author: Mintz, J. S. C.

text:
    CITY OF NEWARK, A MUNICIPAL CORPORATION OF NEW JERSEY, PLAINTIFF, v. NORTH JERSEY DISTRICT WATER SUPPLY COMMISSION, A PUBLIC AGENCY, AND TOWN OF BLOOMFIELD, TOWN OF NUTLEY, TOWN OF KEARNY, BOROUGH OF WEST CALDWELL, CITY OF ELIZABETH, TOWNSHIP OF CEDAR GROVE, BOROUGH OF GLEN RIDGE, VILLAGE OF SOUTH ORANGE, BOROUGH OF VERONA AND CITY OF BAYONNE, MUNICIPAL CORPORATIONS OF NEW JERSEY, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided December 6, 1968.

      Mr. Philip P. Gordon for plaintiff.

      Mr. Oscar B. Wilenshy for defendant North Jersey District Water Supply Commission.

      Mr. Paul J. McOurrie for defendant Town of Kearny.

      Mr. John J. McDonough for defendant Borough of West Caldwell.

      Mr. Joseph A. DeStefano for defendant Township of Cedar Grove.

      Mr. George H. Callahan for defendant Borough of Glen Ridge.

      Mr. Emil E. Mas da for defendant Borough of Verona (Messrs. Sarcone & Masda, attorneys).
   Mintz, J. S. C.

Plaintiff, City of Newark, seeks an adjudication rescinding two water supply contracts entered into between defendant North Jersey District Water Supply Commission (hereinafter referred to as “Commission”), Newark and a number of other municipalities.

The Commission moves for summary judgment on the ground that there exists no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. At the oral argument, defendants Town of Kearny and the Borough of Glen Bidge joined in the Commission’s motion. Defendants Township of Cedar Grove and Borough of West Caldwell expressed their desire to withdraw from the Raritan Valley water project as presently constituted and opposed the motion for summary judgment. Defendant Borough of Verona opposed the motion for summary judgment on the ground that one of the water supply contracts requires clarification respecting that Borough’s obligation therein.

The Commission and several municipalities executed a contract dated July 13, 1965 for the supply of additional water to the heavily populated and industrialized northeastern section of New Jersey. Newark became a signatory to the contract on October 1, 1965. The contract did not become operative until September 12, 1966 when the requisite minimum subscription level of 50 million gaillons daily was reached.

On April 6, 1966 Newark entered into a second and independent agreement entitled “Cooperation Agreement Between City of Newark — North Jersey Water Supply Commission — Contracting Municipalities” (hereinafter referred to as “cooperation agreement”). Pursuant to its option terms, several of the participating municipalities became parties to this agreement. Its purpose was to facilitate the carrying out of the basic contract by permitting the contracting municipalities to utilize Newark’s distribution system or to exchange water to be obtained from the State’s Round Valley-Spruce Run reservoirs and the Raritan River (hereinafter referred to as “Raritan Valley water”) for water from Newark’s Wanaque supply.

Throughout the period of negotiations the parties were apprised of the fact that the figures that they were working with were only estimates, subject to fluctuation resulting from changes in interest rates, the costs of materials and labor, and the total subscription level. In February 1967 Newark, apparently dissatisfied with the arrangement, passed a resolution and ordinance rescinding the two contracts. The Commission then instituted an action in which it sought an adjudication that the two contracts were valid and binding upon the signatories. The trial court entered such a judgment on February 9, 1968. North Jersey District Water Supply Commission v. City of Newark, et al., 103 N. J. Super. 542 (Ch. Div. 1968).

Ten days after this judgment was entered the Gilbert Associates Report was made available to all the participating municipalities. This report promulgated four alternate plans for the project. In possession of this report, Newark, on March 13, 1968 filed an appeal to the Appellate Division. Certification was granted and the matter was argued before the Supreme Court on June 4, 1968. On June 28, 1968 the trial court’s judgment was affirmed. 52 N. J. 134 (1968).

In a letter dated July 1, 1968 the City of Newark through its Mayor wrote the Commission that events have transpired since the hearing in the Chancery Division on December 15, 1967 which render inequitable any insistence by the Commission upon the performance of the contracts by Newark. The letter stated that the contractual undertakings have been altered beyond any reasonable contemplation by the parties at the time they entered into the agreements, and performance has been rendered economically unfeasible. The Mayor concluded that “In view of the foregoing it is entirely inadvisable that the Commission proceed at this time or in the foreseeable future toward implementing any bonding negotiations, or toward any further action with respect to the entire project.”

On August lo, 19G8 the Commission, in order to provide temporary financing, adopted a resolution authorizing the issuance of its bond anticipation notes in a sum not exceeding $4,500,000 in furtherance of the Baritan Valley project estimated to cost $51,226,182. To market the proposed bond anticipation notes, the Commission must certify that there is no litigation pending. The effect of the present suit is to thwart the project.

The gravamen of Newark’s complaint is set forth in Paragraph 5 which recites that:

‘‘5. From and after the date of the rendition of the judgment of the Chancery Division as aforesaid, the following matters have occurred, rendering inequitable any insistence by the defendant Commission upon the jjerformance of the aforesaid agreements by the plaintiff:
a. The contractual undertakings of the plaintiff, as now projected by the defendant Commission, have been altered, physically and financially, far beyond any reasonable contemplation of the parties at the dales of such agreements, rendering the project and undertaking economically unfeasible.
b. When the .1965 contract was entered into, the anticipated cost for Raritan Valley water was between $165 and $185 per mg (million gallons).
c. The defendant Commission’s engineers, Gilbert Associates, completed a study of the Raritan Valley transmission facilities, which was submitted for review to the plaintiff on or about February 19, 1968. In this study, there was recommended construction of a treatment plant and transmission facilities exfeuding from Bound Brook to Newark, under an Alternate Plan 1A, which would have a capacity of 70 mgd (million gallons daily) at an estimated cost of between $217 and $251 per mg. This is the project adopted by defendant Commission. Because of high interest rates presently anticipated, it is realistic to use $250 per mg as the estimated base cost under such study.
d. The base cost was estimated at the designed capacity of 70 mgd, therefore, all the municipalities participating in this project, including the plaintiff, will have fo pay for the difference between the 70 mgd designed capacity and the 61 mgd commitment of the participating municipalities. This will add approximately $29 per mg to the base cost.
e. The plaintiff cannot accept the Raritan Valley water without making improvements to the plaintiff’s internal distribution system, to receive the designed capacity of 70 mgd, at an approximate cost to the plaintiff of over $7,000,000. This the plaintiff is not obligated to do under the 1966 agreement, * * *.
f. The defendant Commission’s latest estimates show that it will cost an additional $30 per mg to filter Wanaque water and, in the above mentioned cooperation agreement, * * * this cost must be arbitrated. Therefore, it is possible that this cost of $30 per mg will have to be added to the base cost.
g. Considering the factors aforementioned, the total unit cost of raw water from the Raritan Yalley system may rise to at least $309 per mg.
h. If the plaintiff is forced to pass this cost of water on to its customers, it will become financially unsound for many of Newark’s industrial and commercial users to continue to locate in Newark, and Newark will be unable to attract new industry and commercial businesses that may use substantial quantities of water, since Newark would have to raise substantially the present retail water charge to large consumers in Newark. Also affected would be all the water consumers in Newark, the home owners, in multiple dwellings, apartment houses, office and commercial buildings and factories, as well as the wholesale rate charged out-of-town consumers.
i. Elizabethtown Water Company now provides Newark with Raritan Valley water at a cost of $132 per mg.”

In its motion for summary judgment, the Commission urges that the prior litigation between the parties is res judicata or, in the alternative, the City of Newark is collaterally estopped from raising the issue of economic unfeasibility resulting from the alleged unforeseen increase in the cost of the project. In opposition Newark, equating economic unfeasibility with impossibility of performance, argues that the issue of impossibility of performance was neither presented to nor considered by the trial court or Supreme Court in the prior action. It claims support for its position in the opinion of the Supreme Court, supra, wherein the court stated:

“* * * On argument before us, Newark challenged only the portion of the judgment below which sustained the basic contract between the Commission and Newark that became operative on September 12, 1966. The attack presented is the same as that advanced below, i. e., .the contract is void because its provisions for determination of the ■price to be paid by Newark for water are too vague and uncertain ■to be enforceable.” at p. 136.

However, a review of the trial court’s opinion and of the transcript of the oral argument before the Supreme Court indicates that N ewark brought to the attention of both courts the anticipated increased cost of the Raritan Valley water. The trial court in the earlier litigation noted that the City of Newark suggested that costs may be greater than were first anticipated or projected bjr the Commission and stated:

“* * * Even if this be so it is no warrant or justification for the action taken by the City. An estimate is not a guaranty. If any of the contracting municipalities saw fit to *.ely upon estimates presented by the Commission they may not now be heard to complain if, because of lapse of time or otherwise, some revision seems probable. * * *”

Before the Supreme Court counsel for Newark raised the argument of increased costs and specifically referred to the impact of the Gilbert Associates Eeport. Additionally, the fact that Newark would be required to expend approximately $7,000,000 in order to absorb the water from the Raritan Valley project and to exchange or transmit this water through the City’s water system was brought to the attention of the Supreme Court. Perhaps the Supreme Court was unimpressed with these arguments for it gave no consideration to the same in its opinion.

Notwithstanding the foregoing, Newark urges that the Commission in the prior suit sought only an adjudication determining the validity of the basic contract and cooperation agreement. It argues that the matter of increased costs was presented to the Supreme Court only in support of its argument that the contracts were vague and uncertain and that the issue of economic unfeasibility was not raised or decided in that suit.

Newark contends that it could not assert the defense of economic unfeasibility before the Supreme Court because it was not until August 15, 1968 that the Commission adopted its bond resolution approving Plan 1A of the Gilbert Associates Report. However, on oral argument before this court, Newark’s counsel conceded that when the Gilbert Associates Report was received on February 19, 1968 Newark deemed all of the proposed plans in that Report economically unfeasible and unacceptable. Further, the letter of July 1, 1968 from the Newark Mayor to the Commission was written prior to the Commission’s decision to adopt Plan 1A. Hence, it clearly appears that before and during the pendency of the appeal in the prior suit Newark was aware of all the pertinent facts it now urges in this proceeding.

In view thereof, the defense of impossibility of performance should have been interposed in the earlier proceeding. Although the facts upon which such defense would be grounded were not known to Newark until ten days after the entry of the judgment by the trial court, Newark could have followed any of the available procedural avenues to protect its substantive rights. Specifically, Newark could have moved to stay the judgment pursuant to R. R. 1:4-6, 1 :4-1)' and to vacate the judgment under R. R. 4:62-2.

The Gilbert Associates Report, if not newly discovered evidence within the meaning of R. R. 4:62-2(&), did afford a basis for a motion to be relieved for “any other reason justifying relief from the operation of the judgment or order.” R. R. 4:62-2 (/). If the trial court deemed that such evidence or subsequent event occurring ten days after the entry of its judgment warranted liberation from the operation of the judgment, it could have granted relief pursuant to said rule. Gallanthen v. Postma, 12 N. J. Super. 464 (App. Div. 1951); cf. Turco Products v. Hydrocarbon Chemicals, 18 N. J. 130 (1955). Furthermore, when the appeal was argued before the Supreme Court, Newark could have but did not request that court to remand the ease to the trial court for consideration of the new issue of economic unfeasibility.

While this court has the power in a proper case to entertain an independent action to relieve a party from a judgment, the policy of our law is to prevent the fragmentation of litigation and to require that relief from a final judgment of a court of this state be sought in the action in which the judgment was rendered when that remedy is adequate. Shammas v. Shammas, 9 N. J. 321 (1952). Under our “single controversy” doctrine courts of this state are determined to enforce the prime aim of the new practice for the just and expeditious determination in a single action of the ultimate merits of an entire controversy between litigants. Thus in failing to assert economic unfeasibility in the prior action, Newark is now precluded from asserting such claim in this action. Falcone v. Middlesex County Med. Soc., 47 N. J. 92 (1966).

It also follows that since the facts herein alleged in support of Newark’s complaint to rescind the two water supply contracts could have been asserted to defeat the Commission’s claim in the prior suit in which it sought an adjudication respecting the binding effect of the two contracts, the first suit is res judicata of the issues raised here. The judgment of a court of competent jurisdiction on a question of law or fact or on a mixed question of law or fact, once litigated and determined, is, so long is it stands unreversed, conclusive upon the parties and their privies. Reeves v. Jersey City, 30 N. J. Super. 392 (App. Div. 1954), affirmed 16 N. J. 529 (1954) ; Hudson Transit Corp. v. Antonucci, 137 N. J. L. 704 (E. & A. 1948); Bango v. Ward, 12 N. J. 415 (1953). The court in Beeves, supra, also stated:

* * where such prior judgment is founded on the claim or demand sued upon in the later suit, it is conclusive not only as to all matters which were actually litigated and decided, hut also as to all matters which might have heen properly raised in said prior suit.” at p. 400 (Emphasis supplied)

To the same effect see Public Service Electric & Gas Co. v. Waldroup, 38 N. J. Super. 419 (App. Div. 1955); Middlesex Concrete, etc., Corp. v. Borough of Carteret, 35 N. J. Super. 226 (App. Div. 1955); Ferger v. Local 483, 94 N. J. Super. 554, 564 (Ch. Div. 1967), affirmed 97 N. J. Super. 505 (App. Div. 1967).

The principle of res judicata or collateral estoppel does not bar relitigation where, after the rendition of the judgment, subsequent events or conditions occur, thus creating a new legal situation or altering the legal rights or relation of the parties. A judgment cannot be conclusive as to rights which were not in existence at the time of its rendition. Lasasso v. Lasasso, 1 N. J. 324, 328 (1949); Washington Township v. Gould, 39 N. J. 527, 533 (1963); Board of Directors of Ajax, etc. v. First Nat. Bank of Princeton, 33 N. J. 456, 464, 465 (1960).

But as already observed the subsequent events herein relied upon by Newark were known to it before the appeal was filed and more than three months before it was argued before the Supreme Court. The trial court judgment entered on February 9, 1968 was but an interim step in the proceeding. Falcone v. Middlesex County Med. Soc., supra. Thus the issues raised in the present litigation, if not argued in the prior suit, could have been raised therein by Newark and accordingly cannot be asserted in this action.

Assuming arguendo that the plaintiff's action is not precluded, the affidavits submitted by Newark in connection with this motion raise no genuine issue of fact. It is urged in Paragraph 5e of the complaint that Newark will be required to expend approximately $7,000,000 in order to absorb, transmit or exchange the Raritan Valley water through its transmission system (60 inch main). Newark has indicated that it will claim a charge of $30.07 per million gallons from each municipality which is a party to the cooperation agreement to cover the $7,000,000 expenditure. This sum is in addition to the presently anticipated base cost of $250 per million gallons for such water. Clearly the parties considered that some expenditure would be necessary for one of the preambles to the 1966 cooperation agreement states:

“WHEREAS, detailed engineering and cost studies will be required to determine such methods and costs incurred or to be incurred directly or indirectly by Newark, attributable to such supplemental transmission or exchange of supplies with the said Contracting Municipalities ; * *■

The municipalities may of course contest this claim in arbitration, as provided for in said agreement. However, assuming Newark will be required to ultimately bear this cost, it is an item that was within the contemplation of the parties when the agreement was signed.

It is also argued that while Newark’s 60 inch main can handle the minimum anticipated demand of 65.675 million gallons daily, it cannot accommodate the projected maximum requirement of 123.6 million gallons daily which includes the demand of the Elizabethtown line. When Newark entered into the basic contract it was aware that the nearly completed Elizabethtown line would furnish between 10 and 30 million gallons daily and would further tax its transmission system. Yot with this knowledge, it executed the two water supply contracts. It is further noted that the 1966 cooperation agreement expressly states that Newark shall not be required to exchange or transmit, with or to any municipality, beyond Newark’s present capacity to absorb “exchange” waters into its system and that the transmission system contemplated to be utilized shall consist solely of the 60 inch water main owned by Newark. Perhaps in order to absorb and distribute the additional water, some supplemental arrangements may be necessary. However, this will not prevent the parties from performing their obligations under the contracts.

In Paragraph 5d of the complaint it is alleged that the base cost was estimated for the designed capacity of 70 million gallons daily and that the participating municipalities who are committed to approximately 61 million gallons daily will have to pay the difference between the 70 million gallons daily designed capacity and the present subscription level of 61 million gallons daily. This will add approximately $29 per million gallons to the base cost. The 1965 agreement expressly provides that it becomes effective upon the Commission and the contracting municipalities when a proprietary allotment aggregating at least 50 million gallons daily is reached. A capacity subscription level was not a condition precedent to the effectuation of the contract. Hence the parties to that agreement contemplated that they would have to pay the difference between the 70 million gallons daily designed capacity and the present commitment of Cl million gallons daily. Furthermore, this added cost is only temporary for in due time it is anticipated that the presently available 9 million gallons daily will be sought by some municipality.

In paragraph 5 f of the complaint it is alleged that the Commission estimates it will cost an additional $30 per million gallons to filter the Wanaque water and in the cooperation agreement this cost must be arbitrated and will possibly be added to the base cost. The parties to the cooperation agreement specifically contemplated the possibility that the State Department of Health may require that filtered water from Newark’s Wanaque water supply be exchanged for filtered Raritan Valley water. Therefore, they provided for the arbitration of any claim by Newark against any contracting municipality for reimbursement of filtration costs should that municipality contest the charge. Furthermore, since filtration of Newark’s Wanaque water supply is required independently of the Raritan Valley water project, an allocation of such costs to the Raritan Valley project seems unwarranted.

In any event all the factors which Newark now complains will add to the present realistic base cost of $250 per million gallons were present and contemplated by the parties when the basic contract and the cooperation agreement were executed.

Plaintiff’s complaint further alleges that the presently anticipated cost of the Raritan Valley water to Newark may rise to $309 per million gallons. The proof indicates that if the questionable expenditure of approximately $7,000,000 is made for improvements to Newark’s internal distribution system, the ultimate cost of the water to Newark may possibly rise to $339 per million gallons as against a maximum estimated cost of $185 per million gallons when the 1965 contract was executed. Assuming this to be so, such evidence is insufficient to raise a factual or legal issue of impossibility of performance. At best the proof suggests that the cost of the project now appears to be higher than originally estimated. There is no “escape clause” in either agreement. As already observed, an estimate is not a guaranty. North Jersey District Water Supply Commission v. City of Newark, et al., supra. This court cannot relieve municipalities from hard bargains simply because alleged as such. Municipal contracts stand on the same footing as contracts between natural persons and courts will not inquire into the reasonableness of the terms of such contracts in the absence of bad faith, fraud or capricious action. Middlesex County Sewerage Authority v. Borough of Middlesex, 74 N. J. Super. 591 (Law Div. 1962), affirmed 79 N. J. Super. 24 (App. Div. 1963).

In Schaefer v. Brunswick Laundry, Inc., 116 N. J. L. 268, 271 (E. & A. 1936) the court stated:

“Generally, impossibility of performance offers no relief from the performance of contractual obligations, whether the impossibility could or could not have been foreseen at the time of the making of the contract. Middlesex Water Co. v. Knappmann Whiting Co., 64 N. J. L. 240. There are three exceptions to this rule: (1) where the impossibility arises by operation of law (Vanderbilt v. Little, 51 N. J. Eq. 289) ; (2) where a thing neeessary to performance is destroyed (Matthews Const. Co. v. Brady, 104 N. J. L. 438) ; (3) where the contract calls for personal services, and the party to perform or receive performance dies (Victory v. Union County Trust Co., 4 N. J. Misc. 908). * * *”

In Edwards v. Leopoldi, 20 N. J. Super. 43 (App. Div. 1952) the court observed that the above stated rule is not universally applicable and has been commonly applied in cases in which the promissor guaranteed or warranted the performance or assumed the risk of impossibility. It further observed, at p. 53 :

“The rule in equity has been that it will not relieve against hardship arising from bad judgment, miscalculation or from a change in circumstances or the result of subsequent events, where these should have been in the contemplation of the parties as possible contingencies when they entered into the contract.”

The same rule was applied in Lincoln Bus Co. v. Jersey Mutual, etc., Co., 112 N. J. Eq. 527 (Ch. 1933) where the court approvingly quoted from 5 Pom. Eq. Jur. 4958 as follows:

“ ‘Subsequent events, which should have been contemplated. No defense. ■—■ Courts of equity frequently state the rule to be that the hardship and unfairness must be judged of in relation to the time of making the contract, and that specific performance will not be refused because of hard conditions brought about by subsequent events, or changes in circumstances. A more accurate formulation of the rule is this: equity will not relieve against hardship arising from a change in circumstances or the result of subsequent events, where these should have been in contemplation of the parties as possible contingencies, when they entered upon the agreement. And of such nature are the ordinary changes like a rise or fall in values, profits or loss in the undertaking, mistakes of judgment, unforeseen events, which yet were fairly possible contingencies, &c. Thus, no hardship arising from a great change in values between the time of making of the agreement, and the conveyance can be a ground for any relief. Nor can hardship arising from bad judgment, miscalculation, or changes of conditions that ought fairly to have been in contemplation of the defendant be considered by the court.’ ”

See also The Superintendent and Trustees of Public Schools of the City of Trenton v. Bennett, 27 N. J. L. 513 (Sup. Ct. 1859); Huyler’s v. Ritz-Carlton Restaurant and Hotel Company of Atlantic City, 1 N. J. Misc. 64 (Sup. Ct. 1923); Costa v. Cranford, 75 N. J. L. 542 (E. & A. 1907); Earlin v. Mors, 1 N. J. 336 (1949); Hopper v. Hopper, 16 N. J. Eq. 147 (Ch. 1863).

Mineral Park Land Co. v. Howard et al., 172 Cal. 289, 156 P. 458, L. R. A. 1916 F. 1 (Sup. Ct. 1916) relied upon by Newark is distinguishable on its facts. There the contract on the part of the defendants to take all gravel and earth needed for certain work from plaintiff’s land could not be fully performed except at 10 or 12 times the usual cost since there was not enough gravel and earth on the land without taking that which was under water. The court held that under the circumstances it was impossible for the defendants to perform and stated:

“ ‘A tiling is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.’ 1 Beach on Contr. §216. We do not mean to intimate that the defendants could excuse themselves by showing the existence of conditions which would make the performance of their obligation more expensive than they had anticipated, or which would entail a loss upon them. But, where the difference in cost is so great as here, and has the effect, as found, of making performance impracticable, the situation is not different from that of a total absence of earth and gravel.”

As already noted in the instant situation the revised cost for the Raritan Valley water is less than twice the amount of the original estimate. Furthermore, our decisional law clearly indicates that subsequent events which should have been in the contemplation of the parties as possible contingencies when they entered into the contract will not excuse performance. New Jersey does not subscribe to the view that a thing is impossible in legal contemplation simply because it is not practicable to perform except at an excessive and unreasonable cost.

Clearly the parties to the two agreements knew they were dealing only with estimates. An increase in the interest-rate, the major factor in the revised estimate of cost, was a contingency that was or should have been in the minds of the representatives for the contracting municipalities in 1965 and 1966. Hence the alleged prohibitive cost of the Baritan Valley water will not excuse the municipalities from performing under the stated agreements.

Furthermore, considering the need, the revised cost of the Baritan Valley water although high cannot be deemed prohibitive. Newark’s present water consumption is estimated to be between 100 and 110 million gallons daily. Accepting the figure of 110 million gallons, the current cost is $68 per million gallons. To this figure may be added the anticipated filtration cost of $30 for a total of $98 per million gallons. When this figure is averaged with the cost of Newark’s proposed new supply of 15 million gallons of Raritan Valley water at $300 per million gallons, the combined cost to the City will approximate $122 per million gallons for bulk water. The price of the new water includes amortization of the construction costs for the water facility.

This combined figure represents an increase of $.18 per month in water charges to the average family of four using 200 gallons per day. There will not be, as Newark alleges, a 50% increase to large industrial and commercial users of water. Rather, there will be an increase to all consumers which will reflect the addition of the Raritan Valley water which will constitute approximately one-eighth of Newark’s total supply. Assuming that the Raritan Valley water will cost $339 per million gallons, the combined cost will average about $127 per million gallons. There is no proof in the record that such cost will discourage large industrial and commercial users of water from locating in Newark. On the contrary, Mr. Dean O. Noll, an engineer for the Commission, states in his affidavit that $122 per million gallons is “admittedly a very cheap price for bulk water”, and that Newark would still retain the advantage of attracting large industrial water users to the City when this cost is compared with the bulk cost for water in other municipalities.

Under all the stated circumstances, the Commission has shown that there is no basis in fact or in law for Newark’s contention that the proposed project is economically unfeasible.

The position taken by the Borough of Verona affords no bar to the Commission’s motion for summary judgment. Verona does not contest the validity of the basic contract, but its counsel stated that it seeks clarification of its obligation under the cooperation agreement. As already noted, this is a matter to be determined by arbitration. The Township of Cedar Grove’s plight is in good measure due to the fact that while it requires only million gallons daily, it agreed to receive a proprietary allotment of 2% million gallons daily. Thus it will be paying for water which it may not presently need. However, this was known to the municipality at the time it signed the agreement and the commitment was made with a view toward anticipating the future needs of that municipality. The Borough of West Caldwell as well as Verona and Cedar Grove generally objects to the alleged excessive cost of the Raritan Valley water. However, all the factors which contribute to the increased cost were within the contemplation of these parties at the time they entered into the two water supply contracts. Therefore, they cannot assert impossibility of performance.

The Raritan Valley water will be expensive but it represents the culmination of efforts expended over a decade by the State, the Commission and a number of municipalities to make available this additional needed water supply. I am mindful of the rule that the moving parties for summary judgment have the burden of establishing the absence of any genuine issue as to all the material facts which, under applicable principles of substantive law, entitle them to judgment as a matter of law. Knutsen v. Brown, 93 N. J. Super. 522, 530 (Law Div. 1966), affirmed 96 N. J. Super. 229 (App. Div. 1967); Judson v. People’s Bank and Trust Co. of Westfield, 17 N. J. 67 (1954). I am satisfied that the moving parties have sustained their burden. Accordingly the motion for summary judgment is granted.

An appropriate form of judgment will be submitted, consented to as to form or to be settled on notice.


source: Caselaw Access Project

author: Consodine, J. C. C.

license: Public Domain

text:
    BESSIE L. ROBERTS, PLAINTIFF, v. CHARLES L. ROBERTS, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    June 12, 1969.

      Mr. Edward 8. Snyder for plaintiff (Messrs. Rudd, Ackerman & Breitkopf, attorneys).

      Mr. Paul N. Silverman for defendant (Messrs. Silverman £ Berg stein, attorneys).
   Consodine, J. C. C.

(temporarily assigned). Plaintiff seeks in a matrimonial action to enjoin defendant pendente lite from entering the marital home owned as tenants by the entirety, predicated on physical extreme cruelty. No minor children are involved.

Defendant argues that there is no authority in this State authorizing a court of equity to expel a tenant by the entirety from his home.

Our Constitution (N. J. Const. 1947), Art. VT, § III, par. 2, gives the Superior Court original general jurisdiction in all causes. This includes jurisdiction in equity matters.

R. R. 4:98-4 and 4:67 correlate in providing for pendente lite relief by way of preliminary restraints and in making provision for injunctive relief in this court.

One of the maxims of equity is that equity will not suffer a wrong without a remedy. This is the very foundation of equity as it has come down to us. 2 Pomeroy, Equity Jurisprudence (5th ed. 1941), § 423. Concerning the use of this maxim by our courts, see Orland Properties, Inc. v. Broderick, 94 N. J. Super. 307 (Ch. Div. 1967); Cona v. Gower, 89 N. J. Super. 510 (Ch. Div. 1965).

Under the general equity power this court has the authority to grant the relief sought. However, we should be reluctant to exercise the power on the content of conflicting affidavits. Such a factual impasse calls for the taking of testimony before the court.

This court also has statutory jurisdiction under N. J. S. 2x1:34-23 (formerly R. S. 2:50-37). Similar relief was sought and granted in Burger v. Burger, 6 N. J. Super. 52 (App. Div. 1949), where the exclusion of a party from rented quarters was premised on the duty of the court to protect children. The Burger case casts no doubt on the broader statutory authority of the court.

The statute involved harks back to 1794 (Pat. L. of 1794, p. 143) but finds it pertinent ancestry in L. 1818, p. 20, which materially broadened its scope. As presently enacted the statute gives the court the same authority to act on behalf of the wife as it does to act for the benefit of the childreu.

Chapman v. Chapman, 25 N. J. Eq. 394 (Ch. 1874), has been cited by legal encyclopediae as representing a dissent to the majority opinion that courts have the power to exclude a husband from a marital domicile pendente lite, e. g., 24 Am. Jur. 2d, Divorce and Separation, § 1003, p. 1143. The ease does not stand for this oft-stated proposition. Rather, it merely states that the mere filing of a complaint charging adultery, and where there is no substantial ground for apprehension, is not sufficient to remove the husband from the home which the wife claims she owns.

Other jurisdictions have held, under the general equity power of the court or by statute, that on a positive showing of certain and immediate necessity to protect the safety of person or property the power of the court will be exercised where there has been harm or threat of harm evidencing a danger of future injury or damage if the husband is not excluded from the home. See Hardin v. Hardin, 277 Ala. 318, 169 So. 2d 762 (Sup. Ct. 1964); Hendrie v. Hendrie, 118 Fla. 478, 159 So. 667 (Sup. Ct. 1935); Lerner v. Lerner, 21 App. Div. 2d 861, 251 N. Y. S. 2d 400 (App. Div. 1964); Ex Parte Cattell, 146 Ohio St. 112, 64 N. E. 2d 416, 164 A. L. R. 312 (Sup. Ct. 1945); Reed v. Reed, 149 Wash. 352, 270 p. 1028 (Sup. Ct. 1928).

There is no real property question involved as between the parties. Lohmann v. Lohmann, 50 N. J. Super. 37, 46 (App. Div. 1958).

I hold that the authority to act on the motion is found both in our general equity jurisdiction and in our statutory law. On the facts, however, I direct that testimony be taken in open court.


author: Herbert, J. S. C.

text:
    VORNADO, INC., A CORPORATION OF THE STATE OF DELAWARE, PLAINTIFF, v. LIBERTY MUTUAL INSURANCE COMPANY, A CORPORATION, AND CONSOLIDATED MUTUAL INSURANCE COMPANY, AN INSURANCE CORPORATION, DEFENDANTS. LIBERTY MUTUAL INSURANCE COMPANY, A CORPORATION, THIRD-PARTY PLAINTIFF, v. CONSOLIDATED MUTUAL INSURANCE COMPANY, AN INSURANCE CORPORATION, THIRD-PARTY DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided June 12, 1969.

      Messrs. Gummis, Kent & Badin, attorneys for plaintiff Yornado, Inc. (Mr. David N. Samson appearing).

      Messrs. Michels, Schwartz & Maher, attorneys for defendant Liberty Mut. Ins. Co. (Mr. Edward B. Schwartz appearing).

      Messrs. Lieb & Teich, attorneys for defendant Consolidated Mut. Ins. Co. (Mr. Donald Berlin appearing).
   Herbert, J. S. C.

All three parties have moved for summary judgment. Insurance coverage is the basic question. On April 31, 1964 Mrs. Irene Vetro, while shopping at Vornado’s store in Kearny, allegedly fell and suffered injuries. The incident was reported promptly to defendant Consolidated, which was then Vornado’s liability insurance carrier. An investigation by Consolidated followed and included taking statements from two employees at the store, an interview with Mrs. Vetro (though without a written statement), a questionnaire to Mrs. Vetro’s doctor, and obtaining information about her employment record. Early in December 1964 Vornado forwarded to Consolidated a claim letter from Mrs. Vetro’s lawyer. Consolidated answered that by sending out a form giving the name of its man in charge of the claim and suggesting discussions about adjustment. To this the attorney responded by stating that he was waiting for a report and would be in contact with Consolidated later. Thereafter Consolidated heard nothing more about the case from anyone prior to May 25, 1966. The period of the statute of limitations apparently having run without suit being started — as Consolidated thought—tne tile was closed in due course.

In October 1965 Mrs. Vetro started suit. Her attorney of record was the same one who had exchanged communications about her case with Consolidated. The complaint contained an error which led to others, and the whole group of errors led to the present case. Mrs. Vetro’s fall in the store was alleged to have happened on August 21, 1964. By that date defendant Liberty Mutual was Vornado’s insurance carrier. Mr. Matusik, Vornado’s insurance manager, being unaware of the prior history of the Vetro claim, relied on the date in the complaint and sent it to Liberty Mutual for defense. That company assumed responsibility, turned the papers over to its regular attorney and began routine investigation and trial preparation. No objection to the application of its policy was raised by Liberty until October 1967, when two of its men called upon Vornado’s insurance manager, stated that the Vetro accident really occurred before Liberty’s policy had been issued, and presented a draft of letter for Yornado to send to Consolidated turning the case back to that company. The suggested letter was not sent, but on October 17, 1967 another one was, and suit papers were delivered to Consolidated so that it might take over the defense. This Consolidated refused to do, giving two reasons: failure of Yornado to notify Consolidated promptly of the Yetro suit, and Liberty’s continued defense of that suit without objection for more than a year after learning that the accident happened in April 1964.

After disclaiming responsibility Liberty sought to withdraw from the defense of the Yetro suit. This case was then started and an order to show cause with restraints against Ciberty’s withdrawal was issued on January 4, 1968, followed by an interlocutory injunction, so that Liberty through its attorneys is still in charge of the defense of the Yetro action, an action which apparently can be reached for trial in the Law Division in the near future.

After getting the Yetro case Liberty quite promptly began to turn up information indicating that the alleged accident had occurred in April 1964 rather than in August 1964. Erom a central index bureau it was learned that a Yetro claim had been presented to Consolidated, and on or about May 25, 1966 Liberty addressed an inquiry about that to Consolidated. The latter answered promptly, but no one at Liberty realized at the time that there was only one mishap alleged by Mrs. Yetro. In or shortly before the summer of 1966 she furnished answers to interrogatories, one of the answers being that the accident occurred on April 22, 1964, a mistake by one day. After the interrogatories were answered her deposition was taken on July 19, 1966, and during the questioning both Liberty’s attorney and Mrs. Yetro adopted the April 22 date as the correct one. By November 17, 1966 Mr. Cole, of Liberty’s claims department, prepared a two-page memorandum on the Yetro case, at the end of which he said:

“The question as to the date of the accident seems to have been resolved at least in the plaintiff’s mind, since now interrogatories state that the accident occurred on April 22, 1964 and not the original date indicated, August 21, 1964.”

Thus Liberty knew, for more than a year prior to its attempt to withdraw from the case, that the Yetro claim was based on an alleged fall in April 1964. It also knew, of course, the period of coverage specified in its own policy. Apparently no one drew the obvious conclusion, and Liberty went forward with the defense of the case until October 1967 without questioning its responsibility to defend and pay.

Vornado demands judgment against either Liberty Mutual or Consolidated. By the first count of its complaint it alleges that it is entitled to judgment against Liberty on grounds of estoppel arising out of Liberty’s actual defense of the Yetro case. The second count of the complaint alleges that the accident happened during the period of Consolidated’s policy and that Consolidated should, therefore, be held responsible. Both insurance companies argue for exemption from liability and, in effect, for imposition of liability on the other.

The contention of Yornado on this motion is that Liberty should be held liable on principles of estoppel which were stated in Merchants Ind. Corp. v. Eggleston, 37 N. J. 114 (1962), and which were stated and applied in Sneed v. Concord Ins. Co., 98 N. J. Super. 306 (App. Div. 1967). Vornado’s arguement against Consolidated is based upon Cooper v. Government Employees Ins. Co., 51 N. J. 86 (1968), and urges that the two-year delay in forwarding Mrs. Yetro’s summons and complaint does not relieve Consolidated of responsibility in spite of a policy provision requiring that such papers be forwarded “immediately,” this result flowing from Consolidated’s failure to make a showing of a likelihood of appreciable prejudice from the delay. Reading Merchants Ind. Corp. v. Eggleston and Sneed v. Concord, Ins. Co. against Cooper points up differences between prejudice as defined in the estoppel cases and that likelihood of prejudice declared in Cooper to be a necessary element of proof by an insurance company seeking to avoid responsibility for an accident on grounds of late notice. Merchants Ind. Corp. v. Eggleston includes (37 N. J., at p. 137) a strong statement about tbe importance to an insured of having continuous control of litigation if he is to be asked to bear, without the benefit of insurance, the burden of an ultimate judgment in that litigation. Concerning Merchants Ind. Corp v. Eggleston, the court said in Sneed:

“In any event, as indicated above, we are satisfied that Eggleston adumbrates the principle that without an effective nonwaiver agreement an insurer who exercises its policy right exclusively to control the handling of a claim against its insured for a substantial period after it knows it has a basis for denial of coverage will be estopped thereafter to disclaim liability on the policy. Prejudice to the insured will be assumed because the ‘course cannot be rerun’ so as to determine whether the insured would in fact have fared better on his own if tbe insurer had disclaimed promptly.” (98 N. J. Super., at p. 320)

By contrast, in Cooper, where there had been a failure to comply with a provision requiring prompt notice of an accident, the defendant insurance company was held liable, the court saying:

“The insurance contract not being a truly consensual arrangement and being available only on a take-it-or-leave-it basis, and the subject being in essence a matter of forfeiture, we think it appropriate to hold that the carrier may not forfeit the bargained-for protection unless there are both a breach of the notice provision and a likelihood of appreciable prejudice. The burden of persuasion is the carrier’s.” (51 N. J., at p. 94)

Before the Cooper case was decided in January 1968 the test of prejudice was the same, or substantially the same, for both sides of this problem. In that state of the law it is interesting that on facts like those of the present case an insurance company in the position of Consolidated was held not liable, and a carrier in the position of Liberty was held responsible on grounds of estoppel, for a claim which arose during the stated period of the other company’s policy. Ebert v. Balter, 74 N. J. Super. 466 (App. Div. 1963), and Ebert v. Balter, 83 N. J. Super. 545 (Cty Ct. 1964).

In tlie case before me there is not the slightest suggestion of inability to pay, but if I could imagine hopeless insolvency on the part of Consolidated, I would conclude that Yornado is entitled to a judgment against Liberty requ iring that company to defend and pay; and if I could imagine hopeless insolvency on the part of Liberty, there would be no difficulty in holding Consolidated responsible for defending the Yetro suit from today on and for paying any judgment that might be obtained by Mrs. Yetro. Here, however, the real choice is between two solvent insurance carriers.

If an insurance company takes charge of a suit which is not covered by its policy and continues to defend after acquiring knowledge of facts indicating lack of coverage, the party who should have had charge of the case from the beginning has been deprived of the opportunity to handle his own defense. If that party is the insured, prejudice to him will be assumed under our law as it now stands (Merchants Ind. Corp. v. Eggleston; Sneed v. Concord Ins. Co.) and such prejudice is a necessary element of the rule of estoppel which requires the insurance company to continue bearing the responsibility for the case which it previously assumed. Erom the point of view of Consolidated in the present case it may be asked, if prejudice be assumed toward the holder of a policy of insurance (which does not cover the particular claim), why should it not be assumed similarly on the same basic facts toward any party, even another insurance company, who has been deprived of the opportunity to defend a case which should have been in its hands from the beginning? In deciding whether to apply principles of estoppel, it is difficult to draw a logical distinction between prejudice to an insured who has not been allowed to defend his own case and prejudice to another insurance company which has not been allowed to handle its own case. However, I think the decision here should go against Consolidated.

The rule of Cooper and the rule of estoppel which was applied in Sneed were both developed to give holders of insurance policies the benefit of insurance protection in sitúations where unfairness would have resulted from cutting off the protection. In the future it may be that an insured who seeks to make an insurance company continue the defense of a case on grounds of estoppel will, as a by-product of Cooper, be required to show “a likelihood of appreciable prejudice” rather than having prejudice assumed; but whether that change in our law comes about or not, I think the Cooper rule should be extended to include Liberty’s position in the present case. Liberty merely assumed an obligation which Consolidated contracted for. The contract should outweigh the assumption. Absent a showing of prejudice as called for by Cooper, the Consolidated company, in spite of the late notice of suit, should be held to its contract to defend and pay and should not shift the burden of performance to Liberty on grounds of estoppel; and I so hold.

The record on this motion has included depositions and exhibits as well as affidavits. Except for pointing out that it was ignorant of the Vetro suit for two years and during that time had no opportunity to defend, prepare for trial and endeavor to settle, Consolidated has pointed to no specific elements of prejudice. Yet it argues that there should be a trial; that facts bearing upon the question of prejudice may then emerge. In this respect Consolidated is like a defendant in a tort action who has no affirmative proof of contributory negligence but hopes that the testimony of plaintiff’s witnesses may furnish the proof.

Proof relating to prejudice affecting Consolidated would almost certainly have to be found in the acts or omissions of Liberty’s employees and attorneys. Among the depositions are those of three of Liberty’s men. I find nothing to indicate that there were any missteps or lost opportunities in handling the Vetro suit. It appears to have been given routine and adequate attention. There is nothing to show that Consolidated would have done any better with the defense than Liberty has done. Though summary judgment is a remedy surrounded by strict limitations — as made plain in many appellate decisions—I have concluded, with some hesitation, that Consolidated is not entitled to a trial merely for the purpose of exploring further the question of possible prejudice. I am somewhat fortified in this by Allstate Ins. Co. v. Grillon, 105 N. J. Super. 254 (App. Div. 1969). The case is one indication that the rule of Cooper will be forcefully applied, since the Appellate Division took the somewhat unusual course of reversing on the facts the trial eouit’s determination (101 N. J. Super. 322) that a likelihood of appreciable prejudice, arising from failure to forward suit papers, had been shown.

There will be a summary judgment declaring that Consolidated is not relieved of the obligations to defend and pay as contained in its policy, and directing it to take responsibility from the date of the judgment for the defense of the Vetro suit and to pay, subject to the limits of its policy, any judgment that may be obtained therein.

Vornado moves for judgment requiring Consolidated or Liberty, or both, to pay its legal expenses. This is done although the amended complaint contains no demands for damages. Vornado compares its position to that of an insured who, after a disclaimer, defends his own case and then brings a successful action for breach of the policy of insurance, including in that action a claim for all expenses connected with the defense of the claim which the insurance company should have defended. The technical obstacle in the way of an award is that Vornado has not defended the Vetro case; it has merely brought its own suit to enforce its rights to have that case defended by Consolidated, or Liberty. Vornado is not entitled to an allowance to cover the expenses of this action. Liberty also seeks an award for legal expenses against Consolidated. That portion of Liberty’s motion will be denied. Liberty has defended the Vetro ease, but got into that through a mistake for which Consolidated is not chargeable and then continued because of its own failure to realize the significance of the facts before it. I conclude it was a volunteer and should bear its own expenses. Though it continued as the defending agent under an interlocutory order in this cause, I think that was an appropriate extension of its voluntary defense efforts for the purpose of maintaining the status quo, and that Consolidated should not be responsible even for the expenses of the period following Liberty’s disclaimer.

If the attorneys for Consolidated think it necessary, the judgment can provide that the relief given to Liberty is subject to the condition that Liberty and its attorneys will turn over to Consolidated all defensive material for the Yetro suit which they have.


author: Stamlek, Joseph PL, J. S. C.

text:
    HELEN OLIFF, AN INFANT, BY HER GUARDIAN AD LITEM, EDWARD OLIFF, AND EDWARD OLIFF, INDIVIDUALLY, PLAINTIFF, v. KIAMESHA CONCORD, INC., A NEW YORK CORPORATION, DEFENDANT.
    Superior Court oí New Jersey Law Division.
    Decided June 16, 1969.

      Mr. Abraham I. Harhavy, attorney for plaintiffs.

      Mr. Frank P. Addas, for defendant (Messrs. James & Addas, attorneys).
   Stamlek, Joseph PL, J. S. C.

Plaintiffs bring this negligence action with service having been made by mail pursuant to B. B. 4:4-4(d) upon defendant at its Pew York City office located at 257 Park Avenue South. Defendant moves to set aside the service as constitutionally impermissible.

On or about February 22, 1967 the infant plaintiff and her parents were paying guests at the resort hotel “The Concord,” owned and operated by defendant Kiamesha Concord, Inc., and located at Kiamesha Lake, Sullivan County, Pew York. The child through her guardian ad litem alleges injuries resulting from defendant’s negligence and sues to recover damages. Her father claims for medical expenses and loss of services.

Defendant argues that it is a Pew York corporation, all of its officers, directors and stockholders reside in the State of Pew York, the corporation owns no real estate or personal property in the State of Pew Jersey, employs no travel agents in this State, has no office for the transaction of business and transacts no business, and makes no contracts within our State. Potwithstanding that advertisements are placed in the New York Times which is circulated throughout Pew Jersey, these advertisements do not list any specific travel agent or agency in this State as authorized representatives of “The Concord” or the corporation. In its brief and on oral argument defendant acknowledges that brochures are sent directly “if requested by Pew Jersey residents,” which brochures containing reservation forms are then mailed from New York State into New Jersey. It was subsequently admitted that once a guest has registered at the hotel, communications, advertisements and seasonal solicitations are sent to the guest, who has become a permanent part of the mailing service of defendant, no request being necessary.

Additionally, defendant argues that the infant was treated on the day of the injury by a Sullivan County doctor and that she was confined for three days in a Sullivan County hospital. Defendant concludes with the statement that “the material and necessary witnesses on behalf of the defendant with respect to the alleged happening of the accident reside in New York State except for two witnesses who reside in Hartford, Connecticut.”

Plaintiffs state that the parents of the infant first went to “The Concord” more than ten years ago, having made reservations as a result of an unsolicited brochure received in the mail at their home in Montclair and receiving a confirmation in the return mail. Thereafter on numerous occasions they continued to receive brochures, particularly for holiday occasions. As members of the B’nai Brith, defendant’s brochures were used to invite them to the District Three annual convention, a letter from the president of the association being incorporated in the printed material copyrighted by defendant. Defendant encourages New Jersey-domiciled travel agents to imprint the agency’s name, address and telephone number on the copyrighted brochures and suggests that prospective guests “call your travel agent.” New Jersey travel agents who make reservations receive a commission of 10% of the cost of the accommodations after the departure of the guests.

Admitting that the infant was hospitalized in Monticello, New York, for three days, plaintiffs argue longer confinement was necessary at Mountainside Hospital in Montclair and that the treating surgeon and physician practiced locally.

B. B. 4:4A4(d) permits the extra-territorial service of process subject to due process of law. The guidelines for the use of our “long-arm” rule are explained in International Shoe Co. v. Washington, 326 U. S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945) where the Court said:

“* * * due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” (at p. 316, 66 S. Gt., at p. 158)

It is clear that each ease which raises questions of “minimum contacts” or forum non conveniens must be decided on its own peculiar and particular set of facts. The question to be answered in each such case is whether “traditional notions of fair play” and “substantial justice” are subverted. There is no present rule of decision by an appellate tribunal in this State which requires formal application by the trial court on this motion. There is no precise dividing line. Precedents here are tools of limited use.

Defendant relies heavily upon Green v. Chicago, Burlington & Quincy Ry., 205 U. S. 530, 27 S. Ct. 595, 51 L. Ed. 916 (1907), and Dowd v. Boro Drugs, Inc., 70 N. J. Super. 488 (App. Div. 1961). The holding in Green to the effect that mere solicitation without more is insufficient to vest jurisdiction has been considerably weakened, although never directly discredited or overruled, by later United States Supreme Court decisions. See McGee v. International Life Insurance Co., 355 U. S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957), where a Texas insurance company subjected itself to in personam jurisdiction in California when the insurance contract was delivered by mail to the California resident, received and accepted in California, premiums mailed from California and the insured died a resident of California.

Thereafter in Hanson v. Denckla, 357 U. S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958), the Supreme Court said:

“* * * It is a mistake to assume that this trend [of expanding in personam jurisdiction] heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. * * * Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the ‘minimal contacts’ with thai State that are a prerequisite to its exercise of power over him. * *■ *” (at p. 251, 78 S. Ct., at p. 1238)

In Dowd, supra, a New York corporation had sold its products to an independent New York distributor, who then distributed them to retailers in New Jersey. Advertisements were circulated in New Jersey. The Appellate Division held that these were not sufficient contacts required for due process. This ease is readily distinguishable from the present one.

In Dowd the foreign corporate defendant merely advertised its products in national magazines, some of which were circulated in New Jersey, and the advertising was intended to promote local independent retail sales to the consumer. No direct transaction took place between the corporation and consumer.

Here “The Concord,” after a New Jersey resident had registered at the hotel, whether initiated by its own advertisements or through a travel agency, maintained direct communication with the guest, directly soliciting the specific New Jersey resident from time to time, and in the very case at bar succeeded in persuading return visits upon receipt of a deposit directly from the guest. There is no question but that “The Concord” availed itself of the privilege of conducting activities in this State directly to its intended guest and also through travel agents to whom it paid commissions. Cf. J. W. Sparks & Co. v. Gallos, 47 N. J. 295 (1966).

In a more recent ease, Roland v. Modell’s Shoppers World of Bergen County, Inc., 92 N. J. Super. 1 (App. Div. 1966), the Appellate Division reconsidered the minimum contacts limitation as expressed in Dowd and stated that “having regard to the development of the law in this field throughout the country since Dowd was decided in 1961, we question whether Dowd is a correct statement of today’s constitutional law.” (at p. 16)

In Berry v. Pennsylvania R. R. Co., 80 N. J. Super. 321 (Law Div. 1963), the court, after reviewing many decisions, concluded:

“[T]hat the standard to be used by the courts in determining whether the activities engaged in are such as would justify the subjection of a foreign corporation to suit is not made up simply of mechanical or quantitative criteria. Rather, the test to be applied depends upon the quality and nature of the activity in relation to the fair and orderly administration of the laws.” (at p. 336)

Defendant urges this court to accept the hotel business as one of a unique nature. In support of this proposition the following cases are cited: Turner v. Jack Tar Grand Bahama, Ltd., 353 P. 2d 954 (5 Cir. 1965); Miller v. Surf Properties, Inc., 4 N. Y. 2d 475, 176 N. Y. S. 2d 318, 151 N. E. 2d 874 (Ct. App. 1958); Miller v. Kiamesha-Concord, Inc., 420 Pa. 604, 218 A. 2d 309 (Sup. Ct. 1966); MacInnes v. Fontainebleau Hotel Corp., 257 F. 2d 832 (2 Cir. 1958).

In the first place, no justifiable reason is advanced to create a special hallowed niche of immunity from process for the hotel which seeks to profit from the resident of the forum state by repeated and direct approaches to the resident.

In the second place, the cases cited above were brought under the “long-arm” statutes of Texas, New York and Pennsylvania. In referring to its statute the New York courts have said that the New York Legislature “has not extended New York’s jurisdiction to the utmost constitutional limit.” A. Millner Co. v. Noudar, 24 A. D. 2d 326, 266 N. Y. S. 2d 289, 293 (App. Div. 1966). What is required under the New York statute is to find the foreign defendant “doing business” in the “traditional” sense. Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N. Y. 2d 443, 261 N. 7. S. 2d 8, 209 N. E. 2d 68 (Ct. App. 1965), certiorari denied Estwing Mfg. Co. v. Singer, 382 U. S. 905, 86 S. Ct. 241, 15 L. Ed. 2d 158 (1965).

Similarly, in Miller v. Kiamesha-Concord, Inc., supra, the Pennsylvania Supreme Court noted that the Pennsylvania Legislature had not chosen to exercise the lull extent of jurisdiction and did not make foreign corporations suable as extensively as it could constitutionally have done.

But in onr State the “long-arm” arises from a rule of court. Judge G-aulkin noted in Roland v. Modells Shoppers World of Bergen County, Inc., supra:

“To paraphrase a popular song, anything any state can do under the Federal Constitution we can do, and if a state is limited by the terms of its statutes or rules, we can do it better. Hence, we do not need to struggle with the oft difficult problems of statutory construction faced by courts in states with detailed ‘long-arm statutes.’ ” (92 N. J. Super., at p. 7)

An interesting comment appears in the annotation “Products Liability: In Personam Jurisdiction Over Nonresident Manufacturer or Seller Under Dong-Arm’ Statutes,” 19 A. L. R. 3d 13 (1968) :

“Dealing with (he New Jersey Civil Practice Rule authorizing, ‘subject to due process of law,’ service by registered mail upon a foreign corporation, the courts have stated that the court is not delayed by the threshold question of whether service under the Rule was statutorily, as distinguished from constitutionally, permissible, since that preliminary determination is only necessary when a state statute has stopped short of the outer constitutional limits on such service and requires even more involvement with the forum than is needed to satisfy due process. It has also been stated that the New Jersey Rule was adopted to enable the New Jersey courts to exercise jurisdiction over foreign corporations and nonresident individuals as far as due process will allow; and that the phrase ‘subject to due process of law’ in the New Jersey Rule signifies New Jersey’s assertion of extraterritorial jurisdiction to the furtherest extent consonant with the Federal Constitution’s restraint upon that power.” (at p. 127)

Both plaintiffs and defendant in support of their respective adverse positions ask that the court consider the convenience of the separate forums. Our broad and liberal rules of court providing not only for the taking and use at trial of pretrial discovery information but also for the taking of testimony of witnesses in foreign jurisdictions for use at trial, are advantageous to both parties. The witnesses in Hartford, Connecticut, are equally available, as are the treating physicians and the hospital records. The difficulty in getting the New Jersey treating physicians to appear personally at a trial in Sullivan County, New York, should be obvious to all who have experienced the great difficulty of securing the attendance of doctors at a trial conducted in the same or neighboring town or city. It cannot be said that in the case at bar New York is any more convenient a forum than New Jersey.

It is concluded that there are sufficient contacts by defendant in New Jersey, and substantial justice requires a denial of defendant’s motion to set aside the service of process.


author: Kentz, J. J. & D. R. C.

text:
    STATE OF NEW JERSEY IN THE INTEREST OF J. W.
    Juvenile and Domestic Relations Court Union County
    Decided June 13, 1969.

      Mr. Henry W. Jaeger, Assistant Prosecutor, for the State (Mr. Leo Eaplowitz, Prosecutor of Union County, attorney) .

      Mr. Leonard Wolkstein, Assistant Deputy Public Defender, for the juvenile (Mr. Stanley 0. Van Ness, Public Defender).
   Kentz, J. J. & D. R. C.

This matter comes before me on a motion made by the juvenile for a trial by jury. The juvenile is charged with various offenses encompassing assault and battery, attempted robbery, breaking and entry and larceny, receiving stolen property, incorrigibility, and conduct endangering his health, morals and general welfare. N. J. S. 2A :4r-14.

The juvenile is 12 years of age, Because of his age he does not come within the provisions of N. J. S. 2A :4-15 which permits a jury trial as of right for a juvenile of the age of 16 or 17 where the complaint is transferred to an adult court pursuant to the statute. The jurisdiction of this court is exclusive in juvenile matters by virtue of N. J. S. 2A :4r-14:, except for those cases transferred at the request of the juvenile or by order of the Juvenile and Domestic Relations Court when the case otherwise falls within the provisions of N. J. S. 2A :4-15. See State v. Monahan, 15 N. J. 34 (1954). Hence, if a juvenile under the age of 16 is to have a jury trial, it must be conducted in the Juvenile and Domestic Relations Court. However, under N. J. S. 2A :4r-35 the Legislature has provided, inter alia:

“The juvenile and domestic relations court shall hear and determine all cases of children arising under the provisions of this chapter without a jury.”

Since the statute in question has not been repealed or otherwise amended and is still in full force and effect, there can be no trial by jury for a juvenile offender under the age of 16 unless the statute is found to be unconstitutional.

It is a well settled rule that there is a presumption of constitutionality in favor of a statute and that a statute will not be declared unconstitutional unless it is plainly in contravention of a constitutional mandate or prohibition. It is the duty of courts to so construe a statute as to render it constitutional if it is reasonably susceptible of such interpretation. St. John the Baptist Greek Catholic Church of Perth Amboy v. Gengor, 121 N. J. Eq. 349 (E. & A. 1937); Lynch v. Borough of Edgewater, 8 N. J. 279 (1951); Woodhouse v. Woodhouse, 17 N. J. 409 (1955); Daly v. Daly, 21 N. J. 599 (1956).

This rule has been affirmed more recently in Williams v. Smith, 94 N. J. Super. 341 (App. Div. 1967), affirmed 51 N. J. 161 (1968). There the Supreme Court adopted the opinion of the Appellate Division wherein the court stated:

“As was said in In Re Loch Arbour, 25 N. J. 258, 264-265 (1957), all doubts are resolved in favor of constitutionality; it is the policy of our law not to invalidate a statute which has been in force without substantial change for many years, unless its unconstitutionality is obvious.”

The burden of proving obvious uneonstitotionality is upon the party seeking to invalidate the statute. Behnke v. N. J. Highway Authority, 25 N. J. Super. 149 (Ch. Div. 1953), affirmed 13 N. J. 14 (1953).

It must be noted that the presumption of legislative validity applies even more forcefully in lower courts than at the appellate levels. In Neeld v. Automotive Products Credit Ass’n, 21 N. J. Super. 159 (D. Ct. 1952), Judge Fulop said:

“The pattern of the law must be drawn by the appellate courts. The trial courts, especially those of limited jurisdiction, must follow, not lead.” It was also stated in State v. Cannarozzi, 77 N. J. Super. 236 (App. Div. 1962) :

“* * * in New Jersey and other states the proposition has been laid down forcefully that inferior courts should assume an act of the Legislature to be constitutional unless it so clearly conflicts with the ■Constitution as to leave no reasonable doubt of its defectiveness.” {citing cases)

, The question of the constitutionality of juvenile proceedings without jury trials is hardly one which is free from doubt. Although the United States Supreme Court in In re Gault, 387 U. S. 1, 87 S. Ct. 1428, 18 L. Ed. 2d 527 (1967), did extend certain constitutional rights and safeguards to juveniles, the court did not determine whether a juvenile was entitled to a jury trial.

The issue has received considerable attention in a number of jurisdictions with conflicting results. Juveniles are afforded a jury trial by acts of the legislatures in nearly half the states. In England all children over the age of 14 charged in the juvenile courts with what would be indictable offenses are accorded the right of trial by jury. See 46 Cornell L. Q. 387 (1961); Colo. Rev. Stat. Ann. § 22-8-2 (1953); Tex. Rev. Civ. Stat., art. 2334 (Supp. 1950); Okla. Stat. tit. 10, § 102 (1941).

In other states statutes similar to that in New Jersey denying a jury trial have been upheld as constitutional. Estes v. Hopp, 73 Wash. 2d 272, 438 P. 2d 205 (Super. Ct. 1968). A jury trial has been denied to a juvenile offender in Dryden v. Commonwealth, Ky., 435 S. W. 2d 457 (1968), where the Kentucky Court of Appeals stated: “Unless and until further enlightened or otherwise directed by the Supreme Court, we hold that a jury trial is not a constitutionally guaranteed right in a juvenile proceeding.” Likewise a jury trial was disallowed in Commonwealth v. Johnson, 211 Pa. Super. 62, 234 A. 2d 9 (Super. Ct. 1957).

In contrast, the Supreme Court of New Mexico, in holding that under its state constitution a juvenile is entitled to a jury trial, made the following comment:

“AA'e would add that if the reasoning ol' In lie Gault, supra, is applied in this ease it would be difficult in our view, to escape the conclusion that the jury trial guarantees of Art. II, § 14, N. M. Const, as well as those of the Sixth Amendment of the United States Constitution are likewise applicable.” Peyton v. Nord, 78 N. M. 717, 437 P. 2d 716 (1968).

In a similar vein, in cases where the juvenile has an election between treatment as an adult or as a juvenile, which choice determines whether a jury trial is granted or denied, conflicting decisions have resulted. In Nieves v. United States, 280 F. Supp. 994 (S. D. N. Y. 1968), such provisions in the Federal Juvenile Delinquency Act, 18 U. S. C. § 5033 (1964), were held ttnconstitutional. Nearly identical provisions in New York law which classifies juveniles as either “young adults” (jury trial and adult treatment) or as “youthful offenders” (no jury trial and juvenile dispositions) were in issue in People v. K., 58 Misc. 2d 526, 296 N. Y. S. 2d 404 (Sup. Ct. 1968), and the court declined to rule the statute unconstitutional saying: “In conclusion I shall not declare void and unconstitutional a statute which I find has been so beneficial in its application. If this is to be done at all it should be done at the Appellate level rather than at the trial level.” In its opinion the court noted that the Supreme Court of Now York, Appellate Division for the First Department, had declared a jury trial a matter of right for a petitioner seeking treatment as a youthful offender in Matter of Saunders, 30 A. D. 2d 803, 292 N. Y. S. 2d 44 (1968). The courts of Ohio are also divided. See State v. Fisher, 17 Ohio App. 2d 183, 245 N. E. 2d 358 (App. Ct. (1969).

Perhaps the case most indicative of the uncertain state of the law on this issue is DeBacker v. Brainard, 183 Neb. 461, 161 N. W. 2d 508 (Sup. Ct. 1968). There it was said:

“Four judges, a majority of this court, are of the opinion that a juvenile charged with violation of a state criminal law as the basis for an adjudication of delinquency is entitled to a constitutional right to a trial by jury in juvenile court if the offense is one which would give rise to a constitutional right to trial by jury if committed by an adult and triable in an adult criminal court.”

Despite this the Nebraska statute denying juveniles the right to a jury trial was upheld because the Nebraska constitution requires the concurrence of five judges to hold an act of the Legislature unconstitutional. Nebr. Const., Art. 8, § ÍJ. Leave to appeal this decision has been granted by the United States Supreme Court. No decision has yet been rendered.

In view of the manifestly unsettled state of the law it cannot be said that the statute with which we are concerned is clearly or obviously unconstitutional. This being so it is not for this court to disregard the well settled rules favoring the presumption of statutory validity, nor to forget the limitations inherent in an inferior, statutory court by acting within the sphere properly belonging to the appellate tribunals.

Dor the foregoing reasons the juvenile’s motion for a trial by jury is denied. An order will be entered accordingly.