Opinion
No. 04-568713
December 15, 2006
MEMORANDUM OF DECISION
This is an action by the White Sands Beach Association, Inc. (White Sand), a quasi-municipality incorporated within the territorial limits of the Town of Old Lyme, to foreclose tax liens on property of the defendants, Mary Bombaci, Frank LaBella, Francis LaBella, Jr., Mary L. Green, Mary Bombaci, Joseph W. LaBella and John L. LaBella.
It is noted that the complaint refers to plaintiff as White Sands Beach Association, Inc. The special act of 1927 described the entity which it purported to create as White Sand Beach. In the body of this memorandum, the corporation will be described as "White Sand."
The matter was reached for trial on October 18, 2005, when, in open court and on the record, the parties entered into a stipulation that the case should be bifurcated as follows: a judgment of strict foreclosure was entered on the tax liens for taxes due on July 1, 2000, July 1, 2001, July 1, 2002, and July 1, 2003, with interest through September 7. A law day was set for April 15, 2006. The action to foreclose the lien for taxes due July 1, 2004 was withdrawn. The issue of attorneys fees and costs in the foreclosure action should be resolved subsequent to the conclusion of the court proceedings on the remaining bifurcated issues. As a part of the stipulation, defendants were to file an amended counterclaim by October 28, 2005 raising certain agreed issues. Other procedural matters were agreed to in the stipulation which was approved by the court.
The date of the law day was subsequently amended in accordance with an agreement of the parties.
Pursuant to the stipulation, defendants filed an amended counterclaim on October 24, 2005. The first count of the amended counterclaim sets forth claims under Connecticut General Statutes Section 12-119, which provides a remedy "[w]hen it is claimed that a tax has been laid on property not taxable in the town or city in whose tax list such property was set." In support of this claim under Section 12-119, defendants allege that due to its failure to follow the requirements of the special act of the legislature allowing its formation, White Sand does not exist as a specially incorporated entity. It is further alleged that due to the failure to follow the requirements of the special act allowing it to annex property not originally within the territory designated by the act, defendant's property was not incorporated into the jurisdiction of the district and therefore is not taxable by it.
The second count of the amended counterclaim sets forth a claim under Connecticut General Statutes Section 42-110(a)(4) alleging that White Sand has engaged in unfair trade practices.
The third count alleges that the action of filing the tax liens in question and a lis pendens on the land records of the Town of Old Lyme by White Sand constituted a slander of defendant's title to their real property.
On September 20, 2005, defendants amended Counts Two and Three of the counterclaim and, on November 18, 2005, White Sand filed its answer denying the essential allegations of the counterclaim. An amended answer to the counterclaim was filed by White Sand on January 12, 2006, together with two special defenses. The first special defense alleges that some or all of the claims asserted by defendant in the counterclaim were barred by latches. The second special defense alleges that some or all of the claims raised by defendants with respect to taxes assessed prior to October 1, 2005 were barred by the statute of limitations contained in Section 12-119.
For reasons hereinafter stated, the issues on the first count are found in favor of plaintiff White Sand. This is determinative of the claims alleged in the second and third counts.
The issues came before the court for trial on September 6 and 8, 2006 and briefs were subsequently filed. Matters not briefed will be considered abandoned. Shaw v. Planning Commission, 5 Conn.App. 520, 525 (1985).
The position of this case is somewhat unusual since we are proceeding primarily on the allegations of the counterclaim. Defendants have the burden of proof to establish the facts essential to their claims. Nikitjuk v. Pishtey, 153 Conn. 545, 552-53 (1966). See also Section 10-70(b) of the Connecticut Practice Book.
I. a.
The first issue which must be addressed is the claim raised by defendants under Connecticut General Statutes Section 12-119 that their property is not subject to taxation by White Sand because White Sand failed to follow the requirements of the special act which allowed its formation and, therefore, it does not exist as a specially incorporated entity with the authority to levy taxes.
The Connecticut General Assembly at its January session of 1927, passed the special act entitled "An Act Incorporating The White Sand Beach Association, Incorporated." This act was approved by the Governor on June 22, 1927. Section 1 of the act provided as follows:
Section 1. All owners of record of land within the limits hereinafter specified, in the locality known as "White Sand Beach," in the town of Old Lyme, are constituted a body politic and corporate by the name of The White Sand Beach Association, Incorporated, and they and their successors shall be a corporation in law with all the privileges set forth in section 3421 of the general statutes, and the rights, privileges and duties hereinafter set forth.
Section 3421 covers the general powers of corporations.
The second section set forth the territorial limits of the entity as described on a map of White Sand Beach dated August 1921 on file in the Land Records of the Town of Old Lyme.
Defendants' property was not included in the area described.
Further sections of the act granted the corporation certain municipal functions and set forth the procedures which the association should follow for its administration. Section 15 provided that the territorial limits of the association should constitute a separate taxing district within the Town of Old Lyme. Section 17 of the act provided that the association "shall have the power to lay taxes, not exceeding the rate of 7 mills per annum, upon all real property subject to tax and located within the limits of the association . . ."
Section 22 of the special act provided for the local ratification as follows:
Section 22. This act shall become effective upon its adoption by a majority vote of all those owners of a freehold interest of land within the limits of said association herein set forth who shall be present at a meeting called for that purpose by the clerk of The White Sand Beach Association, Incorporated, by mailing a notice of such meeting to each of said land owners, so far as the names of the same may be obtained from the tax collector of the town of Old Lyme, at his, her or its last-known address, and by posting a notice thereof on the building containing the post office at Black Hall in said town, two weeks before the time of said meeting.
In evidence are the handwritten minutes of a special meeting of the White Sand Beach Association called to order on Saturday, July 23, 1927, at 7:30 p.m. with eight members present. A communication from J. Smith was read, noted and placed on file. The minutes also reflect the following action.
"Motion made and seconded that the act incorporating White Sand Beach Association be accepted and adopted. So voted."
Other routine business of the association was then conducted at the meeting.
Defendants called as an expert witness with extensive experience in municipal law, Attorney William Howard. Attorney Howard researched the formation of the corporation and looked into whether or not the procedural requirements set forth in Section 22 of the special act had been followed. The attorney determined that there was no evidence that all of the landowners of property as shown on the 1921 map referred to in the special act had received notice of the meeting. He further testified that on the date of the meeting, there were 137 freeholders of land at White Sand Beach entitled to notice in accordance with the statute, but that only 18 "members" were present at the meeting. Attorney Howard further testified that there was no record of compliance with the requirement that the notice of the meeting be posted on the post office building at Black Hall two weeks before the meeting.
Because of the defects noted, Attorney Howard opined that the organizational requirements imposed by Section 22 of the special act for the formation of the corporation had not been performed. From this conclusion, defendants argue that White Sand Beach Association does not exist as a specially incorporated entity authorized to levy taxes.
In the first count, defendants are claiming that in 1927, White Sand failed to perform certain acts required by the special act. "Whoever asserts a claim or defense that is negative in form or depends on a negative proposition as the burden of establishing the truth of the assertion. This is only another way of saying that he or she who affirms must prove. The claim or defense of invalidity illustrates the principle under consideration since invalidity is essentially negative in form." Jones on Evidence, C.S. Fishman, 7th Ed. (1992), Section 3:25. In this regard, defendants have introduced evidence that no proof exists that, in 1927, White Sand performed certain procedures required by the special act. There is no direct proof, however, that such acts were not performed. Assuming that White Sand's officers, acting under the special act, were acting as public officers, there is a presumption that such officers performed their duties properly. Cahill v. Board of Education, 198 Conn. 229, 242 (1985). This situation illustrates the problem involved in attacking the corporate existence of a quasi-municipal corporation formed almost 80 years ago.
This is basically an action to foreclose tax liens. By their amended counterclaim, defendants have questioned the corporate existence of the quasi-municipal corporation which is attempting to foreclose the liens. The general law is that corporate existence cannot be attacked in a proceedings to levy or collect taxes or to enforce a tax lien. 2 McQuillin, Municipal Corporations, Section 352 (3rd Ed.). It is a fundamental principle of law that the legality of the existence of a corporation with de facto existence cannot be questioned collaterally. Am.Jur. Section 207 (2nd Ed.). Connecticut basically follows the general law with respect to an attack on the validity of a de facto municipal corporation. In Stroiney v. Crescent Lake Tax District, 205 Conn. 290 (1987), plaintiff sought to question the existence of a quasi-municipal corporation claiming that certain procedural requirements imposed by the enabling statute for the formation of a tax district had not been performed. The trial court granted the district's motion to dismiss on the grounds that plaintiff lacked subject matter jurisdiction to bring the action. The Supreme Court upheld the trial court relying on "certain fundamental principles" which under lay the case. The principle was stated as, "a de facto municipal corporation's existence cannot be attacked by an individual but only by the state through quo waranto proceedings. Id., 294.
The court determined that there were three requirements for the recognition of a de facto municipal corporation. These requirements were found to be:
(1) A charter or general law under which such a corporation as it purports to be by lawfully be organized;
(2) An attempt in good faith to organize thereunder; and
(3) An actual user of the corporate franchise.
Id., 295.
In this case, the special act of 1927 satisfies the first requirement that there be a charter or general law under which the White Sand Beach Municipal Corporation might be formed.
The minutes of the meeting of the association held on July 23, 1927 indicate a good faith attempt to organize under the special act.
The fact that White Sand has functioned under the special act as a quasi-municipal corporation, assessing and collecting taxes, as well as performing other municipal functions, for almost 80 years satisfies the third requirement of actual user of the corporate franchise.
There is also evidence that the State of Connecticut and the Town of Old Lyme have both recognized the corporate existence of White Sand.
It then must be concluded that White Sand Beach Association, Inc. is a de facto quasi-municipal corporation existing arid functioning under a special act of the State of Connecticut and that defendants are precluded from questioning its corporate existence.
(b)
As a part of their allegations contained in the first count, framed under Connecticut General Statutes Section 12-119, defendants also claim that White Sand failed to follow the requirements of the special act of 1927 allowing it to annex property not originally within the territory described in the act. As a consequence of this failure, defendants claim, that their property was never incorporated into the jurisdiction of the district and, therefore, such property is not taxable by it.
Section 2 of the special act describes the land included within the tax district by reference to the White Sand Map recorded in the land records of the Town. The section then spells out how the territorial limitations of the district may be expanded as follows:
The limits and territory of said The White Sand Beach Association, Incorporated, may be extended at any time with the consent of the voters of the town of Old Lyme, so as to include any other land adjacent thereto by the written consent of the owner of such land in an instrument describing the same and the terms of such annexation, and the acceptance of such other land as a part of said territory by said association, which consent and acceptance shall be recorded on the records of said association and in the land records of the town where such other land shall be situated, and thereupon such other land shall be within the limits and territory of said association, and the owner or owners of such other land while they are owners thereof shall be a part of said body politic and corporate.
The special act, in Section 2, describes the territory of the district by incorporating by reference the map of White Sand in the land records of the Town and provides that adjacent property may be annexed:
(1) With the consent of the voters of the Town of Old Lyme presumably by Town meeting.
(2) With the written consent of the owner of the adjacent land in an instrument containing a description of the land and the terms of annexation.
(3) Acceptance by vote of the association.
(4) The consent and acceptance to be recorded in the records of the association and the land records of the Town.
The evidence indicates that defendant's predecessors in title Winfred E. Chapin and Hattie L. Chapin, husband and wife, acquired title to the property at 1 Seaside Lane on June 28, 1943. It also appears that the Chapins held title to the property until July 23, 1949.
The minutes of a special meeting of White Sand held September 8, 1945, indicate that property owners on the waterfront had indicated their desire to join the association.
The minutes of a special meeting of White Sand Beach Association held September 11, 1948 contains the following:
Membership Applications — Motion was made that applications of property owners adjacent to 1948 limits seeking admission to Association be considered at this time.
Application of Winfred E. Chapin, 164 White Street, Hartford, for admittance of properties 3A, 4A, 34A and 35A into White Sands Beach Association. Motion made by Mr. Maerz that the properties which Mr. Chapin applied for membership with proper qualifications be accepted. Motion seconded by Mr. Long. Voted and so ordered that these properties be accepted as part of the White Sands Beach Association pending approval of Town vote.
The vote on Mr. Chapin's application was followed by votes on five other applications for admission.
The record of the annual town business meeting for the Town of Old Lyme duly warned and held on October 17, 1949 contains the following:
Mr. E. Lea Marsh then presented a motion for the White Sand Beach Ass'n. as follows:
RESOLVED: that we, the voters of the Town of Old Lyme, hereby consent that the limits and territory of the White Sand Beach Ass'n. Inc. be extended by including therein the following properties adjacent thereto: South side Seaside Lane: Lots 3A and 4A, belonging to Winfred S. Chapin.
The record also states that the above motion was seconded and approved by the meeting along with nine other properties.
Attorney Howard examined the records with respect to the annexation of defendants' property into the association in 1948.
The attorney noted that on September 11, 1948, the property was owned by Winfred E. Chapin and his wife, Hattie Chapin. The minutes of the association indicate that only Winfred E. Chapin requested annexation and there is no evidence that Hattie joined in this request. The parties have stipulated that they have been unable to locate any document stating that both Chapins consented to the annexation. Section 2 of the special act requires consent by "the owner." It is claimed that consent then should be by all owners and that Hattie's failure to consent constituted a failure in the annexation process.
For annexation, Section 2 of the special act requires written consent by the owner in an instrument describing the same and the terms of annexation. Attorney Howard could find no written instrument and no description of the property to be annexed. The minutes of the association meeting described the property as "south side Seaside Lane: Lots 3A and 4A." The town meeting vote used the same description. The attorney testified that there was no attempt to incorporate the lots into any map by reference to such map and, at the time, the Chapins owned 14 properties in the area. It was, therefore, he concluded, impossible to determine which of the 14 properties was referred to in the minutes.
All of the lots considered for annexation were similarly described using a number and a capital letter. Ten of these similarly described lots were approved by the town meeting on October 17, 1949. These number-letter designations were references to a document used by the Old Lyme tax assessor. At the time, the tax assessor used aerial photographs with property lines superimposed thereon to assist him in his duties. The number-letter designations corresponded to lots as shown on the aerial photo. This was, and is not an appropriate way to permanently describe property since the aerial photos were working documents subject to change by the tax assessor. At the time, however, the lots could be identified. Defendants dispute this and claim that it is not possible to confirm that the property described as being Lots 3A and 4A on the south side of Seaside Lane belonging to Winfred S. Chapin was the property now owned by them. The evidence, however, is to the contrary. The deeds in defendants' chain of title indicate that the property is at White Sand Beach and is on the southerly side of Seaside Lane and bounded southerly by the waters of Long Island Sound. Lots 3A and 4A on the aerial photo in evidence indicate that the lots are so bound. The Faniolas received a tax bill shortly after the annexation and the tax assessor's records indicate that the property is within the White Sand district.
Attorney Howard and defendant Joseph W. LaBella both testified that they examined the land records of the Town of Old Lyme and there was no recording of any written instrument describing the property and the terms of annexation in the land records as mandated by the special act. The parties have stipulated that no such document has been found in the land records. In this connection, the attorney testified that none of the deeds in defendants' chain of title stated that the property was subject to taxation by the association. In evidence, is a letter from Mr. Faniola to the association, dated July 28, 1950, indicating that Mr. Faniola was confused about taxation by the district. In the letter he stated that he was a new resident at "White Sands" and would appreciate more information about the association. It is noted, however, that the deed from the Faniolas to Josephine LaBella describes the property as being at White Sand Beach.
It was also pointed out by Attorney Howard that at the time the town meeting voted to approve the annexation on October 17, 1949, the Chapins no longer owned the property, having conveyed it to the Faniolas on July 23, 1949.
Attorney Howard, with extensive experience in the field of municipal law, testified that the annexation process, as required by Section 2 of the special act, was not followed with respect to defendants' property. He concluded, therefore, that such property was never incorporated into the association. The attorney contrasted the procedure followed by the association in connection with the Chapin property in 1948 with the annexation of property of Roosevelt Thompson to the association in 1940. Mr. Thompson was represented by an attorney who meticulously followed the dictates of the special act with proper documentation and recording.
Even with the presumption favoring public officers in the performance of their public duties, it is obvious that the annexation procedures followed by White Sand in connection with the Chapin property was flawed. The special act envisions a written instrument describing the property to be annexed and containing the written consent of the owner to be recorded in the land records. Assuming that Mr. Chapin, in requesting annexation, was acting on behalf of his wife as well as himself and that the description of the property was adequate, there is no evidence of any written instrument. No such document was recorded in the land records as required by the act.
It would be fair to conclude that the same cavalier procedure followed by White Sand in connection with the Chapin property was followed in connection with the other nine properties voted in at the town meeting of October 17, 1949. From the evidence, it would appear that this was the usual modus operandi for White Sand, the exception being the Thompson annexation in 1940. And yet, White Sand continued to operate as a quasi-municipal entity with the annexed properties paying taxes and enjoying the benefits of the association until 1999 when Mr. LaBella, out of concern over the amount of taxes, checked the records.
Defendants correctly point out the general law concerning actions taken pursuant to a town charter or enabling act such as we have here. "The charter serves as an enabling act, both creating powers and prescribing the form in which it must be exercised." Palermo v. Ulatowski, 97 Conn.App. 521, 525 (2006). "Whenever the general statutes or the municipal charter prescribes a particular procedure which by a special act it is to be done or a power is to be exercised, the prescribed procedure must be followed for the act to be lawful." Keeney v. Town of Old Saybrook, 237 Conn. 135, 149 (1996). In addition to Palermo and Keeney, defendants have cited twelve additional cases which support the general rule. All of these cases have been reviewed by the court. Although the legal principle in these cases may support the rule of law stated in Palermo and Keeney, the facts are quite different from the case at bar. These cases deal with such things as: actions involving the authority to limit current taxes; personnel appointments under a charter; and zone changes. None of the cases cited involve a situation such as we have here involving the annexation by a quasi-municipal entity which has been de facto for almost 50 years.
With respect to the annexation of September 11, 1948, involving defendants' property and others, White Sand quotes McQuillin concerning annexation.
[A] substantial compliance with all mandatory requirements of the statutes is essential, and sometimes a strict observance is necessary. The objectives of the annexation statutes are to notify the public and protect the rights of landowners against a city's unilateral action in annexing their land. Generally, slight irregularities will not invalidate the proceedings. Annexation proceedings are presumed regular. The burden of proof is on the petitioner to show by competent and substantial evidence that the statutory requirements were in fact not met or that procedural irregularities occurred that materially prejudices petitioner's substantive rights.
McQuillin, Municipal Corporations, Section 7.39.21 (3d Ed.)
In annexation of defendants' property, the objectives stated by McQuillin were met. The town meeting action constituted a notification of the general public including Mrs. Chapin and all affected property owners. The rights of landowners were protected because as the minutes of the meeting confirmed the annexations were at the request of the property owners. There was however, only substantial compliance with this requirement because, as noted, there was no mention of Mrs. Chapin's acquiescence in the annexation. There is no evidence that the procedural irregularities in the annexation materially prejudiced defendants or any of the other owners of real property at White Sand. The situation has existed without litigation since 1949. Defendants' only claim of prejudice is that their property was not properly annexed into the White Sand district.
White Sand, which raised the issue of laches in its pleadings, cites Rocky Hill. Inc. District v. Hartford Rayon Corp., 122 Conn. 392 (1937), in support of its claim that defendants cannot at this late date challenge the validity of the annexation. This is an old case, but it is directly on point and has never been overruled. The cited case was an action by a quasi-municipal corporation to collect four years of back taxes from Hartford Rayon. A special defense was interposed claiming that defendants' real property was not included within the survey describing the territorial limits of the district. Hartford Rayon contested the inclusion of its property within the district from the start and refused to pay the taxes assessed against it, but took no action to have the taxes declared illegal. In preventing Hartford Rayon from raising this claim, the court stated:
Manifestly serious public inconvenience, confusion and injury would result from an adjudication, now, excluding the defendant's property from the district, which could have been avoided had the defendant asserted its claim thereto with reasonable promptness.
Id., 398.
The court then included the following quotation from the federal case indicated:
Every applicant to a court whose claim, if granted, must invite consequences of such serious import should be held to have waived his right to make such a contention where he has had a fair opportunity to make it and failed to avail himself of it and thereafter rights, public or private, have intervened which will be prejudiced if the applicant shall succeed. Coombs v. Larson, 112 Conn. 236, 246, 152 A. 297. This principle is as applicable to cases of inclusion of property within the limits of a municipal corporation in its formation as it has been held to be in cases of subsequent annexation, 1 McQuillin, Municipal Corporation (2d Ed.,) 306, "If a taxpayer were permitted to long acquiesce in [an] order of annexation and then secure its overthrow, great confusion would ensue and much injustice be often done. High considerations of public policy require that a taxpayer who is notified that a public corporation claims to have extended its limits so as to take in his property should act with promptness and proceed with diligence, if he would resist the attempted annexation." Strosser v. Fort Wayne, 100 Ind. 443, 449; Kuhn v. Port Townsend, 12 Wash. 605, 614, 415 P. 923, 29 L.R.A. 445; Black v. Brinkley, 54 Ark. 372, 15 S.W. 1030; Rural Special School Districts v. Ola Special School District, 182 Ark. 197, 31 S.W.2d 129.
Id., 398, 399.
The ruling in Rocky Hill, Inc. District is determinative of the annexation issue raised in the first count of the cross complaint. See also Scoville et al v. Matoon et al, 55 Conn. 144, 148 (1887). If defendants were allowed to contest the annexation made over 50 years ago, "great confusion and injustice" would result. The status of not only defendants' property, but also the other properties annexed with it and probably countless other properties within the White Sand district would be affected. There would be great uncertainty on the part of many property owners now content within the district. The assessment and collection of taxes by White Sand as well as the performance of its other municipal functions would be greatly impeded and the legislative purpose embodied in the special act of 1927 would be thwarted.
(c)
For reasons above stated, the issues on the first count of the cross complaint are found for the plaintiff White Sand.
II.
The second count of the amended counterclaim alleges unfair or deceptive trade practices in violation of Connecticut General Statutes Section 42-110a et seq. In view of the determination on the first count, the issues must be found against the defendants on the second count.
III.
The third count alleges that by filing the certificate of lien and the lis pendens in the land records of the Town of Old Lyme, the plaintiff White Sand has slandered the defendants' title to its real property. In view of the determination on the first count, the issues on the third count must be resolved against the defendants.
Accordingly, judgment is entered in favor of the plaintiff White Sand against the defendants.
Joseph J. Purtill
Judge Trial Referee