text:
    THOMAS, LTD., A LIMITED PARTNERSHIP ASSOCIATION, RESPONDENT, v. DEPARTMENT OF THE TREASURY, STATE OF NEW JERSEY, APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued October 2, 1972—Supplemental Material Filed October 18, 25, 1972
    Decided December 20, 1972.

      Before Judges Lewis, Carton and Mintz.

      Mr. Kenneth F. Yates, Deputy Attorney General, argued the cause for appellant (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney; Mr. Stephen Skillman, Assistant Attorney General, of counsel).

      Mr. Walter R. Cohn argued the cause for respondent (Messrs. Cohn and Turk, attorneys).
   The opinion of the court was delivered by

Carton, J. A. D.

The issue on this appeal is whether a limited partnership association is subject to the New Jersey Business Corporation Tax Act, N. J. S. A. 54:10A-4(c).

Thomas, Ltd. is a limited partnership association created by a certificate of partnership association filed pursuant to the Limited Partnership Association Act, N. J. S. A. 42:3-1 et seq. The certificate, dated May 8, 1958 and providing for a duration of the association for 20 years, recited that the character of the business to be conducted is “real estate ownership, operation and management.”

Thomas started business in May 1958. In October 1961 it acquired title to certain premises in Newark, which it held until December 31, 1965. The association continued to transact business until December 30, 1966, when it no longer held title to any real estate and ceased to operate.

Early in 1969 the Newark Housing Authority was about to acquire the Newark property from a subsequent grantee of Thomas. In connection with the acquisition it caused a franchise tax search to be made as to Thomas, Ltd. When the search disclosed that the Department of the Treasury was asserting a lien for corporate taxes due from Thomas, Ltd., the Housing Authority so informed Thomas. Thomas paid the amount of the lien ($1517.11) in order to secure franchise tax clearance and then filed claim for refund. The Division ruled that the Tax Act did not apply to limited partnership associations and directed that refund be made. The Department has appealed.

The Tax Act imposes a tax upon

* * * any corporation, joint-stock company or association and any business conducted by a trustee or trustees wherein interest or ownership is evidenced by a certificate of interest or ownership or similar written instrument. [N. J. S. A. 54:10A-4(c); emphasis added]

The Division took the position that the words “or association” as used in the statute lacked any independent significance and must be construed in conjunction with the words “joint stock company” which immediately precede it; that the statute was concerned with specifically described classes of business, and that the Legislature, by designating such categories, evidenced an intention of limiting its application to those so described. On this basis the Division held that limited partnership associations were not subject to the tax imposed by the act.

In our view, this interpretation unduly emphasizes certain phases in the act without giving proper regard to its broader language and underlying purpose of subjecting any entity possessing the essential characteristics of a corporation to the tax. Viewed in this light, the critical issue is whether the inherent characteristics of limited partnership associations are such that they must be considered as corporations within the meaning of the statute.

This approach makes it unnecessary to determine whether the words “or association” should be construed in conjunction with the phrase “joint stock company” or be deemed to have independent significance which encompasses limited partnership associations. Parenthetically, we note that the term “joint stock company” is often used interchangeably with “joint stock corporation.” See 46 Am. Jur. 2d, Joint Stock Companies, §1 at 2 (1969); and see Edgeworth v. Wood, 58 N. J. L. 463 (Sup. Ct. 1896).

What are the essential characteristics ox attributes of a limited partnership association ? A limited partnership association is a sui generis creation of the Legislature (L. 1880, c. 204). N. J. S. A. 42:3-1 et seq. Three other jurisdictions presently have similar enactments: Pennsylvania (Pa. Stat. Ann. 15, § 12701 et seq.), Michigan (Mich. Stat. Ann., § 2091 et seq. M. C. L. A. § 449.201 et seq.), and Ohio (Ohio Rev. Code Ann., § 1783.01 et seq.).

The court in Carle v. Carle Tool & Engineering Co., 36 N. J. Super. 36 (App. Div. 1955), examined the structure of limited partnership associations in some detail and concluded that it was substantially similar to that of a corporation.

This analysis of the statute plainly indicates that an association formed thereunder attains eorporateness; it becomes an entity separate and apart from its members. * * * It takes on practically every substantial attribute of a corporation. As an artificial being it is endowed with the capacity of suing and of being sued, of acquiring, holding and conveying property in that character; the members do not act as individuals or as partners but through and in the name of the corporate body; disposal of a member’s interest or his death or insolvency does not bring about dissolution. The members do not conduct its affairs as individual partners who in ordinary partnerships have equal rights in the management and conduct thereof * * *. The operations are placed in the hands of three to five managers, and an individual member not a manager cannot bind the association. [36 N. J. Super. at 40]

The legal commentators have also concluded that limited partnership associations have most of the attributes of corporations. Henn, Corporations, §§ 42-48 (1961); Schwartz, “The Limited Partnership Association — An alternative to the corporation for the small business with control problems,” 20 Rut. L. Rev. 29 (1965); Note, “A Tax Comparison of the Limited Partnership and the Subchapter S. Corporation,” 43 Minn. L. Rev. 964 (1959).

In broad and sweeping terms, our statute imposes a tax upon “any corporation, joint-stock company or association and any business conducted by a trustee or trustees wherein interest or ownership is evidenced by a certificate of interest or ownership or similar written instrument.” N. J. S. A. 54:10A-4(c). As we interpret the legislative intent, it is to subject any legal entity having the essential attributes of a corporation to the tax. Since it is difficult to conceive of an entity which more precisely embraces the inherent features of a corporation, it seems clear to us that the Legislature intended to consider such entities as “corporations” within the meaning of N. J. S. A. 54:10A-4(c).

This interpretation finds strong support in Tide Water Pipe Co. v. State Board of Assessors, 57 N. J. L. 516 (Sup. Ct. 1895), aff'd 59 N. J. L. 269 (E. & A. 1896), where a limited partnership association created under a Pennsylvania statute was held subject to corporate tax in New Jersey.

This association exists under legislative authority; it has a name of its own, under which it can hold, own and convey real personal property, transact business, sue and be sued; it can adopt and use a common seal; it can make by-laws and appoint officers for the management of its affairs; its members are not responsible for it [sic] obligations except to the extent of their unpaid subscriptions to its capital; their interest in the association is personal estate, whatever be the nature of the company’s property, and can be transferred to strangers without dissolving the association; and the association will continue during the term mentioned in its certificate, unless sooner dissolved by the vote of its members. Purd. Dig., p. 937.
These powers comprise the substance of the general powers of corporations under the laws of Pennsylvania (Purd. Dig., p. 335) and also under the laws of New Jersey (Revision, p. 175).
The association having come into this state to exercise its statutory privileges, it should be deemed a corporation within the meaning of our corporation tax act. Tide Water Pipe Co. v. Berry, 23 Vroom 308. [57 N. J. L. at 518]

This interpretation appears to be supported also by a longstanding administrative practice of subjecting limited partnership associations to such tax. The Division maintains no-record of all limited partnership associations as such since no mechanism exists to require county clerks to' report the filing of certificates or the existence of such associations. As a result, the Division has no exact figures as to the number of’ such entities in existence prior to the adoption of the Unincorporated - Business Tax Act, N. J. S. A. 54:11B-1, in 1966.

However, it does appear from supplemental material filed by the Department of Law and Public Safety that the existence cif some 300 limited partnership associations has come to the attention of the Division during the 12-year period from 1961 to 1972 inclusive. From 1961 through 1965 the Division collected or attempted to collect corporate business taxes from about 200 of such associations each year. After the adoption of the Unincorporated Business Tax Act in 1966, the Division has continued to enforce the yearly corporate business tax against such associations. On the other hand, from June 17, 1966 to date, it has not collected or attempted to collect from such' associations taxes imposed by the Unincorporated Business Tax Act.

’ Thus, it appears that the Division of Taxation has uniformly treated limited partnership associations as corporations both before and after the enactment of the Unincorporated Business Tax Act on June 17, 1966. The existence of such administrative construction is entitled to great weight in interpreting the statute, and particularly where it is supported by prior judicial precedent. Pringle v. N. J. Dept. of Civil Service, 45 N. J. 329 (1965); Lane v. Holderman, 23 N. J. 304, 322 (1957).

Tlie judgment of the Division of Tax Appeals is reversed.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    CAROLINA CASUALTY INSURANCE COMPANY, PLAINTIFF-RESPONDENT, v. BELFORD TRUCKING COMPANY, INC., A CORPORATION, DEFENDANT-APPELLANT, AND JAMES T. NEIGHBORS AND JAMES G. MITCHELL, DEFENDANTS.
    Superior Court of New Jersey Appellate Division
    Argued December 11, 1972
    Decided December 27, 1972.

      Before Judges Collester, Leonard and Halpern.

      Mr. Ernest F. Picknally argued the cause for appellant Belford Trucking Company, Inc. (Messrs. Schuenemann & Picknally, attorneys).

      Mr. David M. Mayfield argued the cause for respondent Carolina Casualty Insurance Company (Messrs. Martin and Grawshaw, attorneys).

      Messrs. Kisselman, Deighan, Montano, King & Summers, attorneys for defendants James T. Neighbors and James G. Mitchell, filed a statement in lieu of brief.
   Per Curiam.

For the reasons expressed by Judge Wick in his opinion reported at 116 N. J. Super. 39 (Ch. Div. 1971), we affirm his judgment denying Belford’s motion to set aside service of process and to dismiss plaintiff's declaratory judgment suit.

We are left with the sole issue as to whether plaintiff Carolina Casualty Insurance Company, or defendant Belford Trucking Company, Inc., should be required to pay for the injuries sustained by Clarence P. Young and Carl Heilman, and the expenses incurred by plaintiff in defending defendants James T. Neighbors and James G. Mitchell. The reasonableness of the settlement made by plaintiff with Young and Heilman for $4,000, and the expenses it incurred in connection with defending the suit in the sum of $1,580.30, have not been questioned by Belford.

We are in accord with the views expressed by Judge Wick that under the provisions of the Interstate Commerce Act, 49 U. S. C. A. § 315, and the regulations promulgated thereunder, Belford, a certificated interstate carrier, became the primary insurer of the tractor and trailer leased to it by Neighbors, and that plaintiff's policy qualified as excess coverage only. Hagans v. Glens Falls Ins. Co., 465 F. 2d 1249 (10 Cir. 1972); Cox v. Bond Transportation, Inc., 53 N. J. 186 (1969), cert. den. 395 U. S. 935, 89 S. Ct. 1999, 23 L. Ed. 2d 450 (1969). This is particularly true where, as here, Belford is self-insured and no policy of insurance is before us for construction.

The judgment below is affirmed.


author: Kimmelman, J. S. C.

text:
    ROBERT E. STREET, ET AL., PLAINTIFFS, v. NATIONAL NEWARK & ESSEX BANK, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided December 7, 1972.

      John F. Richardson (Richard T. Ludwig, of counsel on the brief), attorney for Plaintiffs.

      William R. Beilig, attorney for Defendant.
   Kimmelman, J. S. C.

By this summary action the life income beneficiary and two remaindermen of a testamentary trust seek to accelerate and thereby terminate the trust. They contend that the class of remaindermen who are the issue of the life beneficiary has been effectively closed by reason of a vasectomy performed upon the life beneficiary which rendered him sterile. The trustee does not dispute the fact of the operation or its effect, but withholds its consent to the termination of the trust preferring that the court first hold a plenary hearing so that inquiry can be made as to the reasons which motivated the vasectomy and the subsequent request to dissolve the trust.

I

The uncontroverted facts appear as follows:

1. Paragraph Seventh of the Last Will and Testament of Helen E. Street, deceased, created a trust in one-half of the residue of her estate for the benefit of her son Eobert E. Street to receive the income during his lifetime and upon his death the remainder was to be distributed equally among his children.

2. Eobert E. Street has two children, David E. Street and Eleanor Alice Street Hungate. Both children are adults and along with their father seek the termination of the trust whereby each child will be paid one-half of the principal.

3. Eobert E. Street is an aeronautical engineer residing in the State of Washington. The corpus of the trust is quite modest and he no longer desires to receive the income it produces. The logical inference is that the present trust income is inconsequential in relation to his financial circumstances and he would just as well pass on the benefits to his adult children at a time when they can readily enjoy the same.

4. On March 20, 1970, Robert E. Street underwent a vasectomy and subsequent laboratory tests have indicated that he is completely sterile.

5. According to the medical evidence it is impossible for Robert E. Street to father children, and therefore, the class of remaindermen is closed.

II

At common law, a man or woman irrespective of his or her age or physical incapacity was conclusively presumed to be capable of producing children. Trenton Banking Co. v. Hawley, 7 N. J. Super. 301 (Ch. Div. 1950); Anno: Modern Status of Presumption Against Possibility of Issue Being Extinct, 98 A. L. R. 2d 1285. However, the reasons advanced for this once irrebuttable presumption are no longer viable in light of the progress achieved in medical knowledge coupled with our passage into a more enlightened era. Consequently, where the facts adduced show the impossibility of fertility, then common sense dictates that the presumption must fail. Trenton Banking Co. v. Hawley, supra; Sevel v. Swarzman, 33 N. J. Super. 198, 203 (Ch. Div. 1954); In re Lattouf's Will, 87 N. J. Super. 137, 144 (App. Div. 1965); In re Estate of Ransom, 89 N. J. Super. 224, 231 (App. Div. 1965). See also In re Bassett’s Estate, 104 N. H. 504, 190 A. 2d 415, 98 A. L. R. 2d 1281 (1963) quoted extensively in the last cited case.

While the reported New Jersey cases deal exclusively with the inability of women to conceive and bear children because of advanced age, sterilization or a hysterectomy, there is no sound reason to draw any distinction in the case of men where the medical evidence likewise demonstrates an inability to father children.

Although a suggestion can be raised that future advances in medical science may be able to reverse the effect of a vasectomy and to restore fertility, at present that is a remote possibility and certainly not sufficient to require adlierence to a presumption so forcefully destroyed by the medical evidence in this case. Cf. In re Estate of Ransom, supra; 4 Scott on Trusts, § 340.1, p. 2716.

In other jurisdictions where the life tenant of a trust has undergone a vasectomy thereby effectively closing the class of remaindermen, courts have allowed an acceleration of the trust. See e. g. Neitig Estate, 4 Fiduciary Reporter 608 (Pa. 1954); Bosler Trust, 3 Fiduciary Reporter 635, reversed on other grounds, 378 Pa. 333, 107 A. 2d 443 (1953).

Under the circumstances, a plenary trial of the issues involved is not warranted. The Last Will and Testament of Helen E. Street does not contain any language expressive of an intent that the trust could not be terminated except by reason of the death of the life beneficiary. A spendthrift provision (absent here) might be construed as expressing such an intent which would preclude acceleration. Consequently, the life tenant’s motivation for the vasectomy and subsequent renunciation are immaterial.

Counsel shall submit an order for judgment in conformity herewith.


author: Furman, J. S. C.

text:
    CHARLES FRANK AND WOODBRIDGE MONUMENT WORKS, PLAINTIFFS, v. GEORGE F. KUGLER, JR., ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, AND NEW JERSEY CEMETERY BOARD, CLOVER LEAF CEMETERY AND ROCKY HILL CEMETERY ASSOCIATION, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided November 21, 1972.

      Messrs. Paul R. Williams, Jr. and Dennis J. Melofchik, for plaintiffs.

      Mr. Charles L. Terribile, Deputy Attorney General for defendants George F. Kugler and New Jersey Cemetery Board.

      Mr. Francis C. Foley, attorney for Clover Leaf Cemetery.

      Messrs. Herbert F. Moore and Michael F. Spicer, attorneys for Amicus Curiae New Jersey Cemetery Association.
   Furman, J. S. C.

The constitutionality of the New Jersey Cemetery Act approved December 1, 1971, N. J. S. A. 8A:1-1 et seq., is at issue in this declaratory judgment action. Plaintiff Frank is the former owner and now general manager of plaintiff Woodbridge Monument Works and, individually, an interment plot owner in defendant Clover Leaf Cemetery. He was plaintiff in Frank v. Clover Leaf Park Cem. Ass’n, 29 N. J. 193 (1959).

His attack upon the New Jersey Cemetery Act is multifold. In his prior litigation he contended successfully that a tax exempt cemetery association enjoyed an unfair competitive advantage over his private business in selling and installing memorial markers. He has renewed that contention in the context of the act of 1971. He has also asserted broadly discrimination against and deprivation of vested property rights of interment plot owners whose ownership antedates the statute.

The New Jersey Cemetery Act encompasses all nonreligious cemetery corporations and associations, whether formed under it or, prior to its effective date, under N. J. S. A. Titles 8, 14 or 15 or by special act of the Legislature. According to N. J. S. A. 8A:3-13(2), all pre-existing cemetery corporations and associations must apply for a certificate of authority within 90 days after the effective date of the act. Their charter rights and obligations are preserved subject to chapter 5, which governs operation and management of cemetery companies, and subject to other specific provisions, including the obligation to establish and maintain in trust a maintenance and preservation fund pursuant to chapter 4.

Plaintiffs initially contend that pre-existing cemetery corporations are specially favored in this legislative scheme because a right to make profits is assured them. A corollary contention is that under N. J. S. A. 8A:9-7 a sales management-company may be organized as a profit-making corporation to sell off interment lots under contract with a cemetery company. These contentions are untenable. A cornerstone of judicially declared law in this State is that cemetery companies are charitable trusts and are barred from profit making, either by themselves or through sales agents or other affiliates. That law subsists notwithstanding the act of 1971, which is not inconsistent. Terwilliger v. Graceland Memorial Park Ass’n, 35 N. J. 259, 265 (1961); Frank v. Clover Leaf Park Cem. Ass’n, 29 N. J. 193 (1959); Zucchi v. Lakeview Memorial Park Ass’n, 111 N. J. Super. 569 (App. Div. 1970); Fidelity Union Trust Co. v. Union Cemetery Ass’n, 136 N. J. Eq. 15 (Ch. 1944), affirmed 137 N. J. Eq. 455 (E. & A. 1946); George Washington Memorial Park Cemetery Ass’n v. Memorial Development Co., 139 N. J. Eq. 280 (Ch. 1947); Parker v. Fidelity Union Trust Co., 2 N. J. Super. 362, 387 (Ch. Div. 1944); Burke v. Gunther, 128 N. J. Eq. 565 (Ch. 1941).

Plaintiffs urge unfair competition to their own and other private businesses in the provisions of N. J. S. A. 8A:5-2 which authorize cemetery companies to engage in the sale of adornment, embellishment, sod and planting and to reserve the exclusive right to manufacture and install foundations. In conformity with Frank, the manufacture or sale of monuments, markers or bronze memorials is prohibited to cemetery companies. N. J. S. A. 8A:5-2(g).

All the activities under challenge are consonant with the trust purposes of establishing and preserving the beauty and dignity of the cemetery. No profits may be made from them. Reservation of the exclusive authority to install markers was approved in Frank. As noted therein (29 N. J. at 207), "* * * the tablet is prone to sinking or shifting if not based properly.” The manufacture and installation of foundations, that is, subsurface supports not part of monuments or memorials, are recognized as integral to the maintenance of a cemetery. The exclusive authority to manufacture and install them is a safeguard against faulty materials and workmanship.

In his individual standing as an interment plot owner plaintiff Drank raises arguments of discrimination, misconstruing both the New Jersey Cemetery Act and prior law. Perpetual care trust funds were sought consistently by the Attorney General in cemetery litigation prior to the new enactment. The establishment of such funds frequently hinged upon contract or court judgment. The act of 1971 in N. J. S. A. 8A:4-5 standardizes minimum contributions to the maintenance and preservation fund upon sales, resales and interments, subject to reduction to the extent of contributions required by prior contracts or court judgments. In pre-existing cemeteries annual care and maintenance charges pursuant to contract may be continued or reasonable annual charges may be assessed in the absence of contract. N. J. S. A. 8A:4-6. All cemeteries are authorized to fix reasonable charges for perpetual, annual and special care of interment plots. N. J. S. A. 8A:5-1(b).

The interment plot owner who contributed a higher percentage of his sale price to a perpetual care fund than that required by N. J. S. A. 8A:4-5 is not discriminated against or deprived of any property right. The cemetery company’s contract and trust obligations to him remain enforceable. If additional contributions are reasonably required for the maintenance and preservation fund in view of rising costs or otherwise, he is not insulated against them and was not prior to the new enactment. Abra-May Cem. Sales Co. v. Degel Yehudo Cem. Corp., 92 N. J. Super. 365, 370 (Ch. Div., 1966).

Nor is the commingling of prior contributions held in trust into the maintenance and preservation fund, which must be set up under chapter 4, a violation of trust law, in view of the identity of trust purpose of both funds.

Plaintiffs suggest a discrimination in favor of private mausoleum owners who are required before their construction to contribute a minimum of $1 a cubic foot by exterior measurement to the maintenance and preservation fund. N. J. S. A. 8A:4-10. But the plain reading of the act is that this contribution is in addition to, not in lieu of, the other mandatory minimum contributions.

The final attack on the New Jersey Cemetery Act is that by granting tax exemption to cemetery companies it is special legislation relating to taxation, within the constitutional interdiction of N. J. Const. (1947), Art. VIII, § I, par. 2. Patently it is general, not special, legislation affecting all nonreligious cemetery companies and preserving a tax exemption first enacted as general law in L. 1851, p. 257, § 10. Alfred Vail Mut. Assoc. v. New Shrewsbury, 58 N. J. 40, 49 (1971); General Electric Co. v. Passaic, 28 N. J. 499, 505, 506 (1958).

Judgment for defendants.


author: Gelman, J. C. C.

text:
    BOROUGH OF PARAMUS, NEW JERSEY, PLAINTIFF, v. MARTIN PAINT STORES, INC., DEFENDANT.
    Bergen County Court Law Division.
    Decided November 22, 1972.

      Mr. Marvin Olick for plaintiff. (Messrs. Gruen, Sorkow & Sorkow, attorneys).

      Mr. Martin Spritzer for defendant (Messrs. Spritzer & Bressler, attorneys).
   Gelman, J. C. C.

The sole issue on this appeal from the Municipal Court of the Borough of Paramus is the validity of the borough ordinance which was the basis for defendant’s convictions.

The facts are not disputed. The Borough of Paramus is located in central Bergen County and has within its boundaries several major arterial highways serving not only the borough but the county and State as well. Along the routes of those highways are numerous retail business establishments, a great number of which are grouped together in major shopping centers. Defendant Martin Paint Stores, Inc. operates a chain.'of retail stores which sell paint, home decorating merchandise, and hardware. One of defendant’s stores is located within the Garden State Plaza, the largest of the shopping centers in Paramus.

; During the month of May 1972 the Borough of Paramus enacted ordinance 72-11, which was entitled:

An ordinance prohibiting worldly employment or business, except works of necessity and charity on the legal holidays designated Memorial Day, Independence Day (4th of July) and Thanksgiving Day in the Borough of Paramus, County of Bergen, State of New Jersey, and providing penalties for the violation thereof.

As indicated by its title, ordinance 73-11 is a “holiday closing” ordinance which requires most businesses to remain closed on the three named legal holidays. Exceptions are made for the conduct of certain business activities substantially identical to those permitted under the State’s Sunday closing statute. N. J. S. 2A:171-1 et seq.

On May 39 (Memorial Day) and on July 4, 1973 defendant’s Paramus store was open for and did in fact transact business, contrary to the provisions of the ordinance. Subsequently, defendant was found guilty of violating the ordinance on each of the holidays and fined $75 plus $10 costs for each violation.

Defendant challenges the validity of the ordinance on two grounds: it asserts that ordinance 73-11 is either ultra vires because it is contrary to the legislative policy declared by N. J. S. A. 36:1—2, or that it is unconstitutional because its arbitrary classification of proscribed activities violates the equal protection provisions of the Federal and State Constitutions. In keeping with settled judicial policy, the constitutional issues will not be examined since in the court’s view the ordinance is ultra vires, and a determination of the constitutional issues is therefore unnecessary. State v. Fairlawn Service Center Inc., 30 N. J. 468, 470-471 (1956); Donadio v. Cunningham, 58 N. J. 309, 325—326 (1971).

The question for consideration here is essentially whether N. J. S. A. 36:1—2 declares a state policy which preempts any conflicting municipal action under the Home Rule Act, N. J. S. A. 40:48-1 et seq. The question is one of first impression, although the Appellate Division, in a dictum in Elizabeth v. Windsor-Fifth Avenue, 31 N. J. Super. 187 (App. Div. 1954), expressed the view that the licensing provisions of the Home Rule Act, N. J. S. A. 40:53-1(g) do not sanction such action. The answer to the question obviously requires an examination of the legislative intent which must be inferentially determined.

Chapter 1 of Title 36 of the New Jersey Statutes creates and defines legal holidays. It also proscribes certain activities on those days designated as holidays and half-holidays. The main thrust of those proscriptions is directed at the commercial banking field. Since its original passage in 1891 this chapter has been amended many times, most recently by L. 1969, c. 133. The various amendments generally have created new holidays, established new dates of observance for existing holidays, or changed the degree and extent to which Saturday would be considered a holiday or half-holiday. Despite these numerous amendments during the 81 years since its passage, the provisions of the original enactment concerning the transaction of business by individuals and corporations on holidays has never been amended.

Section 3 of L. 1891, c. 43, provided that

* * * the provisions of this act [governing holidays] shall not be construed as interfering with any person or corporation transacting business in this state, either private or public, but every such person or corporation shall be permitted to eonduet business on any holiday or half holiday herein designated, in the same manner as if this law had not been passed. [Emphasis supplied.]

The language above quoted was modified only in the enactment of the Revision of 1937. At that time section 3 of L. 1891, c. 43, was designated N. J. S. A. 36:1-2 and altered to its present form, which reads as follows:

Any person or corporation may transact either private or public business in this state on any designated holiday or half holiday, in the same manner as on any other day of the week on which it is lawful to transact such business.

The changes made in section 3 by the Commission on Revision were intended to consolidate and clarify it without altering its substance or affecting the legislative intent embodied in it. Any construction of N. J. S. A. 36:1—2 must therefore reflect the historical mandate of section 3 as well as the current language of N. J. S. A. 36:1—2.

The power of a municipality to enact any ordinance is derived from and limited by legislative authorization; but where delegated, such powers are to he liberally construed. N. J. Const. (1947), Art. IV, § VII, par. 11; Fred v. Mayor, etc. Old Tappan, 10 N. J. 515, 518 (1952); Moyant v. Paramus, 30 N. J. 528, 534-535 (1959). The omnibus police power provisions of N. J. S. A. 40:48-2 and the general regulatory powers granted in conjunction with the licensing provisions of N. J. S. A. 40:52-1 (g) are the asserted authority for the enactment of ordinance 72-11. While neither of these statutes contains specific authority to regulate business transactions on holidays, the borough contends that the general authority delegated by these statutes is an adequate basis for upholding 72-11 despite the conflicting language of N. J. S. A. 36:1-2.

Speaking for the court in Kennedy v. Newark, 29 N. J. 178 (1969), Chief Justice Weintraub presented the following standard for evaluating apparent conflicts between the exercise of the municipal police power and state statutory law:

It is fundamental that in the exercise of delegated power a municipality may not legislate in conflict with state statutes. [Citations omitted.]
* * *
[However,] before it can be said that the police power delegated to local government must remain inert, it must be clear that the Legislature intended to occupy the field or declared a policy at war with the decision made by local government. The delegated power may not be restrained upon the basis of speculation or dubious inference, [at 186, 187]

Examining the same issue ten years later, the Chief Justice further explained the New Jersey preemption standard in Summer v. Teaneck, 53 N. J. 548 (1969), stating that

* * * an ordinance will fall if it permits what a statute expressly forbids or forbids what a statute expressly authorizes. Even absent such evident conflict, a municipality may be unable to exercise a power it would otherwise have if the Legislature has preempted the field. * * * It is not enough that the Legislature has legislated upon the subject, for the question is whether the Legislature intended its action to preclude the exercise of the delegated police power. Masters-Jersey, Inc. v. Mayor and General Council of Borough of Paramus, 32 W. J. 296 (1960). * * * The ultimate question is whether, upon a survey of ail the interests involved in the subject, it can be said with confidence that the Legislature intended to immobilize the municipalties from dealing with local aspects otherwise within their power to act. [at 554-555]

For recent illustrations of the application of the preemption standards set forth in Kennedy and Summer, supra, see Chester Tp. v. Panicucci, 116 N. J. Super. 229, 234 (App. Div. 1971) (local gun control ordinance held valid because it supplemented rather than conflicted with state hunting statute); State v. Pinkos, 117 N. J. Super. 104 (App. Div. 1971), certif. den. 60 N. J. 195 (1972) (invalidated hunting ordinance deemed to be in conflict with state hunting statute); Mogolefsky v. Schoem, 50 N. J. 588 (1967) (soliciting ordinance held not to be in conflict with state statute licensing real estate salesmen and brokers).

The language of N. J. S. A. 36:1-2 in and of itself strongly suggests a legislative intent to declare a state policy preempting local regulatory control over holiday business activity. This conclusion is confirmed by an examination of the legislative history of the current Home Rule Act, L. 1917, c. 152, N. J. S. A. 40:48-1 et seq. At the same time the Home Rule Act was adopted, the Legislature also enacted L. 1917, c. 97, which expressly delegated authority to municipalities to adopt ordinances “* * * To regulate the opening and closing of barber shops on Sundays and legal holidays * * The fact that the same session of the Legislature omitted a general delegation of authority to control holiday business activity under the police power or licensing provisions of the Home Rule Act must be deemed to have been deliberate and evidential of its intent not to include such authority within those sections. The specific grant of authority with respect to barber shops was the basis for the holding in Amodio v. Board of Comm’rs, W. New York, 133 N. J. L. 220 (Sup. Ct. 1945), which rejected an argument that a municipal ordinance regulating among other things, the closing of barber shops on holidays was invalid.

In 1938 the Legislature similarly delegated specific authority to municipalities to regulate holiday closings, but again limited the grant to a specific type of business, i. e., beauty parlors. L. 1938, c. 249; N. J. S. A. 40:48-2.1. The language used to delegate this authority is as follows:

The governing body of any municipality in this State shall have the power:
(a) To pass, enforce, alter or repeal ordinances to take effect within the limits of such municipality for the following purposes:
To regulate the opening and closing of beauty parlors on Sunday and holidays * * *.

It is obvious that where the Legislature has sensed the need for local control over holiday closing it has granted such authority. In doing so it has employed language which leaves no doubt that the local exercise of such authority is to be limited to the specific business activity involved. The narrowness of the exceptions which have been legislatively recognized suggests that N. J. S. A. 36:1—2 still declares a public policy of the State which preempts conflicting local regulatory activity.

The Borough urges that since N. J. S. A. 36:1-2 was enacted in 1891 it should not be construed to preempt local regulations necessary to deal with current problems; in other words, it is suggested that the statute is outmoded and should be ignored. The judicial interpretation of the public interest as reflected in decisional law is, of course, subject to change to meet “modern concepts and needs.” Collopy v. Newark Eye and Ear Infirmary, 27 N. J. 29, 42 (1958). See also, Immer v. Risko, 56 N. J. 482 (1970). However, courts are not free to disregard the public policy of the State as declared by the Legislature in its enactments. Whether statutory law adequately delegates authority to deal with current local problems is a matter for legislative determination. As the Supreme Court said in Two Guys from Harrison, Inc. v. Furman, 32 N. J. 199 (1960):

It is worth repeating that the Judiciary is not concerned with the good sense of a statute. Policy matters are the exclusive responsibility of the legislative branch of government, [at 229]

The judgments of conviction are reversed.

      See “Report of the Commission on Revision and Consolidation of the Public Statutes, Supplemental to the Better of Transmittal accompanying the Final Draft of Proposed Revision,” 4 Revised Statutes of New Jersey of 1937, IV, 19-20.

      Under N. J. S. A. 40:48-2 “Any municipality may make, amend, repeal and enforce such other ordinances, regulations, rules and bylaws not contrary to the laws of this state or of the United States, as it may deem necessary and proper for the good government, order and protection of persons and property, and for the preservation of the public health, safety and welfare of the municipality and its inhabitants, and as may be necessary to carry into effect the powers and duties conferred and imposed by this subtitle, or by any law.”

      N. J. S. A. 40:52-1(g) authorizes municipalities to enact, amend, .and enforce ordinances to license and regulate “Dumber and coal yards, stores for the sale of meats, groceries and provisions, dry goods and merchandise, and goods and chattels of every kind, and all other kinds of business conducted in the municipality other than herein mentioned, and the places and premises in or at which the business is conducted and carried on; street stands for the sale or distribution of newspapers, magazines, periodicals, books, and goods and merchandise or other articles.”


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

text:
    JOSEPH CERTISIMO AND HARRIET CERTISIMO, PLAINTIFFS, v. HEIDELBERG COMPANY, A COMPANY ESTABLISHED IN WEST GERMANY, AND HEIDELBERG EASTERN, INC., A CORPORATION OF THE STATE OF DELAWARE, DEFENDANTS AND THIRD-PARTY PLAINTIFFS, v. HEIDELBERGER DRUCKMASCHINEN AKTIENGESSELLSCHAFT, A COMPANY ESTABLISHED IN WEST GERMANY, THIRD-PARTY DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided December 6, 1972.

      Mr. Rowland V. Lucid, Jr. for plaintiffs (Messrs. Scerbo, Glickman & Kobin, attorneys).

      Mr. Donald S. McCord, Jr. for defendants and third-party plaintiffs Heidelberg Eastern, Inc. (Messrs. O’Donnell, Leary & D’Ambrosio, attorneys).

      Mr. Peter E. Henry for third-party defendant (Messrs. Crummy, O’Neal, Del Deo & Dolan, attorneys).
   Byrne, A. J. S. C.

This is a motion by the third-party defendant in this action, Heidelberger Druckmaschinen Aktiengessellscliaft (hereinafter HDAG) to dismiss the third-party complaint against it due to insufficiency of process. Defendant and third-party plaintiff Heidelberg Eastern, Inc., a Delaware corporation, sought to serve HDAG, the thirdpariy defendant, under R. 4:4-4(c)(1), which provides in part that:

If it appears by affidavit of plaintiff’s attorney or of any person having knowledge of the facts that after diligent inquiry and effort personal service cannot be made upon any of the foregoing and if the corporation is a foreign corporation, then, consistent with due process of law, service may be made by mailing, by registered or certified mail, return receipt requested, a copy of the summons and complaint to a registered agent for service, or to its principal place of business, or to its registered office.

HDAG argues that it has no contacts with the forum state and that therefore service by mailing would not be “consistent with due process of law.” Heidelberg Eastern, Inc. responds that HDAG does indeed have sufficient minimal contacts with the State of New Jersey to employ the “long-arm rule” by reason of the injury sustained by plaintiff.

A review of the undisputed facts shows that most of the bases for jurisdiction under the long-arm statutes which have been developed since International Shoe v. Washington, 326 U. S. 310, 66 S. Ct. 154, 90 L. Ed. 95, in 1945 are not present in this case. Plaintiff in this case suffered injury to his hands while operating a printing press manufactured by HDAG and distributed by Heidelberg Eastern, Inc. The injury was allegedly caused by a press which was “negligently, carelessly and recklessly designed, constructed, manufactured, inspected and maintained.”

The press was manufactured by HDAG, a West German corporation which manufactures and sells Heidelberg presses in Germany to companies doing business in a number of countries throughout the World. All manufacturing and selling activities by HDAG are carried on outside the United States. Title to the printing presses and parts which are to be sold in the United States passes in Germany to Heidelberg Eastern, a corporation which then imports the presses into the United States. Heidelberg Eastern is not an agent of HDAG. HDAG owns no financial interest in any distributor of its products; nor does it supervise, control or otherwise oversee the business operations of its distributors in the United States. Heidelberg Eastern sold the press to plaintiff’s employer, Compton Press, a New Jersey corporation.

HDAG states by affidavit that it does no business in the State of New Jersey, has never qualified to do business in New Jersey and has no office, place of business or personnel in the State of New Jersey or in the United States. HDAG neither owns nor controls any property in New Jersey. It does not ship its products to individuals or corporations located in New Jersey. It neither solicits business nor advertises its products in the State of New Jersey or in the United States. HDAG does not sell its products to customers in New Jersey, although it sells machines to Heidelberg Eastern; however, those transactions occur in West Germany.

In short, the only contact on which personal jurisdiction may be based in this case is the fact that a printing press sold to the third-party plaintiff with the obvious expectation that it would be resold in the United States eventually caused injury to plaintiff in New Jersey. Third-party defendant claims that this is not even a “contact.” Third-party plaintiffs argue that the single act is enough to support jurisdiction under R. 4:4 — 4(c) (1).

The narrow question to be determined is this: Does the sale and delivery of a product in a foreign nation by a foreign manufacturer to an American distributor with the obvious expectation that it will be sold in some state of the United States subject the foreign manufacturer to the personal jurisdiction of New Jersey’s courts when the product causes injury to a New Jersey resident in New Jersey? More simply, is a finding of jurisdiction in such a situation “consistent with due process of law”?

I

Two United States Supreme Court cases must provide the origin for any response to this question. In International Shoe Co. v. Washington, 326 U. S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945) the Supreme Court held that:

•s * <• [H']ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” [at 316, 66 S. Ct. at 158]

In International Shoe the minimum contacts of the foreign corporation consisted of salesmen within the state exhibiting samples of merchandise and soliciting orders from prospective buyers. Holding that such activities were systematic and continuous, the court found that the State of Washington may maintain suit in its own courts in conformity to the due process requirements of the Fourteenth Amendment. However, in McGee v. International Life Insurance Co., 355 U. S. 220, 223, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957), the contacts with the State of California were not as great. There a resident of California purchased an insurance policy from an Arizona company. The company was later taken over by defendant, a Texas company, which mailed a reinsurance certificate to the assured who, in turn, mailed his premiums to the defendant’s Texas office. Neither the Arizona nor the Texas company ever had an office or agent in California, and the Texas company had never solicited or done any insurance business in California apart from issuing the policy sued upon. After the assured died, the beneficiary sued defendant in California, serving it by mail, and obtained a judgment which the Texas courts later refused to enforce. The Supreme Court held that the California court had jurisdiction and that its judgment was entitled to full faith and credit.

It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State. [Citing cases]. The contract was delivered in California, the premiums were mailed from there and the insured was a resident of that State when he died. It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. [355 U. S. at 223, 78 S. Ct. at 201; emphasis added]

Thus, the Supreme Court has set no firm and established guidelines for the states to follow, except the fact situations presented in International Shoe and McGee, supra, and requirements that suits not offend “traditional notions of fair play and substantial justice,” or have a “substantial connection” with the state.

Partly because the Supreme Court has not set firmer guidelines, and partly due to the rapid recent development of the long-arm concept, it is difficult if not impossible in close situations to find determinative criteria to use in deciding if there is jurisdiction or lack thereof. Almost every case can be distinguished by a factor which has some bearing on the determination of whether minimum contacts do exist. Such distinctions must be closely considered, for although there can be no doubt that since International Shoe was decided in 1945 the personal jurisdiction of the states has been expanding, and although New Jersey has limited itself only by the constitutional limit of long-arm service, Roland v. Modell's Shoppers World, 92 N. J. Super. 1 (App. Div. 1966), there is still some meaning to the concept of limited personal jurisdiction. As noted in Hanson v. Denckla, 357 U. S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958) :

* * & it }S a mistake to assume that this trend [International Shoe] heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. * * * Those restrictions are more than a guarantee of immunity from inconvenience or distant litigation. They are a consequence of territorial limitations on the power of the respective States, [at 251, 78 S. Ct. at 1238]

Still, expansion of personal jurisdiction is the trend, and indeed a necessity, as other fields of the law also change. Especially pertinent to the case at hand is the statement in Gray v. American Radiator and Standard Sanitary Corp., 22 Ill. 2d 432, 433, 176 N. E. 2d 761, 766 (Sup. Ct. 1961) quoted in Hoagland v. Springer, 75 N. J. Super. 560, 568 (App. Div. 1962) :

s.' * * jurisdictional concepts which may have been reasonable enough in a simple economy lose their relation to reality, and injustice rather than justice is promoted. Our unchanging principles of justice, whether procedural or substantive in nature, should be scrupulously observed by the courts. But the rules of law which grow and develop within those principles must do so in the light of the facts of economic life as it is lived today. Otherwise the need for adaptation may become so great that basic rights are sacrificed in the name of reform, and the principles themselves become impaired.

II

There are two major requirements which have emerged for determining the present outer limits of in personam jurisdiction: (1) defendant must take voluntary action calculated to have an effect in the forum state, Hanson v. Denckla, 357 U. S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958), and (2) the act of defendant or the consequence caused by defendant must have a substantial enough connection with the forum state so that the exercise of jurisdiction over defendant does no violation to fundamental fairness. J. W. Sparks & Co. v. Gallos, 47 N. J. 295 (1966); Avdel Corp. v. Mecure, 58 N. J. 264 (1971). See also, 27 A. L. R. 3d. 397 (1969), L. D. Reeder Contractors of Ariz. v. Higgins Industries, 265 F. 2d 768 (9 Cir. 1959), n. 12, quoting 47 Georgetown L. J. 342, 351-352 (1958).

To decide if the first requirement is met, two questions may be posed: (1) does HDAG act purposely to avail itself of the privilege of acting or causing a consequence in the forum state if it is only foreseeable that since the distributor is an American corporation, HDAG’s products will be sold in one or some of the 50 states, and (2) does the fact that the distributor is not connected to HDAG, and therefore the product is only “indirectly introduced” into New Jersey, make the connection between HDAG and New Jersey too tenuous? There are two corollaries to this second question. (1) is the fact that there is no connection whatever between HDAG and New Jersey at all significant, and (2) are the benefits derived from the forum state by HDAG too far removed ?

Ill

Defendant must take voluntary action calculated to have an effect in the forum state. Hanson v. Denckla, 357 U. S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958). Clearly, however, if it is not foreseeable that the foreign party’s actions will have an effect in the forum state, then there can be no “voluntary action calculated to have an effect in the forum state.”

In the case at hand, HDAG could foresee that its product would be used in one or some of the states. Therefore, it is arguable that it was “foreseeable” that HDAG’s product would end up in New Jersey. However, by the same reasoning, HDAG would, under this criterion, be amenable to suit in every state. Third-party plaintiff has in no way narrowed the field by showing that Heidelberg Eastern did a substantial amount of its business in a particular locale and that [¶] AG knew of this restriction.

In Uppgren v. Executive Aviation Services, Inc., 304 F. Supp. 165 (D. C. Minn. 1969), the single contact with Minnesota was the malfunction of a helicopter which caused injury iii Minnesota. As the court pointed out:

It is arguable, of course, that considering the mobile nature of tile product and the fact that the helicopter in question was sold to the United States Government, Loving could reasonably expect that its negligence would have consequences in almost any of the 50 states including Minnesota. It is important to note, however, that the foreseeable use test applied by the Illinois court [in Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d. 432, 441, 176 N. E. 2d 761, 766 (Sup. Ct. 1961)] purports to require that the use and consumption of the defendant’s product in the forum state be “substantial.” [at 170]

With this language the Uppgren court was distinguishing Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d 432, 176 N. E. 2d 761 (Sup. Ct. 1961). In Gray, an Illinois resident was injured by an explosion of a water heater manufactured by a foreign corporation which had been sold to a “middleman” foreign corporation. The manufacturer claimed that it did no business in Illinois and that the state court’s exercise of in personam jurisdiction pursuant io service effected under the Illinois long-arm statute was violative of due process. The record did not disclose whether defendant had done any business in Illinois other than the manufacturing of a product out-of-state which was incorporated into a hot water heater which in the course of commerce was sold to an Illinois consumer. The Illinois Supreme Court, in reversing a lower court judgment, held that the Illinois courts had valid in personam jurisdiction over defendant. Gray is very similar factually to the case at hand. The court in Uppgren distinguished away Gray by noting:

While the record does not disclose the volume of Titan’s [defendant manufacturer] business or the territory in which appliances incorporating its valves are marketed, it is a reasonable inference that its commercial transactions, like those of other manufacturers, result in substantial use and consumption in this State. To the extent that its business may be directly affected by transactions occurring here it enjoys the benefits from the laws of this State, and it has undoubtedly benefited, to a degree, from the protection which our law has given to the marketing of hot water heaters containing its valves. Where the alleged liability arises, as in this ease, from the manufacturer of products presumably sold in contemplation of use here, it should not matter that the purchase was made from an independent middleman or that someone other than the defendant shipped the product into this State. [22 Ill. 2d at 441, 176 N. E. 2d at 766; emphasis added]

Heidelberg Eastern has not shown that it did a substantial amount of business in New Jersey. However, it is also unlike Uppgren in that HDAG could know with certainty that Heidelberg Eastern would be selling to some unlocated customers. Unlike Uppgren, when plaintiff sought to serve defendant because of the highly unforeseeable fact that the accident occurred in Minnesota, in this case and in Gray Radiator, the third-party defendant could foresee that the product would have to be sold in other states and, indeed, it is assumed, hoped that the market for its product would be widespread. Certainly, if the third-party defendant’s products were being sold in all 50 states, that party would be under the jurisdiction of all 50 states. It seems fair to hold, therefore, that HDAG should be liable in as many states as its distributor succeeded in spreading HDAG’s product. It may be assumed that HDAG would prefer as wide a market as possible. Thus, in what is admittedly an after-the-fact argument, it is contended that in as many states as the third-party defendant’s product causes injury, the third-party defendant will be liable to suit. Thus, it may be argued that how foreseeable a contact is will be determined by where the torts actually extend to.

Does the fact that the distributor is not connected to HDAG and that, therefore, the product is only “indirectly introduced” into New Jersey, make the connection between HDAG and New Jersey too tenuous?

On Gray, supra, the court stated:

r * * Where the alleged liability arises, as in this case, from the manufacture of producís presumably sold in contemplation of use here, it should not matter that the purchase was made from an independent middleman or that someone other than the defendant shipped the product into this State.
With the increasing specialization of commercial activity and the growing inter-dependence of business enterprises it is seldom that a manufacturer deals directly with consumers in other States. The fact that the benefit he derives from its laws is an indirect one, however, does not make it any the less essential to the conduct of his business; and it is not unreasonable, where a cause of action arises from alleged defects in his product, to say that the use of such products in the ordinary course of commerce is sufficient contact with this State to justify a requirement that he defend here. * * * [176 N. E. 2d 761 at 766]

In Hoagland v. Springer, 75 N. J. Super. 560 (App. Div. 1962), significantly closer connections were shown between the manufacturer and the distributor such that the distributors were “integral spoke [s] in a wheel in which Engine [the manufacturer sought to be served] is the hub.” 75 N. J. Super. 560 at 564. There the distributors were able to order parts directly from the manufacturer.

In Omstead v. Brader Heaters, Inc., 5 Wash. App. 258, 487 P. 2d 234 (App. Ct. 1971), aff’d 80 Wash. 2d 720, 497 P. 2d 1310 (Sup. Ct. 1972), a case cited by third-party plaintiff Heidelberg Eastern, there was almost the same absence of contacts (other than the injury by the product) as there is here. However, in Omstead an agent for the Japanese manufacturer of pipes visited plaintiff’s orchard in Washington to help plaintiff solve problems which could not be alleviated and which, eventually, by their failure to beat the orchard, caused the rain of the crop. Be these facts as they may, however, the end result for the manufacturer is essentially the same in Gray, Hoagland, Omstead and in this case. But for the middleman, the manufacturer seeking to engage in the same volume of business in which lie was engaged would have had to set up an outright system of agents to distribute his product. The economic reality of the situation is that these distributors, in Hoagland, Omstead, as well as in the case at hand, provide the same service of distribution to the third-party defendant as if they were the manufacturers’ agents. Perhaps for other legal purposes (e. g., to avoid future difficulties with federal and state tax laws and other legislation) Hoagland, supra, 75 N. J. Super. at 569, these distributors cannot be classified as agents. However, to prevent recovery by an injured plaintiff or third-party plaintiff because the manufacturer had no “contacts” in that it handled all transactions through a middleman-distributor, is to allow a legal technicality to subvert justice and economic reality in the worst sense.

The HDAG has received all the same benefit to be derived from having customers in the forum state as if it had sold directly to these customers. As noted in Eoagland,

To conclude otherwise [i e., to not find jurisdiction] would, * * * permit [the manufacturer] to receive the fruits of its New Jersey activities without the attendant liabilities which should go with it. [75 N. J. Super. at 570]

IY

The act of defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over defendant reasonable. There are two facets to this question: Eirst, then, is the need for a citizen of New Jersey injured here to be able to sue in New Jersey; and second, there must not be undue inconvenience to defendant.

The need for a citizen of New Jersey to be able to sue for injuries he sustains here is clear and weighty. New Jersey has pioneered in the field of products liability and in the endeavor to have the rights of all parties decided where constitutionally permissible in a single forum. If the concepts are to be utilized, the legal system must develop and maintain procedural mechanisms. Newmark v. Gimbel’s Inc., 54 N. J. 585 (1969), in holding that strict liability to the injured consumer does not leave the dealer without remedy, the court said:

He has an action over against the manufacturer who should bear the primary responsibility for putting defective products in the stream of trade. Considering the overall problem of prosecuting products liability cases, it would seem to make sense procedurally to have the plaintiff’s cause of action whenever possible adjudicated in one action against manufacturer and retailer. If the plaintiff sues the dealer alone, the dealer in his own interest should implead the manufacturer and thus avoid circuity of action. Service of process on the manufacturer may present a problem occasionally. But here recourse may be had to the long-arm service rule, It. 4:4-4(c)(l), (e), with its obvious implications of liberal application. Its use may overcome the difficulty in most cases, [at 600-601]

This dictum shows the interrelationship between expanding concepts of product liability and personal jurisdiction, and the need for their mutual growth. As stated in McGee v. International Life Ins. Co., supra, “It cannot be denied that California has a manifest interest in providing effective means of redress for its residents,” 355 U. S. at 223, 78 S. Ct. at 201.

With respect to undue inconvenience for defendant, an element of foreseeability enters into the consideration. As noted in Knight v. San Jacinto Club, Inc., 96 N. J. Super. 81 (Law Div. 1967):

Ultimately, then, the question whether New Jersey will recognize a single tort committed within its boundaries in a predicate for in personam jurisdiction must be resolved in terms of “minimum contacts” translated into factual considerations of interests to the forum state and fairness of trial there to defendant, [at 89]

HDAG manufactures its products for distribution throughout the world. Its products, these printing presses, while, perhaps, not inherently dangerous, can become so if they are defective. In this sense, HDAG’s product is not unlike the flammable garment which caused the injury in Roland v. Modell's Shoppers World of Bergen Cty., 92 N. J. Super. 1 (App. Div. 1966), or the highpower engine whose explosion caused the injury in Hoagland, supra. HDAG can foresee that their product may cause injury if defectively designed or manufactured. If HDAG wishes to benefit from American markets, therefore, it is not unreasonable or fundamentally unfair for them to be required to submit to the jurisdiction of a state whose resident has allegedly been injured by its product.

Motion to dismiss for lack of proper service is denied.


author: Rosenberg, J. S. C.

text:
    ESTHER PERDOMO AND PROSCIPIO PERDOMO, PLAINTIFFS, v. JACK GOLDSTEIN, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided December 15, 1972.

      No one appearing for the plaintiffs.

      Mr. Frank W. Cerutti (Messrs. DeSevo, Cerutti & Lombardi, attorneys), and Mr. Robert A. Marks (Messrs. Platoff, Heftler & Harker, attorneys), for defendant.
   Rosenberg, J. S. C.

The proceeding before this court is a motion by defendant Jack Goldstein limiting the amount of verdict to the amount claimed by the plaintiffs in their April 9, 1970 statement of claim for damages.

This matter came on for trial by jury on September 13, 1972. The jury returned a verdict on September 23, 1972 in favor of plaintiff Esther Perdomo and against defendant in the amount of $250,000, and in favor of plaintiff Proscipio Perdomo and against defendant in the amount of $75,000.

On December 1, 1972 this court heard defendant’s motion for new trial, which motion was denied. The proceeding before this court on December 15, 1972 came about on defendant’s objection to plaintiffs’ entry of judgment. Pursuant to R. 4:42-l(b) this court granted hearing for argument to decide the issues presented and to settle the form of order for the entry of judgment.

Pursuant to R. 4:5-2, previously R. R. 4:8-1, plaintiffs submitted to defendant a statement of damages claimed in the amount of $300,000. At trial a jury verdict was entered in the sum of $325,000 in favor of Esther and Proscipio Perdomo against defendant.

The question to be decided by the court at this time is: Are plaintiffs bound by their statement of $300,000 for damages claimed?

The pertinent part of R. 4:5-2, reads:

* * * Upon service of a written request by another party, the party filing the pleading shall within 5 days after service thereof furnish the requesting party with a written statement of the amount of damages claimed, which statement shall not be filed except on court order.

Plaintiffs, as requested, submitted to defendant the statement of damages. The statement was never filed and no court order was ever issued pertaining to the statement.

Defendant’s argument is based on a comment in 2 N. J. Practice 63 (1969), which states:

* * * The last two sentences of the rule were added by the amendment aforesaid. Except in the County District Court, where problems of jurisdiction exist, the pleader is neither required nor- permitted to include the amount of the demand where unliquidated money damages are claimed. Upon written request this information must be furnished; it is probable that requests will be in many cases served upon claimant’s lawyer at the same time as the answer. Certainly in cases involving insurance policies it would be appropriate to make a determination of the amount of the demand as soon as possible in order to acquaint the insured with the facts in the event it exceeds his policy limit. It is to be assumed that a claimant would be limited to the amount of the demand in the event a judgment or verdict were returned in excess of said amount. [Emphasis added]

However, any argument in favor of plaintiffs being limited to the statement of damages would have to be strengthened by the fact that the statement was part of the pleadings. This is not the case. Relative to this, one has only to look at the history of the rule in question to see that such a statement was never intended to be part of the pleading. B. 4:8-1, as amended, effective September 4, 1957, although dealing specifically with motor vehicle actions, at that time contained this section:

(b) A pleading which sets forth a claim for damages for personal injuries or property damage to motor vehicles arising out of the ownership or operation of a motor vehicle shall have annexed thereto a verified statement of the claim as provided for in Civil Procedure Form 9A or Civil Procedure Form 9B printed in the Appendix of Forms. Such verified statement shall be deemed a part of the discovery proceedings and not a part of the pleading to which it is annexed. [Emphasis added]

Not being part of the pleadings, the statement of damages becomes merely that — a statement with no binding effect whatsoever.

In evaluating the worth of a statement such as the one in question, a comparison can be made to the value of an ad damnum clause. In the report of the New Jersey Supreme Court’s Committee on Rules, cited in 83 N. J. L. J. at 152, the reasons given for changing B. 4:8-1 so that no specific amount should be claimed, indicated that the ad damnum clause serves no useful or sound function, more specifically :

The astronomical sums requested in complaints filed today bear no relation whatsoever to any realistic appraisal of the value of the ease for either purpose. At best they confuse individual clients and the general public alike, and at worst they inject into the determination of the cause at the trial level a wholly extraneous factor which may thwart a fair and proper determination by a jury. See Botta v. Brunner, 26 N. J. 82, 103-105 (1958). Affirmatively, the demand, at least where damages are unliquidated, serves no useful purpose whatsoever, particularly in view of the fact that all pertinent information is available to adverse parties by way of discovery. Indeed, even in cases where the damages are liquidated there is little need for a specific amount in the demand both because the amount is usually obvious and because of the aforementioned discovery.

Eurther, it is noted that a trial judge in a personal injury action could properly, on Ms own motion, amend the ad damnum clause of the complaint to adjust the claim upward to equal the sum recovered at trial. Randazzo v. Bacque, 37 N. J. Super. 548 (App. Div. 1955).

In conclusion, this court will follow the advice of Justice Francis in Botta v. Brunner, 26 N. J. 82 at 104: “If it be said that the amount claimed constitutes the maximum limit of permissible recovery, the legal effect of that limitation is better left in the control of an experienced trial court.”

Based on the foregoing reasons this court feels that the plaintiffs are not legally bound by the statement of damages claimed.

Submit an order accordingly.


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

text:
    JACK KRUL, t/a UNITED ROOFING & SHEET METAL CO., PLAINTIFF, v. BOARD OF ADJUSTMENT OF THE CITY OF BAYONNE, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided December 19, 1972.

      Mr. Fred B. Gruen for plaintiff (Messrs. Gruen and Goldstein, attorneys).

      Mr. Cresenzi W. Castaldo for defendant.
   Larner, A. J. S. C.

Since 1957 plaintiff Jack Krul has been conducting a business at 94-96 East 22nd Street, Bayonne, New Jersey, for the storage, sale and distribution of sheet metal and roofing materials and supplies under the trade name of United Roofing and Sheet Metal Co. He held equitable title under a purchase contract for several years until 1961, when legal title was conveyed to him by deed from the former owner. The plot of land covered an area of 125' x 125- on the southeast corner of Avenue E and 22nd Street. The deed described the property by metes and bounds with an additional reference to the designation on the tax map of the city as Lots 8, 8 ¿4, 9, 9 y2, 10 and 10in Block 305. The tax map reflects the plot of land as divided into six.separate lots, each having the dimensions of 25' x 100'.

The property was in a light industrial zone, permitting plaintiff’s use throughout his ownership until 1969 when the city ■ adopted a new comprehensive zoning ordinance which changed the permitted use to multi-family residential. Thereafter, plaintiff’s use and structures continued without interruption as a protected nonconforming use pursuant to N. J. S. A, 40:55-48 and the local ordinance provision, Art. 7, § 701.

On or about February 18, 1972 a fire destroyed one of the buildings which was known as Hooper Cooper Hall. It is undisputed that for all practical purposes this building was totally destroyed, as a result of which the remainder had to be razed, leaving only the foundation. The demolished building was an old three-story frame structure which had been constructed on a portion of the premises measuring 50' x 100' and located at the very corner of Avenue D and East 22nd Street on Lots 8*4 and 9 as designated on the tax map.

For some years prior to the change in zone Hooper Cooper Hall was the main building of a complex of buildings and was used for purposes connected with plaintiff’s business. The first and second floors were used for the storage of many of the metal items and other supplies which required heat and shelter for protection. The third floor was divided into two apartments which were rented out as dwelling units. In addition there was one office on the first floor and another small private office on the second floor. The basement was also used for warehousing of materials.

In addition to this main building which served as the hub of the business use, as the enterprise grew plaintiff constructed a series of one-story buildings around the perimeter of the plot with either corrugated metal or Fiberglas walls. These were, in essence, unheated sheds for the storage of roofing materials and supplies which would not be affected by weather changes. The outside walls of these perimeter buildings and Hooper Cooper Hall formed the street enclosure for the entire complex, except for two sets of gates for ingress and egress. The storage sheds were constructed on parts of Lots 8, 9*4 and 10*/¡ and all of Lot 10. The remaining open area was utilized for driveway and parking purposes. The roofs of these buildings were all connected and, in turn, tied in physically to Hooper Cooper Hall so that one could go from one building to another without going into the center yard.

After the fire plaintiff applied for a building permit to construct a one-story fireproof building for the same business use on the old foundation of Hooper Cooper Hall within the confines of Lots 8y and 9 and containing a total area substantially less than the prior structure. The permit was denied by the zoning officer because of the violation of the use permitted in that zone by the 1969 ordinance. Application was then made to the board of adjustment for a reversal of the determination of the zoning officer, seeking relief on two theories: (1) the right to restore the structure as a protected nonconforming use, and (2) the grant of a variance under N. J. S. A. 40:55-39 (d).

The board of adjustment held a hearing on June 19, 1972 at which evidence was submitted by the applicant and neighboring property owners. The board denied the application for a variance, finding that the use would “substantially impair the intent and purpose of the zone plan and zoning ordinance” and would be “detrimental to the public safety, health and general welfare.” As to the appeal from the zoning officer’s decision denying the application to restore the nonconforming use, the board concluded that the total destruction of the building known as Hooper Cooper Hall deprived plaintiff of the protection under N. J. S. A. 40:55-48 and sections 701 and 702 of the local ordinance, since they limit the right to restore or repair only in the event of partial destruction.

Plaintiff thereupon proceeded by action in lieu of prerogative writs to review the refusal of the board to grant the requested relief. After issue was joined, plaintiff moved for summary judgment on one facet of his application, claiming a right to the building permit as a matter of law by virtue of the claim that the destruction of the single building in the total complex constitutes a “partial” destruction under the applicable statute and ordinance, so as to permit restoration of the prior nonconforming structure and use.

At the court’s suggestion plaintiff supplemented the record before the board of adjustment by additional testimony relating to the characteristics of the structures and their use prior to the adoption of the 1969 ordinance. The operative facts recited above are therefore based not only upon the record before the board of adjustment but also the supplemental testimony presented to the court. In toto, those facts were not controverted, and therefore utilization of the summary judgment procedure is appropriate.

The motion brings into focus the key legal issue in controversy. Does the statutory authorization to continue a nonconforming use or structure by repair or restoration after partial destruction permit such continuance when one of several buildings in a business complex is totally destroyed? This question has not been answered in any reported opinion in the State of New Jersey.

N. J. S. A. 40:55-48 provides:

Any nonconforming use or structure existing at the time of the passage of an ordinance may be continued upon the lot or in the building so occupied and any such structure may be restored or repaired in the event of partial destruction thereof.

With similar intent, section 702 of the zoning ordinance of 1969 reads:

702. RESTORATION OF EXISTING BUILDINGS. Nothing in this Ordinance shall prevent the restoration of a non-conforming building partially destroyed by fire, explosion, act of God or act of public enemy, or prevent the continuance of the use of such building or part thereof as such use existed at the time of such partial destruction of such building or part thereof or prevent a change of such existing use under the limitations provided in Section 701.

The legislative policy inherent in these enactments is twofold. First, it protects a use or structure which preexisted a change in zoning law from the effects of the new restrictions. To dictate otherwise would probably result in an unconstitutional deprivation of property without due process of law. Grundlehner v. Dangler, 29 N. J. 256 (1959); Ranney v. Istituto Pontificio Delle Maestre Filippini, 20 N. J. 189 (1955); Arham Machine & Tool Co. v. Lyndhurst Tp., 73 N. J. Super. 528 (App. Div. 1962). Secondly, it permits restoration or repair of such a nonconforming structure in the event of partial destruction subsequent to the new zoning restrictions, provided that there is no enlargement or extension of the structure or use. Rockleigh Borough v. Astral Industries, Inc., 29 N. J. Super. 154 (App. Div. 1953); Adler v. Dept. of Parks, Irvington, 20 N. J. Super. 240 (App. Div. 1952); Struyk v. Samuel Braen’s Sons, 17 N. J. Super. 1 (App. Div. 1951) aff’d 9 N. J. 294 (1952).

The right to restore.or repair thus is limited by the caveat that the structure be only partially destroyed. This precondition is imposed in recognition of a policy that preexisting discordant uses should be closely restricted and reduced to conformity as soon as it is possible provided that the restriction is compatible with justice. Hay v. Bd. of Adjustment, 37 N. J. Super. 461 (App. Div. 1955); Grundlehner v. Dangler, supra; Arkam Machine & Tool Co. v. Lyndhurst Tp., supra; Ranney v. Istituto Pontificio Delle Maestre Filippini, supra.

This policy of strict containment of nonconforming uses is balanced however by the underlying concept of fairness and justice which dictates that government shall not deprive a- property owner of his investment by legislation adopted ex post facto. Thus, where the destruction of a building is only partial, restoration or repair is permitted to protect and'maintain that investment in recognition of the right of the property owner to continued protection of his use free ■of the restriction imposed subsequent to the vesting of that use.

If, however, a structure is destroyed totally rather than partially, the property owner in effect holds only vacant land and should be controlled by the existing zoning restrictions in the same manner as other owners of undeveloped land. Under such circumstances the dilemma of the property owner • — the loss of his investment — is one created by the unfortunate casualty and not by virtue of the power of government.

It is apparent from a perusal of N. J. S. A. 40:55-48 that the Legislature contemplated a fact pattern of destruction of a single structure. It failed to consider or provide expressly for the eventuality of the total destruction of a single unit which is but a part of an overall nonconforming use.

As a consequence, the board contends that a literal construction of the statute calls for the cessation of the nonconforming use on the lot upon which Hooper Cooper Hall was constructed. It urges that the total destruction of that building requires curtailment of the use without consideration of the other structures used in plaintiff’s business operation; and that the test for permissible reconstruction under the statute is that the destruction must be partial as to the individual structure, without reference to buildings on other lots. As a corollary, defendant asserts that the division of the property into separately numbered lots on the tax map dictates that the “lot" to be considered in determining whether there was partial or total- destruction should be limited to Lots 8% and 9 and not the entire plot owned by the plaintiff.

There is no doubt that although Hooper Cooper Hall was an entity in the form of a separate structure built long before the other structures, it was but a unit of the whole building complex from a use standpoint for many years prior to the adoption of the 1969 ordinance. This building houses the offices from which the personnel controlled all the buildings and the stock of merchandise stored in them. It was the hub of the wheel without which the business activity in the spokes — the other buildings — could not turn. Indeed, the physical layout supports this conclusion as well. All buildings were connected so that one could go from any-building to another without going outdoors. The buildings formed a “U” around the perimeter of the property; and the available open space was used in common for parking and driveway purposes.

Where the destroyed building is so integrated with the total building complex, is it fair or realistic to consider that destruction as total rather than partial within the legislative intent? Manifestly, as far as the property owner and the conduct of his business is concerned, the functional use of the property and its structures has been only partially destroyed by ñre; and the ban on reconstruction will result in the practical impairment of his investment in the total business venture not because of the fire but because of the power of government.

In State v. Steinke, 7 Wis. 2d 275, 96 N. W. 2d 356 (Sup. Ct. 1959), plaintiff owned a plot of land consisting of 53 acres which was operated as a children’s bible camp. When initially purchased by plaintiff the property had built thereon an old family residence with 26 rooms and 6 guest houses. Subsequently, a dining hall and four additional cabins were constructed. The entire complex was used for camp purposes as a permitted use until 1953, and thereafter as a nonconforming use because of the change in the zoning ordinance. In 1957 the family residence burned down and was a total loss. The owner applied for a permit to construct cabins which would equal the campers’ quarters in the residence destroyed by the fire. The local ordinance permitted restoration of a nonconforming use upon destruction by fire or other casualty, provided that the damage did not exceed 50% of the assessed value. The municipality denied the permit on the basis that the total destruction of the individual building exceeded the 50% limitation. The owner sought relief from the court, contending that the destroyed building involved much less than 50% of the value of all the buildings in the camp complex.

The Supreme Court of Wisconsin held that the statutory percentage must be calculated within the frame of reference of the value of all the buildings utilized in the camp operation. It pointed out:

* * # rp¡le go per cent rule, which may be reasonable if applied to one building containing a separate use, may not be reasonable if applied to an individual building used jointly with other buildings in a single noil-conforming use upon one premises. *" * * Suppose that one property is used for an institution or industry housed in several buildings no one of which is worth as much as half the total but each of which is essential to the operation of the whole. In situations of the type suggested the application of the 50 per cent rule to the individual building might well result in a substantial loss of investment out of all proportion to the value of the building destroyed by accident.
s- « * -\ye eondudp that the question of whether relator had the right to restore the family residence without changing it to a conforming use depends upon whether the fair market value of the destroyed building prior to its destruction was more than 50’ per cent of the fair market value of all the buildings on the premises (excluding the cook’s cabin) used by relator for its bible camp. If the value of the one building was not more than 50 per cent of the total, then relator could have “restored” the destroyed building.

A statute should be construed in a manner so as to advance its sense and meaning and not according to its strict letter. Fischer v. Fischer, 13 N. J. 162 (1953); Wene v. Meyner, 13 N. J. 185 (1953); Wright v. Vogt, 7 N. J. 1 (1951); San-Lan Builders, Inc. v. Baxendale, 28 N. J. 148 (1958). As noted in Alexander v. N. J. Power & Light Co., 21 N. J. 373 (1956) :

* * * ijqle ruje 0f strict construction cannot be allowed to defeat the evident legislative design. The will of the lawgiver is to be found, not by a mechanical use of particular words and phrases, according to their actual denotation, but by the exercise of reason and judgment in assessing the expression as a composite whole. The indubitable reason of the legislative terms in the aggregate is not to be sacrificed to scholastic strictness of definition or concept, [at 3781

In this light the nonconforming use statute should be interpreted to encompass the destruction of a part of an integrated whole of a business enterprise in the same manner as the destruction of a part of an individual structure.

Substance should not be sacrificed to form merely because the lots are divided on the tax map. When the statute speaks of the continuance of a use on the “lot,” it does not necessarily mean a lot which has been designated as such for tax purposes. It rather means the plot or parcel of land owned and used as a unit by the property owner. Mere lack of formal consolidation of six lots involved herein should not be the rationale for the destruction of plaintiff’s valuable right to continue a nonconforming use.

In fact, the deed into plaintiff described the plot as a single unit through a metes and bounds description. The additional reference to lot numbers is mere surplusage and only inserted for the purpose of further identification. A lot has. been defined as “a portion of land that has been set off or allotted, whether great or small, but in common use it means simply a piece, parcel, or tract of land, without regard to size.” Edwards v. Derrickson, 28 N. J. L. 39, 45 (Sup. Ct. 1859), aff’d 29 N. J. L. 468 (E. & A. 1861). See also, Lamb v. A. D. McKee, Inc., 10 N. J. Misc. 649 (Sup. Ct. 1932); Burmore v. Champion, 124 N. J. L. 548 (E. & A. 1940); Burmore v. Smith, 124 N. J. L. 541 (E. & A. 1940).

, Furthermore, the mere use of the singular term /lot” in the statute does not have the significance attributed to it by the defendant, for the general definitions applicable to all statutes provide that the use of the singular shall be understood, to include the plural, unless the context is repugnant to such construction. N. J. S. A. 1:1-2; see also 82 C. J. S. Statutes § 337.

Based upon the foregoing analysis, the court concludes that plaintiff is entitled to restore the nonconforming use which existed in Hooper Cooper Hall prior to the fire. The application and plans submitted for the building permit contemplate . a modern one-story fireproof structure on the very foundation of the old frame building. .The usable area is less than existed before the fire and the nature of the contemplated use is exactly the same. There is no semblance of extension or expansion of the physical structure or its use. It therefore comports with the containment policy applicable to nonconforming uses. The denial of the permit constituted an illegal invasion of plaintiff’s vested right to restore the structure for the continuance of his prior nonconforming use.

In the absence of a dispute in the facts underlying the legality of the denial of the building permit, summary judgment will be entered in favor of plaintiff: (1) setting aside the resolution of the board of adjustment so far as it denies the right of plaintiff to restore the structure as a protected nonconforming use, and (2) directing the issuance of a building permit in accord with the filed application.