. title and right of possession, takes the rents and profits which gó into the city treasury and Continue to assess taxes upon the property, and this may go -on indefinitely. It is optional with the city to exercise its right of foreclosure.' There is nothing which the former owner qould do to relieve himself from this anomalous situation of - being neither owner nor occupant and yet liable. to assessment, assuming that he is unable-to redeem. -Asís frequently the case, the assessment may be greater than the valué of the land assessed, of which this case is an illustration. The lands here assessed dor taxes and' local improvements are: insignificant in valúe. They consist of a small-strip of land ten feet wide and one hundred and eighteen feet long, and1 a triangular parcel -of less dimensions, the assessed -value of' whiph is. $50. The 'city has refrained from exercising its right of foreclosure, continuing in the' meantime to assess.'the property until the faxes and assessments have accumulated to an- amount- for which a judgment for- deficiency has been taken against the defendant for $833.66.

- It does not seem that a-fair construction of the statute will permit the city to take the rents and profits of the land, and also at the same time assess the. taxes thereon to the person who was the owner.

A more reasonable rule to adopt would be to require the city to proceed to an immediate- foreclosure of the remaining equity in the property, and thereby vest title in a purchaser, who would become liable to taxation.

The judgment for deficiency is erroneous and should be reversed.

. McLennan, P. J.., concurred.

' So much of the judgments as are -appealed from- affirmed, with costs. . 
      
       See Laws of 1880, chap. 91.— [Hep.
     