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Borough of Wildwood Crest v. Smith

Decided: January 26, 1988.

BOROUGH OF WILDWOOD CREST, A MUNICIPAL CORPORATION, PLAINTIFF,
v.
CECILE O. SMITH; SADYE SILVER, HER HEIRS, DEVISEES AND PERSONAL REPRESENTATIVES AND ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST; MR. SADYE SILVER, HUSBAND OF SADYE SILVER; MONTEREY MOTEL, INC., A CORPORATION OF NEW JERSEY; THE MARINE NATIONAL BANK OF WILDWOOD, NEW JERSEY; UNION TRUST COMPANY OF WILDWOOD, NEW JERSEY; CREST SAVINGS AND LOAN ASSOCIATION; GEORGE M. JAMES AND MARY JAMES, HIS WIFE; MARINE NATIONAL BANK; AND UNITED STATES OF AMERICA, DEFENDANTS. MONTEREY MOTEL, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF, V. BOROUGH OF WILDWOOD CREST, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



Callinan, J.s.c.

Callinan

This case raises the question of whether interest on deficiencies in condemnation cases should be compounded. This matter arises from condemnees' application for the court to set an appropriate rate of interest to be applied to the award entered in this condemnation action. In the instant case, the Borough of Wildwood Crest commenced a condemnation action on February 7, 1983. On or about July 21, 1987 an order for judgment was entered in this matter awarding condemnee Cecile O. Smith the amount of $466,075.00, plus interest and condemnee Monterey Motel, Inc. the amount of $453,250.00, plus interest.

The Fifth Amendment provides that private property shall not be taken for public use without just compensation. "Just compensation" means the full monetary equivalent of the property taken. United States v. Reynolds, 397 U.S. 14, 15-16, 90 S. Ct. 803, 804-05, 25 L. Ed. 2d 12, 15, (1970), citing Monongahela Navigation Co. v. United States, 148 U.S. 312, 326, 13 S. Ct. 622, 626, 37 L. Ed. 463, 468 (1893).

That interest constitutes part of just compensation in a case of eminent domain cannot be seriously disputed. Seaboard Airlines Ry. v. U.S., 261 U.S. 299, 43 S. Ct. 354, 67 L. Ed. 664 (1923); Brooks-Scanlon Corp. v. U.S., 265 U.S. 106, 44 S. Ct. 471, 68 L. Ed. 934 (1924); Phelps v. U.S. 274 U.S. 341, 47 S. Ct. 611, 71 L. Ed. 1083 (1927).

In determining what would be an appropriate rate of interest, the court must be guided by Wayne Township and Passaic County v. Cassatly, 137 N.J. Super. 464, 475 (App.Div.1975),

where the Appellate Division said: "The rate of interest selected by the court is designed to compensate the landowner for the detention of monies owed him during the pendency of the action and put him in the same position he would have been in had he been paid in full on the date the action was commenced."

Testimony was taken in this matter and condemnees' expert Thomas E. Dewey, Jr., an investment banker, testified as to what a conservative investment of the awarded funds would return during the appropriate years. In connection with that testimony, Mr. Dewey offered two exhibits -- Exhibit A (D-1) and Exhibit B (D-2), although Exhibit A was somewhat higher than Exhibit B, this court is satisfied that the interest rates reflected in Exhibit B would be an appropriate rate of interest to follow in the within case.

We find that the range of interest rates for conservative investments was at least those stated in Exhibit B. In passing, we also observe that the rates of interest in Exhibit B coincide with the court-approved rate of interest during the interim period to apply to all amounts of money awarded successful litigants for detained funds.

In his calculations, Mr. Dewey compounded interest semi-annually. Plaintiff-condemnor offered no testimony but relied solely on the cross-examination of condemnee's expert.

The question that we need now decide is whether or not interest should be compounded annually. Counsel have been unable to find any New Jersey case law on the subject.

There is but a sparse treatment of the subject matter on the Federal level. We recognize that Federal lower court decisions are not binding on State trial courts. Nevertheless, judicial comity requires consideration and due respect be given to these decisions, especially on issues of constitutional dimension. State v. Norflett, 67 N.J. 268, 286 (1975); United Savings & Loan Ass'n v. Scruggs, 181 ...


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