On certification to the Superior Court, Appellate Division.
For affirmance in part and reversal in part -- Chief Justice Wilentz and Justices Clifford, Handler, O'Hern, Garibaldi and Stein. Opposed -- None.
This appeal primarily concerns the proper remedy to be invoked after a judicial determination that a municipal license fee is excessive. The trial court resolved the matter by determining the upper limit of what it found to be reasonable and directed a refund of the balance. On appeal, the Appellate Division, holding that a court should not establish a municipal fee, ordered a refund of the entire fee charged. We agree that only in the rarest of circumstances should a court set the fee schedule for a local governmental unit; however, we disagree that there must be a full refund to the licensee. Accordingly, we remand to the governing body to revise the subject licensing ordinance and to refund that portion of the fees collected that are in excess of the reasonable fees established.
The facts of the case are set forth in the reported opinion of the Appellate Division. Automatic Merchandising Council v. Township of Edison, 204 N.J. Super. 395 (1985). In brief, the case concerns an ordinance of the Township of Edison that sought to impose a forty dollar licensing fee for food-service vending machines. The trial court found the fee unreasonable based upon a finding that direct and indirect costs, plus a permissible revenue allowance, did not exceed $15 per machine. The court ordered a partial refund of $25 per machine, the amount in excess of the $15 figure. The Appellate Division affirmed the lower court's decision except that part providing a partial refund. It noted that "where a court invalidates a license fee ordinance as excessive it may not then set the proper fee because to do so would be an intrusion into the legislative prerogative." Id. at 405. The appellate panel remanded the case to the trial court for an order calculating the
sums due named plaintiffs and the members of the class, for a full refund of the fees paid.
The court below held, and we agree, that Edison is authorized to license these food-handling machines under the authority of N.J.S.A. 40:52-1 and -2. These statutes give municipalities general power to adopt and enforce ordinances that license and regulate certain trades and businesses, and to set licensing fees "which may be imposed for revenue." N.J.S.A. 40:52-2. Under the authority of these statutes there is no question that a municipality is not limited to the actual costs of such a regulatory program but may establish such fees for "revenue which may, at least within reasonable limits, exceed the regulatory costs." Salomon v. City of Jersey City, 12 N.J. 379, 390 (1953).
The test of reasonableness will vary according to:
(a) the effect upon the enterprise. See Gurland v. Town of Kearny, 128 N.J.L. 22, 25-26 (Sup.Ct.1942) ($300 fee for ice-cream-vendor licenses that equaled 30% of gross sales held invalid); American Grocery Co. v. Board of Comm'rs, 124 N.J.L. 293, 296-98 (Sup.Ct.1940), aff'd, 126 N.J.L. 367 (E. & A. 1941) (concession license fee of $500 for renting or leasing more than two concessions within market held reasonable in context of volume of business and standard of profit); Giant Tiger Corp. v. Board of Comm'rs, 122 N.J.L. 240, 243-46 (Sup.Ct. 1939) ($200 per food concession not confiscatory and thus valid in light of size and diversity of operation);
(b) fees charged in other municipalities. See Taxi's Inc. v. Borough of East Rutherford, 149 N.J. Super. 294, 300, 303 (Law Div.1977), aff'd, 164 N.J. Super. 160 (App.Div.1978) (comparing $5 fee imposed on taxis by Hasbrouck Heights and $50 fee in Hackensack with $500 fee for the first license and $200 fee for each additional license in East ...