Court Opinion

ID: 9715808
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:15:00.356877+00
Date Added: 2024-06-11T18:23:38.355192
License: Public Domain

The opinion of the Court was delivered by
SCHREIBER, J.
This case involves the retroactivity of a school teacher’s claim for employment credit for military service rendered long before the teacher’s employment began.
Petitioner, Marjorie A. Lavin, served in the Armed Forces between January 2, 1943 and October 20, 1945. Twenty-three years later she was hired as a teacher by the Hackensack Board of Education. Because of her military service, she was at that *148time entitled to employment credit pursuant to NJ.S.A. 18A:29-11, which reads in pertinent part:
Every [teacher] who after July 1,1940, has served ... in the active military or naval service of the United States ... in time of war ... shall be entitled to receive equivalent years of employment credit for such service as if he had been employed for the same period of time in some publicly owned and operated ... school or institution of learning ... except that the period of such service shall not be credited toward more than four employment or adjustment increments.
When translated into wage increments, these service credits would affect a teacher’s salary. See N.J.S.A. 18A:29-8. A teacher is entitled annually to an employment increment until the maximum salary is reached. For example, a teacher with one year’s military service would be treated as if he or she had completed one year of teaching.
Petitioner did not claim credit for the military service when her employment began. It was not until October 14,1977, nine years later, that she wrote to the Superintendent of Schools of the Hackensack Board of Education. Receiving no relief, she filed a petition with the Commissioner of Education. The Commissioner found in her favor and awarded her $20,575 based on three years’ military credit for salary claims retroactive to her initial employment in 1968.
Upon appeal, the State Board of Education held that the retroactive claim was limited by the six year statute of limitations and was barred in its entirety for the period of time prior to September 1978 on the basis of laches and estoppel. However, the State Board awarded petitioner two years’ military service credit to be applied beginning with the 1978-79 school year. The Appellate Division affirmed, except that it held that petitioner was entitled to three years’ credit, 178 N.J.Super. 221 (1981). We granted Lavin’s petition for certification, 87 N.J. 402 (1981), in which she sought review of the applicability of the doctrine of laches and the statute of limitations. We granted the New Jersey School Boards Association leave to file a brief as amicus curiae. The Board of Education did not seek review of the Appellate Division’s determination of the number of years of *149service credit to which she is entitled and that issue is not before us.
The statute of limitations applicable to a “recovery upon a contractual claim or liability” is six years. N.J.S.A. 2A:14-1 (emphasis added). The core of the issue is whether the credit for military service, N.J.S.A. 18A:29-11, is an essential term of the petitioner’s employment contract or whether it represents a statutory entitlement granted by the State in return for military service in time of war.
The legal relationship between petitioner and the Board of Education was that of employer and employee and the terms of her employment were embodied in her contract of employment. Miller v. Board of Chosen Freeholders, Hudson County, 10 N.J. 398 (1952). Petitioner claims that the statute awarding her service credit for time spent in the military was incorporated as a matter of law as a provision in the employment agreement. This would undoubtedly be so if the additional compensation for military service was for work rendered or to be rendered in her position as a teacher.
An example illustrative of that situation may be found in Miller v. Board of Chosen Freeholders, Hudson County, supra. A statute enacted in 1938 provided that the minimum salary for prison guards was $2,000 per annum. Miller, who had been a guard since 1931, was being paid a salary of $1,750 per annum at the time the new law became effective. The County continued to pay him at that rate until his death in May 1939. The administratrix of his estate sued in 1949 to recover the shortfall. The Court held that the six-year statute of limitations applied because of the contractual nature of the claim. The statutory provision, requiring that guards were to receive $2,000 minimum annual salary for their work, was deemed to be incorporated in the employment contract and the Court observed that the claim was one for the reasonable value of the services rendered as a guard. Justice Brennan, joined by Justice Heher, dissented. He contended that the salary increase did not result from an *150agreement between the parties, but was mandatorily established by the Legislature. Thus the statutory entitlement was something apart from the employment agreement.
Whether the benefit flowing from a statute is to be considered a statutory entitlement or a term of the public employee’s contract of employment depends upon the nature of the benefit and its relationship to the employment. Stating the problem in terms of incorporation in the employment contract or as a statutory benefit begs the question. Rather, attention should be directed to the purpose of the statute and its relevance and materiality to the employment.
When tested by this approach the Miller result is sound. There the dollars fixed in the statute were directly related to the services to be rendered. The implicit incorporation of such a provision in the employment contract was appropriate, since it went to the essence of the contract, namely, rate of pay for services to be performed. The only purpose of the statute was to fix the pay for prison guards.
This situation is to be differentiated from those in which there is no such' nexus. Where the benefit is not directly related to the employment service, but is being awarded for a totally unrelated reason, the recipient is truly the beneficiary of a statutory entitlement quite apart from the employment as such. One could articulate the legal theory that every statutory provision having some effect on the employee has been impliedly incorporated into the contract, so that failure to comply with that provision constitutes a breach of the employment agreement. Yet, when viewed realistically the emolument bears no relationship to the services to be rendered as an employee. That is particularly true in this case.
Certainly the value of petitioner’s services as a school teacher is not greater than that of the services of a colleague who had the same training and was teaching the same educational course over the same period of time. There would be no basis from a teaching standpoint for paying a lower salary to the petitioner’s twin, *151who did not have the same military service. The legislative purpose of N.J.S.A. 18A:29-11 is to reward veterans for service to their country in time of war. The reward takes the form of crediting the military service as teaching experience even though there is no functional relationship between the two. The credit has the effect of increasing the number of dollars to which the teacher who is a veteran is entitled. The emolument is not for services rendered or to be rendered for school teaching as such. It was established by the Legislature as a reward or bonus for service in the military, and not for performance as a teacher. Accordingly, the payment should be considered as a statutory entitlement, rather than as an element of the employment contract. That being so, the Statute of limitations is inapplicable.
We turn next to the doctrine of laches, an equitable defense that may be interposed in the absence of the statute of limitations. The time constraints of laches, unlike the periods prescribed by the statute of limitations, are not fixed but are characteristically flexible. Pomeroy defines laches as “such neglect or omission to assert a right as, taken in conjunction with the lapse of time, more or less great, and other circumstances causing prejudice to an adverse party, operates as a bar in a court of equity.” 2 Equity Jurisprudence § 419, at 171-72 (5th ed. 1941). This expansive notion of laches has been articulated in some of our case law.
In Atlantic City v. Civil Service Commission, 3 N.J.Super. 57, 60 (App.Div.1949), the court in describing laches quoted the following language approvingly:
“Laches in a general sense is the neglect, for an unreasonable and unexplained length of time, under circumstances permitting diligence, to do what in law should have been done. More specifically, it is inexcusable delay in asserting a right * * *." 30 C.J.S., § 112, pp. 520, 521.
“Long lapse of time, if unexplained, may create or justify a presumption against the existence or validity of plaintiff’s right and in favor of the adverse right of defendant; or a presumption that if, plaintiff was ever possessed of a right, it has been abandoned or waived, or has been in some manner satisfied; or that plaintiff has assented to, or acquiesced in, the adverse right of defendant; *152or a presumption that the evidence of the transaction in issue has been lost or become obscured, or that conditions have changed since the right accrued; or a presumption that the adverse party would be prejudiced by the enforcement of plaintiff’s claim.” 30 C.J.S. § 116 b, p. 538.
Hall v. Otterson, 52 N.J.Eq. 522, 535 (Ch.1894), adopted the language of a leading English opinion, Lindsay Petroleum Co. v. Hurd, L.R., 5 P.C. 221, 239-40 (1874):
... the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, tliat delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.
The length of delay, reasons for delay, and changing conditions of either or both parties during the delay are the most important factors that a court considers and weighs. Pavlicka v. Pavlicka, 84 N.J.Super. 357, 368-69 (App.Div.1964). The length of the delay alone or in conjunction with the other elements may result in laches. Obert v. Obert, 12 N.J.Eq. 423, 428-30 (E. & A. 1858).1 It is because the central issue is *153whether it is inequitable to permit the claim to be enforced, that generally the change in conditions or relations of the parties coupled with the passage of time becomes the primary determinant. That is why some courts have stated that the mere lapse of time is insufficient, though, as indicated above, that is an overstatement of the principle. Inequity, more often than not, will turn on whether a party has been misled to his harm by the delay. Norfolk & New Brunswick Hosiery Co. v. Arnold, 49 N.J.Eq. 390, 397 (Ch.1892); West Jersey Title & Guaranty Co. v. Industrial Trust Co., 27 N.J. 144, 153 (1958); Hinners v. Banville, 114 N.J.Eq. 348, 357 (E. & A. 1933). It is with these principles in mind that we turn to the facts of this case.
We agree with the Appellate Division that the doctrine of laches should be applied under the circumstances present here. A claim for petitioner’s military service was not made until more than nine years after her employment commenced. Both she and the Board of Education were apparently unaware of the statute.2 Her military service, which occurred approximately 23 years before she was engaged as a teacher, might well have escaped the attention of the Board. If the parties’ ignorance of the statute were the only circumstance, we would probably not invoke the doctrine. However, there are additional important elements.
The Board of Education did not budget for the additional expense, relying as it did on its mistaken belief that petitioner’s salary had been correctly computed. This, of course, implicates *154the Board’s financial requirements and may have serious tax consequences. The situation is compounded when such budgeting occurred over a nine-year period.
Municipal financing is predicated on a pay-as-you-go principle. See Passaic v. Local Finance Board of the Department of Community Affairs, 88 N.J. 293, 301 (1982); Giorno v. Township of South Brunswick, 170 N.J.Super. 162, 166 (App.Div.1979). The governing body must prepare a budget “on a cash basis.” N.J.S.A. 40A:4-3. This entails a listing of proposed expenditures. By understating its expenses, the Board of Education was innocently reducing the amount of funds to be raised by taxation. This situation was aggravated because the underestimating occurred for ten years. To rectify the error would necessitate including in the current budget the full aggregate amount claimed. This could have the dual effect of causing some other service to be diminished because of the limitations imposed by the Cap law, N.J.S.A. 18A:7A-25, and of imposing the complete tax burden on the existing taxpayer for costs that should have been distributed over a ten-year period.
Moreover, this problem should not be viewed exclusively in the context of petitioner’s claim. Though in petitioner’s case only $20,575 would be due, when other teachers similarly situated are considered, the total cost could be substantial. There are a large number of claims of this nature throughout the State and it is estimated that over $4,500,000 is involved. See Union Township Teachers’ Association v. Board of Education of Township of Union, supra. This estimate does not include claims of retired teachers on pension and of those who have otherwise left the teaching profession. We believe that it is fair and equitable to treat all claims of this nature in like manner. This bright line treatment has the additional advantage of administrative ease. Under these peculiar circumstances, wherein public entities are involved, petitioner and others situated like her should not be granted retroactive monetary relief. However, they should be *155granted credit for qualified military service in computing their salaries subsequent to making their claims.
A somewhat comparable situation arose in Giorno v. Township of South Brunswick, supra. There a police officer, who had been employed by the Township of South Brunswick in 1967, sought prior service credit in 1977 for employment as a Middle-sex County Park police officer pursuant to N.J.S.A. 40A:9-5. The Appellate Division, after observing that municipal governments operated on a cash basis and that it was desirable to have the issue of transferred service credits resolved before employment commences, concluded that it was equitable to allow the claim only from the date of the filing of the complaint. Cf. Kloss v. Township of Parsippany-Troy Hills, 170 N.J.Super. 153 (App.Div.1979).
We agree with the Appellate Division that laches should bar plaintiff’s retroactive recovery of past due sums. We agree with the Appellate Division that it is appropriate to allow prospective application of the petitioner’s military credit as of September 1978.
The judgment is affirmed and the matter remanded to the Commissioner of Education for disposition in conformity with this opinion.

Where a legal and an equitable remedy exist for the same cause of action, equity will generally follow the limitations statute. See Cole v. Brandle, 127 N.J.Eq. 31, 38 (E. & A.1940). Where the equitable cause of action is analogous to the one at law, laches may depend solely on the comparable statute of limitations. See discussion in Story, 1 Equity Jurisprudence 61-62 (13th ed. 1886).
Because laches is an equitable principle aimed to promote justice, conditions or circumstances may make it inequitable to prosecute a claim after a period shorter than that fixed by the statute of limitations. Thus where there has been an unreasonable delay, laches has been applied to defeat a claim despite the fact that the time fixed by the analogous statute of limitations has not passed. Patterson v. Hewitt, 195 U.S. 309, 319, 25 S.Ct. 35, 37, 49 L.Ed. 214, 218 (1904). Even if the cause of action in this case were *153deemed to be slmilár to a claim for breach of contract, it would be appropriate to consider the applicability of laches.

The record in the companion case, Union Township Teachers’ Association v. Board of Education of Township of Union, 90 N.J. 161 (1982), discloses that the New Jersey Education Association, an organization representing public school teachers throughout the State, and Boards of Education believed that the statute did not require that the military service credit be applied when the school district had established a salary schedule which exceeded the minimum.