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Board of Chosen Freeholders of Mercer County v. Szaferman

Decided: September 22, 1989.

THE BOARD OF CHOSEN FREEHOLDERS OF MERCER COUNTY, PLAINTIFF-RESPONDENT, AND CITIZENS AUTO REVOLT, PLAINTIFF-INTERVENOR-RESPONDENT,
v.
BARRY SZAFERMAN, COUNTY COUNSEL OF MERCER COUNTY AND DIRECTOR OF THE DEPARTMENT OF LAW OF MERCER COUNTY, DEFENDANT-RESPONDENT, AND AMERICAN INSURANCE ASSOCIATION; NATIONAL ASSOCIATION OF INDEPENDENT INSURERS; INDEPENDENT INSURANCE AGENTS OF NEW JERSEY, INC., AND CHARLES S. STULTS, III, DEFENDANTS-INTERVENORS-APPELLANTS



For reversal -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. For affirmance -- None.

Per Curiam

The issue on this appeal is whether a non-binding county referendum question concerning automobile-insurance regulation, proposed for inclusion on the forthcoming general-election ballot by plaintiff, the Board of Chosen Freeholders of Mercer County (and by the Boards of Freeholders of every other county), is authorized by N.J.S.A. 19:37-1 to be included on the ballot for submission to the voters. We hold that the proposed referendum question is not one pertaining to the "government or internal affairs" of a county and therefore must be excluded from the ballot.

I.

This action for declaratory relief was instituted by the Board of Chosen Freeholders of Mercer County (plaintiff or Freeholders) to determine the validity of the following proposed referendum question (the CAR referendum):

Shall the Mercer County Board of Chosen Freeholders adopt a resolution advising the legislature to roll back auto insurance rates by 20%, except to the extent that the resulting rate would be inadequate for an optimally efficient company; to abolish the JUA and the RMEC surcharge and replace them with a system enabling any driver meeting objective good driver criteria to buy insurance from the company of his choice, to establish an assigned risk plan solely for drivers who do not meet such criteria, and to require insurers to base

their rates solely on objective, risk-related criteria; to require the insurance industry to pay off the JUA deficit to the maximum extent permitted by the United States and New Jersey Constitutions; to repeal New Jersey's anti-trust exemption for the insurance industry, its anti-rebate law and its anti-group laws; and to establish a computerized auto insurance price-information system and a voluntary, non-profit consumer-operated corporation funded solely by its members to intervene before the insurance department.

Defendant Mercer County Counsel, acting pursuant to the County's Administrative Code, refused to approve a resolution of the Freeholders directing the referendum question to be placed on the ballot, concluding that the proposed question was not authorized by N.J.S.A. 19:37-1. Plaintiff-intervenor, Citizens Auto Revolt (CAR), obtained leave to intervene as a representative of New Jersey motorists seeking to place the CAR referendum question on the general election ballot in all twenty-one counties.

The Law Division granted the Freeholders' motion for summary judgment, emphasizing that the object of the referendum question was to determine voter sentiment on whether the Freeholders should adopt a resolution "advising the legislature" to take the action specified in the question. Observing that the Freeholders obviously possessed the authority to "advise" the legislature on the subject matter of the referendum, the court concluded that "if the legislature adheres [to] or follows the advice of the Freeholders * * * there will be significant impact on the County Government and its internal affairs." Accordingly, the Law Division sustained the validity of the CAR referendum.

After the County Counsel determined that he would not appeal the Law Division's decision, defendants-intervenors, American Insurance Association (AIA), National Association of Independent Insurers (NAII), Independent Insurance Agents of New Jersey, Inc. (IIA), and Charles Stults, III (defendants-intervenors), obtained leave to intervene in order to appeal the Law Division's ruling. The grant of intervention was based substantially on the public interest in the issue being litigated.

The Appellate Division expedited consideration of the appeal, and, after argument, affirmed the judgment of the Law Division by a divided court. The majority observed that "insurance costs constitute a pervasive item in county and local budgets," and concluded that there was a "rational and sufficient nexus between the question proposed by the referendum and the function and role of county government." The dissenting member concluded that the referendum question was unauthorized because the regulation of insurance is outside the sphere of county government.

Defendants-intervenors appealed to this Court as of right. R. 2:2-1(a)(2). Pending final disposition of the appeal, we issued an interim order staying the printing of ballots containing the CAR referendum question or one substantially similar thereto in all counties, on notice to the Attorney General and to the county clerks and boards of chosen freeholders of each county, granting all parties served with notice the opportunity to file briefs in this appeal. Cf. R. 4:28-4(a) and (d) (requiring notice to and authorizing intervention by governmental subdivision not party to action questioning validity of ordinance, regulation, or franchise thereof). In response to the Court's order, briefs or affidavits supporting the inclusion of the CAR referendum question on the general-election ballot have been submitted on behalf of the following counties: Bergen, Camden, Essex, Gloucester, Hudson, Middlesex, Passaic, Salem, and Union. In view of the time constraints involved in the printing of general-election ballots, we decide the case without oral argument. R. 2:11-1(b). We have, of course, reviewed the entire record, including the transcript of the oral argument in the Law Division, the briefs submitted in the Law Division and the Appellate Division, and the briefs submitted to this Court.

II.

N.J.S.A. 19:37-1 provides:

When the governing body of any municipality or of any county desires to ascertain the sentiment of the legal voters of the ...


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