author: Fulop, J. S. C.

text:
    POYDAN, INC., A NEW JERSEY CORPORATION, SPRINGFIELD STEAK HOUSE, A NEW JERSEY CORPORATION, AND FRANK BALDAN, PLAINTIFFS, v. AGIA KIRIAKI, INC., A NEW JERSEY CORPORATION, AAA IMPORTERS LIMITED, A NEW JERSEY CORPORATION, NICHOLAS PROTOPAPAS, CONSTANTINE ZAVOLAS, NIKITAS PROTOPAPAS, JOHN ZAVOLUS AND JOHN PROTOPAPAS, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    September 24, 1974.

      Mr. Donald W. Rinaldo, attorney for plaintiffs (Mr. Louis M. Minotti, appearing).

      Mr. Edward N. Stiso, Jr., attorney for defendants Constantine Zavolas and John Zavolas.

      Messrs. Rusignola & Pugliese, attorneys for defendants Nicholas Protopapas, Nikitas Protopapas and John Protopapas (Mr. Carmen Rusignola appearing).

      Mr. Sanford Silverman, attorney for defendant AAA Importers, Limited.
   Fulop, J. S. C.

This action raises ont of a series of transactions dealing with a restaurant known as the Springfield Steak House situated on Route 22 in Springfield Township, Union County, New Jersey.

Plaintiff Poydan, Inc., a New Jersey corporation, owned the real property used by the restaurant. Springfield Steak House, a New Jersey corporation, owned the liquor license and the personal property and operated the restaurant. Both corporations were under the control of Frank Baldan, who was the equitable or principal owner of the stock.

On or about November 18, 1969 plaintiffs jointly agreed to sell the real and personal property, liquor license and restaurant to five individual defendants, Nicholas Protopapas, Nikitas Protopapas, John Protopapas, Constantine Zavolas and John Zavolas for $500,000, plus the value of the inventory. The contract provided for transfer of the assets to two corporations to be formed by the buyers. As it turned out the buyers formed only one corporation, named Agia Kiriaki, Inc. (hereinafter Agia Kiriaki) and took all of the assets in that corporation. The purchase price was to be paid partly in cash, partly by assumption of an existing mortgage, and partly by a purchase money note payable to Poydan, Inc., one of the sellers. The note was for $250,600. It was secured by the following:

1. A real estate mortgage dated June 10, 1970 from Agia Kiriaki, Inc. to Poydan, Inc.

2. A security agreement covering the personal property in the restaurant, made June 10, 1970 by Agia Kiriaki, Inc. to Springfield Steak House, Inc.

3. The pledge to Springfield Steak House, Inc., Poydan Inc. and Prank Baldan of all of the issued and outstanding shares of stock of Agia Kiriaki, Inc.

The individual purchasers as well as the corporation formed by them were co-makers of the note, and became jointly and severally liable thereon.

The contract of November 18, 1969 contained the following, among other provisions:

4. The Buyers shall likewise enter into a buy and sell agreement whereby in the event any of the said Buyers desires to terminate his activity with the businesses herein named that the corporate stock so held by such terminating stockholder shall be first offered to the remaining stockholders or the corporation and the by-laws shall further provide that in the event none of said stockholders desire to purchase said stock that then and in that event the corporation may purchase same if it receives the prior written consent of Seller which shall not be unreasonably withheld. If neither the said stockholders or the corporation want to purchase the proferred stock or are able to purchase same, said stock may then be purchased by Seller or its main stockholder, Frank Baldan, but by no other person or entity of any kind whatsoever. The intent of the parties hereto is that as long as the Buyers are indebted to Seller and Operator that no persons strangers to the corporation shall be entitled to become stockholders of either of said corporations.

A rider dated November 22, 1969 provides:

9. Buyers represent that they will constitute the only stockholders of the corporation that will be formed by them provided however, that it is agreed by the Seller and Operator and the Buyers that one additional stockholder may be admitted providing that such additional stockholder is a blood relative of Constantine Zavolas.

A written agreement executed on June 10, 1970, at the closing of title, expressly continued these provisions of the contract and rider in effect after the closing.

In the mortgage note of June 10, 1970 it is provided:

4. Notwithstanding the foregoing, the unpaid balance of the principal sum of this note and interest hereon shall immediately become due and payable, at the election of the holder hereof, in the event of:
* *
c. Any change in the ownership of the mortgaged property; * * *

In the pledge agreement of June 12, 1970 it is provided:

* * * further that they will not severally, jointly or otherwise sell, assign, transfer, pledge or hypothecate any of said stock or any interest therein, nor suffer nor permit same to be pledged, assigned or hypothecated unless and until this agreement has been fully performed and the Promissory Note fully paid.

In the security agreement covering goods and chattels, dated June 10, 1970, it is provided:

2.2 Debtor is the owner of the collateral free of any other lien or security interest and will not sell, exchange, lease or otherwise dispose of the collateral, nor permit any person other than Secured Party to acquire a lien or security interest therein or file a financing statement covering the collateral.
* ij" *
4. DEFAULT. Debtor shall be in default under this agreement upon the occurrence of any of the following:
4.2 BREACH OF AGREEMENT BY DEBTOR. Failure by Debtor to keep, observe or perform any provision of this agreement.

On October 12, 1973 the five stockholders of Agia Kiriaki, Inc. entered into an agreement with defendant AAA Importers, Limited, a New Jersey corporation, (hereinafter AAA) to sell their stock in Agia Kiriaki, Inc. to AAA for $675,000. The attorney for the buyers drafted the agreement for the sale. Prior to execution of the agreement the attorney for the sellers inserted page 3 (a) therein, which was agreed to by all parties. It included the following provisions:

7. (a) Notwithstanding anything hereinabove set forth the parties hereto do agree as follows:
A. The issued stock mentioned in Paragraphs 1 (a) and (b) hereof has been pledged in connection with the mortgage mentioned in Paragraph 1 (d) hereof in the amount of approximately $264,000.00, the pledgee being Poydan, Inc., and said stock certificates are presently in the possession of one Donald W. Rinaldo, attorney for said Poydan, in escrow, pending payment of the aforesaid mortgage and said stock may have been further pledged to Dr. Allen, the holder of the mortgage in the original amount of $125,000.00, also mentioned in paragraph 1 (d) hereof. In lieu of the physical delivery of the stock certificates owned by the Sellers the Sellers will individually execute assignments of said certificates and will direct a letter to said Donald W. Kinaldo, Esq. authorizing him to turn over the said stock certificates to the Buyer herein upon the payment of the aforesaid mortgage in the approximate amount of $264,000.00 and will further direct a letter to the subsequent pledgee of said stock certificates of the same import.

The sale to AAA was consummated. Sixty percent of the stock of AAA was held by George O’Brien and Michael Daspin. Eorty percent of the stock of AAA was immediately sold to Constantine Zavolas and John Zavolas, two of the sellers of the Agia Kiriaki stock. This was done secretly so that none of the other sellers knew about it at the time. However, Constantine and John Zavolas are minority stockholders, have ceased to be active in the operation of the restaurant, and have no control over the assets mortgaged to plaintiffs.

Plaintiffs seek a judgment for the balance remaining unpaid on the note. They seek an injunction against the payment of the balance of the purchase price by AAA to the sellers until plaintiffs’ note has been paid in full.

It appears that AAA has been paying the installments on the note as they fell due. There is no e.vidence of any default in any term or condition of the instruments 'held by plaintiffs unless it be by the sale of the stock of Agia Kiriaki to AAA.

Plaintiffs contend that the sale of the shares of stock in violation of the provisions of the contract with plaintiffs constitutes a default which permits plaintiffs to accelerate the due date of the balance.

Defendants contend that:

1. The provision against sale of the pledged stock until and unless the debt to plaintiffs is fully paid is invalid under N. J. S. A. 12A:9—311 of the Uniform Commercial Code.

2. The instruments held by plaintiffs nowhere provide for acceleration upon breach of the terms of the contract as to sale oí the collateral, and the covenants and conditions of the contract are independent.

3. The acceleration would constitute a forfeiture not favored by equity.

The first contention is plausible and appears to be supported by the New Jersey Comment to N. J. S. A. 12A:9-311 of the Uniform Commercial Code. The comment says that the section “declares void any provision in the security agreement either prohibiting transfer or making the transfer constitute a default.”

However, the statute does not say that such provisions are void. It provides that such contractual provisions shall be ineffectual to prevent a voluntary or involuntary transfer of the debtor’s equity in collateral. The statute has been construed to mean that the transferee from the debtor acquires title in the equity subject to the terms of the secured transaction documents, and the rights of the secured creditor are not affected by the transfer of the debtor’s equity. If the security agreement provides that the transfer shall constitute a default, the secured creditor may enforce the same.

In American Bar Association, Uniform Commercial Code IlandbooJs (1964), at 400, in an article by Professor William E. Hogan of the Cornell Law School, originally printed in 47 Minn. L. Rev. 205 (1962) and again in Coogan, Hogan and Yagts, Secured Transactions under the Uniform Commercial Code, it is said:

B. Prohibition on Transfer by the Debtor and Default The Code also recognizes the debtor’s interest in the collateral and provides that this interest may he reached by creditors or may be voluntarily transferred by the debtor “notwithstanding a provision in the security agreement prohibiting any transfer or making the transfer constitute a default.” The quoted language should in no way impede the secured party’s right to proceed to enforce his interest in the collateral after the voluntary or involuntary transfer. The only purpose of this reference to default is to assure that even if the transfer is a default, the transferee obtains some rights. In no sense does the language prevent the secured party from proceeding to enforce Ms interest because such a transfer constitutes a default. The only impediment to enforcement by the secured party after this kind of transfer will come from other Code rules protecting third parties.

In 69 Am. Jur. 2d, Secured Transactions, § 211, it is said:

The Uniform Commercial Code clarifies pre-Code law by providing that the debtor’s rights in collateral may be voluntarily or involuntarily transferred by way of sale, creation of a security interest, attachment, levy, garnishment, or other judicial process, notwithstanding a provision in the security agreement prohibiting any transfer or making the transfer constitute a default.
If a security agreement contains such a provision concerning voluntary or involuntary transfer by the debtor, the provision will be enforced only to the extent that it makes such transfer an event of default. It is clear that both the debtor himself may transfer Ms interest in the collateral and that his creditors may also take appropriate action to reach Ms interest. The rights of creditors of the debtor or any transferee, with respect to the collateral, are subject to the rights of the secured party to the extent provided in the various “priority” provisions of the Uniform Commercial Code.

Also see First National Bank of Bay Shore v. Stamper, 93 N. J. Super. 150 (Law Div. 1961); Farrow v. Ocean County Trust Co., 121 N. J. L. 344 (Sup. Ct. 1938).

The general understanding of the Bar, as shown by form books and printed forms in common use, supports the same view.

There does not appear to be any sound reason for invalidating without exception all provisions in security agreements which forbid the transfer of the collateral or make such transfer a default. A mortgagee or other secured lender has an interest in the identity of his debtor. Even though the security may be adequate, an unreliable owner may allow it to deteriorate or even remove or conceal some thereof.

In the present ease a large part of the value of the assets constituting the security depends upon the continuance of a valid liquor license and the successful carrying on of the restaurant business on the premises. An unsuitable, irresponsible or dishonest purchaser may lose the license and/or destroy or “millc, the business, leaving an empty shell. It was not unreasonable for the creditors to reserve the right to determine whom they will accept as their debtor in possession of the security.

The second argument of defendants is that the papers do not provide for the acceleration of the debt upon breach of the agreement not to sell the corporate stock. The contention is technical and incorrect. The note secured by the real estate mortgage, by the security agreement covering personalty and by the pledge of stock provides for acceleration of the dne date of the unpaid balance of the note in the event of “Any change in the ownership of the mortgaged property; * * *

In the circumstances of this case the shares of stock were part of the property mortgaged. In any event, the intent was that the transfer of the, collateral to the control of any human beings other than the Zavolases and the Protopapases should entitle the creditors to call the note. This intent is written large over the entire transaction and was understood by all of the parties. It was also made clear to the principals of AAA, who indicated their understanding that the mortgage note would have to be paid at or about the closing of title.

A court of equity always looks to the substance, not to the form. Fortugno v. Hudson Manure Company, 51 N. J. Super. 482 (App. Div. 1958); Kleinberg v. Schwartz, 87 N. J. Super. 216 (App. Div. 1965), aff’d 46 N. J. 2 (1965). In Grieco v. Grieco, 38 N. J. Super. 593 (App. Div. 1956), the court said:

* * * equity never permits a rigid principle of law to smother the factual realities to which it is sought to be applied. In equity you cannot tune out the relevant static and undertones. Equity adapts its relief to the requirements of the particular case. * * *

The acceleration of a mortgage debt by reason of the failure of the mortgagor to perform the terms of the contract is not a penalty or forfeiture disfavored in the law or in equity. Weiner v. Cullens, 97 N. J. Eq. 523 (E. & A. 1925); Bohland v. Horn, 107 N. J. Eq. 570 (E. & A. 1930); Glorsky v. Wexler, 142 N. J. Eq. 55 (Ch. 1948); Kaminski v. London Pub. Inc., 123 N. J. Super. 112 (App. Div. 1973).

I conclude that plaintiffs have the right to accelerate the due date of the unpaid balance of the debt and to require payment thereof.

Judgment will be entered in favor of plaintiffs and against all of the defendants.

       It is fairly implied by the language of Uniform Commercial Code § 9-311 that the security agreement may provide that a transfer by the debtor is a default. See Report No. 2 of the Permanent Editorial Board for the Uniform Commercial Code. p. 218. * -v *


source: Caselaw Access Project

author: Dreier, J. D. C.,

license: Public Domain

text:
    FIRST NEW JERSEY BANK, ETC., PLAINTIFF, v. F. L. M. BUSINESS MACHINES, INC., ETC., ET AL., DEFENDANTS.
    Superior Court of New Jersey Law Division
    August 23, 1974.

      Mr. Harold Wovsaniker for plaintiff First Few Jersey Bank.

      Mr. John Fiorello for defendant Horace Goodenough (Messrs. Hoffmann & Fiorello, attorneys).

      Mr. David J. Sheehan for defendant John MacMahon (Messrs. Crummy, Del Deo, Dolan & Purcell, attorneys).
   Dreier, J. D. C.,

Temporarily Assigned. Plaintiff has moved for summary judgment against two signers of unconditional and continuing guaranties of the obligations of F.L.M. Business Machines, Inc. (hereinafter referred to as F.L.M.). Although there were several parties who executed the guaranty form, the issues in this case involve only defendants John D. MacMahon and estate of Horace Goodenough (the late Mr. Goodenough having been one of the endorsers).

The parties have submitted this case on an agreed statement of facts, the pertinent portions of which are as follows: The $37,500 promissory note upon which the bank bases its claim was executed by F.L.M. and delivered to the bank on September 27, 1971. It was signed on behalf of the corporation by Robert G. Walker and Richard Froumi, who are also guarantors and against whom judgment has already been entered. The note was due on October 27, 1971.

The history oí F.L.M.’s relationship with the bank as a borrowing customer extends back to February 1967. On July 31, 1970 defendant MacMahon, decedent Horace Good-enough and other officers and directors of F.L.M. executed and delivered to the bank an unconditional and continuing guaranty of the obligations of F.L.M. Four days later, on August 4, 1970, the bank advanced the suin of $45,000 to F.L.M., evidenced by the corporation’s note. This transaction consisted of a renewal by the bank of $12,500 of prior F.L.M. obligations and a new loan of $32,500. The $45,000 would not have been advanced if the guaranty were not executed and delivered. (In addition, although it is deemed by this court not to be pertinent to the present inquiry, the note was personally endorsed by Horace Good-enough and one other defendant).

The original note had a 90-day maturity to November 2, 1970. Ten days after the due date the note was replaced by a note dated November 12, 1970 in the same amount, and thereafter was successively renewed, although on February 18, 1971 F. L. M. made a principal payment of $7,000, thereby reducing the principal amount to $37,500. Renewals were made on February 18, 1971, March 19, 1971, and June 3, 1971. These notes are not available and the parties have no indication as to whether these notes had been marked “paid,” “paid by renewal,” or “renewed.” Each time the note was renewed interest was discounted in advance.

Horace Goodenough died on June 11, 1971, and within one day plaintiff’s branch manager was notified of his death. The bank’s credit department received immediate notification by the branch manager.

On July 14, 1971 the bank accepted another new promissory note from F. L. M. and returned the note of June 3, 1971. There was no notification by the bank to the estate of this transaction. The procedure was repeated on August 13, 1971, again with no notice to the estate.

On September 8, 1971 defendant MacMahon (whose employment had been terminated May 19, 1971) resigned as an officer and director of F. L. M. and gave formal notice to the bank that he terminated and revoked his obligations under the guaranty. This notification was received by the bank on September 13, 1971.

On September 27, 1971 the bank again renewed the corporate obligation, and it is this note of September 27, 1971 that is the basis of plaintiff’s suit. After the application of the value of corporate collateral, the balance due is $27,406.74 plus interest and costs.

The guarant3>- in question is the usual complicated, small-print type of banker’s guaranty, in general use throughout the State, and is entitled “Guarantee [sic] of all Liability.” The pertinent parts read as follows:

In order to induce the First State Bank of Union, Union, N. J., (hereinafter called the “Bank”), its successors, subsidiaries, endorsees or assigns to make such advances, loans, discounts or extensions of credit as it may deem advisable directly or indirectly to or for the account of
F. L. M. BUSINESS MACHINES INC.
for any one or more of them jointly and/or severally (each, any and all of whom are hereinafter called “Borrowers”) and/or to grant to or for the account of Borrower such renewals, extensions, forbearances, releases of collateral or other relinquishments of legal rights as Bank may deem advisable, and in consideration of advances, loans, discounts or extensions of credit, due or to become due, heretofore made to Borrower and for other valuable consideration, receipt of which is hereby duly acknowledged, the undersigned (each, any and all of whom are hereinafter called “Guarantor”, and who, if two or more in number, shall be jointly and severally bound hereunder) hereby guarantee to the Bank its successors, subsidiaries, endorsees, and assigns, the prompt and unconditional payment of each and every obligation of Borrower to Bank, its successors, subsidiaries, endorsees, or assigns whether or not represented by negotiable instruments or other writings, whether direct or indirect, absolute or contingent, due or not due, secured or unsecured, original, renewed or extended, now in existence or hereafter incurred, originally contracted with Bank or with another or others and assigned or transferred to or otherwise acquired by Bank, and whether contracted by Borrower alone or jointly and/or severally with another or others (all of the aforementioned being hereinafter referred to as “Obligations”).
Guarantor consents that, without notice to or further assent by Guarantor, the liability of Borrower or of any co-guarantor or of any other party for or upon any of the aforesaid Obligations may from time to time, in whole or in part, be renewed, extended, modified, prematured, compromised or released by Bank, as it may deem advisable, that any collateral and/or lien or liens for any of the aforesaid Obligations, or for this guarantee, may from time to time, in whole or in part, be exchanged, sold, or surrendered by Bank, as it may deem advisable and that any deposit balance or balances to the credit of Borrower or any party liable for or upon any of the aforesaid Obligations may from time to time, in whole or in part, be surrendered or released by Bank, as it may deem advisable, all without impairing, affecting or releasing the liability of Guarantor hereunder.
Guarantor waives any and all notice of the acceptance of this guarantee or of the creation, renewal, extension or accruals of any of the aforesaid Obligations, present or future, or of the reliance of Bank upon this guarantee. Each of the aforesaid Obligations shall conclusively be presumed to have been created, contracted or incurred in reliance upon this guarantee, and all dealings between Borrower and Bank shall likewise conclusively be presumed to have been had or consummated in reliance upon this guarantee. Guarantor waives protest, presentment, demand for payment, notice of default or non-payment, and notice of dishonor to or upon Guarantor, Borrower, or any other party liable for any of the aforesaid Obligations. * sh * * * # &
* * This guarantee may be terminated only by written notice to that effect signed by Guarantor, delivered to and receipted for by Bank, which notice shall be effective solely with respect to new Obligations incurred subsequent to the receipt by Bank of the notice of revocation of this guarantee as hereinafter provided for; and in the event of such termination (whether by such notice, death or otherwise) Guarantor and his, its or their respective successor, executors, administrators and assigns shall nevertheless remain liable with respect to the aforesaid Obligations, created and arising theretofore, and with respect to such Obligations and any renewals, extensions, or other liabilities arising out of the same, this agreement shall continue in full force and effect, and Bank shall have the right herein provided for as if no such termination had occurred.
This agreement shall be binding upon the undersigned and the legal representatives, successors and assigns of the undersigned, and shall be governed by and construed in accordance with laws of the State of New Jersey.

I

There appears to be no decided case in New Jersey generally construing the effect of the common forms of continuing guaranties used by banks, and, in particular, setting the standards that should apply in the case of either (a) an attempted revocation of the guaranty or (b) the death of a guarantor who has signed such form. It is clear, however, that the language of such a guaranty must be interpreted most strongty against the bank which has prepared the form, and at whose instance the language was included therein. Josefowicz v. Porter, 32 N. J. Super. 585 (App. Div. 1954); St. Paul Fire and Marine Ins. Co. v. N. J. Bank and Trust Co., 104 N. J. Super. 367 (Law Div. 1969), certif. den. 59 N. J. 265 (1971).

The only New Jersey cases discovered by the court that bear upon the effect of the death of a guarantor upon his obligations under a continuing guaranty are Swift and Co. v. Smigel, 115 N. J. Super. 391 (App. Div. 1971); Adelman v. Franklin Washington Trust Co., 137 N. J. Eq. 257 (Ch. 1945), and L. Teplitz Thrown Silk Co. v. Rich, 13 N. J. Misc. 494 (Circ. Ct. 1935). None ol these cases, however, involved a form of continuing bank guaranty. In the Swift and Co. case, which involved the ineompetency of the guarantor, Judge Oonford also discussed the rules relating to the death of the guarantor, and specifically whether a revocation of the guaranty by death is effective prior to notice of the death by the obligee. In our case this issue is not important, since it is acknowledged that the bank had such notice before the note was renewed. In Swift and Co., goods were sold and delivered, thus creating new obligations, after the incompetency of the guarantor. The court there held that the decisive consideration should be the actual or reasonably imputed knowledge by plaintiff of the guarantor’s incompetency at the time of each advance of credit. In our case, however, the credit was advanced prior to Mr. Goodenough’s death, and the only actions thereafter were renewals of the note. The significance of this difference will be discussed later.

In the Adelman case our former Court of Chancery held that a valid agreement between a principal debtor and creditor extending for a definite time the payment of the debt releases a guarantor if made without his consent. The court further found that the taking of renewal notes was such an extension of the time of payment as would effect a release of the guarantors. But case also is distinguishable in that the guaranty form in our case expressly authorizes such renewals. The Teplitz case may also be distinguished on the same basis.

Judge Conford in Swift and Co. noted that, without binding precedents, the standard formulations of rules concerning commercial transactions need not be routinely followed if they do not comport with commercial reality. In first-instance litigation:

* * * The search should be for the rule which will accord with the reasonable expectations of persons in the business community involved in transactions of this kind. * * * [315 N. J. Super. at 398]

This court will endeavor to follow the same principle.

The commercial world to a large extent operates on credit supplied by commercial hanks. Often corporations are organized and operated with meager capital, and corporate borrowing is supported to a large extent on the basis of individual or corporate guaranties of loan transactions (leaving to one side the whole subject of collateralized loans).

Although the parties have agreed in this case that the loan would not have been granted but for the execution of the continuing guaranty, the bank in preparing the guaranty form foresaw the possible issue of reliance being raised in some case, and included express language that the “aforesaid Obligations shall conclusively be presumed to- have been created, contracted or incurred in reliance upon this guarantee.” The “aforesaid Obligations” included not only the original loans, but any renewals thereof. Although the testimony of Mr. Kest, the bank officer in charge of the loan, was ambiguous on the question of reliance, this court finds that there was actual reliance, based upon the statement that he would not have approved the renewal if he knew that a guarantor had revoked. His misinformation, however, does not destroy the legal effect of the contract documentation.

When long-term credit is granted, the renewal problem is not severe. But where short-term credit, renewable on a 30 or 90-day basis, is in issue, it would be unduly burdensome to require a bank to seek out each guarantor, endorser or surety, and obtain express approval of each renewal. In the event an endorser or a guarantor were on vacation, sick or otherwise unavailable, a bank would be forced to call the corporate loan or carry the same on a past-due basis, thus adversely affecting the credit standing of the corporation. To obviate the necessity of such action, guaranty forms have been drawn expressly to cover many situations in which under common law rules a guarantor would be released from renewal obligations. This court finds no legal or practical reason to withhold enforcement of the terms of such agreements.

This analysis accords "with the majority view in the country. See, e. g., Bennett v. Checotah State Bank of Checotah, 176 Okl. 518, 56 P. 2d 848 (Sup. Ct. 1936), where the court stated:

In that class of cases, then, where the consideration has wholly passed and the guarantor has agreed in advance to extensions, he cannot prevent the creditor from extending or renewing the note or contract, and if extensions or renewals are granted the guarantor is still bound and the power of revocation is beyond him.
The rule that where the consideration is entire and has been executed the guaranty is not revocable by the guarantor, and that if he could not revoke the guaranty by notice in his lifetime his death does not revoke it, is thoroughly ingrained in the law.
* S' *
The guaranty included the right in the creditor to give extensions. The grant of that right was an act which took place in the guarantor’s lifetime. It therefore is inappropriate to argue that “dead guarantors can make no new promises,” for the right of renewal and extension did not here depend on any implied new promise, but was derived from the old promise, made by the guarantor at the inception of the contract. That promise related to the fulfillment of the contract entered into at that time, for which the entire consideration passed at that time, and is as binding upon the estate of the promisor as any other right of property he may have vested in other parties during Ms lifetime. There was no necessity for the implication of new promises of guaranty coincident with the creditor’s parting with new or additional consideration (as in the second class of guaranties mentioned above, in which death would have revoked the guaranty), for neither did the creditor furnish any new or additional consideration nor would such have been authorized by the terms of the guaranty. In extending the original debt the creditor merely exercised a right which was vested in it by and during the lifetime of the guarantor at the inception of the contract of guaranty, and no implication of a new or fresh consent was necessary. It follows that tlie extensions did not operate to relieve the guarantor’s estate from liability. [56 P. 2d at 850]

In Exchange National Bank v. Hunt, 75 Wash. 513, 135 P. 224 (Sup. Ct. 1913), on facts practically identical to the case at har, the court held:

The contract of guaranty upon which the action is based did not guarantee the payment of a negotiable instrument, but did in terms guarantee any and all existing loans and any renewals thereof, not to exceed the sum of $10,000. * *
From the facts already stated, it appears that the debt existing at the time of the death of O. W. Hunt, had in no particular been paid, except the interest thereon. The renewal demand note of September 17th did not extinguish the obligation. The language of the guaranty expressly covers the obligation and not the evidence thereof. The Hunt estate was not discharged by the giving of the demand note. [135 P. at 225-226]

See also, First National Bank of Boston v. McGowan, 296 Mass. 101, 5 N. E. 2d 5 (Sup. Jud. Ct. 1936); Corn Exchange Bank and Trust Co. v. Gifford, 268 N. Y. 153, 197 N. E. 178 (Ct. App. 1935); In re Johnson’s Estate, 167 Misc. 318, 5 N. Y. S. 2d 24 (Surr. Ct. 1938); Tyler Bank & Trust Co. v. Shaw, 293 S. W. 2d 797 (Tes. Ct. Civ. App. 1956); 38 C. J. S. Guaranty § 76 at 1244-1245; 38 Am. Jur. 2d, Guaranty, §§ 63, 64 and 69 at 1064-1066, 1069-1070. The analysis in the Am. Jur. section last cited comports with Judge Conford’s analysis of the guaranty in the Swift and Co. case, supra., where he stated:

Neither of the parties to this appeal disputes that the agreement upon which this action was brought was a continuing guaranty of the kind “which is not limited to a particular transaction * * * but which is intended to cover future transactions.” See Fidelity Union Trust Co. v. Galm, 109 N. J. L. 111, 116 (E. & A. 1932). A continuing guaranty is at its inception an offer from the guarantor and is accepted by the creditor each time the latter does a specified act (e. g., extending credit to the debtor). * * * [115 N. J. Super. at 394]

As the editors of Am. Jur. noted, one must distinguish between a contract of guaranty and an offer to guarantee. The offer is revoked by the death of the guarantor, but once sums have been advanced based upon the strength of the offer to guarantee, and a contract is in effect, the contract may not be so revoked. Where, as in this case, the contract includes the term providing for renewals, such renewals also may be made without terminating the guarantor’s liability.

The estate has cited several out-of-state cases to support its position. The first case, Bedford v. Kelley, 173 Mich. 492, 139 N. W. 250 (Sup. Ct. 1913), is distinguishable in that the guaranty there did not provide for renewals or extensions, and thus the same rules as were cited above generated the opposite result. Other cases cited by defendants support their position, but the same were cases decided before 1900, and were products of a different era. See National Eagle Bank v. Hunt, 16 R. I. 148, 13 A. 115 (Sup. Ct. 1888); Gay v. Ward, 67 Conn. 147, 34 A. 1025 (Sup. Ct. Err. 1895), and Home National Bank v. Waterman, 30 Ill. App. 535, aff'd 134 Ill. 461, 29 N. E. 503 (Sup. Ct. 1890), this latter case also having been followed in Commonwealth Trust and Savings Bank v. Hart, 268 Ill. App. 322 (App. Ct. 1932).

II

A slightly different situation is presented in the case of defendant MacMahon in that it was not his death but an express notice to the bank that is claimed to have terminated his liability. Again, however, we must look at the difference between an offer to guarantee and a contract of guaranty. Once the advance had been made by the bank, defendants were bound by the terms of their agreement. Under this agreement a notice of termination was effective only as to any future advances which might have been made by the bank, and guarantors remained liable with respect to the original obligations “and any renewals, extensions or other liabilities arising out of the same.” As to such renewals the bank retained all of its rights “as if no such termination had occurred.” The case of Adelman v. Franklin Washington Trust Co., supra, cited by defendant MacMahon, is inapposite since there was no provision in the mortgage bond for a renewal or extension. Also, the case of Merchants' National Bank v. Cressey, 164 Iowa 721, 146 N. W. 761 (Sup. Ct. 1914), is distinguishable. There the guaranty provided that the guarantor would pay the bank “all the money advanced and loaned the said Cedar Eapids Cereal Company on or after this date, including any renewals thereof, without notice to us, * * * This guaranty to be effective until thirty (30) days written notice to the contrary is given the [bank] by the undersigned.” Defendant was held to be relieved of his obligation to pay a loan renewed more then 30 days after the revocation of the guaranty. Nowhere in that guaranty was there an express promise to be responsible for renewals made subsequent to the revocation. In the case at bar there was such an undertaking, and defendant MaeMahon also will be held to his contract.

Ill

Lastly, defendants assert that they should- be given the benefit of equitable considerations in construing and applying the guaranty agreement. They note, as the court has noted in the opening of this opinion, that their guaranty did not result from arms-length bargaining between the bank and guarantors with respect to the terms of the contract. They state that the guaranty is finely printed on a standard form prepared by the bank and must be executed by any guarantor if he hopes to obtain the financing sought from the bank. They ask to be relieved from its provisions, citing Unico v. Owen, 50 N. J. 101, 111-115 (1967), in which purchasers of consumer paper were held not to enjoy the status of holders in due course, by virtue of their connection with the payees. A similar principle was enunciated in Henningsen v. Bloomfield Motors Inc., 32 N. J. 358 (1960) and its progeny, where an inequitable provision in a contract of adhesion was held to be unenforceable with respect to a consumer. And cf. N. J. S. A. 12A:2-302 permitting a court to refuse to enforce an unconscionable provision of a sales contract.

While it is true that the courts of this State have long possessed the power, both in law and in equity, to relieve a party from the burden of the agreement (see the New Jersey Study Comments to N. J. S. A. 12A:2-302), this is not a case for the application of such power. The parties freely entered into the guaranty agreement knowing full well the import of the same. This was a business transaction, and there were other sources of financing which could have been explored, (such as other banks, private lenders, commercial factors, etc.), if defendants did not wish to sign such an all-inclusive guaranty agreement. Although, in the appropriate case, the mere existence of the commercial setting need not preclude the court’s exercise of its equitable jurisdiction, the facts here do not entitle defendants to such relief. Cf. Moreira Construction Co., Inc. v. Moretrench Corp., 97 N. J. Super. 391, 395 (App. Div. 1967), aff’d o. b. 51 N. J. 405 (1968), where the court held that the commercial setting and the existence of viable alternatives to the disputed contract fortified the enforcement of a contractual allocation of risks provision; Mayfair Fabrics v. Henley, 48 N. J. 483, 488 (1967), involving a similar provision in a lease; and Cozzi v. Owens Corning Fiber Glass Corp., 63 N. J. Super. 117, 125-127 (App. Div. 1960), involving indemnification by a contractor. Even the, Study Comments to § 2-302 of the Uniform Commercial Code show that it is not superior bargaining power but oppression or unfair surprise that will justify a finding of unconseionability in a sales contract. Such factors are not present in this case.

Defendants were not powerless to protect themselves against F.L.M.’s deteriorating financial position. If at any time they (or either of them) determined that their best interests were served by paying the balance to the bank, and becoming subrogated to the bank’s rights, they could have cut their losses. They chose not to do so. In addition, the renewals caused defendants to suffer no additional losses. The bank could have carried the item as past due for the same period of time, and then brought this suit. The time period was not so long as to entitle defendants to claim laches or any prejudice from the delay.

For the foregoing reasons, and based upon the agreed statement of facts, judgment will be entered in favor of plaintiff and against defendants John MacMahon and the estate of Horace Goodenough in the amount of $87,406.74. Prejudgment interest is discretionary with the court. Rova Farms, Inc. v. Investors Ins. Co. of America, 65 N. J. 474 (1974). At least to some extent, the renewal practices of the bank have given rise to this litigation and the concomitant costs to defendants. This court therefore has chosen not to award such prejudgment interest.


author: Furman, J. S. C.

text:
    JOHN J. BRUNETTI, PLAINTIFF, v. MAYOR AND COUNCIL OF THE TOWNSHIP OF MADISON AND PLANNING BOARD OF THE TOWNSHIP OF MADISON, DEFENDANTS.
    Superior Court of New Jersey Law Division
    August 27, 1974.

      Mr. Harold G. Smith for plaintiff (Messrs. Wilentz, Goldsmith & Spitzer, attorneys; Mr. John A. Hoffman on the brief).

      Mr. Richard F. Plechner for defendants Mayor and Council of the Township of Madison.

      Mr. Thomas Norman for defendant Planning Board of the Township of Madison.
   Furman, J. S. C.

Plaintiff moves for summary judgment in litigation challenging the denial of his application for a zoning variance. The Madison Township zoning ordinance of 1970 and the amended zoning ordinance of 1973 were struck down as unconstitutional in Oakwood at Madison, Inc. v. Madison Tp., 117 N. J. Super. 11 (Law Div. 1971), certif. granted 62 N. J. 185 (1972), on remand 128 N. J. Super. 438 (Law Div. 1974). Both trial court judgments were stayed pending appeal.

On September 11, 1972 plaintiff sought a zoning variance for a 1256-unit garden apartment complex on 127 acres of vacant land, approximately 65 acres in R-80 Residential, approximately 38 acres in S-D Special Development and approximately 23 acres in M-l Light Industrial. Other holdings of his surround this 127-acre parcel, which is west of Route 9 in a sparsely developed section olthe township.

The board of adjustment recommended the use variance and incidental bulk variances on December 19, 1972. There were no objectors at the board hearings. The Old Bridge Civic Association through a spokesman favored approval. The mayor and council failed to act on the board recommendation within the statutory 60-day period, as extended several times, amounting to a denial pursuant to N. J. S. A. 40:55-39.1. Plaintiff brought this prerogative writ action on July 23, 1973.

The amended zoning ordinance was adopted, effective October 1, 1973. Plaintiff’s 127-acre parcel was rezoned into a Planned Unit Development zone of over 600 acres. Garden apartments, townhouses and high rise apartments are permitted subject to housing unit density limitations and in proportions to single-family houses, according to total acreage within a planned unit development and other factors. PUD is optional. If not availed of, the governing zoning remains that in the 1970 ordinance.

Plaintiff rejects the PUD alternative and presses for summary judgment on the single issue whether the 'statutory denial of his variance application was unreasonable and therefore invalid. Denial through inaction by the mayor and council, not approval after hearings by the board of adjustment, carries with it the presumption of validity. Wickatunk Village, Inc. v. Marlboro Tp., 118 N. J. Super. 445, 449, 450 (Ch. Div. 1972); cf. Wharton Sand & Stone Co. v. Montville, 39 N. J. Super. 278, 283 (App. Div. 1956), and Nalitt v. Millburn, 66 N. J. Super. 292, 303 (Law Div. 1961).

To reverse the statutory denial this court must determine that it was unreasonable under the evidence not to conclude that a special reason was established for the variance and that the variance “can be granted without substantial detriment to the public good and will not substantially impair the intent and purpose of the zone plan and zoning ordinance.” N. J. S. A. 40:55-39(d); Shell Oil Co. v. Shrewsbury Bd. of Adj., 64 N. J. 334 (1974), rev’g 127 N. J. Super. 60 (App. Div. 1974).

The special reason urged by plaintiff is the need for moderate-income multi-family housing within the township and region. The board of adjustment found that such need exists and that it would be served by plaintiff’s project, relying upon expert opinion, county and township population projections, the low vacancy rate of present garden apartments within the township, plaintiff’s estimates of his rentals, which would be within reach of moderate-income households, and the general knowledge of the hoard members. In addition, the adoption of a rent control ordinance effective July 16, 1973, based upon a rental housing shortage within the township, supports the board’s finding.

No reported decision has held that a need for private multi-family housing constitutes a special reason justifying a zoning variance. DeSimone v. Greater Englewood Housing Corp. No. 1, 56 N. J. 428 (1970), so categorizes semi-public multi-family housing, at least under the circumstance that it would relieve and replace substandard housing in ghetto areas.

A series of other precedents recognizes uses in furtherance of the general welfare as special reasons within the statute. Kunzler v. Hoffman, 48 N. J. 277 (1966) (private hospital for emotionally disturbed); Kramer v. Sea Girl Bd. of Adj., 45 N. J. 268 (1965) (fireproof hotel to replace dangerous structure); Burton v. Montclair, 40 N. J. 1 (1963) and Black v. Montclair, 34 N. J. 105 (1961) (extensions of private, secondary and elementary schools); Andrews v. Ocean Tp. Bd. of Adj., 30 N. J. 245 (1959) (parochial school to serve region), and Wickatunk Village, Inc. v. Marlboro Tp., supra (sewage treatment plant for mobile home park).

Defendants argue that if the need for moderate income multi-family housing is held to be a special reason, zoning use restrictions would break down in every zone. That is not so. The so-called negative criteria, no substantial detriment to the public good and no substantial impairment of the zone plan, must also be met.

The board of adjustment’s finding of a need within the township for moderate-income multi-family housing is inescapable on the record. A need for low and moderate-income housing constitutes a special reason justifying a zoning variance, whether served by semi-public housing as in DeSimone or by private housing as proposed by plaintiff. The mayor and council were unreasonable in not so concluding.

As to the negative criteria, plaintiff established them overwhelmingly and without rebuttal. No threat to the public good is discernible. This section of the township is sparsely developed. The terrain is suitable for garden apartments. Much natural woodland would be preserved. There would be ample parking and recreational areas. Water and electric utilities and sanitary sewer facilities are available in the immediate vicinity to hook up to. A storm drainage system is feasible. No adverse effect on Route 9 traffic is foreseen from the standpoint of safety or congestion. The widening of Route 9 ill this area is planned by the State Department of Transportation.

Both the township master plan and the amended zoning ordinance, in setting up the optional PUD zone, provide for multi-family housing at this site. To conclude that a garden apartment complex would substantially impair the intent and spirit of the zone plan is untenable.

In the approval of various bulk variances the board of adjustment determined that restrictions applicable to other permitted uses but not to multi-family housing should not be enforced, in view of its approval of the use variance. DeSimone, supra 56 N. J. at 443, 444, is in accord. Finally, restrictions on the number of bedroom units were deleted in the 1973 zoning ordinance amendment; the variance relative to such restrictions is therefore moot.

Judgment is rendered directing the governing body to grant plaintiff’s application for a zoning variance.


author: Bilder, J. S. C.

text:
    ELIZABETH V. COLLINS, GENERAL ADMINISTRATRIX AND ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF MARTIN L. COLLINS, DECEASED, PLAINTIFF, v. UNIROYAL, INC., DEFENDANT.
    Superior Court of New Jersey Law Division
    September 9, 1974.

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

      Mr. Burtis W. Horner for defendant (Messrs. Stryker, Tams & Dill, attorneys).
   Bilder, J. S. C.

The issue raised here is whether B. 4: 42-11 (b), providing for prejudgment interest, applies to a judgment arising out of a personal injurjq products liability case in which the jury verdict was based upon a breach of an express warranty.

The case arises out of an accident which occurred on March 27, 1967 when a ear driven by plaintiff’s husband went out of control and turned over as the result of a failure of the right rear tire. Plaintiff’s husband was killed and on June 7, 1968 his widow brought the instant death action against the manufacturer/seller of the tire. Recovery was sought both on the theory of strict liability in tort and breach of express warranty.

On March 1, 1972, almost five years after the fatal accident and almost four years after the institution of suit, a jury verdict was returned in favor of plaintiff in the sum of $125,000.

The trial judge submitted the case to the jury on both theories — i. e., strict liability in tort and breach of express warranty — and instructed it, in the event it found for plaintiff, to state whether such verdict was based on one or the other or both theories. Pursuant to this instruction the jury reported that the basis of its verdict was breach of express warranty.

On March 1, 1972 judgment was entered in favor of plaintiff against defendant in the sum of $125,000 with costs. No reference was made to prejudgment interest.

Appeals followed in which the judgment against defendant was affirmed by the Appellate Division, 126 N. J. Super. 401 (1974), and the Supreme Court, 64 N. J. 260 (1974). The principal litigation finally terminated March 12, 1974, slightly less than seven years after the accident, when the Supreme Court denied a petition for rehearing.

The instant issue is before this court on plaintiff’s motion to require defendant to pay interest on the judgment pursuant to B. 4:42-11. Properly, the plaintiff should have moved to correct the judgment entered by the trial court to include the interest provided by R. 4=:4=2-ll(b). If that rule applies to this case, its application is mandatory. Whatever infirmity lies in the form of the motion is purely procedural and the motion will be treated as one to correct the judgment.

R. 4:4=2-ll(b) reads as follows:

Tort actions. Except where provided by statute with respect to a public entity or employee, the court shall, in tort actions, including products liability actions, include in the judgment interest at 6% per annum on the amount of the award from the date of the institution of the action or from a date 6 months after the date of the tort, whichever is later. The contingent fee of an attorney shall not be computed on the interest so included in the judgment.

That the case was a products liability action is not disputed by the parties. The dispute as to the application of the rule arises from the nature of that products liability action. More specifically, defendant contends that since the jury based its verdict solely on breach of express warranty, the liability was ex contractu and therefore not a tort action within the meaning of R. 4:4-2-ll(b).

In furtherance of their argument, the parties focus on that part of the rule that reads "* * * in tort actions, in*cluding products liability actions, * * *.” This, says defendant, limits prejudgment interest to those products liability cases wherein recovery is based upon tort principles. Roth parties have ably briefed the history and development of products liability cases. The application of the two-year statute of limitations to products liability cases wherein the action is for personal injuries has been noted. Bee e. g., Heavner v. Uniroyal, Inc., 63 N. J. 130 (1973).

Perhaps it would be sufficient in this case to apply ordinary rules of construction and note that the interpretation urged by defendant would render the words "including products liability actions” meaningless. Unless this phrase means something more than products liability actions wherein liability has an ex delicto basis, the words are redundant. Words should never be construed to yield such a result if another and more sensible construction is possible. See e. g., Hoffman v. Hock, 8 N. J. 397, 406-407 (1952). The application of the rule to the instant case, as urged by plaintiff, would be such a sensible construction.

However, the proper construction of B. 4:42-ll(b) should not be dealt with in the narrowness of legal niceties. Eather it should be read in the breadth of the beneficial ends our Supreme Court intended to achieve in its adoption.

The resolution of this question is purely a policy question —- whether to interpret the rule so as to narrow it (cf. Wicks v. Central Railroad of New Jersey, 129 N. J. Super. 145 (App. Div. 1974), where the court refused to apply this procedural rule to a ease based on FELA rights) or so as to maintain its potential breadth. I believe the latter is the appropriate approach to this procedural rule.

Our Supreme Court has recognized the realities of the settlement process and has attacked the problem head-on. Those who are daily faced with the frustrations of crowded calendars, with the attendant inconvenience and occasional unfair burden on attorneys, witnesses and litigants, recogize the reason and efficacy of the rule. The rule is intended to inhibit delay, induce settlement, assist effective court management and yield a greater measure of justice to litigants. Busik v. Levine, 63 N. J. 351 (1973); cf. Crudup v. Marrero, 57 N. J. 353 (1971). All of the reasons which impelled the adoption of the rule are applicable to this case. As the Chief Justice said in another context:

However, it is unnecessary to resolve tie issue since we do not think that compensation should be dependent on what label we place upon an action, but rather on the nature of the injury inflicted upon the plaintiff and the remedies requested by him. [Rova Farms Resort, Inc. v. Investors Ins. Company of America, 65 N. J. 474 at 504 (1971)]

The ex contractu basis of the recovery in this unliquidated personal injury action may make for a distinction but does not thereby make for a difference. The reasons which impelled our Supreme Court to adopt R. 4:42-11(b) compel its application to this case.

The judgment entered on March 1, 1972 will therefore be corrected so as to read in favor of plaintiff and against defendant in the sum of $152,962.50 with costs. Interest as provided by the rule is included in the judgment. R. 4:42-11 (b); Busik, supra, 63 N. J. at 355.


author: Marzulli, J. C. C.,

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. DAVID BURTON, DEFENDANT.
    Superior Court of New Jersey Law Division
    September 10, 1974.

      Mr. Harry Robinson, III, Assistant Prosecutor for the State (Mr. Joseph P. Lordi, Prosecutor of Essex County, attorney) .

      Mr. Charles S. Lorber for the defendant (Mr. Edmond M. Kirby, Deputy Public Defender of Essex Region, attorney).
   Marzulli, J. C. C.,

Temporarily Assigned. A pretrial motion has been made by defendant for the dismissal of counts 1 and 2 of Indictment #2283-73 charging him with the murders of Donald McGill and Lamar Ereeman who were killed by the police while they and defendant were committing an armed robbery. This motion was made by defendant based on his assumption that the State will try the case on. the theory of felony murder. The indictment returned by the grand jury is in the short form and the State contends that this does not bind the State to a particular theory of murder. It is the State’s contention that if the court agrees with defendant’s position with regard to the interpretation of N. J. S. A. 2A:113-1, the State will try the case on the theor3 of vicarious liability. Therefore, in this regard the State urges that this court follow the reasoning of the California courts and permit the State to submit to the jury the question whether the intentional acts of defendant or his co-felons were done with a conscious disregard for life during the commission of a felony.

The court has, however, been advised that the prosecutor .has elected to proceed on the theory of felony murder.

It is defendant’s contention that as a matter of law he cannot be charged with the murders of his two co-perpetrators whose death occurred as a result of police action.

Eor the purpose of this motion the following facts have been stipulated to by both the State and defendant.

On February 20, 1974 defendant, McGill and Freeman robbed at gunpoint one Steven Killen. Killen was a uniformed driver for the United Parcel Service. Defendant and his two co-felons took Killen’s uniform and truck. They then bound and handcuffed Killen, placed him in the back of his truck and forced him to accompany them to Verona. In Verona they entered an establishment known as Rose’s Jewelry Store. At that time Burton was wearing Killen’s uniform and carrying Killen’s clipboard. In the store defendant Burton stayed in front with the counter girl while his co-felons went to the rear of the store. While in the store defendant and his co-perpetrators committed an armed robbery of the person of one Harvey Bressman. They then attempted to commit an armed robbery of the jewelry store.

While the robbery of the jewelry store was in progress the police arrived. When they entered the store defendant was ordered by the police to place his hands upon the counter. Defendant complied. McGill and Freeman started to shoot at the police. A gun battle ensued in which McGill and Freeman were killed. During the gun battle defendant fled the scene and was apprehended under a picnic table in the International House of Pancakes where the knife that he had been holding in his hands at the time of the robbery was recovered. Defendant knew that his co-perpetrators were armed and, in fact, had used the guns in the commission of the iintial armed robbery and kidnapping of Killen and in the attempted robbery of Pose’s Jewelry Store.

The issue before this court is: if a felon is shot and killed during the commission of a robbery by the police, can his death be imputed to his co-felon under the felony murder statute? The answer to this question will be based upon the court’s interpretation of the Legislature’s intent when it enacted N. J. S. A. 2A :113-1 and 2. In making that determination this court is acutely aware that it is the obligation of the court to follow the legislative intent when that intent has been clearly expressed, despite the court’s opinion of what the law should be.

It is of paramount importance to determine whether the Legislature intended that criminal responsibility in this type of case should be based upon the agency theory or the proximate cause theory. The agency theory, simply stated, seeks lo hold a defendant responsible when the act of killing is either that of defendant or someone acting in concert with him. See Commonwealth v. Redline, 391 Pa. 486, 137 A. 2d 472 (Sup. Ct. 1958), and 56 A. L. R. 3rd 249. This would render the felony murder statute inapplicable where the killing was done by a third person in resistance to the felony.

The proximate cause theory states that a defendant may be held accountable for the proximate consequences of his activities and that a foreseeable consequence may be a killing by one resisting the felony. See Commonwealth v. Redline supra; Commonwealth v. Moyer, 357 Pa. 181, 53 A. 2d 736 (Sup. Ct. 1947), and Johnson v. State, 386 P. 2d 336 (Okl. Cr. Ct. 1963).

A reading of our statute clearly indicates that the Legislature intended to extend criminal accountability beyond that imposed upon a felon by the common law. The New Jersey statute contains three clauses which are applicable to this case. The first clause reads as follows:

If any person, in committing or attempting to commit arson, burglary, kidnapping, rape, robbery, sodomy or any unlawful act against the peace of this State, of which the probable consequences may be bloodshed, kills another, * * *.

It is apparent that this clause embodies the traditional concept of felony murder under the common law. The clause has both a subject and a predicate which demonstrate a direct causal connection between the criminal conduct and the homicide. Therefore, this clause standing alone would indicate a legislative intent to follow the agency theory of felony murder.

This clause is followed immediately by a second clause which reads:

* * * or if the death of anyone ensues from the committing or attempting to commit any such crime or act; *■ * *

This clause has been commonly referred to as the “ensues” clause. In interpreting this clause it is important to keep in mind that the Legislature used the word “death” as opposed to such words as killing, homicide or murder. It is logical to assume that the Legislature specifically chose the word “death” so as to extend the culpability of a defendant to all deaths, be they felonious, accidental or justifiable, which occur during the commission of certain offenses. In addition, application of the agency theory would render the “ensues” clause mere surplusage. Under the agency theory all circumstances would be covered by the first clause. Therefore, the “ensues” clause evidences a legislative intent to adhere to the proximate cause theory of felony murder.

This interpretation of the statute has been followed by two reported cases in New Jersey. In State v. McKeiver, 89 N. J. Super. 52 (Law Div. 1965) defendant was charged with felony murder after a victim of an armed robbery died of a heart attack. The court stated:

The i-ule places upon a man committing- a felony, or attempting to commit a felony, the hazard of being guilty of murder if he creates any substantial human risk which would actually result in the loss of life; * *- * The intent to avoid all personal harm, formed in the mind of the transgressor at the time he embarks upon such a felony, is no reasonable safeguard that death will not result from his illegal actions, [at 55]

In State v. Kress, 105 N. J. Super. 514 (Law Div. 1969), the court read N. J. S. A. 2A:113-1 to apply to a situation in which a victim of an armed robbery was shot and killed by police officers in an attempt to thwart the robbery.

It is clear that our statute is not limited by the confines of felony murder under the common law. It is well within the power of the Legislature to hold liable for murder those persons who embark on a course of conduct evidencing “a man-endangering-state-of-mind.” Perhins, Oriminat Law (2 ed. 1969), at 46. An armed robbery involving the use of firearms is such a course of conduct.

The third phrase of the statute reads as follows:

* *■ * then such person so killing is guilty of murder.

Under the proximate causation theory the clause “such person so killing” does not refer to the person who actually pulled the trigger but rather to the felons who embarked on the course of conduct which precipitated the death. It is evident that only by utilizing the proximate cause theory may both the “ensues” clause and the final phrase be given their full and independent meanings.

A review of the statutory history of our murder statute would indicate that the same “ensues” clause has remained intact since the enactment of the murder statute in 1800. This clause has continued in all supplements and amendments to the murder statute from that time until the present.

A study of the appropriate statutes in other jurisdictions indicates their legislative intent to be different from that of New Jersey. In Pennsylvania the basic determination of the fact of murder is to be made according to the rules of the common law. The defense disregards the distinction between Pennsylvania and New Jersey and, therefore, its reliance on the Pennsylvania decision in Commonwealth v. Redline, 391 Pa. 486, 137 A. 2d 472 (Sup. Ct. 1958), which found that a defendant could not be liable for the death of his accomplice who was shot by the police during a gun fight is misplaced.

Defendant also attempts to rely upon New York decisions. A reading of the New York statute shows that it expressly excludes the death of participants in a felony from the ambit of the felony murder statute.

That the “proximate cause” interpretation of the statute is correct is bolstered by the sweeping changes that the proposed New Jersey Penal Code would make in the present murder statute. Section 2C:ll-3a(4) of the proposed Code covers the felony murder situation and specifically excludes felons from liability for the deaths of their co-felons. It is also significant that the “ensues” clause present in everyrevision of the murder statute in this State has been deleted. The comment of the Code recognizes that the present statute embodies a broad felony murder rule and states that the proposed Code advances a new approach.

This court is cognizant of the recent decision of State v. Suit, 129 N. J. Super. 336 (Law Div. 1974), in which the court found that defendant could not be charged with the murder of his co-felon killed by a victim of the robbery during the course of the felony. However, the court feels that the facts of the instant case are distinguishable from those of State v. Suit.

In the instant case defendant was armed as were his two co-felons, and he was fully aware that his co-perpetrators liad guns in their possession and had demonstrated their intention to use them. In addition, the gun battle was initiated by defendant’s co-felons. This fact situation places the ease squarely within the ambit of State v. McKeiver, supra, because defendant, being fully cognizant of the aims of his co-felons and the means to be employed by them, assumed the hazard of anyone dying as a result of their actions.

In view of the language of the statute which this court feels plainly expresses the intent of the Legislature, defendant’s motion to dismiss the first and second count of the indictment is denied.


author: Arnold, J. C. C.,

text:
    NATALIE B. RUGAMER, PLAINTIFF, v. PAMELA THOMPSON, DEFENDANT.
    Superior Court of New Jersey Law Division
    September 18, 1974.

      Mr. Boyd G. Adelman for plaintiff (Messrs. Golm & Lifland, attorneys).

      Mr. Robert F. Colquhoun for defendant (Colquhoun, Kennedy & Brogan, attorneys).
   Arnold, J. C. C.,

Temporarily Assigned. Plaintiff iiled a complaint alleging she sustained personal injuries as a result of defendant’s negligent operation of an automobile on Martin Avenue in Oradell, New Jersey. Plaintiff claims she suffered soft tissue injuries as well as fractures of the left ribs, eight through ten. Her medical expenses, as defined by the New Jersey Automobile Eeparation Eeform Act, N. J. S. A. 39:6A—1 et seq., are less than $200.

The matter is now before this court on defendant’s motion for a summary judgment on the grounds that the claim is barred by N. J. S. A. 39:6A-8. At the conclusion of arguments the court rendered an oral opinion. This opinion is in supplement thereof.

Defendant contends that by virtue of N. J. S. A. 39 :6A-8 she is exempt from tort liability and suit is barred for two reasons. One, conceding for purposes of argument, that plaintiff sustained fractures of ribs, nonetheless her claim is barred because the medical expenses are less than $200. Two, that there were no fractures and plaintiff has not sustained a permanent disability.

The determination of defendant’s motion for summary judgment depends upon judicial construction of N. J. S. A. 39:6A-8, known as the tort exemption provision of the New Jersey Automobile Eeparation Eeform Act. The basic issue presented is whether a bone fracture in and of itself is sufficient to allow one to sue for personal injuries under the provisions of the statute or whether there exists the additional requisite that medical expenses equal or exceed $200 before the suit is allowed.

N. J. S. A. 39:6A—8 is entitled “Tort exemption; limitation on the right to damages,” and reads as follows:

Every owner, registrant, operator or occupant of an automobile to which section 4, personal injury protection coverage, regardless of fault, applies, and every person or organization legally responsible for his acts or omissions, is hereby exempted from tort liability for damages to any person who is required to maintain the coverage mandated by this act, or to any person who has a right to receive benefits under section 4 of this act as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State, if the bodily injury, is confined solely to the soft tissue of the body and the medical expenses incurred or to be incurred by such injured person or the equivalent value thereof for the reasonable and necessary treatment of such bodily injury, is less than $200.00, exclusive of hospital expenses, X-rays and other diagnostic medical expenses. There shall be no exemption from tort liability if the injured party has sustained death, permanent disability, permanent significant disfigurement, permanent loss of any bodily function or loss of a body member in whole or in part, regardless of the right of any person to receive benefits under section 4 of this act. Bodily injury confined solely to the soft tissue, for the purpose of this section means, injury in the form of sprains, strains, contusions, lacerations, bruises, hematomas, cuts, abrasions, scrapes, scratches, and tears confined to the muscles, tendons, ligaments, cartilages, nerves, fibers, veins, arteries and skin of the human body.

The court’s duty in construing a statute is to determine the Legislature’s intention, Highland v. Davis, 124 N. J. Super. 217 (Law Div. 1973), and to this end it must consider any history which may be of aid. State v. Madden, 61 N. J. 377 (1972).

In N. J. Senate Bill No. 956, introduced April 27, 1972, the right to sue for nonsoft tissue injuries was specifically set forth. That bill provided liability if the injury resulted in bone fracture, disfigurement, dismemberment, partial or total disability or death. The bill, however, died in committee.

If a bill covering the same topic never emerges from the committee it has no significant bearing on the matter of statutory construction. J. C. Chap. Prop. Owner’s, &c. v. City Council, 55 N. J. 86 (1969).

Some of our sister states which have no-fault statutes permit suit for nonsoft tissue injuries. Massachusetts’ no-fault statute, Acts of 1970, c. 670, § 5, states that “plaintiff may recover * * * if * * * such injury * * * consists of a fracture.” 7 Blashfield, Automobile Law and Practice, (1974 pocket parts), § 271—316 at 88.

Connecticut, in Substitute House Bill No. 5479, Public Act No. 273, § 5, allows recovery if there has been “fracture of any bone.” 7 Blashfield, op. cit. § 271-316 at 112.

The allowance of a suit for nonsoft tissue injuries as well as serious soft tissue injuries makes good sense. As was said in 60A C. J. S., Motor Vehicles (1974 Supp), § 273.2 at 10, “Certain types of injuries could entail considerable pain and suffering which would warrant monetary compensation regardless of medical expense incurred. * * *”

The intent of the Legislature is to be found in the statute itself, Highlands v. Davis, supra, and the words in a statute are to be given their ordinary and well understood meaning in the absence of explicit indication of a special meaning. Lopez v. Santiago, 125 N. J. Super. 268 (App. Div. 1973).

The plain language of N. J. S. A. 39:6A-8 mandates the creation of a tort exemption only upon the concurrence of two events: one, a soft tissue injury, and two, medical expense of less than $200 exclusive of hospital expenses, X-rays and other diagnostic medical expenses.

Mario A. lavicoli, the author of No Fault and Comparative Negligence in New Jersey (1973), served as legal counsel to the Automobile Insurance Study Commission and formulated and drafted the Commission’s recommended legislation. In § 53 at 130 he states:

If the injury in question is other than one confined solely to soft tissue as defined in the act, an examination of the medical expenses to ascertain whether the $200 medical threshold has been satisfied is of no importance in that the injury itself has relegated the tort exemption inapplicable.

Therefore, if plaintiff has sustained a fracture of the ribs she may maintain her suit regardless of the amount of medical expense.

With reference to defendant’s second contention that plaintiff did not sustain a fracture, the court is faced with a bona tide issue of fact.

The New Jersey Automobile Reparation Reform Act does not appear to set forth the procedure to be followed. Ordinarily it is the province of the jury in a jury trial to determine the facts. Hempstead v. Robinson, 1 N. J. 32 (1948).

It has not been suggested that the court on this motion decide this issue of fact on the limited information before it. At the trial of the matter the judge could, in his discretion, try the issue of fact concerning tort exemption separately, or try it in the main action along with other factual issues.

N. J. S. A. 39 :6A-8 provides for exemption from tort liability and it has been suggested that tort exemption be treated like any other affirmative defense, such as charitable immunity, governmental immunity or contributory negligence. When the applicability of the tort exemption provisions are dependent upon the determination of issues of fact, then those issues should be submitted to the jury for determination with appropriate instructions. See Iavicoli, op. cit., § 57 at 137.

Since the court has already determined as a matter of law that the New Jersey no fault statute allows suit for a bone fracture, the contentions of the defendant as to the lack of a permanent disability, associated with a possible rib fracture, are of no significance.

The motion for summary judgment is hereby denied.


author: Gelman, J. S. C.

text:
    EVAN SETH ROST, AN INFANT BY HIS G/a/L MURRAY ROST, AND MURRAY ROST, INDIVIDUALLY, PLAINTIFFS, v. BOARD OF EDUCATION OF THE BOROUGH OF FAIR LAWN, THOMAS CANNITO, FRANK J. MONTALBANO AND OLIVE FOX, DEFENDANTS.
    Superior Court of New Jersey Law Division
    September 24, 1974.

      Mr. Michael J. Breslin, Jr., for plaintiffs.

      Mr. Stephen B. Fenster for defendants (Messrs. Fenster & Fenster, attorneys).
   Gelman, J. S. C.

The first count of the complaint in this action alleges that the infant plaintiff was injured on September 29, 1972 while a student at and on the premises of the Memorial Junior High School in Pair Lawn, Hew Jersey. The injuries are alleged to have occurred as a result of the negligence of defendant board of education and three employees of the board who are also named as defendants. The second count of the complaint sets forth a claim for consequential damages on behalf of the infant’s father.

In addition to a denial of negligence on the part of defendants the answer sets forth as a further defense the failure of plaintiffs to give timely notice of their claims as required under the provisions of the Hew Jersey Tort Claims Act, N. J. S. A. 59 :1-1 et seq., which became effective July 1, 1972. Hotiee of the claim was not given to the board by plaintiffs until Hovember 2, 1973, well beyond the 90-day period required by N. J. S. A. 59 :8-8 and beyond the one-year time limit for judicial approval of the late filing of a claim. N. J. S. A. 59:8-9; see Lutz v. Semcer, 126 N. J. Super. 288 (Law Div. 1974).

Defendants have moved for a dismissal of the complaint because of plaintiffs’ failure to comply with the notice requirements of the act, and when the matter was argued defendants conceded that the infant’s claim was not barred since N. J. S. A. 59:8-8 expressly extends the time limitations set forth therein for the giving of notice or the institution of an action by an infant until he has become of aged. Cf. Giles v. Gassert, 23 N. J. 22, 34 (1956); Moore v. Truesdale, 48 N. J. Super. 257, 261 (App. Div. 1958). Likewise, it was conceded that the notice and time requirements set forth in chapter 8 of the act (N. J. S. A. 59:8—1 et seq.) apply only to claims against public entities and do not afford a defense to negligence claims against public employees. This follows from the explicit language of N. J. S. A. 59 :8-3, which limits the application of chapter 8 to actions “brought against a public entity,” as distinguished from employees of a “public entity.” Compare N. J. S. A. 59:8-3 with N. J. S. A. 59 :9-1.

As a result of defendants’ concessions there remains for decision the question whether the father’s claim for consequential damages is barred as against the board of education. The Tort Claims Act does not except a consequential damage claim from the operation of prescribed time limits, but plaintiff urges that the notice requirement is tolled by N. J. S. A. 2A:14-2.1, which provides:

Where a jiarent or other person has a claim for damages suffered by him because of an injury to a minor child caused by the wrongful act, neglect or default of any person within this State, an action at law upon such claim may he commenced by the said parent or other person within the same period of time as provided by law in the case of the said minor child so injured, provided that, if an action is commenced by or on behalf of the said minor child, the said claim of the parent or other person shall be asserted and maintained in such action brought on behalf of the injured minor child either as a plaintiff or third party plaintiff and if not so asserted shall he barred by the judgment in the action brought on behalf of said injured minor child.

This statute provides, in effect, that the time period for the commencement of an action on the parental claim shall be coextensive with the limitation period applicable to the infant’s claim so long as the parent’s claim is joined in the same action as that of the infant. Prior to the passage of N. J. S. A. 2A:14-2.1 our courts had held that the parental claim was not derivative but constituted a separate and independent cause of action which was barred by the running of the statute of limitations even though the infant’s claim was tolled by reason of N. J. S. A. 2A:14-21. Higgins v. Schneider, 61 N. J. Super. 36 (App. Div.), aff’d 33 N. J. 299 (1960); cf. Trevorrow v. Boyer, 52 N. J. Super. 215 (Law Div. 1958) (consequential claim against Unsatisfied Claim and Judgment Eund barred by failure to give timely notice to Fund even though infant’s claim held tolled by N. J. S. A. 2A:14-21).

N. J. S. A. 59:8-8 conditions the institution of a civil action against a public entity upon the giving of timely notice of the claim. The notice requirement does not “affect the statute of limitations” time period otherwise provided for in the Tort Claims Act. See Comment to § 59:8-l, Report of the Attorney General’s Task Force on Sovereign Immunity (1972). The purpose of the claim notification requirement is to afford the public entity an opportunity to investigate and attempt to settle the claim prior to the institution of suit, see Comment to § 59:8--3, op. cit., and the accomplishment of that purpose has no relationship to the time period in which an action must be commenced.

The tolling provisions of N. J. S. A. 2A:14—2.1 are directed solely to the extension of the limitation period for the institution of a civil action and do not affect notice requirements which must otherwise be met as a condition of liability. Thus, where the parent has given timely notice of his claim under N. J. 8. A. 59:8-8, under N. J. S. A. 2A:14-2.1 the period of time in which he may institute his action is the same as that which applied to the infant.

A reference to the legislative history of N. J. S. A. 2A: 14r-2.1 confirms this view. Memoranda in the files of the State Archives from the Attorney General and Counsel to the Governor indicate that the purpose of this legislation was specifically to avoid the result reached in Higgins v. Schneider, 61 N. J. Super. 36, supra, so as to reduce the number of court cases consequential to an infant’s injury. At the time the statute was passed the decision in Trevor-row v. Boyer, supra, was presumably known to the authors of the bill. In that case, the court held that a parental consequential claim was barred by failure to give timely notice of the claim to the Unsatisfied Claim and Judgment Pund as required by N. J. S. A. 39:6-65. Had the Legislature intended to toll such notice requirements in addition to the limitation period of the general statute of limitations it would have included language to that effect within N. J. S. A. 2A :14-2.1.

In enacting the Tort Claims Act the Legislature declared that “public entities shall only be liable for their negligence within the limitations of this act,” N. J. S. A. 59:1-2, and that they are not liable for personal injuries except as provided by the act, N. J. S. A. 59:2-l. Under N. J. S. A. 59:8-8 the Legislature did not extend the tolling provisions for the filing of an infant’s claim to the parent’s claim for consequential damages. In the absence of any express exemption from the prescribed conditions for the assertion of a claim such as involved here, the judicial expansion of the act “would constitute an unwarranted exercise of the legislative function”. New Jersey State P.B.A. v. Morristown, 65 N. J. 160, 167 Bergen County Sewer Auth. v. Hackensack Meadowlands Dev. Comm. 129 N. J. Super. 519 (Law Div. 1974).

Judgment will be entered dismissing the second count of the complaint as against the defendant board of education of the Borough of Pair Lawn.

         N. J. S. A. 59 :8-8 reads as follows:
      A claim relating to a cause of action for death or for injury to person or to property shall be presented as provided in this chapter not later than the ninetieth day after accrual of the cause of action. After the expiration of 6 months from the date notice of claim is received, the claimant may file suit in an appropriate court of law. The claimant shall he forever barred from recovering against a public entity if:
      a. He failed to file his claim with the public entity witihn 90 days of accrual of his claim except as otherwise provided in section 09:8-9; or
      b. Two years have elapsed since the accrual of the claim; or
      e. The claimant or his authorized representative entered into a settlement agreement with respect to the claim.
      Nothing in this section shall prohibit an infant or incompetent person from commencing an action under this act within the time limitations contained herein, after his coming to or being of full age or sane mind.

      The text of N. J. S. A. 2A :14-21 is as follows:
      If any person entitled to any of the actions or proceedings specified in sections 2A:14-1 to 2A: 14-S or sections 2A:14-16 to 2A:14—20 of this title or to a right or title of entry under section 2A:14-6 of this title is or shall be, at the time of any such cause of action or right or title accruing, under the age of 21 years, or insane, such person may commence such action or make such entry, within such time as limited by said sections, after his coming to or being of full age or of sane mind.


author: Porreca, J. C. C.,

text:
    CATHERINE E. BARTLETT, PLAINTIFF, v. ROBERT GARRETT, JR., DEFENDANT.
    District Court — Cumberland County
    September 13, 1974.

      Mr. Theodore Ritter for plaintiff (Messrs. Horuvitz & Perlow, attorneys).

      Mr. John R. Himmelberger for the defendant (Horn, Weinstein & Kaplan, attorneys).
   Porreca, J. C. C.,

Temporarily Assigned. In December 1973 plaintiff’s automobile was struck while parked. Defendant, the driver of the car that struck plaintiff’s vehicle, admitted liability and the case comes before the court solely for the purpose of assessing damages. It was established that the cost of repairing the car, about $800, exceeded its fair market value, and both parties stipulated that the car was a total loss. In addition to the difference between the fair market value of the car before the accident and its salvage value, plaintiff sought to recover $26.25 for towing, $213.30 for rental expenses, and $268 for storage. The defendant objected to any award being made for a rental car, and to the size of the amount requested for storage.

A plaintiff in a tort action is entitled to recover in damages for provable personal injury, property damage and economic loss proximately caused by the negligence of another. The rule in New Jersej, at least in cases of partial destruction of a vehicle, is that reasonable loss-of-use damages are recoverable as economic loss where such damages are capable of clear proof. Hintz v. Roberts, 98 N. J. L. 768 (E. & A. 1923); Graves v. Baltimore & New York Ry. Co., 76 N. J. L. 362 (Sup. Ct. 1908). Tn the Hintz; ease, the court stated:

No doubt where, through an injury to an automobile, the plaintiff is temporarily deprived of its use the measure of damages is the amount of injury to the automobile, together with the value of its use during the time required, by the exercise of proper diligence, to procure its repair. [98 N. J. L. at 771]

This appears to be the majority rule. See eases cited in 18 A. L. R. 3d 497, 508-511.

Where there has been a total destruction of the vehicle, however, as in this case, some courts have refused to award loss-of-use damages. See cases cited in 38 A. L. R. 3d 497, 516-519. The rationale has been that where a plaintiff recovers the full fair market value of the vehicle destroyed, he has been made whole thereby. This rule has not been accepted, in any reported New Jersey case and is logically inconsistent with the New Jersey- rule permitting recovery for loss-of-use in partial destruction cases.

When an automobile is damaged through the negligence of another, temporary loss of the use of such vehicle pending repair or replacement is a reasonably foreseeable consequence of the defendant’s tortious conduct. Compensation for the temporary loss of use is directed at plaintiff’s economic loss, the amount of money plaintiff had to pay for rental of a car. This is an injury different in hind from property damage, the amount of money necessary to repair or replace the damaged vehicle. A plaintiff in a total destruction case deprived of his reasonable loss-of-use expenses has simply not been made whole...It would be illogical and unjust to make recovery of this component of economic loss depend upon the extent of .property damage to the vehicle. Where the need for a substitute vehicle is clearly established and where such vehicle is actually procured for a reasonable time, a plaintiff is entitled to recover for out-of-pocket expenses in renting the substitute vehicle whether the property damage to plaintiff’s car is partial or total.

In the case at bar plaintiff established both her need for a car during the 2% week period between the date of the accident and the date on which a replacement vehicle was purchased, and the reasonableness of this period. Plaintiff was an elderly woman in a rural community which was without public transportation. The loss occurred December 21. She particularly needed a car for transportation during the Christmas-New Year holiday season. Given the time. of the year and the type of vehicle properly being sought, namely a used economical vehicle, 2}4 weeks was not an unreasonable amount of time for her to seek, find, finance and have delivered a replacement vehicle. The plaintiff is therefore entitled to recoup her full rental expenses.

The storage of a damaged vehicle for a reasonable period of time, pending a determination of the extent of the damage and the advisability of repair, is another rear sonably foreseeable expense for which the tortfeasor should be held liable. In the instant case, however, storage fees were permitted to accumulate at the rate of $1 a day for nearly nine months. Such a period of time was clearly unreasonable under the circumstances. Within two weeks of the accident plaintiff knew that the cost of repairing her car exceeded its fair market value and the search for a replacement vehicle was on. She should have promptly made arrangements to dispose of the car at that time. Plaintiff is not entitled to recover storage expenses in excess of those reasonably incurred during the time necessary to determine whether the car was worth fixing. Storage expenses are therefore awarded in the sum of $14.

Judgment is hereby entered in favor of the plaintiff and against defendant Garrett only in the sum of $693.55 plus out-of-pocket costs.

      Fair market value of ear on date of accident $500.00
      Towing expenses 26.25
      Storage expenses ($l/day for two weeks) 14.00
      Rental expenses 213.30
      $735.55
      Less salvage 60.00
      $693.55