Challenge to Tax Deed Fails

Lee James Enterprises, Inc. v. Town of Northumberland
Lee James Enterprises, Inc. v. Town of Northumberland
No. 2002-434
Friday, August 1, 2003
The plaintiff owned property in Northumberland that the town took by tax deed in August 1996. At the time of deeding, the plaintiff owed the town $10,650.20 in taxes, interest and water and sewer charges. In January 1997, the town sold the property for $50,000.00 to a third party. The town retained all proceeds from the sale, except $12,432.00 that was paid to a third-party creditor of the plaintiff.

The plaintiff filed suit against the town in October 2000, claiming that the town wrongfully retained the excess sale proceeds and that the retention of funds in excess of the tax liability constituted and unconstitutional taking. The town sought to dismiss the case on the basis of the Supreme Court’s holding in Thomas Tool Services v. Town of Croydon, 145 N.H. 218 (2000). In that case, the Supreme Court held that the pre-1998 version of the alternative tax lien statute was unconstitutional since it permitted a municipality, when selling tax-deeded property, to retain funds in excess of that which was owed to the municipality. In Thomas Tool, the Supreme Court wrote that its decision in that case was limited to the parties “and to any similar cases pending as of the date of this opinion but not concluded, but shall not be retrospectively applied.” The superior court, however, denied Northumberland’s motion to dismiss.

On appeal, the Supreme Court held that since the Thomas Tool decision was issued on August 28, 2000, and plaintiff filed suit in October 2000, plaintiff’s case was barred under Thomas Tool and should have been dismissed.