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Serkin v. Township of Ocean

Decided: February 8, 1983.

LEWIS A. SERKIN, INDIVIDUALLY AND AS REPRESENTATIVE OF ALL PROPERTY OWNERS AFFECTED BY SPECIAL ASSESSMENT PURSUANT TO ORDINANCE # 1079, PLAINTIFF,
v.
TOWNSHIP OF OCEAN (MONMOUTH COUNTY), A MUNICIPAL CORPORATION, AND MARTIN L. BAILEY, COLLECTOR OF TAXES, DEFENDANTS. HUXLEY HOLDING COMPANY, PLAINTIFF, V. THE TOWNSHIP OF OCEAN, DEFENDANT. J.R.H. ELECTRICAL-MECHANICAL CONTRACTING CORP., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF, V. THE TOWNSHIP OF OCEAN, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



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

Rimm

Plaintiffs, Huxley Holding Co. (Huxley), J.R.H. Electrical-Mechanical Contracting Corp. (J.R.H.) and Lewis A. Serkin, individually and as a representative of all property owners affected by special assessments pursuant to ordinance no. 1079 (Serkin), each brought an action challenging the amount of interest to be charged on installment payments of assessments placed on their properties following certain local improvements.*fn1 The action brought by Serkin was certified as a class action, and the three matters were consolidated for trial. Following the order for consolidation and the pretrial conference the matters were submitted to the court for disposition on stipulated facts. The court must decide whether interest on the installment payment of assessments for local improvements is "legal interest" under N.J.S.A. 40:56-35 or the rate "as may be imposed upon unpaid taxes" in accordance with N.J.S.A. 40:56-32.

The parties stipulated that Ocean Township properly passed ordinance no. 1079 providing for the improvement of various streets abutting the plaintiffs' properties. The ordinance authorized the issuance of bonds in an aggregate amount not to exceed $539,000. Section 7.c. of the ordinance provided as follows:

That the number of annual installments within which the special assessments to be levied on the lots and parcels of real estate benefited by the construction of said improvements described in Section 1 hereof is ten.

The ordinance also authorized the issuance of bond anticipation assessment notes in amounts to be determined by subsequent resolutions of township council.

Defendant completed the improvements and the assessor submitted a revised report on October 30, 1981 fixing the

assessment for each parcel of real estate affected by the improvements. The report indicated that the total costs assessed under the ordinance were $525,753.13 as follows:

Construction Costs $407,994.56

Miscellaneous Costs

Bond Sale 9,010.62

Interest*fn2 51,169.89

Engineering 50,765.26

Legal, Advertising and other 6,812.80 117,758.57

--------- ------------

Total Costs $525,753.13

The assessor's report was accepted by resolution of the governing body on November 10, 1981. The resolution also provided for each affected property owner to have two months from the date of the confirmation of the assessments to pay the whole assessment without interest or to pay the assessment in ten equal yearly installments with legal interest. The tax collector then sent a bill to each affected property owner with a covering letter stating that the entire assessment would be payable in full without interest on or before January 10, 1982. The bill also set forth ten equal annual payments in accordance with the provisions of ordinance no. 1079.

Defendant charges interest at the rate of 8% a year on the assessments under $1,500 and at the rate of 18% a year on the assessments over $1,500. In charging 8% and 18% interest on the assessments, depending on the amount of each assessment, defendant relies on two statutes. N.J.S.A. 40:56-32 provides:

When any assessment shall not be paid within two months after the date of confirmation thereof interest thereon from the date of confirmation shall be imposed at the same rate as may be imposed upon unpaid taxes in the municipality.

Since plaintiffs did not pay their assessments within two months after the date of confirmation, interest was imposed in accordance with N.J.S.A. 54:4-67, which provides in pertinent part as follows:

The governing body may also fix the rate of interest to be charged for the nonpayment of taxes or assessments on or before the date when they would become delinquent, and may provide that no interest shall be charged if payment of any installment is made within the tenth calendar day following the date upon which the same became payable. The rate so fixed shall not exceed 8% per annum on the first $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00, to be calculated from the date the tax was payable until the date of actual payment.

Defendant pays interest at the rate of 9% a year on the improvement bonds, as set forth in a resolution dated March 16, 1981.

Plaintiffs argue that the ordinance adopted by the township is authorized by N.J.S.A. 40:56-35 which itself contains a provision for ...


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