Hudson County Chamber of Commerce v. City of Jersey City
| Citation | 153 N.J. 254,708 A.2d 690 |
| Parties | HUDSON COUNTY CHAMBER OF COMMERCE, Hudson County District Council of Laborers Pension Fund, Square Plus Operating Corp., Cunningham Graphics, Inc., and Margulies, Wind, Herrington & Knopf, a Professional Corporation, Plaintiffs-Respondents, v. CITY OF JERSEY CITY, Defendant-Appellant. |
| Decision Date | 09 April 1998 |
| Court | United States State Supreme Court (New Jersey) |
On certification to the Superior Court, Appellate Division, whose opinion is reported at 310 N.J.Super. 208, 708 A.2d 699 (1997).
Dennis J. Drasco, Roseland, for defendant-appellant (Lum, Danzis, Drasco, Positan & Kleinberg, attorneys; Mr. Drasco and Colin M. Danzis, of counsel and on the briefs).
Robert E. Margulies, Jersey City, for plaintiffs-respondents (Margulies, Wind, Herrington & Knopf, attorneys; Jack Jay Wind, on the briefs).
William John Kearns, Jr., Willingboro, for amici curiae New Jersey State League of Municipalities and New Jersey Institute of Municipal Attorneys (Kearns, Vassallo, Guest & Kearns, attorneys).
We affirm the judgment of the Appellate Division substantially for the reasons set forth in that court's opinion. 310 N.J.Super. 208, 708 A.2d 699 (1997). However, we conclude that prejudgment interest should not have been awarded. Because Jersey City is a governmental entity and interest is not provided for by statute, "particular circumspection" in the granting of prejudgment interest is required, and "a showing of overriding and compelling equitable reasons" is essential to justify the award. Board of Educ. v. Levitt, 197 N.J.Super. 239, 244, 484 A.2d 723 (App.Div.1984). In our view, no aspect of Jersey City's conduct in imposing and collecting the payroll taxes at issue warrants the imposition of prejudgment interest.
This appeal involves the validity of a payroll tax ordinance adopted by the City of Jersey City ("City") on December 6, 1995. More specifically, this case questions whether, under the referendum provisions of the Faulkner Act, N.J.S.A. 40:69A-184 to -196, a filed but insufficient referendum petition, which was never cured and ultimately withdrawn, delayed the effective date of that ordinance.
The majority affirms the Appellate Division and finds that the ordinance did not take effect until January 1996, after its statutory authorization had expired. See N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996). Therefore, the majority holds the ordinance to be void and unenforceable. I believe that the insufficient petition suspended the collection of the tax, but did not change the effective date of the ordinance. As a result, I find that the ordinance took effect in December 1995, prior to the expiration of its statutory authority, and thus, the ordinance should be upheld.
The facts are undisputed. On December 6, 1995, the Municipal Council of the City adopted Jersey City Ordinance 95-117 ("Ordinance"). That Ordinance, known as the "Jersey City Payroll Tax of 1995" and titled the "Ordinance Supplementing Chapter 29 (Special Tax) of Jersey City Code," imposed a 1% tax on the payroll of every employer in the City. Ordinance, supra, § 29-1. The Ordinance was enacted pursuant to enabling legislation set forth in N.J.S.A. 40:48C-14 to -19.
Specifically, N.J.S.A. 40:48C-15 provided that any municipality may by ordinance "impose and collect an employer payroll tax for general municipal purposes of the municipality at a rate of 1% of the employer's payroll." The enabling legislation also contained a sunset provision, which prohibited the City from collecting that tax for services performed on or after January 1, 1996. N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996). The Ordinance was approved by the Mayor the next day, on December 7, 1995.
On December 26, 1995, a Committee of Petitioners, pursuant to N.J.S.A. 40:69A-185 of the Faulkner Act, submitted to the Jersey City Clerk ("Clerk") 525 referendum petitions protesting the Ordinance. To invoke the power of referendum, the Faulkner Act provides that a petition must be signed by "a number of the legal voters of the municipality equal in number to at least 15% of the total votes cast in the municipality at the last election at which members of the General Assembly were elected" and must be filed with the municipal clerk within twenty days of the final passage and approval of the ordinance. N.J.S.A. 40:69A-185. The Act then requires the municipal clerk to determine, within twenty more days, whether the petition is signed by a sufficient number of qualified voters and to certify the results of his or her examination to the municipal council at its next regular meeting. N.J.S.A. 40:60A-187. Pursuant to that statute, on January 16, 1996, the Clerk certified that the petitions protesting the Ordinance were insufficient and he notified the Committee of the same. The Committee was short by 869 valid signatures.
N.J.S.A. 40:69A-188 provides that an insufficient referendum petition may be amended by filing a supplementary petition within ten days after a notification of insufficiency has been served. Rather than amending the insufficient petition in this case, however, the Committee filed a letter with the Clerk withdrawing the petition. That letter, dated January 26, 1996, stated:
The undersigned Committee of the Petitioners, pursuant to N.J.S.A. 40:69A-191 do hereby withdraw the Petitions previously submitted requesting a Referendum on City Ordinance 95-117 known as the Jersey City Payroll Tax of 1995.
Peter Murphy, a member of the Committee of Petitioners, asserted that the petition was withdrawn because of the large costs that an election would impose on the City and on the supporters of the referendum petition. Murphy also stated that the Committee withdrew the petition because of its belief that the referendum "was moot at that point due to the expiration of the enabling legislation and failure of the state legislature to extend same."
Concluding that the Ordinance could be enforced because the Committee had withdrawn its petition, the Chief Financial Officer of the City sent to all affected employers a 1995 tax return and payroll tax booklet to be used with regard to the payment of the payroll tax for the fourth quarter of 1995. The letter accompanying the booklet and return, dated March 1, 1996, stated that the employers' payroll tax payment was due on or before April 1, 1996. The City also made available to employers an application to extend the time to file a return. The City then began to collect the tax for the last quarter of the 1995 fiscal year.
On March 25, 1996, plaintiffs, employers in Jersey City, filed a verified complaint in lieu of prerogative writs in the Superior Court, Law Division seeking an order that the Ordinance was invalid. Plaintiffs successfully moved for summary judgment declaring that the Ordinance did not take effect until after January 26, 1996, the date the petition was withdrawn, and was accordingly unenforceable under the sunset provision. See N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996).
The City appealed, and the Appellate Division affirmed the trial court's ruling that the Ordinance was invalid and unenforceable. We granted the City's petition for certification, 151 N.J. 75, 697 A.2d 547 (1997). The majority affirms the Appellate Division judgment for the reasons expressed in the opinion of the Appellate Division, reported at 310 N.J.Super. 208, 708 A.2d 699 (1997). I respectfully dissent.
That the sunset provision in N.J.S.A. 40:48C-19 prohibited Jersey City from imposing a payroll tax on any services performed after January 1, 1996 is undisputed. N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996). That provision was subsequently amended on June 17, 1996, one month after the trial court's decision and order, to extend the sunset provision to December 31, 1999. L. 1996, c. 33, § 1. However, that that amendment does not apply is also undisputed. The amendment excludes those municipalities that have not "within two years prior to July 1, 1995 collected taxes or enacted an ordinance imposing a tax," which Jersey City has not done. N.J.S.A. 40:48C-19.
Therefore, Jersey City could succeed in imposing the payroll tax only if the Ordinance applied to services performed in the fourth quarter of 1995. Specifically, the Ordinance provides that it applies to:
[A]ll payrolls related to services performed on or after the first day of the first month of the calender quarter in which this ordinance takes effect; provided, however, that no tax shall be imposed with respect to services performed in any calendar quarter prior to that in which this Article was adopted.
Because the Ordinance states that the tax shall be imposed on all services completed in the quarter in which the Ordinance "takes effect," whether Jersey City succeeded in imposing that tax depends on the effective date of the Ordinance. If the Ordinance became effective in December 1995, then the tax will survive under the sunset provision because it will apply to all services performed in the last quarter of the year, the quarter in which the Ordinance took effect. See N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996).
Unlike the Appellate Division and the majority, I believe that the Ordinance took effect in December 1995 and, therefore, was valid under the sunset provision. See N.J.S.A. 40:48C-19 (1994), amended by N.J.S.A. 40:48C-19 (1996). As a result, the Ordinance should be upheld and the City should be allowed to collect a payroll tax for the last quarter of 1995.
Absent the referendum petitions and the application of the Faulkner Act, the effective date of the Ordinance is clear. The Ordinance itself provides that it "shall take effect at the time and in the manner as provided by law." Ordinance, supra, § 29-8(d). N.J.S.A. 40:69A-185 provides...
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