Wayne Tp. in Passaic County v. Ricmin, Inc.

• Decision Date: 12 July 1973
• Citation: 124 N.J.Super. 509,308 A.2d 27
• Parties: TOWNSHIP OF WAYNE IN the COUNTY OF PASSAIC, a municipal corporation of the State of New Jersey, Plaintiff-Respondent. v. RICMIN, INC., et al., Defendant-Appellant. Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 509

124 N.J.Super. 509

308 A.2d 27

TOWNSHIP OF WAYNE IN the COUNTY OF PASSAIC, a municipal corporation of the State of New Jersey, Plaintiff-Respondent. v. RICMIN, INC., et al., Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued June 4, 1973.

Decided July 12, 1973.

Gary L. Falkin, Newark, for defendant-appellant (Beckerman, Franzblau & Cohen, Newark, attys., S. M. Chris Franzblau and Gary L. Falkin, Newark, of counsel and on the brief).

Michael K. Diamond, Paterson, for plaintiff-respondent.

Before Judges FRITZ, LYNCH and TRAUTWEIN.

The opinion of the court was delivered by

LYNCH, J.A.D.

In this condemnation case the complaint was filed before the enactment of the Eminent Domain Act of 1971 (N.J.S.A. 20:3--1 et seq.) which became effective December 21, 1971. The issue before us is whether, under that statute, interest on the ultimate award of $170,000 runs, as defendant contends, from the time of filing the complaint on July 27, 1970 to the time plaintiff deposited $140,000 with the clerk of the court on April 14, 1972 (pursuant to N.J.S.A. 20:3--18). ^* The trial court held that defendant was entitled to interest only on $30,000, representing the difference between the deposit and the ultimate award, from the date of the deposit until the date of closing.

Defendant relies on N.J.S.A. 20:3--31, which reads:

Interest as set by the court upon the amount of compensation determined to be payable hereunder shall be paid by the condemnor from the date of the commencement of the action until the date of payment of the compensation; provided, however, that there shall be excluded from the amount upon which interest shall be calculated, all moneys deposited pursuant to Article V hereof; ¹

and provided, further, that interest payable hereunder shall be subject to abatement for rents and profits derived from the property by the condemnee during the period for which interest is payable hereunder, and/or for the fair rental value of such property or any portion thereof occupied by the condemnee during such period.

The argument of defendant settles upon a literal reading of the first clause of the foregoing section of the new statute:

Interest as set by the court upon the amount of compensation determined to be payable hereunder shall be paid by the condemnor From the date of the commencement of the action until the date of payment of the compensation; * * *. (Emphasis added)

We disagree with such a construction of the statute, as the clause upon which defendant relies is taken out of context. In fact, it ignores the very next clause in that section, which expressly repudiates defendant's construction. That clause reads, 'provided, however, that there Shall be excluded from the amount upon which interest shall be calculated, all moneys deposited pursuant to Article V hereof; * * *' i.e., N.J.S.A. 20:3--18. (Emphasis added). The amount upon which defendant calculates interest is $170,000 (the amount of the ultimate award) Without excluding the $140,000 deposit made by plaintiff pursuant to section 18. True, defendant calculates interest on $140,000 from the date of the filing of the complaint only to the date of the deposit, and upon the remaining $30,000 thereafter. But the statue mandates that the $140,000 must be excluded entirely as a base upon which interest is to be calculated.

In a context, as here, where the condemnor has made such a deposit, and the ultimate award is greater, interest is awarded only on The excess. N.J.S.A. 20:3--23 reads, so far as pertinent:

Withdrawal of funds

Upon application of any condemnee, * * * the court may direct that the estimated compensation on deposit * * * be paid to the person or persons entitled thereto, on account of the compensation to which they may be entitled in the action; * * * and provided further, that if the award or judgment fixing such compensation be More than the amount deposited, condemnor shall pay the Excess to the condemnee entitled thereto, With interest at a rate to be fixed by the court From the date of the deposit * * *. (Emphasis added)

Thus, section 23 of the statute is tailored exactly to the facts before us. The condemnee withdrew the deposit of $140,000. The award was more than the deposit. The excess was $30,000. It is on that sum that interest is to be paid. And it is to be calculated from the date of deposit and not from the filing of the complaint, as defendant contends.

Further, defendant's construction of the staute would disavow the traditional concept of just what 'interest' is. It is an exaction for Past due obligations and in essence is in the nature of a penalty. It is compensation For delay in payment. Burlington County v. Martin, 128 N.J.L. 203, 205, 25 A.2d 17 (Sup.Ct.1942), aff'd 129 N.J.L. 92, 28 A.2d 116 (E. & A. 1942); Fidelity Mutual Life Ins. Co. v. Wilkes-Barre and Hazleton R. Co., 98 N.J.L. 507, 120 A. 734 (E. & A. 1913). As said in Consolidated Police, etc., Pension Fund v. Passaic, 23 N.J. 645, 653, 130 A.2d 377, 382 (1957): 'The law imposes a duty to pay interest from the time payment of a principal is Due, or from the Time of the wrongful detention.' (Emphasis added). Absent a statute, interest is not allowable on an indebtedness except when the debtor is in default. 47 C.J.S. Interest § 26 at 38 (1946). And when the debtor is not in default interest is not allowed. Cf. State v. Pia Star Realty Co., Inc., 118 N.J.Super. 55, 64, 285 A.2d 581 (Law Div.1971).

In a condemnation case, whether interest must be paid ordinarily depends on whether the condemnor goes into possession without full payment and the owner is deprived of his property. Interest is a means of measuring the value of the deprivation of the use of property. 3 Nichols, Eminent Domain, § 8.63 at 160 (1965). It is not until the condemnor goes into actual possession, or takes title, that the owner is deprived of his property or its use and profits. State v. Angleton, 89 N.J.Super. 85, 213 A.2d 764 (App.Div.1965); State, by State Highway Commissioner v. Hankins, 63 N.J.Super. 326, 164 A.2d 615 (App.Div.1960). It is only when the condemnee is thus 'deprived' that the debt is 'due.'

The condemnee here was not deprived of the use or title of its property at the time of the 'commencement of the action,' in terms of N.J.S.A. 20:3--31. Therefore, there was no debt owed by the condemnor at that time; similarly, there was no 'default' by it and there was no necessity for measuring the value of the 'deprivation of the use of the property' (interest). The result would be different--and § 31 would be literally applied to compel calculation of interest from the filing of the complaint--if, coincident with such filing, the declaration of taking (§ 17) was also filed.

It is true that the Elgislature might have, by the new act of 1971, changed the foregoing concept of interest as it thus existed. But if a change in common law is to be effectuated, the legislative intent to do so must be clearly and plainly expressed. Blackman v. Iles, 4 N.J. 82, 89, 71 A.2d 633 (1950). Statutes are to be construed in reference to principles of the common law, and the law infers that a statute did not intend to make any alteration to common law other than what is specified. State v. Western Union Telegraph Co., 12 N.J. 468, 486, 97 A.2d 480 (1953), app. dism. 346 U.S. 869 74 S.Ct. 124, 98 L.Ed. 379 (1953). There is no clear language in the 1971 act which would effect such change in the common law concept of interest so that it should begin to run Before the 'debt' of the condemnor was due, I.e., at the commencement of the action. What was specified was that, upon the filing of the declaration of taking, the condemnor 'shall deposit the amount of such estimated compensation with the clerk of the court.' N.J.S.A. 20:3--18. Upon service of a copy of the declaration, 'the right to the immediate and exclusive possession and title to the property * * * shall vest in the condemnor * * *.' N.J.S.A. 20:3--19. Then the condemnee is 'deprived' of his property. And, if the ultimate...