author: Dreier, J. D. C.,

text:
    MONSANTO COMPANY, PLAINTIFF, v. ALDEN LEEDS, INC., ET AL., DEFENDANTS.
    Superior Court of New Jersey Law Division
    September 6, 1974.

      Mr. William H. Hyatt, Jr., argued the motion for plaintiff (Messrs. Pitney, Hardin & Kipp, attorneys).

      Mr. William V. Kennedy, argued the motion for defendant (Messrs. Kennedy and Brogan, attorneys).
   Dreier, J. D. C.,

Temporarily Assigned. Plaintiff has moved for summary judgment on its claim for goods sold and delivered. The goods in question are large quantities of dry organic chlorine, patented and trademarked under the designation ACL-60 and ACL-85. Defendant Alden Leeds, Inc. acknowledges receipt of these goods under a written contract for the amount of $1,056,577.73, as well as goods on open account in the amount of $38,058.86. Plaintiff’s claim is for these amounts, plus interest and costs of suit. Defendant Alden Leeds, Inc. and the other named defendants (who are individual and corporate guarantors of Alden Leeds, Inc.’s obligations) have counterclaimed, alleging that a portion of the goods sold and delivered were defective and that these defects caused extensive consequential damage to defendant Alden Leeds, Inc. The sales price of the allegedly defective goods is approximately $150,000.

The factual picture is relatively simple. The chemicals in question were purchased by defendant Alden Leeds, Inc. from plaintiff under a contract which provided for application of Missouri law. The goods were delivered and stored in defendant’s manufacturing plant which was owned by a related corporation Leeds Terminal Inc. Defendant alleges that moisture problems developed with the chemicals, and that from time to time chlorine gas would escape and a container of the chemicals would spontaneously ignite. On July 26, 1971 the product allegedly caused extensive property damage to 2145 McCarter Highway, Newark. On August 10, 1971 a fire occurred at a reserve location of Alden Leeds, Inc. in Kearny, N. J., causing severe damages to the building, equipment, electrical installations, raw materials and inventory; and on April 10, 1972 a third fire occurred in a building located in Kearny, N. J. (also owned by defendant), causing severe damage to building, equipment, electrical systems, raw materials, and inventory. In addition, defendant alleges that there were numerous smaller fires which were directly traceable to plaintiff’s product. The property damage claims and business losses for Alden Leeds, Inc. are alleged to equal or exceed the main claim by Monsanto, and defendant Alden Leeds, Inc. asserts further that its property damage claims at 2145 McCarter Highway approximate $405,000, with its landlord, Leeds Terminal, Tnc. having an independent claim for the replacement cost of the building of approximately $1,560,000.

Plaintiff has moved for summary judgment, but the real issues in the ease arise under defendant’s counterclaim which raises several points of first impression in New Jersey, including: (1) May a claim for strict liability in tort be maintained by either (a) a commercial processor or (b) its landlord, against a supplier of the allegedly defective material? (2) May general disclaimers in a contract for the sale of commercial materials encompass claims for strict liability in tort? and (3) Does a provision for the prohibition of incidental or consequential damages in a commercial contract encompass claims for strict liability in tort? There are also subsidiary issues in this case concerning the applicability of Missouri law to the contract or tort claims.

By cross-motion defendant Alden Leeds, Inc. has sought leave pursuant to R. 4:33 to permit Leeds Terminal, Inc., a corporation with common stockholders, and the owner of the plant or warehouse in which the chemicals were stored, to intervene in the action, so as to assert its claim against plaintiff for the destruction of the premises.

The contract for the sale of the chemicals contained the following warranty provision (defendant is referred to as the “distributor” in the agreement) :

WARRANTY — Unless otherwise provided herein, Monsanto warrants title and that all goods sold hereunder shall conform to Monsanto’s standard specifications. Subject to the preceding sentence and except as otherwise explicitly stated herein, MONSANTO MAKES NO REPRESENTATION OR WARRANTY OE ANY KIND, EXPRESSED OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OR ANY OTHER MATTER WITH RESPECT TO THE GOODS, whether used alone or in combination with other substances. Monsanto shall not be liable for and Distributor assum.es responsibility for all personal injury and property damage resulting from the handling, possession or use of the goods by distributor, [emphasis supplied]

In addition there is a statement concerning remedies as follows :

Distributor’s exclusive remedy and Monsanto’s limit of liability for any and all losses or damages resulting from defective goods or from any other cause shall be for the purchase price of the particular delivery with respect to which losses or damages are claimed plus any transportation charges paid by distributor. In no event shall Monsanto be liable for incidental or consequential damages.

I

Initially, with respect to the cross-motion for Leeds Terminal, Inc. to intervene pursuant to B. 4:33-3, it is clear that the motion should be granted. The rule provides:

Upon timely application anyone may be permitted to intervene in an action if his claim or defense and the main action have a question of law or fact in common. When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a state or federal governmental agency or officer, or upon any regulation, order, requirement or agreement issued or made pursuant to the statute or executive order, the agency or officer upon timely application may be permitted to intervene in the action. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.

Plaintiff claims that there would be an unreasonable delay if the intervention is permitted, since the case is now approaching the pretrial conference stage. The problem with such an argument is that there are common questions here which would take far more time to try in a second case. Monsanto did not make Leeds Terminal a party to the action since it was not liable for the purchase price of the goods. But, even though the principals of the landlord and defendant are the same, the counterclaim for damages would not adjudicate perhaps the largest single item of damages caused by the fires, the value of the Leeds Terminal building. Also, if it is determined that the contract between Alden Leeds, Inc. and Monsanto precludes the imposition of consequential damages against Alden Leeds, Inc., the real issue in the case may be between Leeds Terminal, Inc. and Monsanto.

Monsanto also has asked for summary judgment for the acknowledged balance due it for the nondefective chemicals, and for immediate execution against defendant. The last-quoted rule in its final sentence shows that this court must consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. This court is of the opinion that such execution should not be permitted, even if summaiy judgment is granted in accordance with this opinion (upon the taking of the testimony noted hereafter), until such time as the rights of Leeds Terminal, Inc. have been adjudicated, in order to accomplish substantial justice to the parties. Plaintiff, therefore, will not be delayed or prejudiced by having the rights of Leeds Terminal, Inc. determined in these proceedings. As to the substantive rights of the landlord, see the discussion infra.

II

The first issue raised with respect to the summary judgment motion is directed to defendant’s counterclaim for breach of express or statutory warranties. Since the contract specifies the law to govern its interpretation, and public policy does not dictate otherwise, the contract will be interpreted under Missouri law. Shotwell v. Dairymen’s League Co-op Ass’n, 22 N. J. Misc. 171 (D. Ct. 1944).

There is no question in this case that defendant’s claims are primarily for consequential damages. Therefore, § 2-719(3) of the Missouri Uniform Commercial Code, Vernon’s Annotated Missouri Statutes (hereafter V. A. M. S) § 400.2-719(3) is relevant. (See also N. J. S. A. 12A:2-719 (3) for similar language.) This provision states that:

Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

Also, V. A. M. S. § 400.2-316 (and N. J. S. A. 12A:2-316) permits the exclusion or modification of express warranties (V. A. M. S. § 400.2-313) and even the statutory implied warranties (V. A. M. S. § 400.2-314). Identical provisions are set forth in the corresponding sections of the New Jersey Uniform Commercial Code.

Case law in both Missouri and New Jersey generally permits the allocation of risks. See Rock Springs Realty, Inc. v. Waid, 392 S. W. 2d 270, 272 (Mo. Sup. Ct. 1965) ; Monsanto Chemical Co. v. American Bitumuls Co., 249 S. W. 2d 428, 431 (Mo. Sup. Ct. 1952) ; Moreira Constr. Co. v. Moretrench Corp., 97 N. J. Super. 391, 394-396 (App. Div. 1967), aff’d o. b. 51 N. J. 405 (1968). Also, see the further discussion of this point, infra, as such allocation clauses relate to tort claims. In the same respect, this court must consider § 2-302 (V. A. M. S. § 400.2-302; N. J. S. A. 12A:2-302, “Unconscionable. Contract or Clause”) which reads as follows:

(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) lVlien it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

This court reads § 2-719(3), by its use of the word “unconscionable,” as incorporating the standards set forth in § 2-302(1) and (2). Specifically, this finding of unconscionability is a matter of law to be determined by the court, without a jury, although there may be a taking of evidence under subsection 2 of the last-cited statute as to the contract’s commercial setting, purpose and effect. (As is noted hereafter, this testimony is equivalent to that which the court will require to determine whether the damage and remedy limitation provisions of the contract were intended to encompass tort claims arising ont of any negligence or strict liability questions, both of these latter questions also concerning contractual interpretation, and thus for the court sitting without a jury.) If this court finds that the consequential damages limitation was unconscionable within the meaning of the cited sections of the Uniform Commercial Code, then plaintiff’s summary judgment motion to strike defendants’ warranty claim will be denied; if the converse is determined, the motion will be granted as to the warranty claim. Cf. Collins v. Uniroyal, 126 N. J. Super. 401, 406-407 (App. Div. 1973), aff’d 64 N. J. 260 (1974), applicable to the consumer situation.

Ill

In the event the limitation is found unconscionable, the next issue within the warranty area will be which of- the parties may assert this breach of warranty. Although there is no question that Alden Leeds, Inc.- can assert the breach of warranty, its landlord, Leeds Terminal, Inc., does not fall within the statutory class of permissible plaintiffs. Section 2-318 of the Missouri and New Jersey Uniform Commercial Codes reads:

A seller’s -warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.

This provision was recently interpreted in Heavner v. Uniroyal Inc., 63 N. J. 130, 153-154 (1973), quoting extensively from the Official Comment. This discussion (and the numerous articles on the subject) leads this court to the conclusion that even the proposed amendments set forth in footnote 14 in the Heavner opinion (63 N. J. at 154) do not foretell the broad scope of potential liability for breach of warranty, as development in this area runs parallel to the expanding area of strict liability in tort.

But insofar as the statutory warranties are concerned, § 2-318 of the Uniform Commercial Code extends such a warranty only to a natural person who is in the family or household of his buyer or who is a guest in his home, if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. The corporate landlord in the case at bar would not so qualify, however illogical this distinction may be. A seller making a warranty concerning a product that can cause damage to the physical area in which the product is located should be aware that substantial damage could arise if the product is defective, and should be held liable to guard against such loss at least as provided in the proposed amendment to § 2-318. See also, Prosser on Torts (4 ed. 1971), at 568. But it is not the duty of the courts to amend the statute where the Legislature has spoken. Therefore, under New Jersey law the statutory breach of warranty claims would not be available to Leeds Terminal, Inc., or to any party other than the contract purchaser, or the limited class set forth in § 2—318.

Missouri has taken the view that the implied statutory warranty and strict liability claims should be treated in the same manner. Keener v. Dayton Electric Mfg. Co., 445 S. W. 2d 362, 364 (Mo. Sup. Ct. 1969); Hales v. Green Colonial Inc., 490 F. 2d 1015, 1022 (8 Cir. 1974). New Jersey has taken a similar position, at least in “defect” cases. See Realmuto v. Straub Motors Inc., 65 N. J. 336, 345 (1974). Since the warranty claim under the contract, governed by Missouri law, would be treated in the same manner as a strict liability claim, and, as noted later, the tort claims would be approached under New Jersey law (Mellk v. Sarahson, 49 N. J. 226 (1967)), the substantive basis for liability may be phrased in terms of our tort theory. A fuller consideration of the standing of the landlord under the warranty theory may be put off until a more appropriate case is presented. As is noted infra, 'there is also a great similarity between the law in Missouri and New Jersey in the strict liability area.

IY

The harder question in this case is defendants’ claim based upon strict liability in tort, and the applicability of this doctrine to a commercial user. First, it should be noted that the law governing this case with respect to the tort claim will be New Jersey law. See Mellk v. Sarahson, supra, where the court noted that, although there should be no mechanical application of the lex loci delicti to all choice of law problems in tort cases, the law to be applied should be that of the state having the greatest interest in the case in question. 49 N. J. at 228-230. In this case the ehemicaí was shipped into the State of New Jersey where the plaintiff knew or should have known that any defect in its product would have effect. Defendant maintained its plants in New Jersey, intended to process the chemicals here, and the actual losses suffered by defendants occurred in this State. This court has no hesitancy in applying New Jersey law to the tort claim.

New Jersey’s decisional law with respect to strict liability in tort is perhaps the broadest in the country. Starting with the early cases (phrased in the warranty terminology) of Henningsen v. Bloomfield Motors Inc., 32 N. J. 358, 409-412 (1960), and Cintrone v. Hertz Truck Leasing & Rental Service, 45 N. J. 434, 451—453 (1965), and running through the true strict liability cases.commencing with Santor v. A & M Karagheusian, Inc., 44 N. J. 52, 63-67 (1965), and down to the most recent case of Realmuto v. Straub Motors Inc., supra, 65 N. J. at 344, our Supreme Court has shown itself willing to expand this field in order to fulfill the public’s expectation of responsibility for products placed in the stream of commerce. As the court stated in Santor:

* * * The obligation of the manufacturer thus becomes what in justice it ought to be — an enterprise liability, and one which should not depend upon the intricacies of the law of sales. The purpose of such liability is to insure that the cost of injuries or damage, either to the goods sold or to other property, resulting from defective products, is borne by the makers of the products who put them in the channels of trade, rather than by the injured or damaged persons who ordinarily are powerless to protect themselves. * * * [44 N. J. at 65]

It is true that the courts of this State have never in a reported opinion applied this strict liability theory to a commercial claimant, but such cases are not unknown in the country as a whole. The leading ease is Randy Knitwear, Inc. v. American Cyanamid Co., 11 N. Y. 2d 5, 226 N. Y. S. 2d 363, 181 N. E. 2d 399 (Ct. App. 1962). The court there noted:

We perceive no warrant for holding — as the appellant urges — that strict liability should not here be imposed because the defect involved, fabric shrinkage, is not likely to cause personal harm or injury. * * * And this makes sense. Since the basis of liability turns not upon the character of the product but upon the representation, there is no justification for a distinction on the basis of the type of injury suffered or the type of article or goods involved. [11 N. Y. 2d at 15, 226 N. Y. S. 2d at 369-370, 181 N. E. 2d at 403-404]

Although the Randy Knitwear case is phrased in the warranty terminology, the case could as well be phrased in strict liability in tort, since the case involved an alleged defect in the product causing the injury to plaintiff. As our Supreme Court noted in Santor:

Under the strict liability in tort doctrine, as in the case of express or implied warranty of fitness or merchantability, proof of the manufacturer’s negligence in the making or handling of the article is not required. If the article is defective, i. e., not reasonably fit for the ordinary purpose for which such articles are sold and used, and the defect arose out of the design or manufacture or while the article was in the control of manufacturer, and it proximately causes the injury or damage to the ultimate purchaser or reasonably expected consumer, liability exists. * * * [44 N. J. at 66-67]

Other courts have considered the problem of a commercial plaintiff in a strict liability situation. In Iowa, Electric Light & Power Co. v. Allis-Chalmers Mfg. Co., 360 F. Supp. 25 (S. D. Iowa 1973), the court reviewed the law throughout the country on this question and determined that the Supreme Court of Iowa would not permit a recovery by a commercial plaintiff in a strict liability situation. In doing so, however, the court distinguished the New Jersey cases and instead followed Seely v. White Motors Co., 63 Cal. 2d 9, 45 Cal. Rptr. 17, 403 P. 2d 145 (1965), in which the Supreme Court of California held that an action for the purchase price and lost profits could not be sustained on the theory of strict liability in tort, but only on the basis of breach of warranty. The federal Judge in Iowa, after extensive citation of cases, following both the New Jersey and California rules determined that Iowa would not allow recovery of the type of damage's plaintiff was seeking under the theory of strict liability in tort.

One of the most cogent opinions applying the strict liability doctrine to a commercial consumer is the Michigan case of Cova v. Harley Davidson Motor Co., 26 Mich. App. 602, 182 N. W. 2d 800 (App. Ct. 1970). This case brings together the eases of “strict liability” and “implied warranty” under a single term “products liability.” Under this theory of products liability the Michigan court permitted the cost of repair of golf carts to be recovered, leaving open for further determination whether plaintiffs there could recover for the loss of business profits, i. e., an economic loss, predicated upon a finding of inequality of bargaining position between the parties. This case was also cited by the Iowa federal court in Iowa Electric Light & Power Co. even though a contrary result was reached. Other courts have allowed recovery for economic losses in strict liability eases. See Air Products and Chemicals, Inc. v. Fairbanks Morse, Inc., 58 Wis. 2d 193, 206 N. W. 2d 414 (Sup. Ct. 1973) ; Arrow Transportation Co. v. Fruehauf Corp., 289 F. Supp. 170 (D. C. Or. 1968); Kassab v. Central Soya, 432 Pa. 217, 246 A. 2d 848 (Sup. Ct. 1968); Morrow v. Caloric Appliance Corp., 372 S. W. 2d 41 (Mo. Sup. Ct. 1963); State Farm Mut. Auto Ins. Co. v. Anderson-Weber, Inc., 252 Iowa 1289, 110 N. W. 2d 449 (Sup. Ct. 1961). Other courts, however, have held to the contrary. See Price v. Gatlin, 241 Or. 315, 405 P. 2d 502 (Sup. Ct. 1965); Southwest Forest Industries, Inc. v. Westinghouse Electric Corp., 422 F. 2d 1013 (9 Cir. 1970), cert. den., 400 U. S. 902, 91 S. Ct. 138, 27 L. Ed. 2d 138 (1971).

Unlike the difficulty faced by tbe Iowa and other courts, this court has the benefit of a line of Now Jersey cases pointing to the expansion of the field of strict liability and, therefore, has no difficulty finding that Santor would he applied by our Supreme Court as encompassing a commercial loss, liven in these; days of consumerism, economic interests are not out of favor. Injuries to a man’s business can he as detrimental to our society as injuries to Ms person. Severe injuries to a family’s economic life can be devastating. Corporations arc, in the last analysis, owned by people who rely upon them for income, and thus commercial losses often are reflected in personal sorrow. Such a conclusion places the liability where it belongs, with the manufacturer, distributor or retailer, who can in turn, through insurance, spread the cost of injuries due to defective products throughout those further along the distribution system.

In the last analysis, however, the extent to which the strict liability in tort doctrine will be applied to a commercial loss is up to the parties, for, as will be noted hereafter, the parties still have bargaining positions from which they may allocate the loss, providing such allocation is not unconscionable. Absent Ms explicit agreement, a single injured party, whether it be a corporation or individual, processor-purchaser or eventual user, businessman or household user, should not be required to absorb the cost of the occasional loss, either by payment for insurance or absorbing the damages. Defective products for the commercial market should also give rise to liability to be borne by the enterprise which created the item or placed it in the stream of commerce, unless there is a valid allocation of the risk of loss between the contracting parties.

Y

The next issue in this ease leads us back to Missouri law, since the parties here entered into an agreement which allocated the risk of “all personal injury and property damage resulting from the handling, possession or use of the goods.” The risk of loss was thus clearly placed upon the purchaser, and consequential damages were additionally prohibited. Missouri law permits the allocation of risks in a negligence setting. Sinclair Refining Co. v. Stevens, 123 F. 2d 186 (8 Cir. 1941), cert. den. 315 U. S. 804, 62 S. Ct. 632, 86 L. Ed. 1203 (1942); Rock Springs Realty, Inc. v. Waid, supra; Monsanto Chemical Co. v. American Bitumuls Co., supra. As noted earlier in the opinion, the Uniform Commercial Code makes specific reference to such disclaimers of warranties, and the same may be enforced in a commercial setting so long as there is no finding of unconseionability by the court. But such allocation agreements are to be interpreted so as to carry out the reasonable expectations of the parties. Since the parties may allocate their risks for express and implied warranties, and for their negligence (Mayfair Fabrics v. Henley, 48 N. J. 483, 488-489 (1967); Cozzi v. Owens Corning Fiber Glass Corp., 63 N. J. Super. 117, 125-127 (App. Div. 1960)), in a commercial setting, reason does not dictate that a different rule should apply to the risk of liability under strict liability in tort. The Code standards can well be our guide, even in this tort situation.

In the commercial setting, unconscionability should no more be presumed with respect to strict liability in tort than with respect to warranty. Cf. N. J. S. A. 12A:2-719(8). But neither should it be conclusively presumed that oppression and unfair surprise are absent, so that a contractual liability limitation is always found sound in the commercial setting. Both the Uniform Law Commissioners and the New Jersey Study Comments to § 2-302 speak to this issue:

* * * These cases make it clear that the effect of the unconscionability rule is not designed to upset the terms of a contract resulting from superior bargaining strength, but to prevent oppression and unfair surprise. * * * [New Jersey Study Comment, H 1]
* * *The principle is one of the prevention of oppression and unfair surprise [citing cases] and not of disturbance of allocation of risks because of superior bargaining power. *’ * * [Uniform Law Commissioners’ Comment, HU

The New Jersey courts have also found the equality of bargaining position in itself not to be the decisive consideration.

In Moreira Construction Co. Inc. v. Moretrench, Corp., supra, the court noted:

Unlike Henningsen, which dealt with a manufacturer and an ordinary layman, the instant matter deals with, two corporations in a commercial setting. Although plaintiff Moreira is obviously a small corporation, its owner has been engaged in the construction business for 18 years.
Furthermore, in Henningsen the courts noted that the clause in question was a standardized one, and used throughout the automotive industry, 32 N. J. at p. 390, thus leaving the consumer with no alternative but to accept the terms of the contract as stated. In 1958 defendant Moretrench Corp. was the world’s largest well point company. Ivy H. Smith Co. v. Moretrench Corp. 253 F. 2d 688, 689 (5 Cir. 1958). However, there was testimony to the effect that there were three competitors of defendant in the area and there was no showing that plaintiff was precluded from negotiating a contract on more favorable terms. [97 N. J. Super. at 395]

The inequality of bargaining position and the availabilty of alternatives will be taken into consideration only as factors bearing on “surprise” and “oppression” mentioned in the Code Comments. However, from the final sentence in the Moreira Construction Co. Inc. opinion it is clear that the court must not stop its analysis merely at a finding that there was a commercial setting. In our case there is a question of fact (as shown by the parties’ conflicting affidavits) as to whether there was any alternative source of the chemicals purchased by defendant, or whether it was possible to purchase the chemicals at all unless the exculpatory clauses were placed in the agreement.

Since it appears to this court that the same rules should apply with respect to the strict liability in tort claims as will be applied in the warranty claim, a hearing must he held as to the contract’s commercial setting, purpose and effect, in order to aid the court in determining whether the clause is unconscionable under the circumstances. Cf. § 2-302 of the Unifom Commercial Code. Such a hearing will not entail a determination of whether or not the product was defective, since such a hearing must await the plenary trial in the event the allocation of risk clause is found unconscionable. Even if the clause is unconscionable, it may he that defendant will be precluded by the purchase of an unstable chemical from asserting a strict liability claim for risks inherent in the material it purchased. See Brody v. Overlook Hospital, 127 N. J. Super. 331, 339 (App. Div. 1974). Therefore the scope of the hearing both on the warranty and strict liability claims will be limited to the contract setting and the manifest intentions of the parties.

VI

We must also consider whether the landlord, Leeds Terminal, Inc., may claim the benefit of the strict liability in tort doctrine. As was noted by Dean Prosser, the early rule was that the strict liability of the seller was limited to users or consumers of the product. This also was the rule initially embodied in the Restatement of Torts 2d, § 402A which speaks of injuries to “ultimate users or consumers.” But, as Dean Prosser notes, the more recent decisions have expanded the class of plaintiffs so that bystanders are as much entitled to protection as the consumers, and this is now the majority rule. Prosser on Torts (4 cd. 1971), at 663. The Restatement., however, in discussing strict liability limits liability to that occasioned to “the ultimate user or consumer, or Ms property” and, in a caveat, the American Law Institute expresses no opinion as to whether the rules in the section may not apply “to harm to persons other than users ox consumers.” In the comment on the caveat, the Institute notes that the courts have not yet applied the strict liability benefits in favor of casual bystanders or others who may come in contact with the product, stating:

>:■ * Thom may be no essential reason why such plaintiffs should not be brought within the scope of the protection afforded, other than that they do not have the same reasons for expecting such protection as the consumer who buys a marketed product; but the social pressure which has been largely responsible for the development of the rules stated has been a consumers’ pressure, and there is not the same demand for the protection of casual strangers. The Institute expresses neither approval nor disapproval of expansion of the rule to permit recoven by such persons. [Comment O to § 402a]

In New Jersey, however, there has been at least one case that has extended the benefits of the strict liability doctrine beyond the actual users or purchasers of the goods in question. Lamendola v. Mizell, 115 N. J. Super. 514 (Law Div. 1971); and cf. Kuhner v. Marlyn Manor, Inc. 129 N. J. Super. 554 (Law Div. 1974). As noted above. Dean Prosser sees this direction of the law heralded by Elmore v. American Motors Corp., 70 Cal. 2d 578, 75 Cal.Rptr. 652, 451 P. 2d 84 (Sup. Ct. 1969), placing “strict liability on the same footing as negligence, as to all foreseeable injuries.” Prosser, op. cit. at 663. See also the “Innocent bystander” cases collected by Judge Doan in Lamendola v. Mizell, supra, 115 N. J. Super. at 521-524. This line of cases appears to state the better view since, although the purchaser is deemed individually to have relied upon the goods being free from defects, the public also should he deemed to have relied upon the fact that defective goods generally will not be injected into the economy. If we apply the test of a “foreseeable plaintiff,” certainly the landlord of the purchaser falls within this class, especially as here where the risk inherent in the defect would be that of fire, and the injury claimed is the destruction by fire of the building where the chemicals were stored. The fact that the loss was economic also should not bar the claim, as has been noted earlier under part IY of this opinion. New Jersey law has not avoided such liability to foreseeable bystanders under other tort doctrines. See the discussion concerning ultra-hazardous and inherently dangerous activities in Majestic Realty Associates, Inc. v. Toti Contracting Co., 30 N. J. 425, 433-439 (1959); and cf. Rodrigues v. Elizabethtown Gas Co., 104 N. J. Super. 436, 445-446 (App. Div. 1969), as to the application of these doctrines only to the risks inherent in the particular activity.

YII

In the event the contract’s limitation provisions are enforceable with respect to the initial defendants in this case, this court must then determine whether they should be binding upon the corporate landlord. As noted earlier, the landlord’s stockholders and directors are the individual defendants who are also the stockholders and directors of the corporate defendant. In their briefs both parties discussed this issue. Unfortunately, their arguments were directed to the question of Leeds Terminal, Inc.’s intervention, with each party taking the opposite position to that which it would assume with relation to the binding effect of the contractual risk allocation. Thus we have defendants asserting that:

* *' * This contract was made for the benefit of Leeds Terminal, Inc. and also for the benefit of the sole stockholders who are that corporation. Certainly, since they are the sole stockholders of both corporations, their interests have been seriously affected by reason of the negligence and breach of warranty on behalf of Monsanto Co. and their personal assets are in jeopardy. * * *

On the other hand, plaintiff claims:

* *■ * [T]he individual defendant-stockholders themselves decided to manufacture products through one corporate entity, Alden Leeds, and to own real estate through another, Leeds Terminal. Monsanto has respected this separation and has no claim against Leeds Terminal because the corporation has not guaranteed the obligations of Alden Leeds. * * *

Under this fact situation the agreement cannot be held binding upon the landlord, based upon the present record. The piercing of both Alden Leeds, Inc.’s and Leeds Terminal, Inc.’s corporate veils requires a factual determination by the court based upon a showing of the parties’ operation in disregard of their corporate forms, fraud or the like. See Whitfield v. Kern, 122 N. J. Eq. 332, 347 (E. & A. 1937); Havey v. Hofmann, 121 N. J. Eq. 523 (Ch. 1937), aff'd 123 N. J. Eq. 589 (E. & A. 1938); Turp v. Dickinson, 100 N. J. Eq. 41 (Ch. 1926); Vreeland v. New Jersey Stone Co., 29 N. J. Eq. 188 (Ch. 1878), aff’d 29 N. J. Eq. 651 (E. & A. 1878) ; cf. Kugler v. Koscot Interplanetary, Inc., 120 N. J. Super. 216, 254 (Ch. Div. 1972); Consolidated Realty Co. v. Dyers, Finishers & Bleachers Fed’n, 137 N. J. Eq. 413 (Ch. 1946); 1 Fletcher, Cyclopedia of Corporations, §§ 41-41.2 at 166-199 and 1973 Gum. Supp. 46. Therefore the landlord’s claim will be barred or allowed based upon the court’s findings concerning these issues after a hearing which can be combined with the unconscionability hearing described earlier.

VIII

As to the negligence issue, the ordinary rules of negligence will apply. Even if it is determined that this court was incorrect in its legal determination that the corporate landlord as well as the purchaser itself could assert the strict liability in tort claim, as a foreseeable plaintiff the landlord possesses an independent claim for negligence. This latter claim may or may not be barred, as noted earlier, by the tenant’s allocation of risk agreement, and must also await the hearing coneerning the binding effect of the agreement upon Leeds Terminal, Inc.

Counsel for defendants shall present an order (1) denying summary judgment, (2) providing for a hearing as to (a) the unconscionability of the disputed contract terms and (b) disregard of the corporate forms, and (3) permitting intervention of Leeds Terminal, Inc., in accordance with this opinion and B. 4:42-1.

       The judge also opined that the New Jersey courts had retreated somewhat from their position in Santor, citing Moreria Construction Co. Inc. v. Moretrench Corp., 97 N. J. Super. 391 (App. Div. 1967), aff’d o. b. 51 N. J. 405 (1968). But the California courts have also modified their absolute position in Seely. See Gherna v. Ford Motor Co., 246 Cal. App. 2d 639, 55 Cal. Rptr. 94 (D. Ct. App. 1966).


source: Caselaw Access Project

author: Lester, J. S. C.

license: Public Domain

text:
    ALFRED J. RIECKER, PLAINTIFF, v. CARL R. HARTMANN, BERGEN COUNTY CLERK, DEFENDANT, LAWRENCE FEROLI, INTERVENING DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided September 24, 1974.

      Mr. Joel M. Ellis for plaintiff.

      Mr. Michael J. Ferrara, Bergen County Counsel, for defendant.

      Mr. R. M. James Ruscich for intervening defendant.
   Lester, J. S. C.

This is a suit involving an interpretation of the Hew Jersey election laws, Title 19, and their effect upon a fortuitous recipient of write-in votes in a primary election. The issue is novel in that the victorious write-in recipient was also an unsuccessful formal candidate for the opposing party’s primary nomination.

Plaintiff Alfred J. Riecker was an unsuccessful candidate for the Republican mayoral nomination in the Borough of Alpine. He filed the necessary petitions and certificates, as-required by N. J. S. A. 19:23-5 et seq., and was entered on the ballot for the June 4, 1974 Republican primary. Ho candidate appeared on the Democratic ballot for the mayoral nomination of that party. Plaintiff was close but unsuccessful in his bid for the Republican nomination. He did, however, receive four write-in votes for mayor in the Democratic primary from four registered Democratic voters, and these votes were sufficient to win the Democratic nomination. Defendant County Clerk Carl R. Hartmann, upon receipt of Rieeker’s acceptance of the Democratic nomination and an objection filed by plaintiff’s successful Republican primary opponent, first determined that plaintiff did not qualify as the Democratic nominee. Defendant county clerk, in a letter dated June 13, 1974, stated that he based his decision upon an interpretation of N. J. S. A. 19:13-8 and N. J. S. A. 19: 49-5.

Subsequently, the Alpine Democratic Municipal Committee met and selected Eiecker to fill the “presumed” vacancy, pursuant to N. J. S. A. 19:13-20. Thereafter, by letter dated July 8, 1974, defendant Hartmann advised the said Democratic Municipal Committee that Kiecker was a qualified Democratic candidate and that Ms name would be placed on the ballot. However, upon the receipt of further objections and after consultation with the county counsel, the county clerk made his ultimate determination that the plaintiff was not qualified and removed his name from the ballot on August 20, 1974. That action precipitated this litigation.

At the time of the hearing Lawrence Feroli, president of the Alpine Kepublican Club, was permitted to intervene as an individual and taxpayer in support of the position taken by defendant county clerk. Feroli appeared and argued through counsel before this, court.

Defendants argue that N. J. S. A. 19:13-8, 19:49-5 and 19:13—20 preclude plaintiff from appearing on the November ballot.

It is first argued that plaintiff, having signed an “acceptance” for the Republican nomination, is barred from running as a Democrat, since he would, of necessity, have to sign a second acceptance in violation of N. J. S. A. 19:13-8. The statute is inapplicable since plaintiff is not a petitioner by direct petition of nomination.

Next, it is argued that the Democratic Committee could not fill the “vacancy” with an unsuccessful Republican candidate, based upon N. J. S. A. 19 :13-20. This statute is also inapplicable, since there never existed a vacancy as described in the statute. Since there was no Democratic nominee for mayor on the Democratic ballot and since the plaintiff received the largest number of write-in votes, plaintiff was properly nominated. Therefore, no vacancy in the Democratic mayoral nomination occurred which might require the application of the cited statute.

Finally, it is argued that N. J. S. A. 19 :49—5 precludes plaintiff from running as a Democratic candidate nominated by “irregular ballots” (write-in votes) because his name is printed on the ballot as a candidate for the Republican nomination. The statute provides that any irregular ballots cast for a candidate whose name appears on the ballot shall not be counted.

Logic dictates to the contrary. In the primary election in question a Democratic voter in the booth was faced with only the Democratic ballot. The Republican lines were “locked out.” To that Democratic voter plaintiff’s name did not appear on the ballot. His only opportunity to vote for the plaintiff was by a write-in vote, and four such Democratic voters availed themselves of that opportunity. The question is whether this court should interpret the statute to disenfranchise those four voters by determining that N. J. S. A. 19 :49~5 precludes plaintiff’s success in this litigation. I think not.

None of the statutes discussed herein cover the instant situation. The law cited by defendants is inapposite. Either the cases rely upon inapplicable statutes, or the facts are not comparable.

Only two cases cited by defendant need be distinguished. In Sadloch v. Allan, 25 N. J. 118 (1957), a defeated primary candidate songht by direct petition of nomination to replace an independent who was nominated by petition and was now withdrawing. The court held that N. J. S. A. 19:13—8 and N. J. S. A. 19:23—15 require a candidate to make a choice as to the method through which he will seek a nomination and a place on the ballot. He may proceed by direct petition of nomination as an independent, or he may seek nomination by affiliation with a political party in a primary election. The two methods are mutually exclusive, and a candidate who chooses to seek nomination in a primary election is precluded from a subsequent attempt at nomination by direct petition. 25 N. J. at 123.

Both N. J. S. A. 19 :13-8 and Sadloch are inapplicable to the present case. N. J. S. A. 19:13-8 begins, "A candidate nominated for an office in a petition * * *” (emphasis added)

Plaintiff herein neither sought nor received the nomination of either the Democratic or Eepublican parties under the provisions of Title 19, Art. 2, c. 13 (a subsection of which is N. J. S. A. 19 :13-8). At no time did he seek nomination for the office of mayor by direct petition. His unsuccessful attempt to receive the Eepublican nomination was conducted under the provisions of N. J. S. A. 19 :23-5 et seq., dealing with political party primary elections. Ilis successful attainment of the Democratic nomination came as a result of write-in votes in the Democratic primary, and since his name did not appear on the Democratic ballot the restrictions of N. J. S. A. 19 :23-5 et seq., dealing with the filing of petitions for a position on a political party primary ballot, are equally inapplicable. Plaintiff received the Democratic nomination through unsolicited write-in votes (unsolicited in the formal statutory sense envisioned by N. J. S. A. 19:23-5). The requirements and restrictions concerning the filing of petitions for a ballot position in a political party primary cannot and should not be applied to a write-in nominee who, by his very nature, did not seek a formal place on the primary ballot.

Defendant also relies upon Stevenson v. Gilfert, 13 N. J. 496 (1953). Stevenson upheld N. J. S. A. 19:13-20 as a valid exercise of legislative control over primary elections. The court found a definite legislative interest in insuring that a candidate, chosen under this statute to fill a vacancy in a party nomination subsequent to the primary, must be a qualified member of that political party. The court invalidated an attempt by the Hudson County Republican Committee to fill vacancies in the Republican ticket, created by the resignation of the Republican nominees, with Democratic candidates.

Clearly, the evils envisioned in Sadloch and Stevenson have no bearing upon the present case. Thus, any reliance on these eases is misplaced. This statutory conflict and the resulting dangers envisioned by the court in those cases are not here present. Plaintiff’s victory in the Democratic primary by write-in votes is neither comparable to an independent nomination by direct petition nor in conflict with his formal, unsuccessful campaign for the Republican nomination. To rule otherwise would serve only to disenfranchise the validly cast votes by the write-in voters in the Democratic primary.

Our courts have been consistent in their determination that the effect of validly cast write-in votes must remain unrestricted by the technical restraints of the election laws. Sadloch, supra 25 N. J. at 128.

Similarly, Stevenson dealt with the statutory scheme which applies to a candidate’s formal appearance on a primary ballot and a subsequent attempt to fill a vacancy in that ballot. Inherent in those cases is the determination that the right of voters to choose whom they please is guaranteed by the -unfettered existence of write-in votes. See Stevenson, supra, 13 N. J. at 503.

The final and most difficult problem presented is not reflected in the briefs, arguments or pleadings before the court. It involves the philosophy of the election laws and the public policy of the State.

The court has determined that the statutes per se do not prohibit plaintiff from running as the Democratic mayoralty candidate in Alpine in the general election. The court must now pass on the question as to whether the public policy of this State dictates that prohibition. Some jurisdictions reveal a liberal approach, others a more conservative one.

It is argued that an overall view of our statutes dictates a public policy under which one could never be a candidate for both parties and under which one party could not, even by write-in votes, adopt as its candidate one listed as a primary candidate for the other party (winner or loser); that such ffiiberality” is a threat to the two-party system and is contrary to the “public policy” of the State as espoused by Title 19.

Defendants in this case insist that the will of the Democratic voters “be treated as a nullity.” They point to no relevant statutory prohibition but argue, as was done in the case of In re Keogh-Dwyer, 106 N. J. Super. 567 (Law Div. 1969), aff’d 54 N. J. 523 (1959), that “as a matter of rationality” such a result is the one intended by the Legislature. In that case, as in this:

The argument is not without at least superficial persuasiveness. But while reason may be a comely handmaiden of intelligent legislation, other considerations may not properly be ignored. [106 N. J. Super. at 573]

The court chooses to believe that when the Legislature enacted specific sections of the statute, which in certain instances prohibit an office seeker in one party’s primary from being listed as a candidate for the same office as the nominee of the other party, it did not intend to legislate a general prohibition of the scope here sought. The Democratic Committee of Alpine and the four registered Democratic voters who cast their votes for plaintiff must have their rights preserved. As registered Democrats those rights include the right to vote for plaintiff and the right to clothe him with the political designation over which they have dominion.

In re Keogh-Dwyer, supra, held that if a candidate for a primary nomination dies before the primary election but after the date set for the removal of his name from the primary ballot, and such candidate wins the primary election, the nomination is not a nullity; instead, a vacancy is created in the nomination. While the factual situation is different, the reasoning and logic expressed in the trial court’s opinion are here relevant.

The Legislature has chosen to deal, in a separate article, with circumstances which shall cause the results of an election to be null and void. N. J. S. A. 19:3-7 et seq. It has immediately thereafter declared the effect and sanctions in such event. N. J. S. A. 19:3-10 et seq. Having thus considered, memorialized and penalized certain conditions throught [sic] to be sufficiently culpable to warrant a declaration of nullity, the Legislature has, in our view, expressed an intent thus to limit those occurrences sufficient to nullify an election. While we recognize that such an invocation of the maxim expressio unius est emcVusio alterius is, “[A]t best * *' * only an aid towards construction, always to be used with ‘great caution’. Gangemi v. Berry, 25 N. J. 1, 11 (1957), Esso Standard Oil Co. v. Holderman, 75 N. J. Super. 455, 471 (App. Div. 1962), affirmed 39 N. J. 355 (1963), we believe its aid here, not to reach an end or achieve a result hut to ascertain intent, is entirely appropriate. Support in this direction is to be found from an examination of N. J. S. A. 19:3-9, where even conduct forbidden under certain circumstances is to he forgiven under others. It is apparent that the Legislature recognized the harsh result in the voiding of an election and intended it to eventuate only in the case of an ‘offense’ proscribed and not justified.” [106 N. J. Super. at 573; emphasis provided]

The court finds in this reasoning a practical and cogent directive to the solution of the current problem of statutory interpretation. The election laws, particularly in their application to primaries, should be construed liberally and in pari materia. Pritel v. Burris, 94 N. J. Super. 485, 490 (App. Div. 1967).

The opportunity of voters to express their choice at a primary election should not be diminished by too narrow a reading of Ghaptep 23 of Title 19. Our highest court has clearly expressed itself in this area, holding that election laws are to be construed liberally so as to effectuate their purpose; they should not be construed so as to deprive voters of their franchise. Wene v. Meyner, 13 N. J. 185, 197 (1953). [In re Chirico, 87 N. J. Super. 587, 593 (App. Div. 1965), cert. den. 45 N. J. 32 (1965)]

Additionally, there is the direction of Kilmurray v. Gilfert, 10 N. J. 435 (3952), which held that election laws must be liberally construed to avoid disenfranchisement and to avoid the nullification of an election for technical reasons, Here the court concluded (at 440-441) that “It is in the public interest and the general intent of the election laws to preserve the two-party system and to submit to the electorate a ballot bearing the names of candidates of both major political parties.” See also, In re Atlantic County Board of Elections, 117 N. J. Super. 244 (App. Div. 1971); Cavanaugh v. Morris County Dem. Comm., 121 N. J. Super. 430 (Ch. Div. 1972); Application of Cucci, 92 N. J. Super. 223 (Law Div. I960).

The court therefore concludes that without an explicit statutory prohibition a proper interpretation of the electiom laws must lead to the conclusion that plaintiff is, and was from the date of the primary election, the Democratic nominee for mayor in Alpine and that his name will appear as such on the November ballot.

Judgment accordingly.

         19:18-8. Acceptance of nomination; annexation of oath of allegiance A candidate nominated for an office in a petition shall manifest his acceptance of such nomination by a written acceptance thereof * ^ Xo candidate so named shall sign such acceptance if he has signed an acceptance for the primary nomination or any other petition of nomination under this chapter for such office.

        19:13-^20. Vacancies among primary election nominees; procedure for filing

      In the event of a vacancy, howsoever caused, among candidates nominated at primaries * * * e. A statement filed pursuant to subsection d. of this section shall state * * * that (the candidate) has not voted in a primary election of any other political party in the last two primary elections * * *.

        19:49—5. Irregular ballots

      Ballots voted for any person whose name does not appear on the machine as a nominated candidate for office are herein referred to as irregular ballots. * * * No irregular ballot shall be voted for any person for any office whose name appears on the machine as a nominated candidate for that office; any irregular ballot so' voted shall not be counted.


author: Huot, J. D. C.

text:
    25 FAIRMOUNT AVENUE, INC., PLAINTIFF, v. MR. & MRS. ROBERT H. STOCKTON, DEFENDANTS.
    District Court—Bergen County
    September 27, 1974.

      Mr. Jack B. Ehrich, attorney for plaintiff.

      Mr. Ronald Abramson, attorney for defendants.
   Huot, J. D. C.

The motion to dismiss this landlord-tenant summary dispossess action raises the question of the applicability of the recent amendment of N. J. S. A. 2A:18-53 (L. 1974, c. 49), particularly to contracts between the parties prior to the effective date of this new legislation.

Defendants were tenants of plaintiff by virtue of a lease which expired June 30, 1974. The parties stipulate that the three-month notice required by N. J. S. A. 2A:18-56 was properly given and received.

June 30, 1974 passed and the defendants remained in possession. This action was commenced on July 17, 1974 and was heard, after consent adjournments, on August 20, 1974. At that time defendant moved to dismiss the complaint on the grounds that plaintiff had failed to serve a notice setting forth “cause” as required by L. 1974, c. 49. Defendant contends that he may not be dispossesed because the landlord has failed to comply with § 3 of the act, which prohibits the entry of a judgment for possession except upon a notice of and a showing of “good cause.”

Plaintiff contends that it acquired a vested right to terminate the tenancy and recover the premises by the stipulation of proper notice, and that L. 1974, c. 49, cannot divest it of this right. It further contends that the recent amendment affects substantive rights and is not remedial or procedural. Plaintiff argues that since it is a vested, substantive right, the statute may not. retroactively apply to divest that right which is protected by the State and Federal Constitutions.

The initial question to be determined, then, is whether L. 1974, c. 49, affects the substantive rights of landlords and tenants or whether it merely establishes a prerequisite to the exercise of jurisdiction by this court. If it is procedural only, it does not affect any basic right but merely contains the method by which those independent rights shall be enforced. And, if this be so, the court need not meet the issue raised by plaintiff of retroactive applicability. That is because the statute would apply prospectively to the exercise of jurisdiction from and after June 25, 1974. If, on the other hand, the statute affects substantive rights, the issue of the constitutional retroactivity must be decided.

N. J. S. A. 2A:6-34 provides, among other things, that “county district courts shall also have jurisdiction in proceedings between landlords and tenants * * *.”

N. J. S. A. 2A:18 is entitled, “Civil Actions in County District Courts,” and consists of 11 articles or chapters, further subdivided by sections. It first appeared as chapter 228 Laws of 1898 and was entitled, “An Act Concerning District Courts.”

That act was construed by the courts to be one granting jurisdiction -but not affecting the substantive rights of landlords or tenants. That the act was jurisdictional was determined in Jonas Glass Co. v. Ross, 69 N. J. L. 157 (Sup. Ct. 1903). There the court held that the section purporting to authorize the removal of tenants was strictly a jurisdictional one. It said:

Under an appropriate title such legislation would apply to every case within its terms, but under a title embracing nothing- beyond judicial jurisdiction and procedure it can extend only to cases where, independent of the enactment, a landlord has the right to recover possession of the demised premises in default of payment of rent. Under article 4, section 7, pargaraph 4' of the constitution the object of a law must be expressed in its title, and the title of that cited does not indicate a purpose to declare or change the relative rights of landlords and tenants, fat 158; emphasis supplied]

In contrast, those acts which became part of N. J. S. A. 2A:42-1 et seq., originating' in 1874, were differently entitled.

Chapter 164, Imws of 1874, was entitled, “A further supplement to an act entitled ‘An act concerning landlords and tenants/ approved April fifteenth, one thousand eight hundred and forty-six.”

Chapter 13, Laws of 1903 was entitled, “A Further Supplement to an act entitled ‘An act concerning landlords and tenants/ approved March twenty-seventh, one thousand eight hundred and seventy-four.”

The reprisal statute appeared as chapter 210, Laws of 1970, and is entitled, “An act concerning landlord and tenants * *

In like manner, chapter 373, Laws of 1948, which became N. J. S. A. 2A:35-1 et seq. relating to ejectment, was entitled “An Act concerning civil actions for the possession of and, superseding actions of ejectment * * *”

It has long been understood that N. J. S. A. 2A :18—53 is part of the District Court Act which embraces only jurisdiction and procedure.

2 LeWine, New Jersey Landlord and Tenant (2 ed. 1942), § 783 at 1800, states:

783. Construction and Interpretation of Statute
As before stated, summary dispossession proceedings are created by statute. Sections 2:58-16 etc. of R. S., are tbe provisions taken from the Landlord and Tenant Act, and sections 2:32-265, etc., of R. S. have their derivation in the District Court act.
The Landlord and Tenant Act provides for the rights and liabilities of landlord and tenant. The District Court act regulates and embraces within its terms only judicial jurisdiction and procedure. The latter act cannot change the relative rights and liabilities of landlord and tenant under the title, “An act concerning District Courts” because that title is not broad enough to support a change of such rights. Under article 4, section 7, paragraph 4 of the New Jersey Constitution, the object of a law must be expressed in its title, and the title of the District Court act does not indicate a purpose to declare or change the relative rights of landlords and tenants. This can be done only by an amendment of the Landlord and Tenant act, changing the rights of landlord and tenant, or by an amendment of the title of the District Court act so that it will be broad enough to cover the granting and changing of such rights.

We come now to an evaluation of L. 1974, c. 49, in light of the above. The title of that chapter is, “An Act establishing grounds for evicting tenants and lessees of certain residential property, amending N. J. S. A. 2A:18-53 and repealing section 1 of P. L. 1973, c. 153 (C. 46:8C-1).”

Initially, we note a change in the title of the act from its predecessor. The new title sets forth that its purpose is to establish grounds for eviction, not just procedures for the enforcement of such.

Section 1 oí chapter 49 is identical to the former N. J. S. A. 2A:18-53 except that the words, “Except for residential lessees and tenants included in section 2 of this act,” have been added at its beginning.

Sections 2, 3, 4. and 5 are new and were never a part of N. J. S. A. 2A:18-53 prior to this amendment.

Section 2 provides that “No lessee or tenant * * * may be removed” except upon the establishment of certain enumerated grounds. When one contrasts this with § 3, which provides that “No judgment of possession shall be entered * * * unless the landlord has made written demand and given written notice * * it is obvious that a change in the substantive rights of landlords and tenants was achieved in § 2. This conclusion is further buttressed by § 4, which prohibits a landlord from evicting or failing to renew the lease except for the causes established in § 2.

This court concludes that L. 1974, c. 49, is really an act which establishes changes in the substantive rights of landlords and tenants while also amending the jurisdictional and procedural requirements. Prior to its adoption the right of the landlord to possession of his property was established by other law, statutory or common, and N. J. S. A. 2A:18-51 et seq. merely established the procedure to be used to assert such rights. The common law rights of ownership and the statutory rights found in N. J. S. A. 2A:42-1 et seq. controlled the decision of the court, while N. J. S. A. 2A-.18-51 et seq. controlled its jurisdiction. Under the new enactment, however, additional limitation upon the right to possession has been established, or perhaps it would be more accurate to say that an owner of property (who is not excepted from §2) once he accepts a tenant on that property, no longer has a right of possession to it; and he does not regain that right of possession unless and until the tenant is guilty of some act or omission which constitutes “good cause,” or unless and until the property is to be removed from the rental market. This prohibition .affects an element of a property right, the right of possession, and not the procedure to enforce such right.

Although these prohibitions appear in the District Court Act, N. J. S. A. 2A :18-1 et seq., it does not mean that they are solely procedural. The title of L. 1974, c. 49, comports with the rationale of Jonas Glass Co. v. Ross, supra, and does encompass “grounds for evicting tenants.”

Section 2 restricts a landlord to “good cause” before a tenant may be dispossessed. Section 4 requires a landlord to renew a lease for a tenant whose lease expires unless it can be established that “good cause” sufficient to dispossess exists. Section 5 prohibits as against public policy the waiver by a tenant of any rights established by the act and makes any such waiver unenforceable. The right established by the act is the right to remain in possession of the rented property until there is “good cause” for him to be removed. Generally, one has always been free to waive- a legal right, and such waiver would be given effect. Now, however, such waiver may not be enforced against a tenant who occupies property covered by § 2. These are the substantive provisions of the act which interfere with and limit the former right of possession which was an element of title.

Section 1 remains a statement of procedure, compliance with which is necessary to give a county district court jurisdiction to hear a landlord-tenant summary dispossess action. Section 3 also establishes a procedural requirement, to wit, notice before action is brought. The notice varies in its time requirements, depending upon the “good cause” alleged.

It having been determined t-hat part of the statute affects substantive property rights, the court must address itself to plaintiff’s contention that it interferes in a contractual right in a way that is constitutionally forbidden. Plaintiff argues that a failure to give effect to the notice, stipulated as in accord with N. J. S. A. 2A:18-56, is to give retroactive application to the law and deprive it of a vested right to dispossess the tenant.

This court thinks not.

It is necessary to distinguish between a right of possession and a “right” to bring a landlord-tenant summary dispossess action. The latter is not a “right” at all. It is a privilege established by statute, which privilege is available to a party upon compliance with the requirements of that statute. Upon such compliance, a procedural remedy is then available. One cannot obtain a “vested right” in a particular type of statutory remedy. The Legislature created the summary dispossess remedy in the county district courts. It could, if it so chose, abolish that remedy. It could also abolish the court. It follows, then, that it can amend the procedure to be followed.

In contrast, however, a “right of possession” has its origin in common law. It is one of the “rights” incident to seisin in “fee simple absolute.” However, one who holds such title always has the power to grant the right of possession to another while retaining all other rights of title. The title owner of real property could always divest himself of the “right of possession” and that right of possession did not re-vest in the title owner until the happening of the condition established as a measurement of the possession granted. A right of possession only “vests” when it is a present right of possession. Carroll v. Newark, 108 N. J. L. 323, 328 (E. & A. 1932). Thus, one who grants the right of possession to another for a fixed period has no vested right of possession during that fixed period of time, but when that period expires a present right of possession arises which then revests in the grantor thereof.

In this case, and prior to the enactment of L. 1974, c. 49, there was no vested right of possession in plaintiff. It had divested itself of the right to possession until the expiration of the lease term at which time the right to possession would again vest in plaintiff.

N. J. S. A. 2A:18-56 is procedural, controlling the county district court jurisdiction in a summary dispossess action involving, among other things, year-to-year leases, once the right to possession arises. If, as was anticipated by plaintiff, a right to possession arose immediatley upon the termination of the lease term, and if the proper notice were given, the court would acquire jurisdiction to summarily dispossess the tenant. The notice requirement of N. J. S. A. 2A:18-56 did not affect the landlord’s right of possession, nor did it create it. The notice only affected his manner of enforcing it. Without compliance with the three-month notice requirement, a landlord had his remedy under N. J. S. A. 2A:35—1 et seq. by an action in ejectment.

The right to possession in this case did not arise in plaintiff until June 30, 1974; thus, there is not a question of retroactive application of the statute. Plaintiff’s argument that “at the moment of notice, etc., that landlord acquired a vested right to terminate the tenancy and to recover said premises,” misconstrues the effect of N: J. S. A. 2A: 18-56. As explained above, at the moment of notice, the landlord complied with the then jurisdiction for a summary dispossess action. But the right to possession in a landlord was not created by that notice. Even under the then existing law, this right to possession would not exist until June 30, 1974.

L. 1974, c. 49, became effective June 25, 1974, five days prior to the date when plaintiff’s right to possession would have come into existence. The facts are readily distinguishable from those in Engler v. Capitol Management Corp., 112 N. J. Super. 445 (Ch. Div. 1970); cited by plaintiff. There the lease expired, giving rise to the right of possession in the landlord; a notice to quit had been given to satisfy the jurisdictional requirements, and the matter was transferred from the county district court to the Superior Court prior to the adoption of N. J. S. A. 2A:42-10.10. (Retaliatory Eviction Act). The court there held that the new act could not be retroactively applied to divest the landlord of his vested right of possession. But that right of possession arose upon the termination of the lease. And it was the “right of possession upon the expiration of a lease and the right of action to dispossess” which arose upon the expiration of the lease, ■which the court there stated were vested rights. In the present action there was no right oí possession in existence prior to the effective date of the new legislation. Since there was no present right of possession in existence, it was not vested.

The applicability of L. 1974, c. 49, is prospective. Applying it prospectively it controls the rights and responsibilities of landlords and tenants where, as here, the right of possession in the landlord did not exist at the time of its adoption.

One other area of confusion is evident in the arguments presented. That concerns the efficacy of the notice. Prior to the adoption of L. 1974, c. 49, the notice required under N. J. S. A. 2A:18-56 was procedural and necessary for the court’s jurisdiction. The law did not change that for the cases to which it applies. There has been no repeal of N. J. S. A. 2A:18-56 and that notice is still required in certain landlord-tenant actions.

Plaintiff argues that “it would be far less than equitable and just to leave such a landlord with a valid right to termination and possession, but with no remedy to realize it.” The argument presumes a right of possession existing upon the expiration of the lease, but that is no longer automatically true. From and after June 25, 1974 all leases must be renewed by the landlord, if the tenant desires to renew, nnless “good cause” exists.

The Legislature has constructed a condition precedent to the revesting of a right of possession once that right of possession has been granted to a specified class of tenants. A present right of possession in a landlord described in § 2 is deferred beyond the expiration of the term of the lease until “good cause” exists. This is an extensive and substantive change in the law of real property affecting those in a landlord-tenant relationship.

L. 1974, c. 49, was adopted by the Legislature in response to its recognition of the problem facing tenants at a time when a critical housing shortage exists. The legislative history of this act indicates a concern by the Legislature for residential tenants who were frequently unfairly and arbitrarily ousted from housing quarters in which they have been comfortable and where they have not caused any problems. The intent expressed in that history is to limit -the eviction of tenants by landlords to reasonable grounds. As legislation in derogation of the common law, it is to be strictly construed. The words are clear and unambiguous. Section 4 says, “No landlord may evict or fail to renew any lease * * Section 2 says, “No lessee or tenant * * * may be removed * * * except upon establishment of one of the following grounds as good cause * * (Emphasis supplied). These sections evince an intent by the Legislature to change the ancient rights of landlords, not merely their remedies. It is the court’s obligation to effect the legislative intent so clearly expressed.

The parties stipulated the procedural notice then required by N. J. S. A. 2A :18-56, which was not repealed. Section 8 of the new act does not change the three-month notice required for a year-to-year lease for premises not covered by § 2. However, by its terms it now. applies to subdivision (a) of N. J. S. A. 2A:18-53 and thus is not applicable to this ease.

Since N. J. S. A. 2A:18-56 applies only to section (a) of the former N. J. S. A. 2A :18-53, which is identical with subdivision (a) of L. 1974, c. 49, § 1, the present N. J. S. A. 2A :18-53, and since the new § 4 prohibits eviction of a tenant under a lease, if the premises are controlled by the new § 2, it becomes clear that the Legislature intended that a landlord conform to the notice requirement of the new § 3. The conclusion must be that for a year-to-year lease, as is here present, covering premises controlled by the new § 2, a three-month notice is no longer required. In its place the Legislature has substituted the notice requirement of § 3. Since June 25, 1974, to give the court jurisdiction to dispossess a tenant upon the termination of a lease, the landlord must give the type of notice specified within the time periods specified in § 3.

As indicated above, one does not acquire a vested right in a procedure or form of remedy. As has also been discussed, plaintiff did not have a vested right of possession at the time of the adoption of the lease. Thus, the motion to dismiss for lack of jurisdiction is granted for the reason that plaintiff has failed to comply with the jurisdictional notice requirements of § 3. Obviously, this is without prejudice to the landlord’s right to serve a notice complying with § 3, and its right, thereafter, to adduce evidence to prove that it has acquired a right of possession by the establishment of good cause.


author: Gaynor, J. C. C.

text:
    GORDON LEASING CO., PLAINTIFF, v. NAVAJO FREIGHT LINES, DEFENDANT, AND RANCH & FARM LINES AND RICHARD WEBB, DEFENDANTS AND THIRD-PARTY PLAINTIFFS, v. HERBERT J. KRAUSE, JOSEPH F. STRUNESKI, GENERAL EXPRESSWAYS, INC. AND SEABOARD SURETY CO., THIRD-PARTY DEFENDANTS.
    District Court—Somerset County
    September 26, 1974.

      Mr. Richard G. O’Brien for defendant and third-party plaintiff (Messrs. Bowers, Rinehart, Murphy & O’Brien, alttorneys).

      Mr. William D. Surdovel for defendant and third-party defendant (Messrs. Conaghan, Surdovel & Scheurer, attorneys).
   Gaynor, J. C. C.

This case involves the application of an indemnification provision contained in a so-called “trip lease” covering the use of a motor truck while engaged in the transportation of goods in interstate commerce. The issue before the court is whether such provision whereby the lessor indemnifies the lessee for any loss resulting from the use of the vehicle is unenforceable as being contrary to public policy as expressed in regulations promulgated by the Interstate Commerce Commission providing in such cases for assumption of all liability by the lessee. Although the subject of conflicting decisions in other jurisdictions, this question is, novel in New Jersey.

On June 7, 1969 Ranch & Parm Lines Nonstock Cooperative Marketing Association, Tnc. (hereinafter Ranch or lessor), the lessee, of a tractor-trailer, with the right to re-lease, entered into a trip lease with Navajo Freight Lines, and General Expressways, Inc. (hereinafter Navajo or Lessee) for the nse of said tractor-trailer in the transportation of certain goods by lessee from South Kearney, New Jersey, to Cornlxusker, Nebraska. While traveling on Route 22 in Green Brook, New Jersey, the tractor-trailer was involved in an accident resulting in damages to a vehicle owned by Gordon Leasing Co. A consent judgment against Navajo for the amount of such damages was entered and its claim against Ranch for indemnification was reserved, which claim is the subject of the present proceedings.

The trip lease provided for the payment of a flat rental charge, inclusive of the driver’s wages; required the lessor to deliver and maintain the equipment in good working condition, to furnish all necessary fuel, tires and repairs for the operation of the vehicle as well as all other expenses incident to such operation, and also included the following terms:

The Lessor shall surrender full control, possession, and management of said equipment to the Lessee during the term of this lease which shall start at delivery of equipment and end with delivery of cargo at destination, and the Lessor further agrees to operate said equipment as directed by Lessee.
❖ $ * * * ' >h *
It .is understood that the leased equipment., under, this agreement is in the exclusive possession, control and use of the authorized carrier Lessee and that the Lessee assumes full responsibility in respect to the equipment it is operating to the'public, the’shippers, and the INTERSTATE COMMERCE COMMISSION. It. is . agreed that Lessor will carry acceptable Public Liability and Property Damage insurance. Lessor agrees to reimburse and otherwise indemnify Lessée for any arid all losses. sustained by Lessee resulting from the use of the aforesaid equipment.
* . , *! íJS * • * * ■ *1
Lessor hereby agrees further to maintain his equipment in a good and efficient manner, observe all safety and other requirements of the I.C.O. and all other regulatory bodies having jurisdiction and to indemnify carrier against any losses in connection, with this operation.

In opposing lessee’s claim for indemnification under the above terms of the trip lease, lessor contends that such provision is unenforceable as being contrary to public policy as expressed in I.G.C. regulations imposing liability upon the lessee. The specific regulations relied upon by the lessor, as set forth in 49 C.F.F. § 1057 entitled “Lease and Interchange of Vehicles” and adopted by the Interstate Commerce Commission pursuant to 49 U. S. C. A. § 304 et seq., are the,following provisions governing truck leasing operations:

(a ) Contract requirements. The contract, lease, or other arrangement for the use of such equipment:
:'r * * >2» *
(4) Exclusive possession and responsibilities. Shall provide for the exclusive possession, control, and use of the equipment, and for the complete assumption of responsibility in respect thereto, by the Lessee for the duration of said contract, lease or other arrangement.

In response, lessee claims that the terms of the lease agreement providing for indemnification by the lessor are not repugnant to the intent of the regulations and are enforceable as a contractual arrangement between two assenting parties as to who will ultimately bear a loss arising from the use of a leased licensed carrier.

Consideration of the contentions of the respective parties requires reference to the purposes of the applicable regulations. A comprehensive discussion of the necessity for and objectives of the regulatory scheme is contained in the opinions in American Trucking Ass’ns v. United States, 344 U. S. 298, 73 S. Ct. 307, 97 L. Ed. 337 (1953), and Cox v. Bond Transportation, Inc., 53 N. J. 186 (1969). In brief, the regulations pertaining to truck leasing were designed to eliminate the detrimental effects of practices that had developed in the industry by the use of nonowned and exempted equipment in authorized carrier operations. Those practices included use of oral leases which resulted in difficulty in fixing the lessee’s responsibility for accidents, failure to adequately and properly inspect and test the equipment used, and failure to comply with operational safety requirements. Thus, the regulations require leasing agreements to be in writing, inspection by the lessee carrier upon transfer of possession of the nonowned equipment,' familiarization of the driver of the leased vehicle with all the safety requirements, and the vesting in the lessee carrier by the terms of the contract of exclusive possession of the equipment for the duration of the lease. 49 C.F.R. § 1057.4.

As indicated, the precise question presented in the instant case has been the subject of conflicting decisions in other jurisdictions. One line of cases holds that such an indemnity clause in a trip lease is contrary to public policy and therefore unenforceable. Alford v. Major, 470 F. 2d 132 (7 Cir. 1972) ; Carolina Freight Carriers Corp. v. Pitt County Transportation Co., 358 F. Supp. 1177 (D. Ct. E.D. Va. 1973) ; Denver Midwest Motor Freight, Inc. v. Busboom Truck, Inc., 190 Neb. 231, 207 N.W. 2d 368 (Sup. Ct. 1973). See also, Simmons v. King, 478 F. 2d 857 (5 Cir. 1973).

Other authorities uphold the indemnification provision on the grounds that there is no specific regulation prohibiting such an agreement between trucking companies; that actual control and custody is retained by the lessor, and that such an agreement between carriers does not affect the stated responsibility to the public. Newsome v. Surratt, 237 N.C. 297, 74 S.E. 2d 732 (Sup. Ct. 1953); S. & N. Freight Line, Inc. v. Bundy Truck Lines, Inc., 3 N.C. App. 1, 164 S.E. 2d 89 (Ct. App. 1968) ; Cooper-Jarrett v. J. Miller Corp., 70 Misc. 2d 88, 332 N. Y. S. 2d 177 (Sup. Ct. 1972); Allstate Ins. Co. v. Alterman Transport Lines, Inc., 465 F. 2d 710 (5 Cir. 1972); Allstate Ins. Co. v. General Fire & Cas. Co., 348 F. Supp. 682 (D. Ct. E.D. Pa. 1972).

In Alford v. Major, supra, the indemnification clause in a trip lease was held unenforceable on the grounds that such a provision would permit the lessee “to circumvent the regulations’ requirements that leased carriers exert actual control over the leased equipment and the borrowed drivers.” The court rejected the argument that the indemnification agreement should be enforced since the actual control of the truck remained with the lessor through the use of its driver, even though the lessee, consistent with the regulations, assumed full responsibility therefor to the general public, and that such an agreement was not against public policy inasmuch as the purpose of the regulations to assure financially responsible defendants to an injured member of the public was being accomplished. The court observed that while one of the objectives of the commission regulations was assurance to the public of responsible defendants, the paramount goal was highway safety and the prevention of traffic accidents from interstate truck leasing operations, and it concluded that this purpose would be overriden if the requirement for actual control of the leased equipment was circumvented by a contrary agreement.

A similar result was reached in Carolina Freight Carriers Corp. v. Pitt County Transportation Co., supra, wherein the court refused to accept the contention that the LO.C. regulation was not operative because actual control of the leased vehicle was retained by the lessor and the parties had contractually provided for indemnification by the lessor. It deemed that such an approach “impliedly makes short shrift of the spirit and intent of the ICC regulation.” In following Alford the court concluded that the regulation is mandatory in application and the contrary lease provision clearly viola-, five thereof and unenforceable.

In Denver Midwest Motor Freight v. Busboom Truck, Inc., supra, the two lines of authority on this issue were considered and the court concluded that the holding in Alford, provided the better solution, reasoning as follows:

Tlie approval oí indemnity provisions under the circumstances here might well adversely affect the safety of operation of vehicles and drivers as suggested in Alford. It would also inject into trip lease negotiations an added element of uncertainty and permit carriers to circumvent (he clearly spelled out requirements that a lessee exert actual control over leased equipment and borrowed drivers. Varying conditions and provisions of indemnity clauses when applied to varying factual situations introduce added elements of uncertainty and tend to blur lines of responsibility to the public between lessor and lessee and increase tbe prospect of litigation between carriers or their insurers without any corresponding benefit to the public. Insurance coverage of carriers might be adversely affected where tort liability of others is assumed by contract if such indemnification clauses were enforceable. If indemnity clauses in these circumstances are' unenforceable, uncertainty is removed, statutory and regulatory provisions are fully enforced, and public policy is best served.

The contrasting decisions reason that an indemnification provision in a trip lease is valid and enforceable and not repugnant to the policy expressed in the I.C.C. regulations, because such an agreement is not specifically prohibited by the Commission, it does not affect the lessee’s liability to injured third persons, and is an acceptable contractual arrangement between two freely contracting parties as to which of the two will ultimately bear the cost of damages done to a third party. It is suggested that the only argument against permitting such agreements is that the lessee, knowing that it does not have to pay damages, might be less careful in supervising and controlling the operation of the vehicle. Allstate Ins. Co. v. Allerman Transport Lines, Inc., supra. Also, that such provisions, if anything, provide additional security to the public. Allstate Ins. Co. v. General Fire & Gas. Co., supra. The practical and actual control of the equipment which is retained by .the lessor is likewise found to be a reason for upholding an indemnity agreement contrary to the pertinent I.C.C. regulations. The- rationale of these decisions is not convincing in light of the' clear and unambiguous language of the regulations imposing complete responsibility upon the lessee and also in view of the fact that a basic purpose of the regulatory scheme was to assure that licensed carriers be responsible in fact, as well as in law, for the maintenance' of the leased equipment and the supervision of its driver.

It has been determined that I.C.C. regulations have the force and effect of law and cannot be evaded by lease provisions which attempt to exclude or limit their application. Cox v. Bond Transportation, Inc., 53 N. J. 186 (1969); Simmons v. King, supra. The indemnification clause in question clearly is an attempt to evade or avoid the provisions of the regulation as well as the authorizing statute, imposing “complete assumption of responsibility” upon the lessee and requiring the lessee to be “fully responsible” for the operation of the vehicle during the period of the lease.

The statutory and regulatory provisions leave no doubt as to the legislative and administrative intentions that full and complete responsibility in connection with the operation of the leased equipment be vested in the lessee. Permitting the shifting of some element of such responsibility by individual agreement logically could require approval of private arrangements as to other elements thereof. This would result in a subversion of the statute and regulations and make “short shrift of the spirit and intent” of these enactments.

The enforcement of the indemnity provision as sought by the lessee could result in adversely affecting the safety of the operation of the equipment, would permit the circumvention of the requirements of the T.C.C. pertaining to truck leasing, and inject uncertainties in the responsibilities of lessor and lessee with respect, to the use of leased equipment.. Public policy is better served by mandating compliance with the regulations.

We therefore conclude that the indemnification clause in the lease between Ranch and Navajo which imposes ultimate responsibility for the loss resulting from the operation of the leased vehicle contrary to the applicable I.C.C. regulations is unenforceable as being against the public policy expressed in those regulations.

Accordingly, judgment will he entered in favor of the third-party plaintiff.


author: Davidson, J. S. C.,

text:
    IN THE MATTER OF THE COMMITMENT OF WILLIAM MINEHAN.
    Union County Court Probate Division
    Decided July 10, 1974.

      Mr. Harold Garwin (of the Union County Legal Services) for movant.

      Mr. William C. Maccarelli for Board of Chosen Freeholders of Union County (Union County Adjuster).

      Mr. Lawrence Greenberg for State of New Jersey (Mr. William F. Hyland, Attorney General of New Jersey, attorney) .
   Davidson, J. S. C.,

Temporarily Assigned. An application for transcript costs was heard and granted orally on July 10, 1974, at which time the New Jersey Department of Institutions and Agencies was ordered to pay the cost of the transcript. A stay of the order was granted to permit the State to file an appeal. This was done. Counsel for the applicant presses for a written opinion to supplement this oral determination. The court obliges.

Movant was committed to Marlboro Psychiatric Hospital under N. J. S. A. 30:4-44. At the time it was determined he was indigent and his legal settlement was New Jersey.

Thereafter he sought his release and a hearing was held pursuant to N. J. S. A. 30 :4-48. This hearing resulted in a denial of his release and an affirmation of his indigency. He has filed a notice of appeal of this denial and seeks an order for the transcript thereof at public expense.

Under R. 2:5-3 and R. 2:6-12 a person seeking appellate review must file a transcript to perfect his appeal. Movant was adjudged indigent at the time of his commitment and continues in that condition. He is therefore unable to pay the costs of the necessary transcript and relies on B. 2:5-3 (d) in claiming that he is entitled to have the transcript prepared at public expense.

Two issues are before the court: whether B. 2:5-3(d) extends to the preparation of a transcript of proceedings relating to the involuntary civil commitment of an indigent at public expense and, if so, what meaning should be given to thé term “public expense” in the circumstances of this ease.

I

The State contends that in the absence of a constitutional mandate or a statutory grant of power, indigent civil litigants are not entitled to a transcript at public expense. The court finds that a constitutional mandate does exist in the instant' cáse, and that the transcript must be supplied at public expense. •

The Fourteenth Amendment to the United States Constitution guarantees that no State shall deprive any person Of life, liberty or property without due process of law, or deny'to any'person'within its jurisdiction the equal protection of the laws. Our courts have already recognized the application of these concepts to' the area of civil commitment. In re Carter, 64 N. J. 382 (1974).

The United States Supreme Court, in In re Gault, 387 U. S. 1, 87 S. Ct. 1428, 18 L. Ed. 2d 527 (1967), held that the basic rights which apply to proceedings should not be determined by the label assigned to them. The court affirmed the principle that what is at stake for the individual is what is determinative of the constitutional safeguards to be applied.

Involuntary civil commitment proceedings, although traditionally civil in nature, may similarly deprive persons of their freedom. Commitment in this case was to a state psychiatric hospital for an indefinite period of time.

Several courts have extended the holding of Gault to the area of involuntary civil commitment. Lessard v. Schmidt, 349 F. Supp. 1078 (E. D. Wis. 1972); Dixon v. Attorney General of Pennsylvania, 325 F. Supp. 966 (M. D. Pa. 1971). Our courts have extended some basic due process rights to persons challenging involuntary civil commitment. McCorkle v. Smith, 100 N. J. Super. 595 (App. Div. 1968); In re Gannon, 123 N. J. Super. 104 (Cty. Ct. 1973). In Gannon the court held (at 105) that commitment to a psychiatric hospital entailed a significant loss of liberty which, ás in a criminal proceeding, must be governed by due process of law. This court finds that further extension of the movant’s rights under due process of law is warranted.

The State concedes that had this been a criminal proceeding, movant would have been entitled to a transcript at the public expense. Griffin v. Illinois, 351 U. S. 12, 76 S. Ct. 585, 100 L. Ed. 891 (1956). In a noncriminal proceeding, it argues, the rights extended by Gault should be granted grudgingly and applied narrowly. State in the Interest of W. O., 100 N. J. Super. 358 (App. Div. 1968). The court held in that case that failure to provide a stenographic transcript to an indigent infant of a hearing at which he was tried on charges of larceny and robbery did not amount to a deprivation of equal protection of the laws even though a person able to pay costs of such a transcript could have obtained one.

On first consideration, the holding of State in the Interest of W. O. appears to preclude the relief sought in the present case. The unwillingness of the Appellate Division to extend the holding of Griffin to transcripts of juvenile proceedings seems significant, particularly in light of the reliance movant has placed on the Gault case.

However, the facts which formed the basis of the court’s ruling in Interest of W. O. are clearly distinguishable from those of this case. At the time Interest of W. O. was decided our rules did not provide for transcripts of trial proceedings. One who could afford the cost of a transcript could obtain a court order allowing for it, with costs to be borne by the moving party. R.R. 6:2-10. Those unable to afford a transcript were bound for purposes of appellate review by a statement of the evidence prepared by the trial court, pursuant to R. R. 1:6-3. Appellant in Interest of W.O., at 365 claimed that the omission to require that in all cases a stenographer be present to record the testimony at a trial in the Juvenile Court deprived him, as an indigent juvenile, of the equal protection of the laws.”

The holding in that case was clearly based upon the fact that a transcript was not required for appellate review, and that transcripts were not prepared in juvenile proceedings as a matter of standard procedure. The reverse is now true, and if Interest of W. O. were decided today, it could reasonably be predicted that the holding of Griffin would be extended to transcripts of juvenile proceedings.

Movant relies on Boddie v. Connecticut, 401 U. S. 780, 91 S. Ct. 780, 28 L. Ed. 2d 113 (1971) in support of his request. The United States Supreme Court held in that case that because of the fundamental nature of the family relationship, due process of law prohibits a state from denying access to the court system to persons seeking judicial determination of divorce claims who are unable to afford court costs and process fees.

It is the State’s position that a broader application of Griffin was rejected by the majoritj'' in Boddie and that the holding was expressly limited to litigants in divorce proceedings who would otherwise be denied access to the courts.

This court believes that the Boddie decision was based on the recognition that one’s opportunity to assert fundamental human rights through the judicial process cannot be denied for lack of the necessary financial resources. Meltzer v. C. Buck Le Craw and Co., 402 U. S. 954, 91 S. Ct. 1624, 29 L. Ed. 2d 124 (1971). What human right could be more fundamental than liberty? Access to the trial court in divorce proceedings provided by Boddie is no more essential to due process under law than is access to appellate review of involuntary commitment proceedings.

In New Jersey a civil litigant is entitled to one appeal as a matter of right. Midler v. Heinowitz, 10 N. J. 123 (1952), R. 2:2-3 (a), and N. J. Const. (1947), Art. VI, § V, par. 2. Access to appellate review implies that it be an effective review. The United States Supreme Court has stated that

*■ * * As any effective appellate advocate will attest, the most basic and fundamental tool of his profession is the complete trial transcript. * * Anything short of a complete trial transcript is incompatible with effective appellate advocacy. [Hardy v. U. S., 375 U. S. 277, 288 (1963), 84 S. Ct. 424, 431, 11 L. Ed. 2d 331.]

The State cites Stewart v. Stewart, 59 N. J. 301 (1971), for the proposition that Boddie should be narrowly interpreted and applied. The court noted (at 303) that Boddie is a "narrowly written opinion which has no controlling application on the broad issue sought to be raised here.” Counsel for Mrs. Stewart sought a holding that all appellants from civil proceedings were entitled under due process to a free transcript on a mere showing of indigency, absent further screening of even the most cursory nature. No such holding is sought here.

Movant is not contesting his right to exercise some gratuitous privilege created by the State and afforded to some and not to others. His liberty is at stake, and his right to appeal its denial should be afforded full protection of due process and equal protection under the law. The fundamental nature of the movant’s right to liberty to be determined on appeal limits the scope of this decision and distinguishes it from other civil proceedings.

The court is satisfied that movant, for the reasons stated above, is entitled to a transcript at public expense under B. 2:5-3 (d).

II

As to the meaning to be applied to the “public expense” in this case, the court finds that the cost of the transcript should be paid by the State, as opposed to the county.

At the original hearing which resulted in movant’s commitment, it was determined both that he was indigent and that his legal settlement was the State of New Jersey. That determination has not been appealed. The court therefore committed him to a state institution, Marlboro Psychiatric Hospital, and the cost of his commitment has subsequently been borne by the State. N. J. S. A. 30:4-69.

Since the movants original commitment was a valid exercise of the police power, Ex parte R.R., 140 N. J. Eq. 371 (1947), and the State has assumed the burden of his care, the cost of the transcript should be paid by the State. Because Marlboro Psychiatric Hpspital is within the jurisdiction, of the State Department of Institutions and Agencies, N. J. S. A. 30:1-7, it appears reasonable to this court that the costs be assumed, by that Department.

It is hereby ordered that the application for a transcript bp granted and that the costs are to be paid by the Department of Institutions and Agencies.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ROBERT E. TREAT, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted September 9, 1974—
    Decided October 7, 1974.
    Before Judges Confoed, Michels and Mobgan.

      Mr. Stanley C. Van Ness, Public Defender, attorney for Appellant (Mr. Gerold T. Foley, Jr., Deputy Public Defender, of counsel).

      Mr. Joseph P. Lordi, Essex County Prosecutor, attorney for Respondent (Mr. David L. Rhoads, Assistant Prosecutor, of counsel).
   Per Curiam.

On pleas of guilty, defendant was sentenced on counts of robbery, entering with intent to steal and private lewdness to aggregate prison sentences of from six to nine years. Other criminal counts were dismissed after the pleas.

Defendant appeals for alleged excessiveness of the sentences. The charge of private lewdness in this case was based upon the complaint of a 21-year-old woman that defendant had forced her to commit fellatio upon him.

We find the sentences well within the range of permissible sentencing discretion of the trial judge.

By supplemental letter memorandum defendant urges he was not guilty of private lewdness, within State v. Dorsey, 64 N. J. 428 (1974). Aside from objections as to the procedural irregularity of raising the issue in this fashion, we find it without merit. The expression of the Supreme Court in Dorsey as to the scope of private lewdness encompasses acts of “indecent exposure.” 64 N. J. at 433. There was obviously an indecent exposure of defendant to the victim in the instant situation.

Affirmed.