Serkin v. Ocean Tp. (Monmouth County)

• Decision Date: 08 February 1983
• Docket Number: ELECTRICAL-MECHANICAL
• Parties: Lewis A. SERKIN, Individually and as Representative of All Property Owners Affected By Special Assessment Pursuant to Ordinance # 1079, Plaintiff, v. TOWNSHIP OF OCEAN (MONMOUTH COUNTY), a Municipal Corporation, and Martin L. Bailey, Collector of Taxes, Defendants. HUXLEY HOLDING COMPANY, Plaintiff, v. The TOWNSHIP OF OCEAN, Defendant. J.R.H.CONTRACTING CORP., a Corporation of the State of New Jersey, Plaintiff, v. The TOWNSHIP OF OCEAN, a Municipal Corporation of the State of New Jersey, Defendant.
• Court: New Jersey Superior Court

Page 392

201 N.J.Super. 392

493 A.2d 531

Lewis A. SERKIN, Individually and as Representative of All

Property Owners Affected By Special Assessment

Pursuant to Ordinance # 1079, Plaintiff, v. TOWNSHIP OF OCEAN (MONMOUTH COUNTY), a Municipal

Corporation, and Martin L. Bailey, Collector of

Taxes, Defendants.

HUXLEY HOLDING COMPANY, Plaintiff, v. The TOWNSHIP OF OCEAN, Defendant.

J.R.H. ELECTRICAL-MECHANICAL CONTRACTING CORP., a Corporation of the State of New Jersey, Plaintiff, v. The TOWNSHIP OF OCEAN, a Municipal Corporation of the State

of New Jersey, Defendant.

Superior Court of New Jersey, Law Division,

Monmouth County.

Decided Feb. 8, 1983.

Paul L. Blenden, Ocean, for plaintiff Lewis A. Serkin.

William R. Connelly, Woodbridge, for plaintiff Huxley Holding Co. (Ravin, Davis & Sweet, Woodbridge, attorneys).

Edward C. Stokes, III, Long Branch, for plaintiff J.R.H. Elec.-Mechanical Contracting Corp. (Stokes & Throckmorton, Long Branch, attorneys).

Dennis M. Crawford, Ocean, for defendant (Schaefer, Crawford & Hirsch, Ocean, attorneys).

RIMM, J.T.C. (temporarily assigned).

Plaintiffs, Huxley Holding Co. (Huxley), J.R.H. Electrical-Mechanical Contracting Corp. (J.R.H.) and Lewis A. Serkin, individually and as a representative of all property owners affected by special assessments pursuant to ordinance no. 1079 (Serkin), each brought an action challenging the amount of interest to be charged on installment payments of assessments placed on their properties following certain local improvements. ¹ The action brought by Serkin was certified as a class action, and the three matters were consolidated for trial. Following the order for consolidation and the pretrial conference the matters were submitted to the court for disposition on stipulated facts. The court must decide whether interest on the installment payment of assessments for local improvements is "legal interest" under N.J.S.A. 40:56-35 or the rate "as may be imposed upon unpaid taxes" in accordance with N.J.S.A. 40:56-32.

The parties stipulated that Ocean Township properly passed ordinance no. 1079 providing for the improvement of various streets abutting the plaintiffs' properties. The ordinance authorized the issuance of bonds in an aggregate amount not to exceed $539,000. Section 7.c. of the ordinance provided as follows:

That the number of annual installments within which the special assessments to be levied on the lots and parcels of real estate benefited by the construction of said improvements described in Section 1 hereof is ten.

The ordinance also authorized the issuance of bond anticipation assessment notes in amounts to be determined by subsequent resolutions of township council.

Defendant completed the improvements and the assessor submitted a revised report on October 30, 1981 fixing the assessment for each parcel of real estate affected by the improvements. The report indicated that the total costs assessed under the ordinance were $525,753.13 as follows:

The assessor's report was accepted by resolution of the governing body on November 10, 1981. The resolution also provided for each affected property owner to have two months from the date of the confirmation of the assessments to pay the whole assessment without interest or to pay the assessment in ten equal yearly installments with legal interest. The tax collector then sent a bill to each affected property owner with a covering letter stating that the entire assessment would be payable in full without interest on or before January 10, 1982. The bill also set forth ten equal annual payments in accordance with the provisions of ordinance no. 1079.

Defendant charges interest at the rate of 8% a year on the assessments under $1,500 and at the rate of 18% a year on the assessments over $1,500. In charging 8% and 18% interest on the assessments, depending on the amount of each assessment, defendant relies on two statutes. N.J.S.A. 40:56-32 provides:

When any assessment shall not be paid within two months after the date of confirmation thereof interest thereon from the date of confirmation shall be imposed at the same rate as may be imposed upon unpaid taxes in the municipality.

Since plaintiffs did not pay their assessments within two months after the date of confirmation, interest was imposed in accordance with N.J.S.A. 54:4-67, which provides in pertinent part as follows:

The governing body may also fix the rate of interest to be charged for the nonpayment of taxes or assessments on or before the date when they would become delinquent, and may provide that no interest shall be charged if payment of any installment is made within the tenth calendar day following the date upon which the same became payable. The rate so fixed shall not exceed 8% per annum on the first $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00, to be calculated from the date the tax was payable until the date of actual payment.

Defendant pays interest at the rate of 9% a year on the improvement bonds, as set forth in a resolution dated March 16, 1981.

Plaintiffs argue that the ordinance adopted by the township is authorized by N.J.S.A. 40:56-35 which itself contains a provision for interest to be charged on the installments.

The governing body may by resolution provide that the owner of any real estate upon which any assessments for any improvement shall have been made may pay such assessments in such equal yearly installments, not exceeding ten, with legal interest thereon, and at such time in each year as the governing body shall determine, but any person assessed may pay the whole of any assessment, or any balance of installments, with accrued interest thereon, at one time.... [ N.J.S.A. 40:56-35; emphasis supplied]

"Legal interest," plaintiffs argue, is 6% a year in accordance with N.J.S.A. 31:1-1.

Plaintiffs also argue that, in any event, the maximum interest rate which the municipality may charge the property owners is the rate it pays on the bonds, 9% a year, relying on McNally v. Teaneck Tp., 75 N.J. 33, 379 A.2d 446 (1977). In that case the Court held that assessments for local improvements made in accordance with N.J.S.A. 40:56-1 et seq. may not exceed the benefit to the property and may not be used for revenue raising purposes. ³

Defendant responds that in charging 8% interest a year on assessments under $1,500 and 18% interest a year on assessments in excess of $1,500 it relied on Mira Land Development Corp. v. Matawan Bor., 133 N.J.Super. 440, 337 A.2d 378 (App.Div.1975), certif. den. 68 N.J. 278, 344 A.2d 312 (1975). There the court held that the statutes dealing with assessments for local improvements, N.J.S.A. 40:56-21 et seq., require that when the original assessment is reduced by judicial order the revised assessment bears interest in the same manner and from the same date as if the original assessment had been made in the revised amount. The court said that all assessments for local improvements are payable in full immediately upon the confirmation of the original assessment by the local governing body and certification thereof to the tax collector. N.J.S.A. 40:56-31. If the assessments are not paid in full within two months after the confirmation, interest will be imposed on the unpaid amount "from the date of confirmation ... at the same rate" as provided for unpaid general property taxes. N.J.S.A. 40:56-32. The taking of an appeal from an assessment does not affect the obligation of the owner of the benfited property to pay the assessment within two months of confirmation in order to stop the accruing of interest. The landowner must pay either principal or interest pending an appeal of his assessment. If he is successful in obtaining a reduction in his assessment, he is entitled to a refund of any amount paid in excess of the revised assessment.

In Mira the court did say that interest was due on an unpaid assessment at the same rate as imposed upon unpaid property taxes, "whether or not the governing body has authorized deferred payment of the assessment in installments." Mira, supra, 133 N.J.Super. at 443, 377 A.2d 378. However, the issue presented to the court was the correct date from which interest was to be paid when the original assessment is subsequently reduced by court order. The opinion does not indicate that the court either had to consider or actually did consider the rate of interest to be charged.

Whether this court must follow Mira with respect to the interest rate under N.J.S.A. 40:56-35 depends on whether the quoted passage from the opinion is judicial dictum or holding. "It is firmly established that dictum, while entitled to great weight, does not invoke the principle of stare decisis." Herschberg v. Taxation Div. Director, 2 N.J.Tax 121, 129 (Tax Ct.1981).

The court's holding was limited to answering the question of whether an assessment revised as a result of judicial review earns interest from the same date as the original assessment. The court answered in the affirmative, stating that the "essential considerations ... [were] the date payment of the assessment is required to be made or the obligation to pay interest if payment of the assessment is not made when due." Mira, supra, 133 N.J.Super. at 445, 377 A.2d 378. The court's statement with respect to the interest rate on installments was not necessary to the court's resolution of the narrow issue before it. The rate of interest to be charged when the installment provisions of N.J.S.A. 40:56-35 are adopted by a governing body was not before the court and the court's pronouncement on that point was dictum.

In reviewing a statement on the issue before it made by the former Court of Errors and Appeals, the Appellate Division in English v. Stokes Molded Products, Inc., 43 N.J.Super. 68, 127 A.2d 591 (App.Div.1956), said:

This statement was not necessary to the decision of the court, but nevertheless, as a deliberate expression of opinion on a question directly...