author: Sugrue, J. C. C.

text:
    JAMES A. BELLO, PETITIONER-APPELLANT, v. COMMISSIONER OF THE DEPARTMENT OF LABOR AND INDUSTRY, TRUSTEE OF THE TWO PER CENT FUND, RESPONDENT-RESPONDENT.
    Essex County Court—Law Division
    Decided October 1, 1968.

      Mr. Seymour Jacobs for petitioner-appellant (Messrs. Balk, Jacobs, Goldberger and Mandell, attorneys).

      Mr. William J. Walsh for respondent-respondent (Mr. Arthur J. Sills, Attorney General of New Jersey, attorney).
   Sugrue, J. C. C.

This case involves a limited appeal from a decision of the Commissioner of Labor and Industry fixing the amount of petitioner’s benefits under the Two Per Cent Fund (hereinafter referred to as Fund). N. J. S. A. 34 :15-95.1.

In July 1959 petitioner filed a formal claim petition against his employer for workmen’s compensation benefits, alleging that by reason of the contraction of an occupational disease and the development of systemic poisoning due to inhalation, absorption and ingestion of harmful dusts and gases, he had suffered injury to his neurological and respiratory systems. An answer was duly filed denying all the material allegations of the petition.

Thereafter, in October 1961, the parties reached a mutual agreement as to certain payments which were to be made to and on behalf of petitioner. Among other things, the agreement provided that the employer pay petitioner a sum equal to 25% partial permanent total, or 137-J4 weeks at $35 per week, a total of $4,812.50. The stipulations and agreement were approved by the judge of compensation and payment ordered.

Petitioner subsequently obtained a third-party recovery in the sum of $30,000.

In July 1965 the judge of compensation ordered that the Eund be made a party to petitioner’s action. Petitioner made application in January 1966 for compensation benefits under the Eund. In April 1967 a hearing was held on the claim set forth in the original petition. The Commissioner of Labor and Industry was represented by counsel at the hearing.

The judge of compensation found that (1) petitioner while employed had developed toxic encephalopathy as a result of inhalation of harmful fumes and gases; (2) the permanent disability resulting from the occupational disease was 75% of permanent total; (3) prior to his employment petitioner suffered from and was disabled to the extent of 25% permanent total by reason of several noncompensable preexisting pathological conditions, among which were chronic bronchitis and cardiovascular disability, and (4) the preexisting noncompensable disability of 25% permanent total, in combination with petitioner’s compensable occupational disease, resulted in petitioner being totally and permanently disabled.

In accordance with these findings petitioner was awarded $13,500 for the 75% disability resulting from the occupational disease (337-% weeks at $40 per week). The employer was given a credit of $8,800 by reason of its right to reimbursement from the recovery in the third-party action. Credit was also given for $4,812.50 previously paid by the employer under the agreement and order of October 1961.

The judge of compensation further found that petitioner had established his eligibility for Eund benefits.

Thereafter, in November 1967, the Judge of Compensation submitted an advisory report to the Commissioner of Labor and Industry. In general, the report recommended that the Commissioner adopt the findings made in the workmen’s compensation case. In particular, however, the judge recommended that the Fund should be reimbursed out of petitioner’s third-party recovery, the Fund being chargeable with a portion of petitioner’s counsel fee and expenses incurred to obtain the third-party recovery.

The advisory report concluded with the suggestion that petitioner be allowed benefits from the Fund at the rate of $13.33 per week until the balance of his third-party benefits had terminated, payments thereafter to be at the full weekly rate of $40.

In reaching the conclusion that the Fund was entitled to reimbursement from the third-party recovery, the judge of compensation recognized that section 40 of the Workmen’s Compensattion Act does not contain any express language granting reimbursement rights to the Fund. He reasoned, however, that the rights of the Fund should be no less than those of employers or compensation insurance carriers. It was further suggested that if the Fund were denied reimbursement, petitioner would have obtained double compensation.

The findings and recommendations of the judge of compensation were adopted by the Commissioner in March 1968. Petitioner appeals from that part of the Commissioner’s determination which held that the Fund was entitled to reimbursement from the third-party recovery.

The question of whether the Fund is entitled to credit from a third-party recovery presents a question heretofore unanswered in any reported decision in this State. The few conflicting decisions in other jurisdictions are of little aid to the court in construing the pertinent provision of our Workmen’s Compensation Act.

The Missouri Supreme Court in Cole v. Morris, 409 S. W. 2d 668 (1966), decided that Missouri’s Second Injury Fund was entitled to be subrogated to the rights of the injured workman in a third-party action. In that case a worker sustained injuries arising out of his employment. The State Industrial Commission found that (1) the employee suffered an injury to his back equal to 40% of total; (2) a preexisting disability accounted for 30% of total, and (3) the two injuries combined had resulted in permanent total disability. The employee settled his claim for compensation against his employer, leaving remaining the claim of 30% of total disability against the Second Injury Eund. While that claim was pending the employee settled his separate action against a third-party tortfeasor. Subsequently compensation was awarded from the Second Injury Eund. The Circuit Court sustained the award.

The State Treasurer, as custodian of the Second Injury Eund, then appealed, contending that the Eund was entitled to the right of subrogation in the recovery against the tortfeasor. The employee argued that the Eund was not so entitled because no statute gave it the right of subrogation. In granting the Subrogation Fund the Missouri Supreme Court expressly rejected the argument that such right must be found in the state statutes. Instead, the court found the elements of legal subrogation were present, and that to deny the Second Injury Eund subrogation would result in unjust enrichment of the employee, who would retain both compensation and damages.

The Minnesota Supreme Court in a case involving an analogous question denied a state fund the right to subrogation. In Orth v. Shiely Petter Crushed Stone Company, 253 Minn. 142, 91 N. W. 2d 463 (1958), a worker sustained employment-related injuries. The employer and its insurer admitted liability and paid $10,000 compensation. The worker instituted a common law action against the negligent third party which was settled for the net sum of $20,000. The employer and insurer waived their subrogation rights to any part of the sum.

After the full $10,000 compensation had been paid, the worker filed a petition with the industrial commission requesting payment of an additional $5,000 from a special compensation fund. The commission denied compensation on the basis that the fund was to be credited with the payment of $5,000 from the money in the hands of the employee from the third-party recovery.

On appeal it was argued that subrogation rights were fixed by statutory provisions and those provisions did not extend such rights to the custodian of the special compensation fund. The state treasurer, custodian of the fund, contended that although the subrogation provision of the compensation statute made no reference to the special fund, under common law principles of equity the fund could be subrogated in third-party negligence actions arising out of industrial accidents. The Minnesota Supreme Court held that since the legislature failed to provide for subrogation, the court was not authorized to construe the subrogation statute to make up for the omission.

In New York the problem is dealt with by express statutory language. The Workmen’s Compensation Law, §29 subdiv. 1, 4 (McKinney’s Consol. Laws 1965, c. 67), provides that a carrier liable for the payment of compensation has a lien on the proceeds of a third-party recovery to the extent of compensation awarded, after the deduction of reasonable and necessary expenditures, including attorney’s fees, incurred in effecting such recovery. Under the provisions of the Second Injury Law the carrier must pay the award in the first instance. Thereafter, however, the carrier is entitled to reimbursement for all compensation and medical benefits subsequent to those payable for the first 104 weeks of disability. Workmen’s Compensation Law, §15, subdiv. 8, par. (d) (McKinney’s Consol. Laws 1965).

Thus, in New York, by reason of the fact that the statute makes the carrier liable in the first instance for the total award in second-injury cases, the Special Disability Eund receives the benefit of a net recovery in a third-party action when the recovery therein exceeds the compensation and medical expenses payable for the first 104 weeks of disability. Dougherty v. J. F. Quakenbush Waverly Stage Co., 10 A. D. 2d, 125, 197 N. Y. S. 2d 658 (Sup. Ct. 1960).

Neither that part of our Workmen’s Compensation Act relating to second-injury cases, N. J. S. A. 34 :15-95, or the section relating to reimbursement and credit from third-party recoveries, N. J. S. A. 34 :15-40, expressly give the Eund the right to reimbursement or credit out of the recovery in a third party action. After a review of both provisions the court concludes that the Eund is not entitled to credit from such a recovery.

The original Compensation Act, L. 1911, c. 95, contained no provision for subrogation or reimbursement to an employer or insurer for compensation paid out. Accordingly, the injured employee or his dependents could recover full compensation from the employer as well as from the wrongdoer. Newark Paving Co. v. Klotz, 85 N. J. L. 432 (Sup. Ct. 1914, affirmed, 86 N. J. L. 690 (E. & A. 1914). The 1913 Legislature evidently considered that such a situation called for legislation and passed L. 1913, c. 174. That law provided the employer with reimbursement rights; no relief was extended to an insurance company, either by way of subrogation or reimbursement. Thus, in Erie Railroad Co. v. Michelson, 111 N. J. Eq. 541 (E. & A. 1932), it was held that where the insurer had made payments directly to eligible dependents it was not entitled to reimbursement or subrogation from a third-party recovery. The court said:

“The statute in question extends no relief to the insurance company, either by way of subrogation or reimbursement. * * * [A]nd the fact that the employee’s dependents accepted weekly payments direct from the insurance company raises no implied contract or agreement, either in law or in equity, that said dependent will reimburse the insurance company out of the judgment recovered against the Brie Railroad Company, [citing cases]” (at pp. 545-546)

In New York S. & W. R. R. Co. v. Huebschmann, 111 N. J. Eq. 547 (E. & A. 1932), an employer demanded reimbursement out of moneys paid into court by a third-party tortfeasor. The insurer had paid the workmen’s compensation award. The court denied the employer reimbursement because it had not paid the award. It was argued that the principle of common law subrogation applied. In refuting that argument the court stated:

“With respect to which it need only be said that (a) the right of the employer to reimbursement is purely statutory; (b) it was determined in the Michelson Case that the statute extended no relief to the insurance carrier either by way of subrogation or reimbursement. * * (at p. 550)

The Legislature apparently anticipated the problems which would arise under the 1913 act and the identical provisions of the Workmen’s Compensation Law which followed, L. 1919, c. 93. In 1931 the law was amended to authorize the employer or his insurance company to proceed against a third-party after certain conditions were met: L. 1931, c. 279. The amendment of 1931 was subsequently construed to give an insurer reimbursement rights. Scheno Trucking Co. Inc. v. Bickford, 115 N. J. Eq. 380, 387 (Ch. 1934), affirmed 116 N. J. Eq. 586, 587 (E. & A. 1934). L. 1936, c. 162, p. 382 codified that interpretation.

Under the present statute, N. J. S. A. 34 :15-40, the right to reimbursement from a third-party recovery is purely statutory and is derived from what is termed the employer’s or insurance carrier’s “statutory subrogation.” United States Casualty Co. v. Hercules Powder Co., 4 N. J. 157, 166 (1950). The statute must be strictly construed. Dugan Brothers of New Jersey v. Robinson, 139 N. J. Eq. 318, 320 (Ch. 1947); Standard Surety & Casualty Co. v. Murphy, 129 N. J. Eq. 284, 288 (E. & A. 1941).

This brief history of the relevant parts of N. J. S. A. 34 :15-40 shows, at least where carriers are concerned, a judicial reluctance to expand the scope of the reimbursement right beyond the express statutory language. Xo reason has been suggested as to why similar restraint ought not to be applied where, absent express statutory authority, the Eund seeks credit from a third-party recovery.

N. J. S. A. 34:15—40 sets up a comprehensive plan for regulating the rights and responsibilities of the several parties concerned in compensation payments where, in the course of his employment, injury or death comes to a workman as the result of the fault of a third party. That section, among other things, retains for the injured employee or his dependents the benefit of his common law action against the third party in which the common law rule for the assessment of damages is applicable. That rule holds the third party liable only for those damages which flow from the third party’s act or omission, and recovery in such an action relates solely to the work-connected accident.

The award from the Eund, on the other hand, is made in permanent disability cases for that portion of the total disability which is wholly unrelated to employment. Belth v. Anthony Ferrante & Son, 47 N. J. 38, 48, 49 (1966). Thus, the award from the Eund and the recovery in the third-party action are for entirely different disabilities. In view of this fact and in accordance with past judicial reluctance to expand the reimbursement and credit provisions of section 40 of the Workmen’s Compensation Act, this court holds that the Eund is not entitled to credit from a third-party recovery.

Inasmuch as the Fund is not entitled to reimbursement from the third-party judgment in favor of the employee, the employee’s compensation from the Eund should have commenced at the expiration of the 75% partial permanent award in favor of him. That date was January 11, 1966. The fund is obligated to the employee for a lump sum payment at the rate of $40 per week from January 11, 1966 to the date of this opinion, less payments already made. From the date of this opinion the employee is entitled to weekly benefits at the rate of $40 per week, to continue in accordance with N. J. S. A. 34:15-95 and N. J. S. A. 34:15-12(b), subject to such periodic reconsideration and extension as the case may require and subject to other provisions of the Workmen’s Compensation Act.

Since counsel fees cannot be awarded on a finding against the Ennd, N. J. S. A. 34:15—95, provision for counsel fees at the original hearing and on this appeal cannot be made.

The matter is remanded to the Commissioner of the Department of Labor and Industry for action not inconsistent with this opinion.


source: Caselaw Access Project

author: Kramer, W. B., J. C. C.

license: Public Domain

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. WALTER D. KINSLEY, DEFENDANT.
    Gloucester County Court—Law Division
    Decided August 14, 1968.

      Mr. Remo M. Croce, Deputy Attorney General of New Jersey for plaintiff.

      Mr. Martin A. Herman for defendant.
   Kramer, W. B., J. C. C.

At the time for the hearing of the appeal, and after oral openings, it was agreed that this appeal would be submitted for decision by the court upon the conclusions and findings set forth in the opinion of Judge Nathan G. Ginsberg of the Municipal Court of Deptford Township, Gloucester County, New Jersey.

The ease involves a violation of N. J. S. 23:5-28 which prohibits the pollution of water by allowing deleterious or poisonous substances to enter streams in quantities destructive of life or disturbing the habits of the fish or birds inhabiting the same.

The municipal court judge made the following findings with respect to the cause of the pollution of the stream in question:

“I conclude from the investigation of Officer Young that the probable source of the pollution was defendant’s landfill. The landfill contained large quantities of organic matter and the pollution was the most intense in the area closest to the landfill.
Furthermore, the court notes that the piggeries and sewer plant have been in this area for many years, yet no complaint had been made of pollution in the waters for a substantial number of years and the pollution came about only when defendant started his relatively recent landfill operation. The inference is inescapable that defendant was a substantial factor in bringing about the pollution charged in the complaint. I so find.
The state has satisfied the burden imposed upon it as to the source and cause of the pollution.
In the instant case the landfill was a continuing operation and from that continuing operation and by the manner in which it was conducted the pollution of the adjoining waters resulted. It cannot be denied that the defendant approved of or acquiesced in the manner in which the landfill was conducted.”

Surely the above findings and conclusions of the Municipal Court Judge indicate that in his opinion the pollution of the stream was caused by the operation of defendant’s landfill. However, the court below then entered into a discussion of the holdings in the case of State v. American Alkyd Industries, Inc., 33 N. J. Super 150 (Bergen County Court 1954) and concluded that there could not be a conviction because there was no proof of guilty knowledge. The judge did state, however, that American Alkyd could readily be distinguished from the case sub judice because the facts in the American Alkyd case proved the pollution resulted from an accident by an employee in overflowing an oil tank and not from a continuing course of business or conduct. Nevertheless, the court found defendant not guilty.

We are dealing with the violation of a statute that is not criminal or gmst-criminal. It is civil in nature and the collection of the penalty is enforced by a civil action in which the burden of proof is by the preponderance of the evidence. Department of Conservation & Economic Development, Division of Fish and Game v. Scipio, 88 N. J. Super. 315 (App. Div. 1965), Sawran v. Lennon, 19 N. J. 606 (1955).

Guilty knowledge or mens rea is a definite requirement of any common law crime. However, there are now many-statutory offenses where no mens rea is required. The Legislature may dispense with the necessity for any criminal state of mind and punish particular acts without regard to the mental attitude of the defendant. Such legislative acts are usually prohibitive of certain conduct imposed by public policy and within the police power of the state.

In Department of Conservation & Economic Development, Division of Fish & Game v. Scipio, supra, which involved a violation of the fish and game laws, it was held that proof of mere possession of a prohibitive missile while hunting was sufficient to sustain a conviction.

A wide variety of social and economic problems has impelled the adoption of numerous “strict liability” penal statutes by both Congress and State Legislatures. Violations thereof result in penal sanctions regardless of moral culpability. State v. Chiarello, 69 N. J. Super. 479 (App. Div. 1961), cert. denied 36 N. J. 301 (1962), State, Borough of East Paterson, Board of Health v. Elmwood Terrace, Inc., 85 N. J. Super. 240, 247 (App. Div. 1964). State v. Elmwood involved a municipal ordinance which required the maintenance of heat at a certain temperature in rented apartments.

It is axiomatic that Legislature can designate mere doing of act as crime, even in absence of mens rea which was a necessary prerequisite at common law. Morss v. Forbes, 24 N. J. 341 (1957), State v. Segal, 78 N. J. Super. 273 (App. Div. 1963). State v. Segal involved a violation of the adoption statutes. In State v. Labato, 7 N. J. 137, 150 (1951) in a case involving possession of lottery slips the Supreme Court said “the criminal mind is not essential where the Legislature has so willed”.

In Department of Labor and Industry v. Rosen, 44 N. J. Super. 42 (App. Div. 1957), it was held that where the Legislature makes the commission or omission of an act penal regardless of intent, only the doing of prescribed act need be shown. This case involved a violation of the act requiring payment of wages in full every two weeks.

In State v. Carlston, 40 N. J. Super. 559 (Bergen County Court, 1956), it was stated “an offense which is malum prohibitum does not require knowledge or intent unless the Legislature clearly so provides”.

In State v. Wenof, 102 N. J. Super. 370 (Camden County Court, 1968) Judge Heine held that a violation of N. J. S. 39:3-40 (driving when license revoked) could be sustained without proof of guilty knowledge. He stated “it is not the province of this court to read into a statute that which the Legislature did not intend. * * * Since the crime is statutory the Legislature is free to require or omit guilty knowledge as an element thereof”. See State v. De Meo, 20 N. J. 1 (1955).

The statute involved in the matter sub judice is and I find it to be malum prohibitum. Proof of guilty knowledge or mens rea is not a prerequisite to a finding of guilt. The decision of the judge of the Municipal Court of Deptford Township is reversed and I, find the defendant guilty.

I impose the minimum fine permitted by the act — $500. No costs.


author: Labrecque, J. A. D.

text:
    CHARLES WALLACH, PLAINTIFF-APPELLANT, v. LLOYD E. WILLIAMS, DEFENDANT, AND ANTHONY GENANTONE, TIDEWATER OIL CO., INC. AND TIDEWATER REALTY CO., INC., DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Decided June 28, 1967.

      Before Judges Lewis, Labrecque and Kilkenny.

      Mr. John Tomasin argued the cause for appellant.

      Mr. Sidney Dincin argued the cause for respondents Tidewater Oil Co., Inc. and Tidewater Realty Co., Inc. {Mr. James I. Toscano, attorney).

      Mr. Cornelius W. Caruso appeared on behalf of respondent Anthony Genantone {Caruso & Caruso, attorneys; Jlír. C. William Caruso, on the brief).
   The opinion of the court was delivered by

Labrecque, J. A. D.

Plaintiff sued for personal injuries sustained while a business invitee at a Flying “A” service station located on lands of defendant Tidewater Realty Co., Inc., (Realty) which was leased to defendant Tidewater Oil Co., Inc., (Tidewater), and sublet to defendant Anthony Genantone. On June 15, 1962 while plaintiff’s vehicle was being fueled at one of Genantone’s gasoline pumps, plaintiff walked to the rear of his car to place something in the trunk. As he was standing there defendant Lloyd E. Williams pulled up and stopped his car at a point about ten feet away. Williams got out of the car leaving two passengers, neither of whom was familiar with the operation of his car, in the front seat. Williams did not shut his motor off although he testified he left the automatic drive lever in “neutral” and applied the holding brake. Suddenly, while Wallach was still standing at the rear of his ear, the Williams ear moved forward, pinning him against the rear of his own ear and crushing his leg so badly that amputation became necessary.

At the trial of the case, at the conclusion of all the proofs, the trial judge granted the motions of defendants Tidewater and Realty for judgment in their favor. R. R. 4:51-1. A similar motion for judgment by Genantone was reserved by the trial judge. R. R. 4:51-2(a). Eollowing the rendition of a verdict in the sum of $175,000 against both Williams and Genantone, Genantone’s motion was granted.

Plaintiff’s original appeal was from the judgments in favor of Genantone, Realty and Tidewater. Williams did not appeal. At the oral argument we were advised that there had been a settlement as to Genantone so that the remaining issues with which we are concerned pertain only to the liability of Tidewater and Realty.

We hold that the entry of judgment in favor of Realty was proper. Realty had no connection with and was exercising no control over the operation of the service station. Its sole interest was as the owner and lessor thereof to Tidewater for a 20-year period beginning December 1, 1959. Conceding, arguendo, that it was a wholly owned subsidiary of Tidewater, the use of such corporate entities for the purpose of holding title to property is not per se fraudulent. Macfadden v. Macfadden, 46 N. J. Super. 242, 249 (Ch. Div. 1957), affirmed 49 N. J. Super. 356 (App. Div. 1958), certif. denied 27 N. J. 155 (1958). The record before us reveals no proof which would support an inference that title was held in Realty for any illegal or fraudulent purpose.

Plaintiff urges that the nature of the relation between Tidewater and Genantone, the operator of the service station, was such that it continued responsible with him for the operation of the station and thus became jointly liable for any injury resulting from negligence in the operation thereof or from nuisances permitted to exist on the premises.

We disagree and hold that, in the context of the facts presented, the judgment in favor of defendant Tidewater was proper. In Brittain v. Atlantic Refining Co., 126 N. J. L. 528 (E. & A. 1941), defendant Atlantic Refining Co. leased certain premises owned by it to one Ramer for use as an automobile service station. Under the lease Ramer agreed to repair damaged equipment and assumed responsibility for “full and exclusive control of premises and equipment thereon.” By a separate agreement he agreed to act as a dealer for the landlord and to purchase from it stipulated amounts of gasoline and lubricants. Brittain later sued the landlord for personal injuries sustained by him when his automobile rolled off the station “lift” while being serviced, pinning him against the wall. His theory as to the company’s liability was that it had failed to perform its duty of exercising reasonable care to make the premises and appliances (the lift) reasonably safe or, alternatively, that it had delivered the premises and appliances to the tenant in such a defective and dangerous condition as to bring about a nuisance for which it continued liable.

In rejecting this contention the court held that the lessor was under no liability for the injuries sustained by plaintiff, notwithstanding that the tenant had been required to sell a minimum amount of the lessor’s products and that the lessor routinely had sent its agents to inspect the premises. It noted that such arrangements “seem to be quite a logical means whereby the company could increase its sales, and there nowhere appears any interference with the tenant’s exclusive responsibility for operation of the premises themselves, as provided in the lease.” As to the existence of the alleged nuisance the court held that the lessor was not a guarantor of the tenant’s non-negligent use of the premises and that the only basis of liability would have been one which arose from a faulty construction which resulted in a situation inherently dangerous to others, and that this had not been established by the facts.

We hold the rationale of Brittain to be equally applicable to the facts sub judice. Tidewater’s lease to Genantone provided that:

“5. Lessee may conduct Lessee’s business on said premises as Lessee sees fit, and none of the provisions of this lease shall be construed as reserving to Lessor any right to exercise any control or management over the business or operations of Lessee. * * *”

Por violation of any of the terms and conditions of the lease, or upon the happening of certain other contingencies set forth therein, Tidewater was given the option to terminate the lease. The lease obligated Genantone to indemnify and save the lessor harmless from liability for personal injuries, comply with all applicable laws and regulations, make necessary repairs and replacements and permit Tidewater to make inspections of the leased premises. By a separate contract Genantone became obligated to purchase and dispense Tidewater’s products to his customers.

Considered in the light most favorable to plaintiff the arrangement between Tidewater and Genantone imposed no duty on the part of Tidewater to Genantone’s business invitees to guard against the condition which caused plaintiff’s injury. Brittain v. Atlantic Refining Co., supra; Marx v. Standard Oil Co. of New Jersey, 6 N. J. Super. 39 (App. Div. 1949); Annotation, “Liability of owner or operator of garage or gasoline filling station for bodily injury to nonemplovees on premises,” 8 A. L. R. 3d 6, 80 (1966). Here,- as in Brittain, the inspection of the premises and the distribution of printed matter to .Genantone and other dealers were the means “whereby the company could increase its sales,” and were not in derogation of Genantone’s exclusive responsibility for operation of dhe premises. The printed suggestions for service station operation contained in the company’s magazine or in other brochures, which counselled such things as the rendition of good service to customers, the wearing of “a clean white uniform” by service station attendants and the exercise of courtesy and politeness by them at all times, all came within this category. So did also the printed brochures giving suggested instructions as to the proper method of rendering certain services such as lubrication, changing tires and towing automobiles.

Plaintiff urges that the jury could have found from the proofs that Genantone had habitually failed to require that motors be shut off before customers were served with fuel and that this amounted to the maintenance of a nuisance on the premises for which Tidewater, as lessor, was equally responsible. Assuming, but not deciding, that - the proofs would support such a finding, no liability would attach to Tidewater by reason thereof. Brittain, supra, at p. 534. Plaintiff’s injuries did not result from a condition which existed at the service station. Tidewater was not a guarantor of the non-negligent use of the leased premises by Genantone. Fletcher v. Greater Newark Bldg. & Loan Ass’n., 123 N. J. L. 59 (Sup. Ct. 1939). Assuming that a condition on the premises had brought about plaintiff’s injury, it was not a condition which was inherently or continuously capable of such harm as was “not to be avoided by the tenant’s exercise of reasonable care.” Wasilewski v. McGuire Art Shop, 117 N. J. L. 264 (Sup. Ct. 1936).

In view of the foregoing we find it unnecessary to pass upon the remaining reasons urged for reversal.

Affirmed.'


author: Conford, S. J. A. D. Foley, J. A. D.

text:
    ARTHUR A. WEST, JR., AND PATRICIA C. WEST, PLAINTIFFS, v. WILLIAM R. MACDONALD, INDIVIDUALLY AND t/a MACDONALD’S SUPPLY CO., DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT, v. GLENS FALLS INSURANCE COMPANY AND STEVEN W. BARRETT, THIRD-PARTY DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued May 15, 1967
    Decided June 5, 1967.

      Before Judges Coneord, Poley and Leonard.

      Mr. Charles M. Egan, Jr. argued the cause for third-party plaintiff-appellant (Messrs. Egan, O’Donnell, Hanley & Clifford, attorneys).
    - Mr. Mark D. Lamer argued the cause for third-party defendant-respondent Glens Palls Insurance Company (Messrs. Budd, Lamer, Kent & Cross, attorneys).

      Mr. Marvin A. Sachs argued the cause for third-party defendant-respondent Steven W. Barrett (Messrs. Feuerstein & Sachs, attorneys).
   The opinion of the court was delivered by

Conford, S. J. A. D.

The plaintiffs West sued MacDonald for negligence in the servicing of their swimming pool resulting in its substantial damage. MacDonald filed a third-party' complaint (1) against Glens Palls Insurance Company (“Glens Palls,” hereinafter) for indemnification of Ills liability to the Wests and .for reimbursement of the costs of the defense against the Wests’ action, pursuant to an insurance policy held by MacDonald for manufacturers’ and contractors’ liability; and (2) against Steven W. Barrett, an insurance agent, for negligence in the writing of the Glens Falls policy resulting in disclaimer of liability on the policy and of the obligation of defense against the Wests’ claim by Glens Falls.

The pretrial order having intended to provide that the claims of MacDonald against Glens Falls and Barrett should be tried “and disposed of” in advance of the Wests’ action against MacDonald, this course was followed with these results. The trial judge found as a matter of law that there was no coverage under the policy for “completed operations” and also that the damage here involved occurred after MacDonald’s work for the Vrests was completed. He consequently held as a matter of law that Glens Falls was under no obligation to MacDonald, either for indemnification or defense, and the first count of the third-party complaint was struck. The issue of Barrett’s liability for negligence was submitted to the jury and Barrett was awarded a no cause for action, the jurjr specifically announcing it found “Steven Wr. Barrett not negligent.”

MacDonald on this appeal challenges the trial court’s rulings and the judgment entered on the jury verdict.

I

We consider first the decision of the trial judge that the policy unambiguously excludes coverage for “completed operations.” A brief summary of the facts developed at the trial is necessary.

Beginning in 1961 MacDonald agreed to service the West swimming pool on a regular basis. There was to be a spring service to open the pool and a fall service to close it. The spring service entailed removal of water, cleaning, repainting if necessary, servicing motors and bearings, installing diving boards, ladders, etc., and placing algacide and chlorine in the water — generally getting the pool in usable condition for the summer.

In early April 1964, since the Wests were going on vacation and wanted the pool water lowered for the safety of their children, MacDonald sent two men to the premises who decided that the pool was “in pretty bad shape” so that they might as well empty the pool and clean it, in accordance with regular spring practice. They did so, and then started running the water into the pool. As it would take about two days to get an adequate amount of water into the pool, the men left and the Wests were to turn- the water off when the deep end of the pool was filled. The remainder of the spring servicing procedure was to await the return of the Wests. This would include, in addition to the other items mentioned above, the repair of a small crack.

About May 1, 1964 West informed MacDonald that in his absence the pool had risen out of the ground. Inspection disclosed a rise of about a foot and a cracking of the pool deck and patio. The complaint filed by the Wests charges the damage was caused by insufficient refilling of the pool in accordance with MacDonald’s instructions and a resulting “sub-pool Hydrostatic pressure.”

MacDonald’s call upon Glens Falls to defend the Wests’ suit was rejected on the ground that this was a “completed operation” hazard not covered by the policy issued to MacDonald.

Under “Insuring Agreements,” the policy in question deals first with coverages. Hazards in respect of which the company undertakes to reimburse for liability of the insured for bodily injury and property damage are divided into four divisions: 1 —• Premises-Operations; 2 — Elevators; 3 — Independent Contractors; and 4 — Products-Completed Operations. The hazard, “Premises-Operations” is defined as “The ownership, maintenance of premises, and all operations.” The material portion of the definition of “Completed Operations” is as follows:

“(2) operations, including any act or omission in connection with operations performed by or on behalf of the named insured on the premises or elsewhere and whether or not goods or products are involved in such operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; * * *” (emphasis added)

There is also an “Interpretive Endorsement” on the policy which states:

“It is understood and agreed that the word ‘operations’ as used in the Products-Completed Operations Hazard includes any act or omission in connection with operations performed by or on behalf of the named insured on the premises or elsewhere, whether or not goods or products are involved in such operations.”

Item 3 of “Declarations” of the policy reads:

“Item 3. The insurance afforded is only with respect to such and so many of the following coverages and divisions thereunder as are indicated by specific premium charge or charges. The limit of the company’s liability against each such coverage and division shall be as stated herein, subject to all the terms of this policy having reference thereto.”

Directly below the foregoing legend is a series of vertical columns designed to list premiums and premium rates corresponding with the four different hazards of the policy form, all of which hazards are blocked off vertically in the last column. In the actual policy here issued premiums and premium rates are shown only in the boxes opposite the hazard, “Division 1. Premises-Operations,” set forth in the last colnmn, and further particularized as “Lackawanna Place, Morristown, Morris Co., N. J. No. 169 (17) Warehonses-Private-Mercantile Building * * *” (where MacDonald’s headquarters are located). Prima facie, accordingly, the only one .of the four divisions of hazards included for coverage within the specifying limitation of Item 3, quoted above, is “Division 1. Premises-Operations,” and not “Division 4. Products-Completed Operations,” Cf. Ohio Cas. Ins. Co. v. Flanagin, 44 N. J. 504, 518 (1965).

It is implicit in the decision of the trial court, and not disputed by MacDonald, that his conceded coverage under Division 1 is subject to exclusion for any operations falling within Division 4 if the policy coverage is properly held not to extend to the latter.

MacDonald seeks to avert the limiting effect of Item 3 by showing an alleged ambiguity in the schedule of amounts of coverage under Item 3 in that the coverage B column (Property Damage Liability) reads:

“$5,000
$25,000 (applies to Divs. 1, 3 & 4)”2

However, reading the foregoing in the context of the whole policy, there is no ambiguity as to whether the policy covers hazard Division 4. The corresponding listing of limits for Coverage A Bodily Injury Liability reads:

“$100,000
$300;000
(applies to Div. 4 only) ”

It -is clear to us that the printed excerpts in parentheses merely indicate what hazards in the policy form are covered by the named categories of coverage, i. e. bodily injury or property damage. It is commonplace for policy forms to have blanket printed provisions the applicability of which to. the • specific individual insurance is dependent on other appropriate indications in the policy. Therefore, nothing in. the .foregoing creates such ah ambiguity as reasonably warrants a. determination that this policjr should be held to cover completed operations on the principle or resolving ambiguities in favor of the insured.

MacDonald also argues that since this policy carries the “Interpretive Endorsement” mentioned above as to “Produets-Completed Operations Hazard” it evidences an intention for the policy to include that hazard (apart from the content of the definition). Since, however, the scope of Hazard Division 4 will operate, as noted above, to define in effect an exclusion from Division 1, the interpretive endorsement is appropriate and does not necessarily imply that the policy covers Division 4. Moreover, there are several other endorsements, all, including that already mentioned, apparently printed together, and some having no relationship to a “Manufacturers and Contractors’ Liability Policy.” In other words, some of these other endorsements are pure surplusage in relation to the basic character of the particular policy involved. The printing of this endorsement as an addendum to the policy creates no ambiguity helpful to MacDonald.

MacDonald relies upon Portella v. Sonnenberg, 74 N. J. Super. 354 (App. Div. 1962). It is not here apposite. That was primarily a determination that a ease for reformation of an insurance policy was made out on the basis of the circumstances surrounding the issuance of the policy coupled with some misleading features of the policy language.

In the instant ease, one in which the language of the policy itself cannot reasonably be read to include coverage for liability in relation to completed operations, the third-party plaintiff cannot take any comfort in this regard from the proofs concerning the circumstances attending the issuance of the policy, in view of the verdict of the jury on the issue of Barrett’s alleged negligence. The nub of the dispute between MacDonald and Barrett was the factual issue whether completed operations had been discussed between them when the policy was written. MacDonald testified that the subject was never mentioned — that all he had specifically refused as products liability insurance (note that products liability and completed operations are combined as a unit comprising Division 4 of Hazards under the policy). Otherwise, he wanted to be fully covered. Barrett, on the other hand, testified that he discussed both products liability and completed operations coverage with MacDonald on at least three different occasions and the latter refused it because the additional premium would have been between $300 and $500, more than he could afford. It is fairly evident that in returning its verdict, absolving Barrett of negligence in writing the insurance the jury was accepting Barrett’s and rejecting MacDonald’s version of the transaction.

- We conclude that neither the language of the policy nor the surrounding circumstances warrant a determination that MacDonald should be deemed to have been covered for completed operations liability by- the Glens Falls Company, giving complete recognition to the principle-that the insured will be protected to the full .extent, that any fair interpreta^ tion of the policy will allow. Danek v. Hommer, 28 N. J. Super. 68, 76 (App. Div. 1953), aff’d. 15 N. J. 573 (1954).

II

We turn next to the trial court’s decision that the facts here dictated a conclusion as a matter of law that MacDonald’s operation at the West premises was completed within the meaning of the.policy, so as to exclude liability on the facts of the case and relieve Glens Falls of the duty to defend. MacDonald argues that the issue of completion should have been submitted to the jury.

It should be noted, preliminarily, that both sides tried the case below and argued the appeal on the implicit assumption, originally determined at the pretrial conference, that the issues both of coverage and Glens Falls’ duty to defend the Wests’ claim should be tried out to a finality prior to trial of the negligence action. But compare Ohio Cas. Ins. Co. v. Flanagin, supra.

We think MacDonald is correct in his assertion that the question whether the operations were “completed” when the damage occurred constituted an issue of fact for the jury rather than one of law. See Van Der Veen v. Bankers Indemnity Ins. Co., 30 N. J. Super. 211, 216-217 (App. Div. 1954), where an assumption to that effect was indulged in a comparable situation.

It is true that there was no dispute of fact as to the operative circumstances related by MacDonald concerning the arrangements for the doing of the work with West and as to what was done and what remained to be done. But disputable conclusory inferences sometimes fall into the category of disputed fact for purposes of allocation to the jury rather than the judge (e. g. negligence), and we are clear that this is so in relation to an issue of completion of a contracted operation. See, generally, Thayer, “ ‘Law and Pact’ in Jury Trials,” 4 Harv. L. Rev. 147, 151-152; cf. Bass v. Allstate Ins. Co., 77 N. J. Super. 491, 495 (App. Div. 1962). We think reasonable men could differ here as to whether this job was completed or not, even in the light of the policy proviso that “operations shall not be deemed incomplete because * * * further operations may be required pursuant to an agreement.” That language is somewhat ambiguous. Almost every ongoing contract operation may be said to involve a situation where further “operations” are required by the agreement. An overliteral reading of the clause could render it destructive of the coverage as to some indisputably incomplete operations. It seems to us that the clause means only that the mere fact that further operations may be required does not necessarily stamp the operation as a whole as incomplete. It does not mean that the requirement of further operations can never be indicative of the incompleteness of the operation as a whole for purposes of coverage under Division 4.

Glens Ealls argues that the issue here is simply one as to whether the facts related by MacDonald fall within the judge’s construction of the completed operations clause. We do not agree. The judge was not resolving competing theories as to the meaning of the clause. He was deciding that a particular set of circumstances constituted “completion” of a contract performance. However, as we see it, that conclusion is a factual one as to which there could be reasonable dispute, and therefore it was for the jury.

Ill

Glens Palls argues it was properly excused from the obligation to defend the Wests5 claim since the coverage of the policy did not extend to the facts of the present claim. However, as held above, the question whether this policy covers MacDonald5s liability to West will be decided on the basis of the jury verdict at the retrial of the third-party claim. If Glens Palls prevails, it will he relieved of the defense of the Wests5 claim thereafter; otherwise not.

However, a distinction must be drawn between the defense expenditures and obligations incurred by MacDonald heretofore and to be incurred hereafter until the third-party claim for coverage is decided at the retrial, on the one hand, and such defense activities as will be necessary after determination of the third-party claim, on the other. As to the former, Glens Palls5 obligation must be determined on the basis of the rule that where the policy, as here, requires the insurer to defend even if the damage claim is groundless, false or fraudulent, “the damage complaint is laid alongside the policy and the test is whether the allegations of that complaint, upon its face, fall within the risk insured against.” Ohio Cas. Ins. Co. v. Flanagin, supra (44 N. J., at 512); Danek v. Hommer, supra (28 N. J. Super., at 77).

Moreover, if in the process of comparison of the complaint and the policy there should be any fair doubt of whether the latter covers the facts alleged in the complaint the doubt will be resolved in favor of the insured. (Danek v. Hommer, supra (at 77); Annot. 50 A. L. R. 2d 458, 504 et seq. (1956). We need not set forth the West complaint at length herein. It suffices to say that it states facts which at least potentially indicate that the accidental damage arose out oi an incomplete contract operation and thus within the scope of coverage of the policy as adjudicated above. The duty of defense or reimbursement therefor by the insurer consequently arose to the extent of any defense efforts, expenditures and obligations made or incurred by MacDonald in relation to the West claim or hereafter to be made until the question of coverage is determined at the retrial. It will be for MacDonald to establish the fact and amount of such expenditures at the retrial, and Glens Palls will be liable to MacDonald therefor. If MacDonald prevails at the retrial on the issue of coverage, Glens Palls will of course also have to assume the defense of the West claim thereafter.

It would, however, be inappropriate to hold that Glens Palls must continue to defend the West claim after final determination of the issue of coverage if that issue is decided in its favor. MacDonald joined without objection in the pretrial order directing that the third-party claim be determined as a finality prior to trial of the West action. He has never disputed, and it is implicit in his whole course of conduct in the litigation thus far that he has recognized that the question of coverage, including subordinate issues of fact as well as of law, will be finally adjudicated in the third-party litigation. It would contravene good sense and justice to impose on the insurer a continuance of the burden of defense of the West claim once the issue of coverage is definitively settled in its favor.

IV

MacDonald seeks to upset the exculpation of Barrett for negligence on several grounds.

He objects to the court’s charge to the jury with relation to his failure to read his policy as evidence of his own negligence. However, in objecting to this portion of the charge at the trial MacDonald failed to apprise the court distinctly of the nature of his objection, as is required. Moreover, the verdict of the jury was based, as noted above, upon an express finding that Barrett was not negligent rather than that MacDonald was contributorily negligent. There is no prejudice.

Claim is made of error in the charge in relation to the standard of care owing by a broker. No exception was taken thereto at the trial. In any case, we find no error, considering the charge in entirety.

Finally, objection is raised to the admission of testimony by Barrett as to a conversation with MacDonald after suit was instituted wherein the latter said -he would stop the suit. But this was offered as part of a discussion wherein MacDonald- assertedly admitted he had discussed completed operations liability with Barrett and refused it. It was therefore relevant and competent as an-admission.

Judgment affirmed as- to Barrett; reversed as to Glens Falls and remanded for' trial on the issues of whether -the West contract operation was completed, and the amount of liability to MacDonald for defense of' the West claim.'. Thereupon final judgment on the third-party claim will be entered in conformity with this opinion-

Foley, J. A. D.

(dissenting in part). The majority holds that the- question of whether' or not the work done by MacDonald was a completed operation was for jury determination, hence the trial court was in error-.-' I think otherwise.

. The facts were not-in'dispute. MacDonald was'engaged by West for a specific purpose,- namely, to lower-the-water level of West’s swimming pool. He did this by running the water from the pool in order to clean it, and that having been done, by arranging to refill the pool to the level desired by'its owner. His employees then lef-t West’s premises taking with them their equipment. The job was-finished.

True, it may have been within the contemplation of the parties that MacDonald would return at-a-later time,- upon West’s request, to ready the swimming pool for summer use involving additional work, e. g., painting the pool ■ at the owner’s option. But any such work would be unrelated ■ to, distinctly different from, and readily severable from, the job of lowering the level of the pool, which was the “operation” for which the parties contracted. To say that the gap of time between the latter job and the time (if indeed it ever arrived) when West would order additional work, i. e., spring servicing, MacDonald’s work in lowering the level of the pool was an “incomplete operation,” to my mind is unrealistic and far beyond the reasonable expectations of either party.

Therefore, considering the definition of completed operations as it appears in the policy, particularly that “operations shall not be deemed incomplete * * * because further operations may be required pursuant to an agreement,” I see no room for holding that prospects of future operations render the one in question an incomplete operation. Concededly, construction of the insurance contract was for the trial judge and on the facts of this case I am convinced that the judge properly concluded that the work involved constituted a completed operation within the terms of the policy, and that to have submitted that question to the jury would have been error.

I would affirm.

       By inadvertence the text of the order i.s to the opposite effect.

       The dollar figures are typed in-; the remainder is printed.


author: Per Curiam.

text:
    JEANNE D. NEBEL, DEFENDANT-RESPONDENT, v. ARTHUR J. NEBEL, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Decided October 14, 1968.
    Before Judges Goldmann, Kolovsky and Carton.

      Mr. Colin M. Dillon argued the cause for appellant (Messrs. Pollis, Williams, Pappas & Dillon, attorneys).

      Mr. Harold G. Pierson argued the cause for respondent.
   Per Curiam.

The Chancery Division order under appeal is affirmed essentially for the reasons stated by Judge Wood, 99 N. J. Super. 256. The record provides substantial support for his findings and conclusions.


text:
    PAUL CUPROWSKI, MARY E. VERDIRANO, JAMES J. MACK, FRANK S. MONACO, AND JEROME LAZARUS, PLAINTIFFS-APPELLANTS, v. CITY OF JERSEY CITY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, AND WILLIAM P. BLACK, CITY CLERK OF THE CITY OF JERSEY CITY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued October 8, 1968
    Decided October 16, 1968.
    Before Judges Gaulkix, Collestek and Labkecque.

      Mr. Gerold Kanengiser argued the cause for appellants (Messrs. Gordon and Kanengiser, attorneys).

      Mr. James F. Ryan argued the cause for respondents (Mr. Francis X. Hayes, of counsel).
   Per Curiam.

The judgment dismissing plaintiffs’ proceeding in lieu of prerogative writs, which sought a referendum to reject the 1968 budget adopted by the City of Jersey City, is affirmed essentially for the reasons expressed by Judge Artaserse in his opinion reported at 101 N. J. Super. 15 (Law Div. 1968).


author: Hartman, J. C. C.

text:
    X, PLAINTIFF, v. Y, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided October 8, 1968.

      Mr. Abraham H. Carchman, for plaintiff (Messrs. Carchman, 8ochor & Garchman, attorneys).

      Mr. Harold J. Brown, for defendant (Messrs. Joyce and Brown, attorneys).
   Hartman, J. C. C.

(temporarily assigned). In 1956 defendant (Y) deserted plaintiff wife (X). In 1961 she gave birth to an illegitimate child. She now seeks an absolute divorce based on the husband’s desertion, a cause of action which had accrued to her in 1958. The question to be determined is whether the trial court should, sua sponte, apply the doctrine of recrimination as a bar to her action and dismiss her complaint. T have decided that the factual circumstances present here require the exercise of judicial discretion -to disregard her adultery and to grant the divorce.

The testimony -in this ease establishes the following facts: The parties were married in Montclair; N. J.,- on February 7, 1948. Plaintiff was then, and has continued -to be, a bona fide resident of this state. Four- children were born of that marriage: A, 19- and now married; B, 18; C,' 15, and D, 13; except for A, they have been in her continuous custody since the date of her marriage. The wife was deserted by her husband on September 1, 1956, and this desertion was a willful, continued and obstinate one. Shortly -after the desertion she filed a complaint in the Juvenile and Domestic Relations Court of Essex County seeking support which was granted to her. The record of that court’s proceedings reflects numerous defaults, contempt motions and continuing arrearages. On -September 1, 1958 there accrued to- plaintiff a cause of action for divorce which she did not pursue. Her explanation satisfies me that she was ignorant of divorce proceedings, was working hard to support her family, had no one to advise her, and gave no thought to it. She has had only' a grammar school education.

■ Defendant’s desertion of his wife and family was complete. From the day he left them he made no attempt to see or communicate with his children. Anniversaries, birthdays, holidays, and Father’s days have come and passed without a single token of his concern or his very existence. Yet, he remained until recently an employee in. the sanitation department of an Essex County Borough. A, the oldest child, was seven when her father left; she barely remembers him. The younger three children have no recollection of him at all.

Sometime in 1960 plaintiff became acquainted with a man (Z). Z in 1956, while a member of the armed forces; met and married a girl in South Carolina. Three months later she deserted him. There were no children of that union. In.any event, at the time he became acquainted with plaintiff he found her home to be barely and inadequately furnished. Z, although an unlettered man, has always been steadily employed. The lack of furniture in the X/Y home was soon remedied by him. The children no longer sat on orange crates. He furnished their home; the children took to.him; he encouraged them to do their school homework; he brought the “family” into his church where he is a trustee and the treasurer; plaintiff became a singer in the choir, and the family became regular attendants in his church. In 1961 plaintiff bore a child by Z. This child has been raised with the X/Y children.

. The oldest child, A, corroborated Z’s role as a father to this family and to the excellent relationship between the children and Z. He bought their food and clothing, pushed them “hard” to study, disciplined them as they were growing up, and saw to it that they attended church services. The pastor of their church was shocked on learning during these proceedings that the X/Z relationship was not that of a legal marriage. He had always thought of them as married, of fine character, with high moral standards; regular church goers and active in its affairs.

I now come to a rather unusual aspect of the factual complex of this case. During a routine visit of the X/Y home, apparently connected with Y’s support order in the Juvenile and Domestic Relations court, a probation officer learned of the existence of the fifth child in that household. As a result of this officer’s expressed views Z left the home. Raced with the need to find quarters for himself, and at the same time to continue Ms support of the X/Y family, he decided to buy a piece of property. Legal advice pointed out the risk of taking title in his own name since it would create a possible dower interest in the wife he still had in South Carolina. if he took title in X’s name there was a similar risk in creating a possible curtesy interest in Y. He sought out Y, told him he wanted to take title in X and asked him to release any curtesy interest in that property in view of the fact that he, Z, carried the major support burden for Y’s children. Y agreed, and Z then purchased a three-family home in Newark. He set up quarters for himself and X’s elderly mother in the first-floor apartment; X and the five children moved into the apartment on the second floor, and the third-floor apartment was rented out. The property is still tenanted in this fashion and Z is paying better than $113 a month towards the mortgage and real estate taxes. The title stands in the name of X, and Y’s release of his curtesy interest is duly recorded.

Z, hoping to be free of his deserting spouse so that he could marry X, filed a complaint for divorce against his wife on the ground of desertion (Docket M-6398-66). On the same date, May 10, 1961, X filed her action for divorce against her husband. In the Z case service was effected on his wife in South Carolina. Failing to answer or otherwise appear, a default was entered against her. Between the first and the continued trial date in his ease, Mrs. Z passed away. Her death was proved and duly noted on the record. The action having thus abated, Z’s complaint was dismissed. He is now free to marry.

In the X/Y case the defendant husband was served personally in this State. He filed an answer denying the desertion. Curiously, the answer contained no separate defense of recrimination despite the fact that he knew of, or had reason to inquire about, X’s relationship to Z. Incidentally, a case worker for the Essex County Welfare Board induced a woman, T, to file a complaint in the Juvenile and Domestic Relations Court (Docket M-4529), on May 31, 1966, charging Y as the father of her seven-year-old illegitimate child, with nonsupport. Defendant had been adjudicated as that child’s father in the Newark Municipal Court on October 10, 1962. On November 23, 1966 defendant was ordered to pay support. A bench warrant issued for his arrest, but he was not apprehended.

Thereafter, Yjs attorney applied to be relieved for the reasons that all efforts to have Iris client cooperate in preparing his defense had failed; defendant had retired from his job and had left New Jersey and gone west. An order was entered- relieving defendant’s attorney, and the X case was scheduled for trial as an uncontested case on the same day that'the Z case was scheduled for a hearing.

X and Z desire the opportunity to be free to legally marry. Such a marriage would legitimatize their child. Z also -wants to-adopt the three' remaining unemancipated X/Y children. They have discussed the matter with the- children, who have indicated they would welcome -such adoption, •

All -the-foregoing facts were brought out :at. trial by the respective plaintiffs in a frank- and open manner. Their attorney withheld nothing in the atmosphere of final hearing.; this in itself was unusual and refreshing.'

In -England, prior to the Reformation^ the dissolution -of marriage was pronounced- by the ecclesiastical' courts which applied the canon law of the Roman Catholic Church. The Church’s doctrine of the indissolubility of marriage, although it did not prevent them from annulling a marriage, did prevent them from granting an absolute divorce. The only divorce available to a spouse in the ecclesiastical courts was a divorce a mensa et thoro, the type variably referred to as a judicial separation, a limited divorce, or a divorce from bed and board; remarriage was not permitted.

By the Matrimonial Causes Act of 1857, the jurisdiction in dissolution cases was transferred from the ecclesiastical courts to the new Divorce Court set up by that act and, since the Judicature Acts of 1873 and 1875, it has been vested in the High Court, assigned to the Probate, Divorce and Admiralty Division. Bromley, Family Law (2d ed. 1962), pp. 55-56.

In the ecclesiastical courts, the fact of a plaintiff’s adultery was an absolute bar to a bed and board divorce — this on the principle that plaintiff’s conduct disentitled that party from relief claimed on the basis of defendant’s matrimonial offense.

When we declared our independence from the mother country in 1776 we adopted as our law the common law of England. Constitution of 1776, par 22. At that time the courts in England wore not empowered to grant divorces; that jurisdiction was then vested in the ecclesiastical courts and only to the extent of granting bed and board, not absolute, divorces. Consequently, the doctrine of recrimination was never applicable to the forbidden absolute dissolution of marriage and was not part of the common law. The courts in England were not given authority to grant divorces until 1857 when jurisdiction was removed from the ecclesiastical courts. New Jersey’s first Divorce Act of December 2, 1794 (Pat. Laws 143), granting jurisdiction to the Court of Chancery, provided in section 5 that no divorce should be decreed if it appeared to the court that both parties were guilty of adultery. N. J. Practice (Herr-Lodge, Marriage, Divorce and Separation) (3d ed. 1963), §1331, n 10. Our present statute, N. J. S. 2A :34-7, provides that “[I]f it appear to the court * * * that both parties have been guilty of adultery not condoned, no divorce shall be adjudged.” No statute has ever been enacted in this State which would apply the principle of recrimination as an absolute bar to offsetting matrimonial offenses except adultery versus adultery. Although the doctrine came to us as part of the unwritten law, Duster v. Duster, 64 N. J. Super. 29, 34 (App. Div. 1960), ecclesiastical law has been followed in case where equitably acceptable in the absence of statute. In re Anonymous, 32 N. J. Super. 599 (Ch. 1954).

In Wells v. Wells, 73 N. J. Super. 545 (Ch. Div. 1962), an uncontested default divorce case, the trial judge raised, sua sponte, the issue of recrimination by reason of facts brought to light by plaintiff’s own testimony, and dismissed the complaint. This decision was affirmed on appeal in the Appellate Division by a 2 to 1 majority. 79 N. J. Super. 388 (1963). In his dissenting opinion in that court Judge Gaulkin pointed out that “[T]he doctrine of recrimination has been established by the courts, and not by the Legislature (except in the case of adultery as a bar to adultery N. J. S. 2A :34-7)”; the rule is not based on public policy, except as to the statutory bar, and neither public policy nor the precedents “make inescapable the automatic and mechanical enforcement of that doctrine, without regard to the equities arising out of the facts.”

Judge Gaulkin also pointed out that if the rationale of applying the defense of recrimination is the doctrine of unclean hands, this doctrine, although a matter of public policy, “is not automatic and mechanical, but allows room for equitable consideration arising out of time, place and circumstance,” citing Warrender v. Warrender, 79 N. J. Super. 114 (App. Div. 1963).

Wells was then appealed to our Supreme Court where it was reversed unanimously per curiam, 41 N. J. 594 (1964), the court being “generally in accord with the dissenting opinion of Judge Gaulkin.” The court held that

“Assuming that a court ordinarily has discretionary power to raise, sua sponte, a recriminatory bar to plaintiff’s cause of action for divorce, we agree that the judge should not have exercised that discretion under the factual complex here present.” (at p. 595)

I take it from the Wells decision that, until such time as the law may be otherwise declared, the trial judge may weigh the application of the doctrine of recrimination against equitable considerations flowing from the peculiar facts and circumstances of each case, and exercise judicial discretion to appfy the bar or not. Such decisions, however, are not readily attainable; we are not provided with precise guidelines or standards. What is judicial discretion? Bou vier’s Law Dictionary (Rawle’s Rev. 1914), describes it in various ways. Eor example:

“The power exercised by courts to determine questions to which no strict rule of law is applicable but which, from their nature, and the circumstances of the ease, are controlled by the personal judgment of the court.”

Again:

“The discretion of a judge is said by Lord Camden to be the law of the tyrants: it is always unknown, it is different in different men; it is casual, and depends upon constitution, temper and passion. In the best, it is oftentimes caprice; in the worst, it is every vice, folly, and passion to which human nature is liable. * * * But the prevailing opinion is that discretion must not be arbitrary, fanciful, and capricious; it must be legal and regular, governed by rule, not by humor; * * *.”

I have had at least 20 uncontested cases in the last two years where plaintiff’s own testimony disclosed adultery committed by plaintiff. In a good number of them these disclosures appeared from the records and files of prior actions between the parties in the Juvenile and Domestic Relations court. These were orthodox cases and clearly required dismissals of the complaints. Unfortunately, in practically all of them it is the poor people of our communities who are affected; the more affluent have the means to avail themselves of other and easier jurisdictions. There are no doubt countless cases where plaintiff’s misconduct is deliberately withheld from the courts, and still others involving collusion, perjury and deceit.

The present case was the first to reach my court to give me concern. The factual pattern, candidly and openly disclosed, seemed to call for a decision which would afford otherwise decent people to make a new life for themselves and to give legality to their apparent status in the community.

I have examined the law of England and find there definitive standards used by the judges in the exercise of judicial discretion which may well be applied by us with regard to the discretionary bar of recrimination.

This doctrine of recrimination was not carried over into the court system as an absolute bar in the law of England. By the Matrimonial Causes Act of 1857 recrimination was made a discretionary bar and continues so to be. Matrimonial Causes Act, 1965, c. 72, § 55(4) (b); 45 Halsbury’s Statutes of England, (2d ed.), p. 452 (1965).

“In 1943 the House of Lords set out five considerations which the court should have in mind when exercising its discretion. Those considerations are: — (1) the position and interests of any children of the marriage; (2) the interests of the parties with whom the petitioner has been guilty of misconduct, with special regard to the prospects of their future marriage; (3) the question whether on the withholding of a decree there is a prospect of a reconciliation between husband and wife: (4) the interest of the petitioner, and in particular, the interest that the petitioner should be able to remarry and lead a respectable life; and (5) the interests of the community at large, to be judged by maintaining a true balance between respect for the binding sanctity of marriage and the social considerations which make it contrary to public policy to insist on the maintenance of a union which has utterly broken down.” 12 Halsbury’s Laws of England (3d ed., 1955) § 623, pp. 311-312.

Testing these considerations against the established facts in this case I conclude, firstly, that the interests of the X/Y children will be best served by continuing Z in the role of their father. He is the only father they have known. He has helped to develop them and to shape their personalities. To deny a divorce to X, and so deny her an opportunity to marry Z, would result in depriving the X/Y children of their “father,” a loss bound to disrupt their lives and deeply upset them. Secondly, the proposed marriage between X and Z, if she is adjudged free to marry, will establish a legal home. Thirdly, the marriage between X and Y is concededly bankrupt and beyond any prospect of reconciliation. Fourthly, a new marriage will establish respectability in a community where they are already assumed to be respectable. Fifthly, society can only benefit by a legal relationship between these people and their children. Added to these considerations is the importance of making legitimate the Z-X child by affording them the opportunity to engage in a ceremonial marriage. Lastly, the adoption of the X/Y children by Z would make possible one family at last and an opportunity to develop decent and law-abiding citizens.

Equitable considerations dictate that the court exercise its judicial discretion by not applying the doctrine of recrimination under the factual pattern of this case. I will grant a divorce to plaintiff for the cause of desertion as charged in her complaint.


author: Lora, J. S. C.

text:
    JOHN MAYO, PLAINTIFF, v. CITY NATIONAL BANK AND TRUST COMPANY, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided October 17, 1968.

      Messrs. Losche and Losche, attorneys for plaintiff (Mr. Kent A. Losche, appearing).

      Messrs. Raff, Sherman and Scheider, attorneys for defendant (Mr. David R. Rudd, appearing).
   Lora, J. S. C.

This is an action to recover from defendant City National Bank and Trust Company the sum of $5,000 assigned by Eairleigh Arms, Inc. to plaintiff John Mayo, which assignment the defendant did not honor.

The facts in this matter are largely undisputed. Defendant was the mortgagee of a construction loan mortgage in the principal amount of $750,000. The Eairleigh Arms, Inc. mortgage was dated May 11, 1966 and was duly recorded on May 13, 1966. It is stipulated and agreed that the sum of $607,500 had been advanced as of August 22, 1966, on which date Eairleigh Arms, Inc. assigned to plaintiff the sum of $5,000 out of the future fifth mortgage advance. This assignment, consideration for which was $5,000 actually advanced for payroll use, was duly executed but unrecorded.

By instrument dated September 7, 1966 and duly recorded on September 8, 1966, Eairleigh Arms, Inc. gave to Cooper-Horowitz, Inc., a New York corporation, a mortgage in the principal amount of $50,000, which mortgage encumbered the same premises as defendant’s mortgage. Defendant had actual notice of the Cooper-Horowitz mortgage by virtue of a letter, dated September 9, 1966, sent by the latter’s attorneys to defendant.

Similarly, by letter dated September 21, 1966 Dominick Fondo, Esq., forwarded to defendant the original of plaintiff’s assignment. Although defendant initially contended that it did not receive notice at this time, Fondo testified as to the date when the letter was sent and produced the return receipt indicating receipt of the letter by defendant. Additionally, it was stipulated at the trial that the Fondo letter was found in the bank’s files. Accordingly, the court finds that the defendant had actual notice of the Mayo assignment on September 22, 1966, and hence long before the disbursements were made in connection with the fifth advance which took place on November 14, 1966.

On September 16, 1966 there was duly recorded a mechanic’s notice of intention covering the subject premises, filed by P. Germinario and Sons, Inc., a plastering contractor. Neither Germinario nor Cooper-Horowitz had notice of the assignment to plaintiff.

The closing statement for the fifth advance and the testimony of William B. Shedd, Esq., who represented defendant at the closing, reveal the following disbursements:

(1) $10,000, was paid to the bank for two interim notes, dated August 19 and September 16, 1966, for advances to the mortgagor Fairleigh Arms, Inc. to meet payrolls;

(2) $10,058.74 was taken out by the bank for interest due on past advances;

(3) $45,000 was paid to P. Germinario and Sons, Inc.;

(4) $5,575 was paid to Cooper-Horowitz, Inc.;

(5) $400 was paid to the bank’s attorney for legal expenses ;

(6) $25 was paid by way of refund to Eairleigh Arms, Inc. on account of $58.74 which had been advanced by Eairleigh. No checks issued to Fairleigh Arms, Inc. and no payment was made to plaintiff. According to Shedd’s testimony, representatives of Germinario and Cooper-Horowitz were present and each insisted upon being paid in full. The court finds that at that time Germinario had done some $100,000 worth of work on the building. After prolonged discussions, however, Germinario and Cooper-Horowitz compromised the payments on account of their claims out of said fifth advance in accordance with the amounts stated above. Cooper-Horowitz executed on that date a postponement of its mortgage to the bank’s mortgage and Germinario subordinated its claim. No further payments have been made, Eairleigh having gotten into financial difficulties.

The generic issue before the court, then, is whether defendant bank is liable to the plaintiff for failing to honor plaintiff’s assignment. Specifically, the issue is whether the bank was justified in disbursing moneys in the manner in which it did.

Mayo contends that by virtue of his written assignment, which antedated all other instruments save the defendant’s mortgage, he was entitled to share in the disbursement of the fifth construction advance, and after such notice the bank made payments to Germinario and Cooper-Horowitz at its peril. Palmer v. Palmer, 91 A. 281, 112 Me. 149 (Me. Sup. Jud. Ct. 1914); Bank of Harlem v. City of Bayonne, 48 N. J. Eq. 246, 252 (Ch. 1891); Todd v. Meding, 56 N. J. Eq. 83 (Ch. 1897); Russell v. Fred G. Pohl Co., 7 N. J. 32, 40 (1951). Plaintiff’s position rests upon what appears to be the prevailing, although by no means unanimous, American rule, that as between successive assignments of the same right, the first in time, rather than the first to give notice, prevails. See 4 Corbin, Contracts, § 902. The court conceives, additionally that having received notice of this equitable assignment, the bank might be considered to have held the $5,000 in trust for plaintiff. See Structural Gypsum Corp. v. National, etc., Co., 107 N. J. Eq. 32, 40-41 (E. & A. 1930), and Wasmuth-Endicott Co. v. Washington Towers, Inc., 110 N. J. Eq. 1 (Ch. 1931).

Were this merely a suit between successive assignees, or as in Palmer, supra, one which involved only assignor’s creditor’s as against the assignee, plaintiff’s position might be perfectly valid, although the present status of New Jersey law in this regard appears, at least at first blush, to be unsettled. See Jenkinson v. New York Finance Co., 79 N. J. Eq. 247 (Ch. 1911); Moorestown Trust Co. v. Buzby, 109 N. J. Eq. 409 (Ch. 1931); In re Rosen, 66 F. Supp. 174 (D. C. N. J. 1946), affirmed 157 F. 2d 997 (3 Cir. 1946).

The difficulty, however, of the issue before the court and, correlatively, with plaintiff’s position, is that defendant bank, far from being a disinterested stakeholder, was itself a lien-holder and creditor of the assignor with a clear and justifiable interest in the preservation of its own priority. A just disposition of the present matter must therefore take into account the bank’s status as an advance money mortgagee, for it is obvious that the bank had a fundamental right to protect its own interest. Thus, the court’s initial inquiry must be whether the bank, in terms of its mortgagee status, was justified in disbursing the fifth advance in the manner previously described.

There is no dispute that the bank had the right to pay the legal expenses of its attorney, nor is there any dispute concerning the $10,058.74 interest payment. Similarly, it was conceded by plaintiff’s attorney at trial that the repayment by the bank to itself of $10,000 for the two interim notes was within the bank’s right of set-off, besides which the mortgage allowed the bank to make advances at any time. The items in dispute, then, are the $45,000 paid to Germinario and the $5,575 paid to Cooper-Horowitz.

Plaintiff contends that defendant had no need to make the payments either to Germinario or Cooper-Horowitz in order to preserve the priority of its mortgage, and points to N. J. S. 2A :44-88 which provides, in relevant part:

“The priority given by Section 2A:44-87 of this title shall exist when, at the time of the recording or registration of the mortgage:
$ * * * * * * *
b. There is upon the affected land no building nor any excavation, footing or foundation construction, evidencing an intention to erect a building thereon; * *

Thus, the argument runs, the priority of defendant’s mortgage was assured by this statutory provision. There is, however, nothing in the record to show that the statutory requisites above-described were met. Further, the statutory provision relied upon by plaintiff, assuming the requirements were met, would only have efficacy as between Germinario, the mechanic’s lien claimant, and defendant mortgagee; it would not resolve the priority issue as between defendant and Cooper-Horowitz. See e. g., First National State Bank of New Jersey v. Carlyle House, Inc., 102 N. J. Super. 300 (Ch. Div. 1968).

In regard to the Cooper-Horowitz mortgage, plaintiff contends that it was expressly subordinated to the entire $750,-000 mortgage held by defendant by virtue of the following clause:

“Subject to a certain mortgage from Fairleigh Arms, Inc. to The City National Bank & Trust Company of Hackensack dated May 11, 1966 recorded May 13, 1966 in Book 4413 of mortgages at page 249 in the amount of $750,000.00 of which $607,500.00 has been advanced.”

As is apparent, this provision is not a model of clarity, nor are the doubts raised therein resolved by the following clause also contained in the Cooper-Horowitz mortgage:

“It is a condition of this mortgage that the mortgagor, its successors and assigns pay to the mortgagee, its successor and assigns, the future advances made by The City National Bank & Trust Company of Hackensack pursuant to the aforementioned mortgage unless the debt secured by this mortgage and interest thereon is fully paid.”

The ambiguity apparent in these provisions is underlined by the letter dated September 9 sent by Cooper-Horowitz’s attorneys to defendant which provided, in relevant part, as follows:

“This is to notify you of the recorded mortgage and the provisions contained therein so that you will not make any advances to Fairleigh Arms, Inc. unless proper releases and subordinations are obtained from Cooper-Horowitz, Inc.”

Thus, there is considerable doubt cast upon plaintiffs contention that the Cooper-Horowitz mortgage was clearly subordinated to that of defendant and, correlatively, there was just cause for defendant’s attorney to he concerned with the priority of his client’s mortgage.

Plaintiff further contends that defendant’s mortgage, although an advance money mortgage, was assured of its priority because the payments thereunder were obligatory, not optional. Accordingly, plaintiff maintains the intervening lienors, Cooper-Horowitz and Germinario, could not affect the bank’s mortgage. This issue, too, is not free from doubt. There was no construction loan agreement between Eairleigh and the bank, but only papers entitled “Mortgage Commitment and Closing Instruction Sheet”, dated January 24, 1966 and May 10, 1966, respectively, the first of which indicated the amount of the commitment to be $600,000 and the terms “Construction Mortgage - Twelve Months - Interest Payable Monthly,” to which was affixed the permanent “Take Out” letter of Manhattan Savings Bank dated December 14, 1965. The May 10, 1966 sheet set forth the amount of the commitment to be $750,000 and the terms “Construction Mortgage - Seven Months - Interest Payable Monthly”. Both sheets contained a provision stating: “Subject to receipt of current financial statements and credit reports satisfactory to the bank on Fairleigh Arms and the guarantors.” Neither of these documents sets forth a schedule of payments but rather seem to envision disbursements at various stages of construction conditioned upon inspection of the premises.

The bank’s construction mortgage in the principal sum of $750,000 is on a printed form designated “Construction Mortgage” and refers to the note or notes given by the mortgagor to the mortgagee, as evidenced by “loans made or to be made up to the amount set forth above”; it also provides that “parts or whole of any installment may be advanced before they come due if the lender believes it advisable so to do.” Provision is also made for procedures on mechanics’ liens in paragraphs two and three. In addition, the construction mortgage is replete with references to conditions which had to be met by the mortgagor to entitle it to disbursements. In light of these clauses, or at very least in light of the ambiguity of the documents themselves, it is difficult to say that defendant was obliged to make advances under the mortgage.

Nor is the status of the law governing the priority of advance money mortgages free from doubt. See 36 Am. Jur., Mortgages, § 234; 3 Glenn, Mortgages, § 402; 4 Pomeroy, Equity Jurisprudence (3d ed.), §§ 1198 and 1199; Griffin v. New Jersey Oil Co., 11 N. J. Eq. 49, 54 (Ch. 1855); Ward v. Cooke, 17 N. J. Eq. 93, 100 (Ch. 1864); MacIntosh v. Thurston, 25 N. J. Eq. 242 (Ch. 1874); Platt v. Griffith, 27 N. J. Eq. 207, 208 (Ch. 1876); Heintze v. Bentley, 34 N. J. Eq. 562, 566 (E. & A. 1881); Central Trust Co. v. Continental Iron Works, 51 N. J. Eq. 605 ( E. & A. 1893); Micele v. Falduti, 101 N. J. Eq. 103, 104 (Ch. 1927); Porch v. Agnew Co., 70 N. J. Eq. 328, 341 (Ch. 1905); Weinstein v. Anderson, 102 N. J. Eq. 8 (Ch. 1927). It is illustrative of the practitioner’s quandary that one of the treatise writers in the field ends his discussion of the rules governing advance money mortgages with the following caveat:

“Prom tlie terms and conditions of advance money mortgages, and tlie statutory regulations already mentioned, the advisability should be clear, of continuing the title search to date and disposing of any new liens before each further advance is made.” (13 N. J. Practice, Lieberman, Abstracts and Titles) (3d ed.), § 1008, p. 616.

Thus, factually and legally, there is serious doubt raised as to each of plaintiff’s claims that the priority of defendant’s mortgage could not have been challenged by either Germinar io or Cooper-Horowitz. Again, it must be borne in mind that defendant in this suit is not the assignor, but the obligor. And it must be reiterated that the obligor, defendant herein, was not a mere stakeholder but rather a secured creditor of the assignor with a clear right to preserve its security and the priority of its lien.

“A mortgagee is entitled to have the security of the debt preserved against loss or diminution in value by reason of obligations owed by the mortgagor upon prior encumbrances. In this connection, it is settled beyond reasonable question that a mortgagee may protect his interest in the mortgaged property by paying off prior liens and encumbrances thereon, thereby substituting himself to the interest so discharged, under the general doctrine of subrogation. It has also been so held that where the mortgagee discharges such obligations, he may tack them to the mortgage debt. * * *” (36 Am. Jur., Mortgages, p. 317).

The court is not dealing with a dispute between successive assignees of the same over an interpleaded fund. Even there, as previously noted, there is an apparent division of authority in New Jersey. The issue, as the court sees it, is not precisely who was entitled to the fund, the issue which would squarely bo presented in an interpleader suit, but rather whether defendant violated a duty to plaintiff by disbursing the fifth advance in the manner it did. It was defendant’s unenviable task to determine, at the time of the fifth advance, which of the competing claims were to be honored. Nor can this quandary be retrospectively mitigated by the contention raised ex post facto that if there were doubt, the entire advance should have been interpleaded. The practical necessity of the situation, as testified to by Shedd, demanded that the contractor be paid so that construction could continue. Again it must be borne in mind that the defendant was not a mere stakeholder. Defendant, a secured creditor, should not be required to hazard the deterioration or the impairment of its security in order to resolve a side transaction between its mortgagor and the plaintiff. Cf. Cambridge Acceptance Corporation v. Hockstein, 102 N. J. Super. 435 (App. Div. 1968). In choosing to disburse funds to the two lienholders, defendant was following a prudent course of action. See First National State Bank of New Jersey v. Carlyle House, Inc., supra.

As was stated in Burke v. Hoffman, 28 N. J. 467 (1958), a case which involved a dispute between an equitable assignee and a lienholder:

“Where there are equal equities, the first in order of time shall prevail; and where there is equal equity, the law must prevail. The first of these equitable maxims means that as between persons having only equitable interests, if their interests are in all other respects equal, ‘priority in time gives the better equity, * * Pomeroy’s Equity Jurisprudence (5th Ed.), § 678. But the principle itself is not absolute; it prevails only where ‘the successive equitable interests are equal; indeed, the equity resulting merely from priority in time has been said to be the feeblest of any, and to be resorted to only when there is no other feature or incident of superiority,’ the ‘superior equity’ that will disturb the order of time. Ibid., § 707; also § 714.
A mortgage debt, although a chose in action, is yet, where the subject of the security is land, ‘an interest in land,’ and priorities are governed by the rules applicable to interests in land, and not by the rules which govern interests in personalty. Pomeroy, Ibid., § 697. See also Sec. 712. And Midland’s claim constituted a lien under the Mechanic’s Lien Law. N. J. S. 2A:44-64 et seq. In equity, Midland’s lien is deemed to have been transferred to the fund.” (at pp. 474-475)

Plaintiff’s sole claim herein is based on the equitable principle of “first in time, first in right.” Defendant’s rejection of that claim in favor of two other “interests in land” was in accord with the principles set forth in Burke.

Then, too, the bank in making the disbursements aforesaid was seeking to guarantee its priority, as provided for in N. J. S. 2A :44-89.

Thus the court concludes that defendant acted reasonably, prudently and correctly in disbursing the fifth advance, and that it violated no duty to plaintiff. Accordingly, judgment will be granted in favor of defendant and against plaintiff dismissing the complaint.