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

text:
    WILLIAM F. HYLAND AND BLUE CHIP PROPERTIES, INC., PLAINTIFFS-APPELLANTS, v. MAYOR AND TOWNSHIP COMMITTEE OF THE TOWNSHIP OF MORRIS, DEFENDANTS-RESPONDENTS, AND SPRING BROOK HOMES ASSOCIATION, A NONPECUNIARY CORPORATION OF THE STATE OF NEW JERSEY, INTERVENOR-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued April 30, 1974—
    Decided May 28, 1974.

      Before Judges Carton, Lora and Seidman.

      Mr. Stewart G. Pollock argued the cause for appellants (Messrs. Schenck, Price, Smith and King, attorneys; Messrs. Stewart G. Pollock and Michael S. Bubb, on the brief).

      Mr. Sidney D. Weiss argued the cause for Defendants-Respondents (Messrs. Rosen and Weiss, attorneys).

      Mr. Sheldon Simon argued the cause for Intervonor-Respondent (Messrs. Bangiola & Simon, attorneys).
   The opinion of the court was delivered by

Carton, P. J. A. D.

Plaintiffs appeal from a judgment rejecting their challenge to the validity of an amendment to the zoning ordinance oí the Township of Morris. The amendatory ordinance in question was enacted on February 9, 1972.

Plaintiffs are the owners of a tract of land consisting of about 25 acres in Morris Township.

It appears that in 1961 the Township established a new Office and Laboratory Zone (O & L) which included land now owned by plaintiffs. The new zone extended wesierly from a public street, known as South Street, to a line running 300 feet east of and parallel to James Street, a two-lane public street to the west. The only public access for the O & L Zone was from South Street. The 300 foot strip between the O & L Zone and James Street retained its pre-existing residential classification.

In 1966 the alignment of 1-287 was established through this sector of the municipality. The highway alignment bisected the O & L Zone leaving plaintiffs’ tracts lying entirely west of the 1-287 right-of-way, but fronting on residentially zoned James Street and bounded by the highway access interchange on the south and by other land on the north. The property thus lay in two zones —- the westerly portion consisting of about eight acres and running to a depth of 300 feet from James Street was located in a residential zone; the easterly portion, comprising the remainder of the tract and bordering on the highway, was located in the Office and Laboratory Zone.

In May 1970 the plaintiffs applied to the Board of Adjustment for a use variance authorizing the construction of two driveways from the portion of their property in the O &• L Zone, across other parts of their property zoned for residential use to James Street. On July 13, 1970 the Board of Adjustment denied plaintiffs’ request. On August 28, 1970 plaintiffs filed an action in Superior Court challenging that determination.

While the matter was before the court, the Township Committee requested the Planning Board to recommend the appropriate zoning for the lands between James Street and 1-287. Despite opposition from defendant Spring Brook Homes Association, an organization of homeowners in that area, the Planning Board recommended that the O & L Zone be extended to James Street.

The Township Committee then met with trustees of the homeowners’ association at the home of one of its trustees on March 7, 1971 to discuss the rezoning of the land in question. At the next regular meeting of the Township Committee on March 10,1971, the question of rezoning the land was postponed until the Superior Court, Law Division had rendered its decision.

On May 21, 1971 that court held the use variance should have been granted. The Township Committee and other defendants appealed that decision on July 8, 1971 with the apparent motive of delaying the start of construction of plaintiffs’ proposed office building. In a per curiam opinion on February 7, 1972 this court affirmed.

The ordinance under attack in this proceeding was introduced on January 12, 1972 and referred to the Planning Board. This ordinance transfers plaintiffs’ property from O & L Zone to R-3 residential. The Planning Board adopted a resolution disapproving the ordinance on February 7, 1972. Two days later, the Township Committee, by a vote of 4 to 1, adopted the ordinance despite the Planning Board’s unfavorable recommendation.

Another amendatory ordinance not directly pertinent to the present controversy, allowing clustering of dwellings in R-3 zones and revising clustering provisions in R-2 zones, was subsequently adopted by the governing body. On October 16, 1972 the Township’s first Master Plan, which recommended low density residential development for the area including plaintiffs’ land, was adopted by the Planning Board.

At trial both parties introduced expert testimony as to the feasibility of using plaintiffs’ land for single-family dwellings. Mr. Winston, who testified for the plaintiffs, prepared plans and cost estimates on the basis of the requirements of the Township ordinances for a residential development of the tract. He concluded that the cost of developing the tract would be $74-7,983 without clustering, and that the cost would vary from $681,550 to $720,250 with clustering. Mr. Winston’s plans wore prepared in accordance with standard engineering procedures.

Defendants produced Mr. Kirkpatrick who prepared plans specifically for use at trial. lie was of the opinion that a residential development would involve costs varying from $275,000 to $375,000.

Peal estate appraisers testified on behalf of both parties; plaintiffs’ expert testifying on the figures provided by plaintiffs’ engineer, projected a loss of $287,000 to plaintiff or $94,000 if clustering should be employed. The witness did state that if he used Mr. Kirkpatrick’s figures the result would be different. The defendants’ expert arrived at the conclusion that a residential development would result in a probable profit of $163,500.

Plaintiffs’ witness Ostergard, an acoustical engineer, stated that home construction within 250 feet of the highway right-of-way would violate criteria established by the Federal Highway Administration for highway design purposes and by the Department of Housing and Hrban Development in connection with federally assisted mortgages.

Defendants’ witness Goodfriend offered the contradictory view that homes constructed within 220 feet of the nearest edge of the highway pavement would meet both criteria and that the distance could be reduced by use of sound barrier devices such as an acoustical fence. Both witnesses agreed that both the E.ELW.A. and ELU.D. criteria had limited authority. In situations which do not involve highway construction or federal mortgages or loan guarantees, the criteria serve only as a guide to evaluating the effect of noise.

Although the record is not entirely clear on the point, there appears to be general agreement that an office complex would generate more traffic on local roads than would a residential development. The two real estate appraisers both agreed that homes, built on this tract would be marketable.

The trial court, in concluding that the amendment was valid, made the following findings:

(1) The tract can be developed for one-family houses in an R-3 zone at a cost which would be feasible;
(2) The noise factor, although a substantial deterrent, would not preclude that development; ■
(3) The homes constructed on the site could he marketed at a reasonable profit; and
(4) One-family homes would tend to cause less aggravation of traffic problems in the area.

Plaintiffs argue that the ordinance should be declared void because it was not enacted for a valid zoning purpose but rather to meet the demands of the Spring Brook Homes Association. Plaintiffs contend that the only purpose behind the ordinance was placating the Association.

There is, of course, a strong presumption in favor of the validity of zoning regulations. Thornton v. Village of Ridgewood, 17 N. J. 499 (1955); Lionshead Lake, Inc. v. Township of Wayne, 10 N. J. 165 (1952), appeal dismissed 344 U. S. 919, 73 S. Ct. 386, 97 L. Ed. 708 (1953). The burden of establishing the invalidity of a zoning ordinance is on the person attacking the ordinance, Vickers v. Tp. Com. of Gloucester Tp., 37 N. J. 232 (1962), cert. denied 371 U. S. 233, 83 S. Ct. 326, 9 L. Ed. 2d 495 (1963), and the burden is to show affirmatively that the ordinance bears no reasonable relationship to public health, morals, safety or welfare. Monmouth Lumber Co. v. Ocean Tp., 9 N. J. 64, 71 (1952). Here there was no determination that plaintiffs met that burden.

N. J. S. A. 40:55-32 requires that zoning regulations be designed for one or more of the following purposes:

to lessen congestion in the streets; secure safety from fire, flood, panic and other dangers; promote health, morals or the general welfare; provide adequate light and air; prevent the overcrowding of land or buildings; avoid undue concentration of population. ** *

In addition to the specified purposes, the statute also requires that such regulations be “in accordance with a comprehensive plan” and “made with reasonable consideration, among other things, to the character of the district and its peculiar suitability for particular uses, and with a view of conserving the value of property and encouraging the most appropriate use of land throughout such municipality.”

The plaintiffs made no serious attempt to show that the terms of the ordinance bear no reasonable relationship to the purposes contained in N. J. S. A. 40:55—32. On the basis of the evidence in the record, the ordinance can reasonably be interpreted to advance several of the purposes for which zoning regulations may be enacted, including protection of the character of the community and lessening of traffic congestion.

We perceive no substance to plaintiffs’ argument that the amendatory ordinance deviates from the comprehensive plan to which zoning ordinances should conform and thus constituted “spot zoning.” We are of the opinion that the ordinance can fairly be said to be in accordance with a comprehensive plan. While it is true the “comprehensive plan” for Morris Township was adopted after the enactment of the ordinance, this fact does not demonstrate that the ordinance is not in accordance with a comprehensive plan. The court in Ward v. Montgomery Tp., 28 N. J. 529, 536 (1959) said that there does not have to be an extrinsic guide, but the zoning ordinance reasonably designed to produce a homogeneous pattern of location and uniform development of varient land uses indicates such a plan. The enactment of the ordinance in question to use 1-287 to divide residential from O & L Zones does indicate such a plan. Of course, the ordinance is in conformity with the subsequentially adopted master plan.

Construction of 1-287 caused the land rezoned by the ordinance in question to be cut off from the rest of the O & L-l Zone. This left plaintiffs’ land completely surrounded by the highway and residential property. Construction of 1-287 made integrated use of both sides of the highway difficult, if not impossible. Rezoning of the land on the west side of the highway to residential made all the land on the west side residential, and the land on the east side remains office and laboratory. The ordinance is not, therefore, a deviation from a comprehensive plan, but rather a change designed to achieve a different concept warranted by the changed conditions. In reality, the rezoning imposed upon plaintiffs’ land imposes burdens similar to those imposed upon the surrounding lands. It was not a case of “spot zoning” to allow a use different from that of the surrounding area. In this connection, we note that large, open areas bordering the right-of-way of 1-287 in addition to plaintiffs’ tract are zoned residential. Inspection of the aerial photographs also indicates that areas immediately adjacent to the highway are actually devoted to that use.

The mere fact that only the land on the west side of 1-287 was rezoned does not indicate that the amendment is not in furtherance of a comprehensive plan. Palisades Properties, Inc. v. Brunetti, 44 N. J. 117 (1965). Nor does the fact that the rezoning conformed to the wishes of the Association indicate that it is deficient in respect to the statutory requirement that zoning regulations conform to a comprehensive plan. See Kozesnik v. Montgomery Tp., 24 N. J. 154 (1957).

Plaintiffs argue that the Township’s action in appealing the decision of the Law Division in regard to the variance and its acts in accordance with the desires of the Association amounted to a demonstration that the ordinance was not enacted for a valid purpose. We do not agree.

The Township had a right to appeal the adverse decision. While that appeal may have caused a delay which benefitted the Township’s position, the exercise of that right does not of itself indicate the ordinance was enacted for an invalid purpose.

Nor does the fact that the Township Committee met with the Association establish that the ordinance was enacted solely for the purpose of placating the Association. Its members had a right to make their views known to the Township Committee. See Eastern R. R. Conference v. Noerr Motor Freight, 365 U. S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961).

Although a circumstance to be considered in determining the validity of the ordinance, the fact that it corresponded with the wishes of the Association does not constitute a misuse of zoning power where it has not been shown that the ordinance was enacted solely for that purpose. See Kozesnik v. Montgomery Tp., supra 24 N. J. at 173; Gartland v. Borough of Maywood, 45 N. J. Super. 1 (App. Div. 1957).

LaRue v. East Brunswick, 68 N. J. Super. 435 (App. Div. 1961) provides no support for plaintiffs’ position. There the court criticized municipal officials for accepting a dinner invitation from a developer who had matters pending in the municipality. This court, while saying that the acceptance showed “poor judgment,” nonetheless discounted its effect on the merits of the case, finding no evidence “that the meeting resulted * * * in anything more than a frank (if somewhat one-sided) discussion of the local zoning provisions from a developer’s point of view.” 68 N. J. Super. at 445, 446.

Plaintiffs’ reliance on Wital Corp. v. Denville, 93 N. J. Super. 107 (App. Div. 1966) is also misplaced. There plaintiff offered evidence showing the real purpose of an ordinance was to depress the value of plaintiff’s land which the municipality intended to acquire. This court remanded for an inquiry into the purpose of the ordinance. There has been no showing of such an abuse in this case.

It certainly was poor judgment for the officials to have a private meeting with those favoring the adoption of the ordinance. However, there is no evidence that the meeting “resulted * * * in anything more than a frank (if somewhat one-sided) discussion of the local zoning provisions” from the Association’s point of view. Plaintiffs do not charge that there was any corrupt agreement between the Township officials and the Association as a result of that meeting.

The meeting with the Association, the delay in any decision until after elections, and the fact that the ordinance was passed even though the Planning Board disapproved the ordinance, lend some credence to plaintiffs’ argument as to the governing body’s motives. Here again, this sequence of events does not of itself establish that the ordinance was enacted for an invalid purpose. When the legislative judgment is at least debatably reasonable and valid, the ordinance must be sustained. Bow & Arrow Manor v. Town of West Orange, 63 N. J. 335, 343 (1973); Kozesnik v. Montgomery Tp., supra, 24 N. J. at 167; Vickers v. Tp. Com. of Gloucester Tp., supra, 37 N. J. at 242. He,re the trial judge heard all the witnesses during the course of the extended trial. He had an opportunity to consider all the evidence and to judge the credibility of the witnesses as well as the motivation and actions of the officials. His determination sustaining the validity of the ordinance was amply supported by the record.

Plaintiffs’ argument that the ordinance is an arbitrary, capricious and unreasonable exercise of the zoning power is essentially the same argument advanced under the previous contention and needs no extended treatment. An exercise of zoning power is arbitrary, unreasonable and capricious when it bears no rational and reasonable relationship to the purposes of zoning found in N. J. S. A. 40:55-32. See Gabe Collins Realty, Inc. v. City of Margate, 112 N. J. Super. 341, 346-347 (App. Div. 1970); J. D. Construction Corp. v. Board of Adjustment, Township of Freehold, 119 N. J. Super. 140, 145 (App. Div. 1972).

Here it was not shown that the ordinance bore no rational relationship to the purposes of zoning. As we have already noted, the evidence in the record justified an opposite conclusion.

Plaintiffs’ final argument is that the amendatory ordinance is confiscatory. They argue that in zoning the land B-3 an excessive burden was placed on land which is tantamount to confiscation.

As noted by the trial judges the evidence in regard to using the land was in sharp conflict. Plaintiffs’ land was not zoned into idleness. While an office or multiple dwelling units may prove more profitable, Judge Byrne found that “[t]he tract can be developed for one-family houses * * * at a cost which would be feasible.” There was reasonable evidence to support that finding. In light of the evidence and his findings, the challenged ordinance cannot be said to be confiscatory.

Affirmed.


source: Caselaw Access Project

author: Fritz, J. A. D.

license: Public Domain

text:
    INGEBORG MOKSVOLD, EXECUTRIX OF THE ESTATE OF NILS MOKSVOLD AND INGEBORG MOKSVOLD, JOHN MOKSVOLD, INGRID JACOBSEN AND HELEN CIACCIO, INDIVIDUALLY, PLAINTIFFS-APPELLANTS, v. FREDERICK L. MEYERS, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued October 16, 1974—
    Decided October 30, 1974.

      Before Judges Matthews, Ekitz and Botter.

      Mr. Donald T. Joworisak argued the cause for appellants (Mr. Thomas W. Sharlow, attorney).

      Mr. Eugene M. Purcell argued the cause for respondent (Mr. Arthur G. D’Alessandro, attorney).
   The opinion of the court was delivered by

Fritz, J. A. D.

Plaintiffs appeal from a denial of their motion for new trial after an adverse jury verdict, in this automobile negligence action involving the death of a pedestrian. They assert as grounds that the verdict was against the weight of the evidence and that the trial judge erred in permitting defendant to read extensively from his deposition during the presentation of plaintiffs’ proofs. We find no merit in either ground.

The accident in question occurred in the early morning dark on Ponte 27 in South Brunswick. It was not denied that an automobile operated by defendant struck and killed plaintiffs’ decedent as he was apparently crossing the highway on foot. Defendant testified on his own behalf, and while this testimony may have had some inaccuracies and inconsistencies, nothing approaching negligence as a matter of law, asserted by plaintiffs, appears. Clearly a jury question was made out, fairly submitted, and decided. We find the trial judge to be justified by the record in his observation at the motion for new trial that he was not persuaded of a miscarriage of justice. In such circumstances he correctly refused to preempt the jury function. Dolson v. Anastasia, 55 N. J. 2 (1969). Nor does our careful review of the record disclose a miscarriage of justice under the law. Our duty in this respect, then, is to affirm. R. 2:10-1; Poison, supra.

With regard to the procedural issue, plaintiffs’ counsel read extensively — approximately 55 transcript pages — from defendant’s deposition. Immediately thereafter and during plaintiffs’ case, defendant’s attorney was permitted over plaintiffs’ objection to read from defendant’s deposition in supplementation of plaintiffs’ reading. Two things are clear. First, defendant’s offer was not a move to compel plaintiffs to offer as a part of their reading other omitted parts “which ought in fairness be considered with the part introduced.” B. 4:16-l(d). It was an offer of defendant’s evidence, said to be “things that were left out and are certainly proper to clear up on the record which might tend to mislead the .jury.” Second, plaintiffs did not below challenge the admissibility of that which was read nor the right of defendant to read it. Their sole complaint there was that defendant was permitted to read his evidence during the presentation of plaintiffs’ case. (As a matter of fact, in framing his objection below — with respect to the “right [of defense counsel] to read everything into the record” — in terms of the timing, plaintiffs’ attorney said, “He will have an opportunity on his own case.”) Plaintiffs acknowledge the time-honored rule that the procedural conduct of a trial rests in the sound discretion of the trial judge and that no reversal will follow except for an abuse of that discretion. Munson v. Johnson, 110 N. J. L. 564 (E. & A. 1933). They urge, however, that this rule of law must succumb to that which they conceive to be the implicit direction.of B. 4:16-l(d), that when any party other than the reading party offers any other parts of the deposition pursuant to the express permission of that rule, he must do it only on his own ease. We reject the argument.

In the first place, the rule neither says nor implies that which plaintiffs attribute to it. We will not intrude on a salutary and respected long-standing rule of procedural discretion on the basis of an imagined implication. In addition, such an interpretation would prevent the trial judge from accomplishing one of his most important tasks: the prevention of the triumph of gamesmanship over fair play and justice. Selective use of deposition testimony has a real potential for insidious unfairness. Timing may be vital to prophylactic measures in this regard. Cf. Westinghouse Electric Corp. v. Wray Equipment Corp., 286 F. 2d 491, 494 (1 Cir. 1961), cert. den. 366 U. S. 929, 81 S. Ct. 1650, 6 L. Ed. 2d 388 (1961). A trial judge should not be shackled in his efforts to control the problem.

The judge below demonstrated a perfect awareness of the problem and the rationale we here articulate, and at the same time impressed upon the record the soundness of the exercise of his discretion in his explanation at the time as to why he overruled plaintiffs’ objection and permitted the reading. He said lie felt that to permit the contiguous reading "would make more sense to the jury * * * than it would when you [defendant] present your case.” We think, in this ease at least, he was entirely right.

Here plaintiffs belatedly also claim, as plain error since no objection appeared below in this regard (see above), that defendant was permitted to read too much of his own deposition. We need not here determine that issue. We have reviewed the record carefully and find such error — if indeed it was error — lacked the necessary capacity to produce an unjust result in any event. R. 2:10-2.

Affirmed.


author: Gelman, J. S. C.

text:
    JOHN P. LANGEVELD, PLAINTIFF, v. L.R.Z.H. CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided October 9, 1974.

      Mr. Robert E. McGuire for plaintiff (Messrs. Randall, Randall & McGuire, attorneys).

      Mr. Joseph A. Higgins, Jr. for defendant Joseph A. Higgins, Sr.
   Gelman, J. S. C.

Plaintiff moves for summary judgment against defendant Joseph A. Higgins, Sr., on his personal guaranty of payment of a promissory note made by defendant L.E.Z.H. Corporation.

The facts are not in dispute. On March 10, 1972, L.E.Z.H. executed and delivered its promissory note in the amount of $57,500 to plaintiff. As security for the note L.E.Z.H. on the same date executed and delivered to plaintiff a mortgage covering lands which it owned in the Borough of Montvale. On the date the mortgage was delivered, there were in existence two prior mortgages on the same property, held, respectively, by the Howard Savings Bank and Albert and Grace Castellane. The Howard Savings mortgage secured a construction loan made by it to L.E.Z.H. in the amount of $825,000, of which approximately $661,000 had been advanced on the date the note and mortgage were given to plaintiff. On that date there was also due and owing on the Castellane mortgage the sum of $54,987.39, plus accrued interest.

Plaintiff’s mortgage contained a provision subordinating it to the lien of the Howard Savings mortgage as to all prior and future advances made by that mortgagee. After plaintiff received his mortgage Howard Savings advanced to L.R.Z.H. the full principal amount of the construction loan, or $825,000.

L.R.Z.H. defaulted on all of the mortgages, and foreclosure proceedings were commenced against it by the holder of a fourth mortgage. A final judgment of foreclosure was entered in that action fixing the amounts due the respective mortgagees (inclusive of interest) and their priorities as follows: (1) Howard Savings Bank — $989,154.27; (2) the Castellanes —• $55,016.60, and (3) plaintiff — $77,145.80. A foreclosure sale was ordered and the sale was held on August 28, 1974, at which defendant Higgins submitted the highest bid, at $1,080,000. By the date of the sale the amount due Howard Savings was in excess of $1,058,000 by reason of additional interest having accrued, plus costs and attorney’s fees. Hence, the amount realized at the sale was insufficient to satisfy the second mortgage, and of course plaintiff received nothing on his third mortgage.

Defendant Higgins acknowledges his position as an unconditional guarantor of payment on the promissory note issued to plaintiff by L.R.Z.H. Corporation. He urges, however, that he was discharged from that liability since plaintiff failed to record his mortgage until March 1, 1973, almost one year after the date the mortgage was delivered to plaintiff by L.R.Z.H. The argument is that the failure to record the mortgage “impaired” the collateral held by plaintiff, thus discharging him by reason of § 3-606 of the Uniform Commercial Code, N. J. S. A. 12A :3-606. That section provides in pertinent part that:

(1) The holder discharges any party to the instrument to the extent that without such party’s consent the holder
Sis *• }H * * *
(b) unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse.

This section of the UCC has not been the subject of any-reported decision in this State, nor are there any pre-UCC decisions which reached the issue raised here. See New Jersey Study Comment, N. J. S. A. 12A :3-606.

Prior to the adoption of the UCC it was generally recognised that the failure to record a security instrument such as a mortgage discharged the surety or guarantor to the extent that his right of subrogation to the collateral was diminished or his risk of loss was unreasonably increased. Thus, in Providence, Fall River & N.S. Co. v. Mass. Bay S.S. Corp., 38 F. 2d 674 (D. Mass. 1930), the seller of a vessel took back a purchase money first mortgage which it failed to record for approximately seven months. Under the terms of the contract of sale the purchaser had furnished a surety bond against maritime liens to which the vessel might become exposed prior to payment of the mortgage. As a result of the failure to record the mortgage, liens were filed which were entitled to priority over the mortgage. The court held that the surety was discharged as to those liens which had gained priority over the mortgage by reason of the delay in recording.

In D. W. Jaquays & Co. v. First Security Bank, 101 Ariz. 301, 419 P. 2d 85 (Sup.Ct. 1966), defendant was an unconditional guarantor of payment of conditional sales contracts which it had assigned to plaintiff. The contracts were not recorded by plaintiff, as a result of which the lien rights of the conditional seller were disallowed after the conditional vendee died in bankruptcy. In an action to enforce the guararanty the Supreme Court of Arizona held that defendant-guarantor was discharged from his liability on the guaranty because plaintiff had impaired the value of the collateral to which the guarantor had the right of subrogation. The court said:

In view of the above we are of the opinion that the plaintiff had an implied-in-law duty to record the sales contracts, that performance of the duty was not waived by the unconditional guaranties executed by defendant, that the defendant was entitled to be released from liability in his guaranties to the extent of his loss caused by the failure to record * * *. [419 P. 2d at 89]

See also, Behlen Manf. Co. v. First Nat'l Bank of Englewood, 28 Colo. App. 300, 472 P. 2d 703 (App. Ct. 1970) (failure to record real estate mortgage discharged unconditional guarantor); Neb. State Bank v. May, 117 Neb. 262, 220 N.W. 276 (Sup. Ct. 1928); Mingus v. Daugherty, 87 Iowa 56, 54 N.W. 66 (Sup. Ct. 1893); Restatement, Security, § 132. The prevailing view is stated in 74 Am. Jur. 2d, Suretyship, §§ 86, 93, as follows:

A surety is entitled to be subrogated to the benefit of all the securities and means of payment under the creditor’s control. Therefore, in the absence of assent, waiver, or estoppel, he is generally released by any act of the creditor which deprives him of such right.
^ 4 $ $ $
The collateral security taken by a creditor may require some act on the part of the creditor to make it a valid security. Where such is the case, the law implies an agreement on his part to perform that act. If he neglects or fails to do so and the security is thereby lost or impaired, the surety may be discharged to the extent of his loss or injury. Thus, where collateral security is given in the form of a mortgage, deed of trust, or similar instrument, and the statute requires it to be filed or recorded in order to make it valid against innocent purchasers, it is the duty of the creditor to see that the instrument is properly filed or recorded; and if he negligently fails to act, the surety will be discharged to the extent of the loss thereby occasioned or perhaps, completely discharged.

The language of TJCC § 3-606 unmistakably adopts what had been the majority position prior to its enactment. While the comments to the Code do not furnish any guidelines to determine what conduct on the part of the holder constitutes unjustifiable impairment of the collateral, at the very least it may he said that the negligent failure to record a mortgage or otherwise perfect a security interest in the collaterized property will discharge a guarantor to the extent that the value of the collateral has been diminished. Cf. UCC § 9-207 (1); N. J. S. A. 12A:9-207 (1).

The reported decisions elsewhere under § 3-606 confirm this view. In Shaffer v. Davidson, 445 P. 2d 13 (Wyo. Sup. Ct. 1968), the secured party failed to record a chattel mortgage on an automobile. His action against the accommodation endorser of the note, for which the mortgage had been given as security, was dismissed, the Court stating:

The evidence shows Shaffer not only accepted the promissory note but also the chattel mortgage upon the motor vehicle given by Nank and Mrs. Davidson as security for the repayment of the $200 borrowed by Nank, and that Shaffer was given the certificate of title for the mortgaged vehicle. When Shaffer failed or neglected to do that which the code required him to do in order that the security placed in his hands became available for the protection of the accommodation maker of the promissory note, Shaffer discharged Mrs. Davidson from her obligation and erased her debt to him. [at 17]

Before a party may he deemed discharged under § 3-606 he must show not only that the holder’s conduct was unreasonable but also that the value of his right of recourse against the collateral was diminished, i.e., that he suffered au actual and not a hypothetical loss attributable to the holder’s conduct. Hence, in Still v. Citizens Bank of Drumright, 6 UCCRS 813 (Okla. Ct. App. 1969), the court held that an accommodation endorser was not discharged by the holder’s failure to record a second mortgage on real estate, since the evidence disclosed that the mortgage had no value at the time it was given and at the time of the foreclosure of the first mortgage. Dor cases reaching comparable results on different facts, see Hunter v. Community Loan & Inv. Corp., 127 Ga. App. 142, 193 S. E. 2d 55 (App. Ct. 1972); Hurt v. Citizens Trust Co., 128 Ga. App. 224, 196 S.E. 2d 349 (App. Ct. 1973); Pancoast v. Century Homes, Inc., 8 UCCRS 1289 (Okla. Ct. App. 1971).

On the facts of the case at bar it may be assumed that plaintiff’s delay in recording his mortgage was unjustifiable. It is nevertheless apparent that defendant Higgins suffered no loss thereby. Both the Howard Savings and the Castellane mortgages were prior to plaintiff’s mortgage when he received it, and by the time of the foreclosure sale these mortgages remained the only liens prior to plaintiff’s. The delay in recording occasioned no loss in priority of the mortgage and cannot be said to have impaired the value of the mortgage as collateral nor to have diminished defendant’s right of subrogation to the collateral. The foreclosure sale result established conclusively that plaintiff’s mortgage had no value in fact, and plaintiff’s conduct did not cause any loss to the defendant so as to effect either a limited or total discharge under § 3-606.

An order for summary judgment in favor of plaintiff may be submitted in accordance with the rules of court.

      There is some suggestion in pre-UCC New Jersey decisions that an unconditional guarantor of payment is not discharged by reason of the holder’s conduct in dealing with the collateral. See Superior Finance Corp. v. McCrane Motors, Inc., 116 N. J. L. 435, 436 (E. & A. 1936) ; cf. Pfeiffer v. Crossley, 91 N. J. L. 433, 434 (Sup. Ct. 1918). Reliance on these pre-UCC decisions in cases arising after the adoption of the UCC in this state (e.g., Bank of New Jersey v. Heine, 464 F. 2d 1161 (3 Cir. 1972) ; Nation Wide, Inc. v. Scullin, 256 F. Supp. 929 (D. N. J. 1966)) would seem to be misplaced since § 3-606 discharges a party to the instrument regardless of his status as an unconditional guarantor if the conditions of that section are met. See Uniform Commercial Code Comment to § 3-606, N. J. S. A. 12A :3-606.


author: Dwyek, J. S. C.

text:
    DOCKET NO. L-9061-72
    FRANK BRISCOE CO., INC., PLAINTIFF, v. RUTGERS, THE STATE UNIVERSITY AND COLLEGE OF MEDICINE AND DENTISTRY OF NEW JERSEY ET ALS., DEFENDANTS. BROADWAY MAINTENANCE CORP., PLAINTIFF, v. RUTGERS, THE STATE UNIVERSITY ET ALS., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, v. FRANK BRISCOE CO., INC. ET ALS., THIRD-PARTY DEFENDANTS. EDWIN J. DOBSON, JR., INC., PLAINTIFF, v. RUTGERS, THE STATE UNIVERSITY ET ALS., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, v. FRANK BRISCOE CO., INC. ET ALS., THIRD-PARTY DEFENDANTS.
    Superior Court of New Jersey Law Divisiou
    Decided October 3, 1974.

      Mr. Theodore W. Geiser for plaintiff Briscoe and third-party defendant Firemen’s Insurance (Messrs. McElroy, Connell, Foley & Geiser, attorneys).

      Mr. Harold G. Smith for plaintiff Dobson (Messrs. Wilentz, Goldman & Spilzer, attorneys) and Mr. Richard R. Bonamo of the New York Bar.

      Mr. C. Stephen Barrett, III, for plaintiff Broadway Maintenance (Messrs. Bum, Biunno & Tomplcins, attorneys).

      Mr. Edward Schwartz, Deputy Attorney General, for defendants and third-party plaintiffs, Rutgers and College of Medicine and Dentistry (Mr. William F. Hyland, Attorney General, attorney).

      Mr. Clyde A. Szuch as amicus curiae for Rutgers (Messrs. Pitney, Hardin & Kipp, attorneys).
   Dwyek, J. S. C.

In this action there are consolidated three separate suits commenced against Rutgers, The State University (Rutgers). The captions of the actions and the respective dates of commencement are:

Edwin J. Dobson, Jr. Inc. v. Rutgers — 8/4/71 (hereinafter Dobson)
Frank Briscoe Co., Inc. v. Rutgers — 12/8/72 (Briscoe)
Broadway Maintenance Corp. v. Rutgers — 5/31/73 (Broadway)

Each action is based on one of six prime contracts dated October 31, 1966 for the construction of the Rutgers Medical School. Dobson had the plumbing and fire prevention contract for $998,413. Briscoe had the contract for general construction for $7,392,000. Broadway had the electrical contract for $2,508,650. Each of said contracts specified the work was to be done in 700 days of 23 months. The project took 48 months. The project was completed in 1970 instead of 1968.

When the Dobson suit was instituted the private firm of attorneys representing Rutgers filed the answer, and no defense of sovereign immunity was asserted. At the present time the Attorney General of the State of New Jersey has assumed the defense of that action and filed the answers in the other two actions and asserted that said actions were subject to the New Jersey Contractual Liability Act, N. J. S. A. 59 :13-1 et seq.

By L. 1970, c. 102, N. J. S. A. 18A:64G-1, The Medical and Dental Education Act of 1970, the Legislature and Governor determined to combine all medical and dental colleges receiving state support into one corporate entity. N. J. S. A. 18A:64G-3 and 30 provide for the transfer of Eutgers Medical School to the newly created College of Medicine and Dentistry of New Jersey (CMDNJ). Pursuant to an agreement entered into in June 1972 CMDNJ assumed all the rights, obligations and duties of Eutgers under the aforesaid contracts and agreed to indemnify Eutgers. It is the court’s understanding that pursuant thereto the Attorney General then undertook the defense of the then pending Dobson claim and the defense of the later actions.

In the period between the commencement of the Dobson action and the later actions, the contractor and the State participated in settlement proceedings before a panel. There was an informal agreement that no other action would be commenced. No agreement was reached.

At the time the case was assigned to this court there were pending a number of motions, including a motion for partial summary judgment by the Attorney General to strike certain claims. Those pertaining to discovery have been disposed of and discovery is now complete. A pretrial is scheduled to be held in a few days. The pending motions have been amplified by the Attorney General and all parties have briefed and argued the motions. In order to properly prepare for a pretrial, the parties have requested the court rule now on as many of the motions as possible.

The court has set forth on the record the disposition of all motions except that based on the contention of the Attorney General that this action is controlled by N. J. S. A. 59:13-1 (New Jersey Contractual Liability Act), L. 1972, c. 45, in that under the laws of 1956 providing for the reorganization of Eutgers, N. J. S. A. 18A:65-1 et seq. (L. 1956, c. 61), Eutgers was initially not subject to suit on these contracts and is now subject to suit only under the New Jersey Contractual Liability Act.

The Attorney General bases this argument on the ground that the Eutgers, the State University Law, L. 1956, c. 61, N. J. S. A. 18A:65-1 et seq., does not authorize the board of governors to sue or be sued. See N. J. S. A. 18A :65-25. He refers to the Report of the Attorney’s Task Force on Sovereign Immunity dated May 1972 (Report), at 32, to show that N. J. S. A. 18A:65-1 et seq. is not one of the statutes included among the list of statutes which authorized a state agency “to sue or be sued”. The expression “to sue and be sued” inserted in a statute creating an agency has been construed as a waiver of sovereign immunity. Report, at 32.

The Attorney General also urges that the Contractual Liability Act must be construed with the other provisions of Article 59, “Claims Against Public Entities,” including the Hew Jersey Tort Claims Act, N. J. S. A. 59 :1-1 et seq., L. 1972, c. 45. The comments to said law enacted by the Legislature state,

*• * * For purposes of establishing liability in the State of New Jersey this definition [“Public Entity”] is specifically intended to include • such entities as the New Jersey Highway Authority and Turnpike Authority and Rutgers, the State University.

The Attorney General further argues that under the decisions in Trustees of Rutgers College in New Jersey v. Richman, 41 N. J. Super. 259 (Ch. Div. 1956); Rutgers, The State University v. Kugler, 110 N. J. Super. 424 (Law Div. 1970), aff’d p.c. 58 N. J. 113 (1971), and Rutgers v. Piluso, 60 N. J. 142 (1972), the courts have repeatedly held that Rutgers is an “instrumentality of the State,” “a state agency”, and other similar expressions.

The Attorney General therefore concludes that since the board of governors was given no power “to sue or be sued,” N. J. S. A. 18A:65-25, there is none and, consequently, since 1956 Rutgers has had available to it the defense of sovereign immunity; hence Rutgers meets the express criteria for the application of N. J. S. A. 59:13-2 which provides:

As used in this chapter:

State shall mean the State and any office, department, division, bureau, board, commission or agency of the State, but shall not include any such entity which is statutorily authorized to sue and be sued.

The Attorney General further concludes that since the contracts which form the subject matter of this litigation were entered into in 1966, they are subject to that defense except, and to the extent, that the Legislature in N. J. S. A. 59:13-1 et seq. has provided otherwise. Said statute therefore broadens and does not take away remedies; hence there are no constitutional problems as contended by plaintiffs.

There is authority that when a college which was founded by, financed by, and used as an instrumentality of, a state, is sued, it may invoke the defense of sovereign immunity. Oklahoma Agricultural and Mechanical College v. Willis, 6 Okl. 593, 52 P. 921 (Sup. Ct. 1898); Donaldson v. Board of Regents of University Preparatory School, etc., 190 Okl. 269, 122 P. 2d 139 (Sup. Ct. 1942). A state legislature, in creating a public corporation to carry out a state purpose, may create it with such powers as it desires, subject only to such limitations as the appropriate Constitution imposes. If the legislature does not grant the public corporation the right to sue or be sued it may not sue or be used.

Understandably, plaintiffs have opposed the position of the Attorney General and have done so on several grounds, not all of which need to be set forth. They have been joined by a representative of Rutgers, the regular counsel for Rutgers, who asked to be heard on this one question. Permission was granted not only because of the importance of the question to Rutgers, but also because the interests of a public university may be different from those of a state and thus need separate representation from the Attorney General. See People v. Barrett, 382 Ill. 321, 46 N. E. 2d 951 (Sup. Ct. 1943).

Plaintiffs urge that Rutgers in fact has sued and been sued since 1956. They note the aforementioned cases cited by the Attorney General and point to the fact that Attorney General Kugler did not advance such a contention when he was a defendant. In addition they cite Richardson Engineering Co. v. Rutgers, 51 N. J. 207 (1968); Avins v. Rutgers, The State University, 385 F. 2d 151 (3 Cir. 1967); Scelfo v. Rutgers, The State University, 116 N. J. Super. 403 (Law Div. 1971).

They further contend that if the New Jersey Contractual .Liability Act is applied to these actions based on contracts entered into six years before the law was passed, said law as so construed and applied to these actions would be unconstitutional. The said law affects the measure of damages, which is a substantive right, Romano v. Greenberg, 108 R.I. 132, 273 A. 2d 315, 317 (Sup. Ct. 1971); Montgomery Ward & Co. v. Callahan, 127 F. 2d 32 (10 Cir. 1942); Pyle v. Kansas City Gas and Electric Co., 23 F.R.D. 148 (D. Kan. 1959), and any modification of a remedy which in reality destroys the right is invalid, Wanser v. Atkinson, 43 N. J. L. 571 (Sup. Ct. 1881); Dwyer v. Volmar Trucking Corp., 105 N. J. L. 518 (Sup. Ct. 1929); Fort Lee v. United States, 104 F. 2d 275, 282-283 (3 Cir. 1939).

Indeed, as part of its motion the Attorney General is moving under N. J. S. A. 59:13—3 to strike alleged claims for consequential damages, damages based upon implied warranties and implied contracts aggregating $7,000,000.

Rutgers, as part of the grounds of its argument, points out that the application of said act to it would deprive it of a jury trial in all contract actions. N. J. S. A. 59:13-4.

The starting point for the answer is N. J. S. A. 18A:65-1 et seq. That law determines the rights and powers of Rutgers. Trustees of Rutgers v. Richman, supra; Rutgers v. Kugler, supra. In the former decision, the court described the 1956 act as creating a “hybrid institution.” Prior to the 1956 act, Rutgers was an incorporated college which had express power to sue and be sued.

The charter granted by Governor William Franklin on March 20, 1770 supplemented that granted by George III of England in 1766, and each in relevant part provides:

* * * And we further of our special grace, certain knowledge, and mere motion, for us, our heirs, and successors, will, give, grant, and appoint, that the said trustees and their successors shall for ever hereafter, be in deed, fact, and name, a body corporate, and politick, and that they the said body corporate and politick, shall be known and distinguished in all deeds, grants, bargains, sales, writings, evidences, moniments, or otherwise however, and in all courts for ever hereafter, shall and may sue, and be sued, plead, and be impleaded, by the name of the Trustees of Queen’s-College in New Jersey; * *

Prior to 1956 Butgers sued from time to time as its needs required. Trustees of Rutgers College v. Morgan, Comptroller, 70 N. J. L. 460 (Sup. Ct. 1904), aff'd 71 N. J. L. 663 (E. & A. 1905) (suit to collect money from the State of New Jersey for tuition for students admitted on state scholarships).

With this background is there any evidence that the Legislature intended to repeal the power to sue and be sued, and that the trustees consented to a loss of that power in the 1956 act? The courts ¡have recited the care with which the 1956 Act was prepared. Rutgers v. Kugler, supra.

The Beport of the Special Committee of the Trustees of Butgers University, the State University dated November 15, 1955, to the trustees, alumni, faculty and students stated that the proposed law had been thoroughly reviewed by counsel, who are named and are individuals who enjoyed reputations as very competent attorneys. It stated that it is the

* * * opinion of counsel that the above changes in the corporate and organizational structure of the University may he effected with the approval of the Board of Trustees of Butgers College and the State. To effect these changes, the Charter must be amended and under existing State law, legislative approval is required.

The statement attached to Senate Bill 167 (1956), which became the act of 1956, provides:

The purpose of this Act is to authorize and implement the plan for the reorganization of the Board of Trustees of The Trustees of Butgers College in New Jersey, the State University, in accordance with the plan conditionally adopted by its Board of Trustees, the outstanding provision of which is the creation of a new Board of Governors, of which a majority will be appointed by the Governor of New Jersey, with the advice and consent of the Senate, and which will have general supervision over and the conduct of the University, with the Board of Trustees continuing in an over-all advisory capacity and with control over .certain properties and trusts and the investment of trust funds; to change its name; and the Act otherwise provides for clarification of the relations between the State and the University and of their respective obligations and amends the existing Charter of The Trustees of Rutgers College, as therein set forth, and repeals inconsistent acts. [Emphasis supplied]

It is .clear that both the Legislature and the trustees regarded the act of 1956 as au amendment to an existing charter for an incorporated college. In the 1956 act there are two provisions which clearly indicate there was an intent to preserve the then existing corporate powers.

'N. J. 8. A. 18A :65-2 provides:

The term “the corporation,” as used in this chapter, shall mean the said body corporate and politic, incorporated under the name of “the trustees of Queen’s-College, in New Jersey,” by royal charter dated November 10, 1766 (amended March 20, 1770), confirmed and amended by acts of the legislature of the state of New Jersey adopted June 5, 1781, and May 31, 1799, respectively, and having perpetual succession and existence; its name having been changed to “the trustees of Rutgers college in New Jersey” by act of the legislature adopted November 30, 1825 and to “Rutgers, the state university” pursuant to an act of the legislature, approved June 1, 1956; one of the departments maintained by which is and continues to be the land grant college of New Jersey; the property and educational facilities, rights and privileges of which are and shall continue to be impressed with a public trust for higher education of the people of the state of New Jersey; and which is the instrumentality of the state for the purpose of operating the state university. Nothing herein contained shall impress with such trust any property of the state.

And, N. J. S. A. 18A :65-4 provides :

Nothing herein contained shall be construed to impair, annul or affect any vested rights, grants, charter rights, privileges, exemptions, immunities, powers, prerogatives, franchises or advantages heretofore obtained or enjoyed by the corporation or the university or any constituent unit thereof, under authority of its charter or any act of this state or under any grant, deed, conveyance, transfer, lease, estate, remainder, expectancy, trust, gift, donation, legacy, devise, endowment or fund, all of which are hereby ratified and confirmed except insofar as the same may have expired or have been repealed or altered or may be inconsistent with this chapter or with existing provisions of law; subject, however, thereto and to all of the rights, obligations, relations, conditions, terms, trusts, duties and liabilities to which the same are subject.

N. J. S A. 18A:65-25 and 26 divide responsibilities between the board oí governors and the board of trustees. In N. J. S. A. 18A:65-28 there is recognition that the, entity as a corporation has certain powers, for there it is stated:

The hoards shall have and etsereise the powers, rights and privileges that are incident to their respective responsibilities for the government, conduct and management of the corporation, and the control of its properties and funds, and of tlie university, and the powers granted to the corporation or the boards or reasonably implied, may be exercised without recourse or reference to any department or agency of the state, except as otherwise expressly provided by this chapter or other applicable statutes. The provisions of sections 11 and 13 of chapter 20 of the Laws of 1944 shall not be deemed or construed to be applicable to the corporation or the university. [Emphasis supplied]

If Eutgers had the corporate power “to sue and be sued” prior to the adoption of the 1956 act, the sections of the Act just cited appear to confirm it and permit the appropriate governing board to use it.

There is no express statement in the 1956 act that the Attorney General has pointed out which repeals the right to sue. In N. J. S. A. 18A :65—27 it is provided that if the State does not provide sufficient funds for the purposes enumerated, the trustees may withdraw the trust assets subject to adjudication of their rights in court. This at least implies a power to sue in the board of trustees.

In 1956 the Legislature was not creating a new college. In creating a new college the Legislature may withhold the power “to sue and be sued.” See Oklahoma Agricultural & Mechanical College v. Willis, supra. Compare the powers of the New Jersey College of Medicine and Dentistry, N. J. S. A. 18A:64C-8 (power to sue and be sued), with those of the College of Medicine and Dentistry of New Jersey, N. J. S. A. 18A:64G—6 (no power to sue or he sued).

In 1956 the Legislature was dealing with an existing incorporated college and could not without the trustee’s consent take that power away. Prior to the development of the provision of our own national Constitution recognized in Dartmouth College v. Woodward, 4 Wheat. (U. S.) 518, 4 L. Ed. 629 (1819), the English courts held that new statutes imposing new conditions on the charter of an existing incorporated college were not applicable to such a college unless the trustees consented. Rex v. Vice Chancellor of Cambridge University, 3 Burr. 1647, 97 Eng. Rep. 1027 (K.B. 1765). The law of this State is the same. Trustees of Rutgers College in N. J. v. Richman, supra.

The relinquishment of such a power as that “to sue and be used” is not to be assumed in the absence of convincing evidence to the contrary.

The Legislature provided in N. J. S. A. 18A :65-8 that

No provision in this chapter contained shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit, of the state of New Jersey.

Undoubtedly, this was intended to protect the State’s treasury from debts created by Rutgers. There is no evidence that Rutgers ever referred anyone to- the Legislature’s committee on claims when suit was threatened. There is no evidence that in the 18 years since the 1956 act was passed the Legislature ever contended that Rutgers should refuse to pay disputed claims and send the matter to the Legislature. Until the enactment of the Medical and Dental Education Act of 1970 and the subsequent agreement, there is every indication that the State intended Rutgers to dispose of the claims in this action based on the contracts.

The court is aware that in deciding questions about the meaning of the 1956 act and the relation of Rutgers to the State caution is indicated. Richardson Engineering Co. v. Rutgers, et al, supra 51 N. J. at 215. Even though the State is present here, Rutgers and the State in the context of this ease are not the true adversaries — plaintiff contractor and the State are.

Plaintiffs have a direct interest in the question of the power to sue because if Eutgers has that power, then under the exception clause in N. J. S. A. 59:13—1 Eutgers is not subject to that act. The decision of this question will avoid the alternative suggestion of Eutgers that it is not subject to the act because it is not one of the entities described in said act but an "autonomous public university.” See Rutgers v. Piluso, 60 N. J. 142 (1972):

The overall result of the legislature contract therefore is an autonomous public university — not merely a contractual relationship or an institution both public and private at the same time. This conclusion is further buttressed by several additional expressions in the act. The institution is specifically designated as “the instrumentality of the state for the purpose of operating the state university,” N. J. S. A. 18A:65-2. The public policy of the state is expressly declared to be, indicative of an intent to create a full-fledged state agency, that:
a. The corporation and the university shall be and continue to be given a high degree of self-government and that the government and conduct of the corporation and the university shall be free of partisanship; and
b. resources be and continue to be provided and funds be and continue to be appropriated by the state adequate for the conduct of a state university with high educational standards and to meet the cost of increasing enrollment and the need for proper facilities. (N. J. S. A. 18A :65-27(I)).
Most significantly for present purposes, these governmentally autonomous powers are directed to be exercised “without recourse or reference to any department or agency of the state, except as otherwise expressly provided by this chapter or other applicable statutes.” (Emphasis added) N. J. S. A. 18A:65-28. And finally, it is provided that the act,
* * * being deemed and hereby declared necessary for the welfare of the state and the people of New Jersey to provide for the development of public higher education in the state and thereby to increase the efficiency of the public school system of the state, shall be liberally construed to effectuate the purposes and intent thereof. (N. J. S. A. 18A:65-9). [at 157-158; footnote omitted]

Based on the provision of its charter authorizing Eutgers to sue and be sued, the absence of any affirmative evideuce of an intent to repeal the right, the confirmation of existing charter power in the 1956 act, and on the history of Rutgers exercise of the power to sue and be sued in the courts after 1956, this court concludes Rutgers had the power to sue and be sued at the time the Contractual Liability Act was enacted and is not subject to said act.

The fact that Rutgers assigned all its rights, duties and obligations to the CMDNJ does not relieve it of its obligation to plaintiffs, Riley v. New Rapids Carpet Center, 61 N. J. 218, 224 (1972) and 3 Williston, Contracts (3 ed. 1960, Jaeger), § 411 at 18 states:

Delegation of Duties. The duties under a contract are not assignable inter vivos in a true sense under any circumstances; that is, one who owes money or is bound to any performance whatever, cannot by any act of his own, or by any act in agreement with any other person, except his creditor, divest himself of the duty and substitute the duty of another. “No one can assign his liabilities under a contract without the consent of the party to whom he is liable.” [Footnotes omitted]

The State has not contended that there was a novation between plaintiffs and CMDNJ and there is no evidence before the court of such a novation.

The actions properly are against Rutgers, and N. J. S. A. 59 :13-1 does not apply. There is no need to discuss the constitutional questions raised or any problems related to the New Jersey Tort Claims Act, N. J. S. A. 59:1-1 et seq.

The court has also noted that N. J. S. A. 18A:64G-26, which is part of the Medical and Dental Education Act of 1970, provides for the survival of actions then pending against the New Jersey College of Medicine and Dentistry, which was the other medical and dental school receiving state support, but no such provision is made as to actions against the Rutgers Medical School. If the court is correct in its interpretation of the various statutes, the Legislature did not have to make such a provision. The claims automatically survived against the corporate entity of Rutgers; however, other provisions of the aforesaid 1970 act provided fox the termination of the corporate entity of the New Jersey College of Medicine and Dentistry and that the new corporate CMDNJ had no power to sue or he sued; hence the need for N. J. S. A. 18A :64G—26. This also explains the reason for the June 1972 agreement between Rutgers and CMDNJ.

Motion denied.


author: Albano, J. D. C.

text:
    BENEFICIAL FINANCE CO., PLAINTIFF, v. MARGARET KELLEHER DIXON AND THOMAS DIXON, DEFENDANTS.
    District Court—Essex County
    October 16, 1974.

      Mr. Henry M. Raff and Mr. Stanley P. Fishman for plaintiff (Messrs. Feuerstein, Sachs & Maitlin, attorneys).

      Mr. Bernard A. Kuttner for defendants.
   Albano, J. D. C.

At the request of the parties, this action has been bifurcated. Liability depends on the resolution of a question of law, given various stipulated facts.

The facts stipulated:

1. On May 6, 1963 defendants Margaret Kelleher and Thomas Dixon signed a note and security agreement in which they promised to repay a sum of money in monthly installments.
2. Plaintiff is the holder of that note.
3. Required monthly payments were made for a period of time.
4. The last payment was made on or about September 25, 1964.
5. The debt has not been paid in full and a balance is due.
6. The complaint in this action was filed on or about November 15, 1973, more than nine years after the last monthly payment was made.

The question of law: Is the six-year or the 16-year statute of limitations applicable? Obviously, if the six-year statute of limitations applies, the action is barred, but if the 16-year statute applies, the action is not barred.

For the purpose of determining the question of law only the concluding parts of the note need to be considered. The note, is a printed form, and the last paragraph, the witness lines and the signatory lines appear as follows:

IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals on the date of loan above written.
Signed, Sealed, and
Delivered in the
presence of:
Witness:............ ...........(Seal)
Witness: ....... .... .............(Seal)
(husband or wife)
Witness:...... ... ...........(Seal)

The “(Seal)” is printed on the form and clearly was not affixed, in the sense of a scroll or wax seal, by defendants who signed their names on the top and bottom signatory lines; two separate witnesses signed the witness lines.

Parenthetically, the observation is made that plaintiff pleaded a “Specialty,” an instrument under sea.1 wherein an obligation is embodied. Balleniine’s Law Dictionary (3 ed. 1969). .

The pertinent parts of onr six year statute of limitations, N. J. S. A. 2A:14-1, are:

Every action at law * * * for recovery npon a contractual claim or liability, express or implied, not under seal, * * * shall be commenced within 6 years next after the cause of any such action shall have accrued.

The pertinent parts of our 16-year statute of limitations, N. J. S. A. 2A:14-4, are:

Every action at law * * * upon an obligation under seal conditioned for the payment of money only * * * shall be commenced within 16 years next after the cause of any such action shall have accrued.

Each statute requires an action to be commenced within a' period of time after accrual of the cause of action. Here, the last monthly payment was made more than nine years before the action was commenced, and it can be assumed that there was no default in payment, no accrual of a cause of action, until a month after the date of the last monthly payment, a period still in excess of nine years. The late Judge Jayne noted that the accrual of a cause of action under our statute is the prescribed event from which the period of limitations is to be computed, and by accrual of cause of action is to be understood the right to institute and maintain a suit. Howell v. Fogg, 17 N. J. Misc. 200 (Cir. Ct., 1939). Plaintiff had no right to institute and maintain its action until default in monthly payments and, in fact, it did commence this action nine years after its cause of action accrued.

The significant reference in our two statutes of limitations is-.the word “seal.” If the instrument is not under seal, N. J. S. A. 2A:1A-1, the six-year statute, controls; if the instrument is under seal, Nr J. S. A. 2A :14-4, the 16-year statute, controls. ’

Under “Definitions and General Buies” of our statutes is N. J. S. A. l.T-2.1, “Seal; Sealed”:

Every instrument, to which it is required or permitted by law that a seal be attached, shall be deemed to be sealed when there is affixed thereto, or printed, impressed, or marked thereon a scroll or other device by way of a seal, and no such instrument shall be impeached or questioned for lack of a wax seal. This section shall apply to sealings by corporations as well as individuals; but any sealing required or permitted by law of a public officer, board, body, or commission having an official seal shall be by the impress of such official seal.

In Coral Gables, Inc. v. Kretschmer, 116 N. J. L. 580 (E. & A. 1936), a promissory note had the printed word “(Seal)” after the name of the maker, and the issue was whether or not this caused the note to be an instrument under seal. The court (at 581) remarked that whether an instrument is under seal or not is a question for the court upon inspection; that whether a mark or a character shall be held to be a seal depends upon the intention of the executant as shown by the paper; that it is an essential that the seal be the maker’s as it is essential that the signature be his. The court further said (at 584) that the only way to affix a scroll or ink or other device by way of seal is by writing “Witness my hand and seal” or “Sealed and Delivered” or something to that effect in the instrument itself. Finally, the court (at 585) held that a promissory note on whose face appears nothing but the printed word “(Seal)” opposite the signed name is not effective as a sealed-instrument.

In Continental Purchasing Co., Inc. v. Daniels, 123 N. J. L. 33 (Sup. Ct. 1939), the instrument in question bore no seal, no scroll or ink or other device by way of seal, but it did close with the following: “Witness * * * the hand and seal of the party of the second part.” It was not an instrument under seal. For a sealed instrument there must be a combination of device and statement of sealing.

In Fidelity Union Trust Co. v. Fitzpatrick, 134 N. J. Law 250 (E. & A. 1946), the agreement in issue was signed, and following, the signature was appended “(L.S.)”; part of the printed form and not in the maker’s handwriting. At the left of the signature appeared “Signed, Sealed, and Delivered in the Presence of D.C. Kirk.” No words in the body of the agreement indicated that it was a sealed instrument. The court found that “L.S.” was a sufficient device for a seal, but held that something must appear in the body of the writing to indicate that the maker intended it to be under his hand and seal. As to the “Signed, Sealed, and Delivered in the Presence of” wording, the court said this was a statement or attestation of the witness, not of the maker, and not binding on the maker. The instrument was not under seal.

Testing of the note and security agreement here in dispute against the above criteria results in the conclusion that it is indeed an instrument under seal, controlled not by the six-year statute, but by the 16-year statute.

The note contains in its body a statement that the makers set their hands and seals to it and a seal by way of a device is imprinted on it. Clearly, it was intended, from an inspection of its verbiage and the “(Seal)” to be a sealed instrument.

Judgment for plaintiff on liability and the matter will be set down for trial as to damages only.


author: Gilmore, J. J. & D. R.

text:
    STATE OF NEW JERSEY IN THE INTEREST OF F. W.
    Juvenile and Domestic Relations Oourt Hudson County
    September 25, 1974.
   Gilmore, J. J. & D. R.

Because of the composition of the form of complaint utilized in the Juvenile and Domestic Relations Courts, this matter arises sua sponte. One complaint charges that F.W. did feloniously receive and have in his possession the goods of another, which goods and chattels were of the value of $1,000. A second complaint charges that F.W. did attempt to feloniously steal the goods of a third person, which goods were of the value of $5,300.

Both complaints allege that these acts occurred on July 27, 1974 at 5:03 a.m. Both complaints aver that “these facts, if established would constitute a violation of [naming the respective criminal statutes] when committed by a person 18 years of age or over.”

At this point there is nothing to provoke the reader’s attention. But complaints in this court are sui generis. Apart from the body of the complaint itself, there is contained a wealth of information on the juvenile. We read of his school, grade, employer, age, height, etc. On the complaints in question there is contained the date of birth, July 28, 1956. F.W. asserted this to be so.

The question is as obvious as Gulliver. How old was F.W. on July 27, 1974? The new Juvenile Act, L. 1973, c. 306, proclaims that a juvenile “means anjr person who is under the age of 18.” Was F.W. now an adult by virtue of N. J. S. A. 9 :17B-1 to 3?

An exhaustive and exhausting search of reported eases in our State discloses legalistic famine on the subject. The extent of this scrivener’s efforts reposes in Mandell v. Passaic National Bank & Trust Co., 18 N. J. Misc. 455 (Cir. Ct. 1940), which asserts that

The plaintiff legally reaches her majority on December 28th, 1939, the day before her twenty-first birthday, for the law takes no cognizance of the part of a day. A day begun is a day done, [at 457]

There is no citation of authority, no further comment, and no mention in the syllabus.

Perhaps the judge felt the statement was of hornbook age since the rule apparently existed in the year 1677. Note the case of Nichols v. Ramsel, 2 Mod. 280, 86 Eng. Repr. 1072, wherein we find:

And the evidence was, that he was born the first day of January in the afternoon of that day, and died in the morning on the last day of December: and it was held by all the judges that he was of full age, for there shall be no fraction of a day.

Blackstone tells us:

Full age in male or female is 21 years, which age is completed on the day preceding the 21st anniversary of a person’s birth. [1 Black. Comm. 457]

Other jurisdictions are in agreement: Nelson v. Sandkamp, 227 Minn. 177, 34 N.W. 2d 640, 5 A.L.R. 2d 1136 (Sup. Ct. 1948); Commonwealth, v. Howe, 35 Pa. Super. 554 (Super. Ct. 1908), and Lenhart v. State, 33 Tex. Cr. R. 504, 27 S.W. 260 (Ct. Crim. App. 1894). See also, Annotation, 5 A.L.R. 2d 1143.

The federal jurisdictions are also in accord. See Fisher v. Smith, 319 F. Supp. 855 (D. Wash. 1970), and Turnbull v. Bonkowski, 419 F. 2d 104 (D. Alaska 1969).

Previously, our Supreme Court, in speaking of our former statute, recognized that “adulthood for criminal purposes commences not at that age, but at 18, and in a sense at 16 under N. J. S. 2A:4-15.” Cf. In re Smigelski, 30 N. J. 513, 522 (1959).

If the ruling is that F.W. is 18 years of age, and not within the jurisdiction of the Juvenile Court, are we splitting hairs ? By a seemingly marginal inequity, are we casting a child into the rigors of the adult criminal processes? Not so.

The new Juvenile Act, as did its predecessor, contemplates that certain juveniles will be handled in courts other than this. Reference is made to paragraph 3 of the act wherein juveniles “of or over the age of 17 years” who violate certain chapters of Title 39 are excepted. Furthermore, paragraph 7 of the act evinces a legislative policy of considering adult treatment for juveniles “16 years of age or older” who have committed certain acts.

Therefore, the sharpness of this decision is not deciding the fate of a person on the basis of a “razor’s edge” judgment. In addition, F.W. is no stranger to this court, nor to the Youth Correctional Institution Complex.

The complaints are hereby dismissed because the court lacks jurisdiction over the person. Since this case did not mature into an adversary proceeding, the matters are hereby remanded to the Hudson County Prosecutor to take whatever action he may deem appropriate. It is the decision of the prosecutor whether to institute criminal proceedings. State v. Le Vien, 44 N. J. 323, 326-327 (1965).


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

text:
    GENERAL MOTORS ACCEPTANCE CORP., PLAINTIFF, v. JOSEPH FALCONE, DEFENDANT.
    District Court—Middlesex County
    October 25, 1974.

      Mr. Richard K. Silberberg for plaintiff. (Messrs. Pressler & Pressler, attorneys).

      Ms. Claudia Slovinsky, Legal Intern, for defendant (Middlesex County Legal Services).
   Longhi, P. J. D. C.

On April 33, 1974 plaintiff obtained judgment against defendant in the sum of $633.89 plus costs. The judgment not having been paid, plaintiff executed on the judgment and on June 33, 1974 levied on $145.39 in defendant’s cheeking account. Plaintiff now seeks an order directing the bank to pay over to the constable the monies levied upon. Defendant resists the order on the ground that the funds levied upon derive solely from social security and workmen’s compensation benefits and are exempt.

Defendant’s sole means of support, for himself and his family, are a monthly social security check in the amount of $518.10 and semi-monthly workmen’s compensation checks in the amount of $160.00.

While on the date of the bank levy there was only $145.39 in defendant’s checking account, his total deposit for June, up to the date of levy, were $900.10. Of these monies $518.10 represented social security benefits and $342.00 represented the residue of workmen’s compensation checks.

It is clear that monies obtained from social security benefits are exempt from execution, levy, attachment, garnishment or other legal process, even after they have been paid to the debtor. 42 U. S. C. A. § 407; Philpott v. Essex County Welfare Board, 409 U. S. 413, 93 S. Ct. 590, 34 L. Ed. 2d 608 (1973).

The question presented to the court is whether the exemption provided in the Workmen’s Compensation Act applies to monies after payment to a debtor.

The relevant portion of the Workmen’s Compensation Act, N. J. S. A. 34:15-29 provides:

Claims or payments due under this chapter shall not he assignable, and shall be exempt from all claims of creditors and from levy, execution or attachment.

At issue is the meaning to be given the phrase “Claims or payments due,” but more specifically tbe word “due.” Plaintiff urges that once payments have been made they are no longer “due” and thus the- exemption no longer applies. In support of his position plaintiff cites Beierlein v. Faulkner, 15 Misc. 313, 190 A. 853 (D. Ct. 1937).

Beierlein involved a similar factual pattern. The court there construed the phrase “Claims or payments due” in its strictest sense. The court viewed the purpose behind the exemption as administrative in nature, intended to avoid confusion in the Workmen’s Compensation Division, thereby-relieving the Division of extra bookkeeping duties and conflicting claims of ownership. Beierlein has not been followed and has more or less withered on the vine. In any event I feel that the result in Beierlein is wrong and contrary to the intent and purpose of the Workmen’s Compensation Act.

The purpose of statutory construction is to bring the operation of the statute within the apparent intention of the Legislature. Nagy v. Ford Motor Co., 6 N. J. 341 (1951).

Exemptions as the term is used in connection with the rights of creditors seeking to secure their debts can be said to be the right of a debtor to retain a portion of his personal property free from seizure under judicial process. 31 Am. Jur. 2d, Exemptions, § 1. Exemptions did not exist at common law and are mere creatures of statute or constitutional enactment. They are granted on grounds of public policy for a humane purpose.

It is the policy of the State of New Jersey to favor exemptions in those situations where they exist by statute. See Hoffman v. Hoffman, 8 N. J. 157, 162-163 (1951); Freedom Finance Co., Inc. v. Fleckenstein, 116 N. J. Super. 428 (Cty. D. Ct. 1971).

The Workmen’s Compensation Act is social legislation designed to accomplish a humane and generous purpose. The award is “in lieu of wages.” Williams v. Newark Dept. of Welfare, 43 N. J. Super. 473, 477 (Cty. Ct. 1957). See also, Kozielec v. Mack Mfg. Corp., 29 N. J. Super. 272 (Cty. Ct. 1953); King v. Western Electric Co., 122 N. J. L. 442, 448 (Sup. Ct. 1939). Workmen’s compensation affords an injured worker a measure of economic security during the period of time he is recuperating from a work-related accident, and further compensates him for permanent disability which reduces Ms future earning capacity. See Naseef v. Cord Inc., 48 N. J. 317, 325 (1966) : Sanders v. Jarka Corp., 1 N. J. 36, 42 (1948), Electronic Associates, Inc. v. Heis inger, 111 N. J. Super. 15, 19 (App. Div. 1970). The obvious intent of the Legislature is to keep the injured worker from becoming a burden to the public.

It is ludicrous to give the exemption provided in the Workmen’s Compensation Act a meaning that merely promotes “the convenience of the state by withdrawing the occasion for conflicting claims of ownership.” Surace v. Danna, 248 N. Y. 18, 22, 161 N.E. 315, 316 (Ct. App. 1928).

I would point out that the logical application of plaintiff’s position would permit a creditor to attach, levy or execute upon the entire workmen’s compensation monies after they were paid to an injured worker — a result he could not obtain if he were garnishing the wages of a non-injured worker. 15 U. S. C. A. §§ 1671 to 1677; N. J. S. A. 2A:17-50 to 56. Such a result is clearly unjust.

I find that the intent of the exemption in the Workmen’s Compensation Act, N. J. S. A. 34:15-29, is not limited to monies before payment to a petitioner but also to funds actually paid to him and deposited in a bank account, insofar as said funds are traceable to workmen’s compensation benefits.

The motion for an order to turn over the bank account is denied and the levy is vacated.