text:
    ERIC DONOFRIO, PETITIONER-APPELLEE, v. HAAG BROTHERS, INC., RESPONDENT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued November 13, 1950
    Decided November 27, 1950.

      Before Judges McGeehan, Jayne and Wm. J. Brennan, Jr.

      Mr. Arthur F. Mead argued the cause for appellant (Messrs. Cox & Walburg, attorneys).

      Mr. Charles Wm. Kappes argued the cause for appellee (Mr. A. Michael Lepore, attorney).
   The opinion of the court was delivered by

William J. Brennan, Jr., J. A. D.

The employee in this workmen’s compensation case is a butcher. He strained his back on February 10, 1947, while lifting an 80-pound hog.

The first of his two claim petitions for compensation was filed on an undisclosed date in 1947. The claim was settled under an agreement stipulating his permanent disability as 7%% of total. The agreement was approved by an “award” entered October 31, 1947, in the Workmen’s Compensation Bureau.

His second petition was filed February 16, 1949. His brief erroneously treats this petition as filed under R. S. 34:15-37 for modification of the “award” of October 31, 1947, to seek an allowance for increased disability. That “award” was in essence a mere agreement of compromise, approved by the Bureau, and is, therefore, not a “formal award” within the intendment of R. S. 34:15-37. The second petition, as appellant employer concedes, is to be viewed as an application for an original determination of the merits of the employee’s statutory claim for compensation, a determination to which the statute entitled the employee. Streng’s Piece Dye Works, Inc., v. Galasso, 118 N. J. L. 257 (E. & A. 1937). If the second petition were to be looked upon as brought under B. 8. 34:15-37 to modify the “award” based upon an after-occurring increase in disability, its dismissal would be required because the record lacks the necessary proofs to permit comparison of his condition and disability on the two dates, proofs which are essential to support a petition for an increased disability allowance. Hopler v. Hill City Coal & Lumber Co., 5 N. J. 466 (1950).

Hearings on the second petition were held May 23, July 11 and July 25, 1949. A formal award was entered September 22, 1949, determining the employee’s permanent disability to be 7%% of total. A sum based on such disability had been paid in compliance with the “award” of October 31, 1947; for that reason, the formal award of September 22, 1949, provided expressly “that the petitioner is not entitled to any further permanent or temporary disability.”

The workman appealed to the Hudson County Court which evaluated the evidence as entitling him to an award of 17%% of total, and on March 11, 1950, the judgment under appeal so ordering was entered. The judgment also allowed Dr. Ajamian a fee of $200 for medical services to be paid by the employer. This appeal challenges the judgment in both particulars.

Appellant asks us to determine as between the percentage adjudged by the Deputy Director and that adjudged by the Hudson County Court and say the former’s determination was right and the latter’s was wrong. We have the impression appellant would cast this court in the role of umpire to select between the differing findings. This approach misconceives the authority of the County Court in a workmen’s compensation case and the duty of this court in reviewing the County Court’s judgment on appeal.

Originally the former Court of Common Pleas, to which the County Court succeeded, was the tribunal for the trial of elective compensation cases, P. L. 1911, c. 95, p. 134. The trial judge was authorized “to hear and determine such disputes in a summary manner, and his decision as to ail questions of fact shall be conclusive and binding,” Ibid., § 18, p. 142, which provision did not, of course, limit the jurisdiction of the former Supreme Court by certiorari.

A Workmen’s Compensation Bureau in the Department of Labor was created by P. L. 1918, c. 149, § 3, pp. 429-430, Zietko v. N. J. Manufacturers Casualty Ins. Co., 132 N. J. L. 206 (E. & A. 1944), and was vested with “exclusive jurisdiction” (section 3) of all such claims and authorized “to hear and determine the matter in dispute in a summary manner” (section 10, as amended by P. L. 1921, c. 229, § 3). The Bureau’s judgment, however, was not to be final and conclusive if appealed (section 11). The Court of Common Pleas, in considering the appeal, while required to make its determination “exclusively on the transcript of the record and testimony” before the agency (section 19, as amended P. L. 1921, c. 229, § 7, pp. 734-735), nevertheless continued to have, the duty originally imposed by section 18 of the 1911 act; the 1921 act provided in substantially the same language as the 1911 law that the court “shall in a summary manner decide the merits of the controversy, and the judgment of the Court of Common Pleas, on any such appeal, shall be conclusive and binding * * * provided, that nothing herein contained shall be construed as limiting the jurisdiction of the Supreme Court to review questions of law and fact by certiorari.

It appears clear from this statutory history the Legislature in creating the Workmen’s Compensation Bureau did not clothe that agency with the controlling authority to make factual findings in cases appealed to the Pleas, but continued that authority and duty undisturbed in the County Court; the burden of conducting the hearings, however, was delegated to the agency.

The County Court should, of course, consider the agency’s findings of fact and give due, although not necessarily controlling, regard to the opportunity of the agency to judge of the credibility of witnesses.

It is clear, moreover, the factual findings to which determinative weight is in the first instance to be' accorded by this court are the findings of the County Court. We on our part approach the review of the County Court’s judgment on that premise. Of course, we are empowered under Rule 3 :81-13 to review the facts and make independent findings thereon (cf. Rules 1:2-20 and 4:2-6) and, while this power is permissive and a litigant may not as a matter of right require our exercise of it, we do not hesitate to employ it where the ends of essential justice will be served by our doing so. In determining whether to accept the findings of the County Court or to make new findings, however, we give the determinative weight to the County Court’s findings we have been discussing and will not reverse unless satisfied from our reading of the record the interests of justice require reversal.

The instant case is not complicated by any issue of credibility of witnesses. Both the Division of Workmen’s Compensation and the Hudson County Court appear to have accepted the testimony of all witnesses as credible; the difference between them lies in the evaluation each made of the evidence. We then examine the record, not to select between the two conclusions, but, giving the required weight to the County Court’s determinations of fact, to say whether and to what extent, if at all, the interests of justice require that we review the facts and make independent findings thereon.

The employee remained away from work for a month following the accident and was treated by Dr. A jam: an almost daily during that time. His condition during the month was one of numbness, which was replaced about the time he returned to work with pain in his lower back, mostly on the left side, which tightened up with prolonged standing or sitting and which persisted and was still being experienced by him at the time of the hearings. The continuous pain caused his weight to fall from 180 to 167 pounds and forced him in July, 1947, to quit his job with appellant and to take light work with another employer at a substantially reduced wage. Dr. Ajamian’s diagnosis was lumbrosacral strain, left sciatica, myofibrosis of left lumber region. The doctor testified he treated the employee continuously from the time of the accident to the date of the May 23rd hearing on a total of 330 occasions, at the employee’s home during the first month, and thereafter at the doctor’s office. The doctor admitted he was baffled by his patient’s failure to respond to treatment.

Following the May 23rd hearing, and on July 20, 1949, the employee was examined by his witness, Dr. Keilly, who diagnosed the cause of the continuing pain to be a ruptured intervertebral disc. This diagnosis was based on physical examination alone. Dr. Reilly recommended a myelography be done to confirm his diagnosis but apparently the employee did not follow this advice. Appellant contends the physical examination was insufficient to support the diagnosis and also challenges Dr. Reilly’s qualifications. The Count}' Court viewed the evidence as satisfactorily establishing the doctor’s qualifications, and evaluated his testimony given on July 35th as entitled to considerable weight, with which conclusion the Deputy Director does not seem to agree. We perceive no reason to disagree with the County Court’s findings in either respect.

Dr. Ajamian was recalled to the stand July 35, 1949, and said that, while he had not diagnosed the ruptured disc, he was now thinking, in light of Dr. Reilly’s conclusions, a ruptured intervertebral disc was the explanation for the employee’s continuing pain. He also said he had discharged his patient after the first hearing, as he could not help him further, and said he had advised the employee to get a short wave therapy machine and treat himself.

Dr. Yisconti supplied the only medical testimony on behalf of appellant. He testified he had examined respondent on July 38, 1947, and May 33, 1949. His diagnosis- was of a sprain of the lower back in the lumbrosacral area. He estimated a permanent disability of three per cent of total on both occasions. The County Court, appraised the doctor’s testimony as too meagre to preponderate over the testimony of Doctors Ajamian and Reilly in light of the employee’s testimony, corroborated by his wife as to the persistent pain.

Our review of the evidence does not persuade us the County Court’s evaluation of the extent of respondent’s permanent disability was without sufficient support in the testimony; accordingly we see no reason to disturb the County Court’s judgment.

At the time of the compromise settlement, approved October 31, 1947, appellant agreed to pay and did pay the employee $50 to cover Dr. Ajamian’s services. The doctor sought an allowance at the hearings on the second petition of $132 for his services in treating the workman on 330 occasions. The Deputy Director referred the matter of reasonable value of his services to the Hudson County Medical Society for consideration but it does not appear any report was made by that Society. The County Court found the treatments given were “beyond those necessary” and fixed $200 as their reasonable value, to be paid by the appellant.

Appellant does not question the services were of the reasonable value of $200, but argues it cannot be made responsible in any amount in excess of $50, relying upon the provision of R. S. 34:15-15, which provides that no amount in excess of $50 shall be allowed “unless the injured workman or the physician who treated him, or any other person on his behalf, shall file a petition with the Workmen’s Compensation Bureau stating the need for physician’s or surgeon’s services in excess of fifty dollars,” and the Bureau, after investigating the need of the services and giving the employer an opportunity to be heard, shall determine that the services were necessary and that the fees for the same are reasonable. This provision, however, relates only to situations in which “the employer shall furnish, to the injured workman” such treatment.

The second paragraph of B. S. 34:15-15 imposes the liability for such services upon the employer when the proofs show the employer lias refused or neglected to furnish such treatment and the employee secures the same on his own behalf. McGimpsey v. Serrie, 1 N. J. Super. 282 (App. Div. 1949). The finding of both the Deputy Director and the County Court that appellant, with knowledge of the injury, refused to furnish treatment within the period limited by the statute is fully established by the proofs.

Affirmed, with costs.


source: Caselaw Access Project

author: William J. Brennan, Jr., J. A. D.

license: Public Domain

text:
    ALFIERO PALESTRONI, PLAINTIFF-RESPONDENT, v. HARRIET KALISHER JACOBS, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued November 6, 1950
    Decided November 27, 1950.

      Before Judges McGeehan, Jayne and Wm. J. Brennan, Jr.

      Mr. Louis J. Greenberg argued the cause for appellant.

      Mr. Eugene T. Sharkey argued the cause for respondent (Mr. John J. Wygant, attorney).
   The opinion of the court was delivered by

William J. Brennan, Jr., J. A. D.

Defendant appeals from a judgment entered in the Bergen County Court upon a jury verdict in plaintiff’s favor for a balance due and extras under a building contract. Defendant sought and was denied a new trial for alleged error of the trial judge who, without prior notice to defendant or her counsel, supplied the jurors with a dictionary at their request while they were deliberating.

The irregularity of the privy communication of the judge with the jury must be depreciated in the strongest terms. State v. Auld, 2 N. J. 426 (1949). Such communication borders perilously close in every case on an infringement upon the litigant’s basic right to due process and in particular circumstances may in fact invade that right. Leonard’s of Plainfield, Inc., v. Dybas, 130 N. J. L. 135 (Sup. Ct. 1943).

Moreover, the trial of a law suit is public; business usually to be conducted openly for all to see. This principle inheres in Rule A9 of the General Rules of Administration enjoining judges so far as possible to conduct all judicial business involving conferences with members of the bar or litigants in open court. The principle applies with greater force to the relations of a judge with the jury; it is difficult to conceive any circumstapces justifying his communication with the jury on matters pertinent to the issues to be decided by it, except in open court and, where practicable, in the presence of counsel if they choose to attend. The principle has had forceful expression elsewhere; for example, over a century and a quarter ago the highest court of Massachusetts set aside a verdict for privy communication of the judge with the jury and said: “It is not sufficient to say this power (of the judge to control the trial) is in hands highly responsible for the exercise of it; the only sure way to prevent all jealousies and suspicion, is to consider the judge as having no control whatever over the case, except in open court in the presence of the parties and their counsel.” Sargent v. Roberts et al., 18 Mass. 337 (Sup.Jud. Ct. 1823).

The trial court’s error had unfortunate consequences. The jurors consulted the dictionary and in the circumstances of this case this vitiated their verdict. The dictionary was consulted to ascertain the definition of the word “wainscot” which appeared (mis-spelled “wainscote”) in the specifications in evidence. The specifications required plaintiff to “wainscote wall of kitchen lavatory and bathroom on 1st and 2nd floor entire height including ceiling around shower with 4-14x4-1,4" cushion edge tile,” and also to “have a good scratch coat of cement plaster” “behind all tile wainscotes.”

The jurors’ depositions taken by plaintiff in opposition to the motion disclosed there was an uncertainty in the minds of some jurors as to the meaning of the word. The juror who suggested getting a dictionary to clarify the doubt read aloud to the other jurors from the dictionary. This record does not show precisely what he read; the testimony is merely it was a definition of “wainscot.”

Plaintiff’s main case dealt largely with claims for 37 items of extra work and materials; defendant’s counterclaim covered 16 items of work which she charged plaintiff failed to complete. So far as appears in the record before us, the specification in question was not specially dealt with in the evidence, nor was the specification or the word “wainscot” mentioned in the judge’s charge. It is obvious, however, the specification was considered by the jury in arriving at its verdict. It follows a definition of “wainscot” was capable of influencing the jury in its consideration of the specification. However small the part played by the specification in the entire verdict, the whole of the verdict is infected by the taint of illegal and extraneous evidence having the capacity to influence the determination. The rule is well settled that, except it appears the improper matter got before the jury by deception of a party (in which event the verdict should be set aside on other grounds of policy, even if the matter is immaterial, Jessup v. Eldridge, 1 N. J. L. 401 (Sup. Ct. 1795)), the test whether a new trial will be granted is whether the extraneous matter could have a tendency to influence the jury in arriving at its verdict in a manner inconsistent with the legal proofs and the court’s charge. If the extraneous matter has that tendency on the face of it, a new trial should be granted without further inquiry as to its actual effect. The stringency of the rule is not mere formalism; the rule is “imperatively required to secure verdicts based on proofs taken openly at the trial free from all danger of extraneous influences,” Lamphear v. MacLean, 176 App. Div. 473, 163 N. Y. S. 432 (1916). On elementary principles the jury’s verdict must be obedient to the court’s charge and be based solely on legal evidence properly before the jury. McLeod v. Humeston & S. Ry. Co., 71 Iowa 138, 32 N. W. 246 (Sup. Ct. Iowa 1887); Guntzer v. Healy, 176 App. Div. 543, 163 N. Y. S. 513 (1917).

We do not know the context of the definition which was read and therefore cannot compare the definition with the specification to test its applicability. This points up the vice of the occurrence. Cf. Daniels v. Barker, 89 N. H. 416, 200 A. 410 (Sup. Ct. N. H. 1938), where a new trial was granted when a jury consulted a dictionary and the purpose of doing so did not appear; the court said, “for all that here appears, the jury may have used the dictionary to learn the meaning of some word or phraseology in the court’s charge, and thus have given the charge a construction varying from the meaning intended by the court to be conveyed.” Similarly, “wainscot” may have been used by the parties in a sense different from the definition read by the juror; defendant was at least entitled to the opportunity to apprise the court in advance that defendant did or did not contend this was the case. Too, even if the word was employed in the specification with its ordinary meaning, defendant was denied the chance to challenge the completeness of the definition given in the dictionary used. Her counsel might have properly suggested that another dictionary containing a more comprehensive definition was more appropriate; a student’s dictionary provides a substantially condensed definition hardly as enlightening as the major work of Webster. Plainly the jury’s reference to the definition without prior opportunity of defendant or her counsel to be heard on its propriety in the circumstances brought into their deliberations an extraneous factor capable of affecting their conclusions and thus invaded defendant’s basic right to have the case decided on the legal evidence.

It is no answer the jury may think they were not influenced by the definition. The law holds it is impossible for them to say what effect it had on their minds. Hix v. Drury, 22 Mass. 296 (Sup. Jud. Ct. 1827). The test is capacity of .the irregular matter to influence, not whether influence in fact resulted. See Whitney v. Whitman, 5 Mass. 404 (Sup. Jud. Ct. 1809); McLeod v. Humeston & S. Ry. Co., supra; In re Merrill’s Estate, 202 Iowa 837, 211 N. W. 361 (Sup. Ct. Iowa 1926); Benson v. Fish, 6 Me. 118 (1829).

Thus a new trial was denied when the incompetency of matter irregularly before the jury was considered not to have the tendency to influence because its incompetency as evidence had been made known to the jurors during the trial, Falzarano v. Delaware, L. & W. R. R. Co., 119 N. J. L. 76 (E. & A. 1937); and because the writing improperly sent to the jury by the judge simply iterated portions of the judge’s charge, State v. Auld, supra; and because the matter was a deposition which merely repeated the witness’ testimony at the trial, State v. Kysilka, 84 N. J. L. 6 (Sup. Ct. 1913).

A new trial has been granted, however, where the jury resorted to dictionary definitions of words and expressions having a technical legal signification already explained in the court’s charge, In re Phelan, 126 N. J. L. 410 (Sup. Ct. 1941) (“undue influence”) ; In re Collins, 18 N. J. Misc. 492 (Cir. Ct. 1940) (“undue influence”); Long v. Payne, 198 App. Div. 667, 190 N. Y. S. 803 (1921) (“assume”); but see contra, Wright v. Clark, 50 Vt. 130 (1877) (“wanton”), criticised and not followed in Daniels v. Barker, supra.

The use by a jury of a dictionary has an obvious potentiality for harmful influence. The danger is ever present it may be employed to ascertain meanings not just of one but of many words used in the court’s" charge or in papers in evidence. The jurors’ word alone that its use was limited is too weak a reed upon which to rest the difficult decision whether the verdict was subject to improper influence. Jurors should be required to advise the judge in open court of their doubt and desire for guidance and should be instructed by him in the presence of counsel if counsel care to attend. Cf. Leonard’s of Plainfield, Inc., v. Dybas, supra.

It is true that motions to set aside verdicts for alleged prejudice in the reference of jurors to improper matter during their deliberations are always addressed to the sound legal discretion of the court and cannot ordinarily be brought to the test of any fixed and definite rule. Rules 1:2-20 and 4:2-6 enjoin, moreover, that on our review a new trial shall not be granted for an error of this kind unless, after examination of the whole case, it appears the error injuriously affected the substantial rights of a party. When, however, a new trial is sought because a jury consulted extraneous matter, another element has to be considered; a new trial should be granted or refused “with a view, not so much to the attainment of exact justice in the particular case, as to the ultimate effect of the decision upon the administration of justice in general.” Hutchinson v. Consumers Coal Co., 36 N. J. L. 24 (Sup. Ct. 1872).

Plaintiff argues defendant is estopped to ask for a new trial because her counsel had knowledge the dictionary was being sent to the jury. This is based on the testimony of the court attendant who acted as the judge’s messenger to carry the dictionary to the jury room. Both trial counsel were waiting in the rotunda of the courthouse. As the attendant passed them on the way to the jury room, he said, “I have a dictionary for the jury,” or “the jury wants a dictionary,” or “words to that effect.” Just what defendant’s counsel should or could have done in the circumstances has not been made plain. The attendant was obeying the court’s instructions already given without prior notice to counsel. Clearly, counsel had no authority to countermand the court’s directions to the attendant. The error had been committed beyond counsel’s power to remedy it. Murphy v. Zimmerman, 9 N. J. Misc. 728 (Sup. Ct. 1931) and Nordsick v. Baxter, 64 N. J. L. 530 (Sup. Ct. 1900), relied on by plaintiff, are readily distinguished; in both cases counsel had ample opportunity before the jury retired to bring the incident to the court’s attention. Silak v. Hudson & Manhattan R. R. Co., 114 N. J. L. 428 (Sup. Ct. 1935), also relied on by plaintiff, was decided on the ground no prejudicial harm had resulted to defendant from the incident.

We have not overlooked the point made by counsel for the defendant that the jurors’ depositions were not competent evidence for any purpose on his motion for a new trial.

Counsel argues this was not a situation in which jurors charged with misbehavior may be heard in their own exculpation as held in Kennedy v. Kennedy, 18 N. J. L. 450 (Sup. Ct. 1842); Douglass v. Kabalan, 22 N. J. Misc. 200 (Sup. Ct. 1944); Queen v. Jennings, 93 N. J. L. 353 (Sup. Ct. 1919). This is so. It does not follow, however, as he contends, that the depositions are to be considered as offered solely to show the verdict was not influenced by the use of the dictionary. True, the depositions did elicit the jurors’ testimony whether their verdict was influenced by the definition and it is plain the depositions to that extent were wholly incompetent; it is against the policy oí the law to receive the affidavits of jurors to show or explain the reasons or the methods of the jurors or any of them in giving or consenting to the verdict or “what was put into it.” Pulitzer v. Martin S. Ribsam & Sons Co., 19 N. J. Misc. 233 (Sup. Ct. 1941); Hutchinson v. Consumers Coal Co., supra. This is for the same reason of policy which will not receive evidence of jurors to impugn or destroy their verdict, Lindauer v. Teeter, 41 N. J. L. 255 (Sup. Ct. 1879), as, for example, to show it was based on a misunderstanding of the court’s charge, Bragg v. King, 104 N. J. L. 4 (Sup. Ct. 1928), or that the jurors had misinterpreted an exhibit, Marconi v. MacElliott, 8 N. J. Misc. 69 (Sup. Ct. 1910); cf. Peters v. Fogarty, 55 N. J. L. 386 (Sap. Ct. 1893).

Jurors may state, however, whether the dictionary was requested, received or used by them. In re Collins, supra; In re Phelan, supra. If it was not consulted, it is the same as if it had not been delivered to them. Hix v. Drury, supra.

Thus, the authorities do not support counsel’s argument; it appears well settled the jurors’ depositions are competent to show whether they consulted the dictionary. The next step is more troublesome; should they be permitted to say w'hat definitions they consulted, or without more, is their admission they did consult the dictionary sufficient reason to grant a motion for a new trial ? It should be noted Mr. Justice (lase, in In re Phelan, supra, staled : “the fact that the use of the volume might be prejudicial is sufficient to vitiate a verdict without proof that the jury did actually give weight thereto.” Perhaps, however, this statement is to be read in light of the fact, which seems to be implied earlier in his opinion, that knowledge the jurors had used the dictionary to ascertain the meaning of the words “undue influence” was obtained from the jurors themselves.

We have no occasion to fix the limits of jurors’ testimony in this case. Our conclusion that a new trial must be granted results whether we rely solely on the evidence the dictionary was consulted, or go further, as plaintiff insisted we should do, and as we did, and consider also the jurors’ evidence the dictionary was used to ascertain the meaning of “wainscot” and was used for that purpose only.

.The delicacy of any inquiry of jurors, however, suggests the preference as to practice that their depositions be taken before the trial judge rather than, as in this case, before an officer appointed by the judge for the purpose.

As there will be a new trial, we have considered defendant’s second point that the court erred in striking her third separate defense. This defense invoked against plaintiff a clause of the contract requiring plaintiff to pay defendant “Two hundred and fifty dollars per week, or any part thereof, upon his failure to have the building completed and ready for occupancy after October 1st, 1947.” The trial court viewed the clause to be unenforceable in the circumstances of the case, construing it as a penalty and not as a provision for liquidated damages. 218-220 Market St. Corp. v. KrichRadisco, Inc., 124 N. J. L. 302 (E. & A. 1939). We are satisfied from our examination this was not error.

Reversed. Costs to abide the event.


author: Bigelow, J. A. D.

text:
    MARGARET McGOWAN, PETITIONER-APPELLANT, v. PETER DOELGER BREWING CO., RESPONDENT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued October 30, 1950
    Decided December 6, 1950.

      Before Judges Jacobs, Eastwood and Bigelow.

      Mr. Perry E. Belfatto argued the cause for the appellant.

      Mr. Andrew Lawrie argued the cause for the respondent.
   The opinion of the court was delivered by

Bigelow, J. A. D.

Appellant, who is the widow of John McGowan, made claim in the Workmen’s Compensation Bureau that her husband’s death August 22, 1946, resulted from an accident July 7, 1946, which arose out of and in the course of his employment. The Bureau made an award in favor of the petitioner but the County Court, upon rehearing the matter, gave judgment for the employer, the Peter Doelger Brewing Co., on the ground that death was not caused or hastened by what occurred on July 7th. There seem to be two questions in the case — Just what did happen on July 7th ? And did that occurrence hasten McGowan’s death that came to pass six weeks later ?

Decedent worked as a fireman’s helper, shovelling coal and taking out the ashes — heavy work. Although he had had heart trouble for several years, he was able to perform his work satisfactorily and without interruption by illness, until July 7th. That morning decedent went to the engine room to help “throw an engine in.” Ten minutes or so later he came out, staggering. In response to a fellow worker’s query, “What’s the matter, Mac ?” he exclaimed, “The ammonia got me.” He sat down by a table 30 or 40 feet from the engine room door, and leaned his head on the table. A police car happened to be in front of the brewery and in it he was taken to St. Michael’s Hospital. We should explain that in the engine room were several refrigeration machines in which was used hydrous ammonia. The machines had not been maintained in good condition. In the engine room in hot weather, the odor of ammonia was constant. “At times you couldn’t go in there, the smell would be so strong of ammonia.” On July 10th, McGowan called on his physician. Dr. McGuire learned from his patient that after being at St. Michael’s a few hours, he insisted on being brought home, but that he had not yet been back to work. The doctor had examined decedent the preceding January and again in June. On each of the examinations he made a diagnosis of “auricular fibril]ation (irregular heart action); cause, probably rheumatic heart disease.” But on the third examination, the doctor found also symptoms of “early cardiac decompensation (heart failure),” and considered that the worsening of McGowan’s condition was due to exposure to ammonia fumes three days earlier. Of course, he had no knowledge of that incident beyond what his patient told him. And his examination of decedent’s nose and throat revealed nothing that the doctor attributed to the ammonia.

Decedent, against his doctor’s advice, returned to work July 11th. Then he had two weeks’ vacation; then to work again, and on August 22nd, while at work at the brewery, suddenly he collapsed and died. It seems to be agreed by all the medical witnesses that death was caused by heart failure. In the interval between the accident of July 7th, and his death, “he couldn’t do his work like he used to.” “Always getting tired.” “He didn’t seem to be the same fellow.”

It is plain that something out of the ordinary happened to decedent on July 7th and that his heart thereafter was in much worse condition than before. One of respondent’s experts thought decedent may have been “a little bit overcome by the heat” that day and have had “a little bit more congestive heart failure.” Another one believes that what decedent had was an “episode related to his mitral stenosis” (heart disease). “He may have developed an abnormal rhythm and had this sense of oppression in the chest.” Evidence that ammonia played a not unimportant part that day is found in the fact that ammonia was very noticeable in the engine room in hot weather — and the day in question was a hot one; and in decedent’s own statement, “The ammonia got me.” That statement was admissible as part of the res gestee. It appears to have been an immediate emanation of whatever had just happened; it was uttered naturally and not produced by calculated policy. Hunter v. State, 40 N. J. L. 495, 539 (E. & A. 1878); Andricsak v. National Fireproofing Corp., 3 N. J. 466 (1950). The respondent argues that several jurisdictions refuse to admit as part of the res gestee, the answer to a question. But the rule is otherwise in New Jersey if the answer seems spontaneous. Slaybach-Van Order Co. v. Eiben, 115 N. J. L. 17 (Sup. Ct. 1935). Not only was decedent’s declaration admissible, but it was persuasive evidence that the ammonia fumes were the cause of his sudden discomfort, or at least an important contributing factor. We also accept as proven that decedent did not inhale the gas in any considerable quantity ox in a strong concentration, else Dr. McGuire would have discovered some evidence of it three days later. A man’s involuntary reaction to ammonia fumes would make him hold his breath and run.

Did the incident of July 7th hasten the death of decedent? Dr. McGuire, who is a general practitioner and not a heart man, considered that the ammonia fumes could have had no direct effect on the heart; but that it was reasonable to believe that the accident of July 7th had a secondary effect on the heart that hastened death. What affected the heart he described as shock, excitement, “the emotional features.” Dr. Bernstein, one of appellant’s experts, expressed the opinion, “The incident of July 7, 1946, in which he was overcome by ammonia fumes produced an acute bronchitis with bronchial spasm, cough and anxiety and inability to get one’s breath, et cetera; that because of the ammonia fumes, that threw such a load on an already damaged heart that this man who had been compensating up to that time developed gradual decompensation.” And he concluded that the incident of July 7th was the precipitating factor that caused death on August 22nd. We would note that there was no direct evideuce of bronchitis, bronchial spasm, or coughing. Dr. York held the view that the chemical inflammation suffered from the ammonia fumes caused an added stress and strain on the “cardiovascular system” and brought about “a rapid cardiac decompensation terminating in death.” Iiis assumption that decedent “had quite a good dose of ammonia,” perhaps goes further than the evidence justifies and may weaken to some extent the force of his opinion.

The respondent’s three medical experts took as one of the bases of their opinions that decedent had not been overcome by ammonia fumes. They minimized too radically what happened on July 7th. Dr. Ormsby and Dr. Yaguda believed it was a normal episode in the development of decedent’s heart disease, and so of course they had no difficulty in reaching the conclusion that that incident did not cause or hasten death. Dr. DeG-raff thought it likely that decedent had been a little overcome by the heat that July day and that this caused a little more congestive heart failure. Still it was his opinion that the July incident did not contribute in any way to McGowan’s death. The three doctors were asked to assume that some inhalation of ammonia fumes excited decedent, and they agreed that his type of rheumatic heart trouble (defect in one of the heart valves) would not be influenced by excitement. Even assuming, said Dr. Yaguda, that the gas caused a temporary increase in pressure, it would not produce any change in the man’s heart muscles.

On an appeal, every intendment is in favor of the judgment under review. To raise a doubt is not enough to lead to a reversal. Phillips v. Longport, 90 N. J. L. 212 (E. & A. 1917). In all jurisdictions this is the presumption recognized in the appellate court with respect to the judicial action of the court from which the appeal is taken. 5 C. J. S., Appeal & Error, § 1533. The presumption is especially fitting on an appeal from one of our County Courts, for those tribunals are constitutional courts entrusted with criminal and civil jurisdiction at law in the most important litigation. If, under our system, the County Court saw and heard the witnesses whose testimony in transcript forms the basis of the judgment, its findings would be accorded even more weight, but as it is, we should not disturb the County Court’s finding of fact unless we are well satisfied that the finding is a mistaken one. Vandenburg v. John DeKuyper & Son, 5 N. J. Super. 440 (App. Div. 1949); Galloway v. Ford Motor Co., 7 N. J. Super. 18; affirmed, 5 N. J. 396 (October 16, 1950). The matter has been considered with much care by Judge W. J. Brennan, Jr., in Donofrio v. Haag Brothers, 10 N. J. Super. 258 (App. Div. 1950). Of course, we are empowered under the Eules to make new findings of fact, and the power creates a duty, which we have performed, to consider the evidence most carefully. But in determining whether to adopt the findings of the County Court, or to make new findings, we yield due deference to the action of that court.

The County Court found that the appellant had not sustained the burden of proving that the happening of July 7th contributed to decedent’s death. The evidence, and especially the expert testimony, presents a sharp question. We are not satisfied that the County Court was mistaken and therefore the judgment will be affirmed.


author: Stein, J. S. C.

text:
    HAROLD D. CLARK, ELMO HERRINGTON, HAVES SULLIVAN, ARTHUR SIMMONS, ON BEHALF OF THEMSELVES AND ALL OTHER MEMBERS, OFFICERS OF HOPEWELL BAPTIST CHURCH, AND ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS, v. HENDERSON WATTS, ET AL., DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided December 7, 1950.

      Mr. David Silver, attorney for plaintiffs.

      Mr. Harvey A. Lieb, attorney for defendants.
   Stein, J. S. C.

This action is brought by Harold D. Clark, pastor of Hopewell Baptist Church, who seeks an injunction permanently restraining the defendants from interfering with the performance of his pastoral duties. Pendente lite he asks for a restrain of the same character. The complaint is verified and it charges, amongst other things, that a meeting of the congregation his dismissal as pastor was approved by a mere majority vote and that such vote is ineffective for the stated reason that the “New Directory for Baptist Churches” by Edward T. Hiscox, D.D. (which work plaintiff alleges is the authority adopted and followed by Baptist churches), requires that “a three-quarters vote of all present at such a meeting should be deemed essential to a call.” Upon this quoted language from the named book or authority the plaintiff draws and presses the point that the meeting at which he was dismissed was invalid.

On the return of an order to show cause the cited work or authority was received in evidence and the court’s attention was directed to note 4 on page 108 thereof. There the quoted language concerning a three-quarters attendance does appear but only in relation to a meeting at which a candidate is “called” to the pastorate. It is there provided that when the church calls one to fill the pastorate, the initial call should not be accepted by the pastor without a three-quarters vote of the members of the congregation present when the “call” is agreed upon. There is nothing, however, in the book which requires the like vote when one already filling the pastorate is to be dismissed. Thus it is apparent that what the plaintiff did was to take the quoted words out of context and to torture the clear language of the manual into a meaning and application entirely alien to the words used in and the purpose intended by the provision under discussion. The willful misuse of the quoted language is obvious, as was the plaintiff’s purpose to deceive the court into relying upon the quoted words. It is interesting to note that in the paragraph itself containing the quoted language appear the words: “Let there be transparent honesty in so delicate and important a matter, and no deception practiced.” It is very unlikely that the plaintiff failed to read the whole paragraph. Certain it is that he failed to observe its mandate of honesty and commandment against deception. His conduct is offensive to the court. It clearly violates our requirement that “A suitor in equity must come into court with clean hands and he must keep them clean after his entry and throughout the proceedings.” A. Hollander & Son, Inc., v. Imperial Fur Blending Corp., 2 N. J. 235, 246 (1949), and cases there cited. “The application of the clean hands maxim does not depend upon an averment in pleadings or the claims of the parties; ii may and should be applied by the court of its volition when a situation calling for it is disclosed on the trial by evidence or otherwise.” Kem Products Co. v. Levin, 117 N. J. Eq. 560, and cases there cited. Here the plaintiff furnished false testimony by his verified complaint and induced the court, upon that false pleading, to grant ex parle an ad interim restraint. It was held in Pfender v. Pfender, 104 N. J. Eq., 107 (Ch. 1929); affirmed, 105 N. J. Eq. 247 (E. & A. 1929), that “One who by false ox misleading testimony or conduct during the hearings in the cause deliberately deceives the court cannot be said to have complied with that rule.” The rule referred to is the clean hands requirement by courts of equity. See also Clickner v. Clickner, 95 N. J. Eq. 479, 123 A. 373 (Ch. 1924); Zearfoss v. Zearfoss, 112 N. J. Eq. 530 (Ch. 1933); Meyer v. Blacker, 120 N. J. Eq. 35, 42 (Ch. 1936); Mas v. Coca-Cola, 163 Fed. Rep. 2d 505 (U. S. C. C. App. 1947).

In the instant case no answer has yet been filed. However, it is not required that the unconscionable conduct of the plaintiff be pleaded by the defendant. Whenever it is disclosed to the court, and at any stage of the proceedings, the court will sua sponte apply the unclean hands doctrine, 21 O. J., 186, § 171, cited with approval and applied by Vice-Chancellor Berry in Gluck v. Rynda Development Co., 99 N. J. Eq. 788, 802 (Ch. 1926); affirmed, 100 N. J. Eq. 554 (E. & A. 1927). Nor does it matter what has been the wrongful conduct of the defendants. The doctrine of unclean hands may be invoked only against a suitor for relief, whether he be the plaintiff or counterclaimant or cross-claimant, but never against the defendant as such. The - conduct that is material to the doctrine is the plaintiff’s misconduct, and if that be of serious nature relief will be denied to the plaintiff, no matter how serious are the charges of wrongdoing laid to the defendant. In the instant case there can be no question that the plaintiff’s misconduct was of the most serious nature. Ilis misuse of the church manual was conscious and purposeful. It was designed to mislead the court into a false assumption of fact and to induce the allowance of an ad interim restraint. Those purposes were accomplished. The court was deceived and the initial relief sought by the plaintiff was granted. The plaintiff’s misconduct, now revealed, disentitles him to further hearing in this court. His hands are unclean in the initiation and conduct of this action and for it all outstanding restraints are vacated and his complaint is dismissed with costs. Present judgment.


author: Hegarty, A. M.

text:
    MARY E. ABETY, PLAINTIFF, v. PETER L. ABETY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided December 7, 1950.

      Messrs. Vander Burgh & Aronsohn (Mr. I. William Aronsohn, appearing), attorneys for plaintiff.

      Mr. N. Demarest Campbell, attorney for defendant.
   Hegarty, A. M.

Defendant’s motion brings up for consideration his application for an order directing plaintiff to show cause why she should not be compelled to expressly waive the provisions of section 352 of Civil Practice Act of New York, in the manner provided by section 354 thereof, with respect to the disclosure of information contained in the records of Morrisania City Hospital, New York, New York, relating to a surgical operation performed therein upon plaintiff on or about July 24, 1935, and the disclosure of information which the surgeon or surgeons who attended plaintiff acquired in his or their professional capacity in and about the aforesaid surgical operation upon plaintiff.

Defendant, in support of his application, relies upon the transcript of testimony taken de bene esse in New York State on August 22, 1950, before Maurice S. Austin, Esq., an attorney-at-law of New Jersey, and the affidavit of Thomas J. Todarelli, Esq., an attorney-at-law authorized to practice in the State of New York. In effect, the testimony sought to be elicited by defendant in New York was not permitted to be given because of plaintiff’s objections on the grounds that any such answer would be a violation of sections 352 and 354 of the Civil Practice Act of the State of New York barring the release of confidential communications in the absence of the patient’s consent and, therefore, the testimony of the doctor involved and the hospital records required could not be offered in evidence.

In opposition to the pending motion plaintiff urges the following grounds in support of her right to rely on the privilege accorded her by the State of New York: (a) that she cannot be compelled by order of a court of New Jersey to waive a privilege given to her by New York State; (b) New Jersey must give full faith and credit to the laws of a sister state; (c) the fact that plaintiff was a resident of the State' of New York at the time of the surgical operation and has since become a resident of New Jersey does not require her to waive any privileges she acquired while a resident of the State of New York.

In the very first instance, the defendant followed the proper procedure in order to obtain depositions upon oral examination. The clear and broad language of Rule 3 :30 — 1, secures to defendant that right. The cloak of privilege thrown about the witnesses called by defendant to give testimony in New York cannot deprive the defendant of the right to the benefit and use of: that evidence. It therefore becomes unnecessary to order and require the plaintiff to expressly waive the provisions of sections 352 and 354 of the Civil Practice Act of New York for the very obvious reason that the plaintiff is not entitled, under the present state of the law and the cases, to the claimed privilege she has previously invoked in New York and which she now seeks here to have sustained.

For clarity of the situation: Such testimony as the defendant sought to obtain by deposition in New York and which was objected to by plaintiff, is not privileged in New Jersey. However, Wexler v. Metropolitan Life Insurance Co., 38 N. Y. S. 2d 889 (1942), sanctions such use of depositions by the defendant free of any claim of privilege by plaintiff or witnesses. The court, in that case held:

“It appears that in New Hampshire a physician may be required to testify fully in relation to his examination and treatment of his patient and no privilege exists such as is afforded here by Section 352, Civil Practice Act.
“The defendant seeks to prove by the testimony of New Hampshire physicians who are claimed to have examined or treated the insured that he died of natural causes. I believe that the testimony of these physicians as to matters privileged under the laws of New York may not be taken by deposition in New Hampshire for use at the trial in New York. The public policy of this State does not permit the use of such evidence. The admissibility of this evidence is determined by the law of the forum. In Doll v. Equitable Life Assurance Society of United States, 3 Cir., 138 F. 705, a federal court, sitting in New Jersey, received in evidence over objection the testimony of a physician who had attended the insured in her last illness in New York; the physician testified as to the cause of her death. It was held that notwithstanding the fact that such testimony would not have been received in evidence in New York, a court sitting in New Jersey, where such testimony is not privileged, properly applied the law of the forum. The New York court is in accord with the views there stated, at page 710 of 138 F. as follows: ‘The prohibition of the New York statute is a rule as to evidence or procedure, * * *.’ The New York statute, therefore, was not applicable to the trial in the Circuit Court for the District of New Jersey.
“There is no reason for departure from the general rule expressed in Restatement, Conflict of Laws, § 597, that: ‘The law of the forum determines the admissibility of a particular piece of evidence.’ ”

Accordingly the defendant may present an order, after first submitting the same to opposing counsel for approval, for the taking of a deposition or depositions of such person or persons, as he desires, upon oral examination as provided for in Rule 3 :30 — 1.


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

text:
    HYMAN I. GOLDSTEIN, PLAINTIFF, v. METROPOLITAN CASUALTY INSURANCE COMPANY OF NEW YORK, A CORPORATION OF THE STATE OF NEW YORK, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided November 9, 1950.

      Mr. Meyer L. Sakin, for the plaintiff.

      Mr. William G. Freeman, for the defendant (Messrs. Starr, Summerill & Davis, attorneys).
   Donges, A. J. S. C.

The plaintiff is a physician and a member of the Rudolph Virchow Medical Society of the City of New York. On June 15, 1946, he made application for group insurance and a policy was issued to him. He informed the defendant’s agent of his physical condition at the time of the application and was assured he was eligible under the group plan.

On November 22, 1948, plaintiff sustained bodily injury as a result of an accident and became incapacitated for 18 weeks, and under the terms of the policy he became entitled to $900, at the rate of $50 per week. Plaintiff filed the necessary forms and received $150 for three weeks. Defendant refused to make further payments. Plaintiff had paid premiums from June 15, 1946, until December 3, 1949, when the defendant returned a tendered premium. Plaintiff sues for the $750, alleged to be due him under the policy.

Defendant contends that plaintiff was not regularly attending all the duties of his profession on June 15, 1946, as required by the policy, and is, therefore, not entitled to benefits. The following questions and answers appear in the application for insurance:

Question No. 9: “Have you been disabled by either accident or illness or received medical attention during the past five years?”
Answer: “Yes, coronary attacks Nov. 1944; May 1945, coronary thrombosis and infarction.”
Question No. 11 : “Are you now in sound condition physically and mentally ?”
Answer: “(coronary) **”
Question No. 12: “Do you understand that this application is subject to. acceptance by The Metropolitan Casualty Insurance Company, of New York, and that the insurance hereby applied for will not be effective unless you are regularly attending all of the usual duties of your occupation on the countersignature date of the policy?”
Answer: “**”

The two asterisks (**) in No. 12 refer to the answer to question No. 9.

The question presented for determination is whether the defendant waived strict adherence to the terms of its policy by issuing the policy to plaintiff and by accepting premiums thereon.

It is now claimed by the defendant that the plaintiff made a misrepresentation by not- fully answering question No. 12 of the application. It must be conceded at the outset that had plaintiff falsely answered questions in the application, the company would have had the right to declare the policy void and thereby avoid iiability in this case. However, there is no question that a condition in the nature of a representation or warranty may be waived by the insurer. Such provisions are placed in the policy for the benefit of the insurer and as such may be waived. Graham v. Security Mut. Life Ins. Co., 72 N. J. L. 298, 62 A. 681 (E. & A. 1905). In order to establish a waiver or even an estoppel, it must be shown that the insurer did some act after having knowledge of the breach of warranty or condition. Generally speaking, the issuance of a policy, with knowledge of the facts upon which its validity may be disputed, is a waiver of a breach of warranty or condition. It is likewise a waiver if the insurer accepts premiums with knowledge of the breach of warranty or condition. Mass. Acc. Co. v. Stone, 127 N. J. Eq. 97, 11 A. 2d 71 (E. & A. 1940); Kozloski v. Prudential Ins. Co. of Am., 95 N. J. L. 101, 113 A. 135 (E. & A. 1921).

The question then is: Did plaintiff’s answers to questions in the application sufficiently apprise defendant that he was not regularly attending all the duties of his profession on the date the policy was issued? I feel, after considering the application for insurance, the testimony offered, and briefs of counsel, that the defendant was fully apprised of plaintiff’s incapacity to perform all his duties, and that the defendant waived said requirement by the issuance of the policy and by the acceptance of premiums from June 15, 1946, until December 3, 1949. Furthermore, if the defendant was not fully satisfied with the answer given, a duty was imposed upon it to secure further particulars, for surely it can not contend at this late date that it was not aware that something was not as the company desired it. See 3 Cyclopedia of Insurance Law, Couch, § 778, p. 2526. Carson v. Jersey City Ins. Co., 43 N. J. L. 300 (Sup. Ct. 1881); affirmed, 44 N. J. L. 210 (E. & A. 1882).

In this connection, it must also be noted that the plaintiff fully informed defendant’s agent (a Mr. Robert Gerling), who solicited the business, just what plaintiff’s physical condition was at that time. Plaintiff was then informed that he nevertheless was eligible. Neither the agent nor anyone else was produced as a witness to dispute this conversation. Although this, of course, is not conclusive evidence of defendant’s knowledge of plaintiff’s inability to perform his regular duties, it lends support and weight to the other evidence submitted on this point.

A judgment will be entered in favor of plaintiff and against defendant in the sum of $750, plus interest.


author: Hartshorne, J. C. C.

text:
    EMANUEL FINE, TRADING AS WORMSER & COMPANY, PLAINTIFF, v. H. KLEIN, INC., A CORPORATION OF NEW JERSEY, HARRY KLEIN AND TESSIE B. KLEIN, DEFENDANTS.
    Essex County Court Law Division
    Decided December 7, 1950.

      Mr. Sidney Krieger, for the plaintiff.

      Mr. Max L. Rosenstein (Mr. Samuel R., Blaine, appearing), for the defendants.
   Hartshorne, J. C. C.

Plaintiff sues defendant corporation on a series of promissory notes, of which the individual defendants are endorsers. These notes contain acceleration-on-default clauses, provide for 15% attorneys’ collection fees, and were, in part at least, secured by a chattel mortgage.

The defendant, among other defenses, has pleaded that of usury. In reply, plaintiff relies on the so-called corporate usury statute, which provides: “No corporation shall plead or set up the defense of usury to any action or suit brought against it to recover damages or enforce a remedy on any obligation executed by said corporation.” R. S. 31:1-6. Plaintiff moves to strike the usury defenses.

This statute has been the subject of much litigation, as have its analogues in other jurisdictions. But the leading decision thereon in this State is that of our highest court in Lembeck v. Jarvis Terminal Cold Storage Co., 70 N. J. Eq. 757 (E. & A. 1905), where the purpose of the statute is stated as follows: “It is obvious, however, that the statute was passed to protect those that had made loans of money and had taken the paper or bonds of a corporation.” This decision was shortly followed by that in Mazarin v. Hudson County R. E. & B. Co., 80 N. J. L. 35 (Sup. Ct. 1910), where the court said: “In view of the uniform legislative policy of the state in the matter of usury, the words ‘obligation executed’ by a corporation refers to corporate obligations in the sense of bonds, mortgages, debentures and the like that go on the market and into the hands of the public. It is not rational to suppose that the legislature intended to go further and weaken its public policy against usury by the construction that would make ‘obligation’ apply to an agreement to pay a usurious commission to an agent. The words ‘obligation executed’ in the context do not lend themselves naturally to such a meaning.”

Had plaintiff’s suit here been upon a mortgage or a bond, such as were involved in the LembecJc case, supra, clearly the statute would apply, and the defense of usury should be stricken. Note also the following mortgage cases to the same effect: Silberman v. Isaac Cades, Inc., 107 N. J. Eq. 575 (E. & A. 1930); Richmond Bldg., &c., Ass’n. v. Aurora, &c., Corp., 9 N. J. Misc. 1015 (Ch. 1931); General Motors Acceptance Corp. v. Larson, 110 N. J. Eq. 305 (Ch. 1932); Heilos v. State Land Co., 113 N. J. Eq. 239 (Ch. 1933).

But since the proceedings here are on promissory notes, even though secured originally by chattel mortgage, defendant claims the statute does not apply, and the defense of usury can be raised. More narrowly, therefore, the issue is whether a corporate promissory note is an “obligation executed” by said corporation within the meaning of the statute.

No decision by the courts of this State on this point involving corporate promissory notes has been brought to the attention of the court. In Seacoast Real Estate Co. v. American Timber Co., 89 N. J. Eq. 293 (Ch. 1918), the note in question was a personal, not corporate, one, the only corporate instrument involved being a deed. In Ovsiovitch v. Federal Tool and Mfg. Co., 94 N. J. Eq. 744 (E. & A. 1923), while promissory notes secured by a chattel mortgage were involved, our highest court in reversing the Court of Chancery, expressly passed the question as to whether the statute covered promissory notes, holding that the statute did apply to the chattel mortgage there involved. Since the chattel mortgage originally involved in the case at bar has been foreclosed, defendant apparently contends that the Ovsiovitch decision is inapplicable. However, the Hew Jersey statute has been held to apply to corporate notes in two cases, one decided by the Third Federal Circuit Court of Appeals, one by the Hew York Supreme Court. In re Tastyeast, Inc., 126 F. 2d 879 (C. C. A. 3rd 1941); Ollendorf v. Lissberger, 28 N. Y. S. 2d 455 (N. Y. Sup. 1941).

In the absence of a controlling decision, the purpose of the statute should, therefore, be examined to reach a conclusion as to its true meaning. In 1902, when the statute -was adopited, the transaction of the business of this country in the corporate form was, compared to the present, in its infancy. The underlying purpose of the statute doubtless was not to have this infant method of conducting the business of the country starved out by depriving it of the essential nourishment of credit, through the public’s fear of purchasing corporate “paper,” if affected by the defense of usury. This purpose was succinctly stated by our highest court in the Lembeclc case, supra, in saying that the statute applied to corporate “paper or bonds.”

But while corporate “paper or bonds” thus constitute “obligations executed by said corporation,” to which the statute alludes, it is equally clear that corporate instruments other than negotiable paper, bonds, or corporate securities underlying them, such as mortgages, were not intended to be covered by the statute, since, as to these others, the defense of usury would not endanger corporate credit, and, therefore, the public policy of prohibiting usury should be continued. Accordingly, the Mazarin case, supra, held that the statute did not cover a corporate agreement to pay a brokerage commission. Identic is the decision of our highest court in Grossman v. Calonia Land and Imp. Co., 103 N. J. L. 98 (E. & A. 1926), in which the court repeated the above language of the Lembeck case, supra.

Nor is it material whether the corporate “paper” in question had in fact remained in the hands of the original creditor, or had come into the hands of the public on the market. This is made clear by the decision of our highest court in the Ovsiovitch case, supra. For, in that case the Court of Chancery held that the statute did not apply to the notes there in question, and that usury could be pleaded because such notes were in the hands of their original holder, the transaction thus being “of a private nature.” The lower court thus interpreted the Mazarin case, supra, as holding the test to be whether the corporate paper had in fact gone on the public market, not what its intrinsic character was. That this was not the holding of the Mazarin case, or the law, is made clear by the fact that our highest court reversed the Court of Chancery in its above opinion. The true test thus is whether, as the Mazarin case says, the instruments in fact are “corporate obligations in the sense of bonds, mortgages, debentures and the like.”'

In addition, the “debentures” which the Mazarin case, as approved by the Court of Errors and Appeals in both the Ovsiovitch and Grossman cases, supra, holds are covered by the statute, are clearly promissory notes, i. e., promises to pay, which intrinsically are not secured. “A debenture is a debt- an acknowledgment of a debt * * * They may be simple acknowledgments or promises to pay like promissory notes.” Words and Phrases, vol. 11, “Debenture” citing many cases. Indeed, the normal distinction between a corporate bond and a corporate debenture or note, is that the former is usually secured by a mortgage, while the latter usually is not. Thus, the promissory notes at bar are intrinsically not secured, though they wore secured separately by a chattel mortgage. They thus are included in “debentures and the like,” held by the several above cases to be covered by the statute.

Furthermore, since there is no question under the above cases that the statute covers the chattel mortgage, which originally secured the promissory notes in question, the above cited cases show that the corporate defendant could not plead the defense of usury to such mortgage. Thus, in this very case where defendant corporation seeks credit on the notes for the surplus from the foreclosure of such mortgage, it cannot charge the amount of the usury against such surplus. Surely it would be anomalous for the court accordingly to refuse to consider the amount of the usury in applying this surplus as a credit to the notes, and then to hold to the contrary, that the amount of the usury must be credited on the notes themselves.

Defendant’s final reliance is upon the case of Pick v. Brand, Inc., 135 N. J. L. 526 (Sup. Ct. 1947), where the court held the statute to be inapplicable. But, the facts there were of a simple loan to the corporation defendant usurious in fact, where the corporation, a month after the loan, issued its checks to pay same, the checks being returned “Payment stopped.” Here the court held: “Although it is insisted that the suit is brought upon the checks, it seems entirely clear that actually the recovery sought is upon the loan itself,” not upon the checks as corporate paper.

But, in the case at bar, the facts are far different. The present situation involves the issuance of a series of promissory notes, executed and due on different dates, the note agreements being further complicated by default-acceleration clauses, by provision for the payment of attorneys’ fees, and by the issuance of a chattel mortgage. As both the pleadings and the pretrial order indicate, this suit is in fact on the notes, as affected by the special agreements incorporated in such notes. Thus Pick v. Brand, supra, is inapplicable.

Since the defense of usury cannot be pleaded by the corporate maker of the notes, it is likewise unavailable to the individual endorsers on the notes. Commercial Funding Corp. v. Melroy Const. Co., 106 N. J. Eq. 11 (Ch. 1930); Liebers v. Plainfield, &c., Bldg. Co., 108 N. J. Eq. 391 (Ch. 1931).

Plaintiff’s motion to strike the defense of usury will be granted.


author: McGrath, J. C. C.

text:
    BOARD OF HEALTH OF THE CITY OF PLAINFIELD, COMPLAINANT-RESPONDENT, v. CHARLES SIMKIN & SONS, INC., CHARLES SIMKIN, SAMUEL SIMKIN AND THEODORE SIMKIN, DEFENDANTS-APPELLANTS.
    Union County Court
    Decided October 30, 1950.

      Mr. David T. Wilentz, attorney for defendants-appellants.

      Mr. Salvator Diana, attorney for complainant-respondent.
   McGrath, J. C. C.

Complaint was filed in the court below • in which the Board of Health of Plainfield charged that the defendants violated Article 2, Section 2, of the local health ordinance entitled, “The Plumbing Code of the City of Plain-field,” in that the defendants entered into a contract to do plumbing work in a new school building being constructed in Plainfield, and did in pursuance to the said contract install or cause to be installed plumbing fixtures, pipes, and other apparatus to be used for bringing in the water supply or removing liquid and water-carried wastes on the premises, and did engage in or carry on the trade, business or calling of an employing or master plumber, without first having been licensed to do so, contrary to the provisions of the said ordinance.

A stipulation was entered into in the municipal court on which that court rendered its decision and this same stipulation is the basis on which the parties wish this court to render opinion as to the validity of the conviction. The gist of the stipulation is that all defendants engaged in the trade, calling or business of employing or master plumbers without the license referred to.

No ordinance has been sent up with the appeal but it was stipulated in open court that the defendants did violate the section of the ordinance in question by working as employing or master plumbers on this school, unless they are excused by statute. All other jurisdictional requirements are admitted and the sole question is whether in view of R. S. 18:11-11, the defendants or any of them were required to submit to such an examination for employing or master plumber under the provisions of Plainfield’s ordinance of the local board of health.

R. S. 18:11-11 reads as follows:

“No board of education of any school district shall be required to secure the approval of its plans and specifications for the erection of any school building or any part thereof by the municipality therein; nor shall any board or any contractor doing work in connection with school buildings be required to secure a building permit from the municipality.”

The defendants contend that the statutes R. S. 18:11-10, 18:11 — 11 and 18:11-12, plainly show an intention of the Legislature that the full responsibility for the erection of public schools and the alterations thereof shall he solely on the local boards of education and state board, and that the object of these statutes in providing that neither the board or the contractor shall be required to secure a building permit is to place the full responsibility on said boards.

Obviously the whole purport of these statutes is to place the responsibility for the proper planning and letting out the work on public schools on such boards. However, responsibility for passing on plans for buildings, usually vested in a local building department, is an entirely different responsibility from that of a local board of health in protecting the public, in general, from unqualified master plumbers, and it is well known that municipalities maintain local boards to license electricians as well as master plumbers and these boards are usually separate from the building departments and operate in a different sphere. To adopt the construction urged by the defendants would mean that the responsibility for having only properly qualified master plumbers and incidentally electricians would be placed solely on the local and state boards of education, if the work happened to be on a school building. In order to obtain approval of any building plans in any city or municipality, it is not only necessary to obtain a building permit to insure proper plans, but in addition to proper plans the persons who shall do either the master plumbing (or electrical work) must be duly authorized after an examination. It does not appear that the Legislature intended an exception in public schools where it is even more necessary that the master plumbers and electricians should be skilled than in an ordinary building. The whole trend of the statute is obviously to secure a building which shall be safe for the children, and the Legislature did not intend an exception whereby a man might do master plumbing or electrical work and not have a license therefor, merely because the work is in a school building. Therefore, unless we can read into the statute a plain intention by the Legislature that the local school board or state board shall have the responsibility of seeing that such workmen are licensed as required, a situation would be created whereby such unlicensed persons could work on public schools but not on any other building.

As pointed out in the case of United Dining Car Co. v. Camden, 103 N. J. L. 232 (Sup. Ct. 1927):

“The usual governmental scheme is to refer plumbing and sewer connections to one department, as the board of health, and the general building scheme to the building department. Neither, as a rule, is dependent on the other, nor should it be, as it would create endless confusion if one department, in exercising its functions, were to be bound by the acts of another within its own sphere.”

It was said in Leeds v. Atlantic City, 13 N. J. Misc. 868 (Circ. Ct. 1935):

“It is elementary that where the words of a legislative enactment are plain and unambiguous and clearly express the intent of the legislature with respect to a subject within the constitutional sphere of legislation, the courts must be governed by the statutory enactment. It is equally true that the courts cannot arbitrarily expand the scope of a statute beyond the natural and literal meaning of its words and in accordance with some conjectural notion of an unexpressed intention on the part of the legislature.”

As a general policy, ilio law has created for master plumbers, on the ground of health protection, a necessity to he examined and licensed and this is an added protection to the public, in addition to requiring proper building plans. I see no legislative intention of removing such added health protection from the building of public schools.

The defendants also contend that the words “responsible bidder” as used in the statute R. S. 18:11-10 mean that the local board and the state hoard have the duty of deciding the qualifications of master plumbers and other workmen who require a license on the ground of “responsibility.” This would require the local or state board to conduct a special examination of master plumbers (and electricians) to decide whether they are qualified, and I know of no such interpretation of the word “responsible” in the statute. The Legislature has provided other means for ascertaining the qualifications of these people and I see no reason why the defendants should he exempt merely because they are working on a school building.

I therefore find that the defendants are guilty of violating the ordinance as charged in the complaint, hut as this is a new question, I suspend sentence but with costs of this court.