Moskowitz v. Mayor and Council of Wilmington

• Citation: 391 A.2d 209
• Parties: Philip L. MOSKOWITZ, Trustee, Plaintiff below, Appellant, v. MAYOR AND COUNCIL OF WILMINGTON, now known as the City of Wilmington, Defendant below, Appellee.
• Decision Date: 14 August 1978
• Court: United States State Supreme Court of Delaware

Page 209

391 A.2d 209

Philip L. MOSKOWITZ, Trustee, Plaintiff below, Appellant, v. MAYOR AND COUNCIL OF WILMINGTON, now known as the City of

Wilmington, Defendant below, Appellee.

Supreme Court of Delaware.

Submitted June 14, 1978.

Decided Aug. 14, 1978.

Upon appeal from Superior Court. Reversed and Remanded.

John T. Gallagher, of Morris, Nichols, Arsht & Tunnell, Wilmington, for plaintiff below, appellant.

Jeffrey S. Goddess, City Sol., and Michael P. Maguire, Wilmington, for defendant below, appellee.

Before HERRMANN, C. J., and DUFFY and McNEILLY, JJ.

HERRMANN, Chief Justice:

In this action to recover interest from the City of Wilmington on a refund of excess property taxes paid, the plaintiff appeals from the Superior Court's denial of his motion for summary judgment.

I.

In 1960 and 1961, the plaintiff, after remitting property taxes upon property for which he is the trustee, challenged in an appeal to Superior Court the assessment on the property, which is located in the City of Wilmington. For reasons not in the record, a decision was not rendered by the Superior Court until 1974. ¹ In its decision, the Superior Court determined that the property was over-assessed and that plaintiff was entitled to a refund. Thereupon, the City paid to the plaintiff a sum representing the refund on the overpaid taxes together with interest from the date of the Superior Court judgment. The plaintiff then sought a declaratory judgment to the effect that the City should have paid interest on the tax payments from the date of payment thereof. The plaintiff's motion for summary judgment was denied by the Superior Court. The plaintiff appeals; we reverse and remand.

II.

Interest is awarded in Delaware as a matter of right and not of judicial discretion. As a general rule, interest accumulates from the date payment was due the plaintiff, because full compensation requires an allowance for the detention of the compensation awarded and interest is used as a basis for measuring that allowance. Metropolitan Mut. Fire Ins. Co. v. Carmen Holding Co., Del.Supr., 220 A.2d 778 (1966). See also Levien v. Sinclair Oil Corporation, Del.Ch., 314 A.2d 216 (1973). It should follow, therefore, that the plaintiff is entitled to recover interest from the City for a period preceding the entry of judgment.

The City contends, however, that since it is a municipal corporation the Trial Court was correct in exempting it from paying interest for the period preceding judgment. According to the City, 713 Company v. City of Jersey City, N.J.Super., 94 N.J.Super. 210, 227 A.2d 530 (1967), upon which the Trial Court relied, states the general rule that a municipality is not liable for interest on a tax refund except as provided by statute. In support of the validity of this rule, a number of rationales are offered by the City. ²

It appears that where, as in Delaware, there is no statute regarding the imposition of interest on tax assessment refunds, the jurisdictions are about evenly divided as to whether interest may be recovered by the taxpayer for the period prior to judgment. Anno : "Tax Refund or Credit-Interest", 88 A.L.R.2d 823. Upon due consideration of the prevailing views, and given the strong policy in Delaware of providing full compensation to a prevailing plaintiff, we find the rule permitting the recovery of interest to be more reasonable. We discern no compelling reasons to support the rule that the City should not be governed by the same rules regarding interest as any other litigant. Indeed, this conclusion is impelled by virtue of § 1-101 of the City Charter wherein the City has been deemed to waive any special privileges in the conduct of litigation. See City of Wilmington v. Spencer, Del.Supr., 391 A.2d 199 (7/25/78). Thus, we hold that the Trial Court erred in relying upon 713 Company and exempting the City from payment of interest prior to judgment.

While we agree with the plaintiff that interest should be paid for the period prior to judgment, we do not agree with the plaintiff's contention that interest should invariably be computed from the day the improper tax assessment was paid. The computation of interest may vary from case to case, depending upon two considerations.

The prevailing rule in those jurisdictions permitting recovery of interest, which we adopt, is that interest is awarded from the date the taxpayer gave notice to the governmental entity that the taxpayer considered the tax payment unlawful or improper. See 88 A.L.R.2d 823, 827. The rationale underlying this rule is that money is not due and payable, and thus not in default, until there has been a demand therefor. See also 56 Am.Jur.2d "Municipal Corporations" §...