Plaintiffs, 9 W Contractors, Inc. and Virginia Faust (taxpayers) moved to have judgments entered for the tax years 1976 and 1977 pursuant to N.J.S.A. 54:2-43 (Freeze Act) on the basis of judgments entered for 1975. Secondly taxpayers seek an order compelling the defendant Englewood Cliffs Borough (borough) to refund to the taxpayers excess taxes paid together with interest for the tax years 1973 through 1977. The taxpayers' claim for interest is based on statutory and constitutional grounds and equitable principles. In regard to the latter it should be noted that the Tax Court is vested with the authority to make such findings and conclusions and to enter such orders as the equities of the matter may require by virtue of the equitable powers delegated to it in N.J.S.A. 2A:3A-4 which states: (a) "The Tax Court, in all causes within its jurisdiction, and subject to law, may grant legal and equitable relief so that all matters in controversy between the parties may be completely determined."
Taxpayers paid the entire tax for each year. With the exception of tax credits allowed in the amount of $3,134 no excess tax payments were refunded nor was any interest paid by the borough. In December 1979 borough tendered payment of the excess taxes, without interest, but taxpayers refused such offer.
Borough did not contest the imposition of the Freeze Act to the 1976 and 1977 tax years nor did it deny that taxpayers are entitled to refunds in the total amount of $38,980.44 which sum includes refunds for 1976 and 1977.*fn1 It resists payment of pre-judgment interest claiming that such interest is not provided for by statute. Borough further argues that taxpayers are barred from raising the issue of pre-judgment interest under the "entire controversy" doctrine and laches. Lastly it argues that the constitutional arguments presented by taxpayers cannot prevail as taxpayers failed to notify the Attorney General of the State of New Jersey of such arguments pursuant to R. 4:28-4.
N.J.S.A. 54:2-43 (Freeze Act) provides that where a judgment final has been rendered by the Division of Tax Appeals such judgment shall be binding for the assessment year and the two succeeding years except where a change in value has occurred after the assessing date. The binding effect of the "freeze" ceases with the year immediately preceding the year in which a revaluation becomes effective.
The undisputed affidavit of taxpayers' expert appraiser clearly shows that no change in value occurred following the assessment. It is further undisputed that no revaluation became effective during any of the years in question. Accordingly, judgments will be entered for 1976 and 1977 in accordance with the 1975 judgment of the Division of Tax Appeals and said years will be included in the court's determination of taxpayers' second argument concerning interest.
Borough's interpretation of R. 4:28-4 with respect to taxpayers' constitutional argument is erroneous. It is only where the validity of a statute, executive order, franchise or constitutional provision of this state is questioned that the party raising the question is required to give notice of the pendency of the action to the Attorney General. Such is not the case here where the taxpayers do not attack a statute or a constitutional provision but, to the contrary, seek the payment of interest on the basis of statutory and constitutional grounds. Accordingly, I find that R. 4:28-4 has no application here.
The course of litigation surrounding these matters was lengthy and involved and was finally concluded on January 16, 1979 when taxpayers' Petition for Certification was denied by the Supreme Court. Counsel for taxpayers notified borough of such denial on January 23, 1979. According to taxpayers borough did not consent to a form of judgment implementing the decision of the Appellate Division until July 23, 1979. On August 8, 1979 and again on September 12, 1979 taxpayers requested borough to refund the excess taxes paid together with interest. On December 31, 1979 taxpayers received vouchers from borough which made no provision for payment of interest. Taxpayers did not execute the vouchers and on January 18, 1980 demanded vouchers for both refunds and interest. No such vouchers having been received, taxpayers brought this motion.
In addressing the "entire controversy" doctrine Judge Pressler in Wm. Blanchard Co. v. Beach Concrete Co., Inc., 150 N.J. Super. 277, 293, 375 A.2d 675 (App.Div.1977) observed that, as a practical matter, the doctrine cannot be dealt with on an a priori basis and must be applied empirically.
That it to say, an evaluation must be made of each potential component of a particular controversy to determine the likely consequences of the omission of that component from the action and its reservation for litigation another day. If those consequences are likely to mean that the litigants in the action as framed will, after final judgment therein is entered, be likely to have to engage in additional litigation in order to conclusively dispose of their respective bundles of rights and liabilities which derive from a single transaction or related series of transactions, then the omitted component must be regarded as constituting an element of the minimum mandatory unit of litigation. That result must obtain whether or not that component constitutes either an independent cause of action by technical common-law definition or an independent claim which, in the abstract, is separately adjudicable.
The point, of course, is that a component of the controversy may not be unfairly withheld, see State v. Gregory, supra, 66 N.J. at 518, and a withholding is by definition unfair if its effect is to render the pending litigation merely one inning of the whole ball game.
Under the circumstances here present I do not view taxpayers' claim for interest as being barred by the entire controversy doctrine. Certainly the interest claim, even if viewed as a component part of the controversy was not unfairly withheld and certainly its effect cannot be deemed to render taxpayers' claim for a tax reduction as being "merely one inning of the whole ball game". In that connection it must be observed that until a judgment final was entered for 1975, taxpayers could not seek the application of the Freeze Act as to 1976 and 1977 and thus no claim for interest could even have been made as to those years. A contrary finding would require the appealing taxpayer to frame a complaint on the basis that if a reduction is granted and judgment entered thereon and if the Freeze Act applied to the two succeeding years then interest should be allowed thereon. A complaint based on such hypotheses is not contemplated by the doctrine nor is it within its spirit and intent.
Borough's dependence on the defense of laches to taxpayers' claim must also fail. Laches involves more than mere delay, mere lapse of time. There must be delay for a length of time which, unexplained and unexcused, is unreasonable under the circumstances and has been prejudicial to the other party. See West Jersey Title &c. Co. v. Industrial Trust Co., 27 N.J. 144, 141 A.2d 782 (1958).
Here, even if there was a delay by taxpayers in pursuing their claim-and the facts support no such finding-it cannot be said that any such delay prejudiced the borough. Indeed, the facts might suggest that a contrary argument could be reasonably made.
Pursuant to N.J.S.A. 54:3-27.2 and general principles of constitutional due process, it is taxpayers' position that they are entitled to interest on the excess tax payments as follows:
(1) Eight per cent (8%) per annum from the date of payment until January 31, 1978;
(2) Five per cent (5%) per annum from February 1, 1978, until 60 days following the final judgment (the denial of movants' Petition for Certification by the Supreme Court), or March 16, 1979;
(3) The prevailing commercial rate-or the average of prevailing rates-from March 16, 1979 ...