author: Ackerman, John A., J. S. C.

text:
    THEODORE BRUNSON, ET AL., PLAINTIFFS, v. RUTHERFORD LODGE NUMBER 547 OF THE BENEVOLENT AND PROTECTIVE ORDER OF ELKS, ET AL., DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided February 22, 1974.

      Mr. Lawrence I. Lerner, attorney for plaintiffs (Mr. John R. MacKay, II, of counsel).

      Mr. Charles L. Bertini, attorney for defendants Rutherford Lodge Number 547 of the Benevolent and Protective Order of Elks, a New Jersey corporation, and Rutherford Lodge Number 547 of the Benevolent and Protective Order of Elks of the United States of America.

      Mr. M. Harry Muser, attorney for defendants Edward McLaughlin, Assessor and the Mayor and Council of the Borough of Rutherford.

      Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney for defendant Bergen County Board of Taxation (Mr. Hal R. Crane, Deputy Attorney General, appearing).

      The same applies to the tax year 1973. N. J. S. A. 54:4-4.4; Newark v. Essex Cty. Board of Taxation, 110 N. J. Super. 93, 122 (Law Div. 1970).

   Ackerman, John A., J. S. C.

This matter presents for the first time in this State the question whether the granting of a property tax exemption under the newly enacted exemption statute for fraternal organizations, N. J. 8. A. 54:4-3.26, adopted in 1971, to an Elks Lodge which adheres to or is governed by an “all-white” membership policy is violative of the 14th Amendment to the Federal Constitution and Art. I, pars. 1 and 5, of the 1947 State Constitution.

I

The action has been drastically changed and limited in its scope since it was instituted late in 1970 and some reference thereto is desirable in order to understand the scope of the relief sought by plaintiffs. It was orginally designed as a class action attacking all tax exemptions and all liquor licenses granted to all Elks lodges in the State of New Jersey. The complaint was filed by 21 individuals, 8 being citizens and taxpayers of Nutley in Essex County and 13 being citizens and taxpayers of Rutherford in Bergen County, suing on behalf of themselves and “all other citizens of other municipalities * * * similarly situated.” Defendants specifically named were the Nutley and Rutherford Elks Lodges and Corporations, the municipal governing bodies and tax assessors of both municipalities, the Essex and Bergen County Boards of Taxation, the Acting Director of the Division of Taxation, and the Director of the Division of Alcoholic Beverage Control, all of whom were served and answered. Also named as defendants were “all other Municipal Tax Assessors, County Boards of Taxation, Municipal Governing Bodies [and] Elks Lodges similarly situated.”

The gravamen of the complaint with respect to taxes was that there was no statutory authority for exemptions granted to Elks lodges, either under the charitable exemption section, N. J. S. A. 54:4-3.6, or under the fraternal organization exemption section, N. J. S. A. 54:4-3.26, as it then stood. Plaintiffs charged that Elks lodges were not exempt under N. J. S. A. 54:4-3.6 because their properties were not exclusively used for charitable purposes nor were they organized exclusively for charitable purposes. They further charged that any exemptions purportedly granted to Elks lodges under N. J. S. A. 54:4-3.26 as it then existed were absolutely nugatory since that statute had been held in Rutgers Chapter of Delta Upsilon Fraternity v. New Brunswick, 129 N. J. L. 238 (Sup. Ct. 1942), aff'd 130 N. J. L. 216 (E. & A. 1943), not only to be unconstitutional, as violative of the “uniformity of taxation” provision of the then 1844 State Constitution because it excluded exemptions for college fraternities, but also to be void in its entirety because the exclusion of exemptions for fraternities was an integral part thereof. It was further asserted that, in any event, any exemptions granted to the Rutherford and Nutley Lodges and to other Elks lodges in the State were violative of the State and Federal Constitutions because such local lodges were a part of a national organization which expressly excluded non-whites from membership and because said lodges in fact followed the policy and practice of excluding non-whites. Relief sought with respect to taxes was not only the withdrawal of exemptions for the current tax year 1971 as well as for future years, but also the recovery of back taxes from each Elks Lodge. With respect to liquor licenses, plaintiffs sought the revocation of such licenses granted to the Nutley and Rutherford Lodges and to all other Elks lodges on the ground that the same were unlawfully granted in view of their racially discriminatory membership policies and practices.

Eollowing a preliminary pretrial conference to work out a schedule for the further conduct of the litigation and for the determination of challenges to the ability to maintain a class action and to the right to some portions of the relief sought, the court heard certain motions and issued an unpublished opinion in which it ruled that a class action as contemplated by plaintiffs could not he maintained and that, unless taxpayers of other municipalities were added as named plaintiffs and additional Elks lodges were named as direct defendants, plaintiffs would be limited to attacks on the exemptions and liquor licenses of the Nutley and Rutherford lodges alone.

I also made rulings with respect to the necessity of exhaustion of administrative remedies by plaintiffs. In view of the nature of the tax questions involved and the fact that different county tax boards would be involved with the possibility of diverse decisions and multiple appeals, I held that exhaustion of administrative remedies with respect to the tax matters would be waived and jurisdiction would be exercised by the court. Farmingdale Realty Co. v. Farmingdale, 55 N. J. 103, 112 (1969); Malawan v. Monmouth Cty. Board of Taxation, 51 N. J. 291, 296-297 (1968). With respect to the matter of liquor licenses, however, since the Director was the sole administrative agency involved and there was no danger of conflicting decisions from his office, and since he had broad powers to initiate suspensions if he deemed them warranted, see Liptak v. Division of Alcoholic Beverage Control, 44 N. J. Super. 140 (App. Div. 1957), and to consolidate cases and take other steps to simplify hearings, see Pleasantville Taxpayers v. Pleasantville, supra, 115 N. J. Super, at 90, I ruled that administrative remedies before the Director had to be resorted to and exhausted.

Following this ruling the plaintiffs decided not to add any new parties plaintiff or defendant and, accordingly, only the tax matters with respect to the Rutherford and Nutley Lodges remained before the court.

In the latter part of 1971, after much public discussion, the Legislature enacted a new exemption for fraternal organizations, applicable to the tax year 1972 and thereafter, and amended N. J. S. A. 54:4-3.26 to read as follows:

All real and personal property used in the work and for the purposes of one or more fraternal organizations or lodges, or any association or society organized on the lodge plan, or affiliated associations, whether incorporated or unincorporated, shall be exempt from taxation under this chapter, if the legal or beneficial ownership of such property is in one or more of said organizations, lodges, associations or societies, and no part of such property is used for pecuniary profit, provided that each such organization, lodge, association or society is also organized and operated in substantial part for charitable or educational purposes and demonstrates these aims in its programs and activities.

Apart from the provision excluding exemptions for college fraternities, which was eliminated, the new statute contained exactly the same language as the predecessor statute except for the added proviso that, in order to- qualify for exemption, a fraternal organization must he organized and operated in substantial part for charitable or educational purposes and demonstrate these aims in its programs and activities. In December 1971 the Division of Taxation issued guidelines for the implementation of the new statute to assessors and county tax boards. These provided in part as follows:

2. With respect to the requirement that such organizations must be organized and operated in “substantial part” for charitable and educational purposes, the following guidelines have been established for interpreting the qualifying phrase “substantial part” as it relates to income:
(a) The financial statement of an applicant must substantiate the fact that a minimum of 331/3% of its net income and at least 10% of its gross income from all sources for the pretax year has been applied to charitable or educational purposes.

As stated above, the proviso requiring substantial charitable activities by qualifying fraternal organizations added a new element which was not required for exemption under the terms of the old statute. It had been held under the old statute, prior to the decision in the Rutgers case in 1943, that it was void in its entirety, that an Elks lodge was entitled to exemption so long as its property was not used for pecuniary profit. Hoboken v. Hoboken Lodge No. 74, B. P. O. E. of America, 123 N. J. L. 506 (Sup. Ct. 1939); Elle Realty Co. of Nutley v. Nutley, 18 N. J. Misc. 691, 16 A. 2d 202 (St. Bd. Tax App. 1940); Trenton Lodge No. 105, B. P. O. E. v. City of Trenton, 18 N. J. Misc. 513, 15 A. 2d 97 (St. Bd. Tax App. 1940); see Camden v. Camden Cty. Board of Taxation, 121 N. J. L. 262 (Sup. Ct. 1938), aff’d 122 N. J. L. 381 (E. & A. 1939). Any problems arising from mistaken but continued application of the old exemption statute after the Rutgers case and from lack of strict adherence to the law after that decision by local assessors (See Report of Commission to Study the Laws of New Jersey Exempting Real Property Held by Religious, Educational, Charitable, and Philanthropic Organizations and Cemeteries from Taxation (January 30, 1970), 18-21, 41) were avoided and rendered moot by the adoption of the new statute, at least so far as the future was concerned, and it was clear that from 1972 on a fraternal organization had to be organized and engaged in substantial part in charitable or educational work in order to qualify for an exemption.

In view of the new enactment and doubts as to the extent to which plaintiffs would be entitled to recoupment of back taxes, even if they were successful, the court made a suggestion, to which all parties agreed, that the issues be moulded to eliminate plaintiffs’ challenges to past exemptions and their attempts to recover past taxes and to focus their attacks on current exemptions granted or to be granted to the Nutley and Butherford Lodges and to test the applicabilffy and constitutionality of the new exemption statute with respect to those two lodges. In May 1972 the original complaint was dismissed. An amended complaint was filed asserting that neither the Nutley nor the Butherford Lodge was entitled on the facts to an exemption under either N. J. S. A. 54:4-3.6 or the new exemption statute, N. J. S. A. 54:4-3.26, and charging that any such exemptions, if granted, were unconstitutional because of the racially discriminatory Elks’ membership policies and practices. No relief was sought with respect to past exemptions or past taxes, nor was there any attempt to maintain a class action affecting other Elks lodges. No relief was sought as to liquor licenses, and the Director of Alcoholic Beverage Control was not made a party to the amended action.

Thereafter the action was further limited. It was determined that the Nutley Elks Lodge had not been granted an exemption for the tax year 1972. The action was therefore dismissed as to that lodge, the tax assessor and Board of Commissioners of Nutley, and the Essex County Board of Taxation. Subsequently, the eight Nutley plaintiffs were withdrawn from the case. The case thus resolved itself into one involving only the Rutherford Lodge. After extensive discovery and denials of motions for summary judgment, the matter came on for trial. Prior to trial the action was dismissed by consent as to the Director of the Division of Taxation. In addition, although the current tax exemption for the Rutherford Lodge had been applied for and granted only under the charitable exemption section, N. J. S. A. 54:4-3.6, and not under the new fraternal organization exemption statute, all the parties agreed at the trial that, if the lodge were in fact entitled to an exemption under the terms of the latter section, even though not under the charitable exemption section, the court should so find and rule upon the constitutional issue. The issues were thus finally drawn so that the constitutional issues were presented if the ladge met the terms of either exemption statute.

II

On the basis of the evidence at the trial, I have made certain findings -which are set forth hereinafter, and it is apparent therefrom that determination of the constitutional issues cannot be avoided. See Peters v. Hobby, 349 U. S. 331, 75 S. Ct. 790, 99 L. Sd. 1129, 1137 (1954).

Eirst, the Rutherford Elks Corporation, a New Jersey corporation not for pecuniary profit organized in 1906, is the owner of the property at 48 Ames Avenue, Rutherford. It operates and manages the building thereon and permits many associations and corporations organized exclusively for charitable or religious purposes to use the premises. The corporation permits the Rutherford Elks Lodge, the fraternal organization, to also use part of the premises for meetings and activities of the lodge. Each member of the Rutherford Elks Lodge, is automatically a member of the Rutherford Elks Corporation and there are no other members of the corporation. Any person who ceases to be a member of the Rutherford Elks Lodge ceases to be a member of the corporation. Trustees of the Rutherford Elks Corporation are elected at a membership meeting of the Rutherford Elks Lodge and are subject to the control of the lodge. Provision is made in the statutes of the Grand Lodge for the organization of separate corporations and for trustees in the management of property beneficially owned by subordinate lodges, and it is perfectly clear that subordinate lodges and separate corporations, such as the lodge and corporation here, are subject to and bound by the constitution and statutes of the Grand Lodge. See Statutes Annotated, Reissue of 1971, Benevolent and Protective Order of Elks of the United Stales of America, §§ 114, 122, 128, 170, 208, 209 and 209-A, and opinions thereunder; By-Laws and Rules of Order of Rutherford, New Jersey, Lodge No. f>J¡7 (1970), 27. In view of the nature of their activities and their relationship, it is clear that, for the purpose of determining whether there is basis for an exemption and testing the constitutionality thereof, the Rutherford Elks Corporation and the Rutherford Elks Lodge are alter egos. The membership policies of the Grand Lodge and the subordinate lodge apply as well to the corporation.

Second, the Rutherford Elks Lodge is not organized exclusively for the moral and mental improvement of men, women and children or for charitable purposes, nor is the building at 48 Ames Avenue in Rutherford actually and exclusively used for such purposes within the meaning of N. J. S. A. 54:4-3.6. It is, of course, axiomatic that exemptions accorded by the statute must be construed most strictly against one claiming exemption. Congregation B’nai Yisroel v. Millburn Tp., 35 N. J. Super. 67 (App. Div. 1955); Teaneck Tp. v. Lutheran Bible Institute, 20 N. J. 86 (1959). Without reviewing the evidence in detail, it is clear that some of the purposes of the Rutherford Lodge are social and fraternal and that the building is used in part for such purposes. A bar and grill is maintained and meetings of the fraternal order are held in the building. Although its purposes are worthy ones and the lodge does a great deal of good, its purposes are not exclusively charitable nor exclusively for for the moral and mental improvement of men, women and children. The need for the enactment of a special statute for fraternal organizations clearly shows that social and fraternal purposes do not qualify for exemption under N. J. S. A. 54:4-3.6. See Dover v. Knights of Columbus House Ass’n, 24 N. J. Misc. 84, 46 A. 2d 376 (Div. of Tax App. 1946); Camden Lodge No. 111, Loyal Order of Moose v. Camden, 135 N. J. L. 532 (Sup. Ct. 1947). The lodge therefore does not qualify for exemption under that section.

Third, I find that the Rutherford Lodge is a fraternal organization, that it is organized and operated in substantial part for charitable or educational purposes, and that it demonstrates these aims in its programs and activities within the meaning of N. J. S. A. 54:4-3.26, as amended in 1971. The proofs satisfy me that no part of the property is used for pecuniary profit within the meaning of that statute. See Elk Realty Co. of Nutley v. Nutley, supra; Trenton Lodge No. 105, B. P. O. E. v. Trenton, supra. Without summarizing the testimony in detail, it is apparent that, taking the combined financial statement of the trustees and the lodge for the fiscal year covering 1971 activities and applying the suggested guidelines prescribed by the Division of Taxation, a minimum of 33 1/3% of net income and at least 10% of gross income from all sources for the pre-tax year had been applied to charitable and educational purposes.' This is clear, not only from items of direct expenditures for designated charitable projects but also from apportioning the costs of operation and maintenance of the building which was used in substantial part for charitable purposes. Although the action of the assessor in granting an exemption for the tax year 1972 under N. J. S. A. 54:4-3.6, as applied for by the lodge, was not warranted, the exemption having been granted is sustainable and clearly justified under the terms of N. J. S. A. 54:4-3.26.

This brings us head-on into the constitutional question. I find that there is factual basis for the constitutional challenge. The lodge is a private club and not a public facility. Its bar and grill and other facilities are available only to its members and their invited guests, and not to the public generally. As a private club the lodge may follow a socially discriminatory policy and it is not subject to the law against discrimination. See N. J. S. A. 10:5-1 et seq. and authorities cited infra.

It is also clear that its membership policies and practices for the tax years 1972 and 1973 were racially discriminatory. The constitution of the Benevolent and Protective Order of Elks and the statutes thereof have provided for years that membership in the order is limited to “white male citizens” of the United States of America. Because of pending and anticipated constitutional attacks on the validity of the exemptions and liquor licenses, the constitution was amended by the required two-thirds vote of the Grand Lodge at New Orleans, Louisiana, on July 22, 1971 to provide that membership is limited to “white male citizens” but with several provisos. Section 10(a) was added to the constitution and provides that the “Grand Exalted Ruler, with the consent of the Grand Lodge Advisory Committee, by Executive Order, may abrogate any provision of the Constitution and Statutes deemed to be to the best interest of the Order, which Executive Order shall remain in force until presented for approval or rejection at the next Session of the Grand Lodge.” There was no evidence offered that any provision of the constitution or the statutes was abrogated pursuant to this provision.

Section 4 of the constitution was amended in 1971 to read as follows:

Membership in the Order is limited to white male citizens of the United States of America not under twenty-one years of age, and having such other qualifications as may be provided by Statute, provided, however, that ■ the Grand Exalted Ruler may, by Executive Order, grant special dispensation for modification of such membership requirement as he may determine necessary to any Subordinate Lodge that now occupies land or property owned by or under the control of the United States of America.

The provision for special dispensation has no application here because the Rutherford Lodge does not occupy land or property owned by or under the control of the United States of America. See Burton v. Wilmington Parking Authority, 365 U. S. 715, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961). Moreover, there was no proof of the granting of any dispensation under this section modifying the all-white policy to any extent at all.

Section 144 of the statutes of the order, as amended in 1971, contains the same provision as section 4 of the constitution referred to above. It provides, among other things, that “No person shall be accepted as a member of this Order unless he be a white male citizen * * *”

Opinions rendered by the Grand Lodge Committee on Judiciary are reported in annotations to section 4 of the constitution and section 144 of the statutes as amended in 1971, and reproduced in the Constitution and, Statutes Annotated, Reissue of 1971, Benevolent and Protective Order of Elks of the United States of America, 21-23 and 209-212. An opinion included in the annotations to both the constitution (Opinion 5 at 22) and the statutes (Opinion 8 at 210) reads in part as follows:

Whether a man is white or not is not a question of previous nationality, or good citizenship. It is a question of Ethnology and the blood that is in his veins. A man may be either white or black and come from Mississippi, Mexico, Ilong Kong- or Oklahoma. He may have served with distinction in the Military Service of our Country, and still be ineligible to become a member of our Order. The test is whether he is a white male citizen * *

Opinion 6, at 22 in the annotations to the constitution provides :

Japanese, Chinese, Indians, Koreans and those possessing a mixture of African blood are not of the Caucasian race and therefore are not eligible to membership in our Order.

Opinion 11, at 22 in the annotations to the constitution provides:

This provision, limiting membership to white, male citizens, not under twenty-one years, does not violate the law banning racial segregation, since the Order of Elks is a voluntary, fraternal organization. Each member of the white race has an equal right to be considered for membership and those of other races are equally deprived of that right. A fraternity is not a public institution and has the right to determine its standards for membership. (1957)

The constitution and statutes of the Grand Lodge are, of course, binding upon the Rutherford Lodge. The by-laws of the Rutherford Lodge, applicable to the tax years in question, provide in Article II that “application for membership shall be received only from white male citizens of the United States of America.” The only form for application for membership in the Rutherford Elks Lodge received in evidence contains the question, “Are yon a white male citizen of the United States of America?” Alhough there was no evidence before me that an application by a nonwhite for membership in the Rutherford Elks Lodge had been formally processed and rejected, there was evidence that such application by one of plaintiffs, a nonwhite, was not fully pressed because the applicant was persuaded by members that the policy of the lodge would result in rejection on racial grounds. Although many members of the Rutherford Elks Lodge may deplore the policies of the National Order and the local lodge and may have exerted strong efforts to have that policy changed, I find that the membership policies of the National Order and of the Rntherford Elks Lodge were racially discriminatory and were adhered to in practice so far as the tax years 1972 and 1973 were concerned.

It is well settled that the Fourteenth Amendment presents no bar to purely private acts of racial discrimination; it bars only state action. As stated in The Civil Bights Cases, 109 U. S. 3, 3 S. Ct. 18, 27 L. Ed. 835 (1883),

It is state action of a particular character that is prohibited. Individual invasion of individual rights is not the subject-matter of the Amendment. It has a deeper and broader scope. It nullifies and makes void all state legislation, and state action of every hind, which impairs the privileges and immunities of citizens of the United States, ... or which. denies to any of them the equal protection of the laws. [109 U. S. at 11, 3 S. Ct. at 21, 27 L. Ed. at 839; emphasis supplied]

The delicate and difficnlt question to answer is what constitutes “state action of every kind,” apart from direct state legislation, which is prohibited by the Amendment? The United States Supreme Court has avoided giving a precise definition of “state action” and has left to the courts the task of deciding on a ease by case basis whether state action is involved. In Burton v. Wilmington Parking Authority, 365 U. S. 715, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961), the court said:

Because the virtue of the right to equal protection of the laws could lie only in the breadth of its application, its constitutional ussurance was reserved in terms whose imprecision was necessary if the right were to be enjoyed in the variety of individual-state relationships which the Amendment was designed to embrace. For tbe same reason, to fashion and apply a precise formula for recognition of state responsibility under the Equal Protection Clause is an “impossible task” which “This Court has never attempted.” Kotch v. River Port Pilot Comrs. 330 US 552, 556, 91 L. ed 1093, 1096, 67 S Ct 910. Only by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance. [365 U. S. at 722, 81 S. Ct. at 860, 6 L. Ed. 2d at 50]

Definitions of “state action,” even though not precise or all encompassing, have been expressed in a variety of ways. In Cooper v. Aaron, 358 U. S. 1, 4, 78 S. Ct. 1401, 1403, 3 L. Ed. 2d 1, 9 (1958), the concept of state responsibility under the Fourteenth Amendment was interpreted as necessarily following upon “state participation through any arrangement, management, funds or property.” In Burton, supra, where it was held that there was prohibited state action because racial discrimination was permitted in a private restaurant in a public building owned by a State Parking Authority, the court said:

By its inaction, the Authority, and through it the State, has not only made itself a party to the refusal of service, but has elected to place its power, property and prestige behind the admitted discrimination. The Slate has so far insinuated itself into a position of interdependence with [the private party] that it must be recognized as a joint participant in the challenged activity, which, on that account, cannot be considered to have been so ‘purely private’ as to fall without the scope of the Fourteenth Amendment. [365 U. S. at 725, 81 S. Ct. at 862, 6 L. Ed. 2d at 52]

In Reitman v. Mulkey, 387 U. S. 369, 380, 87 S. Ct. 1627, 1634, 18 L. Ed. 2d 830, 838 (1967), the court approved the concept that prohibited state involvement could be found even where the state could be charged with only encouraging rather than demanding discrimination, and stated that a court must of necessity, in deciding state action cases, “assess the potential impact of official action in determining whether the state has significantly involved itself with invidious discrimination.” In Evans v. Newton, 382 U. S. 296, 299, 86 S. Ct. 486, 488, 15 L. Ed. 2d 373, 377, 379 (1966), the court held that state action to aid in the transfer of a park from public to private management in order that segregation could be continued was violative of the Fourteenth Amendment. The court said that “when private individuals or groups are endowed by the State with powers or functions governmental in nature, they become agencies ... of the State and subject to its constitutional limitations,” and “State courts that aid private parties to perform [a] public function on a segregated basis implicate the State in conduct proscribed by the Fourteenth Amendment.”

In Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 92 S. Ct. 1965, 32 L. Ed. 2d 627 (1972), the Supreme Court of the United States dealt with the problem of racial discrimination by a private fraternal order as it relates to liquor licenses as ■distinguished from tax exemptions. There a Negro guest of .a white member of the fraternal order was denied service by the lodge’s employees solely because he was a Negro, and he ■sued to have the lodge’s liquor license revoked on the state •action theory. The court, reversing the holding below, ruled that prohibited state action was not involved and said:

The Court has never held, of course, that discrimination by an •otherwise private entity would be violative of the Equal Protection Clause if the private entity receives any sort of benefit or service at all from the State, or if it is subject to state regulation in any degree whatever. Since state-furnished services include such necessities of life as electricity, water, and police and fire protection, such a holding would utterly emasculate the distinction between private as distinguished from state conduct set forth in The Civil Rights Cases, supra, and adhered to in subsequent decisions. Our holdings indicate that where the impetus for the discrimination is private, the State must have “significantly involved itself with invidious discriminations,” Reitman v. Mulkey, 387 U. S. 369, 380, 87 S. Ct. 1627, 1634, 18 L. Ed. 2d 830, 838 (1967), in order for the discriminatory action to fall within the ambit of the constitutional prohibition.

Distinguishing other cases, including Burton, supra, Judge Rehnquist, writing for the majority, noted that the relationship between the state and the lodge arising from its grant of the liquor license was nothing approaching the “symbiotic relationship” between the state agency and the restaurant which discriminated that existed in Burton, where one was lessor and the other lessee of the building and both benefited therefrom.'

I am of the opinion, considering all the facts and the terms of this exemption statute, that the allowance of the exemption to the Rutherford Elks Lodge with respect to the property in question involves the state in prohibited state action.

The involvement of the State in the granting of a tax exemption of the type involved here is far different from that in granting liquor licenses. In this State it has long been recognized that there is a symbiotic relationship between the State and the exempt organization and that the latter is relieved from the burden of taxation because it is practically performing a public work which the State would otherwise have to perform. The nature of the relationship between the State and the holder of this type of exemption was reviewed in Carteret Academy v. State Board of Taxes and Assessment, 102 N. J. L. 525 (Sup. Ct. 1926), aff’d 104 N. J. L. 165 (E. & A. 1927) :

Exemptions from the burdens of taxation, which the great masses of the people are called upon to sustain, as a requiste [sic] of civil government, are only favored in legislation, upon the theory that the concession is due as quid pro quo for the performance of a service essentially public, and which the state thereby is relieyed pro tanto from the necessity of performing, such as words of charity and education, freely and charitably bestowed, as evidenced by the legislation under consideration. Without that concurring prerequisite, an exemption becomes essentially a gift of public funds at the expense of the taxpayer, and indefensible both under our public policy of equal taxation and our constitutional safeguard against illegal taxation. 2 Kent Com. 331. [102 N. J. L. at 528]

Accord: Kimberley School v. Montclair, 137 N. J. L. 402, 404 (Sup. Ct. 1948); Dwight School v. State Board of Tax Appeals, 114 N. J. L. 594, 599 (Sup. Ct. 1935), aff’d 117 N. J. L. 113 (E. & A. 1936); Catholic Charities of the Diocese of Camden v. Pleasantville, 109 N. J. Super. 475, 483 (App. Div. 1970). This rationale specifically applies to exemptions for property used for fraternal purposes, as distinguished from charitable purposes, such as that originally provided for by N. J. S. A. 54:4-3.26 as first enacted and construed in the 1930’s. With respect to such statute, it was held that the exemption was valid because use of the property for fraternal purposes benefited the public generally. See Camden v. Camden Cty. Board of Taxation, supra, 121 N. J. L. at 264-265; Rutgers Chapter of Delta Upsilon v. New Brunswick, supra, 129 N. J. L. at 240.

It is apparent from the opinion in Irvis that the Supreme Court recognized the difference between the relationship arising from tax exemptions as distinguished from liquor licenses. The court was careful to note with reference to the lodge building there involved, “Nor is it located or operated in such surroundings that although private in name, it discharges a function or performs a service that would otherwise in all likelihood be performed by the State.” 407 U. S. at 175, 92 S. Ct. at 1972, 32 L. Ed. 2d at 639. Irvis is therefore not a holding that the granting of a property tax exemption to a racially discriminatory fraternal order does not constitute prohibited state action.

This is an area in which there are strong feelings and lines are hard to draw. Forcible arguments are advanced that constitutional rights to freedom of association are ignored. There is no proof that the Rutherford Elks Lodge discriminates in the selection of the beneficiaries of such charitable works as it performs or sponsors. There is no proof at all that the State, either in the enactment or the enforcement of the exemption statute, intentionally and purposely supports racial discrimination — it simply does not inquire as to the racial policies and ideologies of those claiming exemptions. In other contexts the granting of tax exemptions has been held not to constitute prohibited state involvement or sponsorship. See Walz v. Tax Commission, 397 U. S. 664, 90 S. Ct. 1409, 25 L. Ed. 2d 697 (1970), dealing with exemptions to religious organizations; Chicago Joint Bd. Amal. Cloth. Wkrs. v. Chicago Tribune Co., 435 F. 2d 470 (7 Cir. 1970), cert. den. 402 U. S. 973, 91 S. Ct. 1662, 29 L. Ed. 2d 138 (1971).

But, in the last analysis, it is the Supreme Court of the 'United States which is the final arbiter of what constitutes state action in violation of the Fourteenth Amendment. One cannot read the opinions of the court in state action cases without being impressed with the fact that history is important and that the central purpose of the enactment of the Fourteenth Amendment goes to the heart of the decision-making process. That purpose was to eliminate all official state sources of invidious racial discrimination and it is given strong weight and favor in the balancing of constitutional rights.

Considered in that light, it is apparent that the State is in the position of granting a benefit to an organization on the theory that use of its property for racially discriminatory fraternal purposes benefits the public generally, and by so doing it places its prestige behind such discrimination. A number of well-reasoned decisions, rendered both before and after Irvis, have concluded that a state significantly involves itself in invidious discriminations when it allows an exemption of this type to a fraternal order practicing racial discrimination. A three-judge court so held in Falkenstein v. Oregon Dept. of Revenue, 350 F. Supp. 887 (D. Ore. 1972), app. dism. 409 U. S. 1099, 93 S. Ct. 907, 34 L. Ed. 2d 681 (1973). There the state was enjoined from granting tax exemptions from state property and corporate excise taxes to an Elks lodge because it practiced racial discrimination. The court said:

The State contends that the tax exemptions do not encourage or foster racial discrimination. They assert that the exemptions, like the liquor license in Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 92 S. Ct. 1965, 32 L. Ed. 2d 627 (1972), do not constitute state action within the meaning of the Fourteenth Amendment. We disagree.
Unlike the liquor license in Moose Lodge, tax exemptions for fraternal organizations benefit both the State and the organizations. Oregon relieves fraternal organizations from the burden of property and corporate excise taxes and in return, the public benefits from the charitable and benevolent activities of these organizations. This is the kind of “symbiotic relationship” that was lacking in Moose Lodge, supra, at 175, 92 S. Ct. 1965.
The State grants tax exemptions to encourage private support of activities in which the State has a vital interest, Methodist Book Concern v. State Tax Commissioner, 186 Or. 585, 208 P. 2d 319 (1949), and to support “a service that would otherwise in all likelihood be performed by the State.” Moose Lodge, supra, 407 U. S. at 175, 92 S. Ct. at 1972. The public receives services that would require the expenditure of state funds. These mutual benefits constitute a degree of state involvement in discriminatory activity that the Fourteenth Amendment prohibits. Burton v. Wilmington Parking Authority, 365 U. S. 715, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961) [350 F. Supp. at 888]

See also, Pitts v. Wisconsin Dept. of Revenue, 333 F. Supp. 662 (E. D. Wis. 1971); Opinion of Attorney General for State Tax Commission, State of Idaho (Feb. 13, 1973); see McGlotten v. Connally, 338 F. Supp. 448 (D. C. 1972); Green v. Connally, 330 F. Supp. 1150 (D. C. 1971), aff'd sub nom. Coit v. Green, 404 U. S. 997, 92 S. Ct. 564, 30 L. Ed. 2d 550 (1972); Bright v. Isenbarger, 314 F. Supp. 1382 (N. D. Ind. 1970), aff’d 445 F. 2d 412 (7 Cir. 1971).

The exemptions for the tax years 1972 and 1973 are invalid under the Bederal Constitution. They are also invalid under the State Constitution. See Washington National Ins. Co. v. Board of Review, 1 N. J. 545, 553 (1949) ; Andrews v. Ocean Tp. Board of Adjustment, 51 N. J. Super. 69, 72 (Law Div. 1958), aff'd 30 N. J. 245 (1959). Plaintiffs are therefore entitled to the relief sought for those years.

       Separate corporations were created to own and manage the buildings beneficially owned by the Nutley and Rutherford Elks Lodges, which are unincorporated subordinate lodges of the Benevolent and Protective Order of Elks of the United States of America. See Point II, infra. The word “Lodge” appears in the official names of both the corporations and the subordinate lodges and, in general, the term “Lodge” is collectively used herein to refer to both the corporation and lodge in each municipality.

       I ruled that a class action was not maintainable for a number of reasons. In the first place, it was apparent that a class action would complicate matters and provide nothing that could not be furnished to plaintiffs by a ruling in a test case, and that there was good reason in the circumstances to follow Professor Chafee’s admonition that “courts should be cautious in extending representative suits beyond simple situations where everybody in the class has about the same interest as everyone else. It is best for judges not to bite off more than they can chew”. Chafee, Some Problems of Equity 285 (1950). In addition, it was clear that plaintiffs lacked the necessary standing for a class suit for the following reasons:
      (1) Being taxpayers only of Nutley and Rutherford, they had status only to challenge exemptions granted to Elks Lodges in Essex and Bergen Counties, since it is necessary that one challenging an exemption be a taxpayer of the county where the property involved is located. See N. J. S. A. 54:3-21; Post v. Warren Point Vol., etc., Ass’n, 19 N. J. Misc. 367, 19 A. 2d 636, (St. Bd. Tax App. 1941) ; Saddle River Tp. v. Slavonian Catholic Church, 20 N. J. Misc. 92, 24 A. 2d 398, (St. Bd. Tax App. 1942) ; Schwartz v. Essex County Board of Taxation, 129 N. J. L. 129 (Sup. Ct. 1942), aff’d 130 N. J. L. 177 (E. & A. 1943) ; see Pleasantville Taxpayers v. Pleasantville, 115 N. J. Super. 85 (App. Div. 1971), aff’g 111 N. J. Super. 377 (Law Div. 1970).
      (2) Wholly apart from doubts as to the-extent that there could be recovery for back taxes even if past exemptions had been improperly granted, plaintiffs had status to seek back taxes only with respect to the Nutley and Rutherford Lodges since, except for governmental officials, only a taxpayer of the taxing district involved has standing to assert a right to have back taxes assessed and collected. N. J. S. A. 54 :4-63.13; see Evans v. Wingert, 18 N. J. Super. 128 (Law Div. 1952) ; Jabert Operating Corp. v. Newark, 16 N. J. Super. 505 (App. Div. 1951).
      (3) Plaintiffs had standing only to challenge the liquor licenses of the Nutley and Rutherford Lodges since, absent some special grievance, only a taxpayer of a municipality where a license is effective has a right to appeal from the granting of such license or to seek its revocation or suspension. N. J. S. A. 33 :1 — 22, 33 :1-26 and 33 :1-31; Hudson-Bergen Cty. Retail Liquor Stores Ass’n v. Hoboken Bd. of Comm’rs, 134 N. J. L. 481 (Sup. Ct. 1946), rev. on other grounds, 135 N. J. L. 502 (E. & A. 1947) ; see Hess Oil & Chemical Corp. v. Doremus Sport Club, 80 N. J. Super. 393 (App. Div. 1963).

      The attorneys for the Rutherford Elks Lodge anticipated throughout the course of the litigation that the Grand Lodge might change the membership policy and that the litigation might, for all practical purposes, become moot. Reference has been made to the 1971 amendments. In July 1973 the Grand Lodge did adopt amendments which were approved by the membership in October 1973 and which changed section 4 of the constitution to delete the word “white” from the qualifications for membership but provided that “this Amendment shall be effective only until the Supreme Court of the United States shall decide that the right of the people to form associations and to determine membership qualifications shall not in any way be abridged, limited or denied or until an amendment to the Constitution of the United States shall be adopted which will guarantee that such rights shall not in any way be abridged, limited or denied. In the event of either a favorable decision of the Supreme Court of the United States or the final adoption and effectiveness of such Constitutional Amendment, this Amendment shall be null and void and of no force and effect and the language of this Section 4 of Article YII of the Constitution of the Order as the same existed before this Amendment shall be reinstated and thereupon be in full force and effect.”
      The effect, of this amendment is not before me. It has no bearing upon the validity of the exemptions for the tax years 1972 and 1973.

      The Director of the Division of Alcoholic Beverage Control has ruled in cases involving the Rutherford, Red Bank and Madison Elks Lodges that, despite the racially discriminatory policies of the national and local Elks lodges, the allowance of liquor licenses to the lodges was not prohibited state action in violation of the State or Federal Constitutions. Prime reliance was placed upon the decision in the Irvis case.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ANTHONY SPANO, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 5, 1973
    Decided July 24, 1973.

      Before Judges Fritz, Lynch, and Trautwein.

      Mr. Ira D. Dorian argued the cause for appellant (Mr. Matthew Grayson, attorney).

      Mr. Robert D. Clarke, Assistant Prosecutor, argued the cause for respondent (Mr. Karl Asch, Union County Prosecutor, attorney).
   Per Curiam.

Defendant, a municipal police officer, was convicted by a jury of neglect of duty contrary to N. J. S. A. 2A:135-1 for a failure to act officially with regard to information he allegedly had regarding certain bookmaking activities. The same jury acquitted defendant of other counts in the same indictment charging him with conspiracy with respect to the bookmaking (N. J. S. A. 2A:98-1(a)), bookmaking (N. J. S. A. 2A:112-3) and maintaining a gambling resort (N. J. 8. A. 2A:112-3).

Defendant asserts here that (a) the indictment is defective, (b) the court erred in its charge to the jury, (c) the State “failed to adduce any evidence of the standard of requirement of duty of defendant as a police officer with respect' to bookmaking,” (d) the verdicts were inconsistent, (e) the verdict was against the weight of the evidence, and (f) the prosecutor made unfairly prejudicial remarks requiring a new trial.

While we are deeply disturbed by and forcefully condemn the unjustifiable interruption by the assistant prosecutor of the opening of defense counsel with the interjection of a totally unfair comment, only the court’s charge gives us serious concern. Eor reasons to appear, error there alone requires reversal.

The’ particular count of the indictment of which defendant has been convicted ought to have been more precise. But defendant now latches on to only one count — the 23rd in a multicount indictment in which defendant was charged in three other counts, one of which was in great detail ■ — ■ in making an argument that would exalt technical niceties at the expense of substantial justice, but which suffers from a lack of realistic persuasiveness. The purposes of an indictment are: to enable a defendant to know that against which he must defend; to prevent an accusation in derogation of our interdiction of double jeopardy; and to preclude substitution by a trial jury of an offense for which the grand jury has not indicted. State v. Williamson, 54 N. J. Super. 170 (App. Div. 1959), aff’d o. b. (but with concurring and a dissenting opinion) 31 N. J. 16 (1959). Hone of these purposes was in the least offended here. Having said that we note that, in any event, defendant’s attack comes entirely too late, appearing for the first time on appeal. R. 3 :10-2.

We find without merit the arguments relating to an alleged inconsistency in the verdicts, the weight of the evidence question, or the proof of “standard of requirement of duty” issue.

But we are satisfied the judge’s charge to the jury with respect to the knowledge required of a police officer before he can be guilty of a violation of the statute here charged was erroneous, and that error requires reversal. In a word, the judge charged the jury that cause for defendant to believe reasonably that bookmaking was occurring, or an awareness in defendant that would lead “an ordinarily cautious police officer” to that conclusion, was sufficient knowledge to justify a conviction. While this might be the better rule, at least with respect to a police officer, who has a fundamental duty to investigate and report to a superior, (State v. Donovan, 132 N. J. L. 319, 321 (Sup. Ct. 1945)), it is clearly not the law in New Jersey. Actual knowledge on the part of a defendant police officer is required. State v. Dunphy, 19 N. J. 531, 533 (1955); see State v. Hozer, 19 N. J. 301 (1955). We, of course, may not ignore or change, but must follow, the decision of our court of last resort. In re Education Association of Passaic, Inc., 117 N. J. Super. 255, 261 (App. Div. 1971), certif. den. 60 N. J. 198 (1972).

The objection of defense counsel to this portion of the charge was prolix and imprecise, to say the least. But we have no doubt that in this particular case where defendant was acquitted on the other counts the error had a manifest capacity to mislead the jury. We cannot say that beyond doubt there has been no untoward detriment.

Eeversed and remanded for a new trial.


author: Bischoff, J. A. D. Halpern, P. J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. JOHN J. KENNY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued February 13, 1974
    Decided April 5, 1974.

      Before Judges Halperh, Matthews and Bischoee.

      Mr. Donald A. Robinson argued the cause for appellant (Messrs. Robinson, Wayne & Greenberg, attorneys; Messrs. Donald A. Robinson, Stuart M. Gladstone and Ronald J. Riccio, on the brief).

      ■ Mr. Alfred J. Luciani argued the cause for respondent (Mr. William F. Hyland, Attorney General of New Jersey, attorney; Mr. George F. Kugler, Jr., former Attorney General of Now Jersey; Messrs. Edward Boy Rosen and David 8. Baime, Deputy Attorneys General, of counsel; and Messrs. Edward Roy Rosen, David 8. Baime, John DeGicco, Robert J. Genatt, Alfred J. Luciani, George Henningsen and L. Steven Pessin, Deputy Attorneys General, on the brief).
   The opinion of the court was delivered by

Bischoff, J. A. D.

Defendant John J. Kenny appeals his conviction of the violation of N. J. S. A. 2A :85 — 1 (misconduct in office) and N. J. S. A. 2A:105-1 (unlawful taking of money for the performance of duties) and the sentences imposed thereon. The fundamental issue presented by this appeal is whether a valid grant of transactional immunity by the United States Attorney in the United States District Court effectively immunized defendant from conviction or punishment for the crimes charged.

A statement of the lengthy and complex procedural history is necessary to an understanding of the issues presented.

On September 15, 1970 a state grand jury returned an indictment in two counts charging defendant with unlawfully taking money while in office for the performance of his duties. The charges alleged that in late 1966 defendant, then chairman of the Hudson County Board of Freeholders, received a bribe of $50,000 from four men named Reinauer and one named Schiffman, principals of the Reinauer Land Company, and Hyman Mack, president of the Mackman Realty Corporation, in order that defendant would use his influence and his position to have the Hudson County Board of Freeholders change or modify certain restrictions contained in a recorded deed between the Reinauer Land Company and the county.

On November 15, 1970 the federal grand jury for the District of New Jersey returned an indictment containing 34 counts against defendant and 11 others. The federal charges involved shakedowns of various contractors who sought construction contracts in Hudson County and Jersey City during the period commencing February 14, 1963, down to the time of the indictment. The federal charges did not in any way involve the Reinauer deed transaction.

On May 14, 1971 Kenny was severed from the federal indictment on application of the United States Attorney. Later, on May 19, 1971, the United States Attorney notified the New Jersey Attorney General that Kenny was to be granted transactional immunity and compelled to testify in the forthcoming federal trial. The letter of notification reads in part as follows:

As I advised you in person and telephonically, it was the personal desire and direction of the Attorney General of the United States, John N. Mitchell, that we speak to you and advise you that it was in the national interest that John J. Kenny be compelled to testify in this federal case and be granted immunity from prosecution concerning any matter upon which testimony touched. It was Mr. Mitchell’s desire that you be notified inasmuch as it seemed clear to us that any immunity thus conveyed by the United States Courts would bind the State under the supremacy clause and could possibly prejudice your existing state indictment against John J. Kenny. *■ * *
Thus, by us making every careful effort to limit his direct examination, we hope to achieve for you the result which you wish as exemplified by your letter of May 17, 1971. However, one further problem faces us. As I told you during our telephone conversation, there is no practical way in which I can limit cross-examination of defense counsel and, of course, we must recognize that he will be immunized just as fully to his cross-examination as he will be to his direct. Inasmuch as I cannot see how I, as the Chief federal law enforcement officer of this district, can possibly approach or enter into any kind of agreement with counsel for defendants such as these, it seems to me that we will have to take our chances'and hope for the best.

On May 24, 1971, during tbe trial of the federal court indictments, Kenny was called to the stand and asked the following question by the United States Attorney:

Mr. Kenny, between on or about November 1, 1963, and continuing thereafter until the very date you were indicted by the United States Grand Jury did you conspire with the defendants now on trial here before this Court, particularly John V. Kenny, Thomas Whelan, Thomas Flaherty, Walter Wolfe, William Sternkopf, Jr., Fred Kropke, Joseph Stapleton, Philip Kunz, and Bernard Murphy to violate various laws of the United States Congress?

Kenny invoked liis Fifth Amendment privilege against self-incrimination, as well as his right to remain silent under New Jersey law, and refused to answer the question.

At this time the United States Attorney stated in open court that he had conferred with John N. Mitchell, Attorney General of the United States, and the Assistant Attorney General in charge of the Criminal Division, and Mitchell had advised it was his belief that it was in the national interest that Kenny be granted immunity so that he could testify at the trial. He continued and stated it was also his belief, opinion and judgment that it was in the national interest that the witness be directed to testify, and asked the federal trial j’udge “to direct [the] witness to answer the questions * * * asked and to thereby confer the full transactional immunity provided for by Sec. 2514 of Title 18 U. S. Code.”

The court informed Kenny he was being granted full transactional immunity and he was directed to answer the questions. Kenny then answered “yes” to the question posed and other similar questions put to him during the course of the trial.

On direct examination the United States Attorney did not asir any questions relating to matters included within the state indictment. The testimony given by Kenny on direct examination was damaging to the other defendants. One of the defendants was represented by Walter D. Van Riper and a part of his cross-examination of Kenny is the storm center of this appeal. The pertinent part follows:

Q. Do you know B. Frank Reinauer?
A. Yes, I know Frank Reinauer.
Q. Do you know Frank Reinauer the II?
A. I know Frank — I know him to speak of because he was named in the indictment.
Q. I asked you if you knew him?
A. Not to speak to.
Q. Do you know Gordon S. Reinauer?
A. Not to speak to.
Q. Charles W. Reinauer?
A. Not to speak to.
Q. Do you know Max Schiffman?
A. Not to speak to.
Q. Do you know Hyman Mack?
A. Not to speak to him.’
THE WITNESS: May I talk on that indictment, Judge?
MR. VAN RIPER: I will give you an opportunity.
• THE COURT: Wait for a question.
Q. Did you shake down or attempt to shake down those men for $50,000 while you were Director of the Board of Freeholders?
A. J didn't, but Angelo Sarubbi did and he brought me the money.
Q. You got the money?
A. I got the $50,000 in the bag and I turned it over to Joe Staple-ton.
Q. And the money was for the Board of Freeholders under your direction, and you got the Board of Freeholders to do something which it otherwise wouldn’t have done?
A. I asked him to do it.
Q. It was a bribe?
A. Yes.

No objection to these questions was made by any of the attorneys at counsel table. Thereafter, the attorney for another defendant, as well as the trial judge, interrogated defendant on the same subject matter.

Defendants other than John J. Kenny were convicted in the trial in the federal court. On September 9, 1971, after conclusion of the trial, the trial judge issued a judgment of immunity and permanently enjoined the State from continuing to prosecute Kenny under the indictments involved herein.

The State appealed this injunctive order to the Third Circuit Court of Appeals which reversed the injunctive portion of the judgment of immunity and said in the course of its opinion:

The facts of this case did not warrant the district court in enjoining the pending state prosecution against defendant. [Citations omitted] Rather, the court was required to leave defendant to assert his immunity granted pursuant to § 2514 as a defense to the state criminal prosecution. [U. S. v. Kenny, 462 F. 2d 1230, 1233 1972]

Thereafter, Kenny moved in the state court to dismiss his indictment, asserting his immunity defense. That motion was denied. Leave to appeal the denial was refused by both this court and subsequently by the Supreme Court. A separate application for injunctive relief was made to the United States District Court and denied. Prior to the start of the trial the defense of immunity was again asserted in the state court and rejected. The trial and subsequent conviction of Kenny followed.

I

Defendant appeals, contending that the grant of transactional immunity in the United States District Court immunized him from prosecution and conviction or, in the alternative, from punishment for the crimes charged -in the state indictment.

Defendant first argues that the state court must give full faith and credit to the judgment of immunity entered in the United States District Court on August 30, 1971. That judgment provides in pertinent part as follows:

>r * s.’ [X]hat pursuant to 18 U. S. C. 2514 the witness John J. Kenny shall not lie prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he was compelled to testify or produce evidence, in any Court.

This judgment does not provide that testimony given by Kenny in the federal court on the subject matter of the state indictment was, in fact, compelled. Indeed, the judgment requires a determination of compulsion before it can be implemented. For this reason we pass this argument and reach the heart of the matter — a consideration of the nature and scope of the immunity granted and whether defendant’s testimony was compelled or volunteered.

While the State concedes that a valid grant of transactional immunity under 18 U. S. C. § 2514 is binding on state courts, it contends that the conviction and sentence of defendant should be affirmed. The State argues first that the scope of a grant of transactional immunity is vested by statute in the Attorney General of the United States and cannot be enlarged by the courts. It further contends that the extent of the grant is controlled by the areas about which the Government needs information, and advances and “exchange” theory whereby the United States Government cannot be expected to pay in a grant of immunity for any more information than it was seeking or could reasonably expect to receive. Thus, the argument continues, the United States Attorney, in his direct examination of an immunized witness, covers the matters which he deems necessary and proper, and this interrogation circumscribes the outermost limits of the transactional immunity. It is further contended that if a witness on cross-examination is compelled to answer questions beyond the scope of the direct examination, such compelled answers are protected by “a use plus derivative use” or a “use plus fruits” immunity, and not by the broader transactional immunity.

The State misconceives the nature and extent of immunity conferred by the statute. The United States Supreme Court, in Kastigar v. United States, 406 U. S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972), reviewed the reason behind a grant of immunity and pointed out that the legitimate demands of a government to compel a citizen to testify must be accommodated to the Fifth Amendment privilege against compulsory incrimination. Any statute which authorizes a grant of immunity in exchange for incriminating testimony must offer a protection at least coextensive with the scope of the privilege against self-incrimination. It was there held that this statute [18 U. S. C. § 2514] provides such protection for witnesses and more:

While a grant of immunity must afford protection commensurate with that afforded by the privilege, it need not be broader. Transactional immunity, which accords full immunity from prosecution for the offense to which the compelled testimony relates, affords the witness considerably broader protection than does the Fifth Amendment privilege, [at 453, 92 S. Ct. at 1661, 32 L. Ed. 2d at 222]

Although stated in a dissenting opinion, Justice Brennan has accurately defined the scope of transactional immunity in Piccirillo v. New York, 400 U. S. 548, 568-569, 91 S. Ct. 520, 531, 27 L. Ed. 2d 596 (1971), as follows:

* * * It provides the individual with an assurance that he is not testifying about matters for which he may later be prosecuted. * * * The sole question presented to a court is whether the subsequent prosecution is related to the substance of the compelled testimony.

Tlie New Jersey Supreme Court has similarly defined the scope of transactional immunity. In In re Zicarelli, 55 N. J. 249, 265 (1970), aff’d 406 U. S. 472, 92 S. Ct. 1670, 32 L. Ed. 2d 234 (1972), the court said that transactional immunity bars “prosecution for the offense to which the compelled testimony relates.” Accord, Kasligar v. United States, supra, 406 U. S. at 453, 92 S. Ct. at 1661, 32 L. Ed. 2d at 222.

The purpose behind such a broad grant of immunity is to give complete freedom of mind to a witness so that he will give his utmost cooperation and disclose the complete truth on behalf of the government when called to testify. Transactional immunity seeks to insure that the witness will completely disgorge himself of all details known to him concerning criminal activities about which he is interrogated, whether he is a participant or not. The very purpose of this statute would be defeated by an interpretation which qualified the transactional immunity to those subject matters covered during direct examination.

In this case the United States Attorney General, after consideration of the case and in the exercise of his judgment, was willing to forego a possibility of obtaining a conviction of defendant Kenny in exchange for a probability of the conviction of all other defendants. His judgment was vindicated, for those convictions were obtained.

It is thus seen that it matters not whether the testimony of the witness is elicited on direct examination, cross-examination, or by the court. The only inquiry which need be made to determine whether the witness is immunized by the grant of transactional immunity is whether a subsequent prosecution is related to the compelled testimony. It naturally follows that even though the United States Attorney, or even the court for that matter, did not intend for the compelled testimony to go beyond matters then being tried, if the testimony, in fact, does spill over into other fields and if it is compelled, the transactional immunity applies and may bring other criminal activity of the witness under the umbrella of the immunity. While the original decision to seek an order directing a witness to testify must emanate from the Attorney General, once a person has been granted transactional immunity and has been directed by the court to testify, he is not solely dependent upon the integrity or good faith of the prosecutorial authority for the preservation of his rights. Kastigar v. United States, supra; Murphy v. Waterfront Comm’n, 378 U. S. 52, 84 S. Ct. 1594, 12 L. Ed. 2d 678 (1964). The court thereafter determined the scope of the immunity actually conferred by an examination of the record.

It cannot be disputed that Kenny was granted transactional immunity and that he did testify as to matters related to the Reinauer transaction.

That brings us to a consideration of the question of whether or not the testimony given by Kenny while on the stand was “compelled,” as that term is used in the statute, or volunteered.

II

Defendant’s motion at the outset of trial below raised the immunity defense. The trial judge concluded that the answers of Kenny on attorney Van Riper’s cross-examination during the federal trial were not responsive, were not compelled but were, instead, voluntary and hence did not provide him with immunity.

We cannot accept this conclusion.

The record of the trial in the federal court discloses that Kenny originally refused to answer pertinent questions and invoked his privilege to remain silent. After a voir dire examination out of the presence of the jury, where Kenny asserted his Fifth Amendment privilege to questions asked and was directed by the judge to answer them, there followed lengthy colloquy between the court and the witness, as well as between the court and counsel, and the following directions were then given by the federal trial judge to Kenny:

Mr. Kenny, you will be called to the witness stand before the jury and you will be asked questions concerning your knowledge of the commission of federal offenses and violations of state law. There is a continuing order of the Court that you answer those questions. There is no doubt by the nature of the questions asked Mr. Kenny, being a defendant, incriminates himself by the answers he gave. He answered under compulsion by order of the Court and the statute with respect to such compulsion by order of the Court recites “No such witness shall be prosecuted or subject to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he is compelled after having claimed this privilege against self-incrimination to testify or produce evidence, nor shall testimony so compelled be used as evidence in any criminal proceeding against him in any court.”
There is one exception to the statute, Mr. Kenny, “No witness shall be exempt under this section from prosecution for perjury or contempt committed while giving testimony or producing evidence under compulsion as provided by this section.”
Therefore you will enjoy no immunity from prosecution from perjury, if you give false testimony, if you fail to tell the truth and give false testimony you are not immunized against that. But you are immunized against prosecution for the offenses to which your testimony truthfully given relates.

This was the order issued by the judge in open court to the witness on the witness stand.

Prior to commencement of cross-examination the following day, when some question concerning Kenny’s immunity in the state court was raised, the trial judge made the following statement:

He is subject to further examination, and particularly cross-examination. He has an obligation under the oath he took to tell the truth, the whole truth, and nothing but the truth. His immunity depends upon it. * * * Mr. Kenny, you have a continuing obligation, if you wish to enjoy immunity from prosecution, to continue to testify truthfully. That means in accordance with the oath you took to tell the truth, the whole truth and nothing but the truth. By virtue of the provisions of Title 18 United States Code, 2514, this Court is authorized to conduct an immunization proceeding, and I repeat again that where a witness invokes his privilege against self-incrimination, and pursuant to the statute mentioned he is ordered to testify by the Court and testify under compulsion, it is then provided in the statute “No such witness shall be prosecuted or subject to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he is compelled after having claimed his privilege against solf-incrimination to testify or produce evidence, nor shall testimony so compelled be used as evidence in any criminal proceeding against him in any court.”
As I interpret the statute “any court” means State Court as well as Federal Court.

Returning to a consideration of the specific question put to the witness, “Did you shake down or attempt to shake down those men for $50,000 while you were Director of the Board of Freeholders?”, it is obvious, upon an examination of subsequent questions and answers, that neither a “yes” or a “no” answer would have been the whole truth. He had been ordered and directed by the trial judge to give the whole truth.

Further, not one of the seven experienced trial attorneys or the experienced trial judge — all with diverse roles and interests — saw the need to bring the witness “back to the mark” for any reason, much less because of an unresponsive, volunteered answer.

It is necessary to put the cross-examination of defendant in proper perspective. Defendant John J. Kenny had just given damaging testimony against his codefendants. A successful defense depended upon an attack on the credibility of the witness who gave this testimony. Obviously, the credibility of the defendant John J. Kenny would be seriously weakened if it could be demonstrated that he had been involved in criminal activity. It was the obligation of defendants’ attorney to attempt to do so.

The State argues that when the witness asked the judge if he could “speak to the indictment,” he indicated an intention to depart from the direct examination and seek to bring additional criminal transactions under the immunity protection.

We disagree. First, it seems apparent the witness was seeking reassurance that he could answer the questions and still retain his immunity. Then, after the question was put to the trial judge by the witness, he was instructed to wait for a question. He did so, and when one was put to him he answered it. Bearing in mind the fact that the object of the immunity is to grant absolute freedom of mind to the witness and thus insure his cooperation, a fortiori he should be in a position to answer forthrightly all questions, including those which seek to probe his motivation for turning government witness and for testifying against his codefendants. In short, this question went to the credibility of the witness and was properly answered.

The fact that defendant readily answered the questions, as he was required to do under the federal judge’s instructions to him with the knowledge that he was probably immunizing himself from state prosecution, cannot denigrate the scope of the immunity granted. The answers were responsive to questions asked by highly competent counsel on cross-examination who was seeking to discredit his credibility. The fact that defendant may have welcomed the inquiry is irrelevant to the question of compulsion. The significant fact is that neither he nor his counsel instigated or invited the disputed questions.

We conclude the testimony given by Kenny in federal court put into evidence the subject matter of the state indictment, related to it and was compelled, as that term is used in the statute.

Binding as we do that the result of the proceedings in the federal court was to grant to the defendant immunity from prosecution, conviction or punishment for the matters encompassed by the indictment pending herein, it follows that both the conviction and the sentence imposed upon defendant must be vacated. Heike v. United States, 217 U. S. 423, 431, 30 S. Ct. 539, 54 L. Ed. 821 (1910).

Ill

Defendant contends many other errors and irregularities occurring prior to and during trial justify a reversal. In light of our ruling on the immunity issue, we deem it unnecessary to discuss them. However, defendant does raise one issue wliich merits comment. He argues that improper remarks by the prosecutor in his opening statement and in summation constituted reversible error.

The indictment charged offenses occurring in Jersey City and Hudson County. The grand jury returning this indictment was a state grand jury impaneled pursuant to- N. J. S. A. 2A:73A-1 et seq. The venuo of the indictment was laid, pursuant to N. J. S. A. 2A:73A-8, in Mercer County where the case was tried. With this background the prosecutor remarked in his opening statement:

He was also, that is, John J. Kenny, the dispenser of patronage for the party, the Democratic Party in Hudson County at the time. And, you will hear that Hudson County at that time was strictly a one-party county. It was a democratic county. And those in power in the Democratic Party in the county were in power in the county period.

Later, at the end of his opening statement, he said :

I represent to you most respectfully, ladies and gentlemen, that you will hear in this ease a story of corruption, a story about the only way you could do business in the County of Hudson.

Then, in his summation, the prosecutor said:

[Y]ou know that men don’t take payoffs in front of the State Capitol down here on State Street, not even in Hudson County, ladies and gentlemen, where this is the way they did business.

He continued:

Not even in Hudson County, ladies and gentlemen, where this was the only way they did business would a payoff be taken in public.

Shortly thereafter, the prosecutor said (in reference to Sarubbi’s testimony) :

And, by the way, who else * * * but somebody like Angelo Sarubbi, somebody who had been involved in politics up in the county for a number of years * * * would be able to talk to John J. Kenny? * * * Who else other than someone who had dealt with him and knew how he did business in Hudson County? In essence * * * what I am asking you to consider with respect to Angelo Sarubbi is: who else would carry the money to a corrupt public official — Peter Pan?

Finally, the prosecutor urged the jury to:

* * * g0 in(;0 that jury room and deliberate and come back out to the courtroom and clearly and loudly enough for them to hear you, loudly enough for them to hear you in even in Hudson County, return the verdict which justice requires * * *.

Defendant argues these remarks, referring “to the way business is done in Hudson County,” prejudiced him in that instead of being convicted for his individual wrongdoing, he might well have been convicted because he was a part of the allegation of. widespread corruption of Hudson County.

These repeated references to “the way business is done in Hudson County” injected irrelevant and improper considerations into the case which were prejudicial to defendant. A prosecutor may in his opening state only the facts he intends in good faith to prove by competent evidence. State v. Hipplewith, 33 N. J. 300, 309 (1960). The prosecutor here, in stating to the jury in his opening that they were going to hear a “story of corruption,” “a story of the only way you could do business in Hudson County,” overstepped the bounds of permissible zeal. Such statements were unsupported by any evidence, and he must have known that testimony in support of those statements would not be admissible in the trial of the case.

Kenny was here charged in connection with a single transaction involving extortion and misconduct in office. Corruption in Hudson County was not the charge. Hudson County was not the defendant.

While the prosecutor is permitted a vigorous presentation, his primary obligation is to seek a fair trial. State v. Farrell, 61 N. J. 99, 104 (1972); State v. West, 29 N. J. 327, 338 (1959); State v. Sullivan, 24 N. J. 18, 36 (1957); State v. Hipplewith, supra. Plis zeal must be contained within the boundaries of fair play, propriety and the four corners of the indictment. Dunn v. United States, 307 F.2d 883 (5 Cir. 1952).

We cannot be oblivious to the widespread publicity given to this trial, which highlights the prejudicial nature of the remarks. The prosecutor here went beyond the evidence and the indictment in both his opening statement and his summation. The departure was highly prejudicial to defendant, sufficient standing alone to justify a reversal.

For the reason first stated, we vacate the conviction and sentence and direct entry of a judgment for defendant on the grounds he has been rendered immune from prosecution under the indictment.

Halpern, P. J. A. D.

(dissenting). I respectfully dissent. I am convinced defendant’s testimony was not “compelled” under the transactional immunity given to him under 18 U. S. C. A. § 2514.

Certain significant and undisputed facts appear: (1) the state grand jury indicted defendant on September 15, 1970; (2) the federal grand jury indicted him and others on November 15, 1970; (3) the crimes charged in the federal and state indictments were unrelated, each dealt with separate and unconnected criminal offenses; (4) the United States Attorney for New Jersey gave defendant transactional immunity intending, if possible, not to extend it to the pending state indictment; (5) the United States District Court judge who tried the federal indictment, and all defense counsel, including defendant’s, knew the State of New Jersey intended to try defendant on the state indictment, and that it had made every effort, through its Attorney General, to prevent the immunity granted defendant to jeopardize the trial on the state indictment; (6) the United States Attorney, on direct examination, asked no questions of defendant relating to the state indictment; (7) defendant’s incriminating answers, here in issue, revealed no facts not already possessed by the State of New Jersey, and finally, (8) the ques-ions asked of defendant by defense counsel during the federal trial, if at all relevant, were asked for the purpose of affecting defendant’s credibility by showing a state crime had been committed, so that the jury could infer he expected immunity or leniency in exchange for his testimony against his codefendants.

It is against this backdrop of undisputed facts that we must gauge defendant’s answers for which he now claims transactional immunity. I am satisfied beyond a shadow of a doubt that defendant intentionally answered'the questions posed so as to incriminate himself, knowing that otherwise immunity would not attach.

In my view, defendant’s answers were not made responsively and in good faith, but were shrewdly calculated to obtain the result for which he now argues and, therefore, were not “compelled” but were graspingly volunteered and contrived, under the appearance of compulsion, to obtain an immunity bath. His hope for immunity or leniency could have been revealed to the jury by his answers without the incriminating features voluntarily appended. The commendable philosophic reasons for granting’ transactional immunity, which have become part of our constitutional fabric, should not be demeaned to the point where they are used as a pernicious sword rather than a legitimate shield. See In re Ziccarelli, 55 N. J. 249, 270-271 (1970), aff’d sub nom. Zicarelli v. N. J. State Comm. of Investigation, 406 U. S. 472, 477, 92 S. Ct. 1670, 32 L. Ed. 2d 234 (1972); Shapiro v. United States, 335 U. S. 1, 68 S. Ct. 1375, 92 L. Ed. 1787 (1948), reh. den. 335 U. S. 836, 69 S. Ct. 9, 93 L. Ed. 388 (1948); 8 Wigmore, Evidence (McNaughton rev. 1961), § 2283 at 518-519. Nor should 18 U. S. C. A. § 2514 be construed so as to offer defendant a gratuity for his crime. Heike v. United States, 227 U. S. 131, 152, 33 S. Ct. 226, 57 L. Ed. 450 (1913).

The majority correctly points out that defendants’ attorneys in the federal trial justifiably sought to discredit Kenny as a witness. They think it significant that none of the experienced defense attorneys or the trial judge "saw the need to bring the witness [Kenny] ‘back to the mark’ for any reason, much less because of an unresponsive, volunteered answer.” Its significance escapes me, since I would not expect the defense attorneys, who all wanted Kenny discredited, to voice an objection. They were not concerned with whether Kenny’s answers ultimately immunized him from prosecution on the state indictment. Nor would I expect the trial judge to intervene sua sponte since he felt he had given Kenny transactional immunity sufficiently broad to encompass the state indictment, although immediately after the original questions were asked by attorney Van Eiper, and the answers given, the trial judge expressed his concern thusly:

Mr. Van Riper, it would seem to me that many of your questions on cross-examination were dealing with an attack upon the immunity, particularly the State. I don’t know why you are injecting that here. You have a right to develop before this jury that immunity from prosecution was conferred upon the witness so that the jury can take that into consideration as to the credence they will afford to his testimony, but I don’t want any further attempts in any fashion to elicit! information which goes to the immunity from prosecution on the State indictment. This is not the proper time for this.
Furthermore, it is not a matter of your concern.
* * Hi * 5?T * SjC Jjc
Exactly, but counsel, listening very carefully, I was not naive when there was particular reference to the State Court indictment to believe that an effort was not being made for any evidence to pull out the underpinnings of the immunity on that. That is no concern of counsel here.

In my view, as previously indicated, Kenny’s answers, which the majority say immunized him, were not compelled; rather, they were unresponsive and volunteered, and the failure of the defense attorneys or the trial judge to object is immaterial.

With respect to the other grounds urged for reversal by appellant, I see no prejudicial error in any of them warranting reversal.

I would affirm the conviction.

       18 XI. S. G. § 2514 provides: “Whenever in the judgment of a United States attorney the testimony of any witness, or the production of books, papers, or other evidence by any witness, in any case or proceeding before any grand jury or court of the United States involving any v iolation of this chapter or any of the offenses enumerated in section 2516, or any conspiracy to violate this chapter or any of the offenses enumerated in section 251G is necessary to the public interest, such United States attorney, upon the approval of the Attorney General, shall make application to the court that the witness shall be instructed to testify or produce evidence subject to the provisions of this section, and upon order of the court such witness shall not be excused from testifying or from producing books, papers, or other evidence on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture. No such witness shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, nor shall testimony so compelled be used as evidence in any criminal proceeding (except in a proceeding described in the next sentence) against him in any court. No witness shall be exempt under this section from prosecution for perjury or contempt committed while giving testimony or producing evidence under compulsion as provided in this section.”
      Congress repealed this statute by Pub. L. 91-452, .Title II, §§ 227' (a), 260, October 15, 1970, 84 Stat. 930, 931, effective four years following the sixtieth day after the date of its enactment, with such repeal not to affect any immunity to which any individual is entitled thereunder by reason of any testimony or other information given before such day.


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

text:
    SILVER BAY HOMES, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. EDWARD HERRMANN AND ROSE MARIE HERRMANN, HIS WIFE, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued December 11, 1973
    Decided April 22, 1974.

      Before Judges Kolovsjky, Eritz and Crane.

      Mr. Edward Mainardi argued the cause for appellant (Messrs. Mainardi & Mainardi, attorneys).
    No brief was filed by respondents, nor was there any appearance on their behalf.
   The opinion of the court was delivered by

Kolovsky, P. J. A. D.

In 1971, when defendant Edward Herrmann was adjudicated a bankrupt, he and his wife, defendant Rose Marie Herrmann, owned as tenants by the entirety a one-family house in East Paterson, New Jersey, in which they and their children resided. It is conceded that Edward’s interest in the property passed to his trustee in bankruptcy who, pursuant to an order entered on May 4,1972 by a referee in bankruptcy, sold and transferred that interest for $1,000 to Glen Rock Lumber & Supply Co. (Glen Rock), a prior creditor of Edward.

The complaint filed herein by plaintiff, to which Glen Rock had allegedly conveyed the bankrupt’s interest in the property, concluded with the allegations that defendant Rose was in possession

* * * by virtue of her one-half interest as tenant by the entirety, ■her husband’s interest being the subject of the aforesaid sale to Glen .Rock Lumber and Supply Co., Inc.; [and that] [p]laintiff is seized of an undivided one-half equal interest in the subject premises with the defendant and requests that the premises be partitioned, * * *

and demanded judgment

That the life estate for the joint lives of Edward Herrmann, Jr., and Rose Marie Herrmann, his wife, be sold and that the proceeds thereof be paid to the parties according to their proportionate share.

Following the filing of an answer and counterclaim and an answer to the counterclaim, plaintiff moved

*' * * for an Order directing the sale of the life estate and right of survivorship of Edward Herrmann in and to the premises which are the subject of this partition action and the proceeds be held to await the further order of this Court. [Emphasis supplied]

' The affidavit filed in support of the motion, executed by a member of the firm of attorneys which represents plaintiff, embodies, without specification, an allegation that plaintiff is the “holder of an undivided one-half interest as tenant by the entirety in the premises” and the statements:

3. The premises are incapable of ordinary subdivision and consequently, must be sold to satisfy the interest of the plaintiff herein ■ which succeeded to the interest of the defendant Edward Herrmann, husband of the holder of the remaining undivided one-half interest in the premises.
4. No claim in the nature of a dispute over the title is present, consequently, the sale must take place, any question relating to the proportionate share of the proceeds to await further disposition of this Court.

The answering affidavit filed by defendant Rose Herrmann ■set forth facts allegedly constituting inequitable conduct by <Glen Rock, plaintiffs* affiliated corporation.

After argument on the motion the trial judge, who had reserved decision, filed a letter opinion in which he ’ treated the matter as being before him on cross-motion for summary judgment and stated:

The sole question involved is whether or not an assignee of a purchaser from a Trustee in Bankruptcy of Edward Herrmann’s interest in real estate, consisting of the marital home of himself and his wife, B.ose M. Herrmann, owned by them as tenants by the entirities [sic], has standing to be entitled to have the entire property sold (physical partition being otherwise impractical) and the proceeds apportioned between the wife and the plaintiff-assignee.

The court’s conclusion that “plaintiff does not have that right” and its denial of plaintiff’s motion to have the entire premises sold was correct, Dvorken v. Barrett, 100 N. J. Super. 306 (App. Div. 1968), aff’d o. b. 53 N. J. 20 (1968), even if we were to disregard the absence of proof that Glen Rock had conveyed the interest in the property which it purchased from Edward’s trustee in bankruptcy to the plaintiff and assume that plaintiff is now the owner of the interest formerly vested in Edward.

As the result of the transfer of the interest of the husband, Edward, by his trustee in bankruptcy, the transferee became a tenant in common with the wife Rose for the joint lives of the husband and wife and was vested with the husband’s right of survivorship so that it would acquire the fee if the husband survived the wife. King v. Greene, 30 N. J. 395 (1959); Dvorken v. Barrett, supra.

However, if the wife survives the husband, “she will become the sole owner of the property * * *. [Her] right of survivorship cannot be taken away from her without her consent. * * * [The purchaser] may not have [as plaintiff’s motion sought] partition of the fee by sale or otherwise.” Dvorken v. Barrett, supra 100 N. J. Super, at 309.

The question remains, however, whether the court ruled properly in dismissing plaintiff’s complaint which prayed — as did plaintiff’s attorney in his argument on the motion despite the broader relief sought in the motion itself — not a sale of the fee but a partition and sale only of the tenancy in common for the joint lives of the husband and wife.

Controlling precedent — which binds us even though, as hereafter noted, we disagree with it in principle — indicates that the purchaser of the husband’s interest may have partition by sale of the tenancy in common for the joint lives of the husband and wife — a sale which will not affect in any way the rights of survivorship. Schulz v. Ziegler, 80 N. J. Eq. 199, 202 (E. & A. 1912); King v. Greene, supra, 30 N. J. at 408; Gery v. Gery, 113 N. J. Eq. 59, 63-65 (E. & A. 1933).

In Schulz v. Ziegler, supra, a husband and wife owned property as tenants by the entirety. The husband conveyed all his right, title and interest to his daughter, who then filed a bill for partition. The court sustained the daughter’s right to seek partition, but only of the tenancy in common for the joint lives of the husband and wife, saying:

We hold, therefore, that by virtue of an estate by entireties, as modified by the Married Woman’s act, the seisin of husband and wife during the joint lives is essentially a tenancy in common, terminated on the death of either, with remainder in fee to the survivor; and that the right of the husband may be transferred by him to a third party who thereby becomes tenant in common for the joint lives in the husband’s place; and that partition may be had between such purchaser and the wife of this tenancy in common, but without affecting in any way the common law right of survivorship.
It is suggested that the bill should have been struck out -because the prayer is too broad in asking' for the absolute sale of the premises instead of limiting such sale to the right of possession during the joint lives. But a motion to strike out a bill * * * is in the nature of a demurrer, *’ * * and a demurrer will not lie to the whole bill when the prayer is too broad, but only to the part of the relief to which complainant is not entitled.

The trial judge should therefore not have stricken the complaint. If plaintiff proves the allegations of its complaint and defendants do not show any valid reasons why plaintiff should be barred from maintaining this action, plaintiff is entitled, under existing law, to a judgment for the partition of the tenancy in common for the joint lives of the husband and wife. Since physical partition is impracticable, a partition sale of that tenancy in common may be ordered. Schulz v. Ziegler, supra; Buckis v. Townsend, 100 N. J. Eq. 374 (Ch. 1927). It is of no legal significance that because of the uncertain duration of that tenancy in common a sale thereof may not produce a substantial sales price.

We, as an intermediate appellate court, must follow the decision in Schulz v. Ziegler. Only the Supreme Court, to which defendants may petition for certification despite their failure to appear in this court, has power to change the rule of Schulz v. Ziegler. On principle, we see no justification for the rule which gives the purchaser of the husband’s interest greater rights than those which the husband possessed, and unnecessarily authorizes the dispossession of the wife. In our opinion the purchaser should be relegated to the same adequate remedy which was available to the husband —■ an action for an accounting of one-half of the fair rental value of the premises, a remedy which will not sacrifice the rights of either party.

As Schulz v. Ziegler, supra, recognized, “the seisin of husband and wife during the joint lives is essentially a tenancy in common, terminated on the death of either, with remainder in fee to the survivor.” 80 N. J. Eq. at 201-202. Neither spouse, however, may maintain an action against the other for partition of the tenancy in common. Gery v. Gery, 113 N. J. Eq. 59 (E. & A. 1933). The only remedy available to a spouse excluded from possession is an accounting for rents and profits or for his or her proportionate share of the fair rental value of the property. Neubeck v. Neubeck, 94 N. J. Eq. 167 (E. & A. 1922). (See also, Bilder v. Robinson, 73 N. J. Eq. 169 (Ch. 1907), in which the purchaser at an execution sale of the interest of the husband in property owned by him and his wife as tenants by the entirety was held entitled to the relief there prayed, an accounting of the rents and profits and the appointment of a receiver for the income producing property.)

We are not persuaded by the only justification appearing in the cases for granting the husband’s transferee greater rights than the hnshand had possessed — that set forth in Gery v. Gery, supra, as-follows:

* * * the estate by the entirety has not been abolished in this jurisdiction. It still exists, a sui generis species of tenancy with its origin solely in the marriage state and retaining so long as the title, during coverture, remains in the husband and the wife, the fundamental characteristic that each spouse is seized of the whole or the entirety and not of a share, moiety or divisible part; to use the ancient law Latin, the seizin, during the period named, is per tout et non per my as distinguished from a tenancy in common which is per my et non per tout and from a joint tenancy which is per my et per tout. If either the husband or the wife conveys his or her interest for the period of the joint lives to a third person, as we held in the Schulz Case could be done, then the per tout aspect of the estate falls with the reason for its existence and the retaining spouse and the stranger become tenants in common during the joint lives of husband and wife, leaving little that is characteristic of an estate by the entirety except the incident of survivorship.

The denial of plaintiff’s motion for an order directing a sale of the premises is affirmed. The dismissal of the complaint is reversed and the cause remanded for further proceedings consistent with this opinion. Uo costs to either party on this appeal.