Kann v. King

Background

Caroline King was the long-term tenant of a downtown store under a written lease that required the tenant to pay yearly property taxes. After a long period without tax payments, a tax sale was held for one overdue installment and a buyer, Wiltsie, received the tax certificate. That certificate later passed to Cohen, acting for the Kanns, nearby business neighbors who wanted control of the property. The landlord, Marianne A. B. Kennedy, asserted a forfeiture of the lease because of the unpaid taxes; Mrs. King sued to have the tax title declared void and to stop eviction.

Reasoning

The central question was whether a court of equity should relieve the tenant from forfeiture by forcing the owner to risk defending the owner’s title against an apparently irredeemable tax deed held by a third party. The Court found no evidence of fraud and emphasized the tenant’s long neglect to pay taxes, which amounted to gross negligence. The Court also noted the landlord had offered a compromise protecting her from loss, which the tenant declined. The purchase of the tax certificate by Cohen was lawful under the statute. The Court held that equity will not require an owner to jeopardize the owner’s property title to benefit a negligent tenant and therefore refused to grant relief.

Real world impact

The Supreme Court reversed the lower decree, ordered dismissal of the tenant’s bill, and restored the ability of the owner and tax-title holders to press their claims. Tenants who allow tax sales to mature may not get equitable relief from forfeiture when a tax title appears irredeemable. The decision upholds statutory tax-sale transfers when no fraud or wrongdoing is shown.

Dissents or concurrances

The Chief Justice and Mr. Justice Harlan dissented, as noted at the end of the opinion.