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State v. Pia Star Realty Co.

Decided: December 20, 1971.

STATE OF NEW JERSEY, BY THE COMMISSIONER OF TRANSPORTATION, PLAINTIFF,
v.
PIA STAR REALTY CO., INC. ET AL., DEFENDANTS



Schwartz, J.c.c. (temporarily assigned).

Schwartz

The State moves under authority of N.J.S.A. 27:7-22 for judgment for the excess ($87,200) deposit by it over a jury award in condemnation, and for interest from January 17, 1969 to date of receipt by plaintiff of such excess. In effect, the proceeding is one to settle the form of the judgment. (R. 4:42-1), together with the "hearing" provided for in said statute.

The State on January 1, 1968, pursuant to the statute, deposited $191,600 upon the filing of its declaration of taking. On January 17, 1969 there was a re-appraisal and the State deposited an additional sum of $475,600, making the total deposit $667,200. The owner withdrew these deposits

on January 2, 1968 and February 25, 1969, respectively. The jury verdict on October 7, 1971 was $580,000. It follows that the State was under-deposited from January 1, 1968 to January 17, 1969, and over-deposited from January 17, 1969 to date of verdict. Defendant's admit their liability for $87,200.

The State admits its liability for interest on the difference between the deposit and verdict while under-deposited, but contends that should the court award defendants interest on the difference between the original deposit of $191,600 and the jury award of $580,000, for the period January 2, 1968 to January 17, 1969, the court should also do equity to plaintiff and award it interest on the difference between the total deposit of $667,200 and the jury award of $580,000 for the period commencing January 17, 1969 to the date of payment by defendant. It is further argued that the State shall rely in the main upon the general equity powers of the court, as set forth in State v. Nordstrom , 54 N.J. 50 (1969); State, by State Highway Comm'r v. Seaway, Inc. , 46 N.J. 376 (1966), and N.J. Turnpike Authority v. Bayonne Barrel & Drum Corp. , 110 N.J. Super. 506 (Law Div. 1970), advanced as illustrations of equitable treatment afforded the property owner, and the State concludes with the query, "Should not the State receive the same treatment?"

It is conceded that the statute makes no provision for such interest to the State, but it is urged that "neither does it set forth any prohibition" and "evenhanded and fair administration of justice" requires exercise of such equity power.

Interest and return of an excess deposit are dealt with by the statute as follows:

If the amount of the award as finally determined by the court shall exceed the amount so deposited, the person or persons to whom the award is payable shall be entitled to recover from the department the difference between the amount of the deposit and the amount of the award, with interest at the rate of 6% per annum thereon from the date of the making of the deposit. If the amount of the award shall be less than the amount so deposited, the Clerk of the Superior

Court shall return the difference between the amount of the award and the deposit to the department unless the amount of the deposit or any part thereof shall have theretofore been distributed, in which event the court, upon application of the department and notice to all parties interested in the award and affording them an opportunity to be heard, shall enter judgment in favor of the department for such difference against the party or parties liable for the return thereof. [ L. 1966, c. 155, § 1; emphasis added]

The statute clearly entitles the owner to recover the amount of an under-deposit with interest at 6%. The concluding (emphasized) part of the act provides (as to over-deposit) only for the "difference" to be entered as a judgment, with no mention of interest.

In State, by State Highway Comm'r v. Seaway, Inc., supra , the court, in referring to N.J. Highway Authority v. Ellis , 24 N.J. 1, 7 (1957), said:

Ellis thus provides that the State is constitutionally required to make an award of interest where 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 on any equitable principles, nor upon the 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 to just compensation. [at 381; emphasis added]

In directing that the condemnee "shall be entitled to recover" interest for the period that the State is under-deposited the statute conforms to the prior case law and embodies the constitutional requirement of the right to interest. The constitutional right does not include the rate or period to be used in computation. These matters depend upon specific statutory provision, or where there is none, then on general equity principles. N.J. Highway Authority v. Ellis, supra , at 7. Here the statute fixes the right as well as the rate and period of computation.

The owner is thus entitled to the statutory rate of interest as a matter of right. It is not a matter (as plaintiff argues), that "Should the Court award defendant interest

* * * the Court should also do equity to plaintiff * * *." It is not equity but the statute which directs payment of this interest and, as pointed out, of constitutional dimension and its rationale is that interest to an owner in condemnation is not "interest eo nomine but a substitute or means of measuring the value of deprivation of the use of the property," and "interest has also been held to be a measure of severance damage." 3 Nichols, Eminent Domain (1965), § 8.63 at 160.

The State, being entitled to the excess deposit, "The court * * * shall enter judgment in favor of the department for such difference" (less offsetting credits to the owners). N.J.S.A. 27:7-22.

The remaining question is whether the State is entitled to interest on the excess $87,200 withdrawn by and to the use of the owners. I find no reported decision on this question in this State, nor any construing the act.

The State, conceding that the statute makes no provision for interest to it in these circumstances, argues that "neither does it set forth any prohibition." There are provisions, however, which appear significant clues to the legislative thinking on this question and of some aid in the treatment of the issue. The State relies solely on fairness and equal treatment as the measuring rod in terms of "equity." The statute in question provides that on the filing of the declaration and deposit of the estimated compensation, the State is entitled to exclusive possession, "it being the intent of this provision that the action to fix compensation * * * shall not delay the taking of possession * * *," and, in addition, provides that the owners are entitled to the fund deposited forthwith, on application and order of the Superior Court, "provided that each person shall have filed * * * a consent in writing that, in the event the award in the action should be ...


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