author: Antell, J. S. C.

text:
    MYRON W. KRONISCH AND SHEILA KRONISCH, INDIVIDUALLY AND ON BEHALF OF A CLASS, PLAINTIFFS, v. THE HOWARD SAVINGS INSTITUTION, A NEW JERSEY CORPORATION, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS, DEFENDANT. HAROLD CHAMBERS AND VERAIAN CHAMBERS, HIS WIFE, INDIVIDUALLY AND ON BEHALF OF A CLASS, PLAINTIFFS, v. BERKELEY SAVINGS & LOAN ASSOCIATION OF NEW JERSEY, A NEW JERSEY CORPORATION, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided March 4, 1975.

      Mr. Cyrus J. Bloom for plaintiffs.

      Mr. William H. Hyalt, Jr. for defendant Howard Savings Institution (Messrs. Pitney, Hardin & Kipp, attorneys).

      Mr. Arthur D. Grossman for defendant Berkeley Savings & Loan Association (Messrs. Fox and Fox, attorneys).
   Antell, J. S. C.

This is a motion for an order of maintainability as a class action under B. 4:32. In these consolidated actions plaintiffs and defendants are respectively mortgagors and mortgagees under federally insured residential mortgages. Alleging a relationship sounding in express or constructive trust, plaintiffs seek an accounting for moneys earned by defendants from the investment of tax escrow funds paid by plaintiffs to defendants under their mortgages. They also ask treble damages arising from an alleged conspiracy in restraint of trade under the New Jersey Antitrust Act, N. J. S. A. 56:9-12(a). On this application they apply for designation as representatives of a class consisting of all mortgagors similarly situated in the State of New Jersey and to have defendants named representatives of a class or classes of mortgagees occupying a position similar to defendants’.

The standards governing this application are enumerated in R. 4:32-1 (a). This rule provides:

(a) General Prerequisites to a Glass Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Subparagraph (b)(3) further provides that

An action may be maintained as a class action if the prerequisites of paragraph (a) are satsified, and in addition: * * * (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The factors pertinent to the findings include: first, the interest of members of the class in individually controlling the prosecution or defense of separate actions ; second, the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; third, the difficulties likely to be encountered in the management of a class action.

Plaintiffs Kronisch are homeowner-mortgagors under a mortgage guaranteed by the United States of America pursuant to the Servicemen’s Readjustment Act as amended (hereinafter GI mortgage) executed and delivered to defendant, The Howard Savings Institution (Howard), on October 23, 1957. This mortgage was given to secure the repayment of a home-purchase loan in the amount of $18,000 which is expected to be liquidated sometime in the year 1982. Kronisch is an attorney-at-law and until August 31, 1973 was counsel of record for plaintiffs in both actions.

Plaintiffs Chambers are homeowner-mortgagors under a mortgage insured or guaranteed by the United States of America under the National Housing Act, as amended, and related federal legislation (hereinafter PHA mortgage) executed and delivered to defendant Berkeley Savings & Loan Association (Berkeley) on May 31, 1972. This mortgage was given to secure the repayment of a home-purchase loan in the amount of $26,700 which is expected to be fully paid sometime in the year 1997.

Under the terms of their respective mortgages plaintiffs make monthly advance payments to defendants of their municipal real estate taxes in a sum equal to 1/12 of the annual tax on their respective properties, together with their monthly mortgage payments of principal and interest. The mortgage instruments recite that defendants hold such advance tax payments “in trust” to pay the taxes as they come due, and defendants-mortgagees make the payments every three months to the appropriate tax collectors. It is admitted by Howard and Berkeley that every GI and PHA mortgage ever executed by an individual and at any time held by these defendants as mortgagees contain the “in trust” language.

As of December 31 of each year, beginning with 1967 and ending with 1972, Howard carried between 12,130 and 11,565 active GI mortgages on its books. During the same period it carried between 8,644 and 10,876 active PHA mortgages. Por the year 1972 the average monthly tax escrow which Howard received from its GI mortgagors was $69.45; from its PHA mortgagors the average monthly deposit was $63.16.-

As of December 31 of each year, beginning with 1964 and ending with 1972, Berkeley carried between 1,224 and 985 active EHA mortgages on its books and between 1,851 and 1,302 active GI mortgages. The average monthly tax escrow which it received from its EHA mortgagors was $79.89; from its GI mortgagors it received $85.36.

Calculated at an annual rate of return of 8%, the average EHA or GI mortgagor’s claim for the investment of the tax escrow deposits is roughly $12 a year. The stakes for the individual mortgagors are therefor minimal.

The bond and mortgage forms utilized by the parties in connection with the home loan transactions are obtained from the Veterans Administration and the Federal Housing Administration and for practical purposes no departures from the printed provisions ever occur. The mortgagors are not given the option of deciding whether or not they will advance tax monies. This is required as a condition of the loan.

It is obvious that the number of such EHA and GI mortgagors in the State of New Jersey may number in the hundreds of thousands since the institutional mortgagees holding such mortgages are comprised of some 20 savings banks, 300 savings and loan associations, 93 commercial banks and 120 national commercial banks, doing business in the state of New Jersey.

The issues projected in opposition to certification of the controversy as class actions will be resolved by the following conclusions in conformity with principles to be recited which are deemed to be controlling within the foregoing factual context.

The courts have been generally receptive to the class action concept. “The class action rule should be liberally construed, and such an action should be permitted unless there is a clear showing that it is inappropriate or improper.” Lusky v. Capasso Bros., 118 N. J. Super. 369, 373 (App. Div. 1972), certif. den. 60 N. J. 466 (1972); Eisen v. Carlisle & Jacquelin, 391 F. 2d 555, 563 (2 Cir. 1968). It has been recognized as a particularly useful device in the area of consumer litigation, Kugler v. Romain, 58 N. J. 522, 535-541 (1971), and-has been utilized in controversies between mortgagors and their mortgagee banks. Silverstein v. Shadow Lawn S. & L. Ass’n, 51 N. J. 30, 44 (1968). An element common to such actions is the existence of a claim too small to warrant action by the individual members of the aggrieved class.

If each victim were remitted to an individual suit, the remedy ■could be illusory, for the individual loss may be too small to warrant a suit or the victim too disadvantaged to seek relief. Thus the wrongs would go without redress, and there would be no deterence [sic] to further aggressions. If there is to be relief, a class action should lie unless it is clearly infeasible. [Riley v. New Rapids Carpet Center, 61 N. J. 218, 225 (1972)]

Although disputed by defendants, the proposed defendant and plaintiff classes are sufficiently defined and are so numerous that joinder of all members is impracticable. It is not necessary that the exact numbers comprising the class be specified or that the members be identified. In Lusky v. Capasso Bros., supra, the action was certified for class treatment where “approximately 7,000 potential members of the class may be involved * * *.” And in Daar v. Yellow Cab Co., 67 Cal. 2d 695, 63 Cal. Rptr. 724, 433 P. 2d 732 (Sup. Ct. 1967), where suit was brought by a taxicab customer on behalf of a class to recover excessive charges over a four-year period, the court took pains to distinguish between establishing the existence of an ascertainable class and identifying the individual members of the class. It concluded.that the fact that the members were not then identifiable “will not preclude a complete determination of the issues affecting the class.” 63 Cal. Rptr. at 732, 433 P. 2d at 740.

Defendants also deny that there are questions of law or fact common to the proposed classes. But the governing ideology leads us to conclude that such questions are presented. In Lusky v. Capasso Bros., supra, a number of township residents had entered into garbage collection contracts with defendants under licensing agreements existing between defendants and the Village of Ridgewood. The contracts were not “negotiated,” and defendants were engaged pursuant merely to the terms of the licensing agreements. The basic legal issue, as distilled by the court (at 372 of 118 N. J. Super), for each member of the class was “whether defendants are entitled to demand, collect or retain payments for services they allegedly did not perform.” Noting that the claims were grounded essentially in the contractual relationships which arose from the license and individual agreements, the court concluded that

* * there are questions of law and fact common to the class even though some variances exist in the virtually identical agreements which, among other things, designate a specific place on a particular property from which the garbage will be removed, the rate charged varying accordingly, e. g., for removal from the rear yard, from the interior of the premises, etc. [at 372],

In Silverstein v. Shadow Lawn S & L. Ass’n, supra, a class action was brought by mortgagors against the mortgagee lending institution for breach of contract in connection with the computation of interest on long-term, direct-reduction mortgage bonds. It was there held (at 44 of 51 N. J.) that the class entitled to relief extended to a “large, but presently unknown, number of defendant’s mortgagors,” even though, as the opinion showed, (1) the exact monetary amount involved was unknown, (2) all of the obligations for breach of which relief was being sought might not have been expressed in the same language in each individual case, (3) the class would include mortgagors who paid excessive interest from the inception of the loan, as distinguished from others whose interest rate was changed during the progress of the loan, and (4) the class would include mortgagors whose loans had already been satisfied, so that as to them relief would have to take the form of a cash refund in the amount of the accumulated interest overcharge rather than by a restatement of an existing account. The court indieated (at 44) that under these circumstances treatment of the case as a “spurious” class action would be justified as involving “* * * a common question of law or fact affecting the several rights and a common relief is sought.”

And in Buchanan v. Brentwood Federal S & L Ass’n, 320 A. 2d 117 (Pa. Sup. Ct. 1974), a suit identical to that herein presented, in which mortgagors sought an accounting for earnings of tax escrow funds held by the mortgagees, the class action was allowed to continue. The only limitation placed upon the classes was that each be confined to those mortgagors holding bonds and mortgages having “monthly tax payment clauses that do not differ materially.” (At 131).

The rationale of the foregoing authorities compels the conclusion that the classes here proposed for certification share common questions of law and fact. Concisely, the question of law is whether, having in mind the “in trust” language of the mortgage instrument, and such other facts and circumstances as may be properly developed during the trial, a fiduciary relationship has been or should be created between the proposed classes of mortgagors and mortgagees to the end that the proposed defendant class of mortgagees is accountable to the mortgagors for investment profits realized from the escrow accounts. More specifically: (1) Does the “in trust” language of the mortgage instruments require defendants to ¡hold monthly tax payments in trust for the payment of real estate taxes? (2) Are defendants entitled to use or invest such escrow moneys? (3) Are defendants accountable to the mortgagors for commingling, investing or otherwise using such moneys? These questions rest upon “a common nucleus of operative facts,” Siegel v. Chicken Delight, Inc., 271 F. Supp. 722, 726 (N. D. Cal. 1967), and notwithstanding that there may not be a complete identity of facts common to all members of the proposed classes, common questions are presented within the meaning of R. 4:32-1 (a) (2).

Defendants’ reasoning that the claims and defenses of the representative parties will not be typical of the claims or defenses of the classes rests largely upon the expectation that each mortgage transaction and the treatment of the escrow deposits will require highly individualized attention at trial. Therefore, since, as they urge, the “in trust” language does not in itself conclusively establish a trust, explanatory evidence will be needed to elucidate the intention of the parties in each case. Variant defenses will be offered by the individual members of defendant class based upon legal and equitable considerations, and differences in the treatment of escrowed funds will be demonstrated. Justification will be offered for certain forms of treatment based upon the defaulted status of the mortgagors, and other treatments justified by considerations of waiver, laches and still others upon the doctrine of estoppel. Set-offs will be asserted by certain defendant class members against some but not others of plaintiff class. Differences, we are told, will undoubtedly be shown respecting the manner in which advance tax payments were collected and the funds treated on the books of defendant mortgagees. Moreover, it will be shown that in recent mortgage forms used by the VA and the EHA mortgagees were referred to for the first time as “trustees.” From this it is propounded that claims or defenses arising out of mortgage instruments containing the “trustee” designation would not be typical of claims or defenses arising out of earlier executed mortgage instruments in which such designation is absent.

We note at the outset that it is by no means clear that the issues aforementioned will in fact crystallize at the trial. They embrace subsidiary questions touching the administration of the parole evidence rule, the statute of frauds, as well as notions of relevancy, materiality and competence which, in themselves, may develop into further questions of law common to the classes in the resolution of the main controversy. It is therefore pertinent first to observe that ordinarily “the merits of a complaint are not involved in the determination as to whether a class action may be maintained, unless of course, the allegations are patently frivolous.” Olive v. Graceland Sales Corp., 61 N. J. 182, 189 (1972). The allegations are not frivolous. See Buchanan v. Brentwood Federal S. & L. Ass’n, supra; Carpenter v. Suffolk Franklin Savings Bank, 291 N. F. 2d 609 (Sup. Jud. Ct. Mass. 1973); Sears v. First Federal S. & L. Assn., 1 Ill. App. 3d 621, 275 N. F. 2d 300 (App. Ct. 1971); Note, “The Attack upon the Tax and Insurance Escrow Accounts in Mortgages,” 47 Temple L. Q. 352 (1974).

In Branch v. White, 99 N. J. Super. 295 (App. Div. 1968), a class action was brought for a declaration of rights in a joint union-management pension fund administered by defendants as trustees. The cause of action arose from plaintiffs’ claim that they were not told of their right to participate in the fund by the trustees, and because they therefore failed to make contributions, were denied benefits. The court addressed itself to the argument raised by defendants herein in opposition to the class action and responded in the following language:

Tlie mere fact that in defense of the action (laches, estoppel, etc.) different factual situations may arise with respect to the defenses as to different plaintiffs does not derogate from the fact that the affirmative cause of action itself has the community of interests and of questions of law or fact which justify the class action concept, [at 310]

See also, Siegel v. Chicken Delight, Inc., supra, 271 F. Supp. at 728.

But interrelated with defendants’ denial that the claims of the proposed representatives of plaintiff class are typical of claims of the class is their objection that plaintiffs are not members of the proposed classes. They argue that since the Kroniseh mortgage was to Howard and the Chambers mortgage to Berkeley, and since neither plaintiff has had mortgage dealings with any other institution, neither can represent a class of mortgagors who have obtained mortgage loans from institutions other than the two named. As the defendants state their position, “unless a class action is limited to parties who have dealt with each other, the claims and defenses of the representative parties cannot he typical of the claims and defenses of the class; nor can the purported representative parties fairly and adequately represent the interests of the class.” They also argue, for the same reason, that plaintiffs cannot act as representatives of that class of mortgagors whose mortgages were terminated prior to the date that plaintiffs themselves executed their mortgages. Reliance for their position is placed upon a line of federal authorities which lend facial support for their position. See La Mar v. H & B Novelty & Loan Co., 489 F. 2d 461, 465-468 (9 Cir. 1973); Weiner v. Bank of King of Prussia, 358 F. Supp. 684, 697-701 (E. D. Pa. 1973); Kauffman v. Dreyfus Fund, 434 F. 2d 727, 734 (3 Cir. 1970), cert. den. 401 U. S. 974, 91 S. Ct. 1190, 28 L. Ed. 2d 323 (1971).

Although the New Jersey rules of practice governing the conduct of class actions coincide with the federal rules, we cannot overlook the distinction between the status of class actions in the New Jersey courts and under the federal jurisdiction. In the latter they have been plagued by the problem of “standing” arising from the federal constitutional provision restricting the judical power to actual cases and controversies. U. S. Const., Art. III, § 2; Flast v. Cohen, 392 U. S. 83, 88 S. Ct. 1942, 20 L. Ed. 2d 947 (1968). As it has been stated, plaintiff “must demonstrate injury to himself caused by the party or parties whom he sues before he can be said to have successfully stated a cause of action.” Haas v. Pittsburgh National Bank, 60 F. R. D. 604, 611 (W. D. Pa. 1973). But although the requirement usually prevails in the federal courts that the class representative have standing in the sense of a direct relationship with defendant against whom the class action is sought to be maintained, “[t]he New Jersey cases have historically taken a much more liberal approach on the issue of standing than have the federal cases.” Crescent Pk. Tenants Ass’n v. Realty Eq. Corp. of N. Y., 58 N. J. 98, 101 (1971). Although, not a strict class action, the guiding standards of class membership were clearly explicated in that opinion in the following language:

Without ever becoming enmeshed in the federal complexities and technicalities, we have appropriately confined litigation to those situations where the litigant’s concern with the subject matter evidenced a sufficient stake and real adverseness. In the overall we have given due weight to the interests of individual justice, along with the public interest, always bearing in mind that throughout our law we have been sweepingly rejecting procedural frustrations in favor of “just and expeditious determinations on the ultimate merits.” [at 107-108]

There is little doubt here that plaintiffs’ concern with the subject matter evidences “a sufficient stake and real adverseness.”

But defendants argue further that the federal doctrine is not so closely and invariably linked to the issue of standing; that “when the representative plaintiff’s cause of action is against a defendant unrelated to the defendants against whom the cause of action of the members of the class lies” the class action has also been barred by reason of the resulting lack of typicality, citing La Mar v. H & B Novelty & Loan Company, supra.

Federal court opinions, while entitled to respectful consideration as persuasive authority, are by no means controlling upon local questions arising in state courts. Linden Motor Freight Co., Inc. v. Travelers Ins. Co., 40 N. J. 511, 518 (1963); River Development Corp. v. Liberty Corp., 45 N. J. Super. 445 (Ch. Div. 1957), aff’d 51 N. J. Super. 447 (App. Div. 1958), aff’d 29 N. J. 239 (1959). More importantly, our study of the La Mar opinion fully satisfies us that although its announced rationale for curtailing the class action is, as stated by defendants, lack of typicality, its reasoning and the authorities relied upon (at 468 of 489 F. 2d) demonstrate that the result was predominantly dictated by considerations of standing, and not typicality.

Furthermore, a “liberalized federal approach to standing,” Crescent Pk. Tenants Ass’n v. Realty Eq. Corp. of N. Y., supra, 58 N. J. at 105, is increasingly evident. Haas v. Pittsburgh National Bank, supra, and Samuel v. Univ. of Pittsburgh, 56 F. R. D. 435 (W. D. Pa. 1972), are significantly analogous to the case presented. In Haas plaintiff brought a class action against three banks to recover statutory damages for alleged overcharges of interest to their credit card holders. Plaintiff was the holder of credit cards issued and administered by only two of the three banks and had therefore dealt with only those two. The court denied the motion to dismiss as to the third on the ground that the defect of standing would almost certainly be cured by certifying a class of plaintiffs of which some members would have the requisite standing. In Samuel the class action was brought to obtain relief from an allegedly discriminatory Rule B(2) promulgated by the Auditor General of Pennsylvania whereunder female university students married to nonresidents were classified as nonresidents for tuition purposes. As in Haas, the court allowed the class action even as to those universities by whom plaintiff had not been aggrieved, so long as they were enforcing the rule. The rule as enforced was described as the “missing link” between plaintiff and those members of the class. In both of these cases the outcome turned on the finding of a “nexus” (in Haas, the credit cards; in Samuel, Bule B(2)) which was sufficient to unite the representative and the classes so as to defeat the lack of standing argument. Such an interpretation is equally applicable to mortgage instruments containing tax escrow provisions which do not differ materially, so that judged even by this federal criterion plaintiffs satisfy the test of standing.

It is therefore concluded, based upon the present record, that the claims and defenses of the proposed representative parties will be typical of the claims and defenses of the proposed classes of plaintiffs and defendants. It is further concluded, in light of the close identity of interests and the appearance of resourceful counsel, that the representative parties will adequately protect the interests of their respective classes. E. g., Eisen v. Carlisle & Jacquelin, supra, 391 F. 2d at 562.

Defendants’ resistance to the order of maintainability is also fueled by considerations of manageability. These have to do with differences in defenses which may be available as between different members of the classes, the availability of set-offs, different methods of handling the escrowed funds applied by the diverse class members, difficulty in tracing funds and ascertaining the yield realized thereon, and the spectre of numerous class members entering appearances and participating on the merits. As an example of differences which may be encountered in how the funds were treated by the banks defendants cite the “capitalization system” utilized by Berkeley prior to January 1958. Under this method the unpaid principal was reduced each month by the amount allocated to principal and taxes, and when the tax deposits were disbursed the amount of the disbursement was then added to the unpaid principal balance. It has been suggested that the practical effect of this was to allow to the mortgagor the full benefit of tire monies deposited. These factors have already been weighed in connection with the prerequisites of R. 4:32-1 (a). Such further problems as they may provoke will be dealt with as they arise, subject always to the right of the class members to request exclusion from the class and the power of the court to alter or amend at any time the order of maintainability, to divide the classes into subclasses, to create a “fluid class” (see Eisen v. Carlisle & Jacquelin, 479 F. 2d 1005, 1010 (2 Cir. 1973), vacated on other grounds 417 U. S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974), and R. 4:32-2(c), amended November 27, 1974 to be effective April 1, 1975), and in other respects to control the course of proceedings so as to provide for the fair and efficient conduct of the action. R. 4:32-2, 3. “Even if individual questions arise during the course of litigation, which render the action ‘'unmanageable/ the court still has the power at that time to dismiss the class action and permit the plaintiff to proceed only on behalf of himself.” Eisen v. Carlisle & Jacquelin, supra, 391 F. 2d at 566, a caveat ■which has been described as “a traditional feature of the initial grant of class treatment.” 3B Moore’s Federal Practice, § 23.45 [2] at 23-764, n. 48.

Additionally, as the Supreme Court admonished in Riley v. New Rapids Carpet Center, supra:

* * * a court should be slow to hold that a suit may not proceed as a class action. The nature of a consumer fraud case is such that a plaintiff may not be able to demonstrate at once that all the requisites are met and that no fatal problem of manageability will be encountered, [at 228 of 61 N. J.]

In weighing whether the common questions presented predominate over any questions affecting only individual members and whether a class action is superior to other available methods for the fair and efficient adjudication of the controversy, we have considered the interest of class members in individually controlling the conduct of the litigation, the absence of pending litigation concerning the controversy by or against members of the proposed classes, and the difficulties likely to be encountered in the management of a class action. R. 4:32 — 1(b) (3). Having in mind the minimal financial stake of the individual members of the plaintiff class, their separate interest in conducting the suit must be regarded as altogether remote. We have also considered the advantages of having available the various participation features of the class action. We have also weighed, as we must, (Riley v. New Rapids Carpet Center, supra at 227), the fact that those not requesting exclusion will be bound by an unfavorable judgment, the stare decisis impact of an adverse determination in a conventional proceeding without any form of participation by all affected parties, and the availability of intervention possibilities in the latter as an alternative to a class action. In addition we have kept sight of the cost of litigation relative to the amount in controversy and the usefulness of the class action as a vehicle by which a large class of claimants whose injuries may be small can pool their resources in order to secure judicial scrutiny of relationships allegedly fiduciary in a single proceeding and promote general observance of court-decreed standards applicable thereto. The court has also reflected on the chances of a class action altering in some manner the substantive legal relations of the parties.

While the complexities of managing the action are formidable, the nature of the judgment called for here is one of degree, and whatever hesitations we may have about venturing into an undertaking of such uncommon magnitude are dissolved by the clear imperative to allow this claim to be heard in its only possible form. The class action concept, after all, has never been counted free of difficulty. It contemplates that its saving of time, effort and expense will be at the cost of an "additional burden * * * upon the court and the' parties by the necessity of also determining in the common litigation those issues which may be several.” Branch v. White, supra, 99 N. J. Super. at 310. And here, where each group is manifestly "more bound together by a mutual interest in the settlement of common questions than it is divided by the individual members’ interest in the matters peculiar to them,” 3B Moore’s Federal Practice, § 23.45 [2] at 23-751, our duty is plainly revealed.

We therefore conclude that common questions predominate and that the class action is superior to any other available method for the fair and efficient adjudication of the controversy. The order of maintainability will be granted, allowing the action to proceed on behalf of both plaintiffs individually and as representatives of a class of all mortgagors of residential property in the State of Hew- Jersey under federally insured G.I. and .F.H.A. mortgages containing language reciting that real estate tax payments advanced by the mortgagors' are to' be held "in trust” by the mortgagees, against The Howard and Berkeley, individually and as representatives of a class consisting of approximately 20 mutual savings banks, 300 savings and loan associations and 213 commercial banks, and other financial lending institutions in the State of New Jersey by which such mortgages are now or were ever heid as mortgagees.

With respect to the cause of action grounded in conspiracy under the New Jersey Antitrust Act, certification will be granted to plaintiffs, but only as representatives of mortgagors under such mortgages now or ever held by Howard and Berkeley. As to them, there is the requisite adverseness necessary for standing. Class action certification will be denied, however, as to the proposed defendant class of mortgagees. Unlike the accounting action, it cannot be said that this theory of recovery presents questions of law or fact common to defendant class, that the defenses of the proposed representatives will typify those of the class, that the proposed representatives will fairly and adequately represent the interests of the class, or that the class action is superior to other available methods of adjudicating that controversy. The participation of the various mortgagees in a conspiracy can be proved only by individuated evidence. Within this particular setting the mere fact that each mortgagee followed the same practice with respect to the escrowed tax monies would not, without more, constitute such concert of action from which it could be inferred that the practices themselves were the product of an unlawful combination by all. The case differs from others in which a class of alleged conspirators was certified but where the members belonged to a trade association or other organization which served to advance and coordinate the plot. See Management Television Systems, Inc. v. National Football League, 52 F. R. D. 162 (E. D. Pa. 1971); Research Corp. v. Pfister Associated Growers, Inc., 301 F. Supp. 497 (N. D. Ill. 1969); Forbes v. Greater Minneapolis Area Board of Realtors, 61 F. R. D. 416 (D. Minn. 1973). Proof of individual participation in the conspiracy would therefore have to be supplied in the form of independent evidence as to each class member. The cause of action depends upon several decisions of the class members to join the unlawful agreement, and proof that the representative members acted in combination is not evidence that the absentees were guilty of the same conduct. In addition, individual defenses would have to be heard in response to the principal charge of conspiratorial conduct itself, unlike Branch v. White, supra, or as in the claim for an accounting herein, where the principal cause of action based on trust relationship could be resolved on common questions and individual defenses as to the several plaintiffs deferred. By so splintering the action info hundreds of separate trials the historic justification of the common question class suit of achieving “economies of time, effort, and expense,” 3B Moore’s Federal Practice, §23.45 [2] at 23-811, would be defeated and the trial left unmanageable. Riley v. New Rapids Carpet Center, supra, 61 N. J. at 227.

As a final observation, it is noted that the New Jersey Antitrust Act, under which relief is requested, contemplates joint and several liability. The accumulated damages, trebled pursuant to statute, recoverable by the entire class of mortgagors from the entire' class of mortgagees, may aggregate many millions of dollars. Yet, if the class recovery were allowed, each member of defendant class, no matter how minor its participation in the scheme, would be individually answerable for the full amount of the judgment. We conclude that such a result would constitute a major alteration in the substantive legal relations between the parties and goes beyond the intent of class action policy. See 3B Moore’s Federal Practice, §23.45 [3] at 23-806.


source: Caselaw Access Project

author: Petrella, J. C. C.,

license: Public Domain

text:
    ANTHONY PITTI, BY HIS GUARDIAN AD LITEM, DOMINICA PITTI, AND DOMINICA PITTI, INDIVIDUALLY, PLAINTIFFS, v. GORDON J. ASTEGHER AND MAURIZIO GARGANO, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided February 27, 1975.

      Mr. Kenneth D. Iulo for plaintiffs.

      Mr. George M. Fieldman for defendant Gordon J. Astegher (Messrs. Hein, Smith and Berezin, attorneys).

      Mr. Jeffrey L. Glutterbuck for defendant Maurizio Gargano (Mr. Samuel M. Lyon, Jr., attorney).
   Petrella, J. C. C.,

Temporarily Assigned. This jury case involved a two-car automobile collision on February 25, 1973 and falls within the applicable provisions of the New Jersey Automobile Reparation Reform Act, N. J. S. A. 39 :6A-1 et seq., commonly called the “No Fault” law. Plaintiff was a passenger in the vehicle of the second defendant, who is plaintiff’s cousin.

Plaintiff has already received full medical payments under the “Personal Injury Provisions” coverage (P. I. P.) of the applicable insurance policy for medical expenses incurred to date for the injuries attributable to the accident, including a fractured nose. There is a claim for future surgery claimed necessary with respect to the nose fracture, and there is no question that if necessary and causally related to the accident, the P. I. P. coverage will reimburse plaintiff for any such future expenses, notwithstanding any verdict. Testimony was proffered as to the type of operation necessary and the usual time involved, length of hospitalization related thereto and pain and suffering attendant thereon in the usual case.

However, defendants assert that by virtue of N. J. S. A. 39 :6A-12, no testimony should be allowed as to necessity of any future treatment, related hospitalization or any future pain and suffering because that section of the statute makes inadmissible evidence of “amounts collectible or paid” pursuant to the P. I. P. coverage, N. J. S. A. 39 :6A-4, as well as any additional personal injury coverage under N. J. S. A. 39:6A-10.

N. J. S. A. 39 :6A-12 reads as follows:

Evidence of the amounts collectible or paid pursuant to sections 4 and 10 of this act [N. J. S. A. 39:6A-4 and 10] to an injured person is inadmissible in a civil action for recovery of damages for bodily injury by such injured person.

Consideration of section 12 of the No Fault law indicates that although evidence of amounts collectible or paid are inadmissible, there is no express preclusion of testimony as to necessity for future medical treatment necessary to heal plaintiff and his injury.

Defendants moved to preclude such testimony by plaintiff and argue that since evidence of amounts collectible in the future under P. I. P. is inadmissible, it necessarily follows that the fact of future treatments should be excluded under the statute. They urge that in any event failure to exclude such testimony would allow the jury to speculate as to such amounts, the inference being that the intent under the statute is to make inadmissible all references to future medical treatments which would be reimbursed by the insurance carriers, not only because of its speculative nature but because plaintiff is in effect assured payment thereof.

In the event the jury finds from appropriate medical testimony that such future medical and hospital expenses are reasonably required for the examination, treatment and care of the injuries sustained by plaintiff as a proximate result of the negligence of either or both defendants, it may award damages for future medical aud hospital expenses. The test, as enumerated in Coll v. Sherry, 29 N. J. 166 (1959), is reasonable probability. To some extent the amount of such award, if the jury so finds it appropriate, is to be left to the good judgment of the finder of facts — the jury in this case. It is not a matter of mere speculation if there is some basis in the evidence admitted at the trial that in reasonable probability such treatments may be required. Id. at 174-175. This is, of course, subject to the countervailing requirement that plaintiff is under a duty to mitigate his damages if such a future operation or treatment is necessary. Lorenc v. Chemirad Corp., 37 N. J. 56, 78-80 (1962), and Budden v. Goldstein, 43 N. J. Super. 340, 350—351 (App. Div. 1957).

Some difficulties of proof may occur, particularly where N. J. S. A. 39:6A-6 has made changes in the usual “collateral source” rule. Compare Sporn v. Celebrity, Inc., 129 N. J. Super. 449 (Law Div. 1974).

The concern of the No Fault statute was to eliminate reliance on arbitrary formulas applying or encouraging multiples of damages. See Eeport of Automobile Insurance Study Commission to the Governor and the Legislature, Reparation Reform for New Jersey Motorists, at 61-62 (December 1971) and Iavicoli, No Fault & Comparative Negligence in New Jersey, at 90-92 (1973) (compare pages 44-45 as to certain future damages). For this reason evidence of dollar amounts already paid or collectible in the future are deemed inadmissible. This does not preclude reference to the treatment. And even though future medical bills may be paid through P.I.P. payments, such payments would not take into account inconvenience, loss of time and pain and suffering which are normally taken into account in an award of damages.

: I fmd.no basis:irrthe Hew. Jersey Automobile Reparation. Reform Act of its legislative history, particularly N. J. S. A 39:6A-A2, mandating any substantial change in : the. law of damages, or warranting- removal -from .-consideration- by the fact finder of 'the usual damage elements regarding -fuT ture medical .treatments. ■ / :-

Accordingly, .the motions of defendants are denied, without costs. •

      Subject to possible reductions for the collateral items referred to in N. J. S. A. 39:6A-6.

      Defendants join in this argument because of tbe crosselaim for contribution (N. J. S. A. 2A:53A-1 et seq.) and because of the subrogation provisions of N. J. S. A. 39 :6A-9.

      The issue of any conflict with the procedure for adopting and amending rules of evidence was not raised, and, therefore, is not considered. See N. J. Const., Art. VI, § II, par. 3 and N. J. S. A. 2A:84A-33 to 44.


author: Yanoff, J. C. C.

text:
    IN THE MATTER OF THE ESTATE OF HELEN SAENGER.
    Essex County Court Probate Division
    February 14, 1975.

      Mr. Franklin C. Phifer for proponent.

      Mr. Marius Grosso for Rosedale Cemetery.
   Yanoff, J. C. C.

Helen Saenger died, leaving a will with the following attestation clause and signatures:

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of July, Nineteen Hundred and Fifty-four.
Helen Saenger (LS)
Signed, sealed, published and declared by the said Testatrix, HELEN SAENGER, to be her Last Will and Testament, in our presence, who, thereupon, at her request, and in her presence, and in the presence of each other, all being present at the same time, have hereunto subscribed our names as witnesses, this 7th day of July, Nineteen Hundred and Fifty-four.
Nannie Johnson_151 Greenwood Ave. East Orange, N.J. William L. Yieser_744 Broad St. Newark, N.J._

When the will was offered for probate, the Surrogate found doubt on the face of the will, as the result of which the matter came before me as a county judge pursuant to N. J. S. A. 3A:2-3 to 3A:2-5 and R. 4:84-1(e). If probate is denied, certain charitable gifts will fail.

The will contains the names of decedent and the witnesses, in the form indicated above. Testatrix’ signature was identified by a relative who knew it well. Neither of the witnesses was produced, because William L. Yieser is dead, and Nannie Johnson cannot be located despite diligent search. William L. Yieser was an attorney. At the hearing his former law partner testified that he was “knowledgeable in the field of the execution of wills,” and identified his signature. The posture of the facts is, therefore, that there is a perfect attestation clause, plus proof of the signature of one witness, and proof that search has failed to reveal the whereabouts of the other witness.

The issue in this case is stated in 5 N. J. Practice (Clapp, Wills and Administration), § 129 at 233, 234, n. 3, in a comment on Allaire v. Allaire, 37 N. J. L. 312 (Sup. Ct. 1875), aff’d 39 N. J. L. 113 (E. & A. 1876):

Query whether the will may be probated .by the Surrogate’s Court, in such case, on proof of the signature of one witness, when the proof of the other’s signature has been found unattainable after diligent search therefor. ...

Additionally, I have been told that until this ease arose probate has been denied routinely by the surrogate because of lack of proof of the signatures of both witnesses, and that this has been the practice for a long time. It is, therefore, appropriate that I give reasons for the conclusion that the will should be admitted to probate.

N. J. S. A. 3A:3-2 sets forth .the requirements for a valid will. “A literal construction of the statute with regard to the formal requisites is demanded * * * and we have no right to accept anything short of positive proof of conformity with the statutory requirements * * In re Hale’s Will, 21 N. J. 284, 295 (1956); but note, Langbein: “Substantial Compliance with the Wills Act,” 88 Harv. L. Rev. 489 (Jan. 1975). The issue here, however, is not whether there should be relaxation of proof of compliance with the statute, but whether, considered in the light of the appropriate rules of evidence and the decisions which bear on the subject, the requirement that the signatures of both attesters be proved where there is a complete attestation clause as there is here, does not present an unnecessary barrier to the probate of wills.

The problem is one of evidence, not of substance. Evid. R. 71 specifically so provides. The annotations to the rule state:

Since N. J. S. 3A:3-2 requires attestors to a will or codicil for its validity but not for its authentication, wills and codicils, as other attested writings unaffected by a specific statutory direction to contrary, may be proved by any recognized mode of authentication.

R. 4:80-2(b) provides, under the title “Proof of Will, Nonresident or Deceased Witnesses”

If both witnesses are deceased, the signature of each such witness may be proved by one person, and the same person may prove both signatures. Proof of death of the attesting witness may be made by affidavit without producing certified copies of death certificates.

The rule states how signatures of deceased attesters may be proved, but it takes no position on whether proof of the signature of one attester, plus a complete attestation clause, entitles the will to probate.

The ultimate substantive question ,is. whether testator made a will in compliance with: the Wills Act. In re Hale's Will, supra, was no more than a determination that on the evidence before the Union County Court a judgment, setting aside probate was correct. The problem before this court is whether on the evidence probate should be granted.

The rules as to proof required to probate a will are, in general, clear. Where there is an attestation clause which recites performance of all the requisite acts, the live testimony of one witness that he saw testator execute the will, and that thereafter he and another signed as witnesses, is sufficient. Allaire v. Allaire, supra, the case which gave rise to the query; In re Ferrulli, 105 N. J. Super. 217 (Cty. Ct. 1969); Ward v. Wilcox, 64 N. J. Eq. 303 (Prerog. 1902), aff’d 65 N. J. Eq. 397 (E. & A. 1903). The will may also be proved by the signatures of both deceased attesters. In re Will of Kirkpatrick, 22 N. J. Eq. 463 (Prerog. 1871). It may be proved with or without an attestation clause (see In re Petkos, 54 N. J. Super. 118 (App. Div. 1959), cert. den. 30 N. J. 150 (1959), and without the testimony of an attester, on adequate proof, such as that of a bystander, that testator has done everything required of him by the statute. Clapp, supra (1973 pocket parts), at 76, n. 3. Where there are no live witnesses, and the attestation clause is not perfect, the will may not be admitted to probate. In re Johnson, 115 N. J. Eq. 249 (Prerog. 1934).

The only case which I have found in this State which deals with the problem presented here is The Will of Pamela Jolly, 5 N. J. Eq. 456 (Prerog. 1846). The facts there were that Pamela Jolly left a will dated May 20, 1824, signed by her mark. The will purported to have been witnessed by John Oliver, Joshua Carman, and Elizabeth Carman, but the entire writing of the will was in the hand of Elizabeth Car-man, and the names John Oliver and Joshua Carman were in the same hand. It was shown that John Oliver had died before the date of the will. Both the other witnesses to the will had died before the will was offered for probate. The court had before it a letter written by testatrix, dated 1831, referring to a prior will. The court considered the possibility that the document offered for probate was a copy of the will mentioned in the letter, and was for that reason entirely in the handwriting of Elizabeth Carman, and that it might be admitted to probate. However, it rejected the theory because of lack of proof of execution. It said of the document as offered:

But there is a link wanting in the testimony. No proof of execution is to be derived from the name of “Pamela Jolly” in this case.
If Elizabeth Carman were in life, and had been produced as a witness, and had sworn that she saw Pamela Jolly execute the writing by making her mark, and that she subscribed her name as a witness to such execution, it would have been sufficient proof; or if there had been added to the writing, as it now stands, a new attestation clause, showing that it was executed in the presence of Elizabeth Carman, and her name, proved to be genuine, was subscribed thereto; proof of that signature, she being dead, might have been sufficient. [at 458; emphasis supplied]

The clear implication is that if a new attestation clause had been added to the document, proof of the signature of Elizabeth Carman, after her death, would have sufficed.

Eliot v. Eliot, 10 All. 357, 92 Mass. Rep. 357 (Sup. Jud. Ct. 1865) supports the dictum in The Will of Pamela Jolly. One of the three witnesses to the will was dead, and the other two merely identified their signatures, but did not recollect the circumstances of the execution of the will, not even the identity of the testator. (Massachusetts requires three witnesses to a will.) Cases of similar tenor are found in Wisconsin. In re Maresh Will, 177 Wis. 194, 187 N. W. 1009 (Sup. Ct. 1922); In re Grant’s Will, 149 Wis. 330, 135 N. W. 833 (Sup. Ct. 1912). Although in these cases live witnesses were produced, their testimony was only that they recognized their signatures. This is hardly different from signature identification by a third person, where the attesters cannot be produced.

The theoretical basis for my conclusion is found in Wigmore on Evidence, An attestation clause is hearsay; its use, an exception to the hearsay rule.

What has not been always clearly understood is that such a use of an attestation is in truth an exception to the Hearsay rule, i. e. is the testimonial use of an extrajudicial assertion as evidence of the truth of the fact asserted (§1362, supra). In practice, the dramatic feature of the evidence has tended to obscure the legal principle : that is to say, the mode of using it consists merely in proving the genuineness of the attester’s signature to the document. But this is after all nothing less than offering the attester’s written statement, expressly or impliedly made at the time of execution, that the document was seen by him to be executed as it purports to be. [5 Wig-more, Evidence (Chadbourne rev. 1974), § 1505 at 105; emphasis author’s]

The effect of the exception, declares Wigmore, is to prove proper execution of the will:

When the attester’s signature is identified as genuine, what does the attester thereby purport to testify to?
Assuming that the signature is appended to a clause of attestation expressly stating the facts of execution, it is clear that the signed attestation is a testimonial assertion of all the facts thus required to be stated. [Id., § 1511 at 411; emphasis author’s]

As to the number of witnesses to be called, Wigmore states:

Number of attesters required to be called. The object of placing more than one attestation upon a document, whether at the parties’ voluntary instance or by requirement of law, is ordinarily not to demand the combined testimony of all at the trial, but merely to provide by way of caution a number of witnesses; so that the contingencies of death, removal of residence, and the like, may be guarded against, and one witness at least may be expected to be available. If a statute expressly required the document to be “proved” by a specified number (§2048 infra), the case would be different. But a main object in statutes requiring attestation as an element of validity is to surround the act of execution with certain safeguards; the object of securing evidence for litigation is a secondary one. So far, therefore, as such an object exists, it can hardly be implied to have in view anything beyond what is above noted, i. e., a precautionary supply of persons from whom a testifier is likely to remain available in spite of the accidents that might have totally destroyed the supply if there had been but one person provided in advance.
No doubt, statutes often negative the above view by expressly providing not only that a certain number shall attest, but also that all of the required number shall be called to testify. But in the absence of express provision, such a requirement is not properly to be implied; and it was not implied in common law practice;
* *
For attested documents in general, the rule has always been that but one attester need be called. Eor wills, the rule was clearly the same in the common law courts. [5 Wigmore, op. cit., §1304 at 727-728 emphasis author’s]

The attestation clause in this case describes compliance with all the statutory requirements for the execution of a will. Such a clause is prima facie evidence of due execution. Mundy v. Mundy, 15 N. J. Eq. 290 (Prerog. 1858); In re Will of Alpaugh, 23 N. J. Eq. 507 (Prerog. 1872); Allaire v. Allaire, supra; Beggans Case, 68 N. J. Eq. 572 (Prerog. 1905); see In re Hale, supra. This is true even though the testimony of the attesting witnesses do not confirm the attestation clause. Alpaugh, supra. An example of the application of this rule is In re DuBois, 9 N. J. Super. 280 (App. Div. 1950), cert. den. 6 N. J. 232 (1951), in which there was a perfect attestation clause and in which the live testimony of the witnesses eight years later was vague and in some respects at variance with the statements in the attestation .clause. The court, nevertheless, admitted the will to probate and said:

The attestation clause is now accepted as “a most important element of proof” and the derivative presumption is deemed impregnable unless it is devastated by “strong and convincing evidence.” [at 284]

Another such case is James v. Wendehack, 1 N. J. Super. 203 (App. Div. 1949), cert. den. 1 N. J. 603 (1949). There the will was attacked on the ground that the attesting witnesses had signed before the testator. At trial one of the attesting witnesses testified that the testator had signed first, and another testified that the witnesses had signed first. The trial judge found as a fact that the witnesses had signed first. The Appellate Division reversed because of the force of the attestation clause. Speaking for the court, Judge (now Justice) Jacobs said:

Although our courts have, from time to time, used varying language as to the exact force of the attestation clause (see 5 Wigmore, Evidence (3d Ed. 1940) Sec. 1511, 335) they have, since early times, recognized that sound public policy requires that a will bearing the signature of the testator and the signatures of the attesting witnesses with a complete attestation clause should not be upset for alleged deficiency in its execution except upon clear evidence, [at 206, 207]

When a witness who signed an attestation clause is called to the stand to prove a will, in the usual case, where there are no issues of undue influence or competency, his testimony is no more than a vocal repetition of the attestation clause. Indeed, all that is needed is “some declaration by the testator that it is Ms will, and a communication by him to the witnesses that he desires them to attest it as such.” Mundy v. Mundy, supra, 15 N. J. Eq. at 293-294 (emphasis supplied) ; In re Petkos, supra. The will is admitted to probate because the testimony proves that testator did indeed comply with the Wills Act by signing and declaring his will in the presence of two witnesses, who subscribed their names as witness in the testator’s presence. In this ease proof of Yieser’s signature carried with it proof that Yieser saw Nannie Johnson sign. In fact, it may be inferred that she signed before him because her signature appears first. It shows also that there was compliance with all other requirements of the Wills Act. Since it is the law, as indicated by Wigmore, § 1511, supra, that “the signed attestation is a testimonial assertive of all of the facts thus required to be stated,” identification of one attester’s signature, where both attesters are not available, is proof that testator did what he was required to do to make a will, including proof that two witnesses were present when he affixed his signature to the document. To hold to contrary would be to diminish the traditional force of the attestation clause. In the words of Judge Conford in In re Petkos, supra at 124 of 54 N. J. Super. it would “come close to substituting a fetish for a rule of reason.” If the attestation clause prevails against defect in memory, as in Mundy v. Mundy, supra, or contradictory testimony of one of the attesters, as in James v. Wendehack, supra, and In re Seymour’s Will, 114 A. 799 (Prerog. 1921) (not reported in official reports), it is difficult to conceive why it should not have its customary effect where there is no contradiction at all.

Tangently significant in connection with this ruling, although not essential to it, is the fact that there have been important developments in the Law of Evidence since In re Hale’s Will, supra. The New Jersey Rules of Evidence became effective by statute July 1, 1960 (L. 1960, c. 52) and by court rules September 11, 1967 subsequent to that decision. Evid. R. 63(32), eased considerably restrictions on proof of statements by “declarants unavailable at trial because of their death” (Comment 1972 Edition New Jersey Rules of Evidence, at 286). The rule provides:

“Subject to Rule 64, in a civil proceeding, a statement made by a person unavailable as a witness because of bis death is admissible if the statement was made in good faith, upon the personal knowledge of the declarant, and there is a probability from the circumstances that the statement is trustworthy.”

Pursuant thereto, the letters of a testator were admitted in evidence to establish his testamentary intent. In re Estate of Cory, 98 N. J. Super. 208 (Ch. Div. 1967). In similar litigation the oral statements of a decedent were admitted for the same purpose. Woll v. Dugas, 104 N. J. Super. 586 (Ch. Div. 1969), aff. 112 N. J. Super. 366 (App. Div. 1970). It does not impair the principle that there must be rigid adherence to the requirement of the Wills Act to take this development into account. It would be incongruous to permit the use of hearsay evidence to prove the meaning of a will, while at the same time denying its use to prove the execution of a will.

There are two additional facts which support admission of this will to probate; although in my view what has already been said is sufficient to justify probate. The first is that Yieser was an attorney versed in the law of wills. In some jurisdictions this gives rise to a presumption that “the execution was properly accomplished, especially after a lapse of years.” 3 Page on Wills (Bowe-Parker ed. 1961) § 29.25. The second is that the signature of the testatrix was proved. In re Will of Kirkpatrick, supra at 464 of 22 N. J. Eq., this was stated to be an important factor. To the same effect, see 5 Wigmore, op. cit., § 1513.

      The will was admitted to probate.


author: Morgan, J. A. D.

text:
    JOHN BATES AND VIRGINIA BATES, PLAINTIFFS-APPELLANTS, v. VINCENT J. GAMBINO, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted March 3, 1975
    Decided March 17, 1975.

      Before Judges Michels, Morgan and Milmed.

      Messrs. Stein, Stein, Hughes & McGuire, attorneys for appellants (Mr. John L. McGuire, Jr., of counsel).

      Messrs. Pisano & Triarsi, attorneys for respondent (Mr. John S. Triarsi, of counsel).
   The opinion of the court was delivered by

Morgan, J. A. D.

Plaintiffs, husband and wife, sought money damages from defendant, a licensed insurance broker, as compensation for defendant’s alleged lack of diligence in procuring requested insurance coverage for their home which was destroyed by fire on June 16, 1970. The case was tried without a jury and plaintiffs appeal from a judgment entered in defendant’s favor.

The business relationship between pliantiffs and defendant broker had its inception in 1964 when defendant served as a real estate agent in connection with plaintiffs’ purchase of their home at 1006 Williams Street in Elizabeth, New Jersey. At the time of this purchase defendant, an insurance broker of 20 years experience, secured fire insurance coverage on the premises. That policy, placed with the Firemen’s Insurance Company of Newark, expired on February 6, 1967. Coverage with Firemen’s was renewed for the period commencing February 6, 1967 and expiring February 6, 1970. Before this second policy was scheduled to expire the carrier notified defendant that it declined to further insure plaintiffs’ home. Accordingly, and on January 20, 1970, defendant attempted to obtain other insurance on plaintiffs’ behalf with the Motor Club of America. This attempt was unsuccessful, and when defendant received notice of the rejection of submitted application he wrote plaintiffs on January-27, 1970 to advise them that their homeowner’s policy with Firemen’s would expire on February 6, 1970 and that he had been unsuccessful in securing replacement coverage with another company. Defendant also advised them to contact another broker.

It was not until May 9, 1970, over three months later, that plaintiff husband met with defendant in an attempt to obtain coverage for his home. He had been without coverage from February 6, 1970, the date his previous policy expired, until the date of the meeting. At the meeting of May 9, 1970 defendant explained to him two alternative methods of obtaining insurance. The first alternative was to procure surplus or excess line insurance, which was rejected as being too costly. Defendant had explained that such insurance would cost him approximately $200 a year, and if he could make a down-payment of a third of that amount, the rest could be financed. Plaintiff did not, however, have the amount of money necessary for the down-payment. The second alternative, accepted by plaintiff, was to make application to the New Jersey Insurance Underwriters Association for coverage. Under that alternative defendant explained that there would be a four to six-week delay before any policy would issue. Plaintiff indicated to defendant that he would accept the delay because by the time the policy issued he would have the money to pay for it.

It should be noted, parenthetically, that money seemed to be a perennial problem in the relationship 'between plaintiffs and defendant. Plaintiffs would fall behind in their premium payments, and defendant would frequently make payments on their behalf. On two occasions defendant requested cancellation of their policies, only to seek reinstatement after sufficient payment was made. At the meeting of May 9, 1970 plaintiff first paid the $21 balance due on the policy which had expired over three months previously.

At any rate, it is undisputed that defendant submitted plaintiffs’ application to the Association and it was received by that organization on May 12, 1970. Plaintiffs’ house was destroyed by fire on June 16, 1970 and the application for insurance was approved and notice sent to defendant on June 28, 1970, 12 days after the fire. Plaintiffs were at the time of the fire uninsured.

The New Jersey Insurance Underwriting Association, to which defendant made application on plaintiffs’ behalf, is a creature of statute, N. J. S. A. 17:37A — 1 et seq., which was designed to insure a market to sorely needed and unavailable fire and extended coverage insurance to urban homeowners, among others. The Commissioner of Banking and Insurance was vested with authority to adopt rules and regulations in implementation of the essential goals of the enactment. N. J. S. A. 17:37A-26; New Jersey Ins. Underwriting Ass’n v. Clifford, 112 N. J. Super. 195, 200-203 (App. Div. 1970).

Pursuant to this rule-making power the Commissioner of Banking and Insurance promulgated a series of rules and regulations which the trial judge found was in defendant’s possession at the time application was made to the Association. Among the rules adopted was the following one:

H. Temporary Binder
In the event tbe applicant is not notified by the Association of the acceptance or declination of tbe coverage within twenty-five days after receipt of the application by the Association, the applicant may obtain a temporary binder.
Is order to facilitate the prompt processing of the requests for temporary binders the applicant shall submit to the Association a copy of the application showing file number assigned and date application was received by the Association along wtih the estimated annual premium.
The estimated annual premium shall be based on the applicable existing specific or class rate, including civil disorder loadings and surcharge.

Defendant claims he knew nothing of this rule and consequently was unaware that a temporary binder could have been issued when plaintiffs were not notified of acceptance or declination within 25 days after receipt of the application. Hence, under this rule, temporary coverage was available on June 6, 1970, about ten days before the destruction of plaintiffs5 home. Failure to advise plaintiffs of the immediate availability of coverage on June 6 is the omission charged as being negligent.

In a letter opinion the trial judge entered judgment for defendant on the ground that plaintiffs knew they were uninsured at the time of the fire; that defendant had told them they would be uninsured until the Association issued its policy, which would occur between four and six weeks from the date the application was submitted, and that plaintiffs assented to the delay because by that time they would have money to pay for the policy. In these circumstances, said the trial judge, defendant was under no duty to plaintiff. The judge said:

Here the broker never indicated that he was effecting insurance or that he could effect insurance. Absent that and any reliance by the applicant to the contrary, no liabiilty can be imposed on the defendant.

It is with respect to this expressed basis for decision that we conclude the trial court erred.

The nature and extent of the duty owed by insurance brokers to their principals was comprehensively described in Rider v. Lynch, 42 N. J. 465 (1964), in the following terms:

One who holds himself out to the public as an insurance broker is required to have the degree of skill and knowledge requisite to the calling. When engaged by a member of the public to obtain insurance, the law holds him to the exercise of good faith and reasonable skill, care and diligence in the execution of the commission. He is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which his principal seeks to be protected. If he neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage he undertook to supply, because of his failure to exercise the requisite skill or diligence, he becomes liable to his principal for the loss sustained thereby. Barton v. Marlow, 47 N. J. Super. 255, 259 (App. Div. 1957); Marano v. Sabbio, 26 N. J. Super. 201, 205-206 (App. Div. 1953); Milliken v. Woodward, 64 N. J. L. 444, 448 (Sup. Ct. 1900); 3 Couch, Insurance (2d ed. 1960), §§ 25:32, 25:36, 25:37, pp. 329, 335, 336; 16 Appleman, Insurance Law and Practice, §§ 8841, 8843, pp. 300, 306 (1944). [at 476-477]

In this case the central issue posed was whether defendant possessed “the degree of skill and knowledge requisite to the calling” when he admittedly did not know of the availability of temporary coverage following 25 days of inaction on the application and therefore failed to notify plaintiffs of this opportunity for immediate coverage. Contrary to the decision below, defendant was under a duty to know the rules governing the Association’s issuance of policies which the judge found were in defendant’s possession at the time and to advise plaintiffs, whom he then knew were uninsured, that immediate coverage was available. His admitted failure to know and to advise did constitute a breach of duty even though plaintiffs, too, knew they were, at the time, uninsured. They thought they were uninsured because immediate coverage was unavailable. That information was inaccurate insofar as it pertained to the period of time following 25 days of inaction after the Association’s receipt of plaintiffs’ application. Hence, the trial court was incorrect in concluding that.the element of reliance was absent. In these circumstances judgment of plaintiffs’ favor for the damages suffered as a result of defendant’s dereliction in duty should have been entered as a matter of law.

Defendant argues that plaintiffs would have been unable to pay for this coverage at that time since defendant was informed that they would first have the money at the end of the anticipated waiting period. This contention lacks merit. Plaintiffs ordered the insurance and it cannot be assumed, in light of their expressed desire for coverage, that they were in no position to make payment for it. Had defendant relied upon their representation of temporary poverty in refraining from advising them of immediate coverage, a different question would have been presented. Here, his failure to advise was caused by his own admitted ignorance of the rules which could have afforded plaintiffs immediate coverage.

The fact that plaintiffs permitted their home to be uninsured from the date the former policy expired, Eebruary 6, 1970, until the date they consulted defendant in an attempt to obtain insurance, is not evidential of contributory negligence on their part. Plaintiffs were under no duty to insure their home. The choice of whether or not to do so was theirs to make and they cannot, therefore, be charged with any dereliction in duty in choosing to assume the risks of having their home uninsured for that period of time.

Judgment is reversed and the cause remanded with instructions that the trial court enter judgment in favor of plaintiffs and assess damages.

We do not retain jurisdiction.


author: Per Curiam. Furman, J. S. C.,

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ROBERT PASTORE, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted January 28, 1975
    Decided March 19, 1975.

      Before Judges Lynch, Allcorn and Furman.

      Mr. Stanley C. Van Ness, Public Defender, attorney for the appellant (Mr. Edward P. Hannigan, Assistant Deputy Public Defender, of counsel and on the brief).

      Mr. William, F. Hyland, Attorney General, attorney for the respondent (Ms. Helen Szabo, Deputy Attorney General, of counsel and on the brief).
   Per Curiam.

Defendant appeals his convictions of the offenses of (1) breaking and entering with intent to steal and (2) larceny, entered upon jury verdicts.

Initially, our review of the record satisfies us that there was sufficient proof the guilt of defendant to justify the verdicts of the jury on both charges. Contrary to the assertion of defendant, those proofs included considerable evidence other than and in addition to the evidence of defendant’s statement that he was in possession of the stolen property. There was error neither in the denial of defendant’s motions for judgment of acquittal nor in the denial of his motion for a new trial.

The defendant takes exception also to the failure of the trial judge to charge the jury that "evidence of mere possession of the stolen property was not evidence of larceny unless the time interval between theft and possession was so short as to permit a reasonable man to conclude that defendant was the thief. * * *” It is significant that trial counsel made no request whatever for such an instruction, nor did he take exception to the omission of such an instruction from the charge as given. Equally worthy of note is the fact that the trial judge did not charge the basic proposition as to the permissible inference arising from recent possession of the stolen property.

It has long been an accepted principle that "unexplained and exclusive possession of stolen property shortly after the theft justifies an inference that the possessor is the thief.” That principle was so stated more recently in State v. Dancyger, 29 N. J. 76, 85 (1959), cert. den. 360 U. S. 903, 79 S. Ct. 1286, 3 L. Ed. 2d 1255 (1959), and was there further explicated by the accompanying comment that "the shorter the period between the theft and the possession the stronger this inference becomes.” Id. In Dancyger, this principle was enunciated as a proper yardstick to be applied by the court in passing upon motions for acquittal addressed to the sufficiency of the evidence at the close of the State’s case and at the end of the entire case.

Quite obviously, the principle is nothing more nor less than a statement of elementary logic which anyone, judge or juror, would apply as a matter of common sense in evaluating this single piece of circumstantial evidence in the setting of all the other evidence in the case. Thus, the principle is not a rule of law in the sense that the trial judge is required to specially instruct the jury with respect thereto in a case in which there is evidence of recent possession by defendant, any more than the trial court is required to specially instruct the jury concerning the inference that may be drawn from any other piece or segment of evidence in the case, circumstantial or direct. In any event, even assuming it to be appropriate for the trial judge to specially instruct a jury as to the inference that may be drawn from recent possession of stolen property, there is no obligation on the judge to so charge in the absence of a request therefor.

Additionally, it should be noted that defendant does not claim any error by virtue of the failure of the judge to instruct the jury on the inference itself. His assertion of error goes only to the failure to charge that “mere possession of the stolen property was not evidence of larceny unless the time interval between theft and possession was so short as to permit a reasonable man to conclude the defendant was the thief.” In effect, defendant thus seeks to avail himself of the benefits of a qualifying integral part (the time lapse) of the principle without subjecting himself to the risk of the likely prejudicial effect of an instruction setting forth the fundamental principle and inference itself. At the same time, defendant would place upon the trial judge the obligation of giving this incomplete and distorted instruction on his own motion.

It is significant that neither defendant who advances the contention nor the dissent which endorses it, has supplied a single supporting authority other than a dissenting opinion in State v. Thomas, 103 N. J. Super. 154 (App. Div. 1968). Of further significance is the fact that the majority in Thomas rejected the contention out of hand, despite the fact that counsel for defendant had there requested such a charge of the trial court — unlike the present case where no request was made, no objection was taken, and the contention is raised as plain error. In our view, the contention is without substance or merit.

Equally devoid of merit is defendant’s contention that the trial judge erred in the definition of “breaking” contained in the charge, as supplemented. So far as concerns the sentences imposed (three to five years incarceration on the breaking and entering charge and a concurrent two to three year term on the larceny charge), they were eminently reasonable and well warranted when viewed in the light of the nature of the offenses of which defendant was convicted and the information set forth in the presentence report, including the prior record.

Lastly, defendant argues and the State concedes that defendant was entitled to credit on account of his sentences for the period that he was incarcerated between the date of his arrest (January 4, 1974) and the date of his sentencing (May 10, 1974). We are of the same view. R. 3:21-8.

Accordingly, the judgments of conviction are affirmed; the cause is remanded to the Law Division with directions that the record be corrected so as to credit defendant on the terms of his sentences with the time served by him in custody between his arrest and the imposition of sentence.

Furman, J. S. C.,

Temporarily Assigned (dissenting). I must dissent, agreeing generally with Judge Foley’s dissent in State v. Thomas, 103 N. J. Super. 154 (App. Div. 1968). The circumstances here more strongly support a reversal for plain error than those in Thomas.

Defendant was in Sarah Hyams’s house as a guest for breakfast with Patricia Manson. He saw where Miss Hyams put her coin collection. Shortly after noon he rode for a short distance as a passenger in Miss Hyams’s car. In response to his inquiry she told him that she and Mrs. Manson were on their way to pick up her father. At the trial she did not recall whether she mentioned her destination, Newark Airport. Upon return from the airport with her father and Mrs. Manson the front door was unlocked, the room ransacked where the coin collection was, and the coin collection missing. She notified the police. The police found a porch window ajar. Twelve days later, in the early evening, Miss Hyams and Mrs. Manson in Miss Hyams’s car had a chance meeting with defendant outside a tavern. Defendant said, “Hey, fatso, I got your coins. Prove it, bitch.”

Upon that testimony defendant was convicted of breaking and entering and larceny. Ho evidence was offered that the coin collection or any part of it was found in defendant’s possession at any time.

A series of New Jersey decisions stemming from State v. Dancyger, 29 N. J. 76 (1951), has recognized that an inference of larceny may be drawn from the fact of possession shortly after the larceny. The rationale, according to Justice Proctor in Dancyger, is “the improbability that the accused could have acquired the stolen property so soon after the theft unless he was the thief.” Justice Proctor further commented, “Therefore, the shorter the period of time between the theft and possession the stronger this inference becomes.”

In all these decisions, other than Thomas, the interval the jury might find between the larceny and the possession is a few hours only: Dancyger (4½ hours); State v. Davis, 50 N. J. 16 (1967) (two hours); State v. Fioravanti, 46 N. J. 109 (1965) (less than two hours); State v. Leicht, 124 N. J. Super. 127 (App. Div. 1973) (a few minutes); State v. Griffin, 84 N. J. Super. 508 (App. Div. 1964) (less than an hour); State v. Hall, 55 N. J. Super. 441 (App. Div. 1959) (six hours or less).

In Thomas the owner of the stolen property went on vacation on August 16 and the property was identified in defendant’s possession in the “latter part” of August. Thus, the interval between the larceny and the possession might have been a few hours only, or up to two weeks. Also distinguishing Thomas, the trial judge charged the inference although without explanation: “So what the State asks you to infer is that Thomas and Eose both broke into McMahan’s garage, they stole this material, they were in possession of it and that the proof of the pudding is the fact that they had it and tried to sell it and, in fact, did sell it.”

The trial judge below did not charge the inference nor, of course, the rationale that it rested on the improbability that anyone else could have been the thief and transferred possession to defendant and thus was stronger the shorter the interval since the crime. The circumstantial evidence, combined with the inference (assuming the jury found possession as a fact based on defendant’s statement), warranted denial of the motion to acquit at the close of the State’s case. But the jury should have been charged the inference and its rationale, and specifically that a verdict of guilty might be reached on each count only if the jury determined that possession of the coin collection 12 days after it was reported missing, combined with all the other evidence, precluded any reasonable doubt that defendant was guilty of breaking and entering and of larceny. The failure so to charge, although no request or objection was made, in my view constituted plain error with a clear capacity to bring about an unjust result. State v. Hock, 54 N. J. 526 (1969).

I would reverse and remand for a new trial.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ANGELO APOSTOLIS, DEFENDANT-APPELLANT.
    Superior Court of New Jersey-Appellate Division
    Submitted November 26, 1974
    Decided March 25, 1975.

      Before Judges Matthews, Fritz and Botter.

      Mr. Stanley C. Van Ness, Public Defender, attorney for appellant (Mr. Robert J. Konzelmann, Assistant Deputy Public Defender, of counsel and on the brief).

      Mr. William F. Hyland, Attorney General of New Jersey, attorney for respondent (Mr. Glenn E. Kushel, Deputy Attorney General, of counsel and on the brief).
   Per Curiam.

Other than a complaint of the excessiveness of sentence, which we find to be without merit, the sole question raised by this appeal is whether reference to “unexplained flight” by a trial judge, in his charge to the jury relating to defendant’s flight, unlawfully compromises defendant’s rights under the Fifth Amendment to the United States Constitution in a situation where defendant did not testify. We answer this question in the negative and affirm the conviction below.

In the matter before us there was direct evidence of defendant’s departing the vicinity of the crime by climbing an eight to ten-foot embankment in his car, which then ran through a red traffic light, all the while travelling at high speeds before its flight was stopped by a police road block. The portion of the judge’s charge dealing with flight, here criticized, and to which a timely and appropriate objection was taken below, is as follows:

• * * Hence, again, the State contends that the defendant deliberately and intentionally took flight. You may or may not determine that the actions of this defendant constitute flight. Flight standing alone raises no inference of guilt. But the unexplained flight of a person after a crime has been committed is a circumstance which you may consider together with all of the other evidence in the case in determining whether such unexplained flight tends to prove a consciousness of guilt. If you find beyond a reasonable doubt that the defendant, Apostolis, fearing that an accusation, a charge would be made against him, the charge involved in the indictment, or fearing an arrest by reason thereof, took refuge in flight or for the purpose of evading the accusation or arrest, then you may consider such unexplained flight or conduct as a circumstance which might tend to show consciousness of guilt, and which should be weighed by you with all of the other evidence in the case which is relevant and material on the issue of guilt or innocence of the defendant. You may consider such conduct by the defendant, if true, significant, or you may not. This is a question of fact for you to determine, again, in light of all of the evidence in the case.

Defendant recognizes that consciousness of guilt may properly be demonstrated by evasive flight, but argues that for a judge to present the principle to a jury in terms of “unexplained” flight unconstitutionally imposes either a duty on defendant to testify or a penalty for not testifying. Essentially the same argument was put forward in State v. Copeland, 94 N. J. Super. 196 (App. Div. 1967), and there rejected. We reject it here. Cf. Barnes v. United States, 412 U. S. 837, 846-847, 93 S. Ct. 2357, 37 L. Ed. 2d 380 (1973).

We realize that in both Copeland and Barnes the jury was instructed that defendant had a constitutional right not to take the witness stand. In Copeland the jury was told it could draw no adverse inference from that failure to take the stand. Here defendant specifically requested that the trial judge not comment on his not taking the stand ■ — • a request the judge honored. The distinctions do not support a renunciation of the Cop eland-B arnés rationale, for it was not the instruction on flight which disadvantaged defendant beyond Copeland and Barnes, but rather, if anything, defendant’s election not to have his correlative right explained to the jury. Evasive flight itself, as conduct reasonably evidencing guilt, enjoys no Eifth Amendment protection. And as is pointed out in Barnes, supra:

* * * Introduction of any evidence, direct or circumstantial, tending to implicate tlie defendant in the alleged crime increases the pressure on him to testify. The mere massing of evidence against a defendant cannot be regarded as a violation of his privilege against self-incrimination. Yee Hem v. United States, supra [268 U. S. 178, 45 S. Ct. 470, 69 L. Ed. 904 (1925)], at 185. [412 U. S. at 847, 93 S. Ct. at 2363]

It remains obvious that in the circumstance where flight has occurred but defendant chooses not to take the stand and requests that the judge not comment on his failure to testify, care should be exercised by the trial judge to avoid language which might be misunderstood to impose a burden upon defendant which is not his. At the same time, motive for departure is an essential element with respect to consideration of flight as evidence of guilt, State v. Wilson, 57 N. J. 39, 48-49 (1970), and so it is necessary for the judge to instruct the jury in this respect. As indicated by the language approved in State v. Sullivan, 43 N. J. 209, 238-239 (1964), cert. den., 382 U. S. 990, 86 S. Ct. 564, 15 L. Ed. 2d 477 (1966), this can and should be done by charging the jury that flight, if factual, may be considered as evidence of consciousness of guilt only after a determination from all the evidence in the case that the purpose of the departure was to evade accusation or arrest.

We are satisfied in the circumstances of this case, including the charge read as a whole (see State v. Wilbely, 63 N. J. 420, 422 (1973)), that there was no basic unfairness to defendant. The fact of the matter is that defense counsel in his summation went to considerable lengths in attempting to explain and rationalize defendant’s flight. He said:

Now, we have stipulated that Mr. Apostolis was the owner of that ear that was there. We stipulated that he was the driver of the car. And you did hear testimony that the car loft the scene at a rapid speed. Now, does the State want you to beiievo just from the fact that somebody ran away from a place, from a police officer, that they’re guilty beyond a reasonable doubt of committing a felony? Which is what they allege in this case. I say that, of course, they’re going to allege to you that’s only one of the factors. Now, it’s for you to decide whether in fact that happened. But assuming that you do decide that, isn’t it a reasonable inference that people may leave the scene, any scene, not necessarily the scene of a crime, any place where they are, because they’re afraid of the police for some reason or another in this day and age? Is it possible that they would leave, and isn’t it a fair inference that they would leave because they were at a place where they didn’t belong, outside of Becker Transportation? They were at a place where they were trespassing on somebody else’s property. And let me go even further: Isn’t it also just as reasonable an inference possibly to be drawn by you that there was a — maybe a trespass in this case, and if there was, maybe a trespass, wouldn’t that be a reason to leave? But a trespass is not a breaking and entering with an intent to steal. It’s a trespass. And it’s something that would not be considered by you, is not to be considered by you here today. What you are considering is a charge of a felony, a breaking and entry with an intent to steal.
Now, as I said, in this day and age I think it’s pretty clear that anyone — well, not anyone, but people do run from the police for various reasons of their own, if nothing else, because of the fact that they may be just plain scared of what may happen in the event that somebody catches up with them, period. * * *

Fairness was further assured by the extensive, even redundant, correct charge on the presumption of innocence, the burden of proof and reasonable doubt which included such statements, among others, as, “There is no duty upon the defendant to cause the jury to entertain reasonable doubt as to his guilt.”

Accordingly, we are satisfied that while instruction to the jury in the case of defendant’s flight might better avoid use of the word “unexplained” and rather include a charge in the form suggested above, there was no reversible error here.

Affirmed.