On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.
This is a class action brought in behalf of owners and operators of vending machines located in Edison Township challenging the validity of township ordinance no. 0.38-81 adopted November 12, 1981 which imposed a licensing fee of $40 annually upon each such machine. The trial judge held the ordinance invalid because the annual licensing fee of $40 was arbitrary and unreasonable and greatly exceeded the costs of regulation and any additional revenue factor reasonably or incidentally related to such regulatory costs. He held the ordinance invalid only to the extent the annual fee for each machine exceeded $15 and directed a refund to plaintiffs and other members of the class for the license periods of the years 1981-82 and 1982-83 of any sums paid in excess of that amount.
The township appeals contending that the judge erred in his ultimate conclusion as to the invalidity of the ordinance, that its licensing fee was not confiscatory, ergo it was reasonable, and that the judge erred in limiting its proofs to the calculations supportive of the $40 figure it had set forth in answers to interrogatories and to its calculations contained in a later report it furnished plaintiff after the court, in a pretrial status conference, had directed the township to furnish all the figures upon which it would rely to justify that figure. Lastly, it contends that when the court set a $15 limit to the licensing fee which could be charged it went beyond its judicial powers and "performed an act which the Legislature had delegated, under the statutes, to the municipalities, not to the court."
Plaintiffs cross-appeal contending the judge erred in holding that N.J.S.A. 40:52-1(d) and (g) and N.J.S.A. 40:52-2 give the township the power to license vending machines. They contend that the power to do so only springs from N.J.S.A. 40:48-2 and in such case the fee must be limited to the reasonable costs of regulation.
Ordinance no. 0.38-81 was enacted following the entry of an order on October 5, 1981 in a legal challenge to a prior ordinance which had set a graduated fee ranging from $15 to $30 per machine. The judge in that case declared the ordinance invalid as arbitrary and unreasonable in amount, determining that a fee of $10.27 per machine might be justified. The judgment was stayed for 60 days to permit the township to enact and adopt an ordinance setting a reasonable licensing fee.
In response, the township adopted the ordinance in question which imposed a fee of $40 per machine. Plaintiffs filed suit to invalidate the new ordinance and for a refund of the amounts paid for the licenses. A four day trial was held before another judge who concluded that the licensing power here utilized was granted under N.J.S.A. 40:52-1(d) and (g), and N.J.S.A. 40:52-2. The latter statute permits license fees enacted pursuant to the former statute to "be imposed for revenue." See Salomon v. Jersey City, 12 N.J. 379, 390 (1953). The Salomon court held, however, that such a license fee must nevertheless be reasonably related to regulatory costs and only incidentally provide revenue so as to avoid amounting to an unauthorized taxing measure. Ibid.
The proofs at the second trial, although different from those of the first suit, were hardly of a quality to justify a $40 per machine licensing charge, even assuming a reasonable and incidental revenue factor. The judge found that plaintiffs had sustained their burden of proving that the fee set by ordinance no. 0.38-81 was arbitrary and unreasonable and he declared the ordinance invalid. The judge factually determined that the regulatory costs of the township's Division of Health was acceptable at $4.35 per machine but found the testimony of the township supervisor of the Department of Licensing and Permits vague and confusing and his recitation of its policing and regulatory functions highly exaggerated. He found as a fact that the costs of that department's regulation per machine amounted to $2.58. Thus, the judge concluded that the proven
costs of both departments to regulate any one machine under the ordinance totaled only $6.93.
Since he determined that the licensing power was derived from N.J.S.A. 40:52-1(d) and (g) and a license fee could be imposed in such case for revenue reasonably related to regulatory costs under N.J.S.A. 40:52-2, he concluded that $15 was the maximum fee that could reasonably have been charged under a valid ordinance. He declared the ordinance invalid to the extent it charged a fee in excess of that amount. It cannot escape notice that the $40 fee here set by the township was a figure six times the proven regulatory costs. The trial judge viewed the figure as an impermissible attempt to tax the machines, a power not granted to the township by the Legislature. Gilbert v. Irvington, 20 N.J. 432, 436-437 (1956); Salomon v. Jersey City, 12 N.J. at 390.
Our review of the evidence convinces us that the legal conclusion of the judge that the power here exercised was derived from N.J.S.A. 40:52-1(d) and (g) and N.J.S.A. 40:52-2, rather than from N.J.S.A. 40:48-2, is correct. Equally, we are persuaded that his factual determinations are supported by sufficient credible evidence and require no appellate intervention. Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-484 (1974); State v. Johnson, 42 N.J. 146, 161-162 (1964). Accordingly, we affirm so much of the judgment entered May 27, 1983 as declares the ordinance invalid as arbitrary and unreasonable in setting an annual ...