author: Verga, J. C. C.

text:
    DORIS KOWALSKI, PLAINTIFF, v. THE TRAVELERS INSURANCE COMPANY, DEFENDANT.
    Superior Court oí New Jersey Law Division
    Decided July 19, 1971.

      Mr. Michael H. Hochman for plaintiff (Messrs. Miller, Hochman, Meyerson & Miller, Esqs., attorneys).

      Mr. George P. Moser for defendant (Messrs. Moser, Roveto & McGough, Esqs., attorneys).
   Verga, J. C. C.

This is an action by plaintiff to recover from defendant Travelers Insurance Company benefits as a result of her employment with Radio Corporation of America.

An action was originally instituted by plaintiff Doris Kowalski against her employer, Radio Corp. of America, for wrongful discharge, and against Radio Communications Assemblers Union for breach of a fiduciary obligation to provide her with fair representation in any disputes she may have with her employer, and against Travelers Insurance Company for benefits which she was deprived of as a result of her wrongful discharge. The case against Travelers Insurance Company was severed. The trial against the employer and the union resulted in a money judgment in favor of plaintiff in the amounts of $15,000 and $1,000, respectively, for the illegal discharge by the Radio Corp. of America.

The issue to be decided is: where an employee is illegally discharged by the employer and the insurance company is notified of the discharge, does this terminate the employee’s benefits under a group policy. A group insurance policy is, in effect, a contract between the employer and the insuror. A basic rule of contracts was stated in Midland Carpet Corp. v. Franklin Associated Properties, 90 N. J. Super. 42 (App. Div. 1966), where it was said “Where a writing is unambiguous, construction is not warranted.” New Jersey courts have also held that “When the terms of a contract are clear, it is the function of the court to enforce it as written and not to make a better contract for either party.” U. S. Pipe & Foundry Co. v. American Arbitration Ass’n, 67 N. J. Super. 384 (App. Div. 1961). Most recently it was held that the “contract must be construed as a whole and the language employed must be given its ordinary meaning, in the absence of anything to show that the language was used in a different sense.” McKee v. Harris Seybold Co., 109 N. J. Super. 555 (Law Div. 1970). “Such contracts are generally construed as creating a contract of insurance between the employer and the insuror but for the benefit of the insured employees.” 44 Am. Jur. 2d 1868. An unambiguous insurance policy, like any other contract, must be enforced according to its terms. Larson Construe,' tion Co. v. Oregon Automobile Ins. Co., 301 F. Supp. 1112 (1969).

In the instant ease, the group policy states that coverage is terminated upon notification to the insurer by the employer that the insured employee is no longer employed by the company.

These are the “terms of the contract” of insurance this court is concerned with. There is no question that the insurance company was notified and that the employee in question was discharged.

New Jersey has no case law on the specific question of the effect of an illegal discharge on a group insurance policy; however, as stated in 68 A. L. R. 2d 50, “the most frequent method used by an employer to sever the relationship with an employee is by discharging or firing him. Here again, regardless of the reasons which may motivate the employer, such act constitutes a termination of employment within the meaning of a termination of employment clause contained in a group policy.” See Bradley v. Prudential Ins. Co., 70 F. 2d 988 (9 Cir. 1934); Simsaki v. Equitable Life Assurance Soc., 154 Misc. 533, 277 N. Y. S. 424, (Sup. Ct. 1935); Nelson v. Aetna Life Assurance Soc., 115 Pa. Super. 15, 174 A. 624 (Super. Ct. 1934). The rule is also stated in 44 Am. Jur. 2d 1884 in a discussion of what constitutes a termination of employment. It states:

“While no general rule can he formulated as to what constilul.es an effective termination of employment clause in a group insurance policy since, by necessity, the termination depends on the facts of a particular case, it may be stated that in regard to the manner of severance of relations, the courts have generally held that the relationship between employer and employee is effectively brought to an end, by the employee, regardless of the motive for such action; by the employee’s retirement; by his discharge regardless of the cause and by the sale by an employer of his business or part thereof.” [.Italics added]

Insofar as the insurance company’s liability is concerned with respect to the wrongdoing on the part of the employer, 44 Am. Jur. 2d 1877 states: “Employers, in doing the various acts required to make effective a policy of group insurance covering employees * * * act for themselves and their employees and not as agents of the insurer * * *. Likewise, it has been held that an employer is not an agent of the insurer under a group insurance policy as regards any obligation to give notice to an employee of any termination of his employment.”

The claim is based on the premise that the employee was illegally discharged from her employment, and since her coverage terminated when her employer gave notice of her discharge to the insuror, she feels she should recover against the insuror for benefits allegedly due her after the date of said termination of employee.

Her insurance contract states that the insurance would terminate when her employment terminates. The law says that such a termination clause in a group insurance policy means a termination regardless of the reason for said termination. 44 Am. Jur. 2d 1877.

Here, the insurance company was duly notified of the discharge of the employee. By the very terms of the contract, this notification acted as a termination of the insurance. True, the discharge was illegal, but the insuror did not illegally discharge the employee, nor did any of its agents cause the illegal discharge. The employer illegally discharged the employee, and damages stemming from that illegal discharge have been assessed against it in the amount of $15,000.

Once the contract between the employer and the insuror has been terminated by the employer, the person for whose benefit that contract was made has no cause of action against the insuror. If there is any cause of action at all, it would be against the party who caused the alleged wrongful termination of such contract.

Where an employee is wrongfully discharged by an employer who has given notice to an insuror of said employee’s termination, the coverage afforded such employee by said insuror ceases as of the date of notification of termination and the insurance company is not liable for medical and doctor bills after the date of discharge regardless of the legality of the discharge.

It is agreed that $1,420.20 for damages had accrued up to the termination of employment, and this court is of the opinion that that is all plaintiff is entitled to.

Judgment for plaintiff in the sum of $1,420.20.


source: Caselaw Access Project

author: Ackerman, J. C. C.

license: Public Domain

text:
    P & A CONSTRUCTION, INC., A NEW JERSEY CORPORATION, AND FRANK SANTOS, PLAINTIFFS, v. HACKENSACK WATER COMPANY, A NEW JERSEY CORPORATION, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided July 27, 1971.

      Mr. Meyer L. Rosenthal, for plaintiffs (Messrs. Kaufman and Kaufman, attorneys).

      Ms. Lucille D. Russello, attorney for defendant.
   Ackerman, J. C. C.

(temporarily assigned). On Pebruary 26, 1971 defendant Hackensack Water Company moved before this court for an order allowing it to file a counterclaim. The counterclaim embodied three counts and, by order dated April 6, 1911, this court permitted defendant to file and serve a counterclaim as to the first and second counts and reserved decision upon defendant’s motion with respect to the third count, which embraced allegations sounding in trespass. Plaintiff has alleged that the third count of defendant’s proposed counterclaim is frivolous and fails to set forth a cause of action.

The question presented to the court may briefly be stated as follows: Whether the holder of an easement may maintain an action sounding in trespass for damage to water pipes allegedly within said easement.

In resolving the present dispute between the parties as to the efficacy of the cause of action set forth in the third count this court is governed by certain well-established principles of law set forth by our Supreme Court in Rappaport v. Nichols, 31 N. J. 188 (1954) :

In dealing- with the legal sufficiency of a complaint, plaintiff is entitled to a liberal interpretation of its contents and to the benefits of all of Ms allegations and most favorable inferences which may reasonably be drawn from them, [at 188]

The foregoing principles would logically apply to an attack upon the legal sufficiency of a counterclaim. The court is, in the final analysis, charged with the responsibility of searching the counterclaim in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned from the statement of a claim. See Di Cristofaro v. Laurel Grove Memorial Park, 43 N. J. Super. 244 (App. Div. 1957).

The concept of trespass conprehends in its broadest sense any misfeasance or offense which damages another’s person, health, reputation or property. See 52 Am. Jur., Trespass, § 2. This broad definition has been refined by various jurisdictions with respect to trespass, to realty, which is grounded upon a disturbance of possession, and trespass as to personalty, which encompasses an interference, however slight, with the enjoyment by another of his personal property. See 52 Am Jur., Trespass, §§ 10, 11.

A dichotomy has been clearly drawn between the rights of an easement holder to sue for interference with his easement and the right of an easement holder to sue for damage to the personal property within the easement (e. g., water pipes). In Osborne v. Butcher, 26 N. J. L. 308 (Sup. Ct. 1857), and Goldman v. Beach Front Realty Co., 83 N. J. L. 97 (Sup. Ct. 1912), it was determined that trespass could not be maintained for an interference with a right of way. The ratio decidendi for said decisions was set forth in Osborne:

The gravamen is the obstruction of a by-road, and thereby depriving the plaintiff of its use. The obstructing and blocking up of the road may have been direct, immediate, willful, and forcible, but that was not to, or upon the land of the plaintiff or to his possession; it was not direct and immediate to him. The injury to him was the depriving him of the use of the by-road by reason of such obstruction. It was indirect and consequential, and therefore the subject of an action on the case, and not of trespass. [26 N. J. L. at 309-310]

Although the distinctions between the old common law writs have been disregarded (Miller v. Greenwich Tp., 62 N. J. L. 771 (E. & A. 1898)), our courts still recognize that the action of trespass is a possessory action. See Balinski v. A. Capone & Sons, 1 N. J. Super. 215 (App. Div. 1949). As the court stated in State v. Wouters, 71 N. J. Super. 479 (App. Div. 1962) :

Prom early common law, the unauthorized entry into another’s land constituted a trespass. Prosser, Torts (2d ed. 1955), § 13, p. 54. Blackstone observed:
Every unwarrantable entry on another’s soil the law entitles a trespass by breaking his close. * * * Eor every man’s land is in the eye of the law enclosed and set apart from his neighbors: and that either by a visible and material fence, as one field is divided from another by a hedge; or by an ideal invisible boundary, existing only in the contemplation of law, as when one man’s land adjoins to another’s in the same field. And every such entry or breach of a man’s close carries necessarily along with it some damage or other; for if no other special loss can be assigned, yet still the words of the writ itself specify one general damage, vie. the treading down and bruising Ms herbage. Chase’s Blachstone’s Commentaries (4th ed. 1919), pp. 735-6. [at 485]

Cf. Schaaf v. Pennsylvania R. R. Co., 77 N. J. L. 115 (Sup. Ct. 1908), wherein an action was brought for trespass to an easement. The court, however, did not consider the maintainability of the action. See also, 52 Am. Jur., Trespass, § 28.

The nature of an easement in gross (e. g., a right of way not supported by a dominant estate) appears to contradict a finding of possession necessary to the maintainability of a trespass action for interference with said right. Such easement has been defined as “an incorporeal hereditament * * * a thing lying not in livery but only in grant, a right that may be enjoyed without the exclusive possession of the land.” See Osborne v. Butcher, supra, 26 N. J. L. at 310. An easement in gross, in the final analysis, is a nonpossessory interest in land. See Beetschen v. Shell Pipe Line Corp., 363 Mo. 751, 253 S. W. 2d 785 (Sup. Ct. 1952). It is unnecessary to determine herein whether other types of easements carry with them a sufficient possessory interest to support an action sounding in trespass.

The foregoing, however, does not require a finding by this court that defendant’s motion to serve and file a counterclaim sounding in trespass must be denied. The clear basis of said count is the contention that defendant damaged certain water pipes owned by it lying within its easement. Said water pipes are clearly personal property. As to any alleged damage to said pipes an action sounding in trespass lies. Persuasive authority for the foregoing conclusion can be found in Mountain States Telephone & Telegraph Co. v. Vowell Const. Co., 161 Tex. 432, 341 S. W. 2d 148 (Sup. Ct. 1960), wherein the court stated:

At common law, there was a distinction between “trespass” as a form of action and that of “trespass on the case”. This distinction to some extent was based upon the circumstance that one was a wilful and deliberate act while the other contemplated an act or omission resulting from negligence. However, the trespass of the common law forms of action is not the “trespass” which is involved here.
“The gist of trespass to personalty is an injury to, or interference with, possession, unlawfully, with or without the exercise of physical force.”
“Destruction of, or injury to, personal property, regardless of negligence, may be a trespass.” 87 C. J. S. Trespass §§ 8, 9, p. 962.
* * * The molesting or severing of the cable was a violation of a property right which gave rise to a cause of action regardless of negligence * * * The particular appellation or classification to be given the particular act is not of controlling effect. The important thing is that a property right was violated, [at 150]

See also, New York Steam Co. v. Foundation Co., 195 N. Y. 43, 87 N. E. 765 (Ct. App. 1909); Pioneer Natural Gas Co. v. K & M Paving Co., 359 S. W. 2d 533 (Tex. Civ. App. 1963), rav'd on other grounds 374 S. W. 2d 214 (Tex. Sup. Ct. 1963).

In view of the foregoing, and in accord with this court's duty to liberally interpret the contents of the third count of defendant's counterclaim, it is the opinion of this court that defendant has set forth a cause of action sounding in trespass for the alleged damage to and destruction of defendant’s personal property, i. e., its water pipes. Defendant's motion to file and serve a counterclaim, as to the third count, is therefore granted.


author: Kimmelman, J. S. C.

text:
    ANTHONY F. PESSINI, PLAINTIFF, v. MARY MASSIE, GEORGE VANARELLI AND NEW JERSEY COLLEGE OF MEDICINE AND DENTISTRY, DEFENDANTS. MARY MASSIE EBERHARDT AND WILLIAM EBERHARDT, PLAINTIFFS, v. GEORGE VANARELLI AND NEW JERSEY COLLEGE OF MEDICINE AND DENTISTRY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided July 30, 1971.

      Mr. Jacob M. Goldberg, attorney for plaintiff Pessini.

      Mrs. Mabel L. Richardson, attorney for plaintiffs Eberhardt.

      Mr. John P. McGee, for defendant Mary Massie Eberhardt (Messrs. Gafey, Webb & McDermott, attorneys).

      Mr. Kenneth J. Fost, for defendants George Vanarelli and New Jersey College of Medicine and Dentistry, (Messrs. Stevens and Mathias, attorneys).
   Kimmelman, J. S. C.

This matter is before the court on a motion for a new trial. It is argued that error was committed by the trial court in allowing the jury, over the timely objection of counsel, to separate and retire to their homes for the evening, thereby temporarily suspending their deliberations before they had reached a verdict.

By way of background, it is appropriate to record certain salient facts: On May 5, 1969 at approximately 5:30 p.m. at the intersection of Halsey and Market Streets in the City of Newark, and during the height of rush-hour traffic, an ambulance owned by defendant New Jersey College of Medicine and Dentistry and operated by defendant George Yanarelli in an easterly direction on Market Street collided with a car owned and operated by Mary M. Eberhardt. The force Of the collision drove the Eberhardt vehicle to the southeast corner of the intersection where it mounted the curb in front of the Larkey store, striking and injuring plaintiff Anthony F. Pessini. As a result of the collision Pessini brought suit against Mrs. Eberhardt, the College and the ambulance driver, and Mrs. Eberhardt in turn filed a separate action against the College and the ambulance driver. Both actions were consolidated for trial and tried before a jury solely as to the issue of liability.

The trial was relatively short, commencing on the morning of June 28, 1971, with testimony and summations concluded by 12 :30 p.m. on June 29, 1971. Between 1:30 and 2 that afternoon the jury was instructed as to the law and thereupon retired to deliberate upon its verdict. Pursuant to R. 4:39 the court requested that the jury not render a general verdict but that written interrogatories be answered. Said interrogatories, containing the issues to be decided, were as follows:

1. Was the defendant Mary Massie Eberhardt guilty of negligence which was the sole proximate cause of the injuries of plaintiff Anthony F. Pessini?
2. Was the defendant George Vanarelli guilty of negligence which was the sole proximate cause of the injuries of the plaintiff Anthony F. Pessini?
3. Where the defendants Mary Massie Eberhardt and George Vanarelli both guilty of concurrent negligence which combined to proximately cause the injuries of the plaintiff Anthony F. Pessini?
4. Was the defendant George Vanarelli guilty of negligence which was the sole proximate cause of the injuries of plaintiff Mary Massie Eberhardt ?

The jury retired at approximately 2 p.m. to begin its deliberations; it returned at 3:15 p.m. with several questions and accordingly received additional instructions in the presence of counsel; it again returned at 5 p.m. with further questions and likewise received further instructions. At that point the following colloquy took place:

Court: Now the hour is just after five. I would like to ask the foreman of the jury whether you feel that with more deliberations you can reach a verdict now.
Foreman: I don’t believe we could reach a verdict right now.
Court: What I am going to do is this. The parties to this case have a right to have their matter decided. There is no reason to suppose that another twelve people will be any more intelligent than you. I think this jury is very well-equipped to bring in a verdict. You have a responsibility to bring in a verdict if it doesn’t do violence to your own individual consciences. But you also have a responsibility to listen to the opinions of your fellow jurors and change your opinions if you feel that perhaps the other opinion is better founded in the facts and in the inferences to be drawn from the facts based upon your everyday experience. It is burdensome for this matter to be retried, and I would not want it to be retried if at all possible. Now, apparently you require more time to deliberate. Is that correct?
Foreman : Yes, that is correct.
Court: The court will do this and instruct you. This Courthouse is not located in the most desirable section of Newark. I therefore hesitate to have a jury out deliberating much beyond this hour. I will instruct you that you may return home this evening for dinner and do whatever you would do in your normal everyday life, and you will return here tomorrow morning at 9 :30 to continue deliberating on this case in accordance with the instructions as I gave them to you at 1:30 today and as I just reiterated to you now at five minutes after five. However, I have one serious word of caution. Under no circumstances are you to discuss this matter with anyone. You are not to call any juror, any co-juror or fellow juror on the phone to discuss this case. You are not to discuss it with your family because your families have not heard the evidence nor have your families or friends heard the comments of your fellow jurors and you would be doing a disservice not only to the court but to counsel, the witnesses and to the other jurors, your fellow jurors, if you discuss this case with anyone. But I have a feeling that with a little more deliberation, as your foreman says, coupled with the latest instructions that I have given you, that you can arrive at a verdict; and so I will ask you to take a recess now and return tomorrow morning at 9:30 to resume your deliberations. That will be the ruling of the court.

The following morning, June SO, 1971, the jury returned to the courthouse, attendance was taken in the presence of counsel, and the jury again retired to the jury room to resume its deliberations. Shortly thereafter, in approximately 15 minutes, the jury returned with answers to all interrogatories. In the order listed, their answers to the questions were:

1. Yes 2 No 10

2. Yes 2 No 10

3. Yes 10 No 2

4. Yes 2 No 10

Accordingly, the court directed a verdict in favor of plaintiff Anthony E. Pessini against all defendants, including Mrs. Eberhardt, on the issue of liability, and a verdict of “no cause” against Mrs. Eberhardt on her suit against the College and its ambulance driver.

On behalf of Mrs. Eberhardt it is now argued that allowing the jurors to retire to their homes for the evening in effect constituted an irregular influence which is presumed to be prejudicial, the test being not whether the jury was actually influenced by the irregularity but whether the same had the capacity to influence their result. Although no New Jersey precedent dealing with the precise issue involved has been cited or found, counsel relies upon Panko v. Flintkote Co., 7 N. J. 55 (1951) where the court held:

The fundamental right of trial by a fair and impartial jury is jealously guarded by the courts. A jury is an integral part of the court for the administration of justice and on elementary principles its verdict must he obedient to the court’s charge, based solely on legal evidence produced before it and entirely free from the taint of extraneous considerations and influences. A jury can act only as a unit and its verdict is the result of the united action of all the jurors who participated therein. Therefore, the parties to the action are entitled to have each of the jurors who hears the case, impartial, unprejudiced and free from improper influences. Payne v. Burke, 236 App. Div. 527, 260 N. Y. S. 259 (N. Y. App. Div. 1932) ; Mattox v. United States, 146 U. S. 140, 13 S. Ct. 50, 150, 36 L. Ed. 917 (1892) ; 66 C. J. S., New Trial, § 47, page 362; Ibid. § 61, page 188.
It is well settled that the test for determining whether a new trial will be granted because of the misconduct of jurors or the intrusion of irregular influences is whether such matters could have a tendency to influence the jury in arriving at its verdict in a manner inconsistent with the legal proofs and the court’s charge. If the irregular matter has that tendency on the face of it, a new trial should be granted without further inquiry as to its actual effect. The test is not whether the irregular matter actually influenced the result, but whether it had the capacity of doing so. The stringency of this rule is grounded upon the necessity of keeping the administration of justice pure and free from all suspicion of corrupting practices. It is said to be “imperatively required to secure verdicts based on proofs taken openly at the trial, free from all danger by extraneous influences.” Lamphear v. MacLean, 176 App. Div. 473, 162 N. Y. S. 432 (N. Y. App. Div. 1916) ; Gall v. New York & New Brunswick Auto Empress Co., 132 N. J. L. 466, 468 (E. & A. 1944) ; In re Phelan, 126 N. J. L. 410, 411 (Sup. Ct. 1941) ; Den ex dem. Cox v. Tomlin, 19 N. J. L. 76, 80 (Sup. Ct. 1842) ; Consumers’ Coal Co. v. Hutchinson, 36 N. J. L. 24, 26, 28 (Sup. Ct. 1872) ; Sloan v. Harrison, 1 N. J. L. 123 [Reprint page 145] (Sup. Ct. 1792) ; In re Collins, 18 N. J. Misc. 492, 497 (Cape May Co., Cir. Ct. 1940) ; York v. Wyman, 115 Me. 353, 98 A. 1024, L. R. A. 1917B, 246 (Me. Sup. Jud. Ct. 1916) ; 39 Am. Jur., New Trial, § 96, p. 111 [at 61-62]

See also, Kavanaugh v. Quigley, 63 N. J. Super. 153, 154, 161 (App. Div. 1960); Palestroni v. Jacobs, 10 N. J. Super. 266, 271 (App. Div. 1950); Guzzi v. Jersey Central Power & Light Co., 36 N. J. Super. 255 (App. Div. 1955).

Pursuant to the precepts of Panko, supra, a two-fold determination must be made, i. e., whether the separation of the jury for the evening during the course of its deliberations was an “irregular influence” and, if so, did the irregular influence have a “tendency to influence the jury in arriving at its verdict in a manner inconsistent with the legal proofs and the court’s charge.”

Under the circumstances of this case I am satisfied that the overnight separation of the jury was not an “irregular influence” of the nature and quality interdicted by our courts. Moreover, the separation was not a factor of sufficient caliber to have a tendency to influence the course of the jury’s deliberations in a manner inconsistent with the evidence or the court’s charge.

In Panko, it appeared that during the course of a trial the brother-in-law of a juror, while at the juror’s home, telephoned an officer of defendant corporation to inquire as to the amount of liability insurance carried by the defendant. The inquiry was answered, and although the juror in question denied knowledge of the details of the telephone call, the Supreme Court strongly doubted the juror’s denial and accordingly held such incident to constitute an irregularity having the capacity to influence the jury’s result.

In Kavanaugh, supra, it was alleged that a bailiff failed to communicate the jury’s request for additional instructions to the court and admonished the jury to bring in a verdict one way or the other. While the bailiff’s version differed somewhat, the court found a violation of N. J. S. A. 2A:'M-7, “Oath of officer attending jury,” and likewise held the bailiff’s exhortation to bring in a verdict as an irregularity having the capacity to influence.

In Palesironi, supra, the trial judge, in response to a request and without notice to counsel, sent a dictionary into the jury, which was apparently experiencing some difficulty over the definition of a word. Here, again, the court found an irregularity in allowing the jury to peruse something not in evidence and not part of the trial court’s charge. Finally, in Guzzi, supra, the court struck down as an irregularity an oral message sent by the trial court through a bailiff to the jury without the presence or knowledge of counsel. The exact words used by the bailiff were not known and hence it was presumed that the same had the capacity to influence.

It is immediately apparent that all of the foregoing eases involved the affirmative interference with the deliberative process or invasion of the province of the jury, either by the communication of a third person, or the examination and use by the jury in the course of deliberations of something not in evidence, or the intervention of a court officer. In the matter at hand no such interference or invasion has been shown. Counsel did not request interrogation of the jurors on their return to court in the morning. To presume any such interference would be to assume that the jurors violated or ignored the court’s explicit cautionary instructions delivered to them the prior evening immediately before their separation. This court is unwilling to indulge in such presumption.

Present practice sanctions the separation of jurors after each day’s session during civil and criminal trials of more than one day’s duration. Jurors are cautioned not to discuss the case under trial or to read newspaper accounts of the same. The invariable presumption is that jurors obey such cautionary instructions. Separation during the course of a trial subjects and exposes jurors to countless everyday experiences, including the various forms of mass media communication. This exposure may very well create impressions and involve influence, conscious or otherwise, of a generalized nonspecific nature. But such impressions and influence in the nature of daily life itself are at the very foundation of the jury system where reasonable men and women bring their common experiences together to draw inferences from and unravel factual situations presented in court. Consequently, in the absence of anything specific, this court hesitates to draw any distinction between allowing a jury to separate during the course of trial or during the course of deliberations.

In the ordinary case it is entirely conceivable that keeping the jury together into the evening hours may in itself constitute an influence having the capacity to unfairly affect their deliberations. Thoughts during these hours naturally turn towards one’s home, family or regular routine. Several hours of deliberation without recess, preceded, perhaps, by several hours of sitting in the jury box, will easily tire the sturdiest of jurors. Compelling exhausted or weary jurors, whose attention may not be concentrated on the task at hand, to plod onward is neither realistic nor just to the litigants. Under such circumstances their verdict may not be as trustworthy or reliable as one rendered by a jury fresh from a night spent in familiar surroundings. The possibility of corruption of the jury should not be permitted to outweigh the undesirable effects and real danger of prejudice to the parties by compelling deliberations when respite is indicated.

In the final analysis, whether or not to disperse the jury must be left to the discretion of the trial judge, who has the initial opportunity to observe and gauge the requisite circumstances. Such appears to be the law in most jurisdictions which have had occasion to consider the specific issue. See Annotation, “Separation or dispersal of jury in civil case after submission,” 77 A. L. R. 2d 1086. Accordingly, alter reconsideration of the composite picture presented by this case, no sound reason has been shown to vitiate the jury’s verdict.


author: Johnson, J. C. C.

text:
    IN THE MATTER OF THE GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS OF HOLLY KNITWEAR, INC., A NEW JERSEY CORPORATION, ASSIGNOR, v. ROBERT S. SOLOMON, ASSIGNEE.
    Essex County Court Probate Division
    Decided July 27, 1971.

      Mr. Robert S. Solomon appeared for the assignee (Messrs. Kirsten, Solomon and Friedman, attorneys).

      Mr. Arnold Samuels appeared for the claimant, Jonathan Logan (Messrs. Hein, Smith, Mooney & Berezin, attorneys).

      Mr. Jerome S. Lieb appeared for the claimant Feldwin Realty Co. (Messrs. Lieb, Teich and Berein, attorneys).

      Mr. Richard W. Hill, Assistant United States Attorney for the United States of America.

      Mr. Philip Kagan appeared for claimant State of New Jersey.

      Mr. Sidney Reitman appeared for wage claimants (Messrs. Kapelsohn, Lerner, Leuchter, Reitman and Masiel, attorneys) .

      Mr. David I. Fox appeared for claimant Northern Financial Corp. (Messrs. Fox and Fox, attorneys).

      Mr. Neil A. Kleinberg appeared for claimant Textile Financial Corp. (Messrs Kleinberg, Moroney, Masterson & Schachter, attorneys).
   Johnson, J. C. C.

(temporarily assigned). On December 16, 1970 the assignor corporation Holly Knitwear, Inc., which was engaged in the manufacture of knitted fabrics, effected an assignment for the benefit of creditors. Shortly thereafter, on January 15, 1971, a public auction sale of the assets of the assignor corporation was held, which sale was confirmed by order of the County Court on February 8, 1971. The amount realized pursuant to said sale, $73,395, was inclusive of all machinery, equipment and inventory held by the assignor, with the sole exception of an automobile for which the additional value of $3400 was received.

This matter subsequently came before this court by means of a petition and order to show cause entered on behalf of the assignee for instructions with regard to a determination as to the priority of the various claims to the funds resulting from the sale of the assets of the said assignor. Involved herein, in addition to the assignee’s request for administration expenses, are the following claimants:

1) United States of America: The Federal Government has claimed taxes due to the Internal Revenue Service in the amount of $40,601.34 for social security and withholding taxes and for federal unemployment insurance contributions. However, the proofs indicate that all of the claims arose subsequent to the filing of these proceedings, with the exception of claims for the tax quarter ending June 30, 1970 upon which an assessment was made on November 37, 1970 in the amount of $3,868.39.

2) Jonathan Logan Inc. (hereinafter Logan) : Its claim, arising out of a purchase money security interest in two sewing machines for which financing statements were filed on June 10, 1970, is in the amount of $7500. In addition, attorneys’ fees are sought.

3) Northern Financial Corp. and/or Northern Commercial Corp. (hereinafter Northern): This claim of $8,939.32 is also predicated on a purchase money security interest which was appropriately filed with the Secretary of State of New Jersey on April 7, 1969. It, too, asks for reasonable attorneys’ fees.

4) Textile Financial Corp. (hereinafter referred to as Textile) : This party contends it has a valid and existing secured lien on assets in an amount equal to $23,870. This interest arose out of the security agreement entered into between Textile and the assignor to secure a loan to the assignor of $124,000. Said agreement was to serve as security for all future advances made by the creditor and was also intended to provide the creditor with a secured interest in all of the assignor’s after-acquired property. Financing statements were filed October 3, 1967 and July 24, 1970. Attorneys’ fees are also asked.

5) Feldwin Realty Co.: This party asserts a landlords’ lien of $13,991.04 for rents due and for which it allegedly made a distraint on December 15, 1970.

6) State of New Jersey: The State claims priority for taxes due and owing the Business Personal Property Section in the amount of $4,652.04, in addition to some $1,339.80 due and owing the Division of Employment Security.

7) Employees of the assignor: These individuals seek sums totaling approximately $22,000 as wages to which they were entitled at the time of the assignment.

I

The initial question to be determined in this matter is whether, within the meanizrg of N. J. S. A. 2A:19-43, “all sums received by said assignee” constitutes value received for sale of collateral secured prior to the date of the assignment by purchase money security interests (as defined in N. J. S. A. 12A:9-107) and by general security liens, all of which were filed and perfected in accordance with N. J. S. A. 12A:9-101 et seq.

Essentially, the secured parties in question contend that their respective liens should, not be included in an accounting of the general assets of the assignor’s estate and hence should not be charged with any part of the assignee’s request for compensation or expenses incurred during the administration of said estate. The facts, which are virtually uncontroverted, reveal that the parties holding these security interests agreed to a sale of the collateral on which they held valid liens, solely on the understanding that if a profit resulted, such would redound to the benefit of the estate and that the secured parties would receive full satisfaction to the extent of their outstanding claims. A profit was realized and accordingly these parties in interest assert their reliance on this agreement' in advancing their contentions.

As authority, Logan and Northern have cited cases wherein the courts dealt with questions of an assignees’ status as a general lien creditor, as defined in N. J. S. A. 12A :9-301. However, these references are inapposite for our purposes here. Presently at bar is not the issue of whether the funds should revert to the general assets of the estate but whether the assignee should in fact be recompensed by the security creditors for his services and expenses. It should be recognized that the assignee is not attempting to assert his statutory role as lien creditor under N. J. S. A. 2A :19-14 and 12A:9~301(3) in an effort to wrest from lesser claimants assets which by right should belong to the general estate. Rather, such assets, as determined by the efficacy of the liens outstanding, have already been conceded to these creditors in terms of their priority. Thus, the assignee’s only claim here is for his efforts, costs and expenses in distributing such assets. See In re Pynn-Hawley Co., 63 N. J. Super. 50 (Cty. Ct. 1960); In re General Assignment for Benefit of Creditors of Shay, 75 N. J. Super. 421 (App. Div. 1962); In re General Assignment for Benefit of Creditors of Xaviers, Inc., 66 N. J. Super 561 (App. Div. 1961).

New Jersey courts have long recognized and made mention of the fact that such receivers, trustees and assignees are agents of the court and in this capacity should be considered as working for the benefit of all creditors who seek to reclaim from the insolvent’s estate that which is their just due. Sullivan v. James Leo Co., 124 N. J. Eq. 317 (E. & A. 1938); Seidler v. Branford Restaurant Co., 97 N. J. Eq. 153 (E. & A. 1925); Lerman v. Lincoln Novelty Co., 130 N. J. Eq. 144 (Ch. 1941); Laudan v. ABC Travel System Inc., 64 N. J. Super. 204 (Ch. 1960).

It is true that the above-mentioned eases concern corporate receiverships wherein the court itself took control of the insolvent enterprise. However, it is now settled that the rationales behind the statutes dealing with corporate receiverships, N. J. S. A. 14A:14r-l et seq., and assignments for the benefit of creditors, N. J. S. A. 2A.T9-1 et seq., are identical. Therefore, the receivership cases supply instructive precedent for the assignment proceeding before this court. In re General Assignment for Benefit of Creditors of Xaviers, Inc., supra.

Next, the creditors rely on the case of Sliker v. Fisher, 45 N. J. Eq. 132 (1889). Involved there were lands subject to mortgages which were conveyed to an assignee who, with the consent of the mortgagees, proceeded to sell such property free from any encumbrances. The proceeds realized from the sale were then used to pay off the mortgages, but since the proceeds were less than the appraised value of the lands, the assignee asked fox an allowance out of the general assets of the estate to make up the difference still due. In denying this request the court held that the mortgagees’ interests in the lands were not assigned and hence the assignee had no power over them. The court refused to allow the assignee to be recompensed at the expense of the general unsecured creditors. If he was entitled to any compensation, it would have had to come from the mortgagees themselves on whose behalf he had acted as agent.

It is argued by the creditors that this decision stands squarely for their central proposition, namely, that a valid security interest is superior and paramount to the rights an assignee receives by virtue of a deed of assignment. However, an appreciation of the limited intendment of that decision, to protect the unsecured creditors, and a look at a more recent case wherein Sliker was interpreted in what must be from the creditors’ viewpoint a much less fortuitous light, indicates clearly that their position is not the decided state of the law. In In re Pynn-Hawley Co., supra, the court stated that the statutory language “on all sums received” would lay to rest any further questions raised on account of Sliker. The text of that opinion seems to intimate that the assignee’s commission could be predicated on any and all sums dealt with in the administration of the estate regardless of their source.

Moreover, a substantial line of cases has held that administration expenses must take priority over all other claims. These general expenses of receivership may be paid out of the funds in a receiver’s hands before the payment of debts, whether the latter be secured or unsecured. Laudan v. ABC Travel System Inc., supra; Albert and Kernahan v. Franklin Arms, 107 N. J. Eq. 468 (E. & A. 1931); Pemberton Lumber and Millwork Industries v. William G. Ridgway Co., 38 N. J. Super. 383 (Ch. Div. 1955).

The Laudan case concerned an agreement between a travel agency and airlines, hotels and shipping lines, wherein it was provided that the agency would hold all funds collected by it for transportation costs in trust for the carrier. In the subsequent proceeding by the receiver of the insolvent agency for a pro rata apportionment of the administration expenses, the court dismissed the argument that trust funds involved did not constitute “assets” chargeable to any part of the receiver’s compensation. The court stated succinctly that Hew Jersey courts have consistently afforded priority to the expenses of a receivership over a mortgage or other lien where it was equitable to do so; it perceived “Ho valid reason why the same principle should not apply to trust funds.” At 207.

This court is of the opinion that this policy is similarly dispositive of the present matter. Granted the lien holders hero did not benefit financially by consenting to a sale of the collateral to which they retained a right of reclamation, but nowhere in this jurisdiction has it been held that monetary benefit to a lien holder by a receivership is the sine qua no?i for the priority of general administration expenses of the receivership. Seidler v. Branford Restaurant, supra; Bankers’ Trust Co. v. Maxson, 100 N. J. Eq. 1 (Ch. 1926); Laudan v. ABC Travel System, supra.

What is crucial is that all parties involved have availed themselves of a process, the very existence of which is meant to benefit their own class of preferred creditors. In re PynnHawley, supra, 63 N. J. Super, at 53, and In re Francilli Carriers, Inc. 77 N. J. Super. 522, 527 (Ch. Div. 1962). 1'n light of the strong precedent amassed by this State’s judiciary in efforts to effectuate that process, this court would be loathe to run afoul of that which has been so consistently reinforced over the years. As stated in Laudan, supra:

To hold otherwise would deprive the courts of the services in many cases of competent administrators and be subversive of the administration of this important branch of equity jurisdiction. [64 N. J. Super, at 207]

Accordingly, the creditors’ motions to have the assignee relinquish their interests in toto, without deductions for administration expenses proportionate to the amounts claimed, are hereby denied.

II

The second issue to be considered is the claim for rent by the landlord .Feldwin Realty Company. The landlord contends that the rent is owing for a six-month period which terminated on or about December 12, 1970. The rental amount involved therein was $1500 a month plus additional charges for rubbish removal, power, steam and hot water. The assignee, however, does question the validity of these latter extra charges. The landlord also claims that a second lease was entered into with the assignor, which agreement become operative on September 1, 1970. This lease, covering additional loft premises, provided for rent to the landlord of another $500 plus costs. In total, the realty company is asserting a lien of some $13,991.04.

In accordance with N. J. S. A. 2A :44 — 166, the landlord is entitled to priority over all or any “title, lien, interest, mortgage, judgment, or other encumbrance created or acquired after machinery or other chattels are placed in the premises.” Since Textile’s interest in after-acquired property did not attach until these items were installed for use, it is clear that Eeldwin’s claim would be superior to that of Textile’s for an amount equivalent to the sums of the total rents due for a period not exceeding six months. N. J. S. A. 2A :44-166. Equally certain is that the purchase money security interests held by Logan and Northern, respectively, are paramount to this claim advanced by the landlord since by their very nature those encumbrances were effectuated before the machines or chattels were placed in the premises.

Much has been made by both the assignee and the landlord of the validity of the distraint initiated just one day prior to the date of the assignment itself, viz: December 16, 1970. However, the court is of the opinion that the distraint proceedings, as prescribed in N. J. S. A. 2A:33-1 et seq., are irrelevant to the situation here where the landlord can rely on the strength of the Loft Act provisions, N. J. S. A. 2A :4A-16-5 et seq., by which the efficacy of his lien is assured once rent payments fall due. Gibraltar Factors Corp. v. Slapo, 23 N. J. 459 (1957); also see 22 N. J. Pract. (Landlord & Tenant) § 1553. Hence, this decision obviates the assignee’s argument that the distraint by the landlord on the goods of the; assignor, if in fact valid, constituted a voidable preference pursuant to N. J. S. A. 2A:19 — 3. The operable date of a lien created under the authority of the Loft Act is the first date that the rent becomes overdue. As the facts here disclose, that date was well beyond the four-month period preceding the date of the assignment for the benefit of creditors, within which time preferential transactions are deemed to transpire. N. J. S. A. 2A :19-3.

The landlord’s lien will therefore be apportioned from that amount claimed by Textile pursuant to its general secured lien. Ultimate appropriation of that amount must, however, be deferred until the priority of the remaining claimants is determined.

Ill

Next to be determined are the relative priorities of the landlord’s claim under N. J. S. A. 2A:44^166 and the claim of the Federal Government for taxes owing in the amount of $40,601.34.

The United States predicates its. supremacy on the basis of 31 U. S. C. A. § 191. It should be noted that this statutory provision does not create a lien in favor of the government but rather establishes a general priority in insolvency proceedings in favor of the United States for debts owing the government. Beaston v. Farmers’ Bank of Delaware, 12 Pet. 102, 37 U. S. 102, 9 L. Ed. 1017 (1838); H. B. Agsten & Sons, Inc. v. Huntington Trust and Savings Bank, 388 F. 2d 156 (4 Cir. 1967); United States v. Haddix & Sons, Inc., 252 F. Supp. 634 (E. D. Mich. 1966); Ideco Div. of Dresser Ind. v. Chance Drilling Co., 422 F. 2d 165 (5 Cir. 1970).

The question of whether a state-created lien has the necessary requisites to be exempt from the terms of 31 U. S. C. A. § 191 is a matter wholly within the aegis of federal law. United States v. Waddill, Holland & Flinn, Inc., 323 U. S. 353, 65 S. Ct. 304, 306, 89 L. Ed. 294 (1945).

It is now well settled that this governmental priority based on the above statute can only be defeated by “choate,” perfected security interests in existence prior to the time of the obligees’ indebtedness to the United States. United States v. Guaranty Trust, 33 F. 2d 533, 537 (8 Cir. 1929), aff'd. 280 U. S. 478, 50 S. Ct. 212, 74 L. Ed. 556 (1930), and Exchange Bank and Trust Co. v. Tubbs Mfg., 246 F. 2d 141, 143 (5 Cir. 1957), cert. den. City of Dallas, Tex. v. Tubbs Mfg. Co., 355 U. S. 868, 78 S. Ct. 118, 2 L. Ed. 2d 75 (1958).

Further elucidation of the general standards set forth in Guaranty Trust is provided in the cases of United States v. Bond, 279 F. 2d 837 (4 Cir. 1960), and Illinois ex rel. Gordon v. Camplell, 329 U. S. 362, 67 S. Ct. 340, 91 L. Ed. 348 (1946). In Bond the court stated that under the “choate lien” test it is required that state-created liens be specific to the point that nothing further need be done to make the lien enforceable. In Illinois ex rel. Gordon v. Campbell the court, by use of a tripartite formula calling for the identity of the subject asset, the lienor and the amount of the encumbrance, added a further embellishment to the general language employed in Guaranty Trust. See also United States v. City of New Britain, 347 U. S. 81, 74 S. Ct. 367, 98 L. Ed. 520 (1954).

Thus, it is incumbent upon the landlord to prove to this court that his claim asserted under the provisions of the Loft Act constitutes a lien, which under federal law, will render such claim superior to that of the Federal Government.

Instructive on this point is the case of United States v. Saidman, 97 U. S. App. D. C. 344, 231 F. 2d. 503 (1956). Involved therein was a priority claim by a landlord who relied on a District of Columbia statute which granted to lessors a tacit lien which could be enforced by attachment, judgment, or by an action against the purchaser of the encumbered assets. However, the landlord never made use of this remedial aspect of the statute and was thereby constrained to rely solely on the face of the statute to create a specific and perfected lien. The court denied his claim, holding that the statute did not intend to place absolute title or possession of the chattels with the landlord. Without subsequent enforcement of this statutory lien a “specific and perfected lien in the sense long understood as essential to overturn the Federal priority” was not created. At 507.

Here the facts disclose that the landlord did avail himself of the distress proceedings provided by Hew Jersey statutory law, N. J. S. A. 2A:33-1 et seq., in an effort to enforce the lien authorized under N. J. S. A. 2A:44-166. Hence, at first impression, assuming arguendo that the distraint was proper, it would appear that in accord with Saidman the requisites of title and possession of the assets found on the premises of the debtor were retained by the landlord. Yet the terms of the distress statute do not so provide. N. J. S. A. 2A :33-9 grants, the debtor tenant a grace period of ten days, within which time he can commence an action to regain the goods. Since the alleged distraint occurred on December 15, 1970 and the assignment took place the following day December 16, 1970, nine days remained before the lien reached full fruition. Thus, in no way can the landlord be considered to have had, at the date of the assignment for the benefit of creditors, a claim of the quality sufficient to defeat the federal priority.

The Supreme Court of the United States decided in this fashion in a case strikingly similar in its facts to the one at bar. U. S. v. Scovil, 348 U. S. 218, 75 S. Ct. 244, 99 L. Ed. 271 (1955), and our Appellate Division did likewise in an unpublished opinion. There being ample authority to support this result, the Federal Government’s claim for taxes due shall be considered superior to the landlord’s lien for rents owing. For similar reasons the claims of wage earners and the State of Hew Jersey shall also be subordinate to the rights of the Federal Government.

As regards the wage claims, the ease of Robison-Anton Textile Co. v. Embroidery Prod. Corp., 97 N. J. Super. 507 (App. Div. 1967), is dispositive. The court decided there, as we must here, that the wage claims presented under N. J. S. A. 2A:19-30 and N. J. S. A. 34:11-31-33 were not perfected in the manner nor to the degree required by federal law, as described above. There can be no question, therefore, that the federal claim warrants priority.

The same must hold for the State of New Jersey’s claim of $5901.84 plus interest for business personal property taxes and for contributions owed the Division of Employment Security. These claims, priority of which are founded upon N. J. S. A. 54:49-l, were never reduced to possession by the State and are therefore ineffectual to offset the federal claim under 31 U. S. C. A. 191.

IY

Given the criteria (as set forth in Point III) by which a state-created lien preempts the federal priority arising out of 31 U. S. C. A. 191, the question of whether the legal fees sought by the secured parties meet that standard is easily resolved. It is manifestly clear that they do not. Unlike the purchase money and general secured interests to which the respective agreements providing for attorneys’ fees attached, wherein the identity of the lienor, the subject property and the amount of the lien were all certain at the time the encumbrances arose (see United States v. City of New Britain, supra), the provisions pertaining to the attorneys’ fees cannot be defined with definiteness. This is so because the specific ultimate amounts of these claims were dependent upon future events which, at the time of the inception of these claims, were not entirely foreseeable. See United States v. Pioneer American Ins. Co., 374 U. S. 84, 83 S. Ct. 1651, 10 L. Ed. 2d 770 (1963). In fact, according to the terms of the agreement the amount representing each claim could not be computed until, at the very earliest, the date of the assignment, when the final value of the liens could be ascertained. Moreover the sums certain for these claims might well have been formulated on the basis of the proofs submitted in the affidavits of services.

This court therefore holds that for present purposes the claims for reasonable attorneys’ fees be considered distinct and apart from the security agreements from which they arose, and in such posture they must be treated as inferior to the federal tax claim under 31 U. S. C. A. 191.

Y

In dealing with the remaining group of claimants, i. e., the wage earners, the landlord and the State of New Jersey, the intent of the New Jersey Legislature is determinative. Accordingly, the wage claims presented herein must prevail. As provided in the Assignment Act, N. J. S. A. 2A:19-30, wage claims “shall be preferred and shall be paid by the assignee before any other claim or debt,” and pursuant to N. J. S. A. 34:11-33 wages of employees who» have bestowed labor or services upon the personal property of a manufacturer shall be paid after sale of such property “to such employees in preference to any other creditors- and without delay.” See also N. J. S. A. 14A:1A-21(3).

Subsequent interpretation of these provisions has left, little doubt of the favored nature of wage claims. In Long v. Republic Varnish Enamel & Lacquer Co., 115 N. J. Eq. 212 (E. & A. 1933), involving the payment of wages during the statutory preference period in accordance with § 83 of the General Corporation Act, the court stated:

It luis long- been regarded as a proper function of the state to foster the welfare and safeguard the interests of wage-earners. Economic and other considerations underlay this long-established state1 policy. The amelioration of the condition of labor is recognized by enlightened government as a duty of paramount importance. And. this solicitude for the wage-earners is not alone for the members of the favored class, but for the common good. It is conducive, if not, indeed, essential to the well-being of society that the economic-security and contentment of the class that contributes so largely to the furnishing of its material needs be effected and sedulously maintained. An enactment such as this should be construed in the-light of this sound and firmly established policy, [at 215, 216]

See also Robison-Anton Textile Co. v. Embroidery Prod. Corp., supra.

This philosophy has been the consistent justification for the establishment of the primacy of wage claims vis a vis, landlords’ liens. This policy was reiterated in Appel v. Republic Footwear, Inc., 70 N. J. Super. 335 (Ch. Div. 1961), even though there the landlord who had distrained for rent under N. J. S. A. 2A :33 — 1 et seq. was first in point of time to the wage claimant’s lien under N. J. S. A. 14:14 — 21. However, the court ruled as it did, because the language of the statute, to the effect that wage claimants are prior to "all other liens that can or may be acquired,” had long been considered as entitling those claims to priority over the landlord. At 339. See also Whitehead v. Whitehead Pottery Co., 115 N. J. Eq. 257 (Ch. 1937), and Philadelphia Dairy Prod. Co. Inc. v. Summit Sweets Shoppe Inc., 113 N. J. Eq. 458 (Ch. 1933).

Furthermore, the Loft Act, N. J. S. A. 2A:44r-165 et seq., does not affect the priority of the wage claims. Although there is no holding addressed specifically to this point, the courts have ruled that an analogous statute, N. J. S. A. 2A:44-66, creating a mechanics lien and embodied within the same chapter of Title 2A as the Loft Act, does not upset the wage earner’s preferred status. Thus, the landlord’s lien involved herein should be viewed in pari materia with the mechanics’s lien, to the end that the primacy of the wage claims should still be recognized. J. W. Pierson Co. v. West Orange-Verona Bldg. Co., 112 N. J. Eq. 426, 428 (Ch. 1933).

Added indicia of the Legislature’s intent is evidenced within the context of the Assignment Act itself, N. J. S. A. 2A:19-1 et seq. Therein the Legislature has immediately preceded the section dealing with the landlord’s Hen, N. J. S. A. 2A :19 — 31, by that part pertinent to wage claims, N. J. S. A. 2A:19-30. Although not creating a lien, the Assignment Act does provide wage claimants with a "preferred” status payable ‘^before any other claims or debts.” Certainly meant to be included in that category must be considered those claims or debts provided for in the immediately succeeding section of the act.

This same legislative intendment guarantees the wage-earner’s priority over the State’s claim for business personal property taxes under N. J. S. A. 54:11A-1 et seq. and N. J. S. A. 54:49~1. One such enactment reflecting this purpose is N. J. S. A. 54:4-106 which, while providing for the payment of municipal personal property taxes out of the first moneys received by an assignee or a receiver, explicitly declares wage liens unaffected by the terms of that section. See Spark v. La Reine Hotel Corp., 112 N. J. Eq. 398 (Ch. 1933).

Although the tax in question here was levied on behalf of the State rather than by one of its political subdivisions, there is ample authority to the effect that both municipal and state tax claims are subordinate to liens of wage earners. Decorative Utilities Corp. v. National Motors Trucking Corp., 123 N. J. Eq. 48 (Ch. 1938), and Lerman v. Lincoln Novelty Co., 130 N. J. Eq. 144 (Ch. 1941).

Still remaining, however, is the vexing problem of whether the varying amounts identified by the wage claimants as payments by the employer for vacation pay constitute "wages fully earned, though not yet payable,” within the purview of the Assignment Act, N. J. S. A. 2A:19-30. The wage claimants argue that moneys going into the special welfare benefit fund are tantamount to deferred payments earned by the employees in consideration for services rendered. Hence they contend that these amounts can in no way be considered gratuities, gifts, or even pension funds founded on policies of good will rather than on direct labor costs.

There is no doubt that if the wage claimants are correct and the vacation pay, provided for by the collective bargaining agreement of July 16, 1970 entered into between the assignor corporation and Local 222 of the ILG-WU is, in fact, due and owing each employee for services rendered, such funds must be considered as "wages within the contemplation of the Assignment Act. In re Wil-Low Caf., 111 F. 2d 429, 432 (2 Cir. 1940); Textile Workers Union of America v. Paris Fabric Mills, 22 N. J. Super. 381, 384 (App. Div. 1952); Botany Mills, Inc. v. Textile Workers Union, 50 N. J. Super. 18, 30 (App. Div. 1958); In re General Assignment for Benefit of Creditors of National Meat Supply Co., 66 N. J. Super. 423 (Cty. Ct. 1961).

Nevertheless, neither the express terms of the relied upon collective bargaining agreement nor judicial precedent pertaining to similar provisions in other collective bargaining agreements, United States v. Embassy Rest. Inc., 359 U. S. 29, 79 S. Ct. 554, 3 L. Ed. 2d 601 (1959); Joint Industry Board of Election Ind. v. United States, 391 U. S. 224, 88 S. Ct. 1491, 20 L. Ed. 2d 546 (1968); In re General Assignment for Benefit of Creditors of National Meat Supply Go. supra, support the wage claimant’s view.

The agreement, effective as of July 16, 1970, served to renew the contract (hereafter referred to as the main agreement) which had expired on July 15, 1970. According to the terms of the main agreement, the employer is to pay weekly to the union a sum equivalent to 3-f/2% (subject to subsequent increases) of the total gross weekly payroll of all the nonsupervisory production, maintenance, packing and shipping workers employed in its shops. 2% of these payments are to be allocated towards the Health and Welfare Fund, a “trust fund” maintained by the union for the purpose of providing workers with health, welfare and recreation benefits. However, in Section (A) subsection (a) (1) the agreement expressly states “that none of the payments made hereunder by the employer shall constitute or be deemed wages due to the workers.” In addition, the health and welfare fund, as described in section (A), subsection (b) of the main agreement is not meant to extend to an individual worker any legal or equitable right, title or interest in, or claim against his or any other employers’ payments toward the fund or against the fund itself. Thus, solely the union organization, as contrasted to an individual employee in his capacity as a wage earner, can lay claim to the monies apportioned to the fund. There is absolutely no provision in the contract allowing a worker on his own initiative to secure such amount due him as a consideration for his labors. Enforcement of the trust provision is the exclusive province of either the board of trustees of the fund or of the union organization.

In a federal bankruptcy proceeding the United States Supreme Court had occasion to rule upon the terms of a similar collective bargaining agreement which provided for a union welfare fund. The decision there was that the contributions of the employer were not entitled to priority as “wages due the workmen” under the Bankruptcy Act. United States v. Embassy Rest. Inc., supra. In examining the nature of the employers’ payments to the fund the court took special note of the following:

They are flat sums of §8 per month for each workman. The amount is without relation to his hours, wages or productivity. It is due the trustees, not the workman, and the latter has no legal interest in it whatsoever. A workman cannot even compel payment by a defaulting employer * * *. Finally, Embassy’s obligation is to contribute sums to the trustees, not to its workmen: it is enforceable only by the trustees who enjoy not only sole title, but the exclusive management of the funds. [359 U. S. at 32, 79 S. Ct. at 556]

The mechanics and incidents of that fund being virtually identical to the correlative aspects of the subject fund, I am constrained to reach the same conclusion. Moreover, in the instant case the employees’ representatives have all but contracted away the legal contentions proffered by the wage claimants. In contrast to other collective bargain agreement situations, In re General Assignment for Benefit of Creditors of National Meat Supply Co., supra, the employer’s payments here were not characterized as “wages.” To the contrary, the agreement specifically stated, as described above, that these payments were not to he construed as wages. This fact alone more than reinforces the court’s decision; it requires it.

Accordingly, it is the opinion of this court that the amounts owing the employees out of the health and welfare fund be deemed not to constitute “wages” within the intendment of N. J. S. A. 2A :19-30.

CONCLUSION

It follows from that which has been decided above that the purchase money security interests of Logan and Northern should be satisfied first. Next in terms of priority is Textile which shall recover that amount of its claim outstanding, less that portion of its lien to which the landlord has laid greater claim (see Point 2). This amount will be included in the total apportioned to the general creditors. Among this latter group the Federal Government’s claim will take precedence (see Point 3) and the small balance then remaining shall be allocated first to a satisfaction of the attorneys’ fees and then towards partial payment of the wage claims.

The court has considered the requests for counsel fees by the attorneys for Logan, Northern and Textile and finds that said requests are reasonable. The fees sought by Messrs. Hein, Smith, Mooney and Berezin ($1750), Messrs. Fox and Fox ($1340.90), and Messrs Kleinberg, Maroney, Masterson and Schachter ($3580.50) are hereby allowed and are to be paid by the assignee upon final accounting.

Since the claims of Logan and Northern have been paid by the Assignee pursuant to an order of this court dated June 25, 1971, an order may be submitted to remit their respective proportionate shares of the assignees’ commissions and expenses. In re General Assignment for Benefit of Creditors of Xaviers, Inc., supra.


author: Cozzi, J. C. C.

text:
    JOHN BENSON, PETITIONER-APPELLANT, v. COCA COLA COMPANY, RESPONDENT-RESPONDENT.
    Hudson County Court Law Division
    Decided July 29, 1971.

      Mr. Lewis J. Weinstein attorney for petitioner.

      Mr. Andrew Lawrie for respondent (Messrs. Lawrie & Jennings, attorneys).
   Cozzi, J. C. C.

This is an appeal by petitioner John Benson from that portion of a judgment of the Compensation Division finding that medical treatment rendered to him by Dr. M. W. Weinstein and by the Irvington General Hospital was unauthorized medical treatment under N. J. S. A. 34:15-15 and denying his claim for reimbursement from respondent employer for the expenses resulting from that unauthorized treatment.

In his claim petitioner alleges that “he fell from tank truck” and injured his “neck, head, back and nervous system”; that medical aid was required and his employer failed to furnish it when requested to do so, and that respondent “failed to furnish to the injured workman such medical * * * treatment and hospital service as shall be necessary to cure and relieve the workman of the effects of the injury and to restore the function of the injured member or organ where such restoration is possible * * N. J. S. A. 34:15-15.

It is admitted that on July 24, 1969 petitioner suffered a compensable injury when he fell from the side of a tank truck he was unloading and struck the ground some five to six feet below, his head, shoulder and back striking the ground first. He was not unconscious and got up without assistance and reported the accident to his supervisor, made out an accident report, and thereafter was driven by his foreman to the Cahill Clinic for medical treatment.

Petitioner testified that when he arrived at the clinic, his complaints were as follows: “I had a terrible pain in my neck, my head and my upperback * * * my head was leaning to the left of my shoulder. I couldn’t straighten it out. I couldn’t even my body out.”

At the clinic Dr. Daniel DeLuca, the treating physician, made a physical examination and took X-rays of petitioner’s head, neck and back. The X-rays proved to be negative for fracture and dislocation. He “found [petitioner] to be suffering contusions-muscle spasm of the loft cervical region and contusion of the left shoulder girdle.” He testified that a man with this condition would usually be treated with diathermy, heat treatment, muscle relaxants and pain killers. He was prepared at the time to give this treatment but that treatment and medication were promptly refused. Petitioner did not return for treatment thereafter, as he had been requested to do. In Dr. De Luca’s medical opinion, petitioner did not require hospitalization at the time he saw him.

Petitioner testified that he was offered heat treatment and told to return the following day for additional heat treatment, but was not offered any medication or a prescription for medication. However, the uneontroverted evidence, substantiated by petitioner’s own testimony, establishes that he did not give Dr. DeLuca the opportunity to provide him with any treatment of any kind, nor did he tell the doctor that he thought he needed medical attention other than heat treatment. Instead, petitioner conveyed his feelings to a technician at the clinic, who informed him that the clinic could not authorize his going to another doctor, but could not stop him either.

Later that afternoon petitioner consulted and was examined by Dr. M. W. Weinstein, an orthopedic surgeon, who made the following diagnosis: (1) cerebral concussion; (2) spasm of the cervical spine with possible fracture; (3) contusion of the thoracic spine; (4) sprain of the lumbar spine, and (5) radiculitis affecting his lower left extremity.

Dr. Weinstein’s conclusion, opinion and recommendation were that petitioner should be hospitalized and treated in cervical traction on a bed-board, and he should have medication for relief of pain, spasm and sleeplessness. It was his opinion that in all medical probabilty the necessary treatment, the best and most efficient treatment, would be a combination of heat treatment, bed rest, traction and medication.

Petitioner, without requesting these services from his employer, entered the Irvington General Hospital at 2:20 p.m. on July 24, 1969. X-rays were taken; he was put in traction; urine, SMA and a battery of blood tests were made, and he was given medication. His hospital records indicate that the X-rays were negative for fracture and dislocation, but revealed a flattening of the cervical spine. His condition was diagnosed at the hospital as a contusion of scalp, sprain of cervical spine and contusion of midbaek.

Petitioner was kept “in traction” and received daily wet pack treatments from July 24 until August 6, 1969, when he was discharged by Dr. Weinstein, the hospital records indicating his condition as “improved.” Thereafter, he made seven visits to Dr. Weinstein’s office during the month of August for physiotherapy, and was fitted with a cervical collar on August 11, 1969 for recurrence of muscle spasm in the neck.

Petitioner contends respondent-employer offered inadequate treatment tantamount to a refusal or neglect to treat. Respondent contends it was not given the opportunity to treat nor was it informed of any emergent necessity to treat at a hospital. It contends that the difference, at best, consists of a difference of method of treatment and that no emergency existed.

The issue to be determined on this appeal is whether the evidence showed a refusal or neglect by respondent to provide petitioner with reasonable and adequate medical care. In order to determine this issue one must examine the pertinent statute, N. J. S. A. 34:15-15, which provides:

The employer shall furnish to the injured workman such medical, surgical and other treatment, and hospital service as shall be necessary to cure and relieve the workman of the effects of the injury and to restore the functions of the injured member or organ where such restoration is possible; provided, however, that the employer shall not be liable to furnish or pay for physicians’ or surgeons’ services in excess of fifty dollars and in addition to furnish hospital service in excess of fifty dollars, unless the injured workman or the physician who treated him, or any other person on his behalf, shall file a petition with the workmen’s compensation bureau stating the need for physicians’ or surgeons’ services in excess of fifty dollars, as aforesaid, and such hospital service or appliances in excess of fifty dollars, as aforesaid, and the workmen’s compensation bureau after investigating tbe need of the same and giving the employer an opportunity to be beard, shall determine that such jjhysicians’ and surgeons’ treatment and hospital services are or were necessary, and that the fees for the same are reasonable and shall make an order requiring the employer to pay or furnish the same.

In support of his contention petitioner relics on the fact that by following and receiving the treatment of Dr. Weinstein he was substantially relieved of his disability and injuries. In effect, he argues that by applying the “hindsight test” under these circumstances he was justified in retaining private medical assistance. He does not dispute that the employer has the right to select the doctor, but justifies his actions in seeking outside medical assistance based upon his personal evaluation, as already stated.

The difficulty with this argument is that it presupposes that the injured employee has the right and discretion to evaluate what is adequate or satisfactory treatment without affording the employer a reasonable opportunity to provide medical services. Manifestly, if this were so it would negate the legislative mandate giving the employer the duty to select a doctor and to “furnish to the injured workman such medical, surgical and other treatment and hospital service as shall be necessary to cure and relieve the workman of the effects of the injury and to restore the functions of the injured member or organ where such restoration is possible * * N. J. S. A. 34:15-15.

Clearly, the statute (N. J. S. A. 34:15-15) does not adopt this prescription. It provides a method of operations and procedures which the employee must pursue in order to justify the employer’s liability for any outside medical services not authorized by the employer.

It is a well settled rule that an employer has the statutory right to make the initial choice of physician or hospital when fulfilling his obligation to furnish medical services to an injured employee, and that the employee cannot recover for medical services incurred by him without first giving the employer a reasonable opportunity to furnish such services or to decline without justified reason. See Cavanaugh v. Snyder & Robbins, 4 N. J. Misc. 801 (Dept. Labor 1926); Lee v. Rosenthal, 4 N. J. Misc. 890 (Dept. Labor 1926).

Relevant to the contention that the “hindsight test” should apply to justify the employee’s failure to notify his employer of his intention or-to request the intended services prescribed by Dr. Weinstein, the court was unable to find any case in New Jersey dispositive of this contention under analogous situations. However, in California,' where a similar statute is operative, the courts have expressed their views concerning the legal issues presented. They have held, in effect, that where an employee obtains outside medical treatment, contending the employer’s offered medical services are inadequate or ineffective constituting a refusal or neglect to treat, one must presuppose that the employer had already furnished medical services over a reasonable period of time without reasonable effectiveness. If so, the employee may incur outside medical services and be reimbursed, provided he establishes that such services were beneficial in alleviating his injuries admeasured by hindsight comparison.

In the case of White v. Workmen’s Compensation Appeals Board, 270 Cal. App. 2d 447, 75 Cal. Rptr. 809 (Ct. App. 1969), an employee who had suffered a back sprain and was unsuccessfully treated by employer’s physician for approximately 2)4 months with bed rest, heat therapy, physical therapy and exercise, was awarded expenses for removal of a spinal disc and a spinal fusion which successfully cured his condition. The court, in applying the “hindsight test,” concluded he had established the inadequacy of the treatment furnished by the employer. To the same effect, see also, County of Los Angeles v. Industrial Accident Commission, 13 Cal. App. 2d 69, 56 P. 2d 577 (D. Ct. App. 1936). Compare Boyles v. Industrial Accident Commission, 244 Cal. App. 2d 821, 53 Cal. Rptr. 541 (D. Ct. App. 1948); Sun Indemnity Co. of New York v. Industrial Accident Commission, 85 Cal. App. 2d 171, 192 P. 2d 765 (D. Ct. App. 1948), where reimbursement by the employers was denied.

Application of the “hindsight test” to the facts of this case is clearly inappropriate because of the petitioner’s instant rejection of the medical treatment offered by his employer, thereby precluding a comparison of services upon which a finding of inadequacy of treatment tantamount to a refusal or neglect to treat could be realized.

The transcript establishes that petitioner failed to pursue or comply with the alternate terms of the statute to obtain the employer’s authorization for such treatment, uor has he established an emergency to warrant an exception, as provided by N. J. S. A. 34:15-15, in view of the fact that his condition entailed injuries classified within the “soft tissue” category of injuries.

Under the circumstances and evidence of this case, the court concludes that the statute reposes no discretion in the injured employee to seek independent medical assistance and that the outside medical treatment and hospitalization was unauthorized, considering the employer’s prompt offer to render treatment which petitioner rejected.

The Legislature, from time to time since the adoption of N. J. S. A. 34:15-15 in 1928, has considered many proposed bills and amendments to the statute, authorizing an injured workman to secure his own doctor and medical assistance, but none of these proposals has ever been adopted and enacted into law. “The Legislature giveth and the Legislature taketh away.” Therefore, any change in our present law must be initiated by legislative authority and amendment to the statute, and not by judicial decree where the language of the statute is specific and clear.

Accordingly, for the reasons stated above, the judgment of the Division of Workmen’s Compensation is in all respects affirmed.


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

text:
    TRANSCONTINENTAL GAS PIPE LINE CORPORATION, PETITIONER-RESPONDENT CROSS-APPELLANT, v. TOWNSHIP OF BERNARDS, ET AL., RESPONDENTS, AND BOROUGH OF CARTERET, TOWNSHIP OF EDISON AND TOWNSHIP OF WOODBRIDGE, RESPONDENTS-APPELLANTS CROSS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued September 22, 1970
    Decided October 15, 1970.

      Before Judges Kilkenny, Halpern and Lane.

      Mr. Sam Weiss argued the cause for appellants.

      Mr. John M. Kolibas argued the cause for appellant Borough of Carteret.

      Mr. Roland A. Winter argued the cause for appellant Township of Edison.

      Mr. Isadora Rosenblum argued the cause for appellant Township of Woodbridge.

      Mr. Angelo A. Mastrangelo argued the cause for respondent, cross-appellant (Messrs. Fox. Schackner, Neagle & Mastrangelo, attorneys).

      Mr. Herbert K. Glickman, Deputy Attorney General, filed a statement in lieu of brief (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney; Mr. Stephen Skill-man, Assistant Attorney General, of counsel).
   The opinion of the court was delivered by

Kilkenny, P. J. A. D.

These are consolidated appeals by three Middlesex County municipalities from judgments of the State Division of Tax Appeals, fixing the 1967 assessed valuations of certain transmission pipelines owned by Transcontinental Pipe Line Corp. to the extent of their respective footages in each of the appealing municipalities. There is a cross-appeal by Transcontinental.

In determining assessed valuations for these pipelines, the municipal assessors used the so-called “Middlesex County Formula.” This formula had been adopted and recommended for use in valuing pipelines by the Middlesex County Assessors Association, an unofficial association of municipal assessors. It consisted in establishing first, the “cost” of the pipelines, according to their varying dimensions; secondly, deducting therefrom a non-cumulative 15% (20% for 20-inch pipe) for depreciation to arrive at “true value,” and third, applying a uniform county-wide ratio of 50% to establish “assessed value.” (“Idle” pipelines, not in active use, were given a true value of only 50% of that ascribed to pipelines in active use.) Once this value was determined, it remained constant in later years, despite ever-increasing depreciation and obsolescence, or increases in economic values.

We note at this point that the New Jersey Assessors Association, also an unofficial body, had adopted and recommended for use in the valuation of transmission pipelines a formula whereby “cost” would be diminished by 45% as a constant factor of depreciation, as opposed to the 15% used under the “Middlesex County Formula.” These pipelines run through New Jersey on their way from Texas and the south to the New York metropolitan area.

The State Division did not accept either the 15% or the 45% straight non-cumulative depreciation deduction from historical cost to arrive at true value. Instead, it used a cumulative 3% annual deduction from cost for depreciation. The taxpayer was limited by the controlling Federal Power Commission to this 3% figure. The State Division found, for example, that in 1967 pipelines were entitled to 3% for 16 years, resulting in a 48% deduction for depreciation. But it then added an “appreciation” factor of 25% because of value increases over that same period.

In addition, the State Division found that Carteret was observing the 50% county ratio in assessing properties, but Woodbridge used a 37% ratio and Edison 41%. For this reason, it concluded that Woodbridge and Edison were discriminating against the pipeline company in using against it a 50% ratio of true value in fixing the assessed valuation, while other taxpayers were being assessed at the lower ratios of 41% and 37%.

The position of the municipalities on appeal is that there is a presumption of validity in the assessed valuations as fixed by the municipal assessors and affirmed by the County Board. They argue that the taxpayer did not sustain its burden on appeal of overcoming that presumption. The existence of such a presumption and the burden of proof in an appeal to the State Division may be conceded. See Aetna Life Insurance Co. v. City of Newark, 10 N. J. 99, 105 (1952); Riverview Gardens Section 1 v. North Arlington Borough, 9 N. J. 167, 174r-175 (1952). At the same time, the judgment of the State Division must be presumed to be valid and correct. Anyone appealing therefrom has the burden of overcoming that presumption. Moreover, in an appeal from the final decision of any State administrative agency, appellate courts apply the “substantial evidence” rule. Atkinson v. Parsekian, 37 N. J. 143, 149 (1962).

The position of the pipeline- company in its cross-appeal is that there was no legal justification for the State Division’s adding a 25% “appreciation” factor in its arriving at “true value” by the normal “historical cost minus depreciation” approach.

Both sides agree that the value concept — “what a willing buyer would pay a willing seller” — is not applicable in valuing mere segments in a municipality of a natural gas pipeline which extends from the source of supply in Texas to the New York metropolitan area. We agree. So, too, it is conceded that the “capitalization of income” approach is not a feasible method. The value of these pipelines was not established herein by any such proof. So, only the cost minus depreciation method was employed in the instant case.

The municipalities contend that the “cost” of these pipelines was never established by the pipeline company. They maintain that, without proof of this basic fact, there was nothing upon which one could calculate depreciation and ultimately true value. The fallacy of this argument lies in the fact that the municipal assessors based their calculations on historical costs, evidenced by the taxpayer’s inventories and demonstrated by tax bills paid by the taxpayer during prior years. See, Exhibits P-2, P-3, P-4 and P-5. Thus, there was a finding by the Division that 36-inch pipe cost per foot $46; the 24-inch pipe $27; the 20-inch pipe $16; the 12-inch $10; the 10-inch $8, and the 8-inch $6. The idle lines were reduced by 50%. The footage of each kind of pipe in each municipality was specified and has not been disputed. This was done as to “idle,” as well as “active” lines.

The real issue was what percentage should be deducted from historical cost for the factor of depreciation, including obsolescence. Should it be the straight 15% recommended by the Middlesex County Assessors Association? Or the'higher 45% recommended by the New Jersey Assessors Association? Or the cumulative 3% depreciation to which the pipeline company was limited by the Eederal Power Commission? The municipalities used the 15% noncumulative depreciation factor. Their action was affirmed by the County Board. The State Division deemed the Eederal Power Commission’s 3% annual cumulative deduction for depreciation the most appropriate.

We defer to the expertise of the State Division as to this phase of the case. It comports with the policy of the federal regulatory agency. It is a customary practice in calculating a deduction for depreciation in income tax returns to divide the cost by the number of years in the functional life of the property involved and the quotient represents the annual percentage allowable for depreciation. Thus, if the functional life-span of these transmission pipes is 30 years, an annual cumulative deduction of 3% for depreciation is reasonable.

The State Division properly rejected the testimony of the expert witness for the municipalities who estimated a 75-year “physical” life-span for the pipelines and thereby figured a 1 1/3% annual depreciation. “Functional” lifespan controls.

Accordingly, we find no basis for reversal in the State Division’s use of 3%. It appears to be a more reasonable approach than the single 15% used by the municipal assessors, a figure far lower than the mean average.

We agree with the taxpayer that the addition of 25% for “appreciation” was not warranted. The utility company may not reflect any such increase in value on its books to enhance the quantum of its investment and thereby obtain a larger income under its federally regulated rate of return. It is “historical cost,” i.e., the cost upon acquisition of the pipelines, which controls. It would be unfair to limit depreciation to that original cost and to limit income on that same basis, while superadding a 25% “appreciation” factor for local tax valuation.

We agree with the State Division’s finding of discrimination by the townships of Woodbridge and Edison. Transcontinental’s assessed valuations in those municipalities were at 50% of true value, whereas other taxpayers were assessed at ratios of 37% and 41% respectively. These figures speak for themselves.

One difficulty with the 3% depreciation method lies in the potentiality that, unless checked at some point, the cost figure minus the ever-increasing depreciation figure can become zero. As to Transcontinental, depreciation at 3% over a 16-year period has reached 48%. It would be unrealistic to continue this item unlimitedly to a point where theoretically the pipelines would have no value and would, in effect, bo tax exempt.

Our concern is with the 1967 valuations. The issue of allowing further depreciation beyond the 48% figure has not been determined or briefed on this appeal. Accordingly, we make no determination as to the point when further depreciation should stop. As suggested by the State Division, the valuation of these pipelines should be considered by the Legislature and a suitable state-wide formula enacted for universal guidance throughout the State. Determining “per foot cost” by dividing the cost of the “spread” in New Jersey by the footage in the spread is not, absent a showing of special circumstances, unreasonable.

CONCLUSION

The State Division’s modification of the County Board’s judgments is modified. The local assessments for the purpose of taxing Transcontinental pipelines will be calculated by taking the historical cost of each kind of pipeline, as per the figures noted above; then deducting 3% per annum cumulatively but not exceeding 48% pending clarifying legislation or a more suitable record than that before, us, and after that, applying the particular municipal ratio used in assessing other properties in the municipality. “Idle” pipelines will be assessed at 50% of active pipelines. The 25% “appreciation” factor will not be added.

The matter is remanded to the State Division for a recalculation of the 1967 assessed valuations consistent with this opinion.


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

text:
    WILLIAM JACKSON, ADMINISTRATOR AND ADMINISTRATOR AD PROSEQUENDUM OF THE ESTATE OF EAULA MAE JACKSON, DECEASED, AND ESTHER MAE ELLIOT, PLAINTIFFS-RESPONDENTS, v. MAGNAVOX CORPORATION, A CORPORATION, AND MERIT TRANSPORTATION CORPORATION, A CORPORATION, DEFENDANTS-APPELLANTS, AND SOUTHERN RAILWAY COMPANY, ET AL., A CORPORATION, DEFENDANTS.
    Superior Court of New Jersey Appellate Division
    Argued May 3, 1971
    Decided June 25, 1971.

      Before Judges Conford, Kolovsky and Carton.

      Mr. Arthur N. IF Italia argued the cause for appellant Merit Transportation Corporation {Mr. Maurice J. Frank, attorney).

      Mr. Richard D. Bennett argued the cause for appellant Magnavox Corporation {Messrs. Bennett & Bennett, attorneys).

      Mr. Nathan Baker argued the cause for respondents {Messrs. Baker, Garber, Duffy & Baker, attorneys).
   The opinion of the court was delivered by

Conford, P. J. A. D.

In these seven actions consolidated for trial plaintiffs were passengers (and the administrators ad prosequendum of two deceased passengers) in a car driven by defendant Powers which collided on the night of January 8, 1966 with an unlighted trailer parked on a Jersey City street near the New Jersey Turnpike overpass. As a result three passengers were injured and two were killed. A number of actions were brought on behalf of the injured passengers and by the administrators ad prosequendum. There were also cross-claims by defendants.

Southern Railway Corporation had general possession of the trailer under a lease. Several weeks before, the trailer had been involved in the following transportation operation. Goods of defendant Magnavox, a manufacturer, were shipped from Tennessee to Garden City, New York. Magnavox hauled the loaded trailer with its own tractor from its plant near Morristown, Tennessee, to the Morristown loading point of Southern Railway. The trailer was carried by that railroad “piggy-back” on a flat-car to Alexandria, Virginia. Thence it was hauled by one of the tractors of defendant Merit, an interstate common carrier, to the Teterboro, New Jersey plant of Magnavox. Magnavox, in turn, using its own tractor, brought the loaded trailer to Garden City where it was unloaded. Magnavox then brought the empty trailer back to its Teterboro yard on December 23, 1965. There is no further direct evidence of the trailer’s peregrinations until Powers ran into it while it was parked as aforesaid several blocks from the Merit place of business in Jersey City on January 8, 1966, with the consequences noted above. Merit took responsibility for claiming and repairing the trailer after it was notified of the accident.

Plaintiffs recovered negligence verdicts of liability against Powers, Merit and Magnavox. The issue of damages was deferred. There were special verdicts by the jury that Merit and Magnavox had each caused the vehicle to be parked on the street; that each was negligent; and that such negligence was a substantial factor in causing the collision. Motions by defendants Merit and Magnavox for a new trial or for a judgment n.o.v. in their favor were denied. Those defendants appeal.

There was evidence of a written lease of the trailer from Southern Railway to both Merit and Magnavox pursuant to which both undertook to return the trailer to Southern Railway at Alexandria. There was other evidence, written and oral, reflecting upon the obligations of the defendants Merit and Magnavox to Southern Railway in respect of the trailer which need not be recounted for present purposes.

The proofs show frequent prior shipments of goods by Magnavox using Southern Railway facilities and Merit common-carrier services. There were variable practices in respect of returning empty trailers used for Magnavox shipments to Southern Railway, to other customers of Southern Railway, or to the Merit yard. Most often Merit did this but on occasion Magnavox did.

I

We find no error in relation to the introduction into evidence of ceriain Jersey City ordinances regulating parking of vehicles and the court’s permitting the jury to consider violation thereof as evidence of negligence. We find the ordinances sufficiently germane to the hazards involved in the instant accident to justify their submission to the jury.

II

There is no merit in the contention that defendants Merit and Magnavox were entitled to judgment or to a new trial on the asserted ground that the negligence of defendant Powers was “the sole culpable cause of the accident.”

III

We do find persuasive the arguments of Merit and Magnavox that the trial judge erred in permitting the jury to find liability on the part of both of those defendants. But we do not agree that both defendants are both consequently entitled to judgment in their favor.

We put aside for purposes of the ensuing discussion the possibility that the named defendants were agents of each other for the purpose of returning the trailer to Southern Railway — an issue which was raised neither below nor on this appeal. There was no indication at the trial that the defendants were in actual joint possession and control of the vehicle at any particular time here pertinent. Moreover, there was no intimation in the court’s main charge that the jury might find both defendants liable. Indeed the charge is replete with instructions that the jury were to determine which of the defendants caused the trailer to be put upon the street and whether that defendant was negligent in so doing. No legal theory was presented to the jury in the charge upon the basis of which they could have been informed that they might determine joint or multiple liability of Merit and Magnavox.

The court was, moreover, at pains to instruct the jury that the purpose of allowing in evidence the lease from Southern Railway to Merit and Magnavox and other shipping documents was not to indicate that breach by either of any obligation thereunder to the lessor constituted any breach of duty to plaintiffs. It was only in order to “aid [the jury] in determining whose duty it was [to return the trailer] so that [they] might have some basis for determining who, as between them, was more likely to have that trailer during the period December 23, 1965 and January 8, 1966”. (Emphasis added.)

It was only when the jury, during its deliberations, requested specific instructions as to whether both Merit and Magnavox could be held “responsible for empty trailer being parked on public street” that the court told them that they might return a verdict against both “if the evidence supports in your minds a verdict against both.” However, no legal or factual criteria were supplied to the jury to guide them in determining whether the evidence could support a verdict against both; and, as seen above, there was no such criterion, or even a hypothesis of liability of both presented in the main charge.

Eor the stated reasons, we agree with defendants that the verdict of liability against both Merit and Magnavox cannot survive on the record as it stands. We think, however, that there should be a new trial as to these defendants, not a final judgment in their favor.

In the first place, we are clear that a verdict against either of these defendants alone would have beeri justified by the record. The defendants conceded below that there was no evidence of theft of the trailer. The verdict of the jury therefore establishes what is obvious — that at least one of the two named defendants had possession of the vehicle when it was left on the street; and the verdict further establishes that the action of that defendant in leaving it there under the attendant circumstances was negligence proximately causative of the accident. Those determinations should stand as the law of the case at any retrial. Cf. Greenberg v. Stanley, 30 N. J. 485, 507 (1959).

The only remaining question for determination of fact is as to which defendant — Merit or Magnavox — left the trailer on the street. This issue must be decided at a new trial at which plaintiffs and defendants will present anew whatever proofs they can relative solely to possession and control of the trailer and its placement on the street. Purther, subject to what is stated below in reference to the possible hypothesis of joint liability, the trial court will direct the jury to find a verdict of liability in favor of plaintiffs and against that single defendant — Merit or Magnavox — which they find to have been responsible.

Defendants argue that neither of them can be held to be the responsible party unless plaintiffs meet their burden of showing by the preponderance of the probabilities that a particular one of them is — a burden assertedly not here carried by plaintiffs. We disagree. Rigid procedural principles must bow to common sense and the interests of justice. Where it is virtually certain that one of two defendants is responsible for plaintiffs’ injuries, and the evidential key as to which it is, is peculiarly within the knowledge of defendants, it is fair that the defendants be called upon to furnish information upon the basis of which the jury can determine the responsible party. Cf. Nopco Chem ical Co. v. Blaw-Knox Co., 113 N. J. Super. 19 (App. Div. 1971), and note the authorities cited in the dissent therein (at pp. 31-32).

To further subserve the interests of justice the plaintiffs and defendants are severally granted leave to amend the pleadings and pretrial order to assert, absolutely or in the alternative, that Merit and Magnavox were agents of each other for the purpose of returning the trailer to Southern Railway. If the proofs at retrial justify submitting that theory of joint or multiple liability of Merit and Magnavox to the jury as an alternative basis of liability the trial court may do so. In that case the court should require a special finding by the jury on that issue for purposes of any further review. We intimate no present view on the question, it not having been argued.

The judgment against Merit and Magnavox is reversed, without costs on this appeal, and the cause is remanded for a new trial as to those defendants consonant with the directions in this opinion.