Lindlots Realty Corp. v. County of Suffolk , 278 N.Y. 45 ( 1938 )

The appellant county of Suffolk bid in the land here in question at tax sales. Thereafter, it received deeds of the property so bid in executed by the County Treasurer. The respondent acquired record title to the land in question through deeds from the county. The deeds from the county were quitclaim deeds executed by the County Treasurer, which contained a statement that the premises "were duly sold * * * after due notice in accordance with law."

Thereafter, the respondent ascertained that notices of the tax sales at which the county became the purchaser were not published according to law. The title of the county, because of the failure to publish the notices of sale in accordance with the terms of the statute, section 151 of the Tax Law, was defective. (Bamonte v. Ocean Beach-Fire Island Co., 248 N.Y. 642.)

Thereupon the respondent brought this action against the county to recover the amount paid to it for such land, with interest. Thus far it has been successful. The county resisted payment upon various grounds but the principal question here involved is whether the county was bound by the statement contained in the deeds. The county having received deeds of the land in question which it bid in at tax sales was empowered to dispose of it "upon such terms as shall be determined by a majority of the board of supervisors." (Tax Law, § 154.)

The Board of Supervisors passed a resolution in the following words:

"Resolved, that in cases where tax deeds have been given and are held by the County of Suffolk, the County Treasurer be and he hereby is empowered and directed, in his discretion, to releaseand quitclaim to any applicant any lot, piece, or parcel of land or property which has heretofore or may hereafter be conveyed by any county treasurer to the county of Suffolk because of any sale for taxes, upon payment," etc.

That is the resolution introduced in evidence by respondent and relied on by it as authority for the County Treasurer to execute the deeds delivered to respondent. That resolution only authorized the giving of a "release and quitclaim." It did not authorize the County Treasurer to incorporate in the deeds a warranty or representation. The alleged representation incorporated in the deeds executed by the County Treasurer in the name of the county relied upon by respondent was not authorized by the resolution and is not binding upon the county. The resolution constituted the only authority to bind the county. Any one accepting a deed from the county executed by the County Treasurer was chargeable with knowledge of the terms and limitations of the resolution and the nature and extent of the officer's authority. (44 Corpus Juris, p. 87, § 2167; Freel v.County of Queens, 9 App. Div. 186, 189; modfd., 154 N.Y. 661.)

We are obliged, therefore, to treat the deeds under which the respondent claims as ordinary quitclaim deeds which conveyed only such title as the grantor had. From such deeds there arises no implication that the preliminary proceedings leading to the tax sales had been properly complied with. The acceptance of such deeds could not by any possibility give rise to a cause of action for rescission, at least in the absence of active positive fraud and there is no claim here of such fraud.

The County Treasurer was in no sense a general agent of the county with power to bind it by representations. The respondent and its agent when accepting the deeds in question must be presumed to have known the limitations on the authority of the County Treasurer; must have known that his authority was derived from the Board of Supervisors and should have ascertained the extent of such authority.

One entering into a contract with a municipality through an official thereof "is bound to take notice of limitations on its power to contract and also of the power of the particular officer or agency to make the contract." (3 McQuillin on The Law of Municipal Corporations, § 1268.)

If they exceed their power and authority, the municipality is not liable. (Id. vol. 2, § 519; 2 Dillon on The Law of Municipal Corporations [5th ed.], § 777; Freel v. County of Queens,supra.)

A reading of the resolution would have disclosed that the County Treasurer was not authorized to make representations in the deeds which would bind the county. The statement contained in the deeds being unauthorized, the county was not bound by it. (Freel v. County of Queens, supra; Supervisors of RensselaerCounty v. Bates, 17 N.Y. 242.)

We believe that the general principles stated above are beyond question. It is urged, however, that those principles only apply in an action against a county to enforce a contract but have no application in an action against a county not to enforce a contract but to recover money paid in reliance upon statements alleged to constitute representations. Such is the case where a county has obtained property upon the supposition that it had the power to contract, when in fact it did not have such authority, and the contract could not be enforced because of lack of power on the part of the county to make it. In such a case it has been decided that one who has transferred possession of property to a county and cannot recover the agreed purchase price, may recover the property unjustly held by the county. (Chapman v. County ofDouglas, 107 U.S. 348.)

That principle has no application in the case at bar, because the respondent as a matter of law had no right to rely upon the unauthorized statement of the County Treasurer. His authority was a matter of record and plaintiff is conclusively presumed to have known the extent of his authority. Any declaration of his as to the extent of his authority is not binding on the county in an action on the contract.

"The county treasurer, in making the sale of the certificate issued to the county, is not authorized to make any representations or guarantees in connection with such sale." (Minnesota Loan Investment Co. v. Beadle County, 18 S.D. 431,435.)

The rule of caveat emptor applies at common law to purchasers of tax titles. A purchaser of a worthless title cannot recover from a county the amount paid. He purchases at his peril. That is true even if statements are made in the instrument of conveyance as in this case. (Coffin v. City of Brooklyn, 116 N.Y. 159,166; Traktman v. City of New York, 241 N.Y. 221, 229.)

Various reasons have been given by the court for the rule. Those reasons have been collated in a note in 77 A.L.R. at page 824. The same reasons apply to a purchaser from a county which has bid in property at a tax sale, has taken a deed, and as a part of the proceeding for the collection of the tax, conveys the property by quitclaim deed to another. The court has so decided, as we believe correctly, in each case, brought to our attention, in which the question has been passed upon. (Shelton v. Klickitat County, 152 Wn. 193; Minnesota Loan Investment Co. v. Beadle County, supra; Parrott v.Abernathy, 58 S.D. 603; 77 A.L.R. 818; Wilson v. Salt LakeCounty Corp., 57 Utah, 274; Red River Valley Land Co. v.Harris, 42 N.D. 76. Cf. Keyes v. State, 121 Me. 306.)

No contrary conclusion was reached in Robbins v. Abrew (275 N.Y. 233). The question here presented was not considered in that case. The question there involved was which of two parties, holding deeds of the same land executed by the County Treasurer, had the prior right.

The judgment should be reversed and complaint dismissed, with costs.

CRANE, Ch. J., O'BRIEN, LOUGHRAN and RIPPEY, JJ., concur with FINCH, J.; HUBBS, J., dissents in opinion in which LEHMAN, J., concurs.

Judgment affirmed.