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Township of Middletown v. Simon

193 N.J. 228, 937 A.2d 949 (2008)

TAXATION; PARKS; DEDICATION — Once an owner of land makes an offer of dedication, that offer is complete and irrevocable as far as the dedicator is concerned and the offer remains in place until the governmental authority accepts or rejects it no matter how long delayed and even if the property offered for dedication remains subject to real estate taxes.

In 1929, the owner of land adjacent to a lake “subdivided the land into fifty-six numbered residential lots and one unnumbered lake-front lot labeled ‘Park.’” A subdivision map was presented to the municipality and recorded in 1932. “Many years later, the Park lot was assessed as a separate lot for tax purposes. Because the owners of the Park lot were unknown, taxes on the lot were not paid. Subsequently, the [municipality] sold several tax sale certificates on the lot. A purchaser of a tax sale certificate successfully foreclosed on the property, obtained title to the Park lot, and contracted to sell it to a construction company for the construction of a residence.”

The municipality sued two of the tax certificate holders and the contract-buyer, “asserting that the Park lot was dedicated to the [municipality] for public use and a conversion of the parcel for private use would violate the rights of the public in the dedicated property.” The lower court concluded that the municipality “did not have a dedicated interest in the property and granted judgment against the municipality. On appeal, the Appellate Division reversed, holding that the “recording of the subdivision map and subsequent sale of residential lots with reference to that map constituted an irrevocable dedication of the lot for public use as a park.” The matter was further appealed to the New Jersey Supreme Court.

The Court noted some factual anomalies. First, the municipality was not included as a party in the foreclosure action, a situation that did not disturb the lower court because the lower court found that the “original owners of the Park lot did not intend to dedicate it to the [municipality]; therefore the [municipality] was not an indispensable party to the action.” Second, while the foreclosure action was pending, the municipality’s attorney wrote a letter to the complaining tax certificate holder advising the holder that the surrounding homeowners were claiming that the “tax sale certificate issued on the Park lot was potentially erroneously.”

While the actions were pending, the municipality adopted an ordinance “accepting the dedication of the Park lot as a public park.” The ordinance recited that the Park lot had been “irrevocably offered for dedication by the original developer” and that the ordinance “would assist in establishing and clarifying this ‘park’ parcel as a [municipality] accepted public park.”

The Supreme Court accepted the Appellate Division’s opinion that the municipality was not barred by the doctrine of collateral estoppel from raising the dedication issue just because the foreclosure action had taken place. It explained that “when a person dedicates a portion of land for public use ‘the municipality [acquires] a continuing right to accept the dedication ... by official municipal action’; but commonly the municipality holds ‘no interest in the land’ until it accepts the dedication.” The Court also accepted the Appellate Division’s clarification “that the dedicating party retains legal title ‘and continues to be liable for the payment of property taxes,’ although the tax assessment should ‘reflect [the] dedication ..., which may result in an assessment for only a nominal amount.’” Further, a tax certificate holder “‘only acquires the fee interest in the land that was subject to the taxes,’ ..., and that once a party dedicates property to public use, a subsequent party who ‘acquires title by a tax foreclosure action takes the property subject to the public use and the municipality’s continuing right to accept the dedication.’” As a result, the Court agreed with the Appellate Division that “[t]he entry of a final judgment of foreclosure could only result in a transfer of title to the [P]ark lot, subject to the alleged dedication, just as with a voluntary conveyance to a third party.” Therefore, because the determination whether the original owner had dedicated Park lot for use as a park “was not essential to the judgment in the tax foreclosure action,” the doctrine of collateral estoppel did not bar the municipality’s claim.

Examining the facts, the Court found that because the original owners had recorded the subdivision and had then sold over twenty lots during the next twenty-five years with specific reference to the 1929 subdivision map, this “constituted an irrevocable dedication of the [Park] lot for public use.” It agreed with the Appellate Division that the lower court’s reliance on a particular 1938 Agreement to the contrary was unpersuasive. Despite the lower court’s finding, both the Appellate Division and the Supreme Court “found that no matter what the [original] owner had intended in creating [a] 1938 Agreement, they ‘had already dedicated the [P]ark lot for public use by filing the subdivision map in 1932 and subsequently selling lots based on that map.’” None of the subsequent deeds mentioned the 1938 agreement although they did reference the 1929 subdivision map “that showed the lot designated at a Park.”

The Appellate Division also had found that “levying taxes on the Park lot was [not] evidence that the lot was not dedicated.” The “acts of dedication and issuance of taxes (with corresponding tax sale certificates)” were not mutually exclusive.

The Court’s opinion endorsed and quoted the opinion of the Appellate Division, but added the following: “We continue to adhere to our law of dedication. Dedication is the permanent devotion of private property to a use that concerns the public in its municipal character. ... Although originally used mostly for public highways, dedication law now applies to ‘bridges, square, parks and recreational buildings, wharves and landing places, markets, schools, public buildings, and cemeteries.’” Further, the Court pointed to explanations in its earlier decisions to the effect that, “in determining whether the owner intended to dedicate land, ‘it is not the actual, unrevealed intention that controls, but rather the intention manifested by the acts or conducts of the dedicator. ... We consider the acts or conduct at the time of dedication, rather than at any time thereafter.’ Generally speaking, ambiguities are resolved against the dedicator and in favor of the public.’” ... “Once an owner of land makes an offer of dedication, that offer is ‘complete and irrevocable as far as the dedicator is concerned.’ ... The offer remains in place until the municipality accepts or rejects it, ‘no matter how long delayed, and these public rights can only be destroyed by proper municipal action, usually by vacation.’”

The Court, however, was concerned about the Park owners’ remedy. Those owners argued “that it [was] unfair and harsh after more than seventy years to permit the [municipality] to accept the offer of dedication and correspondingly allow the [municipality] to keep the money [they] paid for the liens and subsequent taxes.” The Court noted that the municipality should have assessed the land at a nominal amount rather than in the way it did, which essentially was by disregarding its dedication as a park. It was also convinced that all of the parties were innocent and had acted in good faith through the foreclosure action. It held that the municipality “would be unjustly enriched if it were to recognize the dedicated status of the Park lot and nevertheless enforce the tax assessments on that lot.” It found that the municipality had received tax revenues well in excess of the value of the lot as dedicated property. As a consequence, it remanded the matter to the lower court to fix the amount that the municipality should be required to reimburse the property owners.

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