713 Co. v. City of Jersey City

• Decision Date: 24 February 1967
• Docket Number: No. L--12313,L--12313
• Citation: 227 A.2d 530,94 N.J.Super. 210
• Parties: 713 COMPANY, a New Jersey corporation, Plaintiff, v. CITY OF JERSEY CITY, a Municipal Corporation of the State of New Jersey, Thomas J. Whelan, Mayor of Jersey City, Council of the City of Jersey City, and Francis X. Beirne, Tax Collector of the City of Jersey City, Defendants.
• Court: New Jersey Superior Court

Page 210

94 N.J.Super. 210

227 A.2d 530

713 COMPANY, a New Jersey corporation, Plaintiff, v. CITY OF JERSEY CITY, a Municipal Corporation of the State of New Jersey, Thomas J. Whelan, Mayor of Jersey City, Council of the City of Jersey City, and Francis X. Beirne, Tax Collector of the City of Jersey City, Defendants.

No. L--12313.

Superior Court of New Jersey Law Division.

Feb. 24, 1967.

Jack Okin, Newark, for plaintiff (Okin & Okin, Newark, attorneys).

T. James Tumulty, Corp. Counsel, for defendants.

PINDAR, J.S.C.

The verified complaint herein is in lieu of prerogative writ in the nature of Mandamus. An order to show cause issued why the relief should not be granted. R.R. 4:88--3, 4. Plaintiff 713 Corporation (713), a New Jersey corporation, seeks legal interest on overpayment of taxes by virtue of judgments entered against defendant City of Jersey City on April 29, 1966, by the State Division of Tax Appeals (Division) entitling 713 to a refund thereon. The judgments were not satisfied until January 20, 1967, or approximately nine months thereafter. The claim sought is as of and from the afore-mentioned entry date. In addition, plaintiff names Thomas J. Whelan and Francis X. Beirne, Mayor and Tax Collector, respectively, as defendants.

For a clear understanding, it is necessary to set forth the following:

713, the owner of real estate in Jersey City, filed tax appeals pursuant to N.J.S.A. 54:2--33 et seq., for excessive tax assessments made upon its property. After extended litigation the Division decided in favor of 713 and entered the aforesaid judgments reducing the questioned assessments for the tax years 1959, 1960 and 1962. By these judgments the provisions of N.J.S.A. 54:2--43 (commonly referred to as the 'Freeze Act') had similar effect for the years 1961, 1963 and 1964. The taxes for those years, in the sum of $1,044,900, were fully paid. The reduced assessments resulted in tax overpayments totalling $120,933.62. The sum paid by the city to and accepted by 713 on January 20, 1967 was $121,933.72, an amount $1,000.10 in the excess of the principal amount demanded. But such payment did not include interest and 713 reserved its right thereto, contending that failure to pay interest was unreasonable. Appropriation of the tendered overpayment was by way of resolution adopted by the City on January 17, 1967 pursuant to municipal procedure.

The contention of plaintiff is urged on the following ground: In June 1966 an officer of 713 telephoned the office of the City's collector of taxes regarding the refund of its overpayment. At that time 713 was advised to forward copies of the receipted bills for taxes paid, with copies of the judgments of Division. Its attorneys did so by mail on July 12, 1966. His letter erroneously contained a demand for the return of overpayment for the year 1965 which was not then included in the judgments.

It appears that the parties thereafter agreed that the requested return of the overpayment would not include the year 1965, and so this is not here involved. On August 3, 1966, 713 by letter again demanded refund payment, excluding the year 1965. The city disputes the stated time element and asserts adequate demand was not made until December 22, 1966, and alleges that for this reason the request of payment was not resolved until January 17, 1967, since the city council convened but twice a month.

As heretofore mentioned, the refund payment was made without interest on January 17, 1967. Except for the controversial time period, the related circumstances are not in dispute.

The basic issue before this court is whether a municipal corporation, in the absence of a statute or agreement, is liable to a taxpayer for interest on overpaid taxes, upon a judgment of the State Division of Tax Appeals from the date of entry of such judgment fixing the amount to be refunded. It is noted that the judgments establishing the right to a refund were not appealed within the time provided by our rules of procedure and are not now subject to attack. Further, plaintiff's claim of interest does not include any period prior to the entry date of the judgments. Both sides agree that there is no statute or agreement in respect to paying interest.

It is a well settled rule of law in New Jersey that interest is not recoverable on an abatement of a tax liability unless provision therefor is made by statute. Hahne Realty Corp. v. City of Newark, 119 N.J.L. 12, 194 A. 191, 112 A.L.R. 1179 (E. & A. 1937); Borough of Edgewater v. Corn Products Refining Corp., 136 N.J.L. 664, 57 A.2d 39 (E. & A. 1947); Milmar Estate Inc. v. Borough of Fort Lee, 36 N.J.Super. 241, 115 A.2d 592 (App.Div.1955); Safeway Trails Inc. v. Furman, 77 N.J.Super. 26, 185 A.2d 245 (Law Div.1962); Universal C.I.T. Credit Corp. v. Borough of Paramus, 93 N.J.Super. 28, 224 A.2d 517 (App.Div.1966).

In Milmar Estate, the municipality was held not to be subject to payment of interest from the date the corporation paid the ever-assessment. In that case Judge Clapp, citing Borough of Edgewater v. Corn Products Refining Co., and Hahne Realty Corp. v. City of Newark, supra, considered three factors in determining that the Borough of Fort Lee should not be charged with interest.

First, as to Hahne Realty Co., was his consideration of the illegality Per se of the assessment. Second, that the taxpayer voluntarily paid, reserving the right to litigate at a later date. Finally, the court cited Edgewater for the proposition that the legislative intent in promulgating the Apportionment Act, R.S. 54:4--56, N.J.S.A., allowing payment of taxes in quarter-annual installments, would not subject a municipality to the payment of interest on the abatement of tax so as not to disarrange local budgets.

This court agrees with the analyses made in the above-cited cases and their application to Milmar Estate. However, those situations do not confront the court here as being the same or analogous problems. The cited cases involved questions of interest on a tax abatement from the date of payment of the tax, and are distinguishable from the case at bar. 713 concedes the principle set forth in cases of Hahne, Edgewater and Milmar Estate to the extent that no right exists to claim of interest at law against the city for tax assessments paid prior to entry date of the judgments. But plaintiff stresses its right to interest upon the tax overpayment from the date of judgment upon the equitable ground that the city unjustly withheld payment after the judgments were entered--not appealed and now unattackable. Thus, it must be considered that the city meaningfully accepted the Division judgments as final.

In its Per curiam opinion in Universal C.I.T. Credit Corp. v. Borough of Paramus, supra, 93 N.J.Super., at p. 30, 224 A.2d, at p. 518, the Appellate Division adopted the holding in Brophy v. Prudential Insurance Co., 271 N.Y. 644, 3 N.E.2d 464 (Ct.App.1936) (cited in Consolidated Police, etc., Pension Fund Commission v. City of Passaic, 23 N.J. 645, 130 A.2d 377 (1957)):

'* * * (I)nterest is not ordinarily payable as damages for the improper withholding of funds by a governmental agency except when provided for by statute.'

It should be noticed that in Universal C.I.T. Credit Corp., 90 N.J.Super. 435, 217 A.2d 905 (Law Div.1966), there was disclosed an agreement between the litigants to place the disputed funds in escrow, but without agreement as to who would receive interest for the period the money was held pending determination of the priority of claims. In view of the lack of an agreement or statute the Appellate Division reversed the allowance of interest by the Law Division. In Brophy v. Prudential Insurance Co., supra, relied upon by the Appellate Division as authority in Universal C.I.T. Credit Corp., the facts reveal that an appeal was taken upon the refusal of defendant to pay interest upon funds held in a trust account created for payment under the Workmen's Compensation Law; the beneficiary, having remarried, was given a lump sum award from the trust fund, less interest, as a final settlement. The widow claimed interest from the date of creation of the trust fund to the date of final settlement. Again, interest was not sought in either case for nonpayment after judgment. Turning now to the Consolidated Police, etc., Pension Fund, case, supra, the demand for interest was rejected neither upon the lack of statutory right nor any agreement of the parties. The Supreme Court rejected payment of interest upon equitable grounds, holding that:

'Considerations of equity and fairness counsel against the allowance of interest in such circumstances, more especially since the delay in payments had reference to the period of transition and the resolution of constitutional issues raised in good faith.' (23 N.J., at p. 655, 130 A.2d at p. 383)

It is noticed, moreover, that the claim...