author: Testa, J. C. C.,

text:
    KULP REAL ESTATE, PLAINTIFF, v. RUDOLPH FAVORETTO AND KATHERINE FAVORETTO, HIS WIFE, DEFENDANTS.
    District Court — Cumberland County
    Decided February 14, 1974.

      Messrs. Milstead and Ridgway (Mr. Richard Milstead appearing), attorneys for plaintiff.

      Messrs. Shapiro, Brotman, Eisenstat and Capizola (Mr. Charles W. Gabage appearing), attorneys for defendants.
   Testa, J. C. C.,

Temporarily Assigned. Plaintiff Kulp Real Estate, a real estate brokerage firm, sued Rudolph Favoretto and Katherine Favoretto, his wife, for the sum of $1,600 allegedly owed under a listing agreement. Defendants, as owners of their home situated in Yineland, New Jersey, entered into an exclusive listing agreement with plaintiff broker. Plaintiff’s claim is based upon this written agreement, which contains a provision that entitles the broker to one-half of the purchaser’s deposit in the event of a forfeiture. Defendants assert that this provision is void and unenforceable as against public policy of the State of New Jersey.

An agent of plaintiff, Roger Scull, who was not available for the trial, solicited a listing from defendants. On April 27, 1970 the litigants executed an agreement which was entitled “Exclusive Listing Agreement of Multiple Listing Service, Affiliated with Cumberland County Board of Realtors.”

The fifth undenoted paragraph of this agreement stated:

In the event of forfeiture the deposit shall be divided equally between Owner and Agent. However, said Agent shall not receive a share which is in excess of the above stated commission.

This agreement was extended by the parties until June 14, 1972. On April 6, 1972 defendants entered into a written contract of sale with a purchaser who was produced by plaintiff. This contract provided for a 10% deposit ($3,200) and a closing date was established.

Nevertheless, settlement was never completed due to the purchaser’s failure to consummate the sale. Plaintiff instituted this suit and. a trial was conducted without a jury. It now becomes necessary for this court to determine the respective rights of the litigants in the deposit and the validity and enforceability of the fifth paragraph of the exclusive listing agreement.

The basis of defendants’ position concerning the enforceability of the fifth paragraph of the exclusive listing agreement is the landmark decision of Ellsworth Dobbs, Inc. v. Johnson, 50 N. J. 528 (1967). In Dobbs a real estate broker sued the owner and the defaulting purchaser for his commission under a listing agreement. The default resulted from the purchaser’s inability to obtain adequate financing. The court, while recognizing the legal principle that persons should not be unnecessarily restricted in their freedom to contract, also indicated its willingness to invalidate unconscionable contractual provisions which clearly tend to injure the public. This especially is true where groups through “experience, specialization, licensure, economic strength or position, or membership in associations created for their mutual benefit and education, have acquired such expertise or monopolistic or practical control in the business transaction as to give them an undue advantage.” Id., at 553; Henningsen v. Bloomfield Motors, Inc., 32 N. J. 358 (1960). The court, in considering the status of a broker and seller in a real estate transaction, stated:

Whenever there is substantial inequality of Bargaining power, position or advantage between the broker and the other party involved, any form of agreement designated to create liability on the part of the owner for commission upon signing of a contract to sell to a prospective buyer, brought forward by the broker, even though consummation of the sale is frustrated by the inability or the unwillingness of the buyer to pay the purchase money and close the title, we regard as so contrary to common fairness, as to require a court to condemn it as unconscionable. [50 N. J. at 555; emphasis added]

The court held that a broker was not entitled to a- commission from the seller if title does not pass due to a default by the purchaser. The court further stated:

Where the buyer is the defaulting party, in our judgment public policy requires the courts to read into every brokerage agreement or contract of sale a requirement that barring default by the seller, commission shall not be deemed earned against him unless the contract of sa'e is performed. By the same ioken, whenever the substantial inequality of bargaining power, position or advantage to which we have adverted appears, a provision to the contrary in an agreement prepared or presented or negotiated or procured by the broker shall be deemed inconsistent with public policy and unenforceable. [Id., at 555-556J

It is noteworthy that although the fifth paragraph of the listing agreement fails to expressly state that the broker is entitled to his commission, upon the execution of a contract of sale with a purchaser, the practical effects are the same as if such language had been employed. Once the contract of sale is executed, the broker becomes entitled to one-half of the deposit, as long as this amount does not exceed the commission, regardless of the passage of the title. Such language is similar to the examples of listing agreements illustrated in the Dobbs decision, 50 N. J. at 554-555, which are designed to impose on the owner liability for brokerage commissions immediately upon execution of a contract to sell to a purchaser produced by the broker. Such a provision in a brokerage agreement is contrary to the principles expounded in Dobbs and therefore unenforceable as against public policy if the Dobbs decision is applicable. The issue now before this court is whether there was a “substantial inequality of bargaining power, position or advantage" between plaintiff broker and defendants.

Defendants are not businessmen but are simple homeowners who have had not prior real estate experience. They were not represented by counsel for the execution of the brokerage agreement. This agreement is printed on a standardized real estate form, apparently compiled by or sanctioned by the Cumberland County Board of Realtors. There was testimony to the effect that defendants negotiated for an installment sale in order to minimize their capital gains tax consequences. However, this factor alone does not affect their status as unsophisticated lay persons involved in their first real estate transaction.

Conversely, plaintiff is an established brokerage firm, with all the benefits of national, state and county real estate boards for legal expertise in the drafting of their standardized listing agreements. As has been pointed out in Barry Norman Agency, Inc. v. Elias, 117 N. J. Super. 480 (Law Div. 1971) :

The relationship between broker and seller has been characterized as one involving substantial inequality of bargaining power. * * * Certainly it is a relationship that requires substantial scrutiny when brought before the courts, [at 483]

Now, this should not be construed to mean that any relationship between a broker and a seller involves a substantial inequality of bargaining power. A recent appellate court decision has reversed a lower court’s finding that there was “substantial inequality of bargaining power” between broker and seller. The court found that the broker, a T.Y. repairman, was a part-time agent; that the seller’s attorney prepared the brokerage agreement and it was executed in the attorney’s office. The broker was not represented by counsel, and the broker accepted a 3% commission as opposed to a customary fee of 6%. Kennedy v. Roach, 122 N. J. Super. 361 (App. Div. 1973).

Clearly, the present case illustrates the type of situation which the Dobbs case was intended to prevent. Here we have the broker soliciting a listing agreement from homeowners. The listing agreement is printed on a standardized form which has the sanction of a large association of realtors. Plaintiff is an experienced real estate firm, an expert in real estate transactions and an employer of full-time experienced agents. On the other hand, defendants are lay persons with no special business knowledge and no prior experience in real estate transactions. Defendants signed a brokerage agreement without benefit of counsel, and after executing a contract for sale and suffering default by the purchaser who had been produced by plaintiff they were informed that one-half of the deposit, retained as damages, belonged to plaintiff broker.

It is, therefore, this court’s determination that between Kulp Real Estate and Rudolph and Katherine Favoretto there is a substantial inequality of bargaining power, position and advantage. Therefore, the fifth paragraph of the listing agreement is unenforceable and void against the public policy of the State of New Jersey. Defendants have elected to retain the deposit rather than institute legal action against the defaulting purchaser. The Dobbs court held:

When he [seller] passively accepts the fact of the buyer’s inability or refusal to perform the contract of sale, and in good faith, in order to bring the matter to an end, receives in return for the exchange of releases what in fairness can only be regarded as salvage as distinguished from the substantial equivalent of performance, in justice and in equity he should not he held to have incurred thereby any liability to the broker. [50 N. J at 558]

The court notes that this decision does not leave plaintiff broker without a remedy. In addition to endowing the seller with certain rights in real estate transactions, Dobbs also permitted the broker to obtain compensation against the defaulting purchaser by implying a promise on the part of the buyer to complete the transaction with the owner. 50 N. J. at 550. It is this court’s opinion that plaintiff has a cause of action against the defaulting purchaser.

Judgment will be entered in favor of defendants.


source: Caselaw Access Project

author: Walsh, P. J. D. C.

license: Public Domain

text:
    ERVING W. HEUER, PLAINTIFF, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANT.
    District Court — Essex County.
    Decided February 21, 1974.

      Mr. Frank P. Minichino for plaintiff (Messrs. Simone & Schwartz, attorneys).

      Mr. Richard D. Catenacci for defendant (Messrs. Mc Elroy, Connell, Foley & Geiser, attorneys).
   Walsh, P. J. D. C.

Plaintiff brings this action to recover, under the terms of Ms homeowners’ policy, a loss sustained by the theft of Ms fishing equipment from the home of Ms aunt in Lanoka Harbor, New Jersey.

The undisputed facts show that plaintiff Erving Heuer maintains his residence at 350 Old Tote Road, Mountainside, New Jersey, and that such residence is the described residence premises covered by his New Jersey Manufacturers homeowners’ policy. Heuer testified that on most winter weekends he uses the Lanoka Harbor house owned by his aunt, and that is covered by a homeowners’ policy issued to her by another carrier not a party to this lawsuit. He admits that he had not been at the premises for three weeks prior to the theft, and further admits that no other person occupied these premises during the winter months.

The pertinent provisions of the policy in question are:

SECTION 1
DESCRIPTION OP PROPERTY AND INTERESTS COVERED
COVERAGE C—UNSCHEDULED PERSONAL PROPERTY
This policy covers unscheduled personal property usual or incidental to the occxipancy of the premises as a dwelling and owned or used by an Insured, while on the described premises and, at the option of the Named Insured, owned by others while on the portion of the premises occupied exclusively by the Insured.
This coverage also includes such unscheduled personal property while elsewhere than on the described premises, anywhere in the world:
.1. owned or used by the Insured;
This coverage excludes:
* * * * >'r * *
7. business property while away from the described premises
sj; ¡b sjs ij-t %
c. Theft lihsclusions applicable to property away from the described premises:
This policy does not apply to loss away from the described premises of:
(1) property at any location owned, rented or occupied by an Insured, except while an insured is temporarily residing thereat;
* * * # r * *
(4) watercraft, their furnishings, equipment * * *

The sole question presented, then, is whether plaintiff was "temporarily residing” in his aunt’s premises at the time of the theft.

Diligent efforts by counsel and research by the court itself have failed to uncover the answer to this problem in any reported decision in New Jersey. However, the precise question has been raised in other jurisdictions and it does not remain unanswered.

Bryan v. Granite State Ins. Co., 185 So. 2d 310 (La. Ct. App. 1966), is directly in point. The issue raised was whether an apartment in New Orleans used by plaintiffs from time to time when they came to New Orleans for social gatherings or to go to the theater, which happened at most only once or twice a week, was afforded theft coverage at a time when the plaintiffs were not present at the apartment and had not visited the apartment for at least four days. The court answered the precise question raised by the court in the instant case with regard to summer residences and concluded that there was no coverage. The court’s cogent reasoning succinctly analyzes the issue in the case at bar. The court stated:

We shall not attempt to define the phrase “residing in.” Its meaning is plain. A person who maintains a permanent abode in New Orleans may own or lease a “temporary residence” on the Gulf Coast which he occupies during the summer months, but he cannot be said to be “residing therein” at a time when he is not occupying the place but is living in the home in New Orleans. As a matter of fact a person may have several cottages, camps or other places of residence in addition to the premises described in the policy which he may occupy from time to time, but he cannot “reside in” all of them at the same time.
Under the facts of this case we cannot hold that the Bryans were “temporarily residing” in the apartment when the theft occurred. They had not visited the apartment for at least four days and were “residing” at Laeombe at the time. We do not hold, nor does defendant contend, that in order to recover under the policy the Bryans' must have been physically present in the apartment at the time of the burglary. If the theft had occurred on one of the nights when they were staying over at the New Orleans apartment to attend a party or other function at a friend’s home there would have been coverage even though they had been absent from the apartment at the time the burglar entered it. They would have been “residing in” the apartment, though not physically present, [at 312]

The Bryan case was recently cited with approval in Reiner v. St. Paul Fire & Marine Ins. Co., 106 Ill. App. 2d 210, 245 N. E. 2d 655 (App. Ct. 1969) :

We agree with the Louisiana Court that the proper construction of the “off premises” exclusion clause is that the insured must temporarily reside in the secondary residence in order to be covered by the homeowners policy insuring the principal residence.

To this effect see also Chalmers v. Oregon Automobile Ins. Co., 500 P. 2d 258 (Ore. Sup. Ct. 1972); Springman v. Pacific Ins. Co. of New York, 5 Ill. App. 3d 604, 283 N. E. 2d 716 (App. Ct. 1972), and Vanguard Ins. Co. v. Stanfield, 442 S. W. 2d 488 (Tex. Civ. App. 1969).

The facts clearly indicate that plaintiff’s actions do not bring him within the ambit of protection provided by the policy from thefts from a location wherein he could be said to be “temporarily residing.”

The policy dictating this exclusion is obvious. The risk of a theft occurring from an unattended home, vehicle or watercraft is appreciably greater. While actual physical presence would diminish the risk even more, the mere fact that people are in and about is usually sufficient to deter a theft. The vacant and vacated premises are an invitation to steal with impunity. The homeowners’ policy in question, which is written on a specific residence, is not meant nor understood to cover other residences, except in the limited circumstances while the insured is actualiy temporarily residing thereat.

Judgment will be entered in favor of the defendant dismissing the complaint.


author: Per Curiam. Meanor, J. A. D.,

text:
    MICHAEL BRUNO, DONALD BUSHER, WOODROW ERNEST, BERNARD O’BRIEN, AND JOSEPH BORAWSKI, AS AND FOR THEMSELVES AND AS MEMBERS OF A CLASS HAVING AN INTEREST IN THE FUNDS OF FORMER LOCAL UNION 853, CARPENTERS, JOINERS & MILLWRIGHTS OF AMERICA, PLAINTIFFS-APPELLANTS, v. JOHN MUNDY, SECRETARY AND BUSINESS AGENT; BARTHOLOMEW BOGLIOLI, TREASURER; MICHAEL LAPCZYNSKI, VICE-PRESIDENT; PAUL MOSCETTI, TRUSTEE ; AND FELIX HELRIGEL, TRUSTEE ; HAROLD RHODES, FINANCIAL SECRETARY; L. LUCARIELLO, FORMER TREASURER; ALL OF FORMER LOCAL 853, CARPENTERS AND MILLWRIGHTS, A LABOR ORGANIZATION; WILLIAM GLENFIELD, PRESIDENT OF CRAFTSMEN’S HALL, INC.; AND CRAFTSMEN’S HALL, INC., A NON-PROFIT CORPORATION ORGANIZED UNDER THE LAWS OF NEW JERSEY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued October 30, 1972—
    Decided May 18, 1973.

      Before Judges Lora, All corn and Meanor.

      Mr. Robert C. Neff argued the cause for the appellants (Meth & Wood, attorneys).

      Mr. John A. Craner argued the cause for the respondents (Craner & Brennan, attorneys).
   Per Curiam.

It is uncontroverted that at-and following the consolidation order of October 29, 1965, these defendants held, received and disbursed various monies and other assets of Local 853. The defendants thereby became and remained trustees of said monies and assets for the membership of Local 853.

The plaintiffs, on behalf of themselves and all other persons who were members of Local 853 at the time of the promulgation of the consolidation order, seek and are entitled to a full and complete accounting from the defendants setting forth, in detail, (a) the nature, source and amount of all monies and other assets of Local 853 (or the membership thereof) which have come into the hands of the defendants, and (b) the disposition of all of said monies and other assets, showing the date, amount and purpose of each disbursement or other disposition — including a full statement or list of all of the monies and other assets presently on hand.

The defendants literally have refused to prepare and to submit any accounting whatever, full and complete, or otherwise. The alleged failure or omission of the defendants to make or maintain records should not and does not operate to relieve them of this fundamental fiduciary duty.

Nor may the defendants take refuge in 29 U. S. G. § 501. Once the consolidation order issued, Local 853 ceased to be a “labor organization” within the meaning and intent of § 501, and thus § 501 would appear to be inapplicable. [See, 29 U. S. G. §§ 152(5) and 206(d) (4).] ' In any event, § 501 clearly authorizes a suit for an accounting where, as here, the persons holding the assets and property have refused to account, and good cause for such an accounting has been so obviously demonstrated. Sabolsky v. Budzanoski, 457 F. 2d 1245, 1252-1253 (C. A. 3rd, 1972), cert. den. 409 U. S. 853, 93 S. Ct. 65, 34 L. Ed. 2d 96 (1972); Hood v. Journeymen Barbers, Hairdressers, etc., 454 F. 2d 1347, 1354, n. 23 (C. A. 7, 1972).

Likewise, the trial court erred in authorizing the defendants to use the assets of Local 853 as a source of funds for advancement to or reimbursement of their attorneys for expenses incurred in their individual resistance to the consolidation. Without authorization by a majority of those persons constituting the membership of Local 853 at the time of the promulgation of the order of consolidation, the defendants have no right, power or authority to use trust funds for such purpose.

Accordingly, the judgment is reversed and the cause is remanded to the Chancery Division to enter judgment directing the defendants to file with said court, by a date certain, a full and complete accounting for the period commencing October 29, 1965 and ending 10 days prior to the date fixed for the filing of the account; fixing dates for the filing and service by the plaintiffs of exceptions to said accounting and for the trial or other disposition of any such exceptions; and directing counsel for the defendants to restore to the Keceiver all sums paid or advanced to them out of the funds and assets of Local 853, within 30 days from the date of the filing of this opinion, in accordance with the terms of the order of the trial court authorizing such advances.

Meanor, J. A. D.,

Temporarily Assigned (Dissenting). Although the majority reaches a desirable result, it is my opinion that 29 U. S. C. A. § 501 controls and requires a dismissal of this action. Accordingly, I dissent.

This labor controversy was initiated by a complaint which charged the individual defendants with breach of their fiduciary duties as officers and trustees of a union local.

The local involved is Local 853, Carpenters, Joiners and Millwrights of America. On October 29, 1965, the United Brotherhood of Carpenters and Joiners of America, AFL-CIO, ordered that Local 853 be consolidated with a larger neighboring organization. Local 853 theretofore had jurisdiction over a territory centered in Bound Brook, New Jersey. The intrinsic reason for the consolidation was that Local 853 could not adequately service its territory.

Approximately 13 members of Local 853 did not comply with the consolidation order. They retained control of the local’s assets. Most, if not all of the other members, including the plaintiffs, joined the organization to which consolidation had been ordered. The consolidation order was judicially contested and held valid by the United States District Court Eor The District of New Jersey in an unreported opinion September 29, 1972. The consolidation order was contested through intra-union procedure prior to the Federal Court action.

Both counts of the complaint refer to and rely on 29 U. S. C. A. § 501. In pertinent part Section 501 provides as follows : .

(a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party or in behalf of an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization . . .
❖ * * ;Js $ $ $ ih
(b) When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization. jSTo such proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown, which application may be made ex parte . . .

There is no doubt that the allegations of the complaint in this case bring the action within Section 501. It is apparent the prerequisites to bringing this action were not met. They are (1) that a demand for the relief requested be refused by the union after the lapse of a reasonable time, and (2) that no action may be brought except upon leave of court obtained on verified application for good cause shown.

The purpose of these essential preliminaries to the institution of legal action has been the subject of discussion in Federal cases to which deference must be given in interpreting this statute. The requirement of a demand for rectification of the grievance and forebearing suit for a reasonable time in order to permit compliance is an expression of the congressional will that, wherever possible, intra-union controversy be settled by intra-union means. The requisite of initial judicial permission, for good cause shown, before suit may be instituted evinces a Congressional intent to save unions from vexatious litigation which has no basis in fact. These two requirements have been described as mandatory. See Purcell v. Keane, 406 F. 2d 1195 (3rd Cir. 1969) ; Cassidy v. Horan, 405 F. 2d 230 (2nd Cir. 1968) ; Coleman v. Brotherhood Of Railway & Steamship Clerks, etc., 340 F. 2d 206, 15 A. L. R. 3rd 933 (2nd Cir. 1965) ; Horner v. Ferron, 362 F. 2d 224 (9th Cir. 1966), cert. denied 385 U. S. 958, 87 S. Ct. 391, 11 L. Ed. 2d 305 (1966); Persico v. Daley, 239 F. Supp. 629 (D. C. N. Y. 1965); International Brotherhood of Teamsters, etc. v. Hoffa, 242 F. Supp. 246 (D. D. C. 1965).

It is obvious that the remedy provided by Section 501 was intended to be an exclusive one. A distinction must be drawn between remedy and substantive law. Section 501 was meant to draw upon State law of fiduciary relationships for rules of decision. See Highway Truck Drivers And Helpers Local 107 v. Cohen, 182 F. Supp. 608 (D. C. Pa. 1960), affirmed 284 F. 2d 162 (3rd Cir. 1960), cert. denied 365 U. S. 833, 81 S. Ct. 744, 5 L. Ed. 2d 744 (1961); Holdeman v. Sheldon, 204 F. Supp. 890, 895 (D. C. N. Y. 1962), affirmed 311 F. 2d 2 (2nd Cir. 1962). But in any controversy within its terms, the preludes provided therein must be obeyed before any court may entertain the action on its merits. Cassidy v. Horan, supra; Giordani v. Hoffman, 278 F. Supp. 886 (D. C. Pa. 1967). The congressional will in imposing these essential preliminary steps to legal action would have no meaning if Section 501 were thought simply to impose another remedy concurrent with that provided by the various state laws.

This appeal has been compounded because Section 501 requires a result neither plaintiffs nor defendants seek. Judgment went to the defendants below and they seek an affirmance in order to put an end to the dispute. 'The plaintiffs seek a reversal and a new trial expanded beyond the perimeters of the litigation as the trial court saw it. Neither side argues for the Section 501 compelled result of a remand and dismissal on procedural grounds.

The record contains no articulated treatment by the trial court of the Section 501 issue. I infer, and the parties seem to agree, that the trial court, because of Section 501, limited the action to a contest over breach of fiduciary duty between the time the order of consolidation became final and the time of trial — a period of about 18 months.

The trial court apparently was of the view that Section 501 applied up to the time that the consolidation order became final because up to then Local 853 existed as a labor organization and no suit such as this could be brought against it without compliance with the statute’s essential preliminary steps. Thereafter, the trial court seems to have reasoned, Local 853 did not exist as a labor organization and thus for the time period following finalization of the order of consolidation an action for breach of fiduciary duties could be brought exclusively under state law. I cannot agree.

I accept the trial court’s implied determination that this case arises under Section 501; I accept the implied ruling that Section 501’s procedural preliminaries were not met; I agree that, therefore, the complaint cannot be heard on its merits for alleged breach of fiduciary duty during all times when Local 853 was a viable union entity; but I cannot agree that Local 853 was not such during any time relevant here.

Local 853 either existed as a separate entity or as an indefinable part of a consolidated union. It never ceased to exist. It would be strange indeed if Section 501 could be vitiated by merger or consolidation thus depriving the former or new labor organization of the protection the statute affords.

Section 501 gives a right of action only to any “member” of the labor organization. The argument- has been made that this is an action by former members of a labor organization and as former members the plaintiffs have no standing to sue. Hence, the argument runs, the action is without section 501.

The issue whether Section 501 grants relief to former union members is not involved here. It may be noted, however, that it would be ironic to say that members driven out by fiduciary dereliction lost their Section 501 rights because of the very conduct they seek to remedy. Rather, it would be appropriate to hold that the statute gives standing to “members” as of the time during which the conduct of the fiduciaries is called into question.

As noted above, the plaintiffs, or at least some of them,' obeyed the order of consolidation and joined the local into which consolidation was ordered. Thus, they were at all pertinent times members of Local 853 or its successor by consolidation and had statutory standing to sue as members.

I would hold, therefore, that since this action is one exclusively under Section 501 and that since the mandatory prerequisites to seeking judicial relief thereunder were not met, the judgment below should be vacated and remanded with directions to dismiss the complaint. Such a dismissal should be without prejudice in order to permit the plaintiffs to reinstitute suit if the demands of Section 501 can be satisfied.


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

text:
    ELOISE BROWN, PETITIONER-APPELLANT, v. GENERAL ANILINE AND FILM CORPORATION, RESPONDENT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued February 13, 1974—
    Decided February 22, 1974.

      Before Judges Halpern, Matthews and Bischoff.

      Mr. Otto C. Staubach argued the cause for appellant (Messrs. Weiner, Mirabelli & Glennon, attorneys).

      Mr. Anthony J. La Russo argued the cause for respondent (Messrs. Lindabury, McCormick & Estabrook, P. C., attorneys) .
   The opinion of the court was delivered by

Halpern, P. J. A. D.

This is a workmen’s compensation ease. Petitioner Eloise Brown, widow of respondent’s employee, Raymond L. Brown, appeals from a dismissal of two dependency claims filed on behalf of herself and her 12-year-old child.

The relevant facts are undisputed. On April 21, 1969 decedent suffered a disabling heart attack. On October 23, 1969 he filed two petitions for workmen’s compensation contending that (a) he suffered a heart attack on April 21, 1969 which arose out of and during the course of his employment, and (b) as a result of his employment he suffered from an occupational disease which climaxed in a heart attack on April 21, 1969.

At a pro forma hearing before a judge of compensation on September 25, 1970 decedent testified that on the advice of his attorney he was of the opinion he could not prove a compensable accident, and requested a dismissal of his petitions with prejudice against, ever reopening his claims. Without taking any proofs, and in reliance on decedent’s statement and the representations of counsel, the judge of compensation purported to make a finding that decedent could not sustain his burden of proof and dismissed the petitions.

On the same day the petitions were dismissed respondent paid decedent $20,000 and obtained a release from him wherein he again, in effect, reiterated that he could not prove a compensable claim, and agreed never to appeal from the judgment dismissing his petitions for workmen’s compensation. It was after he died on February 4, 1971 that the present dependency petitions were filed.

The present dependency petitions were based upon the same factual allegations made by decedent in his petitions. In addition, they alleged that decedent’s death was causally related to the heart attack suffered on April 21, 1969. The petitions were dismissed by the judge of compensation upon the theory advanced by respondent that she was collaterally estopped from relitigating decedent’s claim which had been dismissed with prejudice because a compensable claim had not been proven. In addition, he held that the release given by decedent effectively barred the instant claims. In so doing he erred.

The recital of the undisputed facts leaves no room for doubt that decedent settled his claims against respondent for $20,000 regardless of the form it took or whatever nomenclature the parties placed upon it. "We are satisfied it was done in the manner 'described in an attempt to barter away decedent’s statutory rights, as well as those of petitioner and her child from making future dependency claims.

It is significant that no testimony, factual or medical, was adduced at decedent’s hearing with respect to his claims. Since it was obviously not a hearing on the merits, it was contrary to public policy and was a clear violation of N. J. S. A. 34:15-22 which proscribes this type of settlement. Bisonic v. Halsey Packard, Inc., 58 N. J. Super. 166 (Law Div. 1959), aff’d 62 N. J. Super. 365 (App. Div. 1960); Smith v. Klemm, 118 N. J. L. 471, 475-476 (Sup. Ct. 1937).

Petitioner and her child have separate and distinct statutory causes of action against respondent if they are able to prove their dependency, and that decedent’s death on February 4, 1971 was causally related to his heart attack of April 21, 1969. N. J. S. A. 34:15—13. This cause of action accrues on decedent’s death, and is in no way derived through decedent. Roberts v. All American Engineering Co., 104 N. J. Super. 1, 7 (App. Div. 1968), certif. den. 53 N. J. 351 (1969); McAllister v. Bd. of Education, Town of Kearny, 42 N. J. 56, 59-60 (1964); Eckert v. N. J. State Highway Dept., 1 N. J. 474, 480 (1949). The dependency claims must rise or fall on their own merits, and nothing that the decedent does, or, attempts to do during his lifetime, can deprive dependents -of their statutory benefits. This principle is clearly enunciated by Professor Arthur Larson in his treatise 2 Larson, The Law of Workmen’s Compensation (1970), § 64.10 at 134.37 to 134.44,

The dependent’s right to death benefits is created directly by statute ; it is not derived from the rights of the deceased employee. This principle leads to several conclusions of practical importance.
The settlement, compromise, or release by the deceased of his rights under the Act cannot bar the statutory rights of his dependents, since they are independently created by statute.
The most striking consequence of the independent status of dependency rights is the rule, accepted by the majority of jurisdictions, that an adverse decision on the merits of a claim by the employee while he was alive does not bar a dependency claim under the doctrine of res adjudicata, since the parties and rights involved are different, and since the dependent is not in privity with the injured employee as to the rights asserted by him. [Emphasis added]

See also, 8 Schneider, Workmen’s Compensation (1951), § 1885 at 664—666.

The judgment below is reversed and the matter remanded for a plenary hearing on the merits.


author: Rizzi, A. J. S. C.

text:
    BOARD OF EDUCATION OF THE BLACK HORSE PIKE REGIONAL SCHOOL DISTRICT, PLAINTIFF, v. TOWNSHIP OF GLOUCESTER, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided February 1, 1974.

      Mr. John S. Fields for plaintiff (Messrs. Hyland, Davis S Reberkenny, attorneys).

      Mr. Charles Palumbo for defendant (Messrs. Kmiec and Palumbo, attorneys).
   Rizzi, A. J. S. C.

This matter is before the court on order to show cause why defendant Gloucester Township should not be restrained from effectuating and implementing ordinances affecting the rezoning of certain areas of the township. Defendant seeks upon its cross-motion to have the restraint dissolved and the complaint dismissed pursuant to B. 4:6-2 because of a failure by plaintiff to state a cause of action upon which relief can be granted, or in the alternative, for summary judgment according to B. 4:46-2.

. On October 2, 1973 the township council enacted two ordinances, numbers 73-17 and 73-19, which amended section 83-33 et seq. of the zoning ordinance of Gloucester Township. The effect of these two ordinances was to rezone approximately 470 acres of land from an industrial to a residential classification so that a “Residential Planned Community” district could be established in that area. Plaintiff Board of Education of the Black Horse Pike Regional School District, which serves the municipalities of Runnemede and Bellmawr as well as Gloucester Township, claims that the resultant rapid influx of children into such a district would create an extreme burden upon the effective administration and functioning ability of the school district, to such an extent as to be inconsistent with the high constitutional mandate accorded the educational system. Plaintiff therefore seeks to restrain the implementation of the ordinances in question, contending that the action of the township in passing them is an interference with the educational program which attains a level of unconstitutional proportion.

N. J. Const. (1947), Art. VIII, § 4, par. 1 requires that the Legislature provide for the maintenance and support of a thorough and efficient system of free public schools. Plaintiff cites Robinson v. Cahill, 62 N. J. 473 (1973), in support of the view that the permissive grant of zoning power to municipalities must defer to the constitutional command to the Legislature to provide equal educational opportunities to all children. While this may be true, this court holds that the Robinson rule is inapposite in the instant case. The nature of the action undertaken by defendant in this case does not result in the foisting of an unconstitutional burden upon the educational system in the Black Horse Pike Kegional School District such as to bring zoning within even a most expansive reading of Robinson. Purthermore, the court finds that the rule of such cases as Midlown Properties, Inc. v. Madison Tp., 68 N. J. Super. 197 (Law Div. 1961); Molino v. Mayor, etc., Glassboro, 116 N. J. Super. 195 (Law Div. 1971); and Springfield Tp. v. Bensley, 19 N. J. Super. 147 (Ch. Div. 1951), is not in conflict with Robinson on this point.

In Molino the court struck down an ordinance which, because of the burden upon the school system and increase in taxes concomitant with an influx of children into residentially zoned areas, restricted the future population of Glassboro to adults. Similarly in this case, plaintiff seeks the same result as that accomplished by the ordinance in Molino, through an injunctive proceeding against the effectuation of these ordinances. Where the exercise of the zoning power is reasonable, courts are loathe to foreclose the implementation of resulting ordinances, Midtown Properties, Inc., supra.

Our courts have specifically held that a municipality has no right to refuse to grant approval for a building project merely because its school system would be unable to absorb the increase in students, Midiown Properties, Inc., supra, 68 N. J. Super, at 210, or that it would increase taxes, Springfield Tp. v. Bensley, supra, 19 N. J. Super, at 158. The court notes that such increases in student population are inevitable in any rapidly expanding community. Actions of zoning boards intended to cope with such expansion cannot be classified as unconstitutional interference with the supervening educational priorities held to be' preeminent by our Supreme Court in Robinson. Only by unreasonable and arbitrary extension of Robinson’s principles can these actions be deemed violative of the spirit of our State Constitution, Art. VIII, § 4.

Plaintiff cites Newark Hills and Ice Cream Co. v. Parsippany-Troy Hills, 47 N. J. Super. 306 (App. Div. 1957); Ward v. Montgomery Tp., 28 N. J. 529 (1959), and Gruber v. Raritan Tp., 68 N. J. Super. 118 (Law Div. 1961), for the proposition that the use of municipal zoning schemes is validated for the purpose of offsetting financial difficulties and relieving congestion in the school system. However, it is impermissible to draw from these cases the inference that the inverse result, i. e., an increase in the cost of education in the district due to municipal zoning policies, is the result of irresponsible and arbitrary action of township council.

Plaintiff also claims that the need for new facilities will require additional levies upon the taxpayers of the other municipalities comprising its region, Runnemede and Bellmawr, and as such will deny to them equal protection, since they will be forced to pay for the education of students from Gloucester Township. This contention can be summarily disposed of with the observation that where the Legislature has seen fit to establish a school district with boundaries which are not coextensive with those of each of its respective municipal constituents, any inequity which arises in the bearing of the cost of new buildings is outweighed by the advantages which the Legislature foresaw would inure to every municipality organized into such a district.

Since plaintiff board of education has raised no cognizable claim upon which relief can be granted, the court, pursuant to B. 4:6-2, enters judgment for defendant, dissolving the temporary restraint upon the operation of the aforesaid ordinances and dismissing the complaint. No costs.


author: Larner, A. J. S. C.

text:
    RICHARD J. ALBIGESE, TRADING AS DOMINION ENTERPRISES, PLAINTIFF, v. CITY OF JERSEY CITY, A MUNICIPAL CORPORATION, STEFAN HAJZL, FLORENCE CAFFNEY AND EMMA SMITHERMAN, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided January 14, 1974.

      Mr. Joseph L. Freiman for plaintiffs.

      Mrs. Eileen Tulipan Martini, Special Counsel, for defendants (Mr. Raymond Chasan, Corporation Counsel for the City of Jersey City, attorney).
   Larner, A. J. S. C.

This action in lieu of prerogative writs is brought bjr the owner of several apartment buildings in Jersey City attacking the validity of certain provisions of the Rent Stabilization Ordinance of the City of Jersey City. The matter was heard at a plenary trial with full presentation of evidence by both litigants in the controversy.

At the time of trial the court had before it the basic ordinance, Jersey City, N. J., Ordinance 346, February 20, 1973 (hereinafter cited as J. 346) and the amending ordinance, jersey City, N. J., Ordinance 366, July 17, 1963 (hereinafter cited as J. 366). Subsequent to the hearing, the city passed a further amendatory ordinance, Jersey City, N. J., Ordinance 390, November 20, 1973 (hereinafter cited as J. 390). In view of the fact that the court is required to decide the ease on the basis of the status of the law at the time of determination, Hohl v. Readington Tp., 37 N. J. 271, 279 (1962); Kligman v. Lautman, 91 N. J. Super. 488, 493 (App. Div. 1966); Nolle v. Chairman, etc., Mendham Tp., 91 N. J. Super. 111, 116 (App. Div. 1966), cert. den. 48 N. J. 120 (1966), and with the acquiescence of the parties, the conclusions reached herein will be based upon the local law in effect as of this date.

The power of a municipality to adopt ordinances controlling or stabilizing rents has been approved by the Supreme Court of this state in Inganamort v. Fort Lee, 62 N. J. 521 (1973). The contention that a local government is powerless to legislate in the area of rent control is therefore no longer a viable issue. Hence, the challenge to the ordinance is focused upon the absence of an emergency justifying the exercise of that power and upon the means utilized in the ordinance to accomplish the intended purpose.

The ordinance in question seeks to control rents in buildings having more than four dwelling units by stabilizing the rentals in those buildings at the levels which obtained on January 11, 1973, the date of the expiration of Phase III of the Federal Government’s Economic Stabilization Program. Utilizing the January 11, 1973 base as the standard for the rent freeze, provision is made for permissible increases based upon changes in circumstances. For example, an automatic percentage increase is granted at the termination of a tenancy equal to the amount that the Consumer Price Index of the Bureau of Labor Statistics of the U. S. Department of Labor has increased over the index figure existing at the commencement of the tenancy (§ 4, as amended by J. 366). Provision is also made for a rent surcharge when warranted by increase in taxes (§ 5, as amended by J. 390), or expenditures for capital improvements (§ 10B, as amended by J. 390). In addition, there is a provision for a “hardship” increase when the “landlord cannot meet his mortgage payments and maintenance” (§ 10A, as amended by J. 390).

The ordinance by its terms is limited to a life of one year and expires at that time unless extended by resolution of the municipal council on a year-to-year basis. It delegates the administration of the ordinance to a Pent Leveling Board with appropriate provisions for hearings and notice to interested parties (§§ 10, 11, as amended by J. 390).

The manifold contentions of plaintiff may be briefly summarized as follows:

1. There is no critical housing shortage in Jersey City which can legitimately support the exercise of the police power to control rents.

2. The retroactive provision of the ordinance rolling back rents to the levels in existence on January 11, 1973 is an unconstitutional impairment of the obligation of contracts.

3. The limited applicability of the ordinance to buildings containing more than four dwelling units constitutes an unreasonable classification and creates unconstitutional disr crimination.

4. The use of the Consumer Price Index of the U. S. Department of Labor as a criterion for permissible rent increases is arbitrary and fails to assure the owner a fair return on his investment.

5. The method of computing a rent surcharge for tax increases is arbitrary and unreasonable.

■ 6. The method of computing a rent surcharge for a capital improvement is arbitrary and unreasonable.

7. The provision for a hardship increase is unfair and unreasonable.

Existence of Emergency

The constitutionality of rent control regulation depends upon the existence of a housing emergency, for without such an underlying need the municipality would not be legally justified in exercising its police power in this area of control. Jamouneau v. Harner, 16 N. J. 500, 514-517 (1954). See also, Stuyvesant Town v. Ligham, 17 N. J. 473, 483 (1955). An emergency, in this sense, is an "unusual public exigency calling for the exercise of the police power to alleviate the common peril or need.” Jamouneau, supra, 16 N. J. at 514.

The preamble of the ordinance recites the existence of a housing emergency due to exorbitant and speculative rent increases which are causing "severe hardships upon tenants and are adversely effecting [sic] the health, safety and general welfare of the citizens” of the community (Preamble, J. 346). With or without this recital, the ordinance is presumed to be valid and to have been adopted on the factual foundation essential for its validity. Garden State Racing Ass’n v. Cherry Hill Tp., 42 N. J. 454, 464 (1964) ; State v. Mundet Cork Corp., 8 N. J. 359, 369-371 (1952); Johnson v. Montville Tp., 109 N. J. Super. 511, 519 (App. Div. 1970). The burden therefore rests upon plaintiff to establish the absence of the emergency asserted expressly and impliedly by the municipality.

Although some opinions in the field of landlord-tenant law make reference to the court taking judicial notice of the existence of an acute shortage of low-income housing in urban centers in this State, Samuelson v. Quinones, 119 N. J. Super. 338, 343 (App. Div. 1972); Troy Hills v. Fischler, 122 N. J. Super. 572, 582 (Law Div. 1971), aff’d 122 N. J. Super. 525 (App. Div. 1972); Tanella v. Rettagliata, 120 N. J. Super. 400, 411 (Cty. Ct. 1972); Academy Spires, Inc. v. Brown, 111 N. J. Super. 477, 480 (Cty. Ct. 1970), the imprimatur placed upon the right of municipalities to adopt local rent control ordinances in Inganamort, supra, requires a factual inquiry into the existence or nonexistence of the emergency in the affected locale.

Plaintiff sought to establish the absence of an emergency by reference to factors allegedly demonstrating an open rental market in Jersey City. One factor projected by the proofs is the increase of the number of advertisements for vacant apartments in local newspapers between 1971 and 1973, although there was no correlation between these advertisements and the rental range involved. In addition, real esiate brokers, with a personal financial interest as property owners, testified in very general terms that there were more vacant apartments available in 1973 than there were in 1970 or 1971, and that the payment of broker’s fees on rentals has shifted from tenants to landlords. One of the brokers estimated a vacancy factor of 5% in Hudson County based upon discussions with owners. Another owner-broker testified that he had a current vacancy factor of 16 % in two buildings, with a drastic increase in vacancies commencing in the beginning of 1973. Sevéral building superintendents also testified that more vacancies existed in 1973 than in past years.

The Director of Planning of Jersey City testified as an expert and as one intimately familiar with the housing conditions in Jersey City. His department has monitored the housing situation in the city since 1961, preparing various reports on all phases of data relevant to housing, including statistical analyses of housing unit vacancies. The most recent and comprehensive report prepared under his supervision for submission to the governing body and to the appropriate federal agency was published in September 1973. It is entitled “Jersey City Housing Crisis” and is a compendium of housing information garnered from other reports, investigative field work and discussions with realtors.

The planning expert, using the 1970 census data as a starting point, concluded that as of September 1973 there was a vacancy factor of less than 3%, based on the number of units added to the rental market through construction and removed from the market through demolition or deterioration since 1970. In addition, he pointed out that many available housing units are beyond the reach of economic feasibility for the families in greatest need of housing. He testified that the factors involved in assessing the presence or absence of a housing crisis are more than the statistics of population, housing units and vacancy rate. There must also be considered the income of those in need of housing, the rents demanded by the owners, the age and obsolescence of existing buildings, the amount and cost of new construction, the effect of increased taxes on private construction, the relocation of families because of government subsidized housing developments, and many other variables relating to the social composition of the residents of the city.

It is unnecessary to detail in full the testimony of the expert or the contents of the report. The unequivocal conclusion from this evidence is that there is an acute shortage and demand for housing, particularly in the lower rental categories.

Plaintiff urged that the availability of housing units must be tested by the area rental market, which includes municipalities contiguous to Jersey City. There is some merit to this contention, for the number of available housing units cannot realistically be circumscribed by a mere border between municipalities. From a practical standpoint, however, if a single municipality is empowered by law to adopt rent control legislation, the factual pattern for the determination of the existence of a housing emergency must of necessity be measured by the conditions in that municipality. Otherwise there could be no limit to the potential of housing facilities in neighboring municipalities, nor in the indeterminable variables relating to the economic status of the residents in the various municipalities, the availability of transportation to places of employment, school ties, family relationships, etc. Such a limitless panorama would lead to the absence of any finite basis for conclusion.

The municipal governing body is justified in considering the conditions within its own domain, so long as the state legislature and the courts have invested it with the right to legislate locally on the subject matter. And, as a consequence, the court should utilize the same factual standard in testing the reasonableness of the municipal action.

It should be noted, of course, that a rent control ordinance does not cure a housing shortage, since such a condition can only be remedied by massive rehabilitation and construction. The object of the ordinance is Tather to prevent exorbitant rental increases in a milieu where tenants are deprived of the ability to secure other housing. The absence of a competitive housing market destroys the normal balance of a free enterprise approach in this vital area affecting the health and welfare of the residents of the community.

Because of this the governing body considered not only the reports and data as to the availability of housing facilities but also information relating to rent increases demanded by some landlords in a test period between the termination of federal controls on January 11, 1973 and the end of March 1973. The Mayor’s Action Bureau received approximately 350 complaints, and there was introduced into evidence a list of these specific instances, detailing the names of the tenants, the addresses, and the rentals before and after the increase. From this sampling there is a substantial showing of exorbitant rent increases which in part support the conclusions made by the municipal council in the preamble to the ordinance.

Based upon all the evidence on this subject and the reasonable inferences therefrom, the court concludes that an emergency exists in the area of housing in Jersey City which amply supports the exercise of the police power by the municipality. The plaintiff has failed to sustain his burden to prove the contrary.

Retroactive Provisions of Ordinance

The ordinance was adopted on February 20, 1973 and became effective on March 12, 1973. By its terms it provides for a rollback of rents to the levels in existence on January 11, 1973 and invalidates rental provisions contained in any agreements entered into subsequent to that date. This proviso was included to create a continuity of controls which had existed on a federal level prior to January 11, 1973.

Plaintiff attacks this provision for retroactivity on the ground that it impairs the obligation of contracts entered into between plaintiff and tenants between the base date of January 11, 1973 and the effective date of the ordinance as being violative of U. S. Const., Art. I, § 10 and N. J. Const. (1947), Art. 1V, § VII, par. 3.

It is well settled that legislation which is necessary for the protection of the health, safety and welfare of the public within the police power of the state or its subdivisions may alter or abrogate existing contractual rights without affecting its validity under the foregoing conslitutional prohibitions. City of El Paso v. Simmons, 379 U. S. 497, 508, 85 S .Ct. 577, 13 L. Ed. 2d 446 (1964) ; Veix v. Sixth Ward B. & L. Ass’n, 310 U. S. 32, 38-40, 60 S. Ct. 792, 84 L. Ed. 1061 (1939); Home B. & L. Ass’n v. Blaisdell, 290 U. S. 398, 428, 54 S. Ct. 231, 78 L. Ed. 413 (1933) ; Brookchester v. Ligham, 17 N. J. 460, 467 (1955). The constitutional interdiction against impairment of contracts is not an absolute one. City of El Paso v. Simmons, supra, 379 U. S. at 508, 85 S. Ct. 577; N. J. Sports & Exposition Auth. v. McCrane, 119 N. J. Super. 457, 563 (Law Div. 1971), mod. 61 N. J. 1 (1972). Every contract is made subject to the condition that its fulfillment may be frustrated by a proper exercise of the police power. Veix v. Seneca B. & L. Ass’n, 126 N. J. L. 314, 320 (E. & A. 1941); American Budget Corp. v. Furman, 67 N. J. Super. 134, 144 (Ch. Div. 1961), aff’d 36 N. J. 129 (1961).

The rights of private individuals, whether codified by contract or not, must bow to the paramount right of government under its police power to adopt laws which are necessary for the health, safety and welfare of the public. The only caveat to this overriding power is that the legislation must be reasonable in its effort to achieve the intended purpose and that it shall not constitute an arbitrary exercise of power. Brookchester, supra, 17 N. J. at 466; National City Bank v. Del Sordo, 16 N. J. 530, 542 (1954) ; Jamouneau, supra, 16 N. J. at 514; Monmouth Lumber Co. v. Ocean Tp., 9 N. J. 64, 71 (1952).

The case of Daniel v. Oakland, 124 N. J. Super. 69 (App. Div. 1973), relied upon by plaintiff, is distinguishable. There, pursuant to N. J. S. A. 40 :62-47, the municipality undertook to supply water to residents. Fees were charged by the municipality according to a set schedule. In September 1970 the municipality increased the fees by ordinance, applying such fees retroactively to the previous July. The retroactive amendatory ordinance was struck down under the Federal and State Constitution prohibitions against impairment of contract. The court found that the municipality had effectively entered into a contract with the residents which could not be impaired by retroactive legislation of one of the contracting parties. More significantly, the municipality was engaged in a private or proprietary function. The impairment did not result from nor could be justified by the requisite police power authority. In substance, therefore, the municipality, without police power justification, unilaterally altered its contract with the residents for its benefit. The opinion of the Appellate Division in Daniel has no impact upon the issue before this court which involves the exercise of governmental police power.

The court has already concluded that overall rent control is reasonable because of the existence of an emergency and that the exercise of the police power is warranted under the existing factual circumstances. The additional feature of retroactive application of the ordinance is intended to fill the void which was created by the termination of federal rent controls. It serves the fair and legitimate purpose of equal treatment of landlords and tenants by eliminating the unfair advantage gained by those owners who moved quickly to increase rents the moment that federal regulations were lifted. Such owners undoubtedly acted in anticipation of impending state or local legislation. In this area, celerity should not be rewarded.

The retroactivity provision therefore has a rational public purpose under the existing circumstances. Its tie-in to the point of time of elimination of federal controls constitutes a reasonable exercise of police power uninhibited by the cited constitutional provisions.

Applicability to Buildings Containing More than Four Units

It is asserted that the ordinance is invalid because it ap- . plies only to buildings containing more than four units. Plaintiff alleges that this classification based upon the number of units is arbitrary and constitutes a denial of equal protection of the laws.

In N. J. Chapter, American Institute of Planners v. N. J. State Board of Professional Planners, 48 N. J. 581 (1967), Justice Francis articulated the guiding principles applicable to legislative classifications:

The constitutional mandate for equal protection does not mean that the regulation must reach every, class to which it might be applied — that the Legislature must regulate all or none. The Legislature has wide discretion in the creation of or recognition of classes for different treatment. Equal protection does not require that all persons be dealt with identically. If there is some reasonable basis for the recognition of separate classes, and the disparate treatment of the classes lias a rational relation to the object sought to be achieved by the lawmakers, the constitution is not offended, [at 601]
Equal protection is not denied because a regulatory statute might have gone farther than it did, or might have included some persons or classes of persons who were excluded. Regulatory need in a particular field may appear to the legislative mind in different dimensions and proportions; as more acute in one area than in another. Consequently the reform may proceed one step at a time, addressing itself t.o the aspect of the problem which seems the most pressing * * *. In short, equal protection does not demand immediate logical tidiness; nor is it violated because the legislation as enacted does not bring about the full reform or result intended to be produced. In an area of many competing pressures the constitution is satisfied if the Legislature, in responding to what it conceived to be living facts calling for regulation, did not disregard reason in drawing its lines. That those lines might have been drawn more suitably in light of the whole problem is not a matter for judicial re-examination. Classification is a perennial and difficult problem, capable of no doctrinaire solution. Basically the solution resides in the legislative domain and the judiciary will not intrude unless the classes established for separate treatment represent invidious discrimination, that is, treatment which has no rational basis in relation to the specific objective of the regulatory legislation, [at 602-603, cases omitted]

See also, Woods v. Cloyd W. Miller Co., 333 U. S. 138, 145, 68 S. Ct. 421, 92 L. Ed. 596 (1948).

Plaintiffs reliance for its position on this point upon the opinion in BrooTcchester, supra, is inapposite. The Supreme Court in that case held that a rule of the State Rent Control Director limiting regulations of rent control to new buildings with 50 or more units was invalid because the Director sought thereby to classify on a quantitative basis under enabling legislation which empowered him to make classifications and differentiation only “according to the nse or character” of the property. Brookchester, supra,, 17 N. J. at 470. The Supreme Court holding therefore was confined to the invalidity of the classification as an ultra vires act of an administrative agency beyond the power granted by the legislation creating the agency. Such a holding, regardless of the articulation leading thereto, is not a precedent which controls in a case involving a classification by a local legislature untrammelled in its police power by state legislation. In the latter ease the sole criterion for testing the validity of the classification is whether it meets the test of rationality in relation to the objective of the local legislation.

The proofs before the court demonstrate that a great percentage of buildings with units up to four families are owner-occupied, and profit is not the dominant motive as is the case with absentee owners. In addition, only 10% of the complaints relating to rent increases after January 10, 1973 were from tenants in buildings having less than five families. The governing body concluded that it was unnecessary to control the rents in smaller buildings with less than five units, and that the emergency resulting from the pattern of excessive increases was mainly centralized in the larger buildings. It therefore determined that the object of the ordinance would be accomplished by imposing its regulations upon buildings having five or more dwelling units.

This solution is within the power of the local legislature. It does not represent an invidious discrimination and is based upon rational grounds. Although the legislation could have been made applicable to all rentals, and although other suggestions might be made for a different point of demarcation, the court has no right to interfere with the legislative discretion so long as the result comports with rationality.

Consumer Price Index

The ordinance stabilizes the rentals as of January 11, 1973 but authorizes an automatic increase equal to the percentage difference between the Consumer Price Index (CPI) for this metropolitan region for the three-month period prior to the termination of the tenancy and the CPI for the three-month period prior to the commencement of the tenancy. The CPI purports to measure the “changes in prices of goods and services bought by urban wage earners and clerical workers.” The Consumer Price Index, A Short Description 1 (U. S. Dept. of Labor 1971). It is popularly called a “cost of living” index. And the annual percentage increase of the CPI ad-measures the price changes from the previous year in the area of the test products and services.

The categories of consumer goods and services which make up the statistical findings include: food; housing, including rent and expenses for home ownership such as taxes, insurance, maintenance and repairs; fuel and utilities; household furnishings and operation; apparel; transportation; health; recreation; tobacco; alcoholic beverages, and personal expenses.

Plaintiff complains of the use of the CPI as a standard for authorizing a rent increase. He argues that the weight given to the component parts of the CPI demonstrates that the index has no reasonable relationship to a fair rental or the cost of operating a building. He points to a New York City price index for operating costs of apartment houses as a more reasonable guide to evaluate the fairness of the rent increase.

It is also suggested that the ordinance contains no provision for comparability as a test of fair rental value, and that statutory rent controls in the past have provided other means to insure to the owner a fair return on his investment.

In essence, plaintiff urges that the Jersey City ordinance stabilizes rents for the benefit of tenants but fails to allow landlords a fair and equitable return on their investment. See Friedman v. Podell, 21 N. J. 100, 104 (1956) ; Jamouneau, supra, 16 N. J. at 527.

This challenge requires a brief review of the scheme of the allowable rent increases in the ordinance. Although rents are frozen at the applicable level of January 11, 1973, there are several-areas of permissible increases based upon changes in circumstances affecting the landlord’s return. First, as already noted, an increase in the CPI authorizes the landlord fo impose an equal increase in each tenant’s rent. Second, a tax increase permits a rent surcharge apportioned among all the tenants in the building. Third, the cost of a capital improvement may be recouped over the useful life of the improvement by appropriate rent increases. Fourth, if, regardless of the aforesaid rent adjustments, the landlord can demonstrate that the income is insufficient to meet his mortgage payments and maintenance, he may apply to the Board for further increased rentals.

It can be seen that the potential increases allowed in the ordinance are added to a base created- by the landlord him self in his pre-January 11, 1973 relationship with the tenants. It is not computed upon a base rent dictated or created arbitrarily by the governing body or the Rent Leveling Board. Hence, it can be reasonably assumed that the voluntary act of the landlord in setting the rent prior to the effective date of stabilization was done with a consciousness of producing at least a fair return on investment.

If that is so, the provisions for rent increases super-imposed upon the landlord’s concept of a fair rental constitute a rational technique for arriving at a conclusion seeking fair treatment to the tenant and the landlord. The mere fact that there may be other methods, even more preferable, to achieve the same end does not dictate that the method selected by this governing body is invalid. If it is not arbitrary and reasonably achieves the intended purpose with due regard to the property rights of the landlord as well as the needs of the tenants, it passes judicial muster. The court cannot supplant the local legislature’s discretion with its own opinion of alternative methods of dealing with the subject matter. The municipal action is beyond judicial intrusion.

The prime target of plaintiff’s attack is the alleged Tin-warranted use of the CPI as a measuring stick for a permissible rent increase. Although the CPI is not attuned exclusively to the cost factors involved in operating an apartment house, it serves as a convenient and logical barometer which measures inflation. The index is prepared by experts of the U. S. Labor Department based upon reliable field samplings and inquiries. It is used as a national barometer to measure the changes in the cost of living and is refined to apply to different sections of the country. Despite the possibility of error, the statistical methods used to arrive at conclusions are sufficiently accurate to depict the economic trend.

The components include the major consumer items which, of necessity, incorporate the labor costs involved in furnishing the products and services. In addition, it also includes rental and maintenance costs for owned buildings. It is clearly reasonable to apply the same standard for apartment rental increases as that which reflects the cost of living increase in the area. There is a logical nexus since rent is part and parcel of the cost of living and should in a normal housing market keep pace with that index.

As noted by the Department of Labor in The Consumer Trice Index, a Short Description, supra:

The Consumer Price Index is used widely by the general public to guide family budgeting and to understand what is happening to family finances. It is used extensively in labor-management contracts to adjust wages. Automatic adjustments based on changes in the index are incorj>orated in some wage contracts and in a variety of other types of contracts, such as long-term leases. In addition, the OPI is used as a measure of changes in the purchasing power of the dollar for such diverse purposes as adjusting royalties, pensions, welfare payments, and occasionally alimony payments. It also is used widely as a reflection of inflationary or deflationary trends in the economy, [at 2]

Where the index is used so widely as a means of measuring requisite adjustments in various sectors of our society and economy, it is wholly reasonable for a governing body to resort to such an available statistic to measure the adjustment of rents in the landlord-tenant relationship. It may not represent perfection but it cannot be said that the use of such an index is so arbitrary as to warrant judicial interference.

Rent Surcharges for Tax Increase, Capital Improvements and Hardship

Section 5 of the ordinance as originally adopted on February 20, 1973 provided that an increase in property taxes may be recouped by the landlord through a rent increase. The formula contained therein authorized the landlord to divide the amount of the tax increase for the year by the total number of square feet in the building and to surcharge each tenant in an amount representing the result of the multiplication of the per square foot increase by the number of square feet occupied by the tenant. This formula failed to allocate among the tenants the burden of increased taxes applicable to the common areas of the building, such as lobbies, halls, stairways, basements, etc. In effect, the ordinance provision unfairly compelled the landlord to absorb a substantial portion of a tax increase.

This inequity was corrected by the amendatory ordinance of November 20, 1973 which grants the landlord the option of two alternative methods of calculation: (1) by dividing the total tax increase by the number of square feet of the rentable portions of the building and imposing a surcharge computed by multiplying the tax increase per square foot by the amount of space occupied by each tenant, or (2) by dividing the total tax increase by the number of available rooms in the building to obtain the tax increase per room, and imposing a tax surcharge computed by multiplying this tax increase per room by the number of rooms occupied by the tenant.

By application of either of these methods, the total tax increase is borne by the tenants, and the landlord is thereby granted sufficient additional income to pay for the increased expenditure. Sudh a provision is fair and equitable to both landlord and tenants, and contains no infirmity subject to judicial intrusion.

Section 10 of the ordinance, as amended on November 20, 1973, malees provision for application by the landlord to the Pent Leveling Board for a rental surcharge for “capital improvements or services.” The Board is authorized to grant such a rent increase, after hearing, if the improvement is truly a capital one. Under such circumstances, the ordinance outlines guidelines for computing the Tent increase by arriving at the annual cost based upon the useful life of the improvement, and then apportioning that cost among the tenants by a rent surcharge calculated to shift the total cost of the capital improvement to the tenants.

Although the original ordinance had some features which compelled the landlord to absorb part of the cost of the capital improvement and also imposed a percentage limitation on the allowable increase authorized by this section, the amendment to the ordinance cured these features. As a consequence, there can be no viable objection to the current section which permits the recoupment from the tenants of the cost of the capital improvement after a due process hearing before the Board.

In addition to provisions for the foregoing surcharges, the ordinance also authorizes au application for a hardship increase in the. event that a landlord cannot meet his mortgage payments (including amortization) and maintenance costs. This provision represents an avenue of relief available to a landlord in the event that he is in a financial dilemma after the utilization of the benefits of a CPI increase, tax surcharge, or capital improvement increase.

Plaintiff contends that none of the ordinance provisions affirmatively takes into account the factor of a fair profit or investment return to the landlord. Although the ordinance is not couched in terms of percentage of profit or return to the landlord, the total effect, as the court has already oh-served, incorporates a built-in assurance of a fair return on investment. And this ensues from the fact that all increase provisos are built upon the rental base created by the landlord prior to January 11, 1973.

Undoubtedly, there are and have been many varied techniques adopted by legislatures in the ambit of rent control legislation. And in some instances the landlord has been permitted to secure rent increases upon a showing that he is unable to obtain a fair return on his investment.

Nevertheless, it is not for the court to dictate the particular method by which the local legislature seeks to accomplish its purpose of rent stabilization. Even if there may be more preferable techniques of regulation, the legislative judgment must prevail. Of course, the municipal power is not limitless, but if its exercise is not arbitrary and represents a reasonable regulation of the rights and interests of landlords and tenants within the ambit of the purpose of the legislation, the validity of the ordinance must be sustained.

The court finds that the provisions for tax, capital improvement and hardship increases represent a reasonable exercise of police power when considered with the overall scheme of the total ordinance.

Conclusion

Plaintiff’s other challenges to the ordinance have been considered and found to be without merit.

Judgment will be entered in favor of defendant sustaining the validity of the Jersey City Rent Stabilization Ordinance.


text:
    WOODCLIFF MANAGEMENT, PLAINTIFF, v. TOWNSHIP OF NORTH BERGEN, A MUNICIPAL CORPORATION, MAYOR AND BOARD OF COMMISSIONERS OF TOWNSHIP OF NORTH BERGEN, EMERGENCY RENT LEVELING COMMISSION, DEFENDANTS. INDEPENDENCE ASSOCIATES, PLAINTIFF, v. TOWNSHIP OF NORTH BERGEN, A MUNICIPAL CORPORATION, MAYOR AND BOARD OF COMMISSIONERS OF TOWNSHIP OF NORTH BERGEN, EMERGENCY RENT LEVELING COMMISSION, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided January 23, 1974.

      Mr. Harvey M. Douglen for plaintiffs (Messrs. Stier and Douglen, attorneys).

      Mr. Leon S. Wolk, Assistant Township Attorney, for defendants.
   Larner, A. J. S. C.

These consolidated actions attack the validity of a number of the provisions of the Rent Stabilization Ordinance adopted by the Township of North .Bergen. Ordinance 1577-71, December 16, 1971, as amended by Ordinance 1663-73, June 21, 1973. The cases were heard in a summary manner on the return date of an order to show cause pursuant to £ stipulation that a housing emergency existed in the township and that the issues for determination by the court were purely legal in nature and limited to the validity of the particular ordinance provisions under attack.

The pattern of the ordinance is substantially similar to that of the Rent Stabilization Ordinance of the City of Jersey City which was considered by this court in Albigese v. Jersey City, 127 N. J. Super. 101 (1974). The determination of the comparable issues in Albigese are incorporated herein and adopted as the conclusions of the court controlling the parties to this litigation.

Nevertheless, plaintiffs herein advance an additional facet of constitutional infirmity which requires exploration and decision by the court. They attack the validity of § 5 of the ordinance:

Any rent increase imposed after January 11, 1973, the date of the expiration of Federal price controls, to the extent that such increase is in excess of that which is permitted by this Ordinance is hereby declared to be null and void and such excess rent shall he refunded to the tenant by the landlord forthwith. [Emphasis supplied]

Plaintiffs, pursuant to leases with tenants, collected rents between January 11 and June 22, 1973 which were in excess of that allowed by the June amendment. The validity of the retroactive effect of the ordinance on contracts entered into between the rollback date of January 11 and the effective date of the ordinance has been sustained by the court in Albigese as a reasonable exercise of police power. The narrow issue remaining for determination therefore is whether the municipality may compel a landlord to refund the excess rentals paid by tenants before the effective date of the ordinance.

It is urged by plaintiffs that the right to retain the moneys already collected is a vested property right which is protected by federal and state constitutional limitations, and cannot be divested under the threat of prosecution for violation of the ordinance with potential penalties of fine and imprisonment.

It cannot be denied that the possession of moneys acquired through a consummated transaction has a vested characteristic which is distinguishable from a contract right that is only executory in nature. The latter right may be impaired by legislation which is reasonably necessary for the protection of the public within the ambit of police power reserved to the legislature. A vested property right, on the other hand, is protected by the Fourteenth Amendment of the United States Constitution which prohibits the state from depriving any person of property without due process of law. See also N. J. Const. (1947) Art. I, par. 1. If the right is one which is clearly vested, it cannot be divested by a legislative enactment, albeit that enactment may otherwise constitute a valid exercise of police power. State v. Standard Oil Co., 5 N. J. 281, 293 (1950), aff’d 341 U. S. 428, 71 S. Ct. 822, 95 L. Ed. 1078 (1950); McAllister v. Board of Education, Kearny, 79 N. J. Super. 249, 261 (App. Div. 1963), aff’d 42 N. J. 56 (1964). See Memphis v. United States, 97 U. S. 293, 24 L. Ed. 920 (1877).

In Pennsylvania Greyhound Lines, Inc. v. Rosenthal, 14 N. J. 372 (1954), Justice Heher sought to arrive at a general definition of a vested right in harmony with the constitutional protection:

The term “vested right’ ’is not defined in either the Federal or the State Constitution; but it would seem that, generally, the concept it expresses is that of a present fixed interest which in right reason and natural justice should be protected against arbitrary state action — an innately just and imperative right that an enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny. Such seems to be the principle of Campbell v. Holt, 115 U. S. 620, 6 S. Ct. 209, 29 L. Ed. 483 (1885). [at 384]

See Engler v. Capital Management, 112 N. J. Super. 445, 447 (Ch. Div. 1970); Gilman v. Newark, 73 N. J. Super. 562, 598 (Law Div. 1962).

In the context of the standards set forth in Pennsylvania Greyhound Lines, Inc., supra, it is manifest that plaintiffs had a “present fixed interest” in the rent increases paid and received prior to the adoption of the regulatory legislation. In “natural justice” such a vested property interest is protected from retroactive action of the state or its subdivisions. The attempt of the Uorth Bergen ordinance to compel divestiture of this vested interest is arbitrary and violative of the due process clause of the Constitution.

It must be emphasized, however, -that this determination is limited to the application of the refund provision to rent increases collected between January 11 and June 22, 1973. It does not affect the validity of the rollback provision limiting rentals collected after June 22 to the level existing January 11, nor the requirement of refund of excess rents collected after the adoption of the ordinance. Similarly, this ruling does not modify the court’s determination that the retroactive invalidation of rent increases imposed by contracts entered into between January 11 and June 22, 1973 constitutes a valid implementation of the municipal police power.

The provision contained in § 5, par. (b), as amended, pertaining to refund of excess rents, is therefore declared void so far as it applies to such excess amounts collected by the plaintiffs between January 11 and June 22, 1973. The other provisions of the ordinance which were specifically criticized by plaintiffs in this litigation are held to be valid.


author: Kole, J. S. C.,

text:
    801 AVENUE C, INC., PLAINTIFF-RESPONDENT, v. CITY OF BAYONNE, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued February 4, 1974—
    Decided March 5, 1974.

      Before Judges Handler, Meanor and Hole.

      Mr. M. Stanley Susskind argued the cause for appellant.

      Mr. William M. Feinberg argued the cause for respondent (Messrs. Feinberg, Dee and Feinberg, attorneys).
   The opinion of the court was delivered by

Kole, J. S. C.,

Temporarily Assigned. Before 1969 the zoning ordinance of the City of Bayonne, adopted in 1945, provided for a “C” residence district (one-family dwellings), an “A” residence district (dwellings without limitation as to height or number of units) and a “B” residence and light industrial district (mixed uses for residence and light industry) . As a result over 1,000 apartment houses were built, scattered throughout the city as follows: 891 — 3 stories; 2 — 3^2 stories; 92 ■— 4 stories; 31 — 5 stories and over.

Prompted by notification from the Federal Government that the city might not be certified for a workable building program because its mixed uses resulted in built-in blight, the officials of the city in 1957 commenced extensive professional planning and zoning programs. After a number of comprehensive studies, plans and reports, a proposed revision of the zoning ordinance was prepared by Geiger & Associates in 1966. Many public hearings, as well as meetings with representatives of the various districts involved, were held.

Thereafter, in 1969, a new zoning ordinance was adopted to replace the 1945 enactment. That created two residence districts: R 1 (one-family residences) and R 2 (a general residence district permitting multi-family dwellings). Article 12, paragraphs 1201 and 1206, of the new ordinance limits the construction of multi-family dwellings in the R 2 zone to those with a maximum height of 2 x/¡ stories and 35 feet, and containing no more than six dwelling units. The ordinance does not permit apartment houses of greater height or more units in any zone other than a special Urban Renewal Zone. The latter authorizes multi-family residences not to exceed three stories or 45 feet in height, with a maximum of 36 units per acre for garden apartments and 48 units per acre for two-family townhouse use. The evidence also indicates that a contemplated ten-story building on 24th Street is being or may be built by the Housing Authority of Bayonne under federal sponsorship to which, according to City Council President Collins, the zoning ordinance does not apply.

We sometimes hereafter refer to multi-family dwellings in excess of the height and unit limitations of Article 12, paragraphs 1201 and 1206, as high-rise apartment houses.

The owner of premises in an R 2 zone, known as 801 Avenue C, which it acquired in 1971, desired to raze an old frame dwelling and erect a six-story apartment house with 16 dwelling units. It instituted this action to have the Article 12 prohibitions referred to set aside as invalid. After a hearing the court granted the relief sought, not only as applied to plaintiff’s land hut also to all lands in the R 2 zone. This appeal by the city followed.

Except to the extent indicated below, we adopt, as supported by the evidence, the findings of fact made by the trial court. We also agree with its conclusion that the “[motivation] in adopting the ordinance of resolving future applications for apartment houses in excess of the height and unit restrictions by administrative controls is not in accordance with a comprehensive plan,' is beyond the power of the municipality and is contrary to the purposes and methods of zoning set forth in the enabling statutes.” Accordingly, the judgment is affirmed on that ground alone. See Glen Rock, etc. v. Glen Rock Bd. of Adj., 80 N. J. Super. 79, 89 (App. Div. 1963); Raskin v. Morristown, 21 N. J. 180, 184, 191 et seq. (1956).

Thus, we have no occasion to consider the soundness of the court’s alternative basis for invalidating the provisions of the ordinance involved — i. e., that under the facts it is unreasonable or arbitrary zoning in a fully developed municipality such as Bayonne, with over 1,000 high-rise apartment houses located throughout its residence districts, to preclude further development of multiple dwellings in excess of the limitations set forth in the ordinance. We need not determine, therefore, whether the cases cited for that proposition by the óourt support it in this case.

At the trial and before us the city conceded that although Bayonne is fully developed, there is a need and demand for additional rental housing units and that it did not intend by the ordinance completely to prohibit the further construction of apartment houses in excess of the limitations set forth therein. Instead, it proposed to administer the ordinance through the procedure of board of adjustment variances and planning board site plan approval on a case by case basis. An applicant 'would be able to obtain a permit to build at a specific location if he could satisfy the requirements for the grant of a variance and, in addition, the planning board found compliance with the provisions of the ordinance, that the plan was conducive to the orderly development of the area as well as the site in question, and that all off-site improvements, such as curbing, paving, width of existing streets and drainage that would be affected were sufficient for the proposed use.

The question before us, then, is not whether a fully developed municipality with over 1,000 dispersed apartment houses, many of which exceed three stories, must provide for more; nor is it necessary to decide whether such a municipality may at some point .by zoning ordinance draw a line as to height or density requirements with respect to further multifamily dwellings. See Fanale v. Hasbrouck Heights, 26 N. J. 320 (1958); Vickers v. Gloucester Tp. Comm., supra, 37 N. J. at 263 (1962) (dissenting opinion); Guaclides v. Englewood Cliffs, 11 N. J. Super. 405 (App. Div. 1951). Cf. Oakwood at Madison, Inc. v. Madison Tp., 117 N. J. Super. 11 (Law Div. 1971), certif. granted 62 N. J. 185 (1972). See also, Shipman v. Montclair, 16 N. J. Super. 365 (App. Div. 1951).

What invalidates this ordinance is the conceded intent of the municipal officials in enacting and administering it. Admittedly, its purpose is to meet high-rise apartment housing needs on an ad hoc basis through the mechanism of variance and planning site approval, rather than in accordance with a comprehensive plan or other permissible objective zoning criteria. That hind of enactment violates the standards and purposes required to be met by a zoning ordinance under N. J. S. A. 40 :55-30, 31 and 32. Wilson v. Mountainside, supra, 42 N. J. at 443-447; Rockhill v. Chesterfield Tp., 23 N. J. 117 (1957); Davidow v. South Brunswick Tp. Bd. of Adj., 123 N. J. Super. 162, 166 (App. Div. 1973); Kozesnik v. Montgomery Tp., supra, 24 N. J. at 170.

We also note the absence in the ordinance of any provision authorizing any such apartment house as a permitted use in specific districts or throughout the municipality, but requiring approval as a special exception. Such special exception could be granted by the board of adjustment, with or without further approval by the governing body, provided certain protective measures are imposed, and reasonably adequate and appropriate standards therefor are set forth in the ordinance. See N. J. S. A. 40 :55-39(b); Tullo v. Millburn Tp., 54 N. J. Super. 483, 490-491 (App. Div. 1959) : Verona, Inc. v. West Caldwell, Mayor, etc., 49 N. J. 274 (1967); Kozesnik v. Montgomery Tp., supra, 24 N. J. at 178.; Roman Catholic Diocese of Newark v. Ho-Ho-Kus. 47 N. J. at 224 (1966), concurring opinion; Harvard Ent. Inc. v. Madison Tp. Bd. of Adj., supra and concurring opinion 56 N. J. at 370 (1970); Davidow v. South Brunswick Tp. Bd. of Adj. Tp., supra; Schmidt v. Newark Bd. of Adjustment, 9 N. J. 405, 422 (1952); 2 Yokley, Zoning Law and Practice (3d ed.), §§ 15-1, 15-2, and 1972 Supp. at 72. See also, generally, dissenting opinion in Vickers v. Gloucester Tp.. Comm., supra, 37 N. J. at 252 et seq.

We assume that the variance and planning board procedures contemplated by the 1969 ordinance would have been administered by the municipal agencies involved fairly, objectively and in accordance with applicable legal standards. Nevertheless, an ordinance such as this, which by design and in effect invites such departures from its ostensible prohibition against high-rise apartment house use, is to that extent no zoning ordinance at all.

For the foregoing reasons we affirm the judgment declaring paragraphs 1201 and 1206 of § 12 invalid as applied to plaintiff and to all lands in the E 2 zone.

      The city’s planner, Geiger, testified that the density limitations were GO units per acre in the Urban Renewal Zone. We assume this is in error. See Article 22, par. 2b 1(a), of the 1969 ordinance.

      Of course, we defer to the court’s opportunity to observe and determine the credibility of the witnesses who testified. Although the findings we hereafter refer to are not necessary for a determination of this appeal, we deem it desirable to comment thereon, since we are not clear that t lie sparse record below supports them or that credibility factors are involved in their resolution.
      That the municipal officials in a pro forma fashion asserted that the zoning limitations will lessen congestion and provide more light and air, and fire and traffic control safety, does not necessarily mean that they were merely mouthing the statutory standards for zoning purposes. As we view the evidence, further examination may have given some factual content to such testimony. The city’s planning expert testified that the scattering of high-rise apartments throughout the city might make it difficult to define districts or a district permitting higher buildings for housing. That his originally planned zoning revision provided sueli a definition does not reasonably preclude a different conclusion by him and the municipal officials in 1969 after public hearings and further reflection. Moreover, it cannot be said that consideration of the interests of owners of one-and two-family residences invaded by high-rise apartment houses are not a legitimate municipal concern in zoning, provided, of course, the statutory zoning criteria are met in the ordinance enacted. See Vickers v. Gloucester Tp. Comm., 37 N. J. 232 (1962), cert. den. 371 U. S. 233, 83 S. Ct. 326, 9.L. Ed. 2d 495 (1933) ; Kozesnik v. Montgomery Tp., 24 N. J. 154 (1957) ; Harvard Ent., Inc. v. Madison Tp. Bd. of Adj., 56 N. J. 362 (1970) ; Chrinko v. So. Brunswick Tp. Plan. Bd., 77 N. J. Super. 594, 605 (Law Div. 1963) ; L. P. Marron & Co. v. River Vale Tp., 54 N. J. Super. 64 (App. Div 1959) Additionally, although the design of the ordinance was to maintain control over new high-rise rental units through its administration, we cannot conclude that its purpose was also to maintain control in this fashion over expansion of the number of residents.

      See, e. g., Zampieri v. River Vale Tp., 29 N. J. 599 (1959) ; Scarborough Apts. v. Englewood, 9 N. J. 182 (1952) ; Bogert v. Washington Tp., 25 N. J. 57 (1957) ; Ingannamort v. Fair Lawn, 133 N. J.

        L. 194 (Sup. Ct. 1945) ; Wilson v. Mountainside, 42 N. J. 426 (1964) ; Raskin v. Morristown, 21 N. J. 180 (1956). Cf. Mountcrest Est. Inc. v. Rockaway Mayor, etc., 96 N. J. Super. 149, 154 (App. Div. 1987), certif. den. 50 N. J. 295 (1957).

      Since the provisions here involved are invalid for other reasons, we need not decide whether the standards for planning board site approval under § 903 of the ordinance pass muster under N. J. S. A. 40:55-1.13. See Wilson v. Mountainside, supra, 42 N. J. at 447; Brundage v. Randolph Tp., 54 N. J. Super. 384, 395 (App. Div. 1959), aff’d o.b. 30 N. J. 555 (1959) ; Guaclides v. Englewood Cliffs Mayor, etc., 119 N. J. Super. 403 (Law Div. 1972).