author: Horn, J. S. C.

text:
    PRESS PUBLISHING COMPANY, A DIVISION OF ABARTA CORP., A PENNSYLVANIA CORPORATION, t/a ATLANTIC CITY PRESS, PLAINTIFF, v. ATLANTIC COUNTY ADVERTISER, INC., A NEW JERSEY CORPORATION, t/a ATLANTIC COUNTY ADVERTISER; MAX RAUCH-WARG; HELEN RAUCHWARG; AND DAVE FALCIANO, JOINTLY, SEVERALLY AND IN THE ALTERNATIVE, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided December 9, 1969.

      Mr. Chaim, H. Sandler attorney for plaintiff.

      Mr. David Jerchower for defendants.
   Horn, J. S. C.

Plaintiff is a corporation which publishes and distributes the Atlantic City Press, a daily newspaper which circulates in Atlantic County and neighboring counties. Defendant corporation publishes and distributes the Atlantic County Advertiser, a weekly paper, in portions of Atlantic County.

This action was brought primarily to enjoin defendants, corporate publisher and its staff, from copying or reproducing in its papers advertisements which plaintiff prepares for its advertising customers and which have first appeared in plaintiff’s newspaper.

The thesis upon which plaintiff seeks relief is that the conduct of defendants constitutes “unfair competition” by reason of defendants’ “pirating” the advertising copy and art work prepared by and printed in the Atlantic City Press.

By stipulation it was agreed that the case should be first tried on the issue of liability with respect to six contracts for advertisements, presumably typical of those claimed by plaintiff as having been reproduced; that following the initial hearing, if it were determined that plaintiff was entitled to relief, a further hearing would be afforded whereat plaintiff might establish defendants’ similar conduct with respect to other advertisements, and might prove specific damages for which defendants might be liable.

The facts are not in great dispute. Plaintiff, as part of its advertising department, maintains or employs specialists who suggest and make up advertising designs and layouts which are shown to prospective advertisers. The advertising matter is prepared upon the request and suggestions of advertisers or on plaintiff’s own initiative, in order to induce them to enter their orders for the advertising. In certain cases plaintiff engages an outside agency to aid in preparing special advertising matter.

Shortly after certain advertisements had appeared in plaintiff’s newspaper, similar advertisements and, in some cases, identical advertisements appeared in defendants’ newspaper. These advertisements in defendants’ newspaper result from either defendants’ solicitation of plaintiff’s advertisers, or at the request of some of the advertisers without any solicitation.

Defendants also maintain an advertising department, and there are many advertisements in its paper besides those reproduced from plaintiff’s newspaper. Defendants’ paper is published by use of photo-offset, a comparatively inexpensive process.

Each advertiser signs an agreement with plaintiff which partly provides as follows:

“7. ASSIGNMENT — For value received, advertiser hereby assigns to the ABC Newspaper, Inc., all right, title and interest to all layouts of advertisements placed with the ABC Newspaper which represent the creative efforts of the newspaper and/or utilization of its own illustrations, labor, composition or material. Advertiser understands that because of said assignment, he cannot authorize photographic or other reproduction of any such advertising layout appearing in the ABC Newspaper in any other publication without the express written consent of the ABC Newspaper, Inc. It is further understood that this assignment does not preclude advertiser from supplying to other publications similar or identical material or information for production of advertisements by such publication or from suggesting the content or form of such advertisement.”

The advertising which appears in plaintiff’s newspaper is not protected by federal copyright statutes. 17 U. S. C. A. § 1.

Plaintiff relies upon the following cases for support of its contention that defendants’ conduct in copying the advertisements merits the relief sought: International News Service v. Associated Press, 248 U. S. 215, 39 S. Ct. 68, 63 L. Ed. 211 (1918); Metropolitan Opera Association v. Wagner-Nichols R. Corp., 199 Misc. 786, 101 N. Y. S. 2d 483 (Sup. Ct. 1950), aff’d 279 App. Div. 632, 107 N. Y. S. 2d 795 (App. Div. 1951); Pottstown Daily News Publishing Co. v. Pottstown Broadcasting Co., 411 Pa. 383, 192 A. 2d 657 (1963); Pottstown Daily News Publishing Co. v. Pottstown Broadcasting Co., 247 F. Supp. 578 (E. D. Pa. 1965), and Grove Press, Inc. v. Collectors Publication, Inc., 264 F. Supp. 603 (C. D. Cal. 1967).

In International News Service defendant, a competing news service, was restrained by the court from transmitting news for commercial use in competition with complainant. In that ease defendant copied news from bulletin boards and early editions of complainant’s newspapers and then sold same, either bodily or after rewriting it, to defendant’s customers, in direct competition to plaintiff. This conduct, the court held, constituted unfair competition under the circumstances.

In Metropolitan Opera Association defendant was restrained from making and selling phonograph recordings of the “live” broadcasts of the performances of the plaintiff opera company. It was held that this practice constituted unfair competition as to both plaintiff and intervenor, Columbia Records, which had the contract to produce recordings of the opera. Defendant’s conduct deprived plaintiff of any benefit for its performances and enabled it to compete unfairly and advantageously in the market for the sale of the Columbia records. Additionally, the court held that defendant’s action also constituted an interference with contractual relations between plaintiff and Columbia Eecords.

In the Pottstown Daily News Publishing Co. cases plaintiff, the publisher of a newspaper, was granted an injunction against defendant radio broadcasting company, restraining it from appropriating the plaintiff’s local news reports without its permission or consent and using it to its own advantage. The news broadcast by defendant, it was found, was appropriated in broadcasts completed before all the papers from which the news was taken was distributed, and while the news was still “hot.”

Underlying the decisions in the Pottstown Daily News Publishing Co. cases is the proposition that the protection which the law affords to competition does not and should not countenance the usurpation of a competitor’s investment and toil. Substantially this was the basis of International News and Metropolitan Opera cases.

In Grove Press, Inc. plaintiff had expended substantial moneys in the preparation of an edition of an original work entitled “My Secret Life,” an autobiography which was in the public domain. Plaintiff’s edition, after it was released for sale, was reproduced by defendant through an offset lithography process and then was sold in competition with plaintiff’s edition. The court granted the relief sought by plaintiff, on the ground that defendant’s conduct constituted unfair competition.

These cases, standing alone, ordinarily would be persuasive. However, there are important distinguishing features between the factual complexes of these cases and that of the instant case. Pirst, it may be presumed that plaintiff includes in the cost to the advertiser an amount which compensates it not alone for the actual circulation of the advertisement in the newspaper, but also for its expenditures in preparing the advertisement. Second, advertisers are principally concerned with and purchase public exposure of their respective advertisements. In any event, the law of this State applies as hereinafter observed.

It is assumed that plaintiff fears that advertisers may curtail the series or frequency of exposure if defendants are permitted to duplicate the advertisements. This apprehension was not supported. I find that there is no substantial competition between the two periodicals. The proofs disclose that plaintiff has not lost any customers to defendants. Conversely it was established that defendants have lost certain advertisers who continue to advertise in plaintiff’s newspaper.

Defendants rely upon Sears, Roebuck & Co. v. Stiffel Lighting Co., 376 U. S. 225, 84 S. Ct. 784, 11 L. Ed. 2d 661 (1964), reh. den. 376 U. S. 973, 84 S. Ct. 1131, 12 L. Ed. 2d 87 (1964), and Compco Corp. v. Day Brite Lighting Inc., 376 U. S. 234, 84 S. Ct. 779, 11 L. Ed. 2d 669 (1964), reh. den. 377 U. S. 913, 84 S. Ct. 1162, 12 L. Ed. 2d 183 (1964). In these cases the United States Supreme Court held that a state may not impose liability or prohibit the copying of an article which is not protected by a federal patent.

They also cite Cable Vision, Inc. v. KUTV, Inc., 335 F. 2d 348 (9 Cir. 1964), which reversed a lower court’s decision in enjoining a community antenna company from using plaintiff’s television programs on the holding of International News Service, supra. The court, in reversing, felt that Sears and Compco made it clear that only actions for copyright infringement, or such common law actions as are consistent with primary right of public access to all in the public domain, will lie. The facts in the Sears and Compco eases are closer to the facts in the case at bar.

To the degree that it does not conflict with the Federal Constitution, the law of each state controls the common law action for unfair competition. Sears, Roebuck & Co. and Compco, supra; Purcell v. Summers, 145 F. 2d 979 (4 Cir. 1946); Lahr v. Adell Chemical Co., 300 F. 2d 256 (1 Cir. 1962); Flexitized, Inc. v. National Flexitized Corp., 335 F. 2d 774 (2 Cir. 1964), cert. den. 380 U. S. 933, 85 S. Ct. 899, 13 L. Ed. 2d 799 (1965).

It is clear in this State that in the absence of a patent, there is nothing to prevent the imitation or reproduction of a product, provided the imitator does not misrepresent to the public that his product is made by others or cause confusion as to whose product it is. The courts will consider, however, whether the product has acquired a secondary meaning or an identification coming from appearance, and whether the imitation was obtained by fraud or in breach of a confidential relationship. Squeezit Corp. v. Plastic Dispensers, 31 N. J. Super. 217, 222 (App. Div. 1954); French-American, etc. v. Park Plastics Co., 20 N. J. Super. 325 (App. Div. 1952), aff’g 14 N. J. Super. 450 (Ch. Div. 1951). In Squeezit the court refused to restrain a competitor from reproducing and selling a plastic catsup dispenser almost exactly the same in size, contour and color as that designed, produced and placed upon the market by plaintiff.

Similarly, in Adolph Gottscho, Inc. v. Bell-Mark Corp., 79 N. J. Super. 156, 168 (Ch. Div. 1963), it was held that copying a competitor’s product and selling it in competition to him is not per se actionable.

Cascade Pools Corp. v. Consolidated Pools & Equipment Corp., 68 N. J. Super. 321 (Ch. Div. 1961), involved defendant’s use of advertising material based partly on magazine articles describing swimming pools, prepared and published by plaintiff and which included pictures of pools manufactured by plaintiff. The court held that it would not enjoin defendant from using such advertising material in connection with its own swimming pools, where there was involved no question of misrepresentation or secondary meaning. The court said:

Tn the present, case, as already noted, the defendant has not by use of the reprints passed itself off to the public as the plaintiff or passed off its products as those of the plaintiff; nor has it misrepresented qualities and features of its pools or of the plaintiff’s pools. And no question of secondary meaning is involved.
With all of the elements absent which would make the use of appropriated advertising subject to injunction, it follows that no interlocutory relief should be granted where the magazine material reprinted is not the plaintiff’s property and is not even advertising, [at 329-330]

I cannot- find any essential distinguishing features between the principles as laid down in our New Jersejr cases and the principles which should apply to the case at bar. Consequently, I am obliged to hold that plaintiff is not entitled to an injunction on the ground of unfair competition.

Plaintiff further contends that it is entitled to the relief sought on the grounds that defendants designedly and purposely interfered with plaintiff’s contractual rights with its advertisers, and knowingly encouraged and participated in effecting a breach of its agreement with each of the advertisers.

Apart from the fact that plaintiff has not shown any loss in advertisers or frequency of advertising by any of them as the result of defendants’ conduct, there has been no showing that any of the defendants knowingly encouraged or participated in effecting a breach of the agreement. Louis Schlesinger Co. v. Rice, 4 N. J. 169 (1960).

The last sentence of the above-quoted clause of the contract between plaintiff and its advertisers provides that the assignment of the advertisers’ right, title and interest to all layouts of advertisements through plaintiff will not preclude the advertiser “from supplying to other publications similar or identical material or information for production of advertisements by such publication, or from suggesting the content or form of such advertisements.”

I interpret the forepart of the clause to mean that the advertiser may not authorize photographic or other reproduction of the advertising layout appearing in plaintiff’s publication, without the express written consent of plaintiff. If defendants have the legal right, as I find they have under the circumstances, to copy the advertisement, then this clause, insofar as the factual situation before me is concerned, is without legal efficacy. The granting of the right by the advertiser would be merely illusory.

If plaintiff has any complaint because the advertiser condoned and paid for the republication of the advertisement in defendants’ newspaper, that is a matter which should be settled between plaintiff and the advertiser.

Accordingly, plaintiff is not entitled to the injunction or any of the other relief sought against any of the defendants.

Judgment dismissing the complaint will therefore be entered. No costs.


source: Caselaw Access Project

author: Mountain, J. S. C.

license: Public Domain

text:
    JESSIE C. LOMONACO, PLAINTIFF, v. MARY GOODWIN, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF JOSEPH LOMONACO, ET AL., DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Argued October 9, 1969
    Decided December 11, 1969.

      Mr. Dominick Giordano for plaintiff (Messrs. Giordano and Miller, attorneys).

      Mr. J. Bernard Saltzman for defendants.
   Mountain, J. S. C.

Plaintiff is the widow of the late Joseph Lomonaco, who died November 6, 1967; defendant Mary Goodwin is his daughter by a former marriage. Plaintiff and her late husband, at the time widow and widower, were married in 1956. On January 20 of that year, just before their marriage, plaintiff and Joseph Lomonaco entered into an antenuptial agreement. Each relinquished all rights in the property of the other except that, should plaintiff be the survivor, she was to receive from her husband’s estate the sum of $50 each month for a period of ten years. The payments were to terminate upon her earlier death or remarriage. They were conditional upon the parties being “married and * * * living together” at the time of Joseph’s death. When Joseph died in 1967 he possessed no property except an automobile, having during his marriage made gifts of substantially all his other assets to his defendant daughter. Specifically, in December i960 he transferred to her two savings accounts totalling $9,000, and in February 1961 he assigned over to her his stock interest in defendant Joseph Lomonaco Bakery & Grocery Co., a family business. She contends that these transfers were rightfully and voluntarily made and, furthermore, that at the time of his death Joseph and plaintiff were not living together.

The marriage was not entirely a happy one. Upon occasions Joseph left plaintiff and took up residence with his daughter. It was upon one of these extended sojourns in the winter of 1960-61 that he made the gifts to his daughter which plaintiff seeks to impugn. During this same period plaintiff initiated an action against her husband in the Juvenile and Domestic Relations Court claiming nonsupport, as she was apparently in need of funds. The suit was not, however, pressed. Admittedly, she besought her husband, almost daily, to return to her home. This he did in March 1961, and a period of relative tranquillity followed.

On Sunday, November 5, 1967, Joseph appeared at his daughter’s home in a distraught condition. He and his wife had quarreled. One witness to the event remembers Joseph saying that “he didn’t think he was going back”; another recalls his saying that “he was definitely not going back.” He walked to the nearby home of another relative and while there suddenly died.

I find that within the meaning of the agreement of 1956 the parties were still “living together” at the time of Joseph’s death. As mentioned above, he had from time to time separated from his wife during the years of their marriage, always to return. Upon this occasion he had taken with him no clothing or other personal articles, nor had he sent for them. His comments and expostulations were inconclusive. The agreement itself was not drafted in a manner adequately to protect plaintiff, if it is to be literally interpreted as freeing Joseph’s estate from this obligation should his death occur at a moment of what might otherwise have proven to be only a temporary estrangement, or in the event of separation not occasioned by the fault of plaintiff. It is not necessary, however, to consider further the imperfections or inequalities latent in the agreement. Interpreting it on its face, the prescribed condition of continuing cohabitation has been met.

What of the gifts to defendant that very nearly pauperized plaintiff’s late husband? It seems clear that as a result of these transfers Joseph Lomonaco was left with insufficient assets to permit his estate to meet the obligation to plaintiff embodied in the antenuptial agreement.

Under the Uniform Fraudulent Conveyance Law, N. J. S. A. 25:2-7 ei seq., a creditor “is a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent”; a debt “includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent.” N. J. S. A. 25:2-7. Following her marriage and at the time of the transfers to defendant, plaintiff had the status of a creditor and her contingent rights under the antenuptial agreement constituted a debt within, the broad scope of these definitions. The earlier doctrine in New Jersey that a contingent creditor is not a creditor within the protection of the law of fraudulent conveyances, a rule typified by the once leading case of Severs v. Dodson, 53 N. J. Eq. 633 (E. & A. 1895) was changed by the uniform act. Conway v. Raphel, 102 N. J. Eq. 531 (E. & A. 1928) ; McLaughlin, “Application of the Uniform Fraudulent Conveyance Act,” 46 Harv. L. Rev. 404, 408 (1933). The transfers were admittedly gifts without any consideration passing to the donor. The statute adopts a modification of the so-called “equity” definition of insolvency :

A person is insolvent when the present fair saleable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured. [N. J. S. A. 25:2-8].

From the evidence I conclude that the transfers made by decedent to his daughter in the winter of 1960-61 rendered him insolvent within the meaning of the act. Such a transfer, or related series of transfers, is fraudulent.

‘'Every conveyance made * * by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to liis actual intent if the conveyance is made * * * without a fair consideration.-’ [N. J. S. A. 25:2-10].

Plaintiff’s right to relief having been established, she is entitled to have the transfers set aside to the extent necessary to satisfy her claim. N. J. S. A. 25 :2-15. The former rule, that a creditor had no standing to set aside a fraudulent conveyance unless possessed of a judgment or lien, Gross v. Pennsylvania Mortgage & Loan Co., 104 N. J. Eq. 439 (E. & A. 1929); F. W. Horstmann Co. v. Rothfuss, 128 N. J. Eg. 168 (E. & A. 1940) ceased to be the law upon our adoption of the present Constitution in 1947. Deerhurst Estates v. Meadow, 70 N. J. Super. 404 (App. Div. 1961).


author: Breslin, J. D. C.

text:
    PETER PILAT, PLAINTIFF, v. BROACH SYSTEMS, INC., A NEW JERSEY CORPORATION, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided December 9, 1969.

      Messrs. Alb ano and Allano, attorneys for plaintiff.

      Messrs. Collins and Toner, attorneys for defendant.
   Breslin, J. D. C.

(temporarily assigned). The following facts are not in dispute. Plaintiff was a stockholder and a member of the board of directors of defendant Broach Systems, Inc., and also its vice-president from the time of the corporation’s inception in 1967 until May 26, 1969. On July 28, 1969 he was removed as a director and on September 19 was discharged as an employee.

On June 3, 1969 plaintiff, through his attorney, made a written demand upon the corporation to inspect the corporate balance sheet, profit, loss and surplus statements, minutes of the shareholders’ proceedings, the record of shareholders, and its books, records of account and minutes. The original purpose of the inspection was to ascertain the value of plaintiff’s stockholdings in the corporation, but in his trial memorandum he indicated that he also wanted “to be certain whether or not there had been proper management of the corporate affairs and business.” On June 18, 1969 plaintiff again requested the information set forth in the previous communication and made a formal demand for inspection pursuant to N. J. S. A. 14A:5-28. No response was forthcoming from defendant to either communication. On August 18, 1969 a complaint was filed in which plaintiff sought (1) an examination of the books and records of the corporation; (2) reinstatement as a director; (3) a declaration that the executive committee was illegal, and (4) an order restraining the corporation from removing its assets from New Jersey to Florida.

By letter dated October 1, 1969 defendant informed plaintiff that he would be allowed to examine the listed documents with the exception of the books, records and minutes of the corporation; that he was reinstated as a director, and that a special meeting of the board of directors would be held on October 6. At said meeting the board approved a proposed amendment to the certificate of incorporation authorizing the shareholders to remove a director without cause, as provided by N. J. S. A. 14A:6-6. On October 16 the amendment was adopted and plaintiff was thereupon removed as a director.

Plaintiff asserts that he is acting in good faith, in his own interest as a stockholder and in the best interests of the corporation, and essentially requests this court to rule that (1) he is entitled to inspect the corporate books and records, and (2) the statute enabling stockholders of a corporation to remove a director without cause is unconstitutional.

Defendant contends that plaintiff instituted this action only to harass the corporation and its management and to obtain personal gain; that plaintiff is not entitled to the requested inspection since he has not shown a proper purpose, and that N. J. S. A. 14A :6-6(l) is constitutional.

Other contentions raised by the parties will be treated later on in this opinion.

I

N. J. S. A. 14A :6-6 provides:

(1) One or more or all the directors of a corporation may be removed for cause by the shareholders by the affirmative vote of the majority of the votes cast by the holders of shares entitled to vote for the election of directors. If the certificate of incorporation so provides, one or all the directors may he removed without cause by like vote of the shareholders.” [Emphasis added]

Here, plaintiff’s first removal from his position on the board of directors was without cause, and since there was no provision existing at the time in defendant’s certificate of incorporation authorizing such removal, the same was improper and void. As previously noted, defendant then reinstated plaintiff to his former status, but amended its certificate to provide for removal without cause. Plaintiff enjoyed this renewed status for about two weeks, until the shareholders once again voted him out.

Defendant, by virtue of N. J. S. A. 14A :9—1 (allowing amendments to certificates of incorporation so long as the amendments contain only such provisions as could lawfully be contained in an original certificate filed at the time of making the amendment) and N. J. S. A. 14A:6-6, had the right to amend the certificate to provide for the removal of a director without cause. Although defendant was incorporated prior to the enactment of the present statute, it unquestionably had the right to adopt as its own the provisions of the new Corporation Act. Brundage v. New Jersey Zinc Co., 48 N. J. 450 (1967). Still, the court is of the opinion that such an exercise could not work to affect plaintiff’s existing rights as a director.

The precise question presented — whether an amendment to a certificate, providing for the removal of a director without cause, as authorized by statute, enables the shareholders to remove a director without cause when the director had been elected prior to the amendment •—■ is novel in this jurisdiction, because before the enactment of N. J. S. A. 14A:6-6 New Jersey common law had held that a director could never be removed without cause and without reasonable opportunity for a hearing. Costello v. Thomas Cusack Co., 96 N. J. Eq. 83 (Ch. 1924).

New York courts, however, faced with situations similar to the present one, have resolved the problem equitably and justly. In Abberger v. Kulp, 156 Misc. 210, 281 N. Y. S. 373 (Sup. Ct. 1935), the court reviewed the past decisions in the state and set down the following rules with reference to the removal of directors by the stockholders of a corporation.

(a) That irrespective of the existence of any provision in the certificate of incorporation or of a by-law, a corporation may remove a director during his term of office for cause arising from his acting in a manner inimical to the interests of the corporation; (b) during his term of office, a director may not be removed except for cause unless at the time of his election there existed a by-law that provided for the removal of a director without cause. Tf such by-law exists, then ho has taken the office subject to the provisions of the bylaw's; (c) a corporation may adopt a by-law providing for the removal of a director with or without cause, but such by-laro, in so far as it refers to the removal of a director without cause, is of no value for the removal of a director who is in office at the time of the enactment of the by-law; (d) without a by-law which is in force prior to his election and at the time of his election, a director has a vested right to continue in his office to the end of his said term except if he is removed for cause. [281 N. Y. S. at 376; emphasis added!

See also Tremsky v. Green, 106 N. Y. S. 2d 572 (Sup. Ct. 1951), wherein the court upheld the principles set forth above. The present New York statute dealing with the removal of directors differs only slightly from our statute and was based on the past decisional law of that state. See McKinney, Consolidated Laws of New York, Business Corporation Law, §706. It would appear that the legislature saw no inconsistency between the statute that provides for the removal of directors without cause if the certificate of incorporation or by-laws so provide, and the decision in Abberger v. Kulp, supra.

New York is not the only jurisdiction to pass on the question. In Elevator Operators’ & Starters’ Union, etc., v. Newman, 180 P. 2d 42 (Cal. D. Ct. App. 1947), the court adopted the reasoning of the above decisions as an equitable one and by analogy held:

* * as to unincorporated labor unions, where the term of office of an officer is fixed in the constitution and by-laws at a fixed term, and where at the time of election to the office the constitution and bylaws do not provide for bis removal by the membership, he may be removed only for cause, and in the absence of such removal is entitled to remain in his office for the balance of his term, even though the constitution and by-laws are subsequently amended so as to shorten the term of that office * * s-'
* * * the amendment shall be interpreted to apply prospectively to officers taking of office after its passage, [at 49!

A director is a fiduciary and gímsi-trustee to the Corporation and to the shareholders, Hill Dredging Corp. v. Risley, 18 N. J. 501 (1955); his acts as a director may lead to his personal liability, McGlynn v. Schultz, 95 N. J. Super. 412 (App. Div. 1967), and the entire management of corporate affairs is committed to his charge upon the trust and confidence that they will be cared for and managed within the limits of the powers conferred by law upon the corporation and for the common benefit of the stockholders. 19 Am. Jur. 2d 679. It would appear that the burdens and responsibilities he assumes, and the many economic interests he safekeeps, all give rise to a vested interest in his position.

Eor these reasons a director cannot be removed without cause unless the certificate of incorporation so provides at the time of his election thereto. Plaintiff, consequently, is to be immediately reinstated as a member of defendant’s board of directors.

II

The question now to be considered is whether plaintiff has the right to inspect the corporate books and records. Defendant contends that this right will only be accorded when the applicant has shown a proper purpose and good faith, and that since plaintiff has not shown this, the requested relief should be denied.

It is the law in this State that a stockholder has the right to inspect the books and records of a corporation if it is shown that he is acting in good faith and for some purpose germane to his status or interest as a shareholder. Drake v. Newton Amusement Corp., 123 N. J. L. 560 (Sup. Ct. 1939); Bruning v. Hoboken Printing & Publishing Co., 67 N. J. L. 119 (Sup. Ct. 1902); Rosenbaum v. Holthausen, 9 N. J. Super. 484 (Ch. Div. 1950).

The eases, however, distinguish between the right of a shareholder and those of a director of a corporation. In Siena v. Grand Lodge, etc., Order Sons of Italy, 11 N. J. Super. 507 (App. Div. 1951), It was held that the right of a stockholder to inspect the books and records, unlike that of a director, is qualified rather than absolute in that it is only judicially accorded when the stockholder acts in good faith and for a proper purpose. The court in Drake v. Newton Amusement Corp., supra, also noted the difference between the respective rights and stated that the director’s right was absolute, the reason being that

The directors of a private corporation bears a fiduciary relationship to the corporate body and its stockholders as well; and it is essential to the discharge of this function that the individual directors have access to the corporation’s books of account and other records. It would seem to be axiomatic that the individual director cannot make his full contribution to the management of the corporate business unless given access to the corporation’s books and records. [123 N. J. L., at 561.1

This court is not unmindful of the decision in Mitchell v. Rubber Reclaiming Co., 24 A. 407 (Ch. 1892), where the court granted a stockholder-director’s petition to inspect defendant’s books and records, even though his motive may have been to gain information useful in his formation of a competing corporation. The court said:

Xor should the charge that the petitioner is not. acting in good faith, and that he is really seeking for information which he may use to the detriment of this company, and to establish another, which shall bo rival to this, obtain control. It may be tliat be is willing to sacrifice all his interest in the one in order to gratify some unworthy spirit, or to promote some selfish end, in another direction. But this cannot be said to be sufficient justification for closing the doors of the office against the petitioner, if a proper cause be shown in the case at hand, [at 409]

The court qualified its holding, however, by stating that:

I would not be understood as saying that there can be no case where the subsequent conduct of a party ought to exclude him from the benefit of the statute. Gases may often arise where his interests are very small, and, however plain his legal rights may be, he only pursues them with such mischievous purpose. In such case, if the purpose be clearly established, the court would not lend its aid to its accomplishment. The burden of proving that such a purpose exists devolves upon the party who asserts it; and such proof should be clear and convincing before the party who (seeks inspection) should be denied it.

However, in view of the more recent cases, it would seem that even the above qualification is no longer the law, for if a right to inspect is to be in any way qualified, then it cannot be said to be absolute. A showing of hostile intent, therefore, will not affect a director’s right of inspection.

A reading of similar cases in other jurisdictions reveals a split of opinion on the matter. Some hold that a director may be denied the right to examine the corporate records where it is shown that he has a hostile or improper motive. State ex rel. Paschall v. Scott, 41 Wash. 2d 71, 247 P. 2d 543 (Sup. Ct. 1952); Hemingway v. Hemingway, 58 Conn. 443, 19 A. 766 (Sup. Ct. Err. 1898); Strassburger v. Philadelphia Record Co., 335 Pa. 485, 6 A. 2d 922 (Sup. Ct. 1939); State ex rel. Farber v. Seiberling Rubber Company, 3 Storey 295, 53 Del. 295, 168 A. 2d 310 (Super. Ct. 1961); Henshaw v. American Cement Corp., 252 A. 2d 125 (Del. Ch. 1969). These cases, however, admit that the Hew Jersey law is to the contrary. See State ex rel. Paschall v. Scott, and State ex rel. Farber v. Seiberling Rubber Company, supra.

Other jurisdictions, however, have held a director’s right of inspection to be unqualified. Application of Martin, 32 Misc. 2d 873, 224 N. Y. S. 2d 972 (Sup. Ct. 1962); State ex rel. Watkins v. Cassell, 294 S. W. 2d 647 (Mo. Ct. App. 1956). In the New York case of Davis v. Keilsohn Offset Co., 273 App. Div. 695, 79 N. Y. S. 2d 540 (App. Div. 1948), it was held that

The petitioner, as a director of the corporation, has an absolute right to [inspection]. All that he need show is that he is a director of the company; that he has' demanded permission to examine and that his demand has been refused. It is the duty of the petitioner to keep himself informed of the business of the corporation. To perform this duty intelligently he has the unqualified right to inspect its books and records, [Citations] It is of no consequence that petitioner may be hostile to the corporation. His object in seeking the examination is immaterial. His right of inspection is not dependent upon his being able to satisfy other officers of the corporation that his motives are adequate. [79 N. Y. S. 2d, at 541]

See also Pino v. United Democratic Regular Organization, etc., 195 N. Y. S. 2d 860 (Sup. Ct. 1959); Grossman v. Central Coal Co., 11 Misc. 2d 834, 173 N. Y. S. 2d 423 (Sup. Ct. 1958).

Even if this court were to follow the reasoning of the first-mentioned jurisdictions, there is no showing of plaintiff’s hostile intent so as to preclude him from inspection. Nevertheless, this court must follow the New Jersey decisions and it is therefore held that a director has an absolute, unqualified right to inspect the corporate books and records of account, irrespective of motive, and that in the instant case plaintiff is entitled to such inspection either with or without an attorney or accountant, as soon as conveniently possible.

Ill

In accordance with the provisions of N. J. S. A. 14A:6-9, on April 1, 1969 article III, paragraph 7 of the bylaws of the corporation was adopted which provided for the appointment of an executive committee, and on May 26, 1967 Fred B. Black, Jr., William E. Todd and Fred S. Broach were appointed to that committee. Plaintiff merely asserts his belief that the creation of the committee and its actions were in contravention of the aforesaid statute. In the absence of any proof to support his contention, the third count of the complaint is dismissed.

IV

In respect to plaintiff’s fourth count, the present New Jersey law, N. J. S. A. 14A:3—1, provides:

(1) Bach corporation, subject to any limitations provided in this act or any other statute of this State, or in its certificate of incorporation, shall have power
❖ * *í« * * * *• *
(d) to purchase, lease or otherwise acquire, own, hold, improve, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated.
* * * ❖ * # SÍ? *
(i) to conduct its business, carry on its operations, and have offices and exercise the powers granted by this act anywhere in the universe. [Emphasis added]

In State v. Garford Trucking, Inc., 4 N. J. 346 (1950), it was held that a corporation created and existing under the laws of New Jersey may have a “commercial domicile” or “business situs” elsewhere for taxation and other purposes. See also In re Roche, 16 N. J. 579 (1954).

N. J. S. A. 14A:4-1 provides:

(1) Every corporation organized for any purpose under any general or special law of this State * * * shall continuously maintain a registered office in this State, and a registered agent having a business office identical with such registered office.

It is apparent, therefore, that a corporation may carry on its business in any state, subject to the provisions of N. J. S. A. 14A :4-l.

Since defendant has the right to conduct its business in Elorida, and no proof having been offered of the imminent necessity for the relief plaintiff has requested, the fourth count of the complaint is dismissed.


author: Matthews, J. A. D.

text:
    JOHN SOBIN, JR., AND HARRIET SOBIN, HIS WIFE, PLAINTIFFS-APPELLANTS, v. M. FRISCH & SONS, DEFENDANT, AND JONES & LAUGHLIN STEEL CORPORATION, DEFENDANT-RESPONDENT, JONES & LAUGHLIN STEEL CORPORATION, THIRD-PARTY PLAINTIFF, v. TUBBS GREAT WESTERN CORDAGE CO., A CORP., THIRD-PARTY DEFENDANT.
    Superior Court of New Jersey Appellate Division
    Argued November 3, 1969
    Decided December 15, 1969.

      Before Judges Goldhanh, Lewis and Matthews.

      Mr. Bertram J. Glassner argued the cause for appellants (Messrs. Mandel, Wysolcer, Sherman, Glassner, Weingartner and Feingold, attorneys).

      Mr. John I. Lisowsld argued the cause for respondent (Messrs. Schneider & Morgan, attorneys; Mr.. Flliott Abrulyn on the brief).
   The opinion of the court was delivered by

Matthews, J. A. D.

Plaintiffs John Sobin, Jr. (John) and Harriet Sobin (Harriet) appeal, pursuant to leave granted under former R. R. 2:2-3 (a) (now R. 2:2-4), from an order for summary judgment granted by the trial court in favor of defendant Jones & Laughlin Steel Corporation (Jones & Laughlin). The trial judge found, as a matter of law, that plaintiffs’ amended complaint, asserting causes of action against Jones & Laughlin was barred by the statute of limitations. (N. J. S. A. 2A:14-2)

The facts were undisputed at the argument on the motion below, and on this appeal. John, who was a tree trimmer, was rendered unconscious and injured on April 12, 1966, when he fell from a tree in which he was working. He was removed from the scene of the accident to Middlesex General Hospital in a state of unconsciousness. He was admitted to the hospital with a concussion of the brain, an imparted intertrochanteric fracture of the hip and an open fracture of the right upper extremity. He remained in the intensive care unit for approximately two months, during which time he was visited by his attending physician daily. While in intensive care, John remained either totally unconscious or, toward the end of his stay in the unit, in a state of semi-consciousness. On June 16, 1966 he was removed from the intensive care unit, even though his actions were irrational and he had failed to respond verbally to any stimulus. Subsequent attempts were made by his physician to have John respond to verbal stimuli. When non-verbal responses were elicited, they were totally irrational. The attending physician’s affidavit, filed with the trial court, stated that during John’s entire hospitalization in intensive care and for some period thereafter, he neither was able to comprehend his own situation or condition, nor was he able to respond to any attempt to communicate with him. Portions of the hospital record incorporated in plaintiff’s appendix disclose that the condition just described persisted for upwards of 100 days.

John, in an affidavit also filed with the trial court, stated that he had no recollection of events subsequent to his fall until a few days prior to his release from the hospital on July 28, 1966, when he remembers wanting to go home and being very happy about being released. He also stated that he did not recognize his home when he arrived there.

This action originally was instituted on August 17, 1967. M. Erisch So Sons was the only defendant named in the complaint. In the first count, John alleged that defendant was negligent in selling certain rope to him which became brittle and dry and thereafter broke, causing him to fall and suffer injuries. In the third count, John claimed a breach of warranty of merchantability, alleging that defendant sold the aforementioned rope to him knowing the use for which it was required and representing at the time of the sale that the rope was fit for the purpose for which it was to be used. In the second and fourth counts, Harriet sued per quod.

We are advised by counsel for plaintiffs that the action was not instituted against Jones & Laughlin for at least two reasons. First, that it was unknown, at the time, who manufactured the rope and distributed it to defendant M. Erisch So Sons. Second, because the distributor was regarded as a mere conduit, it was decided that it would not be liable in breach of warranty action. Early in April 1968, plaintiffs’ counsel discovered that the rope purchased by John, after expert examination, was “sisal” rather than “manila” as represented, and that J ones So Laughlin was the distributor which represented the rope to have been “manila”, and sold it as such to defendant M. Erisch So Sons. Plaintiffs then moved for, and were granted, leave to file an amended complaint to include Jones So Laughlin as a defendant. The order permitting the filing of the amended complaint was entered May 1, 1968. The amended complaint was filed May 16, and served May 17, 1968, the latter date being two years and 35 days after the date of the fall complained of.

The trial judge held that the provisions of N. J. 8. A. 2A :14-21, pertaining to disabilities, were not meant to cover the type of situation present here, and concluded that the statute of limitations will not be tolled because of unconsciousness, particularly where it lasted for only about 35 days. We note that in this latter observation, the trial judge was in error since the record undisputedly discloses that John was unconscious for upwards of 100 days.

N. J. S. A. 2A:14-2 requires that every action at law for an injury to the person be commenced within two years after such cause of action shall have accrued. Clearly, it would cover the claims asserted in both the original and amended complaints filed by plaintiffs. Burns v. Bethlehem Steel Co., 20 N. J. 37, 42 (1955). The general question presented here, however, is whether the time for the commencement of the action against defendant Jones & Laughlin Steel Corporation was extended under the provisions of N. J. S. A. 2A:14-21. That statute, in pertinent part, reads as follows:

If any person entitled to any of the actions or proceedings specified in sections 2A:14-1 to 2A:14-8 * * ® of this title * * * is or shall be, at the time of any such cause of action * * accruing, under the age of 21 years, or insane, such person may commence such action * * * Within such time as limited by said sections, after his coming to or being of full age or of sane mind.

Specifically, we are asked to decide whether John’s extended period of unconsciousness and semi-consciousness is encompassed by the word “insane” as used in N. J. S. A. 2A:14-21. Further, if this question is answered in the affirmative, whether John’s insanity existed at the time that his cause of action against defendants accrued.

In Kyle v. Green Acres at Verona, Inc., 44 N. J. 100, 113 (1965), the court defined the word “insane” as used in N. J. S. A. 2A :14-21 to mean:

* * * such a condition of mental derangement as actually prevents the sufferer from understanding his legal rights or instituting legal action.

Kyle involved a plaintiff who developed insanity subsequent to the date of an alleged wrongful act of defendant and within the period of limitation, the insanity having allegedly resulted from defendant’s act. The court reversed the dismissal of the action, granted as being beyond the period of limitation, and remanded for determinations by the trial court whether the subsequent insanity of plaintiff was caused by defendant’s wrongful act, and whether the same was responsible for plaintiff’s failure or inability to institute her action prior to the running of the statute. In remanding, the court observed that it should not permit a defendant whose negligent act brings about plaintiff’s insanity to cloak itself in the protective garb of the statute of limitations. (44 N. J., at 111.) The trial court was also directed to determine whether plaintiff’s suit was commenced within a reasonable time after restoration of sanity.

Defendant asks us to read the word “insane” in N. J. S. A. 2A:14-21 to require something more serious or permanent than the mental trauma and disability suffered by plaintiff. We are referred to the use of the word “insane” in N. J. S. A. 30:4-l et seq. a statute relating to the involuntary and voluntar}' commitment of persons to mental institutions. We find this reference plainly to be inapposite. Those statutes have been enacted for the purpose of dealing with persons so seriously deranged as to constitute an actual threat to society, thus requiring their incarceration. Manifestly, the aim of N. J. S. A. 2A :14^21 is to relieve from the strict time restrictions any person who actually lacks the ability ando capacity, due to mental affliction, to pursue his lawful rights.

We hold that John’s unconsciousness rendered him “insane” as that word is used in N. J. S. A. 2A:14-21, and has been defined in Kyle v. Green Acres at Verona, Inc., above. The record discloses that John clearly was in a mental condition which prevented him from knowing, and, a fortiori, understanding his legal rights for the three and one-lialf month period immediately following his fall. It is only in our reference to the definition oE the word “insane”, however, that we find Kyle to be apposite to this appeal.

The facts before us establish conclusively that John’s unconsciousness (insanity) occurred simultaneously with the injuries he suffered and, therefore, simultaneously with the accrual of his cause of action against both defendants. Under these circumstances, he must be regarded as having been "insane” at the time that such cause of action accrued. N. J. S. A. 2A:14--21. In our view, to Tead the words " * * * is or shall be, at the time of any such cause of action * * * accruing * * * insane”, to be applicable only if John could be found to have been insane a split-second before he hit the ground would amount to nothing more than casuistry. Cf. Nebola v. Minnesota Iron Co., 102 Minn. 89, 112 N. W. 880 (1907); City of Miami Beach v. Alexander, 61 S. O. 2d 917 (Fla. Sup. Ct. 1952); compare Roelefsen v. Pella, 121 Iowa 153, 96 N. W. 738 (Sup. Ct. 1903); Taylor v. Houston, 93 U. S. App. D. C. 391, 211 F. 2d 427, 41 A. L. R. 2d 724 (1954).

In the alternative, defendant argues that if we apply the provisions of N. J. S. A. 2A:14-21 to the facts existing here, as we do, plaintiffs wore only entitled to a "reasonable period” after John’s recovery in which to institute their action, and not the full statutory period of two years set forth in N. J. S. A. 2A:14-2. Kyle v. Green Acres at Verona, Inc., above, is cited as authority for this argument. Kyle involved insanity which arose after the cause of action accrued, and, accordingly, is not controlling here. The most direct answer to defendants’ argument is the language of N. J. S. A. 2A:14-21, providing that “* * * such person may commence such action * * * within such time as limited by said sections, after his coming to or being of full age or of sane mind.” (Emphasis added) Since John was insane at the time his cause of actions accrued, the period of limitation provided for in N. J. S. A. 2A:14-2 did not commence to run until his "being of sane mind” (N. J. S. A. 2A:14b-21), more than 100 days after his fall.

The substantive questions of negligence, breach of warranty and proximate causation of plaintiffs’ damages are, of course, for a jury. We find that plaintiffs have adequately established, for the purpose of invoking N. J. S. A. 2A .T4-21, the causal connection between defendants’ alleged wrongful acts and John’s insane condition. Cf. Kyle v. Green Acres at Verona, Inc., above.

Reversed.


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

text:
    IN THE MATTER OF THE TRANSFER INHERITANCE TAX ASSESSMENT IN THE ESTATE OF THOMAS L. HAMILTON, DECEASED. PATRICIA A. LYONS, EXECUTRIX OF THE WILL OF THOMAS L. HAMILTON, DECEASED, APPELLANT, v. WILLIAM T. KINGSLEY, ACTING DIRECTOR OF THE DIVISION OF TAXATION, TREASURY DEPARTMENT, STATE OF NEW JERSEY, RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued December 15, 1969
    Decided December 22, 1969.

      Before Judges Goldmahh, Lewis and Matthews.

      Mr. Walter E. Cooper argued the cause for appellant (Messrs. Walter E. and Walter M. Cooper, attorneys).

      Mr. T. Robert Zochowslci, Deputy Attorney General, argued the cause for respondent (Mr. Arthur J. Sills, Attorney General, attorney; Mr. Stephen Sldllmm, Assistant Attorney General, of counsel).
   The opinion of the court was delivered by

Goldmann, P. J. A. D.

Patricia A. Lyons, executrix under the will of her father Thomas L. Hamilton, appeals from a transfer inheritance tax assessment determining that decedent’s transfer to Patricia and her husband as tenants by the entirety was taxable one-half to Patricia at 1% and one-half to her husband at 11%.

On April 20, 1965 decedent transferred to Patricia and her husband the property in which they maintained a common household. Patricia, an only child, took care of her father until he died on September 19, 1967. In his will, dated September 10, 1963, he left all his property to Patricia, if she survived him, and named her executrix. He directed that all taxes be paid out of his general estate, to be treated as administration expenses.

Decedent’s attorney, Cooper, states that decedent saw him on April 6, 1965 about a proposed conveyance of the property to his daughter. Cooper advised him that if he died within three years, the transfer for inheritance tax purposes would be presumed to have been made in contemplation of death. He also advised that for convenience in handling the title and to conform to the current practice, the husband’s name should be included in the deed. The attorney explained the consequences of such a tenancy by the entirety, and this was further explained in his letter to decedent dated April 9, 1965. Decedent nevertheless proceeded to create a tenancy by the entirety in his April 20 deed.

Patricia and her husband sold the property for $25,000 immediately after decedent’s death and before filing an inheritance tax return.

The executrix first argues that there is no provision in the Inheritance Tax Act which in specific terms imposes a tax on a transfer of the kind here involved. Initially, it is to be observed that the transfer was certainly one intended to take effect in possession or enjoyment at or after death, and so is taxable under N. J. S. A. 54:34-l(c). This is so not only because the cited section raises such a presumption, but Patricia and her husband had agreed to take care of the father in the house they occupied, for as long as he lived. N. J. S. A. 54:34-2, as amended, fixes the rates of taxation, the rates varying with the identity of the transferee and the value of the property transferred. Thus, it provides that a transfer to a child of decedent is to be taxed at 1% on any amount in excess of $5,000 and up to $50,000, and a transfer to the husband of a daughter is to be taxed at 11% up to $1,100,000.

There can be no debate — and there is none —■ that the transfer on its face created a tenancy by the entirety. What appellant argues is that we should look at decedent’s intent, and she spells out such intention by referring to (a) attorney Cooper’s letter to decedent dated April 9, 1969 (“In connection with the transfer of the house to your daughter, which we discussed the other day,” etc.); (b) the fact that the daughter’s name appears before her husband’s in the deed (this, it is argued, is quite unusual ■—• a departure from ordinary practice!); (c) the will (pre-dating the deed by more than 1 x/2 years) left everything to the daughter, and (d) Patricia (in a self-serving affidavit) alleged that her father told her she was the owner of the property.

All this is entirely unpersuasive. Were we to adopt the appellant’s line of argument, no deed creating an estate by the entireties would be safe from similar attack. The deed is unambiguous on its face. There is the further thought that the deed was executed after full consultation with and advice by counsel.

The nature of an estate by the entirety was discussed by this court in Dorf v. Tuscarora Pipe Line Co., Ltd., 48 N. J. Super. 26, 33-34 (1957), where it was described as one having the characteristics of a tenancy in common for the joint lives of husband and wife, with remainder to the survivor in fee. Each spouse is entitled to half the income; either spouse’s beneficial interest can be reached for the satisfaction of his (her) own creditors; a purchaser of one spouse’s interest at execution sale becomes a tenant in common with the other spouse, subject to the nondebtor spouse’s survivorship interest, and each spouse is protected against waste by the other.

Patricia and her husband having sold the property immediately after decedent died, the tenancy by the entirety vanished and they became tenants in common of $25,000, since there can be no tenancy by the entirety in personalty. Dorf, at 34; Cross v. Transfer Inheritance Tax Bureau, 105 N. J. Super. 452 (App. Div. 1969).

We return to a consideration of appellant’s claim that there is no “taxable category” under which a transfer of realty to spouses, taking as tenants by the entirety, may be taxed. There is no merit in that contention. Appellant fails to note that the tax provisions of N. J. S. A. 54:34-1 not only fail to mention a tenancy by the entirety, but a tenancy in common or a sole ownership. As the Bureau points out, the provisions of section 1 are not concerned with the estate created in the grantee, but only with the transfer-of property in contemplation of death or to take effect upon death.

To bolster her argument, appellant calls our attention to the fact that the Legislature had to set up a separate paragraph, N. J. S. A. 54:3L-l(f), to cover the taxing of joint tenancies. That subsection treats of a situation where one joint tenant dies, and the property automatically goes to the survivor. Without (f) the succession in title would be exempt from taxation. Subsection (f) does not cover property transferred by a decedent to spouses who had no interest in the property prior to the transfer.

We are informed by the Bureau that had the realty not been sold, then, following its established procedure, it would have allocated one-half the interest to each spouse and then, proceeded under N. J. S. A. 54:36-3 to appraise the property, compute a tax on each spouse’s life estate, and tax his (her) remainder interest according to the American Experience Table of Mortality under N. J. S. A. 54:36-2.

Eor tax purposes, the only consequence of the sale of the realty here was to fix the value of the transfer to each party. We find the procedure followed by the Bureau to have been fair and the tax imposed correct. Its determination is affirmed.


author: Labrecque, J. A. D.

text:
    BOROUGH OF MATAWAN, PETITIONER-RESPONDENT, v. TREE HAVEN APARTMENTS, INC., RESPONDENT-APPELLANT, AND DIVISION OF TAX APPEALS, DEPARTMENT OF THE TREASURY, RESPONDENT. BOROUGH OF MATAWAN, PETITIONER-RESPONDENT, v. RAVINE APARTMENTS, INC., RESPONDENT-APPELLANT, AND DIVISION OF TAX APPEALS, DEPARTMENT OF THE TREASURY, RESPONDENT.
    Superior Court oí New Jersey Appellate Division
    Argued November 24, 1969
    Decided December 23, 1969

      Before Judges Kilkenny, Labrecque and Leonard.

      Mr. Stephen C. Carton argued the cause for appellants (Messrs. Carton, Nary, Witt & Arvanitis, attorneys).

      Mr. Louis B. Aihins argued the cause for respondent Borough of Matawan.

      Mr. Arthur J. Sills, Attorney General of New Jersey, filed a statement in lieu of brief on behalf of respondent Division of Tax Appeals.
   The opinion of the court was delivered by

Labrecque, J. A. D.

In these consolidated appeals Tree Haven Apartments, Inc. (Tree Haven) and Ravine Apartments, Inc. (Ravine) challenge judgments of the Division of Tax Appeals (the Division) fixing the assessments on their apartment properties for the year 196'}'.

The original assessment, the county tax board action and the taxable value found by the Division as to each property are as follows:

Tree Haven Ravine

Apartments, Inc. Apartments, Inc.

Original Assessment:

Land $ 80,000 $ 60,000

Improvements 487,600 484,000

Total $56S,200 $544,000

County Board Action:

Land $ 62,600 $ 60,000

Improvements 417,400 420.000

$480,000 Total $480,000

Value found by Division:

Land $ GO,000 $ 60,000

Improvements 498,000 498.000

Total $558,000 $558,000

The two properties adjoined and were under common ownership. Each consisted of a garden-apartment complex, with its attendant parking areas, driveways and recreational facilities. The present appeals do not challenge the correctness of the valuations arrived at by the Division. Instead, both appellants urge that after having found true value, the judge of the Division should have fixed the assessment on each parcel to 89..15% thereof, to conform to the asserted average ratio of assessments to true values in the Borough of Matawan. In addition, Bavine challenges the right of the Division to fix its assessment at an amount in excess of the amount of the original assessment. In support of the true value assessment fixed by the Division, Matawan urges that (1) the tavpayers’ original appeals were not based upon a claim of discrimination, and (2) there was no proof adduced by either party as to the common level for the year in question.

The power of the county board of taxation (board) to grant relief is a statutory one. N. J. S. A. 54 :3-21 permits an appeal to the board by any taxpayer (1) aggrieved by the assessed valuation of his property, or (2) “feeling that he is discriminated against by the assessed valuation of other property in the county.” Inquiry as to the reasons urged in support of the reduction sought by appellants at the board level reveals no mention of the second reason referred to (i. e., discrimination). In the space in each petition of appeal calling for the “reasons” for the reduction sought, each appellant asserted that “the assessment is in excess of true value.” Hence, in the absence of anything in the record to indicate any other basis for the assessments fixed by the board, we conclude that, in response to the contentions set forth above, they represented the board’s findings as to true value.

Matawan’s appeals to the Division prayed that each property be determined “to have a true value” of a stated amount (corresponding with the amount of the original assessment) and that the assessment be fixed at that figure. Eurther, as the result of our inquiry at oral argument, we are convinced that the taxpayers did not advance discrimination as an issue at the de novo hearing. This would seem to account for the absence of any formal proof on that issue by either side. The only “proof” now relied upon by the taxpayers is a statement contained in the written report of their appraisal expert that the “equalization” ratio for 1966 had been 89.15%.

It is a general rule that, in determining tax appeals, the Division may not be guided by any standard other than that fixed by law (here 100% of true value) unless the taxpayer, alleging discrimination, proves the existence and general use by the assessor of a different common level or ratio of assessments to true value, and subjection of his property to a discriminatory assessment above that level. Cf. City of Passaic v. Botany Mills, 72 N. J. Super. 449, 457 (App. Div. 1962), certif. den. 37 N. J. 231 (1962). Where it is made to appear that there is no common level, relief from a discriminatory assessment may be had on the basis of the average ratio of assessments to true values. In re Appeals of Kents 2124 Atlantic Ave., Inc., 34 N. J. 21 (1961). In using the average ratio, consideration may properly be given to any weakness or imbalance which may appear in connection with its use, in order to assure that it is not grossly deceptive as a fair gauge of the ratio of assessments to true value. Id., at pp. 31-32. The award of relief based upon discrimination presupposes proof bearing on that issue and the opportunity of the municipality to meet such proof.

Since the issue of discrimination was not raised by the taxpayers either before the board or the Division, it was not error to fail to award relief on that score. Cleff Realty Co. v. Jersey City, 41 N. J. Super. 465 (App. Div. 1956), certif. den. 23 N. J. 58 (1956). Further, assuming that it had been raised as an issue, the proofs adduced were inadequate to sustain a claim of discrimination. North Bergen Tp. v. Venino, 45 N. J. Super. 143, 147 (App. Div. 1957). Here there Avas nothing before the Division but the statement buried in the face sheet of an appraisal report, that the 1966 equalization ratio was 89.15%.

We turn next to consideration of Ravine’s contenthm that the fixing of its assessment at a figure $14,000 higher than the original assessment was error. Neither party has cited any reported case, and we know of none, which has passed upon the issue. Matawan relies principally upon N. J. S. A. 54:3-35 which, in the case of an appeal from an action of the county tax board, authorizes the Division to give “such judgment therein as it may think proper.”

In Hackensack v. Rubinstein, 37 N. J. 39, 53 (1962), where the City of Hackensack (as did Matawan here),, appealed to the Division from reductions granted the appealing taxpayers, the court opened the door to further reductions,, holding that once the Division obtained jurisdiction of the-appeal, and notwithstanding the failure of the taxpayers to-cross-appeal, they were free to- introduce evidence that the assessments, even as reduced by the county tax board, were still too high. The court was not called upon to determine whether the increases sought by the city could extend beyond the amount of the original assessments.

In Rek Investment Co. v. City of Newark, 80 N. J. Super. 552 (App. Div. 1963) we held that where a taxpayer was dissatisfied with the reduction granted by the county tax board and sought a further reduction by appeal to the Division, the Division was not restricted to consideration of whether there should be a further decrease, but could restore a portion of the decrease granted by the county tax board, notwithstanding the failure of the city to appeal. Accord, Samuel Hird & Sons, Inc. v. City of Garfield, 87 N. J. Super. 65 (App. Div. 1965). While we thus held that the duty cast upon the Division was not circumscribed by the fact that the taxpayers had sought a decrease rather than an increase in the county tax board’s figure, we were not called upon to determine whether the increase granted could extend beyond the amount fixed as the original assessment.

We are satisfied that in the context of the facts before us, the Division was limited to restoration of Ravine’s original assessment.

An original assessment, from which the taxing district has failed to appeal, enjoys a status substantially different from that of an assessment fixed by the county tax board on appeal. It is prepared by the assessor, pursuant to N. J. S. A. 54:4-24, but does not become the assessment until after he has completed his entire assessment list and submitted it to the county tax board (on January 10 of each tax year) for examination, revision and correction by it. N. J. S. A. 54:4—46. Before its submission to the county tax board, the assessment list is required to be open to public inspection. N. J. S. A. 54:4-38. When the county tax board has completed its review and revision and returned the tax duplicate as revised and corrected by it the assessment, is complete, Hackensach Water Co. v. Division of Tax Appeals, 2 N. J. 157, 164 (1949), and no change or alteration may thereafter he made except in the manner provided by law. N. J. S. A. 54:4r-55. Basic fairness would seem to require that a taxpayer be put on notice as to any future proposed revision upward. Renner v. New Barbadoes Tp., N. J. Tax Reports 1912-1934, at 185, 40 N. J. L. J. 309 (St. Bd. of Taxes and Assessments 1917). Cf. Jersey City v. Board of Equalization of Taxes, 74 N. J. L. 753, 759 (E. & A. 1907), and Shillingshurg v. Greenwich, 83 N. J. L. 129, 131 (Sup. Ct. 1912).

To the extent here relevant, changes or alterations are to be made by the county tax board, acting in its appellate capacity, N. J. S. A. 54:3-21, in which ease the requisite notice of any proposed upward revision would be contained in the petition of appeal filed by the taxing district. In the absence of such notice a taxpayer should be entitled to assume that his assessment is not being challenged as too low. Many individual taxpayers appear pro se before county tax boards. Without such assumption, a taxpayer would never know when he would be required to retain counsel and submit expert testimony in defense of his assessment. The inevitable result would be to discourage appeals to the county tax board regardless of merit.

Here Matawan elected not to challenge the original assessment. We are convinced that having waived its right to appeal, it was not entitled to a second bite of the apple on its appeal from the reduction granted by the board. It would appear clear that had the board affirmed the assessment, Matawan would have had no right to challenge it by appeal to the Division. In the absence of an appeal to it by Matawan, the board itself lacked jurisdiction to increase the original assessment. If it lacked such jurisdiction, the Division was likewise without power to do so. Cf. Borough, of Oradell v. Slate Board of Tax Appeals, 125 N. J. L. 37, 40 (E. & A. 1940); Borough, of North, Arlington v. Riverview Gardens, 25 N. J. Misc. 466, 55 A. 2d 303 (Div. of Tax App. 1947).

While N. J. S. A. 54:2-35, authorizing an appeal from any “action or determination” of the county tax board, provides that the Division may “give such judgment therein as it may think proper,” reason and logic lead us to conclude that it was never intended to afford relief beyond that which the county tax board could have granted in the first instance. When the remedies made available for relief from excessive or inadequate assessments are considered together it is clear that the Legislature intended that changes in the amount of the assessment levied were not to be made after the tax list had been reviewed, approved and returned by the county tax board, in the absence of an appeal or equivalent procedure, based upon timely notice to the party whose property was to be affected by the change. In the absence of an appeal to the board, for an increase, where a taxing district appeals to the Division from a judgment of the board granting a reduction at the appeal of the taxpayer, its remedy is circumscribed by the amount of the original assessment from which it failed to appeal. Our examination of Matawan’s petition of appeal to the Division satisfies us that all it was seeking here was restoration of Ravine’s original assessment.

It follows that, while the Division’s finding of true value would generally have supported the judgment appealed from, it could grant relief for the year in question as to Ravine only to the extent of the original assessment, land $60,000, improvements $484,000, total $544,000.

The judgment of the Division is accordingly affirmed as to Tree Haven Apartments, Inc. and, as to Ravine Apartments, Inc., modified to reduce the assessment to: land $60,000, improvements $484,000, total $544,000, and, as modified, remanded for further proceedings consistent with this opinion.


author: Leonard, J. A. D.

text:
    DEBRA JANE SWANK, AN INFANT BY HER GUARDIAN AD LITEM, DALE SWANK, AND DALE SWANK, INDIVIDUALLY, PLAINTIFFS-APPELLANTS, v. ELETHERIOS HALIVOPOULOS, M. D., DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued November 24, 1969
    Decided December 29, 1969.

      Before Judges Kilkenny, Labeeoqüe and Leonaed.

      Mr. Marie D. Lamer argued the cause for appellants (Messrs. Budd, Lamer, Kent & Gross, attorneys).

      Mr. Raymond M. Tierney argued the cause for respondent (Messrs. Shanley & Fisher, attorneys; Mr. A. Dennis Terrell, On the Brief).'
   The opinion of the court was. delivered by

Leonard, J. A. D.

In this pediatric malpractice case plaintiffs appeal from a judgment in favor of defendant following a jury verdict of no cause for action, and from the trial court’s order denying plaintiffs a new trial.

It is not disputed that the infant plaintiff, a premature baby, developed retrolental fibroplasia which caused complete and permanent blindness. Plaintiffs assert that this condition was caused by the excessive administration of oxygen at birth and for the following six days.

The infant was born on September 19, 1964 at the Perth Amboy General Hospital at or about 7:40 p.m. At birth the baby weighed 2 lbs. 14 oz. and was the result of a premature 27-week pregnancy. (A normal pregnancy is 40 weeks.) The birth was complicated by a placenta abrnptus (a premature separation of the placenta from the uterine wall). Further, the birth was a breech delivery with the baby appearing feet first.

The child had been delivered by an obstetrician who promptly placed her in an isolette with oxygen below 40% concentration. Thereupon defendant, who specializes in pediatrics, was called by the obstetrician. Upon being notified of the call by his answering service, defendant telephoned the hospital and was told of the complications of the birth and delivery, the other relevant factors, and that the baby was then being kept in an isolette with oxygen. He directed that the administration of oxygen below 40% be continued. The next morning defendant examined the baby while she was in the isolette and thereafter examined her daily for the next six days. Pursuant to his orders oxygen, below 40%, was administered to the child continuously from September 20 until September 24. On September 25 defendant ordered oxygen to be administered on a “PEN” (as necessary) basis, and it was gradually discontinued on that day. None was given on September 26 or thereafter.

Plaintiffs offered as a witness Dr. Henry G-aynin, an ophthalmologist licensed to practice medicine in New York. He was not a pediatrician but a physician whose specialty involved the treatment and correction of existing eye conditions. He testified that he examined the infant plaintiff in his office on February 11, 1966 and at the St. Clare’s Hospital, New York, on April 1, 1968. He diagnosed her condition as retrolental fibroplasia resulting from oxygen and causing the permanent loss of sight. Based upon his review of the records of the Perth Amboy Hospital, the doctor stated that defendant administered an excess amount of oxygen to the infant. He opined that the amount of oxygen administered by defendant for the number of da}rs that it was given was a deviation from the requirements of accepted medical standards.

At the trial defendant did not dispute Dr. Gaynin’s diag-' nosis of the infant’s eye condition nor the fact that as a result thereof. she was totally and permanently blind. Defendant, without admitting that the oxygen administered pursuant to his orders caused the eye condition, did concede that it “might” be the cause. He testified that even though he recognized that retrolental fibroplasia is one of the known possible dangers resulting from the use of oxygen for prematurely born babies, he nevertheless ordered its administration in the amount and for the time he did because he felt that “the baby couldn’t survive without it” and that “oxygen was a mandatory thing for this particular baby.” He added that “I was trying to save the baby’s life and that was my main concern.” He concluded that under the existing circumstances his conduct in the administration of the oxygen comported with existing accepted medical practice.

Dr. Louis Krafchik, a certified diplómate of the American Board of Pediatries and chief of pediatrics at both St. Peter’s Hospital and Middlesex General Hospital, Hew Brunswick, was called as a witness by defendant. He had reviewed- the infant’s hospital record and based thereon concluded that under the conditions then existing defendant’s care of the infant, particularly as to the oxygen administered, was in accord with- accepted medical practice and there was no deviation therefrom. He stated that it was also his opinion that a “baby’s [situated as was the infant plaintiff] outlook is very, very grave and the baby cannot survive without oxygen.” •

Plaintiffs first contend that the trial court improperly limited cross-examination of defendant and his expert with reference to a certain book known as Dunham's Premature Infants by a Dr. William Silverman. When queried about this, text on cross-examination defendant replied • “I’m not familiar with it.” He further testified that he had neither seen nor heard of this text.- Ho further reference to this book was made during the cross-examination of defendant, and the record fails to disclose that the trial court limited the cross-interrogation of defendant with reference to it.

When defendant’s expert was asked on cross-examination about the book, he replied that “I don’t know the book” and further, that he was not familiar with its authoritative nature. At this point counsel for plaintiffs requested an opportunity to make an offer of proof. Pursuant to the granting .of this request, counsel, out of the presence of the jury, stated that he desired to qualify the book as authoritative through his own medical expert, Dr. Gavnin, so that he could (1) cross-examine defendant and his expert as to specific portions thereof, and (2) comment to the jury that defendant and his expert witness were unfamiliar with a basic a'nd authoritative work in the field. The trial court sustained defendant’s objection to this proffer “until a foundation is laid.” Plaintiffs now argue that the credibility of an expert should be subject to attack by use of a treatise the authoritative status of which is established by any acceptable manner. This argument is in conflict with the existing law of this State. Here, an expert may be cross-examined upon a treatise only if he “admits that the treatise is a recognized and standard authority on the subject.” Ruth v. Fenchel, 21 N. J. 171, 176 (1956). It is only then that the contents of the book may be read for the purpose of contradicting or discrediting the witness. Id., at 178, 179. Hor can the contents be received as substantive evidence in the case. Id., at 176. Proposed Evidence Rule 63 (31), “Learned Treatises,” has not been adopted in this State. Since neither defendant nor his expert witness recognized Dunham’s Premature Infants as an authority.on the subject here involved, the trial court properly prohibited plaintiffs’ contemplated use thereof.

Plaintiffs next contend that the “Standards and Recommendations of the American Academy of Pediatrics” (hereafter Academy Standards), as set forth in the appendix of Dunham’s Premature Infants, should have been admitted as evidence of the applicable standard of care for the administration of oxygen to prematures. Plaintiffs concede that since Evidence Rule 63 (31) was not adopted in this State, the offered document was not admissible as a learned treatise. However, he first argues that it was admissible “as objective standards generally recognized and accepted because representative of a consensus of opinion approved by the profession.” Thus, he contends the publication is similar to “safety codes” held admissible in McComish v. DeSoi, 42 N. J. 274 (1964). However,

* * * such a code is not to be introduced as substantive law, as proof of regulations or absolute standards having the force of law or of scientific truth. It is offered in connection with expert testimony which identifies -it as illustrative evidence of safety practices or rules generally prevailing in the industry, and as such it provides support for the opinion of the expert concerning the proper standard of care. [Id., at 282],

Further, these industrial codes are readily distinguishable from the Academy Standards. The former contains specific directions of the “how to” perform certain mechanical operations, the methods of construction to be followed and the type of material to be used. (In McComish the code was admitted to show the number and size of clips to be used in assemblies like “A” slings in connection with % inch cable.) As to the administration of oxygen to premature babies, the only specific direction contained in the Academy Standards was that oxygen should not be normally given in concentrations of more than 40%. (It is conceded that the concentration of the oxygen administered was below 40%.) Beyond this, it made only general “recommendations” as to oxygen and left the final determination with respect to its use to the clinical judgment of the attending physician. For these reasons, we conclude that the Academy Standards cannot be equated with an industrial code and that plaintiffs’ present argument lacks merit.

Additionally, releases of the Hew Jersey Department of Health concerning the administration of oxygen to premature babies were introduced into evidence by plaintiff without objection and were available to his expert. These exhibits contained substantially the same general information and recommendations as contained in the Academy Standards. Thus, plaintiffs were not prejudiced by the exclusion of the latter.

Plaintiffs also argue that the Academy Standards were admissible in evidence because they are comparable to manufacturer’s brochures which accompany a drug and thereby are admissible as independent evidence of the applicable medical standards. This point was not argued below and is now raised for the first time. These recommendations cannot be compared to drug brochures which set forth the dosage or procedures to be rigidly followed in all cases. To the contrary, the former, as noted above, contain only general recommendations, leaving the final determination under the existing conditions to the physician. Additionally, the law of this State presently does not allow the use of standards as independent evidence. McComish v. DeSoi, supra, 42 N. J., at 282; Ruth v. Fenchel, supra, 21 N. J., at 176. For these reasons, we find that this argument is without merit.

Plaintiffs next assert that the trial court committed plain error in failing to instruct the jury that the purpose of the introduction of the Department of Health publication was as “additional and independent support for the [their] expert’s opinion.” No request was made for such an instruction and plaintiffs did not object to the charge as made on this ground. The receipt of this material into evidence without such a cautionary charge as is now suggested, left the jury in a position where it could generally consider the exhibit; possibly, even as independent evidence of the applicable standard of care. Thus, the cautionary charge would have protected defendant, not plaintiffs. Under these circumstances, plaintiffs were not prejudiced by the court’s failure to make the suggested charge and we find no plain error.

Plaintiffs next complain that the trial court erroneously instructed the jury that they had a double burden of proof, namely, to prove that “the defendant deviated from a standard of care and also that he was otherwise negligent.” Plaintiffs base this contention on the following language in the charge:

■ If you find from the evidence that there was a deviation from such standard medical practice, you must then determine from the evidence if such deviation constituted negligence on the part of Dr. Halevopoulos; * * *

However, this is only a part of a sentence which continues on as follows:

;• * * that is, whether the doctor failed to use, in the circumstances of the case, that degree of knowledge, skill and care ordinarily possessed and exercised- by the average member of his profession practic-' ing his specialty in the diagnosis, care and treatment' of his patient.

Again, plaintiffs did not object to the court’s charge on this ground and did not urge this issue on their motion for a new trial. Considering the charge as a whole, it is clear that the court on numerous occasions properly explained plaintiffs’ burden of proof under the existing evidence and that the jury understood these instructions. Cf. Cross v. Robert E. Lamb, Inc., 60 N. J. Super. 53, 64-65 (App. Div. 1960), certif. den. 32 N. J. 350 (1960). From a reading of the entire charge it is apparent that the court, in referring to “a deviation from such medical practice” at the point presently referred to by appellants, was speaking of the standard of care applicable to defendant’s, conduct, by which the jury was to determine whether he had been negligent. Thus, we find no plain error.

Finally, plaintiffs allege that the verdict was against the weight of the evidence. Defendant and his expert, both pediatricians, testified as to the correctness of the procedure followed by defendant. Plaintiffs’ expert, an ophthalmologist, testified that defendant violated the existing medical standard. The issue of liability was thoroughly presented and argued by both sides. The case could have gone either way. The jury resolved the conflict of evidence in favor of defendant and their verdict is more than reasonably supported by the credible evidence. Consequently, we will not disturb it.

Judgment affirmed.


author: Per Curiam.

text:
    ROBERT TOKER AND MILDRED TOKER d/b/a BUDGET ASSOCIATES OF NEW JERSEY, AS ASSIGNEE OF PEOPLE’S FOODS OF NEW JERSEY, INC., PLAINTIFFS-APPELLANTS, v. JEFFREY OTTO PERL, a/k/a JEFFERSON OTTO PERL AND DIANE PERL, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued November 10, 1969
    Decided January 5, 1970.

      Before Judges Coneobl», Collestek and Kolovsky.

      Mr. Charles B. Turner argued the cause for appellants.

      Mr. Ronald B. Rosen argued the cause for respondents {Messrs. Chamlin and Schottland, attorneys).
   Per Curiam.

Two separate and distinct reasons were given by the trial court for holding unenforceable the installment sales contract made between defendants and plaintiffs’ assignor People’s Foods of New Jersey, Inc., viz.:

(1) People’s Poods defrauded defendants when it procured their signatures on the freezer contract. Their agent led defendants to believe that the freezer was included in the price for the food plan. Nowhere in the record is there any evidence that defendants ever knew they were signing an installment contract for a freezer. [103 N. J. Super., at 502-503]
(2) the exorbitant price of the freezer makes this contract unconscionable and therefore unenforceable. N. J. S. 12A :2-302. [103 N. J. Super., at 503]

We deem it unnecessary to express an opinion either as to the merits of the second reason or as to the relevance of N. J. S. A. 12A-.2-302 since we are satisfied that the judgment for defendants should be affirmed on the basis of the first-stated reason.

The evidence fully supports the trial court’s express findings that defendants’ signatures to the contract for a freezer were procured by fraud and that there is no justification for involving an estoppel against defendants. Further, contrary to what plaintiffs now argue, the evidence supports the court’s implicit determination that under the circumstances of this case defendants had not ratified the contract by making payments totalling $91.08. Those payments were made in reliance on the representation of one of People’s Poods’ officers that the contract was binding on defendants because they had used the freezer to store the 18 weeks’ supply of food which People’s Poods had delivered to them. No further payments were made after defendants learned that the representation was not true. Cf. Hemming v. Ald, Inc., 279 Minn. 38, 155 N. W. 2d 384, 387 (Minn. Sup. Ct. 1967).

We find no substance in plaintiffs’ present additional contention, which is contrary to settled law and their express stipulation at the trial, that defenses available against their assignor, People’s Poods, are not available against them because they are bona fide assignees of the contract. Nor does the waiver of defenses clause in the contract aid plaintiffs. The clause is void as against public policy. Unico v. Owen, 50 N. J. 101, 123-126.

The judgment is affirmed.


author: Collester, J. A. D.

text:
    EDWARD T. BOWSER, SR., APPELLANT, v. DEPARTMENT OF CIVIL SERVICE OF THE STATE OF NEW JERSEY AND THE CITY OF EAST ORANGE, A MUNICIPAL CORPORATION, RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued December 1, 1969
    Decided January 5, 1970.

      Before Judges Coneokd, Collestee and Kolovsky.

      Mr. Norman E. Scull argued the cause for appellant.

      Mr. Philip 8. Garchman, Deputy Attorney General, argued the cause for respondent Department of Civil Service {Mr. Arthur J. Sills, Attorney General of New Jersey, attorney).

      Mr. Allan S. Berger filed a statement in lieu of brief for respondent City of East Orange (Mr. Jaclc Olein, attorney).
   The opinion of the court was delivered by

Collester, J. A. D.

This is an appeal from an administrative decision of the Civil Service Commission placing the position of chief building inspector of the City of East Orange in the classified service under the provisions of the Civil Service Act.

The facts are not in dispute. East Orange is a city of the second class organized under N. J. S. A. 40:103-5 (71) et seq. (Acts Saved from Repeal), which subsequently adopted the provisions of the Civil Service Act. On July 25, 1968 Bowser was appointed by the mayor to the position of chief building inspector as a temporary appointee pending a civil service examination. On Pebruary 24, 1969 plaintiff was permanently appointed to said position by the city council, retroactive to July 25, 1968. The C. S. 6 form filed with the Commission listed appellant as being in the unclassified service.

The Civil Service Commission concluded that the position was in the classified service and scheduled a promotional competitive examination to fill the position. The city contended the position belonged in the unclassified service for which no examination is required and that Bowser was entitled to tenure under N. J. S. A. 40:171-168. Thereafter, Bowser brought an action in the Chancery Division to have the position declared to be in the unclassified service and to restrain holding of the examination. The court, by a consent order, directed that the examination be held but that certification of the results thereof be stayed pending an adjudication of the controversy and transferred the case to this court for a review of the determination of the Civil Service Commission pursuant to R. R. 4:88-8, now R. 2:2-3.

The appellant relies alternatively on three statutory provisions in his argument that the position of chief building inspector is in the unclassified service. The City of East Orange has filed a statement in lieu of brief in which it concurs with appellant’s contentions.

The statutory provisions relied on are as follows:

N. J. S. A. 11:22-2. The unclassified service shall not be subject to the provisions of this subtitle and shall include the following:
c. Appointments of the mayor;
d. Heads of departments * * s';
o. Such other officers and positions not now included in the unclassified service by this section or by any other statute, as the Civil Service Commission shall, from time to time, determine, according to law, to be in the unclassified service.
* ❖ * *

Appellant’s first point is that the position falls within the unclassified service under subsection (o). He alleges that he was permanently appointed chief building inspector by the city council pursuant to N. J. S. A. 40:171-55, which provides that in all cities of this State the common council shall have the right to appoint a building inspector, and that he acquired tenure of office under N. J. S. A. 40:171-168, which gives tenure to building inspectors upon appointment by governing bodies of cities of the second class. He argues that since he acquired tenure upon his appointment this fact, of necessity, places him in the unclassified service under subsection (o).

We disagree. The Civil Service Commission has at no time determined this position to be in the unclassified service. Statutes granting tenure to employees must be read in pari materia with the tenure provisions of the Civil Service Law. Perrella v. Board of Education of Jersey City, 51 N. J. 323, 331 (1968). While the position of building inspector is not included in the positions listed in the unclassified service under N. J. S. A. 11:22-2 and no other statute places it in the unclassified service, the mere fact that an appointee acquires tenure under N. J. S. A. 40 :171:168 does not preclude the Civil Service Commission from exercising its statutory authority to include positions, not assigned to the unclassified service by law, in the classified service. See N. J. S. A. 11:22-2 (o) 50, 51 and 52. When East Orange adopted civil service for its employees it brought into operation all the pertinent provisions of the civil service laws, including the right to have such employees selected on the basis of education, experience and training through competitive examinations and not by personal or political favoritism.

Appellant’s second point is that he is the head of a department and thus is in the unclassified service under N. J. S. A. 11:22-2 (d). We are satisfied that the Commission was fully justified in concluding that appellant’s position does not qualify as the head of a department within the meaning of subsection (d). A major factor to be considered in determining whether an employee qualifies as the head of a department is whether he has the power to “hire and fire” employees in his department, Milton v. Dept. of Civil Service, 7 N. J. Super. 135, 140-41 (App. Div. 1962), a factor which is missing here. Moreover, the other incidents of the position relied on by appellant do not compel a reversal of the administrative decision by the Civil Service Commission that appellant is not the head of a department on the total fact picture.

Lastly, appellant claims that the position is in the unclassified service under subsection (c) of the statutory section cited because he was temporarily appointed to the position by the mayor. This argument obviously is without merit. It is conceded that his permanent appointment as chief building inspector was made by the city council pursuant to N. J. S. A. 40:171—55 and not by the mayor. Cf. Follari v. Dept. of Civil Service, 102 N. J. Super. 598 (App. Div. 1968), certif. denied 53 N. J. 80 (1968).

The decision of the Civil Service Commission is affirmed.

       We have not overlooked the fact that N. J. S. A. 11:22-2 was amended effective November 17, 1969 by L. 1969, c. 189. The amendment does not affect the situation present here.