author: Petrella, J. C. C.,

text:
    CAPPTURE REALTY CORPORATION, A NEW JERSEY CORPORATION, PLAINTIFF, v. BOARD OF ADJUSTMENT OF THE BOROUGH OF ELMWOOD PARK, PLANNING BOARD OF THE BOROUGH OF ELMWOOD PARK, BOROUGH OF ELMWOOD PARK, A MUNICIPAL CORPORATION IN THE COUNTY OF BERGEN AND STATE OF NEW JERSEY AND MICHAEL BUCK, BUILDING INSPECTOR OF THE BOROUGH OF ELMWOOD PARK, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided December 21, 1973.

      Mr. Lucien Baron for plaintiff (Messrs. Andora, Baron, Palmisano & DeCotiis, attorneys).

      Mr. Stephen B. Spector for defendant Borough of Elmwood Park (Messrs. Ferrara, Glock & Spector, attorneys).

      Mr. Malcolm Blum for defendant Board of Adjustment (Messrs. Sirota, Carlton & Blum, attorneys).
   Petrella, J. C. C.,

Temporarily Assigned. Plaintiff corporation in this action in lien of prerogative writ, challenges the denial of a special exception use under Ordinance No. 71 — 13, as amended by Ordinance No. 72-15 of defendant Borough of Elmwood Park. These ordinances and Ordinance No. 73-14 essentially declared a moratorium on construction on certain lands in the borough within what is referred to as the flood-prone or flood-plain area of Fleischer Brook, unless a special exception use permit was obtained from the governing body on recommendation of the board of adjustment. However, the planning board must issue an advisory report approving the variance and the applicant must satisfy criteria in the ordinance. Plaintiff also challenges the requirement for a permit in an “Industrial E” zone under section 88-17 of the borough zoning ordinance. Additionally, the reasonableness of the moratorium and constitutionality of the ordinances are challenged.

The court finds, based on the record in this case, that Ordinance No. 71-18 was adopted in October 1971 for a one-year period. It contained, among other things, the following statement of purpose:

WHEREAS, it is of immediate and vital importance that all construction in the flood prone and flood plain areas be prohibited for a reasonable time to enable the Borough of East Paterson to study and put into operation flood control plans and to study and adopt necessary amendments to its- Zoning Ordinances and Building Code to prevent and alleviate flood conditions in such area; * * *.

The original ordinance also expressed concern for eligibility under the National Flood Insurance Act of 1968. See 42 U. S. C. A. § 4022.

Ordinance No. 72-15 was enacted in October 1972, amended sections 2 and 3 of Ordinance No. 71-13, and extended the moratorium for a second year. In November 1973 the 1972 ordinance was substantially reenacted as Ordinance No. 73-14 and extended for another year. Section 3 of the amendatory ordinance expressly provided that all other provisions of the original ordinance remained in full force and effect. The parties stipulated that although enactment of the 1973 ordinance was subsequent to the filing of the complaint and trial of this cause, the decision would be binding on the 1973 ordinance.

Plaintiff owns approximately 3.2 acres of vacant land in Elmwood Park traversed by Fleischer Brook. The subject property is located within 250 to 300 feet of East 54th Street, an area subject to severe flooding.

An engineering firm was retained by the county in August 1970 to study Fleischer Brook, which runs through the municipalities of Saddle Brook, Fair Lawn, Elmwood Park and Garfield. The resulting report, “Flood Control Study, Fleischer Brook,” dated December 1971, was submitted in April or May of 1972 to the board of chosen freeholders and the concerned municipalities. The report was relied on by both parties and the court has taken judicial notice of it. The report recommended certain construction work along the entire length of Fleischer Brook, including what is referred to as the Lanza Avenue diversion or bypass (at the border of Garfield and the borough) which would carry the water flow past Garfield directly to the Passaic River. The report strongly advised that down-stream work, particularly the diversion project, be completed first, and further land development should be delayed until after completion. The report deals with construction and engineering solutions rather than land use planning and zoning aspects.

The Flood Control Study succinctly states:

Fleischer Brook, although a minor tributary of the Passaic River, traverses a highly urbanized area of Bergen County. Location of the Brook is shown on Plate 1. The drainage basin, with a total area of 2.7 square miles (1780 acres), includes sections of East Paterson (962 acres), Garfield (428 acres), and Fair Lawn (273) and Saddle Brook (67 acres). Based upon the population densities in each municipality in 1970, an estimated 28,000 people reside within the basin. Further urban development within the basin is limited since land use is approaching saturation, [at 1-1]

Certain definitions in the report are pertinent to the problem involved in this case:

Surface Runoff
The flow of water which occurs when the rate of precipitation exceeds the rate of infiltration and after the filling of surface depressions, and which finds its way over the surface of the ground until it reaches the beginnings of a definite stream channel system or is intercepted by a storm sewer system.
Resign Storm (Return Frequency)
A storm with such a pattern that it may be expected not to recur over a specific period of time. A design storm is said to have a return frequency of so many years, thus a design storm of 20 year return frequency is not expected to recur more than once every 20 years over a long period of time.
Design Flood
The quantity of surface runoff from the design storm to be contained within the confines of the stream channel.

As to a description of the borough, the report stated:

East Paterson
The area of East Paterson within the basin is approaching full development. The dense residential development in conjunction with the Garden State Parkway, Route 43 and Interstate Route 80 has left little open space for further development. Since the 1940’s when the population more than tripled from 4,937 in 1940 to 15,386 in 1950, the Borough has shown very slow growth. Between 1960 (19,344) and 1.970 (20,293) there has been only a 5 percent increase in population. Future development in this municipality within the drainage basin is therefore anticipated to have a minor effect on increasing the flow to the Brook, [at II-2]

As the Flood Control Study noted, approximately 962 acres in the borough are within the drainage basin of Fleischer Brook. Only about 5 to 10% of this area in the borough is presently undeveloped. Thus, future horizontal urban development is limited, although if fully developed additional surface runoff would reach the brook and at an accelerated pace during rainfalls. The impact of future development was disputed, but the effect of such urbanization upon the ability^ of Fleischer Brook to convey stormwaters may be seen by comparison of runoff factors between open lands, roofed and paved areas. For open lands, 20 to 35% of the rainfall reaches.the Brook as runoff whereas, for roof and paved areas, the runoff ranges from 70 to 95% of the rainfall. Flood Control Study, at I — 1.

Although plaintiff apparently concedes that the moratorium was reasonable during the first year, it asserts that all subsequent extensions are unconstitutional, unreasonable and arbitrary, and resulted in a taking of property and prevention of its use without compensation by the borough. Plaintiff relies on Morris County Land, etc. v. Parsippany-Troy Hills Tp., 40 N. J. 539 (1963). Further, plaintiff asserts that no industrial structure could be built on its property to meet a requirement for the special exception use that “no additional surface run-off of water will be generated * * and hence should be held impossible to comply with based on Oakwood at Madison, Inc. v. Madison Tp., 117 N. J. Super. 11, 21 (Law Div. 1971). However, in the Oalcwood case the court specifically found nothing in the record to support concern for flooding in connection with a zoning ordinance which required 30% of the town to remain undeveloped.

On April 25, 1973 plaintiff applied to the board of adjustment for a special exception use variance to erect a combination storage warehouse, tractor-trailer maintenance facility for its own trucks, and cardboard box manufacturing facility with related office space. Plaintiff’s property is zoned for “E Industrial Use” and is botmded by tracts developed accordingly. In its application to the board of adjustment plaintiff volunteered to straighten, dredge and improve the entire section of Fleischer Brook contained within the boundaries of plaintiff’s property at its own expense, in accordance with the recommendations in the Flood Control Study.

Defendant planning board recommended to defendant board of adjustment a denial of the application. The application was denied by the board of adjustment on June 27, 1973 based upon plaintiff’s failure to satisfy the criteria required by Ordinance No. 72-15, the 1972 enactment of Ordinance No. 71-13, and the requirements of paragraph C of Ordinance No. 88-17, the borough’s zoning ordinance.

Plaintiff presented an expert, a licensed professional engineer, before the zoning board on April 25, 1973. An engineer from the borough’s engineering consulting firm was called by the hoard. Evidence was presented before the board that Fleischer Brook would he changed from its horseshoe, meandering course to a shorter, straight-flowing channel, and widened and deepened. The brook’s capacity would be increased several-fold, as would its ability to serve as a water retention basin for water from upstream and increased runoff from the Cappture Realty property, if it were improved. The channel construction would reduce existing flood problems for adjacent tracts. No precise information was presented as to what would happen to tracts below the Cappture Realty property. Both experts explained that if an area downstream of the improvement in Fleischer Brook becomes congested or blocked, back-flooding at the Cappture Realty property and surrounding parcels will he worse than before the improvement. Both witnesses agreed that the standard requiring no additional runoff was extremely difficult i.o be met by any use permitted in the zone.

There was testimony before the zoning board regarding the number of trucks coming to the property, the maintenance operation for the trucks in the nature of a “private” service station, and the sound and pollution effects from the cardboard box machinery.

The zoning board found that the applicant’s request to improve Fleischer Brook would be harmful to the community welfare and that the improvement would neither alleviate nor dispose of the existing flood problem. In addition, the board found that if the brook was obstructed downstream, the Cappture Realty tract and surrounding land would be flooded in the backup process and if developed under present plans would substantially increase the water input into the stream.

The board of adjustment denied the special exception use variance for several reasons. It could not grant the relief without a favorable advisory opinion of the planning board, which applicant was unable to obtain. Additionally, the board of adjustment found as a fact that the proposed construction would generate additional surface water runoff as prohibited in Ordinance No. 71-13; that the proposed improvements to the Eleischer Brook channel do not conform in either design or location to those recommended in the engineering report;, that additional data specifying the noise level and dust and odor production of the cardboard box machinery was not submitted; that a glue operation was to be added to the corrugated box manufacturing, which had not been adequately presented to the board of adjustment;, that considerable tractor-trailer traffic would be generated by the warehouse and maintenance operation; that the neighboring property owners were opposed to the proposed use, and that the applicant did not sustain its burden of meeting the criteria under the flood moratorium ordinance and Ordinance No. 88-17. The board of adjustment reserved the right to enter a complete finding of fact if the Cappture Realty Company ever succeeded in obtaining a favorable report from the planning board.

There is little dispute that the flooding of Eleischer Brook has been and is a serious problem today, not only in Elm-wood Park, but in down-stream Garfield. The proposed building would have the acknowledged result of increased runoff to Eleischer Brook due to the imperviousness of the soil created by such construction and related paving for a driveway and parking areas. Plaintiff argues the increase would be negligible in view of the size of the parcel and the developed state of the borough.

Defendant borough’s expert testified that surface runoff from the undeveloped land of plaintiff was approximately 3.84 cubic feet a second, or 28.72 gallons a second. If the land were developed as planned, it was estimated that the surface runoff would be increased to 6.79 cubic feet a second, or 51 gallons a second. The flood control study recommended a flow for Meischer Brook capable of handling a 15-year design storm or an average of from 450 to 700 cubic feet a second.

The borough concedes it is not now trying to alleviate the situation by amending the zoning 'of the flood plain area, presently zoned largely industrial. There was also testimony on behalf of the zoning board of concern for eligibility of the area for federal flood insurance. This may prove inconsistent with the zoning of flood plain areas as “Industrial E,” and the determination of the municipality to forego flood plain zoning despite the mandate for such eventual zoning by N. J. S. A. 58:16A-50 et seq., as well as requirements for permanent federal flood insurance. See 42 U. S. C. A. §§ 4012 and 4022 et seq.

Thus, this is not an interim ordinance to allow adoption of a comprehensive zoning plan or a revision of the zoning ordinance. Bather, its purpose now is to allow time for the construction of certain specified flood control projects along the length of the brook. The borough conceded in argument, however, that construction of the recommended bypass and certain culverts, as well as other recommended channel improvements (straightening and deepening the channel, etc.), may not solve the flood problem. Nevertheless, the borough urges that the work is necessary and required under its police powers for the health, safety and welfare of its residents. It further urges that the county is proceeding expeditiously, since it approved the report of the engineers and has provided monies in the budget and approved a $5,833,565 bond issue in May 1973 which included these flood projects, as well as many capital items in the county. The county also entered into a January 3, 1973 contract with the municipality of Garfield for a $1,000,000 project for the Lanza Avenue diversion, and has prepared preliminary plans. The borough asserts such actions support the necessity, vitality and validity of the ordinance.

The borough and county are presently preparing for construction intended to alleviate these local flooding conditions. The moratorium zoning ordinances under attack in this case were adopted as interim measures and in anticipation of the construction of flood control projects, and initially the amendment of the zoning ordinance. The purpose of the moratorium is to give citizens in the flood plain area protection against haphazard construction or further development that will increase their flooding problems pending completion of the projects.

Therefore, the moratorium issue comes down to whether a municipality may temporarily delay construction of industrial buildings in an industrial zone for the sole purpose of building and completing flood control projects, and if so, for how long. Of course, if the ordinance is found to be unreasonable or beyond the powers of the municipality, the question of taking of private property without compensation arises, including the measure of damages. The parties agreed that any hearing on any damages would abide the outcome of this case.

I

The considerations which prompted legal recognition of comprehensive municipal planning of land uses are now history. The population explosion, industrial and commercial growth, the race for ratables, the constantly accelerating trend towards greater urbanization, and many other factors precipitated the utilization of zoning as a method of guarding against haphazard land usage detrimental to the public welfare. This is particularly evident in New Jersey, which has been called the most densely populated and most industrialized state in the nation. The court can take notice of the fact that New Jersey, based on the 1970 census, is the most densely populated state in the nation, with 953.1 persons a square mile in 1970. Of course, zoning is merely one instrumentality for the implementation of comprehensive municipal land planning. See Mansfield & Swett, Inc. v. West Orange, 120 N. J. L. 145, 148-150 (Sup. Ct. 1938). The enactment of interim ordinances has been upheld as a recognized and logical addition to comprehensive municipal planning during periods required to create or revise comprehensive zoning plans.

See Monmouth Lumber Co. v. Ocean Tp., 9 N. J. 64 (1952); Deal Gardens, Inc. v. Board of Trustees, Loch Arbour, 48 N. J. 492 (1967); Rockaway Estates v. Rockaway Tp., 38 N. J. Super. 468 (App. Div. 1955), and Campana v. Clark Tp., 82 N. J. Super. 392 (Law Div. 1964).

Indeed, it is precisely because of the exigencies surrounding the requirements for planning and adequate action by a municipality that interim ordinances have been upheld. In Monmouth Lumber Co. v. Ocean Tp., supra, the Supreme Court rejected the argument that a zoning ordinance was an invalid exercise of police powers because it was stop-gap legislation adopted to permit delay in preparation of additional zoning legislation.

* * * Such action is within the intent and purpose of the statutes relating to planning, R. S. 40:55-1 et seq., particularly in view of the constitutional and legislative mandates (N. J. Const. 1947, art. IV, sec. VII, par. 11, supra, and R. S. 40:55-2, supra) that such laws as these shall be construed “most favorably to municipalities.” It is entitrdy consistent with the theory of planning to provide, after study of the conditions of the community, a means of preventing changes in the character thereof which might be opposed to the theory of planning and zoning pending the formulation of a detailed and complete “comprehensive plan” for the municipality, either new or in substitution for an outmoded plan. [9 N. J. at 75]

In Rockaway Estates v. Rockaway Tp., supra, while city planning consultants were conducting studies with a view towards formulating a comprehensive plan in accordance with which zoning ordinances were to be adopted, plaintiff submitted to the< governing body a proposed subdivision of its land looking towards the ultimate construction of 1,200 homes. Two months later a zoning ordinance was adopted which rendered the proposed subdivision' illegal. In determining that the zoning ordinance was valid, the court held that the ordinance could not be condemned merely because it was enacted hastily and to some extent as an interim measure to prevent a building project which would destroy aborning the effort to provide for the orderly land use development of the municipality. 38 N. J. Super, at 473.

In Campana v. Clarke Tp., supra, the interim ordinance was attacked on the ground that it had been in effect for 31 months although it was originally provided that it was only , to be in effect for 18 months. In refusing to strike down the ordinance the court held that 31 months was not an unreasonable amount of time, recognizing the complexity of zoning in a modern context. The court in Campana, 82 N. J. Super, at 397, indicated it was fully aware that while the rights of individual property owners were to be protected, the court also had a duty to the community as a whole not to thwart any reasonable effort to adjust land use to modern needs.

The borough concedes it is not now trying to alleviate the situation by amending the zoning of the flood plain area presently zoned largely industrial.

II

In challenging the borough ordinance plaintiff must overcome the presumption of validity initially attaching to the ordinance. See Gruber v. Mayor, etc., Raritan Tp., 39 N. J. 1 (1962).

There is no question that under the state statute which will require flood plain zoning after delineation of flood plains by the State Department of Environmental Protection, L. 1972, c. 185, effective December 14, 1972, N. J. S. A. 58: 16A-50 et seq., a reasonable amount of time would be necessary to come up with an appropriate ordinance which would meet state and federal requirements. In fact, there may even be an obligation under the zoning law in effect prior and after the enactment of chapter 185 for a municipality to take into account and zone to minimize or prevent damage from floods. N. J. S. A. 40 :55-32 expressly states that

Buck regulations stall be in accordance with a comprehensive plan and designed for one or more of the following purposes: to lessen congestion in the streets; secure safety from fire, flood and other dangers; promote health, morals or the general welfare * * * [Emphasis added]

Although this case now involves a moratorium for flood alleviation construction, there is no rational basis for holding that a municipality may not provide sufficient breathing space in order to complete construction of such flood control projects where the health, safety and welfare (as well as property values) of the people in the municipality are involved. The court finds that the borough needs a reasonable time to handle this complex problem. As an interim enactment plaintiff has not been permanently deprived of its property or of all uses thereof. In fact, construction which affects the flow of Fleischer Brook so as to damage upstream or down-stream property owners may well subject a landowner who so increases the flow, and possibly a municipality and county, to damage suits. See Armstrong v. Francis Corp., 20 N. J. 320 (1956); Kidde Mfg. Co. v. Bloomfield, 20 N. J. 52 (1955); Yonadi v. Homestead Country Homes, Inc., 42 N. J. Super. 521 (App. Div. 1956); Hopler v. Morris Hills Regional District, 45 N. J. Super. 409 (App. Div. 1957); 93 C. J. S., Waters, § 42, and Annotation, 59 A. L. R. 2d 413 (1956). See also, Gellenthin v. J. & D. Inc., 62 N. J. Super. 224 (App. Div. 1960), and 71 N. J. Super. 226 (App. Div. 1961) (on retrial), rev'd 38 N. J. 341 (1962). Cf. Barney’s Furniture Warehouse of Newark, Inc. v. Newark, 62 N. J. 456 (1973).

In addition, there has been an increasing number of eases in recent years where further construction has been ordered temporarily halted in municipalities because of the lack of adequate sewage treatment facilities or other health reasons. See, e. g., Bayshore Sewerage Co. v. Dept. of Environmental Protection, 122 N. J. Super. 184 (Ch. Div. 1973). Such construction has been halted on an interim basis because of the potential or actual adverse effects which may result to the public health and welfare.

The court concludes that enactment of the interim ordinance in 1971 was reasonable. The court also finds that under the facts in this case the extensions to date were reasonable and necessary in order to adequately study the problem and make the necessary plans and appropriations. Additionally, some reasonable period of time is needed in which to complete construction and obtain the approvals of other agencies involved. Although construction has not yet begun, two years from the date of this decision would appear a reasonable period within which the borough should obtain necessary approvals and complete, in conjunction with the county, the necessary flood control projects; provided construction is started in good faith within six months and assuming an appropriate extension of the moratorium not to exceed such limits. Failure to meet these limitations would result in the ordinance being unreasonable as to- the property of plaintiff. The language of Justice Haneman in Deal Gardens, Inc. v. Bd. of Trustees, Loch Arbour, supra (48 N. J. at 500), is appropriate to quote:

Although the municipality may adopt a “stop gap” zoning ordinance, which if not temporary might be considered unconstitutional, such power is strictly limited and must be exercised with great caution. One of the more dangerous aspects of this type of legislation, arises from tile damage which may result if there is no restriction of the period of time during which a restraint against some land use is permitted to continue. Plainly there must be some terminal point. It is impossible to establish an inflexible rule applicable to every ease. Each situation must be assayed in its own particular factual setting to ascertain whether the elapsed time during which the ordinance has been in effect is reasonable. See 9 Rutgers L. Rev. 700 (1954-1955).

In Deal Gardens the sole excuse advanced by defendant municipality for allowing the period of time in which to obtain a revised comprehensive zoning plan to far exceed the amount of time needed to complete and finalize the ordinance was inability to obtain federal funds for a planning and zoning survey and the preparation of surrounding zoning restrictions. The court held this inadequate as a reason for the failure to finally act. This court in the present case would also find that such a reason, if it existed, would not be adequate as a future excuse. In any event, it has been represented to the court that county funds have been appropriated and are available and that no federal funds are required in connection with this project.

As pointed out in a report entitled Regulation of Flood Hazard Areas to Reduce Flood Losses, 1972, prepared by the United States Water Resources Council (vol. 1 at 5) :

The construction of dikes, dams and levees to control the flow of flood water is most often at public expense. In contrast private land use adjustments to flood hazards are usually at private expense.

Although perhaps unnecessary for this decision, the other side of the coin is often overlooked in analyzing claims by a landowner in a flood area that he should he able to use his land without restriction. If private construction would call for, or perhaps demand or increase the demand for, public flood control projects; does this not.call for an expenditure of public funds for the protection of specific private property, or purposes? Reference has also been made to the interest a municipality or county has in not causing damage to upstream or down-stream owners.

Thus, under all the circumstances, including the regional nature of the county flood control program for Fleischer Brook, the court does not find the actions or delay to date unreasonable. See Kozesnik v. Montgomery Tp., 24 N. J. 154, 162-163 (1957). It is recognized that governing bodies need time to deliberate, plan and provide for the necessary funding. This case is obviously distinguishable on this basis from Morris County Land v. Parsippany-Troy Hills Tp., supra, 40 N. J. 539, and the fact that plaintiffs land here is not being set aside as a permanent flood basin. Furthermore, increased' urbanization and changing circumstances warrant a more sophisticated approach to flooding problems.

Since the ordinance has been held to be a valid exercise of the police power and temporary in nature, there is no deprivation of property without compensation, as contemplated by U. S. Const., Amendment XIV, and N. J. Const. (1947), Art. I, par. 20. The court having found that the enactments of temporary ordinances were within the police power of the municipality under the zoning laws, and that the period of the moratorium to date has been reasonable (although the borough might have proceeded more expeditiously), this would appear to dispose of the taking question and that of compensation. No right to compensation arises from a valid exercise of the police power. State v. Mundet Cork Corp., 8 N. J. 359 (1959), cert. den. 344 U. S. 819, 73 S. Ct. 14, 97 L. Ed. 637 (1952); Penna. Reading Seashore Lines v. Bd. of Pub. Utility Comm’rs., 13 N. J. Super. 540 (App. Div. 1951), aff’d 8 N. J. 85 (1951), and Bayshore Sewerage Company v. Dept. of Environmental Protection, 122 N. J. Super. 184, 203-205 (Ch. Div. 1973). See Chicago, etc., R. Co. v. Illinois, 200 U. S. 561, 26 S. Ct. 341, 50 L. Ed. 596 (1905); Mugler v. Kansas, 123 U. S. 623, 8 S. Ct. 273, 31 L. Ed. 205 (1887) ; Turnpike Realty Company v. Town of Dedham, Mass. 284 N. E. 2d 891 (1972), cert. den. 409 U. S. 1108, 93 S. Ct. 908, 34 L. Ed. 2d 689 (1973).

Plaintiff also argues it is being assessed for taxes as if the land were not under a moratorium, and is paying property taxes under protest. It appears obvious that the moratorium establishes as a matter of law that the subject land is temporarily restricted, and presumably the tax assessor establishes true value accordingly for that period. See N. J. Const. (1947), Art. VIII, § I, par. 1(a), and N. J. S. A. 54:4-2.25 and regulations thereunder. The taxing authorities cannot have it both ways. It may be noted that L. 1972, c. 185, § 10 (N. J. 8. 58:16A-61) would require tax assessors to consider the impact of rules or regulations issued pursuant to that act in establishing full value of lands designated as ftoodways or as flood fringe areas. The court considers this merely a restatement of present law. Thus, in establishing true value of plaintiff’s property, if the tax assessor fails to take the moratorium ordinances into account, plaintiff may have been damaged by any such excess assessment. Plaintiff has an avenue for redress through tax appeals, which should be sufficient.

Ill

Plaintiff also raises several other grounds in its appeal. It argues that the denial of the special exception variance by the board of adjustment was arbitrary and capricious, and that the borough’s basic zoning ordinance contains an unlawful delegation of powers to the board of adjustment.

A

Section 88-17 of the borough’s zoning ordinance permits industrial uses in the E-Industrial zone if certain requirements of the ordinance are met. These requirements Include prohibition of uses which are noxious by reason of emission of odor, dust or noise, or danger to health and safety of the residents; and also include prior written approval of the planning board as to plot, site and building plans, as well as specifications and use.

Plaintiff also asserts that the enabling state legislation, N. J. S. A. 40:55-39(b), does not allow a municipality to condition approval on a favorable opinion from the planning board. Sufficient answer is that the statute expressly provides that the board has power to “hear and decide, in accordance with the provisions of any such ordinance, requests for special exceptions * * (Emphasis added). There is no reason, and plaintiff has cited no authority, to prohibit a permit system, or even conditions or restrictions, in various zones if the municipality so chooses. In fact, permits appear rather common conditions. See Kozesnik v. Montgomery Tp., 24 N. J. 154, 163 (1957). Plaintiff calls the court’s attention to Home Builders Ass’n of Northern New Jersey v. Paramus, 7 N. J. 335, 341 (1951), and Dallenbach Sand Co. v. Mayor, etc., South Brunswick Tp., 90 N. J. Super. 218 (App. Div. 1966). These cases are not inconsistent with the quoted language of N. J. S. A. 40:55-39 (b) and do not prevent the board of adjustment requiring as a condition to its action the favorable approval of a planning board in areas of its expertise. Unless plaintiff had an opportunity to be heard by that board, neither the zoning board nor plaintiff could be bound by the recommendation. However, this defect does not affect the board of adjustment’s decision in this case since the other grounds for denial were sufficient.

Actually, the board of adjustment in Elmwood Park acts as a “weak board” and could only recommend approval to the governing body if all proper conditions are met. Certainly, the participation by the planning board in an area of its statutory competence can be taken into account by the zoning board, provided the applicant has an opportunity to be heard. In this case the planning board, although present at the board of adjustment hearing, had erroneously refused to consider plaintiff’s application. (See infra).

The board of adjustment found that (1) competent manufacturer’s specifications regarding the noise level and other particulars, such as dust and odor of glue from the proposed corrugated box manufacturing machinery, were not submitted; (2) a gluing operation as part of the box manufacturing facility was not fully revealed, and the board of adjustment was unable to obtain sufficient information, and (3) property owners in the area were opposed to the proposed use, particularly relating to the truck traffic and noise and possible increase in flooding.

The testimony at the hearing on the subject of the corrugated box machinery and the letter and advertisements subsequently submitted by plaintiff were not expert. Plaintiff had agreed to submit expert, specific information so the board could study the effects of the machinery. Such competent evidence was not adduced.

At the hearing before the board of adjustment the applicant was asked if the warehouse would contain gluing machinery for the corrugated boxes. It was initially stated that a gluing operation would not be present, but applicant subsequently stated it was a part of the proposed operation.

The present ease is distinguishable from Yanow v. Seven Oaks Park, Inc., 18 N. J. Super. 411 (1952), rev’d and remanded 11 N. J. 341 (1953). The Elmwood Park Board of Adjustment merely found as a matter of fact that the neighboring residents were opposed to the Cappture Eealty use. The zoning ordinance did not require the approval of the neighbors as a prerequisite for approval of the special exception use. The municipality has not delegated a legislative power to individual citizens or property owners. Yanow v. Seven Oaks Park, Inc., supra, 18 N. J. Super, at 414.

Plaintiff also challenges the fourth “finding” of the board of adjustment which reserves the right to enter a complete finding of facts at such time as it may be determined that the application might properly be considered by the board. Such additional findings apparently related to the corrugated box and gluing operations if new competent evidence was submitted. In this case, on the evidence before it, the board of adjustment made sufficient findings of fact to warrant a denial of the special exception use variance. The resolution by the board is distinguishable from Grundlehner v. Dangler, 29 N. J. 256 (1959), where none of the findings and none of the special reasons were set forth. The Elmwood Park Board of Adjustment set forth its findings and special reasons in clear, explicit terms. Grundlehner, supra, 29 N. J. at 271.

The record before the board of adjustment indicated that the project had not been fully disclosed in the application. The testimony before the board indicated there would be considerable truck traffic and repair facilities for plaintiff’s vehicles. In effect, there would be a private gas filling and repair truck terminal for plaintiff’s fairly large fleet. Zoning ordinances have traditionally treated gas stations as' sui generis, although admittedly the gasoline and service facility were to be for the private use of plaintiff. Based on the testimony as to the extent of truck traffic and use, the operation of machinery, noise and dust, the court finds no basis to set aside the denial of this specific use and, under all the circumstances, including the planned flood construction facilities, does not find the action of the board of adjustment arbitrary or capricious.

Plaintiff also asserts that no one could meet the criteria of creating no additional surface runoff,, citing Oakwood at Madison, Inc. v. Madison Tp., 117 N. J. Super. 11, 21 (Law Div. 1971). In light of the court’s previous holding that the moratorium was reasonable and of temporary duration, it is not essential for the court to consider the point at this time. In construing statutes or ordinances, if there is a reading which would sustain the particular provision, the court attempts to give effect to the legislative enactment, and this would require a finding that the ordinance did not prohibit inconsequential increases in runoff since even a leaf or board on the ground might arguably increase runoff. There was no evidence of possible construction of buildings on pilings, use of catch basins, or similar measures to prevent substantial runoff or what uses might be permitted under alternate interpretations other than possibly using crushed stone for driveway paving.

From the evidence presented to the board of adjustment it is apparent that the applicant failed to adduce sufficient competent evidence to set aside the decision of the board.

Plaintiff also objected to the failure or refusal of the planning board to consider its plot plan and site plan. During the course of this proceeding the court entered an order, on plaintiff’s motion, directing that the planning board review the same. Defendant municipality agreed to its entry. Therefore, that objection is moot.

      The Borough of Elmwood Park was formerly called the Borough of East Paterson.

      ] cu. ft. = 7.48 gallons.

      Legislation has also been adopted recognizing that there are critical areas in the State where unregulated development may be mimical to the public welfare. See, e. g., N. J. S. A. 13:9A-1 (Wetlands Act); N. J. S. A. 13:19-1 (Coastal Area Facility Review Act) ; N. J. S. A. 58:11 — 44 (Critical areas — septic systems) ; N. J. S. A. 58 :ll-24 (controls on large subdivisions) ; N. J. S. A. 58 :16A-50 (flood plains) ; N. J. S. A. 58:10-23.25 (Clean Ocean Act), and N. J. S. A. 13:17-1 (Hackensack Meadowlands).


source: Caselaw Access Project

author: Horn, A. J. S. C.

license: Public Domain

text:
    WHISPERING WATERS, INC., PLAINTIFF, v. ZONING BOARD OF THE CITY OF SALEM, DEFENDANT.
    Superior Court of New Jersey Law Division.
    Decided December 19, 1973.

      Mr. E. Allen Nickerson for plaintiff.

      Mr. Oakford W. Acton, Jr. for defendant (Messrs. Acton & Point, attorneys).
   Horn, A. J. S. C.

This is an action in lieu of prerogative writs. Plaintiff applied to the Salem City Planning Board for a recommendation to the Salem City Zoning Board of plaintiff’s proposed development of certain garden-type, multiple dwelling units. The planning board adopted a resolution recommending unfavorably. Notwithstanding the unfavorable recommendation, plaintiff nevertheless applied to the zoning board for a special exception under section 6 :914 of the zoning ordinance. This section reads as follows:

6:914 — GARDEN-TYPE MULTIPLE DWELLING. The Board of Adjustment may authorize as a special exception, after reveiw by and upon the recommendation of the Planning Board, the erection of a garden-type multiple dwelling or a group of garden-type multiple dwellings in any Residence District. Such dwelling, or group of dwellings as a unit, shall conform with all regulations for the district in which it is located and with all pertinent general regulations of this Ordinance, except those for which the following special regulations shall be substituted * * *.

The zoning board denied the application on the ground that it did not have jurisdiction to authorize the special exception, in view of the unfavorable recommendation of the planning board. Consequently, it refused to conduct a hearing or permit the taking of testimony, or to otherwise act on plaintiff’s application.

Plaintiff asks this court to direct the zoning board to hear and decide its application on the merits thereof.

The parties have agreed that the matter should he decided by me on the allegations of the complaint, as though there were cross-motions for summary judgment.

Defendant contends that the board of adjustment is specifically bound by its authority as set forth in section 6:914 of the zoning ordinance, and that the hoard may not grant a special exception until two things have occurred: first, a review by the planning board, and, second, a recommendaiion by that hoard that a special exception he granted.

Defendant further contends that N. J. S. A. 40 :55-39 (b) directs that, since the hoard of adjustment may “hoar and decide in accordance with the provisions of any such ordinance” and since the ordinance requires recommendation by the panning board, the board of adjustment is without jurisdiction unless such recommendation of the planning board is forthcoming.

Defendant relies on Schmidt v. Board of Adjustment, Newark, 9 N. J. 405 (1952), for the proposition that the board of adjustment may

* * ® define the category of special exceptions and the role of the statutory administrative body in the fulfillment of declared policy, i. e., whether the latter’s jurisdiction shall be exclusive, controlled by certain and definite rules of conduct, or recommendatory only.

Defendant also refers to Verona, Inc., v. Mayor, etc., West Caldwell, 49 N. J. 274 (1967), as holding that the municipality may deny to the board of adjustment sole power to approve special exceptions.

I must disagree with defendant’s contentions and its interpretation of those cases.

In Schmidt, supra, the local board of adjustment refused leave to plaintiff to use lands in Newark for the operation of a gasoline service station. The ordinance involved in that case provided that no permit for such nse should issue “except upon application first made to the Board of Adjustment,” which was empowered, after hearing, to recommend in writing to the local governing body that a permit for such use be granted if in its judgment it would not be detrimental to the health, safety.and general welfare of the community, and is reasonably necessary for the convenience of the community.

Also, in Schmidt, appellants’ challenge to the lower tribunals’ decisions included the lack of statutory authority for action by the governing body on the favorable recommendation or otherwise of the zoning board. They asserted that, since the governing body was not authorized by statute to act and since the board of adjustment could only recommend, there was no valid local legislation authorizing the special exception. 9 N. J. at 412— 413.

A careful reading of the opinion will disclose that the court held that the zoning ordinance, or its provisions drawn pursuant to N. J. S. A. 40:55-39(b), could provide for the authorization directly by the zoning board, or, as in the case of N. J. S. A. 40:55-39(d), merely permit the zoning board to make a recommendation to the governing body.

The court did not discuss whether the zoning board’s jurisdiction to make a determination under section 39(b) was exclusive in relationship to other municipal agencies, such as a planning board. Its holding was confined to zoning boards’ relationships to their respective governing bodies. In other words, a governing body could, by the terms of a zoning ordinance, give authority to a zoning board to authorize a special exception or to restrict the action of a zoning board to recommending to the governing body.

In Verona, Inc., supra, plaintiff sought permission to extend its parking lot into an adjoining area zoned for a residence, and also sought a variance from the rear-yard requirements applicable to its commercial building. The board of adjustment, after public hearing, recommended approval of both requests, but the mayor and council denied both applications, whereupon plaintiff brought action challenging the denial.

The pertinent section of the zoning ordinance involved in that case provided that parking areas for business use should be permitted in adjoining residential zones for a distance not exceeding 100 feet, provided said area was contiguous to the lot upon which the main business building is located, after hearing on notice to adjacent property owners upon an application for a special variance and recommendation.

The court held that the zoning ordinance before it limited the authority of the board of adjustment to a recommendation of the action for final approval.

A municipality may deny the Board of Adjustment power to approve by itself special exceptions and may limit the authority of the board to recommendations to the governing body for that body’s final apjiroval. Schmidt v. Board of Adjustment of City of Newark, 9 N. J. 405, 419-420 (1952). [49 N. J. at p. 284]

Nowhere in these opinions does the Supreme Court hold that a zoning board is paralyzed by a failure to receive an affirmative recommendation from another agency, such as a planning board.

In Duffcon Concrete Products v. Cresskill, 1 N. J. 509 (1949), it was said:

Once the board of adjustment is provided for in the zoning ordinance, its powers stem directly from the statute (R. S. 40:55-39), and may not in any way be circumscribed, altered or extended by the municipal governing body, [at 515-510]

In Swimming River Golf and Country Club v. New Shrewsbury, 30 N. J. 132 (1959), the court held:

* * the board of adjustment is the only agency empowered to hear and decide requests for special exceptions in accordance with standards specified in a municipal zoning ordinance, as this matter is committed by state statute to that board and the municipality may not deviate from that framework. Saddle River Country Day School v. Saddle River, supra; Duffcon Concrete Products, Inc. v. Borough of Cresskill, 1 N. J. 509, 515-516 (1949) ; Tzeses v. Board of South Orange, 22 N. J. Super. 45 (App. Div. 1952). [at 136]

In Saddle River Country Day School v. Saddle River, 51 N. J. Super. 589, 604 (App. Div. 1958), a zoning ordinance providing that requests for special exceptions be referred to the planning board for recommendation and then to the governing body for final decision was invalid because, as held in Schmidt v. Board of Adjustment, Newark, supra, the board of adjustment was the only agency authorized to consider the special exception applied for, and to either grant it or recommend it to the governing body.

Thus, more recently in Piscitelli v. Tp. Comm., Scotch Plains Tp., 103 N. J. Super. 589, 596 (Law Div. 1968), the same principles were repeated.

Defendant contends that the wording of section 6:914, “after review by and upon the recommendation of the Planning Board,” means only favorable recommendation. If this is true, then this section of the zoning ordinance is invalid, for the reason that the practical effect of such a provision would be to make the planning board the sole arbiter of whether the application for the special exception should be granted.

The word “recommend” has been defined as meaning to commend or to counsel. Random House Dictionary of the English Language (unabridged ed. 1966). Obviously, if the word “recommend” means “to counsel,” then all that the ordinance calls for from the planning board is either a favorable or an unfavorable recommendation. If the recommendation is favorable, it may consider that recommendation and proceed pursuant to the statute and the ordinance. If the recommendation is unfavorable, the zoning board may likewise consider the recommendation and proceed to take action on the application for the special exception. It may allow the special exception notwithstanding an unfavorable recommendation, from the planning board, so long as its determination falls within appropriate guidelines.

But even construing “recommend” to mean to commend or to report favorably, for the reasons already mentioned, the zoning board may nevertheless act, since such condition precedent is invalid.

The third paragraph of N. J. S. A. 40:55-1.13 reads as follows:

Whenever the planning board, pursuant to this act shall have made a recommendation to another body, such recommendation may be overridden only by a majority of the full membership of such other body. Where the body which shall have overridden a recommendation of the planning board is a municipal body or agency, the action of such body shall not become final until the governing body of the municipality shall, by majority vote, approve its action in overriding the recommendation of the planning board.

It is not necessary to pass upon the question of whether the quoted paragraph is applicable to this situation. That has not been argued or briefed and may not actually constitute a problem or create an issue.

For the foregoing reasons, summary judgment will be entered in favor of plaintiff, directing the zoning board to take appropriate steps pursuant to the ordinance and N. J. S. A. 40:55-39(b) with respect to plaintiff’s application for a special exception.


author: Mehler, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. LEROY PLOWDEN, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued November 19, 1973
    Decided January 2, 1974.

      Before Judges Lynch, Mehler and Michels.

      Mr. James K. Smith, Jr., Assistant Deputy Public Defender, argued the cause for appellant (Mr. Stanley C. Van Ness, Public Defender, attorney).

      Mr. Mart Vaarsi, Deputy Attorney General, argued the cause for respondent (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney).
   The opinion of the court was delivered by

Mehler, J. A. D.

Defendant appeals his convictions of first degree murder and assault with intent to kill. He urges two reasons for reversal, the first of which is that the court erred in permitting the prosecutor to inquire of an alibi witness whether she had gone to the police with her story and in allowing the prosecutor to comment to the jury on her failure to do so.

Defendant was tried for killing one Williams and shooting one Mitchell during a card game in Jersey City at about 1:30 a.m. on Sunday, April 30, 1972. The defense was alibi. Defendant’s sister, Thelma Johnson, testified that he came to her apartment in New York City some time between 11 and 11:30 p.m. on Saturday, April 29, 1972, and remained there continuously until the following Tuesday. On Tuesday night Mrs. Johnson was told by her sister that defendant had been arrested on suspicion of a murder that had occurred on Saturday night. Mrs. Johnson testified she then realized defendant could not have committed the murder. She was then asked when it was that she went to the police, to which she responded that she did not. When the prosecutor followed with the question, “You never went to the police?”, there was an objection, which was overruled, and a motion for a mistrial, which was denied. The prosecutor then elicited testimony from Mrs. Johnson that she never went to the police and made no effort to tell them that her brother had been in her home.

In his summation the prosecutor commented on Mrs. Johnson’s failure to go to the police. A motion for mistrial on this ground was denied. Defendant contends that the foregoing cross-examination of Mrs. Johnson and the prosecutor’s comments on her testimony were prejudicially erroneous because she was under no duty to go to the police. We disagree. Mrs. Johnson’s failure to tell the police soon after her brother’s arrest that he had been with her when the murder for which he was arrested had been committed was inconsistent with what one could reasonably expect she would have done had defendant been in her apartment when the shootings occurred. As was said in People v. MacCullough, 281 Mich. 15, 26, 274 N. W. 693, 697 (Sup. Ct. 1937), “[T]he conduct of a witness inconsistent with his testimony may be shown.” In People v. McClow, 40 Mich. App. 185, 198 N. W. 2d 707 (Ct. App. 1972), defendant’s brother testified as an alibi witness for defendant. The prosecutor cross-examined defendant’s brother concerning his failure to come forward with the alibi at any time prior to trial and argued to the jury that the failure of the witness to come forward at an earlier date should be considered as bearing upon his credibility. On appeal the court said:

Here, it was not improper cross-examination to interrogate the witness as to the conduct on his part at variance and inconsistent with what would be natural or probable if his statements on his direct examination were true. The credibility of a witness may be attacked by showing that he failed to speak or act when it would have been natural to do so if the facts were in accordance with his testimony. People v. MacCullough, supra. It was within the jury’s province to determine the credibility of all the witnesses, including any whose testimony tends to establish an alibi. People v. Loudenslager, 27 Mich. 718, 42 N. W. 2d 834 (1950). [198 N. W. 2d at 711-712]

To the same effect, see People v. McMath, 104 Ill. App. 2d 302, 244 N. E. 2d 330, 336 (App. Ct. 1968); People v. Terrell, 10 Ill. App. 3d 56, 293 N. E. 2d 468 (App. Ct. 1973).

As a second and final reason for reversal defendant challenges three statements of the prosecutor made in the course of his summation. The first involves a statement that three named witnesses had a common fear of defendant. The comment was justified since those witnesses were or had been in the apartment where the shooting occurred, and there was testimony that when defendant got ready to leave the apartment he said he would kill anyone who identified him. In a second comment the prosecutor argued that a witness, Eudy Johnson, was used, duped or forced to take the witness stand and lie. Johnson, the defendant’s 15-year-old nephew, testified as an alibi witness. The prosecutor, after calling the jury’s attention to discrepancies in Johnson’s testimony and conflicts between his testimony and that of others, said that he was lying. In the light of the evidence in the ease, we deem the statement to have been a fair argument. In the third comment the prosecutor said it was the jury’s “job to protect the lives of every citizen in Hudson County [and] to protect the citizens of Hudson County against crime.” We do not approve of this kind of argument. Cf. State v. Johnson, 31 N. J. 489, 512-513 (1960), app. dism. 368 U. S. 145, 82 S. Ct. 247, 7 L. Ed. 2d 188 (1961). However, we are of the opinion that under the circumstances of this case it did no harm, particularly since the court in its charge instructed the jury that its verdict must he in accordance with the evidence. See State v. Knight, 63 N. J. 187, 193-194 (1973).

No objection was made at trial to any of the remarks about which defendant now complains. As the court said in State v. Thornton, 38 N. J. 380 (1962), with respect to a similar situation:

[W]e cannot overlook the failure of counsel to object to them and thus provide the trial court with an opportunity to remedy the situation if he felt the need was present. Such failure gives rise to the influence [sic] that in the atmosphere of the trial the defense did not consider the summation out of bounds, [at 399]

Upon a review and analysis of the summation, we conclude that defendant was not improperly prejudiced by any of the remarks made by the prosecutor in the course of his summation and that those remarks did not lead the jury to a result it otherwise might not have reached. State v. Macon, 57 N. J. 325, 335-336 (1971); State v. Hill, 47 N. J. 490, 499 (1966); State v. Johnson, supra, 31 N. J. at 510.

Affirmed.


author: Crane, J. A. D.

text:
    CHRIST J. PAITAKIS, APPELLANT, v. CITY COUNCIL OF THE CITY OF NEW BRUNSWICK AND JOYCE KILMER BOWLING CORP., RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued November 27, 1973
    Decided January 7, 1974.

      Before Judges Kolovsky, Fritz and Crane.

      Mr. Barry D. Maurer argued the cause for appellant (Messrs. Maurer Maurer, attorneys).

      Mr. Franklin F. Feld argued the cause for respondent City of New Brunswick (Mr. John J. Harper, on the brief).

      Mr. George F. Kugler, Jr., Attorney General of New Jersey, filed a statement in lieu of brief for Division of Alcoholic Beverage Control (Mr. David S. Piltzer, Deputy Attorney General, of counsel).

      Messrs. Garrenger & Rosta filed a brief on behalf of objector Court Tavern, Inc. (Mr. Robert L. Garrenger, Jr., on the brief).
   The opinion of the court was delivered by

Crane, J. A. D.

This is an appeal from a determination of the Division of Alcoholic Beverage Control. Appellant sought approval of the transfer of a liquor license from Joyce Kilmer Bowling Corp. to himself to enable him to dispense liquors at a luncheonette in New Brunswick.

At a hearing before the New Brunswick City Council, Vincent Albert, the principal stockholder of Court Tavern, Inc., which operated a nearby tavern, was the sole objector. The city council denied the transfer on the ground it would be contrary to the health and welfare of the city due to the proximity of various county buildings, and that traffic congestion would be increased by deliveries and the arrival and departure of customers. Parenthetically, we take judicial notice of the fact that the position was diametrically contrary to that taken by the city council in previous litigation in this court in which the present objector, Court Tavern, Inc., sought, among other things, to compel the building inspector to withhold the granting of a certificate of occupancy to Christ J. Paitakis to permit him to operate the luncheonette which is the subject matter of this suit. Court Tavern, Inc., v. Bernard Schrurn (Docket A 758 — 71, decided March 26, 1973). In that suit the city council stated in its fifth separate defense that:

City Council has considered the application of defendant Paitakis for the transfer of a liquor license in conjunction with applicable laws and standards, and after a hearing wherein all objectors in-eluding this Plaintiff had an opportunity to be heard. Although the governing body has not formally articulated its decision, nevertheless it can be stipulated for the purpose of this case that the governing body finds Defendant Paitakis has complied with all the requirements of law pertaining to a liquor license transfer, that such license should be consistent with the general character and needs of the neighborhood and that its existence at such location would not be detrimental to the general welfare.

Pursuant to N. J. 8. A. 33 :1 — 2-2 an appeal was taken to the Director of the Division of Alcoholic Beverage Control and a de novo hearing was held, after which the denial of the transfer by the city council was affirmed. Appellant then petitioned for a supplementary hearing on the ground of newly discovered evidence^ alleging that City Councilman John A. Smith was in a position of conflict of interest by reason of his close association with Court Tavern, Inc. and its principal stockholder, Vincent Albert.

The Division held a supplementary hearing, as requested, during the course of which appellant presented testimony showing that Councilman Smith maintained law offices next door to the Court Tavern, and that the Court Tavern as an accommodation provided a telephone answering service in the tavern for Councilman Smith’s private law office. Neither the council nor Court Tavern, Inc., both of which were represented at the supplemental hearing, presented any witnesses' although Vincent Albert was present and available. The hearer’s report, which was adopted as the decision of the Division by the Director, found that:

I find that the proofs supplied fall far short of that measure necessary to support the contention of conflict of interest. There was no proof whatever offered in support of any personal relationship between Smith and Albert. While respondents offered no testimony in rebuttal, contending that none was needed, the existence of the telephone connection between the law office and the tavern was uncontroverted. By conjecture alone, it is thus assumed that Smith does have such connection, the use for which appears from the proofs to be a late-hour or weekend convenience. Proofs were totally lacking respecting the relationship, financial or otherwise, that gave rise to this extra-hour telephone convenience.

Ordinarily, a factual conclusion of the Director of Alcoholic Beverage Control supported by the record would be conclusive. Hornauer v. Division of Alcoholic Beverage Control, 40 N. J. Super. 501, 507 (App. Div. 1956). This matter, however, presents issues of grave public concern. Where a public official has a direct or indirect private interest in the outcome of his official action which is different from that which the public official holds in common with members of the public, the action is voidable. Aldom v. Roseland, 42 N. J. Super. 495 (App. Div. 1956). The determination of whether such an interest is sufficient to disqualify the official is factual in nature and requires an inquiry as to “whether the circumstances could reasonably be interpreted to show that they had the likely capacity to tempt the official to depart from his sworn public duty.” Van Itallie v. Franklin Lakes, 28 N. J. 258, 268 (1958).

The evidence presented by appellant was admittedly thin, but the highly unusual circumstance of an attorney having a telephone answering service in a tavern operated by a man with whom he had been acquainted for a number of years should have alerted the officials of the Division to the possibility of the existence of other evidence bearing upon the closeness of their relationship. The affidavits submitted to the Division by the appellant suggested that Albert and Smith were close friends and that Albert had loaned Smith money. If these facts had been proven, undoubtedly the disqualification of Councilman Smith would have been established, it being the strong policy of the administration of the law pertaining to the control of alcoholic beverages that the appearance of objectivity and impartiality as well as their actuality be maintained. Fanwood v. Rocco, 33 N. J. 404, 417 (1960).

The Legislature has invested the Director with broad powers of supervision and control to remedy the abuses inherent in the liquor traffic. Butler Oak Tavern v. Div. of Alcoholic Beverage Control, 20 N. J. 373, 385 (1956). Ilis mandate is “to insure the fair, impartial, stringent and comprehensive administration.” of the law. N. J. S. A. 33 :1—23. In carrying out gwsi-judicial functions pursuant to N. J. S. A. 33 :l-22 and 23, the Director’s powers of supervision and control transcend those of an ordinary tribunal. Belmar v. Div. of Alcoholic Beverage Control, 50 N. J. Super. 423, 427 (App. Div. 1958); Hudson Bergen &c., Ass’n v. Hoboken, 135 N. J. L. 502, 510 (E. & A 1947). He has the power to direct the issuance of a transfer of a license where the local municipal licensing authority has refused to do so for unjustified reasons. South Jersey Retail Liquor Dealers Ass’n v. Burnett, 125 N. J. L. 105 (Sup. Ct. 1940).

Ho public outcry against the transfer of the liquor license was manifest here, as was the case in Lyons Farms Tavern v. Newark Mun. Bd. Alc. Bev., 55 N. J. 292, 306-307 (1970). Here the sole objector was a nearby licensee whose primary interest undoubtedly was the elimination of a potential competitor. That objector was shown to have a unique relationship to one of the members of the local licensing authority. Under those circumstances invocation of the Director’s investigative power was manifestly indicated. N. J. S. A. 33: 1-35 provides that the Director may make investigations; he may examine witnesses under oath, and he may compel the attendance of witnesses by subpoena. At the very least, the circumstances suggested the interrogation of Vincent Albert and Councilman Smith as to the relationship between them. Cf. State v. Andreano, 117 N. J. Super. 498, 502 (App. Div. 1971). Further independent investigation under the direction of the Director would also have been appropriate. “A power to act imports a duty to act when the public interest suggests to the unfettered official judgment that something should be done.” McDonough v. Roach, 35 N. J. 153, 157 (1961).

Accordingly, we reverse and remand the matter for further proceedings before the Director of the Division of Alcoholic Beverage Control in accordance with the views expressed in this opinion.


author: Seidman, J. A. D.

text:
    HARRY BONNETT, ET AL., PLAINTIFFS-RESPONDENTS, v. STATE OF NEW JERSEY; WILLIAM T. CAHILL, GOVERNOR OF THE STATE OF NEW JERSEY; JOSEPH M. McCRANE, JR., TREASURER OF THE STATE OF NEW JERSEY; RAYMOND H. BATEMAN, PRESIDENT OF THE NEW JERSEY STATE SENATE; THOMAS H. KEAN, SPEAKER OF THE GENERAL ASSEMBLY OF THE STATE OF NEW JERSEY; ROBERT CLIFFORD, COMMISSIONER OF THE DEPARTMENT OF INSTITUTIONS AND AGENCIES OF THE STATE OF NEW JERSEY; AND EDWARD B. McCONNELL, DIRECTOR OF THE ADMINISTRATIVE OFFICE OF THE COURTS OF THE STATE OF NEW JERSEY, DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued December 11, 1973
    Decided January 9, 1974.

      Before Judges Carton, Seidman and Demos.

      Mr. Richard M. Conley, Deputy Attorney General, argued the cause for appellants (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney; Mr. Morton I. Green-berg, Assistant Attorney General, of Counsel and on the brief).

      Mr. William L. Brack, argued the cause for respondents (Messrs. Brach, Eichler, Rosenberg & Silver, attorneys; Mr. William H. Eaton, on the brief).

      Mr. David G. Lubell of the New York Bar, argued the cause for intervenor-respondent League of Women Voters of New Jersey (Mr. William J. Bender, attorney).
   The opinion of the court was delivered by

Seidman, J. A. D.

Pursuant to leave granted, defendants appeal from the denial of their motion to dismiss the complaint.

Plaintiffs, who are residents and taxpayers of Essex County, filed a class action under R. 4:32-l et seq. as representative parties of (1) owners of real property in the county, (2) black residents, (3) low-income residents, and (4) property owners “with lost or jeopardized equities.” The nine-count complaint challenged the allegedly inequitable tax system in New Jersey insofar as it related to (1) categorical public assistance, (2) the courts, and (3) supporting agencies in the administration of justice.

The thrust of the complaint is that the individual plaintiffs, as well as the county and the municipalities within it, are unconstitutionally discriminated against by reason of a system whereby certain expenses are allocated for payment by real estate taxes assessed within the county, rather than allocated on an equal state-wide basis with a resultant disproportionate and inequitable burden on the residents of the county.

Subsequently, the League of Women Voters of New Jersey was permitted to intervene as a party plaintiff.

Defendants moved for a dismissal of the complaint on the ground that it failed to state a claim upon which relief may be granted. The court below denied the motion, holding that an issue was raised whether there was “a reasonable or rational justification for the New Jersey system of providing welfare assistance'and the judiciary, as required by the equal protection clause.”

It is thoroughly established that in dealing with the legal sufficiency of a complaint “the plaintiff is entitled to to a liberal interpretation of its contents and to the benefits of all its allegations and the most favorable inferences which may be reasonably drawn from them.” Rappaport v. Nichols, 31 N. J. 188, 193 (1959); Di Christofaro v. Laurel Grove Memorial Park, 43 N. J. Super. 244, 252 (App. Div. 1957) ; Winkler v. Hartford Acc. & Ind. Co., 66 N. J. Super. 22, 25 (App. Div. 1961). See also P & A Const. Inc. v. Hackensack Water Co., 115 N. J. Super. 550, 551 (Law Div. 1971); Young v. Gilbert, 121 N. J. Super. 78, 82 (Law Div. 1972).

While defendants do not question this rule, they argue that the recent cases of San Antonio Independent School District v. Rodriguez, 411 U. S. 1, 93 S. Ct. 1278, 36 L. Ed. 2d 16 (1973), and Robinson v. Cahill, 62 N. J. 473 (1973), decided after the disposition of the motion below, are controlling and mandate a reversal and a dismissal of the complaint. We do not agree.

We recognize from Rodriguez that in determining the validity under the equal protection clause of the Fourteenth Amendment of a state’s statutory scheme for the local financing of public services which results in substantial disparities in per capita expenditures because of variations in the amount of local taxable properties, the standard of review is not that of strict judicial scrutiny requiring a showing of compelling state interest, unless fundamental constitutional rights are involved. 411 U. S. at 16, 93 S. Ct. at 1287, 36 L. Ed. 2d at 33. Rather, the standard is that the system be shown to bear some rational relationship to a legitimate state purpose. 411 U. S. at 40, 93 S. Ct. at 1300, 36 L. Ed. 2d at 47; and, if it does, the Fourteenth Amendment does not require absolute equality or precisely equal advantage. 411 U. S. at 24, 93 S. Ct. at 1291, 36 L. Ed. 2d at 37, U. S. Const., Amend. 14.

To this extent, Robinson v. Cahill, supra, is in accord; but as our Supreme Court observed, Rodriguez does not say that there could never be a successful equal protection attack where a State has called upon local government to participate in the rendition of a public service. 62 N. J. at 488. The court in Robinson v. Cahill chose not to rest its decision on the equal protection concept of either the Federal or the State Constitution, but relied, instead, on the public education provision of the State Constitution. N. J. Const. (1947), Art. VIII, § 4, par. 1. It pointed out, however, that even though there might not be a federal constitutional flaw, it was for the State to decide whether "the equal protection demand of our State Constitution is offended.” 62 N. J. at 490.

The court made the following significant comments, even though as obiter dictum: 62 N. J. at 499-500:

* * It is undeniable that local expenditures per pupil do vary, and generally because other essential services must also be met out of the same tax base and the total demands exceed what the local taxpayers are willing or able to endure. But for that same reason similar discrepancies, both as to benefits and burdens, can be found with respect to- the other vital services which the State provides through its local subdivisions. The equal protection proposition potentially implicates the basic tenet . . . that there be local authority with concomitant fiscal responsibility. The case now befox-e us was not tried or argued in terms that local govex-xxment as a political institution denies equal protection in New Jersey because unequal demands upon unequal tax bases result in statewide inequality as to benefits or as to tax burden. In these circumstances we will not pursue the equal protection issue in the limited context of public education.
Nor do we consider a question the parties have not projected, whether, apart from the equal protection guarantee, there is an implicit premise in the concept of local government that the State may not distribute its fiscal responsibility throxxgh that vehicle if substantial inequality will result. It may well be that at one time there was a rough correlation between the needs of an area and the local resources to meet them so that there was no conspicuous unfairness in assigning State obligations to the local units of government. Surely that is not true in our State. Problems are now mobile. They have settled intensively in limited areas. Statewide there is no correlation between the local tax base and the number of pupils to be educated, or the number of the poor to be housed and clothed and fed, or the incidence of crime and juvenile delinquency, or the cost of police or fire protection, or the demands of the judicial process. Problems which are in no sense local in origin have become the special burden of those who cannot find a haven elsewhere. [62 N. J. at 499-500]

The court recognized the consequences of a successful ehallenge to the State's system of distributing its fiscal responsibility through the vehicle of local government:

We need hardly suggest the convulsive implications if home rule is vulnerable upon either of the grounds to which we have referred. Nor need we expound the difficulties of management of judicial solutions if the problem must be met by the courts. We point to the dimensions of the subject to explain why we should not deal with it on the record of this case.

Despite the above, the court has not ruled out the potential formulation of a cause of action which would squarely confront the court with the issues projected.

This is what the complaint in this case seeks to do. Although plaintiffs' charge that they and those they represent have been deprived of equal protection of the laws and due process under both the Federal and State Constitutions, their grievance- more broadly is that the county in which they reside has been unfairly and inequitably burdened with a disproportionate share of the cost of the enumerated state functions. In effect, they claim not only “unequal tax basic result [ing] in statewide- inequality as to benefits or tax burdens,” but also a distribution by the State of its fiscal responsibility in such manner as to result in substantial inequality.

Obviously, plaintiffs have the burden of establishing that the system complained of is unjust and results in illegal discrimination. Ring v. North Arlington, 136 N. J. L. 494, 498 (Sup. Ct. 1948), aff'd o. b. 1 N. J. 24 (1948). Defendants have not demonstrated that such a shoving is impossible, nor have they established as a matter of lav that there is a reasonable and fair justification for the alleged inequities and discrimination which plaintiffs seek to prove.

Tailing the facts as pleaded and considering the current state of the lav in this area, we are satisfied that plaintiffs have presented questions of such a serious and substantial nature as to require development at a plenary trial.

Affirmed.


author: Cohen, J. C. C.,

text:
    HOSPITAL SERVICE PLAN OF N. J. ET AL., PLAINTIFFS, v. MARY JANE AND LOUIS PHILLIPS, DEFENDANTS.
    District Court, Middlese County
    Decided December 13, 1973.

      Ms. Phyllis J. Kessler for plaintiffs (Messrs. Pitney, Hardin and Kipp, attorneys).

      Mr. John L. Maddalena for defendants (Messrs. Mezzacca, Guida and Maddalena, attorneys).
   Cohen, J. C. C.,

Temporarily Assigned. The plaintiffs, Blue Cross and Blue Shield, made payments for hospital and surgical services which, they now assert, were within the workmen’s compensation exclusions of their contracts. They brought this action against their subscriber and his injured dependent for the amount of the payments. The matter is here on plaintiffs’ motion for summary judgment.

The exclusionary language in the two contracts is essentially the same. The quoted clause is from the Blue Cross contract, and the only differing language in the Blue Shield contract is placed in brackets:

Tie Plan shall not be liable for: * * * Hospital services rendered for [services resulting from] any * * * accidental injury arising out of and in the course of employment for which benefits and/or compensation are available in whole or in part under the provisions of any Workmen’s Compensation Law, * * * whether or not the covered person claims compensation or received benefits for * * * services thereunder. * * *

Defendant Mary Jane Phillips was injured on October 10, 1967 while employed by Eedders Corporation. Her accident arose out of and in the course of her employment. Her employer provided medical treatment for a substantial period of time. She was paid temporary disability by her employer’s workmen’s compensation carrier.

In April 1970, apparently dissatisfied with her progress and her treatment, Mrs. Phillips consulted Dr. 'Weisenfeld. The record does not disclose whether she made a demand upon her employer for further treatment. She did, however, receive from her employer’s carrier a prompt and timely notice that it would consider as “unauthorized,” under R. 8. 34:15 — 15, any treatment by Dr. Weisenfeld. She nevertheless decided to go ahead. According to her testimony in the Division of Workmen’s Compensation, her own attorney at that time told Mrs. Phillips the treatment was unauthorized.

Dr. Weisenfeld performed exploratory surgery in the lumbar and sacral spine and fused the fifth lumbar and first sacral vertebrae. The apparently eligible bills were $2691.10 and plaintiffs paid them in the ordinary course of business. In July 1970 Blue Cross ascertained that Mrs. Phillips had filed a workmen’s compensation petition and soon gave notice to the Division and the employer’s carrier of its claim for the hospital charges. R. S. 34:15-15.1.

In August 1972 Mrs. Phillips’ petition came before the judge of compensation for resolution. It is apparent from the judge’s remarks that the matter had been the subject of numerous fruitless prior conferences. It is equally clear that the surgery, performed three years after the accident and without authorization, was a major stumbling block to earlier resolution. The parties proposed a settlement for approval pursuant to N. J. S. A. 34:15-58. They proposed that Mrs. Phillips be paid for 17j4% of partial total permanent disability and that the 1970 surgery and hospitalization be held unauthorized and thus not reimbursable by the carrier to Blue Cross or to Mrs. Phillips. In her testimony in the Division Mrs. Phillips said she understood that it would be her responsibility to pay all bills for unauthorized treatment.

The judge of compensaton entered an order approving the settlement. That order had the same effect as a judgment resolving the issues raised in the petition. He found the disability resulting from the compensable injury to have been “post-operative residuals exploritories [s-i'c] LA-L5, L5-S1 and fusion L5-S1 and post-traumatic neurosis.”

The judge of compensation ruled that the surgery and hos* pitalization were unauthorized. Thus, the residual effects of the surgery were held to' have resulted from the compensable injury, but the cost of the surgery and hospitalization was held not to be the employer’s responsibility.

Plaintiffs’ contract language has an informative history. Earlier contracts issued by plaintiffs excluded payment for hospital and surgical services which “are in whole or part compensable under any State * * * workmen’s compensation law * * The Supreme Court dealt with that language in a case factually very like this one. Hunt v. Hospital Service Plan of N. J., 33 N. J. 98 (1960). The court held that hospital expenses ruled unauthorized and thus not recoverable in the Division were not “compensable” and therefore not excluded from the Blue Cross and Blue Shield Contracts. The contract language, according to the court, barred double recovery by an injured workman. If the intent was to bar payment for any services necessitated by work-connected injuries, whether or not reimbursed, the court said, Blue Cross and Blue Shield could have chosen “appropriate unambiguous words to accomplish the result.” 33 N. J. at 106.

The contract language before me is plaintiffs’ response to Hunt. In it plaintiffs seek to exclude payment for any services rendered for or resulting from a work-connected injury, whether or not the cost of the services is paid by the employer or is the subject of a workmen’s compensation petition, and whether or not the Division rules the particular expense not recoverable for some statutory reason.

Plaintiffs chose language that focuses on the work-connection of the injury itself and not on the “compensability” or reimbursability of the particular expense incurred. Their purpose is evident. They wish to avoid giving the injured employee an easy choice between authorized treatment, for which the employer pays, and unauthorized treatment, for which plaintiffs would be liable- under Hunt. (An injured employee whose employer refuses to authorize necessary medical care has an adequate remedy in the Division. R. S. 34: 15-15.1. Benson v. Coca Cola Co., 120 N. J. Super. 60 (App. Div. 1972)). Such a choice would permit the employee to shift the medical cost of a work-connected injury from the employer to plaintiffs.

Plaintiffs also wish to avoid providing the parties, in an otherwise insoluble dispute in the Division, the easy solution of stipulating away Blue Cross notices of claim, thereby relieving the employee of a substantial expense and the employer of a large area of cost liability. Plaintiffs are, as a practical matter, unable to protect their interests in the Division. See Bielak v. Counties Contracting and Const. Co., 95 N. J. Super. 266 (Law Div. 1966).

The language plaintiffs chose expresses their goals clearly and unambiguously. To hold otherwise would be to distort the words out of their obvious meaning. There may be a cost of permitting plaintiffs to attain their goals. Their current language opens a previously non existent gap between “compensable” expenses and work-injury-eonnected expenses. It leaves the injured parly to absorb, without coverage, all work-connected but uncompensated medical expenses. The gap, however, is not created by the contractual language standing alone, but only as it interacts with the workmen’s compensation statute and the practices of parties before the Division. Plaintiffs are not obliged to cure every potential injustice created by this complex of influences.

On balance, I cannot say that the clear words used by plaintiffs are either unconscionable or so divergent from the parties’ legitimate expectations as to require judicial nonrecognition. Plaintiffs are not required to cover all medical expenses not otherwise reimbursed.

Where, as here, Blue Cross and Blue Shield claim protection of their workmen’s compensation exclusion, the sole question for decision is whether the medical services were rendered for or resulted from a work-connected injury for which statutory workmen’s compensation benefits are available in whole or part. Whether a Division ruling, that a medical service is causally unconnected with a compensable injury, binds plaintiffs in this court is a question not now before me. Xo such ruling was made. A Division ruling that a medical service was not authorized is not binding here because it is irrelevant to the test created by the contractual language.

“Unauthorized” medical expenses are not simply those which an employer has refused to supply or pay for. An employer is liable for all medical services it actually authorized and also for all necessary services it refused to authorize, after request. N. J. S. A. 34:15-15. The ruling of the judge of compensation that Fedders did not have to pay Mrs. Phillips’ expenses necessarily implied findings both that the services were not authorized and that they were not requested or not necessary. These implicit findings were made with the parties’ consent and without any testimony whether Mrs. Phillips made the required demands, whether Fedders made an offer of adequate alternative treatment, or whether postoperative diagnosis justified the surgery. See Benson v. Coca Cola Co., 120 N. J. Super. 60 (App. Div. 1972). They were made also alongside findings that the disability resulting from the compensable accident were the postoperative residuals of the surgery.

There is no dispute, on the record before me, that the services were rendered for and resulted from .an injury for which workmen’s compensation was available, in whole or part. Compensation was ordered by the Division and paid. The gist of Mrs. Phillips’ testimony was that the surgery and hospitalization resulted from the injury. Her expert, Dr. Novich, was to the same effect. He testified that the post-operative residuals were causally related to the accident and its aggravation of a congenital condition. The judge of compensation made findings consonant with Dr. Novieh’s opinion. The question does not arise whether Mrs. Phillips could reverse her field and here attack those findings, made, as they were, at her instance. She has not done so. She has submitted nothing factually different on this motion.

There is no genuine issue as to any material fact. Plaintiffs are entitled to judgment as a matter of law.

It is conceivable that the limited testimony before the Division and its resultant findings and the settlement it approved arose out of mistake by Mrs. Phillips as to the consequences. I cannot say whether the Division would entertain an application to reopen its judgment on that basis. I have no power to remand this matter there. I would, however, entertain a motion to stay my judgment in the event any such application should be made to the Division.


author: Per Curiam.

text:
    FOONT-FREEDENFELD CORPORATION, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT, v. ELECTRO PROTECTIVE CORPORATION, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued May 29, 1973
    Decided June 28, 1973.

      Before Judges Leonard, Halpern and Ard.

      Mr. Sidney Krieger argued the cause for appellant.

      Mr. Theodore W. Geiser argued the cause for respondent and cross-appellant (Messrs. Hughes, McElroy, Connell, Foley & Geiser, attorneys).
   Per Curiam.

Following a jury trial, defendant appeals from a judgment in the amount of $27,500 and from an order denying its motions for a judgment n.o.v., a new trial, or alternatively, that the judgment in favor of plaintiff be reduced to the sum of $50. Plaintiff cross-appeals from an order entered before trial, which granted a partial summary judgment limiting defendant’s contractual obligation to $50.

Plaintiff is a manufacturer of women’s apparel and operated its plant on the second floor of premises at 225 Adams Street, Hoboken. Defendant is engaged in the business of designing, installing and maintaining burglar alarm systems. On August 2, 1962 the parties entered into a written contract whereby defendant agreed to install and maintain an alarm system in plaintiff’s premises and pursuant thereto such a system was installed. Following two minor break-ins in April and June I960, a major break-in occurred on June 27, 1969. Plaintiff asserted that the latter resulted in a loss of $55,423.13 and it instituted this suit to recover that loss.

Plaintiff, 'in accordance with an amendment to the pre-trial order secured by it, presented this case to the jury upon the theory of “misrepresentation or constructive fraud.” At the trial, plaintiff did not charge or prove knowledge of the falsity or scienter of the alleged fraud on the part of defendant or its agents. Likewise, on this appeal plaintiff admits that it never contended that its action was based upon “legal fraud.” Rather, it asserts that its action was “grounded upon the principles of equitable fraud, sometime known as misrepresentation.”

Preliminarily, we point out that “constructive fraud is not fraud at all but is descriptive of conduct which may in the eyes of the law give rise to certain consequences ensuing upon acutal fraud; perhaps the law would he better without the term.” [Emphasis added]. Bedrock Foundations, Inc. v. Geo. H. Brewster & Son, Inc., 31 N. J. 124, 136 (1959).

Legal fraud or misrepresentation consists of a material representation of a presently existing or past fact, made with knowledge of its falsity, with the intention that the other party rely thereon, and he does so rely to his damage. Louis Schlesinger Co. v. Wilson, 33 N. J. 576, 585-586 (1956); Lopez v. Swyer, 115 N. J. Super. 237, 250 (App. Div. 1971), aff’d 62 N. J. 267 (1973); Dover Shopping Center, Inc. v. Cushman’s Sons, Inc., 63 N. J. Super. 384, 391 (App. Div. 1960). In equitable fraud, the second element (knowledge) is not necessary, but the other four are essential. Id. at 391. However, in an action in which plaintiff relies upon equitable fraud, the only relief that may be sought is equitable relief, such as rescission or reformation of an agreement, and not monetary damages only. Gherardi v. Trenton Board of Education, 53 N. J. Super. 349, 366 (App. Div. 1958). Here, plaintiff bottoms its cause of action upon equitable fraud and solely sought and recovered money damages. Under these circumstances, the trial court improvidently denied defendant’s motions for a directed verdict or for a judgment n.o.v. Accordingly, the $37,500 judgment entered in favor of plaintiff is reversed and a judgment in favor of defendant and against plaintiff for no cause of action is entered. By reason of this disposition, it is not necessary for us to consider the additional points raised by defendant on this appeal.

Next, we consider plaintiff’s cross-appeal from the partial summary judgment which limited defendant’s contractual obligation to $50. Paragraph 15 of the written contract entered into by the parties provided as follows:

It is agreed by and between the parties hereto that the Contractor is not an insurer; that the payments hereinbefore named are based solely on the value of the services provided for herein; that, from the nature of the services to be rendered, it is impracticable and extremely difficult to fix the actual damages, if any, which may proximately result from a failure on the part of the contractor to perform any of its obligations hereunder; that, in case the failure of the Contractor to perform any of its obligations hereunder, and a resulting loss to the Subscriber, the Contractor’s liability hereunder shall be limited to and fixed at a sum equal to ten percent of the annual service charge hereinabove’ provided for, but in no event amounting to less than the sum of fifty dollars, as liquidated damages, and not as a penalty, and this liability shall be exclusive.

Plaintiff contends that this clause either is (1) susceptible to interpretation in its favor as applying only to defendant's duty to service and maintain the alarm equipment or (2) unenforceable as a penalty since it is not a valid liquidated damage clause. Neither contention has merit. The trial court properly found that the parties were in equal bargaining position. Plaintiff voluntarily entered into the contract with full knowledge of the clause and its effect. As provided therein, the contract did not make defendant an insurer for every loss caused by a theft, no matter how extensive. Under the existing circumstances, we find paragraph 15 to be a valid limitation of contractual liability See Shaer Shoe Corp. v. Granite State Alarm, Inc., 110 N. H. 132, 262 A. 2d 285 (Sup. Ct. 1970); Better Food Markets, Inc. v. Amer. Dist. Tel. Co., 40 Cal. 2d 179, 253 P. 2d 10 (Sup. Ct. 1953); Amer. Dist. Teleg. Co. v. Roberts & Son, Inc, 219 Ala. 595, 122 So. 837 (Sup. Ct. 1929); Schepps v. Amer. Dist. Tel. Co., 286 S. W. 2d 684 (Tex. Civ. App 1955). Thus, we affirm the partial summary judgment from which plaintiff cross-appeals.

The main appeal is reversed, the cross-appeal is affirmed, in accordance herewith.


text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. RAYMOND HYERS, DEFENDANT-APPELLANT. WALTER STRINGER AND FLORENCE STRINGER, GUARANTORS-APPELLANTS, v. STATE OF NEW JERSEY AND THE COUNTY OF MONMOUTH, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued September 11, 1973
    Decided September 25, 1973.
    Before Judges Halpern, Matthews and Bischoff.

      Mr. Ralph A. Real argued the cause for guarantors-appellants.

      Mr. Edward A. MacDuffie, Jr., Assistant Prosecutor, argued the cause for defendants-respondents (Mr. James M. Coleman, Jr., Monmouth County Prosecutor, attorney; Mr. Frederick J. Kdlma, Assistant Prosecutor, on the brief).
   Per Curiam.

Appellants, Walter and Florence Stringer, were guarantors on a bail bond in the sum of $5,000 posted by Stuyvesant Insurance Company on behalf of defendant, Raymond Hyers. On Hyers’ failure to appear to commence serving his prison sentence, Monmouth County forfeited the bail. Ultimately, appellants paid the $5,000. Subsequently, through appellants’ efforts, Hyers was located and confined to the New Jersey State Prison.

Appellants’ application for remission of all or part of the $5,000 they paid was denied by the trial court. On appeal; this court reversed and remanded with directions to the trial ■court to consider certain facts, using equitable standards, and to reconsider appellants’ application. State v. Hyers, 122 N. J. Super. 177, 180 (App. Div. 1973).

A hearing was held in compliance with the remand. The trial court again denied appellants’ application primarily because it felt appellants had no standing to seek relief, and secondarily, that the interests of justice would not be served by granting relief. We disagree.

Appellants having paid the $5,000, they were subrogated to Stuyvesant Insurance Company’s right to make a claim for a refund under R. 3 :26-6; Guarantee Co. of No. America v. Tandy & Allen Const. Co., 76 N. J. Super. 274, 278 (App. Div. 1962). Brushing aside technicalities, appellants were the real parties in interest. Admittedly, appellants made all reasonable efforts to locate defendant which ultimately bore fruit, and the State suffered no prejudice. Using the standards we set as guidelines in our remand, justice mandates that a portion of appellants’ $5,000 be remitted. State v. Peace, 63 N. J. 127 (1973). It is undisputed that the State expended $1,154 by reason of the default, and since we feel that an added penalty should be imposed, we direct that respondents remit to appellants the sum of $3,500, without interest.

Reversed. Judgment to be entered in accordance herewith. No costs on this appeal.


text:
    GULF CHEMICAL AND METALLURGICAL CORPORATION, A TEXAS CORPORATION, PLAINTIFF-APPELLANT, v. SYLYAN CHEMICAL CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted November 27, 1973
    Decided December 19, 1973.

      Before Judges Halpern, Matthews and Biscshoff.

      Messrs. Riker, Danzig, Scherer & Brown, attorneys for appellant (Mr. Peter N. Perretti, Jr., of counsel; Mr. William C. Dodd, on the brief).

      Mr. Francis B. Rusch, attorney for respondent.
   Per Curiam.

Plaintiff, a Texas corporation, agreed to sell to defendant, a New Jersey corporation, 70,000 pounds of cupric oxide to be shipped in three equal shipments, at a price of 42 cents per pound E. O. B. Texas, net payment to be made in ten days. Defendant sent three purchase orders. The first, dated January 28, 1971, requested shipment of 24,000 pounds immediately; the second requested shipment' during the week of February 22, 1971, and the last called for shipment when requested by defendant.

The first shipment of goods was concededly made on time. The price to be paid was $10,229.84. Defendant objected that the material shipped did not meet specifications, and after several conferences it was agreed that plaintiff would reduce the amount of its claim bjr five cents per pound, resulting in an amount due of $9,372.35.

Plaintiff thereafter refused to ship the second order until the $9,372.35 was paid. Defendant refused to pay for the shipment until plaintiff committed itself to make the remaining shipments. Plaintiff thereupon instituted this action and defendant counterclaimed seeking loss of profits because of plaintiff’s breach.

After hearing testimony -without a jury, the trial judge granted judgment against defendant for $9,372.35, without interest, and granted judgment to defendant on its counterclaim for breach of contract against plaintiff for the sum of $3,281.94. Plaintiff appeals from the judgment on the counterclaim and the court’s denial of interest on its judgment.

The issue must be resolved under the terms of N. J. S. A. 12A:2-612. The question for determination is whether the refusal by defendant to pay for the initial installment constituted a substantial impairment of the contract under the statute. We find it significant that the agreement did not provide for the right of either party to declare a breach of the whole contract on a breach of one part of it, and that defendant stood ready, willing and able to pay for any installment provided it could be assured by plaintiff that the balance of the goods were to be shipped.

The burden of proof was on plaintiff to prove that, a substantial impairment of the contract had taken place. The trial judge found that plaintiff had not sustained its burden. On the other hand, he did find the proofs ample to support the counterclaim. The record amply supports his conclusions.

We affirm substantially for the reasons expressed by Judge Van Tassel in his opinion rendered February 5, 1973, as supplemented by his letter to counsel dated February 27, 1973, subsequently published in 122 N. J. Super. 499, 300 A. 2d 878 (1973).

Affirmed.