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O''Neill v. Township of Washington

Decided: February 2, 1983.

THOMAS J. O'NEILL, TRUSTEE IN BANKRUPTCY FOR WASHINGTON TOWNSHIP RACQUET CLUB, INC., PLAINTIFF,
v.
TOWNSHIP OF WASHINGTON, DEFENDANT



Evers, J.t.c. (temporarily assigned).

Evers

This memorandum constitutes the opinion of the court concerning a motion for summary judgment filed by plaintiff Thomas J. O'Neill, trustee in bankruptcy for Washington Township Racquet Club, Inc. (taxpayer) against defendant Township of Washington (township) seeking a refund from township by reason of tax overpayments plus interest and costs, without right of offset for unpaid taxes for subsequent years. The issue involves the right of a municipality to set off against a tax refund due taxpayer, by an amount due to a taxing district for delinquent taxes. Questions concerning a bankruptcy action involving taxpayer and the effect of the federal Bankruptcy Act on this litigation must be addressed. Township has also raised several procedural objections and defenses. For reasons hereinafter stated, taxpayer's motion is granted.

Taxpayer filed tax appeals for 1978 and 1979. Taxpayer filed a chapter 11 petition in bankruptcy on May 19, 1980 in the United States Bankruptcy Court for the District of New Jersey.*fn1 On March 11, 1981 a Tax Court judgment, based upon a settlement, was entered. The settlement, and the judgment entered pursuant thereto, entitled taxpayer to a refund in the amount of $8,482.32 plus interest, for 1978 only. When judgment was entered taxpayer owed 1979 taxes in the amount of $3,986.57, including interest, and 1980 taxes in the amount of $38,500 excluding interest. By letter dated March 13, 1981 taxpayer's counsel requested the refund be remitted to taxpayer. Notwithstanding that demand, on March 25, 1981 township adopted a resolution authorizing the application of the refund and interest to the unpaid taxes due for 1979 and 1980. The resolution provided that

. . . the Municipal Treasurer is hereby authorized to make a check payable to the Township of Washington Tax Collector all [sic] the amount due to the Washington Township Racquet Club and to apply said amount to all past due taxes according to the following calculations.

1978 Refund of Taxes

Lot 1 Block 2202

Tax refund $8,482.32

Interest 1,010.78

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Total to be applied to unpaid taxes $9,493.10

Amount to be applied as follows:

Nov. 1, 1979 taxes $3,615.85

Interest due ...


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