Automatic Merchandising Council of New Jersey v. Edison Tp.

• Decision Date: 01 May 1985
• Citation: 204 N.J.Super. 395,499 A.2d 224
• Parties: AUTOMATIC MERCHANDISING COUNCIL OF NEW JERSEY, Automatic Catering, Inc., B & C Vending Inc., Crystal Vending Company, and Parkway Vending Co., Inc., Plaintiffs-Respondents Cross-Appellants, v. The TOWNSHIP OF EDISON in the County of Middlesex, a municipal corporation, Defendant-Appellant, Cross-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 395

204 N.J.Super. 395

499 A.2d 224

AUTOMATIC MERCHANDISING COUNCIL OF NEW JERSEY, Automatic Catering, Inc., B & C Vending Inc., Crystal Vending Company, and Parkway Vending Co., Inc. Plaintiffs-Respondents Cross-Appellants, v. The TOWNSHIP OF EDISON in the County of Middlesex, a municipal corporation, Defendant-Appellant Cross-Respondent.

Superior Court of New Jersey Appellate Division.

Argued Nov. 5, 1984.

Decided May 1, 1985.

Peter A. DeSarno, Edison, argued the cause for appellant (Peter A. DeSarno, Edison, on brief).

Douglas S. Brierley, Morristown, argued the cause for respondent (Schenck, Price, Smith & King, Morristown, Clifford W. Starrett, Morristown, of counsel; Douglas S. Brierley, Morristown, on brief).

Before Judges McELROY and DREIER.

PER CURIAM.

This is a class action brought in behalf of owners and operators of vending machines located in Edison Township challenging the validity of township ordinance no. 0.38-81 adopted November 12, 1981 which imposed a licensing fee of $40 annually upon each such machine. The trial judge held the ordinance invalid because the annual licensing fee of $40 was arbitrary and unreasonable and greatly exceeded the costs of regulation and any additional revenue factor reasonably or incidentally related to such regulatory costs. He held the ordinance invalid only to the extent the annual fee for each machine exceeded $15 and directed a refund to plaintiffs and other members of the class for the license periods of the years 1981-82 and 1982-83 of any sums paid in excess of that amount.

The township appeals contending that the judge erred in his ultimate conclusion as to the invalidity of the ordinance, that its licensing fee was not confiscatory, ergo it was reasonable, and that the judge erred in limiting its proofs to the calculations supportive of the $40 figure it had set forth in answers to interrogatories and to its calculations contained in a later report it furnished plaintiff after the court, in a pretrial status conference, had directed the township to furnish all the figures upon which it would rely to justify that figure. Lastly, it contends that when the court set a $15 limit to the licensing fee which could be charged it went beyond its judicial powers and "performed an act which the Legislature had delegated, under the statutes, to the municipalities, not to the court."

Plaintiffs cross-appeal contending the judge erred in holding that N.J.S.A. 40:52-1(d) and (g) and N.J.S.A. 40:52-2 give the township the power to license vending machines. They contend that the power to do so only springs from N.J.S.A. 40:48-2 and in such case the fee must be limited to the reasonable costs of regulation.

Ordinance no. 0.38-81 was enacted following the entry of an order on October 5, 1981 in a legal challenge to a prior ordinance which had set a graduated fee ranging from $15 to $30 per machine. The judge in that case declared the ordinance invalid as arbitrary and unreasonable in amount, determining that a fee of $10.27 per machine might be justified. The judgment was stayed for 60 days to permit the township to enact and adopt an ordinance setting a reasonable licensing fee.

In response, the township adopted the ordinance in question which imposed a fee of $40 per machine. Plaintiffs filed suit to invalidate the new ordinance and for a refund of the amounts paid for the licenses. A four day trial was held before another judge who concluded that the licensing power here utilized was granted under N.J.S.A. 40:52-1(d) and (g), and N.J.S.A. 40:52-2. The latter statute permits license fees enacted pursuant to the former statute to "be imposed for revenue." See Salomon v. Jersey City, 12 N.J. 379, 390, 97 A.2d 405 (1953). The Salomon court held, however, that such a license fee must nevertheless be reasonably related to regulatory costs and only incidentally provide revenue so as to avoid amounting to an unauthorized taxing measure. Ibid.

The proofs at the second trial, although different from those of the first suit, were hardly of a quality to justify a $40 per machine licensing charge, even assuming a reasonable and incidental revenue factor. The judge found that plaintiffs had sustained their burden of proving that the fee set by ordinance no. 0.38-81 was arbitrary and unreasonable and he declared the ordinance invalid. The judge factually determined that the regulatory costs of the township's Division of Health was acceptable at $4.35 per machine but found the testimony of the township supervisor of the Department of Licensing and Permits vague and confusing and his recitation of its policing and regulatory functions highly exaggerated. He found as a fact that the costs of that department's regulation per machine amounted to $2.58. Thus, the judge concluded that the proven costs of both departments to regulate any one machine under the ordinance totaled only $6.93.

Since he determined that the licensing power was derived from N.J.S.A. 40:52-1(d) and (g) and a license fee could be imposed in such case for revenue reasonably related to regulatory costs under N.J.S.A. 40:52-2, he concluded that $15 was the maximum fee that could reasonably have been charged under a valid ordinance. He declared the ordinance invalid to the extent it charged a fee in excess of that amount. It cannot escape notice that the $40 fee here set by the township was a figure six times the proven regulatory costs. The trial judge viewed the figure as an impermissible attempt to tax the machines, a power not granted to the township by the Legislature. Gilbert v. Irvington, 20 N.J. 432, 436-437, 120 A.2d 114 (1956); Salomon v. Jersey City, 12 N.J. at 390, 97 A.2d 405.

Our review of the evidence convinces us that the legal conclusion of the judge that the power here exercised was derived from N.J.S.A. 40:52-1(d) and (g) and N.J.S.A. 40:52-2, rather than from N.J.S.A. 40:48-2, is correct. Equally, we are persuaded that his factual determinations are supported by sufficient credible evidence and require no appellate intervention. Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-484, 323 A.2d 495 (1974); State v. Johnson, 42 N.J. 146, 161-162, 199 A.2d 809 (1964). Accordingly, we affirm so much of the judgment entered May 27, 1983 as declares the ordinance invalid as arbitrary and unreasonable in setting an annual fee of $40 per machine. We do so substantially for the reasons stated by Judge Skillman in his comprehensive and well reasoned oral opinion rendered April 7, 1983.

We find no merit in the township's contention that the trial judge abused his discretion in limiting its proofs to materials it furnished plaintiff in answers to interrogatories and to the figures in the second Borelli report it furnished on February 28, 1983, at the judge's direction after the pretrial status conference. The interrogatories clearly called for all of the figures supportive of the $40 fee charged in the ordinance. Moreover, the record reveals no dispute about the fact that at the pretrial status conference the trial judge ordered the township to "provide more specific answers to interrogatories 16 and 18 by February 28, 1983, with a copy to the Court, or be barred at trial from presenting any calculation of the cost of inspection or other cost justification for the fee charged, except for the Borelli study, set forth in Mr. Borelli's letter of October 26, 1981." This was fair notice in a case which eventually started on March 24, 1983. The information sought to be elicited by the township was or should have been known to it long before the second day of trial when it first sought to develop it. It was the very basis of its decision to impose a $40 fee. We see here no "extraordinary and compelling reasons" for the judge to have relaxed R. 4:17-7 or his prior explicit order.

In any event, we have carefully examined appellant's proffer of proof made at trial and find it sorely lacking in probative value. The testimony elicited from Mr. Grun on the proffer of proof can only be described as vague in content and speculative at best. This evidence, if allowed, would have added no material dimension to the question of direct or indirect costs of regulating the vending machines. Grun admitted on cross-examination that the "cost" items to which he could testify were otherwise covered by the time study sheets already in evidence and to the extent he had additional items he had no figures which would demonstrate reasonable costs.

The proffer of proof, attempted through the testimony of Mr. Borelli, rises to no higher level than the testimony of Grun. His testimony of April 5, 1983 demonstrates an attempt by appellant's counsel to conduct discovery during the course of trial with calculations being made, upon doubtful foundation, from the witness stand. When one gives this impromptu testimony its greatest possible weight, it amounts to indirect costs of $5.00 per machine in 1982 and $5.34 in 1983. When added to the $6.93 figure found by the trial court the direct and indirect costs per machine are $11.93 for 1982 and $12.27 for 1983. It is a settled principle that "mathematical exactness is not required" as to regulatory-revenue producing fees imposed under N.J.S.A. 40:52-1 and 2. Nelson Cooney & Son, Inc., v. Tp. of So. Harrison, 57 N.J. 384, 394, 273 A.2d 33 (1971). Nevertheless, the type of business here regulated and licensed cannot realistically be said to place any special impact or burden upon the community services and finances. The burden here appears to be upon the health department which inspects the machines and the department of licensing which does the paper work. The ordinance in question has, in operation, only these relatively minimal regulatory features. Equally, the actual costs of supervision and regulation are demonstrated to be minimal compared to the $40 per machine attempted to be exacted, even when one accepts appellant's proffer of proof which presented figures...