author: Stamlek, J. S. C.

text:
    LARANCE VALENT AND JOAN VALENT, GUARDIAN AND NATURAL PARENTS OF ANTHONY VALENT, AMY VALENT, AND COLEEN VALENT, PLAINTIFFS, v. THE NEW JERSEY STATE BOARD OF EDUCATION, NEW JERSEY STATE DEPARTMENT OF EDUCATION, ET ALS., MORRIS COUNTY SUPERINTENDENT OF SCHOOLS, ET ALS., AND PARSIPPANY-TROY HILLS BOARD OF EDUCATION MEMBERS, ET ALS., DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided February 8, 1971
    (orally from the bench) — supplemented in writing March 2, 1971.

      Mr. Salvatore Simeona for plaintiffs (Mr. Frank A. Paglianite, attorney). ,

      Mrs. Virginia Long Annieh for defendants N. J. State Board of Education, N. J. Department of Education, Carl Marburger, Commissioner of Education, Members' of the State Board of Education and Leslie V. Rear, Morris County Superintendent of Schools (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney).

      Air. Allen W. Bead, for defendants Parsippany-Troy Hills Board of Education, George Oldham, Superintendent, John Sheohy, Assistant Superintendent, and the individual members of the Parsippany-Troy Hills Board of Education (Messrs. Schenclc, Price, Smith é King, attorneys).
   Stamlek, J. S. C.

The complaint in the ease at bar was originally filed in the Law Division and upon motion of defendants was ordered transferred to the Chancery Division.

This matter is now before the court on the motions of the Attorney General as attorney for the New Jersey State Board of Education, the New Jersey Department of Edueation, Carl Marburger, Commissioner of Education, the members of the State Board of Education and Leslie Y. Eear, county superintendent of schools, joined in by the attorneys for defendants Parsippany Troy Hills Board of Education, the superintendent of schools, the assistant superintendent of schools, and the individual members of the ParsippanyTroy Hills Board of Education.

The motions are two-fold attacks upon plaintiffs’ verified complaint. The first seeks a dismissal of the complaint on the ground that it fails to state a claim upon which relief can be granted in this court. The second is for summary judgment. At the conclusion of arguments the court rendered an oral opinion. This opinion is in supplementation thereof.

Generally, plaintiffs allege that a course entitled “Human Sexuality” given in the Parsippany-Troy Hills public schools requiring the attendance of their children violates the First, Ninth, Tenth and Fourteenth Amendments of the United States Constitution and Art. I, pars. 3 and 4 of the New Jersey Constitution.

Collating the allegations of the verified complaint in each of its seven counts with the answers, there is but one area in which denials are found. For the most part the Attorney General expresses neither admission nor denial, asserting lack of knowledge, leaving plaintiffs to their proof. The local board, in answering many vital paragraphs of the complaint, neither admits nor denies. The local board does deny that the questioned course includes teachings and discussions of sexual intercourse, masturbation and contraception, contrary to religious beliefs of plaintiffs; that the course is critical of parental authority; that a defacto religion is created.

The thrust of the first motion made by both State Board and local board is that plaintiffs have failed to exhaust their administrative remedies, for the Legislature of New Jersey has given a quassi-judicial power to the State Board of Education to determine school disputes. Defendants assert that the issues raised by the complaint are school disputes. It is the position oí defendants that since no formal application has been made for State Board adjudication in approval or disapproval of the local board’s action, plaintiffs are left to their exclusive remedy under the statutes of New Jersey (N. J. S. A. 18A:6-9) to contest administratively what the local board is doing before the Commissioner of Education and if an adverse ruling results, appeal to the State Board. Thereafter, an appeal pursuant to rule of court may be taken directly to the Appellate Division as an appeal from an administrative determination B. 2:2-3 (a) (2).

Plaintiffs are Laranee Valent and Joan Valent, guardian and natural parents of Anthony, Amy and Coleen Valent. The children attended the Parsippany-Troy Hills public schools. Plaintiffs are members of the Catholic faith.

On January 4, 1967 the New Jersey State Board of Education issued a policy statement recommending that appropriate programs of sex education be developed by educational institutions in this State. On July 2, 1969 the Legislature of the State of New Jersey in an Assembly Concurrent Resolution noted that public controversy had arisen in the area of sex education and requested the Commissioner of Education to direct all boards of education that no new sex education program should be instituted pending the outcome of a legislative inquiry.

On July 25, 1969, pursuant to that resolution, the Commissioner of Education with the approval of the State Board of Education advised all school boards to postpone consideration of new sex education programs. Notwithstanding the Assembly Concurrent Resolution and the Commissioner’s memorandum of advice to the local boards, defendant Parsippany-Troy Hills Board of Education instituted a program in “Human Sexuality” in its school district. It is this program which is the subject of the complaint.

On April 9, 1970 the Senate and the Assembly Committees on Education made a joint report to the Legislature concerning and endorsing with recommended limitations sex education-in the public schools. On July 27, 1970 the State Board5 of Education by memorandum of the Commissioner of Education advised all superintendents, county superintendents and all local boards of education that the moratorium on the-institution of programs of sex education pending the conclusion of the legislative inquiry was rescinded. The. State Board concurred in some-of the limiting recommendations of the Legislature, -but rejected others. It is in' this ' latter area that the ■ controversies- here arise. In his memorandum .of July '27/1970-the, •Oommisi'soner of-Education conveyed' the views and directives of the State' Board of Education. The .-first sentence is an expression of that agency: • •

The State ■ Board; of Education' has received : the - report -to the Legislature; by,,.the : Senate.. and Assembly Qommittees on-, education concerning sex education” in the ..public schools and’ wishes to acknowledge tó'th fe Joint Committee its appreciation for that body’s fair, impartial, and comprehensive study of problems', and-issues relating to sex .education.. . , • , . . . -

'The thir.d-paragraph/of .the- Commissioner’s memorandum states,-;.-... . ■ , ■ . ' ■■

.-1 The ¿.third, recommendation- [of the Legislature]-' to which' the State Board takes specific exception,.^ that] local boards of education permit students to take ,se® education ' courses unless a parent or guardian-files tbritiéñ'objection with the Board of Education. [Emphasis ini text]:

The Commissioner went on to' isay:

It is the-belief of-the State Bohrd that local boards of education should not he required to griunt such; exceptions. To do otherwise would -.be to establish a precedent which could have far-reaching impact On 'the' efficacy of the public school system. Such a precedent could open the door for demands for exclusion, on grounds of conscience, from such courses as health and physical education, biology, history and even English literature. This belief of the State Board does not'’alter the accepted principle that local boards of education have 'a right either to- establish' sfex education courses or' to refrain from approving any sex education in the schools under their control. [Emphasis supplied].

The Commissioner further advised local hoards:

Another recommendation of the Joint Committee that local boards of education not adopt any formal course of study on sex education for grades below the junior high school level requires clarification. The State Board agrees that the study of sex education in an informal course structure is appropriate for the elementary grades. However, it does not believe that school districts should be limited in their choice to an informal curriculum nor does the State Board believe that such studies should necessarily be restricted to Biology, Health, Zoology and other science courses. [Emphasis supplied].

The letter concludes, “local districts are now advised that the moratorium, which I referred to heretofore, is rescinded as of this date.”

Defendants urge that this court has no jurisdiction to determine the issues raised by the complaint and answers filed. The Education Act (N. J. S. A. 18A:6~9) did give to the State Board of Education a qmsV judicial function in those matters where it could exercise its expertise. This court cannot and does not intend to substitute its judgment in those matters where the State Board of Education and the Commissioner of Education have special expertise. However, in matters of substantial constitutional dimension the Executive and the Legislature are not the determining or final arbiters of what is and what is not constitutional. Since Marbury v. Madison 1 Cranch 137, 5 U. S. 137, 2 L. Ed. 60 (1803), this obligation is imposed upon the judiciary, not the executive or legislative branches.

An additional reason why this matter should be resolved in the courts rather than administratively is the discretionary power of the courts, in particular cases where the interests of justice so require, to by-pass the administrative' process where either there is no special expertise or where the administrative judgment has in fact been rendered, albeit informally. Malawan v. Monmouth County Tax Board, 51 N. J. 291, 296 (1968); Durgin v. Brown, 37 N. J. 189, 202 (1962).

For many years our courts have been critical of various administrative procedures where the administrative board has been both judge and jury as well as prosecutor. The question raised in this case is whether the local board has, with the imprimatur of the State Board, intruded upon a matter of conscience, a matter of religion, in a fully and completely forbidden area. The State Board has expressed itself in that field.

The Commissioner and the State Board of Education have already rendered a decision with regard to matters of conscience. They have directed that no one shall be excused from a class in sex education or “Human Sexuality” (as it is entitled in Parsippany) on grounds of conscience.

To now go back to the State Board and ask it to consider an exclusion on the grounds of religion or conscience would be an exercise in futility, because the Board had all of the information including the recommendations of the Legislature. The Board considered the divergent opinions'. Notwithstanding that the instructions to the local board did not require a course in human sexuality, the State Board concluded that if such a course were instituted, no one was permitted to abstain on grounds of conscience. Courts are required to protect, preserve and interpret, as they have been doing over the years, the Constitution of the United States.

The motion to dismiss for a failure to state a claim upon which relief can be granted, on the ground that there has not been an exhaustion of administrative remedies, is denied.

Attending to the motion for summary judgment, it is well settled in our State that on such motions the court is required to scrutinize the complaint, the answers and affidavits, if any, and determine whether there is a genuine issue of relevant fact. The burden is on the moving party to exclude any reasonable doubt as to the existence of a genuine issue of material fact. All inference of doubt must be drawn in favor of those who oppose the motion. United Advertising Corp. v. Metuchen, 35 N. J. 193, 196 (1961). If there were no affidavits by defendants, a complaint fully verified which in part alleges an intrusion in the public schools upon religious dogma, contrary to the First Amendment to the United States Constitution, would be considered in a light most favorable to plaintiffs. Defendants have filed an affidavit by the Director of Curriculum in Human Sexuality. The Director avers that his curriculum does not offend any religious doctrine or religion. He has determined, and defendants accept his view, that there is no intrusion upon religious freedoms. The Director further states that the State Board and the elected officials on the local board, and the Junior Chamber of Commerce, by a house-to-house canvass found that sex education courses in the Parsippany-Troy Hills School system are necessary and beneficial for the students.

Counsel for the local board argues that Cornwell v. State Board of Education of Maryland, 314 F. Supp. 340 (D. C. Md. 1969), is dispositive of all issues here raised. In that case similar questions were raised on a motion by the state board of education to dismiss the complaint of parents of minors against the sex education course. Cornwell passes briefly by, and in cursory manner, what is the most important decision with regard to “free exercise”. The present state of the law requires that all courts must in “free exercise” cases, use Sherbert v. Verner, 374 U. S. 398, 83 S. Ct. 1790, 10 L. Ed. 2d 965 (1963), as the starting point.

The First Amendment to the United States Constitution reads:

Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof.

No constitutional provision has caused greater turmoil, litigation and divisiveness throughout the country than this one brief sentence. The United States Supreme Court has recognized that this short sentence is incongruous.

Defendants rely heavily on Everson v. Board of Education, 330 U. S. 1, 67 S. Ct. 504, 91 L. Ed. 711 (1947) (school bussing); Engel v. Vitale, 370 U. S. 421, 82 S. Ct. 1261, 8 L. Ed. 2d 601 (1962) (school prayer); Chamberlin v. Dade County Board of Public Instruction, 374 U. S. 487, 83 S. Ct. 1864, 10 L. Ed. 2d 1043 (1963), rehearing 377 U. S. 402, 84 S. Ct. 1272, 12 L. Ed. 2d 407 (1964) (devotional Bible reading); Board of Education v. Allen, 392 U. S. 236, 88 S. Ct. 1923, 20 L. Ed. 2d 1060 (1968) (loan of text books to parochial school students); Zorach v. Clauson, 343 U. S. 306, 72 S. Ct. 679, 96 L. Ed. 954 (1952) (released-time program). However, these cases are all “establishment clause” cases. The present case is predominantly one of “free exercise.”

Where the “establishment clause” confronts the “free exercise clause,” the founding fathers who drew this constitutional provision intended that the “free exercise clause” be dominant. This is readily understandable.

Plaintiffs here allege that if they do not send their children to school they will be subject to criminal prosecution. (This is no longer in the case since they are being tutored at home with the understanding that pending a determination herein no prosecution will be pressed, but there has been no excusal as a matter of conscience.) But of greater importance is the fact that the children are compelled to attend instruction violating a religious dogma or be educated at additional expense in a sectarian school.

The first limitation on the “free exercise clause” — as opposed to the “establishment clause” — by the United States Supreme Court came in Reynolds v. United States, 98 U. S. 145, 25 L. Ed. 244 (1878). There it was held that although government by its laws cannot interfere with religious beliefs and opinions, it may with religious practices. Reynolds was the historically significant polygamy case. Erom the language in that case “beliefs” and “opinions,”- as opposed to “practices”, were recognized as the core value to be protected and which permitted of no exception.

In later years, in later cases, it had been held that this clause protects “religious practices” as well as the right to worship through quiet belief and opinion. The right to engage in a particular act or acts essential in the exercise of one’s religious freedom was always carefully guarded by the courts. The only exception occurred when the specific ritual in religious practice endangered the health or safety of others.

We come through the years from 1878 to Sherbert, supra, in 1963. A startling instruction by the United States Supreme Court for trial court conduct in “free exercise” cases appears between the lines. Mrs. Sherbert, a Seventh Day Adventist, was denied unemployment compensation because of her unwillingness to accept employment which required her to work on Saturday, a religious day. Mr. Justice Brennan, speaking for the Supreme Court, stated:

It is basic that no showing merely of a rational relationship to some colorable state interest would suffice [to justify the denial]; in this highly sensitive constitutional area, [o]nly the gravest abuses, endangering paramount interests, give occasion for permissible limitation.” (374 U. S. at p. 406, 83 S. Ct. at p. 1795)

Because the state had failed to carry its burden of showing clearly that an essential state interest would be jeopardized by noncompliance, Mrs. Sherbert prevailed. To put it another way, the impact of the questioned regulation upon her amounted to the loss of her living allowance, and the interest of the state was not particularly endangered. Additionally, an unquestioned, sincere religious belief was protected.

This, then was the prime step by the United States Supreme Court charging lower courts with the obligation to examine and balance harm, if any, to an individual’s freedom of conscience, on the one hand, against damage, if any, to the essential governmental regulatory or legislative purpose. Unfortunately, no guidelines to assist a trial court were established by the Supreme Court in Sherbert. It would have been extremely helpful to this court had some standards been designed.

In People v. Woody, 61 Cal. 2d 716, 40 Cal. Rptr. 69, 394 P. 2d 813 (1964), the court held that the state could not constitutionally apply the statute prohibiting the use of peyote so as to prevent an Indian tribe from using the forbidden drug as sacramental symbols similar to the bread and wine used in Christian churches. The trial court took the proofs of the necessity for a broad statute prohibiting the general sale and use of narcotics and was satisfied that for many, many years the Native American Church of the State of California had as its doctrine the use of peyote in sacramental ritual. The state was unable to show to the satisfaction of the trial court or the high court that to permit these Indians to use peyote in their religious services would harm the state’s program against narcotic users. The important part of that case, as far as this court is concerned, is that the state presented evidence as to the substantial necessity for the prohibition, and the defendants were permitted to show that no harm would come to the state by way of that practice. The trial of facts in Woody was deemed essential under the ruling in Sheri ert.

It would be absurd for this court to say that a state regulation which prohibited the sacramental use of wine in the rites of a specific church would be constitutional during Prohibition days. The sacramental use of wine was permitted because of minimal harmful effects to the state.

The infant plaintiffs, speaking through their parents, state that they are sincere in their beliefs; that the program in “Human Sexuality” is derogatory of the beliefs that their religion requires them to entertain.

State v. Perricone, 37 N. J. 463 (1962), clearly exhibits that the trial court and our Supreme Court anticipated the Sheri ert requirements of balancing. In Perricone the parents refused to grant permission for a blood transfusion for their infant son. The refusal was based upon their affiliation with and membership in Jehovah’s Witnesses, whose dogma forbids the taking of blood or transferring it from one person to another. The trial court not only heard testimony of medical witnesses as to the child’s condition, but also testimony of the parents as to the basis for the assertion of religious conscience. On appeal from an adverse decision at the trial level, the Perricones argued that their constitutional rights of parental care and religions freedom had been violated.

Speaking for a unanimous Supreme Court in affirmance of the trial court, Justice Schettino considered appellants’ argument that the trial court violated the First and Fourteenth Amendments to the Constitution of the United States and Art. I, par. 3 of our State Constitution, by depriving the parents of freedom of religion and their rights as parents. On the parents’ side of the scale, Justice Schettino placed: the position of the parents in accord with the tenets of their religion and that they had at all times acted sincerely with the best interests of their child in mind (37 N. J. at 471); “freedom of religion and the right of parents to the care and training of their children are to be accorded the highest possible respect in our basic scheme” (at 472) ; freedom of conscience and freedom to adhere to a form of worship embraces two concepts —■ freedom to believe and freedom to act, the first being absolute, the second limited (at 472).

On the State’s side, the Justice placed: the State’s sovereign right and duty to care for a child and protect him from neglect or abuse during his minority (at 475) ; the medically proven necessity of the blood transfusion to save life or mental health (at 477) ; the imminent danger, as opposed to situations where corrective surgery is sought (at 478). In reference to the latter situation, Justice Schettino said:

Had there been a relevant and substantial difference of medical opinion about the efficacy of the proposed treatment or if there were substantial evidence that the treatment itself posed a significant danger to the infant’s life, a strong argument could be made in favor of appellants' position. No such evidence was here presented. The medical testimony was unanimous in its endorsement of the necessity for immediate blood transfusions, [at. 479]

In upholding the State’s position, the Supreme Court concluded that the facts placed on the balamce clearly evidenced a compelling necessity for the protection of the welfare of the child.

The intrusion into the religious life and parental authority in Perricone can be justified because the State, as parens patriae, is charged with protecting a child from “immediate and present danger,” and the parents in the context of the case were unfit, cruel or neglectful.

In the case at bar can it readily be said that all parents are neglectful and unfit to explain sexual relations or to teach their children a moral way of life? Is the State, through the educational system, permitted to encroach upon the patterns and molding of a child’s behavior in personal family or religious beliefs? Parental discipline, authority and respect. diminish as the great sovereign state forces its way into the home as a foster parent. Some parents may be happy to be relieved of the obligation and responsibility. Others may feel that the constant eroding of their usefulness as parents portends great danger, and youth will look to the state, rather than the parent, for guidance.

The balancing test has found support in many law review articles. Two which contain complete analysis are: Clark, “Guidelines for the Free Exercise Clause,” 83 Harv. L. Rev. 327 (1969), and Gianella, “Religious Liberty, Nonestablishment and Doctrinal Development (Part I. The Religious Liberty Guarantee)”, 80 Harv. L. Rev. 1381 (1967).

The questions to be answered in the present case are the extent of the governmental interest in promoting this program of “Human Sexuality” and whether permitting a student to be excused therefrom will detract substantially from or prevent the success of an essential program. Plaintiffs’ assertion of a right of conscience is more impressive than the scorecard which was presented by the defendant local board, that 70% of the Junior Chamber of Commerce poll thought sex education was a good idea.

Defendants attempt to persuade the court that because in the recent school board elections the “pro-sex-education” candidates defeated the “anti-sex-education” candidates, an over-riding governmental interest and necessity is clearly demonstrated. This is completely unacceptable. If majority rule were to govern in matters of religion and conscience, there would be no need for the First Amendment.

The First Amendment, and particularly the “free exercise clause,” was adopted to protect the one percent, one individual, one person, who is sincere in a conscientious religious conviction. Even if it were concluded that the government’s interest is a tenable interest and that school boards have a right to - proceed in conducting these courses in ‘‘Human Sexuality,” is the manner- in which they are proceeding reasonable ? Insofar as the State Board permits local boards to adopt or reject the program, even if arguendo this is constitutionally permissible, is it essential to the State or local board to require children to attend over the objection of their parents?

Other questions are raised by Sherbert and Woody: is there no alternative method which would accomplish the State’s plan or scheme without an intrusion upon the individual’s conscience? Plaintiffs must show in this balancing of State against individual that plaintiffs’ religious or conscientious values are truly sincere. Is it a fraudulent claim of conscience or privilege asserted to eliminate a personal inconvenience or to avoid an unwanted or unpleasant duty to society ?

Is the individual who objects to the plan of the State required to commit a mortal or a venial sin? Is the individual called upon by the government to disavow his conscience or to accept an operational dogma which is in direct conflict and derogatory of his or her religious belief?

The case of Epperson v. Arkansas, 393 U. S. 97, 89 S. Ct. 266, 21 L. Ed. 2d 228 (1968), the successor case to the Scopes trial, in which the Arkansas statute prohibiting the teaching of evolution was struck down, does not sustain defendants’ position here.

There is nothing inherently evil from a constitutional standpoint in teaching evolution or comparative religions as historical fact. The disputed area of evolution, still disputed after all these years, is a matter of one belief in a scientific fact which does not intrude as long as other doctrine of genesis is given to the children. Mr. Justice Brennan in his concurring opinion in School Dist. of Abington v. Schempp, 374 U. S. 203, 281-283, 83 S. Ct. 1560, 10 L. Ed. 2d 844 (1963) suggests that equal time may be one answer, but difficult of constitutional formulation. Epperson does clearly state that the First Amendment mandate is absolute and “forbids alike the preference of a religious doctrine or the prohibition of theory which is deemed antagonistic to a particular dogma.” (393 U. S. at 106, 89 S. Ct. at 271-272).

In the case at bar what is taught is operational — how best to plan a future life and what conduct is acceptable —and which, according to plaintiff, is in direct conflict with or derogatory of plaintiffs’ religious belief. The First Amendment stands ready, in the “free exercise” clause, to protect that person. Once it is shown that the state intrudes upon one’s religious belief, the state, according to Sherbert, has the burden of showing an overriding need and that it has no other way to satisfy that need.

If the state can demonstrate that no satisfactory alternative exists, then the interest of the state and the individual must be balanced. It may be that the individual’s conscience may be fully protected by excusal from the program, or it may be that attendance is required because failure to perform the imposed duty has a harmful effect upon society generally and therefore involves a detriment to others. For example, a person may be required to take a smallpox or measles innoculation because failure to submit to injection may affect the health and welfare of many others in the community. There the state program is found to have an overriding purpose..

However, in dealing with persons who are fully consenting (unlike the situation in Perricone, supra), it may be that if an act is against religious belief and harms no other person, that person may be excused from submitting. For example, in the area of injections of penicillin and surgical procedures upon those people who practice Christian Science. It should be apparent that, in a “free exercise” case requiring a balancing approach, judicial determinations are not solely answers to questions of law on summary judgment. Facts must either be proven or stipulated and then balanced before a legal standard can be applied and judgment rendered.

The motion of defendants for summary judgment is denied and an early pretrial conference date will be fixed.


source: Caselaw Access Project

author: Tbautwein, J. S. C.

license: Public Domain

text:
    PAUL BARTEL, EXECUTOR UNDER THE WILL OF DANIEL L. CLARENBACH, DECEASED, PLAINTIFF, v. ETHEL CARNATHAN CLARENBACH, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided March 1, 1971.

      Mr. Paul Bartel for plaintiff.

      Mr. Beginald P. HopMnson for defendant (Messrs. Jeffer, Walter, Tierney, DeKorte, HopMnson & Vogel, attorneys).
   Tbautwein, J. S. C.

There are two matters before the court. The first is an order to show cause why plaintiff should not distribute the remaining corpus of the estate of Daniel Clarenbaeh in accordance with plaintiff’s informal accounting wherein defendant’s residuary interest, which qualified for the marital deduction under 26 U. S. C. A. § 2056, was calculated after the deduction of federal taxes. The second is defendant’s motion which seeks to compel plaintiff, as executor of Daniel Clarenbaeh’s estate, to file an inventory and settle an account. Defendant’s motion also seeks to order plaintiff to comply with R. 4:88-1 (N. J. Court Rules, 1969) which rule would require an application for commissions on corpus and attorney’s fees to be supported by an affidavit of services.

The facts material to a resolution of the issues are neither complex nor essentially conflicting. Plaintiff, who drew the will, is the attorney-proctor of the estate, the nephew and executor under the will of the deceased, Daniel Clarenbaeh, hereinafter “testator,” and is also a substantial beneficiary. At the time testator made his will and at all times prior thereto he was unmarried. The will was executed on November 27, 1966. At some time prior to this event testator had been advised by plaintiff of the advantages of the marital deduction. Presumably this information was supplied so that testator could utilize it in the event he ever married and desired to include such provisions in his estate plan. A codicil to the will was executed on June 2, 1967 but did not change the residuary disposition as set forth in the will. Under the terms of the will and codicil testator made certain specific bequests and devices. The residuary estate was then bequeathed to 20 different persons, each of whom received a stated percentage of the residue. Among the residuary legatees 12 were relatives, 1 was an unnamed college, 2 were male friends, and 5 were what plaintiff described, chivalrously, as testator’s “lady friends,” of whom defendant Ethel Carnathan, later Clarenbaeh, was one. Including specific bequests and devices as well as her residuary interest, defendant' has less than a 25% interest in the estate, whereas- the combined interests of the other lady friends were greater than 25%. The will contained no provision for the payment of taxes.

Several years after the will was executed testator, at the age of 71 and after having had several heart attacks and at least 'one- major operation, married defendant- whom he had known for more than 40 years.. There is nothing before the court to indicate testator was of unsound mind at any time, nor is this an issue raised by the pleadings. This marriage appears to be a direct result of a doctor’s advice to testator to the effect that it would be medically inadvisable for testator to live alone. Testator died approximately two months after his marriage. During the two-month period between marriage and death testator made several statements that indicated that he wanted to make certain changes in his will. There is nothing before the court that would remotely indicate the nature of the desired will changes. Indeed, testator neither changed his will nor made any arrangements to discuss such changes with his attorney.

On October 15, 1970, approximately two years after the death of testator, plaintiff sent to each beneficiary under the will an informal account. A release and refunding bond accompanied each copy of the account. The account in part stated:

When you sign the refunding bond and release, you release the executor from any further obligation to you in connection with the estate and you agree to return your proportionate share of any monies you have received in the event that the estate has not paid all' its bills and does not have sufficient reserve to pay them.
If any beneficiary prefers a formal accounting, please notify me as. promptly as possible because in that case, I will have to withhold all payments until the accounting is approved.

Each beneficiary, including defendant, signed and returned to the plaintiff his or her release and refunding bond. Defendant had the instrument for approximately two weeks before she signed and returned it. Subsequent to the execution and return of the instrument, and either because she changed her mind or because she obtained the advice of counsel, defendant requested that plaintiff return the instrument to her. Plaintiff has continually refused to do this.

The question before the court is whether defendant’s share of the residuary estate, which qualified for the marital deduction under 26 U. S. G. A. § 2056, should be calculated before or after payment of the federal estate tax. It is fundamental that in the absence of instructions to the contrary, the residuary estate is to be charged with the payment of federal estate taxes. Case v. Roebling, 42 N. J. Super. 545 (Ch. Div. 1956). This rule is limited to the extent set forth in Gesner v. Roberts, 48 N. J. 379 (1967); see also Dodd v. United States, 345 F. 2d 715 (3 Cir. 1965). In Gesner it was stated that “absent an express statement in the will, we should start with the assumption that the testator intended the maximum tax advantage for the estate and maximum benefit to the spouse within the limits of his gift to her.” (Emphasis supplied). The limitation of Gesner, and N. J. S. A. 3A:25-33, which provides in pertinent part: “In the absence of directions to the contrary, * * * (ii) any deduction allowed under the law imposing the tax by reason of the relationship of any person to the decedent or by reason of the charitable purposes of the gift shall inure to the benefit of the fiduciary or transferee, as the case may be, * * *” should not be interpreted to mean that in every case, and absent any instructions to the contrary, the mere fact that a spouse’s share of the residuary estate qualifies for the marital deduction automatically excludes it from paying its proportionate share of the federal estate tax imposed on the residuary estate. In re Burnett, 50 N. J. Super. 482, 495 (Cty. Ct. 1958), Surina v. Gilbert, 54 N. J. 68 (1969); Gesner v. Roberts, supra.

As stated in Gesner, the plan of a will may suggest that a testator did not intend the maximum benefit to his spouse or even to his estate. Such are the circumstances in the present ease. Testator and defendant were not married when the will and codicil were made. Obviously testator could not have intended at that time to exonerate defendant’s residuary interest from the payment of her proportionate share of federal estate taxes.

At this point we reach a threshold problem — if a person is a residuary legatee under another’s will and subsequently marries the testator, should the testator have to re-execute his will before the residuary legatee-spouse can take advantage of the Gesner assumption? The answer to this question is obviously in the negative. A will is ambulatory and speaks only as of the time of the testator’s death. Miller v. Reich, 134 N. J. Eq. 28 (Ch. 1943); Dodd v. United States, supra. Thus, the residuary legatee’s rights are determined at the time of testator’s death and defendant should be granted the advantage of the Gesner presumption. This presumption, however, under Gesner is rebuttable.

Again adverting to the plan of the will, it is seen that testator made several specific bequests and devises to the various unrelated and related persons. He then disposed of the residue of his estate to one unnamed college and to 19 persons: 12 of them related by blood to testator and 7 unrelated by blood, 2 of whom were male friends and 5 women friends. Testator knew of the marital deduction and had ample time before Ms death to include such provisions in his will. These facts repel the assumption in Gesner v. Roberts, supra, and fully demonstrate a plan whereby “the testator intended the beneficiaries to receive shares in the stated proportions and hence after the payment of taxes.” Surina v. Gilbert, supra.

One area of factual conflict is emphasized by defendant. It relates to whether decedent intended to revise his will either before or after his marriage to her in order to take full advantage of the marital deduction. The ultimate fact is that he did not, and hence I find that such fact issue is not material.

The second and final question before the court is whether plaintiff should be compelled to submit a formal accounting. It is not disputed that defendant received the copy of the informal account and release and refunding bond. This account was detailed. Reference to N. J. S. A. 3A:9-3 is here pertinent. It provides that an executor may settle his account in the Superior Court. This statute is directory and not mandatory. In re Tarby, 25 N. J. Super. 336 (Cty. Ct. 1953); Heath v. Maddock, 81 N. J. Eq. 469 (Prerog. 1913), aff’d 83 N. J. Eq. 366 (E. & A. 1913). Nonetheless, after studying the account defendant executed and returned the release and refunding bond to plaintiff. However, defendant professes that she did not fully comprehend the nature and effect of this document, did not understand the account, and shortly thereafter requested the return of the same, which request was refused. The general rule is that when all of the interested parties agree to an informal accounting and sign release and refunding bonds (defendant is the only beneficiary here challenging plaintiff), none of them can later compel the fiduciary to account formally. Maloney v. Kinkead, 130 N. J. Eq. 169 (Ch. 1940), aff’d 131 N. J. Eq. 111 (E. & A. 1941). This rule is limited in its application to those instances where fraud, misrepresentation, mismanagement, or undue influence of the fiduciary or a substantial misunderstanding by the legatee are not shown. Donnelly v. Ritzendollar, 14 N. J. 96 (1953); Ratti v. Ratti, 6 N. J. Super. 352 (App. Div. 1950); In re Tarby, supra; 7 New Jersey Practice (Clapp, Wills and Administration 3d ed.) § 1731.

Defendant complains of misunderstanding and mismanagement in three basic areas. Pirst is the alleged improper inclusion in the gross estate of certain items which she characterizes as “insurance policies” payable directly to beneficiaries for the purpose of illegally inflating attorney’s fees and commissions. Second is plaintiff’s alleged negligence in failing to include other insurance policies in the inheritance tax returns, resulting in penalties. Third is a charge that the amount claimed by plaintiff for executors commissions and attorney’s fees is excessive.

N. J. S. A. 3A:10-1 and 2 provide comprehensive plans for the payment of commissions. These commissions are to be determined by the value of actual services rendered as well as by the trouble and risk involved in settling the estate. A formal application for fees or commissions, predicated upon an affidavit of service, is not in every instance mandated by either court rule or statute. N. J. s. A. 3A:10-8 and R. 4:88-1 and 4 merely provide that such application is mandatory in certain instances where an account is to be or has been settled by the court.

However, I conclude the facts in the instant case mandate an accounting. Plaintiff was the draftsman of the will, a blood relative of the testator, a substantial beneficiary under the will, the executor of the estate and an attorney for the estate. When plaintiff’s many faces are added to the alleged areas of his mismanagement and defendant’s alleged misunderstanding, it is amply demonstrated that defendant is entitled to some relief. In any event, a fiduciary should not be permitted to evade the statutory limitations on fees and commissions by simply settling his accounting informally. In allowing defendant relief the court is, in effect, opening the account which was settled informally by release and refunding bond. In doing this the entire account is not reopened. The opening of the account should be limited to those specific areas discussed above. Cf. Stevenson’s Adm’rs v. Phillips, 15 N. J. Eq. 236 (Prerog. 1856); In re Kuser, 132 N. J. Eq. 260 (Prerog. 1942).

Por the foregoing reasons it is ordered that defendant’s share of the residuary estate pay its proportionate share of the federal estate tax imposed on the estate. Before doing so, however, the informal account is reopened to the extent that plaintiff is ordered to formally account in regard to the state transfer inheritance tax and federal estate tax and penalties imposed, fees and commissions charged and collected, and details of the treatment and handling of all alleged “insurance policies” as they relate to the estate administration. Defendant may then submit exceptions in this limited account within 30 days after receipt of the same.

       For a detailed treatment of the marital deductions law, see Burnett; Surina v. Gilbert, and Gesner v. Roberts, infra.

       Obviously, if a testator marries a legatee, post will execution, and thereafter re-executes the will without a codicil covering death taxes, serious doubt would be generated respecting a right to the Gesner assumption.


author: Herbert, J. S. C.

text:
    JOSEPH E. HIGI, PLAINTIFF, v. ELM TREE VILLAGE, A CORPORATION OF THE STATE OF NEW JERSEY; ESTATE OF EARL E. EBY, DECEASED; LEONARD G. BROWN AND DOROTHY M. GEIGER, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided March 4, 1971.

      Mr. Herman Eapp for plaintiff (Messrs. Eapp and Finhel, attorneys).

      Mr. Ralph N. Solodar, attorney for defendant.
   Herbert, J. S. C.

Plaintiff is one of the victims of defendant Leonard Brown. In March of 1966 he was induced by Brown to convey real estate at 415 Prospect Street, East Orange, to defendant Elm Tree Village, a corporation which Brown controlled. A little later plaintiff bought and paid for the real estate at 409 Prospect Street, East Orange, but at Brown’s persuasion took title in the name of Elm Tree Village. Brown acted as plaintiff’s attorney in these transactions. At the time plaintiff thought Brown was his friend and an honest lawyer.

This suit is for relief against the consequences of the fraud perpetrated by Brown. No appearances were entered in this action by Brown or by Elm Tree Village. After defaults were entered against those defendants and proofs were taken, judgment in this cause was entered on September 15, 1970 transferring title of the two properties from defendant Elm Tree to plaintiff. The question now presented is whether plaintiff has recovered title subject to mortgages purportedly placed on the real estate by Elm Tree Village while the record title stood in the name of that corporation, or are the mortgages in question invalid because of Elm Tree’s loss of corporate standing at a date earlier than the date of any of the mortgages? Plaintiff now moves for judgment declaring the mortgages invalid and takes the position that the essential facts are undisputed.

There are three mortgages in question. Two are dated April 17, 1967 and one is dated December 4, 1968. Each one has the appearance of being the corporate act of Elm Tree Village. Each was signed by defendant Brown as president and the defendant Geiger as secretary. In all three documents the mortgagee is designated: “Estate of Earl E. Eby, Helen P. Maguire and Harold A. Chapell, Executors * * Mme than three months before the earliest of the mortgages the charter of Elm Tree Village was repealed on January 3, 1967 by proclamation of the Governor for failure to pay taxes. -N. J. S. A. 54:11-1 et seq. The 'Governor’s proclamation naming Elm Tree and many other corporations is printed in L. 1967, vol. 1 at 1073 et' seq. By authority of N. J. 8. A. 54 :ll-2 the proclamation specifically declared “that all powers conferred by law upon such corporations and each of them, shall hereafter be inoperative and void.” (at 1210).

The Eby estate was also a victim of Brown’s crimes. Brown, Helen P. Maguire and Harold A. Chapell were co-executors and trustees under the Eby will until Brown’s powers were suspended and Brown was thereafter, on March 15, 1967, removed from office. The claims of the Eby estate against Elm Tree Village are set forth in the affidavit of Morris J. Oppenheim which was filed in opposition to plaintiff’s motion for judgment. I quote from that affidavit:

3. At the time of his decease, August 7, 1957, Earl E. Eby was the owner of 75 shares and Leonard G. Brown was the owner of 25 shares of the stock of Elm Tree Village, a corporation of New Jersey. Said stock represented all of the issued and outstanding stock of said corporation. After Eby’s decease, Brown represented that he had an arrangement with Eby to purchase all of Eby’s Elm Tree Village stock. Pursuant to such representations the executors agreed to sell and on or about December 15, 1969 assigned to Brown the estate’s 75 shares of such stock for the price of $125,000.00 subject to court approval. The sale was eventually approved by the court by Order dated June 13, 1968.
4. At the time of his decease, Elm Tree Village was indebted to Earl E. Eby in the amount of $70,000.00 secured by a mortgage on its real estate. After Eby’s decease, the executors loaned additional moneys to Elm Tree Village, namely: $15,000.00 on February 26, 1959, $10,000.00 on July 10, 1959 and $55,000.00 on August .4, 1960, it being intended that all such loans were to be secured by Mortgage on Elm Tree Village real estate. It was found, from the Final Account filed by Leonard G. Brown pursuant to Court Order, that the $70,000.00 Mortgage which Eby held had been discharged or cancelled of record subsequent to his decease and that the entire aggregate amount of the loans, $150,000.00 was unsecured, no mortgages having been made and executed as intended.
5. Exceptions having been filed to Brown’s Accounting, and on the basis of court proceedings, an Order was entered in the Essex County Court, Probate Division, dated September 20, 1967 which ordered (among other things) that as partial security there be executed and delivered to the executors of the Eby Estate, a first Mortgage on 415 Prospect Street, East Orange, N. J. in the amount of $27,500.00 and a second Mortgage on #409 Prospect Street, East Orange, N. J. in the amount of $10,000.00 subject to a first Mortgage in the amount of $12,000.00. In compliance with said Order there was executed by Elm Tree Village and delivered to the executors the Bond of Elm Tree Village dated April 17, 1968 in the amount of $10,000.00 together with a Mortgage on # 409 Prospect Street, East Orange, N. .T. of the same date to secure the said Bond and the Bond of Elm Tree Village in the amount of $27,500.00 dated April 17, 1967 secured by Mortgage on #415 Prospect Street, East Orange, N. J. of the same date to secure the said Bond.
6. The First Mortgage on #409 Prospect Street, East Orange, N. J., referred to in the preceding paragraph, was held by Albert B. Vreeland, Executor of the Estate of Barbara S. Rowland. The Mortgage having been defaulted, a suit was instituted in the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F 3252-67 for its foreclosure. Joseph E. Higi was not a party and made no application in that action. As a result of the foreclosure action, the mortgage held by Vreeland was paid. Also as a result, an Order was made by the Essex County Court, Probate Division dated December 4, 1968 which ordered that another Mortgage be made and executed by Elm Tree Village and delivered to the executors of the Estate in the amount of $12,500.00 as additional security for the corporation’s indebtedness to the estate. In compliance with said Order, Elm Tree Village executed and delivered its Mortgage in that amount dated December 4, 1968.

If this case had to he decided by balancing the respective equities of plaintiff and the Ehy estate, there perhaps would he factual questions requiring trial. I am not entirely certain about that. However, there is no question but that the charter of Elm Tree Village was repealed January 3, 1967 and has never been restored. A Governor’s proclamation does not entirely destroy a corporation named in it, but merely suspends the powers of the corporation until there has been compliance with N. J. 8. A. 54:11 — 5, which permits reinstatement upon payment of the delinquent taxes. J. B. Wolfe, Inc. v. Salkind, 3 N. J. 312 (1949). That case also announced the rule (at 320) that “a reinstatement of a repealed charter relates back to the date of the proclamation of repealer and validates corporate action taken in the interim.”

The charter of Elm Tree Village having been repealed before the dates of the mortgages in question, and never having been reinstated, can there be any basis for holding those mortgages valid? I think not. To hold them valid would be to regard a corporation which has lost its charter for nonpayment of taxes just as much an effective entity to create mortgage liens on real estate as a corporation in good standing. The policy considerations behind measures in aid of collection of taxes are plainly strong ones, and the Legislature has indicated an especially forceful policy in this particular area by making it a misdemeanor for anyone to “exercise or attempt to exercise any powers under the charter of any such corporation after such proclamation [by the Governor] shall have been issued * * *.” N. J. S. A. 54 :11-3.

When Elm Tree Village lost its charter it became subject to N. J. 8. A. 14:13-4, which reads as follows:

All corporations, whether they expire by their own limitation or be annulled by the legislature or be otherwise dissolved, shall be continued bodies corporate for the purposes of prosecuting and defending suits by or against them, of enabling them to settle and close their affairs, of disposing of and conveying their property and of dividing their capital, but not for the purpose of continuing the business for which they were established.

The facts surrounding the giving of the purported mortgages to the Eby estate are described in the paragraphs quoted above from Oppenheim’s affidavit. Nothing there appears to bring the mortgages within the scope of section 4. They were not for the purpose of winding up the affairs of Elm Tree Village, but rather appear to have been signed for the purpose of improving the position of the Eby estate by converting its existing claims against Elm Tree from an unsecured position to — at least in part — a secured one. Nor is there even a suggestion in the form of the three mortgages that they or any of them were being given by trustees in dissolution of Elm Tree Village, as required by the statute then in effect. N. J. S. A. 14:13-5. Compare N. J. S. A. 14A:12-9(2).

Authorities from other jurisdictions support the conclusion that these mortgages must be regarded as nullities. Burgess Battery Co. v. Solar Light Co., 266 F. 368 (2 Cir. 1920), a New Jersey corporation; New Hampshire Fire Ins. Co. v. Virgil & Frank’s Locker Service, 302 F. 2d 780 (8 Cir. 1962), a Missouri corporation; Shumway v. Earley, 56 Ariz. 124, 106 P. 2d 194 (1940), an Arizona corporation; Chevron Oil Co. v. Clark, 291 F. Supp. 552 (D. Miss. 1968), a Mississippi corporation; Houston v. Utah Lake Land, Water & Power Co., 55 Utah 393, 187 F. 174 (1919), a Utah corporation. Also see 16A Fletcher, Cyclopedia of Corporations, (perm. ed. 1962), § 8137 at 306 and 307 (1962).

A secondary argument for the Eby estate is that action taken by the Essex County Court in relation to the Elm Tree-Eby mortgages gives them validity. That argument has no bearing on the particular question at hand. Though the mortgages were approved by it, the County Court could not restore the corporate powers of Elm Tree Village and, I am sure, assumed the existence of capacity to make mortgages as a prerequisite to carrying out the transactions being approved.

My ultimate conclusion is that the three purported mortgages from Elm Tree Village to the Eby estate are invalid and are to be cancelled of record. A judgment to that effect may be submitted.


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

text:
    SIDNEY L. BRODY, PLAINTIFF, v. CITY OF MILLVILLE, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided March 3, 1971.

      Mr. Anthony Buonadonna for plaintiff (Messrs. Tuso and Cruccio, attorneys).

      Mr. Edward Miller for defendant City of Millville.

      Mr. Bennett I. Bardfeld appeared for City of Vineland.
   Horn, A. J. S. C.

By this action in lieu of prerogative writs plaintiff challenges the authority of the City of Millville (city, or Millville) to enter,into certain leases and contracts with Airwork Service Division, a division of Pacific Air-motive Corporation (Airwork) and to borrow money for the purpose of erecting buildings and facilities to lease to Airwork.

The parties stipulated that another issue regarding the tax status of the land and buildings so utilized by Airwork is under review by the Division of Tax Appeals. Consequently, this issue is excluded from consideration.

The events leading to this action commenced during World War II. As part of the war effort the Federal Government established within the corporate limits of Millville a military airport as a staging area for military aircraft. The facility, including runways and buildings, was of a size and capacity to accommodate aircraft larger and more numerous than ordinarily would be essential for a municipality the size and population of Millville and its environs.

Following the war the entire complex was ceded to the city, which has since operated same as a public utility. N. J. S. A. 40:8-2.1 Shortly thereafter a predecessor of the presently constituted Airwork entered into a lease with Mill-ville whereby it occupied some of the buildings, runways and aprons in connection with its business of repairing and servicing aircraft motors. However, the unoccupied portions continued to be used as a municipal airport.

As Airwork’s business expanded over the ensuing years many different leases were negotiated with the city to permit Airwork to utilize more of the available space. On July 3, 1962 all existing leases were consolidated into what is known as the “master lease.” This instrument recognized that title to certain buildings previously constructed by Air-work was vested in Airwork and that title to certain others was vested in the city. It provided that ownership and title to all buildings would vest in the city at the termination of the lease on December 31, 1970. The instrument also fixed the rents to be paid by Airwork to the city. It recounted the obligations of each of the parties with respect to providing fire insurance so that all buildings were protected. Rent for buildings owned by the city was fixed at 25e per square foot. Bent for buildings “owned” by Airwork was fixed at $1 per year.

On September 17, 1968 these parties executed another agreement providing for the construction by Airwork of a hangar, taxiway and apron on the facility. By its terms the city leased to Airwork the land on which the hangar was to be constructed as well as the land for the taxiway and apron for a term of 25 years upon the same terms and conditions as the 1962 lease, “except that there shall be no rent during said term.” This document further provides that title to the building is to vest in the city at the expiration of said term and that at the expiration of said term “the parties agree to negotiate a new lease at a price to he then agreed upon hut not to be in excess of a figure then calculated to be equivalent to 40e per square foot at the 1968 level.”

On February 3, 1970 the city and Airwork entered into still another agreement whereby the former agreed to construct for the use of Airwork a hangar and an addition to a building already occupied by Airwork under lease with the city. This instrument further provided for the making of a lease for the hangar and addition for 20 years, subject to the applicable terms of the master lease at a rental of $1.70 per square foot and a further lease for same upon its termination for an additional term of not less than ten years at a rental to he negotiated. The city then adopted ordinance 3-1970 directing the issuance of bonds to raise funds for the improvements contemplated by this agreement.

Airwork uses the leased premises for repairing aircraft motors and engines which are brought to its plant at the airport by air and surface transportation. Admittedly its business is not confined to the repair of motors, which only incidentally require servicing when at the airport. In the future Airwork will probably expand its operations at the airport to include repairs to industrial engines which power generating systems.

The city maintains that it requires the additional revenue derived and which may he derived from the leases and contracts with Airwork in order to alleviate the large drain upon its finances required to maintain the airport. Incidental, but by no means minor, benefits are derived from the employment furnished to its citizens by Airwork.

Plaintiff first advances the view that the proposed construction and associated bond issue are invalid because the proposed building is to be used under lease to Airwork for a private purpose instead of “airport purposes,” as required by N. J. S. A. 40:8 — 1. This statute reads as follows:

The governing body of any county and the governing body of any municipality, or either of them, may acquire by gift, grant, purchase, condemnation or in any other lawful manner real estate or any right or interest therein for airport purposes and so use lands theretofore acquired for other public purposes and being used for airport purposes and erect thereon and maintain buildings for the airport purposes.
Upon such acquisition or use, the governing body of any county and the governing body of any municipality, or either of them, may lease the real estate, so acquired, with or without consideration to the state of New Jersey, or any agency thereof, or may lease it to any person for such consideration and for such term of years as may be agreed upon. [Emphasis added]

He asserts that renting the existing buildings and building the new structures for rental to Airwork constitute the ultra vires engagement by the city in private business.

I do not agree that this properly describes an activity proscribed by law. Rather the issue is simply whether the proposed action is authorized by law, either expressly or impliedly.

Although the language of N. J. S. A. 40:8-l authorizes the erection of buildings for airport purposes, it does not delimit the construction of buildings for other purposes. I do not find that any statute of this State evinces a. prohibition against such construction. Other statutes may be read in pari materia. Brewer v. Porch, 53 N. J. 167 (1969); City of Clifton v. Passaic County Board of Taxation, 28 N. J. 411 (1958); Palmer v. Kingsley, 27 N. J. 425 (1958).

N. J. S. A. 40:60-42 authorizes municipalities to lease to any person any land or building not presently needed fox public use. Its language is broad enough to authorize leases of less than the entire airport property for either airport or other purposes.

In Cordingley v. Borough of Mendham, 12 N. J. Misc. 331, 171 A. 158 (Sup. Ct. 1934) cited by our present Supreme Court in Schwartz v. Borough of Stockton, 32 N. J. 141 (1960), the court upheld the validity under this statute of the lease of a building by a borough to a lumber company. See also Camden Plaza Parking v. Camden, 16 N. J. 150 (1954); N. J. S. A. 40 :28-3(b).

In our State, municipalities are endowed with powers expressly conferred as well as purposes necessarily or fairly implied in or incident to the powers expressly conferred. Camden Plaza Parking v. Camden, supra. Courts are enjoined to construe liberally, in favor of municipalities, laws concerning them. Bruno v. Long Branch, 21 N. J. 68, 71 (1956) ; N. J. Const. (1947) Art. IV, § VII, par. 11.

N. J. S. A. 40 :28 — 3, which governs county airports, demonstrates that the Legislature intended to grant broad powers to counties in establishing and operating airports. No persuasive reason appears to indicate that it was intended to grant broader powers to counties in this area than to municipalities.

Plaintiff relies on the following cases in support of his position that the actions of the city are ultra vires: Shell Oil Co. v. Bd. of Adjustment, Hanover Tp., 38 N. J. 403 (1962); Borough of Moonachie v. Port of N. Y. Authority, 38 N. J. 414 (1962); Todd Shipyards Corp. v. Township of Weehawkin, 45 N. J. 336 (1965).

Shell Oil dealt with the question of whether the use of part of the airport property for a gasoline station was barred by the zoning regulations of the municipality in which the airport site lay. The court held that it was so barred because the proposed use was unrelated to “airport purposes.” Justice Haneman said that “(t)he test to be applied to a land nse in order to ascertain whether it qualifies for an immunity from local zoning regulations is whether it is reasonably accessorial or incidental to the primary purpose sought to be advanced by the creation of the separate authority.” At 38 N. J. 409. The site in question was so located as to cater to the traveling public in general; not specifically to those using the airport. Thus, the holding is not that the airport land could not be rented for a purpose foreign to airport purposes; but only that if part of the airport lands were leased for purposes unrelated thereto, the use must comply with the zoning requirements of the municipality having jurisdiction. Actually, this case supports the views of defendants because it recognizes that a portion of municipal airport property may be rented for a use unrelated to airport purposes and also because of its recognition of the right of a municipality to foster the development of a part of the airport lands for commercial purposes.

The question in Moonachie, supra, was whether the Borough of Moonachie had the right to tax land acquired by the Port 'of New York Authority lying within its borders, and a building constructed by the Authority specifically for a tenant whose use was totally unrelated to “airport terminal purposes.” The court held that since the land was acquired and held for airport terminal purposes, it could not be taxed; but that the building which was unrelated to such purposes was taxable. No question was raised in the case with respect to the power of the Authority to lease the building for the purposes described in the lease.

Todd Shipyards, supra, does not support plaintiffs view. That case revolved about N. J. S. A. 54:4-2.3, which provides that when real estate is exempt from taxation and is leased to one whose real property is not so exempt, and the leasing does not make the real estate taxable, the leasehold estate shall be taxed as real estate to the lessee.

The attack upon the validity of the bond issue under ordinance 3-1970 rests upon two premises. The first is that since the city allegedly may not rent any portion of the airport property for the private purposes of Airwork, the subordinate undertaking to make such lease is likewise invalid. Second, that Art. VIII, § III, pars. 3 and 3 of our 1947 Constitution prohibit this course of action by Millville.

Plaintiff does not contend that there is any other legal impediment to the issuance of the bonds and to build the structures, but only that since the purpose of building is ultra vires, the entire transaction is invalid.

The above constitutional paragraphs are as follows:

2. No county, city, borough, town, township or village shall hereafter give any money or property, or loan its money or credit, to or in aid of any individual, association or corporation, or become security for, or be directly or indirectly the owner of, any stock or bonds of any association or corporation.
3. No donation of land or appropriation of money shall be made by the State or any county or municipal corporation to or for the use of any society, association or corporation whatever.

Roe v. Kervick, 43 N. J. 191 (1964), construed these provisions to hold that if public funds are used for beneficent public purposes, governmental in nature, albeit the recipients are private entities, the State constitution is not contravened. The mere fact that a private advantage may incidentally result does not affect the constitutional validity of the transaction. See Whelan v. N. J. Power & Light Co., 45 N. J. 337 (1965).

The reason why these sections were incorporated into our Constitution as amended in 1875 was because of a practice that had grown up very largely in the West in the furtherance of aid to railroads and other private corporations. But where municipalities obtain a benefit by such a transaction, the Constitution is not flouted. Carr v. Borough of Merchantville, 102 N. J. L. 553, 556 and 557 (Sup. Ct. 1926); Camden v. South Jersey Port Comm., 2 N. J. Super. 278 (Ch. Div. 1949), aff’d and mod. 4 N. J. 357 (1950). The constitutional restrictions "must be applied according to their essence, understood in the light of the evil that led to their adoption.” Whelan, supra, 45 N. J. at 247; 64 C. J. S. Municipal Corporations § 1870, at 429.

Whelan decided that a municipality could validly enter into a contract with a public utility electric company whereby the municipality would construct two reservoirs which would extend its water facilities and would provide the electric company with means of generating hydroelectric power through facilities to be constructed by the utility company under the contract. The Court said:

The City’s motivation is confined to its own water business; it has no interest in meeting the electric power needs of the area.
The case at hand actually presents none of the difficulties discussed in Roe v. Kervich, for here the municipality entered into a bargain solely for its own dollar profit. It decided it would accomplish more at a lesser unit cost if it so arranged its project that a public utility could simultaneously advance its separate interests, [at 247].

Certainly the form that the transaction takes for the purpose of accomplishing the municipal benefit is not the criterion for determining the validity thereof.

In Roe v. Kervick, supra, the court sustained a statute under which the State and a municipality, in conjunction with the Federal Government loaned money to finance development projects, privately owned and operated for private profit, in order to provide job opportunities in economically distressed areas, saying:

The concept of public purpose is a broad one. Generally speaking, it connotes an activity which serves as a benefit to the community as a whole, and which, at the same time is directly related to the functions of government. Moreover, it cannot be static in its implications. To be serviceable it must expand when necessary to encompass changing public needs of a modern dynamic society. Thus it is incapable of exact or perduring definition. In each instance where the test is to be applied the decision must be reached with reference to the object sought to be accomplished and to the degree and manner in which the object affects the public welfare. [42 N. J. at 207]

See also Newark v. Essex County Board of Taxation, 54 N. J. 171, 187 (1969), cert. den. City of Newark v. Port of New York Authority, 396 U. S. 987, 90 S. Ct. 483, 24 L. Ed. 2d 452 (1969).

Very recently our Supreme Court again recognized that municipalities were properly concerned with the economic problems of its citizens and that action reasonably taken by them toward betterment, where tied to authorized projects, serve a public purpose for the general welfare of the city. Levin v. Township Committee, Bridgewater Tp., 57 N. J. 506 (1971).

In the case at bar it is conceded that there is ample statutory authority for the city to maintain an airport. There is no limitation on the size. The airport’s facilities are presently greater than the population of the area requires. The size was the result of the fortuitous circumstances of its acquisition. The contracts heretofor made between Millville and Airwork, and those hereinafter contemplated, were and are primarily focused upon relieving the municipality of either raising by taxation substantial sums to meet the maintenance charges or reducing the size or surrendering the airport facility.

Seducing the size or surrendering the facility may carry with it unfavorable economic impact. The city is charged only with the exercise of its discretion in good faith. Plaintiff does not assert that the municipality has acted in bad faith. However, he claims that the city exercised poor judgment in connection with the consideration exacted from Airwork.

Although grossly insufficient consideration for a lease of municipal property may constitute a violation of the above constitutional prohibitions, East Orange v. Bd. of Water Com’rs, etc., 79 N. J. Super. 363 (App. Div. 1962), aff’d on other grounds 41 N. J. 6 (1963), plaintiff has not offered any proof by affidavit to support his contention. R. 4:46.

Jamouneau v. Local Government Board, 6 N. J. 281 (1951), does not militate against defendants. In that case there was nothing to be considered except the income or monetary consideration. It did not involve, as here, the maintenance of an authorized municipal facility.

Einding as I do on this motion that the challenged actions of the city were and are valid, summary judgment will be entered in favor of the defendants.


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

text:
    WILLIAM S. RUDDEROW, WILLIAM X. BONNER AND MARYANNE A. BUSHA, PLAINTIFFS, v. THE TOWNSHIP COMMITTEE OF THE TOWNSHIP OF MOUNT LAUREL, THE TOWNSHIP OF MOUNT LAUREL, A MUNICIPAL CORPORATION, AND HANNAH A. ROSING, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided March 4, 1971.
    As Amended March 25, 1971.

      Mr. William B. Scatchard, Jr., for plaintiffs (Messrs. Cape-hart and Scatchard, attorneys).

      Mr. Malcolm L. Bloch for defendants (Messrs Beck and Block, attorneys).
   Martino, A. J. S. C.

This is an action in lieu of prerogative writs to determine the legality of a tentative approval granted by defendant township for a planned unit development granted under the provisions of an ordinance which was adopted under the legislative mandate of N. J. S. A. 40:55-54 et seq.

On or about April 10, 1970 the township committee by majority vote adopted certain findings of fact as required by N. J. S. A. 40:55-61 and adopted a resolution granting tentative approval to the developer.

The plaintiffs, who are taxpayers of defendant municipality, contend that the approval by the township was improperly granted for reasons which will be revealed in the course of these conclusions.

One facet of plaintiffs’ contentions requiring primary consideration is the interpretation of a section of the statute, N. J. S, A. 40:55-57(a), which was adopted word for word in the ordinance. That section reads:

(a) Permitted uses. An ordinance adopted pursuant to this act shall set forth the uses permitted in a planned unit development, which uses may include and shall be limited to (1) dwelling units in detached, semidetached, attached, groups of attached or clustered or multistoried structures, or any combination thereof; and (2) any nonresidential use, to the extent such nonresidential use is designed and intended to serve the residents of the planned unit development, and suoh other uses as exist or may reasonably be expected to exist in the future, and (3) public and private educational facilities, and (4) industrial uses and buildings. [Emphasis added]

While it is conceded that the first portion of the underlined section, ending with the word “development” limits the extent of the nonresidential uses, defendant owner-developer contends that the latter part of the underlined portion and other sections of the statute and ordinance would permit nonresidential uses to serve others outside the area of the planned unit.

Parenthetically, it should be noted that the political complexion of the township has changed since tentative approval was granted, and the township as now constituted does not oppose plaintiffs’ cause of action.

Planned unit development had its genesis when the Urban Land Institute, which is an independent, nonprofit organization incorporated under the laws of the State of Illinois, initiated interest in this new land use philosophy. The statement of objectives of that organization indicates that its interests and activities cover the entire field of urban planning, growth and development. Among the principal purposes of the Institute are to study and to interpret trends in real property and to seek their orientation in the changing economic, social and civil needs of the country; to study principals and methods by which urban land can be developed and improved most efficiently, and to act as a clearing house in this field for the dissemination of information in the form of ease material, monographs and technical journals. Members of the Washington, D. O. — based Institute include land developers, builders, architects, city planners, investors, planning and renewal agencies, financial institutions and others professionally interested in land uses. This organization issues technical bulletins. Urban Land Institute Technical Bulletin No. 52 first brought to light a model statute; the authors of which were two lawyers from the State of Illinois and Jan Krasnowiecld, a Professor of Law of the University of Pennsylvania. The model statute was to apply to those developments which were residential in nature, and was referred to as a Planned Unit Eesidential Development (PUED).

Our statute was not to be so limited. Its title removes the word “residential” and reads, “Municipal Planned Unit Development Act.”

However, when our Legislature adopted the present statute it used the language in the model statute, viz., “any non-residential use, to the extent such non-residential use is designed and intended to serve the residents of the Planned Unit Development,” and added to this the words, “and such other uses as exist or may reasonably be expected to exist in the future.”

Planned unit developments have received favorable comments in law reviews in all parts of this country. The efforts of those seeking imaginative, flexible and creative results from planning, zoning, and land use control have recently been concentrated on planned unit developments. 35 Mo. L. Rev. 27 (1970); also see John D. Johnston, Jr., “Developments in Land Use Control,” 45 Notre Dame Lawyer 399, 402 (1970); “Zoning: Planned Unit Development — The Attorney and the City Planner,” 22 Okla. L. Rev. 108 (1969); “Kentucky Planning and Land Use,” 56 Ky. L. J. 598 (1968).

Many developers are disenchanted with our contemporary massive development of uniform housing types, be they of the single-family or multi-family variety. Lloyd, “A Developer Looks at Planned Unit Development,” (Symposium: Planned Unit Development), 114 U. of Pa. L. Rev. 3 (1965). More than 30 years ago Radburn, New Jersey showed how man and automobile both gain from a super block planned with central park, a peripheral collector street, and quiet, safe, residential lanes between. Hanke, “The EHA’s View,” U. of Pa. L. Rev., supra, at 15. The existing controls, it is often noted, tend to focus on the individual lot, a focus which makes sense where development occurs on an individual lot basis but which offers the residential developer nothing better than a “cookie cutter” with which to create. Krasnowiecki, “A Law Professor’s View,” Id., at 47.

Earlier we referred to. the fact that the ordinance under permitted uses was word for word with the statute, with the reference to the restricted quantum of nonresidential uses. In addition to the restriction set forth under permitted uses, the ordinance' under paragraph 111, D-l, again states, “* * * commercial uses and buildings designed and intended to serve the residents of the planned community.” (Emphasis added)

No provision in the developer’s plan is made for industrial, although the area selected was zoned industrial, and N. J. 8. A. 40:55-57(a) (4) provides for industrial use. The developer concedes that the development, as far as the commercial structures are concerned, far exceeds the need of those who will occupy the dwelling units to be constructed in the planned community. The developer contends that under a planned unit development (PUD) there are no restrictions on the quantum of commercial structures, while there may be under a planned unit residential development (PURD).

The inartistic attempt to draft a proper enabling statute has created confusion as to what was meant by the Legislature. While the enabling statute seems to restrict nonresidential uses, on at least one occasion the ordinance appears to restrict nonresidential or commercial uses in two sections. In attempting to construe the intent of the Legislature, we referred to the history of this legislation, but this proved unenlightening. It appears that on April 4, 1966 Senate Bill 321 was introduced in the State Legislature and it provided for a planned unit residential development (PUED). This died in committee. On January 16, 1967 Senate Bill 60 was introduced and this also provided for a planned unit residential development (PUED). This also died in committee.

On April 10, 1967 Senate Bill 452 was introduced, and this was adopted by both houses with many amendments suggested and incorporated by the Assembly. This bill with its amendments became chapter 61, Laws of 1967, and presently known as N. J. S. A. 40:55-54 et seq. The object in the title was for planned communities, and later the act came to be known as “Municipal Planned Unit Development Act (1967).”

None of the amendments proposed in the Assembly and adopted was directed to the section on permitted uses.

In both Senate Bills 321 and 60, supra, a provision concerning the limitation of nonresidential uses did not contain the additional provision which appears in N. J. S. A. 40 :55-57(a)(2), viz, “* * * and such other uses as exist or may reasonably be expected, to exist in the future(Emphasis added)

There is no Statement annexed to the adopted statute. The fact that the section in question was enlarged upon in the adopted statute may give some reason for the position taken by the developer.

At the suggestion of this court, counsel at a supplementary hearing produced Professor Krasnowieeki, one of the authors of the model statute. The court’s purpose was not to augment the record below, but to attempt to learn better the objectives of this new philosophy. The model statute appears in Urban Land Institute Bulletin Number 52, at 69 and U. of Pa. L. Rev., supra, at 140. While he acknowledged that the Legislature copied provisions of his model statute in N. J. S. A. 40:55-57, particularly under permitted uses, he was unable to clearly establish what was meant by our Legislature when it added the phrase, “* * * and such other uses as exist or may reasonably be. expected to exist in the future." (Emphasis added)

He made it clear that his model statute pertained to planned unit residential development (PURD), although he saw nothing wrong in a statute which would enlarge upon the scope and purpose of the philosophy which was the basis for the model statute.

One of the objectives of a planned unit development is to provide for common open spaces, and it permits a developer to disregard the density or intensity for land use as provided in a zoning ordinance previously enacted under N. J. S. A. 40:55 — 30 et seq. However, where intensity is increased, it is assumed that the reduced size of a permitted lot will create the balance of the area exclusive of streets as common open space. U. of Pa. L. Rev., supra, at 49.

Our statute, N. J. 8. A. 40:55-57(e), states:

* * * an. ordinance * * * shall require that any common open space resulting from the application of standards for density or intensity of land use he set aside for the use and benefit of the residents in such development * * *.

An examination of the local ordinance does not specifically seem to follow this requirement. However, the ordinance does limit such open space to 15% of the total residential area, and the township’s findings as required by the statute in section 11 of the ordinance fail to indicate any specific conclusion as to the purpose, location and amount of the common open space, although it is required to do so. N. J. S. A. 40:55-61(b)(3).

Article 4, § 6, para. 2 of our State Constitution provides:

The Legislature may enact general laws under which municipalities, other than counties, may adopt zoning ordinances limiting and restricting to specified districts and regulating therein, buildings and structures, according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land, and the exercise of such authority shall be deemed to be within the police power of the State. Such laws shall be subject to repeal or alteration by the Legislature. [Emphasis added]

N. J. S. A. 40:55 — 31 follows the dictates of the constitutional mandate in providing that a municipality be divided into districts, etc. This very question was decided in Rock Hill v. Chesterfield Township, 23 N. J. 117 (1957).

One of the purposes outlined in our Municipal Planned Unit Development Act provides:

To insure that the provisions of Revised Statute 40:55-30 et seq., which direct the uniform treatment of dwelling type, bulk, density and open space within each zoning district, shall not be applied to the improvement of land by other than lot by lot development in a manner that would distort the objectives of Revised Statute 40:55-30 et seq. [N. J. S. A. 40:55-55].

N. J. S. A. 40:55-30 provides in part:

Any municipality may by ordinance, limit and restrict to specified districts and may regulate therein, buildings and structures according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land, and the exercise of such authority, subject to the provisions of this article, shall be deemed to be within the police power of the State. * * *.

The above statute would seem to imply that the preparation of an ordinance under N. J. S. A. 40:55-54 would require some indication of a district or districts in which a planned unit development can be constructed. The ordinance of defendant municipality declares that any district within the township may he used as sites for planned communities or planned unit development. (Emphasis added) This would appear to be in conflict with the constitutional requirements, supra, and the provisions of N. J. S. A. 40:55-30, which refers to specified districts.

The Municipal Planned Unit Development Act, in its reference to common open space, requires that an ordinance shall contain provisions by which the amount and location of any common open space shall be determined. N. J. S. A. 40:55-57 (c).

The ordinance provides:

The amount, location or locations, types, configuration, topography, and maintenance of open space * * * shall be reviewed and approved by the Township Committee. It shall make detailed findings of the adequacy or inadequacy of the aforementioned items in conformance with the provisions of the enabling legislation. [Emphasis added.]

The findings of fact make no detailed findings of the adequacy of the common open spaces ■— only the conclusionary statement that “the purpose, amount and location of open space as related to the proposed density and type of development is adequate.”

One of the prime objectives of a planned unit development is the availability and quantum of space made possible by the deviation from the usual zoning requirements.

There seems to be some misunderstanding as to open space and common open space. The developer would appear to see no distinction between the terms. In one part' of the ordinance there is a reference to open space in regards to the residential area, and it provides that “suitable land equal in area to at least 15% of the total residential area shall be designated as open space.” Following that provision, there appears another statement which reads:

Usable open space shall be one thousand square feet per multiple family dwelling. Usable open space for multiple-family dwelling units may include patios, landscaped areas of the site, and other areas within a multi-family residential site which can be used for open space purposes, in addition to the 15% common open space. [Emphasis added].

When the ordinance required the detailed findings of the adequacy of open space, a strict interpretation of this provision would require not mere conclusions. The findings should have facts which would justify a basis for that finding.

Local officials must be on their guard, since this type of a development can be used as a subterfuge to evade the provisions of N. J. 8. A. 40:55 — 30 et seq. They must guard against inadequate safeguards in the case of incompetent or impecunious developers.

A careful reading of the various transcripts made of the hearings creates some confusion as to the procedures and substances contained therein. On November 3, 1969 the public hearing was declared concluded. On December 29, 1969 the transcript indicates the mayor announced that in accordance with the decision of the committee the hearings were being reopened. At that meeting the main thrust concerned the economics of the proposed project. This resulted in further hearings, and again the township met on January 21, 1910 and February 9, 1970, when the hearings were concluded.

While a development under a planned unit development philosophy can give advantages to the general public, its abuse can work only to the economic advantage of a developer. In this case a reading of the voluminous testimony of the many public hearings indicates much confusion on the part of the township officials and a continuous hodgepodge of statistics which at times seem inconsistent with other testimony in previous or subsequent hearings.

This is borne out by the resolution of the township committee granting tentative approval to the applicant. It appears that on or about April 10, 1970, after the concluding hearing of February 9, 1970, the township committee granted tentative approval with certain conditions, one of which was that the applicant

Within 30 days of the date of the resolution submit revised tables relating to “proposed land uses and density”, “estimated public school enrollment”, “costs and revenue”, and “anticipated schedule of development, incorporating all up to date information.”

The applicant did file a revised table of “proposed land uses and densities” on April 20, 1970, which indicated that 63.1 acres were to be devoted to commercial use while 56.1 acres were to be devoted to residential. The findings of fact, however, indicate approximately 58 acres devoted to commercial use and fails to delineate the quantum of acreage devoted to residential. The findings do, however, refer to the fact that 975 dwelling units are to be provided, reduced from 1038 as set forth in the original application.

Most of the ordinances which have been examined by the court have delineated percentage-wise the quantum of residential, commercial, industrial and open space in a planned unit development. The Township of East Windsor, Mercer County, New Jersey, by amendment to an ordinance, which amendment was adopted October 2, 1967, divided its municipality into eight classes of districts in which provision was made for the establishment of a planned unit development district. The ordinance was careful to delineate by some means of ascertainment the quantum of residential, commercial, industrial and open space. In Cheney v. Village 2 at New Hope, Inc., 429 Pa. 626, 241 A. 2d 81 (1968), the Pennsylvania Supreme Court passed upon a PUD ordinance which provided for PUD districts in which the uses were confined to percentages and found no fault with that classification.

The ordinance in the case at hand made no provisions as to the quantum of residential uses to be contained in the planned unit development, which may have caused a reduction of such uses as indicated in the findings of fact.

Our present statute on planned unit development needs attention and clarification. Only those who understand this new philosophy and the requirements of N. J. S. A. 40 :55-30 et seq. and our constitutional restrictions, should attempt to mold the statute which would in every detail be consistent with the existing state of the law. While zoning concepts are rapidly evolving, from static specifications referred to as “Euclidean zoning,” after the well-known decision in Euclid v. Ambler Realty Co., 272 U. S. 365, 47 S. Ct. 114, 71 L. Ed. 303 (1926), to flexible techniques which many planners have embraced, there does appear an omnipresent struggle between a land owner-developer attempting to maximize his economic return and the local officials striving to harmonize any such interests with the broader social view of the entire community.

To summarize these findings, it is the judgment of this court that the provision of the statute and the ordinance do not permit the construction of nonresidential uses beyond those intended to serve the residents of the planned community; the ordinance fails to delineate the method common open space should be determined before an approval is granted an applicant; the findings of facts do not fully conform with the facts as they appear of record in behalf of the applicant; the ordinance is invalid in that it does not provide for specific districts as required by the statute and Constitution of this State. Therefore, the tentative approval granted by defendant municipality should be^set aside.