Busik v. Levine

307 A.2d 571, 63 N.J. 351, 1973 N.J. LEXIS 193

• Court: Supreme Court of New Jersey
• Decided: July 6, 1973
• Docket: A-92; A-93
• Status: Published

Opinions

The opinion of the Court was delivered by

Weintraub, C. J.

These cases involve the validity of B. 4:42-ll(b), adopted on December 21, 1971 and effective on January 31, 1972, which authorizes prejudgment interest in tort actions. The accidents here involved occurred before the-rule was adopted, but the eases came to trial after the effective date of the rule. Interest as provided in the rule was included in the judgments. We certified defendants’ appeals before they were argued in the Appellate Division.

The principal charge is that prejudgment interest is a matter of “substantive” law and as such beyond the constitutional grant to the Supreme Court of the power to “make rules governing * * * the practice and procedure” in all courts, Art. VI, § 2, ¶ 3. Hence, it is argued, we trespassed upon the legislative domain in adopting the rule, in breach of the principle of separation of powers embodied in Art. Ill, § 1, of the Constitution. The argument is supplemented with the proposition that defendants were thereby deprived of the opportunity to be heard required by due process of law.

The rule was upheld in Riley v. Savary, 120 N. J. Super. 331 (Law Div. 1972), but that case did not come to us for review.

I

Although it is said with respect to interest on claims that “in this country interest is generally of statutory origin,” Consolidated Police and Firemen’s Pension Fund Commission v. City of Passaic, 23 N. J. 645, 653 (1957), the contrary is true in our State. The Legislature has dealt with usury; that is, it has fixed the upper limit of the interest for which an ordinary loan may be made, see N. J. S. A. 31:1 — 1, but there is no statute dealing with interest upon other obligations or claims or with interest upon judgments. The conitrolling rules have always been and remain judge-made. See Jersey City v. O’Callaghan, 41 N. J. L. 349, 353-354 (E. & A. 1879); Verree v. Hughes, 11 N. J. L. 91, 92 (Sup. Ct. 1829); Erie Railway Co. v. Ackerson, 33 N. J. L. 33, 36 (Sup. Ct. 1868); Simon v. New Jersey Asphalt and Paving ‘Co., 123 N. J. L. 232, 234 (Sup. Ct. 1939); Cohrs v. Igoe Brothers, Inc., 71 N. J. Super. 435, 448 (App. Div. 1962).

And, briefly, these are the rules which the courts of this State developed: As to¡ interest upon judgments, the practice permitted collection at the “legal” rate, that is, at the rate permitted to be contracted under the usury statute to which we have referred. With respect to prejudgment interest, our courts of law assessed interest, if the demand was liquidated, at the same “legal” rate on the assumption that the creditor could have earned such interest if his obligor had paid him what was due, see Jersey City v. O’Callaghan, supra, 41 N. J. L. at 354, but declined to allow interest on claims •.that were unliquidated. The justice of that limitation has been questioned, as we will develop in a moment. Our courts of equity allowed or withheld interest or fixed the rate as justice dictated. See Small v. Schuncke, 42 N. J. 407, 415— 416 (1964); Agnew Co. v. Paterson Board of Education, 83 N. J. Eg. 49, 67-70 (Ch. 1914), affirmed o.b., 83 N. J. Eg. 336 (E. & A. 1914); Jardine Estates, Inc. v. Donna Brooks Corp., 42 N. J. Super. 332, 340-341 (App. Div. 1956); Dial Press, Inc. v. Phillips, 23 N. J. Super. 543, 551-552 (App. Div. 1952), certif. denied, 12 N. J. 248 (1953); McGlynn v. Schultz, 90 N. J. Super. 505, 529-530 (Ch. Div. 1966), affirmed, 95 N. J. Super. 412 (App. Div. 1967), certif. denied, 50 N. J. 409 (1967); Brown v. Home Development Co., 129 N. J. Eg. 172, 178 (Ch. 1941).

In this setting we adopted R. 4:42-11 which reads:

“Interest: Rate on Judgments; in Tort Actions.

(а) Rate. Judgments, awards and orders for the payment of money and taxed costs shall bear interest at 6% per annum from the date of entry, except as otherwise ordered by the court.

(б) Tort Actions. In tort actions, including products liability actions, the court shall include in the judgment interest at 6% per annum on the amount of the award from the date of the institution of the action or from a date 6 months after the date of the tort, whichever is later. The contingent fee of an attorney shall not be computed on the interest so included in the judgment.”

It will be noted that paragraph (a) deals with interest upon judgments. We dealt in that rule with post-judgment interest because the Legislature had amended the usury statute, N. J. S. A. 31:1 — 1, to permit the rate upon ordinary loans to go as high as 8% if the Commissioner of Banking and Insurance so provides. By adopting paragraph (a), we advised the bar and the clerks of the courts that judgments would continue to carry interest at the rate of 6%, in accordance with our prior practice. That paragraph has not drawn fire, although the constitutional challenges addressed to paragraph (b) would be no less appropriate if they have substance. We could have waited until some litigant raised the issue, but we thought it good sense and good administration to inform all concerned through the vehicle of a rule incorporated in our rules of civil practice. As we have said, our doing so has not excited criticism. It is subparagraph (b), relating to prejudgment interest, which is attacked.

We repeat there is no conflict with any statute; there is no statute on the subject. Nor can it be doubted that the Court has the power and the continuing responsibility to change these judge-made rules of law as justice may require. In short, 'had the proposition in paragraph (b) been announced in a case of A against B, there could be no claim that the Court lacked the power or in any way transgressed upon the area contitutionally allotted to the Legislature. Thus it is not our power to act that is questioned; it is the method we chose to exercise that power.

But if we erred in adopting that method (we will demonstrate in Point II below that we did not), this litigation would not end. Eor plaintiffs here are entitled to ask for the same result which the challenged rule provides. They cannot be denied their due merely because we mistakenly expressed our view in a rule of court. The underlying issue is thus before us. The merits have been argued fully, and the litigants thus afforded a hearing. Nothing new, however, emerged. This is not surprising, for the subject is not new, and was fully explored at a public hearing before we adopted the rule.

We turn then to the merits. Interest is not punitive, Wilentz v. Hendrickson, 135 N. J. Eq. 244, 255-256 (E. & A. 1944); here it is compensatory, to indemnify the claimant for the loss of what the moneys due him would presumably have earned if payment had not been delayed. We mentioned earlier the judge-made limitation that interest should not be allowed if the claim was unliquidated. That limitation apparently rested upon the view that a defendant should not be deemed in default when the amount of his liability has not been adjudged. But interest is payable on a liquidated claim when liability itself is denied, even in good faith, Kamens v. Fortugno, 108 N. J. Super. 544, 552-553 (Ch. Div. 1970). The fact remains that in both situations the defendant has had the use, and the plaintiff has not, of moneys which the judgment finds was the damage plaintiff suffered. This is true whether the contested liability is for a liquidated or for an unliquidated sum. Eor that reason, the concept of a “liquidated” sum has often been strained to find a basis for an award of interest.

It is said there is now, in general, a willingness to allow interest on unliquidated claims as justice may dictate. 22 Am. Jur. 2d, Damages, § 181, pp. 259-260. In upholding the retrospective application of a New York statute providing for interest in contract actions upon unliquidated damages, the United States Supreme Court observed that “The statutory allowance is for the purpose of securing a more adequate compensation by adding an amount commonly viewed as a reasonable measure of the loss sustained through delay in payment,” and that “It has been recognized that a distinction, in this respect, simply as between cases of liquidated and unliquidated damages, is not a sound one.” Funkhouser v. J. B. Preston Co., 290 U. S. 163, 168, 54 S. Ct. 134, 136, 78 L. Ed. 243, 246 (1933).

So also, a refusal to allow interest in tort matters has been criticized. See Moore-McCormack Lines v. Amirault, 202 F. 2d 893 (1 Cir. 1953). It is questioned whether justice is thereby done as between parties to the suit. But beyond their interest, there is also a public stake in the controversy, for tort litigation is a major demand upon the judicial system. Delay in the disposition of those cases has an impact upon other litigants who wait for their turn, and upon the taxpayers who support the system. And here there is a special inducement for delay, since generally the claims are covered by liability insurance, and when payment is delayed, the carrier receives income from a portion of the premiums on hand set aside as a reserve for pending claims. See In re Insurance Rating Board, 55 N. J. 19 (1969). Hence prejudgment interest will hopefully induce prompt defense consideration of settlement possibilities. In that meaningful way, prejudgment interest bears directly upon the judicial machinery and the problems of judicial management. It is this facet, added to the consideration of justice between the litigants, which warrants our holding that prejudgment interest be payable in these matters.

The proposition we thus accept is not uniquely ours. There are a number of States which so provide by statute. See Colorado: Rev Stats. 1963, Ann., § 41-2-1; Louisiana: LSA-R. S. 13:4203; Michigan: Stat. § 27A.6013, M. C. L. A. § 600.6013, New Hampshire: RSA § 524:1-b (Supp.); New York: CLPR § 5001(a) (damages to property); North Dakota: § 32-03-05; Oklahoma: 12 Okla. St. Ann. § 27(2); Rhode Island: Gen. Laws, § 9-21-10. We add, parenthetically, that it is of no moment that there the principle was established by the Legislature. As we have already noted, the subject of interest on claims rests wholly in case law in our State, and, assuming as we do for the moment that the issue is one of substantive law, the power and responsibility of the judiciary to deal with the subject in the absence of a statute cannot be questioned.

We see no strength in the assertion that the allowance of interest duplicates some element of damage or constitutes a payment with respect to damages not yet experienced. The jury is not instructed to add interest to its verdict in tort cases. In any event an instruction to the jury can obviate the risk. And with respect to the criticism that a verdict may embrace losses not yet suffered, the answer is that a verdict necessarily anticipates future experience, and the interest factor simply covers the value of the award for the period during which the defendants had the use of the moneys to which plaintiffs are found to be entitled. We think the equities are met when the date for the commencement of liability for interest is fixed as set forth in paragraph (b) of R. 4:42-11 (the rule here under attack).

The question arises whether our holding that prejudgment interest be paid should be imposed retrospectively. We see no reason not to apply the usual rule that judge-made law is retrospective. Under our holding plaintiffs merely receive what in justice is their due, and defendants are required to turn over a gain they received at the plaintiffs’ expense. We note that where liability for prejudgment interest was established by statute, the statutes were held to be “remedial” and hence applicable to actions brought before the statute’s effective date, and this notwithstanding the usual rule that statutes operate prospectively. Pepin v. Beaulieu, 102 N. H. 84, 151 A. 2d 230 (Sup. Ct. 1959); Foster v. Quigley, 94 R. I. 217, 179 A. 2d 494 (Sup. Ct. 1962); Kastal v. Hickory House, Inc., 95 R. I. 366, 187 A. 2d 262 (Sup. Ct. 1963); Ballog v. Knight Newspapers, Inc., 381 Mich. 527, 164 N. W. 2d 19 (Sup. Ct. 1969); see also Wilcoxon v. Sun Oil Co., 49 Misc. 2d 589, 267 N. Y. S. 2d 956 (Sup. Ct. 1966).

Finally we add that we see no merit in the proposition advanced by the intervenor, that the usual insurance policy, which provides for payment of interest upon a judgment, does not cover prejudgment interest and therefore we should not impose such liability. It is enough to say the carrier’s obligation to pay the judgment plainly includes the obligation to pay the constituent elements of damage incorporated in that judgment, among which, of course, is the item of prejudgment interest.

II

For the reasons given in “I” above, the question whether this Court exceeded its power when it adopted B. 4:42-11 (b) is academic. The underlying merits have been reached and decided. Nonetheless we will state why we believe the adoption of the rule was consonant with proper judicial performance.

A

Defendants point out that the rule-making power granted the Supreme Court in Art. VI, § 2, ¶ 3, relates to “practice and procedure,” and from this grant defendants would infer that this constitutional provision inferentially dictates the mode whereby the Supreme Court may make “substantive” law. But the constitutional provision is what it purports to be — a grant of power with respect to “practice and procedure.” It does not purport to deal with .substantive law or to prescribe a format for the discharge of the Court’s responsibility as to that topic. Limitations of course do exist, but they arise, not from the cited seeton of the Constitution, but from the nature of the judicial process and of the Court’s responsibility.

Nor, for that matter, is the constitutional grant of power with respect to “practice and procedure” a mandate that that subject may be dealt with only in a rule-making process. Many matters of practice and procedure repose in case law. Sometimes the procedures established in a judicial opinion will later be embodied in a formal rule of practice and procedure.¹ Commonly they are not.² Or a formal rule may expressly call for a case-by-case exposition, as for example, R. 4:4-4(i) relating to service of process which expressly leaves the outer reaches of substituted service to “due process of law.” Indeed the most valued rights upon which life, liberty, and property depend are “procedural” and are embedded in the Constitutions of the United States and of this State. Although those rights are procedural, the courts have not chosen to particularize those rights by way of a rule-making process. Cases are legion which expound their meaning and the consequences of infringement. And, finally, a matter of practice may be prescribed in an administrative directive.³

The constitutional grant of rule-making power as to practice and procedure is simply a grant of power; it would be a mistake to find in that grant restrictions upon judicial techniques for the exercise of that power, and a still larger mistake to suppose that the grant of that power impliedly deprives the judiciary of flexibility in the area called “substantive” law.

B

“Substantive” law of course is regularly established in cases brought before the Court. But there is no constitutional mandate that a court may not go beyond what is necessary to decide a case at hand. Whether an issue will be dealt with narrowly or expansively calls for a judge’s evaluation of many things, including the need for guidance for the bar or agencies of government or the general public. To that end, the Court may express doubts upon existing doctrines, thereby inviting litigation, or may itself raise an issue it thinks should be resolved in the public interest, or may deliberately decide issues which need not be decided when it believes that course is warranted. So a court may decide an issue even though the litigation has become moot, again in the public interest. John F. Kennedy Memorial Hospital v. Heston, 58 N. J. 576, 579 (1971); Board of Education, East Brunswick Tp. v. East Brunswick, 48 N. J. 94, 109 (1966); Delaware River and Bay Auth. v. International Org., etc., 45 N. J. 138, 142 (1965); Cooke v. Tramburg, 43 N. J. 514, 516 n. 1 (1964); State v. Perricone, 37 N. J. 463, 469 (1962), cert. denied, 371 U. S. 890, 83 S. Ct. 189, 9 L. Ed. 2d 124 (1962).

Defendants refer to the statement in Winberry v. Salisbury, 5 N. J. 240, 248 (1950), cert. denied, 340 U. S. 877, 71 S. Ct. 123, 95 L. Ed. 638 (1950), that “While the courts necessarily make new substantive law through the decision of specific cases coming before them, they are not to make substantive law wholesale through the exercise of the rule-making power” (emphasis ours). There can be no quarrel with that proposition, but one might note in passing that Winberry is a classic example of a deliberate decision upon a far-reaching issue, involving the respective powers of the Supreme Court and the Legislature, which no doubt could have been avoided but which the majority believed should be decided then in the public interest.

C

And finaEy, it is simplistic to assume that all law is divided neatly between “substance” and “procedure.” A rule of procedure may have an impact upon the substantive result and be no less a rule of procedure on that account. Speaking of the proposition that a court may not promulgate rules governing substantive law in the exercise of their rule-making power, Professors Levin and Amsterdam agreed that “rational separation is well-nigh impossible.” “Legislative Control over Judicial Eule-making: A Problem in Constitutional Revision,” 107 U. Pa. L. Rev. 1, 14-15 (1958). See also State v. Otis Elevator Co., 12 N. J. 1, 24 (1953) (Jacobs, J. dissenting). As said in Hanna v. Plumer, 380 U. S. 460, 471, 85 S. Ct. 1136, 1144, 14 L. Ed. 2d 8, 16-17 (1965), “The line between ‘substance' and ‘procedure’ shifts as the legal context changes. ‘Each implies different variables depending upon the particular problem for which it is used.’ ” One context is conflict of laws; another is retrospective application of statutes; and a third is law-making, the subject at hand.

As to conflict of laws, the traditional approach was to decide whether the issue was “substantive” or “procedural,” the law of the forum to be applied if the matter was “procedural.” The Restatement (2d) of Conflict of Laws (1971), comment b to § 122, ¶. 352, correctly discards that approach and goes directly to the question whether the law of the forum should be applied with respect to each particular subject.⁴ As to a conflicts issue, the forum would prefer to apply rules with which it is familiar, thus to avoid the inherent margin of error when the forum tries to decide what another jurisdiction would likely do. On the other hand, if the ultimate result is permitted to turn upon the forum selected, there are the evils and injustices of forum-shopping.

When the context is retrospective application of a statute, the values involved are different, for then the target is whether some right or liability is so “vested” as to make it unjust to change the rules. Morin v. Becker, 6 N. J. 457, 464-471 (1951); Pennsylvania, Greyhound Lines, Inc. v. Rosenthal, 14 N. J. 372, 380-388 (1954). In Rosenthal, in which the Joint Tortfeasors Contribution Law was applied to a payment made after the statute was enacted but upon a judgment which antedated that law, it was aptly said (¶. 382):

* * * It was pointed out by Lehman, C. J., that “changes of form are often closely bound up with changes of the substance,” and “nice distinctions are often necessary,” but in the end “it is in considerations of good sense and justice that the solution must be found.”

And, finally, in the context of rule-making, other factors may come into play. The Court may be spurred by the needs of the judicial system measured, not only by the private interests of all litigants, but also by the interest of the public. Or the Court, mindful of the problem of exclusivity and its impact upon the delicate relations among the co-equal branches of government, may be reluctant to move or to go as far as it would if the Legislature retained the power to disagree.

To illustrate, what is the statute of limitations? For conflict of laws purposes, it is usually said to be “procedural,” meaning that the law of the forum will be applied, Marshall v. Geo. M. Brewster & Sons, Inc., 37 N. J. 176, 179-182 (1962); see Restatement (2d) of Conflict of Laws (1971) § 142, although even there the just course may be to apply the law of another State if the parties were there throughout its period of limitations and the suit was brought after that period had run.⁵ In the context of retrospective application of a statute, there may be no substantial reason to refuse to apply a change in a period of limitations retrospectively so long as a barred cause of action is not thereby revived or an existing cause of action is not thereby barred without a fair opportunity to sue. But when we turn to the third context, whether the statute of limitations is within the Court’s rule-making power, the considerations may well be different. We need but say that thus far it has not been suggested that this subject matter is “procedural” within the meaning of our constitutional provision. On the other hand, time for appeal, which much resembles a statute of limitation, may confidently be said to come within the Court’s rule-making power. R. 2 -A.

What is “evidence”? It arguably is “procedural,” “substantive” or a hybrid. It smacks of “procedure” insofar as it controls what may enter the mix, but it is quite “substantive” as an ingredient of the end product, the judgment. Some rules of evidence, particularly those relating to privileges, may themselves be thought to generate rights or values of a “substantive” cast. In the context of conflict of laws, evidence generally would be for the forum. Restatement (2d) of Conflict of Laws (1971) § 138 adopts that view, with, however, certain exceptions. In the context of retrospective application of a statute, it would likely again be “procedural” in most respects. But the third context, the respective powers of the legislative and judicial branches, brings other values into view.

We participated in a process whereby a. code of evidence was adopted “wholesale,” to use a word in the quotation above from Winberry. The rules of evidence were adopted cooperatively by the- three branches of government under the Evidence Act, 1960 (L. 1960, c. 52; N. J. S. A. 2A:84A — 1, et seq.) 'after the Supreme Court and the Legislature conducted their separate studies. Under the statutory arrangement, some of the rules, notably those embodying privileges, were fixed in the statute itself while other rules, prepared by the Court after consideration at a Judicial Conference, were filed with the Legislature to become effective unless disapproved by a joint resolution signed by the Governor. Thus we did not pursue to a deadlock the question whether “evidence-” was “procedural” and therefore, according to the Winberry dictum, the sole province of the Supreme Court. Nor were we deterred by the spectre of the criticism that, if “evidence” is “substantive,” it was unseemly or worse for the Court to participate in the “wholesale" promulgation of substantive law. The single question was whether it made sense thus to provide for the administration of justice, and the answer being clear, we went ahead.⁶ We add that the United States Supreme Court, which does not have a constitutional grant of rule-making power as to practice and procedure, is pursuing a similar project in cooperation with the Congress. 18 U. S. C. A. §§ 3402, 3771, 3772 (1964); 28 U. S. C. A. §§ 2072, 2075 (1958).

D

What then is “interest”? As we have said, it is compensatory as to the parties and represents “damages” for delay in payment. “Damages” constitute a “remedy.” And “remedy” promptly connotes “procedure.” 1 Am. Jur. 2d, Actions, § 6, p. 546. But in the context of conflict of laws, the majority view is that “damages'” go to the substance, i. e., that it would disserve the values involved to apply the law of the forum rather than the law of the place of the wrong.⁷ 22 Am. Jur. 2d, Damages, § 3, pp. 15-16. The Restatement (2d) of Conflict of Laws (1971), §§ 145 and 171, espouses that view. Prejudgment interest may be deemed to be part of the damages occasioned by the initial wrong, although one might say that such interest is a remedy for a second wrong, i. e., the delay in payment. Upon the latter view the situs of that wrong might arguably be the forum. The Restatement (2d) of Conflict of Laws (1971), § 171, comment c, would apply to prejudgment interest the same rule applicable with respect to the basic damages to determine "whether the plaintiff can recover interest and, if so, at what rate for a period prior to the rendition of judgment as part of the damages for a tort.”

Upon that approach, the statutes providing for prejudgment interest would not be applied to a foreign cause of action. This is the view usually taken. See Sylvania Electric Products v. Barker, 228 F. 2d 842, 850-851 (1 Cir. 1956), cert. denied, 350 U. S. 988, 76 S. Ct. 475, 100 L. Ed. 854 (1956); Moore-McCormack Lines v. Amiraull, supra, 202 F. 2d at 896-897; Ryan v. Ford Motor Co., 334 F. Supp. 674 (E. D. Mich. 1971); New Amsterdam Casualty Co. v. Soileau, 167 F. 2d 767 (5 Cir. 1948), cert. denied, 335 U. S. 822, 69 S. Ct. 45, 93 L. Ed. 376 (1948); Williams v. Petroleum Helicopters, Inc., 234 So. 2d 522 (La. Ct. App. 1970), cert. denied, 256 La. 371, 236 So. 2d 501 (Sup. Ct. 1970); but see Glick v. White Motor Co., 458 F. 2d 1287, 1293 n. 13A (3 Cir. 1972). But when the context is the retrospective application of such a statute, the statute is generally deemed to be "remedial” and "procedural” and hence to apply to a preexisting cause of action not yet reduced to judgment.⁸ We have already referred to decisions so holding and repeat the citations for the convenience of the reader.⁹ Pepin v. Beaulieu, 102 N. H. 84, 151 A. 2d 230 (Sup. Ct. 1959); Foster v. Quigley, 94 R. I. 217, 179 A. 2d 494 (Sup. Ct. 1962); Kastal v. Hickory House, Inc., 95 R. I. 366, 187 A. 2d 262 (Sup. Ct. 1963); Ballog v. Knight Newspapers, Inc., 381 Mich. 527, 164 N. W. 2d 19 (Sup. Ct. 1969); see also Wilcoxon v. Sun Oil Co., 49 Misc. 2d 589, 267 N. Y. S. 2d 956 (Sup. Ct. 1966). We refer again to Funkhouser v. J. B. Preston Co., supra, 290 U. S. 163, 54 S. Ct. 134, 78 L. Ed. 243, in which it was held that a statute imposing interest upon unliquidated damages in contract matters could constitutionally be applied to a preexisting transaction. The Court said (290 U. S. at 167, 54 S. Ct. at 135, 78 L. Ed. at 245-246) :

* * * The contractual obligation of appellants was to take and pay for the described articles, and the law, in force when the contract was made, required that in case of breach appellants should make good the loss sustained by the appellee. The ascertainment of that loss, and of what would constitute full compensation, was a matter of procedure within the range of due process in the enforcement of the contract. (Emphasis added.)

With respect to our immediate context — the making of rules of law — it may be noted that the New York statute involved in Funkhouser, the case just cited, was a section of the Civil Practice Act of New York, thus evidencing a legislative evaluation that the subject was “procedural.” So also, in five of the eight States, which provide by statute for prejudgment interest in tort matters (p. 360 of this opinion), the statutes are included among laws dealing with procedure. One State (North Dakota) places the statute under “Judicial Remedies,” while another (Colorado) includes it under “Damages” in the substantive law portion of the laws.

In the light of the foregoing it surely cannot be said to have been palpably inappropriate to think of prejudgment interest as a matter of procedure in the context of law-making. The question was of general concern, affecting many thousands of pending tort actions. The issue could have been raised in any of those cases, at the instance of the litigant or on the court’s own motion. Had the issue been raised that way, all litigants would have been bound by the result notwithstanding that they were not heard upon the merits. One of the consequences of the stubborn myth that courts do not make law is the continuing failure to develop a technique whereby all may be heard who are interested in a legal proposition and might contribute to an informed decision. In this respect the rule-making approach is clearly superior. Here all interests were heard at a public meeting. Surely the litigants themselves lost nothing in that process. And when there is added the signal fact that the rule, while serving the cause of justice as between litigants, has the equally important objective of expediting the disposition of cases, thereby to advance the welfare of all litigants and the welfare of the taxpayers who must support the system, we have no doubt of the propriety of the course we followed. The rule concerns the practice and procedure in the courts in any view of that subject notwithstanding that the: rule has also a “substantive” impact upon the dollar result. It made sense to invoke the rule-making process in such circumstances. It was a responsible exercise of our responsibility.

In Crudwp v. Marrero, 57 N. J. 353 (1971), there was involved still another rule which, although having a dollar impact upon the litigants, was nonetheless beamed toward the effective management of the judicial system. The rule, R. 4:58-1, et seq., deals with offers of judgment and provides for interest and counsel fees on the basis of the relationship between the verdict and a pretrial offer of settlement. The issue in the case was whether the rule applied to the Unsatisfied Claim and Judgment Eund. In holding that it did, we said (p. 361) :

At any rate, the factors described above stimulated adoption of the Offer of Judgment rules with which we are now concerned. It is a remedial measure in operation on a test basis and designed to produce early out-of-court settlements. As already pointed out, the broad language does not exclude any negligence or unliquidated damage case from their operation. The Unsatisfied Claim and Judgment Fund has a very substantial number of such cases in the trial lists throughout the State. Every time it tries a case that could and fairly should be settled without trial, disposition of other pending actions, some of which must be tried, is delayed. Accordingly, in our judgment, in the ordinary situation the Fund must be regarded as subject to the Offer of Judgment rules. “Interest” to the extent that it may be imposed under those rules is within the Fund’s statutory authorization to pay interest. But even if the statute contained no such authority, the grant of interest under the rules is well within the inherent powers of this Court. The same is true with respect to the grant of counsel fees up to $750. As a procedural sanction they are likewise within our broad constitutional power, and as such they are within the statutory provision for costs. Compare Red Devil Tools v. Tip Top Brush Co., Inc., 50 N. J. 563, 576 (1967) ; Vargas v. A. H. Bull Steamship Co., 25 N. J. 293, 296 (1957), cert. den. 255 V. S. 958, 78 S. Ct. 545, 2 L. Ed. 2d 534 (1958).

This quotation refers to “costs” and “counsel fees.” Quite obviously both have a dollar impact upon litigants. Yet “costs” are characterized as “essentially procedural,” John S. Westervelt’s Sons v. Regency, Inc., 3 N. J. 472, 479 (1950), even though statutes still deal with the subject (see N. J. S. A. 22A:2 — 2, 3, 9, 10 and 11). And as to “counsel fees,” which no less than “interest” or “costs,” have a “substantive” dollar impact, the subject has been consistently held to be one of practice and procedure within the constitutional grant of power to the Supreme Court and is governed by R. 4:42-9. John S. Westervelt’s Sons v. Regency, Inc., supra, 3 N. J. at 479; Liberty Title & Trust Co. v. Plews, 6 N. J. 28, 44 (1950); Driscoll v. Burlington-Bristol Bridge Co., 8 N. J. 433, 495 (1952), cert. denied, 344 U. S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952); State v. Otis Elevator Co., 12 N. J. 1, 5 (1953); see Alcoa Edgewater No. 1 Fed. Credit Union v. Carroll, 44 N. J. 442 (1965), and Red Devil Tools v. Tip Top Brush Co., Inc., 50 N. J. 563, 576 (1967).

It is insisted we cannot uphold the rule for prejudgment interest without also deciding whether the rule comes within the Winberry dictum that the Court’s authority as to practice and procedure is exclusive. We see no need to meet that issue. The sole question is whether the Court may treat the subject by a rule rather than by a judicial decision despite the substantive aspect of the subject. The issue of exclusivity involves a touchy matter, the relations among the three branches of government. It will be time enough to talk about exclusivity when there is an impasse and no way around it.¹⁰ A coordinate branch should not invite a test of strength by proclamation. Our form of government works best when all branches avoid staking out the boundaries which separate their powers.

Ill

The final question is whether the rule denies equal protection because it is limited to tort actions.

We see no serious issue. To begin with, tort actions are a distinctive class of litigation having a special impact upon the administration of the judicial system in terms of volume. They are distinctive too insofar as overall there is insurance coverage permitting carriers to invest for gain portions of the premiums allocated to the reserve for pending claims. Purther, problems of this kind may be met in stages or on the basis of intensity. Hence it is no solid objection that a rule, whether announced in a judicial opinion or in a rule of court, does not go as far as it might. See New Jersey Chapter, American Institute of Planners v. New Jersey State Board of Professional Planners, 48 N. J. 581, 601-603 (1967), appeal dismissed, 389 U. S. 8, 88 S. Ct. 70, 19 L. Ed. 2d 8 (1967). Pinally the adoption of the rule does not foreclose holders of other unliquidated claims from contending the circumstances which attend their scene are so like the circumstances here involved that interest should also be allowed to them.

The judgments are affirmed. Mr. Justice Jacobs and Mr. Justice Proctor join in this opinion.

1 For example, the procedure outlineed in New Jersey Dept. of Health v. Roselle, 34 N. J. 331 (1961), for the handling of contempt matters was thereafter incorporated in the formal rule, R. 1:10. In State v. Abbott, 36 N. J. 63, 77-78 (1961), we dealt with the problem of offers of proof in criminal matters and thereafter incorporated the suggested practice in R. 1:7-3.

2 For example, in State v. Guido, 40 N. J. 191, 199-200 (1963), we suggested a procedure to deal with the problem of the recalcitrant witness.

3 In State v. Pontery, 19 N. J. 457, 468 (1955), it was said by way of dictum that the prosecutor could not effectively waive the death penalty and thus take that issue out of the case. That proposition affected procedure, and quite obviously “substance” too in terms of the impact upon the individual. We prepared an administrative memorandum, In re Waiver of Death Penalty, 45 N. J. 501 (1965), which we directed to be published both in the New Jersey Dane Journal and in the official New Jersey Reports for “the information of the bench, the bar and the public,” in which we said (p. 502) :

Since it is not likely that the Supreme Court will have occasion in a litigated case to express itself on the subject, the Supreme Court, after careful consideration of the matter, has concluded that in the public interest and in the interest of the fair and expeditious administration of criminal justice it should advise all judges by means of this administrative memorandum that it does not subscribe to the dictum in the Pontery case.

We thought that step was sensible and within the obligation and authority of the judiciary.

4 The comment reads:

Substance — procedure dichotomy. The courts have traditionally approached issues falling within the scope of the rule of this Section by determining whether the particular issue was ‘procedural’ and therefore to be decided in accordance with the forum’s local law rule, or ‘substantive’ and therefore to be decided by reference to the otherwise applicable law. These characterizations, while harmless in themselves, have led some courts into unthinking adherence to precedents that have classified a given issue as ‘procedural’ or ‘substantive’, regardless of what purposes were involved in the earlier classifications. Thus, for example, a decision classifying burden o-f proof as ‘procedural’ for local law purposes, such as in determining the constitutionality of a statute that retroactively shifted the burden, might mistakenly be held controlling on the question whether burden of proof is ‘procedural’ for choice-of-law purposes. To avoid encouraging errors of that sort, the rules stated in this Chapter do not attempt to classify issues as ‘procedural’ or ‘substantive’. Instead they face directly the question whether the forum’s rule should be applied.

5 “Borrowing” statutes, adopted in some States, establish the exception just suggested to the rule of the forum. We have just reached the same conclusion as a matter of decisional law in Heavner v. Uniroyal. Inc., 63 N. J. 130 (1973).

6 The agenda at the Judicial Conference held on May 24-25, 1973 included the subjects of polygraph and voiceprint. We thought it appropriate to gather whatever information we could, without deciding the format of such action, if any, which we may take.

7 But the answer may he otherwise when the foreign event concerns only citizens of the forum or citizens of States other than the State of injury. See Pfau v. Trent Aluminum Co., 55 N. J. 511, 523-524 (1970).

8 Our prejudgment interest rule is thus retrospective. See “Notice to the Bar,” 95 N. J. L. J. 349 (April 13, 1972) ; American Metal Co. v. Fluid Chemical Co., 121 N. J. Super. 177, 183 (Law Div. 1972).

9 A somewhat parallel case is Jersey City v. O’Callaghan, supra, 41 N. J. L. 349. The suit was for the refund of an illegal assessment. At the time of the wrong the usury statute provided for 7% interest but the rate was later lowered to 6%. The Court of Errors and Appeals accepted the proposition that a reduction in the usury rate would not affect an express agreement to pay the higher rate, but held that, since in the absence of such an agreement interest was a matter of damages,-the measure should reflect the statutory change. Hence interest was allowed at 7% to the effective date of the statutory amendment and at 6% thereafter.

10 In some instances our rules expressly accept statutory provisions relating to the same subject matters. See R. 4:27-2; R. 4:42-8(a) ; R. 4:52-7; R. 4:59-1; R. 4:83-1. After the adoption of the prejudgment interest rule here involved, the Legislature enacted the New Jersey Tort Claims Act, N. J. S. A. 59:1-1, et seq., which provides in N. J. S. A. 59 :9-2a that “No interest shall accrue prior to the entry of judgment against a public entity or public employee.” We have approved an amendment to our rule of Court which will except that situation.