author: Di Btroiro, J. C. C.

text:
    PAUL SVEC, PETITIONER-RESPONDENT, v. WESTFIELD MOTOR SALES, INC., RESPONDENT-APPELLANT.
    Union County Court Law Division
    Decided March 12, 1969.

      Mr. Oiio 0. 8taubach for petitioner (Messrs. Werner, Weiner é Glennon, attorneys).

      Mr. Isidor Kalis ch attorney for respondent.
   Di Btroiro, J. C. C.

Petitioner, Paul Svec, was injured while working at Westfield Motor Sales, Inc., on August 4, 1960. He filed claim petition on June 4, 1962, alleging injury to his forehead and right eye. Westfield answered, admitting compensability of the head, but denied that any injury to the eye was related to the accident.

A hearing was held before a formal referee on October 10, 1962. At the outset it was stipulated that

“The sole issue in this case is the nature and extent of permanent disability for a suturing of the right eyebrow, sear over the right eyebrow, as a result of the aforementioned accident. * * * (Emphasis supplied)

Petitioner testified to the details of the accident and extensive medical testimony was taken, not only as to the head injury, but as to the eye injury as well. The referee, in conclusion, stated:

“The sole issue remaining is the nature and extent of permanent disability and from the proofs adduced before me, I find petitioner sustained a partial permanent disability of 3%% of total which is neurological in nature entitling him to 19% weeks at $35.00 a week or $673.75. As far as any claim for loss of vision or an early cataract in the petitioner’s right eye, the treating records and that of Dr. Plain spelled out the view that this incident could not cause that and I so find and that the disability given to the petitioner will be strictly for the scar and any anxiety reaction he may have had as a result of this accident.” (Emphasis supplied)

Following entry of this judgment, petitioner filed an application for review and modification of formal award, pursuant to N. J. 8. A. 34:15-27, alleging an increase of disability as 100% of the right eye. Respondent denied liability, any increase in disability, and further asserted that the judgment by the referee was res judicata.

The judge of compensation, in denying respondent’s motion to dismiss, held that the referee’s judgment was not res judicata for the reason that he had exceeded his jurisdictional powers as specified under N. J. 8. A. 34:15-22 of the Workmen’s Compensation Act because he made a finding not only as to the extent of disability resulting from the head injury, but also as to the causal relationship of a nonstipulated eye injury which allegedly resulted from the accident.

The matter was then reheard by the judge of compensation, who stated that “The issue before me is the nature and extent of ophthalmological injury causally related to the accident of August 4,1960.” * * * He found petitioner’s blindness of the right eye was caused by the accident and was due to the worsening of the condition of the injury to the head for which petitioner had been compensated; that respondent was responsible for 100% loss of vision of that eye, and that petitioner was totally disabled from all causes under conditions such as entitle him to benefits.

The compensation judge, in finding that the referee had exceeded his jurisdictional and statutory power, relied on N. J. 8. A. 34:15-22, which provides in part:

“No agreement between an employee and Ms employer * * * for ■compensation shall operate as a bar to the formal determination •of any controversy, unless such agreement has been approved by the * * * referee designated as a ‘referee, formal hearings,’ in open ■court; provided, * * * that the only issue involved is the extent of the disability, the * * * referee * * may, with the consent of the parties, after considering the sworn testimony of the petitioner and such other witnesses present, together with any stipulations of the parties, enter a determination and rule for judgment which shall include a finding of fact as to the amount of the then present disability. * * *» (Emphasis supplied)

The judge of compensation, in arguing against respondent’s contention that every finding of extent of disability necessarily implies a finding of causal relation between the disability and the accident, stated that section 20 must be read in pari materia with the other sections of the act. After citing various sections which refer to both “extent and nature,” he commented:

“Again, we have in the conjunctive a reference to the nature and extent. And section 22 very pointedly uses the language, the ‘only’ issue involved shall be the extent of disability. So it would appear to me that there is sufficient language in the statute under the several sections to which I made reference that there is a distinction made between the nature of the injury and the extent of the injury, and the powers conferred upon a Referee.”

This Court must agree; the language of N. J. S. A. 34: 15-22 specifically states that a referee may make an adjudication “when it shall appear * * * that the only issue involved is the extent of the disability” (emphasis supplied). Therefore, it would follow that all other issues, such as the nature or cause of the injury, must be stipulated by the parties, thereby leaving only the extent of the disability to be determined by the referee.

This procedure was not followed in the present case. Notwithstanding the fact that there may have been a stipulation by and between the parties that the injury was solely neurological in nature, the referee, at the formal hearing, allowed extensive testimony to be taken on the issue of ophtiialmological injury. This was clearly in violation of the statute.

The court, in specifically discussing N. J. S. A. 34:15-22, stated in Ferraro v. Zurcher, 12 N. J. Super. 231 (App. Div. 1951) :

“Before there exists an adjudication of the extent of disability which may be modified only under R. S. 34:15—27 (that is, when, as here, the only issue involved is the extent of disability), there must be a determination and rule for judgment which includes a finding of fact as to the amount of the then present disability and which is entered after hearing in open court upon consideration of the sworn testimony of petitioner and other witnesses present, together with any ‘stipulations of the parties,’ and which otherwise satisfies the requirement of the proviso to R. S. 34:15-22. * * *” (at p. 235; emphasis supplied)

The court, by exclusion, makes it quite obvious that a hearing under N. J. S. A. 34:15-22 is not to encompass any more than a finding as to the extent of disability along with any stipulations made by the parties. Tor a referee to go beyond these limitations is a violation of his statutory power and jurisdiction. Such error, in effect, negates that part of the judgment over which the court had no jurisdiction. Bes judicata will not apply to that portion of the judgment because “Bes judicata applies only in the ease of a final judgment.” Andersen v. Well-Built Homes of Central Jersey, Inc., 69 N. J. Super. 246, 254 (App. Div. 1961).

The Supreme Court of New Jersey, in discussing finality of judgment, stated:

“A workman who sustains a work connected accidental injury is entitled to compensation for any resulting percentage of a partial permanent disability. When such an award is made, the natural presumption is that it fully compensates him within the statutory limits for the permanent incapacity and the symptoms and physical weakness which are representative of such incapacity. * * * The allowance made is res judicata and binds both employer and employee for all time subject only to N. J. S. A. 34:15-27 which authorizes an application by the employer for review and reduction thereof if the disability has diminished, or by the employee within two years after the last payment of benefits, for additional compensation if his incapacity increases.” Sechiffres v. Kittatinny Lodge, Inc., 39 N. J. 139, 147-148 (1963).

The court, in defining the boundaries of N. J. S. A. 34:15-27 in Tucker v. Frank J. Beltramo, Inc., 117 N. J. L. 72, 80 (Sup. Ct. 1936), stated:

“* * * The extent of the disability, in so far as it may have subsequently increased or diminished, or ended, is properly the subject, and the only subject, of review under this clause. This is the full extent and limit of the continuing jurisdiction. A corollary is that the statute is inapplicable where the original adjudication was that the employee had not sustained a compensable injury, as distinguished from injury of the statutory character then found to have been fully compensated.”

Applying the above guidelines to the present case, this court must conclude that if the eye’s formation of a cataract was the result of the worsening of a previously compensated condition, i. e., from the blow and damage to the eyebrow, then this increase of disability is the proper subject for modification and review under N. J. S. A. 34:15-27, and it is inconsequential that the referee found the nature of the cataract condition to have no causal relation to the accident, since this determination was not within his jurisdiction.

Admittedly, however, if the formation of the cataract was independent and unrelated to the injured eyebrow but nevertheless a result of the same accident, then petitioner’s relief from the referee’s adverse finding of noncompensability of the cataract condition should have been by way of appeal within 45 days under N. J. S. A. 34:15-66, or by the filing of a new petition in the Workmen’s Compensation Court, and not by way of modification of a previous award for disability under N. J. S. A. 34:15-27.

It is this court’s opinion, however, that the present ease falls within that area which is subject to modification under N. J. 8. A. 34:15-27. In reviewing the record with special attention to the medical testimony, I find that petitioner’s proofs sufficiently establish that the blow to the region located above the right eye was so severe so as to cause an injury to the right eye and the formation of a traumatic cataract. The cataract being the result of the worsening of the previously compensated injury was, therefore, properly the subject for modification by the judge of compensation. Hence, respondent’s additional argument that petitioner’s relief was by way of appeal, pursuant to N. J. S. A. 34:15-66, is rejected.

The judgment of the ’Workmen’s Compensation Court is hereby affirmed.


source: Caselaw Access Project

author: Lewis, J. A. D.

license: Public Domain

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. FRANK E. WHITE, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 17, 1969
    Decided April 1, 1969.

      Before Judges Sullivan, Eoley and Lewis.

      Mr. Michael Blacker, Assistant Deputy Public Defender, argued the cause for appellant (Mr. Peter Murray, Public Defender, attorney).

      Mr. Elliot L. Katz, Assistant County Prosecutor, argued the cause for respondent (Mr. Vincent P. Keuper, County Prosecutor of Monmouth County, attorney).
   The opinion of the court was delivered by

Lewis, J. A. D.

Defendant appeals from a judgment of conviction following a trial by jury on an indictment charging him with impairing the morals of a child in violation of N. J. S. 2A :96-3. The trial court imposed a sentence to the Monmouth County jail for a period of one year on each of two counts, to run concurrently, which sentence was suspended and defendant placed on probation. Defendant was also fined $200 and costs.

There were two victims, R and N, girls, respectively aged 9 and 10. The evidence reveals that defendant, 54 years of age, induced these minors to submit to the exposure of colored, large-sized calendar photographs of nude men and women in various postures.

It is urged on appeal that (1) the indictment was fatally defective in that the offense alleged could not be prosecuted under the general provision of N. J. S. 2A:96-3 (debauching or impairing morals of a child under 16 ■—-a misdemeanor), but could be prosecuted only under N. J. S. 2A 115-3.2 (uttering or exposing obscene publications to children under 18 — a high misdemeanor), and (2) it was plain error for the trial court to admit the exhibits into evidence since they were obtained as the result of an illegal search of defendant’s home.

As this court stated in discussing N. J. S. 2A ¡96-3, the statute “is for the protection of children under 16.” State v. Raymond, 74 N. J. Super. 434, 438 (App. Div. 1962), appeal dismissed 39 N. J. 241 (1963). When compared with N. J. S. 2A:115-3.2, it appears plain that the respective statutes deal with separate and distinct crimes and the defendant could have been indicted under either. The nature and character of the proofs to sustain conviction are not the same; neither are the penalties. It is fair and reasonable to assume that the Legislature intended to provide for a contingency that the State’s proofs might not be sufficient to convict under N. J. S. 2A :115-3.2 but would be adequate to support a conviction under N. J. S. 2A:96-3. State v. Bott, 53 N. J. 391 (1969), and State v. Serrano, 53 N. J. 356 (1969), are plainly distinguishable.

We need not, for purposes of this opinion, consider whether the photographs in question were obscene per se within the meaning of cases such as Sunshine Book Company v. Summerfield, 355 U. S. 372, 78 S. Ct. 365, 2 L. Ed. 2d 352 (1958). We are satisfied from an examination of the exhibits (“Nudism Today —■ Large Pull Sized Photographs”) that the actions of defendant and the methods employed by him to induce the minor girls to become exposed to them had the potential effect of debauching the children or impairing their morals, within the meaning and contemplation of the statute under which defendant was indicted, tried and convicted.

It is urged that the statute (N. J. S. 2A:96-3) contemplates some physical contact or physical abuse. We disagree. The mere fact that most cases decided under the statute involve physical contact does not compel a reading into the legislation of such a condition which the Legislature did not see fit to include.

Defendant’s last point is without merit. There was no pretrial motion to suppress the evidence. R. R. 3:2A-6(a). The evidence demonstrates that there was a voluntary and intelligent consent to the search of defendant’s home and that he waived his right to object to the search. Indeed, at trial the court inquired of counsel, “What I am talking about now is, whether or not if you have any objection to the search,” to which counsel replied, “No, I don’t. No, I don’t.”

Judgment affirmed.


author: Kilkenny, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ROBERT D. BELL AND PETER J. LYNCH, DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division.
    Argued March 17, 1969
    Decided April 1, 1969.

      Before Judges Coneokd, Kilkenny and Leonard.

      Miss Gynihia M. Jacob, Assistant Deputy Public Defender, argued the cause for appellants {Mr. Richard Newman, Deputy Public Defender, attorney).

      Mr. 8. Philip Klein, Assistant County Prosecutor, argued the cause for respondent {Mr. Michael R. Imbriani, Somerset County Prosecutor, attorney).
   The opinion of the court was delivered by

Kilkenny, J. A. D.

Defendants were found guilty, after separate trials before separate juries, of breaking and entering with intent to steal. Bell was sentenced to the New Jersey Eeformatory for an indeterminate term. Lynch was sentenced to State Prison for a term of two to four years. Defendants appealed from the respective judgments of conviction. The appeals were consolidated because of the common questions of law and fact, both defendants having been allegedly involved in the same incident.

On February 28, 1967, in the early morning hours, Three Lights Tavern in Bernardsville was broken into and entered. A jug containing $120.82 and a bottle of liquor, valued at $6, were stolen. Shortly thereafter the police spotted a suspected vehicle and followed it. The vehicle stopped at a motel and the defendants left the car and went into the place. The police saw on the seat of the vehicle, in plain view, a jug of money and a bottle of liquor, later identified by the owner of the tavern as the items stolen therefrom. Defendants were taken into custody.

They pleaded guilty in the municipal court to a charge of “receiving” stolen goods (N. J. 8. 2A:139-1), for which they were fined $25 and $5 costs of court. In default of payment, they spent six days in the county jail. Thereafter, they were indicted for breaking and entering with intent to steal (N. J. 8. 2A:94-1), tried separately before a jury and found guilty, as first noted above.

I

Defendants argue that the State was collaterally estopped from indicting and convicting them for breaking and entering with intent to steal, after there had been a prior determination, by their guilty plea in the municipal court, that they had “received” the stolen goods. They rationalize that, if they were receivers of the stolen goods, some other person or persons must have done the stealing. The next step in their logic is that it is inconsistent to find them guilty of breaking and entering “with intent to steal,” if someone else was the thief.

The State agrees that one may not be convicted of larceny of particular items and also be convicted at the same time of receiving the same stolen goods. Concededly, it would be repugnant to convict one as the thief and at the same time convict him as a receiver from the thief. But no such repugnancy exists between the crime of breaking and entering with intent to steal and the crime of receiving stolen property.

In State v. Fioravanti, 46 N. J. 109, 127 (1965), defendant was convicted on six counts of breaking and entering, larceny and receiving stolen goods. The court found that the repugnancy between the larceny and receiving counts did not exist between the breaking and entering count and the receiving count. See, too, State v. Harris, 78 N. J. Super. 232 (App. Div. 1963).

The crimes of receiving stolen property and breaking and entering with intent to steal are two separate crimes. State v. Quatro, 44 N. J. Super. 120, 127 (App. Div. 1957). They are not necessarily inconsistent. The proof warranting a conviction of each crime is different. No repugnancy exists, because one can break and enter with intent to steal and yet be a receiver of goods stolen by another. Since defendants pleaded guilty in the municipal court as mere receivers, they thereby estopped themselves from maintaining that they were the thieves. The State was not, therefore, collaterally precluded from indicting and convicting them of the separate crime of breaking and entering. There was ample proof to support the breaking and entering conviction. State v. Fiorello, 36 N. J. 80 (1961). No claim has been made on this appeal that the verdict was contrary to the weight of the evidence. Neither defendant testified.

Eor completeness, we also note that R. R. 3:5-5 (b)(2) provides that a collateral estoppel motion must be made before trial. This was not done here. But see State v. Currie, 41 N. J. 531, 535 (1964).

II

Defendant’s only other point is that the search and seizure of the car in which they were riding violated their rights under the Fourth Amendment to the United States Constitution.

Defendants' pretrial motion to suppress the evidence —the jug of money and bottle of liquor—was denied. We find no error in that ruling. These items were in plain view on the seat of the automobile when the police looked into the car, after defendants had stopped and entered the motel. There was no search, but merely an observation made of items apparent to the human eye. As we said in State v. Griffin, 84 N. J. Super. 508 (App. Div. 1964):

“A search implies some exploratory investigation. It is not a search to observe that which is open and patent, in either sunlight or artificial light.” (at p. 517)

Hence, the claim of an unlawful search and seizure is without merit. The denial of the motion to suppress was proper. The judgments of conviction are affirmed.


author: Kilkenny, J. A. D. Cotn?om>, S. J. A. D.,

text:
    IN THE MATTER OF THE ESTATE OF CLIFFORD H. SHIVERS, LATE OF GLOUCESTER COUNTY, NEW JERSEY.
    Superior Court of New Jersey Appellate Division
    Argued February 17, 1969
    Decided April 1, 1969.

      Gonford, S. J. A. D., dissented in part.

      Before Judges Coneoed, Kilkenny and Leonard.

      Mr. David E. Crabtree argued the cause for appellant.

      Mr. T. Robert ZochowsTti, Deputy Attorney General, argued the cause for respondent (Mr. Arthur J. 8ills, Attorney General of New Jersey, attorney; Mr. Stephen Slcillman, Deputy Attorney General, of counsel).
   The opinion of the court was delivered by

Kilkenny, J. A. D.

This is an appeal from a final determination of the New Jersey Transfer Inheritance Tax Bureau fixing the amount of inheritance taxes payable by the Shivers Estate. The executor first challenges the propriety of including as part of the taxable estate, as gifts made in contemplation of death, certain substantial 1964 transfers made by decedent to his two daughters about one year before his death in 1965. The second issue involves the State’s disallowance, as a deductible item, of the sum paid by the executor to the Federal Government on those transfers as a purported “debt” due under the Federal Gift Tax Act.

I

Decedent, a New Jersey domiciliary, died on June 21, 1965. On April 20, 1964 and June 25, 1964 lie transferred, without consideration, to his two daughters Katherine S. Halloek and Mary Ann S. Ziegler income tax-exempt municipal bonds having a market value of $298,606.50 as of the date of his death.

On April 20, 1964 approximately $14,200 was given in bonds to each daughter; on June 25, 1964 each daughter received about $134,500 in bonds. At the time of the transfers the bonds were worth $299,087.16.

The United States Internal Revenue Service and the New Jersey Inheritance Tax Bureau found that those transfers were made in contemplation of death. Both agencies treated the items as part of decedent’s estate in calculating the amount of the federal estate tax and the New Jersey inheritance tax due from this estate.

There was substantial evidence supporting the administrative findings, in addition to the provision under our law that any transfer made as a gift within three years prior to decedent’s death is deemed, in the absence of proof to the contrary, to have been made in contemplation of death and includible in decedent’s estate, in calculating the amount of inheritance taxes payable to the State. N. J. 8. A. 54: 34^1 (c). The transfers in issue were concededly gifts.

[ 1, 2] Were they made “in contemplation of death”? The applicable criteria and standards to resolve this issue have been set forth recently in In re Lichtenstein, 52 N. J. 553, 569 (1968). The presumption that the gift within three years of death was made in contemplation of death places an obligation on the taxpayer to establish by a preponderance of the evidence that it was not in contemplation of death. It is sufficient for taxability to find an “impelling” motive to make the gift in lieu of testamentary disposition.

The executor claims that the transfers do not come within the “three years prior to death” rule because the decedent intended the gifts to be effective in 1957 when he first placed the initial group in a safe deposit box in a bank. The box was registered in the names of his two daughters, but it was also registered in his name as “Deputy.” He was the only one to enter the box from June 7, 1957 to June 23, 1964. He kept the safe deposit box key. He clipped the coupons and retained the income which was deposited in his account. The box was surrendered on June 25, 1964. Significantly, it was on the last-mentioned date that actual delivery of the bonds was made to the daughters.

The deposit of bonds in the safe deposit box in 1957 did not legally effect a gift thereof at that time. Decedent retained control of them. See In re Posey, 89 N. J. Super. 293, 304 (Cty. Ct. 1965), affirmed 92 N. J. Super. 259 (App. Div. 1966). He negated any donative intent by clipping the coupons and retaining the income which he placed in his own account. There was, under the circumstances, no delivery to the donees in 1957. Hence, the estate’s contention that the gift was made in 1957, rather than in 1964, lacks merit. The mere intent to make a gift inter vivos to be consummated in the future is legally insufficient. In re Dodge, 50 N. J. 192, 216 (1967).

There was substantial evidence to support the findings that those substantial transfers made by decedent to his two daughters only about a year before he died were gifts made in contemplation of death. Decedent’s gifts to his two daughters in the prior years of his lifetime were relatively meager, considering his considerable possessions. Coneededly, there was no consideration paid for these bonds, which approximated $300,000 in value. They represented a material part of decedent’s estate •— about 25% of a gross estate of $1,146,005.62. The net estate, including these transfers, was $1,052,910.34.

Decedent was 86 years old at the time of the transfers. He was 87 when he died a year later. The cause of his death was myocardial infarction due to arteriosclerotic heart disease. On April 20, 1964 he executed his last will and testament, and it was on that same day that he made some of the transfers. This is suggestive of his awareness of tax consequences, as is his substantial holdings of municipal income tax-free bonds.

The totality of the proofs, the presumption under N. J. S. A. 54:34r-1 (c) and the substantial evidence rule (cf. In re Public Service Electric and Gas Co., 35 N. J. 358, 376 (1961)), compel the conclusion that the transfers in issue were gifts made in contemplation of death and includible in decedent’s estate for inheritance tax purposes.

II

We next consider the estate’s claim that the unpaid federal gift tax liability for the 1964 transfers, paid by his executor after his death, was a legally due “debt” of the decedent owing at his death and, therefore, ail allowable deduction for Now Jersey transfer inheritance tax purposes under N. J. 8. A. 54:34—5(a).

Our Inheritance Tax Bureau had disallowed this item, which amounted to $53,368.39, on the ground that the Internal Revenue Service had also treated the transfers as gifts in contemplation of death and includible as assets of the estate for federal estate tax purposes. After computing the amount due under the Federal Estate Tax Act, the Internal Revenue Service gave the estate a “credit” against the amount due for federal estate taxes to the extent of the amount paid as a gift tax. In brief, the amount paid by the executor as a purported “gift tax” was regarded merely as a “down payment” on account of the federal estate taxes, which apply to gifts made in contemplation of death. Obviously, an estate would rather pay the lower gift tax upon such transfers made in contemplation of death than the higher federal estate tax.

N. J. 8. A. 54:34-5 enumerates the allowable deductions in computing our State’s inheritance taxes. They include “debts” of a decedent owing at the time of his death. Sub division (e) expressly declares nondeductible “a federal estate tax.” It provides:

“Transfer taxes paid or payable to other states or territories or the District of Columbia or foreign countries on any property the transfer of which is taxable hereunder [are allowable deductions], but the amount due or paid the government of the United States as a federal estate tax shall not he considered as an expense of administration and shall not he allowed as a deduction.” (Emphasis ours)

The Internal Eevenne Code (36 U. S. C. A. §2012) states that if a gift is made and a gift tax is paid either by the decedent or his representative, and if that gift is determined to have been made in contemplation of death, that gift becomes part of the decedent's estate and the tax paid thereon is to be credited against the federal estate tax levied. This also applies to gift taxes unpaid at decedent's death. See Federal Estate Tax Regulation, §20.2012-1 (a).

In McGill v. Oklahoma Tax Commission, 258 P. 2d 1180, 1183 (Okla. Sup. Ct. 1953), it was held that gifts made in contemplation of death and, therefore, subject under the Federal Estate Tax Act to the payment of federal estate taxes, were subject to a contingent gift tax liability that disappeared upon the death of the donor. The gift tax could not be enforced against a decedent's estate after his death. Upon his death the tax on gifts in contemplation of death reappeared as an estate tax “and such a debt is not deductible” under Oklahoma’s inheritance tax law.

In Smith v. Shaughnessy, 318 U. S. 176, 63 S. Ct. 545, 87 L. Ed. 690 (1943), it was pointed out that where a gift tax is paid on transfers in contemplation of death, it merely constitutes a “down payment” on the estate tax that is subsequently imposed on the transfers. As the court expressed it:

“Under the statute the gift tax amounts in some instances to a security, a form of down-payment on the estate tax which secures the eventual payment of the latter; it is in no sense double taxation * * (At p. 179, 63 S. Ct., at p. 547)

The federal gift and estate tax laws are closely related. “Congress has provided as its plan for integrating the estate and gift taxes this system of secured payment on gifts which will later be subject to the estate tax.” (Ibid.)

The gift tax and the estate tax are not mutually exclusive in the case of a gift made in contemplation of death. The fact that a gift was made must be reported within the time fixed by the Gift Tax Law. Failure to do so subjects the donor to penalties, in the absence of a showing of excusable neglect. Here, report of the 1964 taxes should have been made by April 15, 1965. It was not filed until March 2, 1966, and then by the executor of the donor’s estate. Because the report was 11 months overdue, penalties amounting to $12,949.65 were assessed against and paid by the estate. The executor sued in the United States District Court for the District of Hew Jersey for a refund of the $12,949.65 penalty, assessed for the delinquent filing of the federal gift tax return for the 1964 gifts. Eelief was denied upon the ground that the delinquent filing was due to willful neglect both by the donor and the executor. The court found the executor’s excuse that it was “too busy” with other matters insufficient cause to avoid the obligation of timely filing. The attempt to find reasonable cause for the delay in the donor’s physical and mental condition was found to be inadequate in the light of his timely filing of his income tax return, “legibly signed” by him.

The attorney for the estate has furnished us, after oral argument, with a copj'' of the District Court’s opinion of October 4, 1968, dismissing the executor’s suit for a refund of the penalty. The attorney advised paying the federal estate tax, which included in the return the 1964 gifts, and also paying the penalty for the delinquency in filing the gift tax return, and then seeking a refund. The executor now argues that the gift tax liability is a completely separate and independent liability as demonstrated by the fact that the above-mentioned penalty for a delinquent gift tax return was upheld by the District Court.

We do not subscribe to that argument. The penalty was for a willful neglect of filing the gift tax report within the time required by law. There is no obligation to pay the gift tax as a separate liability, in the case of gifts made in contemplation of death, when the same items are included in the federal estate tax return. If a gift tax on such gifts has been paid before the donor dies, it does not affect the computation of the federal estate tax, and the gifts in contemplation of death are includible as assets of the donor’s estate and subject to federal estate tax. A gift tax paid on such gifts is a mere credit on account of the calculated federal estate tax. If the gift tax has not been paid, the estate simply receives no credit. In the final analysis, the tax paid, by whatever label is put on it by the executor, is the federal estate tax. Our law, as noted above, expressly states:

“* * * the amount due or paid the government of the United States as a federal estate tam * * * shall not be allowed as a deduction.”

The determination of the Hew Jersey Inheritance Tax Bureau is affirmed.

Cotn?om>, S. J. A. D.,

(dissenting in part). I agree with so much of the court’s opinion as sustains the determination of the Transfer Inheritance Tax Bureau that the 1964 transfers by the decedent to his daughters were gifts in contemplation of death. I disagree with the decision to the extent that it holds that the gift taxes due the Federal Government at the decedent’s death in respect of those gifts, and later paid by the executor with interest and penalty, were not deductible from the decedent’s estate as debts on the asserted thesis that they were an “amount due or paid the government of the United States as a federal estate tax,” within the coverage of the exclusion set forth in N. J. 8. A. 54:34-5(e).

It is quite clear from the federal Internal Revenue Code and Regulations that the federal gift tax is a completely separate and independent entity vis a vis the federal estate tax, notwithstanding that in some respects they intermesh in the overall federal tax policy in relation to these types of disposition. The gift tax was absolutely due and owing by the decedent before and as of the time of his death, as a gift tax return with accompanying payment was due in April 1965 (death occurred June 21). 26 U. S. C. A. §§6019, 6075(5); 6151 and Regulations §25.6151-1. By contrast, the federal estate tax return was not due or the tax payable until 15 months after the decedent’s death. 26 U. S. C. A. § 6075(a). Moreover, the gift is valued as of date of gift, 26 U. S. C. A. § 2512, whereas the estate is valued, ordinarily, as of date of death. Id., § 2031(a).

As an enforceable pecuniary obligation of decedent at his death (as well as of his estate after his death) the gift tax was a debt deductible from his gross estate for New Jersey transfer inheritance tax purposes. N. J. S. A. 54:34.-5(a). See Sullivan v. Margetts, 9 N. J. Super. 189, 194 (App. Div. 1950). That deduction should not be held cancelled by a later exclusion in the same statutory section unless the exclusion explicitly calls for that result, and I cannot conceive that an exclusion for “an amount due” or paid as a “federal estate tax” should be read to include an amount in fact due and paid as a “federal gift tax,” in view of the distinct character of each of these taxes in the federal statutory tax scheme. It is basic that even in cases of doubt a taxing statute will be construed most strongly against the government and in favor of the citizen. Kingsley v. Hawthorne Fabrics, Inc., 41 N. J. 521, 528-529 (1964); American Can Co. v. Director of Division of Taxation, 87 N. J. Super. 1, 13 (App. Div. 1965), certification denied 44 IV. J. 587 (1965).

The entirely disparate character of the gift tax involved in this case was brought home to this taxpayer when the estate was required to pay a substantial statutory penalty for decedent’s failure to pay the tax in April 1965 when it came due (see this court’s opinion). The here relevant lesson of that experience was that the estate could not have prevailed on the plea that it should not be penalized for lateness in payment because the gift tax was only a so-called “down-payment” on the federal estate tax, and that that exaction was not due until later. The fact that the federal statute allows a credit, in computation of the net federal estate tax payable, in respect of any gift tax paid with respect to a transfer when the value of the transferred property is included in the gross estate (26 U. S. C. A. § 2012), does not alter any of the special and distinguishing incidents of the gift tax — the time the return is due, the time payment is due, valuation dates, penalties, rates, exemptions, etc. That credit in no proper sense alters the character of the gift tax when paid as a gift tax (as distinguished from an estate tax), nor of the obligation of payment, where unpaid as of the time of death, as here, as a debt of the estate.

The extent of the error of the Bureau here is more fully appreciated if one contemplates the situation which would have been presented had decedent paid the gift tax prior to his death, as he should have done under the Code and Regulations. In that case the gross estate at death would inescapably have been less by the amount of that payment and incontestably not subject to augmentation by that sum for New Jersejr inheritance tax purposes. This would have been no less true notwithstanding the circumstance that the amount of such gift tax payment would still have been creditable against the computed federal estate tax, pursuant to section 2012 of the Code and the Regulations. Can it be reasonably supposed that the New Jersey Legislature contemplated a difference in inheritance tax result dependent upon whether the federal gift tax was paid subsequent rather than prior to the death of the decedent ? The question is self-responsive.

The “down-payment” language from the Supreme Court opinion in Smith v. Shaughnessy, 318 U. S. 176, 179, 63 S. Ct. 545, 87 L. Ed. 690 (1943), quoted in the opinion of the majority and relied upon by the State, does not derogate from the soundness of the views expressed above. That language was merely a loose description of a collateral effect one might figuratively attribute to the relationship between the gift and estate taxes in some applications. It is not controlling, or even helpful, in resolving the instant problem of construction of the Hew Jersey statute. The actual decision in Shaughnessy tends rather to emphasize the discrete and independent character of federal gift and estate taxes in its holding that a gift tax on the grant of a remainder after a life estate was not invalid by mere reason of the fact that the same remainder would also be included in the value of the gross estate subject to estate tax. See also Heiner v. Donnan, 285 U. S. 312, 52 S. Ct. 358, 76 L. Ed. 772 (1932).

As for McGill v. Oklahoma Tax Commission, 258 P. 2d 118C (Okl. Sup. Ct. 1953), also relied upon by the court, I regard it as poorly reasoned. It is simply incorrect to say, as that opinion did, that the 1949 gift tax there paid by the executor was, because of the federal statutory credit, “a Federal estate tax when paid and not a Federal gift tax” (at p. 1183). I think I have demonstrated the error thereof hereinabove. That court was also wrong, in my opinion, in saying that the 1949 gift tax liability “was a contingent liability that disappeared upon death” (ibid.). To the contrary, the liability, qua gift tax liability, survives to the executor. (Regulations, § 25.2502-2)

I thus conclude that the gift tax owing as of decedent’s death was a deductible debt under N. J. S. A. 54:34-5 (a) and that the right of deduction was not destroyed by reason of any notion of the tax having become transmuted into a federal estate tax excluded from deduction under (e) of the cited section.

       It is of interest that the gift tax was also a debt deductible from the gross estate for purposes of determining the federal estate tax. See Regulations, § 20.2012-3 (a) (second sentence). Notwithstanding this, the credit for gift tax against federal estate tax still applies. Ibid. In other words, federal law gives the taxpayer the precise deduction, for federal estate tax purposes, which the Bureau refused the taxpayer here, in precisely the same factual situation, for New Jersey inheritance tax purposes.


author: Caktoit, J. A. D.

text:
    ALLSTATE INSURANCE COMPANY, A BODY CORPORATE AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. RAYMOND GRILLON, DEFENDANT-APPELLANT, AND GEORGE A. BRADLEY, DEFENDANT.
    Superior Court of New Jersey Appellate Division
    Argued February 13, 1969
    Decided April 7, 1969.

      Before Judges Goldmam, Kolovsky and Castoh.

      Mr. Thomas T. Warshaw argued the cause for appellant (Messrs. Brazin, Warshaw, Auerbach and Rudnick, attorneys).

      Mr. Ralph W. Campbell argued the cause for respondent (Messrs. Campbell, Mangini, Foley, Lee é Murphy, attorneys; Mr. Michael J. Cernigliaro on the brief).
   The opinion of the court was delivered by

Caktoit, J. A. D.

Defendant Grillon appeals from a declaratory judgment determining plaintiff Allstate Insurance Company to be under no obligation to defend one George Bradley as an additional assured under its policy, or to pay any judgment obtained against him in a pending negligence action brought by Grillon in the Law Division.

Allstate had issued a liability policy to one Douglas as owner of the automobile which Bradley was operating with his permission on August 13, 1964. The automobile ran over a catch basin on the side of the highway, skidded some 200 feet and struck a parked car, which pinned Grillon against a diner situated about 70 feet off the roadway.

It is undisputed that the accident was reported to Allstate the next day. It is also conceded that during the two-week period following the accident Allstate completed its investigation as to liability, during the course of which the investigator obtained a four-page statement from Bradley and a copy of the police report. He also got in touch with the police officer mentioned in the latter report.

Allstate's investigator communicated with Grillon's wife the day after the accident and learned from her that her husband, who was a soldier, was at the Patterson General Hospital at Port Monmouth. Although the investigator was unable to interview Grillon at that time because he was being operated on, the records of Grillon’s hospitalization were available. Allstate's claim manager conceded that, although the investigator was able to determine the names of the persons treating Grillon from an examination of those records, no effort was made to interview any of those persons.

Grillon filed his Law Division action in February 1966 against Bradley and Douglas. Bradley alone was served in that action. No answer was filed by him or on his behalf. Grillon, not having entered a default judgment, served notice through his present attorneys, returnable November 3, 1967, upon Bradley and upon Allstate Insurance Company, Douglas' liability insurer, that he would apply for leave to proceed and for an order allowing ten days to file answer to the complaint.

Thereupon, Allstate brought this action in the Chancery Division, claiming that the conditions of the policy were breached and it was thereby relieved of all liability. The Law Division action was stayed. After a trial in the Chancery Division, the trial judge, in upholding Allstate’s contention, filed a written opinion detailing the factual background and the reasons for his determination. Allstate Ins. Co. v. Grillon, 101 N. J. Super. 322 (Ch. Div. 1968).

The trial judge found that Bradley was operating the vehicle with the owner’s permission and was therefore an additional assured under the policy and that there was a breach of the policy condition requiring the summons and complaint to be forwarded immediately to Allstate. However, he held (and the parties agree) that the case was controlled by the principle enunciated in Cooper v. Government Employees Ins. Co., 51 N. J. 86, 94 (1968), that an insurer is not entitled to be relieved from liability for breach of a policy condition requiring notice unless it shows both a breach and a “likelihood of appreciable prejudice” to the insurer.

In Cooper Chief Justice Weintraub pointed out that although liability policy provisions requiring notice refer to conditions precedent, what is actually involved is a forfeiture. We observe that usually such notice provisions require notice of the occurrence of the accident, notice of claim for damages and notice of the bringing of an action thereon. The Chief Justice also stated:

“* * * Thjs is tQ bgiitflg need for notice of an accident, but rather to put the subject in perspective. Thus viewed, it becomes unreasonable to read the provision unrealistically or to find that the carrier may forfeit the coverage, even though there is no likelihood that it was prejudiced by the breach. To do so would be unfair to insureds. It would also disserve the public interest, for insurance is an instrument of a social policy that the victims of negligence be compensated. * * *
The insurance contract not being a truly consensual arrangement and being available only on a take-it-or-leave-it basis, and the subject being in essence a matter of forfeiture, we think it appropriate to hold that the carrier inay not forfeit the bargained-for protection unless there are both a breach of the notice provision and a likelihood of appreciable prejudice. The burden of persuasion is the carrier’s.” (at p. 94)

In applying the principle enunciated in Cooper to the evidence adduced at the trial at which only four witnesses testified, the trial judge rejected Allstate’s first two contentions that it had sustained a “likelihood of appreciable prejudice” from Bradley’s failure to forward to it the summons and complaint in a reasonable time after they had been served on him on March 21, 1966. These contentions were (1) that Allstate would have been able to keep informed of Bradley’s whereabouts, and (2) it was possible the Law Division might deny additional discovery time if Allstate was required to defend the negligence action.

We agree that the evidence fully supported these findings.

Nevertheless, the trial judge upheld Allstate’s alternative contention, that it had established the “likelihood of appreciable prejudice” because it was deprived of the opportunity of a reasonably early physical examination of Grillon, and, to a lesser degree, because it did not have timely opportunity to investigate and take Grillon’s deposition and that of other available persons concerning Grillon’s activities while he was receiving medical care and subsequent thereto.

In our view, the record does not support this conclusion and does not justify relieving the insurer of liability under the policy.

Allstate’s claim of prejudice rests in large part on the thesis that notwithstanding the fact it received prompt notice of the accident and of Grillon’s injury and was aware Grillon was making a claim for damages, had Bradley promptly forwarded to it the summons and complaint served on March 21, 1966, it could and would have compelled Grillon to submit to a physical examination within a short time thereafter. Assuming such to be the case, the question remains whether, in view oí the character of the injuries sustained by Grillon, the delay from March 1986 to the date in October 1967 when it learned that the suit had been filed, caused a likelihood of appreciable prejudice.

The record reveals not only that Allstate was aware that Grillon was taken to the Army hospital shortly after the accident, but also that it kept abreast of his physical condition by receiving copies of the Army medical records. On June 4, 1965 the Army issued its clinical record — a three-page, official document containing a comprehensive narrative summary of Grillon’s treatment up to the time of his discharge from the medical holding detachment on April 28, 1965.

This record shows that Grillon sustained a compound com-minuted fracture of the fibula and tibula of the right leg; that a cast was first applied to the injured leg, but that after the lapse of four months, when it became apparent that the bones were not uniting properly, it was necessary to perform a bone-grafting operation. In all, Grillon was compelled to undergo three separate operations. Postoperatively there were no complications. The record recites that the wound had healed satisfactorily and that Grillon was discharged from the medical holding detachment on April 28, 1965, fully ambulatory; that he had a slight limp and some residual atrophy in the calf and moderate joint stiffness, but no shortening in the leg.

It may well be that insurance carriers generally consider it to be important, in the defense of actions involving serious personal injury claims, to have their own doctors make a physical examination of the claimant within a reasonable time after the accident. However, it does not necessarily follow that, because it is a desirable company practice, it is, therefore, essential in every case. Nor does a delay in obtaining such an examination automatically demonstrate the existence of prejudice to the insurer in defending against such a claim.

Each case must turn on its own circumstances. Here, plaintiff offered no evidence that it suffered any prejudice merely because a medical examination was not made by its physician soon after the suit was started.

As this brief summary of the Army’s clinical records shows, plaintiff’s injuries were primarily orthopedic in nature. The details were fully revealed by X-rays and records by an agency, whose accuracy of assessment and disinterest is hardly open to question. Since Grillon remained in the military service until at least April 38, 1965, the date of his discharge, as ambulatory, from the medical holding detachment company, it is apparent that any controversy as to the extent of his claim for damages will revolve principally around the extent of his permanent injury. Proof of the claim for hospital charges of some $4,151, as to which the United States Army appears to have given notice of a third-party liability lien claim, would seem to be fairly routine. Such a situation differs vastly from one where the injuries largely involve subjective complaints, and where intermittent examinations may be of importance in testing their veracity.

Moreover, there is nothing in the proofs to show that an examination of Grillon now would not reveal the extent of his permanent injuries as fully as they would have been revealed by an examination immediately after the suit was commenced.

Allstate makes the subsidiary argument that it has sustained prejudice as to Grillon’s claim for temporary disability. It is. suggested that a physical examination at this time may not aid greatly in fixing the duration of any such temporary disability. The argument is that the duration of any temporary disability may require investigation among Grillon’s co-workers and supervisors, whether in the Army or in civilian life. It is also argued that a similar investigation among Grillon’s acquaintances may be necessary with respect to his claim for loss of income.

We note that the proofs in this case do not disclose whether, in fact, a claim is advanced for temporary disability or for loss of income, and the natnre and extent of any snch claims. Purthermore, the record is barren as to Grillon’s activities since his discharge from the hospital, his employment, whether Army or civilian, the nature of his present complaints and the details of his claim for damages. At best, discussion of prejudice sustained by the carrier as to these elements of damages is grounded not on proof, but rather on speculation and surmise.

Purthermore, although more than six months elapsed between the date when Allstate filed this action and the trial thereof in May 1968, the insurer appears to have attempted no pretrial discovery in an effort to determine whether any investigation among Grillon’s acquaintances as to these possible claims would have served any useful purpose. Nor does it appear that it made any attempt to ascertain whether relevant witnesses were still available. No proof at all was offered on this issue. We also note that Allstate specifically refrained, at the time of the pretrial conducted on April 3, 1968, from requesting a physical examination of Grillon, notwithstanding the fact that he was a party defendant in this action as well as plaintiff in the negligence action.

Under the circumstances, it can hardly be said that plaintiff has met the burden of persuasion imposed upon it of showing the “likelihood of appreciable prejudice” as to the temporary disability aspects of Grillon’s claim. As in the case of the claim for permanent injury, plaintiff’s claim of the likelihood of prejudice rests, as we have said, on mere speculation and surmise, and not upon proof which it had the burden of establishing.

Plaintiff’s failure to carry the burden of persuasion on the issue of prejudice as to any element of damages makes it unnecessary to consider the interesting question whether a showing of prejudice in relation to only one aspect of that claim, e. g., temporary disabilities, would serve to bar recovery for the whole of the claim, as opposed to only that specific element for which the requisite showing of prejudice has been established. Cf. Dziedzic v. St. John's Cleaners and Shirt Launderers, Inc., 53 N. J. 157 (1969).

Reversed.


author: Hokn, J. S. C.

text:
    HELEN S. WAGENHEIM AND HARRY H. WAGENHEIM, HER HUSBAND, PLAINTIFFS, v. J. TANEY WILLCOX, JR., CATHERINE E. WILLCOX, HIS WIFE, AND ROBERT E. RITTERHOFF, DEFENDANTS.
    Superior Court ol New Jersey Chancery Division
    Decided April 2, 1969.

      Mr. Nathan 0. Staller for plaintiffs (Messrs. Staller, Hay-man & Goreliclc, attorneys).

      Mr. W. M. Balliette, Jr. for defendants (Messrs. Oafiero and Balliette, attorneys).
   Hokn, J. S. C.

Plaintiffs, husband and wife, seek a mandatory injunction to compel defendants Willcox, likewise husband and wife, and their builder Robert E. Ritterhoff, to remove 1.9 feet of a covered porch on the second floor of the Willcox home located on Lot 16, Block 15A, in the Borough of Avalon.

The right to this relief is founded upon a restrictive covenant which reads as follows:

“No building shall be erected which will be closer than twenty-seven feet (27') from the south curb line of 15th Street of the Borough of Avalon.”

This covenant was created by David J. Kerr and his wife when they were the common owners and developers of the land in the area involved in this suit. It resulted from the request of plaintiffs when they acquired title to Lot 6, Block 15A in the development. Their agreement of sale stated that seller agreed to create the covenant in order to protect buyers’ view of the ocean.

Defendants Willcox acquired Lot 16, Block 15A, situate about 200 feet east of plaintiffs’ lands, and therefore lying between plaintiffs’ house and the ocean, about two years after plaintiffs’ purchase.

According to Mr. Kerr, the purpose of the restriction was not only to protect the view toward the ocean, but also to establish uniformity of and conformity with the set-back.

Defendants Willcox readily admit that measured horizontally their porch extends 1.9 feet within the 27 feet referred to in the covenant. They also admit that they had knowledge of the covenant at the time they acquired title to their premises. They urge, however, that alternatively there is no violation of the covenant, or that this court should deny the relief sought, because (1) the set-back line of 27 feet is the same as that contained in the zoning ordinance; that the covenant was made only to insure conformance with the zoning ordinance and therefore should be construed as the zoning ordinance which permits projections into the space up to two feet; (2) that measuring the leading edge of the floor of the porch on a diagonal line to the curb there is more than 27 feet; (3) plaintiffs are not entitled to relief because this small projection offers practically no obstruction to their view of the ocean and they suffer no harm or damage from its maintenance; (4) the language of the covenant should be construed to except porches from the prohibited space.

I disagree. Apart from the fact that Mr. Kerr, the builder, testified that the number of feet of set-back was selected by him somewhat arbitrarily and not because that was the set-back required by the zoning ordinance (indeed, he testified he thought the zoning ordinance set-back was only 35 feet) the covenant must be interpreted from its own terms and from the facts and circumstances surrounding its creation. Javna v. D. J. Fredricks, Inc., 41 N. J. Super. 353, 358 (App. Div. 1956). The surrounding circumstances disclose no factual or other basis by which one is persuaded to construe the covenant as if it were the zoning ordinance.

Apart from the fact'that defendants have not presented any authority for measuring the distance on a diagonal line, such method of measurement is unrealistic and lacks support by any fact in the case. To measure in the fashion suggested by defendants would make the validity of such obstructions depend on their height from the ground, rather than on whether the setback space is invaded. The suggestion therefore is artificial and unreasonable.

Kor can I accept the view that plaintiffs are not entitled to the enforcement of the terms of the covenant merely because allegedly they suffer no injury. Plaintiffs have testified that the projection of 1.9 feet, from their personal observations, has diminished their view to the ocean. In Supplee v. Cohen, 80 N. J. Eq. 83, 88 (Ch. 1912), affirmed 81 N. J. Eq. 500 (E. & A. 1913), defendants likewise contended that a restriction should not be enforced because no damage was proved. The court there said:

“But in eases of this class it is unnecessary for complainants to prove that damage is sustained by them. Kirkpatrick v. Peshine, 24 N. J. Eq. (9 C.E.Gr.) 206, 216; Morrow v. Hasselman, 69 N. J. Eq. (3 Robb.) 612, 615. The rights which accrue to complainants under a covenant of this nature are property rights in the restricted space.”

Additionally I conceive that if plaintiffs had failed to object or seek enforcement of their rights, they might be estopped later from claiming their existence or right to enforce us against others similarly affected.

Apart from the foregoing, it seems to me that the integrity of such covenants and contracts in general require parties who purchase with knowledge of same to comply. This is so, especially where, as in this case, defendants do not advance any valid, plausible excuse for the violation. See Gilpin v. Jacob Ellis Realties, Inc., 47 N. J. Super. 26 (App. Div. 1957).

Defendants rely on Ocean City Land Co. v. Weber, 83 N. J. Eq. 476, 477 (Ch. 1914), affirmed in 84 N. J. Eq. 505 (E. & A. 1915) in support of their contention that the language of the covenant must be construed to except porches from its prohibition. In this case the covenant declared “that no building, of any description whatever, shall at any time be erected within ten feet of the front line of said avenue.” The court refused to enforce it because the physical surroundings made it confusing as to what street was referred to in the use of the word “avenue.” The lower court also stated, at page 478:

“* * * Whether the language above quoted includes covered porches as a part of a building may be said to be within the field of doubt * * * and any uncertainty of meaning of the covenant in that respect further contributes to render its enforcement impossible in this court. * * *”

Cited as authority for this statement were Meaney v. Slork, 80 N. J. Eq. 60 (Ch. 1912), affirmed. 81 N. J. Eq. 210 (E. & A. 1912), and Supplee v. Cohen, supra.

A review of these cases leads me to believe that the quoted statement was too sweeping or must be understood from the perspective of the surrounding facts. Meaney v. Stork, supra, involved a covenant restricting erection of a building within ten feet of the street line. Plaintiff sought to restrain the projection of eaves and steps within the set-back space. During an earlier part of the construction defendant deleted projecting bay windows at the instance of plaintiff, at which time plaintiff failed to object to eaves, although he knew that they would also extend into the space. The court withheld the relief by reason of the estoppel of the complainant. Vice-Chancellor Garrison found that the projection of the steps was not in violation of the covenant as he construed it. He stated specifically at page 67:

“I am of the opinion, on the one hand, that if the front of the building was ten feet from the line of the street and then a covered porch projected from it on to the ten feet, that would be part of the erection of the building, and would violate the covenant.”

The affirming opinion withheld approval of this statement because the record showed that there were other buildings in the tract having similar porches and “this fact establishes either a contemporary construction by the parties concerned * * * or an abandonment of the restriction in that respect.” The other Hew Jersey ease cited, Supplee v. Cohen, supra, involved a covenant that no building should be erected upon the lot adjoining complainants’ premises on the west nearer than three feet from the party line between the lots. Defendants, in erecting the house, permitted eaves and other parts from and above the second floor level to extend into the area some 17 inches. The Court of Errors and Appeals affirmed the judgment granting a mandatory injunction requiring defendants to remove the protrusions. Defendants had contended that the restriction touching the distance the “building” should be erected from the line must be understood to refer to the main body of the building and not to overhanging bay windows or eaves. The court rejected that argument, saying (80 N. J. $q. 83, 86) :

“The language used is entirely clear and exact and certain in its meaning, and in the absence of some circumstance sufficient to disclose that the parties used the language adopted by them in a restricted sense the covenant must be understood in accordance with the natural import of the language used.”

And at page 87 :

“* * to read into such a covenant a reservation that it shall apply only to the main body of the building and shall not apply to projecting bay windows or eaves is clearly without justification unless circumstances exist to warrant the conclusion that such a reservation was intended by the parties.”

See also Hemsley v. Marlborough Hotel Co., 65 N. J. Eq. 167 (Ch. 1903), reversed on other grounds Hemsley v. Marlborough House Company, 68 N. J. Eq. 596 (E. & A. 1905), and Wahl v. Stoy, 72 N. J. Eq. 607 (ch. 1907).

In Loudenslager v. Pacific Improvement Company, 93 N. J. Eq. 218 (E. & A. 1921) the restrictive covenant provided that private dwellings only should be built on the lots referred to, and that no portion of any building should be erected on the lots within three feet of the rear dividing line of any lot, nor, except porches and steps, within 18 feet of the front property line. The court said, at page 219:

“® * ® I am unable to discern any difference between building parts of a hotel on and extending parts of a hotel building over a tract of land on which a hotel cannot be built; nor am I able to discern, except in degree, any difference between extending parts of a hotel over land on which a hotel cannot be built ten inches and ten feet. * * *”

I have considered Gilpin v. Jacob Ellis Realties, Inc., supra, which dealt with the question of what variables will affect the issuance of a mandatory injunction to enforce a restrictive covenant. None of the considerations favoring defendants referred to in that case are found in the instant case. Defendants had ample notice of the violation in time to comply with the covenant. I believe that they decided to preceed on the theory that if they were compelled to remove it, the work entailed a cost not in excess of $300.

Eor the reasons given, I find that defendants have violated the restrictive covenant without reasonable cause or excuse and, accordingly, a mandatory injunction will issue directing them to remoye the protruding portion of the porch withhin 30 days of the date that judgment is entered.

Plaintiffs’ counsel is directed to submit a form of judgment pursuant to the rules, and include therein a direction that costs shall go to plaintiffs.


author: Antell, J. C. C.

text:
    JOHN B. KEENAN, SUPERINTENDENT OF ELECTIONS OF ESSEX COUNTY, AND COMMISSIONER OF REGISTRATION OF ESSEX COUNTY, WITHIN THE STATE OF NEW JERSEY, AND LESTER E. MAHR, LEGAL ASSISTANT TO THE SUPERINTENDENT OF ELECTIONS AND ADMINISTRATIVE ASSISTANT TO THE COMMISSIONER OF REGISTRATION OF ESSEX COUNTY, PLAINTIFFS, v. THE BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF ESSEX, A BODY POLITIC OF THE STATE OF NEW JERSEY; HENRY A. PEER, TREASURER OF SAID COUNTY, AND THE CIVIL SERVICE COMMISSION OF NEW JERSEY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided March 21, 1969.
    See also 101 N. J. Super. 495.

      Mr. Herman W. Kapp, attorney for plaintiff.

      Mr. Irwin I. Kimmelman, Essex County Counsel, argued the cause for defendants.
   Antell, J. C. C.

(temporarily assigned). Plaintiff John B. Keenan is the commissioner of registration and superintendent of elections of Essex County. In this action in lieu of prerogative writs both he and co-plaintiff, Lester E. Mahr, seek relief from certain refusals of the county treasurer and the county board of chosen freeholders to pay Mahr’s salary under appointments of the commissioner of registration. The refusals are defended on the ground that the appointments are unauthorized.

A member of the New Jersey bar since 1924, Mahr was appointed counsel to the commissioner of registration and superintendent of elections of Essex County effective November 1, 1940. On or about January 16, 1944 he was appointed legal assistant to plaintiff Keenan’s predecessor in office and served in that capacity until June 27, 1968. By appropriate action he was certified as eligible for civil service status and was thereafter classified by the Department of Civil Service as a permanent employee. The effective classification date is June 1, 1952.

On June 27, 1968, defendant board of chosen freeholders, by resolution No. 37, directed defendant county treasurer to discontinue salary payments to Mahr or any other person who might be appointed to the position of legal assistant in the office of commissioner of registration and superintendent of elections, and to remove Mahr’s name from the county payroll. No salary payments have since been made, although Mahr regularly reports for duty and renders services substantially the same as those prior to June 27.

Eor reasons set forth by this court in Keenan v. Essex County Board of Chosen Freeholders, 101 N. J. Super. 495 (Law Div. 1968), I conclude that the position of legal assistant to which Mahr was appointed in 1944 never enjoyed legal existence and that he may not lawfully act in such a capacity. The application for his restoration to the payroll as a legal assistant is therefore denied. There can be no judicial restoration to a position which was never legally created. Kovalycsik v. City of Garfield, 58 N. J. Super. 229, 239 (App. Div. 1959). It follows that the tenure provisions of the Civil Service Act are not available to Mahr since these inure solely for the benefit of those who are lawfully in the employ of a governing body. Handlon v. Town of Belleville, 4 N. J. 99, 109 (1950); Grunewald v. Township Committee of Weehawken Tp., 18 N. J. Super. 401 (App. Div. 1952), certification denied 10 N. J. 145 (1952). One who was appointed to a nonexistent office is no better off in terms of job protection than one whose lawfully created position was abolished in good faith. In the latter situation it has been held that civil service security does not prevail. Kraibuehler v. Civil Service Commission, 134 N. J. L. 97 (Sup. Ct. 1946); Scowcroft v. Civil Service Commission, 13 N. J. Misc. 448, 177 A. 679 (Sup. Ct. 1935); 4 McQuillin, Municipal Corporations (3rd ed. 1968), § 12.248(d).

On June 28, 1968, the day following the passage of resolution No. 37, plaintiff Keenan, purporting to exercise his statutory powers, appointed Mahr to the position of administrative assistant in the office of commissioner of registration and accompanied this action by filing with defendants a “Request for Personnel Action” which described the duties of this position. Defendants again refused to meet the salary expense thereof.

Plaintiffs argue that this appointment is in all respects valid under N. J. S. A. 19:31-2, which, in pertinent part, provides that the commissioner of registration

“* * * shall have power to appoint on a permanent, or temporary basis, such number of persons, as in his * * * judgment may be necessary in order to carry out the provisions of this Title,”

and that under the seventh paragraph of that section the county treasurer must pay the resulting salary expense, subject only to the $655,000 budget ceiling prescribed by N. J. 8. A. 19:32-2. Defendants answer that the appointment violates the principle applied in Keenan v. Essex County Board of Chosen Freeholders, supra, since the duties of the new position do not significantly vary from those performed by Mahr as legal assistant. Also, it is said that the appointment assumes sole prerogatives of the Attorney General and exceeds the commissioner’s statutory power.

An understanding of the contentions is aided by the following comparison of duties contemplated by the 1968 appointment as administrative assistant with certain of those contained in the 1952 Civil Service job description for what I have held is the unauthorized position of legal assistant. The latter document has been marked in evidence.

Legal Assistant

Confers with the Attorney General, prosecutor’s office, police departments, county clerk, county board of elections, municipal clerks and public officials concerning the conduct of elections and violations of the election law.

Analyzes legislation introduced affecting the election law and confers with members of the Legislature.

Maintains contact with election officials in the State in order to maintain standard practices.

Prepares legislation for the office.

Administrative Assistant

Confers with county board of elections, municipal clerks and public officials concerning the conduct of elections.

Analyzes pending legislation which concern this office * * * confers with members of the Legislature concerning legislation affecting the office.

Maintains contact with election officials in the State in order to maintain uniform practices.

Performs such other duties as may be assigned to him by the commissioner of registration.

Although certain duties, clearly of a legal nature, which he performed as a legal assistant have been omitted from the new position, the similarity of the two jobs is strikingly enhanced by Mahr’s testimony that since at least 1952 approximately 95% of his working time in the commissioner’s office was devoted to legislative work, “call it lobbying if you will.” The remainder was occupied with legal work, and this only on election days. Since the latter services are to be discontinued, his status will now be solely that of the commissioner’s legislative representative. In this capacity he is chiefly required to be present at Trenton at all times when the Legislature is in session and there attend to all pending legislation involving or touching upon Election Law policy and the interests of the citizens of Essex County, taking such action to deter or expedite passage thereof as may be suitable. At the same time he serves on retainer as the legislative representative of an unspecified number of private clients whose interests are also the subject of his attention in Trenton.

Although the duties of the two jobs closely coincide, and even though it is evident that nothing has really changed except the job title, this alone does not mandate the conclusion that the commissioner is merely reappointing his legal assistant in borrowed plumes. While he may have done lobbying as a legal assistant it does not follow that lobbying can be done only by a legal assistant. Legal training and experience are useful adjuncts to lobbying work, but they are not required and the field is open to non-lawyers.

Uor is the appointment vitiated by N. J. S. A. 52:17A-4(e), which designates the Attorney General as the sole legal adviser for all state officers and reserves exclusively to that official the right and obligation to “interpret all statutes” for their guidance. Perhaps, as the county counsel reasons, “interpretation” is necessarily intrinsic to the “analysis of pending legislation,” but this brings the duties of the proposed appointment into fatal collision with the statute only if the word “interpret” is intended to encompass every level and variety of interpretation. In a broad sense, verbal symbols always require a process of interpretation. In and of themselves words embrace only the most generalized of meanings, and it is only when they are examined in terms of context and situational referents — i. e., interpreted —■ that they acquire meaningful identity. Carroll, Language and Thought pp. 41-42 (1964) ; Hayakawa, Language in Thought and Action pp. 61-63 (1949) ; Ogden & Richards, The Meaning of Meaning (rev. ed. 1956) ; 2 Sutherland, Statutes and Statutory Construction (3rd ed. Horade, 1943), § 4504, pp. 319-330; 9 Wigmore, Evidence (3rd ed. 1940), § 2470(3), p. 227.

If read literally to preempt to the Attorney General the right of interpretation in its broadest meaning, as county counsel urges we do, the foregoing statute would effectively immobilize the operation of every state office. Charged as they are with responsibility for administering multitudes of statutory directives, even their most routine functions, no matter how plainly prescribed by the Legislature, would have to be deferred pending formal determinations by the Attorney General. I do not read this statute to have intended so awkward a result. See State v. Gill, 47 N. J. 441, 444 (1966). Statutes should be read sensibly so as to be consistent with reason and good discretion, Schierstead v. City of Brigantine, 29 N. J. 220, 230 (1959), and it is often true that the surest way to misconstrue a statute is to read it literally. N. J. State Board of Architects v. Armstrong, 89 N. J. Super. 358, 360 (App. Div. 1965). The more reasonable understanding of the statutory language is that the Attorney General shall “interpret all statutes” where, at the very least, the functional meaning of a law is so uncertain that the legislative intent can bo achieved only by the application of professional skills and disciplines for the construction and interpretation of statutes. Since such techniques are inapplicable to statutes which are plain and unambiguous, Watt v. Mayor, etc., of Franklin, 21 N. J. 2274, 277 (1956), and bearing in mind that words and phrases in a statute are ordinarily to be given their generally accepted meaning, according to the approved usage of the language, N. J. S. A. 1:1-1, I conclude that the analysis of pending legislative measures does not necessarily encroach upon the prerogatives of the Attorney General. Clearly, there is an area of discretion here within which the commissioner is free to make choices, to draw lines, to decide when legal guidance is needed for the interpretation of a statute, and I will not assume that he will disregard his obligation to seek counsel from the Attorney General where circumstances fairly warrant. His good faith is to be presumed. N. J. Highway Authority v. Currie, 35 N. J. Super. 525, 532 (App. Div. 1955).

A somewhat analogous question was posed in Commonwealth ex rel. Woodruff v. Lewis, 282 Pa. 306, 127 A. 828 (Sup. Ct. 1925). A number of state agencies had requested that the Auditor General make payment to certain of their claimed creditors. He refused on the ground that payment was not due. He also refused to submit the validity of the claims to the Attorney General, notwithstanding a statute requiring all state agencies and officials to request his advice when "any legal difficulty or dispute arises * * In an action by the Attorney General to compel submission of the question to him, the court held that it would be an unreasonable interpretation of the statute to require the Auditor General to submit "every question of law which arises in the ordinary transaction of the duties of the office,” but that such action should be taken (1) where administrative questions of a legal nature arise affecting the harmony between state agencies; (2) where doubtful legal questions are presented which had not been previously passed upon which affect a state officer’s performance of official duties, and (3) in situations likely to result in litigation in which the state is interested. (at p. 832). To the extent that it rejects a rigid and literal reading of this kind of statute, the opinion furnishes support for the result reached here.

The narrow question to be decided is whether defendant county treasurer is required, under the seventh paragraph of N. J. S. A. 19 :31-2, to pay Mahr’s salary as administrative assistant in the job described, as part of the “necessary expenses incurred” in the management of the commissioner’s office. If this appointment is authorized by the statute, then the salary becomes part of the necessary expenses. In resolving the question I note again that the third paragraph of that section authorizes the commissioner to appoint “such number of persons, as in his * * * judgment may be necessary in order to carry out the provisions of this Title” (emphasis ours). The propositional phrase “as in his * * * judgment” modifies “such number of persons.” Therefore, the commissioner appears to be vested with unlimited discretion as to the unit number of persons he may appoint. But he is not given comparable authority as to the purpose for which the appointments may be made. As to this, an objective, though flexible, standard is provided, i. e., “may be necessary in order to carry out the provisions of this Title,” and he may make appointments for this purpose only. In connection with the provisions of Title 19, the duties of the commissioner appear to be entirely administrative, investigative and ministerial in nature. See the partial synopsis in Keenan v. Essex County Board of Chosen Freeholders, supra, at pp. 499-500. While some degree of discretion is naturally implicit in formulating job assignments, it is inconceivable how the services of a legislative representative in the state capitol may be necessary for this state official to carry out such duties. Dor this reason I conclude that the appointment falls outside the commissioner’s defined appointive powers and is therefore unauthorized.

Even if the statute expressly left to the commissioner’s “judgment” what services are necessary for this purpose, this would still not imply unlimited discretion; it would still be circumscribed by its stated purpose of carrying out the provisions of Title 19, and appointments made thereunder would still be required to have at least a rational bearing upon the provisions to be carried out. The official conduct of a public officer may not overflow the reasonable limits of his legal discretion. Driscoll v. Burlington-Bristol Bridge Co., 8 N. J. 433, 474-475 (1952) ; 3 Am. Jur., Public Officers, § 291, p. 101. Where, as here, it unmistakably appears that even the most vigorous and imaginative theorizing cannot relate, even colorably, the proposed services in any way to any of the statutory provisions to be carried out, I would conclude that the commissioner had wrongly measured the remotest limits of the supposed discretion and that the salary attendant upon such an appointment could form no part of the “necessary expenses” which must be paid by the county treasurer.

But plaintiffs maintain that the necessity of the services to be rendered is not a question which under any circumstances may be open to consideration in this forum; that N. J. S. A. 19 :31-2 plainly ordains that “all necessary expenses incurred, as and when certified and approved by the commissioner of registration * * * shall be paid by the county treasurer of the county” (emphasis ours); that the necessary certification has here been submitted by the commissioner, and that there is no power on the part of defendants to look behind the certification to determine the necessity of the expenses or the propriety with which the commissioner exercised his discretionary powers.

Statutory provisions of this kind, whereby an agency is authorized to requisition operating revenue to be appropriated by a municipal or county governing body without any corresponding responsibility on the part of the agency to the latter, are not uncommon. Under such arrangements it is settled that the appropriating body is not empowered to review and modify to its satisfaction the budgetary certifications of the requisitioning agency. It has a mandatory duty to provide the money's requested. Nolan v. Fitzpatrick, 9 N. J. 477, 482-483 (1952); Grosso v. City of Paterson, 33 N. J. 477, 481 (1960). The rule is particularly apposite where, as here, the Legislature obviously intended to confide to the requisitioning agency “large and unusual determinative powers,” Barringer v. Miele, 6 N. J. 139, 143 (1951), “to prevent the offices of the superintendent of elections and the commissioner of registration from being financially crippled by an unsympathetic or a hostile board.” Sewell v. Board of Chosen Freeholders of Hudson County, 126 N. J. L. 186, 189 (Sup. Ct. 1941); MacPhail v. Board of Chosen Freeholders, 6 N. J. Super. 613, 618 (Law Div. 19-50).

But this does not mean that the commissioner’s certification of necessary expenses is totally inviolate. In Nolan v. Fitzpatrick, supra, the Boulevard Commissioners of Hudson County requisitioned operating funds under a statute which directed that the board of chosen freeholders shall thereupon provide the money for the use of the commissioners and that the board “shall have no control over the fund.” One question raised by the board of chosen freeholders, in an action brought to compel payment, concerned the legality of certain budgeted expenditures in the requisition. The issue was evidently raised for the first time on appeal and thus was not adjudicated by the Supreme Court. However, Chief Justice Vanderbilt noted, 9 N. J., at page 484, that the legality of the expenditures presented “questions of law which can be settled only by appropriate legal proceedings,” recognizing that the legality of the expenditures may indeed be questioned, albeit “only by appropriate legal proceedings”; and it was pointed out that the board of chosen freeholders could attack the annual requisition directly by an action in the courts. But, as the late Chief Justice carefully observed in the same paragraph, this does not give the board “power to take the law into its own hands, for to do so would defeat the clear legislative intent.”

We are dealing, therefore, with a legislative policy clearly intent on guarding against any curtailment in the operation of the commissioner’s office by an interruption of funds —• even at the risk of instances where some public moneys may be irregularly disbursed until court determination as to the legality thereof is secured. The demands of procedural correctness here required the county to perform its unequivocal duty to pay the certified necessary expenses and thereafter seek its revisions or deletions.in an independently instituted action. However, plaintiffs have not requested an adjudication in their favor on this ground. The matter has been fully briefed and argued and submitted almost entirely on facts which were either stipulated or undisputed. At no time was interlocutory relief, in the form of summary judgment or an order striking defenses, sought by plaintiffs, and although the case was pretried in October 1968, the plenary hearing was deferred until mid-Eebruary 1969 at their instance. I am of the view that no useful purpose can now be advanced by disposing of the matter on adjective grounds and awaiting a re-presentation of the meritorious issues, which are of public importance, in another proceeding to be brought by defendants. However, the parties should be placed as nearly as possible in the position they would have occupied had the proper procedural steps been followed.

Since, as I have said, the commissioner was unconditionally entitled to have the salaries of his appointees paid pending judicial determination to the contrary, and since it is not disputed that Mahr has been regularly serving the commissioner since the date of his severance from the payroll, I will adjudge that payment be made to him for all salary accruing during the interval between June 28, 1968 and the date of this opinion, but not thereafter.

Mahr also seeks to have the doctrine of equitable estoppel applied against the county to bar it from repudiating its course of conduct over the years in paying his salary. He bases this application upon the fact that he rejected retainers over the years from prospective private clients as a legislative representative because his position with the county often left him with insufficient time to care for the requirements of new accounts.

Feldman v. Urban Commercial, Inc., 70 N. J. Super. 463, (Ch. Div. 1961), sets forth the following essential elements of an equitable estoppel:

“(1) there must be conduct — acts, language, or silence — amounting to a representation or a concealment of material facts; (2) these facts must be known to the party estopped at the time of his said conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him; (3) the truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when such conduct was done, and at the time when it was acted upon by Mm; (4) the conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon; (5) the conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it; (6) he must in fact act upon it in such a manner as to change his position for the worse; in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party’s being permitted to repudiate his conduct and assert rights inconsistent with it.” (Emphasis added, at pp. 474^475)

See also Clark v. Judge, 84 N. J. Super. 35, 54 (Ch. Div. 1964), affirmed 44 N. J. 550 (1965).

Doctrines of estoppel are not applied against the State and its counties to the same extent as they are against individuals and private corporations. City of Bayonne v. Murphy & Perrett Co., 7 N. J. 298, 311 (1951); see also Adler v. Dept. of Parks and Public Property, Irvington, 20 N. J. Super. 240, 243 (App. Div. 1952).

Here there was no misrepresentation or concealment of material fact. Indeed, all the facts of the matter were at least as well known to Mahr as by defendants. He complains only that over a period of years the county wrongly paid his salary while he held a legally nonexistent job. It was at all times open to him to examine the lawfulness of the county’s action in this respect and make his own assessment with respect thereto. Having failed to do so, he acted at his peril in anticipating that he could not be lawfully removed from the position. E. g., V. F. Zahodiakin Engineer ing Corp. v. Zoning Board of Adjustment of City of Summit, 8 N. J. 386, 396 (1952). Nor do I find that the fourth requisite has been shown. There is no evidence to suggest that the county should have reasonably foreseen that by paying his salary for this unique employment Mahr would be induced to limit his private clientele. Under the circumstances the doctrine of equitable estoppel does not apply.