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State v. Seaway Inc.

Decided: February 21, 1966.


For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Schettino, J.


[46 NJ Page 377] 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 No. 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.*fn1 [46 NJ Page 379] 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.*fn2 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.


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. 2 d. 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 (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 ...

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