Board of Chosen Freeholders v. Szaferman

Citations: 563 A.2d 1132; 117 N.J. 94; 1989 N.J. LEXIS 123

Court: Supreme Court of New Jersey; September 22, 1989; New Jersey; State Supreme Court

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The Supreme Court of New Jersey addressed the legality of a non-binding county referendum proposed by the Board of Chosen Freeholders of Mercer County regarding automobile insurance regulation. The court examined whether this referendum question, intended for the general-election ballot, falls under the authorization of N.J.S.A. 19:37-1. The court concluded that the proposed question does not relate to the "government or internal affairs" of a county and thus must be excluded from the ballot.

The Board of Chosen Freeholders of Mercer County filed an action for declaratory relief to validate a proposed referendum (the CAR referendum) concerning auto insurance rates. The referendum sought voter approval for a resolution advising the legislature to roll back auto insurance rates by 20%, abolish the Joint Underwriting Association (JUA) and the RMEC surcharge, establish a system for drivers to choose their insurers based on good driver criteria, create an assigned risk plan for non-qualifying drivers, and require insurers to base rates on objective risk-related criteria. It also aimed to address the JUA deficit, repeal anti-trust exemptions for the insurance industry, and establish a price-information system for auto insurance.

Mercer County Counsel refused to approve the resolution for the referendum, citing lack of authorization under state law (N.J.S.A. 19:37-1). Citizens Auto Revolt (CAR) intervened to represent New Jersey motorists in placing the referendum on the ballot. The Law Division ruled in favor of the Freeholders, affirming their authority to advise the legislature and recognizing the potential impact on county governance. After the County Counsel opted not to appeal, several insurance-related organizations intervened to appeal the decision, citing public interest.

The Appellate Division expedited the appeal, affirming the Law Division's ruling with a divided opinion. The majority found a significant connection between the referendum and county government functions, while the dissent argued that insurance regulation was beyond county jurisdiction. The defendants-intervenors subsequently appealed to the higher court, which issued a stay on printing ballots for the CAR referendum pending the appeal's resolution.

Notice and intervention by governmental subdivisions not party to an action questioning the validity of an ordinance, regulation, or franchise are mandated by R. 4:28-4(a) and (d). In response to a court order, counties including Bergen, Camden, Essex, Gloucester, Hudson, Middlesex, Passaic, Salem, and Union submitted briefs or affidavits supporting the inclusion of the CAR referendum question on the general-election ballot. Given the tight timeline for ballot printing, the court decided the case without oral argument, having reviewed the full record, including transcripts and briefs from previous proceedings.

N.J.S.A. 19:37-1 allows a municipality or county governing body to ascertain voter sentiment on government-related questions via a ballot proposition, which must be submitted to the county clerk at least 74 days prior to the election. The validity of the referendum question hinges on whether it pertains to "the government or internal affairs" of the county. This statutory phrase is clarified through relevant case law, notably Botkin v. Mayor and Borough Council of Westwood. In that case, a non-binding referendum on deconsolidating a school district was challenged as it was deemed beyond the scope of the borough's authority, with the Appellate Division ruling that the local governing body could not intrude into school district affairs.

The court examined whether a referendum could address matters related to the "government or internal affairs" of Westwood, concluding that such questions must pertain to policy issues within the legal powers of the body calling the referendum. A broader interpretation would lead to confusion and undermine the referendum's purpose of guiding the governing body on matters within its jurisdiction. The court determined that the issue of school district deconsolidation fell outside the governing body's authority, thus providing no support for the borough's position under the referendum statute.

In **Santoro v. Mayor and Council of South Plainfield**, the court invalidated non-binding referendum questions regarding the sewerage authority's operations, as the authority had been granted exclusive control over sewerage matters. The Appellate Division upheld this decision, emphasizing that referendum questions must relate to actions the municipality is authorized to take.

In **Camden County Board of Chosen Freeholders v. Camden County Clerk**, the board's attempt to place a referendum about compliance with a judicial budget directive on the ballot was thwarted due to a missed statutory deadline. The court noted the directive was a judicial action that did not require county involvement, reinforcing the principle of separation of powers. Consequently, the proposed referendum was deemed invalid as it did not pertain to the internal affairs of the counties.

Legislative intent does not support referenda that pose questions beyond the control of counties. In Gamrin v. Mayor and Council of Englewood, the court validated a referendum regarding the transfer of elementary school grades, emphasizing that such questions must pertain to actions within municipal authority, as funding was contingent on the board of school estimate's decision. The court noted the governing body's involvement due to shared membership with the board, affirming their authority to influence the proposal. In Rowson v. Township Committee of Mantua, the Appellate Division recognized that while the referendum dealt with actions by the utilities authority, the relevant statute permitted municipal cooperation with utilities for facility construction. The township's prior financial support for the authority was also considered, affirming the referendum's connection to municipal affairs. The overarching principle derived from case law interpreting N.J.S.A. 19:37-1 limits referenda to subjects within the jurisdictional scope of the municipalities. While this principle may result in complex applications, it is clear that the legislature did not intend for non-binding referenda to gauge public sentiment on matters outside the governing body's authority, as highlighted by Justice Hall in Botkin.

The referendum question in focus seeks voter opinions on whether Freeholders should advise the legislature on several proposals related to auto insurance, including: reducing auto insurance rates by 20%, abolishing the Joint Underwriting Association and the RMEC surcharge, establishing an assigned-risk plan for non-good drivers, requiring insurers to set rates based on objective criteria, mandating the insurance industry to cover JUA deficits, repealing various anti-trust and anti-rebate laws, creating a computerized price-information system, and forming a consumer-operated organization to engage with the insurance department. 

Defendants-intervenors argue that these proposals are too technical or vague for typical voters to understand, a point previously emphasized in Gormley v. Lan regarding the need for clarity in public questions. However, the court's decision does not hinge on this argument. It asserts that all proposals require legislative action and do not pertain to topics within Freeholders' jurisdiction, thus failing to meet statutory requirements. 

CAR contends that the referendum is valid as it seeks voter sentiment for legislative advice, but the court counters that allowing such questions would undermine the legislative intent to limit referenda to issues within local governmental competence. The court also dismisses CAR's claim that the county's financial interests in insurance justify the referendum, asserting that budgetary implications do not constitute a sufficient governmental interest to support the question.

Any referendum question related to municipal or county budgets could be deemed authorized, irrespective of its alignment with municipal or county governance. However, if mere budgetary impact suffices to meet the governmental-interest test, counties could leverage non-binding referendum authority to gauge public opinion on state-level issues like welfare and law enforcement, which exceed county governmental responsibilities. The County's interest in controlling insurance costs does not validate the CAR referendum question, as allowing local referenda on matters statutorily designated for state government would contradict the legislative framework, which permits non-binding public questions solely on local matters. A similar referendum proposal was introduced as Assembly Bill No. 4503 but was defeated, reinforcing the conclusion that county-wide referenda on such topics, outside county jurisdiction, oppose legislative intent. The state legislature, responsible for addressing automobile-insurance costs, has not sanctioned a statewide referendum on this subject, making it inconsistent to approve local referenda. The CAR referendum question does not pertain to the internal affairs of a county and thus cannot appear on Mercer County's general-election ballot or that of any other county. The Hudson County Board's argument for the question's permissibility under its county executive plan is specifically rejected. The judgment has been reversed, with Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi, and Stein in favor of the reversal, while none supported affirmance. Additionally, an appeal filed by the Bergen County Clerk was dismissed without merit consideration, with three court members expressing agreement with a dissenting opinion from Judge Gaulkin.