State by State Highway Commissioner v. Seaway, Inc.

• Decision Date: 21 February 1966
• Docket Number: No. A--37,A--37
• Citation: 217 A.2d 313,46 N.J. 376
• Parties: STATE of New Jersey, by the STATE HIGHWAY COMMISSIONER, Plaintiff-Appellant, v. SEAWAY, INC., a corporation of New Jersey, et al., Defendants-Respondents.
• Court: New Jersey Supreme Court

Page 376

46 N.J. 376

217 A.2d 313

STATE of New Jersey, by the STATE HIGHWAY COMMISSIONER Plaintiff-Appellant, v. SEAWAY, INC., a corporation of New Jersey, et al Defendants-Respondents.

No. A--37.

Supreme Court of New Jersey.

Argued Oct. 26, 1965.

Decided Feb. 21, 1966.

William J. McCormack, Deputy Atty. Gen., for appellant (Arthur J. Sills, Atty. Gen., attorney, Alan B. Handler, Deputy Atty. Gen., of counsel, William J. McCormack, Trenton, on the brief).

John Warren, Jr., Red Bank, for respondents (Parsons, Canzona, Blair & Warren, Red Bank, attorneys, William G. Bassler, on the brief, John Warren, Jr., Red Bank, of counsel).

The opinion of the court was delivered by

SCHETTINO, J.

Plaintiff appealed to the Appellate Division from a judgment of the Superior Court, Law Division awarding interest at four percent to Seaway, Inc. on a condemnation commissioners' award of $24,000 from June 15, 1962, the day the plaintiff took possession of Seaway's property, until July 2, 1964, the date stipulated by the parties as the date the plaintiff was ready to make payment. The rate of interest is not at issue on this appeal. Prior to argument in the Appellate Division, we certified the cause. R.R. 1:10--1(a).

Seaway was the owner of property on Woodbridge Avenue and U.S. Route #1 in Edison Township. Desirous of widening a portion of the highway, the plaintiff on April 15, 1962 instituted condemnation proceedings in Superior Court in accordance with N.J.S.A. 20:1--1 et seq., by filing a complaint and obtaining an order to show cause. Condemnation commissioners were appointed by the court on May 14, 1962. Due to several adjournments granted upon plaintiff's request, the commissioners did not hold a hearing until December 26, 1963. On January 3, 1964 the commissioners filed their report, awarding Seaway $24,000.00 for the property taken 'including the damage, if any, resulting from the taking, to any remaining property, as of the date of the commencement of this action (April 15, 1962) * * *.' The report made no award of interest. No appeal was taken by either party from this award. N.J.S.A. 20:1--16; R.R. 4:92--6.

Meanwhile, the State Highway Department entered possession of Seaway's property on June 15, 1962 pursuant to authority granted it by L.1927, c. 319, sec. 111, p. 725, as amended by L.1929, c. 221, sec. 1, p. 413; N.J.S.A. 27:7--22. This statute (prior to its amendment, L.1965, c. 79, sec. 1) permitted the State Highway Department to enter upon and take property in advance of making compensation where it could not acquire the property by agreement with the owner. Unlike the procedure of the recent amendment L.1965, c. 79 and of N.J.S.A. 20:1--12, the State Highway Commissioner was not required to deposit a fund in court prior to his entry upon the land. ¹

On June 19, 1964 (more than 5 months after the Commissioners filed their report) Seaway moved before the Superior Court, Law Division, for an order compelling payment of the award with interest from June 15, 1962, the date the State took possession of Seaway's property, until the day that the State would make payment to Seaway. The motion in respect to the question of interest was continued until October 1, 1964 at which time the court awarded interest on the award at 4%, from the date of possession until July 2, 1964, the date stipulated by the parties as the date for payment of interest, as it was on this date that the plaintiff notified Seaway that payment would be made upon the clearance by Seaway of its title. ² The plaintiff seeks a reversal of this order on the ground that interest should have been one of many factors considered by the commissioners in making their condemnation award, and that, absent a timely appeal (N.J.S.A. 20:1--16; R.R. 4:92--6), the Superior Court had no jurisdiction to grant an award of interest inasmuch as such a grant would be no more than a review of the commissioners' award.

I

We first consider the plaintiff's contention that interest is encompassed in the award of damages by the commissioners. Although the New Jersey Constitution of 1776 contained no provision respecting compensation for the taking of private property for public use, the Constitution of 1844 in Art. I, par. 16 provided that 'Private property shall not be taken for public use, without just compensation.' In Metler v. Easton and Amboy Railroad Co., 37 N.J.L. 222, 224--225 (Sup.Ct.1874), it was held that interest was allowable on a condemnation award not as damages for the taking, a part of the commissioners' award, but rather as a means of meeting the 'just compensation which, by the (C)onstitution, must precede the taking of the property of a private citizen for public uses.' See North Hudson County R.R. Co. v. Booraem, 28 N.J.Eq. 450 (E. & A. 1877). As stated in Jahr, Eminent Domain, Valuation and Procedure (1953) sec. 176, p. 290:

'When compensation is not paid coincidentally with the taking, it must include some sum in addition to the bare value of the property on the taking day, for delay in making payment, so that compensation may be just. Without the addition of some sum, the requirement of just compensation constitutionally guaranteed would not be met.'

See, I Orgel, Valuation under Eminent Domain (1953) Sec. 5; Nichols, Eminent Domain (1964) sec. 27.25. See Annotation, 'Interest On Amount of Damage, Eminent domain,' 96 A.L.R. 150, 111 A.L.R. 1304, 36 A.L.R.2d 337.

The implementation of this constitutional mandate was set forth by this Court in New Jersey Highway Authority v. Ellis, 24 N.J. 1, 7, 130 A.2d 601, 604 (1957):

'Whether interest must be paid on the value of land taken in a condemnation proceeding Constitutionally depends on whether there is a lapse of time between the date of the actual taking of the property and the tender of or payment of the value of the property so taken. The amount of interest and when it should be paid in turn depends on specific provisions with respect to interest in a statute or where there is no such provision then on general equitable principles.' (Emphasis added.)

Ellis thus provides that the State is constitutionally required to make an award of interest when there is a lapse of time between the day of actual taking of the property and the date of payment for that taking. This requirement is not based upon any equitable principles, nor upon a theory that the owner must be reimbursed for the income he might have obtained had he remained in possession of his property. Rather, the Constitution demands that the condemnee receive interest as a part of his right to just compensation. It is clear, then, that the State errs in contending that Seaway is not entitled to interest as of right.

II

As we understand the State's position, it is that interest is an element which should have been considered by the commissioners in making the award for Seaway's property and that if Seaway feels that interest was not considered, an appeal should have been brought in time. But, the Eminent Domain Act, N.J.S.A. 20:1--9, which describes the duties of condemnation commissioners specifically states:

'The commissioners shall take and subscribe an oath faithfully and impartially to examine the matter in question and make a true report according to the best of their skill and understanding. Thereafter they shall meet at the time and place appointed and proceed to view and examine the land or other property and Make a just and equitable appraisement of the value of the same, and an assessment of the amount to be paid by the plaintiff for the land or other property and demages as aforesaid, as of the date of the commencement of the action for condemnation. (L.1900, c. 53, sec. 6, p. 81, as am. by L.1931, c. 365, sec. 5, p. 894, as am. by L.1953, c. 20, p. 363, sec. 18.)' (Emphasis added.)

See, State by State Highway Commissioner v. Cooper, 24 N.J. 261, 268, 131 A.2d 756 (1957) cert. denied 355 U.S. 829, 78 S.Ct. 41, 2 L.Ed.2d 42 (1958). Cf. State by State Highway Commissioner v. Jones, 27 N.J. 257, 142 A.2d 232 (1958); New Jersey Turnpike Authority v. Jersey City, 36 N.J. 332, 341, 177 A.2d 539 (1962).

The order of reference in this case contained the statutory mandate that the commissioners were to:

'* * * Examine and appraise the Land and premises set forth in the complaint taken by the plaintiff, State of New Jersey, for public use for State Highway purposes as stated therein, and To fix the compensation to be paid therefore, Including the damage, if any, resulting from the taking, to any remaining property, as of the date of the commencement of this action, * * *.' (Emphasis added.)

The controlling fact is that the order of reference does not mention the element of interest. Thus, loss of interest is beyond the order of reference. Consistent therewith, the report of the commissioners in awarding Seaway $24,000 as a 'just and equitable appraisement of the value of the same (Seaway's) Property, including the damage * * *, to any remaining property, * * *.' did not encompass the item of interest. (Emphasis added.)

III

We next consider the time period for which the interest is to be awarded. Plaintiff contends that N.J.S.A. 20:1--13 limits an award of interest to a period from the date of the filing of the commissioners' award up to the date of payment by providing that 20 days after the commissioners' award, the condemnee may institute suit against the State to recover the award with interests and costs where there is a delay in payment and no satisfactory reason is given for the delay by the condemnor. See State by State Highway Commissioner v. Hankins, 63 N.J.Super. 326, 164 A.2d 615 (App.Div.1960). Although plaintiff agrees that interest must be awarded from January 3, 1964, the date of the filing of the commissioners' award, until July 2, 1964, it contends that this legislative limitation prohibits the Superior Court from awarding interest for the interim period--June 15, 1962 to January 3, 1964--even though...