author: Gelman, J. S. C.,

text:
    RONALD BEEK, PLAINTIFF, v. OHIO CASUALTY INSURANCE COMPANY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided January 8. 1974.

      Mr. Richard H. Wildstein for plaintiff. (Messrs. Gelman and Gelman, attorneys).

      Mr. Thomas M. Guiney for defendant. (Messrs. DeYoe, DeYoe & Guiney, attorneys).
   Gelman, J. S. C.,

Temporarily Assigned. Plaintiff Ronald Beek moves for summary judgment directing defendant Ohio Casually Insurance Company (Ohio) to proceed with arbitration of plaintiff’s claim under an uninsured motorist (TIM) endorsement.

Beek was the owner of a 1970 Ford automobile on which Ohio issued a liability policy containing UM coverage effective for a onc-year term from October 22, 1969. On June 13, 1970 Beek was seriously injured while operating a motorcycle which was involved in an accident with an uninsured motorist. Beek had purchased liability insurance coverage for the motorcycle from Reserve Insurance Company. The Reserve policy also contained a UM endorsement and Reserve paid Beek the full amount of its coverage ($10,000) under its policy.

For the purposes of this motion it is conceded that Beek would be entitled to recover from the uninsured motorist an amount in excess of that which he was paid under the Reserve policy. He claims that Ohio is obligated to pay to him such excess liability of the uninsured motorist up to the limits of the UM coverage afforded by the Ohio policy, for which Ohio charged him and he paid a separate premium.

Ohio contends that its policy does not furnish coverage for Beek’s claim because of the following language contained in the exclusions clause of the UM endorsement:

Exclusions
This insurance does not apply:
* e * * •*' * =s *>
(b) to bodily injury to an insured while occupying a highway vehicle (other than an insured highway vehicle) owned by the named insured, any designated insured, or through being struck by such a vehicle, but this exclusion does not apply to the named insured or his relatives while occupying or if struck by a highway vehicle owned by a designated insured or his relatives.

The above-quoted language excludes coverage if Beek was injured while occupying another vehicle owned by him, but .the exclusion is in turn subject to two exceptions: (1) if the second vehicle occupied by the named insured is “an insured highway vehicle,” or (2) if the second vehicle occupied by the named insured is owned by a “designated insured or his relatives.”

As to the first exception defendant urges that BeelPs motorcycle is not an insured highway vehicle by reason of section Y, captioned “Additional Definitions” and which provides in part:

* * * “insured highway vehicle” means a highway vehicle: * * * (e) while being operated by the named or designated insured or by the spouse of either if a resident of the same household; but the term “insured highway vehicle” shall not include: * * * under sub-paragraphs (b) and (c) above, a vehicle owned by the named insured, any designated insured or any resident of the same household as the named or designated insured * * *.

Since the motorcycle was owned by Beek, it is not “an insured highway vehicle” as that term is defined in the policy, and the first exception therefore does not apply.

As to the second exception, it applies to the named insured but only if injured while occupying a vehicle owned by a designated insured, which is not the ease here, since the motorcycle was owned by Beek who is the named, not a designated, insured under the Ohio policy. While the structure of the policy and the language employed to accomplish the claimed exclusion is subject to criticism, the basic intent of the insurer is clear and unambiguous: to deny coverage to the named insured under all circumstances if he is injured in a nonseheduled vehicle owned by him.

Plaintiff contends that the blanket exclusion from UM coverage for injuries sustained while occupying a second owned vehicle violates the intent and purpose of the Legislature in enacting N. J. S. A. 17 :28—1.1. The statute requires that

No automobile liability policy or renewal of such policy, of insurance insuring against loss resulting from liability imposed by law for bodily injury or death, sustained by any person arising out of the ownership, mainl enanco or use of a motor vehicle shall be delivered or issued for delivery in this State * * * unless coverage is offered in connection therewith, in limits for bodily injury or death set forth in N. J. S. A. 39:6-69] * * * for payment of all or part of the sums which the insured or his legal representative shall he legally entitled to recover as damages from the operator or owner of an uninsured automobile, or hit and run automobile * * * because of bodily injury *' :i" w sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or hit and run automobile * * *.

The argument is that a policy which denies coverage in contravention of a declared legislative edict that such coverage he afforded, must be deemed amended so as to conform to the legislative requirements. Selected Risks Ins. Co. v. Zullo, 48 N. J. 362 (1966); Kish v. Motor Club of Amer. Ins. Co. 108 N. J. Super. 405 (App. Div. 1970), certif. den. 55 N. J. 595 (1970) ; Willis v. Security Ins. Group, 104 N. J. Super. 410 (Ch. Div. 1968), aff’d 53 N. J. 260 (1969); McFarland v. Motor Club of Amer. Ins. Co., 120 N. J. Super. 554 (Ch. Div. 1972).

In McFarland the court was also concerned with the interpretation of a UM endorsement which denied coverage under the insured’s policy where he had been paid the statutory UM minimum by the insurer of the vehicle in which he was a passenger. The policy in McFarland provided “excess” coverage only to the extent that the insured’s own UM coverage limits exceeded the UM coverage provided by the primary insurance. Since both policies were issued with statutory minimum limits, the McFarland insurer rejected the claim that its policy furnished any excess coverage. The court held that the policy was in conflict with N. J. S. A. 17:28-1.1, in that the Legislature mandated UM coverage not limited to the statutory minimum afforded by N. J. S. A. 39: 6-69, but for “all” sums which the insured might be entitled to recover to the limits of available insurance. The court concluded that

Where an insured’s loss exceeds the limits of one policy, he may proceed against.other available policies. * * * [T]his court will not permit an insurer to escape its statutorily imposed liability by including in its policy a limiting clause which prevents the insured from receiving coverage he has paid for. [At 563]

As applied to the facts here, McFarland’s reasoning would require amendment of the Ohio policy to furnish coverage to the named insured regardless of his ownership of the vehicle involved in the accident.

The basic question posed in McFarland and here is whether the legislative policy reflected in N. J. S. A. 17:28-1.1 requires insurers to offer UM coverage which permits “stacking” of coverages under multiple policies so as to permit insureds to recover the full monetary value of their claims against uninsured motorists. Ohio contends that the legislative purpose underlying N. J. S. A. 17:28-1.1 does not have so broad a reach. It is urged that the statute was intended only to ensure that policy holders would be offered UM protection in limits corresponding to the amounts fixed by the Legislature in the Unsatisfied Claim and Judgment Fund Law, N. J. S. A. 39 :6-61 et seq. As a consequence, insurers are free to offer UM coverage containing provisions which preclude stacking where multiple policies are issued to the same individual covering more than one vehicle under the same ownership.

In support of this view Ohio relies on Allstate Insurance Co. v. McHugh, 124 N. J. Super. 105 (Ch. Div. 1973). In McHugh the insured owned two vehicles, both of which were insured by Allstate under one policy containing two declaration sheets, and UM coverage in the statutory minimum amount was included for each vehicle. The insured was injured in an automobile accident with an uninsured motorist while operating one of the insured vehicles, and claimed that he was entitled to collect double UM coverage because he had paid two premiums. The court rejected this contention because in its view the purpose of N. J. S. A. 17 :28—1.1 was to ensure coverage only to the extent of the recovery limits set forth in the Fund Law, supra. The court in McHugh acknowledged that while insurers could voluntarily enlarge the limits of UM coverage,

* * * any increase in the limits of liability should be expressed in the policy and not imposed upon an insurance company by a tortured construction of either the policy or the statute. [124 N. J. Super, at 111]

As noted in McHugh, several jurisdictions 'have dealt with the problem of stacking uninsured motorist coverage and have come to different conclusions. Two Pennsylvania cases, not cited in McHugh, illustrate the diversity of the opinions elsewhere. In Bankes v. State Farm Mutual Auto. Ins. Co., 216 Pa. Super. 163, 364 A. 2d 197 (Super. Ct. 1970), the named insured was killed in an accident with an uninsured motorist while operating a motorcycle he owned but which was uninsured. The court construed an exclusions clause, similar to the one present here, as being in conflict with the legislative policy embodied in the Pennsylvania equivalent of N. J. S. A. 17:38-l.l because it extended the exclusion to include an owned motorcycle as well as other owned automobiles. The court stated

* * * the provisions of the uninsured motorist act must be liberally construed so that innocent victims will be protected from irresponsible drivers. The intent of this act is that an insured recover those damages which he would have received had the uninsured motorist maintained liability insurance. [264 A. 2d at 199-200]

In Nationwide Mut. Ins. Co. v. Ealy, 221 Pa. Super. 138, 289 A. 2d 113 (1972), the same court had before it a claim made by the named insured who had five separate policies containing UM coverage, each policy insuring a separate automobile. Each policy contained a provision excluding from its coverage other vehicles owned by the insured. The insured was injured while occupying one of the insured automobiles as the result of an accident with an uninsured motorist, and he sought to stack the coverage of all of the policies. The court rejected the claim, stating:

The above-quoted [Pennsylvania Uninsured Motorist] act has as its purpose the protection of innocent victims from irresponsible drivers. * * * The primary thrust of the act is to insure that the innocent victims are not left completely uncompensated. Accordingly, insurance companies are required to provide at least minimal uninsured motorist coverage for their insureds. However, nothing in the act authorizes insureds to cumulate their individual coverages in order to exceed the minimum coverage required by law. Since in the present case the appellees contractually agreed not to cumulate the coverages on their five vehicles, and since they will still be afforded recovery on one of the policies in compliance with the minimum standards set by the state, we find that they cannot recover on the other four policies covering the vehicles not involved in the accident. [289 A. 2d at 115]

The court went on to distinguish BanTces on the ground that a contrary interpretation in that case would have resulted in a denial of any recovery at all, which it deemed to be contrary to the essential purposes of the act.

The reasoning of the court in Ealy is consistent with McHugh and finds support in the limited legislative history available with respect to N. J. S. A. 17:38—1.1. See Obst v. State Farm Mut. Auto. Ins. Co., 133 N. J. Super. 60 (Ch. Div. 1973); Hannan v. Employers Commercial Union Ins. Co, 117 N. J. Super. 485 (Law Div. 1971); Exum v. Marrow, 112 N. J. Super. 570 (Law Div. 1970). In each of the cited cases the court noted that the legislative purpose in enacting N. J. S. A. 17:38-1.1 was to relieve the Unsatisfied Claim and Judgment Eund from the financial burden of meeting the growing number of claims being made against the Eund. By requiring insurers to offer UM coverage in limits at least equal to the Eund’s liability as part of the automobile liability insurance package, the Legislature effectively eliminated the Fund’s liability to the extent that policyholders did not reject the coverage. Exum v. Marrow, supra at 575.

The legislative intent to use N. J. S. A. 17:28—1.1 to protect the financial viability of the Fund is also manifest in the recent amendment of that statute in which the limits of TJM coverage to be included in the liability package were increased to $15/30,000 to correspond with legislation increasing the Fund’s liability. See L. 1972, c.c. 198, 204. It is apparent that the objective of the statutory scheme is not to compel UM coverage in such form as to maximize a policyholder’s recovery in the uninsured motorist situation, but only to ensure recovery by the insured motorist in such amount as will avoid liability on the part of the Fund. It would follow, therefore, that the exclusions clause of the Ohio policy here is not violative of any legislative command and it should be applied as written.

Judgment will be entered dismissing the complaint without costs. The attorney for the defendant shall submit the order in accordance with B. 4:42-1.


source: Caselaw Access Project

author: Horn, A. J. S. C.

license: Public Domain

text:
    FRANCIS X. SCHAD AND MARIE SCHAD, HIS WIFE; MILDRED M. HASSLER, GEORGE A. KLITSCH, JR., AND BESSIE KLITSCH, HIS WIFE; WILLIAM J. THIEDE AND DOROTHY H. THIEDE, HIS WIFE; JOHN DONNELLY AND MRS. JOHN DONNELLY; DAUGHTERS OF THE MOST HOLY REDEEMER, INC.; JOSEPH D’ANGELO AND KATHERINE F. D’ANGELO, HIS WIFE; G. STEFANO AND A. STEFANO; EUGENE SPIEGEL AND MRS. EUGENE SPIEGEL; GEORGE T. COLLINS; WILLIAM D. RILEY AND JEANNE D. RILEY, HIS WIFE; FRANK L. TAVANI AND MARY R. TAVANI, HIS WIFE; MARY G. HAFFEY; MARY ANN DONAHUE; FRANCIS ROMMELMAN, AND E. A. ROMMELMAN; CATHERINE M. GRIFFITH, AND EDWARD J. GRIFFITH, HER HUSBAND; J. McKEE; JAMES J. COONEY AND HELEN J. COONEY, HIS WIFE; MARY V. DELANEY; R. GLEMSER; STANLEY J. BEDNAREK AND REGINA M. BEDNAREK, HIS WIFE; JOAN LEDDY; GEORGE B. RAMSEY; THOMAS A. DORIS AND HELEN H. DORIS, HIS WIFE; J. KING; ABRAHAM L. FREEMAN AND ARLENE M. FREEMAN, HIS WIFE; JOHN U. SALZMANN AND MARY M. SALZMANN, HIS WIFE; ANTHONY J. EDWARDI AND MARY V. EDWARDI, HIS WIFE, PLAINTIFFS, v. CITY OF SEA ISLE CITY; FREDERICK FOURQUREAN; DAVID A. FARINI, AND ALBERT WEISS, COMMISSIONERS OF ASSESSMENT OF THE CITY OF SEA ISLE CITY, JOINTLY, SEVERALLY OR IN THE ALTERNATIVE; DOMINICK C. RAFFA; ALFRED P. LIGNELLE AND WILLIAM R. WILSEY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided February 26, 1974.

      Mr. Anthony D. Buonadonna for plaintiffs (Messrs. Tuso and Gruccio, attorneys).

      Mr. Norman L. Zlotnick for defendants (Messrs. Perskie and Callinan, attorneys).
   Horn, A. J. S. C.

Cross-motions for summary judgment are before me. Plaintiffs are landowners in defendant city who brought an action in lieu of prerogative writs for the purpose of challenging the validity of certain assessments made under N. J. S. A. 40 :56-l et seq.

In 1970 the city determined to install bulkheads on the beach from 46th Street to 55th Street, the cost of same to be defrayed in part by grants from the State Government, appropriations by the city and assessments for local improvements under the aforementioned statute.

It adopted two ordinances, number 445 which provided for the improvement between 46th and 47th Streets, and number 437 which provided for the improvement between 47th and 55th Streets.

Paragraph IY (5) of Ordinance 445 directed that the area between 46th Street and 47th Street extending from the beach to the southeasterly line of Pleasure Avenue be designated as the area within which property owners would be assessed to the extent as outlined in the ordinance. Resolution 186 provided substantially the same thing with respect to the rest of the area between 47th and 55th Streets.

Inasmuch as the city did not have an officer or board charged with the duty of making general assessments of taxes, or any other board as referred to in N. J. S. A. 40: 56-31, it appointed assessment commissioners under N. J. S. A. 40 :56—33 consisting of three resident land owners of the municipality for the purpose of making “the assessments for benefits for such improvement.”

The primary attack upon the assessments ultimately made by these commissioners arises from the fact that they were not free to determine what lots were benefited by the improvement so that assessments should be made against same. Thus, plaintiffs contend that the city illegally usurped the function which the statute charged the assessment commissioners to perform.

Depositions of two of the three assessment commissioners make it abundantly clear that although they examined the locus of the improvements, they never considered benefits sustained by lands outside of the area designated by the governing body through the ordinance and resolution respectively.

I agree with this contention. The city was without authority to predetermine the benefited area. That function is imposed by the statute exclusively on the assessment commissioners. Had the commissioners ignored that direction and had they arrived at the same assessment as reported by them, there probably would be no basis for this attack. However, they followed the direction of the governing body. State, Hunt, Pros. v. Rahway, 39 N. J. L. 646 (Sup. Ct. 1877), aff’d o.b. 40 N. J. L. 615 (E. & A. 1878).

In Sinclaire v. West Hoboken, 58 N. J. L. 129 (Sup. Ct. 1895), one of the reasons assigned by the prosecutors of the writ of certiorari was that the commissioners did not exert their own judgment in defining the area of land which was specially benefited by the improvement because, having done so earlier, the municipal body had rejected the first report of assessments and directed them to reassess a smaller area. The statute involved in that ease directed the commissioners to determine and assess the costs and expenses of improvement “on all the land and real estate, in the opinion of said commissioners, specially benefited by the improvement, in proportion to the benefit received * * *.” Testimony of the commissioners in that case made it amply clear that they had omitted the property included in the first assessment as a result of such instruction.

In Bradley v. Asbury Park, 87 N. J. L. 293 (E. & A. 1914), the court held that the common council of defendant city did not have the power to limit the range of the assessment to the abutting landowners as they attempted to do by providing such, limitation in the ordinance itself. The controlling statute in that case provided that “all property benefited should be assessed to the extent of the benefits.”

In DeMarmon v. Roselle, 8 N. J. Misc. 904, 152 A. 656 (Sup. Ct. 1930), plaintiffs, in challenging the assessment, argued that the governing body had failed to establish the tentative area of the assessment for the improvement. The court stated that there was no such statutory requirement “but, on the contrary, no such power can reasonably reside in the governing body, but from and for practical necessity must reside in the commissioners of assessment.”

Defendants contend that inasmuch as the city could have made such a determination through a board of assessment or other legally appointed body, such fact implies that it could predetermine the area for assessment where it appointed commissioners of assessment. That does not follow, since the statute is clearly to the contrary.

Defendants next urge that inasmuch as the improvement was for the purpose of checking the action of waves and not to prevent damage caused by flooding, it was perfectly legal and appropriate for the city to designate the area for the assessments. This does not follow either. A governing body may not act in violation of a statutory mandate based on its determination of the ultimate benefits flowing from an improvement.

Defendants further assert that inasmuch as the attack comes over two years after the work on the bulkhead was completed, it is barred under the doctrine of laches.

I have considered whether or not plaintiffs should have taken action sooner with respect to Ordinance 445 and Resolution 186, inasmuch as the direction to the assessment commissioners was obvious from the content of these respective municipal actions. However, it is admitted by defendants that the action to review the assessments was timely. As I have already stated, the assessment commissioners were not obliged to follow the direction of the respective ordinance and resolution. If they had not followed them, probably no successful attack on the assessment could be sustained.

Finally, defendants assert that the method employed by the assessment' commissioners was reasonable and valid and, therefore, should not be set aside.

Ordinarily, it is incumbent upon one who questions the action by a municipality or any of its assignees to establish the error, the invalidity, abuse of discretion, arbitrariness, unreasonableness or capriciousness, because such actions are presumptively valid. Manning v. Paramus, 37 N. J. Super. 574 (App. Div. 1955). However, the error has been established by proof from two out of the three commissioners of assessment that they never gave any thought to considering benefits outside the area designated by the governing body. Consequently, this contention is likewise without merit. Sinclaire v. West Hoboken, supra.

In view of the foregoing, judgment will be entered setting aside the assessments.


author: McGowan, A. J. S. C.

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. LUKE J. PENTA, DEFENDANT.
    Superior Court of New Jersey Law Division (Criminal)
    Decided February 25, 1974.

      Mr. Theodore J. Labrecque, Jr. for defendant.

      Mr. Bussell Cottrell, Assistant Prosecutor, for the State (Mr. James M. Coleman, Jr., Monmouth County Prosecutor, attorneys).
   McGowan, A. J. S. C.

Defendant Penta moves for dismissal of both counts of the indictment above-captioned in which he is charged with alleged violations of the criminal laws of this State.

Factually it is conceded and alleged in the indictment that the crimes with which he is charged in both counts occurred during the last week of May 1971. At that time and date defendant had been elected to the office of councilman of the Borough of Highlands, but did not assume the office by taking tire oath prescribed until the following July 1, which was the beginning of his term. Defendant is charged in the first count with violating N. J. S. A. 2A :93-4 and in the second count of violating N. J. S. A. 2A :85-1. More particularly, it is charged in the first count that defendant

* * * having been duly elected to councilman in the Borough of Highlands, Monmouth, New Jersey, and prior to his being sworn in as a councilman, did request and solicit from James It. Snyder, then the Mayor of the Borough of Atlantic Highlands and a developer with projects in being or in the planning stages for the Borough of Highlands, that he intercede for him, the said Luke J. Penta with Mayor James T. White of the Borough of Highlands to make Luke J. Penta the Police Commissioner, and at the aforesaid time and place the said Luke J. Penta did advise, tell and threaten the said James R. Snyder that if he did not help him to become the Police Commissioner that he the said Luke J. Penta would do whatever he could to prevent approval of the projects of James R. Snyder in the Borough of Highlands, contrary to the provisions of N. J. S. 2A :93-4. * * *

The second count repeats the identical language and then additionally alleges:

* v * Although at the time aforesaid the said Luke J. Penta had not officially been sworn in as a councilman in the Borough of Highlands, he had been elected by the people of Highlands and would be considered a councilman-elect. The said attempt to secure a position on the Council of the Borough of Highlands as Police Commissioner by exerting pressure or threatening the said James R. Snyder was unlawful and an abuse and misuse of his public position, contrary to the provisions of N. J. S. 2A :85-l. * * *

More succinctly, the charge under count 1 is soliciting a reward for a vote, and the charge under count 2 is misconduct in office. The question which is thus squarely presented, assuming arguendo that all facts alleged in the indictment are true, is whether a person who is elected to public office thus becomes a public official within the purview of the language employed in the two statutes involved prior to such person being sworn into office, and assuming the duties thereunder. A research of the cases by the court and counsel indicates no case in this jurisdiction dealing squarely with this question.

N. J. S. A. 3A:93-4, which is part of the “Bribery and Corruption” chapter of the “Crimes” Title, provides as follows:

Any member or officer of any state, county or municipal government, or member of any public authority, board, association, commission or committee, who solicits or receives directly or indirectly any money or valuable thing, reward or commission for his vote as a member thereof is guilty of a misdemeanor.

Defendant argues that the statute, as it would be attempted to be applied to him, involves only “any member or officer” of a municipal government. He further argues that in order to bring him within the purview of the statutory language he must have been at the time of the alleged offense an “officer or member” of such municipal government, and until such time as he took the oath of office on July 1, 1971 he was not “a member or officer” of a municipal government.

The contention appears to have merit and it is the court’s opinion that to extend the language of the statute to include within the definition of “member” or “officer” a councilman-elect who has not yet been sworn into office would be to place an interpretation on the language beyond the fair meaning of its terms and thus apply it to persons and conduct not within and beyond the contemplation of the statute. See State v. Provenzano, 34 N. J. 318, 333 (1961).

A consideration of the statutes and cases interpreting what constitutes an officer or member of a municipal government is appropriate in support of the court’s conclusion above stated. N. J. S. A. 41 :l-3 requires every person elected to a ■municipal office to subscribe to an oath of office before he enters upon the execution of that office. Also see N. J. S. A. 40A :5-3. Admittedly, the statutory language is mandatory rather than directory and has so been interpreted by our courts. In Douglass v. Essex Cty. Bd. of Chosen Freeholders, 38 N. J. L. 314 (Sup. Ct. 1876), failure to take an oath of office within the time prescribed by statute was held to void qualifications of members of the board of freeholders, the court indicating that since the time within which to subscribe the oath was expressly provided by statute, the court should not by judicial intervention interfere with the legislative directive. The court notes also the language in McCue v. Antisell, 105 N. J. Super. 138 (App. Div. 1969) :

* * * Defendant never "held” the office of councilman to which he was elected because he never assumed the office by qualifying for it. This conclusion results from two basic considerations: (a) the general and better rule is that one elected to an office does not become an incumbent of it until he assumes it by qualifying therefor •—- which in this case called for being sworn. N. J. S. A. 41:1-3; N. J. S. 40A :5-33 Am. Jur., Public Officers, § 122, p. 968; State ex rel. Rhinesmith v. Goodfellow, 111 N. J. L. 604, 606 (E. & A. 1933). * * * [at 130-131]

Moving to the second count which charges misconduct in office, defendant argues that since at the time of the alleged offense he had not been sworn into office, a charge of misconduct in office must fall since he was under no duty, had assumed no responsibilities and was in effect lacking in any incidents of office. State v. Silverstein, 76 N. J. Super. 536, 540 (App. Div. 1963), aff’d 41 N. J. 303. Relying on McCue v. Antisell, supra, defendant urges that without the oath of office and assumption of duties thereunder a councilman-elect is merely that. A reading of Stale v. Silverstein indicates quite clearly that misconduct in office as defined by Professor Perkins and as set forth in that court’s opinion (at 540) is “corrupt misbehavior by an officer in exercise of the duties of his office or while acting under color of his office.” This then presupposes that the party being charged must in fact be in office and in order to be in office the oath prescribed is a necessary prerequisite. Also see, State v. Goodfellow, supra, and State v. Winne, 12 N. J. 152, 164 (1953), and cases there cited, as to the question of duties arising out of the nature of an office.

The State argues to the contrary and urges that since defendant did in fact on July 1, 1971 take the oath of office and assume the duties of the office of councilman, public policy considerations dictate that he can be held to answer as a public official within the language contained in State v. Silverstein, supra. The State submits that from the time of his election defendant assumed and agreed to perform a public function and that by acting as alleged he willfully engaged in unlawful behavior. It is further argued that defendant should not be heard to claim exemption from liability premised only on his failing to be sworn. He had been elected and was to assume the office later, and the time sequence should not mitigate his wrongdoing where such wrongdoing is alleged to constitute the commission of a crime or crimes. It was further alleged at argument before the court that the acts complained of were directly connected with and arose out of the fact that he, defendant, was to become a councilman upon his assuming office on July 1, 1971 and that condition gave rise to the circumstances which are the gravamen of the charges against him. Moreover, it was further argued and suggested that if the court were to determine that a person in such a situation were immune from responsibility during the period of time between election and the actual swearing in, it is conceivable that illegal dealings, including threats and criminal activities, could be carried on with complete immunity by a person so situated, in contemplation of holding such office, and this clearly contrary to public interest. While this argument has appeal and at first blush would seem to be persuasive, it is obvious from what the court has said heretofore that it is inapplicable.

The court is not unmindful that a dismissal of an indictment is an extraordinary remedy, and ordinarily a court should not exercise its power to dismiss except on clearest and plainest grounds; but where evidence is clearly lacking, it is likewise the duty of the court to set aside the charge. Slate v. Welects, 10 N. J. 355, 364 (1952).

While the court does not here pass upon any other charges not now before it or any other charges which might subsequently arise out of this alleged matter, if any, it is to be noted generally that there are other provisions of the criminal laws pertaining to this type of alleged criminal activity that might be applicable and under which a defendant could be charged, such statutes being directed at what could be termed nonofficial conduct. The court's determination that the indictment under consideration as to both counts should be dismissed for the reasons above stated does not immunize defendant or any other individual from being otherwise prosecuted for violations of applicable criminal statutes. The determination herein made is simply that the sections of the statutes under which this defendant was indicted for an offense allegedly committed while his admitted status was that of a councilman-elect are inapplicable: he is not within the purview of these sections of the statutes relied upon.

Accordingly, for the reasons above recited, the motion to dismiss the indictment is granted.


author: Pressler, J. C. C.,

text:
    TOWNSHIP OF RIVER VALE, PLAINTIFF, v. R. J. LONGO CONSTRUCTION CO., INC. AND CAMPOLI AND SON, INC., DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided March 4, 1974.

      Mr. Victor W. Hart for plaintiff (Messrs. Gladstone, Hart, Mandis, Rathe & Shedd, attorneys; Ms. Celene Y. November on the brief).

      Mr. William A. Feldman for defendant R. J. Longo Construction Co., Inc.

      Mr. Richard Jon Contant for defendant Campoli and Son, Inc. (Messrs. Contant, Contant & Meehan, attorneys).
   Pressler, J. C. C.,

Temporarily Assigned. This declaratory judgment action, submitted to the court for disposition by way of motion and cross-motions for summary judgment, raises the single legal question of the right of a municipality to award a public works contract to the lowest bidder, who, in lieu of accompanying his bid with the 10% certified check required by the published notice and instructions to bidders, submitted a bid bond in the penal snm of the required amount.

The lowest bidder, defendant R. J. Longo Construction Co., Inc. (Longo), claims that it is entitled to the award of the contract, asserting that submission of the bid bond constituted substantial compliance with the municipal requirements for a security deposit. The second lowest bidder, defendant Campoli and Son, Inc. (Campoli), claims that it is entitled to the award of the contract, asserting that Longo’s submission of the bid bond in lieu of a certified check constituted a material noncompliance with the municipal requirements, thus disqualifying it as the lowest responsible and complying bidder. Plaintiff Township of River Yale, faced with these defendants’ conflicting demands, chose the course of awarding the contract to neither, seeking instead, by the commencement of this action, a judicial declaration as to which bidder is entitled thereto.

The essential facts, as demonstrated by the pleadings, affidavits, exhibits and stipulations of the parties, are not in dispute.

River Vale is in the process of installing, in progressive stages and by bond financing, a municipal sanitary sewer system to be ultimately connected to the extended trunk lines of the Bergen County Sewer Authority. On December 19, 1973 it advertised for bids on so-called “Contract No. 6, Northern Valley Lateral Sewers.” The advertisement required that each bid be accompanied by a consent of surety, that is, an undertaking by a surety company to provide the municipality with a performance bond in the full amount of the bid if the bidder were successful in obtaining the contract, and by a certified or cashier’s check in the amount of 10% of the bid or $20,000, whichever was less. The advertisement further provided that the conditions of the deposit were the execution by the low bidder of the contract and his furnishing of the required performance bond, the deposited sum to be forfeited as liquidated damages upon the bidder’s default of either condition. The instructions to bidders, in the provision requiring the certified or cashier’s check, specifically stated that “Proposal or bid bonds will not be accepted.” Plaintiff, in both the advertisement and in its instructions to bidders, expressly reserved the right to waive any “informalities, irregularities or minor defects in the bids received,” or to reject all bids. The instructions further provided that the township “may consider informal, irregular, or defective any bid not .prepared and submitted in accordance with the provisions hereof” (emphasis added).

The 13 bids received by River Yale in response to its advertisement were opened on the evening of January 31, 1974, at the specified time and place. Longo’s low bid, in the amount of $1,419,180, had annexed to it a bid bond in the penal sum of $20,000, conditioned as required by the notice to bidders. Campoli’s bid, in the amount of $1,449,185, was accompanied by a certified check in the amount of $20,000. The 11 other bids, all higher than Campoli’s, were also accompanied by certified checks. The question of the acceptability of Longo’s bid having been raised when the bids were opened, Longo, the following morning, submitted a certified check in the amount of $20,000 to the municipal clerk.

It is not suggested that Longo’s bid in any other way failed to meet the specifications. It is also not disputed that both Longo and Campoli are deemed “responsible” by plaintiff and that both submitted with their bids a properly completed and adequate statement of qualification. Nor is it disputed that Longo, in prior bidding for plaintiff’s public works contracts, had submitted certified checks. Longo’s explanation for the bid bond here submitted, as stated in the affidavit of its president, is simply that it was

* * * my understanding and belief that bid bonds in the statutory amount of 10% of the contract price bid are acceptable practice in the State of New Jersey in eases such as this and I sincerely believed in preparing this bid that the option was mine to submit a bid bond, as is my usual practice, instead of the cashier’s or certified check as requested in the advertisement for bids.

Plaintiff originally assumed that it had neither the power nor the discretion to waive its certified check requirement in these circumstances, irrespective of any inclination it might have had to do so, and its complaint demanded judgment declaring that it should award the contract to Campoli. At the hearing on the motion, however, municipal counsel made clear that plaintiff’s preference would be to award the contract to Longo because of the municipal savings to be thereby effected; that it was completely satisfied with the security of the bid bond, and that its option would be to waive the certified check requirement if, as a matter of law, the bid bond submission were deemed to constitute substantial compliance with its stated security requirement. This position was later iterated in its supplemental letter memorandum.

Based on the foregoing, it is clear and the court so finds, first, that the expeditious disposition which the summary judgment technique of B. 4:46 was designed to afford is particularly appropriate here, the controversy presenting exclusively a question, of law, and second, that the declaratory action technique here employed by plaintiff pursuant to N. J. S. A. 2A :16-50 et secq., in view of the insistent demands of the two bidders, was an appropriate procedure for bringing the controversy before the court, particularly as each bidder had advised plaintiff that if the contract were awarded to the other, it would promptly institute suit seeking to reverse that municipal action.

The question here posed must be resolved in the context of the express provisions as well as the purpose and policy of the bidding requirements of the Local Public Contracts Law, N. J. S. A. 40A :11-1 et seq. (formerly N. J. S. A. 40:50-1). The purpose of competitive bidding for local public contracts is, as has been frequently reiterated, not the protection of the individual interests of the bidders but rather the advancement of the public interest in securing the most economical result by inviting competition in which all bidders are placed on an equal basis, thereby guarding against favoritism, improvidence, extravagance and corruption. While this policy dictates that only bids which comply with the specifications and instructions are acceptable, it also dictates, lest the primary purpose of achieving economy be unnecessarily frustrated, that minor irregularities and immaterial variances in the. form of the bid not be permitted to result in its invalidation, particularly where the municipality has, as here, expressly reserved the right to waive such defects and there is no suggestion of any fraud, bad faith or collusion surrounding the transaction. See, e. g., Hillside Tp. v. Sternin, 25 N. J. 317, 322 (1957); Bryan Const. Co. v. Bd. of Trustees, etc., Montclair, 31 N. J. Super. 200, 206 (App. Div. 1954); P. Michelotti & Sons, Inc. v. Fair Lawn, 56 N. J. Super. 199, 201-202 (App. Div. 1959), certif. granted 31 N. J. 75 (1959), app. dism. 31 N. J. 556 (1960); Hanover Tp. v. Inter. Fidelity Ins. Co., 122 N. J. Super. 544, 551 (App. Div. 1973); 10 McQuillin, Municipal Corporations (1966 ed.), §§ 29.29, 29.65. There must, therefore, be applied two criteria in determining whether a specific noncompliance constitutes a substantial and hence nonwaivable irregularity — first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to. its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition. See Hillside Tp. v. Sternin, supra; 10 McQuillin, supra, § 29.65 at 397. It is concluded for the reasons here set forth that the irregularity here is not of such a nature and is, therefore, waivable by plaintiff.

In 1971 the Legislature enacted the Local Public Contracts Law, N. J. S. A. 40A :11-1 et seq., including N. J. S. A. 40A :11-21, which provides in full as follows:

There may be required from any person bidding on any contract or agreement, for any contracting unit, advertised in accordance with law, that the bid be accompanied by a certified cheek, cashier’s check or bid bond, payable to the contracting unit as a guarantee that if the contract or agreement is awarded to him he will enter into a contract therefor and will furnish any performance bond or other security required as a guarantee or indemnification. The amount to be so deposited shall be 10% of the bid, but in no case in excess of $20,000.00.

Although the New Jersey statutes were silent prior thereto as to a municipality’s right to require a security deposit, that right, its salutary purpose, the widespread use of the bid bond as a required or permitted mode of deposit, and the applicability of the waiver principle to minor irregularities in the form of the deposit, had been repeatedly recognized and accepted by the courts. See Bryan Const. Co. v. Bd. of Trustees, etc., Montclair; P. Michelotti & Sons, Inc. v. Fair Lawn; Hillside Tp. v. Sternin; Hanover Tp. v. Inter Fidelity Ins. Co., all supra.

In Bryan Const. Co. the published notice to bidders required a deposit by way of certified check. The specifications, however, referred to bid bonds and included a blank form of bid bond. The court there held that in those circumstances submission of the bond in lieu of a check constituted substantial, if not precise, compliance. In Hillside Tp. the published notice also required a certified check deposit. The low bidder failed to accompany his bid with any form of security and at no time thereafter evidenced any intention to cure the defect. The court held this failure to be a material noncompliance, noting that a demand “for the deposit of some form of security” is a material and appropriate requirement serving the two-fold purpose of providing the municipality with some evidence of the bidder’s financial responsibility and permitting the municipality to secure itself against the bidder’s failure to execute the contract by declaring a forfeiture of the deposit, thus making itself “whole for any resulting loss or expense by summary action without having to sue for damages.” 25 N. J. at 323.

The next decision dealing with irregularity in a security deposit was P. Michelotti & Sons, Inc., supra. There the court, considering the strict injunction of Hillside Tp. against erosion of the bidding policy even at the expense of sacrificing a public fiscal advantage, nevertheless found immaterial and waivable the deposit of an uncertified check in lieu of the required certified check where the bidder submitted a replacement certified check the day after the bids were opened.. The court’s observation was that the municipal waiver “in no way affected fair and competitive bidding. This was not a case of ‘material departure,’ ‘substantial noncompliance’, or a ‘substantial variance’ which would stand in the way of a valid contract * * And see, Kensil v. Ocean City, 89 N. J. Super. 342 (App. Div. 1965). And finally, in Hanover Tp., supra, the court upheld the municipal waiver of a defect in a bid bond whose stated amount was $12,000, some $1,885 less than the required 10% of the bid, on the finding that the minimal extent of the variation and the parties’ good faith materially distinguished the situation before it from that presented in. Hillside Tp., where the bidder “neither attempted to, or intended to, submit a check as called for by the advertisement.” 122 N. J. Super, at 551.

While it does not appear that our courts have yet considered the precise irregularity here involved, analysis of the foregoing adjudicated security-deposit disputes, in view of the statutory policy and the subsequent enactment of N. J. S. A. 40A:11-21, compels the result here reached.

First, it must be recognized that a bid bond issued by a reputable surety company serves both of the purposes noted in Hillside Tp. Even though plaintiff pointed out at the hearing that its security deposit requirement was not primarily intended as evidence of financial responsibility, that having been otherwise dealt with in the bid documents, it is nevertheless clear that as a practical matter a bidder’s ability to meet the deposit requirement, will provide the municipality with some measure of assurance of his financial stability. That a reputable surety company, which customarily exercises appropriate caution before assuming the risk of issuing the bond, is willing to guarantee the bidder’s compliance is, however, as good — and perhaps a better — demonstration of the bidder’s probable ability to perform as his own deposit of what is essentially cash. Further, the bond affords the municipality very little less protection than it secures by having available the check-forfeiture remedy. Certainly the bond affords it an easy remedy by way of summary action against the surety company to recover the full penal amount. It is not left, as was the concern in Hillside Tp., with only the unsatisfactory recourse of a plenary action against an unsecured bidder in which its actual damages are subject to proof and limit the recovery. The bond is furthermore, and for these reasons, substantially better security than the unsecured promise to pay represented by the uncertified check which was approved in P. Jlichelolti & Sons, Inc. Defendant Campofi, in urging that a certified check and a bid bond are substantially different forms of security from the municipal point of view, points to cases collected in Annotation, “Bureiy’s Liability on Bid Bond For Public Works,” 70 A. L. R. 2d 1370 (1960), illustrating the kinds of problems which may be encountered in seeking recovery on bid bonds. Tt need merely be observed, however, that these problems ordinarily arise out of the assertion of defenses by surety companies which would be equally available to bidders themselves in challenging a municipal attempt to declare a forfeiture of a cash deposit.

Consider further the use of a bid bond in lieu of a certified chock as it may affect the common standard of competition— the second criterion. It is purely speculative as to whether the bond premium does or does not ordinarily exceed the financing charge which may he incurred by a bidder depositing a certified check, either by way of interest lost during the deposit period or interest paid to borrow the deposited sum. Nor does it appear that the out-of-pocket cost in providing the security deposit, in contradistinction to the performance bond premium, is an element of the job cost calculated by the contractor in computing the amount of the bid. Cf. Albanese v. Machetto v. N. J. Super. 605 (Law Div. 1949), aff’d 7 N. J. Super. 188 (App. Div. 1950). Nor can it he fairly said, as was the case in Hillside Tp., that the effect of the acceptance of a bid bond in lieu of a certified check would either relieve the low bidder of the burden of complying -with a required element of the competitive scheme or would place him at an actual or potential competitive advantage in relation to bidders who elect to compete and who furnish certified checks. In Hillside Tp. the issue was not one of comparability or acceptability of one form of security vis-a-vis another. There, no form of security was offered at all.

Most significant, however, is the effectiveness of the bid bond alternative in stimulating competitive bidding. As defendant Campoli itself points out, a bidder may be discouraged from simultaneously bidding on several contracts where certified check deposits are demanded, as he may be unable or reluctant to tie up the amount of cash thus required. The utility of the bid bond technique, therefore, is to widen the circle of potential bidders without substantially diluting the essential public protection which a certified check deposit affords. Indeed, it may be assumed that the Legislature’s inclusion of the bid bond alternative in N. J. S. A. 40A :11-21, which constitutes a restatement of the theretofore judicially approved common practice, proceeded from its recognition of the public advantage thereby gained and its intention to secure that advantage to local governmental units. Note that the predecessor provision on which this enactment is based, N. J. S. A. 40 :25-9 (applicable to counties only and repealed by N. J. S. A. 40A :11-38), while substantially similar in language to the 1971 provision, expressly referred only to cash or certified check as the form of security deposit, although, as the parties have stipulated, counties nevertheless commonly used bid bonds in lieu thereof. It is thus clear that N. J. S. A. 40A :11—21 represents a legislative determination of the essential comparability of the bid bond and certified check forms. It may, therefore, be argued, as defendant Longo urges, that the legislative intent, consistent with the public policy of encouraging competitive bidding, was to require the municipality, if it cho.se to demand security at all, to accept any of the legislatively designated forms in which it might be offered. Thus, the statute is susceptible to the interpretation that municipalities are precluded in the first instance from the option of demanding one form of security to the exclusion of others. While that construction of N. J. S. A. 40A :11-21 may have merit and appeal, the question need not, however, be reached. The point here is simply that the legislative placing of these deposit forms in an apparent position of equal status further bespeaks their substantial comparability and therefore the immateriality of submitting one rather than the other, and hence the municipal right to waive that noncompliance with its security demand.

Defendant Campoli seeks to counter these arguments by reliance upon Stage v. Whitehouse, 43 Misc. 2d 103, 252 N. Y. S. 2d 142 (Sup. Ct. 1964), in which a bid bond was submitted by the low bidder in lieu of the required certified check and the court upheld the municipal award of the contract to the second lowest bidder. That case is distinguishable on two essential grounds. First, the municipality chose not to waive the defect, the court suggesting, however, that it could have had it so opted. 252 N. Y. S. 2d at 146. Second, and more significant, the bid bond there submitted was not in the amount of the required 10% of the bid but rather limited to the difference between the amount of the principal’s bid and the next lowest bid. A bid bond in such form does not necessarily constitute the same extent of security as a 10% certified cheek and further, in such form, would not accord with the requirements of N. J. S. A. 40A :11-21 and might well not be within the municipal discretion to accept.

The court finds the remaining objections of defendant Campoli to be without substantial merit. It urges first that the express stipulation by plaintiff in its instructions to bidders that a proposal or bid bond would not be accepted precludes it from a subsequent determination to accept it. Hot so. Since plaintiff expressly, both in positive and negative terms, reserved the right to waive insubstantial irregularities, it may waive any irregularity which as a matter of law is concluded to be an insubstantial one. It is further important to note that where the irregularity is not substantial, it may well be the duty as well as the right of the municipality to waive it. See 10 McQuillin, supra, § 29.65 at 397. Campoli further argues that Longo’s delivery of a certified check on the morning following the opening of bids failed to cure the defect. While it is, indeed, clear that a material defect cannot be permitted to be cured after the opening of bids, it is equally clear that an insubstantial defect may be. See Faist v. Hoboken, 72 N. J. L. 361 (Sup. Ct. 1905); Bryan Const. Co. v. Bd. of Trustees, etc., Montclair, supra, 31 N. J. Super, at 206. While it is, moreover, evident that the good faith of the parties may not cure a substantial defect, a bidder’s good faith, evidenced as here by the subsequent compliance, may be an appropriate factor for municipal consideration in its determination of whether to waive a minor irregularity.

In the circumstances here the plaintiff’s determination to waive the defect and to accept the Longo bid is well within its discretion. The motion for summary judgment of defendant Longo is granted.

      The cause was heard on an expedited basis. The complaint was filed with the court on February 15, 1974, together with a notice of motion for summary judgment, returnable February 22, 1974. An ex parte order was on that date entered abbreviating the time for the filing and hearing of the motion. Defendant Campoli, while not filing a written cross-motion for summary judgment, advised the court of the commencement of the hearing that it also agreed that there was no genuine dispute of material fact and, with the consent of all counsel, cross-moved orally, for summary judgment.

      Prior to the hearing the court requested all counsel to produce as joint exhibits all relevant bid documents. There was not, however, submitted prior to or at the hearing the complete, some 200-page book of contract documents, instructions and specifications. The matter was, therefore, argued on the basis of the public notice to bidders as constituting the sole municipal expression of the certified check requirement. Subsequent to the hearing defendant Oampoli submitted to the court, with the consent of the other parties, page B-3 of the specification book which contained the express statement of nonacceptance of proposal or bid bonds above quoted.

       A review of tlie available legislative history is not helpful in determining the precise intention of the Legislature in adopting the verbiage of what is now N. J. S. A. 40A :11-21. The sole indication suggests that this section was intended to consolidate then existing law. See County and Municipal -Law Revision Commission, “Preliminary Draft, Local Contracts Law.” (Nov. 7, 1960) ; County and Municipal Law Revision Commission, “Third Legislative Report, Local Contracts Law,” chapter 6 (1961) ; N. J. Senate, County and Municipal Government Committee, “Public Hearing on Local Public Contracts Law;” (April 4, 1972).


author: Kimmelman, J. S. C.

text:
    STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, ETC., PLAINTIFF, v. EUGENIO TORO, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided March 5, 1974.

      Mr. Allan B. Stein for plaintiff (Messrs. Soriano & Henkel, attorneys; Mr. George B. Henkel on the brief).

      Mr. Irvin L. Solondz for defendant.
   Kimmelman, J. S. C.

This is a declaratory judgment action brought by an insurance company against its insured to determine whether towing and storage charges incurred following a collision are recoverable under an uninsured motorist endorsement.

Plaintiff State Farm Mutual Automobile Insurance Company (State Farm) issued an automobile insurance policy to defendant Eugenio Toro, among the provisions of which was an endorsement entitled “Coverage U — Uninsured Motorists." On October 30, 1970, while the insurance policy was in force and effect, Violeta Toro, the wife of the insured (also an insured under the policy), was driving the insured vehicle and was involved in a motor vehicle aceiderit with an uninsured motorist. The insured’s vehicle was disabled as a result of the collision and, accordingly, he arranged to have it towed from the scene and taken to Greenfield’s Auto Body, Sussex Avenue, Newark. State Farm was promptly notified of the accident; its agent was advised of the towing and storage charges, and it was requested that their adjuster inspect the vehicle and honor the claim in order that defendant might arrange for repairs. For some reason the inspection was not made until February 24, 1971, and then State Farm took the position that there was contributory negligence on the part of the insured driver which barred recovery against the uninsured motorist. Thereafter the matter was submitted to arbitration and was determined in favor of the insured. The arbitrator made an award for the property damage but withheld determination on the claim for towing and storage charges pending a declaratory judgment by a court as to the extent of coverage afforded by State Farm’s uninsured motorist endorsement.

The above facts are undisputed and thus the sole issue to be resolved is whether towing and storage charges are included and recoverable under an uninsured motorist endorsement. The insured seeks to hold State Farm responsible for such charges from the date of the accident to the date of inspection at a rate of $5 a day, for a total of $755.

The pertinent provisions of N. J. S. A. 17:28-1.3, which fixes the standards for uninsured motorist coverage, provide that the insurance policy:

* * shall also include coverage for the payment of all or part of the sums which persons insured thereunder shall he legally entitled to recover as damages from owners or operators of uninsured automobiles, other than hit and run automobiles, because of injury to or destruction to the personal jjroperty of such insured with a limit in the aggregate for all insureds involved in any one accident of $5,000, and subject, for each insured, to an exclusion of the first $100.00 of such damages. [Emphasis added]

The uninsured motorist endorsement written into the instant policy properly adopts the language of the statute by promising to pay “all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle * * *.”

However, other sections of the policy expressly exclude the payment of towing, storage and other “salvage” charges in the event the insured makes claim for property damages under the uninsured motorist endorsement.

Paced with such exclusionary clauses the insured here argues that it is against the public policy considerations which prompted the requirement for uninsured motorist coverage to so limit the sum to which he is “legally entitled to recover” where the tortfeasor is an uninsured motorist, as opposed to a situation where the tortfeasor is an insured motorist represented by his own insurance carrier.

The question for decision, therefore, turns upon whether the insured is “legally entitled to recover” towing and storage charges because of the property damage sustained in a reasonable effort to protect the damaged property, irrespective of the cited terms of the policy which purport to exclude such coverage.

In the interpretation of insurance policies the law is settled that ambiguities are to be resolved in favor of the insured. Bryan Const. Co., Inc. v. Employers’ Surplus Lines Ins. Co., 60 N. J. 375, 377 (1972); Bauman v. Royal Indem. Co., 36 N. J. 12 (1960); Hanover Ins. Group v. Cameron, 122 N. J. Super. 51 (Ch. Div. 1973). “[WJhere the language of the policy is capable of two reasonable interpretations, the court will adopt that which permits recovery rather than the one which would deny coverage.” State Farm Mut. Auto. Ins. Co. v. Cocuzza, 91 N. J. Super. 60, 63 (Ch. Div. 1966). However, “the court will not make a new agreement for the parties, and exceptions, exclusions, and reservations in a policy which are not inconsistent with public policy will be construed in accordance with their language and the usual rules governing the construction of insurance contracts”. Id. at 63; Allstate Ins. Co. v. McHugh, 124 N. J. Super. 105, 110 (Ch. Div. 1973).

State Farm’s policy defines “property damage” as “injury to or destruction of” an insured vehicle owned by the named insured or his spouse. That definition must be interpreted as comprehending as well damages flowing as a proximate result of the basic property damage. The general rule usually applied in fixing such damage under principles of tort law is the difference in market value of the automobile immediately before and immediately after the injury. Hintz v. Roberts, 98 N. J. L. 768 (E. & A. 1923); Parodi v. Universal Ins. Co., 128 N. J. L. 433 (Sup. Ct. 1942). The proper measure of damages is the amount which will compensate for “all the detriment naturally and proximately caused,” and where plaintiff is temporarily deprived of the use of the vehicle, this has been held to include the value of its use during the time reasonably required to repair it. Hintz v. Roberts, supra 98 N. J. L. at 770-771; Graves v. Baltimore & N. Y. R. Co., 76 N. J. L. 362, 364 (Sup. Ct. 1908). Even loss of earnings or business profits have been allowed as damages where the proofs showed such loss to be the proximate result of the damage to the motor vehicle. Nightengale v. Public Service Coord. Transport, 8 N. J. Misc. 238, 149 A. 526 (Sup. Ct. 1930).

In the instant ease defendant seeks compensation for towing and storage charges as part of his consequential damages. Such charges were clearly sustained as the proximate result of the damage to his vehicle. Many policies of automobile insurance obviate the need to resort to a common-law damage formula by including a “protection of salvage” or “duty to protect” clause, under which any act of the insured in recovering, saving and preserving the property, in case of loss or damage, shall be considered as done for the benefit of all concerned, and all reasonable expenses thus incurred constitute a claim under the policy. Under such a provision towing and storage charges have uniformly been held to be recoverable. See, e. g., Parodi v. Universal Ins. Co., supra; Harper v. Pelican Trucking Co., 176 So. 2d 767 (La. Ct. App. 1965); Buxton v. International Indem. Co., 47 Cal. App. 583, 191 P. 84 (D. Ct. App. 1920); Southwestern Fire & Cas. Co. v. Kendrick, 281 S. W. 2d 344 (Tex. Civ. App. 1955); City Coal, & Supply Co. v. Amer. Auto Ins. Co., 99 Ohio App. 368, 133 N. E. 2d 415 (Ct. App. 1954). The towing and storage charges herein sought would have been covered by the “duty to protect” clause contained in the general section of the State Earm policy but for the fact that the insured was involved in an accident with an uninsured motorist.

In the absence of a “duty to protect” clause applicable to the uninsured motorist endorsement the court considers the towing and storage charges to have been naturally and proximately caused by the accident under the rule of Hintz v. Roberts, supra. They are damages which the insured is “legally entitled to recover.” It is highly foreseeable that the owner of a damaged vehicle will have to tow it from the scene of an accident and store it at some location to await repair. Policy exclusions notwithstanding, an insured is entitled as part of his property damage claim to reimbursement of the expenses incurred in protecting his insurer against further property loss and safeguarding the damaged vehicle by application of general principles of law. A tortfeasor, as well, would expect his victim to take reasonable measures to safeguard damaged property. Harper v. Pelican Trucking Co., supra, 176 So. 2d at 773; Myers v. Amer. Indem. Co., 457 S. W. 2d 468, 471 (Mo. Ct. App. 1970); 15 Blashfield, Automobile Law and Practice, § 480.13 at 45 (1969); 7 Appleman, Insurance Law and Practice, § 4327 at 110 (1971 pocket part).

The legislative policy behind N. J. S. A. 17 :28-1.1, providing for mandatory uninsured motorist coverage, would be defeated were State Farm allowed to create an arbitrary deletion from such coverage. Although the primary purpose of N. J. S. A. 17 :28-1.1 was to relieve the Unsatisfied Claim and Judgment Fund of some of its financial burdens, Exum v. Marrow, 112 N. J. Super. 570, 574 (Law Div. 1970), the Legislature had other concerns which are highly relevant here. Statutes providing for unsatisfied judgment or uninsured motorist plans have been adopted to alleviate the economic hardship imposed upon victims of negligently operated automobiles where compensation is otherwise thwarted either by reason of lack of knowledge of the tortfeasor’s identity or his financial irresponsibility. 7 Blashfield, Automobile Law & Practice, § 274.1 at 43 (1966).

The decisions are uniform throughout the country to the effect that uninsured motorist laws are designed to provide the same right to recompense to a person injured by an uninsured motorist as he would obtain if he were involved with an insured motorist. E. g., Peterson v. State Farm Mut. Auto. Ins. Co., 238 Or. 106, 393 P. 2d 651 (Sup. Ct. 1964); Ullman v. Wolverine Ins. Co., 105 Ill. App. 2d 408, 244 N. E. 2d 827 (Ct. App. 1969), aff’d, 48 Ill. 2d 1, 269 N. E. 2d 295 (Ill. Sup. Ct. 1970); Southeast Title & Ins. Co. v. Austin, 202 So. 2d 179 (Fla. Sup. Ct. 1967); Durant v. Motor Vehicle Acc. Indemnif. Corp., 20 A. D. 2d 242, 246 N. Y. S. 2d 548 (App. Div. 1964), mod. on other grounds, 15 N. Y. 2d 408, 260 N. Y. S. 2d 1, 207 N. E. 2d 600 (Ct. App. 1965), rearg. den., 16 N. Y. 2d 716, 261 N. Y. S. 2d 1028, 209 N. E. 2d 565 (Ct. App. 1965).

In providing for uninsured motorist coverage the Legislature undoubtedly intended to place automobile victims in as good a position to recover damages to the extent of the coverage dollar amounts whether or not the tortfeasor was insured. If under ordinary principles of negligence a tortfeasor is legally responsible to pay towing and storage charges as part of the proximate damages of a claimant, a fortiori an. uninsured motorist tortfeasor would bear the same legal responsibility to an injured claimant. Conversely, any injured party is legally entitled to recover that which a tortfeasor is legally responsible to pay. The existence or nonexistence of insurance coverage applicable to the tortfeasor does not and cannot alter his legal responsibility.

By requiring endorsements to afford coverage for sums which an injured person shall “be legally entitled to recover” as damages, the Legislature evinced no purpose to limit the legal responsibility of any category of motorist tortfeasor but rather clearly mandated equal protection for the injured claimant regardless of whether he makes his claim against an insured or uninsured motorist.

Consequently, to deny to the victim of an uninsured motorist the coverage which he would otherwise be afforded under the “duty to protect” provision of the policy or under ordinary principles of negligence law would contravene the public policy embodied in N. J. S. A. 17:28-1.1. To the extent that the uninsured motorist endorsement in the State Earm policy attempts to narrow the required statutory protection, the same will be held invalid.

Eor the foregoing reasons the coverage afforded to defendant under the uninsured motorist endorsement will be construed to include towing and storage charges, and any provision of the policy purporting to exclude such coverage will be denied effect. This result coincides with the reasonable expectations of the insured. Harr v. Allstate Ins. Co., 54 N. J. 287, 303 (1969); Bryan Const. Co., Inc. v. Employers Surplus Lines Ins. Co., supra, 60 N. J. at 378. Defendant exercised reasonable care to minimize the extent of the damage to the vehicle pending its inspection, for the mutual benefit of himself and State Earm. It would be incongruous to defeat his reasonable expectations merely because the driver of the other ear happened to be uninsured.

Counsel are directed to submit an appropriate order for declaratory judgment construing the State Earm policy in accordance with this decision.


text:
    MARGARET Mc MULLEN, ADMINISTRATRIX OF THE ESTATE OF CHARLES Mc MULLEN, DECEASED, PLAINTIFF-APPELLANT, v. MARYLAND CASUALTY COMPANY, A CORPORATION, DEFENDANT-RESPONDENT. MARGARET Mc MULLEN, ADMINISTRATRIX AND ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF CHARLES Mc MULLEN, DECEASED, PLAINTIFF-APPELLANT, v. CONFORTI & EISELE, INC., A CORPORATION, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued November 5, 1973—
    Decided March 15, 1974.

      Before Judges Handler, Meanor and Kole.

      Messrs. Nathan Baker and Morris Schnitzer argued the cause for appellant (Messrs. Baker, Garber, Duffy & Baker, attorneys).

      Mr. Edward E. Kuebler argued the cause for respondent Maryland Casualty Company.
   The opinion of the court was delivered by

Meanor, J. A. D. This case brings to us for resolution issues concerning the application of the contingent fee schedule of R. 1:21-7 (c) to a tort settlement or judgment against which there is a workmen’s compensation lien. The trial court’s opinion is reported. McMullen v. Maryland Cas. Co., 123 N. J. Super. 248 (Law Div. 1973). We delayed our decision in this matter to await American Trial Lawyers Ass’n, etc. v. New Jersey Supreme Court, 126 N. J. Super. 577 (App. Div. 1974). It was there determined that R. 1:21—7 was valid and applicable to tort settlements and judgments occurring after its effective date of January 31, 1972, despite contrary provisions of preexisting retainers. That decision has now ripened the questions presented here.

Plaintiff’s husband, Charles McMullen, was killed in the course of his employment with Beach Concrete Co. on June 11, 1969. Beach, and consequently decedent, were at the time working under a subcontract with Conforti & Eisele, Inc. A wrongful death action was brought against Conforti & Eisele, Inc., N. J. S. A. 2A :31-1 et seq., by the widow as administratrix ad pros, seeking money damages arising out of the death for the benefit of herself and her children. Following' the effective date of B. 1:21-7 the case was settled for $250,000.

Maryland Casualty Company apparently was both the liability and workmen’s compensation carrier for Beach Concrete Co. It made workmen’s compensation payments on account of McMullen’s death and, we have been told, took over the Conforti & Eisele, Inc. tort defense because of an indemnity agreement between Beach and Conforti.

N. J. S. A. 34 :15-40 imposes a lien in favor of an employer ox his workmen’s compensation carrier against the proceeds of a third-party recovery obtained by an injured workman or arising out of his death. The three leading cases construing this statute are: Teller v. Major Sales, Inc., 64 N. J. 143 (1974); Caputo v. Best Foods, 17 N. J. 259 (1955), and Dante v. Gotelli, 17 N. J. 254 (1955). These cases all involved tort recoveries obtained before B. 1:21-7 became effective, and, in light of the gloss they have placed upon the statute, the following is clear:

1. The lien is exercisable to the fullest extent possible, Whether the third-party recovery be less than, equal to or greater than the lienor’s compensation exposure.

2. The lienor must pay the successful plaintiff’s attorney in the third-party action a fee not to exceed one-third of the amount of the lien and must contribute toward litigation expenses an amount not to exceed $200.

3. Where the fee arrangement between plaintiff and his ah torney is for a fee (whether contingent or on a fee for service basis) which equals a percentage of less than one-third of the recovery, the carrier would pay only that lesser percentage of its lien as fee.

4. Where the third-party recovery equals or exceeds the total compensation exposure, the amount of the lien on which the fee is calculated is the total compensation exposure of the lienor on account of the injury or death and not merely the amount of workmen’s compensation paid to the date of third party recovery.

B. 1:21-7(c) provides:

In any matter where a client’s claim for damages is based upon the alleged tortious conduct of another, including products liability claims, and the client is not a subrogee, an attorney shall not contract for, charge, or collect a contingent fee in excess of the following limits:
(1) 50% on the first $1,000 recovered;
(2) 40% on the next $2,000 recovered;
(3) 33-1/3% on the next $47,000 recovered;
(4) 20% on the next $50,000 recovered;
(5) 10% on any amount recovered over $100,000; and
(0) where the amount recovered is for the benefit of an infant or incompetent and the matter is settled without trial the foregoing limits shall apply, except that the fee on any amount recovered up to $50,000 shall not exceed 25%.

R. 1:21-7 (d) requires assessment of these fees on that amount of the recovery remaining after deduction of litiga^tion expenses, and subparagraph (f) permits an attorney who deems inadequate the fee allowed by the rule to apply to the assignment judge for an increase.

The court below applied the fee allowed by the rule to the net recovery and determined that the gross fee amounted to 16.8% of it. The court then determined that the lienor would be required to pay that percentage of its total compensation exposure as the fee for recovery of its lien. We take a different view.

Obviously, N. J. S. A. 34:16—40 was not enacted with a sliding scale contingent fee in mind. The new fee schedule, in cases of recoveries over $50,000, conflicts with the preexisting principle of equality of fee percentage between plaintiff and lienor. It was to this principle that the trial court gave full deference in holding that on their respective shares of the net recovery plaintiff and lienor would each pay 16.8% as fee. The method of calculation used by the trial court results in essentially the same overall fee as the criterion we use. However, the trial court’s determination had plaintiff paying more in fees on that portion of the recovery available for distribution after deduction of the lien than a plaintiff without a lien would be required to pay on the same part of the fund.

As we have pointed out above, where there is a workmen’s compensation lien it must be satisfied to the fullest extent possible out of the third-party recovery. Only that part of the recovery which exceeds the lien is available for distribution to plaintiff (unless, of course, the compensation owed has not been paid completely at the time of third-party recovery, in which event compensation ceases and the full difference beween the compensation paid and the total amount of compensation awarded is realized by plaintiff in lieu of further compensation payments).

Since the lienor has the prior right to payment, the lien exists on the first monies paid. Thus, the lienor, on its share of the recovery, will pay the greater of the percentages allowed by the fee schedule. Plaintiff’s fee obligation will begin after the lien is paid, and will begin at that point in the fee schedule where the lien stops and plaintiff’s interest begins. There is one caveat. The schedule allows 50% of the first $1,000 and 40% of the next $3,000, while N. J. S. A. 34 :15-40 puts a 33-1/3% ceiling on the'lienor’s fee. It is not evident that B. 1:31-7 was intended to modify the statute. Thus, the statute should control and the lienor may not be made to pay more than 33-1/3% of the lien or any portion thereof as fee.

Here the lien (total compensation exposure) is $39,450. The lienor owes 33-1/3% of this amount — $13,150 — as fee. N. J. S. A. 34:15—40 also provides that the lienor shall contribute up to $300 toward litigation expenses. The statute is clear that this charge is in addition to the fee required to be paid. Thus, the lienor in addition to the fee will be required to pay $300 toward litigation costs.

Total litigation expenses were $1,390. The $300 expense contribution from the carrier reduces the litigation expenses chargeable to plaintiff from $1,390 to $1,190. Deducting the latter amount from the gross settlement leaves a total fund of $348,810 on which to calculate the fees. The fee on the first $39,450 to be paid by the lienor has already been set forth. Since the plaintiff’s obligation begins where the lienor’s ends, the fees here will be:

(a) One-third of the lien of $39,450 or $13,150.
(b) One-third of $10,550 (i. e., the difference between the lien of $39,450 and $50,000) ____ $3,516.67.
(c) 20% of the next $50,000 .... $10,000.
(d) 10% of the net recovery over $100,000 or 10% of $148,810 .... $14,881.

The lienor owes $13,150 in fees and $200 toward litigation expenses.- The plaintiff owes $28,397.67 in fees and $1,190 in litigation costs. This result renders moot in this case the argument advanced that the lienor’s share of the recovery is not subject to the fee schedule because of the subrogation exception set forth in it.

Under our Death Act, in cases of intestacy an action for damages arising out of a wrongful death may be brought only by an administrator ad pros, specially appointed for that purpose. N. J. S. A. 2A :31-2. If the decedent dies testate, his executor may bring the action. In cases of intestacy payment is always to the general administrator of the estate, never to the administrator ad pros. N. J. S. A. 2A :31-6. No matter who brings the action, recovery is effectuated in one lump sum representing past and future economic loss to the class of beneficiaries entitled to share in the proceeds of the action. This class consists of “the persons entitled to take any intestate personal property of the decedent.” N. J. S. A. 2A :31-4. The statute goes on to provide that if any members of the class were dependent upon decedent, they shall take to the exclusion of any non-dependent members of the class.

Once the lump-sum recovery is obtained, whether by way of settlement or judgment, the trial court must hold a hearing without a jury in order to apportion the fund equitably among the members of the class entitled to share in it. N. J. S. A. 2A :31-4. See Jurman v. Samuel Braen, Inc., 47 N. J. 586, 598 (1966), and Suarez v. Berg, 117 N. J. Super. 456 (App. Div. 1971).

The settlement here was apportioned among plaintiff and her children pursuant to N. J. S. A. 2A :31-4. The argument is advanced that each distributive share represents a separate recovery and that the fee schedule should be applied to each fund after its division among the beneficiaries. We reject the contention. The rule assesses a sliding scale fee based on varying percentages of the amount “recovered.” There were no separate recoveries for each beneficiary and cannot be. The beneficiaries have no right to sue individually to recover their respective losses. All that our statute permits is a lump-sum recovery by one suing in a representative capacity, the sum later to be divided equitably among those entitled to benefit from it. Since under our Death Act there can be only one “recovery,” the fee schedule is to be applied to the total amount received, no matter how many beneficiaries are entitled to share in it, and not to the amounts of the various shares after distribution is determined.

What we have said above applies with equal force to the thought that some portion of the settlement hero is subject to B. 1:21—7(c) (6) which limits fees to not more than 25% on amounts recovered by way of settlement for the benefit of infants and incompetents. We think the rule basically was aimed at those situations, all subject to judicial approval, where a specific settlement is obtained because of a tort committed against the person or property of an infant or incompetent and was not intended to apply to wrongful death recoveries where the class of beneficiaries included one or more adults. It may be that the 25% limitation is applicable to a wrongful death recovery where all the beneficiaries are infants or incompetents — a point on which we do not rule. If that is so and a workmen’s compensation lien exists against the recovery, the highest fee percentage that could be charged the lienor would be 25%.

Thus, we vacate the judgment below and remand the matter for the assessment and allowance of fees and expenses as set forth in this opinion. Since the result reached increases the amount available for equitable distribution among the widow and children, the distributive shares will have to be adjusted accordingly.

Vacated and remanded.

      See, however. Teller v. Major Sales, Inc., supra, 64 N. J. at 145, n. 1, and Suarez v. Berg, supra, 117 N. J. Super, at 464, both of which involved settlements consummated prior to R. 1:21-7.


author: Kole, J. S. C.,

text:
    JERRY M. FERRARA, PETITIONER-APPELLANT, v. DIRECTOR, DIVISION OF TAXATION, RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued November 12, 1973—
    Decided March 5, 1974.

      Before Judges Haxdler, Meakor and Kolb.

      Mr. Frank J. Glock argued the cause for appellant (Messrs. Ferrara and Glock, attorneys).

      Mr. Michael E. Goldman, Deputy Attorney General, argued the cause for respondent (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney).
   The opinion of the court was delivered by

Kole, J. S. C.,

Temporarily Assigned. Appellant individually owns and operates a retail gasoline station. He challenges on this appeal a judgment by the Division of Tax Appeals based on a determination that the federal and state excise taxes on gasoline must be included in the computation of gross receipts for the purposes of the Unincorporated Business Tax Act, N. J. S. A. 54 :11B-1 et seq.

That statute, enacted in 1966, imposes a tax on gross receipts. When it was passed there already existed a federal excise tax on gasoline sold by the producer or importer thereof (Internal Revenue Code of 1954, 26 U. S. C. A. § 4081), and a state statute imposing a motor fuel tax on gasoline sold or used by a distributor in the State (N. J. S. A. 54:39-27). Both of these taxes will be sometimes referred to as gasoline taxes.

Appellant filed his Unincorporated Business Tax return for the year 1967 in which he deducted, as “receipts not subject to tax,” the motor fuel tax imposed by the State and the excise tax imposed on the sale of gasoline by the Federal Government. The deduction was disallowed by the Division of Taxation and, as indicated, by the Division of Tax Appeals.

The federal and state gasoline taxes are collected by the distributor or producer of the gasoline from the retail dealer by means of a billing invoice whereby the amount of the tax is listed separately from the actual price of the motor fuel itself. The amount of these taxes is collected by the retailer from the consumer. The retailer remits it to the distributor or producer, which pays it to the appropriate state or federal authority.

The New Jersey Unincorporated Business Tax Act imposes

* * * upon every individual or other unincorporated entity engaged in an unincorporated business an annual excise tax, measured by the gross receipts of such unincorporated business, and allocated to the State as hereinafter provided at the rate of % of 1%. [N. J. S. A. 54 :11B-3]

“Gross receipts” is defined to “mean and include all receipts, of whatever kind and in whatever form, derived by an unincorporated business, without any deduction therefrom on account of any item of cost, expense or loss, except that gross receipts shall not include the sales price of property returned by customers to the extent that the sales price thereof is refunded either in cash or by credit.” N. J. S. A. 54:11B-2(b), emphasis added.

If the state and federal gasoline taxes are imposed on the producer or distributor and thus merely constitute an element of its cost passed down to the retailer and finally to the consumer in the form of a higher retail selling price, then these taxes are an “item of cost” or “expense” that must be included within appellant’s “gross receipts” under the act. On the other hand, if, as appellant contends, the gasoline taxes are not part of the cost of production or distribution but, rather, taxes imposed on the consumer at the time of the retail sale, then the producer, distributor and retailer would be, in effect, agents of the taxing government, charged with the responsibility of collecting the consumer taxes. In that event the dollar increase for gasoline at retail caused by the imposition of the taxes would not be an “item of cost” or “expense”; it would be money collected by the retailer not as part of the retail selling price but rather as a separate fund to be passed along through the marketing chain to the government. It would thus not be includible in the retailer’s gross receipts for the purposes of the Unincorporated Business Tax.

The resolution of the issue of whether the gasoline taxes are merely elements of the cost of production or distribution, or separate charges arising only at the retail sale, involves a determination of the time at which and upon whom in the marketing chain the gasoline taxes are imposed, rather than who eventually bears the economic burden. See Dow Jones & Co. v. United States, 128 F. Supp. 748, 130 Ct. Cl. 696 (Ct. Claims 1955); Lash's Products Co. v. United States, 278 U. S. 175, 176, 49 S. Ct. 100, 73 L. Ed. 251 (1929); Agron v. Illinois Bell Telephone Co., 449 F. 2d 906, 913 (7 Cir. 1971). As stated in Blackmon v. Coastal Service, Inc., 125 Ga. App. 28, 186 S. E. 2d 441 (1971), aff’d 229 Ga. 471, 192 S. E. 2d 372 (1972) :

In determining the point at which any such tax falls, primary consideration must be given to the applicable taxing statutes * * *. [186 S. E. 2d 442]

See also, 68 Am. Jur. 2d, Sales and Use Taxes, § 131.

1. The Federal Gasoline Tax

The federal excise tax on gasoline provides as follows:

There is hereby imposed on gasoline sold by the producer or importer thereof, or by any producer of gasoline, a tax of 4 cents a gallon. [26 U. S. C. A. § 4081]

The term “producer” is defined in § 4082 of the federal act to include wholesale distributors, and §§ 48.4081-1(0) and 48.4101-1 of the Treasury regulations provide that the liability to pay the tax is on the producer who makes the sale.

It is true, as appellant contends, that the revenue raised by the federal tax does not go into the general treasury of the Federal Government but instead is directed to a highway trust fund. In this connection there have been statements by Congress describing the tax as a “user tax” which serves to assess highway users for the costs thereof. Report of the House Ways and Means Committee on H. R. 8371, 89th Cong. 1st Sess. (1965), 1965 U. S. Code Cong, and Adm. News pp. 1658-1659. However, the mere fact that it may be universally recognized that the ultimate economic burden of a tax is passed on to the consumer does not determine the legal incidence of the tax. Traditionally, the economic burden of all taxes, like costs in general, is passed down to the consumer level. Tax Review Board v. Esso Standard Div., etc., 424 Pa. 355, 227 A. 2d 657 (Sup. Ct. 1967), cert. den. 389 U. S. 824, 88 S. Ct. 63, 19 L. Ed. 2d 79 (1967); State v. Thoni Oil, etc., Gas Stations, Inc., 121 Ga. App. 454, 174 S. E. 2d 224 (App. Ct. 1969) aff’d 226 Ga. 883, 178 S. E. 2d 173 (1970); Martin Oil Service, Inc. v. Dept. of Revenue, 49 Ill. 2d 260, 273 N. E. 2d 823 (Sup. Ct. 1971), cert. den. 405 U. S. 923, 92 S. Ct. 961, 30 L. Ed. 2d 794 (1972); Sun Oil Co. v. Gross Income Tax Div., 238 Ind. 111, 149 N. E. 2d 115 (Sup. Ct. 1958).

Similarly, the use by a producer or distributor of a billing invoice wherein the federal tax is separately listed cannot affect its true legal incidence. Tax Review Board v. Esso Standard Div., etc., supra; Pure Oil Co. v. State, 244 Ala. 258, 12 So. 2d 861, 863 (Sup. Ct. 1943); People v. Werner, 364 Ill. 594, 5 N. E. 2d 238, 240 (Sup. Ct. 1936).

However, it has been held that the word “sold” in 26 U. S. C. A. § 4081, and the provisions of the Internal Revenue Code permitting refunds to gasoline purchasers if the gasoline is used on a farm or for other nonhighway purposes, are evidence of a Congressional intent that the- gasoline tax be considered a sales tax imposed on the consumer at the moment of retail sale with the producer or distributor acting merely as government tax collectors. Tax Review Board v. Esso Standard Div., etc., supra. We do not subscribe to that view.

Nowhere in the federal statute is there any evidence that the tax arises only upon a consumer sale. Rather, the statute indicates that the taxable event is any sale by the “producer,"’ as that term is defined. The liability for payment of the tax is on the producer or distributor who makes the sale. If it fails to remit payment, the Federal Government does not have the option of proceeding directly against the purchaser-consumer. The government may seek to collect the tax only from the producer or distributor. We find this determinative and hold that the legal incidence of the federal gasoline tax is on the producer, as defined in 26 U. S. C. A. § 4082. The tax arises and the taxable event occurs whenever the producer or distributor makes a sale, whether that be to a retail dealer or consumer. State v. Thoni Oil, etc., Gas Stations, Inc., supra; Martin Oil Service, Inc. v. Dept. of Revenue, supra; Sun Oil Co. v. Gross Income Tax Div., 238 Ind. 111, 149 N. E. 2d 115 (Sup. Ct. 1958).

Moreover, the refund provisions of the federal statute referred to above do not compel a contrary conclusion. As was stated in Martin Oil Service, Inc., v. Dept. of Revenue, supra:

We consider that these payments by the Federal government are not refunds in the technical sense but rather allowances to certain consumer-purchasers based on a recognition that the economic burden of the gasoline taw falls on the ultimate consumer. The gasoline tax proceeds are used to provide Federal finances for highway support. There was an obvious inequity in requiring farmers and others using gasoline for off-highway uses to assume the same burden as consumers whose use of the gasoline required use of the highways. The Congress for this reason provided for these payments. [27.3 N. E. 2d at 827; emphasis added]

2. The New Jersey Motor Fuel Tax

N. J. S. A. 54 :39—27 provided for the tax year here involved :

Every distributor shall *■ * * render a report to the commissioner * * * stating the number of gallons of fuel sold or used in this State by him * * *. A tax of $0.06 per gallon on each gallon so reported shall be paid by each distributor * * *. If any distributor shall fail, neglect or refuse to file the report within the time prescribed by this section, the commissioner shall * * * estimate the sales, distribution and use of said distributor, assessing the tax thereon, adding to said tax a penalty of 20% thereof for failure, neglect or refusal to report, and such estimate shall be prima facie evidence of the true amount of tax due to the commissioner from such distributor *’ * *. [Emphasis added]

The term “distributor” is defined in N. J. S. A. 54 :39-3 to include producers.

There is nothing in the state gasoline tax statute to suggest that the legal incidence of the tax is on the consumer. To the contrary, on its face it is clear that the liability for payment of the tax rests on the distributor. The taxable event is any sale or use by a distributor; nowhere is the word “consumer” employed in the statute. It would be inconsistent to say that the legal incidence is on the consumer, but at the same time to say that he is not liable for the tax. Martin Oil Service, Inc. v. Dept. of Revenue, supra.

Appellant contends that the requirement that distributors list separately the state gasoline tax in a written statement delivered to their purchasers, N. J. S. A. 54 :39-35, the use of the proceeds of the state tax primarily for improvement of transportation facilities, N. J. S. A. 54:39-11 through 15, and the provisions for refunds of the state gasoline tax to certain consumer-purchasers, N. J. S. A. 54:39-66, all indicate a legislative intention that the tax is imposed on the consumer or user of the highways. As with the federal tax we find these arguments unpersuasive. These statutory provisions reflect nothing more than a legislative awareness that suppliers o£ gasoline can be expected to pass their tax costs down to the retailer, and subsequently the economic burden will be imposed on the consumer and certain users of transportation facilities in the form of a higher retail price. Whether a tax is passed on to the consumer is immaterial in determining the liability for the tax or on whom it is actually imposed. See e. g., Sun Oil Co. v. Gross Income Tax Div., supra.

Thus, we hold that the wording of N. J. S. A. 54 :39-21 compels the conclusion that the legal incidence of the state gasoline tax is on the distributor, as defined in the New Jersey Motor Enel Tax Act. Apart from the statutory language, it is also significant that in the statement attached to the 1950 amendment of the Motor Fuel Tax Act, L. 1950, c. 144, distributors were referred to as those “who are the taxpayers under the law.”

Had the Legislature intended to impose the tax on the consumer, it could have done so plainly, as it did in the New Jersey Sales and Use Tax Act, N. J. S. A. 54 :32B-1 et seq. That statute clearly indicates that the legal incidence of, and primary liability for, the tax is on the consumer or user, and the retailer or seller is liable therefor as a collecting agent or trustee for the State. The State may collect from or sue the customer, as well as the retailer or seller, for the tax, and the retailer or seller may also sue the customer to collect the tax, provided the Director is made a party. N. J. 8. A. 54 :32B-6, 12, 14 and 22.

Appellant also contends that in view of the size of both gasoline taxes in relation to the wholesale price of gasoline, it would be unconscionable to require their inclusion as part of gross receipts under the Unincorporated Business Tax Act. That argument is addressed to the wisdom of the Legislation and is not a proper subject for judicial concern. A. & B. Auto Stores of Jones St., Inc. v. Newark, 59 N. J. 5, 19 (1971); Burton v. Sills, 53 N. J. 86, 95 (1968), app. dism., 394 U. S. 812, 89 S. Ct. 1486, 22 L. Ed. 2d 748 (1969); Thomas v. Kingsley, 43 N. J. 524, 530 (1965).

Appellant further claims that N. J. S. A. 56 :6-2.3 of the Unfair Motor Fuel Practice Act, requiring that the retailer post a unit price separately stating the state and federal gasoline taxes, respectively, evidences an intent that such taxes constitute a tax on the consumer. We do not agree. The purpose of that provision and the statute of which it is a part bears no relationship to the gasoline tax statutes or the Unincorporated Business Tax Act. It was designed to control the practice of deceiving the public with respect to the price charged for gasoline and to prevent unfair practices, including price wars, in the retail sale of motor fuels. Fried v. Kervick, 34 N. J. 68 (1961).

Nor is it significant, as appellant suggests, that state gasoline taxes are deductible by the consumer for federal income tax purposes. The treatment of these taxes under the federal Income Tax Act is not relevant to a determination of their actual legal incidence under, and the intent of, any of the statutes here involved.

In State v. Thoni Oil, etc., Gas Stations, Inc., supra, the court found a state motor fuel tax to be imposed on consumers and thus not includible in a calculation of gross proceeds. However, the Georgia statute shows marked differences from that of this State. Although it provides that a per gallon tax is “imposed on all distributors" the Georgia statute also states that it was the intention of the legislature that the consumer bear the tax burden, and it prohibits sellers of motor fuel from absorbing the tax themselves. Moreover, the Georgia statute declares that the gasoline tax is to be “added to the sales price" and that the taxes shall he a debt from the consumer to the distributor. See also, American Oil Co. v. Mahin, 49 Ill. 2d 199, 273 N. E. 2d 818 (Sup. Ct. 1971). In contrast, there is no New Jersey statutory requirement that the tax he passed down to the consumer level.

In view of the foregoing, the determination by the Division of Tax Appeals that appellant was required to include the federal and state taxes on gasoline in his gross receipts and its judgment are affirmed.

       26 U. S. C. A. § 6420(a) provides for a full refund if the gasoline has been used on a farm for farming purposes. 26 U. S. C. A. § 6421(a) permits a partial refund if the gasoline has been used for other nonhighway purposes, and 26 U. S. C. A. § 6421(b) provides for a partial refund to local transit systems.

      Support for our conclusion is found in a report of the U. S. Senate Committee on Finance, which stated that the federal gasoline tax is imposed on the “producer, importer or wholesale distributor of the gasoline and is payable shortly after he makes its sale.” 1961 U. S. Code Cong, and Adm. News p. 1830.

      This section was subsequently amended to include gasoline jobbers and to increase the tax rate. L. 1968, c. 111, § 1; L. 1968, c. 420, § 10; L. 1972, c. 26, § 1.

      Although the federal statute, 26 U. S. C. A. § 4081, employs the term “producer,” and N. J. S. A. 54 :39-27 uses the word “distributor,” the state and federal statutes each define the one to include the other. In addition, a tax on gasoline will be includible in a retailer’s gross receipts so long as it is imposed at any point in the marketing chain prior to the consumer sale. Thus, for the purposes of this appeal the fact that the state and federal statutes use these different terms is of no significance.

       In this connection note the provisions of N. J. S. A. 54 :39-18 requiring distributors to file a bond with the commissioner conditioned upon “the payment of all taxes, penalties, and other obligations of such person arising out of this chapter.”

      The Sales and Use Tax Act permits the Director of Taxation in his discretion, where necessary to protect revenues under that act, to require any person who must collect the tax to file a bond to secure payment of the tax, penalties or interest. N. J. S. A. 54 :32B-18. The Motor Fuel Tax Act, on the other hand, requires distributors to file such a bond with respect to taxes thereunder. See fn. 5, supra.