On petition for rehearing.
For denying petition -- Chief Justice Vanderbilt, and Justices Wachenfeld, Burling, Jacobs and Brennan. Opposed -- Justices Heher and Oliphant.
[16 NJ Page 48] In this matter the court recently filed its opinion expressly overruling Mills &c. Co. v. Hegeman-Harris Co., 94 N.J. Eq. 802 (E. & A. 1923). See 15 N.J. 418
(1954). The respondent, by petition for rehearing, seeks a determination that the overruling is to have prospective rather than retrospective application.
Our courts have adhered to the prevailing common-law doctrine that the overruling of a judicial decision is retrospective in nature. See Fox v. Snow, 6 N.J. 12, 14 (1950); Ross v. Board of Chosen Freeholders of Hudson County, 90 N.J.L. 522, 527 (E. & A. 1917). However, in the well-known companion cases of Montana Horse Products Co. v. Great Northern Ry. Co., 91 Mont. 194, 7 P. 2 d 919 (1932) and Sunburst Oil & Refining Co. v. Great Northern Ry. Co., 91 Mont. 216, 7 P. 2 d 927 (1932), the Montana Supreme Court allowed recovery on the basis of an earlier decision which it then proceeded to overrule prospectively; and on certiorari the United States Supreme Court in an opinion delivered by Justice Cardozo held that this action did not violate any provision of the Federal Constitution. See Great Northern R. Co. v. Sunburst Oil & Ref. Co., 287 U.S. 358, 53 S. Ct. 145, 77 L. Ed. 360 (1932). Since then there has been much written on the issue of whether the overruling of a prior decision upon which the litigant has guided his conduct should not justly be confined to future transactions. Cf. Note, The Effect of Overruled and Overruling Decisions on Intervening Transactions, 47 Harv. L. Rev. 1403 (1934) with Stare Decisis -- The Montana Doctrine, 13 Mont. L. Rev. 74 (1952). See von Moschzisker, Stare Decisis in Courts of Last Resort, 37 Harv. L. Rev. 409, 426 (1924); Justice Cardozo in Hall, Selected Writings of Benjamin Nathan Cardozo, p. 36 (1947). However, we need not concern ourselves with the conflicting social and individual considerations which have been advanced since we are satisfied that the respondent is in no position to assert reliance on the overruled decision.
In 1934 the Court of Errors and Appeals in St. Michael's Orphan Asylum and Industrial School of Hopewell v. Conneen Constr. Co., 114 N.J. Eq. 276 (Ch. 1933), affirmed 115 N.J. Eq. 334 (E. & A. 1934), largely nullified the decision in Hegeman-Harris. After Conneen was decided no
one could reasonably assert that Hegeman-Harris remained wholly unimpaired. Indeed, in Noland Co., Inc. v. Chelsea Housing Corp., 64 N.J.L.J. 469 (1941), United States District Court Judge Avis took the position that Hegeman-Harris had been overruled by Coneen, and although the Circuit Court of Appeals disagreed with him (128 F.2d 872 (C.C.A. 3 1942)) no appellate state decision ever reaffirmed Hegeman-Harris. Under the circumstances it seems entirely evident that after Conneen there existed no clear or settled construction of the pertinent provision of the Mechanics' Lien Law upon which reliance could justifiably be placed. The record contains nothing whatever to suggest that the respondent actually disregarded the timely stop notices served upon it by the materialmen and made later payment to the contractor in continued, though mistaken, reliance upon Hegeman-Harris; in any event, we consider that the retrospective application of the overruling of Hegeman-Harris, in the instant matter, does no injustice to the respondent or any others similarly situated.
The petition for rehearing ...