On certified appeal from the Law Division to the Appellate Division of the Superior Court.
For modification -- Chief Justice Vanderbilt, and Justices Heher, Burling and Jacobs. For reversal -- Justice Weintraub. The opinion of the court was delivered by Heher, J.
On April 1, 1955 the defendant City of Passaic forwarded to the plaintiff Consolidated Police and Firemen's Pension Fund Commission, by mail, its check for $415,508.96, the aggregate principal payments then due to the Commission under L. 1952, c. 358, N.J.S.A. 43:16-1 et seq., approved June 19, 1952, whereby all existing pension funds created by L. 1920, c. 160 and chapter 16 of Title 43 of the Revised Statutes were consolidated and placed under the administrative control and jurisdiction of the plaintiff thereby established as a "State Commission," as of July 1, 1953; and the question at issue in this proceeding is whether in the particular circumstances the plaintiff Commission may now have interest of $22,411.57 allegedly accrued on the several principal sums making up the aggregate, that is to say, $90,038.39, "called for" July 1, 1953 under section 3(b) and (c) of the Consolidated Act of 1952, N.J.S.A. 43:16-5(b) and (c); $107,555.72, January 1, 1954; $109,796.62, July 1, 1954; and $108,118.23, January 1, 1955.
The issue was submitted to the Superior Court on a stipulation of facts and cross-motions for summary judgment; and the holding was that "(a)cceptance of the principal debt" by the Commission "extinguished its claim for interest." The case is here by our certification of the Commission's pending appeal to the Appellate Division from the consequent judgment in favor of the city.
The city refused compliance with the Commission's demand for the payment of the first of the series of contributions to the consolidated fund thus provided for in the act of 1952, as of July 1, 1953, on the ground that certain provisions of the act, N.J.S.A. 43:16-5(b)(2) and (b)(3) and 43:16-5(c), were unconstitutional; and shortly thereafter the city brought a proceeding in the Superior Court to have the act declared void as contrary to the State's organic law, but in the end the challenged provisions were sustained. City of Passaic v. Consolidated Police and Firemen's Pension Fund Commission, 18 N.J. 137 (1955). The opinion of this court was delivered March 28, 1955. As just said, the city on April 1 ensuing mailed to the Commission its check for the total of the four assessed contributions. On April 7 following, this court's mandate issued pursuant to R.R. 1:9-1; and by letter dated that day, the day of the deposit of the city's check for collection, the Attorney-General advised the city's treasurer that the Commission had received the check for $415,508.96, "the principal amount of the deficit installments, the employers contributions and administrative fees due from the City to the fund from July 1, 1953 as detailed" therein, but "since these payments were not made on the dates due, despite the fact that demand was made therefor, lawful interest at the rate of 6% per annum became due thereon and the City is obligated to pay such interest to the Fund." The interest claimed was itemized; and demand for payment was made.
But it was stipulated in the Law Division of the Superior Court, July 3, 1956, that the contributions were "called for" on the given dates; that when the Commission submitted a statement of the "monetary obligations" of the city under the statute, the city advised the Commission of its constitutional challenge, and thereafter, in October 1953, the city "in good faith, instituted suit * * * to have the statute declared unconstitutional and void, and prosecuted said action with all reasonable diligence and dispatch"; that on April 1, 1955, following the judgment of this court on the prior March 28, "defendant remitted to plaintiff its check
for $415,508.96 in full payment of principal on all installments then due," and "Said check was accepted by the plaintiff"; that "no demand for interest on any of the" given "installments was made until April 7, 1955," but the Commission "contends that it is entitled to interest on the various payments, as follows: (a) On the July 1, 1953 payment -- from April 1, 1954 to April 1, 1955; (b) On the January 1, 1954 payment -- from April 1, 1954 to April 1, 1955; (c) On the July 1, 1954 payment -- from July 1, 1954 to April 1, 1955."
And by an order entered November 9, 1956 in the Appellate Division, after appeal taken, the record on appeal was "enlarged" to include an acknowledgment that the "check for $415,508.96 remitted by the City * * * to the plaintiff on April 1, 1955 was received by the plaintiff on April 4, 1955, was deposited for collection on April 7, 1955 and was thereafter honored"; and also that "No demand for interest on any of the installments was made by plaintiff until it set forth said demand in a letter dated April 7, 1955, which letter was not received by defendant until April 8, 1955 or thereafter."
It developed after further inquiry following the interrogation of counsel on the oral argument that on March 23, 1955 the Commission, by letter addressed to the city's treasurer, directed "attention" to "item(s) billed January 1, 1955, due and payable on or before March 31, 1955, which our records indicate remain unpaid as of this date," the "4th semi-annual deficit installment" and "5% of payroll for six month period ended December 31, 1954 (Mun. Share)," aggregating $108,118.23, "as a reminder to enable you to meet the dead-line date" and notice that "On April 1, 1955, outstanding items will be subject to an interest penalty of 6%." A like letter was dispatched to all employers similarly circumstanced.
And it was then also shown that it had been the "policy" of the Commission to allow "grace periods" to the employer units for "a reasonable time"; that the Commission's minutes ...