author: Kole, J. S. C.

text:
    ELMO G. VALLE AND ODETTE SCHIELKE, PLAINTIFFS, v. NORTH JERSEY AUTOMOBILE CLUB, A MUTUAL ASSOCIATION INCORPORATED IN ACCORDANCE WITH TITLE 15 OF THE LAWS OF THE STATE OF NEW JERSEY, AND FLOYD HUGHES, ALEXANDER PATTERSON. PETER CALCIA AND WALTER D. VAN RIPER, AS OFFICERS AND DIRECTORS OF NORTH JERSEY AUTOMOBILE CLUB, AND FLOYD HUGHES, ALEXANDER PATTERSON AND PETER CALCIA, INDIVIDUALLY, AUTO CLUB AGENCY OF HUDSON COUNTY, A CORPORATION OF THE STATE OF NEW JERSEY, DONALD HUGHES, ALEXANDER PATTERSON, JR., WILLIAM HOLLRITT AND CARLETON H. RITTER, DEFENDANTS. WILLIAM RICCARDO, PLAINTIFF-INTERVENER, v. JAMES T. WHITE, DEFENDANT ON COMPLAINT OF INTERVENER.
    Superior Court of New Jersey Chancery Division
    Decided August 24, 1973.

      Mr. Howard Stern, of counsel, argued the cause for plaintiffs Elmo G. Valle and Odette Schielke (Mr. A. Crew Schielke, Jr., attorney).

      Mr. Walter D. Van Riper argued the cause for defendant North Jersey Automobile Club (Messrs. Van Riper, Belmont and Villanueva, attorneys).

      Mr. John B. Hall argued the cause for plaintiff-intervenor William Riccardo.

      Mr. Albert S. Gross argued the cause for defendants Floyd Hughes, Alexander Patterson, Peter Calcia, Walter D. Van Riper, Auto Club Agency of Hudson County, Donald Hughes, Alexander Patterson, Jr., William Hollritt and Carleton H. Ritter, and for defendant James T. White as defendant on complaint of intervenor.
   Kole, J. S. C.

Plaintiffs challenge the organizational procedures of North Jersey Automobile Club (“NJAC” or “club”), essentially on the ground that as members they have been foreclosed from a voice in the election of directors as a result of certain by-law provisions. Additionally, p’aintiffs attack the acquisition in December 1951, over 20 years ago, of the Eletcher Insurance Agency, now Automobile Club Agency of Hudson County (“Hudson”), by four of NJAC’s directors and the operation thereof for the benefit of the directors until November 1971. At that time, while this action was pending, Hudson was turned over by the directors without compensation to NJAC. With respect to the latter claim, plaintiffs seek an acounting of the profits derived from Hudson and the removal of the directors who have so profited.

Defendant NJAC is a nonprofit membership corporation organized under Title 15 of the New Jersey Statutes and operating under a franchise from the American Automobile Association. Its essential object is to provide automobile road service and travel information to its membership which presently totals over 100,000. Eor such benefits the member pays an annual fee and agrees to be bound by the charter and by-laws of NJAC.

Plaintiffs are all members of NJAC. Elmo Yalle had been a member since 1952, for over 18 years when this suit was started. He served as a director from 1965 to 1970. He has also been retained as an accountant by both NJAC and HUDSON. Odette Schielke has been a member of NJAC from 1969. William Eiccardo, a member since 1965, was granted leave to intervene as a plaintiff after the action had been commenced by the two above-mentioned plaintiffs, seeking substantially the same relief.

I

THE POEM OP THE ACTION

This action was designated as a class action under B. 4:32-1 by order dated January 31, 1972, with Eiccardo representing the class of members of NJAC. After the close of all the evidence, defendants challenged this designation insofar as the action involves an alleged breach of duty by certain directors of defendant NJAC. Defendants contend that this portion of the action must properly be viewed as a shareholder’s derivative suit.

Prior orders in a case are, of course, normally considered "the law of the case” and are not lightly modified or set aside. In the present situation, however, B. 4:32-2 (a) specifically provides that an order determining the maintainability of a class action may be altered or amended before the decision on the merits.

In considering the merits of defendants’ contention it must be recognized that there is a real substantive difference between a derivative cause of action by shareholders to enforce derivative or secondary rights under R. 4 :32-5 and a claim asserted in a class action to enforce primary rights under R. 4 :32-1 to 4 :32-4, inclusive. In the former the alleged wrong was committed against the corporate entity. Any recovery by the representative plaintiff inures to the corporation’s benefit, not the plaintiff’s. In the class action the representative plaintiff has been directly harmed and sues to redress his grievance and those of all shareholders similarly situated. An example of this latter category is the action which arises when a class of preferred stock has been wrongfully redeemed. The holders of such stock are directly affected. They may sue individually or through a representative in a class action. Conversely, the most common example of a derivative cause of action is wrongdoing by directors or officers that is alleged to have depleted the corporate treasury in some way. The cause of action belongs to the corporation, not the shareholders. As the wrongdoing officers usually are in control of the corporation, enabling them to suppress any corporate effort to remedy such wrong, equity has permitted shareholder derivative suits to prevent a failure of justice. See 13 Fletcher Cyc. Corporations (perm. ed. 1970), § 5908 et seq., at 279 et seq.; 3B Moore’s Federal Practice, § 23.1.16(1); Weiner v. Winters, 50 F. R. D. 306 (D. C. S. D. N. Y. 1970); Publishers Appendix 3, “Ad visory Committee’s Note to Federal Rule on Class Action” N. J. Court Rules (1972 ed., Gann, at 981-982).

That part of the present action which alleges a breach, of trust by defendant directors in acquiring and operating Hudson and seeks their removal therefor seems clearly to involve a cause of action ..which reposes in the corporation NJAO, not its members. Ho individual member or class of members has been directly injured. Rather, defendants are said to have wrongfully usurped a “corporate opportunity.” In such a case there can be no doubt that the cause of action is primarily that of the corporation.

Accordingly, I conclude that the breach of trust allegations made by plaintiffs constitute a derivative claim and should not have been allowed to proceed as a class action. Por purposes of this decision, then, the claim must be considered as having been brought in the form of a shareholder’s derivative suit under R. 4 :32-5.

R. 4 :32-5, “Derivative Action by Shareholders,” provides as follows:

In an action brought to enforce a secondary right on the part of one or more shareholders in an association, incorporated or unincorporated, because the association refuses to enforce rights which may properly be asserted by it, the complaint shall be verified and allege that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his share thereafter devolved on him by operation of law. * * *

There can be no question but that the term “shareholder,” as employed in R. 4 :32-5, includes a “member” of a nonprofit corporation who seeks to proceed on a derivative cause of action. Leeds v. Harrison, 7 N. J. Super. 558, at 570 (Ch. Div. 1950), rev’d on other gds., 9 N. J. 202 (1952). See also, Escoett v. Aldecress Country Club, 16 N. J. 438 (1954), wherein another provision of the derivative suit rule (then R. R. 4:36-2) was in issue. Implicit in the determination of the case on the merits is that the rule is applicable to “members” as well as shareholders.

Although one of the purposes of the rule requiring the plaintiff to be a shareholder or member at the time of the transaction of which he complains is to prevent “strike” or nuisance suits against corporations by persons acquiring stock or membership for that purpose, other equitable considerations enter into a determination of whether and the extent to which it should be applied in a given case. Thus, the fairness to all the parties, including the corporation, under the circumstances of permitting a stale claim as to a wrongful transaction by directors occurring many years before plaintiff acquired his interest; laches by plaintiff; unclean hands on the part of plaintiff; the nature of the wrong involved; whether the directors then or thereafter acted in good faith; whether the corporation has obtained benefits from the transaction between its occurrence and plaintiff’s acquisition of membership which in a substantial degree may offset the wrong involved therein; the difficulties of proof of such matters as, for example.; the amount of damages suffered by the corporation; whether the application of the rule would violate the general policy against procedural frustrations of determinations on the merits implicit in the philosophy of the court rules, and whether failure to apply the rule would involve an inequitable or unjust result — these, among others — are factors to be evaluated by the court in deciding whether the rule should or should not be applied. See Bookman, supra, 138 N. J. Eq. at 372-373, 398, 405-407; Escoett, supra; Amabile, supra; Hill Dredging Corp. v. Risley, 18 N. J. 501, 530-532, 536-537 (1955); Endicott v. Marvell, 81 N. J. Eq. 378 (Ch. 1913), aff’d 83 N. J. Eq. 632 (E. & A. 1914); Solimine v. Hollander, 128 N. J. Eq. 228, 246 (Ch. 1940). Cf. Crescent Pk. Tenants Ass'n v. Realty Eq. Corp., 58 N. J. 98, 107-108 (1971).

In the present case the transaction of which plaintiffs complain is the purchase of Fletcher’s insurance agency in 1951 by four of the defendant directors and the operation of that business by and for the benefit of such directors from 1951 until November 1971.

The original plaintiff in this action was Elmo Valle. He was and is the only plaintiff to have been a member prior to 1965.

For the reasons hereafter given, Valle is barred from bringing the derivative action on behalf of the NJAC against such directors because of laches, unclean hands or both.

Unless there are special circumstances warranting an exception from R. 4 :32-5, therefore, the derivative action is without a proper representative plaintiff under that rule for the conduct complained of for the period 1951 to 1965. I find, as hereafter set forth, that there are no reasons to carve out any such exception in this case. The other representative plaintiffs are Riecardo, who became a member of NJAO in 1965, and Odette Schielke, who did not become a member until 1969.

[The court then considered plaintiffs’ claim that an exception to the contemporaneous ownership-membership rule exists when the conduct complained or was of a continuing nature and did, in fact, continue after the plaintiff became a shareholder or member. The court observed that there was conflicting authority under the Federal Rules of Civil Procedure, after which R. 4 :32-5 is patterned, as to whether such an exception exists, and no authority under the New Jersey rule. Noting that a continuing-wrong exception might he desirable in some situations, the conrt concluded that on the facts of this case there was no compelling reason to find such an exception applicable. Rather, the court found that, based on the factors heretofore referred to, complete justice and equity could be done in this case by considering Riceardo, who became a member in 1965, as the plaintiff in the derivative action, allowing recovery against defendant directors from the date of his membership.

Insofar as plaintiffs’ complaint was addressed to the electoral procedure within NJAC, the court found the action to have been properly designated a class action under R. 4 :32-l to 4:32-4, citing Lusky v. Capasso Brothers, 118 N. J. Super. 369 (App. Div. 1972), certif. den. 60 N. J. 466 (1972), and R. 4:32-2(d).]

II

BREACH OE TRUST

[The court found the four NJAC directors who had purchased the Fletcher Agency in 1951 and operated it as a virtual department of NJAC from 1951 through 1971, guilty of a breach of fiduciary duty. It found that they were not guilty of actual fraud; in good faith, though erroneously, they believed their breach of trust had been ratified by NJAC’s members. They were ordered to pay to NJAC the sum of Hudson’s earnings accrued for or distributed to them from 1965 (when Riccardo became a member of NJAC) through 1971— a total of $87,540. They were not removed from office. Plaintiff Valle was found barred by laches and unclean hands as a proper representative plaintiff in the derivative action for breach of trust, but intervener Riccardo was held to be a proper representative plaintiff in both that and the class action.]

III

ELECTION OF DIRECTORS

[With respect to the challenge to certain by-laws of NJAC, the court observed that traditionally courts have been hesitant to interfere with the internal affairs of voluntary associations — intervening only if a statute or public policy was violated or the governing rules worked an unconscionable hardship or contravened natural justice.

Using these standards, the coart then analyzed Article IX of the by-laws which vests authority to amend the bylaws in the board of directors.]

Title 15 contemplates that, in addition to the certificate of incorporation, the governing rules of the corporation shall be its by-laws, “which shall be passed by the members.” N. J. S. A. 15:1-7, 15:1-4; Leeds v. Harrison, supra, 9 N. J. at 213.

There is neither a prohibition in the statute against, nor express authority for, the members adopting a by-laws provision such as Article IX giving the power of amendment to the board of directors. Compare this situation with the specific statutory authorization for delegation of the amendatory power to the board contained in the former and present statutes governing general business corporations, subject, however, to the reserved power in the shareholders to alter or repeal any such by-law adopted by the board. N. J. S. A. 14 :3-2 and N. J. S. A. 14A :2-9(1).

I have concluded that since the only statutory provision here applicable (N. J. S. A. 15 :l-7) provides for by laws “which shall be passed by the members,” Article IX would be invalid if read to deprive members of the power to alter by-laws passed by the board. Such a “surrender” of the amendatory power to the board by the members would be contrary to the statute and hence unlawful. See Lo Curto v. River Edge Girl Scouts Ass’n, Inc., 59 N. J. Super. 408 (Ch. Div. 1960); Leeds v. Harrison, supra, 9 N. J. at 211-213, and the trial court opinion which it reversed, 15 N. J. Super. 82, 97-98 (Ch. Div. 1951); Bible Presbyterian, etc. v. Harvey Cedar Bible, etc., 84 N. J. Super. 441, 450 (App. Div. 1964), certif. den. 43 N. J. 258 (1964); Moorestown Management, Inc v. Moorestown Bookshop, 104 N. J. Super. 250, 260 (Ch. Div. 1969); State v. Jefferson Lake Sulphur Co., 36 N. J. 577, 589-591 (1962), app. dism. 370 U. S. 158, 82 S. Ct. 1253, 8 L. Ed. 2d 402 (1962). Cf. Bookman, supra, 138 N. J. Eq. at 324-328; Penn-Texas Corp. v. Niles-Bement-Pond Co., 34 N. J. Super. 373 (Ch. Div 1955); 8 Fletcher Cyc. Corp. (Perm. Ed. 1966), § 4185 at 688 et seq.

Similarly-, if Article IX were interpreted as a “delegation” to the board of the members’ amendatory power, it would appear that such delegation would be contrary to the statute unless viewed as subject to a reserved power in the members to repeal or alter such by-laws as the board might adopt.

[The court then reviewed the history of Article IX since its adoption in 1951, finding it had never been abused and that there was no evidence that the members had ever attempted to exercise their reserved power to amend the bylaws. Absent such a showing, the court held that Article IX must be construed as being consistent with the statute; that is, the members had arid still have the authority to repeal or amend any by-laws.

The other challenged by-laws provision was then discussed — Art. Y, § 2, providing for nominations of members of the board of directors. In sum, this by-law provides that a nominating committee, appointed by the board of directors, shall make nominations. Other nominations can be made by 5% of the total membership filing a certificate. The signature, residence and membership status of each member signing the certificate is required to be notarized.

The court concluded that the by-law was not objectionable on its face but observed that plaintiffs’ principal claim was that in application the effect of the by-law was to deny to members the right to nominate and vote for candidates of their choice because the board controlled the nominating committee procedure and the requirements for other nominations were virtually impossible to meet.]

Defendants consider this by-law as a device to protect the membership. They ciaim it eliminates the risk of many frivolous nominations which would confuse the membership and render a rational and meaningful choice of directors from among many nominees exceedingly difficult, if not impossible. There is authority for this view of corporate or association management control with respect to provisions restricting independent nominations by members to a percentage thereof. See Stuberfield v. Long Island City S. & L. Ass’n, 235 N. Y. S. 2d 908, 916, 918 (Sup. Ct. 1962). But cf. In re Veloso, 93 N. J. Super. 186, 194 (App. Div. 1966), certif. den. 48 N. J. 580 (1967).

Plaintiffs contend that, as NJAC now has over 100,000 members, the by-law requires over 5,000 notarized signatures for such a nomination. Moreover, they contend that those in charge of the records of NJAC would not make available the membership list of the club to a potential candidate. They argue, therefore, that the burden imposed on the membersiiip is virtually impossible of accomplishment, resulting in a de facto denial of the members’ freedom to nominate and choose the directors of NJAO.

While there was no evidence that any member ever actually attempted to obtain the requisite 5,000 signatures for a nomination, defendants have not challenged the assertion that such a task would be so burdensome as to render the independent nominating procedure of little practical value. Rather, they take the position that the by-law provisions are valid contractual terms with which the court should not interfere.

I find that defendants have failed adequately to answer plaintiffs’ claim for relief insofar as it appeals to public policy, "the ultimate source of justice.” Bron v. Weintraub, 42 N. J. 87, 92 (1964). See also In re Veloso, supra.

UJAC had but 651 members at the end of World War II. By the end of 1950 membership was 8,610 and by the close of 1960 it had grown to 39,482. Membership presently is over 100,000. Its membership dues income is now in excess of $1,000,000; its assets exceed $1,000,000.

Yet, by virtue of HJAC’s status as a Title 15 nonprofit corporation, it and its management are not regulated or otherwise subject to scrutiny except by its members or, when called upon, a court. Moreover, it must be recognized that the individual member of UJAC does not have the same interest in his corporation’s affairs as do shareholders in a corporation for profit. He has no real stake in its management; he has only better service to gain by better management, not money which might be his reward in a corporation operated for profit. If management is poor, he stands to lose only his membership dues for one year rather than what may well be a sizeable capital investment in a. business corporation. Thus, it is readily apparent that there is little to motivate any individual member or group of members to keep a close eye on those who manage an organization such as NJAC.

It is in the light of the foregoing considerations that the defendants’ reliance on judicial laissez faire must be adjudged an inadequate answer to plaintiffs’ claim for relief. As noted by our Supreme Court in a different context, when courts originally declined to scrutinize admission practices of membership associations, they were dealing with social, religious and fraternal organizations. When they were later called upon to deal with the admission or expulsion practices of trade and professional groups involving public policy considerations, judicial relief was provided. Falcone v. Middlesex Cty. Med. Soc, supra, 34 N. J. at 596; Higgins v. American Soc. of Clinical Pathologists, supra.

Changing conditions produce new problems with which the court must deal. These problems often require remolding of the law and the extension of old remedies. In the Matter of the Guardianship of C., 98 N. J. Super. 474, 487 (Cty. Ct. 1967); Ellsworth Dobbs Inc. v. Johnson, 50 N. J. 528, 553-554 (1967).

So it is in the present ease. While past court decisions generally may have considered the member-association relationship as purely contractual, that view cannot be permitted to frustrate necessary growth and development of the common law in this area in a proper case based on public policy considerations'.

Here, NJAC has grown in terms of assets and membership to a size which defies characterization of the organization as a private club. Its attributes and the character of its activities are much more those of a moderately large business corporation than those of a club or voluntary association. It is in the business of insurance for its members. It provides various services in exchange for annual fees. There is no evidence of the participation by members in club activities that is a common aspect of membership in the usual voluntary association. In sum, except for the somewhat higher fees that would presumably have to be charged to generate profits, NJAC could easily pass for an ordinary business corporation.

It is incongruous that such an organization, which controls substantial income and assets contributed by its members, should be considered and conducted as a small club or should have its electoral process so structured that the persons managing it — its board of directors — may, for all practical purposes, be perpetuated in office. The prospect of possible failure of reelection may help instill in each director a sensitivity to the public trust aspect of his role.

Except for the breach of trust already discussed, I have found nothing in the evidence that would warrant criticism of the present or past management of NJAC by the individual defendants as officers or as members of the board of directors. On the contrary, I have found it to' have been a well-managed automobile club.

Nevertheless, the by-laws provisions relating to independent nominations of board members in actuality do not afford “the democratic process of election” that should be required in such a corporation. Cf. In re Veloso, supra, 93 N. J. Super. at 194. Since 5% of the total membership is now over 5,000, the requirement that that number of members file a written certificate of such nominations would appear to be so burdensome as realistically to preclude independent nominations being made. Moreover, the failure of the by-laws to provide a method of seeking out the requisite number of members to sign such a certificate or of communicating the names of any such independent candidates to the members makes the 5,000 members requirement virtually impossible to meet. Unquestionably, there is a valid business reason for not disclosing the list of members. But certainly a by-law provision permitting such a procedure may be devised which is consistent with the need for membership confidentiality.

Again, although there may be good cause to require the certificate of independent nominees to be verified, the provision apparently requiring the signatures, residence and membership status of each of the 5,000 members appearing on the certificate to be verified under oath in practice is patently unreasonable.

[The court concluded that the changes to be made in Art. V, § 2, or in any other by-law provision relating to nominating or election procedures, and in Art. IX (involving by-law amendment procedure) should be effected in the first instance by the NJAG membership. Accordingly, the court ordered that representatives be selected by plaintiff Riccardo, NJAO’s board of directors, and the court for a committee which would formúlate proposed by-law revisions for membership approval at its meeting in 1974. An election of a new board of directors was ordered to be held subsequent to adoption of the new by-laws by the members and pursuant thereto.

The court rejected plaintiffs’ demand that the election of directors of November 2, 1970 and subsequent appointments by the board to vacant seats on the board be set aside. It held that (1) there was insufficient evidence of the irregularities therein charged by plaintiffs, and (2) despite the invalidity of Art. V, § 2, of the by-laws, the evidence did not show that NJAG would be prejudiced by the court’s declaring such by-law invalid prospectively and continuing the present directors in office until their successors were elected. Rather, it found that NJAG would be better served by the above-mentioned orderly procedure of revising the by-laws, followed by an election.]

       As indicated by its being part of R. 4 :32 “Class Actions,” shareholders’ derivative suits are a form of class action in the sense that plaintiff undertakes to be representative of the large group of shareholders not actually before the court. See fn. 2 infra.

      However, as used in this opinion, the term “class action” refers to one under R. 4 :32-l to 4 :32-4 to enforce primary rights, rather than a derivative action under R. 4 :32-5.

         R. 4 :32 is patterned after Fed. R. Civ. Proc. 23 and 23.1. Comment to R. 4 :32, N. J. Court Rules (1972 ed., Gann), at 554.
      The difference between the derivative “class” action and the usual class action to enforce primary rights lies in the nature of the rights which plaintiff prosecutes. With this difference lies the reason for the special conditions imposed by R. 4 :32-5, when the suit is a derivative action, which are inapplicable when the suit is a class action to enforce primary rights under R. 4 :32-1 to 4 :32-4. See 3B Moore's Federal Practice, supra; Weiner v. Winters, supra. See also, Pomeroy v. Simon, 17 N. J. 59 (1954).

         Cf. Amabile v. Lerner, 64 N. J. Super. 507 (Ch. Div. 1960), aff’d on other gds. 74 N. J. Super. 443 (App. Div. 1962), applying the General Corporation Act standing to sue provision (N. J. S. A. 14A :3-6), as well as the court rule, to a derivative action against a mutual casualty insurance company. The General Corporation Act provision is merely declaratory of the preexisting case law. Bookman v. R. J. Reynolds Tobacco Co., 138 N. J. Eq. 312, 394-400 (Ch. 1946).

       The receipt of benefits by the injured corporation from the challenged transaction is, of course, immaterial to the issue of whether a breach of trust occurred. The corporation is entitled to all, not just part, of the benefits. Keely v. Black, 90 N. J. Eq. 439, 444 (Ch. 1919), rev’d on the facts, 91 N. J. Eq. 520 (E. & A. 1920). Nonetheless the existence or absence of substantial benefits to the injured corporation clearly affects the equities of the respective parties on the matter of standing. The .effect of the wrongful conduct might have been so offset by collateral benefits to the corporation prior to plaintiff’s acquiring an interest in the corporation as to render plaintiff’s interest in the injury trifling, in which case the action might not be allowed. See Bookman, supra, 138 N. J. Eq. at 398.

       The court cited the following cases relating to the continuing-wrong exception: for the exception : In re Penn Central Transp. Co., 341 F. Supp. 845 (E. D. Pa. 1972); Hoff v. Sprayregan, 42 F. R. D. 243 (S. D. N. Y. 1971); contra: Henis v. Compania Agricola de Guatemala, 116 F. Supp. 223, 228 (D. C. Del.), aff’d 210 F. 2d 950 (3 Cir. 1954); Weinhaus v. Gale, 237 F. 2d 197, 199-200 (7 Cir. 1956) ; McQuillan v. Nat'l Cash Register, 112 F. 2d 877, 882 (4 Cir. 1910), cert. den. 311 U. S. 695, 61 S. Ct. 140, 85 L. Ed. 450 (1940); de Haas v. Empire Petroleum Co., 286 F. Supp. 809, 812 (D. C. Colo. 1968), mod. on other grds. 435 F. 2d 1223 (10 Cir. 1970); Lawson v. Baltimore Paint & Chemical Corp., 298 F. Supp. 373, 375-376 (D. C. Md. 1969). In its determination on this issue the court emphasized the fact that the directors had transferred the Hudson agency to NJAC without compensation, even though that occurred after the litigation was instituted, thus in effect mooting NJAC’s primary damage claim.

       The court cited Harker v. McKissock, 7 N. J. 323, reh. den. 8 N. J. 230 (1951); Higgins v. American Soc. of Clinical Pathologists, 51 N. J. 191, 202 (1968).

       Defendants argue that the by-law nominating- procedure is not the exclusive means by which one may be elected to the hoard, suggesting that the court not follow In re Hamilton, 5 N. J. Misc. 660 (Sup. Ct. 1927). That case holds that where a by-law provides a procedure for nominations in advance of election, voting for a “write-in” candidate is not possible. Courts in other states have refused to follow Hamilton. Commonwealth v. Markey, 325 Pa. 433, 190 A. 892 (Pa. Sup. Ct. 1937); In re Farrell, 205 App. Div. 443, 200 N. Y. S. 95 (App. Div. 1923), aff'd 236 N. Y. 603, 142 N. E. 301 (Ct. App. 1923). Whether Hamilton should be followed need not be decided. If Hamilton is to be overruled, it should be in the framework of a factual controversy involving an actual attempt to vote for someone not nominated in accordance with the by-laws, rather than in a ease testing the validity of the by-law nominating procedure itself.

       The fact that there is no express statute giving the Superior Court authority to review elections or electoral procedures of a Title 15 corporation does not, as defendants seem to contend, preclude such jurisdiction where, as here, the case presents questions involving the rights of members of a corporation such as NJAC to nominate and vote for the members of the board of directors that manage it. See Kanengeiser v. First S. & L. Ass’n. of Jersey City, 50 N. J. Super. 427, 433 (App. Div. 1958); In re Veloso, supra. Cf. Engler v. Capital Management Corp., 112 N. J. Super. 445 (Ch. Div. 1970); Higgins, supra; Falcone v. Middlesex Cty. Med. Soc., 34 N. J. 582 (1961). See also, Lo Curto v. River Edge Girl Scout Ass’n. Inc., supra.

      The court noted that pursuant to the settlement of a law suit in November 1950, at the annual membership meeting of NJAC on February 19, 1951 certain changes in the by-laws were duly adopted. The net effect of two of the changes — in Art. IX and Art. V, § 2 — was to strengthen the position of, and control by, the board of directors of NJAC as against anyone who might challenge it. Defendants Peter Calcia, Floyd Hughes, Alexander Patterson, Sr. and Carloton Ritter have been members of the board of directors substantially ever since the 1951 by-laws amendments.


source: Caselaw Access Project

author: Gelman, J. S. C.

license: Public Domain

text:
    MICHAEL J. BRESLIN, JR. AND BRESLIN AND BRESLIN, ESQS., PLAINTIFFS, v. LIBERTY MUTUAL INSURANCE COMPANY, DEFENDANT. JOHN M. ARCADIPONE, PLAINTIFF, v. WESTWOOD FORD AND JAMES A. PETERSON, DEFENDANTS.
    Superior Court of New Jersey Law Division
    October 2, 1973.

      Mr. E. Carter Corriston for plaintiffs Michael J. Breslin, Jr. and Breslin and Breslin, Esqs. (Messrs Breslin & Breslin, attorneys).

      Mr. Philip C. Geibel for plaintiff John M. Arcadipone.

      Mr. John R. Kingstand for defendant Liberty Mutual Insurance Company.

      Mr. Frank R. Cinquina for intervenor-respondent Connecticut General Life Insurance Company (Messrs. Schwartz and Adolino, attorneys).
   Gelman, J. S. C.

These motions in two separate eases evolve from identical fact situations and present common questions of law. In each instance a Now Jersey resident, employed in New York, was injured in an automobile accident in New Jersey. Disability benefits were paid to the employees by their respective New York employers’ insurance carriers:. Actions were commenced in New Jersey by the employees against third parties for injuries received in the accidents and resulted in the recovery of amounts in excess of the disability benefits received by the employees from the carriers, plus attorneys’ fees and costs (computed on the whole sum recovered) . The carriers in these actions assert subrogation rights under New York law to the full extent of the benefits paid, without allowance for costs or attorneys’ fees incurred by the employees in effecting a recovery.

On their part the employees assert that (1) the enforcement of the New York statutory subrogation claims should be denied in their entirety because the claims conflict with the statutory law and public policy of New Jersey, or (2) at the very least and for similar reasons, the amounts claimed by the carriers are subject to an offset for the pr'o rata share of costs and attorneys’ fees incurred in effecting the recovery against which the right of subrogation is being claimed.

The New York disability benefits law provides for full subrogation of the total amount of benefits paid to an employee in any recovery by the employee against a third party, so long as the amount recovered, after deducting attorneys’ fees and expenses, exceeds the amount of benefits paid. Workmen’s Compensation Law, § 227, McKinney’s Consol. Laws, c. 67. As interpreted by the New York courts, the employee’s attorney does not have a lien against and is not entitled to' a fee for services rendered in effecting the recovery. See, e. g., Cianciosi v. Merchant’s Mut. Ins. Co., 61 Misc. 2d 867, 307 N. Y. S. 2d 136 (Sup. Ct. 1970). The New York law is the same where third-party recovery has been effected after workmen’s compensation. benefits have been paid. Workmen’s Compensation Law, § 29; Kussack v. Ring Const. Corp., 1 A. D. 2d 634, 153 N. Y. S. 2d 646 (Sup. Ct. App. Div. 1956), aff’d 4 N. Y. 2d 1011, 177 N. Y. S. 2d 522, 152 N. E. 2d 540 (Ct. App. 1958); Privetera v. Hillcrest Homes, Inc., 29 N. J. Super. 591 (Law Div. 1954).

Under the comparable New Jersey statute a disability benefits carrier is not accorded any right of subrogation against a third-party recovery, see N. J. S. A. 43 :21-25 et seq., and in the case of workmen’s compensation benefits the carrier’s right of subrogation is subject to payment of an attorney’s fee on the amount recovered not to exceed 33 1/3% plus expenses not to exceed $300. See N. J. S. A. 34 :15-40 (b), (e).

The fact that the New Jersey statutory disability benefits scheme does not create a right of subrogation with respect to claims against third parties does not compel New Jersey courts to deny the carriers’ statutory rights under New York law. Viewed as a choice-of-law question, New York’s disability benefits law as enunciated in § 227 must govern the existence vel non of the right of subrogation. The place of employment here was New York and the benefits were paid to the injured employees by reason of their New York employment and pursuant to the statutory scheme of that state. While choice of law in this situation is not controlled by the application of mechanistic formulae as such, it is evident that fundamental fairness as well as the need for certainty of result commits our courts to look to the laws of the state pursuant to which the benefits were paid to determine questions affecting the essential rights of the employers, co-employees, as well as insurance carriers. See Stacy v. Greenberg, 9 N. J. 390; Privetera v. Hillcrest Homes, Inc., supra; but see, Wilson v. Faull, 27 N. J. 105 (1958).

However,' it does not automatically- follow that the choice of New York law on the first issue compels us to choose New York law in determining the status of the asserted attorneys’ liens. It bears repeating that choice of law is no longer the product of the application of ritualistic concepts such as precedural vs. substantive law, place of contracting, place of injury, etc. See Wilson v. Faull, supra; Heavner v. Uniroyal, Inc., 63 N. J. 130, 140-141 (1973). Where choice-of-law questions - are presented we must scrutinize the interests and public policy of the forum state, the contacts of the parties and of the transaction with the respective jurisdictions whose laws may be at variance, and -the juridical as well as the social consequences of the selection of the law to be applied. Rose v. Port of N. Y. Auth., 61 N. J. 129, 139-140 (1972); Pfau v. Trent Aluminum Co., 55 N. J. 511, 514-515 (1970). We ought, also, to discourage “forum shopping” to obtain the advantage of more favorable statutory or decisional law in the forum state. See Ehrenzweig, “Contracts in the Conflict of Laws,” 59 Colum. L. Rev. 973, 1021 (1959). It is, however, clear that within these guidelines, rationally applied, there is no constitutional impediment to the selection of forum law over foreign law, even where the latter creates or gives rise to- the cause of action. See Carroll v. Lanza, 349 U. S. 408, 413, 75 S. Ct. 804, 99 L. Ed. 1183 (1955); Pacific Employers Ins. Co. v. Industrial Accid. Comm’n, 306 U. S. 493, 59 S. Ct. 629, 83 L. Ed. 940 (1939).

“Eorum shopping” is obviously not in issue here. These actions are common, garden-variety negligence suits brought by New Jersey residents in New Jersey courts and arising out of New Jersey accidents. Likewise, the agreements for the.retention of the respective attorneys to prosecute the third-party claims were concluded in this State. Thus, with respect to all issues affecting the employees’ rights of action, whether we apply mechanical choice-of-law rules or the more enlightened contacts test, New Jersey law applies and determines the result.

A long line of New Jersey judicial and statutory precedent has established the priority and status of the attorney’s lien in this State. See, e. g. State v. Otis Elevator Co., 12 N. J. 1, 5 (1953); Visconti v. M. E. M. Machinery Corp., 7 N. J. Super. 271, 274-275 (App. Div. 1950); Lehigh & N. E. R. Co. v. Finnerty, 61 F. 2d 289 (3 Cir. 1932); N. J. S. A. 2A:13-5. It is likewise established in this State that one who derives a benefit from the services rendered by an attorney, whether the party involved retained the attorney or not, ought in good conscience and as a matter of fundamental fairness bear at least a pro rata share of the costs of those services to the extent of the benefit derived. Klacik v. Kovacs, 111 N. J. Super. 307 (App. Div. 1970). The rationale of that policy is set forth in Klacik as follows:

TVe conclude that the more equitable rule is that espoused by the majority * * *. Clearly, had Home decided to institute its own action, or intervene in the action instituted by plaintiffs against Kovacs, it would have been required to incur expenses including an attorney’s fee for such action. To establish an artificial rule which would provide an insurer with the right to sit back and permit its insured to proceed with an action, expecting to share in the avails of that proceeding without the burden of any of the expense, occurs to us to be anomalous, [at 312]

Of course, in Klacih the subrogation right arose as a matter of private insurance contract and not by virtue of the law of a sister state. But surely the origin of the subrogation right does not vitiate the public policy of this State as expressed in its decisional or statutory law. After all, public policy is nothing more nor less than an expression of what the state — speaking through its legislature and its courts — deems to be fundamentally fair in the complex relations within a just and ordered society.

Por the purpose of this decision, then, it is accepted that New Jersey public policy favors the recognition of an attorney’s lien on moneys recovered and inuring to the benefit of a subrogee. Were this the end of the inquiry it may be doubted whether that policy, however firmly embedded in our law, is sufficient to deny exact enforcement of the statutory law of a sister state. As has often been said, the mere fact that one state, albeit the forum state, views the resolution of a particular issue in a different way than its neighbor, is not necessarily reason to preclude enforcement of a foreign statute within its borders. See, e. g., Interstate Wrecking Co. Inc. v. Palisades Interstate Park Comm’n, 57 N. J. 342 (1971).

But there are pragmatic considerations here as well. Every attorney practicing, in this field and judges know full well that the settlement of third-party actions when subrogation claims are lurking in the background are often impossible without the cooperation of the subrogee in compromising its claim, especially if the subrogee refuses to bear its pro rata share of litigation fees and costs. It may be judicially noticed that hundreds of thousands of New Jersey residents are employed out-of-state, principally in New York, and the volume of third-party negligence litigation in this State, where disability benefits have been paid under the New York statute, is not insignificant. The State of New Jersey and its citizens, not just the litigants here, have a legitimate interest in promoting settlement of court controversies to avoid calendar congestion. That interest militates in favor of a rule which will remove an impediment to the settlement of disputes in our courts. New Jersey, as the forum state, thus has an important and substantial interest in promoting its policy, and it can subject the carriers’ statutory subrogation liens to the payment of attorneys’ fees and expenses in furtherance of that policy. Cf. Rodes, “Workmen’s Compensation ” 11 Rutg. L. Rev. 140, 156 (1956).

It Us therefore held that the subrogation claims of the disability insurance carriers in these actions are subject to the payment of a pro raía share of the attorneys’ fees and expenses necessary to effect recovery from the third-party tortfeasors.

It should also be noted that the conclusion reached here is probably consistent with the result that would obtain if these cases were decided by a court in New York. On at least one occasion a New York court has applied foreign law to sustain the enforceability in New York of a contractual claim for attorney's’ fees, although the claim asserted was assumed to be against the public policy of and invalid under New York law. First Nat’l Bank v. Fleitman, 168 App. Div. 75, 153 N. Y. S. 869 (Sup. Ct. App. Div. 1915). The court ruled that the law of the place of contracting controlled the validity of the claim for attorneys’ fees, although the majority view is to the contrary. See Annotation, “Conflict of Laws — Attorneys’ Fees,” 54 A. L. R. 2d 1053.

In In re King, 34 Misc. 10, 69 N. Y. S. 399 (Sup. Ct. 1901), rev’d on other grounds, 61 App. Div. 152, 70 N. Y. S. 356 (Sup. Ct. App. Div. 1901), rev’d 168 N. Y. 53, 60 N. E. 1054 (1901), New York attorneys rendered legal services in New York pursuant to an agreement with a New Jersey testamentary trustee entered into in New York. The attorneys instituted an action in New York to recover trust assets and were successful. The assets then being located in New York, the attorneys sought to impress a New York statutory attorneys’ lien on the assets and to have their compensation fixed by the New York court. The trustee urged that the attorneys’ compensation should be fixed by a New Jersey court since New Jersey was the domicile of decedent and the situs of the trust. The trustee’s position was rejected, the court stating:

The contract of retainer was made in this state. The property is here, and the action was brought here, and the services rendered here, and the trustee is properly before this court. * * “A party should not run away with the fruits of a cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expense, those fruits are obtained.” [69 N. Y. S. 401]

From the foregoing cases it may be reasoned that the New York courts’ choice-of-law rule with respect to attorneys’ fees is to apply the law of the state where the services were rendered to determine the right to as well as the measure of compensation to be allowed. On the facts of the cases at bar, then, New York would apply New Jersey law to determine whether the carriers’ subrogation claims are subject to the payment of New Jersey attorneys’ fees for services rendered in this state.

A choice-of-law rule which refers us to the whole of the foreign law, including its choice-of-law principles, has been urged persuasively by Dean Griswold. See Griswold, “Renvoi Revisited,” 51 Harv. L. Rev. 1165 (1938) :

* * * domestic courts referred abroad should not blind themselves to foreign rules of conflict of laws. They should instead, as a matter of course, look first at the “whole law” of the other state, and undertake to dispose of the case as the foreign court would dispose of it; and if the foreign court would in its disposition apply, some rule of conflict of laws the domestic court should do the same, [at 1182]

The renvoi view was rejected by the Appellate Division in In re Damato, 86 N. J. Super. 107, 115-116 (App. Div. 1965), where the court held that in applying foreign law we should look only to the internal law of the foreign jurisdiction “and not the conflict of laws of the foreign state.” In reaching this conclusion the court relied primarily upon the rule as then set forth in the Restatement, Conflict of Laws, § 7(b) (1934), which likewise rejected the renvoi doctrine.

Since In re Damato was decided, the Restatement position has been significantly modified. Restatement, Conflict of Laws 2d, § 8 (1971), sets forth its present renvoi position as follows:

(1) When directed by its own choice-of-law rule to apply “the law” of another state, the forum applies the local law of the other state, except as stated in Subsections (2) and (3).
(2) When the objective of the particular choice-of-law rule is that the forum reach the same result on the very facts involved as would the courts of another state, the forum will apply 1he ehoieeof-law rules of the other state, subject to considerations of practicability and feasibility.
(3) When the state of the forum has no substantial relationship to the particular issue or the parties and the courts of all interested states would concur in selecting the local law rule applicable to this issue, the forum will usually apply this rule.

Moro recently the Supreme Court in Heavner v. Uniroyal, Inc., 63 N. J. 130 (1973), ruled that a New Jersey court would apply the foreign state’s statute of limitations to a foreign cause of action on the facts present in that case. While the court did not refer to the renvoi doctrine as such, the underlying rationale of the decision was the desire to conform the judicial result in the forum state to that which would obtain in the state in which the cause of action arose. Id., at 136-138. This is consistent with the position adopted by the Restatement, Conflict of Laws 2d, § 8(2), and suggests that we may be more flexible in accepting the more recent renvoi view expressed in the cited section of the Restatement.

Surely it would seem anomalous that a New Jersey court, applying New York law to a transaction in which New Jersey has a substantial interest, should be compelled to reach a result which our courts have deemed unfair and which is the opposite of the result a New York court would probably reach on the same facts. Hence, whether the proper choice of law rule directs us to apply the internal law of New Jersey or the law of New York, the result here is the same.

Orders may be submitted by the attorneys for the plaintiffs in accordance with R. 4 :42-.1(b).

       In Breslin tile disability benefits paid to the employee totaled $1,462. Following the institution of suit by plaintiff’s client in New Jersey the action was settled for $20,000, and by agreement between the employee and her attorney, attorney’s fees and costs wore fixed at $5,000, or 25% of the settlement proceeds. Plaintiff seeks to reduce the defendant’s subrogation claim by 25%. In Arcadipone, :$1,050 was paid in benefits by the carrier. The employee’s third-party claim was settled for $5,200, and the employee’s attorney sought to offset $320.55 as attorney’s fees, and $88.35 as expenses, against the carrier’s subrogation claim.

       In Wilson v. Faull our Supreme Court held thnt a New Jersey employee, employed in New Jersey but injured while working in Pennsylvania, was barred under Pennsylvania law from suing the general contractor for its negligence, although compensation benefits were paid under the New Jersey statute and our law would not have barred the action. The resolution of the choice of law question, the court said,
      * * * should not be governed by wholly fortuitous circumstances such as where the injury occurred, or where the contract of employment was executed, or where the parties resided or maintained their places of business, or any combination of these “contacts”. Rather, it should be founded on broader considerations of basic compensation policy which the conflicting law's call into play, with a view toward achieving a certainty of result and effecting fairness between the parties within the framework of that policy, [at 124]


author: Conford, P. J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. NATHANIEL SHEPPARD, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted September 10, 1973
    Decided October 17, 1973.

      Before Judges Conford, Handler and Meanor.

      Mr. Sherwin D. Lester, Bergen County Prosecutor, attorney for appellant (Mr. Peter A. Jeffer, Assistant Prosecutor, of counsel and on the brief).

      Mr. Theodore E. Maloof, attorney for respondent.
   The opinion of the court was delivered by

Conford, P. J. A. D.

This is an appeal by the State and a cross-appeal by the defendant from an affirmance on trial de novo by the Bergen County Court of a conviction of defendant by the Bergen County District Court of driving a motor vehicle while under the influence of alcohol, contrary to N. J. S. A. 39 :4-50(a). The affirmance was on the county district court transcript.

The county district court sentenced defendant as a second offender to the county jail for three months and revoked his driver’s license for a period of ten years. However, the jail term was suspended and defendant placed on probation for two years. The State appealed the suspension, contending imprisonment for three months was mandatory under the statute, while the defendant cross-appealed the finding of guilt of the substantive offense. The County Court, on appeal, reaffirmed guilt and imposed the same suspended jail term as had the county district court.

Defendant’s appeal requires no extended discussion. There was ample proof to support the fact findings below that defendant was under the influence of intoxicating liquor 'while operating his motor vehicle at the time and place charged.

As to the State’s appeal, defendant contends that the State had no right to appeal the suspension of sentence, the case not falling within any of the provisions of R. 2 :3-1 (b), which purports to list the instances in which the State may appeal in criminal actions. Before addressing ourselves to that question, we hold that the action of the lower tribunals in suspending a prison sentence of a repetitive drunk-driving offender constituted error and an exercise of jurisdiction those courts did not possess.

The Supremo Court squarely ruled in State v. Johnson, 42 N. J. 146, 174-176 (1964), (1) that “on the face of and in the light of the legislative history of N. J. S. A. 39:4-50, imprisonment was intended to be mandatory on conviction for the second and all subsequent violations thereof” (at 174); and (2) that no other statute extant, including N. J. S. A. 2 A:168-1, the general probation statute, on which the county district court relied in the instant ease, .overcomes the unequivocal command of the motor vehicle law for mandatory imprisonment of a second offender. Although the State says the Johnson case was called to its attention, the county district court’s supplemental opinion does not cite it. The County Court also by-passed Johnson, announcing its agreement with the county district court that imprisonment was discretionary with the court. It is elementary that a Supreme Court opinion construing a statute is binding on all lower courts so long as the statute remains unchanged. The Supreme Court has observed: “Trial judges are privileged to disagree with the pronouncements of appellate courts; the privilege does not extend to non-compliance.” Reinauer Realty Corp. v. Paramus, 34 N. J. 406, 415 (1961).

Turning to the procedural question, we conclude that in the existing circumstances we have the right and duty on this appeal to vacate the illegal suspension of sentence and order the mandatory jail term to be served by the defendant. Either of two approaches justifies the determination: (1) defendant’s cross-appeal brings the judgment of conviction and sentence before us, and permits us to correct an illegal sentence brought to our attention, even if it were conceded that the State had no right to appeal; (2) the State had the right to invoke the substance of the certiorari jurisdiction of the Superior Court, inherited under the Constitution of 1947 from the former Supreme Court, to superintend and correct the act of an “inferior” court beyond its jurisdiction. Neither approach entails a disturbance of the fundamental principle that the State may not have review of an acquittal of a defendant in a criminal case, see Newark v. Pulverman, 12 N. J. 105 (1953), or take an appeal which would again place a defendant in jeopardy. Both approaches would subserve due appellate superintendence of the orderly administration of justice by trial courts — and here in a vital area of public policy. See State v. Macuk, 57 N. J. 1, 8 (1970).

A

It is well established that an illegal sentence is “correctible at any time,” State v. Fisher, 115 N. J. Super. 373, 378 (App. Div. 1971); State v. Weeks, 6 N. J. Super. 395 (App. Div. 1950); State v. Strupp, 101 N. J. Super. 94 (App. Div. 1968); State v. Heslip, 99 N. J. Super. 97, 100 (App. Div. 1968), certif. den. 51 N. J. 570 (1968), cert. den. 393 U. S. 928, 89 S. Ct. 265, 21 L. Ed. 2d 265 (1968). In several of the cases cited the principle was applied by the court on an appeal to the Appellate Division by a defendant in criminal proceedings, although the illegality corrected concerned an aspect of the sentencing not brought in question by defendant. As stated in State v. Strupp, supra, an illegal sentence becomes “inoperative in [its] entirety and [is] properly vacated” (101 N. J. Super. at 98). In In Re Nicholson, 69 N. J. Super. 230 (App. Div. 1961) an illegal sentence was corrected on an appeal by the State.

Thus, the judgment of conviction and sentence being exhibited before the court on the defendant’s cross-appeal, and the illegality in the sentence (the suspension) confronting the court on the face of the record, it becomes our right and duty to correct the sentence by excising the suspension.

B

As already noted, we take the view that the suspension of sentence in this case was totally beyond the jurisdiction of either of the trial courts in the light of the statutory mandate for a jail term for a second offender. The former Supreme Court’s jurisdiction by certiorari to review and correct, among other things, actions outside their jurisdiction by so-called inferior tribunals of divers kinds is undoubted.

The office of the common-law writ of certiorari is to bring before the Superior Court for inspection the record of the proceedings of the inferior tribunal, to determine whether the latter had jurisdiction and had proceeded according to law. Errors of law as well as jurisdictional excesses are remediable on certiorari. [State v. Court of Common Pleas, 1 N. J. 14, 19 (1948)]

By virtue of the Judicial Article of the Constitution of 1947, the prerogative writs, including certiorari, were superseded, and it was declared that “review, hearing and relief” in lieu thereof should be afforded in the Superior Court on the terms and in the manner provided by rules of court, as of right except in criminal cases where such review should be discretionary. Art. VI, § V, par. 4. The reference therein to criminal cases was motivated by the fact that the former review by certiorari of an indictment in advance of trial was discretionary. See 2 Proceedings of Constitutional Convention of 1947, Report of Committee on the Judiciary, at 1193. There is no suggestion in the Judicial Article or elsewhere that the transfer of the former certiorari jurisdiction to the new Superior Court did not include the authority to correct excesses of jurisdiction in lower tribunals in criminal cases, whatever the comprehensive appellate review in criminal matters, generally, vested in the Appellate Division of the Superior Court pursuant to Art. VI, § V, par. 2. There has been frequent iteration of the understanding that the Superior Court has succeeded generally to the jurisdiction of the old Supreme Court in all prerogative writ cases. See, e. g., Barry v. Wallace J. Wilck, Inc., 65 N. J. Super. 130, 139 (App. Div. 1961).

It is evident, as defendant argues, that R. 2 :3-l(b) seems to catalogue all the situations in which the State may appeal in a criminal case; also that the instances there specified do not include final judgments of conviction.

Since, however, it is the Constitution, not the rules of court, which is the source of the underlying in-lieu-of jurisdiction of the Superior Court, the rules representing, under the Constitution, only the ordained mode of exercise of sudh jurisdiction, we should not be astute to read R. 2:3-1(b) as prohibiting by inference an invocation by the State of the present equivalent in this court of the former certiorari jurisdiction to correct a usurpation of jurisdiction by a lower judicial tribunal. Indeed, the practice rule appears intended to afford the State broadly comprehensive review except for adjudications of acquittal and interlocutory orders during trial. The instance of an illegal sentence on conviction, to the prejudice of the State, or any other form of usurpation of jurisdiction in a final criminal judgment, appears to us as an unintended casus omissus in the rule. We can conceive of no consideration of basic fairness to, or of constitutional rights of, a criminal defendant which would argue against the right of the State to vindicate a statutory sentencing policy by pursuing timely appellate review of an illegal sentence •— one beyond the jurisdiction of the sentencing tribunal. We will not, therefore, imply from the promulgation of R. 2 :3-1(b) an intent of tlhe Supreme Court to deny the State such review.

Reasoning paralleling the foregoing conclusions is found in State v. Salinas, 362 P. 2d 298 (Alaska Sup. Ct. 1961). A trial court had granted a new trial for newly discovered evidence after a conviction had been affirmed on appeal. The trial court action was held beyond its power under the controlling statutes and rules. In meeting the defendant’s argument that the State had no right to raise the point on appeal in view of the practice rule permitting the State to appeal in a criminal case only to test the sufficiency of an indictment, the court held that in view of the replacement of the writs of prohibition and mandamus (formerly available to adjudicate absence of jurisdiction in a court) by a petition for review the State wss entitled to urge the jurisdictional point by a petition for review. Cf. State v. LaFera, 42 N. J. 97, 103 (1964), mentioning the “distinction,” for State appeal purposes, “between the traditional motion for a new trial and a proceeding for relief based upon lack of jurisdiction * *

Defendant cites Roselle v. Santone Const. Co., Inc., 119 N. J. Super. 314 (App. Div. 1972), where the court expressed doubt of a municipalfly’s right to appeal a suspension by the County Court of a fine against a corporation imposed for violation of a municipal building ordinance, the municipal argument being that corporations were not entitled to suspensions of sentence. The court cited State v. Lanish, 103 N. J. Super. 441 (App. Div. 1968), aff’d o. b. 54 N. J. 93 (1969). However, in Lianish it was held that where a defendant was charged with driving under the influence of alcohol and was found guilty in the municipal court only of driving while “impaired,” the County Court could not on defendant’s appeal of that determination adjudicate him guilty of driving “under the influence,” as the municipal court decision was tantamount to an acquittal on the latter charge, constitutionally precluding a retrial of the charge in the County Court. The case plainly is no authority against appellate correction of an illegal sentence at the instance of the State.

For the reasons stated, the judgment of the County Court is modified to exscind the suspension of the jail sentence, and as thus modified the sentence is affirmed.

       By amendment of the act by L. 1964, c. 137, the court may suspend the prison sentence if the second offense occurs ten or more years after the previous conviction.


author: Kolovsky, P. J. A. D.

text:
    THOMAS CLARK, ET AL., PLAINTIFFS-APPELLANTS, v. BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF HUDSON AND GEORGE M. BONELLI, SHERIFF OF THE COUNTY OF HUDSON, DEFENDANTS-RESPONDENTS. JOSEPH MURRAY, ANTHONY SCALCIONE, FRANCIS MURPHY, AND HUDSON COUNTY SHERIFF’S OFFICERS, PLAINTIFFS-APPELLANTS, v. DEPARTMENT OF CIVIL SERVICE OF THE STATE OF NEW JERSEY, AND BOARD OF CHOSEN FREEHOLDERS OF HUDSON COUNTY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued September 25, 1973
    Decided October 15, 1973.

      Before Judges Kolovsky, Fritz and Crane.

      Mr. Arthur N. D’Italia argued the cause for appellants in the Clark case (Messrs. Chasan, Leyner, Holland & Tarleton, attorneys; Messrs. Arthur N. D’Italia and John Spadora, on the brief).

      Mr. Peter S. Valentine argued the cause for appellants in the Murray case (Messrs. Glickman & Valentine, attorneys; Mr. Edward F. Zampella, of counsel).

      Mr. Jay M. Liebman, Assistant County Counsel, argued the cause for respondents Board of Chosen Freeholders of Hudson County and George M. Bonelli, Sheriff of Hudson County (Mr. John J. Geronimo, Hudson County Counsel, attorney).

      Mr. John M. Van Dalen, Deputy Attorney General, argued the cause for respondent Civil Service Commission (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney).
   The opinion of the court was delivered by

Kolovsky, P. J. A. D.

The controversy before us has its genesis in a resolution adopted by the Board of Chosen Freeholders of Hudson County (Board) on December 10, 1970 reading in pertinent part as follows:

1. This Board hereby establishes that the title of Sheriff’s Officer in the County of Hudson will be the title employed by this County to encompass the duties of Court Attendant, Process Server and County Correction Officer.

These consolidated appeals ■—■ in Clark by a group of court attendants and in Murray by a group of other employees appointed by the sheriff —■ are, to quote from the Attorney General’s brief, “from various orders of the Civil Service Commission (Commission) which modified and implemented” the resolution and also from the refusal of the Commission to grant appellants a hearing with respect thereto. This court has heretofore stayed the effectiveness of the Commission’s orders during the pendency of this appeal.

Since we are satisfied, for the reasons hereafter given, that the Board had no power to adopt its resolution of December 10, 1970, we need not deal with either the content of the Commission’s orders purporting to modify and implement that resolution or the propriety of its refusal to grant appellants a hearing.

We recognize that, procedurally, the more appropriate vehicle for attacking the validity of the Board’s resolution would be an action in lieu of prerogative writs in the Law Division. In fact, the plaintiffs in Clark had instituted such an action but that action was stayed by the trial court pending decision of the appeal before us. Hence — and since the validity or invalidity of the resolution does not depend on facts other than those admitted in the record before us — we proceed to a consideration of that question.

The power to appoint court attendants is vested in the sheriff of the county, an elected officer, by N. J. S. A. 2A :11-32. In addition he may, under N. J. S. A. 2A :11-35, by and with the consent of the board of chosen freeholders, “appoint not more than 4 persons as officers in charge of court attendants,” the cited section further providing that

The positions of officers in charge shall be filled only by promotion from the personnel of court attendants in accordance with civil service laws and regulations.

The sheriff’s power to appoint employees — such as the plaintiffs in the Murray case — is found in N. J. S. A. 40A : 9-117, formerly N. J. S. A. 40 :41-31, which authorizes the sheriff to “select and employ the necessary deputies, chief clerks and other personnel.”

Various sections of the statutes grant authority to the board of freeholders to fix or approve the salaries to be paid court attendants and classes of employees of the sheriff. But that power to fix or approve salaries — and to approve the creation of the position of officers in charge of court attendants, see N. J. S. A. 2A :11-35 — in nowise embodies a grant of power to the board to control the exercise by the sheriff of the authority granted him by the Legislature to select and appoint court attendants and other employees, positions provided for by the legislative enactments.

The Hudson County Board of Chosen Freeholders has no power to override, as in effect it lias sought to do by its resolution, the Legislature’s directions relating to positions to be filled by appointment by the sheriff and to create a new position, to be called “Sheriff’s Officer,” to encompass not only the duties of court attendant and process server but also the duties of a county correction officer — the guarding and supervision of inmates of the county jail — a position with respect to which the power of appointment is not in the sheriff but in the board of freeholders.

In Hudson County the “custody, care and control” of the county jail is not in the sheriff under N. J. S. A. 30:8-17 but in the board of chosen freeholders pursuant to N. J. S. A. 30:8-19. The Board, not the Sheriff, appoints not only the warden of the county jail, N. J. S. A. 30:8-20, but also, pursuant to N. J. S. A. 40A:9-9 (formerly N. J. S. A. 40: 21-3), such other employees, including correction officers, as “may be required for the execution of the powers conferred upon it (N. J. S. A. 40A :9-9) by N. J. S. A. 30 :8-19, which vests in the Board “the custody, rule, keeping and charge of the county jails.”

The Board argues that authority for the action taken by it is to be found in Caldaro v. Ferber, 39 N. J. 314 (1963). The argument lacks merit.

Caldaro arose in Bergen County where the sheriff — unlike the sheriff of Hudson County — has custody, care and control of the county jail and the authority to appoint jail keepers. N. J. S. A. 30:8-18. All that Caldaro held was that, under Civil Service Rule 53 (1), the sheriff of Bergen County had power, subject to the limitations embodied in the rule (which is quoted at 39 N. J. 319-320) to temporarily transfer court attendants, whom he had appointed, to duties as jail keepers for a period not exceeding six months. Oaldaro in nowise supports the validity of the resolution adopted by the Board in this case, a resolution whose effect would be to permanently alter the legislative provisions governing the positions and employments of the plaintiffs in the eases before us.

We have no occasion to resolve, since the issue is not before us, whether Civil Service Rule 53 (1), as construed in Caldaro v. Ferber, supra, would authorize, in a particular case and subject to the limitations therein provided, the temporary transfer of an employee of the sheriff of Hudson County, be he a court attendant or other employee, to the performance of duties in the county jail.

Since the Board’s resolution was invalid, the orders of the Civil Service Commission purporting to modify and implement that resolution must be vacated.

So ordered.


author: Mehler, J. A. D. Collester, P. J. A. D.,

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. RONALD JOHNSON, DEFENDANT-APPELLANT.
    Superior Court of New Jersey-Appellate Division
    Argued October 1, 1973
    Decided October 26, 1973.

      Before Judges Collester, Lynch and Mehler.

      Mr. James J. Lee, Assistant Deputy Public Defender, argued the cause for appellant (Mr. Stanley C. Van Ness, Public Defender, attorney).

      Mr. R. Benjamin Cohen, Assistant Prosecutor, argued the cause for respondent (Mr. Joseph P. Lordi, Essex County Prosecutor, attorney).
   The opinion of the court was delivered by

Mehler, J. A. D.

Defendant appeals from his convictions on a two-count indictment. Count 1 charged him with the possession of heroin. Count 2 charged him with possession of a revolver, contrary to N. J. S. A. 2A :151-41. He urges a number of grounds for reversal and also contends that his sentence was excessive. The main thrust of his appeal is directed against his conviction on the gun charge.

The jury was justified in finding from the evidence as follows :

Two Newark detectives accompanied one Meyers to his third-floor apartment so he could produce his driver’s license and registration. Before defendant opened the, door from the inside of the apartment, a detective on the street saw him push out a window screen, extend his hand holding a gun and place it and a package on the ledge. Upon investigation, the package was found to contain 74 small glassene envelopes and three tin foils of a loose white powder. Analysis of the contents of one of the glassene envelopes and of one of the tin foils showed they contained heroin.

Defendant contends that his motion for judgment of acquittal on the gun charge should have been granted because the State failed to prove that the weapon was in a public place. This contention is without merit. Possession in a public place is not required to establish a violation of that portion of the statute which prohibits one from possessing a revolver without first having obtained a permit. N. J. S. A. 2A :151-41 provides, in pertinent part, as follows:

Except us hereinafter provided, any person who carries, holds or possesses in any automobile, carriage, motorcycle or other vehicle, or on or about his clothes or person, or otherwise in his possession, or in Ms possession or under his control in any public place or public area:
a. A pistol or revolver without first having obtained a permit to carry the same in accordance with the provisions of this chapter; * * js g^yty of a high misdemeanor.

The position of a comma in the phrase “or otherwise in his possession, or in his possession or under his control in any public place or public area” makes it plain that, subject to the exemptions enumerated in N. J. S. A. 2A:151-42, a violation is committed by the carrying of a firearm without a permit in any place, private or public. This construction is borne out by section 20-39-3 (g) of the proposed New Jersey Penal Code, which provides that any person who, unless licensed to do so. knowingly has in his possession any firearm or weapon, is guilty of a crime. The Commission’s commentary to this section states that this provision carries forward the policy of N. J. S. A. 2A:151-41 and 62.

A legislative history of the statute also supports our view. Section 41 was enacted in its present form in 1966 (L. 1966, c. 60, § 32) eliminating the requirement that proscribed weapons need to be concealed. Prior thereto section 41, as it was amended in 1960 (L. 1960, c. 26, § 1) did not restrict the unlawful possession of firearms to public places. It provided, in pertinent part, that “any person who carries in any automobile, carriage, motor cycle or other vehicle, or concealed on or about his clothes or person, or otherwise concealed in his possession: a. a pistol, revolver or other firearm * * * is guilty of a misdemeanor.”

In light of the proliferation of guns and the crimes that have followed in their wake in recent years, the Legislature could not have intended by the 1966 amendment to have restricted the area in which it is unlawful to possess, a firearm. It is likely that the addition of the phrase “public place or public area” was intended to make it clear that possession was prohibited there as well as in private.

Since it was not necessary that the State prove that defendant possessed the gun in a public place, the court did not err in denying the motion for judgment of acquittal on that ground.

Defendant next contends that the trial judge erred in his charge to the jury and argues that his supplemental charge was not sufficient to cure the error. The judge not only charged the elements of section 41 but, referring to them by their titles, also Charged the substance of N. J. S. A. 2A:151-5, 8 and 42 which had no relevance or place in the case. He told the jury that certain persons are forbidden to have guns under any circumstances and that N. J. S. A. 2A:151-8. provides that any person convicted of any crime enumerated in N. J. S. A. 2A:151-5, whether or not [sic] armed with a firearm, is guilty of a crime. The jury was then told that there was testimony defendant 'had been convicted of several crimes which fell within the provisions of N. J. S. A. 2A:151-5, and that the cited sections applied to the gun charge.

At the conclusion of the charge, defendant’s counsel objected to the foregoing portions and asked for a mistrial, which was denied.

The judge then gave the jury further instructions. The pertinent provisions of section 41 were once again read. The jury was then told to disregard N. J. S. A. 2A:151-42, 2A:151-8 and 2A:151-5, — that those statutes might be more confusing than helpful. The reference was not to the substance but to the title, chapter and sections of the statutes. The judge asked the jury to assume those statutes had no bearing on the case and that the only statute with which the jury was concerned was whether or not defendant possessed a revolver without a permit in a public place.

The curative instructions were insufficient to remove the objectionable references to N. J. S. A. 2A:151-5 and 8. (Reference to section 42 was harmless.) Cf. State v. Bankston, 63 N. J. 263, 272 (1973). Since sections 5 and 8 had no place in the case and could lead to harm, the jury should have been instructed in strong language that the statutes were not to be considered in reaching a determination. As we have noted above, the judge merely asked the jury to assume that the statutes had no bearing on the case and, by indicating that they might be more confusing than helpful, he in effect indicated that it was the confusion rather than the irrelevance that caused him to instruct the jury further as he did. Moreover, it is difficult to see how an untutored jury hearing statutes referred to only by their title, chapter and section numbers could be sure to know exactly what the judge had in mind in his second charge.

The error was not 'harmless. While it is true that the only objection made by defendant’s counsel to the supplemental charge dealt with counsel’s conception of what was a public place, there was a real possibility that the error led to an unjust verdict on the gun charge. See Bankston, supra, at 273. The only witness who testified that defendant placed the gun on the window sill was a detective. As against this was the testimony of defendant, who denied that he had done so. There was not adequate^ removed from the balance the essential elements of irrelevant statutes which had a reasonable possibility of contributing to the conviction on the gun count. The conviction on this count must accordingly be reversed. In view of tfluis, we find it unnecessary to discuss defendant’s contention that the judge committed reversible error in not granting a mistrial as to count 2 of the indictment.

Defendant challenges a statement in the charge to the jury that “an indictment, far from being a mere allegation, constitutes a finding by a Grand Jury that a basis exists for subjecting the accused to a trial, to a trial before a jury such as you.” He claims that this implied a determination had already been made that defendant is probably guilty. While the challenged statement was unnecessarily included in the charge, we are satisfied defendant was not prejudiced thereby. In the course of his instructions the judge had correctly informed the jury that an indictment is not proof of any of the allegations therein contained and that the indictment had no evidential value whatever. It has been repeatedly held that portions of a charge alleged to be erroneous cannot be dealt with in isolation but the charge should be examined as a whole to determine its overall effect. State v. Wilbely, 63 N. J. 420 (1973). Reading the charge as a whole, we are satisfied that the jury was not misled.

In the course of his summation the assistant prosecutor referred to various convictions of defendant to which he had testified. Defendant contends these remarks were improper and were a deliberate attempt to prejudice the jury. However, since the assistant prosecutor also said, and the court charged the jury, that evidence of previous convictions could only be considered for the purpose of affecting defendant’s credibility as a witness, the remarks did not constitute prejudicial error. State v. Sinclair, 57 N. J. 56 (1970); State v. Knight, 63 N. J. 187 (1973).

Defendant raises as plain error a contention that when the judge ordered a remark made by the assistant prosecutor concerning defendant’s prior convictions stricken from the record, he should have instructed the jury on the meaning of something being struck from the record. As the court said in State v. Anderson, 35 N. J. 472, 489-490 (1961), concerning a similar objection, “the criticism is miniscule.”

Defendant was sentenced to concurrent prison terms of 3-5 years on each of the counts. He contends that his sentence is manifestly excessive. Upon a consideration of the record, the presentence report, the argument of counsel and all relevant factors, including the duty of an appellate court in reviewing a sentence, we are satisfied that the sentencing judge did not abuse his discretion in imposing a sentence of 3-5 years on the narcotics charge and that that sentence is not manifestly excessive.

The conviction and sentence on count 1 are affirmed; the conviction on count 2 is reversed and remanded for a new trial.

Collester, P. J. A. D.,

(Dissenting, in part.) I agree with the majority opinion in all respects with one exception. I do not agree with the conclusion that the conviction for unlawful possession of a gun should be reversed because the supplemental charge did not sufficiently correct the erroneous instructions in the main charge.

As noted in the majority opinion, after the judge instructed the jury to disregard the statutes erroneously charged he then recharged the elements of N. J. S. A. 2A:151-41 and told the jury that was the only statute with which it was concerned. It should be assumed that the jurors followed the judge’s supplemental instructions. State v. Begyn, 58 N. J. Super. 185, 195 (App. Div. 1959), aff’d 34 N. J. 35 (1961).

Moreover, no objection to tbe supplemental charge on the ground that it was unclear or confusing was made by defense counsel. Thus, the issue is whether the plain error rule, R. 2 :10-2, should be invoked. It is fundamental in our practice that a claim of error which could have been raised at trial will not be dealt with as would be a timely challenge and except in extraordinary circumstances will not be entertained on appeal unless it is perfectly clear that there actually was error. State v. Macon, 57 N. J. 325, 333, 273 A. 2d 1 (1971).

I do not believe the jury was misled once the curative instructions were given. In my opinion there is no basis to invoke the plain error rule in this case. I would affirm the judgment of conviction for unlawful possession of the gun.


author: Per Curiam.

text:
    RAMON LE COMPTE, PLAINTIFF-APPELLANT, v. STATE OF NEW JERSEY; RICHARD J. SULLIVAN, COMMISSIONER OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION; AND THE NATURAL RESOURCE COUNCIL OF THE DIVISION OF MARINE SERVICES OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued October 16, 1973
    Decided October 29, 1973.

      Before Judges Halpern, Matthews and Bischoff.

      Mr. Richard O. Venino argued the cause for appellant.

      Mr. William C. Rindone, Jr., Deputy Attorney General, argued the cause for respondent (Mr. Stephen Skillman, Assistant Attorney General, of counsel).
   Per Curiam.

Plaintiff in this action seeks a judgment declaring an assessment levied by defendant National Resource Council for use and occupancy of lands owned by tbe State illegal and without statutory authority.

Plaintiff, a developer, starting in the year 1966, built homes along the Jersey shore which encroached upon tidelands belonging to the State. He mistakenly thought he had obtained appropriate grants from the State. Upon learning that he had not, he made application to the State and received a grant for the consideration of $50 a front foot. In addition, the Natural Resource Council also levied a $50 a front foot use and occupancy assessment for trespass and purpresture. Plaintiff does not question the authority of the Council to charge $50 a front foot for the grant, but disputes the authority of defendant to levy a use and occupancy assessment.

A complaint for declaratory judgment was filed in the Chancery Division. Defendant filed a counterclaim seeking (1) damages for trespass to lands of the State, and (2) an order compelling the restoration of the lands to the condition existing prior to the alleged trespass of plaintiff.

The trial judge was of the opinion that the assessment for use and occupancy by the Natural Resource Council constituted a final decision or action of a state administrative agency or officer which vested original jurisdiction in the Appellate Division. B. 2:2—3 (a) (2). The trial judge thereupon transferred the complaint to this court, retaining jurisdiction of the counterclaim. We express no opinion on this procedure but pass to a consideration of the legal issue raised.

Defendant contends that, pursuant to N. J. S. A. 12:3-7 and 12:3-10, it has the complete discretion and power to decide whether or not a grant shall be made and, if so, the consideration to be charged, citing Bailey v. Driscoll, 34 N. J. Super. 228, 253 (App. Div. 1955), rev'd 19 N. J. 363 (1955); Taylor v. Sullivan, 119 N. J. Super. 426, 430-431 (App. Div. 1972), certif. den., 62 N. J. 70 (1972).

The State further contends that implicit in this statutory grant of authority is the power to admeasure and assess damages for trespass and purpresture.

We find no basis for such implied authority in the statute. The statutory authority given to the Natural Resource Council is limited, by its terms, to determination of whether or not a grant, conveyance or license shall be given and, if so, the consideration to be paid for it. N. J. S. A. 12.3-7, 10.

The intent of the Legislature concerning the manner in which trespass to lands of the State is to be dealt with is clearly expressed by N. J. S. A. 12 :3-8, wherein defendant is given the right to institute a civil action in the name of the State of New Jersey to recover damages for trespass to or for occupancy of lands belonging to the State of New Jersey. Defendant has proceeded pursuant to the terms of the statute by filing a counterclaim in the Chancery Division.

We hold that defendant is without authority to make a use and occupancy assessment for trespass and pnrprestnre, and accordingly hold that the assessment so levied in this case is null and void.

The matter is remanded to the Chancery Division for further proceedings consistent with this opinion.


author: Crahay, J. A. D.

text:
    JOSEPH TAMECKI, PETITIONER-RESPONDENT, v. JOHNS-MANVILLE PRODUCTS CORPORATION, A CORPORATION, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued October 15, 1973
    Decided November 7, 1973.

      Before Judges Leonard, Allcorn and Crahay.

      Mr. Richard H. Thiele, Jr. argued the cause for appellant (Messrs. Wharton, Stewart & Davis, attorneys; Mr. Richard H. Thiele, Jr. and Ms. Joan L. Mott, on the brief).

      Mr. Herbert Koransky argued the cause for respondent (Mr. Arthur D. Fialk, on the brief).
   The opinion of the court was delivered by

Crahay, J. A. D.

In this workmen’s compensation case the sole issue presented on appeal is the propriety of the assessment of temporary disability benefits to petitioner who suffered serious and permanent injury to his left hand and wrist while in respondent’s employ.

The record reflects that in June 1969 petitioner had completed his freshman year as a full-time student at Rutgers University and took summer employment with respondent. He suffered the involved accident on June 18, 1969 and was immediately hospitalized. Emergent surgery was effected and he was discharged from the hospital on June 27, 1969. He continued to receive treatment and respondent referred him to one Dr. Robert E. Carroll for a program of reconstructive surgery. He resumed his studies at Rutgers, as was his intention, as a full-time student at the beginning of the 1969 fall semester. Dr. Carroll, in furtherance of the reconstructive program, scheduled surgical procedures for (1) the Christmas recess of 1969, (2) June 1970 and (3) December 1970. The schedule was structured so as not to interfere with petitioner’s educational program.

The Division of Workmen’s Compensation entered a judgment awarding partial permanent disability and requiring payment of all medical expenses by respondent. Additionally, petitioner was awarded temporary disability benefits from the date of the accident up to the time of the resumption of his school work and for the time required for his last hospitalization for surgery by Dr. Carroll.

Petitioner appealed to the County Court seeking additional temporary disability benefits. The County Court reversed the Division of Workmen’s Compensation and awarded petitioner temporary disability benefits to cover the period from the date of the accident to June 1971 when petitioner was discharged from Dr. Carroll’s care. This appeal challenges the increased temporary disability benefits.

The judge of compensation concluded, and we think correctly, that while petitioner was attending his college program he was not entitled to temporary disability benefits under the Act. N. J. S. A. 34 :15-38 provides in pertinent part:

To calculate the number of weeks and fraction thereof that compensation is payable for temporary disability, determine the number of calendar days of disability from and including as a full day the day that the employee is first unable to continue at work by reason of the accident, including also Saturdays, Sundays and holidays, up to the first working day that the employee is able to resume work and continue permanently thereat; * * *.

Petitioner’s essential argument is that since the condition to the injured part of his body had not been fixed and was not measurable as to partial permanent disability until June 1, 1970, the act mandated that he enjoy temporary disability benefits during that period. He relies in large measure on Monaco v. Albert Maund, Inc., 17 N. J. Super. 425 (App. Div. 1952), but we do not find that authority controlling. There, the true nature and extent of petitioner’s injury and the ultimate course of his treatment were not ascertained until long after the compensable injury. Petitioner there was totally disabled and unemployable in any capacity, except for a very brief period, and was awarded temporary disability benefits from the date of the injury to the time when the permanent Character of his injury had been ascertained (deducting the time when he briefly and unsuccessfully attempted employment.) Monaco (at 431) reminds us that generally temporary disability continues until the employee is able to resume work and continue permanently thereat, or until he is as far restored as the permanent character of the injury will permit — the determinant date being whichever of these events happens first.

Petitioner places heavy reliance on the fact that Dr. Carroll, in August 1970 in an interim report, found that his total disability continued from June 18, 1969 — the date of the accident — to the date of the report. We do not infer from that report that petitioner was unemployable in any capacity. The statute obviously does not contemplate that a petitioner be able to return to the identical employment ho was engaged in at the time of a fateful event. We think Dr. Carroll’s understanding of “total disability” is more clearly reflected by a later report of January 11, 1971 in which he concluded, “he [petitioner] is unable to use his left hand for work at this time but he is able to return to bis duties at school.”

The hard fact remains that petitioner was able to return to full-time studies in September 1969, some two months after the accident, as he intended. We are satisfied that when he returned to his college studies that that was the “first working day that the employee was able to resume work and continue permanently thereat * * within the meaning of the statute. He was able to drive his automobile and engage in other physical activities, albeit with some difficulty, and at the time of the hearing on his petition in January 1972 he was still attending his classes and anticipated graduating “on time.” He was, in a word, able but un available to work because of his college program.

While attendance at school may not be regarded as “work” in common day parlance, it is oftimes, as here, a full-time undertaking and ordinarily is, among other things, a step in an individnal’s economic development. Our review of the record does not satisfy us that if petitioner had elected to remain in the labor market he would be “totally disabled” within the contemplation of the act. His ability to work may have been diminished and the areas of his employability narrowed, but he was compensated for those losses by the award for partial permanent disability.

Accordingly, we hold that petitioner did not suffer any loss of wages as a direct result of his compensable injury beyond that awarded by the judge in the Division of Workmen’s Compensation. As we said in Electronic Associates, Inc. v. Heisinger, 111 N. J. Super. 15 (App. Div. 1970), certif. den. 57 N. J. 139 (1970) :

* r * Temporary disability benefits within the intendment of workmen’s compensation legislation represent a “partial substitute for loss of current wages.” * * *
Petitioner here is entitled to no award for temporary disability because she suffered no current wage loss as a result of an ailment attributable to her occupation. Rather, her loss of wages was the direct result of the voluntary termination of her employment. The reason for cessation of work was for a cause totally unrelated to her employment [she was pregnant].
We do not construe the concept of temporary disability to include wage loss claims by those who have voluntarily terminated their employment for reasons unrelated to that employment. So to hold would depend upon creating a fictitious wage-earning status for the unemployed workman and run counter to the manifest tenor of N. J. S. A. 34 :15-38 — the statutory method for calculating the period for which temporary disability benefits shall be awarded, * * *
This interpretation of . temporary disability benefits is not only consistent with the beneficent purposes of workmen’s compensation laws but also harmonizes with the comprehensive design of other legislation intended to benefit the labor force. Individuals in situations comparable to that of petitioner are not left without remedy. They are entitled to receive permanant disability awards and, where authorized, medical expenses, N. J. S. A. 34 :15-30 to 35, N. J. S. A. 34 :15-15 * * *. [at 20]

Accordingly, the County Court’s award of additional temporary disability benefits is reversed and the judgment of the Division is affirmed.