text:
    HYMAN S. ABRAMSON ET AL., APPELLANTS, v. JOHN J. FARRELL, CHIEF EXAMINER AND SECRETARY, DEPARTMENT OF CIVIL SERVICE, STATE OF NEW JERSEY, RESPONDENT. ROBERT J. BERISH ET AL., APPELLANTS, v. JOHN J. FARRELL, CHIEF EXAMINER AND SECRETARY, DEPARTMENT OF CIVIL SERVICE, STATE OF NEW JERSEY, RESPONDENT. IN THE MATTER OF THE PROFESSIONAL ASSOCIATION, NEW JERSEY STATE DEPARTMENT OF EDUCATION, A NEW JERSEY CORPORATION, REPRESENTING CERTAIN PROFESSIONAL EMPLOYEES IN THE DEPARTMENT OF EDUCATION — HAY APPEAL. ROBERT MICAI, WILLIAM BROWN, ORVILLE ABBOTT, GEORGE HUTCHINSON, JOSEPH R. SMITH, JOHN SHANER, AND HENRY JUSTUS, APPELLANTS, v. NEW JERSEY CIVIL SERVICE COMMISSION, RESPONDENT. NICHOLAS C. MAIDA, APPELLANT, v. CIVIL SERVICE COMMISSION OF THE DEPARTMENT OF CIVIL SERVICE, RESPONDENT. IN THE MATTER OF STATE COLLEGE LIBRARIANS, I AND II, 10 MONTHS AND 12 MONTHS — HAY APPEAL. IN THE MATTER OF THE DISTRICT INHERITANCE TAX SUPERVISORS, HAY REPORT APPEALS. IN THE MATTER OF SENIOR APPEALS EXAMINERS, DEPARTMENT OF LABOR AND INDUSTRY, STATE OF NEW JERSEY, HAY REPORT APPEAL.
    Superior Court of New Jersey Appellate Division
    Argued October 2, 1972
    Decided December 12, 1972.

      Before Judges Gaulkin, Lora and Allcorn.

      Mr. William S. Greenberg argued the causes for appellants Abramson et al.; Berish et al.; Professional Association, New Jersey State Department Of Education, and State College Librarians (Messrs. Sterns and Greenberg, attorneys; Mr. William 8. Greenberg, of counsel and on the brief).

      Mr. Robert J. Partlow argued the cause for appellants Robert Micai et al. (Messrs. Parker, McCay & Criscuolo, attorneys).

      Mr. Mario H. Volpe argued the cause for appellant Nicholas C. Maida.

      Mr. Ernest Gross argued the cause for appellants District Inheritance Tax Supervisors (Messrs. Gross, Weissberger & Lineti, attorneys).

      Mr. William J. Walsh argued the cause for appellants Senior Appeals Examiners, Department of Labor and Industry (Messrs. Scott, Fox & Walsh, attorneys).

      Mr. Theodore A. Winard, Assistant Attorney General, argued the causes for respondent (Mr. George F. Kugler, Jr., Attorney General, attorney).
   Per Curiam.

The above-entitled appeals were argued at the same time. Since most of the questions involved and the arguments for reversal are substantially similar in all eight cases, this opinion will deal with all of them.

The appellants are State employees who appeal from the salaries allocated to their job titles by the Civil Service Commission (hereafter Commission). The steps that led np to the appeals, beginning with the hiring of the management consultant firm of Edward Hay and Associates^ are summarized in In re Senior Appeals Examiners, 60 N. J. 356, 358-360 (1972), and need not be repeated here. However, it is necessary to add some details as to what happened between the hearings before the Hay appeals panels and the final action of the Commission fixing the salaries.

It appears from the record (as supplemented on November 15, 1972 by our order) that the procedure was as follows. After receiving the “information supplied by the appellant” (60 N. J. supra, at 360) the panel sent a questionnaire to the Division of Classification, State Services (hereafter Classification) and the Division of Eesearch and Planning (hereafter Eesearch) of the Department of Civil Service, designed to elicit the information which the regulations adopted by the Commission governing the appeal procedures stated was to be obtained from Classification and Eesearch and was to be considered by the panels (60 N. J. supra, at 360). After these questionnaires were answered by Classification and Eesearch, the panel met and decided upon its recommendation. The recommendation was made in writing on forms prepared by the Commission for that purpose, and indicated whether all three members of the panel agreed. If there was a dissent by one of the three, the reasons for the dissent were given. The panels made no findings of fact, although sometimes they gave reasons for their recommendations. The recommendations were then delivered to the Civil Service Commission, together with the transcripts of the hearings.

On March 23, 1971 a meeting was held at which there were present Mr. William Druz, Deputy Chief Examiner and Secretary of the Department of Civil Service (hereafter Deputy Chief); Mr. John Cornell, Director of the Division of Classification; Mr. Ealph Shaw, Director of the Division of Research and Planning, and Mr. Robert DeNieholas, Mr. Willard Thompson, and Mrs. Marilyn Riley, the three employees of the Department of Civil Service who served on the appeals panels, bio stenographic record was made or minutes kept of that meeting. The supplemental appendix describes what happened at that meeting:

At the meeting of March 2.3, 1971 the recommendations [of the appeal panels] wore submitted * * *. The disputed titles were discussed at the meeting of March 23, 1971 as follows: When the three members of a Hay Appeals Board had made a unanimous recommendation to either deny, uphold or modify a salary range change and the Directors of the Divisions of Glassification and Research and Planning concurred in that recommendaiion, the Deputy Chief Examiner and Secretary approved the recommendation as submitted. The same procedure was followed when the vote in favor of a recommendation was 4 to 1, i. e., one dissenting opinion from either a member of the Hay Appeals Board or one of the above mentioned Divisions. When the vote on the proposed recommendation was 3 to 2 and two of the Civil Service staff members were in the minority, there was prolonged discussion concerning the title and the merits of the appeal. The Deputy Chief Examiner and Secretary considered all of the recommendations in favor and against the proposed action and stated his recommendation for resolution of the appeal. * * *

[In the Matter of State College Librarians (A-2187-70) was not taken np at that meeting. See Point III infra.]

The Deputy Chief’s recommendations to resolve such 3-2 appeals was reduced to writing and submitted to the Commission at its meeting of March 30, 1971, together with the following:

The respective recommendations of the Hay Appeals Boards and the Divisions of Classification and Research and Planning were prepared for submission to the Civil Service Commission by the Civil Service representatives on the Hay Appeals Boards. The respective appeals were segregated in the following five categories: a) unanimous recommendations of the Hay Appeals Boards and the respective Divisions of Classification and Research and Planning to uphold or change the salary range assigned to the title in question; b) a 4 to 1 vote in favor of sustaining or changing the assigned salary range; c) a 3 to 2 majority recommendation to sustain or change the assigned range; d) a 3-2 majority recommendation to sustain or change the assigned range (two professional Civil Service staff members in the minority) with the recommendation of the Deputy Chief Examiner noted; and e) recommendations concerning classification problems to be resolved by the Division of Classification rather than a salary range problem to be resolved through the Hay Appeals Board procedure. The recommendations of the panels and the Divisions were submitted to the Civil Service Commission. * * * There were no other writings or recommendations presented to the Civil Service Commission, other than a summary reference sheet described infra.

The proceedings at the meeting of the Civil Service Commission on March 30, 1971 are described as follows:

A stenographic record was not made of the proceedings of the Civil Service Commission on March 30, 1971. The [panel] recommendations were submitted * * *. The Civil Service Hay Appeals Board Representatives prepared a reference sheet on all disputed titles for each Civil Service Commissioner in attendance at the meeting. The sheet contained information regarding the department of State government, title, pre-Hay range, range as of June 27, 1970 and the recommended range as established by the meeting of March 23, 1971. The presentation was made by the Civil Service Hay Appeals Board Representative familiar with the disputed title. In some instances appeals were resolved by the Civil Service Commission after a review of the summary reference sheet referred to above and the recommendations [of the panels and Classification and Research] and, in some instances, an additional oral summary was presented by the Hay Appeals Board Representative to the Commission and a colloquy ensued between the Civil Service Commission and the Hay Appeals Board Representative regarding the merits of the appeal. [The records of the Civil Service Commission do not indicate] * * * the precise manner in which the present eight eases were presented to the Civil Service Commission.

The major contentions common -to the appeals are (a) the Commission had no right to “sub-delegate its responsibility to the Hay Appeals Board”; (b) the members of the Civil Service Commission did not read the testimony presented before the panels; (c) neither the panels nor the .Commission made findings of fact; and (d) the opinions and recommendations of Classification and Research were accepted and relied upon by the panels, the Deputy Chief and the Commission without giving appellants an opportunity to challenge them.

No appellant charges bias, prejudice or improper influence of any kind, but each claims that it was arbitrary and an abuse of discretion for the Commission not to allot a higher salary to his position.

We find no merit in the contention that it was improper to have the panels conduct the hearings and make recommendations. In the case of In re Senior Appeals Examiners, supra, 60 N. J. at 370, the court said, “Subject to any controlling statutory restrictions * * * the Commission undoubtedly had broad power to mold its procedures in conformity with due process principles.” We find no statutory provision which forbade the Commission to establish the appeals panels, and we hold that the procedure established did conform to due process principles.

The keystone of appellants’ remaining due process arguments is that when the Commission fixed the salaries of the appellants it was exercising gwisi-judicial power, and therefore the appellants were entitled to all of the rights possessed by a litigant in a contested case presented for adjudication to an administrative agency. The Commission answers that what it did was not adjudicative but growi-legislative and that the hearings before the appeals panels were merely informative and advisory, as they would be considered if they were held before a legislative committee; and when the Commission adopted the salary schedules, it was merely implementing the governing legislation (N. J. S. A. 11:8-1, 2; N. J. S. A. 52:14-17.50; L. 1970, c. 96, p. 474), as the Legislature had directed it to do. The Commission contends that the hearings before the appeals panels were no different than hearings before an administrative agency or a member thereof with reference to the adoption of proposed rules, at which hearing affected members of the public are invited to present their views. Appellants reply that the adoption of the schedules may have been legislative, but their challenge of the portions of the schedules that affect them created a justiciable issue and a “contested case,” and the decision of that issue constituted adjudication which entitled them to all of the rights of a litigant.

N. J. S. A. 11:8-l and 2 have been in force at least since 1930. They provide (N. J. 8. A. 11:8-l):

The chief examiner and secretary shall, after consultation with appointing authorities and their pz-incipal assistants, report to the commission, not later than October fifteenth of each year, compensation schedules for each class of positions in the classified service together with his recommendations, based upon experience in recruiting vaznous positions and upon such data as he may obtain relating to rates of pay for comparable service in commercial and industrial establishments, as to the need for changes in the compensation schedules for a class or group of classes. He shall also report other matters deemed pertizient in developizzg and administering a compensation plazi for such service, taking proper account of prevailing market rates, costs and staizdards of living, the state’s employment policies, finances and needs.

N. J. S. A. 11:8-2 sets forth:

The compensation schedules mentioned in section 11:8-l of this title, together with any amendments and modifications as may be made as provided in this subtitle, when approved by the commission, shall, for the ensuing fiscal year period beginning July first, except as to azzy modification by legislative action, constitute the eompensatioiz plan for classes of positions in the classified service.

The preparation and adoption of salary schedules under these sections seem to us to be clearly legislative. These sections do not require consultation with the employees, or that an opportunity be afforded them to be heard before adoption. The Commission could have given the employees a hearing at any time since 1930 but, had the Commission done so, it would not have altered the legislative nature of the Commission’s function in adopting the schedules.

Neither L. 1968, c. 304, N. J. S. A. 52:14-17.50, nor L. 1970 c. 96, p. 474 (which appropriated 30 million dollars to be used to implement the Hay report “insofar as practicable”), contain anything which affected the legislative nature of the Commission’s function in adopting salary schedules. Neither statute provided for hearings, and the fact that the Commission did provide for the employees to voice their opinions, orally or in writing, did not change the essentially legislative nature of the Commission’s function. Bayonne v. Division of Tax Appeals, 49 N. J. Super. 230, 240 (App. Div. 1958); New Jersey Mfrs. Cas. Ins. Co. v. Holderman, 54 N. J. Super. 260, 266 (App. Div. 1959).

Does the fact that these appellants challenge the salaries allotted to their positions make them litigants in a contested case, with all that that entails, and the decision of the Commission an adjudication? In support of the contention that it does, appellants rely on Carls v. Civil Service Comm’n, 17 N. J. 215 (1955), but we do not think that the case supports their position. That portion of the Carls opinion which spoke of the decision of the Commission in that case as “quasi-judicial” related to the question whether the appeal should have been taken under R. R. 3 :81 — 8 or R. R. 3 :81 — 10 (now combined in R. 2 :2-3), but Justice Jacobs made it clear that he did not consider the distinction between gwasi-judicial or gnosi-legislative of any importance beyond settling the question as to which rule to follow. He pointed out that “the line betwen rule making and adjudication is often shadowy,” and even though the appellants in Carls proceeded under the wrong rule, the merits should be decided. (See also New Jersey Mfrs. Cas. Ins. Co. v. Holderman, supra, 54 N. J. Super. at 268.) The balance of the opinion dealt with the merits and did not turn upon whether the action of the Commission was legislative or judicial. None of the questions raised here as to the absence of findings, the reading of the testimony, etc., was involved. Furthermore, in Carls the court dealt not with a comprehensive plan covering thousands of employees, but with a limited change in classification affecting a specified few.

In the cases at bar no one was reduced in salary; the objections are that the raises were not high enough. The regulations governing the appeals stated that the hearings would not be adversary and, in fact, there was no cross-examination, introduction of evidence contrary to that submitted by the employees, or any of the other things characteristic of a contested case. If these be contested cases, then any one who appears before an administrative agency opposing contemplated rules can claim the rejection of his position to be adjudication.

As Professor Davis has pointed out, and as Justice Jacobs indicated in Carls, supra, it has proved impossible to precisely define when an administrative agency is acting legislatively and when judicially, and the definitions which have been attempted are of little use in deciding concrete cases. As he stated in 1 Administrative Law Treatise, § 5.01, at 285-286:

But precise definition in the abstract is not necesarily desirable, for the same function may well be regarded as rule making for one purpose or in one context and as something else for some other purpose or in another context. Here as elsewhere throughout the law a proper classification requires that both the purpose and the effect of the particular classification be taken into account. For practical law making, definitions must draw from special circumstances accompanying particular problems. * * *
Often the best solution of the problem of classifying borderline activities is to avoid classifying them — to skip the labelling and to proceed directly to the problem at hand. * * *

Proceeding “directly to the problem at hand” we hold that in the case at bar there was no need for findings of fact by the appeals panels or by the Commission. Consolidation Coal Co. v. Kandle, 105 N. J. Super. 104 (App. Div. 1969), aff'd 54 N. J. 11 (1969); Wilson v. Long Branch, 27 N. J. 360 (1958), cert. den. 358 U. S. 873, 79 S. Ct. 113, 3 L. Ed. 2d 104 (1958).

Appellants argue that, even assuming it was proper to have appeals panels to hear the employees, it was improper for the Commission to delegate to those present at the March 23, 1971 meeting, described above, the task of reviewing and considering the recommendations of the appeals panels. Furthermore, they argue, assuming that the delegation was not improper, it was improper to receive from the Deputy Chief, as a result of that meeting, his recommendations as to the disposition of the appeals, particularly when the appellants were not advised of the recommendations of the Deputy Chief or given an opportunity to challenge them.

We disagree. N. J. S. A. 11:8-l requires the “Chief Examiner and Secretary” to “report to the Commission * * * compensation schedules * * We know of no reason why the Deputy Chief Examiner could not so report in this case. The Commission, of course, could accept, modify or reject those recommendations. Nor do we perceive any impropriety in the Deputy Chief’s conferring with those present at the March 23 meeting. Prom the very begining it was known that Classification and Eesearch were to be consulted, to avoid “ripple” effects. Obviously, it was important to have internal consistency in the schedules. The two divisions had given their opinions in each case to the appeals panel hearing it; it was proper for the Deputy Chief to discuss with the Directors of those divisions the bases of their opinions. The three Civil Service Hay Appeals representatives were there to report on each of the appeals, and that, too, was proper.

It was not necessary for those present at the March 23 meeting or for the members of the Commission to read the testimony. It was enough that it was available, Fifth St. Pier Corporation v. Hoboken, 22 N. J. 326, 331, 333-334 (1956) ; In re Shelton College, 109 N. J. Super. 488 (App. Div. 1970); 2 Davis, Administrative Law Treatise, §§ 11.03, 11.04 at 44-56, and there is nothing to indicate that the substance of the pertinent considerations was not submitted to the Deputy Chief and to the Commission. As Judge Conford said in Bayonne v. Division of Tax Appeals, supra, 49 N. J. Super. at 241: “Practical exigencies may justify an administrative practice in the course of a gwasi-legislative function, notwithstanding possible occasional weaknesses, if generally fair and geared toward the accomplishment of the legislative objective on the basis of reasonable probabilities.” See also 2 Davis, Administrative Law Treatise, § 11.07 at 65.

The procedures followed in the cases at bar constituted what Professor Davis calls an "institutional decision.” Davis 2 Administrative Law Treatise, c. 11 at 36. We hold that, under the facts of these cases, those procedures were reasonable and gave the appellants due process.

II

The next question is whether the Commission acted reasonably substantively. The burden is upon the appellants to show that "the Commission acted arbitrarily or in abuse of its discretion.” This appellants have failed to do. Their arguments add up to no more than that upon the evidence adduced at the hearings their jobs should have been assigned higher salaries. But that is not enough to prove that the determination was arbitrary or an abuse of discretion. As the court said in Flanagan v. Civil Service Department, 29 N. J. 1, 148 A. 2d 14 (1959) :

* * * “courts should let administrative boards and officers work out their problems with as little judicial interference as possible. They may decide a particular question wrong •— but it is their question. [They are] vested with a high discretion, and its abuse must appear very clearly before the courts will interfere.” * * * [at 12]

We have studied the arguments advanced in each case to demonstrate arbitrariness or abuse of discretion, and the underlying evidence. In no case do we find arbitrariness or abuse of discretion.

Ill

Appellants In the Matter of State College Librarians (A-2187-70) additionally argue that "The Civil Service Commission had no jurisdiction to extinguish the appellant librarians faculty rights.” They contend the salary scheduled did affect or extinguish those rights. The Commission answers, and we agree, "that the faculty status of an individual college employee and any attendant rights thereto are conferred by the boards of trustees within the general policies and guidelines set by the Board of Higher Education. N. J. S. A. 18A:64-6(c) and (g). In reclassifying these state college librarians the Civil Service Commission did not thereby affect the right of the boards of trustees to control the faculty status and rights of the librarians and any attendant rights thereto.”

The recommendations of the Hay Appeals Board with reference to this case (A — 2187—70) were presented to the Commission at its meeting of June 3, 1971. All three members of the panel agreed that the salary range for Librarian I remain the same, but the panel split on Librarians II and III, the majority voting to keep those also the same while the representative of the Department of Higher Education recommended that they be increased two ranges. The recommendations were made in a long statement which detailed the reasons pro and con for the votes on salary and discussed other points (which the panel properly felt did not involve salary) about which the librarians were concerned and which the panel wrote “should be brought to the Commission’s attention.” The minutes recite that “Mr. Willard Thompson and Mr. Eobert DeNicholas appeared before the Commission and presented a summation of the Appeals Board recommendations,” and a “memorandum dated June 2, 1971,” which is also part of the record. The Commission approved the panel’s recommendations “as submitted.” We find nothing improper in this procedure.

IV

All of the appellants in Micai et al. v. Civil Service Commission (A-1888-70), are employed in the Department of Transportation. Effective October 16, 1972 there was a reorganization of that department and an accordant change in the salary schedules which satisfies the appellants. However, all parties agree that this does not render the appeal moot because, as the Commission says, “The effective date of the Hay Compensation Plan was June 27, 1970. The issue of retroactive pay * * * is still a matter before the Court.”

Since we find for the Commission in Micai, no retroactive pay will be due.

Y

There will be judgment for the Commission in each of the above entitled cases. No costs.


source: Caselaw Access Project

author: Pee Curiam.

license: Public Domain

text:
    THOMAS O’KEEFE, PETITIONER-APPELLANT, v. JOHANSEN CO., RESPONDENT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued September 25, 1972
    Decided January 5, 1973.

      Before Judges Collester, Leonard and Halpern.

      Mr. Ronald W. Bronstein argued the cause for appellant (Mr. Richard, J. Traynor, attorney).

      Mr. Alfred A. Arnold argued the cause for respondent (Messrs. Carroll & Galvin, attorneys; Mr. Eugene G. Galvin, on the brief).
   Pee Curiam.

Petitioner appeals from a judgment of the Morris County Court which set aside an order of the Division of Workmen’s Compensation denying respondent’s application to vacate a judgment awarding petitioner additional compensation for increased disability pursuant to N. J. S. A. 34:15-27.

The facts are not in dispute. On July 29, 1966 a judgment was entered by the Division awarding petitioner workmen’s compensation for 72 weeks of temporary disability and 143 weeks of partial total disability — a total of 215 weeks of compensation payments. The award was paid by respondent. The last check delivered to petitioner was dated September 11, 1967, and on its face indicated that it covered the period from August 31, 1967 to September 27, 1967.

On September 24, 1969 petitioner filed an application for a review of the award, pursuant to N. J. S. A. 34:15-27, alleging that his disability had increased. Respondent answered, alleging the last payment of compensation was made on September 11, 1967 and therefore the Division lacked jurisdiction to hear and determine the matter since more than two years had elapsed from the date of the last payment of compensation and the date of filing of the application. At the hearing respondent abandoned this defense when it was disclosed that the last check sent to petitioner indicated it covered compensation payable to September 27, 1967. A judgment was entered on May 6, 1971 awarding petitioner an additional 10% for increased disability.

Thereafter respondent moved to set aside the award on the ground that it had been entered through mistake or inadvertence. It alleged that the correct date of the final payment of the initial award was September 20, 1967 and that petitioner filed the petition for review on September 24, 1969, four daj's after the two-year limitation period of N. J. S. A. 34:15-27 had run. It conceded that it had mistakenly overpaid petitioner for one week and had indicated on its check compensation coverage to September 27, 1967. The judge of compensation denied the motion, holding that respondent’s error induced the late filing of the petition and that petitioner had a right to assume he could file up to and including September 27, 1969.

On appeal the County Court reversed, holding that the Division lacked jurisdiction because the petition was not filed within the two-year period prescribed in N. J. S. A. 34:15-27.

We think the County Court took too restrictive a view under the facts of this case. Riccioni v. American Cyanamid Co., 26 N. J. Super. 1 (App. Div. 1953), certif. den. 13 N. J. 289 (1953), and De Asio v. Bayonne, 62 N J. Super. 232 (App. Div. 1960), certif. den. 33 N. J. 386 (1960), referred to in the court’s opinion are factually distinguishable.

In the instant case it is clear that petitioner relied on September 27, 1967, the date indicated on respondent’s check as the last date of compensation coverage when he filed his petition for review on September 24, 1969. While respondent’s error was unintentional it nevertheless lulled petitioner into a sense of security and resulted in the untimely filing of the petition. We conclude that respondent is estopped by its own action from asserting that any date other than September 27, 1967 was the last date of compensation under the facts of this case. Cf. Herringshaw v. Travelers Aid So ciety, 206 Pa. Super. 219, 212 A. 2d 914 (Sup. Ct. 1965). To hold otherwise would lead to a harsh, uujust and unreasonable result.

The judgment of the County Court is reversed and the judgment of the Division of Worlonen’s Compensation is reinstated.


author: Pee Cukiam.

text:
    LOUISE DeANGELIS, PLAINTIFF-RESPONDENT, v. JOHN DeANGELIS, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted November 28, 1972
    Decided January 5, 1973.

      Before Judges Labrecque, Kolovsky and Matthews.

      Messrs. Spritzer & Spritzer, attorneys for appellant (Mr. Henry M. Spritzer, on the brief).

      Messrs. Selesky, Kolsky, Kravarik & Epstein, attorneys for respondent (Mr. Martin E. Kravarik, on the brief).
   Pee Cukiam.

Plaintiff Louise DeAngelis was granted a divorce from bed and board on May 21, 1959 on the ground of adultery. A property settlement agreement was entered into between the parties at the time judgment was entered. On September 14, 1971 defendant filed a notice of motion in the original cause seeking to convert the limited divorce judgment to one of absolute divorce under N. J. S. A. 2A :34-3.

In the interval between May 1959 and September 1971 defendant had obtained a Mexican divorce and remarried, and Louise had secured a judgment in New Jersey which found that the Mexican divorce was void.

When the motion to convert was made, plaintiff responded with a cross-motion seeking alimony and maintenance, and equitable distribution of property and counsel fees and costs. The record does not disclose that plaintiff opposed the application for conversion below.

The trial judge, after hearing argument, denied both motions, indicating that he was acting on procedural grounds and that a new action was necessary for the relief here sought by motion. We affirm.

If defendant John DeAngelis desires to convert the judgment for present limited divorce entered against him into one of absolute divorce under N. J. S. A. 2A :34-3, he must institute a plenary action to do so. Of course, if he elects to move under the statute in this manner, plaintiff Louise DeAngelis will be free to establish that she is entitled to a revision of whatever property agreement exists between the parties, including such items as alimony, dower and equitable distribution of property. To the extent that Horesta v. Horesta, 118 N. J. Super. 71 (Ch. Div. 1971) may appear to hold to the contrary, it is disapproved.

A counsel fee in the amount of $150 plus disbursements of $21.50 is awarded to counsel for plaintiff Louise, for services rendered on this appeal.

Affirmed.


author: Stamler, J. S. C.

text:
    HANOVER INSURANCE GROUP, PLAINTIFF, v. PHILIP CAMERON, ROSEMARY KARL, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF EDWARD J. KARL, DECEASED, PETER SCHLOEMP, STEPHEN E. GOGGIN AND ALBERT CHRONE, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided January 8, 1973

      Mr. Anthony G. Wahl for plaintiff (Messrs. Vogel, Chait & Wacks, attorneys).

      Mr. Howard C. Trueger, attorney for defendant Philip Cameron.

      Mr. Brian M. Laddey for defendant Rosemary Karl (Messrs. Porzio, Bromberg & Newman, attorneys).

      Mr. David B. Rand for defendants Peter Schloemp, Stephen E. Goggin and Albert Chrone (Messrs. Schenck, Price, Smith & King, attorneys).
   Stamler, J. S. C.

This declaratory judgment action brings into sharp focus the problems anticipated by Burd v. Sussex Mutual Ins. Co., 56 N. J. 383 (1970), along with those beyond the contemplation of the Burd decision.

Difficult questions of grave concern are posed to judges in calendar control. The financial burdens imposed upon plaintiffs in personal injury cases impatiently looking to the trial in the Law Division, the uncertain plight of the insured in determining whether he will be required to provide his own defense, and the distance and the manner in which the insurer may travel on behalf of the insured in investigating and participation in pretrial discovery, are just some of the problems. The most difficult problem is the continued legitimacy of the “reservation of rights” agreements between insurer and insured approved by the Supreme Court in Burd, supra, and Merchants Indemnity Corp. of New York v. Eggleston, 37 N. J. 114 (1962).

In attempting solutions this court is mindful of the limitations imposed upon trial courts in Reinauer Realty Corp. v. Paramus, 34 N. J. 406, 415 (1961).

The timing of both the Law and Chancery Division suits is significant. The proceedings in the Law Division case (Rosemary Karl, individually and as executrix of the estate of Edward Karl, deceased v. Cameron, L-11405-70) disclose in relevant part:

1. Complaint filed December 18, 1970.
2. Summons dated December 21 and December 28, 1970.
3. Summons served on: defendant Cameron January 11, 1971; defendant Cbrone, December 30, 1970; defendant Goggin December 31, 1970; defendant Sehloemp December 21, 1970 (by mail).
4. Answer filed by all defendants except Cameron, March 3, 1971.
5. Order directing Cameron to file answ’er, May 6, 1971.
G. Answer filed by Cameron, May 11, 1971.
7. Notice to file pretrial memorandum, January 18, 1972.
8. Notice of trial mailed March 13, 3972.
9. Notice of motion by Cameron for stay of Law Division action pending Chancery Division determination or, alternatively, relieving counsel. (Arguments on the motion heard on May 17, 1972; meeting May 24, 1972, assignment judge, Chancery Division Judge and all counsel in both actions).
10. Order staying Law Division action pending determination of Chancery Division action entered June 6, 1972. (Pretrial discovery was conducted in interim periods and the case was on the Law Division calendar call a number of times).

The Chancery Division proceedings in the present case, Hanover Ins. Co. v. Cameron, (C-1280-71), in relevant part reveal:

1. Complaint for declaratory judgment by insurer filed only against the insured on December 29, 1971.
2. Summons served on Cameron January 10, 3972.
3. Answer for Cameron by Legal Aid Society filed April 4, 1972. (Meeting of May 24, 1972 referred to above.)
4. Consent order to amend complaint to include all indispensable parties filed May 31, 1972.
5. Amended complaint filed May 31, 1972.
6. Order accelerating discovery, establishing timetable and fixing September 22, 1972 as date for pretrial conference filed July 10, 1972.
7. Answers by all additional defendants to amended complaint filed July 13 and July 19, 1972.
8. Pretrial order entered September 22, 1972 fixing trial date as November 27, 1972.
9. Trial in Chancery Division November 27, 1972.
10. Decision reserved November 29, 1972. (Discovery was conducted strictly in accordance with the order of July 10, 1972.)

Hanover in its complaint demands a determination that it is neither obligated to pay nor obligated to defend notwithstanding the issuance to Cameron of a homeowner’s Policy which was in effect on the date of the incident which gave rise to the Law Division action. (However, Hanover at the pretrial offered to defend, using counsel of Us choice.) The disclaimer is based on Hanover’s contention that Cameron’s act which resulted in the death of Karl was an intentional act excluded from coverage. All codefendants in the Chancery-Division action (plaintiff and all defendants in the Law Division action) take the position that Cameron was covered. Defendants also contend that even if he were not covered, Hanover cannot disclaim because of the equitable grounds of estoppel, waiver, unclean hands and the unenforceability of a “reservation of rights” agreement signed by Cameron.

When an insurance company by way of declaratory judgment action seeks an adjudication of noncoverage, it has the burden of proof of the facts alleged in the complaint. Concord Ins. Co. v. Miles, 118 N. J. Super. 551 (App. Div. 1972). This burden shifts only if and when the court must consider any affirmative defenses.

As to Hanover’s disclaimer, the following findings of fact and conclusions of law are made:

On February 8, 1968 Hanover issued a standard homeowner’s Policy to Cameron. It was for a term of three years. The following excerpts are relevant to the main issue:

1. COVERAGE E — PERSONAL LIABILITY
(a) Liability: To pay on behalf of the Insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the Company shall defend any suit against the Insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent; but the Company may make such investigation and settlement of any claim or suit as it deems expedient.”
SPECIAL EXCLUSIONS
SECTION II OE THIS POLICY DOES NOT APPLY:
(c) tr * * under Coverages E and E, to bodily injury or property damage caused intentionally by or at the direction of the Insured;

In late November or early December 1968 Cameron was in the sauna in the Madison Y. M. C. A. One other person was present in the sauna and, as Cameron later related to Y. M. C. A. officials and a Madison police officer, this other person not known to Cameron made physical homosexual advances. These were thwarted by Cameron’s hurried departure from the sauna area. A week or so thereafter Cameron reported the incident to defendant Sehloemp, physical director of the Y. M. C. A. Cameron was unable to identify the man in the sauna bath. Sehloemp advised Cameron that he should see the man again, Sehloemp was to be notified and Cameron was to point him out to Sehloemp.

On December 19, 1968 Cameron related the incident to a friend of his, a Madison police officer on routine foot patrol. Cameron received the same advice from the police officer. However, when questioned by Cameron as to what he could do to repel a physical advance, the police officer advised that if Cameron were unable to “get away from him because he won’t let you go, that you have a right to defend yourself even if you have to hit him * * The officer’s report contained the following: “Cameron told me that the guy was real big, and that he didn’t want any part of him.”

During the weeks that followed Cameron was at the sauna on a number of occasions but did not see the man.

On January 6, 1969, at approximately 7:15 p.m., Cameron asked Sehloemp to open the sauna bath for him. While Cameron was in the sauna, a young man joined him. This young man and Cameron were in the sauna when the individual that both Cameron and Sehloemp sought to identify joined them. The youth left, leaving Cameron and the man alone in the bath. When the man spoke to him and offered him a ride home, Cameron replied that he had his own car and immediately left the sauna and went to the shower room where he showered. He then proceeded to his locker and dressed. Cameron next went upstairs to Schloemp’s office and told him that he now could point out the man to Sehloemp. Sehloemp described Cameron as being very excited. Sehloemp preceded Cameron down the stairs to the locker room area. Schloemp passed the open door to the sauna room and continued to the shower-locker area. As Cameron passed the entrance to the sauna, he saw the man emerging and shouted “There he is.” Cameron suddenly raised his arm and pointed his finger, which was now quite close to the face of the. approaching man. According to Cameron, the man’s right hand suddenly came up and Cameron reacted to the sudden movement by swinging his arm. The man fell unconscious on the floor and both Schloemp and Cameron attempted to aid him. The man was later identified as Edward Karl. The Madison police were notified and Karl, severely injured, was taken by ambulance to Morristown Memorial Hospital. Statements were taken by the police the next day from Schloemp and Cameron. Karl died 11 months later on December 6, 1969, never having regained consciousness.

• On December 18, 1970 Karl’s widow, individually and as executrix, filed the complaint in the Law Division against Cameron, Schloemp and two other employees of the Y. M. C. A. As to Cameron the complaint alleged that he “did negligently and wantonly” strike Karl. Hanover had been notified of the incident on April 9, 1969. It takes the position that Cameron’s action was intentional and falls clearly within the exclusionary clause of the policy quoted above.

Defendants collectively assert that since the complaint in the Law Division only alleges “negligent and wanton” conduct and not “intentional” conduct, Hanover cannot disclaim coverage. Although in some jurisdictions a carrier may be so foreclosed, at least in its duty to defend, in New Jersey Burd, supra, is the governing authority and permits the insurer in a separate action to prove that the conduct actually fell within an exclusion of the policy. In Burd the court stated that “* * * the duty to defend may depend upon the actual facts and not upon the allegations in the complaint.” 56 N. J. at 388. Hanover’s position is supported by Burd when, as here, the factual issue of coverage or exclusion will not be resolved in the trial of the third party against the insured. Chief Justice Weintraub' states in Burd that the Supreme Court will not direct the timing of the declaratory judgment action when he states, “We think the better course is to leave it to the contenders to decide for themselves if and when to sue.” Id. at 392. See Glens Falls Ins. Co. v. American Oil Co., 254 Md. 120, 254 A. 2d 658 (Ct. App. 1969), where after a verdict founded in negligence against the insured in a third-party action, the court permitted the carrier to litigate against the insured as to whether the act was intentional. Due process requires that Hanover have its day in court on ihis issue.

From the proofs before this court it is required to determine whether the act of Cameron fell within the exclusionary clause. Hanover takes the position that all it need show for the exclusionary clause to be effective is that the insured' intended to inflict harm on the injured party. Defendants argue that the clause is operative only when the insured inflicts an injury actually intended to be inflicted. In Hanover’s summation counsel described Cameron as “essentially a simple and honest man” who “wishes he [Cameron] didn’t want to hurt him [Karl].” In its brief Hanover acknowledges: “It would seem that the language of the [exclusionary] clause applies to injury which was intended as opposed to injury resulting from an act which was intended.” The carrier admits that one interpretation of the clause, although perhaps not the best one, permits one to read it as requiring the insured to intend to commit the injury which resulted.

There are two cardinal rules applicable in the interpretation of insurance contracts. First, ambiguities are resolved in favor of the insured. Bryan Construction Co., Inc. v. Employers’ Surplus Lines Ins. Co., 60 N. J. 375 (1972). Second, exclusionary clauses are to be strictly interpreted. Butler v. Bonner & Barnewall, Inc., 56 N. J. 567, 576 (1970); Chicago Ins. Co. v. Security Ins. Co. of Hartford, 111 N. J. Super. 291, 295 (App. Div. 1970). Using these standards for construction, Hanover must show that defendants’ contention as to the meaning of the clause was entirely unreasonable. As long as defendants’ interpretation is reasonable, the exclusionary clause should be inapplicable.

There is a distinction between a “wanton” act and an “intentional” act. Prosser describes the difference in his treatise on torts:

Lying between intent to do harm, which * * * includes proceeding with knowledge that the harm is substantially certain to occur, and the mere unreasonable risk of harm to another involved in ordinary negligence, there is a penumbra of what has been called “quasi intent.” To this area the words, “willful,” “wanton” or “reckless” are customarily applied; and sometimes, in a single sentence, all three [these terms] apply to conduct which is still merely negligent, rather than actually intended to do harm, * * [Prosser, Torts (4th ed. 1971), § 34, at 184]

Although generally following this definition, our courts have added, at various times, translations or interpretations that add or subtract a variety of ingredients which tend to make the distinction obscure. Cf. McLaughlin v. Rova Farms, Inc., 56 N. J. 288, 305 (1970) ; Krauth v. Geller, 31 N. J. 270, 277 (1960); Tabor v. O’Grady, 61 N. J. Super. 446, 454 (App. Div. 1960).

In other jurisdictions there is no consistency in defining an injury caused intentionally. A few examples follow:

Putnam v. Zeluff, 372 Mich. 553, 127 N. W. 2d 374 (Sup. Ct. 1964) : insured’s son while camping “shot from the hip” at what he believed was an attacking wild dog. He shot while excited and frightened. The shot killed the pedigreed dog. The question was the boy’s total intent and whether he intended to destroy the animal or stop its onrush. That is, the injury inflicted had to be intended.
Baldinger v. Consolidated Mutual Ins. Co., 15 A. D. 2d 526, 222 N. Y. S. 2d 736 (App. Div. 1961), aff’d 11 N. Y. 2d 1026, 230 N. Y. S. 2d 25, 183 N. E. 2d 908 (Ct. App. 1962) ; damage action for assault and battery by six-year-old on infant. Policy had exclusion for injuries “caused intentionally.” The court held the injury for which judgment was entered was not caused intentionally but was rather the unintended result of an intentional act. See also Wigginton v. Lumbermens Mutual Cas. Co., 169 So. 2d 170 (La. App. Ct. 1964) ; American Ins. Co. v. Saulnier, 242 F. Supp. 257 (D. C. Conn. 1965) ; Morrill v. Gallagher, 370 Mich. 578, 122 N. W. 2d 687 (Sup. Ct. 1963).

Since it must be accepted that there is a distinction, even though vague, between wanton conduct and intentional conduct, this court accepts the definition of “intent” as used in Restatement, Torts 2d, § 8a (1965) :

The word “intent’’ is used throughout the Restatement of this Subject to denote that the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it.

Thus, the distinction is that to be intentional the consequences must be substantially certain to result, and while only probably certain, to result in wanton acts. As comment (b) to the Restatement notes, as the probability that the consequences will follow decreases and becomes less than substantial certainty, the actor’s conduct loses the character of intent and becomes mere recklessness.

Hanover, argues that the absence of the article “the” immediately preceding “bodily injury” in the exclusionary clause means it is not necessary that the insured intended “the bodily injury” which he visits upon the injured party, but rather that the insured merely intended to inflict harm. Whether the article “the” is present or not, the exclusionary clause can reasonably be read so that the harm incurred is what is meant. The clause in question uses the word “injury” and not the word “act.” To sustain Hanover’s interpretation the clause would have to be read, “This policy does not cover any bodily injury which was intended. * * *”

Guided by the rules of construction of insurance policies, and from the particular facts in this case, it is concluded that the exclusionary clause is not available to Hanover if a judgment be recovered against Cameron by plaintiff in the Law Division action.

This determination should render it unnecessary to consider the affirmative defenses. However, there are three reasons which make it necessary to consider them. First is that since the trial presented these defenses, should an appellate tribunal disagree with the trial court in its interpretation, a remand might not be necessary for consideration of the affirmative defenses. Second is this court’s disposition with regard to “reservation of rights” agreements. Third is the growing practice of insurance companies to delay until threshold of trial of the Law Division damage action the filing of a declaratory judgment complaint and then move, as it did in this case, for a stay in the Law Division. This practice has also been criticized in other jurisdictions. In Zurich Ins. Co. v. Rombough, 384 Mich. 228, 180 N. W. 2d 775 (1970), the Michigan Supreme Court, in discussing a declaratory judgment action by an insurance company seeking to have coverage determined, said:

Although the above disposes of the instant case, we feel compelled to speak out against a practice which has unnecessarily delayed the trial of the law action brought by plaintiff Latz in the circuit court for the county of Clinton on September 9, 1965. Regardless of whether Latz is entitled to a judgment for damages, the progress of his case should not have been stopped while a nonparty insurer contests, in a separate action, Ps obligation to defend defendant Rombough.
.The declaratory judgment procedure was not intended as a weapon to be used against a plaintiff in this manner. Such practices add to the civil case backlogs and waste of judicial time. Such actions are causing the public to rapidly lose confidence in the judiciary’s ability to handle litigation.
For the above listed reasons we are of the opinion that the evils occasioned by delay of the main action will in most cases far outweigh the benefit to the insurer of a prior judicial declaration of its obligations to the defendant. Accordingly, to delay trial of plaintiff Latz’ action while processing a declaratory judgment may well constitute an abuse of judicial discretion.
Plaintiff-appellant Zurich Insurance Company shall defend Rom-bough in the Latz case and the circuit court for the county of Clinton is instructed to grant immediate trial in the negligence action.

See also Allstate Ins. Co. v. Mahan, 448 S. W. 2d 392, 394 (Tenn. Sup. Ct 1969).

This practice, iC permitted to continue, delays the injured party’s day in court and confuses the trial calendar.

In making findings of fact as to the affirmative defenses, the testimony adduced at the trial and the voluminous Hanover inter-office memoranda and letters to and from counsel from Hanover aré compacted. It ineluctably leads to one resolution: those who were representing Hanover (adjuster, claims manager, home office and others) were out to establish that Cameron was guilty of a crime which would then relieve Hanover of coverage responsibility.

It will be recalled that the incident at the Y.M.C.A. occurred on January 6, 1969. On April 9, 1969 Hanover was notified of the incident by the insured’s personal attorney. The claims manager assigned an adjuster inexperienced in investigation. The adjuster and claims manager agreed that

There is no question that if insured committed assault and battery, that there would be no coverage as there is a specific exclusion in the policy to this effect that any assault and battery committed by insured or by direction of insured is excluded.

This documentation was made before the adjuster had interviewed the insured and had made little or no investigation.

On July 14, 1969 the adjuster met with Cameron and his personal attorney. In a signed statement given to the adjuster, Cameron said that Karl “made a movement with his hands, it appeared to me that he was going to strike me.” On the very same day, and with no further investigation, the adjuster reported to the claims manager. The report reads in part:

2. COVERAGE: There definitely does appear to be a question of coverage in this matter as the insured committed an act of assault and battery on the claimant which we will elaborate under captioned liability.

Although the adjuster suggested witnesses be interviewed and the investigation be continued, the claims manager apparently disagreed, for nothing more was done for some time.

On August 8, 1969 Hanover wrote to Cameron and in part said:

It should be understood that our activities in investigating this claim are not to be construed as a waiver of any rights which we may have to deny coverage by reason that the injury to the claimant was caused by an assault committed by yourself, or for any other reason which may become apparent during investigation of this claim.

Cameron certainly had the right to assume from this letter that an investigation was being conducted. Nothing more took place until after the Law Division complaint was filed. One month later in a letter Hanover retained trial counsel to “protect our interests in this matter.”

On January 25, 1971 Hanover, still equivocating on coverage, took the adjuster’s advice given on July 14, 1969 and renewed its “investigation.” On February 3 Hanover asked the trial attorney for an opinion “as to whether our exclusion on an intentional act would stand up in this instance.” On the same day Hanover assigned the claim of Karl against Cameron to a qualified investigator for the first time. Among other instructions the investigator was directed “to check into the background of our assured especially as to his pugnacious tendencies.” On February 9 the trial attorney for Hanover notified Cameron’s personal attorney of his opinion that the assured was not covered. This letter stated in part that “All of the investigation would clearly substantiate that Mr. Cameron intentionally committed an assault and battery upon the decedent.” The trial attorney then expressed his concern that if he interposed an answer for Cameron it would later be claimed that Hanover “pursued a path that amounted to a conflict of interest.”

On February 10 trial counsel suggested to Hanover that a “reservation of rights” agreement should be obtained, that an answer should be filed in the Law Division, and that a declaratory judgment action should be immediately filed which would result in the staying of the Law Division action.

On March 15, 1971 Cameron, on advice of his personal attorney, on assurance by Hanover of a continued investigation which might be helpful to him, and on the further assurance that Hanover would have the coverage determined in a declaratory judgment action, signed the “reservation of rights” agreement.

An answer in the Law Division action was filed on behalf of Cameron by Hanover’s trial counsel on May 11, 1971. Discovery, by way of oral deposition, attended and participated in by the carrier’s trial attorney, was of no real assistance in defense of Cameron.

Hanover continued to equivocate. On December 29, 1971 the Chancery Division action was filed. It was not until after the Law Division ease was called for trial that Cameron received a letter from Hanover which advised him that the carrier had agreed to defend him “under the provisions of the policy but will not be responsible for any judgment that might be rendered against you.” This was written May 10, 1972. On May 24, 1972 the assignment judge, the Chancery Division judge and all attorneys held the conference referred to at the outset of this opinion.

Under the policy Cameron was immediately entitled to some aid. The carrier is obligated to commence by immediate investigation the defense of the insured at the time it first learns of the accident. Hanover did not comply with this obligation.

In Merchants Indemnity Corp. of New York v. Eggleston, 37 N. J. 114, supra,, the court stated that, among other things, success absolute or relative may depend upon skill in investigation. Hanover’s performance in the investigative stage was directed primarily to whether or not it had to provide coverage. It does not appear that an investigation for the benefit of Cameron was made at any time. Why were not potential witnesses sought out? To this day the third man in the sauna has not been interviewed. Other witnesses have left the jurisdiction.

Usually a necessary element of estoppel is proof prejudice. But in a case of this nature, it is extremely difficult to prove prejudice when the insured is deterred by faulty and misdirected investigation. Cf. Reliable Newspaper v. Maryland Cas. Co., 131 N. J. L. 424 (E. & A. 1943). In Merchants Indemnity Corp., supra, it is indicated that prejudice need not be actually proven by the insured since “the course cannot be rerun.”

It is concluded that in the case at bar prejudice sufficient to estop Hanover’s claim of noncoverage has been shown both in fact and in law. This is so notwithstanding the reservation of rights agreement. 3 Pomeroy Equity Jurisprudence (5 ed. 1941), § 804. See LoRocco v. N. J. Mfrs. Indem. Ins. Co., 82 N. J. Super. 323 (App. Div. 1964); Ebert v. Balter, 83 N. J. Super 545 (Cty. Ct. 1964).

Although agreements of "reservation of rights” have been generally approved by our Supreme Court, such agreements may have a questioned place in our judicial approvals. Such contracts, like insurance contracts, are contracts of adhesion. The insured has given up a valuable right in respect to control of investigation, negotiation and defense. Sneed v. Concord Ins. Co., 98 N. J. Super. 306, 314 (App. Div. 1967). What has the carrier surrendered?

What appears to be the majority view was recently set forth in McAlear v. St. Paul Ins. Co., 493 P. 2d 331 (Mont. Sup. Ct. 1972). There it was said that the allegations in a ocmplaint against an insured determine whether there is coverage. Where the complaint is clearly not within the coverage and the insurer is not obligated to indemnify, the insurer has no duty to defend. This is consistent with Burd v. Sussex Mutual Ins. Co., supra, where it was said:

* * * the duty to defend may depend upon the actual facts and not upon the allegations of the complaint * * *
The obligation to defend “groundless, false or fraudulent” claims does not mean the carrier will defend claims which would be beyond the covenant to pay if the claimant prevailed. It means only that a carrier may not refuse to defend a suit on the ground that the claim asserted against the insured cannot possibly succeed because either in law or in fact there is no basis for a plaintiff’s judgment.” [56 N. J. at 388; emphasis supplied.]

Consider the example given by our Supreme Court in Burd: the insured owned an automobile insurance policy on his Eord but not his Chevrolet. The claimant mistakenly pleaded that the insured drove the Ford, when actually he was driving the uninsured vehicle. In this instance the insurer is not obligated to defend. The policy did not cover the accident. It is as if a person owned two homes, one insured and the other uninsured against fire. If the uninsured house burns down, it would be ridiculous to assume that the insurance company would be responsible for the loss on the uninsured home.

This is not the case at bar. Hanover asserts grounds of noncoverage, not because the policy does not in any way, shape or form cover the alleged incident, but asserts non-coverage solely on the exclusionary clause. In the example cited in Burd, the policy never came into effect. Here, Hanover’s policy came into effect along with all its provisions, including the obligation to defend. In the example in Burd the policy obligations were never triggered because the insurance company insured an auto not involved in any incident and the defense provisions were never activated.

Therefore, A' Hanover did have a duty to defend, Hanover did not provide any new consideration for the “reservation of rights” agreement. This view is consistent with the cardinal rule that the interpretation that best protects the insured should be adopted. It is concluded that the “reservation of rights” agreement signed by Cameron for the benefit of Hanover is unenforceable.

Further, this court questions the public policy in judicial approval of a “reservation of rights” agreement. To permit a carrier to take up an insured’s defense, and then through the control of investigation and discovery prove the injured party’s claim to a point where the carrier can claim exclusion, would encourage insurers to stall settlements and create chaos in a court calendar. Each trial lawyer under the protective umbrella of a reservation would be placed in the untenable position of a conflict of interest. See DR5 — 105 (B).

Our Supremo Court has ruled that “reservation of rights” agreements are valid. It did not say that all were enforceable. It is suggested by this trial court that if appropriate at all, a “reservation of rights” agreement should be limited to a right of disclaimer for facts in dispute between carrier and insured, such as late notice, lack of cooperation,etc. These factors are not concerned with the investigation of facts relating to the defense of the injured person’s claim.

It is concluded that a judgment be entered declaring that Hanover has the obligation to defend and to pay in accordance with the terms of its policy. Since the trial attorney has taken the position that Cameron’s act was an intentional harm, he cannot very well provide Cameron an adequate defense to protect him at trial. The judgment shall therefore provide that upon motion by Cameron this court will appoint a qualified attorney to defend Cameron with single fidelity, the cost and expenses of which are to be born by Hanover.

Costs of this action taxable against Hanover.


text:
    LIBERTY MUTUAL INSURANCE COMPANY, A COMPANY, PLAINTIFF, v. KIERAN O’ROURKE, LOUIS GUNDLACH, FREDERICK BIFULCO, INDIVIDUALLY AND AS PARENT AND NATURAL GUARDIAN OF FREDERICK VINCENT BIFULCO, FREDERICK VINCENT BIFULCO, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, A CORPORATION, STATE FARM FIRE AND CASUALTY COMPANY, A CORPORATION, ALL STATE INSURANCE COMPANY, A CORPORATION, AND FORD MOTOR COMPANY, A CORPORATION, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided January 8, 1973.

      Mr. Frank R. Cinquina for Plaintiff (Messrs. Schwartz and Andolino, attorneys).

      Mr. George H. Harbaugh, attorney for defendants O’Rourke and Gundlach.

      Mr. Stephen Leary for defendant State Farm Insurance Company (Messrs. O’Donnell, Leary & D’Ambrosio, attorneys) .

      Mr. Joseph M. Speidel for defendant Bifulco (Mr. Robert Fogelson, attorney).

      Messrs. Friedman & D’Alessandro, attorneys for defendant Allstate Insurance Company.

      Messrs. Morgan, Melhuish, Monaghan, Mc Coid & Spielvogel, attorneys for defendant Ford Motor Company.
   Stamler, J. S. C.

This matter is before the court on cross-motions for summary judgment requiring interpretation of an insurance policy in a declaratory judgment action. There is currently pending and awaiting this decision an action in the Law Division by an injured third party. On the return day of plaintiff’s summary judgment motion, all defendants made cross-motions. This court, having been informed that the Law Division action was to be in the daily call on January 2, 1973, considered defendants’ motions as timely made.

In this action Liberty named as defendants Kiernan O’Rourke, Louis Gundlach, Frederick Bifulco, Frederick Bifulco’s infant son, State Farm Fire and Casualty Insurance Company, State Farm Mutua] Automobile Insurance Company, Allstate Insurance Company and Ford Motor Company.

The following are the undisputed facts essential to a determination in this case:

On June 11, 1969, tlie wife of I’ifulco had been driving her children home in the family’s Ford automobile. The car suddenly stalled in front of the house where Gundlach resided. After unsuccessfully attempting to restart the vehicle, Mrs. Bifulco asked Gundlach to assist her. Gundlach determined that the car was out of gas, secured some from his home and put it in the gas tank. The ear still would not start. Gundlach and his son-in-law, O’Rourke, decided that the carburetor needed priming. As Gundlach sat in the driver’s seat turning the engine over, O’Rourke with head and hands under the hood poured gasoline into the throat of the carburetor. An explosion occurred, igniting the gasoline container. O’Rourke threw the container away from him and into the face and body of Bifulco’s nine-year-old boy, who received severe and disfiguring injuries.

At the time of the incident there was in effect a policy of automobile liability insurance issued to the boy’s father by Liberty, which provided coverage on the Ford in the amount of $300,000. Bifulco gave prompt notice of this incident to the company. At this late date Liberty disclaims coverage and asserts that any insurance coverage must come from Allstate, which issued an automobile policy to O’Rourke, and from State Farm Auto and from State Farm Fire, which issued, respectively, an auto and homeowner’s policy to Gundlach.

The Liberty policy contained the following pertinent provisions :

Persons Insured
Under the Liability and Medical Expense Coverages, the following are insureds:
(a) With respect to an owned automobile,
(1) tlie named insured,
(2) any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission. * * *
EXCLUSIONS
This policy does not apply: Under the Liability, Medical Expense & Accidental Death Benefit Coverage,
(g) to any automobile or trailer while maintained or used by any person while such person is employed or otherwise engaged in the automobile business, but this exclusion does not apply to the maintenance or use of an owned automobile (1) by the named insured or a relative, or (2) by any other insured in an automobile business in which the named insured has an interest as proprietor or partner;

It is Liberty’s contention that neither Gundlach nor O’Rourke were “using” the car but instead were “maintaining-” or “repairing” it. They allege this type of act is not covered by the above-quoted section. Liberty relies on a number of cases in foreign jurisdictions which it feels are dispositive of the issue raised here. Each is readily distinguishable.

In Gullickson v. Western Casualty & Surety Co., 17 Wis. 2d 220, 116 N. W. 2d 121 (Sup. Ct. 1962), the car was in a service station and the employee had the owner assist him by pouring gas into the carburetor while the service station mechanic turned the ignition. There it was held that it was not a “use” of the car by the owner of the service station or his employee. The court ruled that the service station liability policy for “maintenance” covered the accident.

However, this decision was based on facts judicially noted, that activities at a service station are different from occurrences elsewhere. The court stated:

It is common knowledge, and we take judicial notice of it, that the attendants at such stations are employed to render a variety of services to the traveling public to enable the patron of the service station to proceed on the journey which he has in mind. Among those services commonly rendered are to put gasoline in the tank of the cai', check the oil, water and tire pressure and restore the proper levels in those respects if deficiencies are discovered, diagnose the causes of an unsatisfactory behavior by the automobile which the attendant is servicing and make minor repairs and adjustments to improve its performance. We do not think the servicing of the motorist’s automobile is a ‘use’ of the car by the proprietor of the service station or his employee. Any motorist would be astonished to hear that his car is being ‘used’ by the station attendant who is wiping the windshield, or filling the tank, or changing a spark plug, or adjusting a carburetor or attempting to start the motor. In our view such servicing is not a use of the automobile by the personnel of the station. [116 N. W. 2d at 124; emphasis supplied!

In Graf v. Bloechl, 36 Wis. 2d 635, 154 N. W. 2d 340 (Sup. Ct. 1967), the court held that what occurred was an act of maintenance and not an act of use or operation. There had been an attempt to start a previously inoperable car, which had been towed to the service station for timing and testing of a rebuilt engine not yet completely assembled. The Supreme Court of Wisconsin said that “Under usual circumstances the starting of a motor vehicle would he considered an act reasonably related to the use of the vehicle.” 154 N. W. at 342. However, the court went on to note that the usual facts were not present. The ear was inoperable, starting the engine would not permit its use, further repairs were necessary, and the engine was not completely assembled. The court found that it could not have been BloeeKPs intent to drive the auto after it was started. The primary intent and purpose in starting the auto was to finish the repairs.

Chase v. Dunbar, 185 So. 2d 563 (La. Ct. App. 1966), is a ease that is slightly closer to the facts at bar. In Chase a bystander was struck by a can of flaming gasoline tossed aside by an unidentified party attempting to start an automobile in the same manner as was tried by O’Rourke. The insurance policy had a clause exactly like the one in the Liberty policy. However, the court held that it was “maintenance” rather than “use”:

The actions of the mechanics herein %oere in essence a test to determine whether the engine could be made to run or tohether adjustments or repairs were necessary to mahe it functional. We hold, therefore, that the attempt to start the vehicle under the circumstances shown constitutes “maintenance” rather than “use” and such activity was not insured against since the policy in question afforded no coverage to an individual engaged in maintaining the insured vehicle, [at 570; emphasis supplied]

The court in Chase held that each case had to be considered in light of its own particular facts and circumstances and that the intent, purpose and objective of the actor were important considerations. In the case at bar Gundlach and O’Rourke were not starting the ear to test it for possible needed repairs. They were restarting Mrs. Bifulco’s automobile so that she could continue on her way home.

The Mew Jersey courts have taken a different approach to this problem. In Unsatisfied Claim and Judgment Fund Bd. v. Clifton, 117 N. J. Super. 5 (App. Div. 1971), the owner of an automobile left the vehicle at a service station for repair. While an employee of the service station was raising the car on a lift, the auto slipped and injured a helper of the employee (a non-employee). The court held that when a customer’s policy covered any person using his auto, with his permission and within the scope thereof, a clause excluding coverage, if the automobile were used by a person engaged in the automobile business, was invalid.

The court reasoned:

[The repairman], as a permitted user under the terms of the omnibus provision, was entitled to protection under the policy for the duration of his permitted use. We see no sound policy why such rights should be lost, abridged or suspended during the period of permitted use simply because the permittee may arguably have been engaged in the automobile business. [Defined as repairing, servicing, selling, storing or packing autos.] To hold otherwise would have the effect of denying to injured persons the possibility of recovering for their damages, [at 9]

If an insurance company cannot use a specific exclusion clause to exclude from an omnibus clause the repairs to an automobile, how can it do so by limiting the meaning of the word "use” in light of the rules of construction of insurance policies which dictate a reading favoring the insured. See State Farm v. Zurich Am. Ins. Co., 118 N. J. Super. 84 (App. Div. 1972). N. J. S. A. 39:6-46(a) requires that all liability insurance policies shall “insure the insured named therein and any other person using or responsible for the use of any such motor vehicle with the express or implied consent of the insured.” * * * An automobile liability policy must meet the minimum standards as set forth in N. J. S. A. 39 :6-46 to 48. Selected Risks Ins. Co. v. Zullo, 48 N. J. 362 (1966).

Eor the omnibus clause to be effective all that is needed is a permissive use. All parties agree that O’Rourke and Gundlach had the permisison of Mrs. Bifulco. On the meaning of the omnibus clause, see Capece v. Allstale Ins. Co., 86 N. J. Super. 462 (Law Div. 1965).

In construing automobile liability insurance policies such contracts are to be construed liberally in favor of the injured and insured. Matits v. Nationwide Mutual Ins. Co., 33 N. J. 488 (1960); Indemnity Ins. Co. v. Metropolitan Cas. Ins. Co. of N. Y., 33 N. J 507, 513 (1960), where the court said that “use” is broader than “operation.”

If the controlling language of a policy supports two meanings, that sustaining coverage will be applied. Bryan Const. Co. Inc. v. Employers’ Surplus Lines Ins. Co., 60 N. J. 375, 377 (1972); Chicago Ins. Co. v. Security Ins. Co. of Hartford, 111 N. J. Super. 291, 295 (App. Div. 1970); See Gronquist v. Transit Casualty Co., 105 N. J. Super. 363, 366 (Law Div. 1969), where Judge Fulop refers to a number of cases in other jurisdictions which broaden the meaning of “use.”

In the case at bar Mrs. Bifulco was on her way home when her automobile stalled. Gundlach and O’Rourke were restarting the engine at Mrs. Bifulco’s request so that she could continue on her way home. It is reasonable to describe this activity as a “use” of the automobile within the meaning of the omnibus clause of the insurance policy.

It is concluded that judgment be entered declaring that the acts of Gundlach and O’Rourke were covered by the policy of liberty.

Despite the court making a determination that would dispose of this case, it is advisable for a trial court to consider affirmative defenses. The question of estoppel raised by defendants clearly demonstrates the abuse by insurance carriers of the declaratory judgment procedure. See Zurich Ins. Co. v. Rombough, 384 Mich. 228, 180 N. W. 2d 775 (Sup. Ct. 1970); Allstate Ins. Co. v. Mahan, 223 Tenn. 496, 448 S. W. 2d 392, 394 (Tenn. Sup. Ct. 1969) Certainly an insurance company is entitled to have its day in court. However, it should not be dilatory in seeking relief.

Liberty was notified by its insured of the accident shortly after June 11, 1969.

On October 6, 1970 the complaint in the Law Division was filed. Shortly thereafter Liberty assumed the defense of three defendants by filing answers. The suit was later dismissed as to Mrs. Bifulco, but Liberty continued to represent Grundlaeh and O’Rourke.

On June 9, 1972 this declaratory judgment suit was filed by Liberty. A motion by Liberty made in the Chancery Division action for a stay of the Law Division action was denied on July 19, 1972. Discovery proceeded in the Chancery Division suit and it was not until December 14, 1972, on the very threshold of trial, that Liberty moved for summary judgment returnable December 22, 1972.

The questions presently raised by Liberty in its declaratory action could have been formulated in December of 1970 based on facts known in full to Liberty at that time. The present action could have and should have been filed then and a motion for summary judgment could have been decided in early 1971. This would have established Liberty’s obligations as to defense and coverage in the negligence action at a date in which the negligence action could have proceeded without unnecessary delay. Even if it could be said that the declaratory judgment action was timely filed in June 1972, the summary judgment action was still not forthcoming. This motion, presenting a question of novel impression in this jurisdiction, could have been brought in early July 1973 instead of just ten days before the negligence action was to begin. The result was to again ask for delays in a case nearly three years old.

In this special type of situation the usual requirement of a showing of prejudice is unnecessary. Merchants Indemnity Corp. v. Eggleston, 37 N. J. 114 (1963); Sneed v. Concord Ins. Co., 98 N. J. Super. 306 (App. Div. 1967). It is three years after the accident of which Liberty was timely notified, and 16 months after Liberty assumed control of the defense of the two principal actors. (There is a products liability claim against Ford Motor Company which is not relevant to this decision.) All discovery had been completed. Certainly State Farm and Allstate had every right to believe that the defense and coverage of Gundlach and O’Eourke had been accepted by Liberty.

With trial set for the first week in January, Liberty asks that it be relieved from the duty to defend and the duty to pay. The attempted substitution comes too late.

In Hanover Ins. Group v. Cameron, 122 N. J. Super. 51 (1973) an opinion also decided by this court, the effect of such tactics upon the injured parties and upon the trial calendar is considered.

Had I not found for defendants on the main complaint, I should have concluded that Liberty is estopped to deny coverage. This determination will also be incorporated in the form of judgment.

Costs against plaintiff.


author: Wood, A. C., J. C. C.,

text:
    WILLIAM R. KUHLMAN, PLAINTIFF, v. THE TOWNSHIP COUNCIL OF EVESHAM ET AL., DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided January 2, 1973.

      Appearances:

      Messrs. Hartman, Schlesinger & Schlosser (Mr. Robert A. Porter appearing) attorneys for Plaintiff.

      Mr. D. Neil Manuel, attorney for defendant Evesham Township Council.

      Mr. John F. Vassallo, Jr., attorney for defendant Evesham Township Zoning Board of Adjustment.

      Messrs. Ballen, Batoff & Laskin (Mr. Lee B. Laskin, appearing), attorneys for defendant Thomas O. Marini.
   Wood, A. C., J. C. C.,

Temporarily Assigned. Thomas O. Marini is the owner of a tract of land containing approximately eight acres, situate on Green Tree Eoad in the Township of Evesham, Burlington County. The tract is a district designated by the zoning ordinance as an E-l Eesidence District. Permitted uses for such district are set forth in section 400 of the ordinance and include among others, the following:

(2) Single-family detached dwelling.
(3) Pubiie, private and parochial education institution
(4) Hospital or sanitarium when authorized as a special exception.

On December 20, 1971 Marini, following proper notice in accordance with N. J. S. A. 40 :55-44, made application to the zoning board of adjustment for a variance under N. J. S. A. 40:55-39 (d) to permit the construction on a four-acre portion of said tract of a medical office building capable of accommodating the offices of four doctors. The application was considered by the board of adjustment at its meetings of December 20, 1971, January 17, 1972 and February 21, 1972. At the meeting of February 21, 1972 the board adopted a resolution, incorporating therein findings of fact and conclusions and recommending to the township council that such variance be granted, subject to certain conditions.

The recommendation was presented to the township council and a resolution for the approval of the recommendation was introduced at the meeting of the council held March 21, 1972. It does not appear that defendant Marini had any notice of that meeting. Cf. Reinauer Realty Corp. v. Paramus, 34 N. J. 406, 418 (1961). A very brief discussion followed in which one councilman (plaintiff herein) objected that the recommendation did not disclose the use of the remaining four acres of the tract and, further, that the land would be better used for a public park. The council then voted 4-0 against adoption of the resolution of approval.

By letter dated March 23, 1972, addressed to Jack Higgins, chairman of the zoning board of adjustment, the township clerk advised the board of the action of the council, giving as the "reason for the non-approval” the failure of the board’s findings of fact and conclusions of law to "stipulate what the petitioner intends to do or how he intends to use the remaining acres.”

Thereafter, on April 14, 1972, Lee B. Laskin, attorney for the petitioner Marini, addressed to D. Neil Manuel, attorney for the Township of Evesham, a letter pointing out that the variance was only applied for as to four acres of the tract; that the remaining four acres, located in a residential zone, would remain subject to all the applicable restrictions on the use thereof provided by the zoning ordinance. The letter indicated the belief that the action of the council was the result of a "misunderstanding” and requested reconsideration of the matter by the council.

On May 2, 1972 the council, at its regular meeting, considered the above letter. It thereupon by a vote of 3-1 voted to reconsider the “Marini variance,” and thereafter, after brief deliberation, voted by the same division to "approve the variance.”

Thereafter Marini applied to the township planning board for approval of a subdivision to set off the four-acre tract upon which the proposed building is to be erected. The planning board, on June 11, 1972, approved the application. Cf. Loechner v. Campoli, 49 N. J. 504, 512 (1967).

The present plaintiff, the dissenting member of the township committee, thereupon instituted this in lieu proceeding, seeking to set aside the action of the township council’s granting the variance and to reinstate the council’s action denying same.

Plaintiff predicates his suit upon three grounds. He first argues that the governing body did not take action within the time limited by N. J. S. A. 40:55-39.1. That statute provides:

Whenever a board of adjustment shall recommend the granting of a variance, pursuant to Revised Statutes 40:55-39d, the governing body or board of public works shall take action upon such recommendation within 60 days of recipt thereof by the municipal clerk or within such further time as the applicant may agree to, and, upon the failure of the governing body or board of public works so to do within said time, the recommendation shall be deemed to have been disapproved as though a resolution to that effect had been adopted.

The exact date on which the municipal clerk received the recommendation from the township council is not disclosed. However, it is clear that the council originally considered the matter on March 21, 1972, exactly one month after the meeting of the zoning board of adjustment at which the favorable recommendation was adopted. The council did indeed “take action” on the recommendation within the time limited by the statute. The action taken at that time was a vote rejecting a resolution to approve the recommendation. It is to be noted that the council did not then adopt a resolution disapproving the recommendation.

The applicant thereupon, through his attorneys, undertook to clear up what he conceived to be a “misunderstanding” on the part of the township council and to request reconsideration of its action. That request was considered and the resolution approving the recommendation adopted at the council meeting of May 2, 1972.

Plaintiff argues that the latter resolution, not having been adopted within 60 days after receipt of the recommendation by the municipal clerk, was beyond the power of the council and therefore void. The argument loses sight of the statutory proviso that the action is to be taken within such period “or within such further time as the applicant may agree to.” Here the applicant clearly, by his request for reconsideration, may be said to have “agreed to” a reasonable extension of time. The statute does not require agreement by anyone else for an enlargement of time, and this is reasonable since it is the applicant who is directly affected thereby and may suffer from the inaction or negative action by the governing body. I conclude under the circumstances that the action taken was within the time limitations set forth in N. J. S. A. 40 :55-39.1.

Plaintiff next contends that the recommendation of the board of adjustment was not based on proper findings of fact and conclusions founded upon “substantial evidence in the record,” and that the approval thereof by the township council was therefore void.

It is fundamental that the action of a zoning board of adjustment in either approving or disapproving an application for a variance under N. J. S. A. 40:55-39(e) or (d) must be based upon adequate findings of fact which must, in turn, be supported by substantial evidence contained in a proper and adequate record of the proceedings before the board. Gougeon v. Stone Harbor, 52 N. J. 212, 219 (1968); Kempner v. Edison Tp., 54 N. J. Super. 408, 417 (App. Div. 1959). In the present case the board of adjustment adopted a resolution recommending the granting of the variance sought, following consideration of the application by the board at three meetings held December 20, 1971, January 17, 1972 and February 21, 1972. At the meetings of December 20, 1971 and January 17, 1972 considerable testimony was heard both from the applicant and from other interested persons. An examination of the minutes of those meetings satisfies me that the evidence, if not stenographically reported, was nevertheless recorded with sufficient accuracy and detail to furnish an adequate basis for action by the board. The resolution based thereon sets forth findings of fact which adequately support the conclusions reached by the board that special reasons exist for the granting of a variance to permit the construction of the proposed medical facility in the residential district in question. Moreover, it was well within the board’s discretion to find, as it did, on the evidence presented, that the “negative criteria” of N. J. S. A. 40:55-39 were established, i. e. that

* * * [the relief sought] 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.

I conclude that the resolution of the zoning board of adjustment recommending the grant of the variance sets forth fully adequate findings of fact and conclusions of law, based on an adequate evidential record, and that it should not be disturbed, cf. Kramer v. Bd. of Adjust., Sea Girt, 45 N. J. 268, 296-297 (1965).

It should, of course, be noted that it is the resolution of the governing body and not the recommendation of the board which is the final act of the local authority from which the right to judicial review arises. Where a recommendation is made by a zoning board of adjustment under N. J. S. A. 40:55-3 9(d), the correctness of the action of the governing body is also to be judged upon the basis of the record taken before the board of adjustment. Kempner v. Edison Tp., supra. Here the evidence supporting the recommendation by the board was such that, had the action of the township council rejecting the resolution to approve the recommendation been the final action, it might well have been set aside as arbitrary and capricious. However, the final action of the township council was to approve the recommendation. For all the reasons stated the court considers that action proper.

Plaintiff finally argues that the township council, having rejected the resolution of approval, could not legally reconsider its action and approve same. In support of this contention the plaintiff relies on Morton v. Mayor, & etc., Clark Tp., 102 N. J. Super. 84 (Law Div. 1968). In that ease an application was made to the board of adjustment for a variance under N. J. S. A. 40:55-39(d) for the building of a garden apartment. The board of adjustment recommended the granting of a variance and the township council adopted a resolution approving the recommendation and granting the variance. Certain citizens thereupon instituted an action attacking the grant, and the owner-applicant intervened. One year and a day after the granting of the variance the council, with new members (an election having intervened), gave notice of review and reconsideration, held a public hearing, and thereafter rescinded the grant of the variance. The Law Division judge held that the rescission was improper and beyond the power of the council. While acknowledging the inherent right of administrative reconsideration as set forth in Mackler v. Board of Education, Camden, 16 N. J. 362 (1954), he noted that there is no provision in the statutory scheme for the initiation of reconsideration hearings either on the part of the applicant or the municipal governing body.

The present case is distinguishable from Morton, supra, in several respects.

In the first place, the rescission was of a resolution granting a variance, whereas here the reconsideration was of a vote rejecting a resolution of approval. In the second place, the governing body’s action in Morton, came more than a year after its original action, and while litigation arising out of that action was pending. In the present case the township council reconsidered its first vote and adopted the resolution granting the variance less than two months after its original vote.

Thirdly, and most importantly, the action of the governing body in Morton, was a final action granting a variance, whereas in the present case the council’s vote against the resolution of approval cannot be said to have been a final action. The council’s vote was simply a negative vote on that resolution approving the recommendation as presented. No resolution disapproving the recommendation was presented or adopted.

The power of an administrative or governmental agency to reconsider and revise prior administrative determinations so long as it retains control of the proceedings and rights have not vested, is an inherent power. Mackler v. Bd. of Education, Camden, supra; In re Plainfield-Union Water Co., 14 N. J. 296, 305 (1954). In this case the township council clearly retained control of the proceedings. The negative vote on the resolution was not a disapproval or denial of the variance. It was taken because the council deemed that there were certain unanswered questions, possibly requiring further findings of fact. These questions being resolved, it was within the inherent power of the council, even in the absence of specific statutory authority, to reconsider the matter and approve the zoning board’s recommendation. This is the more apparent because no rights were vested or positions changed as a result of the first vote.

As previously stated, a final rejection of the variance by the council, in view of the strong factual and evidential support undergirding the recommendation of the board of adjustment, would, in the opinion of this court, have been arbitrary and capricious. To deny to council the right to reconsider its earlier vote would be to nullify the proceeding and to require the parties to start again from the beginning in a situation where the facts have been found and conclusions reached after full and fair consideration, and where it is highly unlikely that any more or better or clearer evidence would be produced. This would, in its resultant unnecessary expenditure of time and money, be unfair and inequitable to all concerned. This court does not consider that the law requires such multiplication of effort.

For the reasons stated, judgment will be entered dismissing the complaint. No costs.


author: Per Cuthaji.

text:
    JOHN F. DE ANGELO, PLAINTIFF-RESPONDENT, v. ALSAN MASONS INC., DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted January 2, 1973-
    Decided January 12, 1973.

      Before Judges Collester, Leonard and Halpern.

      Messrs. Carton, Nary, Witt & Arvanitis, attorneys for appellant (Mr. James D. Carton, III, on the brief).

      Messrs. Norton & Kalac, attorneys for respondent (Mr. Peter P. Kalac, on the brief).
   Per Cuthaji.

The Division of Workmen’s Compensation determined that petitioner, an employee of the appellant, suffered a myocardial infarction which was causally related to his work effort, and awarded him temporary and permanent disability benefits. The thrust of appellant’s argument is that the Division’s findings were against the weight of evidence in that (a) petitioner’s illness was not compensable because it was related solely to everyday emotional stress, and (b) the opinion given on causal relationship by petitioner’s medical expert was “a net opinion based on complete speculation.”

The scope of our appellate review limits us to a determination of whether the findings of the judge of compensation could reasonably have been reached on sufficient credible evidence present in the whole record, after giving due weight to his expertise in the field and his opportunity of hearing and seeing the witnesses. Jackson v. Concord Co., 54 N. J. 113, 117-118 (1969); Close v. Kordulak Bros., 44 N. J. 589, 599 (1965). This is the same test utilized prior to March 2, 1972, from which date appeals from the Workmen’s Compensation Division come directly to us under N. J. S. A. 34:15-66. To effectuate and implement the statute, B. 2:2-3 (a) was amended, effective September 5, 1972, abolishing de novo appeals to the County Courts.

In reaching this conclusion, we take judicial note of the fact that hearings before the Division are adversary in nature; are presided over and tried by a judge who must now be an attorney-at law of New Jersey (N. J. S. A. 34:1A — 12.1 and N. J. S. A. 34:15-49), and that the judge is required to file a copy of his determination and award (N. J. S. A. 34:15-58). Under such circumstances, the judge of compensation’s determination, when reviewed on appeal, is equivalent to a trial by a judge without a jury. Abeles v. Adams Engineering Co., Inc., 35 N. J. 411, 423-424 (1961) State v. Macuk, 57 N. J. 1 (1970). Additionally, the same test is generally applied in appeals to this court from determinations by administrative agencies. E. g. Atkinson v. Parsekian, 37 N. J. 143, 149 (1962); Hornauer v. Div. of Alcoholic Beverage Control, 40 N. J. Super. 501 (App. Div. 1956). See, also, the many examples of the application of this test in the dissenting opinion of Justices Francis and Jacobs in Ricciardi v. Marcalus Mfg. Co., 26 N. J. 445, at p. 454 (1958).

So viewed, we affirm essentially for the reasons expressed by Judge Hapier in the Division.


text:
    CONSUMERS FINANCE CO., PLAINTIFF-APPELLANT, v. ROBERT F. KYLISH, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted December 19, 1972
    Decided January 15, 1973.
    Before Judges Labrecque, Kolovsky and Matthews.

      Messrs. Young & Young for plaintiff-appellant.

      Mr. Robert F. Kylish pro se.

   Pee Curiam.

Plaintiff Consumers Finance Company sued for the balance due on a note dated June 9, 1970 in the sum of $1,000. The note was the last of a series of renewal notes given to secure a loan originally negotiated on June 10, 1968. At the time the June 1970 note was executed a previous note, -on which a balance of $902 was owing, was can-celled and defendant received $85 in cash.

At the time of the renewal defendant filled out and submitted an application which required a listing of his currently outstanding debts. He represented in his application that his debts consisted of the balance due plaintiff, and two additional obligations totalling $860, a total of $1,762. He specifically wrote, “I owe no other debts.” However, on December 2, 1970 defendant filed a petition in bankruptcy listing 19 unsecured creditors to whom a total of $11,754.98 was owing. He had been indebted to 13 of these creditors in an amount exceeding $9,200 on the date of his application.

At the trial defendant pleaded his discharge in bankruptcy as a defense. Plaintiff countered that defendant’s liability to it was incurred by means of the materially false statement referred to, hence the debt was not affected by the discharge in bankruptcy. 11 U. S. C. A. § 35(a)(2). The trial judge, sitting without a jury, held that the debt was not discharged but limited plaintiff’s recovery to the sum of $85, the additional money, over and above the balance due on the old note, which defendant received at the time of the renewal. Plaintiff’s appeal followed.

We hold that plaintiff was entitled to judgment for the full amount of the balance due on the note, with interest. The facts here closely resemble those in Personal Finance Co. of Paterson v. Snyder, 131 N. J. L. 597 (Sup. Ct. 1944), which we hold to be controlling. In that case plaintiff, which held defendant’s note on which a balance of $254.65 was owing, accepted a renewal in the amount of $300 on the basis of a statement of debts which proved to be false, and was permitted to recover the entire balance due on the note rather than the sum of $45.35, the difference between the balance due on the original note and the amount of the renewal. See also Personal Finance Co. of N. J. v. Bruns, 16 N. J. Super. 133, 135-136 (App. Div. 1951); Beneficial Finance Co. v. Norton, 76 N. J. Super. 577, 584 (App. Div. 1962).

Reversed and remanded for the entry of judgment for plaintiff in conformity with this opinion.

       Defendant’s petition in bankruptcy was filed prior to the effective date of the 1970 amendment (Pub. L. 91-467, § 5-7, 84 Stat. 992) to 11 U. S. C. A. § 35.