What Does “Annual” Mean?

In re Petition of BofI Federal Bank to Assign Lottery Prize Payment Rights, 437 N.J. Super. 549 (App. Div. 2014).  These consolidated cases called on the Appellate Division to decide whether N.J.A.C. 17:20-7.9(j), which states that “no one shall have the right to assign [New Jersey Lottery] prize payments due during the last two years of the annuity term,” conflicts with its enabling statute, N.J.S.A. 5:19-13(h), which says that “[a] winner shall not be permitted to assign the last two annual prize payments.”  In each case, the Law Divsion found no conflict and rejected petitions by BofI Federal Bank to obtain assignments of the last two years of guaranteed quarterly payments.  BoI had filed those petitions because the relevant statute makes court approval a prerequisite to any assignment of lottery payments.  According deference to the administrative agency that promulgated the regulation, and viewing the statute in light of its intended purpose, the Appellate Division affirmed in an opinion by Judge Higbee.

The wrinkle in these cases was that lottery payouts are done quarterly, not in a single payment each year.  As a result of that, BofI contended that these quarterly lottery payments were not “annual.”  Therefore, according to BofI, the bar to assigning “the last two annual prize payments” contained in N.J.S.A. 5:19-13(h) did not apply and the regulation that banned assignments “during the last two years of the annuity term” was contrary to the statute.  Like the several Law Division judges in the cases below, Judge Higbee did not agree.

Though “annual” could he defined as an event that occurs once a year, “such as an annual report or an annual event,” the word “annual” also often describes “something calculated over or covering a period of a year.”  Judge Higbee cited, for example, “annual income” and “an annual rate of increase,” and noted that property owners “regularly pay their annual real estate taxes in quarterly payments.”  Since the use of “annual” in the statute was therefore unclear, the Appellate Division looked to “the intent and purpose of the legislation.”

Judge Higbee stated that all parties agreed that “one purpose of N.J.S.A. 5:19-13(h) was to promote collection of delinquent child support and debts owed to the State.  By prohibiting assignment of the last two years of annual payments, the statute guarantees that if money is owed by the winner for child support, college loans, taxes, or welfare liens, the State will have the opportunity to collect what is owed before the money is gone.”  That objective would be frustrated, Judge Higbee said, “if the statute is interpreted to not include the last two years of quarterly payments.”  Accordingly, the panel considered N.J.A.C. 17:20-7.9(j) to be “a sound clarification of the law that promotes the purpose of the enabling statute.”  The decisions below were thus affirmed.