text:
    KENNETH R. AYRES, BERNARD L. ZOVLUCK, AND ANDREW A. VACCARO, PLAINTIFFS-RESPONDENTS, v. TERRE L. DAUCHERT, DEFENDANT-APPELLANT, AND THE MAYOR AND COUNCIL OF THE BOROUGH OF CRESSKILL, A MUNICIPAL CORPORATION, JOHN V. LYONS AND HARRY RANDALL, JR., AND ROBERT E. McGUIRE, PRACTICING LAW UNDER THE FIRM NAME OF RANDALL, RANDALL AND McGUIRE, DEFENDANTS.
    Superior Court of New Jersey Appellate Division
    Argued September 19, 1974—
    Decided October 23, 1974.

      Before Judges Matthews, Ekitz and Bottek.

      Mr. Kurt E. Johnson argued the cause for appellant.

      Mr. Anthony D. Andora argued the cause for respondents (Messrs. Andora, Palmisano & DeCotiis, attorneys).
   The opinion of the court was delivered by

Fritz, J. A. D.

This is an appeal by defendant Terre L. Dauchert (Dauchert) from an adverse summary judgment in a suit in lieu of prerogative writs challenging his right to sit as a councilman in the Borough of Cresskill. The precise question presented is whether a councilman •— in this case, Dauchert — may extend his term by resigning his seat in order to accept appointment to a different council seat for a longer term, the vacancy of which was also created by resignation.

The facts are neither contested nor complex. Dauchert became a councilman when one Bichard Devlin resigned on September 18, 1973, and Dauchert was appointed to serve until December 31, 1973. Pursuant to statute, the balance of the Devlin term was to be filled at the general election of November 1973. Dauchert ran for the seat in that election and was defeated. By letter of November 12, 1973, another councilman, Eobert Muir, resigned his seat on the council. The term for which, Muir was elected was to expire December 31, 1974. Shortly after Muir’s resignation and some 13 days before the expiration of the term of his appointment, Dauchert resigned his interim councilmanic seat and was forthwith appointed to fill the Muir vacancy. It is that appointment which was successfully challenged below and is the subject of this appeal.

The question presented depends upon a determination of an issue that can be simply stated: Is there in the circumstances before us a sufficient potential for prejudice to the public weal that we should, as a matter of public policy, refuse to implement that which appears to us to be the reasonably clear intention of the Legislature in this regard? Eesolution of the issue is more difficult. Our concern is more intense because we are satisfied for reasons which will appear that the Legislature expressly countenanced the conduct which was enjoined by the decision below in this case, and yet at the same time we can understand the trial judge’s intuitive reaction that such action smacks of perfidy. In the long run, we must measure whether that sense of wrongness — or at least of a potential therefor — is sufficient to support judicial sanctions in the name of public policy.

It is to be noted at the outset that no chicane or fraud is charged here.' Plaintiffs simply urge that a method of apparent self-perpetuation such as that they say was here invoked is contrary to public policy, and that this is especially true where, as here, the voters have rejected the candidate at a regular election. On the other hand, defendant urges that the mayor has been charged with the responsibility of filling vacancies in the elective offices, however created, limited by the advice and consent of the council (N. J. S. A. 40: 87-12 and 13), and that public policy suggests he should not he circumscribed in the performance of this obligation by artificial rules limiting his selection of the best person. We make particular mention of this framework for our determination because we do not doubt the overriding public policy opposed to a conflict of interest, private gain motivation or fraud in the execution of the public trust inherent in the holding of public office. Hazlet Tp. Committee v. Morales, 119 N. J. Super. 29 (Law Div. 1972). Irrespective of our conclusion in the situation before us here, we would not hesitate for a moment to declare the illegality of conduct infected with any of those particular diseases. Driscoll v. Burlington-Bristol Bridge Co., 8 N. J. 433 (1952), cert. den. 344 U. S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952), reh. den. 344 U. S. 888, 73 S. Ct. 182, 97 L. Ed. 687 (1952). But these things are for the most part dependent upon the circumstances of the particular case, see Van Itallie v. Franklin Lakes, 28 N. J. 258, 268 (1958), and our review of the record before us satisfies us of the absence here of any of these improper and illegal elements.

Legislative direction is to be found in N. J. S. A. 40A: 9-155. Enacted as B. 1971, c. 200, effective July 1, 1971, this statute is as follows:

A member of the governing body of a municipality who resigns Ms office as such may be appointed to an office or position required to be filled by the governing body unless the office or position was created by ordinance adopted during the term of office of the member so resigning. In cases of any such appointment the salary of the holder of said office or position shall not be increased during the term of office of the member so resigning.

The legislative history of this particular statute, enacted as it was in a general revision oí Title 40, contains no reference to the section with which we are involved, although there was a substantial conditional veto to the first enactment of this revision. However, prior statutory history and case law is enlightening.

An ancestor of the present statute is to be found in P.L. 1885, p. 178, set forth in 3 Comp. Stats. 3478, § 79. This legislation directed:

That hereafter no member of * * * common council * * v shall, during the term for which he shall have been elected such member be eligible for election or appointment to any office that is now or hereafter may be by law required to be filled by any such * *' * council H’ * *; provided, however, that this act shall not apply to any offices now required by law to be filled from any such appointing body.

In Doughty v. Scull, 96 A. 564 (Sup. Ct. 1915) (not officially reported), this statute was held to prohibit the extension of the term in office of a councilman by the device of his resigning and accepting in lieu thereof the seat of another councilman who had also resigned.

A general revision of the law of municipalities in 1917 incorporated essentially the same statutory provision. L. 1917, o. 152, Art. XXXVII, § 23 (Laws of 1917, p. 461).

With the adoption of the revised statutes in 1937 the statute was reenacted in precisely the same form except for a minor change in form in the provision concluding the statute. R.S. 40:46-5. Between that enactment and the revision appearing at Title 40A, presently extant, amendments eroded the limitation of the statute, including the following:

* * provided, nothing herein contained shall prohibit a councilman * ® from resigning as councilman * * * and being appointed to a position required to be filled by the governing body of a municipality during the time for which he was elected such councilman * * *; provided, further, that said position shall have been in existence and continuously filled for 5 years or more prior to the passage of this act or was created by statute; provided, said position was not created during said term of office; and provided further, that the salary of said office shall not be increased during the term for which said councilman * * * was elected.

The courts were again called upon to answer the question presented in Doughty (and here), but this time under N. J. S. A. 40:46-5, as amended. The result was the same: the statute was held to prohibit the resignation of a councilman to accept a different councilmanic seat. Bernstein v. Krom, 108 N. J. Super. 176 (Law Div. 1969). Because of the amendment to the statute which was to occur shortly after Bernstein v. Krom, it is notable that this opinion construed the statute as it did because the amended statute spoke in terms of appointment to a “position” and the court distinguished the council seat as an “office.” It is true that the judge in Bernstein v. Krom then said that had the Legislature intended to include “office” in the use of the word “position,” he still would have found that public policy precluded the resignation and reappointment proposed in the circumstances of the case before him, but the circumstances of that particular case were sufficiently unique that in his determination in this latter respect he italicized “on the facts of this case."

It is assumed that the Legislature is “thoroughly conversant with its own legislation and the judicial construction of its statutes.” Brewer v. Porch, 53 N. J. 167, 174 (1969). It must therefore be presumed to have known of the foregoing legislative history and of Bernstein v. Krom when the present statute, N. J. S. A. 40A:9-155, was enacted.

This present statute, which controls the case before us, is significantly different from its predecessors. In the first place, it is affirmative and permissive in character, whereas the previous statutes all prohibited something. Secondly, the only prohibition presently attaching is against appointing a resigning councilman for the filling of an “office or position * * * created by ordinance adopted during the term of office of the member so resigning.” Finally, and considering Bernstein v. Krom, dispositively, the statute is no longer expressed solely in terms of a “position,” but the affirmatively expressed competencies of a resigned member are set forth in precise terms of appointment “to an office or position.” We have no doubt that the Legislature, presumed to know the case law, clearly intended to express its displeasure with and correct the result of Bernstein v. Krom, decided less than four months before the introduction of chapter 200 of the Laws of 1971.

As against the suggestion of plaintiffs here that the reference in the statute to the creation of an office or position by ordinance and the reference to salaries demonstrates an intent that the statute should apply only to such an office or position, we observe that we see no such limitation in the statute. While the statute does indeed contemplate filling vacancies where an ordinance and salary are involved, the manner in which the present statute differs from the previous statutes, including the addition of the word “office,” clearly signifies an intent that it should mean much more than that.

Plaintiffs also urge that we read the statute in pari materia with other statutes, pursuant to the mandate of State v. Green, 62 N. J. 547 (1973). While such recourse is purposeful in “resolving doubts or uncertainties” (62 N. J. at 555), and we find no doubt at all in the intent of the statute before us, a search of statutes in pari materia need look no further than N. J. S. A. 40A :9-23, This section, enacted in. the same legislation, prohibits a member of a board of chosen freeholders from filling "any office or position required to be filled by the board” in the first three months subsequent to his resignation. Obviously the Legislature was completely aware of the problem. Had they intended to impose conditions upon the acceptance by a resigned councilman of another “office or position,” they would have said so as they did in N. J. S. A. 40A:9-23.

We are implored to protect plaintiffs’ view of important public policy by interpreting the statute so as to effectuate that public policy, “unless there is absolute evidence that the legislature intended otherwise.” Jersey City Gaslight v. Consumers Gas Co., 40 N. J. Eq. 427 (Ch. 1885). We find no succor for plaintiffs in this entreaty for at least three reasons.

First, reserving for appropriate judicial action the case in which a conflict of interest, private gain motivation or fraud appears, as noted above, and emphatically restating our willingness to prevent that chicane in the circumstances of any given case, we record our belief that the conviction of plaintiffs here and the concern of the judge below that, “To permit such an appointment would mean, taken to its conclusion ad absurdum, that a person would be able to serve his entire adult life on the council, and the public would never have an opportunity to remove him,” substantially overstates the problem, and magnifies policy considerations far out of proportion. For such a result to occur, successive, fortuitous, involuntary resignations would have to occur (or “cooperative” voluntary resignations, presumably of the same political faith in any event), and the voters — unable by hypothesis to vote to remove the councilman — would have to sanction the return to office of the errant appointing mayor. Sight is not to be lost of the fact that although it might be said arguendo that the direct influence of the voter on the councilmanic office is somewhat dissipated, the appointing authority remains uninsulated from the 'heavy imposition of political responsibility and entirely dependent upon the will of the voters for his continuance in office.

As diverted as we may be by a concept which permits a man to resign an office in order to accept an appointment to that same office (but for a longer term), and as naturally suspicious of such conduct as we remain, we are not convinced that the risks are so great we should ignore that which we perceive to be the clear intent of the Legislature or rewrite the legislation so that it may better accord with our views.

Second, for reasons set forth above, we believe the intent of the Legislature to have been clearly expressed and its intention plainly apparent in the statutory revision. In such ease it is improper to usurp the function of the legislative branch under the guise of statutory construction. As was said in Wormack v. Howard, 33 N. J. 139 (1960) :

* * * But while liberality of construction of remedial legislation is desirable, we cannot ignore the plain meaning of the language employed by the Legislature for as was said in Dixon v. Gassert, 26 N. J. 1, 9 (1958) “It is not our function to legislate; it is our duty to interpret. And in doing so we must give effect to the language employed by the legislative body in order to properly effectuate the legislative design.” * * * fat 142]

Bayonne Textile Corp. v. American, &c., Silk Workers, 116 N. J. Eq. 146 (E. & A. 1934), said by plaintiffs to support the proposition that only the most compellingly clear demonstration of legislative intent will serve to override “established policy,” also stands firmly for the “fundamental” proposition that “the intention and policy of [the legislative branch], as expressed in the enactment should be effectuated.” (At 151). While sound public policy and the weal of the people are the concern of all the government, and the judiciary cannot properly shirk the obligation of this concern, in cases where the Legislature has clearly spoken it is the privilege of that body to establish public policy, and the judiciary must not ignore the policy thus established on the ground that its views differ with those plainly expressed by the Legislature.

Thus, and thirdly, we may impose our views of public policy only where, we are truly free to do so: in cases where interpretation and construction of the legislative voice is needed. When the Legislature expresses itself less than perfectly and thereby fails to enunciate matters thought to touch upon public policy, we may and should limit or enlarge the words so as to make them accord with established public policy. This is simply because public policy, once established, carries the credentials of that which is right, and in the doubtful or questionable expression, or in the imperfect statement, we will presume the Legislature intended to do that which is right. Bayonne Textile Corp., supra.

For reasons set forth above, we are satisfied in the matter before us that the legislative expression is quite clear and that we would be judicially legislating were we to do anything but give it effect.

Plaintiffs also argue that the appointment violates Art. II, par. 3 of the 1947 New Jersey Constitution, that every qualified voter “shall be entitled to vote for all officers that now are or hereafter may be elective by the people * * *.” Local municipal offices, and the qualifications therefor, were not the concern of the Constitution, and consequently “the power of the Legislature over them is broad and well established.” Strothers v. Martini, 6 N. J. 560, 563 (1951). The Legislature has the right to determine whether local self-government shall be provided by elective office. This right includes the right, as well, to determine how vacancies should be filled. N. J. S. A. 40:87-12 and 13 provide for interim appointment to borough council vacancies. The Legislature has thus determined that vacancies in municipal office, as contrasted with original terms, shall be filled by appointment. A vacancy, to be filled by appointment pursuant to the statutes, is not an “elective” situation, enjoying the protection of the State Constitution.

Finally, plaintiffs urge that since the appointment in this case was made on motion from a councilman, rather than by the nomination of the executive, within 30 days after the resignation creating the vacancy, it was contrary to statute and void. In the particular circumstances of this case, including but not limited to the fact that the mayor had nominated Dauchert, but had withdrawn the nomination to accommodate the exact question raised here as to the effective date of the resignation which created the vacancy, we are satisfied that the view of the judge below in this regard, describing these arguments as “technical” and refusing to let form “dominate the substance of reality,” is sound. We reject these arguments as he did.

We reverse and declare the legality of the appointment of Councilman Dauchert. No costs.

B otter, J. A. D. (dissenting). Prior to the revision of Title 40, of which N. J. S. A. 40A:9-155 was one of approximately 110 sections in chapter 9 alone (L. 1911, c. 200), N. J. S. A. 40:46-5 generally provided that “during the term for which he shall have been elected or appointed” no councilman could be appointed to an “office” required to be filled by the governing body of which he was a member. However, the statute was amended over the years to allow a councilman to resign from office and be appointed to a “position'” required to be filled by the governing body, so long as the position was not created during his term of office and provided, further, that the salary of “said office" was not increased during the councilman’s term. Those amendments carelessly employed both terms, office as well as position, in the same statute, without apparent purposeful distinction. Although in Bernstein v. Krom, 108 N. J. Super. 176, 180 (Law Div. 1969), the judge held that the words “office” and “position” were not synonymous in this statute, he also said that “even if the Legislature intended to include ‘office’ in the use of the word ‘position’ in N. J. S. A. 40:46-5,” it would not change his holding in the case. Thus, the argument that the Legislature added the term “office” to the stat ute to overturn the holding in Bernstein v. Krom disregards the term “office” in the preexisting statute and the ultimate reasoning of that ease.

• As the majority opinion points out, starting in 1885 there was a clear legislative prohibition against appointment of a councilman during 'his term to “any” office by the governing body of which he was a member. It was held in Doughty v. Scull, 96 A. 564 (Sup. Ct. 1915), that the statute prevented the appointment of a councilman to a longer term than the term for' which he was originally appointed or elected. The statute was amended, apparently to permit a councilman to be appointed to some other position (or office), so long as such position or office was not created or its salary increased during the councilman’s term, and the Bernstein case made it clear that the appointment cannot be to the same council. The ease reaffirmed the view of Doughty, supra, that sound public policy condemned the manipulation by which the term of a councilman might be extended by resignation and reappointment to another vacancy on the same council. The possibility of holding office for successive terms, without ever being elected to such office, is obviously contrary to our basic concept of representative, democratic government. In Dauchert’s case, at hand, we have a councilman who was not elected to his first term of office, and who was defeated when the electorate had the chance to pass on his candidacy. This illustrates the insult to the electorate inherent in such tactics, regardless of his qualifications and the political persuasion of those who voted for his reappointment. (In this case the vote was three to one, apparently along party lines.) It has the potential for self-perpetuation by members of a governing body inimical to the electoral process.

In our statutory scheme of government the membership of municipal governing bodies is determined essentially by public election. In the case of boroughs the law provides for the election of a mayor and six councilmen. N. J. S. A. 40: 87-1. Appointment is the exception (N. J. S. A. 40:87-13) and only to fill vacancies until a successor is cliosen' at the next annual election. N. J. S. A. 40:87-13. The revision of Title 40 did nothing to change this basic mode. For example, in case a vacancy in the membership of a municipal governing body results from a judicial determination ousting someone from office, a special election is called for to fill the va^ caney, although an interim appointment may be made. N. J. S. A. 40A:9-162. (If the majority opinion prevails, conceivabfy even this section might be circumvented by a resignation to avoid ouster, with reappointment to the same vacancy to avoid a special election.) Self-perpetuation of power through manipulated appointments is clearly contrary to the legislative intent expressed by companion statutes. See also N. J. S. A. 40A:9-156, which prohibits appointments to any office whose term is to commence after the expiration of the term of any member of the governing body. We should interpret related provisions of the law “as a homogeneous and consistent whole, giving effect to all their provisions.” Watson v. Jaffe, 121 N. J. Super. 213, 214 (App. Div. 1972), quoted with approval in State v. Green, 62 N. J. 547, 555 (1973).

The majority says that a clear intent to change this policy is found in the revision of this section, which is now N. J. S. A. 40A:9-155. I disagree. The section merely simplified the language of the preexisting statute. The prevailing law, as interpreted by the courts, permitted appointment only to offices or positions other than that of councilman. A councilman could not resign his office simply to be appointed to a vacant office with a longer unexpired term on the same council. This rule did not depend upon his being defeated shortly before in the general election. What the statute permitted and continues to permit is appointment by the mayor and his fellow council members of the resigning councilman to some other office or position. In my view nothing in the new statute demonstrates an intent to change this proposition of law. A councilman is elected or appointed for a given term fixed by statute. (N. J. S. A. 40 :87-9; N. J. S. A. 40:87—13), and the statutory design is to have him stand for election, or reelection, if he wants to continue in office beyond that term. I do not find it persuasive to say that the public has a means of redress at the polls against a mayor and couneilmen who combine to appoint a councilman after he has just resigned from his own expiring term following a defeat at the polls. In fact, this form of redress might not be available against couneilmen in a municipality who are elected on a district or ward basis. See N. J. S. A. 40 :87—6. How would the electorate of one ward strike back against the abuse committed by couneilmen from another ward ?

The majority opinion refers to N. J. S. A. 40A :9—23, which prohibits members of the board of chosen freeholders from filling “any office or position required to be filled by the board” until three months after resignation. This statute merely proves that a stricter inhibition is imposed upon freeholders. The exceptions for appointment to the office of county counsel or county treasurer show that what was contemplated by this comparable statute is appointment to some other position. This more restrictive legislative policy, requiring a three-month hiatus, is, nevertheless, harmonious with the statute in question as interpreted by the courts. It is not persuasive to say the Legislature knew how to express those restrictions in clear terms when it wanted to do so. The three-month disability is clear, but the Legislature did not specifically say whether or not a, freeholder can resign and be reappointed to a vacancy on the same board of chosen freeholders. This is not a case of one Legislature speaking with different tongues for different effects. N. J. S. A. 40A:9-23 is simply a reenactment of N. J. S. A. 40:21—1, without change in substance. Its origin was L. 1918, c. 185, § 216, when the three-month disability period was first introduced. Considering the preexisting judicial interpretation of the statute which was continued in the form of N. J. S. A. 40A:9-155, there was no need for the Legislature to change its content, unless it wished to overturn that interpretation. If that was the objective, it can be argued even more persuasively that the. Legislature should have expressed its intent explicitly. In my view, only the clearest expression of legislative will should be taken to override the important long-standing principles and policy at stake. A purpose opposed to sound public policy, contrary to the spirit of our laws, should not be attributed to the Legislature “except upon the most cogent evidence.” Bayonne Textile Corp. v. American Fed’n of Silk Workers, 116 N. J. Eq. 146, 160 (E. & A. 1934). Where the literal interpretation of a statute, as here, conflicts with public policy, it should be assumed, unless the contrary is clearly expressed, that the Legislature did not intend to abrogate that policy. Spencer v. Morris, 67 N. J. L. 500, 502 (Sup. Ct. 1902); Cahn v. Allen, 124 N. J. L. 159, 160 (Sup. Ct. 1940). The import of the words used should be “enlarged or restrained” to comport with long-established policy, unless a legislative intent repugnant to that policy is clearly manifest. Bayonne Textile Corp. v. American Fed’n of Silk Workers, supra; Conover v. Public Service Ry. Co., 80 N. J. L. 681, 684 (Sup. Ct. 1910). See also Robertson v. Railroad Labor Board, 268 U. S. 619, 627, 45 S. Ct. 621, 625, 69 L. Ed. 1119 (1925), where Mr. Justice Brandéis said, in rejecting a literal interpretation of a statute in favor of a more confined application, “It is not lightly to be assumed that Congress intended to depart from a long-established policy.”

Obviously, it is not for the courts to assert a policy in defiance of the legislative will. But it is the obligation of the judiciary to interpret a statute harmoniously with the purposes and intent of the entire legislative scheme. New Jersey Builders, etc., Ass’n v. Blair, 60 N. J. 330, 338 (1972), holding that the spirit of a statute will prevail over its literal terms. We should not ignore the provisions fixing the terms of members of a municipal governing body, and the method of election thereto. We must avoid interpreting a statute in a way that produces absurd results. New Capitol Bar & Grill Corp. v. Div. of Employment Security, 25 N. J. 155, 160 (1957). I would not do violence to the overall legislative scheme, nor sanction an affront to the electorate. As stated by Chief Justice Weiutraub in the New Capitol Bar & Grill case:

•* * * cases inevitably arise in which a literal application of the language used would lead to results incompatible with the legislative design. It is the proper function, indeed the obligation, of the judiciary to give effect to the obvious purpose of the Legislature, and to that end “words used may be expanded or limited according to the manifest reason and obvious purpose of the law. The spirit of the legislative direction prevails over the literal sense of the terms.” Alexander v. New Jersey Power & Light Co., 21 N. J. 373, 378 (1956) ; Wright v. Vogt, 7 N. J. 1, 6 (1951) ; Glick v. Trustees of Free Public Library, 2 N. J. 579, 584 (1949). [at 160]

Thus this dissent. I would affirm the judgment below and invalidate the appointment.

        Shepard’s Citations indicate that certification was denied in Bernstein v. Krom at 55 N. J. 356. This appears not to be so. A companion case, Bernstein v. Thomas, apparently presenting the same question as Krom, was decided the same way in the trial court and affirmed, in an unpublished opinion, by the Appellate Division for the reasons set forth in the Law Division opinion in Krom. It was apparently Bernstein v. Thomas which was denied certification at 55 N. J. 356. Evidently Bernstein v. Krom was not appealed, or if appealed, the appeal was not perfected.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    KATHLEEN ANN PELUSIO, PLAINTIFF-RESPONDENT, v. JOSEPH STEPHEN PELUSIO, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted October 8, 1974—
    Decided October 23, 1974.

      Before Judges Ly^ch, Allcobx and Milked.

      Mandelbaum, Mandelbaum & Gold, attorneys for the appellant (Mr. Barry R. Mandelbaum, of counsel and on the brief).

      Mr. Herman J. Ziegler, attorney for the respondent.
   Per Curiam.

In our view, the counsel fees and costs awarded to the plaintiff wife upon the entry of the final judgment of divorce are as much “necessaries” as are alimony, maintenance and support and, as such, fall within that class of indebtedness excepted from release by a discharge in bankruptcy. 11 U. S. C. A. § 35(a)(7); Turman v. Turman, 438 P. 2d 488 (Okl. Sup. Ct. 1968); Allison v. Allison, 150 Colo. 377, 372 P. 2d 946 (1962). See R. 4:42-9; Williams v. Williams, 59 N. J. 229, 233 (1971).

We find no abuse of discretion in either the subsequent allowance of $1,250 to counsel or the manner and quantum of payment of the total amount still due and owing by defendant to counsel for plaintiff on account of both allowances.

Affirmed.


author: Allcorn, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. EDWARD J. McCARTHY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted September 19, 1974—
    Decided October 23, 1974.

      Eefore Judges Kolovsky, Lynch and Allcorn.

      Mr. Stanley C. Van Ness, Public Defender, attorney for the appellant (Mr. Elliott M. Baurngart, of counsel and on the brief).

      Mr. William F. Hyland, Attorney General, attorney for the respondent (Mr. Julian Wilsey, Deputy Attorney General, of counsel and on the brief).
   The opinion of the court was delivered by

Allcorn, J. A. D.

Defendant appeals his conviction of the offense of illegal possession of narcotics (phenobarbital), entered upon a jury verdict,

The single ground urged for reversal is that the trial judge erred “in admitting into evidence the fruits of an illegal, warrantless search” of the trunk of defendant’s automobile. The argument ignores the significant circumstances that, initially, the police conducted a search of the interior of the passenger compartment of the vehicle which, on the basis of substantial credible evidence, the trial judge found to have been made with the express consent of defendant (not here controverted by defendant), and 'that search, revealed phenobarbital in the glove compartment. Hence, even assuming the search of the automobile trunk to have been illegal and to have disclosed, in the words of counsel for defendant, "possession of an additional quantity of the phenobarbital found earlier in the glove compartment,” no prejudice resulted to defendant by the admission of the additional phenobarbital.

At all events, under the circumstances here present the warrantless search of the trunk of the automobile was entirely valid; there was no violation of the Fourth and Fourteenth Amendment rights of defendant. According to the evidence adduced on the motion to suppress, after defendant and Mrs. Burdge arrived at the Trott Inn, defendant opened the trunk of his automobile, removed from it a clear plastic bag containing green vegetable matter which he exhibited to Mrs. Burdge, at the same time informing her that it was "grass”; when she told him she did not want any “he put it back and locked his trunk and * * * his car, and we went in the Trott Inn.” Mrs. Burdge thereupon telephoned the police, who dispatched two officers to Trott Inn.

Upon arrival of the officers at Trott Inn one of them interviewed Mrs. Burdge and she related to (him the fact that defendant had exhibited and "had offered her grass,” and that it was "in the trunk of the car”. The officer then questioned defendant. Despite his denial of the "grass” incident related by Mrs. Burdge, defendant agreed to allow the officers to look inside the vehicle, gave them the key to the passenger compartment, and accompanied the officers and Mrs. Burdge to the parking lot. A search of the passenger compartment revealed in the glove compartment zig-zag papers (used commonly for rolling marihuana cigarettes) and three ampuls of a clear liquid ultimately determined to be phenobarbital. When asked what the ampuls were for, the defendant gave no answer.

After completing their search, of the passenger compartment the officers attempted but were unable to open the trunk with the key originally given them by defendant. Although the officers requested defendant to give them the key to the trunk, he did not supply it. (It was subsequently found concealed in one of the socks being worn by defendant.) The officers then escorted defendant and Mrs. Burdge to headquarters; defendant’s automobile (which bore Vermont registration plates) was locked by the officers and left standing in the Trott Inn parking lot, in the care of an off-duty officer who had been asked to “stand by the vehicle.”

At police headquarters the officers’ renewed request of defendant to supply the trunk key still was unproductive. They thereupon obtained elsewhere a key that would open the trunk and returned to the Trott Inn parking lot, without defendant. There the trunk was opened, and a search revealed a clear plastic bag containing vegetable matter later found to be marihuana, five ampules of phenobarbital, a hypodermic syringe and two hypodermic needles.

Prom the foregoing it is plain that at the time the initial search of the automobile was made, the police officers had probable cause to believe that a violation of the Controlled Dangerous Substances Act (N. J. S. A. 24:21-1 et seq.) was being or had been committed by defendant, and that the automobile trunk contained articles that the officers were entitled to seize. Those same circumstances also justified the making of a search of the entire vehicle, including the trunk, without a warrant and without the consent of defendant. In short, at the time of initial search there were plentiful facts associating the automobile with a violation of the Controlled Dangerous Substances Act which, coupled with the mobility of the automobile, would have made a warrantless search proper then and there. Chambers v. Maroney, 399 U. S. 42, 90 S. Ct. 1975, 26 L. Ed. 2d 419 (1969), ret. den. 400 U. S. 856, 91 S. Ct. 23, 27 L. Ed. 2d 94 (1970).

Given the propriety of a warrantless search of the entire automobile initially, the lapse of time between the moment when the police locked the automobile and left it in the keeping of the off-duty officer at the Trott Inn parking lot and their return with a key for the trunk in no way detracted from the right and authority of the police to conduct the warrantless search of the automobile and its trunk upon their return. This, notwithstanding the fact that the search was not incident to the arrest of the defendant and without regard to the fact that the police could have further retained custody of the automobile pending application for and issuance of a search warrant. Chambers, supra. See Cady v. Dombrowski, 413 U. S. 433, 93 S. Ct. 2523, 37 L. Ed. 2d 706 (1973); State v. LaPorte, 62 N. J. 312 (1973).

As the court stated in Chambers in upholding the validity of a warrantless search of an automobile sometime after it had been stopped and taken to police headquarters, which search was not incident to arrest:

Neither [Carroll v. United States, 267 U. S. 132, 45 S. Ct. 280, 69 L. Ed. 543 (1925)1 nor other cases in this Oourt require or suggest that in every conceivable circumstance the search of an auto even with probable cause may be made without the extra protection for privacy that a warrant affords. But the circumstances that furnish probable cause to search a particular auto for particular articles are most often unforeseeable; moreover, the opportunity to search is fleeting since a car is readily movable. Where this is true, as in Carroll and the case before us now, if an effective search is to he made at any time, either the search must be made immediately without a warrant or the car itself must be seized and held without a warrant for whatever period is necessary to obtain a warrant for the search.
In enforcing the Fourth Amendment’s prohibition against unreasonable searches and seizures, the Court has insisted upon probable cause as a minimum requirement for a reasonable search permitted by the Constitution. As a general rule, it has also required the judgment of a magistrate on the probable-cause issue and the issuance of a warrant before a search is made. Only in exigent circumstances will the judgment of the police as to probable cause serve as a sufficient authorization for a search. Carroll, supra, holds a search warrant unnecessary where there is probable cause to search an automobile stopped on the highway; the car is movable, the occupants are alerted, and the car’s contents may never be found again if a warrant must be obtained. Hence an immediate search is constitutionally j)ermissible.
Arguably, because of the preference for a magistrate’s judgment, only the immobilization of the car should be permitted until a search warrant is obtained; arguably, only the “lesser”’ intrusion is permissible until the magistrate authorizes the “greater.” But which is the “greater” and which the “lesser” intrusion is itself a debatable question and the answer may depend on a variety of circumstances. For constitutional purposes, we see no difference behoeen on the one hand seising and holding a car before presenting the probable cause issue to a magistrate and on the other hand carrying out an immediate search without a warrant. Given probable cause to search, cither course is reasonable under the Fourth Amendment.
On the facts before us, the [automobile] could have been searched on the spot when it was stopped since there was probable cause to search and it was a fleeting target for a search. The probable-cause factor still obtained at the station house and so did the mobility of the car unless the Fourth Amendment permits a warrantless seizure of the ear and the denial of its use to anyone until a warrant is secured. In that event there is little to choose in terms of practical consequences behoeen an immediate search without a warrant and the car’s immobilization until a warrant is obtained. * -' * [399 U. S. at 50-52, 90 S. Ct. at 1980; emphasis supplied] [italics added |

Iii challenging the search of the trunk, defendant places considerable reliance upon the decision of this court in State v. Naturile, 83 N. J. Super. 563 (App. Div. 1964). To the extent that it expresses a view contrary to that set forth in Chambers v. Maroney, supra, the Naturile decision no longer is acceptable or viable.

Affirmed.


text:
    AMERICAN DREAM, INC., PLAINTIFF-RESPONDENT, v. TOWNSHIP OF FRANKLIN, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    A-69-73
    Argued October 8, 1974—
    Decided October 29, 1974.

      Before Judges Halpekh, Cbahay and Aoicebmah.

      Mr. Thomas J. Cafferty argued the cause for appellant (Messrs. Seiffert, Frisch & Gruber, attorneys; Mr. Robert M. Frisch, on the brief).

      Mr. Leroy C. Gipson, Jr. argued the cause for respondent.
   Per Curiam.

Appellant municipality challenges a summary judgment entered on stipulated facts which ordered that it The narrow issue presented is whether plaintiff, as an optionee to purchase the involved premises, was entitled to an exemption from liability, as allowed by N. J. S. A. 54:5-18.5. We are satisfied that there was no exemption and reverse. The essential factual and procedural history is_ that —

* *• * remove the lien in the amount of $20,719.70 from certain real property within the township constituting a sanitary sewer assessment made under a local ordinance.

On January 27, 1972 plaintiff, American Dream, Inc. (American) executed a written option agreement with the owner of the involved premises — one Goldberger — to purchase approximatety 31 acres of land, the option to endure until January 31, 1973. The consideration for tli-e option was $16,344.9-6 and, if exercised, the purchase price was to be $250,000. Additionally, plaintiff assumed the responsibility to pay all municipal taxes and assessments.

On January 31, 1973 American and Goldberger extended the option for a period of six months for an added consideration of $5,625.24, that sum representing the aggregate- of the monthly installments and real estate taxes for the period from February 1 to July 31, 1973. The purchase price of the property was increased from $250,000 to $260,000. Prior .thereto, on December 26, 1972, plaintiff had been informed by the municipality that no assessments were then owing. This admittedly was in error since the township had in fact adopted an ordinance on March 25, 1971 imposing a sewer assessment against the property.

On March 9, 1973 plaintiff contingently contracted to sell its option to a third party — one Prel' Holding Co. (Prel) — that contract providing that Prel pay plaintiff $100,000 and Goldberger $260,000. In April 1973 Goldberger advised American that he had received a sewer assessment bill in the amount of $20,719.17.

Plaintiff’s complaint sought a declaratory judgment of nonliability for the assessments, reciting basically that

(1) Tt had received, pursuant to its request, a search for municipal lien on December 26, 1972 indicating that there was no assessments or liens of record and that on March 9, 1973, based upon “all its cost factors,” it entered into an agreement with Prel to sell its option.

(2) Having paid consideration for the option, that it was protected by N. J. S. A. 54:5-17. (This was later amended, without objection, to claim exemption under N. J. S. A. 54: 5-18.5).

(3) “To allow the continuation of said assessment and lien to remain upon this property would work both a substantial hardship and irreparable harm upon the said American Dream, Inc. More particularly, the transaction between the said American Dream, Inc. and the Prel Holding Co. would be cancelled, wherein damages to the said American Dream, Inc. would be substantial.” (Emphasis supplied)

The relief prayed for was the removal of the lien in the stated amount of $20,719.17.

Following argument on the motion for summary judgment, the trial judge granted plaintiff’s claim for relief, rejecting the municipality’s argument that the holder of an option for the purchase of land does not have such an interest in land to warrant the statutory exemption. The court distinguished State v. New Jersey Zinc Co., 40 N. J. 560 (1963), holding that Zinc dealt with the issue of optionees’ entitlement to participate in eminent domain proceedings. It went on to consider as factors in its holding that American had (1) expended monies to improve the propertjc (2) extended the original option agreement and (3) assumed certain contractual obligations by entering a contract to sell that option with Prel Holding Co. and that —

The financial considerations involved in the negotiation of the extension of the agreement as well as the sale of the option to Prel were in part based upon tbe certification that the property was not subject to any assessment [and further that] the combination of these factors viewed in the light of the entire transaction renders plaintiff’s interest in the land similar to that of a purchaser insofar as the application of the subject statute [N. J. S. A. 54:5-18.5] is concerned.

We are satisfied that plaintiff on this record is not entitled to the protection of the cited statute. There is no meaningful authority which holds other than that one who has an option to purchase real estate has no estate in the land but acquires merely inchoate rights therein which during the option period will be protected in equity. Those rights and interests in the property do not vest in an optionee until he has effectively made his election under the option. River Dev. Corp. v. Liberty Corp., 45 N. J. Super. 445, 464 (Ch. Div. 1957), aff’d 51 N. J. Super. 447 (App. Div. 1958), aff’d 29 N. J. 239 (1959); Bright v. Forest Hill Park Dev. Co., 133 N. J. Eq. 170, 183-184 (Ch. 1943).

Justice Hall, in Zinc, supra, treated of “the essential nature and effect of an option to purchase realty * * Albeit Zinc was a condemnation case, its author does not qualify, by way of the litigated context, when he instructs that

The owner is bound by his offer, but no obligation is imposed upon the optionee. Ne has nothing but a continuing, irrevocable proposal to sell him the property, which will not ripen into anything more unless and until he exercises it, which he may do or not entirely as he pleases. An option does not create any interest in the land, 3 American Law of Property §311.17 (1952), and in New Jersey, at least, the holder of an unexercised option is not entitled to share in the condemnation award (absent some contrary provision in the option agreement). * 1(1 * [40 N. J. at 576, emphasis added 1

In enacting N. J. S. A. 54:5-18.5, did the Legislature intend otherwise? We are satisfied that it did not.

Bright, supra, decided in 1943, and Chas. J. Smith Co., Inc. v. Anderson, 84 N. J. Eq. 681 (Ch. 1915), both, like Zinc, holding that no estate in land passes under an option, were published decisional law prior to the enactment (1946) of N. J. S. A. 54:5-18.5. Since we deal' here with words of legal art we presume the Legislature’s awareness thereof in its law-making process. Commercial Trust Co. v. Hudson Cty. Tax Bd., 87 N. J. L. 179, 183 (E. & A. 1914); River Development Corp., supra.

Furthermore, we observe that N. J. S. A. 54:5-17, “Liens and Outstanding certificates of tax sale not shown by search’; persons protected, immunizes only purchasers, lessees and mortgagees. Since N. J. S. A. 54:5-17 and 18.5 treat of the same essential subject matter, they should in the ascertainment of legislative intent be read in pari materia. LoBoda v. Clark Tp., 40 N. J. 424 (1963). Thus, we see nothing warranting a judicial finding whereby optionees might be brought under the statutory umbrella. If the Legislature intended to enlarge the protected class, it would have said so. Simply, it did not. As emphasized above, American here, in claiming damages, did not rely on the assertion that it had a genuine interest in the involved property but rather did so as the contingent vendor of the option to purchase it.

The trial judge in his letter opinion cited as controlling Polish National Alliance, Relator v. Perrapato, 12 N. J. Misc. 163, 170 A. 225 (Sup. Ct. 1934). Respondent American urges that same authority to us. Reliance on it is misplaced, that case being clearly inapposite. There the exempted party was a “mortgagee in good faith” — an interest “real.” Parenthetically, we observe that the judgment here under review unqualifiedly order’s the lien removed, notwithstanding that the option had not been exercised. (At oral argument we were advised that such was still the case.) The force of the judgment, then, in the event of an ultimate failure of the option, would be to absolve the owner, Goldberger, and his predecessors in title of tax liability. Obviously Goldberger could not claim that such a windfall was legislatively contemplated.

Accordingly, the judgment under review is reversed.

       “Any person who shall acquire for valuable consideration an interest in lands covered by any such certificate in reliance thereon shall hold such interest free from any subsequent liens of the municipality for any such municipal improvement which have been authorized by ordinance at the time such certificate was issued, but not assessed, and which are not shown in such certificate.” (Emphasis supplied)


author: Leonard, P. J. A. D.

text:
    MARK RADAY, BY HIS GUARDIAN AD LITEM, DELORES ABRUZZESE, AND DELORES ABRUZZESE, INDIVIDUALLY, PLAINTIFFS, v. BOARD OF EDUCATION OF THE BOROUGH OF MANVILLE AND JOSEPH BLAIR, DEFENDANTS, AND JOSEPH BLAIR, DEFENDANT, THIRD PARTY PLAINTIFF-RESPONDENT, v. GLENS FALLS INSURANCE COMPANY, THIRD PARTY DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued October 15, 1974—
    Decided October 30, 1974.

      Before Judges Leonard, Setdman and Bischoee.

      Mr. William J. Gannon argued the cause for appellant (Mr. Edward V. Ryan, attorney).

      Mr. Michael S. Feldman argued the cause for respondent (Messrs. Ozzard, Bizzolo, Klein, Mauro & Savo, attorneys).
   The opinion of the court was delivered by

Leonard, P. J. A. D.

Plaintiffs filed a complaint alleging that defendant Blair (defendant) committed an unprovoked assault and battery upon infant plaintiff Mark Raday by punching him in the face in the hallway of the school wherein both were enrolled as students. (Defendant board of education is not involved in this appeal).

Appellant Glens Palis Insurance Company (Glens Palls), with which company defendant’s parents had a homeowners insurance policy, upon receipt of the above complaint and accompanying summons, refused coverage and also refused to defend said suit. Thereupon defendant, through his own counsel, filed an answer to the complaint denying the allegations thereof and asserting the separate defenses of self-defense and provocation.

At or about the same time defendant filed a third-party complaint against Glens Falls seeking damages for all sums that might be adjudged against him in favor of plaintiff Mark Eaday in the tort action, plus legal fees expended by him in defense of it. Glens Falls, in its answer, admitted the existence of the policy but disclaimed coverage and refused to defend the original action.

Thereafter, the tort action was tried with a six-man jury and a unanimous verdict of no cause of action was returned. Subsequently, however, the judge, “in the interest of justice,” ordered a new trial. Approximately seven weeks thereafter defendant moved for a “declaratory judgment” requiring Glens Falls to, pay his legal fees, costs and expenses “to date and in the future” incurred in the original action, and further authorizing him to have his private counsel continue to represent him therein. Following oral argument and a hearing to settle the form thereof, the order was entered May 15, 1974 granting defendant the relief he sought and fixing counsel fees and disbursements to date in the amounts of $3,675 and $4,065 respectively. Glens Falls, with leave first granted, appeals therefrom.

At the outset it is to be noted that the controverted order applies only to Glens Falls’ obligation to pay defendant the legal fees and costs incurred by him in defending the main action in the past and in the future. We are not now specifically concerned with the ultimate issue of coverage or the obligation of Glens Falls to pay a judgment against defendant if one is entered. As a matter of fact, the trial judge refused to rule on that issue, declaring that it was not included in the motion before him.

Nevertheless, Glens Falls contends that it is obligated to defend an action only when the complaint filed therein alleges a basis of liability within the covenant to pay. It asserts that because the claim presented in the instant case is one for assault and battery — an intentional tort — which is excluded from coverage by the terms of the policy, the company was not obligated to provide a defense for defendant in the main action nor responsible for fees expended by him in providing his own defense.

Defendant first maintains that the exclusionary clause of the policy which denies coverage for “bodily injury * * * which is either expected or intended from the standpoint of the insured” is vague at best and therefore the policy should be construed to sustain coverage in accordance with his expectations as a purchaser thereof. He also maintains that in no event does that clause bar coverage in the main action. He argues that since, in that action, he has raised the defense of self-defense, he could demonstrate that in physically defending himself he did not commit a willful or intentional injury but that any si:ch injury was only the unintended result of his conduct in defense of himself or the result of his negligence. See Lyons v. Hartford Ins. Group, 125 N. J. Super. 239, 245-247 (App. Div. 1973), certif. den. 64 N. J. 322 (1974).

As previously noted, the only issue involved in defendant’s motion for a declaratory judgment was Glens Falls’ obligation to defend him in the main action. Generally, a carrier is obligated to defend this type of an action whenever the complaint alleges a basis of liability within the covenant to pay. However, when that duty to pay cannot be resolved by the trial of the third parly’s action against the insured, the duty to defend may depend upon the actual facts and not upon the allegations in the complaint. Burd v. Sussex Ins. Co., 56 N. J. 383, 388 (1970). Here, since the issue before the trial court involved the policy exclusion of an alleged intentional injury, the problem could not be resolved by a simple inspection of the complaint but was dependent upon the “actual facts.”

As the court said in Burd, supra:

* * * The exclusion of intentional injury is somewhat unique with respect to the problem of coverage. The usual coverage issue depends upon status, time, place, identity of the instrumentality, and the like. But in the case of the exclusion of intentional injuries, the injuries, which otherwise are within the coverage, are excepted therefrom because of a state of mind, and indeed a state of mind which the injured claimant may but need not allege or prove, to prevail against the insured. Since a claimant who charges intentional injury may thus recover even though the intent to injure is not proved, his complaint, on its face, is simultaneously within both the basic covenant to pay and the intentional injury exclusion from that coverage, [at 393]

Defendant, in support of his motion for a summary judgment, did not offer affidavits, answers to interrogatories, depositions, admissions or any other competent proof of any material facts. See B. 4:46-2. Likewise, Glens Palls filed no such proofs. The existence of such facts cannot be established by oral argument of counsel or briefs filed with the court, neither of which are verified. P. & J. Auto Body v. Miller, 72 N. J. Super. 207, 211 (App. Div. 1962). Neither party presented a transcript of the testimony of the trial of the tort action.

Where, as here, the subjective element of the willfulness or intent of the party moving for summary judgment is material to the claim or defense of the party opposing the motion, a conclusion from pleadings alone that palpably there exists no genuine issue of material fact, will ordinarily be very difficult to sustain. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N. J. 67, 76 (1954).

Based upon the above, we find that the trial court erroneously entered the summary declaratory judgment. Accordingly, we reverse and vacate that judgment and remand the matter to the trial court for a plenary hearing.

Presently, both defendant and Glens Palls are in agreement that private counsel should continue to represent defendant in the tort suit. Thus, the only controverted issue now involved is reimbursement of counsel fees and expenses incurred as a result of that representation. In view of this, we conclude that the remand hearing shall not be had until after the retrial of the tort action. See Burd v. Sussex Mutual Ins. Co., supra at 391. By reason of this schedule a transcript of the testimony in the first trial will be available to the parties at the remand hearing. This transcript shall be prepared and secured at the expense of Glens Palls. Likewise, we suggest that the judge who tries that action shall submit to the jury written interrogatories upon all pertinent issues, including self-defense. B. 4:39-2. Thus, the parties hereto will be aware of the basis of the verdict found therein.

If the verdict in the tort action is in favor of defendant, then there need only be determined the issue of reimbursement for legal fees and expenses. However, if the verdict is against him, then expediency and justice would require that the court at the remand hearing shall determine not only the reimbursement issue, but also the further issue of coverage under the policy, i.e., the duty to pay. Additional proofs, testimonial or otherwise, should be received at the remand hearing to the extent necessary to resolve such remaining issues as may not have been determined in the tort action.

Reversed and remanded for a plenary hearing in accordance herewith. We do not retain jurisdiction.


author: Thuring, J. S. C.

text:
    EDWARD J. DOWNS, PLAINTIFF, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided June 4, 1974.

      Mr. Leonard Meyerson for plaintiff (Messrs. Miller, Hochman, Meyerson & Miller, attorneys).

      Mr. Edward J. Russo for defendant (Messrs. Nugent, Russo & Tumulty, attorneys).
   Thuring, J. S. C.

Plaintiff seeks summary judgment on the ground that the incontestability provisions of a life insurance policy issued to his deceased wife became operative, barring defenses asserted by defendant insurance company. Plaintiff’s motion is directed to whether the counterclaim for rescission based upon equitable fraud states a claim upon which relief can be granted.

Sometime prior to July 1, 1960 The Prudential Insurance Company of America issued a noncontributory group policy to the Board of Trustees, Teachers’ Pension and Annuity Eund, State of New Jersey. Eollowing the death of his wife on March 1, 1970 plaintiff received from defendant the benefits payable under the policy in the amount of $20,011.50.

On July 1, 1960 a contributory group policy designated as GC-14300, which is the subject of this litigation, was issued as between the same parties. That policy was later amended to provide that its members had the right to apply for additional insurance by making contributions and furnishing evidence of insurability satisfactory to the insurance company. On January 5, 1970 plaintiff’s wife, a teacher, applied for and subsequently received approval for the additional insurance coverage.

The amendment provided:
1. The section ‘Insured Members’ appearing on pages 3 and 4 of the policy is enlarged to include the following provision:
Each person who is a Member on January 1, 1970 but is not then insured under this Policy may become insured hereunder by (x) making request, within the Enrollment Period described below, to participate on a date on which he is actively at work and performing all his regular duties at his customary place of employment, (xx) agreeing to make the contributions required by the Policyholder therefor pursuant to the section ‘Contribution of Individual Members’ and (xxx) furnishing evidence of insurability satisfactory to the Insurance Company.

The insurance under the aforesaid policy became effective July 1, 1970.

Following the insured’s death the Division of Pensions referred the claim to defendant in view of the fact that the member, Tina A. Downs, died within two years from the date of the issuaúce of the policy. Plaintiff’s request for payment of the insurance policy proceeds was officially refused by defendant on September 15, 1972 on the ground that the insured had failed to truthfully set forth her health status at the time she made application for insurance.

The complaint demanding the proceeds of the policy was filed on July 5, 1973, and answer and counterclaim were filed July 30, 1973 seeking rescission of the insurance contract for misrepresentation by the insured of material facts concerning her health and on the ground of mutual mistake.

Each insured did uot receive a copy of the group policy but received a certificate evidencing coverage under the group policy. A group life policy and the certificate issued thereunder together constitute the contract between the parties, Metropolitan Life Ins. Co. v. Poliakoff, 123 N. J. Eq. 524 (Ch. 1938) and “[o]rdinarily an insured holding a certificate of insurance is held to have constructive knowledge of the group insurance policy,” Wells v. Wilbur Driver Co., 121 N. J. Super. 185, 197 (Law Div. 1972). The certificate itself was silent as to the incontestability clauses in question; thus, reference must be made to the group policy provisions and to N. J. S. A. 17:34-15(c) to reach a determination as to whether the incontestability clauses operate to bar defendant's right to assert its defenses.

The group policy contains a caption which reads “INCONTESTABILITY OF POLICY,” followed by the words:

The validity of this Policy shall not be contested, except for nonpayment of premiums, after it has been in force for one year from the date of issue.

Immediately underneath the aforesaid language appears another caption reading “THE CONTRACT,” followed by language identical with that required by N. J. S. A. 17:34-32(2)-(3), repealed by L. 1971, c. 144, which reads:

All statements made by the Policyholder or by the Members insured under this Policy shall be deemed representations and not warranties, and no statement made by any Member insured hereunder shall be used in any contest of the insurance hereunder unless a copy of the instrument containing the statement is, or has been furnished, to such Member or to his Beneficiary. No Statement made by any Member insured under this Policy relating to his insurability shall be used in contesting the validity of the insurance under this Policy with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such Member’s lifetime nor unless it is contained in a written instrument signed by him. [Emphasis supplied]

Plaintiff alleges that the one-year incontestability clause applies or, if it does not, that the two-year clause requires that a contest must be initiated by the insurer within a two-year period following issuance of the policy.

Defendant insurance company answers by stating that (a) the one-year incontestability clause applies solely to the initial agreement between it and -the Board of Trustees, Teachers’ Pension and Annuity Fund, dated July 1, 1960; (b) under the incontestability clause of the statute and under the policy itself decedent’s coverage remained contestable after the two-year period because the insured died within two years of the date of issuance of the policy, and (c) defendant is entitled to rescission becanse the policy was obtained through a misrepresentation of material facts and mutual mistake.

The court recognizes its obligations and responsibilities in considering a motion for summary judgment and is familiar with the ground rules set forth in Judson v. Peoples Bunk & Trust Co. of Westfield, 17 N. J. 67 (1954), and cases following thereafter. The law is that where a genuine issue as to a material fact exists, the court cannot decide the issue. Here defendant alleges misrepresentation of material facts by the deceased insured relative to insurability, which presents an issue of a material fact. However, for the purposes of this motion plaintiff is willing to concede that misrepresentation by the deceased insured did, in fact, occur. Accordingly, as a matter of law, the court can decide the issue of contestability.

A careful reading of the language contained in the group policy leads to the inescapable conclusion that the one-year incontestability clause refers solely to the one-year period following the effective date of the group policy, namely, from July 3, 1960 to June 30, 3963. That incontestability clause refers singularly and clearly to the agreement between the initial parties to the group policy and not to future individually covered insureds. The premiums referred to in that clause were paid by each insured to the Board of Trustees of the Teachers’ Pension and Annuity Fund, who in turn made payment to defendant. The court’s view with respect to the one-year incontestability clause is strengthened by the reading of the two-year incontestability clause in the group policy which unmistakably refers to each insured. It would be superfluous and lack reason to have a two-year clause if, in fact, the one-year incontestability clause applied to each insured.

The two-year incontestability clause, now repealed by L. 1971, c. 144, uses language similar to that found in N. J. S. A. 17:34-15(c), which reads as follows:

That the policy shall constitute the entire contract between the parties and that after it has been in force during the lifetime of the insured a specified time not later than two years from its date, shall be incontestable, except for nonpayment of premiums and for violation of its express conditions * * * [Emphasis supplied]

The “law * * * treats the contract [of insurance] as embodying the [above] statutory clause, and resolves the apparent conflict in favor of the statute,” and “the inconsistent provisions written in the policy yield to it,” Foster v. Washington National Ins. Co., 118 N. J. L. 228, 231 (Sup. Ct. 1937), but where there is no conflict both clauses can be read together in aid of reaching a reasonable result.

It is clear that the contract requirement for the insured to submit evidence of insurability, i. e., the condition of the applicant’s health at the time of application, would become an empty gesture if we were to accept plaintiff’s contention that the one-j’-ear incontestability clause applies. The language of the two-year incontestabilHy clause in the policy requires the intended insured to submit such evidence of insurability. This, together with the mandatory maximum two-year statutory period of incontestability satisfies the court that the two-year incontestability clause applies.

The next question the court must consider is whether the policy continued contestable by defendant, since the insured died before the expiration of a two-year period following the issuance of the insurance. Plaintiff contends that the contest under the policy was never initiated by defendant until defendant filed its answer and counterclaim seeking rescission past the two-year period. Defendant counters this argument by asserting that the incontestability clause in the contract of insurance made the limitation of contestability contingent on the passage of two years from the date of issue during the lifetime of the insured. 18 Couch on Insurance (2 ed. 1968), § 72.48, reads as follows:

If an incontestable clause is conditioned so that it operates only after one year during the lifetime of the insured from the date of issue of the policy, incontestability never commences if the insured dies within the year. That is, the clause does not take effect unless the insured lives out the period of contestability.
Where the limitation period is 2 years from the date of issue, the death of the insured within the period will not stop the running of the time limitation, but where it is provided that the policy must be in force for a stated period during the lifetime of the insured, the death of the insured before the expiration of sueh period it-Jll have the effect of canceling the incontestable clause and will make the policy contestable at any time. * * *
Where a life policy provided that “this policy shall be incontestable, except i'or default in payment of premium for more than thirty-one days, after it has been in force during the lifetime of the insured for 2 years from the date of issue hereof”, to be incontestable tbe policy had to be in force for 2 years, and tbe insured bad to live 2 years from tbe date of issue, and hence, where the insured died about 2 months after the issuance of the policy, the incontestable clause did not, after the lapse of 2 years, prevent the insurer from setting up defenses, in an action on the policy, of fraudulent and false material answers knowingly made by the insured in the application [at 69-70; emphasis supplied]

A Few Jersey case directly construing the statutory incontestability language is Lance v. Prudential Ins. Co. of America, 19 N. J. Misc. 551, 22 A. 2d 3 (C.P. 3941). In Lance two life policies were issued, one on November 15, 1937 and the other on April 18, 1938. The insured died on August 10, 1938 and suit was commenced against the insurer on August 19, 1939. Plaintiff posited its claim for payment on the ground that the incontestability clause barred the insurer’s defense of misrepresentation by the insured. It was established at trial that the insured was treated for grave physical ailments prior to the issuance of the policies. The insurance company relied on the voidability of the policies for failure of the insured to live the requisite one year after the insurance became effective. Each policy provided :

This Policy shall be incontestable after it has been in force, during the lifetime of the Insured, for one year from its date of issue, except for nonpayment of premiums.

The court found the aforesaid language in conformity with N. J. S. A. 17:34-15(c) and distinguished a line of cases wherein the contracts did not specify that a given period of time must elapse during the lifetime of the insured before the incontestability clause would bar a defense. The court held:

The incontestability clause in these policies fixes the limitations of contestability as one year from the date of issue during the lifetime of the insured. This language has a normal and purposeful meaning; under this wording, the insured must live for at least one year after the policy is issued before it can mature into incontestability; if the insured dies before the end of that year has been reached, the policy remains contestable and never becomes incontestable against a valid defense. This type of clause (limited to a period during the lifetime of the insured) has an entirely different significance from that earlier type of incontestability clause in which the limitation of contestability is fixed by a definite period of time from the date of issue of the policy but without the requirement that such period of time must elapse during the lifetime of the insured; in this earlier type of incontestability clause, it makes' no difference, generally speaking, when the insured dies, the criterions being the time when the contest is interposed and what constitutes a contest [at 553]

Plaintiff’s reliance upon Johnson v. Metropolitan Life Ins. Co., 53 N. J. 423 (1969), is without foundation. In Johnson the court undertook to construe a health and accident polie]'' issued under authority of N. J. S. A. 17:38-13.2(A), a statute different from the one' here in question. There the policy became effective December 13, 1961 and the insured became totally disabled on August 5, 1963, a time prior to the expiration of the two-year incontestability period. The court did undertake to construe the language of the incontestability provision. It excised a part of the language having to do with a time period of contestability on the ground that the excised part resulted in a patent ambiguity when read with other provisions of the clause. The incontestability provision of the statute in Johnson was construed to mean that “after two years the policy may not be voided for a misstatement in the application unless the misstatement in the application is ‘fraudulent’ * * *” (at 441). The court did not consider the holding in Lance, supra, nor did it construe the phrase “during the lifetime of the insured.”

In Russ v. Metropolitan Life Ins. Co., 112 N. J. Super. 265 (Law Div. 1970), a beneficiary commenced suit to collect the proceeds of a life insurance policy. Defendant by counterclaim asserted the defense of equitable fraud, seeking rescission. The court did not squarely have the problem of incontestability before it since suit was instituted within the two-year incontestability period of the statute. The court did state in passing:

It is clear that this statute, by exclusion, provides that the ordinary life policy cannot be rescinded after two years for fraud in the application therefor, whether it be legal fraud or equitable fraud, and that no defense based upon fraud may be asserted to defeat a claim on the policy after the contestable period has expired, ['at 274; emphasis supplied!

The issue here is whether the contestable period had expired. The court finds that it had not.

The identical incontestability language here in question was considered in Taylor v. American Heritage Life Ins. Co., 448 F. 2d 1375 (4 Cir. 1971), except that there the group policy contained the language in one paragraph over the caption “INCONTESTABILITY,” whereas the present case uses two separately captioned paragraphs. In Taylor an action was brought by the beneficiary against the insurer to recover the proceeds of insurance written under a group policy. The court held that the two sentences in the incontestability clauses were not in conflict. The court held (at 1376) that the first sentence, “This policy shall be incontestable after two years from its date of issue except for non-payment of premium,” referred to the master policy agreement between the insurance company and the group representative of the insured, whereas the second sentence, also bearing on incontestability, referred to the obligation of the individual insured to live for a specific period of timfe. after issuance of the certificate of insurance. The court concluded (at 1376) that the clear meaning of the language of the second sentence, “* * * after such insurance has been in force prior to the contest for a period of two years during such person’s lifetime * * barred plaintiff from invoking the incontestability clause because, as here, the insured had not lived for a period of at least two years following the issuance of said certificate.

Giving the words “in force during the lifetime of the insured,” as used in the statute, or the words “in force prior to the contest for a period of two years during such member’s lifetime,” as used in the insurance contract, their ordinary meaning, the court finds that there is a requirement that the insured survive the specified period of time, namely, two years if the policy is to become incontestable. Accordingly, since the insured did not survive the two-year period, the policy remained contestable.

The motion for summary judgment will be denied and the matter will proceed to trial on the issues of whether there was, in fact, equitable fraud (i.e., misrepresentation of material facts by the deceased insured) and whether mutual mistake, in fact, existed.