author: Feller, J. S. C.

text:
    ALFRED PISCITELLI AND MILDRED PISCITELLI, HIS WIFE, PLAINTIFFS, v. TOWNSHIP COMMITTEE OF THE TOWNSHIP OF SCOTCH PLAINS; TOWNSHIP OF SCOTCH PLAINS, A MUNICIPAL CORPORATION; BOARD OF ARCHITECTURAL REVIEW OF THE TOWNSHIP OF SCOTCH PLAINS, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided December 4, 1968

      Mr. Daniel S. Bernstein for plaintiffs and on the brief (Messrs. Sachar, Sachar & Bernstein, attorneys).

      Mr. George A. Wood, attorney for defendants.
   Feller, J. S. C.

This matter comes before the court as the result of plaintiffs’ motion for summary judgment pursuant to R. R. 4:58-3.

Plaintiffs, who are residents of the Township of Union, New Jersey, are property owners and taxpayers of the Township of Scotch Plains, New Jersey, being the owners of property commonly known as 809 Jerusalem Road, Scotch Plains, New Jersey.

On December 5, 1967 defendant adopted an ordinance establishing an Architectural Review Board. Under this ordinanee, all applicants for building permits for construction or renovation of commercial, industrial or multi-family structures or signs must submit plans to this board for approval, said approval to be based upon the standards set forth in section 5 of the ordinance, if the board determines the applicant has complied with the ordinance, the application will be approved and submitted to the building inspector to determine whether the other laws are complied with. If so, the permit issues.

Plaintiffs contend that (1) Scotch Plains has no authority to enact such an ordinance, and (2) the standards set forth in section 5 are vague and unreasonable in that they call for subjective findings.

It is defendants5 position that (1) plaintiffs have no standing to bring this suit; (2) the municipality has authority under its police power to enact this ordinance for aesthetic purposes, and (3) the ordinance sets out satisfactory legal standards.

I

With regard to the question of standing, defendants contend that plaintiffs have not built on the vacant land that they own and that they do not intend to build thereon. However, this court is satisfied that plaintiffs have complied with the requirements of Kozesnik v. Montgomery Twp., 24 N. J. 154 (1951) wherein the court stated at pmges 177-178:

“* * * we llave recognized a broad right in the taxpayers and citizens of a municipality to such review of local legislative action without proof of unique financial detriment (o them. Driscoll v. Burlington-Bristol Bridge Co., 8 N. J. 433, 476 (1952); Garrou v. Teaneck Tryon Co., 11 N. J. 294, 302 (1953); Koch v. Borough of Seaside Heights, 40 N. J. Super. 86, 93 (App. Div. 1956), affirmed 22 N. J. 218 (1956); Haines v. Burlington County Bridge Commission, 1 N. J. Super. 163, 171 (App. Div. 1949). The community at large has an interest in the integrity of the zoning plan. Beirn v. Morris (14 N. J., at page 536), sufficient to justify an attack which goes to the validity of the entire district.”

In the case of Behlen & Bros., Inc. v. Mayor and Council of Town of Kearny, 31 N. J. Super. 30, 37 (App. Div. 1954) the court ruled in effect that property owners have standing to challenge the validity of zoning ordinances relating to the non-conforming use of other properties within the same zone.

Borough of Cresskill v. Borough of Dumont, 15 N. J. 238 (1954) succinctly expresses the law to date. In Cresshill, the court has laid down as criteria for standing to attack zoning ordinances mere ownership of property in the area affected.

This court is satisfied that the ownership of property in an area affected by zoning is sufficient to create standing to contest the validity of a zoning ordinance.

As stated above, defendants contend plaintiffs have not built on the vacant land and do not intend to build. This is immaterial. The ordinance in question imposes an additional burden which inures to the land to which this ordinance is applicable. The imposition of this burden is sufficient to create standing. See Speakman v. Mayor & Council of Borough of North Plainfield, 8 N. J. 250, 258 (1951).

II

The next question to be determined is whether Scotch Plains has authority to enact said ordinance. Municipalities have no inherent authority to enact zoning ordinances. Such power is derived from the State. N. J. Constitution of 1947, Art. 4, § 6, par. 2, gives the Legislature the power to enact enabling legislation in order that the municipalities could enact zoning ordinances. See N. J. S. A. 40:55-1.1 et seq.

N. J. S. A. 40:55-30 specifically gives municipalities the authority to enact zoning legislation. Municipal authority to pass a zoning ordinance is confined to that given by statute. Hegeman Co. v. Mayor, etc., of River Edge, 6 N. J. Super. 495, 502 (Law Div. 1949); Jones v. Zoning Bd. of Adjustment, Long Beach Tp., 32 N. J. Super. 397, 403 (App. Div. 1954); Schmidt v. Board of Adjustment, Newark, 9 N. J. 405, 416, 417 (1952); Midtown Properties, Inc. v. Madison Tp., 68 N. J. Super. 197, 207 (Law Div. 1961), affirmed per curiam 78 N. J. Super. 471 (App. Div. 1963). See also Stoker v. Irvington, 71 N. J. Super. 370 (Law Div. 1961); Magnolia Development Co., Inc. v. Coles, 10 N. J. 223 (1952).

N. J. S. A. 40:55-36 authorizes the governing body or board of public works to provide for the appointment of a board of adjustment, which is empowered to act pursuant to N. J. S. A. 40:55-39.

“In the exercise of the powers conferred by the statute and the ordinance, the zoning board is not the agent of the local governing body. It is a statutory creation for the effectuation of the essential legislative policy. It performs siicm-judieial functions, in their essence discretionary, controlled by the principle and policy of the statute and the local ordinance so far as consistent therewith. Potts v. Board of Adjustment of Borough of Princeton, 133 N. J. L. 230." Lynch v. Hillsdale, 136 N. J. L. 129, at pp. 132-133. (Sup. Ct. 1947)
“Once the Board of Adjustment is provided for in the zoning ordinance, its powers stem directly from the statute, R. S. 40:55-39, and may not in any way be circumscribed, altered or extended by the municipal governing body.” Duffcon Concrete Products, Inc. v. Borough of Cresskill, 1 N. J. 509, pp. 515-516. (1949)

TJpon the oral argument, it was conceded by both parties that the ordinance in question was in fact a “special exception” ordinance.

A “special exception” to a municipal zoning ordinance refers to special uses which are permissive in the particular zone under the ordinance, and are neither nonconforming uses nor akin to a variance. A special exception to a municipal zoning ordinance refers to a special use which is considered by the local legislative body to be essential or desirable for the welfare of the community and its citizenry, and which is entirely appropriate and not essentially incompatible with basic uses in the zone involved, but not at every or any location therein or without restrictions or conditions being imposed on such use. Tullo v. Millburn Tp., 54 N. J. Super. 483 (App. Div. 1959).

“Special uses,” denominated “special exceptions” in blew Jersey, are specifically provided for in our Zoning Act (R. S. 40:55-39(b), as amended), under which the board of adjustment is the agency empowered to hear and decide requests for same in accordance with the provisions of any such ordinance. Saddle River Country Day School v. Borough of Saddle River, 51 N. J. Super. 589, 604 (App. Div. 1958).

Our Supreme Court, in Swimming River Golf & Country Club v. Borough of New Shrewsbury, 30 N. J. 132 (1959), stated the same principle when it held invalid an ordinance which would give the power to grant special exceptions to the planning board. The court stated:

“It has been held- that the board of adjustment is the only agency empowered to hear and decide requests for special exceptions in accordance with the standards specified in a municipal zoning ordinance, as this matter is committed by statute to that board and the municipality may not deviate from that framework.”

See Saddle River, supra; Duffcon Concrete Products, Inc. v. Cresskill, 1 N. J. 509 (1949); Tzeses v. Board of Trustees, South Orange, 22 N. J. Super. 45 (App. Div. 1952).

Matters committed to the board of adjustment by statute and the exercise of its powers, may not in any way be circumscribed, altered or extended by the municipal governing body; and therefore, since the board of adjustment is the only agency empowered by statute to hear and decide a request for special exceptions, an ordinance providing for reference to the planning board for recommendation, and to the governing body for final decision is invalid. Saddle River, supra, at pp. 604-605. See Houdaille Con. Mats. Inc. v. Board of Adjustment, Tewksbury Tp., 92 N. J. Super. 293 (App. Div. 1966).

In Levy v. Mravlag, 96 N. J. L. 367 (Sup. Ct. 1921), plaintiff applied for a permit to construct a building that conformed to the building code. The permit was denied on the ground that a city ordinance, which provided for written approval consent of three-quarters of the property owners within an area of 500 feet of the construction site, had not been complied with. The Supreme Court in determining the ordinance invalid, stated:

“* * * The p0wer fjpjg granted to the governing body [by statute] of each municipality does not authorize the delegation of that power to any body of citizens to determine uniformity of regulations to be applied. Under this ordinance one person may be prevented from building a certain character of building on a certain street, because three-fourths of the landowners will not consent, while another may have a permit on the same street for exactly the same character of building, for the samo use forbidden the other, because the required proportion of landowners within the same area may consent.”

The ordinance in the instant case creates in the proposed Architectural Be view Board the power to recommend or deny application for a building permit for a use which under the zoning code would be otherwise proper.

In the present case defendants, by the ordinance in question, seek to aesthetically control construction in the municipality independently of the zoning law. The ordinance in effect imposes an additional condition precedent to the issuance of a permit. By that is meant that if a proposed use conforms to the zoning code, the additional burden is placed that it must conform to surroundings aesthetically. In effect, the ordinance places aesthetic value first and creates an unjustifiable condition precedent to the issuance of a certificate.

There is no doubt, and the law is well settled, that aesthetic value plays an important role in modern-day zoning legislation. Nevertheless, in this State it has been held that zoning power may not be exercised for purely aesthetic considerations. Passaic v. Paterson Bill Posting, etc., Co., 72 N. J. L. 285 (E. & A. 1905); Romar Realty Co. v. Board of Com’rs of Borough of Haddonfield, 96 N. J. L. 117 (Sup. Ct. 1921); Vassallo v. Board of CVom’rs of City of Orange, 125 N. J. L. 419 (E. & A. 1940); Pfisler v. Municipal Council of City of Clifton, 133 N. J. L. 148 (Sup. Ct. 1945); Hendlin v. Fairmount Const. Co., 8 N. J. Super. 310 (Ch. Div. 1950).

However, aesthetics are relevant to zoning when they bear in a substantial way upon land utilization, or where an ordinance is designed primarily to conserve property values the mere fact that it may also take into account aesthetic considerations does not render it invalid. United Advertising Corp. v. Borough of Metuchen, 42 N. J. 1 (1964).

Today, aesthetics is recognized as a legitimate aim of zoning. It has been used to control the following activities: Prohibiting outdoor signs other than those related to business conducted on the premises, United Advertising Corp. v. Borough of Raritan, 11 N. J. 144 (1952); United Advertising Corp. v. Borough of Metuchen, 42 N. J. 1 (1964); prohibiting trailers from being parked in certain areas for aesthetic reasons, Napierkowski v. Gloucester Tp., 29 N. J. 481 (1959), Livingston Tp. v. Marchev, 85 N. J. Super. 428 (App. Div. 1964), certification denied 44 N. J. 412; prohibition of front yard fences over a certain height upheld (safety and beauty), Klotz v. Board of Adjustment, of Borough of Englewood Cliffs, 90 N. J. Super. 295 (Law Div. 1966); prohibition of trailer camps and parks in an industrial zone, Vickers v. Tp. Committee of Gloucester Tp., 37 N. J. 232 (1967); outdoor storage of vehicles could be prohibited, but ordinance did not apply to railroad operation, N. Y. Central Railroad Co. v. Borough of Ridgefield, 84 N. J. Super. 85 (App. Div. 1964); minimum square feet for homes upheld, Lionshead Lakes, Inc. v. Wayne Tp., 10 N. J. 165 (1952), appeal dismissed 344 U. S. 919, 73 S. Ct. 386, 97 L. Ed. 708, minimum lot size of five acres upheld, Fischer v. Bedminster Tp., 11 N. J. 194; prohibition of hotels and motels in residential district allowed, Pierro v. Baxendale, 20 N. J. 17 (1955), height restriction allowed, Pequannock Tp. v. De Wilde, 21 N. J. Super. 517 (App. Div. 1952), adopting the dissenting opinion in Brookdale Homes, Inc. v. Johnson, 126 N. J. L. 516 (E. & A. 1941).

However, these considerations must be prescribed in the ordinance and implemented by the board of adjustment. If landowners comply with building requirements and their property is not restricted by zoning ordinance, they have a continuing right to a building permit, not subject to discretionary powers of a board or commission not authorized by statute. Schack v. Trimble, 48 N. J. Super. 45, 50-51 (App. Div. 1957).

State of Missouri, ex rel. Magidson v. Henze, 342 S. W. 2d 261 (Mo. Ct. App. 1961), was an action similar to this case. In said case the ordinance provided for the appointment of an architectural control commission to pass upon plans for proposed buildings ■ — • particularly with reference to exterior designs thereof and to approve or disapprove the same. The ordinance further provided that in making its determinations the commission shall be guided by the intent and purpose of this section and shall approve the plans for said buildings, provided it finds that they are in harmony with and will promote compatible architectural design in the same vicinity and thus promote and protect the health, safety, morals and general welfare of the community. The plans presented in this case were disapproved by the architectural control commission and plaintiff was denied a building permit.

The court said that zoning ordinances and building regulations constitute the exercise of a governmental function referable to the police power. Further, that the city has no inherent police powers and we must look to the statutes to determine the extent of the power granted by the state to the city. After reviewing the statute in question, the court stated that the statutory grant for this purpose was to the legislative body of the city and could not be delegated to an architectural control commission, and that this delegation of power to the architectural control commission was invalid since the power to zone could not be delegated.

The ordinance in question usurps the power of the board of adjustment and vests unbridled discretion in the Architectural Review Board. There is no authority in N. J. S. A. 40:55-1.1 et seq. for the enactment of an Architectural Review Board, the purported ordinance is an invalid exercise of municipal power.

Due to the determination of this court that the ordinance is an invalid exercise of municipal power, it is unnecessary and superfluous to consider defendants’ third contention regarding the standards set by the ordinance.

Summary judgment should be rendered forthwith if the pleadings, depositions and admissions on file, together with the affidavits, if any, show palpably that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order, as a matter of law. R. R. 4:58-3. See Judson v. Peoples Bank & Trust Co., 17 N. J. 67 (1954).

The facts in the case before the court are undisputed. The question broached is purely a question of law to be determined by the court.

Plaintiffs’ motion for summary judgment is hereby granted.


source: Caselaw Access Project

author: Leonard, J. A. D.

license: Public Domain

text:
    MARY EVELYN ROBERTS, PETITIONER-RESPONDENT, v. ALL AMERICAN ENGINEERING CO., RESPONDENT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued November 12, 1968
    Decided December 10, 1968.

      Before Judges Con ford, Kilkenny and Leonard.

      Mr. William G. Freeman argued the cause for respondent-appellant {Messrs. Freeman and Freeman, attorneys).

      Mr. Oharles J. Oasale, Jr. argued the cause for petitioner-respondent {Messrs. Pelleltieri and, Rabstein, attorneys).
   The opinion of the court was delivered by

Leonard, J. A. D.

In this workmen’s compensation ease All American Engineering Co. (hereinafter employer) appeals from an adverse judgment entered against it by the Ocean County Court. This judgment affirmed a determination of the Division which awarded death benefits to petitioner and her children upon petitioner’s dependency claim petition.

Petitioner’s husband (hereinafter employee), now deceased, had been employed by the employer for a considerable period of time up until December 10, 1957. It is not disputed that while so employed he contracted a seriously disabling occupational disease, retrobular neuritis and polyneuritis, by reason of his constant exposure to massive inhalations of ethylene glycol. This disease totally and permanently disabled him and ultimately caused his death on June 16, 1966.

On April 4, 1958 the employee filed an original compensation petition, and on March 20, 1962 an amended petition for increased disability payments. Judgment was entered in the Division on July 31, 1962, based upon a finding of total and permanent disability, in the sum of $18,000, which represented 450 weeks at $40 per week running through September 6, 1966.

In addition to the compensation claim, the employee, as sole plaintiff, on December 23, 1958 also filed a third-party tort action in the United States District Court against Union Carbide Corporation, the company that manufactured the ethylene glycol. On May 26, 1961 a judgment was entered in that action in favor of plaintiff in the sum of $210,-000, and that judgment was affirmed by the Third Circuit Court of Appeals on April 18, 1963.

The Insurance Company of North America, the compensation carrier for the employer was permitted to intervene in the third-party tort action in order to preserve its right of subrogation under N. J. S. A. 34:15-40, and its attorneys associated themselves as “of counsel” with plaintiff’s counsel therein.

Polio-wing the affirmance of the judgment in the third-party tort action, the liability insurance carrier for Union Carbide, on July 2, 1963, issued its draft in payment thereof in the sum of $237,883.98. From that sum the Insurance Company of North America first received its actual trial expenses. Then it was reimbursed for the total amount of compensation payments made to the employee as of June 18, 1963, less the statutory one-third counsel fee on the entire amount of its liability. After the deduction of these items, other miscellaneous trial costs and the attorney’s fee of the employee’s personal counsel, the employee received on July 25, 1963 the net sum of $105,450.89. Thereafter no further compensation payments were made to the employee by the employer or its carrier.

On December 6, 1966 petitioner filed a dependency claim petition on her own behalf as a widow and on behalf of their three children. In answer thereto, the employer asserted, among other things, that under the circumstances here present, and pursuant to N. J. 8. A. 34:15-40, it was completely and fully discharged from all liability for any additional compensation payments. It pointed out that the total amount of its liability under the original compensation judgment, plus the amount that could be legally awarded on the dependency claim, was considerably less than the third-party recovery. The Division determined that the employer was “not entitled to any credit whatsoever for any monies received by decedent during his lifetime from the judgment against the third party” as a set-oif against petitioner’s dependency claim and accordingly awarded petitioner on her own behalf and on behalf of the children the total sum of $18,830.40. The County Court reached the same conclusion and affirmed the judgment of the Division.

The employer now first contends, as it did below, that pursuant to N. J. 8. A. 34:15-40 the “Employer’s Insurance Carrier is entitled to be released of all of its liability for compensation where the third-party recovery [regardless of the fact that it was by the employee alone and not his dependents] exceeds all of its liability for compensation under the statute either to the injured employee and/or to his dependents in case of death.” In support of this contention appellant points to the uncontradicted fact that the employee recovered the net sum of $105,450.89 from his third-party tort action, which is substantially greater than the total of the sum awarded to him as compensation for total and permanent injuries ($18,000) and the sum awarded to his widow and children for compensation dependency death payments ($18,830.40). Thus, it argues that N. J. 8. A. 34:15-40(5) bars the widow and children from recovering the sums so allowed to them by the trial court.

Petitioner, on the other hand, asserts that a proper construction of the statute, in the light of the overall purposes of the act, is to subrogate the employer to third-party tort recovery by the employee himself only with respect to compensation awards made to the employee himself, and that there is no subrogation in respect to dependency compensation awards other than as against recovery in wrongful death actions brought' by the employee’s dependents against the third person.

N. J. 8. A. 34:15-40 in its pertinent parts reads as follows :

“* * * In tbe event that the employee or his dependents shall recover and be paid from tbe said third person or his insurance carrier, any sum in release or in judgment on account of his or its ■liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is hereinafter in this section provided. •j* V -í- v ^
■ (b) If tbe sum recovered by the employee or his dependents from the third person or his insurance carrier is equivalent to or greater than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be released from such liability and shall be entitled to be reimbursed, as hereinafter provided, for the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents.* * *.”

The pertinent language of N. J. S. A. 34:15-40 does not compel the result urged by appellant. As to the specific problem here raised, the statutory expression is ambiguous. Therefore, we must look to the spirit, object and purposes of the act as a whole and not merely to the letter of the particular section under construction. Giordano v. City Commission of Newark, 2 N. J. 585, 594 (1949).

Preliminarily, we first consider the relationship of the sum awarded to the employee during his lifetime for his permanent and temporary disability and the sum awarded to the widow and children upon their dependency claim petition. Under our Workmen’s Compensation Act, when an injury or disability is caused to an employee by accident or disease arising out of and in the course of his employment, the employee is entitled to compensation for temporary and permanent disability in accordance with the schedule of payments set forth in N. J. 8. A. 34:15-12. If death results from the accident or occupational disease, the employee’s dependents (widow and children) are entitled to compensation benefits as provided in N. J. S. A. 34:15-13. The rights of these dependents to compensation are independent and separate rights flowing to them from the act itself. They are not rights to which they succeed as the representatives of the deceased husband and father. Eckert v. New Jersey State Highway Department, 1 N. J. 474, 480 (1949). These new rights accrue at the time of the employee’s death. McAllister v. Board of Education, Town of Kearny, 42 N. J. 56, 59-60 (1964).

Keeping in mind the distinct independence of the respective types of claim, we return to a consideration of N. J. 8. A. 34:15-40. Prior to the enactment of this section “the employee or his dependents had (1) a right of action for compensation under the statute, and (2) an action in tort against the third-party wrongdoer, and the amendments to the statute were made to meet a mischief where an injured employee could retain both the compensation payments and full damages from his common-law right of action against a third party.” New Amsterdam, Casualty Co. v. Popovich, 18 N. J. 218, 225-226 (1955) (emphasis added). The amendments gave the employer or its insurance carrier a right to reimbursement for compensation paid by them to the injured employee or his surviving dependents from any sums which might be recovered from the third-party tort-feasor liable for the employee’s injuries or resultant death. This right to reimbursement from such third-party recovery is derived from the employer’s (or his insurance carrier’s) “statutory subrogation” under N. J. S. A. 34:15-40. United States Casualty Co. v. Hercules Powder Co., 4 N. J. 157, 166 (1950).

Under our compensation law the employer was obligated only to the employee for temporary and permanent disability payments. It was not obligated to the wife and children for any such payments. The July 31, 1962 compensation award was payable solely to the employee. Upon payment of this obligation the employer was entitled to be subrogated to all of the rights that the employee had against the third-party tortfeasor who caused these disabilities. Thus, when the employee recovered a judgment against the third-party tortfeasor, the employer, pursuant to N. J. S. A. 34:15-40, was entitled to be reimbursed out of that sum for the compensation payments it had made to the employee. The balance then remaining was the employee’s to do with as he desired. He could dispose of it all before he died. His wife and children had no legal claim thereto. Indeed, the record is barren of any proof that petitioner or the children received any part thereof.

Following the employee’s death, the employer, pursuant to N. J. S. A. 34:15-13, independently and separately from its obligation to the employee became obligated to the widow and children for dependency payments. Upon payment of this obligation the employer would be subrogated to the rights of the widow and children to assert a claim against the third-party tortfeasor under the Death Act. In fact, such a suit has been filed, and petitioner concedes that if plaintiffs are successful therein and recover any money, the employer will be entitled to reimbursement therefrom up to the amount of the dependency payments. However, this is the limit of the employer’s right of reimbursement. Since the widow and children had no legal rights in the fund created by the employee’s third-party action, the employer has no right to be subrogated to any part of this fund by way of reimbursement therefrom for any dependency payments made to the widow and children. Cf. Ganger v. Moffett, 8 N. J. 73, 79 (1951); Guarantee Co. of North America v. Tandy & Allen Const. Co., 76 N. J. Super. 274, 278 (App. Div. 1962). Therefore, under the circumstances here present, we conclude that N. J. S. A. 34:15-40(6) does not release the employer or its insurance carrier from liability to the petitioner and her children for the dependency payments awarded to them by the trial court.

This result does not effectuate “a double recovery.” Bather, it equitably carries out the purpose of N. J. S. A. 34:15-40 by “marshaling the rights and responsibilities of the several parties concerned in compensation payments where, in the course of his employment, injury or death comes to a workman as a result of the fault of a third party. * * *” United States Casualty Co. v. Hercules Powder Co., supra, 4 N. J., at p. 165. Moreover, this result assures the availability of an unimpaired fund for the relief of the surviving dependents of the employee, an obvious salutary objective of the Workmen’s Compensation Act.

In accord is Cresci v. Mike Krasilousky Trucking Co., 5 A. D. 2d 569, 172 N. Y. S. 2d 322 (App. Div. 1958). In that case the employee suffered a work-connected injury and suffered a second injury five years later which was causally related to the first injury. He died therefrom two days later. Before his death he had received compensation benefits for both injuries, had settled a third-party action and had reimbursed the employer’s carrier. After his death his widow and child filed a compensation dependency claim against his employer and its carrier. It appeared that the employee gave his wife a substantial part of the proceeds of his third-party settlement, most of which remained in her bank account at the time of his death. The employer claimed a credit for this remaining sum as against the widow and child’s dependency claim. The court, in denying this credit, said:

“The rights of employers and carriers as respects recoveries against third parties are created and defined by section 29 of the Workmen’s Compensation Law. We find therein no support for appellants’ position. That section treats causes of action for personal injuries and those for death damages as separate remedies, as clearly they are, even when the same wrong gives rise to. both (Decedent Estate Law, §§ 119, 120, 130). The subrogatory and other rights conferred by section 29 ai-Q there treated as similarly separate and independent, as respects the separate causes of action to which they apply. ‘Disability compensation and death benefits are distinct from each other and are entirely unrelated. Disability compensation is paid to an injured employee. Death benefits are for a decedent’s dependents. Likewise the two causes of action, the one for wrongful death and the other for personal injuries, are separate and distinct. The former is for the loss resulting to the persons pecuniarly damaged by his death; while the latter is for the tortious injury to the person or property of the deceased during his lifetime.’ j>; * s.'s * # * *
The damages recovered by decedent were for his personal injuries, including such elements as pain and suffering which are not comprehended in payments by employers and carriers under the Workmen’s Compensation Law, and the settlement proceeds remaining after reimbursement of the compensation received were his to do with as he pleased. See Hitt v. Cardillo, 76 U. S. App. D. C. 334, 131 F. 2d 233, certiorari denied, 318 U. S. 770, 63 S. Ct. 760, 87 L. Ed. 1140. That some part of the proceeds reached the hands of his dependents, by gift and by inheritance, is of no moment. It may be worthy of remark that appellants claim as a credit against the award only the unexpended proceeds and would thus penalize such dependents as these, who, with decedent, chose to conserve, rather than to dissipate the money’s received.”

Accord, Schwabacher v. International Salt Company, 272 App. Div. 173, 70 N. Y. S. 2d 370 (App. Div. 1947), affirmed 298 N. Y. 726, 83 N. E. 2d 140 (Ct. App. 1948); see also, Laird v. State of Vermont Highway Dept., 112 Vt. 67, 20 A. 2d 555, 562 (Sup. Ct. 1941).

The employer relies upon Richardson v. United States Fidelity & Guaranty Co., 233 Miss. 375, 102 So. 2d 368 (Miss. Sup. Ct. 1958), and Meachem v. New York Central Railroad Company, 7 A. D. 2d 253, 182 N. Y. S. 2d 501 (App. Div. 1959), reversed on other grounds, 8 N. Y. 2d 293, 206 N. Y. S. 2d 569, 169 N. E. 2d 913 (Ct. App. 1960). Both are inapposite. Richardson did not involve a claim by a dependent for death benefits, and thus the court’s statement therein that the carrier was entitled to a credit against a death benefit was merely dictum.

In Meachem the court held that the widow’s dependency claim was barred because she violated the New York Compensation Act in settling a third-party death action without the approval of the employee’s carrier. The court did not bar the dependency claim because of any previous third-party recovery by the deceased employee.

The employer’s position is not strengthened by the fact that its counsel participated in employee’s third-party action and that its carrier paid the trial costs and expenses thereof. No doubt but that this activity contributed to the success of the employee in that suit. However, by reason of that success the employer and its carrier were repaid all of their trial expenses and costs, were reimbursed for all of the compensation payments paid to the employee as of that date, and were released from all such future payments.

The employer next contends that petitioner’s recovery is barred by the statute of limitations because her petition was not filed within two years after the accident or within two years after the last payment of compensation. Appellant attempts to support this contention by two alternative arguments. It first selects December 10, 1957, the last day that the employee worked for it, as the day upon which the compensable accident occurred. Secondly, it points to the fact that the employee received the proceeds of his third-party tort action on July 25, 1963, and to the fact that petitioner did not file her dependency petition until 2y2 years thereafter, to wit, December 6, 1966. We deem this contention to be without merit.

N. J. 8. A. 34:16-34 has no reference to the date of the accident. This is the pertinent limitations section applicable to cases involving occupational disease, and not N. J. 8. A. 34:15-51 (the general limitations section) cited by appellant. N. J. 8. A. 34:15-34 permits a dependency claim in case of death from occupational disease “if filed within two years after the date of last payment to the employee * *

However, the two-year period of limitations does not commence to run on the date upon which the employee received the lump sum payment. The award represented 450 weeks at $40 per week, running through September 6, 1966. That is the critical date, representing “date of last payment to the employee.” King v. Western Electric Co., 122 N. J. L. 442 (Sup. Ct. 1939), affirmed 124 N. J. L. 129 (E. & A. 1940); Hercules Powder Co. v. Nieratko, 113 N. J. L. 195 (Sup. Ct. 1934), affirmed 114 N. J. L. 254 (E. & A. 1935); Lazzio v. Primo Silk Co., 114 N. J. L. 450 (Sup. Ct. 1935), affirmed 115 N. J. L. 506 (E. & A. 1935). Since the petitioner’s dependency petition was filed within two years of the maturity date, it was filed within the time prescribed in N. J. S. A. 34:15-34.

Oleyar v. Swift & Co., 51 N. J. 470 (1968) is not contrary to the foregoing. There, “More than two years went by after the decedent had suffered his accident without any compensation or any claim therefor,” (at p. 471). Here, the employee promptly filed a compensation petition resulting in the July 31, 1962 award for permanent and temporary disability and this award was fully paid on July 25, 1963.

Judgment affirmed.


author: Mehler, J. S. C.

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. ANTHONY J. CASALE, DEFENDANT.
    Superior Court of New Jersey Law Division, Criminal
    Decided December 4, 1968.

      Mr. Joseph P. Lordi, Prosecutor of Essex County, for the State (Mr. Thomas G. Brown, Assistant Prosecutor, appearing).

      Mr. Ralph G. Mesce, for Daniel DeMichael.
   Mehler, J. S. C.

Applications were made by Anthony J. Casale and Daniel DeMichael for orders to suppress and for the return of papers and other evidence seized by law enforcement officers from premises 865 Clifton Avenue, Newark, pursuant to a search warrant.

Casale was arrested when the warrant was executed and he was subsequently indicted. His motion to suppress has been denied. DeMichael was not arrested nor has be been indicted. He nevertheless moves to suppress, claiming that the conduct of the officers in executing the warrant in his premises was unlawful and therefore the seizure was illegal as to him. He contends that ho is a person aggrieved by the search and seizure. In an affidavit made by him in support of his motion he states that law enforcement officers, in the course of executing the search warrant, seized certain documents, papers, writings and evidence, without describing them and without stating from what part of the premises they were taken. He makes no claim that the items so taken belonged to him. At the argument it developed that the evidence sought to be suppressed was found on the roof of 865 Clifton Avenue. Since DeMichael was not arrested nor indicted, the court learned, irpon inquiry made of the prosecutor at oral argument, that the evidence obtained was not intended to be used against DeMichael. The questions presented, therefore, are whether on these facts the court should undertake to consider whether the search was illegal as to DeMichael and whether the evidence is suppressible as to him and returnable to him.

DeMichael argues that he has standing to make this motion, citing Spinelli v. United States, 382 F. 2d 871 (8 Cir., 1967), certiorari granted 390 U. S. 942, 88 S. Ct. 1025, 19 L. Ed. 2d 1130 (1968); Mancusi v. DeForte, 392 U. S. 364, 88 S. Ct. 2120, 20 L. Ed. 2d 1154 (1968), and United States v. Konigsberg, 336 F. 2d 844 (3 Cir., 1964), certiorari denied 379 U. S. 933, 85 S. Ct. 334, 13 L. Ed. 2d 344 (1964). In Jones v. United States, 362 U. S. 257, 267, 80 S. Ct. 725, 734, 4 L. Ed. 2d 697, 734 (1960), the court held that “anyone legitimately on premises where a search occurs may challenge its legality * * * when its fruits are proposed to be used against him.” In Mancusi the court held that DeForte had Fourth Amendment standing to object to the admission, in evidence on his criminal trial of papers which the court found were illegally seized from a union office shared by him with several other union officials. It will be noted that in those cases, as well as in Spinelli and Konigsberg, the courts were wnsidering the suppression or admissibility of seized evidence which was being offered or proposed to be used in a criminal trial against the movant.

This court is of the view that in a suppression case, an aggrieved person, within the meaning of the law, is one against whom or against whose property seized evidence is proposed to be used by the State. This is made clear by the decisions of the United States and New Jersey Supreme Courts and by the latter’s rule of court. In Weeks v. United States, 232 U. S. 383, 34 S. Ct. 341, 58 L. Ed. 652 (1914), the Supreme Court announced that illegally seized evidence was to be excluded from federal criminal trials as a means of enforcing Fourth Amendment rights. In Mapp v. Ohio, 367 U. S. 643, 81 S. Ct. 1684, 6 L. Ed. 2d 1081 (1961), the court extended the exclusionary rule, holding for the first time that evidence illegally obtained by state officers is as inadmissible in state court proceedings as it is in federal proceedings. This exclusionary rule was followed in State v. Macri, 39 N. J. 250 (1963). R. R. 3:2A-6(a) contemplates that an aggrieved person is one against whom a criminal charge has been or is being made. It provides that a motion to suppress shall be made within 30 days after the initial plea to the criminal charge and shall be determined before trial. Since the purpose of a motion is to exclude evidence proposed to be used in a criminal or forfeiture proceeding, it necessarily follows that where no such proceeding is contemplated against a particular person or his property, he is not aggrieved and therefore has no standing to make the motion. If the prosecutor does in fact proceed at some time against DeMichael contrary to the representation made at oral argument, DeMichael will have ample opportunity to contest the search and seizure, since, as already noted, a defendant may move to suppress within 30 days after he has entered a plea to the indictment.

Since DeMichael is not an aggrieved person, it is unnecessary to consider whether the search was illegal unless the evidence taken from the roof, if unlawfully taken, is returnable to him. DeMichael has not claimed that the items seized by the officers were in his possession or belonged to him. There is indication that they are contraband; in fact, it may be inferred from the allegations in the search warrant and from the charge made against Casale that the items consist of articles used in the crime of bookmaking or lottery or both. Courts will not order the return of contraband even though its use as evidence is suppressed. United States v. Jeffers, 342 U. S. 48, 72 S. Ct. 93, 96 L. Ed. 59 (1951). See also State v. Carter, 8 Terry 147, 47 Del. 147, 89 A. 2d 131 (Sup. Ct. 1952), which holds that numbers slips are not property subject to legal ownership and therefore need not be returned even to the person from whom they were illegally seized, although their use as evidence is to be suppressed. Our Supreme Court, consistent with this principle, has declared in B. B. 3:2A—6(a), which is patterned after Buie 41 (e) of the Federal Buies of Criminal Procedure, that if a motion to suppress is granted, “the property shall be delivered to the person entitled thereto, unless otherwise subject to lawful detention, and shall not be admissible in evidence in any court.” Since the seized items are contraband, they are subject to lawful detention. Furthermore, they are not returnable to DeMichael since there is no proof that they were taken from him, and he does not contend that they are his. It is therefore unnecessary on this phase of the case to determine whether the search was illegal, for DeMichael is not entitled to the return of the evidence. Accordingly, his motion is in all respects denied.


author:
Pee Cueiam.
      Eoley, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. RICHARD ANDERSON, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued June 17, 1968
    Decided July 5, 1968.
    Foley, J. A. D., dissented.

      Before Judges Sullivan, Foley and Leonakd.

      Miriam N. Span, Assistant Deputy Public Defender, argued the cause for appellant (Mr. Peter Murray, Public Defender, attorney).

      Mr. Richard A. Mink, Assistant Prosecutor, argued the cause for respondent (Mr. Leo Kaplowitz, Union County Prosecutor, attorney).
   Pee Cueiam.

Defendant was tried by jury and convicted of armed robbery. He prosecutes this appeal on the ground that it was plain error and manifestly prejudicial to defendant for the trial judge to have given the accomplice charge to the jury.

It is unnecessary to detail the State’s proofs except to note that a prima facie case of defendant’s participation in a four-man armed robbery was established. Indeed, defendant was shot by the police during the course of the robbery.

Defendant’s story was that on the day in question he had been drinking and had taken some goof balls. He then visited a night dub with three friends, Herman Fisher, Eugene Coleman and Melvin Spence, and had some more drinks. He began to feel ill and went outside and fell asleep in the back seat of Spence’s car. The next thing he knew he woke up in the car and heard bells ringing (apparently the burglar alarm). He got out of the car and walked over to a lighted building, entered and saw his three friends inside. Defendant heard shots and then he was wounded by two bullets. He denied having taken any part in the robbery.

Fisher, who had pleaded guilty to the robbery and been sentenced, testified in support of defendant’s story. Defendant had also subpoenaed Coleman, who was in State’s Prison, having pleaded guilty to the robbery and been sentenced. Coleman apparently was unwilling to testify because he was trying to reopen his case. As a result, defendant decided not to call him as a witness.

However, the State decided to call Coleman as a rebuttal witness and, over Coleman’s objection and a threat by the trial judge of contempt proceedings if he refused to testify, Coleman was sworn as a State’s witness. Coleman’s story was that defendant “was like bombed out” and had been left in the car while the other three committed the robbery.

In his charge to the jury the trial judge stated:

“Two individuals, Eugene Coleman and, I believe it was one Herman Fisher, have testified to facts which show some involvement on their part in the criminal situation out of which this indictment and this trial of the defendant arose. One testified for the State and one testified for the defendant. The law in this State is that a jury may convict one charged of crime upon the testimony of one who claims to have participated in the criminal event out of which the indictment and trial of the defendant arose, if in the judgment of the jury the testimony of such witness is entirely credible and worthy of belief. However, the testimony of such witnesses must be given close scrutiny in order to determine whether he or they have any special interest in. the outcome of the case and whether the testimony of such person was influenced by the strong motive of hope or expectation of favorable treatment or reward or by any feelings of revenge or reprisal or by any feelings of loyalty or friendship to the one charged with the crime. One who admits his participation in a criminal offense, tainted as he is with confessed criminality, is often influenced in his testimony by the hope or expectation of favorable treatment or reward or by feelings of revenge or reprisal.
The basic question with respect to the testimony of such witnesses is one of interest in the event or case. The interest of a witness in the event or the result of the trial may be shown to affect his credibility or believability and aid you in determining the weight to be given to the testimony of such a witness.
You should carefully scrutinize all of the testimony of the witnesses, Herman Fisher and Eugene Coleman, and assess it in light of their interest, if any, in the outcome of the case as you determine what weight to accord to that testimony.”

Defendant’s attorney made no objection to the charge, saying he was “completely satisfied” with it. However, it is now asserted that the portion of the charge quoted above was “plain error” which manifestly prejudiced defendant.

It is undisputed that the testimony of both Eisher and Coleman supported defendant's story. Eor that reason, the accomplice charge as such had no relevancy to the case and should not have been given.

Defendant's argument is that the charge admonishing the jury as to the weakness of accomplice testimony, rather than benefit him is is the purpose of the accomplice charge, hurt him since these witnesses had testified in his favor. In short, defendant contends that the testimony of Eisher and Coleman was unfairly downgraded.

We do not agree that plain error was committed by the trial judge in the aforesaid charge and that defendant was manifestly prejudiced by it. Despite the irrelevancy of the accomplice charge as such to the facts of the case, it was proper for the judge to remind the jury that it had the right to consider possible motives of loyalty and friendship in weighing the testimony of Eisher and Coleman.

The judge, in his charge, mentioned “close scrutiny” and ‘‘carefully scrutinize” in referring to the testimony of these witnesses. We do not approve of this particular language. However, in our opinion it did not possess the clear capacity to prejudice defendant, especially when no objection was made to it.

The case of State v. Gardner, 51 N. J. 444 (1968), while it states that the accomplice charge has no place in a situation similar to the one here presented, does not require the conclusion that the mere giving of the charge without more constitutes plain error. In Gardner, the court pointed out that the use of the term “accomplice” had an opprobrious and detrimental connotation of implication of the defendant. Here it is to be noted that the court did not use such term.

In the overall picture, we do not believe that the language used was so manifestly prejudicial as to require reversal, particularly in view of the overwhelming evidence of defendant’s guilt.

Affirmed.

Eoley, J. A. D.

(dissenting). Preliminarily, I wish to say that I agree with the majority’s statement that the State’s proofs made out a prima facie case of defendant’s participation in a four-man armed robbery. However, I think the trial judge’s comment that “defendant was shot by the police during the course of the robbery” is given undue significance and may be misleading. The fact is that defendant claimed that he stumbled into the robbery, was not a participant in it, and was shot in the back. In conclusion, the majority states that the evidence of defendant’s guilt was “overwhelming.” This is true if the testimony of both Eisher and Coleman exonerating defendant was properly rejected, and points up the importance of a fair guidance by the trial judge to the jury of the standards to be applied by that body in its assessment of the credibility of those witnesses.

The majority does not expressly state that it was error for the judge to have charged the “accomplice rule.” It does state that the rule “should not have been charged” and that the court did not “approve” the language employed by the trial judge, viz., “close scrutiny” and “carefully scrutinize,” in referring to the testimony of Eisher and Coleman. It is inferable that by the use of the quoted language the majority intended to say that the trial judge committed error. I would go further and state unequivocally that it was indeed error.

I think I am supported in this view by State v. Gardner, 51 N. J. 444 (1968); see also State v. Spruill, 16 N. J. 73, 78 (1954) and State v. Begyn, 34 N. J. 35 (1961), cited therein. Athough Gardner was reversed on other grounds, it clearly states that there existed no reason to especially charge the accomplice rule since the witness therein could not hope for any special consideration from the State for having testified for defendant. We have the same situation here. Eurther, the court gave a strong admonition that upon a retrial of the case the charge should not be given except upon the request of counsel, and then the trial court should carefully phrase the charge in the light of developments at the trial.

This brings us to the real point of cleavage between the majority views and my own. The majority holds that the trial judge did not commit plain error affecting the substantial rights of defendant. See R. R. 1:5-1 (a). I think otherwise.

It is fundamental that in every criminal case the State has the burden of proving defendant’s guilt beyond a reasonable doubt and, consequently, if after an examination of all of the evidence, there remains in the minds of the jury a reasonable doubt of defendant’s guilt, he is entitled to an acquittal, however suspicious a jury may be of his guilt. In this case the jury was erroneously instructed by the judge that not only could they take into consideration the interests of Fisher and Coleman in testifying favorably to defendant because of a feeling of friendship or loyalty (which, of course, is a legitimate consideration in assessing the motivation of these and other witnesses for testifying as they did), but, as distinguished from the witnesses who testified for the State, the jury’s determination of the witnesses’ credibility was further emburdened by their right to take into consideration Fisher’s and Coleman’s hope of reward or favor by the State. In this connection the trial judge went on to point out that the testimony of a participant in a criminal offense is “tainted” by his confessed criminality and thus is often influenced in his testimony by hope or expectation of favorable treatment or reward, or by feelings of revenge or reprisal.

Thus, there was improperly imported to the jury’s deliberations a wholly irrevelant concept which had the capacity of persuading it that by reason of what the trial judge called “a special interest” in the outcome of the case (which plainly did not exist) the testimony of Fisher and Coleman was rendered suspect and less worthy of belief than that of the State’s witnesses.

I am convinced that if the jury so concluded, the reasonable doubt rule was deeply invaded and therefore defendant’s “substantial rights” were affected to his manifest prejudice. Of course, we cannot know whether this actually occurred, but that is not the test. The test is: Did the plainly erroneous and irrelevant instruction have the capacity to prejudice defendant? I am convinced that it did. And it seems to me that if there is any question about it, the doubt should be resolved in favor of defendant, since he was powerless to prevent the judicial error created by the trial judge sua sponte.

I firmly believe that in such a situation it is far better to send a case back for retrial than to affirm a conviction which would remain shrouded by the suspicion that it may have resulted from the misguided jury instruction.

Therefore, I would reverse and remand for a new trial.


author: Wjck, J. S. C.

text:
    MUTUAL HOME DEALERS CORPORATION, A CORPORATION, PLAINTIFF, v. COMMISSIONER OF BANKING AND INSURANCE OF THE STATE OF NEW JERSEY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided December 4, 1968.

      Mr. W. Louis Bossle for plaintiff.

      Air. Arthur J. Sills, Attorney General of New Jersey, for defendant (Mr. E. Robert Levy, Deputy Attorney General, of counsel).
   Wjck, J. S. C.

An order to show cause issued why defendant Commissioner of Banking and Insurance of the State of New Jersey (hereinafter called “Commissioner”) should not temporarily be restrained (R. R. 4:67-2) from proceeding against plaintiff Mutual Home Dealers Corporation (hereinafter “Mutual”) in conducting an administrative hearing for the purpose of deciding whether MutuaPs secondary mortgage license should be revoked. N. J. 8. A. 17:-11A-1 et seq. After the restraining order was signed on August 27, 1968 and a hearing date set, the Commissioner applied for an order to dissolve the restraints and to dismiss the complaint. The facts pertinent to this motion are set forth below.

On May 14, 1968, following an investigation of MutuaPs lending practices, the Commissioner issued an order to show cause why the secondary mortgage license of Mutual (a licensee under the Secondary Mortgage Loan Act of 1965, N. J. 8. A. 17 :lll—1 et seq.) should not be suspended, revoked or not renewed. The order, issued pursuant to N. J. 8. A. 17:ll.á—11, alleged that Mutual had violated various provisions of the Secondary Mortgage Loan Act and certain rules and regulations promulgated thereunder. It is not necessary for the purposes of this hearing to describe these charges in detail; suffice to say that they dealt with MutuaPs alleged noncompliance with the act.

No administrative hearings have been held pursuant to the Commissioner’s order for the reason that this court issued ex parte temporary restraints on such proceedings. In its complaint regarding these restraints Mutual seeks a judgment declaring that (1) the Secondary Mortgage Loan Act is unconstitutional in certain respects, and (2) some' of the grounds alleged by the Commissioner as a basis for revoking Mutual’s license are ultra vires the statute. As incidental to the declaratory judgment, Mutual also seeks a restraint to prevent the administrative hearings until the questions of constitutionality and ultra vires acts are resolved.

In opposing Mutual’s declaratory judgment-injunction suit, the Commissioner takes the position that the constitutional and other legal issues raised in Mutual’s complaint are not substantial or meritorious and that the appropriate procedural remedy in this case is by means of an administrative hearing and, if dissatisfied thereafter, by judicial review to the Appellate Division of the Superior Court.

After reviewing the pleadings and other papers submitted by the parties and the relevant New Jersey law on this subject, I have concluded that the temporary restraints should be dissolved and Mutual’s complaint should be dismissed for the reasons that the pleadings do not raise constitutional questions substantial or meritorious enough to warrant judicial interference with the administrative process at this juncture. Moreover, the evidence offered does not demonstrate sufficient irreparable harm so as to justify injunctive relief. Interstate Milk Handlers v. Hoffman, 34 N. J. Super. 356 (App. Div. 1955) certification denied 18 N. J. 496 (1955).

In order to invoke the inherent power of equity to grant injunctive relief a plaintiff must demonstrate that irreparable injury will result to his interests if the relief demanded is not granted, or that the remedy at law is inadequate. Light v. National Dyeing & Printing Co., 140 N. J. Eq. 506 (Ch. 1947). This principle of law was discussed in Interstate Milk Handlers v. Hoffman, supra, a case procedurally similar to the instant one. There plaintiff sought to enjoin the Director of the Office of the Milk Industry from holding a hearing on an order to show cause why plaintiff dealers’ licenses should not be suspended or revoked, and for a judgment declaring that the regulation of milk sales in question was invalid as in conflict with the paramount federal power over interstate commerce, and that certain administrative orders associated therewith, while generally valid, were unconstitutional when applied to these sales. The basis of the milk dealers’ demand for injunction was to prevent the irreparable injury which would follow if the licenses were revoked. The relief was denied and on this question Judge (now Justice) Francis said:

"Moreover, from a practical standpoint the danger of irreparable harm resulting from an illegal order revoking the licenses is more imaginary than real. R. R. 4:88-12(a) permits application to the Appellate Division for a stay of any such order pending appeal therefrom under R. R. 4:88-8. In fact, ‘when necessary, temporary relief may be granted without notice for a period not exceeding 10 days by the Appellate Division or a single judge thereof.’ ”

In the present case the only irreparable harm alleged by Mutual is with regard to the possibility of the loss of its license under the Secondary Mortgage Act. On the basis of the Interstate Milk Dealers case there is not sufficient irreparable harm to grant equitable relief.

Mutual relies heavily on Abelson’s Inc. v. New Jersey State Board of Optometrists, 5 N. J. 412 (1950), for the proposition that injunctive relief should be granted here. In Abelson’s the provision declared unconstitutional provided that the administrative agency may revoke a license for optometry for “any conduct which, in the opinion of the board, is of a character likely to deceive or defraud the public * * *” (emphasis supplied). In allowing the injunction the comt held that the subjective test of conduct meriting revocation was so vague, indefinite and uncertain as to render the provision void for want of due process (at p. 424). The instant case does not involve a subjective standard; it involves an ambiguity with respect to computation of legal fees which may be interpreted one of two ways. More importantly, in this ease unlike Abelson’s, the administrative process had already begun to function pursuant to the Secondary Mortgage Act.

An additional consideration bearing on the question of the propriety of judicial restraints imposed upon administrative proceedings is that courts generally decline to grant relief of any kind where there is an adequate administrative remedy available. Interstate Milk Handlers v. Hoffman, supra.; Hoffman v. Garden State Farms, Inc., 76 N. J. Super. 189 (Ch. Div. 1962); Roadway Express, Inc. v. Kingsley, 37 N. J. 136 (1962); Matawan v. Monmouth County Tax Board, 51 N. J. 291 (1968); 3 Davis, Administrative Law Treatise, §§ 20.01 - 20.10. This rule of law, more commonly referred to as the doctrine of exhaustion of administrative remedies, is embodied in R. R. 4:88-14, which states:

“Except where it is manifest that the interests of justice require otherwise, proceedings under Rule 4:88 shall not be maintainable, so long as there is available * * * administrative review to an administrative agency or tribunal, which has not been exhausted.”

Although, technically speaking, Mutual does not seek relief under R. R. 4:88-1 et seq., I feel that the policy and spirit underlying R. R. 4:88-14 (i. e., the harmonious relationship between the administrative agencies and the judiciary) should govern this case.

Accordingly, Mutual should exhaust its administrative remedies by appearing at the hearing before the Commissioner and raising its objections at that time, and by pursuing the appropriate judicial review therefrom if necessary R. R. 4:88-8. This is the proper recourse unless Mutual can clearly demonstrate that “the interests of justice require otherwise.” Matawan v. Monmouth County Tax Board, supra, at p. 296.

Mutual appears to take the position that the mere allegation of a constitutional issue or an issue solely of law requires that the doctrine of exhaustion of remedies not be applied. I cannot concur. In the recent Matawan case the Supreme Court quoted from its decision in Roadway Express, Inc. v. Kingsley, 37 N. J. 136 (1962):

“However, we are not particularly concerned with the label or description placed on the issue but are concerned with underlying considerations such as the relative delay and expense, the necessity for taking evidence and making factual determination thereon, the nature of the agency and the extent of judgment, discretion and expertise involved, and such other pertinent factors * * * as may fairly serve to aid in determining whether, on balance, the interests of justice dictate the extraordinary course of bypassing the administrative remedies made available by the Legislature.” (51 N. J., at p. 297.)

Mutual has failed to demonstrate that it qualifies for judicial relief under this exception. I am satisfied that a majority of the issues raised by Mutual in its complaint will require the taking of evidence and the making of factual determinations thereon. This is the job which the statute directs the Commissioner to do. N. J. S. A. 17:11A-11. Moreover, there is nothing before me which in anywise suggests that the pursuit of administrative remedies will entail any undue delay or expense or any irreparable harm to the plaintiff. See Roadway Express, Inc. v. Kingsley, 37 N. J. 136 (1962).

With respect to the constitutional attacks on the act I should point out that the presumption of the constitutionality of statutes and the reluctance of the judiciary to pass on constitutional issues before it is necessary to do so give me additional reasons to dismiss this suit. Mutual contends that sections 29, 21 and 11 are unconstitutional. Assuming that the issues raised by Mutual contain a constitutional aspect in them, I do not feel that this aspect is of such a nature as to require judicial intervention at this juncture. For instance, Mutual contends that section 29, which precludes the enforcement of any secondary mortgage loans unless they are made and negotiated in full compliance with the act, is unconstitutional because of both its vagueness and its confiscatory nature. However, in this case as in Crescent Investments Co. v. Commissioner of Banking and Insurance, 103 N. J. Super. 11 (Ch. Div. 1968), there is no justiciable issue between Mutual and the Commissioner concerning the enforceability of obligations negotiated under the act. In addition, the recent holding of Oxford Consumer Discount Co. of North Philadelphia v. Stefanelli, 102 N. J. Super. 549 (App. Div. 1968), upheld the constitutionality of section 29.

Mutual also attacks the language of section 11 as unconstitutional for vagueness and overbreadth. In the Crescent case cited above, this court upheld the constitutionality of section 11 against similar attacks; however, plaintiff now urges the Court to consider the void-for-vagueness doctrine — a doctrine recently advanced by the United States Supreme Court as a ground for enjoining administrative proceedings. Dombrowski v. Pfister, 380 U. S. 479, 85 S. Ct. 1116, 14 L. Ed. 2d 22 (1965). I think it is sufficient to point out that the doctrine referred to is applicable to federal injunctions of state criminal proceedings (prior to institution of state proceedings) where the prospective defendant or class of defendants will suffer a “chilling effect” on their First Amendment rights (i. e., free speech) as a result of prosecution under a state law which is void on its face or as applied to plaintiffs. This doctrine and the cases cited by Mutual are inapposite to the instant matter.

Finally, Mutual contends that section 21, particularly the phrase “the full amount of such loan,” when read in conjunction with sections 22(a) (4) and 1(/), is so vague, uncertain and contradictory as to violate MutuaPs right of due process of law.

Sections 21 and 22(a) (4) say in pertinent part:

N. J. S. A. 17:11A-21

“A licensee may make a secondary mortgage loan in such an amount that the net proceeds thereof shall equal a predetermined sum, and may take interest in advance upon the full amount of such loan for the period from the making of the loan to the date of maturity of the final installment. The full amount of such loan shall not exceed the aggregate of the net proceeds and the amount of interest which may be taken in advance, as determined by the application of the formula,
I = .14 A (P + 1)
W
in which T represents the amount of interest which may be taken in advance; ‘A’ represents the amount of the predetermined net proceeds; ‘P’ represents the number of payment periods contained in the period from the date of the making of the loan to and including the date of maturity of the final installment; and ‘N’ represents, to the nearest whole number, the number of payment periods contained in a calendar year.”

N. J. 8. A. 17:11-22(a) (4) :

“(a) The following is hereby fixed as the schedule of maximum amounts which may be charged to an applicant for a secondary mortgage loan for costs, fees, services, points and premiums which may be incurred by such applicant in connection with a secondary mortgage loan: >¡s a£s s¡« # * * * *
4. Legal fees, including preparation of all documents—5% of the full amount of the mortgage loan, not to exceed the sum of $250.00.”

The due process argument relied upon here is applicable to criminal and penal statutes, as distinguished from remedial statutes; and I believe that in the context of an administrative hearing to revoke the privileges of a licensee, the statute here under consideration may be characterized as penal. See HIMC Investment Co. v. Siciliano, 103 N. J. Super. 27 (Law Div. 1968). Furthermore, I agree that the language in sections 21 and 22(a)(4) does create an ambiguity as to the computation of legal fees and the total amount of the loan, i. e., whether legal fees are computed on that part of the loan which excludes interest or includes interest. However, I cannot say that this ambiguity is of such a nature so as to render the statute unconstitutional on its face as a violation of due process of law and to interfere with the administrative hearings by the Commissioner. I feel that the Commissioner has the expertise and working knowledge of the statute to enable him to clarify this ambiguitj', if necessary. In the meantime, Mutual is not left in a position of suffering irreparable harm from this decision not to enjoin the administrative agency inasmuch as Mutual has recourse to the Appellate Division in case of an adverse determination, and it may obtain a stay of the revocation of its license (the alleged irreparable harm) in such case. B. B. 4:88-12. Furthermore, I cannot agree with Mutual’s contention that the Appellate Division cannot fully review the alleged constitutional and legal issues raised here in light of the public policy embodied in the statute. Yannuzzi v. United States Casualty Co., 19 N. J. 201 (1955).

Eor the reasons set forth above the temporary restraints should be dissolved and the complaint dismissed.


author: O’BRrEisr, J. C. C.

text:
    BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION, PLAINTIFF, v. CAROL HOROWYTZ, DEFENDANT.
    Bergen County Court Law Division
    Decided December 3, 1968.

      Mr. Milton T. Lasher for plaintiff.

      Mr. Kenneth F. Lay for defendant (Messrs. Sping am & Sachs, attorneys).
   O’BRrEisr, J. C. C.

This is a suit on a promissory note, dated October 26, 1961, signed in the name of defendant, “Carol Horowytz d/b/a E. D. S. by J. Pearl,” and endorsed on the reverse side by “Jack Pearl.”

Defendant has admitted in the pretrial order that J. Pearl is her father and that he engaged in business in defendant’s name from time to time.

It appears from the exhibits introduced into evidence that on April 8, 1957 a cheeking account was opened with plaintiff bank in the name of defendant, doing business under the tradename E. D. S., as a men’s clothing business at 957 Market Street, San Eraneisco, California. The signature card, containing defendant’s authorized signature, also contains the statement, “J. Pearl power of attorney attached.” The original of this “signature card: power of attorney” was received into evidence and defendant admits signing it.

No oral testimony was offered by either party. The evidence consisted of the admissions contained in the pretrial order and the instruments introduced into evidence. The question presented is whether J. Pearl had the authority to obligate defendant on the note in question. Plaintiff relies solely upon the power of attorney as establishing such authority.

Thus the court is called upon to determine whether the power of attorney can he construed as clothing the attorney-in-fact with the authority to borrow on behalf of defendant principal.

A power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal. The primary purpose of a power of attorney is not to define the authority of the agent as between himself and his principal, but to evidence the authority of the agent to third parties with whom the agent deals. 3 Am. Jur. 2d, Agency, § 23, p. 433.

The authority to borrow money on the credit of the principal is among the most important and also dangerous powers which a principal can confer upon an agent, since manifestly there is a great possibility of the abuse of the power. For this reason, in the absence of express authority, the authority of an agent to borrow on the principal’s credit will not be inferred unless it is necessarily implied by the scope and character of the authority which is expressly granted. 3 Am. Jur. 2d, Agency, § 88, p. 490. Unless otherwise agreed, an agent is not authorized to borrow unless such borrowing is usually incident to the performance of acts which he is authorized to perform for the principal. Restatement, Agency 2d, § 74, p. 192.

These principles have been well expressed by the court in Williams v. Dugan, 217 Mass. 526, 105 N. E. 615, L. R. A. 1916C 110 (1914) :

“The power to borrow money or to execute and deliver promissory notes is one of the most important which a principal can confer upon an agent. It is fraught with great possibilities of financial calamity. It is not lightly to be implied. It either must be granted by express terms or flow as a necessary and inevitable consequence from the nature of the agency actually created.”

Courts are reluctant to find an authority to borrow where such authority is not explicitly conferred. 55 A. L. R. 2d, p. 1215 (in particular, § 3(6), p. 1221 and § 5, p. 1228). See Consolidated National Bank v. Pacific Coast S. S. Co., 95 Cal. 1, 30 P. 96 (1892).

Since the determination of this case rests entirely upon a construction of the power of attorney, it is set forth herein in full.

It is apparent that the authority to borrow money is not given to the attorney-in-fact in so many words. Thus, it becomes necessary to determine whether such authority may be implied by a reasonable construction and interpretation of the instrument, or whether such power may be inferred or necessarily implied by the scope and character of the authority which is expressly granted.

The power of attorney was executed in California and the court must therefore construe it in accordance with the laws of that state.

The instrument delegates power “to sign and endorse checks, notes and drafts and transact all business with your Day and Night Branch San Francisco Calif.” The delegation is in both specific and general terms. If the power to borrow money is necessarily to be implied by the terms of the instrument, it must be expressed by the specific terms “sign * * * notes” rather than by the general term “and transact all business.” For, by the law of California:

“When authority is given partly in general terms and partly in specific terms, the general authority gives no higher powers than those specifically mentioned.” Byer v. Canadian Bank of Commerce, 8 Cal. 2d 297, 65 P. 2d 67, 69 (1937), citing Cal. Civil Code, § 2321.

Focusing, therefore, on the words “sign * * * notes,” plaintiff construes that language to mean'“make and deliver promissory notes as evidence of a debt,” i. e., the power to borrow money. Defendant, on the other hand, construes the same language to mean “endorse notes presented for payment” or “sign notes payable at the bank”, which amounts to an authorization to the bank to pay such notes from funds credited to the checking account.

Powers of attorney are to be construed in accordance with the rules for the interpretation of written instruments generally. 3 Am. Jur. 2d, Agency, § 28, p. 436 (citing Todd v. Superior Court, 181 Cal. 406, 184 p. 684, 7 A. L. R. 938 (1919)).

It is a general rule of construction, and it is the rule in California, that in ease of uncertainty in a contract, it is to be construed most strongly against the party who caused the uncertainty to exist — the party drafting the instrument. Burr and Ladd, Inc. v. Marlett, 230 Cal. App. 2d 468, 41 Cal. Rptr. 130 (1964). As otherwise expressed, a contract is to be construed most firmly against the party who drafts or supplies it. Warshauer v. Bauer Construction Co., 179 Cal. App. 2d 44, 3 Cal. Rptr. 570 (1960), citing Cal. Civil Code, § 1654; Distillers Distributing Corp. v. J. C. Millett Co., 310 F. 2d 162 (9 Cir. 1963) ; Riess v. Murchison, 329 F. 2d 635 (9 Cir. 1964), certiorari denied 383 U. S. 946, 86 S. Ct. 1196, 16 L. Ed. 2d, 209. In New Jersey see Forbes v. First Camden Nat. Bank & Trust Co., 25 N. J. Super. 17, 21 (App. Div. 1953), a ease involving the construction of a signature card and the rules printed in a passbook.

If the third party who loaned money to the agent was a stranger to the power of attorney, this rule of construction would probably be properly invoked against the principal, who adopted the language used by signing it.

However, in this case, plaintiff lender is not a stranger to the instrument. On the contrary, in connection with the opening of a checking account, it supplied in the form of a signature card, the very power of attorney upon which it now relies. The power does not expressly authorize the agent to borrow money and requires construction and interpretation of the language used. Therefore, it is this court’s opinion that the instrument must be construed most strongly against the party supplying it — plaintiff bank.

The instrument expressing the power of attorney is a standard bank form. See, Modern Legal Forms, c. 15, § 1290, p. 610, in which the identical instrument is referred to as “Form No. 37 of the California Bankers Association.” It is interesting to note that the form is catalogued by that publication as a “Power of Attorney to Endorse Checks (Short Form).” This seems to be consistent with the legend on the power of attorney in question (not contained on Form No. 37 of the California Bankers Association), “attorney in fact should complete these two lines exactly as checks will be signed.” (Emphasis added)

The very next form in the cited publication contains a power of attorney to endorse checks and to execute promissory notes. Modern Legal Forms, c. 15, § 1290.1, p. 611. The latter form, utilizing the language “and to execute in the name of the undersigned, promissory notes” may more strongly suggest the implication of authority to borrow money. Even that language may be insufficient for such an implication. Nonetheless-, it seems to this court that if such power is intended to be given, it could and should be expressed in clear, unambiguous language. See, for example, the form of “Declaration of Partnership for Opening and Maintaining Checking Account and Authorizing Loans,” Modern Legal Forms, § 1288.2, p. 596, 2(5).

The construction urged by plaintiff was rejected by the English Chancery Division in Jacobs v. Morris (Eng.) (1902) 1 Ch. 816 - CA, cited in 55 A. L. R. 2d 1229, a case involving a power of attorney containing similar language.

In any event, the court concludes that it cannot by any reasonable construction or interpretation construe the language used in the power of attorney supplied by plaintiff bank to authorize the attorney in fact to borrow money on the defendant’s credit, nor can the court find that such authority is to be necessarily implied by the scope and character of the authority expressly granted.

It is a rule of construction generally, and in California, that a contract should be construed in the context of surrounding circumstances. Kerr Land & Timber Co. v. Emmerson, 233 Cal. App. 2d 200, 43 Cal. Rptr. 333 (1965).

It appears that the primary transaction between plaintiff and defendant, at the time of the execution of the power of attorney, was the opening of a business checking account. It is difficult to conceive that in opening this checking aecount defendant intended to authorize her father to borrow such unlimited amounts of money as plaintiff bank would loan him and which she would be obligated to repay. It is more logical to conclude from the evidence that defendant only intended to empower her father “to sign and endorse checks, notes and drafts and transact all business” in connection with that checking account.

In addition to the authority to borrow which may be directly granted or which may be indispensable to the execution of the powers actually conferred, an agent may hare an apparent authority to borrow money on the credit of his principal — for example, where such borrowing has been approved by a long course of dealing of such a nature as must inevitably have become known to the principal. 3 Am. Jur. 2d, Agency, § 88, p. 491.

The burden of proof rests upon plaintiff to establish its claim by a preponderance of the evidence. Here, plaintiff has relied solely upon the admissions in the pretrial order and the documentary evidence. There has been no testimony adduced to indicate any prior transactions between the parties nor the circumstances surrounding the opening of the checking account and the execution of the power of attorney; nor any other facts upon which an ostensible or apparent agency may be established. There is no indication as to the disposition of the funds which were borrowed by Mr. Pearl, whether they had any connection with the defendant’s business, or that the attorney-in-fact had on any prior occasion borrowed funds in connection with the operation of such business. It is noted that plaintiff bank called upon Mr. Pearl to personally endorse the promissory note in question, from which it may be fairly inferred that it relied upon his credit for the repayment of this loan, at least in part, rather than wholly upon the credit of defendant.

Accordingly, for the reasons herein stated the court concludes that the power of attorney does not contain an express or implied grant of power to borrow money; nor may such power be inferred as necessarily implied by the scope and character of the authority which is expressly granted; nor has any evidence been adduced of any apparent or ostensible power given to the attorney-in-fact sufficient to bind defendant principal. Judgment will therefore be in favor of defendant.