author: Matthews, J. A. D.

text:
    CARDELL, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. TOWNSHIP OF WOODBRIDGE, A MUNICIPAL CORPORATION IN THE COUNTY OF MIDDLESEX, STATE OF NEW JERSEY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued June 8, 1971
    Decided July 19, 1971.

      Before Judges Lewis, Matthews and Mintz.

      Mr. Norman Robbins argued the cause for appellant (Mr. Joseph Lunin, on the brief).

      Mr. Stewart M. Hutt argued the cause for respondent (Messrs. Mutt & Berkow, attorneys; Mr. George J. Otlowski, Jr., on the brief).
   The opinion of the court was delivered by

Matthews, J. A. D.

Defendant Township of Woodbridge (township) appeals from two judgments in favor of plaintiff Cardell for $14,506.36 and $7,605.55 for its wrongful rejection of Car dell’s low bids on construction contracts No. 3306 and No. 3115, respectively. Cardell cross-appeals from the trial judge’s determinations of damages. Because the parties and issues in both cases are identical, we consolidated the appeals.

On June 25, 1969 the township advertised pursuant to N. J. S. A. 40:50-l et seq., that it would receive sealed public bids on contract No. 3306, which involved the reconstruction of several streets in the township. The published notice contained a statement usually found in such solicitations for public contracts:

The Town Council reserves the right to accept or reject any or all bids which in its opinion will be in the best interests of the Township.

A similar warning appeared in the notice to bidders and in the specifications.

On July 6, 1969 the six sealed bids received in response to the advertisement were opened, and they revealed the following bidders and amounts:

Cardell, Inc. $114,826.10

Middlesex Concrete Products and Excavating Company 119,982.80

Manzo Contracting Co., Ine. 128,892.50

Della Pello Contracting Co., Inc. 129,772.00

Halecrest Company 144,158.20

Earle Asphalt Company 212,827.50

GardelPs low bid was less than the township engineer’s estimate of the cost of the construction work ($120,702) by approximately $6,000.

Despite the township engineer’s recommendation that Car-dell’s offer be accepted, the township council, by resolution of August 5, 1969, refused all bids and ordered a readvertisement of the contract. No reason for the blanket rejection was given in the resolution. At the trial, however, it was disclosed that the council was of the opinion that even lower bids might be received because of the onset of winter and its attendant slowdown in construction. Neither the trial court nor this court has been apprised of any fact that warranted such a conclusion.

On August 13, 1969 the township readvertised for bids. The new contract was designated No. 3306-A and was virtually identical in its specifications to No. 3306. On August 28 the sealed bids received were opened with the following results:

Manzo Construction Co., Inc. $107,734.50

Middlesex Concrete Products and Excavating Company 112,901.45

Cardell, Inc. 116,121.40

Manzo was now the low bidder and plaintiff Cardell the high bidder. On September 2, 1969 the township council awarded the contract to Manzo.

The facts surrounding .contract No. 3115 are virtually identical to those just related as to contract No. 3306. 3115 involved similar repaving work to be performed in other parts of the township. On July 23, 1969 the township advertised for sealed bids, and on August 11, 1969 the opening of the four bids produced -the following offers:

Carden, Inc. $ 95,987.75

Middlesex Concrete Products

and Excavating Co. 101,937.75

Manzo Contracting Co., Inc. 103,641.50

Trap Rock Industries, Inc. 120,085.00

Cardell’s bid was the lowest of those received. Moreover, even the highest bid under 3115 was less than the township engineer’s estimate of the cost of the work which he figured to be $124,117.50. By resolution of August 19, 1969, however, the township rejected all bids, offering no reason for its action. The deposition of council president Gene Tomasso, used at trial, reveals that he “had no reason” for thinking that a readvertisement of the contract could produce lower bids. None of he township’s witnesses could specifically recall ever having rejected a responsible party’s bid which was lower than the engineer’s estimate.

The contract was redesignated No. 3115-A and was readvertised. Three bids were received, and the lowest was again Cardell’s at $99,999.99. Once again, all bids received were rejected — this time because Manzo had not been properly notified of a change in the timetable for receiving and opening bids.

Finally, on October 1, 1969 the contract was redesignated No. 3115-B and was advertised for the third time. Six lids were received:

Manzo Contracting Co., Inc. $ 99,588.75 Mountaineer Construction

Company 104,135.25

Cardell, Inc. 104,846.00

Middlesex Concrete Products and

Excavating Company 105,560.25

Trap Rock Industries, Inc. 110.574.75

Halecrest Company 119.488.75

On October 21, 1969 contract No. 3115-B was awarded to Manzo Contracting Co., Inc.

Cardell instituted legal proceedings regarding both contracts 3306 and 3115 immediately preceding the opening of the bids on the respective successor contracts 3306-A and 3115-A. A supplemental complaint was also filed as to 3115-A. All these complaints sought an order declaring that Cardell be awarded the contracts in suit and requested injunctive relief prohibiting township from readvertising or awarding the contracts to other bidders and from doing anything in furtherance of the resolutions which rejected the various bids.

A temporary restraining order granting the requested injunctive relief was entered on August 13, 1969, and on August 26, 1969, upon township’s motion, the restraint was amended to allow for advertisement, acceptance and review of bids respecting 3306-A. Again, at township’s behest, the restraint was dissolved on October 7, 1969. Cardell strenuously resisted these motions.

Upon separate trials of these matters the trial judge found that township had wrongfully rejected Cardeil’s bids and estimated damages on both contracts 3306 and 3115 to be “the difference between the contract price and the cost of performance or production.”

With respect to 3306 the trial judge rejected Cardeil’s cost estimate of $94,000 because it “had not sustained the burden of proof” and accepted as credible the cost estimate of Eugene De Stofano, township’s supervising principal engineer, in the amount of $99,244.75 as a reasonable projection of costs. In addition to De Stefano’s estimate, the trial judge added .5% bond premium totalling $575 and $500 as the approximate salary of a construction superintendent. The trial judge specifically determined that there was no credible evidence of extra engineering costs nor of any “other item or items which might be identified or associated as overhead.” The cost of performing 3306 was therefore computed to be $100,319.75, and damages were fixed at $14,506.35.

With regard to 3115, the trial judge stated: “Consistent with the proofs in the prior case, the determination of damages will be in the amount of $8,605.55 minus the salary of Bill Jones, the Supervisor. * * *[and] the premium on the maintenance bond as submitted as $500.” Damages were fixed at $7,605.55.

Defendant’s appeal from the whole of the judgments under review is grounded upon the theories that (1) “having [expressly] reserved the right to reject all bids and having exercised its powers without fraud or bad faith, it was entitled to reject all bids” in the good-faith belief that such rejection would result in lower bids; (2) the trial court erroneously omitted general costs of overhead in computing plaintiff’s construction costs in the absence of proof that such overhead costs were inapplicable, and (3) plaintiff’s opposition to defendant’s motion to join Manzo as an interested party precluded its recovery, if any, to the difference between Manzo’s and plaintiff’s bids.

Plaintiff, in its cross-appeal, contends that the trial court’s estimation of its damages was against the weight of the evidence.

On the issue of liability, defendant argues that our bidding statute, N. J. S. A. 40:50-1, does not proscribe even the arbitrary rejection of bids provided that rejection is made in good faith. It contends that the absence of the provision contained in a predecessor bidding statute, empowering the governing body to “reject any and all bids,” L. 1912, c. 342, at 593-594, indicates the Legislature’s intention to leave “it for the municipality to specifically, rather than automatically, reserve the right to reject all bids if it subsequently wished to avail itself of that right.”

None of the cited New Jersey cases support these contentions.

In every instance in which the question of the power to reject bids has arisen, our courts have assiduously avoided deciding this “troublesome problem.” See, e. g., Scatuorchio v. Jersey City Incinerator Authority, 14 N. J. 72, 91 (1953); Cardell, Inc. v. Madison Tp., 105 N. J. Super. 594, 601 (Law Div. 1969), aff'd 105 N. J. Super. 604 (App. Div. 1969), rev’d dissenting o. b. 54 N. J. 151 (1969); Poling v. Roman, 86 N. J. Super. 484, 488-489 (Law Div. 1965). They have, however, intimated the existence of that power. See Scatuorchio, supra, 14 N. J. at 91; Cardell, supra, 105 N. J. Super. at 601; Poling, supra, 86 N. J. Super, at 488; cf. Arthur Venneri Co. v. Paterson Housing Authority, 29 N. J. 392, 402-403 (1959), and Coward v. Bayonne, 67 N. J. L. 470 (Sup. Ct. 1902). Additionally, see Schwartz and Nagle Tires v. Board of Chosen Freeholders, 6 N. J. Super. 79, 81-82 (App. Div. 1949), certif. den. 4 N. J. 127 (1950), wherein this court, in speaking of N. J. S. A. 40:2o-2, which is identical to N. J. S. A. 40:50-1 in the critical respects here considered, stated, “where the statute applies, it is mandatory, leaving no room for discretion, except to give the contract to the lowest responsible bidder or else to reject all bids.” The intimation is even stronger in regard to cases where the right to reject was reserved. See Poling, above, at 86 N. J. Super. 488-489.

Assuming the existence of the power to reject bids, the logical inquiry is to ask how such power must be exercised. Defendant suggests that arbitrariness and capriciousness is immaterial provided that the power is exercised in good faith. Although there is support for this theory in other jurisdictions — see the discussion and cases cited in Annotation, “Eight of public authorities to reject all bids for public work or contract,” 31 A. L. R. 2d 469 (1953) — our courts do not subscribe to that view. On the contrary, they have more than once criticized the arbitrary rejection of bids. Venneri, supra, 29 N. J. at 403; Scatuorchio, supra, 14 N. J. at 88; Sellitto v. Cedar Grove, 132 N. J. L. 29 (Sup. Ct. 1944); Cardell, supra, 105 N. J. Super. at 601; Poling, supra, 86 N. J. Super. at 489.

In Paterson Contracting Co. v. Hackensack, 99 N. J. L. 260 (E. & A. 1923), the Court of Errors and Appeals expressed the purpose of bidding statutes thusly:

? * * To encourage contractors to submit bids for public improvements should be the aim of every community. Numerous bidders create competition. Competition lowers the cost. If bids are rejected arbitrarily or capriciously, contractors will not take the time and expend the money necessary to submit proposals. They will infer favoritism. This will result in few bidders and higher bids. The statute providing for the award of a contract for a public improvement to the lowest responsible bidder was enacted for the protection of bidders, [at 264]

This declaration has repeatedly received juridical approbation. Venneri, supra, 29 N. J. at 402-403; Asbury Park Press v. City of Asbury Park, 23 N. J. 50 (1956); Sellitto, supra, 139 N. J. L. at 33; Cardell, supra, 105 N. J. Super., at 605; Poling, supra, 86 N. J. Super. at 489.

The unbridled power to reject bids, even where such right is served in the invitation for bidding, if allowed, would violate our public policy, contravene our Legislature’s intention in enacting the competitive bidding statute and, in fact, afford a means by which “the statute can he evaded under color of the rejection ‘of any and all bids.’ ” Armitage v. Newark, 86 N. J. L. 5, 9 (Sup. Ct. 1914). Even under the 1912 statute authorizing the rejection “of any and all bids,” such action was wrongful. Armitage, supra. It is not less so today. Scatuorchio, supra, 14 N. J. at 91; Cardell, supra, 105 N. J. Super., at 601-602; Poling, supra, 86 N. J. Super. at 488.

We do not imply that a municipal governing body is without power to reject all bids under proper circumstances. No municipal governing body could effectively engage in competitive bidding without such power. At the very least, the existence of the possibility of total rejection of bids serves as a strong inducement to bidders to keep their bids as low as circumstances permit. Suffice it to say that when a municipal governing body concludes in good faith that the purposes of the public bidding statute are being violated, it may reject all bids submitted and in its discretion order a readvertising of the contract. Furthermore, should the lowest bid substantially exceed the municipality’s cost estimate or its appropriation for the job, or should circumstances arise which might cause the municipal governing body to abandon or substantially revise the project, then a total rejection of bids might well be required.

We find that the proofs more than amply support the conclusions reached by the trial judge in each of the cases. Defendant’s rejection of plaintiffs low bids for the respective contracts was totally unwarranted.

Turning to the issue of damages, defendant argues that “plaintiff did not introduce any evidence to permit the trial judge to determine whether general overhead costs should have been included in figuring total costs. Nor, did the judge rule on the point.” This is incorrect. The proofs demonstrated that overhead was constant and, therefore, appropriately excluded. Apex Metal Stamping Co. v. Alexander & Sawyer, Inc., 48 N. J. Super. 476, 482-486 (App. Div. 1958).

Defendant’s third point claiming a mitigation of damages is unsupported and unsupportable, especially since its dilemma was self-inflicted. Plaintiff’s prompt action to review the initial rejections and to restrain readvertisement, bidding and award was consistent with the procedures specified in Richardson Engineering Co. v. Rutgers, etc., 51 N. J. 207, 219-220 (1968), and any legal or procedural impropriety adversely affecting defendant was attributable to defendant’s wrongful and precipitant conduct.

In its cross-appeal, plaintiff contends that the trial judge improperly accorded too much significance to the testimony of De Stefano and that he improperly considered estimated or speculative cost statements in preference to the actual cost statements testified to by its witnesses. In essence, plaintiff’s complaint is that the trial judge believed De Stefano and disbelieved its witnesses. Obviously, the court was not obliged to believe plaintiff.

Affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    ROBERT C. ELLIOTT, AN INFANT BY HIS GUARDIAN AD LITEM, RUTH I. ELLIOTT, AND RUTH I. ELLIOTT, INDIVIDUALLY, PLAINTIFFS-APPELLANTS, v. DOMINIC DITURSI, ALICE DITURSI, AND WINDSOR WAX COMPANY, INC., DEFENDANTS, AND PETER GALLAGHER AND HERTZ CORPORATION, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued May 25, 1971
    Decided July 19, 1971.

      Before Judges Lewis, Matthews and Mintz.

      Mr. Alfred G. Osterweil argued the cause for appellants (Messrs. Schreiber and Osterweil, attorneys; Mr. Robert S. Schulman, on the brief).

      Mr. Gerald W. Conway argued the cause for respondents (Messrs. Schreiber and Lancaster, attorneys).
   The opinion of the court was delivered by

Matthews, J. A. D.

The issue raised in this appeal is whether the granting of the motion by defendants Peter Gallagher (Gallagher) and Hertz Corporation (Hertz) for judgment n. o. v. constituted reversible error.

The facts are uncomplicated. Infant plaintiff, eight years of age, was visiting his grandmother who lived on the east side of Newkirk Avenue, North Bergen, Hudson County. Newkirk Avenue is a narrow thoroughfare on which parking on the east side is prohibited. A truck operated by Gallagher, owned by Hertz and leased to defendant Windsor Wax Company, Inc. (Windsor), was parked on the east side of Newkirk Avenue some 66 feet from its intersection with 61st Street. The truck, according to the testimony -of an investigating police officer, was parked half on the sidewalk and half on the street (slanted) in a “no parking” zone.

At about 1 p.ji. on the date in question, infant plaintiff finished his lunch and decided that he would go to see some puppies at the house across the street from his grandmother’s. He testified that he left via the back door of the house. He then walked down the alley that was between his grandmother’s house and the house next door. When he reached the street, there was a large Hertz rental truck parked to his left. The rear of the truck was nearest to him. In attempting to look for oncoming traffic, he extended his right foot about one to one and one-half feet from in back of the truck into the street. About “one second” later, a vehicle operated by defendant Dominic Ditursi (Dominic), owned by Alice Ditursi (Alice), ran over his extended foot. The child never saw the oncoming vehicle, nor did Dominic see him.

The trial judge dismissed the complaint against Windsor, and the jury brought in a verdict of no cause of action as to the Ditursis, and a verdict in favor of plaintiffs in the amounts of $2,500 and $119.50, respectively, against Gallagher and Hertz. Gallagher and Hertz thereafter moved for judgment n. o. v. which was granted.

Defendants Gallagher and Hertz argue that it was immaterial whether their vehicle was legally or illegally parked on the street since it was not an operating efficient or proximate cause of the accident. They rely heavily on Powers v. Standard Oil Co., 98 N. J. L. 730 (Sup. Ct. 1923), aff’d 98 N. J. L. 893 (E. & A. 1923), as did the trial judge in ruling on the motion for judgment n. o. v.

In Powers defendant parked its truck on the wrong side of the road and plaintiff-decedent ran out into the street from behind it and was killed. Parking was permitted and the only illegality of the defendant was that his truck was facing the wrong way. The former Supreme Court found that even if the position of the truck had been reversed and it was legally parked, the same difficulty of an obstructed vision would have been presented. Hence, we read Powers to hold that the accident would have occurred regardless of which way defendant’s truck was facing. We believe that the trial judge’s reliance on Powers, under the circumstances presented here, was misplaced.

In Beyer v. White, 22 N. J. Super. 137, 142-143 (App. Div. 1952), this court, in referring to Powers, observed that the former Supreme Court in its opinion did not hold that an immobile truck could never be capable of perpetrating harm or damage. In Beyer defendant had parked his tractor-trailer along the side of a highway on a dark night and did not set out flares as required by N. J. S. A. 39 :3-64. Plaintiff-decedent was unable to see the parked truck and struck it from the rear. This court found that defendant’s failure to obey the law raised a jury question as to his negligence.

In Lutz v. Westwood Transportation Co., 31 N. J. Super. 285 (App. Div. 1954), plaintiff was a passenger on a bus which had stopped at a corner to pick up passengers. The evidence showed the bus came to a halt two feet from the curb in violation of N. J. S. A. 39:4r-135, which requires such vehicles to stop within six inches of the curb. The bus on which plaintiff was riding was thereafter struck by another bus on the right rear corner while parked. This court affirmed the dismissal of the claim of negligence against the bus in which plaintiff was riding. Eelying on Powers, the court treated the parked bus as a mere existing condition and not a moving cause of the accident. Clearly, had the bus moved over 18 inches nearer the curb, in compliance with N. J. S. A. 39 :4r-135, it still would have been struck.

Finally, in Boody v. Good Bros., 31 N. J. Super. 439 (App. Div. 1954), defendant’s truck was parked on the wrong side of a street near an intersection. Plaintiff, a five year-old infant, crossed the street behind the truck and was struck by an oncoming vehicle. His view of oncoming traffic was blocked out by defendant’s truck. In an opinion fox this court reversing the trial judge’s dismissal of plaintiffs’ cases at their close, Justice (then Judge) Proctor wrote:

The fact that the truck was parked on the street facing the wrong direction is of no significance. Powers v. Standard Oil, 98 N. J. L. 730 (Sup. Ct. 1922). However, a jury could find that the truck, parked as it was so near to the curb line of Pearl Street, obstructed the view of pedestrians of the approach of passing vehicles on Ninth Street and also prevented the drivers of such vehicles from observing pedestrians on the crosswalk. * * * It could find that if the truck had not obstructed the views of Wilson and the infant plaintiff or the view of either of them, the boy would not have been struck by the Wilson automobile and that the parking of the truck in the manner described was a contributing element in causing the infant plaintiff’s injuries; that the parking of the truck created a dangerous situation which its owner could have anticipated might cause injuries to pedestrians at the intersection. * * * [at 442]

We find the reasoning in Boody persuasive. If, under the facts of this case, the infant plaintiff had been struck head-on in the middle of the street by the Ditursi car, then perhaps defendant’s immobile truck could have been regarded as a mere existing condition which plaintiff would be obligated to take into account when crossing the street. See Powers, above, and Lutz, above. Under the facts as established, however, it is clear that the negligent act of unlawfully parking the Hertz truck contributed to the happening of the event complained of. Thus, the jury could easily have found that since parking was not permitted on the east side of the street, plaintiff should have been able to ascertain whether cars were approaching while he was standing on the curb, and, because defendant’s truck was illegally parked as it was, partially on the sidewalk, plaintiff’s view was blocked and he was forced to walk into the street to see if traffic was approaching. Einally, plaintiff was struck in the act of ascertaining if an oncoming vehicle was approaching. Although mere parking on the wrong side of the street is not of itself consequential, that fact, coupled with the additional circumstances of the truck being parked partially on the sidewalk and the narrow nature of the street, created an issue of negligence properly submitted to the jury. The jury determined that defendants Gallagher and Hertz were negligent and we believe this result should be upheld.

The judgment non obstante veredicto entered by the trial judge is reversed and the judgment is entered on the verdict in favor of plaintiffs and against Gallagher and Hertz as rendered by the jury.


author: Labrebque, J. A. D.

text:
    STATE OF NEW JERSEY, BY THE COMMISSIONER OF TRANSPORTATION, PLAINTIFF - RESPONDENT, v. HAZEL R. BIRCH, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued June 7, 1971
    Decided July 22, 1971.

      Before Judges Sullivan, Collester and Labrecque.

      Mr. Theodore W. Geiser argued the cause for appellant (Messrs. Hughes, McElroy, Connell, Foley & Geiser, attorneys).

      Mr. Bichard L. Budin> Deputy Attorney General, argued the cause for respondent (Mr. George F. Kugler, Jr., Attorney General of Hew Jersey, attorney; Mr. Stephen Skill-man, Assistant Attorney General, of counsel; Mr. Budin, on the brief).
   The opinion of the court was delivered by

Labrebque, J. A. D.

In this condemnation case defendant Hazel R. .Birch appeals from a verdict in the sum of $22,000 for a portion of her land taken by the State in connection with the construction of the Route 35 freeway (the freeway) and damage to the remainder.

Mrs. Birch was the owner of a tract of land which lay athwart the proposed right-of-way of the freeway. The actual taking involved approximately three acres. However, the effect of the taking was to cut her property in two, leaving approximately 4 acres to the east of the right-of-way and 15 acres to the west. Her home and outbuildings were located on the westerly 15 acres, and prior to the taking access thereto was via Bentz Road, a sand and gravel road maintained by the Township of Wall, which ran in an easterly direction to Hew Bedford Road. Bentz Road comprised the easterly end of a dedicated street which extended through various properties from the Hew Bedford Road west to tire Bailey’s Corner Road, but the part to the west beyond defendant’s home was no more than a “paper” street and appears never to have been opened or worked by either the township or the adjoining owners. The distance from defendant’s house to the Bailey’s Corner Road over the route of the paper street was approximately 1,700 feet, of which 960 feet was through the property of others. The route was impassible for any sort of vehicle at the time of the taking.

The case produced the usual disagreement between the admittedly qualified experts as to the damage sustained by defendant. Her witness, Lazarus, was of the opinion that the land actually taken was worth $2,000 per acre and that the damage to the remainder was $35,000 based upon his value oí the westerly 15 acres before the taking of $41,000 and his value after of $6,000. Gall, the State’s expert, estimated the value of the land taken to be $7,640 and the damage to the remainder to be $6,860, a total of $14,500. As noted, the jury awarded $22,000.

The wide divergence between the opinions of the experts was occasioned by their inability to agree upon the cost of curing the resultant landlocked condition of defendant’s westerly 15 acres. The State’s expert, while not disputing its landlocked character, averred that this could be relieved by the construction of a 20-foot wide gravel road leading to the Bailey’s Corner Boad and that such a road could be built for $6,860. He appears to have assumed that it would be maintained by the township. Defendant countered that the construction of such a road would be subject to a miniber of contingencies, including, in addition to the cost of construction, whether she would have the right to construct such a road, whether her right of access to Bailey’s Corner Boad over the paper street would survive a vacation by the township, and whether the township would maintain it (as it had been maintaining the easterly end of Bentz Boad for some 20 years). Ancillary to resolution of the cited questions was whether the land subdivision ordinance of the township governed the size and type of the road proposed to be constructed, and, if not, whether the township could require defendant, as a prerequisite to its taking over and assuming the maintenance of the new road, to comply with the street standards set forth in the subdivision ordinance. There was testimony that at the time the original taking was determined upon, the State had contemplated building the access road itself, but upon being confronted with a demand by the township authorities that it be constructed in conformity with the street standards sot out in the subdivision ordinance, it elected not to do so but to leave the issue of the building of the road to the owner.

The appeal presents a single, key issue: whether it was prejudicial error to instruct the jury, both during the trial and in the charge, that the land subdivision ordinance was not applicable to the case and plaj’ed no part therein, and that Mrs. Birch did not have to comply with the ordinance in building the access road. In the charge the jury was instructed, in substance if not expressly, that if defendant’s expert based “his after value upon the expense to which Mrs. Birch would be put to comply with the land subdivision ordinance,” there was no basis for that portion of his testimony. Defendant contends that this had the effect of emasculating the testimony of her expert, and led to the allegedly inadequate verdict returned by the jury.

Erom our consideration of the proofs in the light of the issues involved, we are inclined to agree that the challenged instruction was error, and that the interest of justice call for a new trial.

Defendant was entitled to just compensation. N. J. Const. (1947), Art. I, par. 1. In general, had the whole of her lands been taken, her damages would have amounted to the fair market value of the property as of the date of the taking, determined by what would be agreeable between a willing seller and a willing buyer, neither being under any compulsion. State v. Speare, 86 N. J. Super. 565, 572 (App. Div. 1965), certif. den. 45 N. J. 589 (1965). Where, as here, there was only a partial taking, the measure of damages was the difference between the fair market value, as above defined, of the whole property before the taking and the fair market value of the remainder after the taking. Port of N. Y. Authority v. Howell, 59 N. J. Super. 343, 348 (Law Div. 1960), aff’d 68 N. J. Super. 559 (App. Div. 1961), certif. den. 36 N. J. 144 (1961). The proximate effect of the taking was also to be taken into consideration in ascertaining the value of the remaining land. Ridgewood v. Sreel Investment Corp., 28 N. J. 121 (1958); State v. Speere, supra, 86 N. J. Super. at 573. Since the denial of access to the freeway resulted in the greater part of defendant’s property being landlocked, the cost of ameliorating or curing that condition was an important factor to be considered in arriving at its fair market value. Any significant restriction on the jury’s consideration of the proofs on that issue, if found to be erroneous, would go to the very heart of the matter it was impanelled to decide.

The State urges that since the court was dealing with a dedicated street, and the two remaining parts of defendant’s land had been severed by court order (condemnation), the court properly charged that the subdivision ordinance did not apply and that Mrs. Birch did not have to comply with it in building the proposed access road. It further argues that as a lot owner adjoining the dedicated way, she would always retain a right of access over it to Bailey’s Corner Road by reason of the dedication. Wholly aside from the possibly nonbinding effect of the court’s pronouncement upon the Township of Wall (which did not participate in the litigation), the difficulty with the State’s position is that the township had already determined administratively to compel compliance with most of the street standards set forth in the subdivision ordinance. Of even more importance, the proofs were silent as to the nature and extent of the dedication of wliat came to he known as Bente Road.

The dedication of private lands to public use is essentially a matter of intent. Haven Homes v. Raritan Tp., 19 N. J. 239, 246 (1955). Although acceptance of a dedication is a necessary prerequisite to imposing responsibility upon a municipality and vesting any present right of use in the public, the dedication is nevertheless complete, so far as the landowner is concerned, when he has manifested an intent to devote the land to public use. Velasco v. Goldman Builders, Inc., 93 N. J. Super. 123, 134 (App. Div. 1966). Notwithstanding nonacceptance, the power of acceptance remains with the public authorities until such time as they reject or vacate the dedicated land by official municipal legislative action. See N. J. S. A. 40:67-19; Highway Holding Co. v. Yara Engineering Corp., 22 N. J. 119, 126 (1956); Cunningham and Tischler, “Dedication of Land in New Jersey,” 15 Rutgers L. Rev. 377 (1961).

In certain instances, a dedication also gives rise to private rights. When a developer plots a tract of land into building lots and prepares a map disclosing streets abutting such lots, if he conveys by reference to the map and the purchaser relies thereon, an intention to dedicate such streets may be assumed. Long Branch v. Toovey, 104 N. J. L. 335, 337 (E. & A. 1927); Cunningham and Tischler, supra, at 386-388. In such case, even in the absence of an acceptance by the municipal authorities or in case of a vacation, the individual purchaser of a building lot abutting one of such streets in a development retains a private easement to the extent of a perpetual and indefeasible right of access to -his lot over the dedicated street. At the least this amounts to a right of passage from his lot to the next adjoining public street on each side. Velasco v. Goldman Builders, Inc., supra, 93 N. J. Super., at 139; Highway Holding Co. v. Yara Engineering Corp., supra, 22 N. J. at 126 — 128, 134.

While generally an offer of dedication is irrevocable, the actual dedication to public use is consummated when the dedication is accepted by an appropriate ordinance or resolution of the municipality. See N. J. S. A. 40:67-l(b); Velasco v. Goldman Builders, Inc., supra, 93 N. J. Super. at 137. Acceptance may also be effectuated by other official conduct which manifests an intention to treat the land in question as dedicated to public use. Id.; Cunningham and Tischler, supra, 15 Rutgers L. Rev., at 398. Here the trial judge found, and properly so, that there had been an acceptance of the portion of Bentz Road running easterly from defendant’s house, through its improvement and maintenance by the Township of Wall, but that the unopened portion running westerly still remained a paper street. See George Van Tassel’s, etc., Inc. v. Bloomfield, 8 N. J. Super. 524, 530 (Ch. Div. 1950) ; cf. Sarty v. Millburn Tp., 28 N. J. Super. 199, 205-206 (App. Div. 1953).

As noted, the test to be applied in arriving at the amount of damages flowing from the taking is based upon fair market value. The nature of the dedication here involved, as bearing upon the rights of the owner, vis ft vis adjoining owners in the event of a vacation, would appear to be of the utmost importance to a prospective willing purchaser not required to buy in fixing the fair market price to be paid. Of even greater importance would be the distance necessary to be travelled in order to provide a new access to Bailey’s Corner Eoad, the expense involved in constructing the new road, and whether the obligation of maintaining it was to devolve upon the owner or upon the municipality. Here it is clear that in order to reach Bailey’s Corner Eoad over the course of the paper street defendant will be required to traverse 1,700 feet, of which 960 feet would be over land not her own. In the absence of proof in the record to establish the specifics of the dedication it is impossible to determine her rights in the event the municipality should in the future determine, for good and sufficient reasons, upon vacation of the dedication of the unaccepted portion of Bentz Eoad. N. J. S. A. 40:67 — 19. In the absence of proof to such effect we may assume that defendant’s plot was not sold by reference to a map on which Bentz Eoad was delineated as a street.

Here, the expense of construction of the road and the owner’s obligation as to its future maintenance depended, not so much upon whether the severance came within the ambit of the township’s land subdivision ordinance, but whether the owner, as a prerequisite to acceptance of the road and its maintenance thereafter by the township, would be required to construct it in conformity with certain standards set forth in that ordinance. Clearly, the township would have the right to refuse to accept the dedication and assume the maintenance of the road unless it met certain reasonable standards. Cf. Kligman v. Lautman, 98 N. J. Super. 344 (App. Div. 1967), aff’d 53 N. J. 517 (1969). It was not limited by the fact that the east end of Bentz Road, which it had been maintaining for some 20 years, did not comply with such standards.

It is clear from undisputed testimony on both sides that the township was insisting (with certain exceptions not here relevant) upon the standards set forth in the subdivision ordinance. Without passing upon their reasonableness, we are convinced that the instruction that the ordinance played no part in the case and that Mrs. Birch did not have to comply with its provisions was erroneous. When considered in the light of the testimony of Gall, the State’s expert, it had a tendency to mislead the jury into believing that the township was agreeable to assuming the maintenance of a 1,700-foot access road to Bailey’s Corner Road, even though it were to be constructed of but six inches of gravel to a width of only 20 feet and to be without curbs, drainage, sewer or water mains. Such was not the case.

Eor the foregoing reasons the judgment is reversed and the matter remanded for a new trial.

Since the case must be retried, we call attention to certain admonitions to the jury by counsel for the State to the effect that “this is going to be a landmark ease * * *. Your determination of the questions that come out here during the course of this trial will largely determine how much the State Treasury will have to pay in similar situations.” “There is a very important issue involved here, because this situation is going to arise again. Apparently it hasn’t arisen before. The State is going to be faced with similar situations. How much is the State going to have to pay in the future for situations like this? We know where the money is coming from.” Such admonitions had no place in the ease and should not be repeated.

The usual costs, but not counsel fees or expert fees, to defendant.

      We are advised that the condemnation commission had awarded $48,900.


author: Fritz, J. A. D.

text:
    HOUSING AUTHORITY OF THE BOROUGH OF CLEMENTON, A BODY POLITIC OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ALEXANDER MYERS AND ANN MYERS, HIS WIFE, ANN’S DRESS SHOP, G. & G. DRESS COMPANY, INC., DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued April 5, 1971
    Decided August 2, 1971.

      Before Judges Goldmann, Leonard and Fritz.

      Mr. Michael D. Varbalow argued the cause for appellants {Mr. Joseph R. Livesey on the brief; Messrs. Jubanyik, Jubanyik & Varbalow, attorneys; Messrs. Kates, Livesey & Edelstein, of the Pennsylvania Bar, of counsel).

      Mr. Charles A. Little argued the cause for respondent (Messrs. Bleakly, Stockwell, Zink & McGeary, attorneys).
   The opinion of the court was delivered by

Fritz, J. A. D.

In addition to other questions presented in this appeal, we are faced squarely with the question of whether the expenses of moving industrial equipment constitute an item of “just compensation” in condemnation proceedings. Until the decision in State v. Gallant, 42 N. J. 583 (1964), there seemed no doubt of the negative answer to this inquiry. American Salvage Company v. Housing Authority of Newark, 14 N. J. 271 (1954). Gallant and the very recent pronouncements in Jersey City Redevelopment Agency v. Kugler, 58 N. J. 374 (1971) have supplied that doubt, and it is with that posture of things that we are here concerned.

In this action, plaintiff Housing Authority, acting in accordance with proper statutory warrant in connection with a federally funded urban redevelopment project, condemned defendants’ property for proper public purpose.

The premises in question were owned by defendants and were operated as a dress factory and retail outlet store. The building which housed defendants’ operations was furnished with equipment typical of that necessary to the dress manufacturing operation there conducted and the retail store. This included, among other equipment, 6 sewing machine line systems, 11 sewing machines and tables, 2 cutting tables, 53 special lighting fixtures, 4 dressing booths, 5 garment hang rails ceiling-anchored, 1 garment hang rail floor-anchored, and 5 other garment rails, a work bench, a press table and hand irons which included steam piping and electric wiring and which was floor-anchored, a press which was steam and electric-connected, 2 steam boilers, and shelving and a. mirror which were wall-anchored.

At the condemnation hearing before commissioners an award of $50,000 was entered. Defendants appealed, plaintiff cross-appealed, and a jury trial followed. By the time of the trial defendants had removed the equipment to a different location where they had reinstalled it and from whence they had continued the dressmaking and selling operation.

At the trial defendants offered an expert to prove “the value of the property at the time of taking,” including the value of the “machinery and equipment and various other pieces of equipment or fixtures, as you might call them,” which defendants contended “were an integral part of this building” and, therefore, an element contributing to the value of the premises. The court sustained an objection to the offer.

Defendants then made a “secondary offer” to prove the costs of removal. Objection to this was also sustained.

In his rulings the trial judge distinguished Gallant on the basis that defendants had chosen to remove the equipment from the premises. He relied on language from American Salvage Company where it is said:

The owner is ordinarily obliged to pay the expense of the removal of any movable personalty that he does not decide to abandon. This is because it is generally held that damages for injury to such personalty not included in the taking or the expense of moving it are not proper elements of compensation. Cf. City of Newark v. Cook, 100 N. J. Eq. 581 (E. & A. 1927), affirming 99 N. J. Eq. 527 (Ch. 1926) ; City of Newark v. Eisner, 100 N. J. Eq. 101 (Ch. 1926) ; 18 Am. Jur., Eminent Domain, sec. 255, n. 894; Annotations 34 A. L. B. 1523; 156 A. L. R. 397. On the other hand, the owner is at liberty to abandon such personalty as he chooses when he surrenders possession, and in such case the condemnor takes the land as it is and must remove the personalty at its own expense. [ 14 N. J. at 280]

We turn first to a consideration of whether an ownereondemnee may demonstrate the value of the premises taken by including in proof of such value its enhancement attributable to personal property used by the owner in his operations on the premises. The policy considerations involved in the question, the growth of the law and its present state are all cogently synthesized in State v. Gallant, supra. Despite prior pronouncements, for the most part collated in Gallant, we need look no further back than that relatively recent case.

Plaintiff, realizing as we do that Gallant gently commences a refurbishment of condemnation doctrine by substituting contemporary considerations for anachronistic aphorism, attacks the application of Gallant here in a manner sufficiently interesting to be worthy of comment. Plaintiff first points out, correctly enough, that the Gallant facts and the facts here are different, at least to the extent that in Gallant the machinery was difficult and expensive to remove whereas here the machinery was “easily dismantled and transported to a new location and reassembled.” (We pass for the moment the fact — unmentioned by plaintiff in its brief — that defendants’ proffered proof showed the cost of this movement to he almost half the value of the freehold as determined by the jury.) Erom there plaintiff argues that “it can be concluded that before condemnation the machinery was not an integral and valuable part of a going business.”

Such an argument not only appears to us to involve a non sequitur of some magnitude, but as an effort to distinguish Gallant that is frustrated by the specific language of the case: “We disagree [with the Appellate Division], however, that the test for compensation of the looms is their removability.” (42 N. J. at 586).

If not removability, what then? Gallant provides the answer:

* * * Where, therefore, a building and industrial machinery housed therein constitute a functional unit, and the difference between the value of the building with such articles and without them, is substantial, compensation for the taking should reflect that enhanced value. This, rather than the physical mode of annexation to the freehold is the critical test in eminent domain cases. See Harvey Textile Co. v. Hill, 135 Conn. 686, 67 A. 2d 851 (Sup. Ct. Err. 1949) ; Jackson v. State, supra [213 N. Y. 34, 106 N. E. 758, L. R. A. 1915D, 492 (Ct. of App. 1914)]. [at 590]

The definition of functional unit is provided. The looms in question in Gallant were said to be “an integral and valuable part of a going business housed in defendants’ factory” (at 589).

The inevitability of the Gallant holding was heralded in prior cases. Ridgewood v. Sreel Investment Corp., 28 N. J. 121 (1958) recognized function as an element of value. Less directly, but for a long time, natural attributes on the land, such as trees and topsoil, were acknowledged as an element of value capable of enhancing the value of the land, even though their intrinsic value, constituting as it does a part of the realty, could not be separately proved. W. A. Manda, Inc. v. D., L. & W. R. Co., 89 N. J. L. 327, 329 (E. & A. 1916); Tennessee Gas Transmission Co. v. Maze, 45 N. J. Super. 496, 503 (App. Div. 1957). So it was not really a departure from traditional concepts when Gallant held that where personalty which is an integral part of a going business enhances the freehold, the unwilling condemnee should be compensated for the enhancement valuable to him and of which he is being deprived. Cf. State by State Highway Com’r v. Burnett, 24 N. J. 280 (1957).

We have no doubt that defendants here fit within that rule. Accordingly, the question becomes: Does a defendant’s removal of the personalty after condemnation —• at his expense — deprive him of his right thus to be compensated. We think it should not. Holding as we do, consistent with Gallant, that the condemnee is entitled at the outset to compensation for the value of his land as enhanced by the personalty, we see no logical reason then to penalize him because he chooses to salvage some use from the personalty — at his own expense — and not leave it behind to become the condemnor’s economic burden to remove. American Salvage, supra. Viewed from the summit of practicality, personalty left behind is generally of little value to a condemnor and is frequently an expense. It would be illogical to compel a condemnor to assume the expense of disposing of the personalty in a situation where the condemnee was willing to undertake the burden, by a rule which also penalized the condemnee unless he left the personalty behind. We discuss below the occasional situation where the condemnor may want the personalty.

Just compensation for value to the owner of a business, as enhanced by personalty he has there utilized as a functional unit with the building and land, does no more than compensate the owner for his loss. His loss with respect to those premises is no less because he chooses at his own expense to remove the personalty.

Nor is such a concept at odds with the equivalency established in our cases between just compensation and fair market value. City of Trenton v. Lenzner, 16 N. J. 465, 476 (1954). There value is described as follows:

* * * In Kimball Laundry Co. v. United States, 338 U. S. 1, 5, 69 S. Ct. 1434, 93 L. Ed. 1765, 1771 (1949), the court pointed out that “value” has many meanings, that oftentimes the value to the owner differs from the value to the acquirer, but that most things have a general demand which give them a value transferable from one owner to another. Ordinarily this transferable value may be measured by the price which, in all probability, would voluntarily be agreed upon in fair negotiations between an owner willing (but not forced) to sell and a buyer willing (but not forced) to buy; and it is this price which is generally said to determine the fair amount of compensation to be paid to the owner. See East Ridgelawn Cemetery v. Winne, 11 N. J. 459, 469 (1953) ; Jahr, supra. [Eminent Domain (1953)], 100. While it has been pointed out that these concepts are somewhat indefinite, it may well be that their flexibility is the very thing which will best serve to attain the goal in eminent domain proceedings of “justice and indemnity in each particular ease.” See Westchester Co. Park Comm. v. United States, 143 F. 2d 688, 692 (2d Cir. 1944), certiorari denied, 323 U. S. 726, 65 S. Ct. 59, 89 L. Ed. 583 (1944).

Cf. Jersey City Redevelopment Agency v. Kugler, supra, where value is described as "the full equivalent in money of the property taken.” [58 N. J. at 378]

We have no doubt that, in terms of City of Trenton v. Lenzner, the willing buyer purchasing defendants’ premises in a free sale would be expected to include in the purchase price the enhancement of the value of the property by reason of the personalty in place. Cf. State v. Gallant, supra, where it is said:

* * An owner, who is under no duress, and where the building and machinery are a functional unit, would undoubtedly sell only at a price which would reflect that increased value. * * *. [42 N. J. at 590]

To offer less to an unwilling seller forced by law to sell (or at best relocate) a going business appears to be a gross inequity in the nature of that at least implicitly proscribed in Jersey City Redevelopment Agency.

We turn to the alternate and separate problem of reimbursement for moving expenses as an item of damage in eminent domain. The rule in New Jersey has been said to be that the expense of moving personalty is not a proper element of compensation. American Salvage Company, supra, 14 N. J. at 289; State v. Gallant, supra, 42 N. J. at 587; Port of N. Y. Authority v. Howell, 59 N. J. Super. 343, 348-349 (Law Div. 1960), aff’d 68 N. J. Super. 559 (App. Div. 1961), certif. den. 36 N. J. 144 (1961); Newark v. Eisner, 100 N. J. Eq. 101, 103 (Ch. 1926). It appears beyond dispute that elsewhere, except where a different rule is imposed by statute, this is the “greatly predominant” view. 27 Am. Jur. 2d 102, Eminent Domain, § 293; 29A C. J. S. Eminent Domain § 164, p. 713. The rule has been sharply criticized. See, e. g-, Aloi and Goldberg, “A Eeexamination of Value, Good Will, and Business Losses in Eminent Domain,” 53 Cornell L. Rev. 604 (1968). And there is authority expressly to the contrary on the basis of constitutional mandate of just compensation. Jacksonville Expressway Authority v. Henry G. Du Pree Co., 108 So. 2d 289 (Fla. Sup. Ct. 1958), and its annotation at 69 A. L. R. 2d 1445.

Without denying that certain elements of loss to a going business have been sufficiently speculative to prevent their consideration as damages in condemnation, such as loss of profits and good will, we are not convinced that the rule procribing an allowance for moving expenses said to be extant in New Jersey as noted above appeared as a binding judicial proclamation prior to American Salvage Company or since.

Newark v. Cook, 99 N. J. Eq. 527 (Ch. 1926), aff'd 100 N. J. Eq. 581 (E. & A. 1927), cert. denied McEuen v. Cook, 274 U. S. 757, 47 S. Ct. 768, 71 L. Ed. 1337 (1927), the bedrock on which subsequent acceptance of “the rule” was constructed, concerned litigation among conflicting claimants arguing as to the apportionment of a condemnation award in a fixed amount previous^ made. In considering the problems thus involved (and without a suggestion otherwise in the opinion that removal costs as such were involved; an evaluation of good will does appear among the issues), the court posed a “remaining question” as to whether the tenants were “entitled to compensation for the loss of their business, profits, good will, fixtures and cost of removal” and answered it in the negative. Worthy of careful observation in this first homily from which the rule has often been repeated is the vice-chancellor’s statement with regard to his holding, “And, while no reported cases in our own courts have been referred to, this rule, as I understand, has always been applied in this state.” 99 N. J. Eq. at 537. He believed the matter to be strictly for the Legislature and his decision as absolutely controlled by the then existing statute, a concept not in accord with our present view of the overriding constitutional requirements of “just compensation” (Jersey City Redevelopment Agency v. Kugler, supra) and the privilege and obligation of the courts to decide what constitutes just compensation, about which more appears below. And finally, he acknowledged that such a rule “works hardships.”

Neither the opinion in Eisner, another battle between tenants for apportionment of a prior condemnation award, nor that in Howell, contains any suggestion of a factual moving expenses problem, and in each the statement with regard to noncompensability of moving costs is lumped generically with such things as loss of profits and good will. With like effect. New Jersey Highway Authority v. J. & F. Holding Co., 40 N. J. Super. 309 (App. Div. 1956), cited in Gallant, concerned an apportionment action between contesting owner and tenant with respect to a condemnation award, and no suggestion of a particular removal expenses problem appears, the statement with respect to the unavailability of a claim by the tenant for such being again lumped with comment on loss of business, profits and good will. Wayne Co., Inc. v. Newo, Inc., 75 N. J. Super. 100 (App. Div. 1962), also cited in Gallant, is of the same nature; Newark v. Cook is quoted.

We have no quarrel with a rule disallowing alleged damages of a speculative nature, such as loss of business and good will. On the other hand, in the case of moving expenses which are actual and demonstrable, so that any complaint of their speculative and hypothetical nature disappears, the only reasonable argument lor their exclusion also disappears.

To the extent that the rule excluding reasonable moving expenses as damages might have been thought to be the law in New Jersey, we believe it no longer viable, and hold to the contrary. Recognizing that the Appellate Division may not declare the law contrary to pronouncements of our Supreme Court and eschewing absolutely an arrogation of the exclusive right of the Supreme Court to alter the law as thus announced, we express our opinion that the result in State v. Gallant in general and the reference to and quotation therein from the Note, 36 Oregon L. Rev. 180, at pp. 180-181 (1957) [42 N. J. at 588] in particular, have implicitly overruled Newark v. Cook and the adoption of its “rule” in American Salvage Co. v. Housing Authority of Newark. While an easier escape for this court might be found in lip service to American Salvage, despite our conviction that the Supreme Court has renounced the principle applied there solely on the basis of the Cook and Eisner cases, as far as New Jersey precedent is concerned, we believe that to adopt such a position would be an abrogation of our function to determine the law as it exists at the present moment and not as it was thought to he in 1954. As aptly put by Justice Hall in Roadway Express, Inc. v. Director, Division of Taxation, 50 N. J. 471 (1967), app. dism. 390 U. S. 745, 88 S. Ct. 1443, 20 L. Ed. 2d 276 (1968) :

* * * Our obligation is therefore that so well expressed by Judge Learned Hand in his dissenting opinion on an earlier phrase of Spec-tor in the Court of Appeals for the Second Circuit:
* * * I conceive that the measure of La lower court’s] duty is to divine, as best it can, what would be the event of an appeal [to the United States Supreme Court! in the case before it. (Spector Motor Service, Inc. v. Walsh, 139 F. 2d 809, 823 (1944)). [at 475]

The legislative and constitutional mandates center around the requirement of “just compensation,” and both are satisfied with the xesnlt here reached. Ascertainment of that which is just compensation is a judicial function. United States v. New River Collieries Co., 262 U. S. 341, 343-344, 43 S. Ct. 565, 67 L. Ed. 1014 (1923). A “margin of discretion” exists for both courts and the Legislature in order that they may assure the provision of just compensation, and each may in this effort prescribe a rule of damages more favorable to the landowner than that which would satisfy the minimum requirement of the Constitution. Jersey City Redevelopment Agency v. Kugler, supra, 58 N. J. at 384. As noted above, just compensation has been equated with fair market value, and value as used in that context has been variously described and said to have “many meanings.” City of Trenton v. Lenzner, supra, 16 N. J. at 476. Indeed, in Lenzner (which succeeded American Salvage by 11 months) an inescapable portent of the direction of the law in this regard appeared when that court, speaking through Justice Jacobs, said:

* * * More significant is the increasing tendency displayed in recent eases of giving fair and weighty consideration to the consequential loss of business as an element of the compensation rightly due to the owner. See Kimball Laundry Co. v. United States, supra; Housing Authority of City of Bridgeport v. Lustig, [139 Conn. 73, 90 A. 2d 169,] supra; 18 U. of Chi. L. Rev. 349 (1951) ; 35 Va. L. Rev. 1059 (1949). [16 N. J. at 477]

Ten years later that farseeing prediction achieved reality when Gallant injected indemnification into the formula for just compensation thusly:

There is no logical reason, however, why a condemnee, although compensated for the market value of his land and buildings, should suffer all other loss incidental to the taking thereof for the public benefit. * * *. [42 N. J. at 588]

It is not without significance that this statement followed immediately after three paragraphs dealing specifically with reimbursement for moving expenses.

It is in order to accommodate such an awakening to contemporary realities and such an adjustment to our changing times — which have seen an increasingly broad ntilization of the power of eminent domain by a vastly greater number of entities concerned with public purpose, coupled with an ever-expanding impact upon domestic economic factors —- that the rule of flexibility and the avoidance of a fixed standard has been formulated. As appears in Jersey City Redevelopment Agency,

* * * There is uo precise and inflexible rule for the assessment of just compensation. The Constitution does not contain any fixed standard of fairness by which it must be measured. Courts have been careful not to reduce the concept to a formula. The effort has been to find working rules and practical standards that will accomplish substantial justice such as, but not limited to, market value. United States v. Cors, supra, 337 U. S. [325] at 332, 69 S. Ct. 1086, 93 L. Ed. [1392] at 1398; 27 Am. Jur. 2d, supra, § 267, pp. 55-57. [58 N. J. at 383-384]

As has been said, the establishment of a relationship of indemnification to just compensation is accordant with constitutional and legislative mandate. The Constitution speaks merely in terms of just compensation. N. J. Const. (1947), Art. I, par. 20. The Legislature, in defining the duties of condemnation commissioners in N. J. S. A. 20 :1-9, supplies the following informative instruction:

* * * Thereafter they [the condemnation commissioners] shall meet at the time and place appointed and proceed to view and examine the land or oilier property and make a just and equitable appraisement of the value of the same, and an assessment of the amount to be paid by the plaintiff for the land or other property and damages as aforesaid, * * [Emphasis supplied]

Consequential damages for remainder lands have long been allowed. Stale v. Gallant, supra. Legislative concern for the hardship inflicted in removal cases has been statutorily expressed in N. J. S. A. 27:8-7 and -8 and 52:31B-4.

The Legislature cannot in any event constitutionally mandate the payment of less than “just compensation” as the courts determine that to be. Jersey City Redevelopment Agency v. Kugler, supra.

In thus holding that a property owner may demonstrate the value of his property for condemnation purposes as enhanced by industrial equipment which is part -of a functional unit therein, or that he may prove as damages in lieu thereof the reasonable moving expenses, we do not suggest that both are available. To the contrary the allowance of both would exceed just compensation and constitute an unfair penalty to the condemnor. As a matter of fact, in the event the condemnor is willing to pay the value of the property as enhanced by the personalty in place, the election as to whether the personalty may be removed should be that of the condemnor and not of the eondemnee. This is no more than to say that if the condemnor is willing to buy the personalty, it should be permitted to do so. Otherwise, as appears from all the foregoing, it should be compelled to pay removal expenses without undertaking the unfair burden of the value of the property as enhanced by the personalty.

Consistent with the legislative formula of the cost of the taking and damages with respect to the land or other property taken, the moving expenses may in no event exceed the value attributed to enhancement of the value of the property by the personalty. We are satisfied that these limitations do not present a danger of the eondemnee receiving less than just compensation.

Eeversed and remanded for a new trial in conformity with the foregoing.

      Defendants, in their brief, “do not take the position” that the rule allowing moving costs, said by them to be extant “in some jurisdictions,” should “apply in this action.” But the offer was made, and the objection sustained. In view of the fact that the personalty was removed, we believe we must consider the problem.


author: Herbert, J. S. C.

text:
    GIZELLA STRULOWITZ AND HERMAN STRULOWITZ, PLAINTIFFS, v. SUSAN B. ANTHONY BUILDING AND LOAN ASSOCIATION, NOW KNOWN AS SUSAN B. ANTHONY SAVINGS AND LOAN ASSOCIATION, A BANKING ASSOCIATION OF THE STATE OF NEW JERSEY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided July 9, 1971.

      Mr. Milton C. Yarrow, attorney for plaintiffs.

      Miss Jennie E. Precker for defendant (Messrs. Precker & Precker, attorneys; Mr. Alfred C. Clapp, of counsel.
   Herbert, J. S. C.

On April 6, 1971 plaintiffs brought this action to have the court determine the amount due on a mortgage plaintiffs had given to defendant in 1959 and for cancellation of that mortgage upon payment of the amount so determined. Because a contract had been made to sell the mortgaged premises free and clear of liens, plaintiffs sought interlocutory relief and, after argument on the adjourned return date of an order to show cause, they were ordered to deposit with the clerk of the court the full amount defendant claimed to be due on the mortgage debt ($5,930.17), and it was further ordered, among other things, that the lien of the mortgage be transferred to the money on deposit and the real estate relieved of the lien.

There has now been a summary hearing to resolve the basic dispute over the amount due from plaintiffs to defendant. The difference between the two positions is small in dollars though important in principle to both plaintiffs and defendant.

It is argued for plaintiffs that they made, on March 10, 1971, a tender of the amount then claimed by defendant to be due and that their tender is entitled to recognition as an act which stopped the running of interest. On January 29, 1971 defendant wrote plaintiffs a letter containing this statement of the mortgage account:

Balance due as of February 1, 1971 $5,651.88

Interest 2/1/71 28.26

Premium for repayment of mortgage 169.56

5,849.70

Interest per diem .94

On March 10, 1971 plaintiffs’ attorney wrote to defendant on behalf of his clients. He enclosed a certified check to the order of defendant, but his letter included these paragraphs :

The mortgagors are paying this amount under protest inasmuch as they claim the account has not given them proper credits for tax payments and other charges.
* * * A- * * *
Kindly furnish me with the mortgage properly endorsed for cancellation, together with the bond, insurance policies and pertinent documents you hold in this matter.

On March 12 the solicitor of defendant returned the certified check. Her covering letter read in part:

I am returning the check herewith as the association will not accept repayment of a mortgage under protest. In addition thereto, I wish to advise you that the mortgage is in the process of being foreclosed. The mortgagors will have to pay all foreclosure charges.

It may be noted parenthetically that no foreclosure suit had been started at the time, although a complaint was later filed on March 30, 1971. If plaintiffs here had known of that filing they could have sought appropriate relief in the foreclosure action.

At the hearing it was conceded that if there had been no protest registered in the letter which accompanied plaintiffs5 certified cheek, the tender would have been proper and acceptable to defendant. The case gets down to this: Can a mortgagee — specifically a savings and loan association — properly refuse to accept payment of the amount claimed to be due on the mortgage if there is a protest made as to the correctness of the claimed amount at the time the payment is offered? No New Jersey cases dealing with this question have been found. However, decisions in other jurisdictions have taken the position urged by the plaintiffs here: a tender of the amount claimed by the creditor is not made ineffective by being coupled with a protest. Manning v. Lunn & Thrupp, 2 Car. & K. 13; 175 Eng. Repr. 6 (1845); Scott v. Uxbridge & Rickmansworth Railway Co., L. R. 1 C. P. 596 (1866); Sweny v. Smith, L. R. 7 Eq. 324 (1869); Jaynes v. Heron, 46 N. M. 431, 130 P. 2d 29, 142 A. L. R. 1191 (Sup. Ct. 1942); Smith-Wogan Hardware & Implement Co. v. Bice, 34 Okl. 294, 125 P. 456 (Sup. Ct. 1912).

Williston makes this statement:

Moreover, a debtor may, when making an absolute tender, protest that the amount claimed by the creditor and tendered by himself is •excessive and thereby indicate that his payment is not “voluntary,” thus reserving a right to sue to recover a portion of what he tenders. [6 Williston On Contracts (rev. ed 1938), § 1814 at 5145, •citing, inter alia, Scott v. Uxbridge and Sweny v. Smith, supra.]

The courts have given no special position to a secured creditor who rejects a tender made under protest. In Manning v. Lunn & Thrupp, supra, a landlord was tendered in coin, but under protest, the rent he demanded. He refused to take the money and subsequently asserted a landlord’s lien by seizing the tenant’s goods. The tenant then sued for damages for the taking. At trial Pollock, C. B.? said:

If a man makes a tender, he cannot do it in such terms as by the taking of the money he causes the other party to make any admission, because, if he does so, it is a conditional tender, and therefore bad. * * *. A tender under protest is just as good as any other tender; as the person tendering merely says thereby, “I do not mean to preclude myself from recovering this money back again, if I can.” [175 Eng. Repr. at 7]

There was left to the jury only the question of the tenant’s damages for the landlord’s taking of the goods.

In Jaynes v. Heron, supra, tax liens were involved. There, plaintiff sued to quiet title to lands which he claimed to own by virtue of a tax sale certificate and deed based thereon. Defendants challenged the validity of the certificate and deed on the ground that they had redeemed their lands. They proved that they had offered to pay the county treasurer the amount called for by the certificate, provided the treasurer would accept such payment as made under protest. No other conditions were imposed. However, the treasurer refused to take the offered redemption money subject to the protest, and the land was sold for nonpayment of taxes. The court rejected plaintiff’s argument that tender of payment under protest constituted a conditional and therefore ineffective tender, and held that defendants had made a good tender and were entitled to redeem. This observation pertinent to a mortgage debt is in the opinion:

We think the following statement from Hunt on Tender points out the difference between “Offer made under protest” which does not effect the tender, and some conditional offers which will invalidate a tender:
Sec. 243. Offer under protest. — There are decisions holding that a tender under protest, reserving the right to dispute the amount due, if it does not impose any conditions on the creditor, is good. As when the mortgagee is in possession and the mortgagor makes a tender of the amount claimed to he due, and at the same time reserving the right to review their account. [130 P. 2d at 34, 142 A. L. R. at 1196]

Though the only reason given for rejecting plaintiffs’ tender of March 10, 1971 was the protest contained in the letter which accompanied the certified check, defendant now agues that the final paragraph of the letter attached a condition to the offer to pay and made the tender ineffectual. Noyes v. Wyckoff, 114 N. Y. 204, 21 N. E. 158 (Ct. App. 1889) is cited.

The paragraph in question is not expressed in terms of a demand or condition but reads as follows:

Kindly furnish me with the mortgage properly endorsed for cancellation, together with the bond, insurance policies and pertinent documents you hold in this matter.

That appears to be nothing more than the usual request for a turn-over of papers to wind up formally a mortgage transaction which has been closed by payment of the mortgage in full. However, if the quoted paragraph can be regarded as attaching a condition to the acceptance of the check, then it is my view that the old and strict doctrine stated in Noyes v. Wyckoff should not be followed. Williston says:

Allowance of a condition in a tender by a mortgagor that a satisfaction piece or discharge be executed involves the same difficulty in theory as a condition of the execution of a receipt on tender of payment of any debt; but it is so vital in the case of a mortgage to have satisfaction entered of record that statutes in many states make a mortgagee liable for damages or a penalty if he refuses to execute a release, and though many, if not most of these statutes do not in terms require concurrent performance, it is not surprising that most courts hold that a tender by the mortgagor is valid though conditional on receiving a release. [6 Williston on Contracts, § 1815, Cum. Supp. for 1970, at 97]

Also see, Annotation, 93 A. L. R. 12, at 74 et seq.

I conclude that plaintiffs made a valid tender on March 10, 1971 and that the rejection of March 12, 1971 was not justified. It follows that plaintiffs are obliged to pay no more than the amount tendered, namely $5,878.84. Shields v. Lozear, 22 N. J. Eq. 447 (Ch. 1871), aff’d 23 N. J. Eq. 509 (E. & A. 1872). In reaching this result I have considered the argument that defendant, being a savings and loan association operated for the benefit of its members and subject to the regulation of the Department of Banking, is entitled to special consideration. I see no merit in those arguments.

It remains to consider the protest of plaintiffs and their contentions that they did not really owe $5,878.84 on March 10, 1971. Plaintiffs object to a prepayment fee. They also object that certain tax moneys were advanced by defendant prior to the due date and then added to the amount of the mortgage debt, thus resulting in some interest charges which plaintiffs say were not proper.

The mortgage is dated July 10, 1959. There is no provision that final payment shall be made on a specified date. However, the stipulated monthly installments of $302.78 were calculated on a ten-year basis; so plaintiffs contend the period in which a charge was required, “equivalent to six months interest” on any balance due at the time of prepayment, has already run out. Plaintiffs’ argument fails to recognize that the parties, in effect, extended the ten-year estimated life of the mortgage. Defendant’s ledger sheet shows that plaintiffs paid $273.32 each month for several years instead of $302.78. As the tax bill increased, plaintiffs did not pay the higher taxes directly, but they were paid by defendant and added to the amount of the mortgage. These two factors explain, or largely explain, why a mortgage of 1969, calculated then to have a ten-year life, was still unpaid in 1971 to the extent of approximately $5,600. On March 10, 1971 plaintiffs were bound by the prepayment clause of the mortgage and subject to a charge of six months’ interest at the contract rate of 6% on the balance of principal then due. Defendant’s statement to plaintiffs dated January 29, 1971 included a prepayment charge of $169.56. That was calculated on the then balance of principal and interest, although the language of the mortgage provides for a charge on principal only. The correct amount is $167.87.

Plaintiffs complain further that defendant on six occasions paid half a year’s taxes, then added the advances for taxes to the mortgage debt and began to charge interest on amounts so advanced. This, they say, subjected them to interest on tax instalments that were not due until three months later. The grand total of the six items is $5,558.93. If half of that amount, or $2,779.46, was paid three months earlier than necessary, the resulting interest charge to plaintiffs by defendant was by my calculation $41.89, an amount plaintiffs would have avoided if defendant had made all of its tax advances quarterly. The amount is small, but plaintiffs press the point and as I can see no warrant in the tax clauses of the mortgage for prepayment by the mortgagee, plaintiffs will be.allowed a credit of $41.89.

Defendant’s ledger sheet states the balance of principal and interest for March 1, 1971 at $5,680.14 and interest for the month of March at $28.40. Adding $9.40 for ten days’ interest to $5,680.14 produces $5,689.54. Then adding the prepajmaent charge of $167.87 and subtracting the credit of $41.89 gives a final result of $5,815.52, the amount required to satisfy the mortgage on the date the tender under protest was made.

The amount held by the clerk is $5,930.17. Plaintiffs are entitled to the difference between that sum and $5,815.52. They are also entitled to the costs of this action. Lozear v. Shields, 23 N. J. Eq. 509, 512 (E. & A. 1872). The taxed costs should be paid to them out of the deposit. The balance, subject to the clerk’s charges, will then be paid over to defendant.