author: Doan, J. S. C.

text:
    FORSTER W. FREEMAN, JR., PLAINTIFF v. PATERSON REDEVELOPMENT AGENCY, A PUBLIC BODY CORPORATE AND POLITIC UNDER THE LAWS OF THE STATE OF NEW JERSEY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided May 6, 1974.

      Mr. Douglas C. Borchard, Jr. for plaintiff (Messrs. Evans, Hand, Allabough & Amoresano, attorneys).

      Mr. Harry Zax, for defendant.
   Doan, J. S. C.

In this eminent domain action plaintiff, an owner of commercial property in an area that has been declared blighted, seeks the appointment of commissioners to assess compensation or, in the alternative, to compel defendant redevelopment agency to initiate condemnation proceedings. Pursuant to an order to show cause and for a hearing under R. 4:67, this matter was heard in a summary proceeding. Although the order to show cause was limited to the first count of the complaint, counsel for both parties requested that the court consider the evidence and arguments presented as to both counts of the complaint and all issues in controversy, so that a full and final adjudication could be rendered. Inasmuch as the evidence presented is relevant to both counts of the complaint and the issues have been briefed by counsel, a consideration of the merits of the entire controversy is appropriate. R. 1 :1-2.

The property that is the subject matter of this action is a three-story structure located in the downtown business district of Paterson. The building was constructed in 1924 and was acquired by plaintiff in 1958 by devise. The first two floors have been used for professional offices; the third floor contains two residence apartments. The building itself has been maintained in good condition.

In accordance with the provisions of the Blighted Areas Act of 1949, N. J. S. A. 40 :55-21.1 et seq., a large section of the Paterson business district was declared blighted, and a redevelopment plan adopted, in September 1964; the background history is described in Paterson v. Housing Authority of Paterson, 96 N. J. Super. 394, 401-403 (Law Div. 1967). The redevelopment plan is administered by defendant Agency, which is organized and operated pursuant to the Redevelopment Agencies Law of 1949, N. J. S. A. 40 :55C — 1 et seq. A redevelopment agency does have the power of eminent domain. N. J. S. A. 40:55C-12(j).

In the redevelopment plan plaintiff’s property is identified as parcel 14 of block 1106 and is designated for acquisition and demolition. The adopted plan contemplates the construction oí a parking garage, utilizing all or a portion of plaintiff’s land. The property itself was initially appraised on January 6, 1965, but no offer to purchase was ever made. During the years of 1965 through 1971 there appears to have been little contact between the parties, although the plaintiff himself did testify that many times he was told that his property would be taken soon. Nevertheless, during the same period, the redevelopment agency did implement and complete certain other phases of the adopted plan.

On December 22, 1971 the events that precipitated and formed the basis of the present action commenced. At that time plaintiff was notified by the tenant who occupied the first-fioor premises that the tenant would terminate the leasehold and vacate the premises on February 1, 1972. Coincidentally, plaintiff secured a prospective tenant, Gallo’s Trophy Shop, which was relocating from a building across the street that had been acquired by the Agency. Because of the extensive renovations that would be necessary to make the premises suitable for its business, this prospective tenant did consult with representatives of defendant Agency before finalizing the rental agreement and was advised that such a move would be unwise since plaintiff’s property would likely be acquired within one year. This prospective tenant decided ’again'st the rental because of the impending acquisition. Subsequently, the premises were advertised for rent, but any interest by prospective tenants dissipated when it was learned that the property was included in the redevelopment plan.

Thereafter, plaintiff sought consideration of his property for acquisition because of a hardship situation. The property was inspected on January 21, 1972, and a review of the circumstances initiated. This hardship consideration was ultimately denied because the Agency erroneously assumed that the premises were fully rented since it had learned that certain carpentry work was being done on the first-floor area; in reality, this work was being done in order to repair damages caused by the removal of the previous tenant.

In May 1972 Gallo’s Trophy Shop again contemplated rental of the first-floor quarters. From consultation with the Agency, Gallo’s was informed that if the property was subsequently acquired, it would not be eligible for another business dislocation payment or reimbursement for any improvements to the property. Although the Agency recognized that such consultation would tend to discourage the rental, nevertheless its intention was to make this prospective tenant aware of the ramifications of a decision to rent. Again, Gallo’s decided against the rental.

Plaintiff’s property was successively reappraised on November 17, 1972, February 4, 1973 and March 8, 1973. Such appraisal would ordinarily indicate that acquisition was imminent. However, on May 17, 1973 plaintiff was informed that acquisition was not contemplated because no specific development proposal existed for that area and because there was a municipal policy against condemnation of property so as to remove it from the tax rolls without a tax-productive replacement project. The Agency reiterated plaintiff’s right to maintain, improve, rent and sell the premises.

Presently, plaintiff’s property is one of four parcels on the northwest corner of Hamilton and Smith Streets which have not been acquired. The parcels designated for acquisition on the other corners have been acquired, but the intended developments have failed to materialize. Although the funds to finance acquisition of plaintiff’s property are available, the Agency is in the process of transferring those funds to other projects that are ready for implementation.

In his complaint and in his brief plaintiff presents two arguments to support the relief demanded: 1) that actions of defendant Agency so interfered with plaintiff’s beneficial use and enjoyment of his premises as to constitute a taking of private property without compensation, in violation of the Federal and State Constitutions, and (2) that the actions of defendant Agency and the delay in acquisition have diminished the value of plaintiff’s property and are so unreasonable as to require the compelling of condemnation. Contrarily, defendant Agency argues that, in the absence of physical possession and actual deprivation of use, the facts adduced are insufficient to support a finding of a constructive taking, that any diminution of value is damnum absque injuria in this context, and that the judiciary should not interfere in a matter that is so enveloped in administrative discretion.

The theory advanced by plaintiff appears to be res nova in this state.

I

It is incontrovertible that the court does have the power to compel the condemnation of private property under appropriate circumstances. N. J. S. A. 20:3-5 expressly grants the court the power “to compel the exercise of [eminent domain] power.” The determinative issue in this case is whether plaintiff has proved that his circumstances are such that condemnation is required by the constitutional, statutory, and case law.

Generally, the problems posed by urban redevelopment and its effect upon the individual property owner have evoked different judicial and legislative responses on the questions of damages prior to the initiation of eminent domain proceedings. Three distinct approaches have evolved. In some states the constitutional provision regarding private property has been enlarged so as to require the payment of just compensation where private property is taken or damaged:

In a strict sense, inverse condemnation is used to obtain compensation for property claimed to have been “taken.” However, in the approximately twenty-five states having constitutions which provide that property shall not be taken or damaged for public use without just compensation, theory also permits recovery when land is injured to a lesser degree. The damage clause has been added to the various state constitutions ostensibly in an effort to enlarge the rights of recovery available to landowners under the federal and then-existing state constitutions. [7 Nichols, Eminent Domain, § 14.02(5) at 14-19 (1973)]

The New Jersey constitutional provision has remained limited to the taking situation. N. J. Const., Art. I, ¶ 20.

As another distinct approach, the theory of a constructive taking has been utilized to justify a valuation date that is more realistic and just to the property owner:

The developing expansion of the theory of constructive “taking” — sometimes referred to as inverse condemnation and more recently in the case law as a de facto “taking” • — ■ has been responsive to the reality that activities carried on incident to massive, complex and time consuming programs launched by government to solve some of the acute problems that beset our society may so substantially interfere with one’s use and enjoyment of his property as to constitute a compensable injury in a constitutional sense or as being within applicable statutory law, even though the power of eminent domain has not been formally exercised against the property in question and there has been no physical intrusion of it. [Redevelopment Auth. of Hazleton v. Hudock, 2 Pa. Cmwlth. 670, 281 A. 2d 914, 917 (Cmwlth. Ct. 1971)]
Generally, the cases in which this view has been advanced have involved questions relating to the time as of which the condemned property should be valued, and, in holding in effect that the actions of the condemnor causing depreciation in the value of such property amounted to a taking tliereof, tiie courts have been able to permit tlie market value of the property to be established as of a date before the depreciation resulting from the condemnor’s acts impaired such value.” [Annotation, “Plotting or Planning in Anticipation of Improvement as Taking or Damaging of Property Affected,” 37 A. L. R. 3d 127, 131-132 (1971)]

In the oft-cited cases of In re Elmwood Park Project Section 1, Group B, 376 Mich. 311, 136 N. W. 2d 896 (Sup. Ct. 1965), City of Cleveland v. Carcione, 118 Ohio App. 525, 190 N. E. 2d 52, 5 A. L. R. 3d 891 (Ct. App. 1963), and Foster v. City of Detroit, 254 F. Supp. 655 (E. D. Mich. 1966), the constructive taking theory is, as generally, used to justify a valuation date before condemnation, hut not as a basis for compelling condemnation itself. See also, Jersey City Redev. Agency v. Bancroft Realty Co., 117 N. J. Super. 418, 424 (App. Div., 1971); Becos v. Masheter, 15 Ohio St. 2d 15, 238 N. E. 2d 548, 551-552 (Sup. Ct. 1968), and Cinco v. City of New York, 296 N. Y. S. 2d 26 (Sup. Ct. 1968).

As opposed to expanding the concept of a taking, the third approach expands the nature of compensation after a taking has otherwise occurred. See, e. g., Luber v. Milwaukee County, 47 Wis. 2d 271, 177 N. W. 2d 380 (Sup. Ct. 1970). Now Jersey has followed this approach. N. J. S. A. 20 :3-38 and 40:55-21.10 provide that where property is being aequ Lred for redevelopment of a blighted area, it is to be valued at no less than its value as of the date of the declaration of blight. These provisions reflect “the concept of a pennmhral zone wherein the harmful effect of public projects on private property may be regarded as not constitutionally compensable as of right but wherein the Legislature may nevertheless appropriately elect to compensate the owner.” Jersey City Redev. Agency v. Kugler, 111 N. J. Super. 50, 59 (App. Div. 1970), aff’d 58 N. J. 374, 376 (1971). Moreover, this compensation approach coalesces a number of competing factors. It recognizes the damages suffered by the property owner after the declaration of blight. Lyons v. Camden, 52 N. J. 89, 99 (1968). It recognizes that “in condemnation proceed ings the quantity of land to be taken, its location and the time of taking are within the discretion of the body endowed by the Legislature with the right of eminent domain.” Burnett v. Abbott, 14 N. J. 291, 294 (1954). It recognizes that “even though an area is declared blighted, the municipality maj' decide at a future date to drop the project.” Housing Auth. of Hoboken v. Segal, 112 N. J. Super. 359, 364 (App. Div. 1970). Consequently, under the New Jersey approach the facts that plaintiff relies upon to establish a constructive taking would be appropriate to establish the quantum of damages after initiation of condemnation, but do not justify the compelling of that condemnation itself.

Laying aside the concept of a constructive taking, the evidence adduced at the trial would not support a finding that a taking has otherwise occurred. The defendant Agency has not entered into possession of the property and put it to public use so that mandamus majr be utilized to compel payment. Jersey City Redev. Agency v. Kugler, supra, 58 N. J. at 378 (1971). This case does not involve regulatory action bjr a municipality or agency which “has deprived the landowner of all beneficial use of his lands for indeterminate lengths of time.” E. Rutherford Industrial Park v. State, 119 N. J. Super. 352, 371 (Law Div., 1972) (emphasis added). The damage to plaintiff’s property does not constitute "total or substantial destruction of its beneficial use” and is not “different in kind from the damage suffered by other property owners in the area.” Morristown Bd. of Ed. v. Palmer, 88 N. J. Super. 378, 390 (App. Div., 1965), rev’d per curiam 46 N. J. 522 (1966) (emphasis added). Although one prospective tenant was discouraged from renting and other willing tenants have been difficult to find, nevertheless the premises can be used for rental purposes; the Agency’s “actions and activities did not in themselves deny to [plaintiff] a market for their property.” Redevelopment Auth. of City of Hazleton v. Hudock, supra, 281 A. 2d at 918. In large measure, plaintiff’s difficulties are shared with others in similar circumstances and stem from the redevelopment process itself.

Accordingly, the facts adduced by plaintiff, although potentially establishing a compensable injury, do not support a conclusion that a taking of his property without compensation has occurred. In such circumstances the court cannot compel condemnation or appoint commissioners to assess compensation.

II

Wholly apart from the issue of a taking, plaintiff seeks the compelling of condemnation because the passage of ten years since the declaration of blight constitutes an unreasonable delay, hence pecuniary detriment. It should be noted, however, that during the years 1964 through 1971 plaintiff does not appear to have suffered any actual harm, damage or prejudice. During this period his property was fully rented and income-producing. There was no evidence adduced regarding any detriment incurred during this period. The issue presented then, is whether the ten-year period, per se, is sufficient to invoke the authority of the court.

Contrary to plaintiff’s arguments, mandamus will not lie to compel a redevelopment agency to acquire a parcel of property in a declared blighted area:

Condemnation to acquire a property in blighted areas is distinguishable from other types of condemnation. The statute authorizing the taking after a declaration of blight, ~N. J. S. A. 40 :55-21.10, provides that the municipality “shall not be required to acquire the real property *' - Therefore, even though an area is declared blighted the municipality may decide at a future date to drop the project. If dropped, the owners, although they may suffer pecuniary loss, are without remedy, [Hoboken Housing Auth., supra, 112 W. J. Super. at 364]

This specific statutory provision was discussed and upheld as constitutional in Wilson v. Long Branch, 27 N. J. 360, 374 (1958). This provision contains no time limitation within which a redevelopment agency must act to acquire the property. In amending the Blighted Areas Act in 1967 the Legislature recognized the absence of any time limitation in a statement appended to the Assembly bills: “There is no time period during which these development agencies must acquire the property needed to carry out the proposed plan.” Footnote 1, Jersey City Redev. Agency v. Kugler, supra, 58 N. J. at 381-382. Since a redevelopment agency is not required to acquire the property and there is, designedly, no time limitation within which it must act, a court cannot compel initiation of condemnation before a taking, as discussed previously, has occurred.

Plaintiff has cited no case in which the court has ordered condemnation in the absence of facts which indicate that a taking has occurred. In State v. Milkon Realty Inc., 119 N. J. Super. 156 (Law Div. 1972), the court observed, in a purety dictum statement, that a “condemnee is not helpless * * * because mandamus is available * * * should the condemnor unreasonably delay in the proceedings to effect just compensation” (at 163). The “proceedings” referred to in that case were proceedings after a taking has occurred; the State there entered into possession before initiation of the condemnation proceeding. In support of its statement as to the availability of mandamus, the court cited (at 158) Haycock v. Jannarone, 99 N. J. L. 183 (E. & A. 1923), another instance where a taking had occurred without initiation of proceedings to effect just compensation. As shown previously, in this case no taking has yet occurred.

Principally, plaintiff relies upon certain comments of the Supreme Court in Lyons v. Camden, 52 N. J. 89 (1968). In that case the court stated that “equitable considerations call for action by the public authority to effectuate the redevelopment with reasonable dispatch” (at 99), and that if such proceedings were not done “within such time as is reasonable under the circumstances, plaintiffs may apply * * * for such relief as the demands of justice may require” (at 100). The court did not specifically order condemnation nor discuss mandamus to compel condemnation. As noted by the Appellate Division in footnote 1 in Jersey City Redev. Agency v. Kugler, supra, 111 N. J. Super, at 57, “Lyons involved condemnation proceedings prior to tlie effective date of the 1967 amendments.” In a case arising after the 1967 amendments, the Supreme Court discussed unreasonable delay as an element of just compensation, not as a basis for compelling condemnation :

In some situations the concept of [just compensation] requires the payment of interest on the market value of the property taken, particularly where the public agency concerned has been guilty of unreasonable delay in completing the condemnation action * * [Jersey City Redev. Agency v. Kugler, supra, 58 N. J. at 384.]

Gleariy then, just as the actions of the redevelopment agency are relevant to the eventual assessment of just compensation, so, too, any unreasonable delay is relevant to the award of interest after a taking or initiation of condemnation by the agency. However, it does not support a court order compelling that condemnation, if such an order was permitted by the statutory provision.

Nevertheless, even assuming that the court could compel condemnation, the equitable considerations contemplated in Lyons are not present in this case. The court there was concerned with residential property, not commercial property as here. The court there was concerned that a family would be “imprisoned economically in the blighted area” (52 N. J. at 99), a situation quite unlike the owner of the commercial property in the present case. In Lyons the court was concerned with the “deterioration that afflicts a neighborhood at an accelerated pace following a declaration of blight” (ibid.); here there was no- evidence of a similar effect. Moreover, in light of the agency’s inability to secure a potential developer and the municipality’s serious taxation problems, the present delay cannot he deemed unlawful under the circumstances. Accordingly, even the equitable considerations herein do' not warrant the compelling of condemnation.

For the foregoing reasons, judgment for defendant shall be entered.


source: Caselaw Access Project

author: Lane, J. S. C.,

license: Public Domain

text:
    IN THE MATTER OF THE ESTATE OF MARY D. HAYS, DECEASED.
    Monmouth County Court Probate Division
    May 7, 1974.

      Mr. Donald D. Rankin for the successor trustee, Colonial First National Bank (Messrs. Baling, Moore, O’Mara & Coogan, attorneys).

      Mr. Theodore J. Labrecque, Jr. for Lee H. Deedmeyer, individually and as virtual representative of Diana Louise Deedmeyer and Lee H. Deedmeyer, Jr. (Messrs. Labrecque, Parsons & Bassler, attorneys).

      Mr. Robert D. Broege, guardian ad litem of Rachael Clayton, pro se.

   Lane, J. S. C.,

Temporarily Assigned. Colonial First National Bank, successor trustee of the trust under Article Fourth of the will of Mary D. Hays, has presented to the court for approval its first and final accounting covering the period of October 10, 1968 to October 2, 1973. In conjunction with the accounting it also asked for instructions concerning the interpretation of paragraph 4 of Article Fourth.

Article Fourth provides:

All the rest, residue and remainder of my estate, including both real, personal and mixed property and wherever the same may be situate, I give, devise and bequeath unto my Executor and Trustee hereinafter named, in trust, however, for the following uses and purposes :
(1) To pay the net income of my estate to or for and on behalf of my said husband, ARTHUR G. HAYS, for and during the term of his natural life, the same to be paid at least semi-annually and to be effective as to all income received by my estate from the day of my death.
(2) Upon the death of my said husband, ARTHUR G. HAYS, and provided my brother, OTTO L. DEEDMYER, shall survive him, the said income shall be paid to the said OTTO L. DEEDMEYER for and during the term of his natural life and shall likewise be paid at least semi-annually.
(3) In the event my Executors and Trustees, in their discretion, should deem it necessary or advisable to use said income or so much of the principal as may, in their determination, be required to provide for the proper care, comfort and maintenance of my said husband, ARTHUR G. HAYS, during his lifetime, my said executors and trustees are hereby authorized and empowered, without necessity of obtaining Court approval therefore, to use said income or any portion thereof and if said income should be insufficient, to use the principal of said trust or any portion thereof for such purpose during my said husband’s lifetime.
(4) Tn the event my brother, OTTO L. DEEDMEYER, should predecease my husband, ARTHUR Q. HAYS, leaving lawful issue him surviving, then I direct that upon the death of my husband, ARTHUR G. HAYS, the trust herein provided for shall end and terminate and the corpus of said trust together with any accumulation of income therein not yet remitted to or on behalf of my said husband, ARTHUR G. HAYS, shall then go to and I hereby give and bequeath the same in equal shares, share and share alike, to the issue of the said OTTO L. DEEDMEYER and their heirs, provided however, and it is my intention in such event, that if there are grandchildren of the said OTTO E. DEEDMEYER alone or together with children of the said OTTO E. DEEDMEYER who would then be entitled to share, that they shall all share equally in equal shares, per stirpes and not per eapifa. In the event that my said brother, OTTO E. DEEDMEYER, should predecease my said husband, ARTHUR G. HAYS, without leaving lawful issue Mm surviving, or without grandchildren Mm surviving, then said trust shall also end and terminate and the corpus thereof together with any accumulation of income therein not yet remitted to or on behalf of my said husband, ARTHUR G. HAYS, shall then go to and I hereby give and bequeath the same unto my said husband, ARTHUR G. HAYS, his heirs and assigns forever.

Mary D. Hays and Arthur G. Hays were married in 1912. Mary Hays’ Will is dated January 15, 1959. She died July 16, 1966. Her husband died May 25, 1967. Her brother, Otto Deedmeyer, died October 2, 1973.

Mr. and Mrs. Hays had no children surviving. At the time of the execution of hex will her brother Otto L. Deedmeyer, her nephew Lee H. Deedmeyer and his two children Diana Louise Deedmeyer and Lee H. Deedmeyer, Jr., were, with the exception of her husband, her next of kin. Mr. Hays’ family other than his wife consisted of a nephew and two nieces, one of whom was married and had three children.

Mr. and Mrs. Hays each had substantial assets in his or her own right. On November 14, 1963, Arthur G. Hays created an inter vivos trust, reserving the income to himself for life, and upon his death to his wife, Mary D. Hays. In the event that Mary D. Hays should predecease Arthur G. Hays, then the income was to be paid over equally to his two nieces and nephew, until the death of the last survivor of them, at which point the principal was to be divided among their issue. The will of said Arthur G. Hays had substantially similar provisions, except that it eliminated the income for life for Mary D. Hays, since it was executed on August 17, 1966, after the death of said Mary D. Hays.

The original inventory of that trust was valued at over $399,000, and at the date of death of Arthur G. Hays on May 25, 1967 the inventory value was over $415,000 and the market value almost $444,000. The inventory value of the estate of Arthur G. Hays, exclusive of the above-mentioned trust, was over $280,000. The value of the assets of the estate of Mary D. Hays amounted to over $235,000 on the date of her death.

Arthur G. Hays was born in 1881 and Otto Deedmeyer was born in 1888.

Need for construction of Article Fourth arises from the fact that it contains no gift-over of the residue on the contingency which occurred, namely, Otto L. Deedmeyer surviving Arthur G. Hays. The guardian ad litem for an infant next of kin of Arthur G. Hays argues that an intestacy occurred so that the residue should be distributed to them through Arthur G. Hays’ estate. The Deedméyer son and grandchildren argue that Mary D. Hays’ probable intent requires her will to be construed to incude a gift-over to them.

There has been introduced into evidence an affidavit of the scrivener of the will. He has no specific recollection of any conferences with Mr. or Mrs. Hays in connection with the preparation of the will. He had known the Hayses from the early 1930s. He states that both Mr. Hays and Mrs. Hays treated their estates separately. His explanation of the failure to provide for the disposition of the residue in the contingency which occurred is commendably candid. “[M]y only explanation for that fact is that apparently both Arthur G. Hays, Mary D. Hays and I overlooked this contingency.”

In construing a will the function of the court is to ascertain and give effect to the intent of the testator. Primary emphasis is to be given to the dominant plan and purpose as they appear from the language of the entire will as illuminated by the surrounding facts and circumstances existing at the date of the execution. It is the “probable” intent of the testator which the court must ascertain. Wilson v. Flowers, 58 N. J. 250, 260 (1971); In re Conway, 50 N. J. 525, 527 (1967); In re Cook, 44 N. J. 1, 6 (1965); Fidelity Union Trust Co. v. Robert, 36 N. J. 561, 564 (1962). So far as the situation permits, courts will ascribe to the testator those impulses which are common to human nature and will construe his testament so as to effectuate those impulses. In re Cook, supra, 44 N. J. at 6; Fidelity Union Trust Co. v. Robert, supra, 36 N. J. at 565. The testator’s probable intent is not to be thwarted by a literal meaning of his words. Wilson v. Flowers, supra, 58 N. J. at 260; Fidelity Union Trust Co. v. Robert, supra, 36 N. J. at 565; Bank of New York v. Black, 26 N. J. 276, 284 (1958); Bottomley v. Bottomley, 134 N. J. Eq. 279, 291 (Ch. 1944). Not only are circumstances surrounding the execution of the will admissible, but also circumstances from then until the testator’s death are admissible. In re Cook, supra, 44 N. J. at 6. Courts have not only substituted words but have readily inserted omitted words when needed to effectuate the manifest intent of a testator. In re Cook, supra, 44 N. J. at 6; Bottomley v. Bottomley, supra, 134 N. J. Eq. at 291. See Holcomb v. Lake, 25 N. J. L. 605, 608-609 (E. & A. 1855); Den ex dem. Brown v. Mugway, 15 N. J. L. 330, 331-332 (Sup. Ct. 1836); Zabriskie v. Huyler, 62 N. J. Eq. 697, 700 (Ch. 1901), aff’d o. b. 64 N. J. Eq. 794 (E. & A. 1902). The inquiry is always peculiar to the individual circumstances. Neither precedents involving the construction of other wills nor canons of construction have great force in determining the testator’s probable intent. In re Morton, 48 N. J. 42, 47 (1966) ; Fidelity Union Trust Co. v. Robert, supra, 36 N. J. at 568.

Prior to In re Cook, supra, 44 N. J. 1, it was said that the actual intent of the testator, independent of the words used, was not the issue, but rather what was the reasonable meaning of the words actually written. In re Armour, 11 N. J. 257, 271 (1953); In re Thompson, 90 N. J. Super. 350, 353 (App. Div. 1966); In re Hoffman, 53 N. J. Super. 396, 400 (App. Div. 1959); Weiss v. Rheinstein, 50 N. J. Super. 308, 316 (App. Div. 1958). However, Wilson v. Flowers, supra, 58 N. J. at 262, would appear to have changed this general rule. The Supreme Court there appears to have directed courts in the ease of an ambiguity to find as near as possible the actual intent of the testator. However, the rule remains that if no ambiguities exist, the terms of the will may not be varied. This rule would seem to have little, if any, force since apparently any evidence is admissible to show an ambiguity.

The cases involving failure to dispose of residue under a specific contingency although other contingencies are covered are quite difficult to reconcile. The guardian ad litem relies upon Montclair Trust Co. v. Lupher, 44 N. J. Super. 408 (App. Div. 1957). In that case the will provided for a gift-over in the event that both husband and wife shall die or meet death as a result of a common disaster. In fact, the testator survived his wife. The Appellate Division refused to find a gift-over by implication and allowed the residue to pass by intestacy.

Recently that case was foHowed in In re Schuhmann, 125 N. J. Super. 56 (App. Div. 1973) certif. den. 63 N. J. 569 (1973). There the court stated:

We agree with the court below, and here adjudge, that an intestacy exists. AVe announce this determination with an awareness of, and respect for, the sound rule which presumes that one who would make a will would not intend an intestacy. But as we said in In re Schmidt, 46 N. J. Super. 369, 381 (App. Div. 1957), “It is not our function to make a will for the testator, but to construe the one he made.” ,In Montclair Trust Company v. Lupher, 44 N. J. Super. 408 (App. Div. 1957), we did not hesitate to declare an intestacy in a situation almost precisely like the one before us now except that two (reciprocal) wills were involved. There the testator (who was a lawyer), like Wilbelmina here, simply did not think of the contingency which later occurred. In Glover v. Reynolds, 135 A. J. Eq. 113 (Ch. 1944), aff’d o.b. 136 A. J. Eq. 116 (E. & A. 1945), the same testamentary situation existed and the same arguments were made. The court held the will “inoperative to pass any of the testatrix* estate.” Darpino v. D’Arpino, 73 N. J. Super. 262 (App. Div. 1962), is distinguishable. There was no express nullification in the will of the dispositive clause in the event the deaths did not result from a common disaster. There was no practical interpretation by the testator comparable to Wilhelmina’s note of April 19, 1971, here, [at 65-66]

On the other hand, in City Bank Farmers Trust Co. v. Hentz, 107 N. J. Eq. 283 (Ch. 1930), Vice-Chancellor Buchanan construed the decedent’s will by relying upon the doctrine of gift by implication. Although it was not necessary for him to interpolate a clause into the will to accomplish the result reached, he stated:

In the classical instance of gift by implication, where testator says “after the death of A, I give my estate in fee to B” (B being the heir), there is no clause or provision which can be construed into a provision expressing the gift of a life estate to A or to anyone else. The interpretation of a gift of a life estate to A is in effect an interpolation of a clause expressing such a gift.
Courts in interpreting ambiguous or imperfect testamentary dispositions constantly interpolate (or strike out) one or more words. There is no difference in principle between the interpolation of a few words and the interpolation of an entire clause, if the requisite justification therefor exists, [at 294]

In Russell v. Russell, 16 N. J. Super. 589 (App. Div. 1951), the Appellate Division in an opinion by Judge (now Mr. Justice) Brennan applied the rule of a gift by implication. He stated:

We find here such a strong probability that the testator intended the disposition made in the event of the possible contingency actually provided for in the will to apply also in the probable contingency which actually occurred, but which was not specifically provided for in the will, that we conclude a contrary intention cannot be supposed.
Our conclusion does not make a new will for Mr. Russell. It is merely giving effect to testamentary intention limited to language within the four corners of the will. It is a sustaining of a bequest by implication in exact accord with the expressed bequest in the will, thus giving effect to the expressed general testamentary plan and purpose of the testator, [at 595]

In his concurring opinion in In re Klein’s Estate, 36 N. J. Super. 407 (App. Div. 1955), Judge Clapp started us down the road that we are presently on of probable intent. He stated:

The critical question in this case, as above stated, is what should be the standard of proof here. I think Lord Eldon’s rule and the rule calling for clarity are too strongly stated. In my view the criterion should be simply probability; a provision should be implied if we are of the opinion that in all probability the testator actually intended that very provision. Such a standard produces a far more just result, than if we were to refuse to make any implication at all. We extend our efforts, as we ought, toward effectuating the testator’s intentions. But — and this is the heart of the matter — the result reached does not, I think, do any violence to the overriding policies of the Statute of Wills which require the testator’s intentions to be integrated into the paper propounded. For we derive a probability as to his designs from the very words on that paper.
The English cases seem to be opposed to these views. But it will be found upon an examination of the facts presented by cases in this country that a substantial number of authorities accept the more liberal position advanced here. 2 Poivell, Real Property 710-713 (1950), and cumulative supplement. See the New York cases referred to in Russell v. Russell, 16 N. J. Super. 589, 595 (App. Div. 1951). [at 419-420]

There followed Fidelity Union Trust Co. v. Robert, supra, 36 N. J. 561, a leading case in will construction matters.

Darpino v. D’Arpino, 73 N. J. Super. 262 (App. Div. 1962), involved a will which provided for an alternative disposition of the residual estate in favor of the testator’s four children in the event that testator and his wife should die in a common disaster. That event did not take place. There was no express provision for a similar or other disposition if his wife should predecease the testator, which she did. The court construed the will to provide a gift-over to those who were named to take in the contingency clause.

A definitive statement of the rule tvas given in In re Burke, 48 N. J. 50 (1966). The court stated:

The current view of probable intent to which this court is now committed was crystallized in Justice Jacobs’ opinion in Fidelity Union Trust Co. v. Robert, supra (36 N. J. 561), following the ground-breaking decisions in In re Klein’s Estate, 36 N. J. Super. 407, 415 (concurring opinion of Judge Clapp) (App. Div. 1955) and Bank of New York v. Black, 26 N. J. 276 (1958). The essence of this broader and more liberal approach to will construction, is found in certain key expressions in Robert. “* * * ‘when we say we are determining the testator’s intent, we mean his probable intent.’ ” [i]n ascertaining the siibjective intent of the testator, courts will give primary emphasis to his dominant plan and purpose as they appear from the entirety of his will when read and considered in the light of the surrounding facts and circumstances * * *. So far as the situation fairly permits, courts will ascribe to the testator, ‘those impulses which are common to human nature, and will construe the will so as to effectuate those impulses.’” “* * [T]he court’s endeavor is to put itself in the testator’s position insofar as possible in the effort to accomplish what he would have done had he ‘envisioned the present inquiry.’ ” (36 N. J., at pp. 564-566). “Since the goal is the ascertainment of the testator’s probable intent in this particular will construction case, precedents involving the construction of other wills have no great force *' * Similarly, canons of construction which are largely designed to serve as aids in ascertaining the testator’s probable intent hare no controlling force.” (36 N. J., at p. 568). As was very recently said in In re Estate of Morton, 48 N. J. 42 (1966) ; “The inquiry is always peculiar to the individual circumstances.” See also 5 Clapp, op. cit. supra, § 196 (1965 supp.), 416. Among cases since Robert applying this approach may be noted In re Cook’s Estate, 44 N. J. 1 (1965), and Darpino v. D’Arpino, 73 N. J. Super. 262 (App. Div. 1962). See also In re Coes Estate, 42 N. J. 485 (1964). While a court may not, of course, conjure up an interpretation or derive a missing testamentary provision out of the whole cloth, it may, on the basis of the entire will, comxjetent extrinsic evidence and common human impulses strive reasonably to ascertain and carry out what the testator probably intended should be the disxjosition if the xjresent situation developed.
This positive approach has particular significance in the case, as here, of an unxsrovided for contingency causing a failure in the complete disposition of the residue. Formerly the judicial viewpoint was quite negative. When the xn-oblem arose in Lawes v. Lynch, supra [6 N. J. 1 (1950)], the court looked at it this way in arriving at a conclusion of partial intestacy:
“Since the testator is presumed to know the law, it must be presumed that he knew how to provide for the right of survivorship as well as how to provide for substitution. If the testator had intended survivorship as an attribute of the estate given he could have expressly so provided. Manifestly he did not do so.” (6ff. J., at p. 9.)
To be contrasted is the opposite result reached in analogous situations in Robert and Gooh where judicially ascertained probable intention carried the day. In such situations, of paramount importance is the great strength 'of the so-called presumption against intestacy, cogently expressed in the Robert opinion by a quotation from a New York case: “ ‘A testator, by the act of the making of a will, easts grave doubt on any assumption that he expressly intends to chance dying intestate as to any portion of his property * * *. “The idea of anyone deliberately purposing to die testate as to a portion of his estate and intestate as to another portion is so unusual in the history of testamentary disposition as to justify almost any construction to escape it.” ’ ” (36 N. J., at p. 572) [at 63-65]

See also In re Poschl, 94 N. J. Super. 482 (Cty. Ct.), aff’d o.b. 49 N. J. 82 (1967).

This court has difficulty justifying the Appellate Division’s language in In re Schuhmann, supra, 125 N. J. Super. at 64. That court relied upon an Appellate Division decision which preceded Fidelity Union Trust Co. v. Robert, supra, 36 N. J. 561. In re Burke, supra, 48 N. J. 50, and In re Poschl, supra, 49 N. J. 82 require a more sympathetic approach to the probable intent of the testator. In any event, In re Schuhmann, supra, is factually distinguishable.

An examination of the background of the testatrix and the other provisions of her Will make it perfectly clear that she intended to benefit her husband and her brother with life estates and then her brother’s child and grandchildren with the remainder. There is no way that one can find any intention to benefit her husband’s next of kin except in the contingency of Otto Deedmeyer dying without issue surviving. Her probable intent is clear. That intent requires a filling of the gap by the court finding a gift-over to her brother’s child and grandchildren in the same form provided for the contingency of Otto Deedmeyer predeceasing Arthur G. Hays leaving lawful issue.

The successor trustee is, therefore, instructed that Lee H. Deedmeyer, Diana Louise Deedmeyer and Lee H. Deedmeyer, Jr. take the residue of the trust. That residue -will include the income accumulated to the date of Otto L. Deedmeyer’s death.


author: Lynch, J. A. D.

text:
    NEW JERSEY ASSOCIATION OF INDEPENDENT INSURANCE AGENTS, A NEW JERSEY CORPORATION, C. W. BOLLINGER CO., A NEW JERSEY CORPORATION, AND JOHN A. WINDOLF, PLAINTIFFS-APPELLANTS, v. HOSPITAL SERVICE PLAN OF NEW JERSEY, A NEW JERSEY HOSPITAL SERVICE CORPORATION, MEDICAL-SURGICAL PLAN OF NEW JERSEY, A NEW JERSEY MEDICAL SERVICE CORPORATION, AND RICHARD C. McDONOUGH, AS COMMISSIONER, DEPARTMENT OF INSURANCE OF THE STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued September 24, 1973
    Reargued April 22, 1974—
    Decided May 21, 1974.

      Before Judges Collestek, Lynch and Michels.

      Mr. Frank X. McDermott argued for appellants (Messrs. Apruzzese & McDermott, attorneys; Mr. Hugh P. Francis on the brief).

      Mr. Clyde A. Szuch argued for respondents (Messrs. Pitney, Hardin & Kipp, attorneys; Mr. Richard L. Plotkin on the brief).
   The opinion of the court was delivered by

Lynch, J. A. D.

Plaintiffs appeal from a summary judgment which declared that defendants Hospital Service Plan of New Jersey (“Blue Cross”) and Medical-Surgical Plan of New Jersey (“Blue Shield”) acted within their statutory powers in selling student accident insurance. The judgment also sustained the action of defendant McDonough, Commissioner of Insurance, in approving the policy so issued.

Appellants contend that, in issuing the student accident policies, the Plans acted beyond their statutory power and were acting as health and accident indemnity insurers without being qualified as such, without the burdens of the stringent financial requirements of the General Insurance Laws (N. J. S. A. 17 .17-6 and 7), while at the same time enjoying certain tax exemptions (N. J. S. A. 17:48-18 and N. J. S. A. 17:48A-24), whereas the insurance companies for whom plaintiffs sell student accident insurance are subject to those requirements and have no such exemptions.

By letter opinion the trial judge held that (1) defendant McDonough, having approved the form of policy offered by the Plans, his action was within his statutory authority and is “entitled to considerable weight in the courts”; (2) the plan for student coverage is “consistent with, rather than contrary to, the basic conception of Blue Cross-Blue Shield functions authorized by N. J. S. A. 17:48-1 et seq. and by N. J. S. A. 17:48A-1 et seq., as well as by the respective corporate charters”; (3) the proposed student coverage contract furnishes “basically the kind of protection” which has traditionally been offered by the Plans, and the fact that “the proposed contract concentrates upon particular groups (students and schools) or limited area (accidents) appears unimportant since the concentration does not change the type of protection to be furnished.” Finally, it was held that "N. J. S. A. 17:48-13 and N. J. S. A. 17:48A-20 give to the Commissioner of Insurance broad powers to regulate hospital and medical service plans * * *.”

With all due respect to the learned trial judge, his reference to the “broad powers” of the Commissioner to regulate “hospital and medical service plans” begs the real question here: Is the student accident insurance here offered by the Plans a “hospital and medical service plan” — or is it simply “insurance,” without the dominant characteristics of the “service” plans which Blue Cross and Blue Shield are coneededly authorized to offer, and have traditionally provided? We note that the trial judge omitted to point out any express statutory language which authorized the Plans to issue the subject policies.

The distinction between “medical service corporations” and “health and accident insurers” was clearly set forth by our Supreme Court in Group Health, Ins. of N. J. v. Howell, 40 N. J. 436 (1963), as follows:

Tlie basic distinction between medical service corporations and ordinary health and accident insurers is that the former undertake to provide prepaid medical services through participating physicians, thus relieving subscribers of any further financial burden, while the latter only undertake to indemnify an insured for medical expenses up to, but not beyond, the schedule of rates contained in the policy. The ordinary health and accident insurer makes no attempt to provide medical services as such. The primary purpose of a medical service corporation, however, is an undertaking to provide physicians who will render services to subscribers on a prepaid basis. Hence, if there are no physicians participating in the medical service eorpoi’ation’s plan, not only will the subscribers bo deprived of the protection which they might reasonably have expected would be provided, but the corporation will, in effect, be doing business solely as a health and accident indemnity insurer loithout having qualified as such and rendering itself subject to the more stringent financial requirements of the General Insurance Laws, N. J. S. A. 17 :17-1 et seq. Compare N. J. S. A. 17 :48A-4 with N. J. S. A. 17:17-6 and 7. [at 451; emphasis added]

Thus it is that the statutes under which Blue Cross and Blue Shield operate are respectively headed “Hospital Service Corporations” (emphasis added), N. J. S. A. 17:48-1, and “Medical Service Corporations” (emphasis added), N. J. S. A. 17:48A-1. A hospital service plan is defined as a plan “whereby health care services are provided by a hospital service corporation or by a health care facility with which the corporation has a contract for such health care services * * *.” (Emphasis added). N. J. S. A. 17:48-1. It is because the corporation has such “contracts” that it has a “fund” of hospitals through which it is able to supply hospital service. And “health care services” shall include “health care” provided by health care facilities described in N. J. S. A. 17:48-1. The corporation is to be operated for the benefit of its subscribers with whom it has contracted to “provide hospital serviceThe concept of "furnishing services” or providing “hospital care or medical care” permeates the entire statute. N. J. S. A. 17:48-1.7, 6, 6.3, 6.6 and 7. Again, thus it is that Blue Cross subscription certificates provide that the corporation will be liable “for hospital care and services” rendered by an “Approved Hospital,” a,nd payment is made directly to such hospital unless a subscriber has made payment to it for services for which the Plan is liable, in which event the subscriber is reimbursed in such amount as the Plan would be required to pay such hospital.

So, too, under N. J. S. A. 17:48A-1 et seq., the concept of furnishing medical “services” is the power granted to “Medical Service Corporations.” Such powers —• and not the power to do business as a “health and accident indemnity insurer” — are those granted to such corporations. So it was held in Group Health Ins. of N. J. v. Howell, supra.

We note that N. J. S. A. 17:48A-1 provides that a medical service corporation is organized “for the purpose of establishing, maintaining and operating nonprofit medical service plans, or to provide or pay for medical services * * It might be argued that the corporation is therefore authorized to “pay for” such services as an insurer —• a right not granted to Hospital Service Plan corporations under N. J. S. A. 17:48-1 et seq. —- and that the statute gives a power of indemnity to a Medical Service Plan corporation. We note also, however, that the payment is principally to be made to the physician. Thus it is that Blue Shield’s subscription certificate provides that payments thereunder shall be made to the “Participating Physician” or other “Eligible Physician” unless the physician certifies he has been paid, is a non-participating physician, or the charge is made by a corporation, hospital clinic or group which includes other than participating physicians. In those cases payment may be made to the subscribers.

Despite the provisions of the statute just recited, the dominant theme of the relevant statute is, in line with the holding in Group Health Ins. of N. J. v. Howell, supra, that the Medical Service corporation is to provide service. It is to that end that “participating physicians” agree in writing to perform the medical services, and thus there is created the “fund” of physicians which enables the corporation to fulfill its function of providing medical services. As Chief Justice Weintraub said in his dissent in the second Group Health Ins. case, 43 N. J. 104 (1964) :

As was pointed out in our earlier opinion in this litigation, Group Health Ins. of N. J. v. Howell, 40 N. J. 436, 451 (1963), the essential difference between the plan authorized by the statute and the usual contract of insurance is that whereas the usual insurance contract provides for the payment of fined dollar indemnities, the plan before us contemplates that the medical service will be furnished under agreements betxoeen the medical plan and participating physicians requiring the physician to accept scheduled payments from the medical plan in full payment for his services, [at 115-116; emphasis added]

We therefore hold that the “pay for” provision in the Medical Service Corporation Act does not grant insurance powers to the corporation, and must be merely incidental to its main purpose, i. e., providing “services.”

Indeed, the Plans do not here contest the contention that, in offering the student accident policies, they are acting as “insurers.” They point out that the Plans are a form of insurance. But they assert:

Defendants submit a determination to that effect is not relevant to the question sub judice, to wit, whether the Plans have authority pursuant to N. J. S. A. 17:48-1 et seq. and N. J. S. A. 17:48A-1 et seq. and to their respective charters to sell the student accident insurance policy in issue.

But where in the cited statutes is there such authority ? As noted above, the trial court did not point to any provision of the statutes which grants it, nor is any such provision cited by defendants. And we can find none.

It is true that some aspects of the Plans’ traditional functions partake of “insurance” characteristics. Eor example, Blue Cross, under its traditional Hospital Service Plan, for a premium, promises to pay a hospital on the contingency that the subscriber is hospitalized, and Blue Shield, under its Medical Service Plan, for a premium, promises to pay a physician on the contingency that he treats one of its subscribers. Thus, those aspects of the- Plans have some characteristics of “insurance.” But the Plans are not precluded from such undertakings, for the reason that those incidents of their functions are within the statutory powers granted to them under N. J. S. A. 17:48-1 et seq. and N. J. S. A. 17:48A-1 et seq., pursuant to which they provide their “service” plans. The question turns not on whether risk, or some other characteristic of insurance is involved, but on what is its primary or principal object. Jordan v. Group Health Ass’n, 71 App. D. C. 38, 107 F. 2d 239 (1939). Absence or presence of assumption of risk or peril is not the sole test to be applied in determining whether the undertaking is “insurance” or not. “The question, more broadly, is whether, looking at the plan as a whole, ‘service’ rather than ‘indemnity’ is its principal object and purpose.” California Physicians’ Service v. Garrison, 28 Cal. 2d 790, 809, 172 P. 2d 4, 16 (Sup. Ct. 1946). It was in applying that principle that our Supreme Court, in the first Group Health Ins. case, supra, distinguished between “service” corporations and “ordinary health and accident insurers.” 40 N. J. at 451. That analysis would exclude Blue Cross’ Hospital Service Plan and Blue Shield’s Medical Service Plan from the business of insurance because, in essence, they are “service” contracts — they offer services, respectively of hospitals and participating physicians.

What, then, of the student accident policy here proffered? Unlike the Hospital and Medical Service Plans there is no undertaking to provide “services” through either hospitals or participating physicians. Cf. Group Health Ins., supra, 40 N. J. at 45. In fact, under this policy Blue Cross is not obligated to have “contracts” with hospitals (as it must under N. J. S. A. 17:48-1) so that it could provide services of such institutions to the covered student. Nor, under this policy, does Blue Shield offer agreements by participating physicians to perform services, as provided by N. J. S. A. 17:48A-1. All this policy offers is to pay “benefits” for the 15 items for which the student may have incurred obligations due to accident and up to the limit of $10,000. Items 1 through 9 indemnify against what may be termed “non-physician” services and supplies. Items 10 through 15 may be termed “physician” services and supplies. But no such services or supplies are offered in the subject policy. Again, all that the policy provides is that it indemnifies the subscriber for the obligation to pay which the subscriber has incurred. The risk is shifted from him to Blue Cross and Blue Shield. Unlike the method of payment in the traditional Hospital Service Plan (N. J. S. A. 17:48-1) where payment is made to the hospital under “contract” with the Plan, under this policy there is no hospital under contract with Blue Cross. Any hospital, whether or not it has a contract with Blue Cross, comes within the definition of “Hospital” under this policy (Art. III, 8).

Payment for ítems 1 through 9 is made to the covered student’s parents or guardian, provided, of course, that the contingency, i. e., the accident, occurred while at or going to or from school or during other school related activities. As to items 10 through 15 (“physician” services and supplies), payment is to be made directly to the physician, but where he is a New Jersey physician not participating in Blue Shield’s Prevailing Eee Program, or he certifies he has been paid, or the charge for the service is made directly or indirectly by a corporation, hospital clinic or group which includes New Jersey licensed physicians not participating in the Prevailing Pee Program, again the payment under the policy is made to the covered student’s parents or guardian.

This policy in no way differs from an accident policy issued by an ordinary insurance company except for its “excess” features. It is a “contract or promise, based upon valid consideration to compensate the insured or other persons designated by the policy for loss sustained upon the occurrence of some contingency.” 12 Appleman, Insurance Law and Practice, § 7001 at 3 (1943) (emphasis added). It is “a contract to pay a sum of money upon the happening of a particular event or contingency.” 1 Couch on Insurance 2d, § 1.2, at 28 (1959). See also, State v. Community Health Service, Inc., 129 N. J. L. 427, 429 (E. & A. 1943). And it is no more than that, for there is no agreement to provide services.

“Services” (plural) has been defined as “any result of useful labor which does not produce a tangible commodity; in economics, such business concerns as railroads, telephone companies, laundries and such persons as physicians are regarded as performing services.” (Emphasis added). Fennell v. South Carolina Tax Comm’n, 233 S. C. 43, 103 S. F. 2d 424, 426 (Sup. Ct. 1958), quoting the definition which is found in Webster’s New International Dictionary (2d ed. 1950) at 2288. Webster also defines “service” (singular) as: “performance of labor for the benefit of another; the deed of one who serves; * * * act or instance of helping, or benefiting; conduct contributing to the advantage of another or others * * “Services” (plural) has been defined as “ “any act performed for benefit of another under some arrangement or agreement whereby such act was to have been performed.’ ” See Skrivanich v. Davis, 29 Wash. 2d 150, 161, 186 P. 2d 364, 370 (Sup. Ct. 1947); Faul v. C. I. R., 263 F. 2d 645, 649 (9 Cir. 1959). Again, “service” is action or use furthering some end or purpose, conduct of performance assisting or benefiting someone or something; deeds useful or instrumental towards some object. Van Zandt v. Fort Worth Press, 359 S. W. 2d 893, 895 (Tex. Sup. Ct. 1962).

In essence, therefore, “service” or “services” contemplate an act or deed and not mere payment of money. No such act or deed is provided for in this policy. Payment of money is alone provided for under the student accident policy here offered by the Plans.

In Maloney, Inc. Com’r v. American Independent Med. & H. Ass’n, 119 Cal. App. 2d 319, 259 P. 2d 503 (D. Ct. App. 1953), the court held that where a corporation had agreed, in reiurn for dues paid, to indemnify beneficiary members against hazards of illness or injury by paying medical and hospital bills in accordance with a schedule in the beneficial membership certificate, but the corporation did not employ physicians or contract with hospitals, and the only service rendered by the corporation was payment of members’ bills, the corporation was transacting insurance business. The corporation had defended on the theory that its corporate charter had authorized it to contract with physicians and hospitals for the purpose of making available to its members and hospital services, and that § 9200 of the California Corporation Code authorized it to render “services.” The court said:

There is no merit in the contention that AIM was merely rendering a service to its members, as distinguished from transacting an insurance business, and there is nothing in the cases cited which compels or supports such a conclusion. On the contrary, the business transacted by AIM constitutes an insurance business as defined in California Physicians’ Service v. Garrison, 28 Cal. 2d 790, 172 P. 2d 4, 167 A. L. R. 306. By the certificates of beneficial membership issued AIM agreed that it would make the specified benefits available to the member when needed, in return for the dues paid. AIM employed no physicians and made no contracts with hospitals, and its contract clearly discloses that it was itself rendering or furnishing no' such service. The member, when needing such services, was to secure them wherever he desired and anywhere in the world. The corporation agreed to pay the bills therefor, within specified limits,' and this was not dependent upon the amount of dues that might be collected from other members within any period. Under this contract AIM undertook to indemnify the beneficiary member against the hazards of illness or injury by paying the medical and hospital bills specified. There was no agency here, other than that common to any insurance contract, and the business here transacted was not a mere rendering of service within the principles established in the ease of California Physicians’ Service v. Garrison, supra. While the assumption of a risk is not the sole test of the status involved, there was here a definite assumption of risk on the part of the corporation, and not merely one assumed by the doctors and hospitals as argued by the appellants.
No service was rendered or to be rendered by AIM other than that of paying the bills incurred by the members, in accordance with its agreement; the doctors were to get a fixed fee regardless of the amount of dues collected; any increase of illness or injury would increase the cost to AIM; and whether benefits were to be furnished, and the amount furnished, was dependent upon chance. Viewing the plan of operation as a whole, it clearly appears that its only object and purpose was in the nature of an “indemnity” and not merely the furnishing of a “service”. The findings that AIM was transacting insurance business in this state without the certificate required by section 700, and that it was insolvent within the meaning of the provisions of the Insurance Code, are fully supported by the record. [259 P. 2d at 306; emphasis added]

So here. And the fact that Bine Cross and Blue Shield may have contracts with hospitals and participating physicians for use pursuant to their traditional Hospital Service and Medical Service Plans avails them nothing here where they have written what is plainly and simply an accident insurance policy. In doing that, as said in Group Health Ins., supra, they are “doing business solely as a health and accident indemnity insurer without having qualified as such and rendering itself subject to the more stringent financial requirements of the General Insurance Laws, N. J. S. A. 17: 17 — 1 et seq. Compare N. J. S. A. 17:48A-4 with N. J. S. A. 17:17-6 and 7,” 40 N. J. at 451. We might add that, unlike commercial insurance companies, the Plans are availing themselves of exemption from taxation as charitable and benevolent institutions, except that Blue Cross is not exempt from taxes on real estate and equipment. N. J. S. A. 17: 48A-24 and N. J. S. A. 17:48-18. Their authority as “service” corporations cannot be construed as granting such exemptions when they write accident insurance policies such as here.

The dichotomy between “service” contracts not within insurance laws, and contracts partaking of “service” characteristics but encroaching into impermissible areas of insurance, is demonstrated by the respective decisions in California Physicians’ Service v. Garrison, supra, and People v. California Mutual Ass’n, 68 Cal. 2d 677, 68 Cal. Rptr. 585, 441 P. 2d 97 (Sup. Ct. 1968). In the former the plaintiff (CPS) sought a declaratory judgment that it was not engaged in the business of insurance. CPS was organized by the medical profession of California to make available medical care to those of lower income. Under its plan CPS did not promise its beneficiary members that it 'would provide medical care, but the services which were offered to them were offered personally by the professional members of CPS, with payment to them from the fund. The court found that the corporation itself assumed no risk and that all risk was assumed by the physicians. Citing among other decisions State v. Community Health Service, Inc., supra, for the proposition that hazard and risk are the significant elements of “insurance,” the court held that since CPS assumed no hazard or risk (and because the beneficiary members incurred no liability which could be the risk insured against), its operation was “unquestionably” a “service of high order” and not “indemnity or insurance.”

On the other hand, in People v. California Mutual Ass'n, supra, the Association (CMA) was formed to make payments in limited amounts for medical and hospital services rendered to its members, using funds derived from periodic dues. CMA had contracts with some physicians who agreed to look exclusively to CMA for payment of the scheduled fee, but reserved the right to charge an amount in excess of the specified fee. CMA encouraged the use of the services of physicians with whom it had contracts but, as a matter of practice, paid the bills of physicians independently chosen by a member in areas where it had no such contracts. The court, after pointing out that, in its previous decision in CPS, indemnity features were only incidental and the beneficiary members incurred no liability for the services which were to be indemnified, modified its decision in CPS and said:

In determining the nature of a plan, we are cognizant of two policy considerations. Where indemnity features are present, the member bears ■the risk of personal liability for medical services. This is the insurance risk which can be protected against by financial reserves to assure that the member will recive the benefits for which he has paid. On the other hand, there is a strong social policy to encourage the services which health plans provide the public. In 1946 when the California Physicians’ Service case was decided, the health plan concept was new to California. Although today there are over 53 health plans in California, as the committee noted, “care must be taken to always make it possible for new plans to enter the stage, for health is a commodity which has too few purveyors.” (15 Assembly Interim Committee Report No. 26, Finance and Insurance (1961— 1963) p. 36.)
Any workable test must be a compromise of these two policies. A finding that the principal object and purpose of a plan is direct service merely establishes that the indemnity feature is not dominant, yet, a substantial minority of the members may face liability without the security of financial reserves. We, therefore, conclude that where indemnity is a significant financial proportion of the business, the organisation must be classified as an “insurer” for the purposes of the Knox-Mills Plan Act. The principal object and purpose test as enunciated in the California Physicians’ Service case does not, provide for adeqrrate financial security.
We realize that this determination involves balancing the indemnity aspects against the direct service aspects of the business, but only in the context of the plan as a ichole can it be determined whether the indemnity feature is so significant as to warrant imposing the Insurance Code financial reserve requirements. Nor, should this requirement unreasonably restrict the development of new health plans or impinge on the growth of existing plans. Health care service plans were given special legislative treatment because of the direct service feature. Only so long as the plans pursue and achieve that objective is the public assured that the protection of the Insurance Code is not necessary.
Although CMA’s contracts with the 38 physicians provide for direct service without indemnity, the remainder of the plan is one of insurance. A member is liable for medical services procured from the Riverside foundation, the seven physicians who did not limit themselves to seek payment exclusively from CMA, those physicians who treated members in geographical areas where CMA did not have contracts, and any hospital rendering treatment. [68 Cal. Rptr. at 588-589, 441 P. 2d 100-101 ; emphasis added]

Since the record before it was not adequate to determine to what extent indemnity features were present at the time of the appeal, the matter was remanded for a determination of that question as to the status of CMA as a health care service plan or as an insurer.

We have no such obscurity here. Certainly “indemnity is a significant financial portion” of the proposed student accident policy. Clearly, as to the “hospitalization” services and supplies (items 1 to 9 in Art. V of the contract), indemnity or “insurance” is the nature of the Plans’ participation, for payment is made to the student’s parents or guardians for the charges incurred. And as to the “physician’s” services and supplies (items 10 to 15 in Art. Y), the member, in the words of the AIM case, supra, “when needing such services, was to secure them wherever he desired and anywhere in the world” (emphasis ours) and, if the physician is a “non-participating” New Jersey physician, or any physician certifies he has been paid, or the charge is made by a corporation, hospital clinic or group including nonparticipating New Jersey physician, then, in those instances also, payment is made to the covered student’s parents or guardian. Thus, in at least a “significant” variety of instances, the member’s liability to pay for the services and supplies is indemnified by the Plan’s policy of accident insurance. Thus the policy is diametrically opposite to the “service” plan sustained in State v. Community Health Service, Inc., supra, as to which the court said:

The defendant does not undertake to pay such debt as the subscriber may incur for medical services. The contract is not one of indemnification. The defendant does not promise to indemnify the subscriber against any loss. [129 N. J. L. at 428]

Such undertakings and promises are made in the subject policy. It is “insurance” with little, if any, characteristics of “service.”

To construe the Blue Cross and Blue Shield statutes, as defendants urge, so as to permit them to offer student accident insurance without the burdens imposed on insurance companies, while permitting them to enjoy privileges not granted to such companies would, in our view, deny insurance companies equal protection of the laws in violation of the Eourteenth Amendment of the United States Constitntion and Art. 1, f 5 of the Constitution of the State of New Jersey.

Equal protection under the laws was defined by our Supreme Court in Washington National Ins. Co. v. Board of Review, 1 N. J. 545 (1949), where the court said:

The equal protection clause means that the right of all persons must rest upon the same rule under similar circumstances, and that it applies to the exercise of all the powers of the state which can affect the individual or his property, including the power of taxation. r * * While the due process and equal protection guarantiees] are not coterminous in their spheres of protection, equality of right is fundamental in both. Bach forbids class legislation arbitrarily discriminatory against some and favoring others in like circumstances. It is essential that the classification itself be reasonable and not arbitrary, and be based upon material and substantial distinctions and differences reasonably related to the subject matter of the legislation or considerations of poliey, and that there be uniformity within the class. The equal protection of the laws means that no person or class of persons shall be denied the protection of the laws enjoyed by other persons or classes of persons under similar conditions and circumstances, in their lives, liberty, and property, and in the pursuit of of happiness, both as respects privileges conferred and burdens imposed. * * i:" This includes equality of exemption from liabilities, fat 553-554; emphasis added]

Siace there is no “substantial distinction” between the policy here sought to be offered and those offered by a commercial carrier, defendants, in arguing that their source statutes authorize the student accident policies, would haye us construe those statutes in an unconstitutional sense. A court has a duty to construe a statute so as to render it constitutional if it is reasonably susceptible of such a construction. Woodhouse v. Woodhouse, 17 N. J. 409, 416 (1955); 2A Sutherland, Statutory Construction (4th ed. 1973), § 56.04, at 408. If it is fairly and reasonably open to more than one construction, that construction will be adopted which will reconcile the statute with the Constitution and ayoid the consequences of unconstitutionality. Blade on Construction and Interpretation of Law (2d ed. 1911), § 41 at 110, citing, among other cases, Road Comm’n v. Har rington Tp., 55 N. J. L. 327 (E. & A. 1893). We are therefore impelled to reject the construction of the statutes as contended by the Plans.

We conclude that the judical power is here severely restrained and that the language of our Supreme Court in Burlington Cty. Evergreen Pk. Mental Hosp. v. Cooper, 56 N. J. 579 (1970), in an analogous setting, is our polestar:

In situations where such an important public policy matter is involved the proper course for the judicial branch of the government to follow is to deny the power and to assume that if the legislative branch desires PERC to have the authority, it will bestow it in unmistakable terms, [at 599]

If the Legislature wishes to bestow upon the Plans the powers we would deny them, here too, it can do so “in unmistakable terms” by legislative enactment.

Reversed.

      Tke members of plaintiff New Jersey Association of Independent Insurance Agents are in the business of selling student accident insurance together with other types of insurance. Plaintiff O. W. Bollinger Co., a member of the Association, is an independent agent and broker and is said to administer accident insurance for approximately two-thirds of all schools and school districts in New Jersey. Plaintiff Windolf is president of C. W. Bollinger Co. and is also a direct payment subscriber of Blue Cross and Blue Shield. All plaintiffs will be referred to collectively as “plaintiffs.”

      Collectively, Blue Cross and Blue Shield are hereafter sometimes called the “Plans.”

      The complaint also charged that defendants acted beyond their powers in issuing a policy offering students benefits for dismemberment or. death, but the judgment below did not involve that issue and it is therefore not before us. All parties nevertheless agree that we shall consider the judgment as “final.”

      The subscription certificates ordinarily issued by defendants under their Hospital Service Plan and Medical Service Plan will sometimes be referred to as “traditional” plans.

      Prior to a 1944 amendment payment could only be made to natural persons wbo were participating physicians or physicians who would, except for residence, be eligible to become participating physicians. L. 1940, o. 74, § 8.

      Payment of benefits will not be made where benefits are available under any other insurance program.

      Capital and assets required of insurance companies — N. J. S. A. 17:17-6 and 7.

      Exemption from taxation granted to the Plans — N. J. S. A. 17:48-18 and N. J. S. A. 17:48A-24.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. JAMES EARL BEATTY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted May 21, 1974
    Decided May 30, 1974.

      Before Judges Halpebn, Matthews and Bischoee.

      Mr. Stanley G. Van Ness, Public Defender, attorney for appellant (Mr. William E. Norris, Assistant Deputy Public Defender, of counsel and on the brief).

      Mr. Karl Asch, Union County Prosecutor, attorney for respondent (Mr. Thomas P. Simon, Assistant Prosecutor, on the brief).
   Per Curiam.

Defendant pleaded guilty to two counts of an indictment charging robbery, in violation of N. J. S. A-2A: 141-1, of two individuals at the same time and place, and two counts of an indictment charging him with being armed in perpetrating the robberies, in violation of N. J. S. A. 2A:151-5. He was sentenced to seven to ten years on the first count, concurrent with sentences then being served, and given lesser terms on the other counts, all concurrent with that imposed on count 1.

Defendant argues first that the sentence is excessive. The sentence is well within the statutory limits. The serious nature of the crime, as well as defendant’s past criminal record, fully justify the sentence imposed. We see no abuse of discretion.

Defendant next contends he is entitled to receive credit for time spent in a New York jail while awaiting transfer to New Jersey, citing R. 3:21-8 which provides:

The defendant shall receive credit on the term of a custodial sentence for any time he has served in custody in jail or in a state hospital between his arrest and the imposition of sentence.

The facts upon which defendant bases this claim are briefly as follows. He was indicted for the present offenses by the Union County grand jury on June 18, 1970. At the time of the indictment he had been arrested on charges in the State of New York. He was sentenced to a New York penal institution for a term, where the latest release date was September 11, 1971. At the time of his conviction in New York defendant was in violation of parole in New Jersey and a detainer based on that violation was lodged with New York authorities in July 1971. He was returned to a New Jersey penal institution on Eebruary 24, 1972, following extradition. He was then released on habeas corpus to Union County where he pleaded guilty to the charges above noted and the present sentences were imposed.

Defendant contends he is entitled to receive credit for the 166 days he spent in the New York penal institution from September 11, 1971 to February 24, 1972, as a result of the detainer filed with New York authorities by New Jersey authorities.

The State argues that (a) R. 3:21-8 applies only to time spent in custody in New Jersey; (b) since the detainer was for violation of parole and not the result of the robbery charges, defendant is not entitled to credit on the sentence for robbery, and (c) the Uniform Interstate Detainer Act (V. J. 8. A. 2A:159A — 1 et seq.) makes no provisions for credit to be given in a similar situation, and defendant is accordingly not entitled to it.

We disagree. R. 3:21-8 expresses the public policy of the State and should be liberally construed. Defendant was detained in a New York institution because of action taken by New Jersey, and whether that action finds its source in the robbery charge or the violation of parole charge is in our view immaterial. We accordingly hold that defendant is entitled to receive credit against his sentences for the 166 days that he was detained in the New York penal institution.

The sentences are accordingly modified to provide for this credit and they are, in all other respects, affirmed.


author: Kimmelman, J. S. C.

text:
    GOVERNMENT EMPLOYEES INS. CO., PLAINTIFF, v. HELEN BUTLER AND MARIA LAND, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    January 22, 1974.

      Messrs. Hansen, Pontages, Sellar & Zavesky, attorneys for plaintiff.

      Mr. Donald Werner, attorney for defendants.
   Kimmelman, J. S. C.

The complaint in the present action, which is captioned for trial in the Chancery Division, seeks a declaratory judgment to resolve the question of coverage under an uninsured motorist endorsement forming part of an automobile liability insurance policy. As a result the court has for consideration a matter illustrative of a recurring problem with respect to the concurrent jurisdiction of the Law and Chancery Divisions of the Superior Court. The issue is the extent to which the distinction between the two Divisions should be observed.

A brief history bears repeating. The reorganization of the judicial system into a unified court structure by the 1947 State Constitution was designed to eliminate the precedence of form and procedure over substance as well as the fragmentation of controversies into piecemeal litigation in various courts. Original jurisdiction of all causes was vested in a Superior Court with two trial divisions, Law and Chancery. Each Division was given plenary jurisdiction to render both legal and equitable relief as a given case requires so that the entire controversy between the parties would be expeditiously, completely and finally determined in one unified action. O’Neill v. Vreeland, 6 N. J. 158, 166 (1951); Ajamian v. Schlanger, 14 N. J. 483, 485 (1954), cert. den., 348 U. S. 835, 75 S. Ct. 58, 99 L. Ed. 659 (1954).

Counsel bear a heavy measure of responsibility in maintaining the distinction between the Chancery and Law Divisions. The attorney for plaintiff, in drawing a complaint, must decide in which Division to label the case for trial. Steiner v. Stein, 2 N. J. 367, 377 (1949). His decision should turn upon whether plaintiff’s primary right or principal relief sought is equitable or legal in nature. R. 4:3-1 (a)(1). The choice of trial division should represent a responsible exercise of the attorney’s judgment in order to obtain for all concerned the obvious advantages to be realized by having particular cases normally tried before judges who are specialized in either law or equity but who nevertheless have jurisdiction to dispense full and complete relief. O’Neill v. Vreeland, supra. Extraneous considerations should not govern the choice of division. No doubt counsel at times tend to gravitate to the Chancery Division motivated by the desire to secure the more individualized attention of a trial judge which occurs when ho lives with a case from its inception, coupled with the hope of obtaining a more expeditious final decision. Eor some reason, experienced counsel, as a matter of practice, generally bring actions for declaratory relief in the Chancery Division.

Clearly, declaratory relief may be granted by any Division of the Superior Court. Abbott v. Beth Israel Cemetery Ass’n of Woodbridge, 13 N. J. 528, 539 (1953); National-Ben Franklin Fire Ins. Co. v. Camden Trust Co., 21 N. J. 16, 22 (1956). Such relief is neither equitable or legal in nature, but takes on the color of either, depending upon the issue involved. Utility Blade & Razor Co. v. Donovan, 33 N. J. Super. 566 (App. Div. 1955); Georgia Cas. & Sur. Co. v. Turner, 208 Ga. 782, 69 S. E. 2d 771 (Sup. Ct. Ga. 1952) ; 1 Anderson, Actions for Declaratory Judgments, (2 ed. 1951), § 123 at 225; § 195 at 401. Although the range of relief which may be sought in a declaratory judgment action presents a broad spectrum indeed, more often than noJ the typical case filed in the Chancery Division (as here) involves the construction of an insurance policy to determine questions of coverage and the duty of the insurance carrier to defend. Occasionally, there is joined a count to restrain a liability action already pending in the Law Division of the Superior Court in order that the issue of coverage can be litigated in advance. See Carolina Cas. Ins. Co. v. Belford Trucking Co., 116 N. J. Super. 39 (Ch. Div. 1971), aff’d 121 N. J. Super. 583 (App. Div. 1972); Hanover Ins. Group v. Cameron, 122 N. J. Super. 51 (Ch. Div. 1973).

However, there exists a misconception that such a declaratory proceeding in advance of trial of a third-party liability action must necessarily be brought in the Chancery Division. The construction of a contract and a determination of the rights of the parties thereunder is within the province of a court of law even though equitable principles such as the doctrine of estoppel may be involved. Ewing Tp. v. Trenion, 137 N. J. Eq. 109, 111 (Ch. 1945). Hence, an action for the declaration of the parties’ rights under an insurance policy is basically an action for construction of a contract which has been held to be cognizable before the law courts. Paterson v. North Jersey Dist. Water Supply Comm’n, 124 N. J. Eq. 344 (Ch. 1938). See also, Wolverine. Mut. Motor Ins. Co. v. Clark, 277 Mich. 633, 270 N. W. 167 (Sup. Ct. 1936); 20 Appleman, Insurance Law and Practice § 11531 at 411 (1963).

When counsel seeks to enjoin an already pending liability action until the question of coverage can be litigated, the declaratory judgment action is not thereby converted to one where the principal relief sought is equitable in nature. B. 4:52-6 must be observed. It is there provided that

No injunction or restraint shall be granted in one action to stay proceedings in another pending action in the Superior Court . . . but such relief may be sought on counterclaim or otherwise in the pending action. As stated in Massari v. Einsiedler, 6 N. J. 303, 309 (1951). “[Wjhere adequate relief can be obtained in the Law Division, there is no need for intercession by the Chancery Division since the entire controversy can be determined in the Law Division in one and the same suit.” Were the Chancery Division to entertain only a portion of a larger controversy and restrain a proceeding in the Law Division, it would be directly contrary to the philosophy underlying the court restructuring effected by the 1947 Constitution. Tumarkin v. Friedman, 17 N. J. Super. 20, 23 (App. Div. 1951), cert. den. 9 N. J. 287 (1952); Hanover Ins. Group v. Cameron, supra, 122 N. J. Super, at 62.

Obviously, the correct procedure requires an insurance carrier to commence its declaratory judgment action relating to questions of coverage in the Law Division, move for a consolidation with or restraint of any pending third-party liability action, and then litigate its rights under the insurance policy. Likewise, the insured may resort to the same or similar procedure when the carrier denies coverage or the duty to defend. Burd v. Sussex Mutual Ins. Co., 56 N. J. 383, 391 (1970).

The Chancery Division must not become clogged or burdened with the weight of actions properly cognizable in the Law Division. It must remain alert to the bounds of its jurisdiction, otherwise, Chancery’s inherent flexibility and ability to operate with dispatch when the occasion demands will be seriously impaired.

Accordingly, the court on its own motion pursuant to R. 4:3-1 (a) (2) directs counsel for plaintiff to submit an order transferring this action to the Law Division.


author: Dbrier, J. D. C.,

text:
    MUHLENBERG HOSPITAL, PLAINTIFF, v. GERALDINE PATTERSON, DONALD PATTERSON, AND BABY BOY PATTERSON A/K/A ANTHONY LENARD PATTERSON, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided January 22, 1974.

      Mr. Norman Carter appeared on behalf of plaintiff Mrs. Geraldine Patterson and Mr. Donald Patterson, pro se.
   Dbrier, J. D. C.,

Temporarily Assigned. This matter involved an emergent application for the appointment of a Guardian Ad Litem and for an order permitting the staff physicians of Muhlenberg Hospital to effect a blood transfusion on the person of Anthony Lenard Patterson, a six day old infant. Anthony’s parents are devout Jehovah’s Witnesses and refused to permit such transfusion on religious grounds.

Anthony was born prematurely after 32 weeks gestation, and was found by his physician Dr. Eudolph Archer to be suffering from jaundice caused by an uncommon incompatibilty between Mrs. Patterson’s blood and the child’s system. Dr. Archer, understanding the parents religious aversion to blood transfusions, permitted the child’s bilirubin count to exceed the level at which, ordinarily, he would have ordered such transfusion; but as the level approached one which could produce serious hazards to the child, Dr. Archer contacted the Chief of Pediatrics and the Hospital Administrator, who in turn requested assistance from the Court. I convened a hearing at Muhlenberg Hospital at 5 :30 p.sc. on January 22, 1974 at which were present the parents, two fellow Jehovah’s witnesses (ministers), two friends of the parents, as well as the hospital director, other hospital personnel and Dr. Archer. Testimony was taken stenographically by a Court Eeporter.

Dr. Archer testified that a bilirubin count of 20 or 21 would, within a short period of time, produce severe and irreparable brain damage, seriously impairing the infant’s mental facilities, and that the count had risen during the day to the area of 18-19. Based upon my preliminary interrogation of the parents, I determined that the Guardian Ad Litem should be appointed, and Mr. Dailey, the Director of Muhlenberg Hospital, was so designated. He testified that from the hospital records and from consultations with the Chief of Pediatrics, it was necessary for the hospital to have permission to transfuse the infant and accomplish a complete blood exchange in the event the bilirubin content advanced beyond its present state. Both he and Dr. Archer agreed that the danger was not one of loss of life, unless secondary infection set in following the adverse consequences of the liver problem. I found as a fact that, although there was only incidental danger to life, there was, to a reasonable medical certainty, immediate danger of irreparable brain damage and concomitant severe mental retardation, in the event the transfusion would be withheld when the bilirubin count equalled or exceeded 20. The requested order was signed after the hearing. Although the transfusion was attempted, the child later died from deterioration of his general physical condition. Notwithstanding the death, the legal question raised justifies the reduction to writing of the reasons for my decision. State v. Perricone, 37 N. J. 463, 469 (1962).

The parents and ministers and friends argued that the transfusion was against God’s law (see the references m State v. Perricone, supra., 37 N. J. at p. 471), and, in addition, had never been authorized by any New Jersey Court in a case where there was not immediate danger to life.

I noted at the hearing, that transfusions have been directed in John F. Kennedy Memorial Hospital v. Heston, 58 N. J. 576 (1971); State v. Perricone, supra., and Raleigh Fitkin Paul Morgan Memorial Hospital v. Anderson, 42 N. J. 421 (1964), certiorari denied 377 U. S. 985, 84 S. Ct. 1894, 12 L. Ed. 2d 1032 (1964), but this case appears to be the first New Jersey case in which a blood transfusion has been ordered where the potential harm is serious injury, rather than death. The Perricone Court noted in passing that other States have ordered transfusions to save an infant’s ‘Míe or mental health”. 37 N. J., at p. 477.

In New Jersey, government action has been permitted in areas which would transgress religious beliefs' where the general health of the community, rather than the saving of life, has been the beneficial goal. See Mountain Lakes Board of Education v. Maas, 56 N. J. Super. 245 (App. Div. 1959), affirmed 31 N. J. 537 (1960), certiorari denied 363 U. S. 843, 80 S. Ct. 1613, 4 L. Ed. 2d 1727 (1960), involving the vaccination of children, and Young v. Board of Health of Somerville, 61 N. J. 76 (1972), involving fluoridation of the public water supply. In these instances, however, the action taken has affected the community rather than the individual. The parents questioned the Court’s power to require particular medical treatment which, although it may be beneficial to the patient, it is not necessary to save the patient’s life. They asked: “Where will this intrusion end?, and, “Is it not the forerunner of State control over an individual’s life?”

Courts elsewhere in the country have considered this issue, and there is apparently a split of authority, although the majority view supports the action taken in this case. See In Re Sampson, 29 N. Y. 2d 900, 328 N. Y. S. 2d 686, 278 N. E. 2d 918 (1972), affirming 37 A. D. 2d 668, 323 N. Y. S. 2d 523 (3rd Dept. 1971), affirming 65 Misc. 2d 658, 317 N. Y. S. 2d 641 (1970) ; Morrison v. State, 252 S. W. 2d 97 (Mo. App. 1952); Mitchell v. Davis, 205 S. W. 2d 812 (Tex. Civ. App. 1947); Application of President and Directors of Georgetown College, Inc., 118 U. S. App. D. C. 80, 331 F. 2d 1000 (1964), rehearing en banc denied, 118 U. S. App. D. C. 90, 331 F. 2d 1010 (1964), certiorari denied 377 U. S. 978, 84 S. Ct. 1883, 12 L. Ed. 2d 746 (1964) ; and People ex rel. Wallace v. Labrenz, 411 Ill. 618, 104 N. E. 2d 769 (1952), certiorari denied 344 U. S. 824, 73 S. Ct. 24, 97 L. Ed. 642 (1952). Cf. Jehovah’s Witnesses in State of Washington v. King County Hospital, 278 F. Supp. 488 (W. D. Wash. 1967), affirmed 390 U. S. 598, 88 S. Ct. 1260, 20 L. Ed. 2d 158 (1968), rehearing denied 391 U. S. 961, 88 S. Ct. 1844, 20 L. Ed. 2d 874 (1968) where a Washington statute empowering Superior Court judges to declare children dependent for the purpose of transfusions was upheld, and the Court declared that the right to practice religion does not include the liberty to expose children to ill health or death. But see, In Re Brooks’ Estate, 32 Ill. 2d 361, 205 N. E. 2d 435 (1965) involving refusal of a transfusion by an adult, (cited and rejected in John F. Kennedy Memorial Hospital v. Heston, supra.); In Matter of Seiferth, 309 N. Y. 80, 127 N. E. 2d 820 (1955), involving a fourteen year old boy who would not give his cooperation, (apparently but not explicitly, severely limited or overruled in In Be Sampson, supra.); and In Re Green, 448 Pa. 338, 292 A. 2d 387 (1972), apparently rejecting the power to order transfusions, unless the child’s life is immediately impaired.

The reasoning of the majority view, especially the very recent New York opinion of In Be Sampson, outweighs the arguments advanced in support of the minority view. The Courts have been and will continue to be the guardian of the religious rights of the individuals to see that this power of the State is not exercised beyond the area where treatment is necessary for the sustaining of life or the prevention of grievous bodily injury.

The guiding principles are found in the Perricone case where the Court stated:

“Concededly, freedom of religion and the right of parents to the care and training of their children are to he accorded the highest possible respect in our basic scheme [citing cases] But ‘neither rights of religion nor rights of parenthood are beyond limitation.’ [citing cases] * * *' In Reynolds v. United States, 98 U. S. 145, 25 L. Ed. 244 (1879), the Supreme Court upheld a Mormon’s conviction for bigamy against the defense of interference with religious freedom as guaranteed in the First Amendment. Chief Justice Waite there stated: ‘Laws are made for the government of actions, and while they cannot interfere with mere religious belief and opinions, they may with practices. Suppose one believed that human sacrifices were a necessary part of a religious worship, would it be seriously contended that the civil government in which he lived could not interfere to prevent a sacrifice?’ 98 U. S., at p. 166, 25 L. Ed., at p. 250.” 37 N. J., at pp. 472-473.

In discussing Prince v. Massachusetts, 321 U. S. 158, 64 S. Ct. 438, 88 L. Ed. 645 (1944), the Perricone Court cited with approval the statement that:

“ ‘Parents may be free to become martyrs themselves. But it does not follow they are free, in identical circumstances, to make martyrs of their children before they have reached the age of full and legal discretion when they can make that choice for themselves.’ ” 37 N. J. at pp. 473-474 quoting from 321 U. S. at p. 170, 64 S. Ct. at p. 444.

The Court noted, at 37 N. J., pp. 478-470, that not every refusal to consent to treatment for an infant constitutes evidence of either unfitness or neglect to provide for proper protection, and gave examples of refusals to permit corrective surgery for congenital deformities as having been held insufficient grounds for taking custody from parents. Also, if the disputed procedure involved a significant danger to the infant, the parents’ wishes would be respected. In our case, however, it cannot be said that the danger to the infant was slight if the procedure were not followed, nor that the transfusion procedure constituted a serious risk to the infant. (The death was apparently unrelated to the transfusion). Both questions were explored in detail with Dr. Archer. It is to the best interests of our society as a whole that infants be protected in instances where there be an imminent danger of severe and irreparable brain damage, just as where there is the equivalent danger of death. As was noted in the Prince and Perricone cases, it does not follow that parents who wish to be martyrs for their religious beliefs have a right to impose such martyrdom upon their offspring before they reach their age of full and legal discretion.

For the foregoing reasons, I have signed the order permitting the transfusion with the understanding that these reasons would be given as soon as a formal opinion could be reduced to writing.