author: Gascoyne, J. C. C.,

text:
    HOWARD SCHWEIZER, PLAINTIFF, v. ELOX DIVISION OF COLT INDUSTRIES AND GENERAL ELECTRIC COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF, v. SENTRY INSURANCE COMPANY, STATUTORY SUBROGEE OF METEM CORPORATION, THIRD-PARTY DEFENDANT. STANLEY J. KRAWCZUK, PLAINTIFF, v. ELOX DIVISION OF COLT INDUSTRIES AND GENERAL ELECTRIC COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF, v. SENTRY INSURANCE COMPANY, STATUTORY SUBROGEE OF METEM CORPORATION, THIRD-PARTY DEFENDANT. STANLEY J. KRAWCZUK AND CAROLYN KRAWCZUK, PLAINTIFFS, v. ELOX DIVISION OF COLT INDUSTRIES, DEFENDANT. LINDA BARTON, ADMINISTRATRIX AD PROSEQUENDUM, ETC., PLAINTIFF, v. ELOX DIVISION OF COLT INDUSTRIES AND GENERAL ELECTRIC COMPANY, THIRD-PARTY PLAINTIFF, v. SENTRY INSURANCE COMPANY, STATUTORY SUBROGEE OF METEM CORPORATION, THIRD-PARTY DEFENDANT.
    Superior Court of New Jersey Law Division
    February 25, 1975.

      Mr. Edmond J. Dwyer, Jr. for plaintiff Howard Schweizer (Messrs. Jung, Dwyer and Lisbona, attorneys).

      Mr. David S. Cramp for defendant Elox Division of Colt Industries, Inc. (Messrs. Schenck, Price, Smith and King, attorneys).

      Mr. Bernard F. Conway for defendant and third-party plaintiff General Electric Company (Messrs. Conway and Belsole, attorneys).

      Mr. John J. Ronca for third-party defendant Sentry Insurance Company (Messrs. Ronca and McDonald, attorneys).

      Mr. Vincent J. Infinito for plaintiffs, Stanley J. Krawczuk and Carolyn Krawczuk (Messrs. Dunn and Infinito, attorneys).

      Mr. Carl Greenberg for plaintiff Linda Barton (Messrs. Porzio, Bromberg and Newman, attorneys).
   Gascoyne, J. C. C.,

Temporarily Assigned. These four actions arise out of an industrial accident which occurred on April 30, 1971. Plaintiffs were employees of Metem Corporation (Metem) and all were injured while on tlieir employer’s premises. Sentry Insurance Co. (Sentry) is the workmen’s compensation carrier for Metem and has paid plaintiffs benefits pursuant to its insurance policy. Plaintiffs instituted suit against Elox Division of Colt Industries (Elox) and General Electric Company (G. E.) charging that their injuries were proximately caused by the negligence of Elox and G. E. By leave of court, G. E. was permitted to file a third-party complaint joining Sentry as a statutory subrogee. G. E. alleges that to the extent that Sentry seeks reimbursement for payments made or to be made by it to the various plaintiffs, any judgment against G. E. should be reduced to the extent of such payments because of the concurrent negligence of Metem. To put it another way, G. E. argues that Sentry’s right to reimbursement should be barred since it should not benefit from the concurrent negligence of its insured. G. E. vehemently argues that it does not seek to hold Metem and hence Sentry liable as a joint tortfeasor, and further contends that it does not seek to disturb the rights of plaintiffs regarding compensation benefits. It does seek to reduce its liability to plaintiffs to the extent that Sentry is liable to plaintiffs for compensation benefit, i. <?., a pro tanto reduction of any judgment against it to the extent that Sentry has paid or will pay plaintiffs. Sentry moved for dismissal for failure to set forth a cause of action pursuant to R. 4:6-2(e).

While this argument is of novel impression in New Jersey, it has been decided and accepted in other jurisdictions, notably Pennsylvania, California and North Carolina.

To anyone who has had any dealings with a workmen’s compensation carrier in seeking to dispose of third-party actions such as these, there is a certain practical appeal to G. E.’s argument. Too often a favorable disposition of such actions is frustrated by the carrier’s refusal to compromise its lien, thus making disposition impossible. The matter must then proceed to trial, ofttimes to the detriment of the plaintiff-employee. These factors, together with the philosophy that a subrogee should not be allowed to profit by the wrongful acts of its subrogor, gives impetus to the position advocated by G. E.

Under the law of this State certain basic principles are firmly established.

When the employer and employee elect to have their rights adjudged and fixed pursuant to the terms of the compensation act then the common law remedy in tort falls by reason of the statutory contract for compensation, based not upon the principle of tort but on remuneration regardless of fault to the injured employee. [Danek v. Hommer, 9 N. J. 56, 60 (1952) ]

The Workmen’s Compensation Act was intended

* * * to accomplish an economic reform in the legal rights and responsibilities between employer and employee, and to accomplish its purpose it made the employer responsible to this employee for injuries sustained in an accident arising out of and in the course of his employment even though no negligent act of the employer caused the accident and even though the accident was the result of the negligent act of a third party. United States Casualty Co. v. Hercules Powder Co., 4 N. J. 157, 163 (1950).

Au employee cauuot 'lawfully maintain an action in tort against his employer, hence the employer is not liable in tort”. Farren v. N. J. Turnpike Auth., 31 N. J. Super. 356, 361 (App. Div. 1954).

Historically, when the Workmen’s Compensation Act was enacted in 1911 the act made no provision for the reimbursement of the employer or his insurance carrier out of any proceeds recovered by way of judgment against or settlement with a third party who was responsible for the employee’s injury or death. The employer had to continue payments pursuant to any award despite any recovery against a third party by the employee. The injured employee or his dependents could retain all compensation payments for which his employer was responsible under the act and at the same time recover and retain in full damages resulting from his common law right of action in tort against the third-party wrongdoer. To remedy this inequity, the Legislature, through a series of amendments, made provision for complete reimbursement to the employer or his insurance carrier as presently set forth in N. J. S. A. 34:15-40. As was noted by the court in United States Casualty Co. v. Hercules Powder Co., supra:

Obviously the purpose of this amendatory legislation was to set np a comprehensive plan within the structure of the Workmen’s Compensation Act for regulating and marshaling the rights and responsibilities of the several parties concerned in compensation payments where, in the course of his employment, injury or death comes to a workman as the result of the fault of a third party. There is retained for the benefit of the injured employee or his dependents the benefit of his common law action against such third party in which the application of the common law rule for the assessment of damages may result in the recovery of an amount in excess of the total amount of the compensation awarded according to the statutory formula prescribed by the act. At the same time the evil of the old law is obviated by providing for the reimbursement of the employer or his insurance carrier out of the proceeds of any such recovery from or settlement with the third party tort-feasor, [at 165 of 4 N. J.]

Thus, this right to reimbursement from such third-party recovery is derived from the employer’s or his insurance carrier’s "statutory subrogation under N. J. S. A. 34:15-40.” United States Casualty Co. v. Hercules Powder Co., supra; Roberts v. All American Engineering Co., 104 N. J. Super. 1 (App. Div. 1968).

With this background it would be in order to examine the bases of the majority and minority views in order to determine which comports closer to the public policy as enundated by our courts. The minority view takes two separate approaches to the problem.

In Brown v. Southern Ry. Co., 204 N. C. 668, 169 S. E. 419 (Sup. Ct. 1933), the court said:

«■ * * Nevertheless, when the employee or his estate has been satisfied, and the employer seeks to recover the amount paid by him, from such third party, his hands ought not to have the blood of the dead or injured workman upon them, when he thus invokes the impartial powers and processes of the law. [169 S. E. at 420]

The court went on to hold that the judgment against the third-party tortfeasor is reduced pro tanto by the amount to which the plaintiff employee would be entitled under the Workmen's Compensation Act. See also Essick v. City of Lexington, 233 N. C. 600, 65 S. E. 2d 220 (Sup. Ct. 1951); Lovette v. Lloyd, 236 N. C. 663, 73 S. E. 2d 886 (Sup. Ct. 1953); Hunsucker v. High Point Bending & Chair Co., 237 N. C. 559, 75 S. E. 2d 768 (Sup. Ct. 1953). It is interesting to note that the North Carolina Legislature has now amended its statute (C. S. § 97-10.2), incorporating the holdings of its Supreme Court.

Pennsylvania also permits the impleading of the employer for the purpose of showing his contributory negligence. However, upon a finding of negligence on the part of the employer, Pennsylvania employs a different modus operandi in giving a third-party tortfeasor relief. The third-party tortfeasor's contribution is limited to the amount of compensation payments made by the employer to the employee or his representative. Maio v. Fahs, 339 Pa. 180, 14 A. 2d 105 (Sup. Ct. 1940); Brown v. Dickey, 397 Pa. 454, 155 A. 2d 836 (Sup. Ct. 1959). Thereafter, if the third-party tortfeasor satisfies the balance of the judgment after a pro tanto reduction for such payments, the employer or his insurance carrier make payments for the balance still due and owing pursuant to the workmen's compensation agreement directly to the third-party tortfeasor or his insurauce carrier. Stark v. Posh Construction Co., 192 Pa. Super. 409, 162 A. 2d 9 (Super. Cl. 1960).

Parenthetically, it should be noted that Pennsylvania seemingly would permit the employer to be held liable i'or the negligence of a coemployee, Maio v. Fahs, supra, while North Carolina does not hold the employer liable under the doctrine of respondeat superior but only for his independent negligence. Poindexter v. Johnson Motor Lines, 235 N. C. 286, 69 S. E. 2d 495 (Sup. Ct. 1952); Brown v. Southern Ry. Co., supra; Lovette v. Lloyd, supra.

California adhered to the majority rule prior to the enactment of the Joint Tortfeasors Contribution Act of 1957 (Code of Civil Procedure, §§ 875-880). The court equated the seeking of a reduction to the extent that plaintiff had been paid benefits pursuant to the Labor Code with an attempt to secure contribution between joint tortfeasors. See Finnegan v. Royal Realty Co., 35 Cal. 2d 409, 218 P. 2d. 17 (Sup. Ct. 1950). In Witt v. Jackson, 57 Cal. 2d 57, 17 Cal. Rptr. 369, 366 P. 2d 641 (Sup. Ct. 1961), the court held that the enactment of the Joint Tortfeasors Contribution Act made prior holdings obsolete. The court went on to adopt the North Carolina rule and, after quoting the above portion of the Brown case, continued by saying:

* * * The Lovette case, supra, reiterated the same argument in more moderate language: “It is contrary to the policy of the law for the employer, or Ms subrogee, the insurance carrier, to profit by the wrong of the employer.” (73 S. E. 2d at pp. 893-892). (See also Stark v. Posh Construction Co., 192 Pa. Super. 409, 162 A. 2d 9, 12.) This policy should prevail here since there is nothing in the Labor Code to suggest that the Legislature contemplated that a negligent employer could take advantage of the reimbursement remedies that those sections provide. Tn the absence of express terms to the contrary, these provisions must be deemed to bo qualified by Civil Code, section 3517 which provides that “No one can take advantage of Ms own wrong.” Thus, whether an action is brought by the employer or the employee, the third party tortfeasor should be able to invoke the concurrent negligence of the employer to defeat its right to reimbursement, since, in either event, the action is brought for the benefit of the employer to the extent that compensation benefits have been paid to the employee. (See Lovette v. Lloyd, supra, 73 S. E. 2d at p. 892). [17 Cal. Rptr. at 377, 366 P. 2d at 649]

See Roe v. Workmen's Compensation Appeals Bd., 12 Cal. 3d 884, 117 Cal. Rptr. 683, 528 P. 2d 771 (Sup. Ct. 1974); Gregory v. Workmen's Compensation Bd., 12 Cal. 3d 899, 117 Cal. Rptr. 694, 528 P. 2d 782 (Sup. Ct. 1974).

The majority jurisdictions follow the reasoning that the employer should be reimbursed by the third-party tortfeasor despite any concurrent negligence on his part because the relevant portion of the Workmen’s Compensation Act does not expressly preclude recovery, or alternatively, that since the employer stands in the shoes of his employee, the concurrent negligence of the 'employer does not bar the employee and hence neither can it bar the employer. The majority view is exemplified in General Box Co. v. Missouri Utilities Co., 331 Mo. 845, 55 S. W. 2d 442 (Mo. Sup. Ct. 1932), wherein the court said:

* * * The sole test of liability of the third party to the subrogated employer is the liability of the third party to the injured servant or his dependents, and it clearly is no defense to the third party’s liability for his own negligence to show that another party, his employer, was also negligent concurrently and contributing thereto. Moreover, the employer is by this statute subrogated to the rights of the injured employee, or his dependents in ease of death, against the negligent third party, and the law certainly is that the right of an injured party or his dependents to recover damages against a party whose negligence caused the injury is not defeated or impaired by the fact that another party’s negligence also aided or contributed to the injury. At most, the negligence of the plaintiff, employer, made it and the defendant, the negligent third party, joint tort-feasors, and the injured employee, Clark, or his dependents, had a right under the general law, except as modified by the Workmen’s Compensation Act, to sue and recover full damages against either tort-feasor, and the concurrent or contributory negligence of the other tort-feasor is wholly immaterial as a defense or in diminution of the amount of recovery. Our Courts have held that, while the Workmen’s Compensation Act deprives the injured employee, or his dependents in case of death, of the right to maintain a suit based on negligence against his employer when such act applies, the compensation allowed being exclusive * * !h yet the right of such employee to sue and recover against the negligent third party remains unimpaired by such act, * * * Under these provisions of the statute, it is properly held that the employer takes over unimpaired the injured employee’s whole cause of action against the negligent third party, defendant in this case, by statutory assignment rather than strict subrogation, and, so far as the negligence of the third party is concerned, steps in the shoes of the injured employee. * * * The suit of the subrogated employer is not one pro tanto merely for indemnity or reimbursement of the compensation paid or to be paid to the employee, but is for the whole cause of action of the injured employee against one responsible in damages for the whole injury, and who cannot interpose the concurring negligence of a joint tort-feasor as a defense. McKenzie v. Missouri Stables, 225 Mo. App. 64, 70, 34 S. W. 2d 136, 139, where the court said: “There is nevertheless no doubt that it [the statute in questionj gives him [the employer] the right to bring and prosecute the action for damages, not pro tanto, but in its entirety.” And in Superior Minerals Co. v. Railroad, 227 Mo. App. 1044, 45 S. W. 2d 912, 914, this is said: “Likewise we have held in somewhat the same connection that, even though section 3309, the subrogation statute, does not deprive the injured employee, as a real party in interest, of the right to maintain an action against the third party, yet it does, by a process of conventional subrogation in the nature of an assignment, plainly invest the employer liable for compensation with the right to bring and maintain the action against such third party, in his own name, but for the benefit of both himself and the injured employee. [at 445-446; emphasis supplied; citations omitted]

See also Cyr v. F. S. Payne Co., 112 F. Supp. 526 (D. Conn. 1953); Baker v. Traders & Gen. Ins. Co., 199 F. 2d 289 (10 Cir. 1952); Williams Bros. Lumber Co. v. Meisel, 85 Ga. App. 72, 68 S. E. 2d 384 (Ct. App. 1951); Royal Indemnity Co. v. Southern Calif. Petroleum Corp., 67 N. M. 137, 353 P. 2d 358 (Snp. Ct. 1960); Utley v. Taylor & Gaskin, 305 Mich. 561, 9 N. W. 2d 842 (Sup. Ct. 1942); Clark v. Chicago, M., St. P. & P. R. Co., 214 Wis. 295, 252 N. W. 685 (Sup. Ct. 1934): Graham v. City of Lincoln, 106 Neb. 305, 183 N. W. 569 (Sup. Ct. 1981); Fidelity & Cas. Co. v. Cedar Valley Electric Co., 187 Iowa 1014, 174 N. W. 709 (Sup. Ct. 1919); City of Shreveport v. Southwestern Gas & Electric Co., 145 La. 680, 82 So. 785 (Sup. Ct. 1919).

G. E. emphasizes that since it does not seek contribution, therefore the Joint Tortfeasors Contribution Act is not relevant to the issue. This contention is without merit. That the Workmen’s Compensation Act and the Joint Tortfeásors Contribution Act must be read in pari materia is clearly. demonstrated by the Witt case, supra, wherein the position of California prior to the adoption of the Joint Tortfeasors Contribution Act was overruled after the adoption of the act.

Except when construing the right of the employee, the Workmen’s Compensation Act, being in derogation of the common law, must be strictly construed. Standard Surety & Cas. Co. of N. Y. v. Murphy, 129 N. J. Eq. 284 (E. & A. 1940); Belfatto v. Massachusetts Bonding & Ins. Co., 39 N. J. Super. 507 (Ch. Div. 1956); Dugan Bros. of N. J. v. Robinson, 139 N. J. Eq. 318 (Ch. 1947). N. J. S. A. 34:15-40 lays out a comprehensive legislative plan for the application of the "statutory subrogation” for the employer or his insurance carrier. How can it be said, in the light of the foregoing, that the court should write in provisions that the Legislature in its wisdom did not ? To answer this question a review of our eases construing the Joint Tortfeasors Act as applied to the employer-employee relationship is in order. In Yearicks v. Wildwood, 23 N. J. Super. 379 (Law Div. 1952), the court noted that ordinarily joint tortfeasors statutes are inapplicable to an employer within the terms of a Workmen’s Compensation Act as to a third-party tortfeasor, but allowed a third-party complaint where there was contractual indemnification applicable to the employer.

In the Farren case, supra, 31 N. J. Super. 356, the Appellate Division held that an employer could not be held liable as joint tortfeasor. The rationale of this case was that since the employee could not maintain a cause of action against his employer in tort, neither could a third party. The court pointed out (at 361) that plaintifE’s employer "was legally exempt from 'liability in tort * *

The issue-raised in the present case was presented with ramifications (accident occurred in Pennsylvania and the law of the locus delecti was pleaded) in Zotta v. Otis Elevator Co., 64 N. J. Super. 344 (App. Div. 1960). The procedural deficiency in that case (the denial of the motion to join the employer as a third party) has been cured herein, and this court is in essence presented with the issue unresolved in Zotta. The reason for use of the term “in essence” is that there is no conflict of laws problem involved here. Succinctly put, the question then is whether New Jersey law is more compatible with the majority or minority views as presented heretofore. As Judge Kilkenny said in Zotta:

New Jersey, however, following the majority view holds that where, because of the workmen’s compensation law, the negligence of the employer does not give his injured employee a cause of action in tort against him, the third-person tortfeasor cannot recover contribution even though the employer’s concurring negligence was the proximate cause of the injury. The essence of the doctrine of contribution, by the New Jersey and majority view, is a common obligation to the person injured by the common tortious conduct. Fault alone is not enough; there must be a joint liability to respond to the injured person in damages for the consequences of the default, [at 348-349; citations omitted]

In New Jersey the employer stands in the shoes of the employee. All defense available against the employee, such as his contributory negligence,, are available against the employer. In view of the foregoing and because of the legislative scheme set forth in N. J. S. A. 34:15-40, as matter of public policy, if an employer is to be held liable for a pro tanto share based on his concurrent negligence with that of a third-party tortfeasor, this should be a matter of legislative fiat. If the Legislature had wanted an exception, it could have made provision in either the Workmen’s Compensation Act or the Joint Tortfeasors Contribution Act. Having not provided for an exception, the court should not indulge in judicial legislation. The New Jersey workmen’s compensation statute dealing with subrogation and the holdings of our courts are akin to that set forth in the General Box Co. case, supra, thus dictating that New Jersey should adopt the majority view. •

The motion to dismiss the third-party complaint is granted.


source: Caselaw Access Project

author: Rosenberg, J. S. C.

license: Public Domain

text:
    LAWRENCE R. McCOY CO., INC., PREMIER TRADING CO., PHILLIP BROTHERS (SOCOMET, INC.), RUSS STONIER, INC., AMERLUZ STEEL PRODUCTS CORP., SIMPSON TIMBER CO. AND SIMPSON INTERNATIONAL, C. ITOH & CO. (AMERICA) INC., WEYERHAUSER CO., KURT ORBAN CO., INC., SIGMA MACHINERY, INC., C.A.M. MACHINERY CORP., FIDELITY MACHINE TOOL, INC., NATIONAL MACHINERY EXCHANGE, INC., EVANS PRODUCTS CO., PLAINTIFFS, v. S.S. “THEOMITOR III”, MONDEZUMA COMPANIA ARMADORA, S.A., RETLA STEAMSHIP CO., S.S. “OLYMPIC PEARL”, FALMOUTH MARINE PANAMA, S.A., S.S. “MEGALO HARI”, DEMETRIOS RAVIOLOS AND PETROS DAICAS, S.S. “OLYMPIC PIONEER”, RICHMOND MARINE PANAMA, S.A., SIDMAR MARITIEME STAALNIJVERHEID, S.S. “FRATERNITY”, DICTA MARITIME CORP., FRATERNITY SHIPPING CORP., S.S. “OLYMPIC PEGASUS”, SOMERSET NAVIGATIONAL CO., PANAMA, S.A., S.S. “BRITISH MONARCH”, SCOTT’S SHIPBUILDING & ENG. CO., LTD., S.S. “VENNACHAR”, AIDEN SHIPPING CO., LTD., S.S. “PHILIPPINE BATAAN”, MARITIME CO. OF THE PHILIPPINES, HOLT HAULING & WAREHOUSE SYSTEMS, INC., HOLT MARINE TERMINAL, INC., LUCKENBACH STEAMSHIP CO., INC., AND SOUTH JERSEY PORT CORPORATION, A CORPORATION WITHIN THE STATE DEPARTMENT OF ENVIRONMENTAL PROTECTION OF THE STATE OF NEW JERSEY, DEFENDANTS. HOLT MARINE TERMINAL, CORP., A NEW JERSEY CORPORATION, THIRD-PARTY PLAINTIFF, v. LUCKENBACH STEAMSHIP CO., INC., A DELAWARE CORPORATION, AND SOUTH JERSEY PORT CORPORATION, A CORPORATION WITHIN THE STATE DEPARTMENT OF ENVIRONMENTAL PROTECTION OF THE STATE OF NEW JERSEY, THIRD-PARTY DEFENDANTS. AMERICAN WOOD FINISHING SYSTEMS, PLAINTIFF, v. HOLT HAULING & WAREHOUSE SYSTEMS, INC. AND SOUTH JERSEY PORT CORPORATION, A CORPORATION WITHIN THE STATE DEPARTMENT OF ENVIRONMENTAL PROTECTION OF THE STATE OF NEW JERSEY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided February 25, 1975.

      Mr. David A. Birch for plaintiffs (Messrs. Burn, Biunno & Tompkins, attorneys; Mr. Ronald DeMaria of counsel)

      Mr. John P. Dwyer for defendants S.S. “Theomitor III” et al. (Messrs. Carpenter, Bennett & Morrissey, attorneys; Mr. Raul Betancourt, Jr. and Mr. Richard W. Palmer of the Pennsylvania Bar on the brief and of counsel).

      Mr. James H. Freis for defendant and third-party plaintiff Holt Marine Terminal, Inc. (Messrs. Shanley & Fisher, attorneys; Mr. William G. Becker, Jr. on the brief and of counsel).

      Mr. Daniel K. Read for defendant and third-party defendant Luckenbach Steamship Co.

      Mr. Charles M. Rand for defendant Holt Hauling & Warehouse Systems, Inc. (Messrs. Asbell, Ambrose, Ergood & Asbell, attorneys; Mr. Harry D. Ambrose, Jr. of counsel).

      Mr. Richard A. Tanner for defendant South Jersey Port Corporation (Messrs. Morgan, Melhuish, Monaghan, McCoid & Spielvogel, attorneys; Mr. James B. Meihuish of counsel).
   Rosenberg, J. S. C.

This is a motion for summary judgment brought by defendant and third-party plaintiff Holt Marine Terminal, Inc. (H.M.T.) to dismiss the complaint, cross-claims and other claims against it in the instant lawsuit. The court rejected a previous application for the same relief based on different grounds in a prior opinion containing a full statement of the salient facts of this ease. It is necessary to restate only those facts which are particularly relevant to this motion.

As the result of a fire on August 6, 1971 at the Holt Hauling & Warehouse Systems, Inc. marine terminal compound in Gloucester City, U. J., goods owned consigned to or shipped by the various plaintiffs were destroyed. Action was instituted to recover for this loss by complaint filed July 25, 1972. Service was made on defendant Holt Hauling & Warehouse Systems, Inc., on August 11, 1972. H.M.T., the terminal operator and a subsidiary of Holt Hauling, was not named as a party until the second amended complaint filed June 21, 1973 on leave granted by order dated June 19, 1973. Since that time a third amended complaint has been filed, litigation has been removed to the federal court and then remanded to the state court, and various cross- and counterclaims have been asserted. The matter was pretried on October 10, 1974 and is scheduled to go to trial on April 14, 1975.

H.M.T. bases its motion on the fact that the goods destroyed in the fire were involved in marine commerce and therefore were shipped under bills of lading issued by the carriers. Although original documents apparently were destroyed in the fire, defendant Eetla Steamship Co. has provided sample bills of lading which the parties agree reflect the terms of the bills destroyed. On the reverse side of the bills are various terms which are applicable to carriage of the goods. Paragraphs 19 and 24 of those terms are particularly relevant:

19. In any event the carrier and the ship shall be discharged from all liability in respect of loss, damage, delay, or any other claim concerning the goods or their carriage, including but not limited to, any claims by preceding or connecting carriers for contribution or indemnification for claims asserted against or paid by such other carriers, unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered. Suit shall not be deemed brought until jurisdiction has been obtained over the carrier or ship by service of process or by an agreement to appear. Nothing shall be deemed a waiver of any of the provisions of this clause or Clause 18 except an express written waiver specifically referring thereto and signed by the carrier or its authorized agent. [Emphasis supplied]
24. In addition to those hereinabove listed as included in the term “carrier,” the owners, managers, charterers, master, officers and crew members of the ship and the carrier’s agents, servants, officers, stevedores, longshoremen, representatives, contractors, terminal operators, or others dealing with cargo destined for or discharged from the vessel or used, engaged or employed by the vessel and the carrier, and any substituted vessel or carrier, whether any of them be acting as carrier or bailee or as an independent contractor, shall have the benefit of all privileges and of all exemptions, immunities from, and limitations of liability granted to ca/rrier in this bill of lading, or by laws applicable to the carrier; including, but not limited to, those limitations set forth in clauses 11 and 19 of this bill of lading, and the carrier shall be deemed to contract for the benefit of all such parties in this regard. Protection extended to third persons in the foregoing are granted to the extent permitted by law or contract, but in no event give rise to any liability of the carrier to such third persons. [Emphasis supplied]

H. M. T. reasons that since the claims relate to losses from the August 6, 1971 fire the subject goods must have been delivered no later than that date. It argues that under the above-quoted terms any action for loss against it must be commenced within the one-year limitations period and that since it was not joined in the suit until June 1973, nearly two years after the last possible delivery date, all claims against it are barred. Plaintiffs and codefendants raise various arguments in opposition, claiming that fact questions exist making summary judgment inappropriate and that under the so-called “discovery” rule and our court rules by which amended pleadings relate back to the filing date of the original pleading the terms of the limitations provision are satisfied and the action is not barred. They also contend that the substantive effect of the terms of the bills of lading should not operate to defeat their respective claims.

I

There is no question but that action against H. M. T. was commenced well beyond the limitations period specified in the bills of lading. Under the circumstances, however, this fact alone is not dispositive of the motion. Although H. M. T was not joined until June 1973 the original complaint filed within one year of the fire named Holt Hauling & Warehouse Systems, Inc., H. M. T.’s parent company, as a party defendant. The affidavit of William B. McGuire filed in support of the motion to amend the complaint wherein H. M. T. was named recites that it was not until shortly before leave to amend was sought that plaintiffs became aware of H. M. T. as a separate entity against whom their claims should be directed. Letters from Holt Hauling to plaintiff Evans Products Co. in which reference was made to “our terminal” and “our terminal Tariff” were written on the letterhead of Holt Hauling & Warehouse Systems, Inc. and not H. M. T. The Federal Maritime Commission tariff in effect for the Holt terminal prior to the fire reflected the name Delaware Valley Terminal, Inc. and not H. M. T. At all times instant to this lawsuit the principals of Holt Hauling and H. M. T. were the same. Eor all these reasons it is argued that plaintiffs should not be penalized for failing to join H. M. T. until June 1973.

In Lopez v. Swyer, 62 N. J. 267 (1973), the court gave expression to the so-called “discovery” rule.

This doctrine * * * provides that in an appropriate case a cause of action will be held not to accrue until the injured party discovers, or by an exercise of reasonable diligence and intelligence should have discovered that he may have a basis for an actionable claim, (at 272)

The rule is one of equity and calls upon the sound discretion of the trial court in weighing the claims of the aggrieved plaintiff on the one hand and defendant compelled to defend an action out of time on the other. “Where, as is often the case, they cannot be wholly reconciled, a just accommodation must be reached”. Id. at 274. Such factors as “the nature of the alleged injury, the availability of witnesses and written evidence, the length of time that has elapsed since the alleged wrongdoing, whether the delay has been to any extent deliberate or intentional, whether the delay may be said to have peculiarly or unusually prejudiced the defendant” may all be considered in determining the application of the rule. Id. at 276. The overriding consideration is fairness to the parties.

The instant ease is distinguishable from Lopez in that here plaintiffs were aware of a basis for their claim but were merely uninformed as to the proper identity of a potential defendant. A relatively simple search of records of incorporation with the Secretary of State of New Jersey and surrounding jurisdictions (notably, Pennsylvania) may well have revealed that more than one Holt entity was involved in the Gloucester City operation. Despite this, the facts present a compelling case for giving plaintiffs some relief under the "discovery” rule. They were never apprised of the existence of H. M. T. by Holt Hauling prior to the time that leave was sought to amend the complaint. Past dealing with Holt Hauling gave no indication that the terminal was operated by any entity other than Holt Hauling. Most important, in view of the fact that both Holt Hauling and H. M. T. has the same principals there appears to have been no prejudice suffered by defendants. Of course, "prejudice” here refers to injury to the party and not inconvenience to his counsel. Allstate Ins. Co. v. Grilon, 101 N. J. Super. 322, 331 (Ch. Div. 1968). Such circumstances bring this case well within the spirit, if not the letter, of Lopez and mandate relief from the limitations language of the bills of lading. Accord, Farrell v. Votator Div. of Chemetron Corp., 62 N. J. 111 (1973). The question is the nature of such relief.

R. 4:9-3 deals with the relation back of amended pleadings to the time of the original pleading. It reads:

Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading; but the court, in addition to its power to allow amendments may, upon terms, permit relates back if the foregoing provision is satisfied and, within the the statement of a new or different claim or defense in the pleading. An amendment changing the party against whom a claim is asserted period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) he knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.

A look at the facts in this case indicates that all the criteria arc satisfied for relating back the second amended complaint, and plaintiffs’ claims against H. M. T., to the time of the original pleading. All claims against the Holt enterprises result from the Auugst 6, 1971 fire. Because of the commonality of principals in the Holt companies it is clear that H. M. T. had effective notice of its potential liability when the first complaint was filed. Likewise, under the circumstances, the court perceives no prejudice to H. M. T. in having to defend itself in a suit arising from the fire. Finally, if H. M. T. did not know at the time of the original filing that it was a potential party to the suit, it should have realized it because of its close interrelationship with Holt Hauling. Application of the rule is underscored in Harr v. Allstate Ins. Co., 54 N. J. 287 (1969):

The rule should be liberally contraed. Its thrust is directed not toward technical pleading niceties, but rather to underlying conduct, transaction or occurrence giving rise to some right of action or defense. When a period of limitation has expired, it is only a distinctly new or different claim or defense that is barred. Where the amendment constitutes the same matter more fully or differently laid, or the gist of the action on the basic subject of the controversy remains the same, it should be readily allowed and the doctrine of relation back applied, [at 299]

Accord, Rooney v. Coraggio, 95 N. J. Super. 112 (App. Div. 1967), certif. den. 50 N. J. 89 (1967); Bradley v. Powles, 90 N. J. Super. 550 (App. Div. 1966), certif. den. 47 N. J. 422 (1966); Avdel Corp. v. Mecure, 58 N. J. 264 (1971); Farrell v. Votator Div. of Chemetron Corp., supra.

Consideration of the circumstances in relation to the provisions of R. 4:9 — 3 and the “discovery” rule suggests a “just accommodation” between the interests of all parties in the claims asserted against H. M. T. The cause of action against the movant first expressed in the second amended complaint may be viewed as having accrued at the time of the fire and having been first expressed in the original complaint filed July 25, 1972. Although H. M. T. was not made a party to the suit until a period well beyond the limitations period, it is held as a matter of law that claims against it relate back to the original filing. It thus becomes necessary to determine the effect of the limitations language in the bills of lading on claims against H. M. T. dating from July 25, 1972.

II

H. M. T. seeks application of the terms of the bills of lading as a third-party beneficiary of the contract reflected in the bills entered into by plaintiffs and defendant ocean carriers. See paragraph 24, Retía bill of lading, supra. It is manifestly clear from paragraph 24 that the parties to the bills of lading intended for the benefits of the bills to apply to specified third-parties as well as to themselves. Both by statute and the cases it is a principle of long standing that in such a situation the third-party may maintain an action on the contract and claim relief under its terms. N. J. S. A. 2A:15-2; Republic Factors, Inc. v. Carteret Work Uniforms, 24 N. J. 525 (1957); Graybar Elec. Co. v. Continental Cas. Co., 50 N. J. Super. 289 (App. Div. 1958); Brooklawn v. Brooklawn Housing Corp., 124 N. J. L. 73 (E. & A. 1940). H. M. T. thus has good standing, to invoke terms of the bills.

The hills of lading in question contain specific provisions incorporating the Carriage of Goods by Sea Act (C.O. G. S. A.), 46 U. S. C. A. § 1300 et seq. The terms of the act include a limitation period for commencing actions expressed in § 1303(6) : “In any event the carrier and ship shall be discharged from all liability in respect of-loss or damages unless suit is. brought within one year after delivery of the goods or the date when the goods should have been delivered * * Clause 19 of- the, bills is patterned upon this section and extends to H. M. T. as third-party beneficiary under the terms of clause 24. However, C. O. G. S. A. pertains only to the period of time during which the goods are on board ship, 46 U. S. G. A. § 1301(e). Thus, although C. O. G. S. A. is encompassed within the bills of lading, the time-for-suit term does not apply ex proprio vigore to claims arising from events after the goods were discharged from the carriers. J. Aron & Co. v. The Askvin, 267 F. 2d 276 (2 Cir. 1959); Empacadora Puertorriquena de Carnes v. Alterman Tr. Line, 303 F. Supp. 474 (D. P. R. 1969). The effect of this is that the limitations language only has the impact of a contractual limitation to liability and not a statutory limitation.

N. J. S. A. 12A:7-309(3) expressly provides that bills of lading may contain “reasonable provisions” governing the time in which actions under the bills may be commenced. Contractual limitation periods of one year for bringing suit have consistently been held to be reasonable, J. Aron & Co. v. The Askvin, supra; Ingram, v. Weir, 166 F. 328 (C. C. E. D. Pa. 1909); Lagerloef Trad. Co. v. United States, 43 F. 2d 871 (S. D. N. Y. 1930); Sapinkopf v. Cunard S. S. Co., 254 N. Y. 111, 172 N. E. 259 (Ct. App. 1930), cert. den. 282 U. S. 879, 51 S. Ct. 83, 75 L. Ed. 776 (1930); United Merchants & Mfrs., Inc. v. United States Lines Co., 204 Misc. 989, 126 N. Y. S. 2d 560 (City Ct. 1953); Annotation, “Validity of Contractual Time Period, Shorter Then Statute of Limitations, Por Bringing Action,” 6 A. L. R. 3d 1197, § 6 at 1228 (1966). Although there is no case law in Now Jersey dealing with the one-year limitations period, the authority from other jurisdictions is persuasive. It is held that the one-year limitation period for commencing suit is “reasonable” under N. J. S. A. 12A:7-309(3) and, therefore, valid under that statute.

In addition to the one-year period for bringing suit clause 19 of the bills of lading provides that “suit shall not be deemed brought until jurisdiction has been obtained over the carrier or ship by service of process or an agreement to appear.” In the present case this qualification to the limitations period has a profound potential impact. Since all claims against EL M. T. are predicated on its having custody of goods at the time of the fire, the goods must have been delivered no later than August 6, 1971, the date of the fire. S'ervice of process was not perfected on Holt Hauling’ (and, by relation back, on H. M. T.) until August 11, 1972 — more than one year after the last delivery date. If the effective date for commencement of the suit was August 11, 1972 plaintiffs’ claims against H. M. T. would appear to be barred by the contractual limitations period. However, the original complaint was filed on July 25, 1972, within a year of the delivery cut-off date. Under B. 4:2-2 of our court rules “a civil action is commenced by filing a complaint with the court” (emphasis supplied). Thus, there is presented the problem of the effect of R. 4:2-2 vis a vis the language in the bills specifying the commencement date of actions brought on the bills. The juxtaposition of the language of clause 19 with the dates when the complaint was filed and served makes this question a unique one.

It is well settled in this State that the power to promulgate rules of court is vested in the Supreme Court. N. J. Const. (1947), Art. VI, § II, par. 3. Such rules extend to matters of practice, procedure and administration and as such are not subject to overriding legislation. Winberry v. Salisbury, 5 N. J. 240 (1950), cert. den. 340 U. S. 877, 71 S. Ct. 123, 95 L. Ed. 638 (1950); United States Pipe, etc., Co. v. United Steelworkers of America, 59 N. J. Super. 240 (App. Div. 1960); Busik v. Levine, 63 N. J. 351 (1973). Although there is statutory authority in N. J. S. A. 12A:7-309(3) for the one-year time-for-suit provision the statute can not provide a basis for specifying the time or manner by which an action is “commenced”. This principle was recognized in an admiralty action brought in federal court in United Nations Relief & R. Adm. v. The Mormacmail, 99 F. Supp. 552 (S. D. N. Y. 1951), where the court observed (at 554) that “the issuance of process has no bearing on the determination of when a suit is commenced in a federal court under a federal statute.” By the same token the service of process has no bearing on when a suit is commenced in state court under the state court rules. Such a matter is indisputably one of procedure and not substantive law and therefore is in the purview of the Supreme Court and not the Legislature or the parties. Since federal law is not directly applicable to the circumstances here, the parties’ contractual undertakings must be tested against state law. By availing themselves of our courts parties become bound by our court rules. R. 4:2 — 2 applies to all civil actions, including those arising under terms of bills of lading. Thus, the portion of clause 19 of the bills establishing service of process as necessary to commencement of suit is void. Insofar as N. J. S. A. 12A:7 — 309(3) permits the parties to specify a time and manner for instituting actions at variance with R. 4:2-2 it, too, is without effect. As a matter of law, under R. 4:2 — 2 the action against Holt Hauling (and H. M. T.) was commenced with filing of the complaint on July 25, 1972 and not with service of process on August 11, 1972.

In view of this holding it follows that under the terms of the bills of lading action against H. M. T. may be barred as to claims arising on goods delivered before July 25, 1971. Action is not barred for goods delivered after that date. The proofs currently before the court do not show the delivery dates of the specific lots of goods lost in the fire. Thus, there exists a genuine issue of material fact as to whether some or all of the goods destroyed in the August 6, 1971 fire were delivered prior to July 25, 1971. Motion for summary judgment therefore must be denied since the fact question makes it impossible to determine whether H. M. T. is entitled to the relief it seeks as a matter of law. R. 4:46-2; Judson v. Peoples Bank & Trust Co. of Westfield, 17 N. J. 67 (1954).


author: Albano, J. D. G.

text:
    SHERMAN PROPERTIES, INC., PLAINTIFF, v. HYMEN B. MINTZ, THE REGISTER OF DEEDS AND MORTGAGES OF ESSEX COUNTY, DEFENDANT.
    District Court, Essex County
    March 3, 1975.

      Mr. Howard S. Greenberg for plaintiff (Messrs. Ravin & Ravin, attorneys).

      Mr. Richard M. Cignarella for defendant (Mr. Francis Patrick McQuade, attorney).
   Albano, J. D. G.

These cross-motions for summary judgment focus attention on the taxability, or liability for additional recording fees, of a corrective deed.

The facts arc not in dispute and the matter is ripe for summary determination. Judson v. Peoples Bank and Trust Co. of Westfield, 17 N. J. 67, 73-75 (1954).

Both parties agree that (1) plaintiff is the named grantee in a certain deed recorded March 18, 1968 in Essex County Deed Book 4268 at page 521, etc.; (2) no tax, either by way of a federal stamp tax or by way of New Jersey additional recording fees, was attributable to this recording; (3) the acknowledgment of the deed was defective; (4) an additional and correcting acknowledgment was appended to the deed, on or about July 26, 1974; (5) L. 1968, c. 49, providing for the payment of additional fees on the recording of deeds evidencing transfer of title, became effective on or about July 3, 1968; (6) the same deed with the new acknowledgment was offered for re-recording on August 1, 1974; (7) the Essex County Register’s Office demanded additional recording fees of $373 based on the balance due of an existing mortgage; (8) an affidavit for exemption was executed and presented to the Register’s office; (9) the additional recording fee of $373 was demanded and was paid under protest; (10) the deed then was re-recorded in Deed Book 4481, page 1059; (11) the re-recorded deed was a corrective deed.

Various statutes must be read and construed for the resolution of this matter and their reading and construction must be consonant with Lane v. Holderman, 23 N. J. 304, 313, (1957), which says that the meaning of a statute is primarily ascertained by reading the language employed in its ordinary and common significance.

N. J. S. A. 46:15-5 defines both “deed” and “consideration” : “deed” means an instrument or writing by which title to any land, tenements or other realty sold shall be granted, assigned, transferred or otherwise conveyed; “consideration” means, in the ease of any deed, the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, tenements or other realty, including the remaining amount of any prior mortgage to which the transfer is subject or which is to be assumed and agreed to be paid by the grantee, and any other lien or encumbrance thereon not paid, satisfied or removed in connection with the transfer of title.

N. J. S. A. 46 :15-7 provides for the payment by a grantor of an additional recording fee, computed at the rate of $.50 for each $500 of consideration or fractional part thereof recited in a deed, to the count}1' recording officer at the time the deed is offered for recording.

N. J. S. A. 46:15 — 10 excludes certain instruments from additional recording fees, and N. J. S. A. 46:15-10 (d) specifically refers to any deed which confirms or corrects a deed previously recorded.

Plaintiff reads these statutes as excluding its corrective deed from additional recording fees.

Defendant argues that, while plaintiff’s deed is a corrective deed, it does not fall within the class of corrective deeds enjoying the exclusion of N. J. S. A. 46:15-10(d). According to defendant, the Legislature intended that grantors pay an additional recording fee when property was transferred. Having once paid this fee, a grantor would not need to pay it again if a corrective deed were recorded. And, since plaintiff here paid no additional recording fee on March 18, 1968 (said fee not then being in existence), it must pay one now on the re-recording.

A plain reading of the statutes supports plaintiff’s interpretation. Under N. J. S. A. 46:15 — 5 a deed transfers title, and consideration equals the monetary value making up the compensation paid or to be paid for the transfer of title. It is this consideration to which the additional recording fee attaches.

The corrective deed here was necessitated by a faulty or defective acknowledgment. The original deed, recorded March 18, 1968, was valid, between the parties, to transfer the title to the realty. No part of the title was transferred by, and no consideration was paid for, the corrective acknowledgment. In Moore v. Riddle, 82 N. J. Eq. 197, 203 (Ch. 1913), the court said that a certificate of acknowledgment is not essential to the validity of a deed and forms no part of it, but the acknowledgment supplies evidence of the due execution of the deed in lieu of direct proof and enables the deed to be recorded. It follows, then, that the imposition of the additional recording fee when the deed was re-recorded was not proper since there was no transfer of the title and no consideration.

Additionally, under N. J. S. A. 46:15-10(d), fairly read, the re-recorded deed was a corrective deed and excluded from the additional recording fee.

Defendant’s motion for summary judgment is denied, plaintiff’s motion for summary judgment is granted, and judgment is entered in favor of plaintiff and against defendant in the sum of $373.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ROUMANIA EARL TRAVIS, ANTONIO NASISI AND WILLIAM JULIANO, DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued March 3, 1975
    Decided March 21, 1975.

      Before Judges Collester, Lora and Handler.

      Mr. William S. Singer, designated counsel, argued the cause for appellant Roumania Earl Travis (Mr. Stanley C. Van Ness, Public Defender, attorney).

      Mr. Robert C. Gruhin argued the cause for appellant Antonio Nasisi.

      Mr. Sam Weiss argued the cause for appellant William Juliano (Mr. Anthony F. Ditri, attorney).

      Mr. Harry Robinson, III, Assistant Prosecutor, argued the cause for respondent (Mr. Joseph P. Lordi, Essex County Prosecutor, attorney).
   Per Curiam.

Roumania Travis, Antonio Nasisi and William Juliano were convicted of conspiracy to violate the gambling statutes (N. J. S. A. 2A:98-1) and maintaining premises used for gambling (N. J. S. A. 2A:112-3; N. J. S. A. 2A:121-3(c)). Both Travis and Nasisi were also convieted of working for a lottery (N. J. S. A. 2A:121-3(a)), and Travis was further convicted of possession of lottery slips (N. J. S. A. 2A:121-3(b)).

Defendant Travis was sentenced to three concurrent six-month terms in the Essex County Correction Center, a suspended two to three-year term at the State Correctional Institution for Women, and a $1,000 fine. Defendant Nasisi was sentenced to three concurrent terms of two to two and a half years in State Prison and a $1,000 fine. Defendant Juliano received two concurrent terms of two to two and a half years at State Prison and a $1,000 fine.

The three defendants filed separate appeals which, on motion by the State, were consolidated.

A pretrial motion to suppress on the grounds the wiretap used in the case was illegal was denied by the trial judge in a written, reported decision, State v. Travis, 125 N. J. Super. 1 (Cty. Ct. 1973).

All defendants contend the trial judge erred in his denial of the motion to suppress the wiretap evidence on the ground that there had not been a lawful application for the court-authorized tap. The authorization of the wiretap in question was signed by Leonard D. Eonco, an assistant prosecutor in the Essex County Prosecutor’s Office, when the prosecutor was away on vacation during the month of August 1972 and had designated Eonco as the acting prosecutor. The order was signed by a Superior Court judge empowered to sign such orders.

We are of the view the pretrial motions to suppress were properly denied, essentially for the reasons expressed by the trial judge in State v. Travis, supra. Subsequent to his decision on the motions, the United States Supreme Court decided United States v. Giordano, 416 U. S. 505, 94 S. Ct. 1820, 40 L. Ed. 2d 341 (1974). In Giordano a wiretap application made before a federal judge stated that the specific Assistant Attorney General in charge of wiretap authorizations, and so specially designated by the Attorney General pursuant to 18 U. S. C. A. § 2516(1), had approved the application. In actuality, the Attorney General’s executive assistant had placed the Attorney General’s initials on a memo instructing authorization of the application by the named ■ Assistant Attorney General, who himself had not personally reviewed the application.

The Supreme Court found that the statute (after which the New Jersey Wiretapping and Electronic Surveillance Control Act, N. J. S. A. 2A:156A-1, is patterned) conferred upon the “Attorney General, or any Assistant Attorney General specially designated by the Attorney General” the power to authorize an application for a wiretap order to a federal judge, but did not authorize wiretap applications to be made by any individuals other than the Attorney General or an Assistant Attorney General specifically designated by him; that Congress intended to narrowly limit the power for a few who were responsive to the political process, a category to which the executive assistant to the Attorney General obviously did not belong. 416 U. S. at 520, 94 S. Ct. at 1829, 40 L. Ed. 2d at 356.

However, although the court stated that “it is apparent that Congress desired to centralize and limit this authority where it was feasible to do so,” Id., 416 U. S. at 521, 94 S. Ct. at 1830, 40 L. Ed. 2d at 357; it further noted that 18 U. S. C. A. § 2516(2) provided for a'wider dispersal of authority among state officers to approve wiretap applications and left the matter of delegation up to state' law. In a footnote the court referred to the comments in S. Rep. No. 1097 that the delegation of authority in the states could proceed down to the district attorney (county prosecutor) level, but “[t]he proposed provision does not envision a further’ breakdown. Although city attorneys may have in 1 some places limited criminal prosecuting jurisdiction,’ the proposed provision is not intended to’ include them.”

Here,’ the prosecutor was unavailable since he was out of the county for the entire'month of August.’ An acting prosecutor was appointed by him to exercise all of the duties of the office of prosecutor during -the prosecutor’s absence. We agree with the trial judge’s determination that the prosecutor had the inherent power to designate an acting prosecutor to assume the duties of his office during such absence, and as acting prosecutor Eonco properly initiated this wiretap application within the scope of his duties.

Under the circumstances of this case his exercise of the power was within the comprehension of N. J. S. A. 2A: 156A-8 of the New Jersey Wiretapping Act which empowers a person designated to act for a county prosecutor and to perform his duties in and during his actual absence or disability to authorize a wiretap application. There is no merit to defendants’ contentions that the statute does not contemplate delegation to a subordinate during a prosecutor’s vacation. Cf. State v. Cocuzza, 123 N. J. Super. 14, 22 (Cty. Ct. 1973), and see State v. Travis, supra, 125 N. J. Super. at 6, 10.

During the course of his opening to the jury the prosecutor stated:

Again, you might ask, well, what led to this information that was the basis of this search warrant?
Well, on or about August 1, 1972, information was received by certain law enforcement officers relative to the criminal activities of some of these defendants * * *

Motions for a mistrial were denied. Immediately thereafter the remarks were ordered stricken by the trial judge and the jury instructed to disregard the comment. All defendants urge prejudicial error. However, we are satisfied that in the context of this case and in light of the curative instruction, the remarks complained of were not sufficient to raise a reasonable doubt that the jury was led thereby to a result it otherwise might not have reached. State v. Macon, 57 N. J. 325, 335-336 (1971). Cf. State v. Bankston, 63 N. J. 263 (1973).

Defendant Nasisi’s contention that the competency of the wiretap evidence was not demonstrated because the evidence of the installation of the wiretap was insufficient is meritless. He argues that since the exact location of the terminal box, appearances, access points, tap station and site of the interception were not revealed, there was no showing the taps were in fact on defendant’s line and hence there was an insufficient foundation laid for the admission of the taped conversations. The trial judge ruled this information was privileged under regulations of the Public Utilities Commission and to reveal the monitoring location would endanger future surveillances. Be that as it may, we are of the view defendant did not make a satisfactory showing of why this information was needed to show a possible inaccurate hookup. Evict. R. 34.

We find no merit in defendant Nasisi’s further contention the trial judge erred in permitting two of perhaps 80 or 90 taped calls to be played during the prosecutor’s summation since this is no different from any attorney utilizing demonstrable evidence before the jury in the course of summation. People v. Coontz, 119 Cal. App. 2d 276, 259 P. 2d 694 (Cal. D. Ct. App. 1953). Similarly, there is no substance to the argument that the expert’s opinion, embracing as it did the hypothetical question posed, was improper, or that incorporated therein were many assumptions of fact not within the testimony. See State v. Boiardo, 111 N. J. Super. 219, 237-238 (App. Div. 1970), certif. den. 57 N. J. 130 (1970), cert. den. 401 U. S. 948, 91 S. Ct. 931, 28 L. Ed. 2d 231 (1971).

Defendant Juliano asserts there was insufficient evidence to connect him with the conspiracy and to justify his conviction for maintaining a place for gambling. Our review of the record satisfies us there was sufficient credible evidence to sustain defendant Juliano’s conviction. While circumstantial, it was nevertheless persuasive and such that the jury could properly find beyond a reasonable doubt that defendant Juliano was guilty of the crimes charged. State v. Moffa, 42 N. J. 258, 263 (1964); State v. Reyes, 50 N. J. 454, 458-459 (1971); State v. Seaman, 114 N. J. Super. 19, 29-30 (App. Div. 1971); R. 3:18-1.

Lastly, defendants Travis and ISTasisi contend their sentences are manifestly excessive, basically because they are custodial and they are first offenders with no previous records. Additionally, Nasisi asserts his poor health and left arm amputation mandate a suspended sentence and probation. Travis claims her participation was at the lowest level and of a minimal nature.

Eeview of the record together with the presentence reports reveals no abuse of discretion in the sentences imposed. State v. Tyson, 43 N. J. 411 (1964), cert. den. 380 U. S. 987, 85 S. Ct. 1359, 14 L. Ed. 2d 279 (1965); State v. Souss, 65 N. J. 453 (1974); State v. Leverette, 64 N. J. 569, 571 (1974); State v. De Stasio, 49 N. J. 247 (1967), cert. den. 389 U. S. 830, 88 S. Ct. 96, 19 L. Ed. 2d 89 (1967); State v. Ivan, 33 N. J. 197 (1960).

Affirmed.


text:
    AL FRIEDMAN, PLAINTIFF-APPELLANT, v. FRIENDLY ICE CREAM CO., COMMERCIAL UNION ASSURANCE COMPANIES AND EMPLOYERS-COMMERCIAL UNION COMPANIES, DEFENDANTS AND THIRD-PARTY PLAINTIFFS-RESPONDENTS, v. FRUIT CROWN PRODUCTS CORP. WAWONA PRESERVING CO. AND BLANKE BAIR, INC., THIRD-PARTY DEFENDANTS, v. LYONS MAGNUS, FOURTH-PARTY DEFENDANT.
    Superior Court of New Jersey Appellate Division
    Argued March 18, 1975
    Decided March 27, 1975.

      Before Judges Halperst, Crahay and Wood.

      Mr. Donald T. Joworisak argued the cause for appellant (Mr. Thomas W. Sharlow, attorney).

      Mr. Thomas E. Lenney argued the cause for respondents Friendly Ice Cream Company, Commercial Union Assurance Companies and Employers-Commercial Union Companies (Mr. Robert F. Colquhoun, attorney).

      Messrs. Wolf, Britt & Riehl filed a statement in lieu of brief for Fruit Crown Products Corp.

      Mr. George H. McElroy filed a statement in lieu of brief for Wawona Preserving Co.

      Messrs. Lewis, Siegel & Wood filed a statement in lieu of brief for Blanke Bair, Inc.

      Lyons Magnus was made a fourth-party defendant but was never served with process.
   Per Curiam.

Summary judgment was entered in favor of defendants Friendly Ice Cream Company (Friendly), Commercial Union Assurance Companies and Employers-Commercial Union Companies (insurers), and plaintiffs complaint against them was dismissed. Plaintiff appeals from the entry of that judgment.

The third and fourth-party defendants were not sued directly by plaintiff, and for all practical purposes are not parties to this appeal.

It is necessary, for a better understanding of our opinion, to briefly set out in chronological order the events leading up to the filing of the complaint.

On September 14, 1971 plaintiff, while eating a dish of peach ice cream purchased at Friendly’s store, bit into a pit and sustained injuries to a tooth and his mouth. Admittedly, by September 28, 1971 the insurers received notice of plaintiff’s injuries. They investigated the incident and had plaintiff examined by a dentist of their choice. On or about February 18, 1972 they offered plaintiff a $400 settlement which he turned down. Negotiations for a settlement continued but they were not productive. For the first time, on July 12, 1973, the insurers wrote plaintiff and told him that responsibility for his injuries rested with Wawona Preserving Co. which had furnished the fruit for the ice cream. Wawona disclaimed liability. On September 11, 1973 plaintiff wrote Friendly and complained about the treatment he had received at the hands of the insurers since liability was never questioned, and threatened suit. On September 17, 1973 insurers answered plaintiff’s letter of September 11, 1973 and told him, for the first time, his claim was now barred by the statute of limitations and that “your rights towards the accident were not prejudiced by any acts of omission or commission by this company.”

Plaintiff, on October 19, 1973, instituted suit against Friendly and its insurers. His first count sounded in negligence and breach of warranty; the second count charged the insurers with misrepresentations and fraud in carrying on settlement negotiations and in lulling him into believing that the statute of limitations would not bar his claim. Thereafter, by way of third and fourth-party complaints relief was sought in the event plaintiff recovered a judgment against defendants.

When the trial judge granted summary judgment to the original defendants he made no findings of fact but merely stated, “My inclination is that I feel in this action that the statute of limitations is an applicable defense, and I will grant the motion for summary judgment.”

It is fundamental that a motion for summary judgment should be granted only if the pleadings, depositions and admissions on file show palpably that there is no genuine issue as to any material fact, and that the moving party is entitled to a judgment as a matter of law. R. 4:46-2; Judson v. Peoples Bank & Trust Co. of Westfield, 17 N. J. 67, 73-75 (1954). Such motions are granted only with much caution, Devlin v. Surgent, 18 N. J. 148, 154 (1955), and where there are genuine disputed issues of fact, they must be resolved at a plenary hearing. Wilson v. Miller, 25 N. J. Super. 280, 289 (App. Div. 1953). In deciding whether a genuine issue as to any material fact exists, the moving papers and pleadings are considered most favorably for the party opposing the motion and all doubts are resolved against the movant. If there is the slightest doubt as to the facts, the motion should be denied. Ruvolo v. American Cas. Co., 39 N. J. 490, 499 (1963); United Advertising Corp. v. Metuchen, 35 N. J. 193, 195-196 (1961).

We have reviewed this entire record with these principles in mind and have concluded that summary judgment should not have been granted. Fact questions were presented pertaining to defendants’ conduct in negotiating a settlement, calling for jury determination as to whether the statute of limitations was available to them as a defense. Giving plaintiff the benefit of all reasonable inferences, as we must, a jury could find that (a) plaintiff had a valid cause of action against Friendly and its insurance carriers, (b) these defendants had, in effect, admitted liability, (c) these defendants had offered a settlement which was refused by plaintiff (at oral argument defendants’ attorney admitted the offer was too low), (d) the settlement negotiations were intentionally protracted for about 22 months so as to have the statute of limitations run against plaintiff’s claim, and (e) defendants were guilty of unconscionable conduct which tolled the running of the statute of limitations while settlement negotiations were being carried on. See Peloso v. Hartford Ins. Co., 56 N. J. 514 (1970), wherein the statute of limitations was tolled during the period that an insured attempted to negotiate a settlement with his own insurance carrier over a fire loss. We see no reason why the principles enunciated in Peloso should not be applied here when defendants are charged with admitting liability but disagreed only as to the settlement amount. The approach we take comports with the philosophy expressed by our Supreme Court that the statute of limitations should not be a shield against legitimate claims when equity requires otherwise or that an estoppel be invoked. See Fernandi v. Strully, 35 N. J. 434 (1961); Kyle v. Green Acres, 44 N. J. 100 (1965); New Market Poultry v. Fellows, 51 N. J. 419 (1968); Rosenau v. New Brunswick, 51 N. J. 130 (1968); Warren v. Employers Fire Ins. Co., 53 N. J. 308 (1969); Sobin v. M. Frisch & Sons, 108 N. J. Super. 99 (App. Div. 1969), certif. den. 55 N. J. 448 (1970).

In addition, our review of the meager record convinces us that, in view of the issues outlined herein, it was wholly inadequate for a decision on the merits by the summary judgment route. Anderson v. Sills, 56 N. J. 210, 215 (1970); Jackson v. Muhlenberg Hospital, 53 N. J. 138, 142 (1969).

Reversed and remanded for a plenary trial.


text:
    STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. JOHN TEARE, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey , Appellate1 Division
    Argued December 3, 1974
    Decided February 6, 1975.

      Before Judges Kolovsky, Lynch and Allcorn.

      Mr. R. Benjamin Cohen, Assistant Prosecutor, argued for appellant (Mr. Joseph P. Lordi, Essex County Prosecutor, attorney; Mr. Robert L. Martin, Assistant Prosecutor, of counsel and on the brief).

      Mr. George J. Minish argued for respondent (Messrs. Minish and Dooley, attorneys).

      Mr. Richard W. Berg, Deputy Attorney General, argued for Mr. William F. Hyland, Attorney General of New Jersey, amicus curiae.

   Per Curiam.

In this case, wherein defendant was charged with operating a motor vehicle while under the influence of intoxicating liquor (N. J. S. A. 39:4^50 (a)), the State, by leave granted, appeals from an order suppressing the results of a breathalyzer test which had been administered to defendant. The trial court granted the motion to suppress, basically for the reason that, pursuant to practice, the ampoule used in the test had been destroyed, that it was therefore not available to defendant for examination to determine the validity of the test results, and thus defendant was denied due process of law.

The matter had been tried on behalf of the State by the office of the Essex County Prosecutor. During the pendency of this appeal William E. Hyland, Attorney General of New Jersey, moved to file a brief and to be heard as amicus curiae. The motion was granted and we have considered the arguments of the defendant, the prosecutor and the amicus.

At the hearing below defendant produced an expert who testified that, if the ampoule had been preserved, defendant would have been afforded the opportunity to determine by subsequent examination whether the reading of the breathalyzer at the time of the test was accurate. Based on this evidence the trial judge held that, considering the many factors as to the qualitative and quantitative contents of the ampoule, which were critical to the accuracy of the test, the destruction of the ampoule prevented defendant from authenticating the fact that the particular ampoule used in the test was properly composed and thus he was denied the right to challenge the result of the test.

In this case the State offered no scientific testimony to contradict the theories espoused by defendant’s expert. Contrariwise, in State v. Bryan, 133 N. J. Super. 369 (Law Div. 1974), involving the same issues, the State did produce scientific testimony in refutation of defendant’s expert, who was the same witness who testified for defendant in this case. In Bryan the court, considering the expert testimony of both defendant and the State, held that the theories proposed by defendant were speculative. It was further held that the essential fairness and adequacy of the test had been established and the present method of spot-cheeking test ampoules (see State v. Dickens, 130 N. J. Super. 73 (App. Div. 1974); State v. DeVito, 125 N. J. Super. 478 (App. Div. 1973)), provided ample protection of defendant’s rights. Consequently, the Bryan court held that there was no denial of due process in 'the destruction of the test ampoule.

Unquestionably, the issues involved here, as well as in Bryan, are of great significance in the administration of criminal justice in this area, affecting as they do the accuracy of breathalyzer tests which are so extensively used. Likewise we must consider the practice of destruction of the test ampoules involved. No appellate court of this State has yet passed on the issues.

To the end that a thorough development of the scientific issues involved should be undertaken, and findings and conclusions made thereon, the order suppressing the breathalyzer test in this case is reversed and the matter is remanded to the trial court for supplementation of the record to the extent reasonably required. Both the State and defendant may produce such additional scientific proofs on the issues as they may deem appropriate. The trial court shall then make findings of fact and conclusions of law as to whether preservation of the test ampoules involved is feasible or practical; if so, under what conditions, and whether testing thereof will provide scientifically useful data to determine the reliability of the test administered and of the resultant reading.

The findings and conclusions of the trial court shall be filed with this court by March 15, 1975. The State and amicus curiae shall file and serve their briefs with relation to the whole record by April 5, 1975, and defendant shall serve and file his answering brief with respect thereto by April 25, 1975. If any party desires oral argument, request for same shall be set forth in their brief. If no such request is made, oral argument shall be deemed to have been waived.

      However, defendant’s motion to dismiss the complaint was denied.

        See People v. Hitch, 12 Cal. 3d 641, 117 Cal. Rptr. 9, 527 P. 2d 361 (Sup. Ct. 1974), for consideration of some of the factors involved in determining such an issue. There it was held that where the ampoules are unavailable because of the intentional but nonmalicions destruction thereof by law enforcement officials, the court would impose sanctions on the prosecution for nonpreservation of the ampoules, unless the prosecution could show that the loss or destruction occurred in spite of good faith adherence to systematic procedures to preserve the ampoules. However the holding was prospective only. At this time we express no opinion on either issue.

        N. J. A. C. 13:51-3.5 directs that the test ampoule be destroyed.

      Whether the matter shall be supplemented by further oral testimony, or by use of transcripts of the testimony in Bryan, or otherwise, shall be left to the parties, subject to supervisory discretion of the trial judge.


author: Kimmelman, J. S. C.

text:
    EDMOND J. DWYER AND ALBERT C. LISBONA, PLAINTIFFS, v. FRED W. JUNG, JR., JUNG AND HOWARD, A PARTNERSHIP, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided March 19, 1975.

      Mr. Joseph C. Glavin, Jr., attorney for plaintiffs.

      Messrs. Franzblau, Cohen & Falkin, attorneys for defendants (Mr. S. M. Chris Franzblau, appearing).
   Kimmelman, J. S. C.

In this action following the termination of a law partnership the court is called upon to determine the enforceability of a restrictive covenant contained in the partnership agreement which parcels out named clients to specific partners upon dissolution and prevents one partner from intruding upon another’s clients for a period of five years.

Effective January 1, 1973 the parties entered into a partnership agreement for the practice of law (primarily defense of negligence actions) under the name of “Jung, Dwyer and Lisbona.” Their agreement provided that each partner would contribute a stated amount for capital, cooperate in the business of the partnership and share in the partnership net profits in a stated manner. Upon dissolution each partner would be entitled to a repayment of capital and a distributive share of remaining profits and net assets.

The agreement also contained the following provision:

Should the partnership terminate, all clients listed in exhibit “A” shall be designated to certain individual partners. Upon termination, and by virtue of this Agreement, all partners shall be restricted from doing business with a client designated as that of another partner for a period of 5 (five) years.

Exhibit A, annexed thereto, contained a list of insurance carriers; 154 were designated to defendant Jung as his clients, 5 were designated to plaintiff Dwyer as his clients, and none was ascribed to plaintiff Lisbona.

On June 7, 1974 defendant notified plaintiffs that the partnership was dissolved as of June 1, 1974. The business of the partnership continued in de facto fashion until September 1, 1974 when the former partners went their separate ways. Plaintiffs now practice under the name of “Dwyer and Lisbona.” Defendant practices under the name of “Jung and Howard.”

In this action brought for an accounting defendant, by way of counterclaim, contends that plaintiffs have violated the restrictive covenant contained in the partnership agreement which designates or assigns certain clients to partners in the event of dissolution. Specifically, plaintiffs are charged with attempting to pirate defendant’s clients and undermining Ms relationsMp with certain 'named insurance carriers. These charges are denied. - "

Plaintiffs argue that the quoted provision is void as against public policy. They claim that they entered into the agreement at the insistence of defendant although all parties regarded the provision as unenforceable.

Initially, it must be recognized that lawyer restrictive covenants are to be distinguished from noncompetitive covenants incident to the sale of a business Where the covenants are designed to protect the good will of the business for the benefit of the buyer. Solari Industries, Inc. v. Malady, 55 N. J. 571, 576 (1970); Whitmyer Bros. Inc. v. Doyle, 58 N. J. 25, 32 (1971). A lawyer’s clients are neither chattels nor merchandise, and his practice and good will may not be offered for sale. Drinker, Legal Ethics, at 161, 189 (1965). In this regard Abraham Lincoln’s sage observation (slightly paraphrased) is particularly appropriate: A lawyer’s time and advice are his stock in trade.

Nor may lawyer restrictive covenants, whether contained in a partnership agreement or an agreement of employment, be classified within the general category of agreements restricting post-employment competition. The usual employee restrictive covenant is a legitimate business device to protect the business and good will of an employer against various forms of unfair competition. Although not freely as enforceable as a seller’s noncompetitive agreement, such restrictive covenant will nevertheless be given effect if it is reasonable under all of the circumstances. “It will generally be found to be reasonable where it simply protects the legitimate interests of the employer, imposes no undue hardship on the employee, and is not injurious to the public.” Solari, supra, 55 N. J. at 576; Whitmyer, supra, 58 N. J. at 32.

Commercial standards may not be used to evaluate the reasonableness of lawyer restrictive covenants. Strong \publie policy considerations preclude their applicability. In that sense lawyer restrictions are injurious to the public interest. A client is always entitled to be represented by counsel of his own choosing. See Marshall v. Romano, 10 N. J. Misc. 113, 114, 158 A. 751, 752 (C. P. 1932). The attorney-client relationship is consensual, highly fiduciary on the part of counsel, and he may do nothing which restricts the right of the client to repose confidence in any counsel of his choice. Drinker, supra at 89 et seq. No concept of the practice of law is more deeply rooted. The lawyer’s function is to serve, but serve he must with fidelity, devotion and erudition in the highest tradition of his noble profession.

These principles underlie DR 2-108 (A) of the Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association which provide:

A lawyer shall not be a party to or participate in a partnership or employment agreement with another lawyer that restricts the right of a lawyer to practice law after the termination of a relationship created by the agreement except as may be provided in a bona fide retirement plan and then only to the extent reasonably necessary to protect the plan.

Opinion No 147 of the Supreme Court’s Advisory Committee on Professional Ethics, 92 N. J. L. J. 177 (March 20, 1969), applied these precepts in dealing with a restrictive covenant in a law partnership agreement. The agreement provided that a withdrawing partner shall not open an office or associate with or be employed by any attorney engaged in the practice of law in the county for a period of five years from the date of withdrawal.

In deciding that the provision was unethical, the committee said:

We recognize in the legal profession the existence of a “client market” which is divided among lawyers within a particular locality. But the division of that “market” can be ethically achieved only through individual performance and the “establishment of a well-merited reputation for professional capacity and fidelity to trust.” (Original Canon 27, August 27, 1908 (33 A.B.A. Reports 85)) It cannot be achieved by active competition and solicitation of professional employment. The insertion of a restrictive covenant in a law partnership agreement is an attempt to control and divide the “client market” by means other than individual performance. Therefore, it is the opinion of this Committee that the instant restrictive covenant is improper, unworthy of the legal profession, and unethical. See Disciplinary Rule 2-108(A) of the Preliminary Draft of the Code of Professional Responsibility of the American Bar Association Committee on Evaluation of Ethical Standards, dated January 15, 1969.

Question No. 621 (73-9) posed to the New York County Lawyers’ Association Committee on Professional Ethics and reported at 97 N. J. L. J. 199 (March 21, 1974) involved the following issue:

Is it proper for a lawyer to agree that upon his withdrawal from membership in a partnership he will not for a period' of two years thereafter accept professional employment from any person who was a client of the partnership at the time he ceased being a member?

The committee concluded as follows:

It is not proper for a lawyer to enter into what is in effect a restrictive covenant. DR 2-108 (A) provides in substance that a lawyer shall not be a party to or participate in a partnership agreement with another lawyer that restricts the right of a lawyer to practice law after the termination of the partnership, except as a condition to payment of retirement benefits.
In this connection EC 2-26 provides in substance that in furtherance of the objective of the bar to make legal services fully available, a lawyer should not lightly decline proffered employment; and EC 2-31 provides in substance that full availability of legal counsel requires both that persons be able to obtain counsel and that lawyers who undertake representation, complete the work involved.
Reading these provisions together leads to the conclusions that a covenant restricting a lawyer after leaving a partnership from accepting employment by persons who were theretofore clients of the partnership, or from otherwise fully practicing his profession, is “an unwarranted restriction on-the right of the lawyer to choose his clients in the event they seek his services, and an unwarranted restriction on the right of the client to choose the lawyer he wishes to represent him. [N. Y. State 129 (1970)]

Reported cases in this area are almost nonexistent. Only one warrants mention. Hicklin v. O’Brien, 11 Ill. App. 2d 541, 138 N. E. 2d 47 (App. Ct. 1956), upheld a noncompetitive covenant incidental to the sale of a law practice limiting the geographical area in which the selling attorney could practice. While not binding upon this court, it is not at all persuasive. That ease, in this court’s opinion, incorrectly proceeded upon the theory that the restrictive covenant imposed no undue burden upon the attorney and completely ignored the effect the covenant might have upon potential clients. The court there viewed the matter as a business proposition and failed to respect the underlying ethical considerations affecting the practice of law.

In view of the foregoing it is apparent that an agreement dividing the client market and prohibiting attorneys from representing certain insurance carriers in the defense of negligence cases has the effect of restricting those carriers in their unlimited choice of counsel. Accordingly, the restrictive covenant contained in the partnership agreement of the former law firm of “Jung, Dwyer and Lisbona” is declared to be void as against public policy. All counts of the pleadings relating thereto will be stricken and the case will continue solely for the purpose of effecting a proper accounting amongst the parties.

      Exeept, perhaps, in cases of indigency.