[108 NJSuper Page 546] This case, in which plaintiff sues for legal fees, is before the court after remand from the Appellate Division pursuant to its opinion dated June 20, 1969. Therein the court reversed the trial judge's decision which had held that a written agreement, dated June 14, 1957, with reference to fees for services to be rendered in the United States Tax Court was unenforceable because made under duress. The trial court relegated plaintiff's right to recover
fees for such services*fn1 to a letter agreement of September 22, 1954 under which that court found that there was owing to plaintiff $6,000 and judgment was entered in his favor in that amount. In reversing, the Appellate Division directed that fees calculated pursuant to the 1957 agreement be awarded to plaintiff. Such calculation thereunder produces a fee owing to plaintiff in the amount of $72,200.*fn2 There remains the question herein considered as to whether interest will be allowed on that sum and, if so, from what date interest will run.
The agreements concern legal services to be rendered by plaintiff in the United States Tax Court with reference to federal tax difficulties confronting defendants and involving the tax years 1940 to 1952. Defendants had deposited $1,000,000 in cash with the I.R.S. to be applied toward any taxes and penalties which might subsequently have been found to be owing, and to be refunded to defendants to the extent not so applied. Eventually all claims by I.R.S. were settled on October 2, 1962, for the sum of $214,000. The balance of the $1,000,000 deposit -- $786,000 -- was refunded to defendants
on July 30, 1965. Thereafter interest in the amount of $425,000 was later paid to defendants.
The principal dispute between the parties on remand here involves the question as to whether plaintiff shall recover interest on the principal of $72,200 now found to be due under the 1957 agreement and, if so, the period of time for which interest shall be allowed.
Defendants' basic argument against allowance of interest is that it does not follow as a matter of law. They argue that it should not be allowed where there is a "bona fide dispute as to the validity of the claim"; that their contest of plaintiff's claim herein was bona fide and reasonable, as evidenced by the judgment of the trial court in finding the 1957 agreement unenforceable, and that the "equities" should preclude an award of interest. Defendants assert that at least until the time of the Appellate Division decision on June 20, 1969, they did not know the amount which was owed to plaintiff, and until the amount legally due was finally ascertained by that decision they should not be considered in default so as to be liable for interest.
Plaintiff contends that his claim is a liquidated one; that it became due at the time the fee was earned, namely, the date of the settlement of the Government's claim on October 2, 1962, and that interest on the principal sum owed should run from that date.
In the case of Stout v. Sutphen , 132 N.J. Eq. 583 (Ch. 1943), Vice-Chancellor Jayne stated the general rule with respect to payment of interest as follows:
Broadly stated, interest has been allowed by the courts of our State either by way of damages for the detention of a fund, or by way of profit earned or advantage attained. In the absence of a definitely controlling precedent, courts of equity are free to decide all questions pertaining to the allowance of interest according to the "plainest and simplest considerations of justice and fair dealing" in the given case [at 590]
It is also true that considerations of "fault" for nonpayment of a debt are indulged to ...