author: Labrecque, J. A. D.

text:
    JAMES J. JOHNSON AND MARY B. JOHNSON, HIS WIFE, AND CURTIS DECKER AND THERESA DECKER, HIS WIFE, PLAINTIFFS-APPELLANTS, v. TOWNSHIP OF MONTVILLE, A MUNICIPAL CORPORATION OF NEW JERSEY, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued March 16, 1970
    Decided April 9, 1970.

      Before Judges Ktt.ee síty, Labbeoqtje and Leojstabd.

      Air. Jeffrey B. Lowe argued the cause for plaintiffs-appellants.

      Mr. Barry L. Sears argued the cause for defendant-respondent (Messrs. Young & Sears, attorneys; Mr. Lawrence K. Eismeier, on the brief).
   The opinion of the court was delivered by

Labrecque, J. A. D.

Plaintiffs challenge a judgment of the Law Division affirming the validity of an amendment to the zoning ordinance of the Township of Montville rezoning a tract of approximately 450 acres in that municipality from an A-3 residential zone to a D-3 industrial zone. They raise three points: (1) passage of the amendatory ordinance was by less than the two-thirds vote of the township committee required by N. J. S. A. 40:55-35; (2) the rezoning of the subject property was not in accordance with a comprehensive plan, and (3) it was unreasonable, arbitrary and capricious.

N. J. S. A. 40:55-35 provides, in pertinent part, as follows :

In ease of a protest against such proposed change signed by llie owners of twenty per centum (20%) or more either of the area of the lots or land included in such proposed change, or of the lots or land in the rear thereof extending one hundred feet therefrom, or of the lots or land on either side thereof or directly opposite thereto extending one hundred feet therefrom (exclusive of street space), such change shall not become effective except by the favorable vote of two-thirds of all the members of the governing body or board of public works of such municipality.

The amendatory ordinance was passed by a vote of B to 1 with one member of the governing body abstaining.

The proposed industrial zone is located between the Rock-away River, which borders Montville on the west, and Change Bridge Road on the east. John Henry Drive and Yan Riper Avenue, are two parallel streets serving a small A-3 residential area, extending into the new industrial zone in a generally westerly direction from Change Bridge Road. At the time the amendatory ordinance was up for consideration by the township committee a group of owners of property on John Henry Drive and Yan Riper Avenue, including plaintiffs herein; filed a protest against its passage.

The manner in which plaintiffs arrive at the conclusion that a two-thirds vote of the governing body was necessary to passage of the amendatory ordinance is summarized in their factual and legal contentions contained in the pretrial order, as follows:

The plaintiffs contend that the north side of Van Riper Avenue and the south side of John Henry Drive, each constitute the rear or a side of the rezoned area within the purview of the statute and that if 20% of the lot owners or owners of 20% by area of all the lots on the north side of Van Riper Avenue or the south side of John Henry Drive, signed the petition, a 2/3’s vote was required.

They assert (and it is not disputed) that four of the ten lot owners on the north side of Yan Riper Avenue and six of the twelve lot owners on the south side of John Henry Drive signed the protest petition. They contend that this amounts to a protest by the owners of more than 20% of the lots or land in the rear or on a side of the new D-3 zone.

The core issue presented by plaintiffs’ foregoing contention is whether each of the sides of this residential area which projects into the proposed industrial zone and adjoins it, amounts to a "rear” or "side” of the rezoned area within the purview of the statute. It appears from the zoning map that projecting into the proposed industrial zone, but not included therein, there are four additional nonindustrial areas. Under the interpretation advanced by plaintiffs, if the owners of 20% of the property on any side of any one of these areas adjoining the new zone had filed a protest, a two-thirds vote would have been necessary to passage of the proposed rezoning.

Counsel cites no New Jersey ease which has directly passed upon the issue and we know of none The protest provisions of the zoning statutes of other states take varying forms, so that wo find no case directly dispositive. See Annotation, 4 A. L. R. 2d 335 (1949); 1 Rathkopf, The Law of Zoning and Planning, c. 28, p. 28-1 et seq. (3d ed. 1969).

It appears clear, however, that the purpose of a provision requiring a greater than ordinary vote for a change of the zoning classification upon the filing of protests is to confer a measure of added protection against unwanted or ill-considered change upon those property owners who would be most affected by it. Farmer v. Meeker, 63 N. J. Super. 56, 64 (Law Div. 1960); Warren v. Borawski, 130 Conn. 676, 37 A. 2d 364, 366 (Sup. Ct. Err. 1944). Thus, in computing the protest area to which the statute refers, it is to be measured by the area affected by the change. Rusnak v. Woodbridge Tp., 69 N. J. Super. 309, 314 (Law Div. 1961). See also Durrwachter v. Fair Lawn, 136 N. J. L. 314, 315 (Sup. Ct. 1947); Morrill Realty Corporation v. Rayon Holding Corporation, 254 N. Y. 268, 172 N. E. 494 (Ct. App. 1930).

Rusnak is extremely helpful in the resolution of the present issue. There an amendment to the zoning ordinance made a number of substantial zoning changes in the preexisting ordinance, including the rezoning of certain premises to “highway business.” It was there held that, as a bare minimum, the entire district rezoned for highway business, of which the subject parcel was a part, was to be deemed the measure of the area with respect to the protest provisions of the statute, rather than individual plots or lots within that district such as was the subject property. The court noted (69 N. J. Super., at 315) that “to hold otherwise would be to permit one lot or block (or its surrounding area) to control the passage of an amendment relating to an entire district.”

Here, since there was only one change, the protest provisions of the statute are to be applied to the entire 450 acres affected by the ordinance. With relation to them, the statute permits a protest by the owners of land in the affected area, directly opposite, i. e., on the opposite side of the street with only the street intervening, Penny v. City of Durham, 249 N. C. 596, 107 S. E. 2d 72 (Sup. Ct. 1959), to the rear, or on either side thereof. This contrasts with the statutes of a number of other states which combine the latter three groups as one, usually as the owners of contiguous or adjacent lands. Towle v. Nashua, 106 N. H. 394, 212 A. 2d 204 (1965); Parsons v. Town of Wethersfield, 135 Conn. 24, 60 A. 2d 771, 4 A. L. R. 2d 330 (Sup. Ct. Err. 1948). While our statute does not define “rear” or “side,” we construe the rear as meaning that portion of the periphery of the rezoned area opposite the main street frontage, and the sides as those portions of its periphery other than the front or rear.

We accordingly hold that neither the north side of Yan Eiper Avenue nor the south side of John Henry Drive qualified as a separate “side” or “rear” of the rezoned area within the purview of the statute. They were but a part of its continuous easterly boundary. At the least, the area of the land represented by the signers of the protest was to be compared with the total area of the lots or lands along the easterly boundary in determining whether the protest was such as to require a two-thirds vote of the governing body. So considered, it is clear that the protest did not include the required 20% of the area of the lots or lands. It follows that a two-thirds vote of the governing body was unnecessary and that the amendatory ordinance was properly adopted.

In passing upon the validity of the ordinance the role of the courts is tightly circumscribed. Kozesnik v. Montgomery Tp., 24 N. J. 154, 167 (1957). There is a presumption that the municipal governing body acted reasonably and that the resulting legislation is valid. Ward v. Montgomery Tp., 28 N. J. 529, 539 (1959) ; Bartlett v. Middletown Tp., 51 N. J. Super. 239, 261 (App. Div. 1958), certif. den. 28 N. J. 37 (1958). We may not pass upon the wisdom of a particular ordinance, and debatable issues or questions of policy involved in its passage must be resolved in favor of the municipality. Vickers v. Tp. Comm. of Gloucester Tp., 37 N. J. 232, 242 (1962), appeal dis. 371 U. S. 233, 83 S. Ct. 326, 9 L. Ed. 2d 495 (1963). We are not free to compare the views of the municipal governing body with our own and from this to determine what policy would be in the best interest of the community’s residents. The wisdom of the course chosen by the governing body, as distinguished from its legality, is reviewable only at the polls. Kozesnik v. Montgomery Tp., supra, 24 N. J., at 167.

In sum, we may interfere only when the presumption in favor of the ordinance is overcome by an affirmative showing that it is arbitrary or unreasonable in the light of the standards prescribed by N. J. S. A. 40:55-32; Kozesnik v. Montgomery Tp., supra, 24 N. J., at 167. The burden of proof is upon plaintiffs. Fischer v. Bedminster Tp., 11 N. J. 194, 204 (1952). That burden is a heavy one. Ward v. Scott, 16 N. J. 16, 23 (1954) ; Vickers v. Tp. Comm. of Gloucester Tp., supra, 37 N. J., at 242; Ward v. Montgomery Tp., supra, 28 N. J., at 539.

Plaintiffs principally base their contention, that the action of the municipal governing body was unreasonable, arbitrary and capricious, upon the fact that it was not in accordance with a comprehensive plan and did not receive adequate consideration by the planning board.

The basic requisites of a comprehensive plan are set forth in Kozesnik v. Montgomery Tp., supra, as follows:

There has been little judicial consideration of the precise attributes of a comprehensive plan. Saar, “In accordance with a Comprehensive Plan,” supra (68 Harv. L. Rev. 1154). Our own decisions emphasize that its office is to prevent a capricious exercise of the legislative power resulting in haphazard or piecemeal zoning. Speakman v. Mayor and Council of Borough of North Plainfield, S N. J. 250, 256 (1951); Raskin v. Town of Morristown, 21 N. J. 180, 198 (1956). Without venturing an exact definition, it may be said for present purposes that “plan” connotes an integrated product of a rational process and “comprehensive” requires something beyond a piecemeal approach, both to be revealed by the ordinance considered in relation to the physical facts and the purposes authorized by R. S. 40:55-32. Such being the requirements of a comprehensive plan, no reason is perceived why we should infer the Legislature intended by necessary implication that the comprehensive plan be portrayed in some physical form outside the ordinance itself. A plan may readily be revealed in an end-product—here the zoning ordinance—and no more is required by the statute.
The comprehensive plan embraced by an original zoning ordinance is of course mutable. If events should prove that the plan did not fully or correctly meet or anticipate the needs of the total community, amendments may be made, Hochberg v. Borough of Freehold, 40 N. J. Super. 276 (App. Div. 1956), and if the ordinance as thus amended reveals a comprehensive plan, it is of no moment that the new plan so revealed differs from the original one. [24 N. J., at 166-167]

Plaintiffs argue that the foregoing definition “has not proven satisfactory” and should be discarded. However, it has been described as “probably the best analysis of a comprehensive plan,” 1 Rathkopf, The Law of Zoning and Planning, c. 9, p. 9-8 (3d ed. 1969), and has been uniformly followed in this State. Angermeir v. Sea Girt, 27 N. J. 298, 309 (1958): Gruber v. Mayor, etc. Raritan Tp., 39 N. J. 1, 11 (1962).

It follows that the comprehensive plan to which the municipal governing body is required to adhere here is not necessarily synonymous with a master plan for the township. On the contrary, the statutory requirements are fulfilled if the comprehensive plan is revealed by the zoning ordinance itself. Ward v. Montgomery Tp., supra, 28 N. J., at 536. The comprehensive plan continues mutable and if subsequent events or changed viewpoints as to the community’s needs prove that it does not fully or correctly meet or anticipate them, amendments to bring about this result may be made. Gruber v. Mayor, etc. Raritan Tp., supra, 39 N. J., at p. 11; Kozesnik v. Montgomery Tp., supra, 24 N. J., at 167. The fact that the ordinance as amended differs from the original one does not preclude it from constituting the comprehensive plan referred to in the statute. Kozesnih v. Montgomery Tp., supra, 24 N. J., at 167, Bartlett v. Middletown Tp., supra, 51 N. J. Super., at 268, 269.

Prom our review of the evidence we concur in the conclusion of the trial judge that the rezoning hero in question was not the result of unreasonable and arbitrary action and that it was in accordance with a comprehensive plan for the township. Although the area in question had been zoned residential since 1961, its development had boon relatively slow in comparison with other sections of the township. As time passed the call for additional industrial space, the need for additional ratables, and the advisability of rezoning the subject area for industrial use were discussed at a number of meetings between the township committee and the township’s industrial commission. Thereafter, the meetings were enlarged to include members of the planning board. Eventually, it was proposed to set up an industrial zone of some 1700 acres in what would generally be the westerly area of the township. Later the present ordinance was introduced, restricting the change to the 450-acre area here in question. The rezoned area consists of continuous open low-lying land situated along the westerly border of the township, where the Eockaway Eiver would serve as a natural buffer. It had been zoned industrial prior to 1961. It is directly adjacent to and between industrially zoned land. The rights-of-way of two high tension power lines, as well as a gas transmission line, pass through it. It abuts Change Bridge Eoad to the east and is in close proximity to major highways, both built and under construction.

Plaintiffs urge that under the new ordinance their residential area will be surrounded on three sides by industrial uses, thus depreciating the value of their propperty for the benefit of the owners of the surrounding vacant land as well as other citizens of the township who might benefit, taxwise, from the rezoning. But the lowering of their values or the fact that surrounding owners would reap greater profits from the change does not necessarily render the ordinance unreasonable. Cf. Rockaway Estates v. Rockaway Tp., 38 N. J. Super. 468, 478 (App. Div. 1957). The owners of property adjacent to a district which is restricted to a particular use have no vested right to the continuation of that use when the public interest dictates otherwise. Cf. Jones v. Zoning Bd. of Adjustment, Long Beach Tp., 32 N. J. Super. 397, 405 (App. Div. 1954); Crecca v. Nucera, 52 N. J. Super. 279, 285 (App. Div. 1958). Plaintiffs were not entitled to insist upon maintenance of the area surrounding their homes as virgin land pending its development for residential purposes. When a zoning plan conformable to the general welfare of the community seeks to adjust conflicting interests some property owners may find the value of their land to be adversely affected. Cf. Brundage v. Randolph Tp., 54 N. J. Super. 384, 392 (App. Div. 1959), aff’d o.b. 30 N. J. 555 (1959). It was not sufficient for plaintiffs to show that the value of their property would be greater if they could be assured of the exclusion of a use more detrimental to them than the current one. They were required to show an abuse of discretion resulting in an unreasonable exercise of the zoning power of the municipal body. Cf. Fischer v. Bedminster Tp., supra, 11 N. J., at 206; Esso Standard Oil Co. v. Westfield, 33 N. J. Super. 324, 331 (App. Div. 1954). The Law Division found that they had failed to do so and the proofs were adequate, to support that finding.

Plaintiffs urge that the planning board failed to give adequate consideration to the proposed amendment, thus rendering its enactment faulty. We disagree. N. J. S. A. 40 :55-35 requires that the proposed revision of the ordinance be first submitted to the planning board for "approval, disapproval or suggestions,” and that the board have a reasonable time, not less than 30 days, for consideration and report. The board’s resolution approving the proposed amendment satisfied the statutory requirement. While the resolution could have been supplemented by a detailed report setting forth the reasons for its approval, the failure to do so did not detract from the effectiveness of its action. Had the governing body desired more information it could readily have requested it. Presumably, the prior conferences and discussion between the governing body, the industrial commission and members of the planning board made this unnecessary.

We have reviewed the remaining points raised by plaintiffs and find them to be without merit. We find the rezoning to be internally consistent and rational. The prior recommendation or approval of the township’s planning consultant was not a prerequisite to its adoption.

The judgment of the Law Division is accordingly affirmed.


source: Caselaw Access Project

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

license: Public Domain

text:
    GARDEN OF MEMORIES, INC., A CORPORATION OF NEW JERSEY, PLAINTIFF-APPELLANT, v. FOREST LAWN MEMORIAL PARK ASSOCIATION, A CORPORATION OF NEW JERSEY, ARTHUR J. SILLS, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued December 1, 1969
    Decided April 15, 1970.

      Before Judges Coítfobd, Collesteb and Kolovskt.

      Mr. J oseph Gordon argued the cause for appellant (Messrs. Gordon <& Kanengiser, attorneys).

      Mr. 8am Weiss argued the cause for respondent Forest Lawn Memorial Park Association (Messrs. Sandies & Sandies, attorneys).
    A statement in lieu of brief was filed by Mr. Arthur J. Sills, Attorney General of New Jersey (Mr. Kenneth M. Olex, Deputy Attorney General, of counsel).
   The opinion of the court was delivered by

Conford, P. J. A. D.

Plaintiff Garden of Memories, Inc. (“Garden of Memories”) appeals from a judgment of the Chancery Division dismissing “with prejudice” its complaint filed under N. J. 8. A. 2A:62-1 et seq. to quiet title to 30.786 acres of vacant land in North Brunswick.

The complaint asserted that plaintiff’s title to the land was “denied or disputed” by defendant Forest Lawn Memorial Park Association (“Forest Lawn”), and it contained the recitals, jurisdictional under the statute, of peaceable possession in plaintiff and absense of pending action to enforce or test the validity of defendant’s title or claim. While the complaint also recited that both corporations were organized as cemetery associations pursuant to N. J. S. A. 8:1-1 ei sag., there was no proof thereof as to plaintiff corporation, and the contrary was asserted by plaintiff on a motion (which was denied) to “present new evidence” and for amended findings and conclusions. Concededlv, Forest Lawn was organized under the cemetery association act.

In its filed opinion the trial court essentially decided that plaintiff, although holder of record title to the property in question since April 15, 1952, had taken its interest with constructive notice from the public title records of a prior interest of Forest Lawn as contract vendee of the property under an unrecorded contract executed June 21, 1946, some of the terms of which were reflected by recitals in certain recorded deeds and a recorded mortgage hereinafter described.

At the trial the parties stipulated in evidence recorded title instruments which may be summarized as follows.

Both parties claim title to the property in question through common grantors, Arihur Jarett and associates. Jarett acquired title to 39.79 acres, including the land in controversy, together with “ail cemetery permits affecting” the entire parcel on July 9. 1946. On that same day, Jarett and his wife declared a trust as to three undivided one-fourths of the 39.79 acres on behalf of three associates, each of whom had contributed one-fourth of the purchase price.

Jarett, Ms wife and associates conveyed 4.003 acres of the 39.79 acres to Forest Lawn on August 8, 1946. Two other deeds from the same grantors to the same grantee convoyed another 1.5 acres and 3.5 acres, respectively, of the 39.79 acres on October 22, 1947. Moreover, each of the deeds contained (verbatim or substantially) the following clause:

“This deed is given as a partial conveyance of a tract of land immediately adjoining [sic] the within described premises and containing 39.79 acres of land and the balance of said lands has this day been conveyed to the party of the second part by the party of the first part, but which deed of conveyance is held in escrow by Isidore M. Dubrow, Esq., attorney for the party of the first part and which deed will be given to the party of the second part upon full payment of a mortgage in the sum of $30,000.00 this day given by the party of the second part to the party of the first part and it is also represented and warranted that at the time of the delivery of the said deed held in escrow, the permit for the use of said lands for cemetery purposes will be good, and valid and in full force and effect, provided that the said permit shall not be invalidated by any act of the party of the second part.”

No such escrow deed was ever recorded or offered in evidence in this case. However, a purported purchase money mortgage in the amount of $30,000, recited as executed and delivered by Eorest Lawn to Jarett on August 8, 1946, and covering the 39.79 acres, was recorded on August 12, 1946. The mortgage recites:

“This is a purchase money mortgage given to secure the sum of $30,000.00 owed by the Mortgagor to the Mortgagee as the balance of ■ the Purchase Price under a contract of sale entered into by Arthur W. Jarett and Arthur Weisler on the 21st day of June, 1946, and assigned by the said Arthur Weisler to the Grantee herein.
There has actually been conveyed at the time of the execution of this mortgage 4.003 acres of the tract herein described, and the balance of the tract herein described is to be conveyed to the said Mortgagor in accordance with the terms of the said contract. The balance due at any time under the said contract shall be considered a lien upon the entire tract herein described, until the full amount of this mortgage in the sum of $30,000. shall be paid in full.”

The mortgage also provides for the release of any part of the premises upon the payment by the mortgagor of “$5.00 per grave” (3j4'x8'). The mortgage calls for a schedule of payments the last of which was to come due August 1, 1949.

Jarett and his associates conveyed the 30.786 acres to Lillian B. Linker by deed of March 16, 1951, the description thereof being by metes and bounds for the 39.79 acres but made subject to a recital “exempt [ing] from this contract” 9.004 acres “previously conveyed” by the grantors to the “Forest Lawn Memorial Park” by deeds recorded in three specified books at specified pages. After mesne conveyances one Myron Fox and his wife conveyed the 30.786 acres to Garden of Memories by deed dated April 15, 1952 and recorded May 22, 1952. The deed first describes the property conveyed by metes and bounds for the 39.79 acres and then excepts and reserves out four tracts, each described by metes and bounds (for 4.003 acres, 1.500 acres, 1.5 acres and 2.00 acres, respectively) and identified therein as premises conveyed by Jarett to Forest Lawn by three deeds expressly identified as to grantor, grantee, date, and recorded book and page. These deeds are the same recorded deeds aforementioned from Jarett to Forest Lawn.

The records show that the mortgage taken back by Jarett from Forest Lawn, aforementioned, was assigned by Jarett to Linker February 3, 1949 (recorded January 22, 1952). The assignment recites that $11,500 is then due thereon. The mortgage was “released” by Jarett in favor of Linker on March 31, 1951. An action to foreclose the mortgage was instituted by Linker, Jarett and the latter’s associates on February 23, 1952, and a lis pendens was filed March 1, 1952. This action was withdrawn or discontinued in 1959 in some manner completely unintelligible from the instant record. No order appears to have been entered. Upon objection by plaintiff at the trial herein to the materiality of correspondence between counsel in the foreclosure proceeding relating to a proposed termination of those proceedings without prejudice, sought to be offered in evidence by defendant, the trial court declared: “I will disregard any reference to the disposition of the foreclosure suit other than that it lasted from 1952 to 1959.”

At the trial plaintiff’s material proofs were essentially as follows: A witness, Birnbaum, gave testimony tending to indicate Garden of Memories paid substantial consideration for the property. A title searcher (not a member of the bar) testified that Forest Lawn was not in the chain of title for the 30.786 acres and was not required to be searched in the mortgagor index as to that property. He also testified that proper searching practice (in relation to the 30.786 acres) did not call for examination of the three deeds mentioned in the reservations in the deed from Fox to Garden of Memories, except for the metes and bounds descriptions therein and except to look “for any encroachments and reservations that may affect the property.”

This constituted plaintiff’s case.

After a motion by defendant to dismiss on both jurisdictional and constructive notice grounds, decision on which was reserved by the court, defendant submitted the following. A lawyer-title searcher testified that proper searching practice is to read the entirety of any deed referred to in an exception contained in a deed in the chain of title; that in this case so doing brought his attention to the mortgage from Forest Lawn to Jarett. In the course of the testimony of this witness it was developed, incidentally, that Garden of Memories subsequently conveyed a small portion of the property in question to Garden of Memories Memorial Park Association, which plaintiff asserts is a completely independent organization. Another lawyer-title searcher supported the testimony of the first as to proper searching practice.

Defendant also adduced the testimony of William Osterweil, a lawyer, who said he organized Forest Lawn as a rural cemetery association. Osterweil also negotiated the transaction between Forest Lawn and Jarett, the latter being ■represented by the late Isidore M. Dubrow. The court excluded defendant’s offer of a closing memorandum by Dubrow concerning the escrow deed.

Defendant closed its case without offering in evidence the original contract of sale for the property, the escrow deed, any proofs concerning the amount of money paid on the contract, or any details concerning the extent of any physical possession by it of the property, actual dedication of the property at any time to cemetery purposes, sales of burial lots or the like. In its answer and counterclaim, and in the pretrial order, defendant had alleged that the original contract price for the -39.79 acres was $38,000, of which it had paid a total of $26,500, leaving $11,500 besides interest due on the mortgage. It sought in the counterclaim alternative relief of a conveyance of a total 13)4- acres (inclusive of the 9.003 acres) out of the entire 39.79 acres, purportedly pursuant to the release clause of the mortgage.

In deciding the case in favor of defendant on the merits the trial judge did not expressly deal with defendant’s motion to dismiss on jurisdictional grounds, particularly plaintiff’s alleged failure to show peaceable possession. Since defendant presses the point before us, we deal with it. The historical explanation for the requirement in predecessor statutes to N. J. S. A. 2A :62—1 et seq. going back for many years (e. g., Rev. 1877, p. 1189, § 1), that in order to vest jurisdiction in Chancery of a quiet-title suit plaintiff must be alleged to be in the peaceable possession of the lands, was that otherwise plaintiff would have an adequate remedy at law—e. g., ejectment (now an action for possession of lands) for possessory actions by others. Barry v. Tunick, 97 N. J. Eq. 281 (E. & A. 1925) ; Sheppard v. Nixon, 43 N. J. Eq. 627, (E. & A. 1887). There is no suggestion whatever that defendant here has interfered with plaintiff’s possession, if any, by any such act as would give rise to an action at law for redress. However the only act of plaintiff in evidence possibly referable to exercise of possession is plaintiff’s sale and conveyance of some two acres out of the 30.786 acres to a cemetery association. But we need not decide whether this is technically sufficient to support jurisdiction under N. J. S. A. 2A :62-1 et seq. In view of the abolition in this State of the distinction between law and equity jurisdiction (except for administrative allocation of litigation between the Chancery and Law Divisions of the Superior Court) and the New Jersey philosophy of subordination of procedure to effectuation of substantive justice, we should not here strain toward abrogation of jurisdiction to settle the real controversy between these litigants. In any event, an alternative jurisdictional basis for consideration of the meritorious title question here presented resides in the equity jurisdiction to remove a cloud on the title (bill quia timet). Sheppard v. Nixon, supra; Estate of Gilbert Smith, Inc. v. Cohen, 123 N. J. Eq. 419, 425 (E. & A. 1938).

We thus proceed to the merits.

It is conceded by defendant that it did not show actual knowledge by plaintiff of its rights as a contract-vendee of the 30.786 acres when the latter purchased the property for value in 1952. It relies on the doctrines of constructive notice from the record and duty of inquiry from recitals of record to fasten notice of its rights upon plaintiff. We agree with the trial court that plaintiff was subject to such notice, but not for all of the reasons stated in its opinion.

The question of notice here is two-fold: (a) was Garden of Memories as purchaser on constructive notice of the information relative to defendant’s interest contained in the three recorded deeds for 9.003 acres from Jarett to Forest Lawn, independent of the exception recitals in Jarett’s later deed to Linker and in the deed from Rose to Garden of Memories?; (b) did the exception recitals in Jarett’s later deed to Linker and in the deed from Rose to Garden of Memories, referring to the three deeds from Jarett to Forest Lawn, place plaintiff on constructive notice of both the entire contents of the said three deeds and of the existence and nature of defendant’s interest to which it would have been led by investigation of the information in those deeds ? We conclude that an affirmative answer to the first question is dubious in the light of Glorieux v. Lighthipe, 88 N. J. L. 199 (E. & A. 1915), but that the second question must be decided in the affirmative.

In view of the conclusion last stated, we need not tarry long in indicating why the general duty of a purchaser to search the records probably does not impute notice of defendant's interest to plaintiff under these facts. While it is unquestionably the duty of the purchaser to search the grantor and other pertinent recording indexes for each holder of record title for the period during which he held such title, Bingham v. Kirkland, 34 N. J. Eq. 229, 234 (E. & A. 1881); Solomon v. Canter, 113 N. J. Eq. 43, 45 (E. & A. 1933); 4 American Law of Property, § 17.17, at 589-591 (1952), the apparent philosophy of Glorieux v. Lighthipe, supra, is that the effect of the recording acts is to relieve a purchaser of constructive notice of the contents of any recorded deed not in his strict chain of title except, seemingly, interests "dying in grant” (grants of title, easements, etc.) created by a recorded deed of a prior holder of the title during his tenure. See 88 N. J. L., at 203. The strict holding of Glorieux v. Lighthipe is that a purchaser is not on constructive notice of his grantor's covenant in a previous recorded conveyance of adjoining property to restrict the use of the property in question, the rationale being that the statute imputes notice of the record only to subsequent purchasers of the same property as that the subject of the record (88 N. J. L., at 201). See also Camp Clearwater, Inc. v. Plock, 59 N. J. Super. 1, 3 (App. Div. 1959), certif. den. 32 N. J. 348 (1900). It would seem to follow, a fortiori, that if a recorded deed of other property conveyed by the same grantor, itself purporting to create an interest affecting the subject property, is not constructive notice to a purchaser of the existence of such an interest, mere informational recitals in a deed from a prior grantor concerning interests in the property in question should not impart either constructive notice of or a duty of inquiry as to such interests. See Jones, “The New Jersey Recording Act, etc.,” 12 Rutgers L. Rev. 328, 338 (1957).

We have no present concern with the broad diversity of viewpoint concerning the merits of the rule of Glorieux v. Lighthipe nor as to its consistency with actual practices of title examiners in New Jersey. Compare Philbrick, “Limits of Record Search, etc.,” 93 U. of Pa. L. Rev. 125, 171-175 (1944), approving Glorieux, with the contrary views taken in Finley v. Glenn, 303 Pa. 131, 154 A. 299 (Sup. Ct. 1931); McQuade v. Wilcox, 215 Mich. 302, 183 N. W. 771 (Sup. Ct. 1921), and Reed v. Elmore, 246 N. C. 221, 98 S. E. 2d 360 (Sup. Ct. 1957).

However, as indicated, constructive notice of defendant’s interest does devolve upon plaintiff because of the Tecitals in the exceptions and reservations as to the lands conveyed set forth in deeds in its own direct chain of title. The deeds from Jarett to Linker and from Rose to plaintiff (not to mention two mesne deeds) identify the deeds from Jarett to Eorest Lawn as the basis for the reservations and exceptions from the areas conveyed in the deeds constituting plaintiff’s chain of title. This was notice of such deeds and called for inspection thereof. Examination of. these instruments would put the reader on notice of the existence of the escrow deed and the mortgage. Consequent examination of the mortgagor index for Eorest Lawn would have led to disclosure of the text of the mortgage as recorded and thereby of the basic terms of the contract of sale taken over by Eorest Lawn as assignee of the vendee of Jarett and associates.

* * * it is established that every purchaser takes title subject to any defects, reservations and exceptions that are referred to in his deed, or that may be ascertained by reference to his chain of title as spread forth upon the public records. [Mitchell v. D’Olier, 68 N. J. L. 375, 384 (E. & A. 1902)]

As more broadly stated in Roll v. Rea, 50 N. J. L. 264 (Sup. Ct. 1888):

“[The purchaser] is undoubtedly chargeable with notice of every matter affecting the estate which appears upon the face of any deed forming an essential link in the chain of instruments through which he derived his title, and also with notice of whatever matters he would have learned by any inquiry which the recitals in these instruments made it his duty to pursue.” [at 288; emphasis added]

See also, Camp Clearwater, Inc. v. Plock, 52 N. J. Super. 583, 598-599 (Ch. Div. 1958), aff’d 59 N. J. Super. 1, supra, certif. den. 32 N. J. 348 (1960).

It is well recognized that a record which affords record notice of the transfer therein made may contain a statement or recital which does not of itself give either record notice or actual notice but which does place on inquiry one who is affected by the record. 4 American Law of Property, § 17.28, at 608-609 (1952). A purchaser who is placed on inquiry is chargeable with notice of such facts as might he ascertained by a reasonable inquiry. McCrea v. Newman, 46 N. J. Eq. 473, 474 (Ch. 1890).

A soundly reasoned example of imputed constructive notice based upon the duty of inquiry from the record, though leading beyond the purchaser’s chain of title, is Kennedy v. Island Development Co., 9 N. J. Misc. 921, 156 A. 233 (Cir. Ct. 1931). There defendant in ejectment (now an action for possession of lands) claimed under a deed which described the property by reference to a mortgage stated as recorded in a specified book and page. The mortgage had been previously released to plaintiff by release duly noted on the record of the mortgage. The release contained recitals of an unrecorded grant to plaintiff. The court held defendant bound by constructive notice, saying it had “clews” which were “so easily followed that to have failed to do so charges that company with its own neglect.” (9 N. J. Misc., at 924).

We think the foregoing principles apply here to impute notice of defendant’s rights in the 30.786 acres—such as they were—to plaintiff at the time it purchased the property, and that it therefore took subject thereto.

Plaintiff contended below and on the appeal that defendant’s contract rights were defeated by virtue of N. J. S. A. 46 :21-3 -which renders void as against subsequent purchasers recorded contracts of sale of realty not followed by legal action, and recorded lis pendens, for enforcement or for rescission, etc., of such agreement, within specified time periods of the stipulated date of consummation, etc. While conceding that this contract was not recorded, plaintiff argues defendant’s rights can rise no higher against it than if the contract had been recorded. This is specious. The statute cannot be rewritten by the court. The statute does not here apply because the contract was not recorded. Koppel v. Olaf Realty Corp., 56 N. J. Super. 109, 118 (Ch. Div. 1959), aff’d 62 N. J. Super. 103 (App. Div. 1960); Reade v. Leslie, 137 N. J. Eq. 343, 350-351 (Ch. 1945); Storch v. Tepperman, 99 N. J. Eq. 48, 52 (Ch. 1926).

While, therefore, we agree with the statements in the opinion of the trial court that “The interest of Garden of Memories is held to be subordinate to that of Forest Lawn,” it does not follow that a judgment of simple dismissal of the complaint was necessarily the appropriate course. The statute directs that the court “finally settle and adjudge whether a defendant to the suit has an estate, interest or right in or lien or encumbrance upon the affected lands, or any part thereof, and what the same is and in or upon what part of the affected lands it exists.” N. J. S. A. 2A:62-6. This was obviously not done here, hieither the opinion nor the judgment purports to declare what title to the property vests in defendant, nor could the court properly do so in the existing state of the proofs, where defendant was in at least prima facie default of payment of the amount dire on the contract of sale, if not subject to the defenses of laches, abandonment, waiver and estoppel asserted in the pretrial order by plaintiff.

The following added observations concerning the trial court’s opinion are necessary against the event of retrial. None of the conclusions therein resting upon the assumption of dedication of the lands to cemetery purposes can stand without more proof than contained in the instant record concerning actual dedication ox use of the property for cemetery purposes. The court stated that the availability of the remedy of rescission in favor of a vendor of cemetery lands to a cemetery association in possession must be viewed as doubtful. We express no view on that proposition on the state of the present record. But in the absence of actual dedication and use of the property for cemetery purposes it is difficult, on principle, to see why a vendor should not have, even against a cemetery association, the ordinary right of rescission of an executory contract of sale on which the vendee is in material default (absent other legal or equitable considerations or otherwise controlling provisions of the contract). Cf. N. J. S. A. 8 :2-42, permitting sale for general purposes of lands acquired for burial purposes by a cemetery association, before use or sale of portions thereof for burial purposes. However, this entire subject is left open for proper adjudication on the law and the facts, as may appear upon retrial, if any. As to qualification of vendor’s lien where the vendee dedicates for cemetery purposes, see Attorney-General v. Linden Cemetery Ass’n, 90 N. J. Eq. 404 (Ch. 1919), aff’d sub nom. Bliss v. Linden Cemetery Ass’n, 91 N. J. Eq. 329 (E. & A. 1920).

The trial court stated that the foreclosure action was dismissed in 1959 “apparently” because of the statutory immunity of Title 8 cemetery associations from mortgage foreclosure sales. N. J. S. A. 8:2-27. We refer to the earlier part of this opinion indicating that the obscure record herein affords no basis for a conclusion as to the reason for the discontinuance of the action. In this connection, additionally, the trial court opinion rejected plaintiff’s contention that defendant had abandoned or waived its claim by not exercising any rights of ownership or possession over the 30.786 acres since termination of the foreclosure action, on the ground that “the dismissal” of the foreclosure “affirmed” Eorest Lawn’s right of possession. But there was no “dismissal” so far as the record shows. We do not believe tbe discontinuance of tbe foreclosure "affirms” any right of possession. Whether Forest Lawn had a right of possession depends upon what would be disclosed by the original contract of sale in the light of all the other instruments and, desirably, testimony concerning the circumstances attending the negotiations for the com tract and its assignment to Forest Lawn. No safe conclusions as to the foregoing can be drawn from this sparse record, particularly if plaintiff can be regarded as having satisfied the jurisdictional requirement for a quiet-title action, since in such case it was defendant’s burden to establish its right, plaintiff having shown record title in itself. Graves v. Fancher, 81 N. J. Eq. 517 (E. & A. 1913); Warner v. Smith, 115 N. J. Eq. 572 (E. & A. 1934).

It should be noted, finally, in this regard, that the trial court made clear on the hearing of the post-decision motion by plaintiff for new findings, etc., that it did not intend by the judgment entered that day to preclude or bar whatever lawful remedy might exist on behalf of the vendor or its assignees in relation to any default in payment under the contract by the defendant.

We are thus brought to the question of what appellate action is appropriate under all the circumstances. Plaintiff’s rights in the land have been held subordinate to those of defendant, but it is not held that plaintiff has no right. Defendant was merely a contract vendee of the property at the time of the creation of plaintiff’s interest. The exact nature of its rights is uncertain for lack of evidence of the material circumstances (particularly the contract itself), and defendant’s interest is possibly defeasible because of default in payment of the contract price or for other reasons.

Ordinarily, in the light of the policy of the statute calling for a full and complete adjudication of the rights of the parties in the property, we would remand and direct a trial of the issues relative to defendant’s status under its contract. However, the particular remedy elected by a party to a dispute over an executory contract of sale of realty is generally determinative of the nature of the relief available to it, whether on the law or the equity side of the court. Eor example, it may be that pursuit of any particular remedy by defendant would appropriately call for tender of the unpaid purchase price plus interest. (We imply no view on the merits.) It does not seem to us that the court should in the present posture of this case direct either party to initiate any particular remedy unless it chooses voluntarily to do so. The court can, however, remain hospitable to the initiative of either or both toward that end, within the framework of this action.

The cause is remanded to the Chancery Division for: (1) modification of the judgment so as to declare plaintiff to have record title to the 30.786 acres, but subject and subordinate to the legal or equitable rights, if any, which defendant may have by virtue of its contract to purchase the property from Jarett and associates and by virtue of the several other instruments mentioned above, and (2) for an opportunity to be afforded either plaintiff or defendant within a fixed, reasonable time to file a supplemental pleading in this cause electing pursuit of such legal or equitable remedy as it may be advised is proper with respect to the contract aforesaid, or a supplemental pleading responsive to any such supplemental pleading filed by the other party. If any such pleading is filed the case should be pretried and tried. Tailing the filing of any supplemental pleading by either party the judgment, modified as aforesaid, will constitute the final adjudication of the action.

So ordered; no costs.

         All instruments mentioned were recorded except as otherwise stated.

       The parties agree this is a misstatement. Each conveyance is of land constituting a' part of the 39.79 acres.


text:
    DAVID A. VEEDER, ET AL., PETITIONERS-RESPONDENTS, v. TOWNSHIP OF BERKELEY, RESPONDENT-APPELLANT.
    Superior C'ourt of New Jersey Appellate Division
    Argued February 9, 1970
    Decided April 15, 1970.

      Before Judges Kilkenny, Labrecque and Leonard.

      Mr. William J. Kearney argued the cause for appellant (Messrs. Ewart, Lomell, Adler & Kearney, attorneys).

      Mr. Martin P. Gartner argued the cause for respondents David A. Veeder ei al. (Messrs. Vseder & Priviiera, attorneys).

      Mr. Arthur J. Sills, Attorney General oí New Jersey, filed a statement in lieu of brief on behalf of respondent Division of Tax Appeals; Mr. Stephen STcillman, Assistant Attorney General, of counsel.
   The opinion of the court was delivered by

Labrecque, J. A. D.

In these consolidated appeals the Township of Berkeley (the taxing district) appeals from judgments of the Division of Tax Appeals (the Division) reducing the assessed valuations oí some 20 parcels of real estate owned by petitioners.

The facts are uncomplicated and not seriously in dispute. Petitioners filed timely appeals to the Ocean County Board of Taxation seeking reductions in the assessment on each parcel. The matter was scheduled for hearing on September 8, 1966 at 1 p.m. at the Berkeley Township Municipal Building, Route 9, Bayville, pursuant to notice. On that day the attorney who was to try the case for petitioners, through inadvertence, failed to appear at the hour appointed. The omission was detected by one of his associates at 1:30 p.m. whereupon a call was placed to the tax assessor’s office in Bayville advising that the attorney was on the way. When he arrived some 15 minutes later he was informed by the tax assessor that the county board had adjourned for the day at 1:30 p.m. after “dismissing” the appeals for lack of prosecution.

Petitioners thereupon prepared and filed a petition, supported by the attorney’s affidavit as to the foregoing facts, praying that the appeals be relisted for hearing at the board’s earliest convenience. By letter dated October 11, 1966 the board advised that it “reaffirmed” its decision to dismiss the appeals for lack of prosecution. Finally, on November 14, 1966 judgments were entered dismissing the appeals as to each property. Each judgment bore the notation “Dismissed—No Appearance.”

The taxpayers thereupon filed timely appeals to the Division. We are not clear as to whether the Division initially declined to entertain them or merely suggested that an action in lieu of prerogative writs be filed to compel the county board to hear them. In any event, the taxpayers attempted to pursue the latter course but their complaint was dismissed on the ground that the action was out of time.

Thereafter the appeals were listed for hearing before a judge of the Division. At the hearing there was a motion to dismiss the appeals on the ground that the Division was without jurisdiction to hear them since they had been dismissed in the county board for lack of prosecution. N. J. 8. A. 54:2-39. The motion was denied and at the hearing on the merits each petition was amended to set forth the true value of each parcel to be the value (somewhat higher) agreed upon by the parties in settlement of the 1967 assessments on the same parcels. Eollowing the hearing judgments were entered reducing the assessments to coincide with such valuations. The taxing district thereupon appealed, challenging both the Division’s jurisdiction to hear the appeals and the sufficiency of the proofs to justify the reductions granted.

The taxing district urges that since the judgments of the county board were based upon the petitioners’ failure to prosecute the appeals, the Division of Tax Appeals was without jurisdiction to entertain the appeals from the county board’s action. It relies upon N. J. S. A. 54:2-39 which provides:

Any appellant who is dissatisfied with the judgment of the county board of taxation upon his appeal may appeal from that judgment to the Division of Tax Appeals in the Department of the Treasury by filing a petition of appeal to the division, in manner and form to be by said division prescribed, on or before December 15 following the date fixed for final decisions by the county boards, and the division shall proceed summarily to hear and determine all such appeals and render its judgment thereon as soon as may be.

but:

No appeal * * !! shall lie to the Division of Tax Appeals in the Department of the Treasury where the appeal to the county board of taxation has been (a) withdrawn at the hearing, or previously thereto in writing by the appellant or his agent; (b) dismissed because of appellant’s failure to prosecute the appeal at a hearing called by the county tax board; (c) settled by mutual consent of the taxpayer and assessor of the taxing district. This provision shall not preclude an appeal to the Division of Tax Appeals in the Department of the Treasury in the event that the appeal was “dismissed without prejudice” by the county board of taxation.

It would appear clear that if, in truth, there is a failure to prosecute an appeal before the county board which justifies dismissal, there may be no further appeal to the Division. However, whether there had been such a failure involves a question of fact. A mere recital to that effect in the county board’s judgment is no more conclusive on appeal than its finding on any other matter committed to its jurisdiction.

We are satisfied that the Division was vested with jurisdiction to hear the appeals and to determine, de novo, whether there had been a failure to prosecute within the intendment of N. J. S. A. 54:2—39 and whether the dismissal for that reason was proper. The legislative scheme contemplates an administrative review of assessed valuations, on appeal by either the taxpayer or the taxing district, first in the county board of taxation and thereafter in the Division of Tax Appeals. Hackensack Water Co. v. Division of Tax Appeals, 2 N. J. 157 (1949); J. H. Becker, Inc. v. Marlboro Tp., 82 N. J. Super. 519, 529-530 (App. Div. 1964). The Division is not restricted to reviewing the county board’s findings as to valuation. It is vested with jurisdiction to review any action or determination by the board. N. J. S. A. 54:2-35. Oradell v. State Board of Tax Appeals, 125 N. J. L. 37 (E. &. A. 1940); Rek Investment Co. v. Newark, 80 N. J. Super. 552 (App. Div. 1963); Pope v. Red Bank, 19 N. J. Misc. 383, 385, 19 A. 2d 208 (Div. Tax App. 1940). Here the county board’s judgment dismissing each of the appeals for lack of prosecution was such an action or determination and was properly cognizable by the Division.

Implicit in the judgment of the Division was a finding, with which we are in agreement, that the appeals were improperly dismissed by the county board. The imcontradicted facts, as revealed by the sworn affidavit of petitioners’ counsel, clearly support such a finding. Petitioners were at all times desirous of proceeding with their appeals. At most, their attorney was late in arriving at the place fixed for the hearing. The board was made aware of the true situation and requested, well within the period limited by statute for the hearing of appeals, to fix a new date. We are advised of no reason why it declined to do so. The dismissal of an appeal for failure to prosecute is a drastic step and ordinarily should not be invoked unless it is clear that the conduct of the offending party is deliberate. Cf. Allegro v. Afton Village Corp., 9 N. J. 156, 160-161 (1952). While the expedition of the business of the board and full utilization of its time was highly to be desired, the duty of administering justice in each individual appeal was not to be lost sight of as the board’s paramount objective. Id., at 161. If the board found itself unable to conveniently reschedule the appeals, they could have been “dismissed without prejudice” and thereafter heard by the Division pursuant to N. J. S. A. 54:2-39.

N. J. S. A. 54:2-35 authorizes the Division not only to review any action or determination of a county board but to “give such judgment therein as it may think proper.” Thus the Division, if it found that the appeals had been erroneously dismissed, was charged with the duty of disposing of them on the merits. At the hearing on the merits petitioners would have been required to adduce proofs sufficient to overcome the presumption of correctness which attaches to a county board judgment. Riverview Gardens, Section One v. North Arlington, 9 N. J. 167, 174-175 (1952); City of Passaic v. Botany Mills, 72 N. J. Super. 449, 454 (App. Div. 1962), certif. den. 37 N. J. 231 (1962).

The taxing district urges that here such proofs were entirely lacking and the presumption in favor of the county board’s judgments required that the appeals be dismissed and the assessments affirmed. We disagree. It appears without dispute that the parties had entered into an agreement of settlement as to the 1967 assessments. As noted, following denial of the taxpayers’ motion to dismiss each of the petitions was amended to call for a smaller reduction to coincide with the 1967 settlement, and judgments were entered reducing the assessments to the amended figures. While we are assured by counsel for the taxing district that these were not consent judgments, we find no objection in the record to the procedure followed and conclude that the judge of the Division, as well as the attorney for the taxpayers, may well have been misled into believing that, in lieu of taking testimony, there was no objection to reductions to the 1967 figures. In view of the uncertainty, we incline to the view that the ends of justice will best be served by a remand to the Division for the purpose of taking such proofs as the parties may care to submit on the issue of valuation, having in mind that the burden of proof is on petitioners to justify the reductions sought. It is suggested in the interest of expedition that the taxing district determine and advise the Division promptly whether it desires a hearing on the merits or is satisfied to have the Division adopt the 1967 figures.

The judgment of the Division of Tax Appeals is accordingly modified and, as modified, is remanded for further proceedings in accordance with this opinion. We do not retain jurisdiction.

No costs.


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

text:
    IN THE MATTER OF LOOK MAGAZINE, CHRISTOPHER S. WREN AND MARGARET ENGLISH.
    Superior Court of New Jersey Law Division
    Decided March 25, 1970.

      Mr. John G. Thevos, Prosecutor.
    On petition for order to show cause.
   Crane, A. J. S. C.

The Prosecutor of Passaic County has petitioned the court to issue an order to show cause why LooTc Magazine, Christopher S. Wren and Margaret English, authors of an article entitled “Murder New Jersey Style” which appeared in the March 10, 1970 issue of the magazine, should not be held in contempt of court. Such an application should receive careful scrutiny in view of the drastic nature of the relief sought. Initially, a preliminary determination must be made as to whether probable cause exists to support the issuance of the order to show cause. Van Sweringen v. Van Sweringen, 34 N. J. Super. 394, 403 (App. Div. 1955), rev’d on other grounds 33 N. J. 440 (1956).

The prosecutor contends that the article, containing allegations directly bearing upon the guilt or innocence of defendants, was published during the course of a trial and before the return of the verdict. This, he asserts, tended to interfere with the orderly process of the trial and the due administration of justice. He also contends that the article has “infected and poisoned the atmosphere of every county in this state” with respect to the trial of other indictments against the defendants not yet tried.

Prom the exhibits presented and from the records of the court, of which we take judicial notice, the following facts appear. After the death of two persons in Passaic County in 1966, murder indictments were returned. In one ease (Indictment 379-67) Paul Kavanaugh, Vincent Kearney, Jr., Harold Matzner and Dorothc Krueger were charged with the murder of one Judith Kavanaugh, the wife of defendant Kavanaugh. In the other case (Indictment 64-67) Vincent Kearney, Jr., Harold Matzner and John C. De Groot, a Clifton police sergeant, were charged with the murder of one Gabriel De Franco. The cases attracted a great deal of attention in the local press, necessitating the drawing of trial juries from other counties. During the preliminary stages the trial judge issued orders directed to counsel and the parties which in essence forbade the dissemination of information concerning the cases to the public press and other news media. The conduct of one attorney with relation to matters appearing in the press resulted in the revocation of permission for him to appear pro hac vice. State v. Kavanaugh, 52 N. J. 7 (1968). The trial of State v. Kearney et at. (Indictment 64-67), relating to the De Franco homicide, was completed in February 1969, resulting in a verdict of acquittal. The trial of State v. Kearney et al. (Indictment 279-67) was begun in October 1969. It was concluded on February 22, 1970 by a verdict of acquittal.

The article itself is hardly objective. It may more accurately be described as a one-sided version of the investigation of the homicides and the trial of the cases, exhibiting a strong bias in favor of defendants’ point of view. Its dominant theme is stated in the subtitle: “How gambling, incompetence and'corruption led to the trials of five people for murders they didn’t commit.” It is replete with statements which might be regarded as libelous such as:

The Prosecutor’s Office had no case. But to drop charges against Matzner and his co-defendants would have been to invite a massive false-arrest suit. It would also have brought about inquiries into the Passaic County Prosecutor’s office, and Mafia involvement in De Franco’s murder.
Before Dowd could testify for the defense months later, he was approached quietly and told he would get two bullets in his head if he talked too much.
Edward Lenney, now out on parole, speaks bitterly of the Prosecutor’s Office: “they fed me information that I believed, and they had to know it wasn’t true.”
If the state’s assault was launched in error, it was pressed maliciously. The Prosecutor’s Office wanted public credit for the spectacular solution of two nagging, unsolved murders. It could not, by backing down, risk a false arrest suit and an inquiry into its own conduct. Faced with admitting incompetence or pressing a trumped-up case, Passaic County chose the latter.

Obvious journalistic tricks are used to persuade the reader to the intended conclusion. The principal investigator for the prosecutor is described as “a fat, asthmatic county investigator” who “owed his job to political influence,” while an investigator for the defense is described as “a top private investigator.” One side of a double-page spread shows four of the prosecution witnesses in characteristically unflattering police identification photographs, while defendants in sharp contrast are attractively portrayed on the other side. The total effect is one of sensational muckraking journalism in classic form.

The prosecutor has submitted a point-by-point analysis purporting to refute the statements contained in the article. It is not necessary, however, to decide the truth or falsity of the contents of the article to resolve the issue of whether an order to show cause should be issued. Whether the article is libelous is also totally irrelevant to the inquiry here. In re Bozorth, 38 N. J. Super. 184 (Ch. Div. 1955). Persons claiming to have been libeled by this article may, of course, pursue civil remedies if they wish. Whether criminal libel has been committed need not be explored in this proceeding.

From evidence offered in connection with this petition it appears that the March 10 issue of Look Magazine was shipped from Philadelphia to distributors in Passaic County on February 17, 1970. Delivery was made in Passaic County on February 18, 1970. It further appears from affidavits presented that the magazine appeared on the newsstands in Passaic County on February 23, 1970.

Having been aware of the expected publication of the article, the trial judge ordered the jury sequestered on the evening of February 18. So far as is known, no juror saw the offending article. The summations of counsel began on the 19th and were completed on the 21st. The court charged the jury on the 21st and ultimately the verdict was returned on the 22nd. Thus, in actual fact the publication of the article did not have an influence upon the outcome of the case.

The matter of the relationship between the courts and. the press is a delicate one. In deference to the provisions of the United States and New Jersey Constitutions relating to freedom of-the press (U. S. Const., 1st Amdt.; N. J. Const. (1947), Art. I, par. 6) our courts have shown understandable restraint in dealing with the press.

A variety of reported opinions have dealt with the problems of preserving the right of litigants to a fair trial while recognizing the right of the press to report the news and express opinions freely. Most of these have involved situations in which excessive publicity before and during the trial prejudiced a defendant’s right to a fair trial. See, e. g., Sheppard v. Maxwell, 384 U. S. 333, 86 S. Ct. 1507, 16 L. Ed. 2d 600 (1966); Marshall v. United States, 360 U. S. 310, 79 S. Ct. 1171, 3 L. Ed. 2d 1250 (1959); State v. Van Duyne, 43 N. J. 369 (1964). Few have faced the problem of whether a court may take direct action against the press. In Bridges v. California, 314 U. S. 252, 62 S. Ct. 190, 86 L. Ed. 192 (1941), the publishers of a newspaper had been held in contempt of court for comments pertaining to pending litigation. Eeversing the contempt convictions, the Supreme Court held that a finding that the published material had an “inherent tendency” to interfere with the orderly administration of justice was an insufficient basis for a contempt conviction. The “clear and present danger” test announced in Schenck v. United States, 249 U. S. 47, 39 S. Ct. 247, 63 L. Ed. 470 (1919), was reiterated with emphasis on the idea that “the substantive evil must be extremely serious and the degree of imminence extremely high before utterances may be punished.” 314 U. S. at 263, 62 S. Ct., at 194. Again in Craig v. Harney, 331 U. S. 367, 373, 67 S. Ct. 1249, 91 L. Ed. 1546 (1947), it was said that “freedom of speech and of the press should not be impaired through exercise of that power [contempt] unless there is no doubt that the utterances in question are a serious and imminent threat to the administration of justice.” The same test was applied in the ease of In re Bozorth, supra> where defendant had caused to be published a statement critical of a judge’s decision. Since the case had been concluded, it was held that the author of the statement was not subject to punishment for contempt even though the utterance may have been libelous.

In recent years the subject has been studied by a committee of the American Bar Association. These studies have culminated in the promulgation of “Standards Relating to Tair Trial and Tree Press,” adopted Tebruary 19, 1968. The approach favored by the Standards is to place restraints upon lawyers, law enforcement officers, judges, witnesses and others to prevent the release of information or opinion to the press which would tend to interfere with the trial of a case or prejudice the administration of justice. The Standards recommend (§ 4.1) that the contempt power be used cautiously, but that it should be exercised where

* * * a person who, knowing that a criminal trial is in progress * * * disseminates by any means of public communication an extrajudicial statement relating to the defendant or to the issues in the case that goes beyond the public record of the court in the ease, that is wilfully designed by that person to affect the outcome of the trial, and [emphasis supplied] that seriously threatens to have such an effect.

If the Loole article had been published earlier, it might have been relevant to inquire whether it was “wilfully designed * * * to affect the outcome of the trial” and whether there was a serious threat to the outcome of the trial. In view of the fortuitous fact that the jurors had been sequestered and had begun deliberations before the publication could have reached them, the ingredient of imminence deemed to be of such importance in the judicial decisions cited above and which seems to be implicit in the Standards has been removed. So, too, has the necessity for an inquiry into the state mind of the authors and publishers of the article.

With respect to the indictments against the defendants which have not yet been tried, the prosecutor has requested a “cooling off” period. They have not yet been scheduled for trial. We do not know what effect, if any, the article has had on the minds of prospective jurors. A searching examination of prospective jurors on voir dire may perhaps be revealing. In any event, we are not persuaded that the publication of the article presents a serious or imminent threat to the ability of the State to obtain a fair trial of the issues in those remaining indictments.

Here more than substantial doubt exists as to the ultimate relief sought. Proeedurally the situation is analogous to that existing where an application for a preliminary injunction is presented. In such cases a preliminary injunction will not issue if the plaintiff’s rights are not clear as a matter of law. Accident Index Bureau Inc. v. Male, 95 N. J. Super. 39, 50 (App. Div. 1967); General Electric Co. v. Gem Vacuum Stores, 36 N. J. Super. 234, 236 (App. Div. 1955). For the reasons expressed above, the court is unconvinced that probable cause exists for the issuance of the order to show cause.

The petition is denied.


author: Breslin, R. W., J. D. C.

text:
    EDWARD B. MC KEE AND BARBARA MC KEE, PLAINTIFFS, v. HARRIS-SEYBOLD COMPANY, DIVISION OF HARRISINTERTYPE CORP.; SEYBOLD MACHINE CO.; CARL W. HAGMAN AND MIEHLE-GOSS-DEXTER, INC., DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided April 2, 1970.

      Messrs. Harrison, Hartman <& MacDonald, attorneys for plaintiffs.

      Messrs. Morrison, Lloyd & Griggs, attorneys for defendants Harris-Seybold Company, Division of Harris-Intertype Corp. and Seybold Machine Co.

      Mr. Donald B. Kaufman, attorney for defendant Carl W. Hagman.

      Mr. Norman 8. Costanza, attorney for defendant, MiehleG oss-Dexter, Inc.
   Breslin, R. W., J. D. C.

(temporarily assigned). This matter arises out of a motion for summary judgment in favor of defendant Harris-Seybold Company, Division of HarrisIntertype Corp., on the amended complaint filed by plaintiffs and cross-claims asserted by the co-defendants.

Plaintiff Edward B. McKee contends that on January 18, 1968, while an employee of the American Mission to the Greeks, Inc., Ridgefield, New Jersey, he sustained serious personal injuries while operating a paper cutting machine known as a “Dayton.” The machine was manufactured in 1916 by the Seybold Machine Company of Dayton, Ohio. On Nfovember 22, 1926 Seybold entered into a contract with the Harris Automatic Press Company of Cleveland, Ohio, whereby it agreed to sell certain assets and Harris Automatic agreed to assume specified liabilities, as more particularly set forth in a contract of sale. Said contract was assigned to a new corporation, Harris-Seybold-Potter Company, and was consummated by the parties. Subsequent thereto HarrisSeybold-Potter changed its name to Harris-Seyboid Company and thereafter acquired the Intertype Corporation.

In'the agreement between Seybold and Harris Automatic the former sold its property, assets, business and good will and authorized the use of the names “The Seybold Machine Company” and “Seybold.” Seybold agreed to change its corporate name to eliminate the word “Seybold,” to not thereafter engage in any active manufacturing business and to hold Harris harmless from any undisclosed or contingent obligations not incurred in the ordinary course of manufacturing business since June 30, 1926. In accordance with the agreement Seybold changed its name to the Washington Machine Company, which was subsequently dissolved on February 9, 1928. Defendant Harris-Seyboid Company Division of Harris-Intertype Corp. (hereinafter Harris') contends that it did not assume any contingent liability of the Seybold Machine Company arising out of (1) the alleged negligent design and manufacture of the machine in question by Seybold, (2) any express or implied warranties arising out of said sale, or (3) the defective design or manufacture of the machine. It further contends that it did not incur any liability by virtue of informing plaintiff’s employer that the machine could be serviced by defendant Hagman. The claims asserted by plaintiff Edward McKee against Harris are set forth in the first, second, third and fifth counts of the complaint. The fourth count is directed against defendant Hagman and alleges that he was negligent and careless in the servicing of the machine. The seventh count is directed against defendant Miehle-Goss-Dexter, Inc. (hereinafter Miehle) and alleges that it installed a safety device on said machine which was defective in design and manufacture and that it impliedly and expressly warranted that said safety device was for the intended purpose.

Defendant Hagman is the owner of a business in Long Island. City, New York, which services and repairs paper cutting machinery, manufactures parts for obsolete machines and supplies parts for machines of various sizes and molds. On the recommendation of Harris his company made a service call to the American Mission on July 25, 1967. An employee, Conrad Nagel, reset the clutch of the Dayton machine and checked its operation to determine if it had the power to go through the heavy lip of paper. The only other contact with the American Mission was the sale of two used cutting knives for the machine on November 29, 1967. The knives were installed by employees of American Mission.

Defendant Miehle sells paper cutting machines, paper drilling machines, PMC die cutting and presses. In 1957 it acquired the E. P. Lawson Division. In 1936 Lawson designed a one-hand, two motion position knock-out device which it installed on the Dayton machine in question in order to comply with the requirements of New York State Department of Labor, and there was placed on the machine a label bearing the name E. P. Lawson, Inc., with the approval number 2172. It was an additional safety device to the one incorporated in the machine and known as a safety stop. Harris had no transaction or communication with the Lawson Company relating to the safety device.

Preliminarily, it must be noted that neither party requested this court to take judicial notice of Ohio law, pursuant to Evidence Rule 9. Although Ohio may have the most substantial contacts with the instant matter, in that the contract in question was made and performed in Ohio by Ohio corporations, the subject matter of the contract being the sale of assets located mostly in Ohio, HIMC Investment Co. v. Siciliano, 103 N. J. Super. 27 (Law Div. 1968); Woll v. Dugas, 104 N. J. Super. 586 (Ch. Div. 1969); Mellk v. Sarahson, 49 N. J. 226 (1967), this court will, nevertheless, apply the law of our own jurisdiction as the forum’s choice of law. See Evidence Rule 9; Graulich Caterer, Inc. v. Hans Holterbosch, Inc., 101 N. J. Super. 61, 66 (App. Div. 1968); Donnelly v. United Fruit Co., 75 N. J. Super. 383, 397 (App. Div. 1962), aff’d 40 N. J. 61 (1963). Parenthetically, the laws pertaining to the instant issue are basically uniform throughout the country, and since Ohio law is essentially similar to our own, neither party will be prejudiced by the court’s adherence to New Jersey law.

It is the general rule that where one company sells or otherwise transfers all its assets to another company the latter is not liable for the debts and liabilities of the transferor, including those arising out of the latter’s tortious conduct, except where: (1) the purchaser expressly or impliedly agrees to assume such debts; (2) the transaction amounts to a consolidation or merger of the seller and purchaser; (3) the purchasing corporation is merely a continuation of the selling corporation, or (4) the transaction is entered into fraudulently in order to escape liability for such debts. Jackson v. Diamond T. Trucking Co., 100 N. J. Super. 186 (Law Div. 1988); Andres v. Morgan, 62 Ohio St. 236, 56 N. E. 875 (Sup. Ct. 1900); Ruedy v. Toledo Factories Co., 61 Ohio App. 21, 22 N. E. 2d 293 (App. Ct. 1939); Kloberdanz v. Joy Mfg. Co., 288 F. Supp. 817 (D. Colo. 1968); 19 Am. Jur. 2d, § 1546, at 922. A fifth exception, sometimes incorporated as an element of one of the above exceptions, is the absence of adequate consideration for the sale or transfer. 19 Am. Jur. 2d, § 1551, at 927; 7 Fletcher, Cyclopedia of Corporations, § 4751 (1919 ed.).

I

Liability cannot be impressed upon the movant under the first exception. The contract in question provided that the purchaser and its successors, i. e., the movant, assume certain liabilities of the seller (Seybold) enumerated in the contract. These specific liabilities were open accounts for purchasers, accrued water bills, local taxes, payroll accounts, past federal taxes owing, if any, certain sales representative contracts, and current obligations of the seller for purchase of materials and supplies and for the delivery of manufactured goods. These liabilities were in existence at the time the balance sheet attached to the contract was prepared. Since the contract was not to be consummated until February 1, 1927, it was also provided that the purchaser assume the liabilities incurred by Seybold “in the usual course of its manufacturing business, but not otherwise” subsequent to June 30, 1926—the date the balance sheet was prepared. (Seybold’s earnings from that date were to be assigned to the buyer). In paragraph eight of the contract Seybold warranted that there were “no undisclosed or contingent obligations” of Seybold not specified in the contract, and that Seybold would hold the purchaser harmless from such undisclosed or contingent obligations.

A 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. Hudson County Newspaper Guild v. Jersey Pub. Co., 19 N. J. Super. 440 (Law Div. 1952), aff'd 23 N. J. Super. 419 (App. Div. 1952); S. G. Young, Inc. v. B. & C. Distributors Co., 23 N. J. Super. 15 (App. Div. 1952). Provisions of a contract must be interpreted, if possible, so as to give effect to the general purpose and intention of the parties. Josefowicz v. Porter, 32 N. J. Super. 585 (App. Div. 1954). It is clear that there was no express assumption by the purchaser of any liabilities except those designated in the contract. It is equally manifest that the purchaser’s assumption of those obligations incurred by the seller in the “usual course of manufacturing” subsequent to June 30, 1926 does not include the type of contingent liability herein sought to be imposed. “Usual” is variously defined to mean that which happens in the ordinary course of events, that which is customary or according to common practice. Dancy v. Abraham, Bros. Packing Co., 171 Tenn. 311, 102 S. W. 2d 526 (Sup. Ct. 1937); Roberts Coal Co. v. Corder Coal Co., 143 Va. 133, 129 S. E. 341 (Sup. Ct. App. 1925); People v. Carman, 385 Ill. 23, 52 N. E. 2d 197 (Sup. Ct. 1943). The liabilities incurred by Seybold prior to June 30, 1926, expressly assumed by the purchaser, were those incident to regular upkeep of manufacturing operations, e. g., obligations for materials and supplies purchased. The liabilities incurred by Seybold in the usual course of manufacturing subsequent to June 30, 1926, which were also expressly assumed by the purchaser, were not intended to be of an all-inclusive nature, but rather of the same type as those incurred prior to the above date. This is so especially in view of the restrictive language that appears immediately after “in the usual course of manufacturing business,” i. e., “but not otherwise.” There was no contractual express or implied assumption of contingent tort liability.

II

Plaintiff also asserts that the transaction in dispute was not a mere sale of assets but a de facto merger or consolidation which would render the movant liable for the torts of Seybold. In Applestein v. United Board & Carton Corp., 60 N. J. Super. 333 (Ch. Div. 1960), aff’d 33 N. J. 72 (1960), the court stated:

A merger of corporations is the absorption by one corporation of one or more usually smaller corporations, which lose their identity by becoming part of the large enterprise * * * A merger of two corporations contemplates that one will be absorbed by the other and go out of existence, but the absorbing corporation will remain. In a consolidation, the two corporations unite and both go out of existence, and a new amalgamated corporate enterprise takes the place of the former corporations, [at 342]

And the court in Sterling v. Mayflower Hotel Corp., 33 Del. Ch. 293, 93 A. 2d 107, 38 A. L. R. 2d 425, 434 (Ch. 1952), held:

A merger may be said to “involve” a sale of assets, in the sense that the title to the assets is by operation of law transferred from •the. constituent corporation to the surviving corporation; but it is not the same thing. * * * A merger ordinarily contemplates the continuance of the enterprise and of the stockholders’ investment therein, though in altered form; a sale of all assets * * * ordinarily contemplates the liquidation of the enterprise.

In Cortland Specialty Co. v. Comm’r of Internal Revenue, 60 F. 2d 937 (2 Cir. 1932), the court distinguished a sale of assets from reorganization, merger and consolidation, stating that the latter indicated corporate readjustments of existing interests, whereas in the former the vendor corporation parts with its interest for cash and receives nothing more.

The court in Applestein v. United Board & Carton Corp., supra, held that the nature of the transaction there involved was in effect a merger rather than a sale of corporate properties. In so holding, however, it stressed the fact that the head of the selling corporation would have virtual control over the purchasing corporation; the transaction was designated in the proxy statement as a “polling of interests” ; it was intended that the selling company be dissolved; it was provided that the vendee would assume all of the vendor’s liabilities, and the executive and operating personnel of the vendor would be retained by the vendee.

Although not every element found in Applestein is essential in the determination of a de facto merger, Good v. Lackawanna Leather Co., 96 N. J. Super. 439 (Ch. Div. 1967), the court in the latter case noted certain key elements present in Applestein which were absent in the case before it. Thus, the court held that since there was no transfer of the assets and business of the one corporation in exchange for the shares of the other corporation, there was no ceasing of corporate functions by the transferor and there was no assumption of liabilities by the transferee, there was no de facto merger or consolidation.

In Farris v. Glen Alden Corp., 393 Pa. 427, 143 A. 2d 25, 31 (1958), the Supreme Court of Pennsylvania held:

* ® * When as part of a transaction between two corporations, one corporation dissolves, its liabilities are assumed by the survivor, its executives and directors take over the management and control of the survivor, and, as consideration for the transfer, its stockholders acquire a majority of the shares of stock of the survivor, then the transaction is no longer simply a purchase of assets or acquisition of property * ® • but a merger. * * *

The court in Marks v. Autocar Company, 153 F. Supp. 768 (E. D. Pa. 1954) also examined the corporate transaction involved there, designated a sale, and stated:

Of course, there was a transfer of assets for a consideration, which could be properly designated a sale, but every merger has in it the elements of a transfer for consideration. Autocar’s business was taken over by White which has, since the transfer, been conducting it as a division of its company. Autocar has been or is about to be dissolved and will cease to exist as a corporate entity abandoning its name and legal identity. When the transaction is completed, all of its stockholders will have passed into White and will have become members thereof. White has assumed all of the liabilities of Autocar and has acquired its goodwill and the right to use the name, [at 770]

In the present case Seybold sold all its assets, including its physical assets, patents and its good will and the right to use its name. It cannot be argued that it was not a complete transfer. However, the consideration paid to Seybold for the transfer was almost $2 million in cash and 5,500 shares of the vendee’s common stock. It was not a transfer for securities alone. The shares paid as consideration amounted, in fact, to only a negligible part of the total purchase price. Since the overwhelming portion of the consideration was cash, there was little, if any, continuity of stockholder interest in the purchasing corporation.

The contract also provided that Seybold was to change its name to eliminate the word “Seybold.” The seller was also required to refrain from engaging in any manufacturing business, and its president, Charles Seybold, was also restricted from engaging in any manufacturing operations similar to the operation to be sold. On January 12, 1927 the stockholders of Seybold voted to change the corporate name to the “Washington Machine Company,” and the latter continued in existence at the time of the sale and for a period of one year thereafter. The Washington Machine Company was dissolved in February, 1928. The identity of the corporation and of its stockholders as an integral part of the corporate identity was not eradicated by the transfer. The corporation could no longer function as a manufacturer, yet it could and did operate and function as a corporation for some time after the sale. The vendor corporation, as a corporate entity, was not absorbed into the purchasing corporation. What was absorbed was the nature of the manufacturing operations previously engaged in by Seybold, not the Seybold corporate entity itself. The stockholders of Seybold continued to remain stockholders of the Washington Machine Company. The two corporations, Seybold and the purchaser, were strangers before the sale and continued to remain strangers after the sale. See Kloberdanz v. Joy Mfg. Co., supra; Lamb v. Leroy Corp., 454 P. 2d 24 (Rev. Sup. Ct. 1969). If the vendor corporation receives the consideration for the transfer, as opposed to those situations where the stockholders directly receive the same, and that corporation is thereby kept alive, there seems to be nothing in the nature of merger or consolidation. 44 Harv. L. Rev., at 263.

Furthermore, there is here no broad assumption of liabilities such as is usually present in de fado merger situations, and, on the face of the contract and the exhibits offered, there is nothing that can be remotely construed as evidence of an intent on the part of the contracting parties to effectuate a merger or consolidation rather than a sale of assets.

It may be argued that since the purchaser caused a new corporation to come into existence and succeed to the former’s rights under the contract, a consolidation was in reality accomplished. However, although the new corporation, “Harris-Seybold-Potter,” did take over the operations of the purchaser and those sold to it by Seybold, the Seybold corporate entity still enjoyed its separate and distinct identity after the transfer. Moreover, the new corporation was brought into being solely through the efforts of the purchaser, not through any activity of Seybold.

The transfer in question was not a de fado merger or consolidation so as to render the movant liable for Seybold’s torts.

Ill

Plaintiff also asserts that the movant (including its predecessors) was a mere continuation of the vendor corporation. As authority it cites Jackson v. Diamond T. Trucking Co., supra, 100 N. J. Super. 186. In that case, one Taylor, president, director and principal stockholder of Diamond T., in furtherance of his desire to acquire the assets of Phillips, a trucking corporation, contracted with the latter’s owner for the sale of Phillips’ assets for a specified consideration. In the contract Taylor, individually, was the named buyer, but there was a provision for the assignment and transfer of the rights and assets covered by the contract to Diamond T. The buyer was to assume no liabilities of Phillips. Taylor operated Phillips for some time after the sale until the I. C. C. approved the transfer of the franchise to Diamond T. The transfer to Diamond T. from Taylor as head of Phillips was without consideration. The court held that Diamond T. was liable for the debts of Phillips since (1) the transfer was without consideration; (2) Taylor as the president, director and principal stockholder of both Phillips and Diamond T., affected the transfer; (3) Taylor had actual knowledge of plaintiff’s claim; (4) Diamond T. was presently operating out of the Phillips’ buildings with some of Phillips’ trucks, and (5) Phillips had no assets to pay plaintiff’s claim and was dissolved in fact, no longer conducting any operations.

The court in Jackson reviewed previous New Jersey cases touching upon the subject matter and noted, that in each case where the vendee corporation was held liable there was present

* * * (1) transfer of corporate assets (2) for less than adequate consideration (3) to another corporation which continued the business operation of the transferor (4) when both corporations had at least one common officer or director who was in fact instrumental in the transfer (except in the Aetna case where there was, however, actual knowledge of the transferor’s financial condition) and (5) the transfer rendered the transferor incapable of paying its creditors’ claims because it was dissolved in either fact or law. [at 196]

See Parsons Mfg. Co. v. Hamilton Ice Mfg. Co., 78 N. J. L. 309 (Sup. Ct. 1909); Chorpenning v. Yellow Cab Co., 113 N. J. Eq. 389 (Ch. 1933), aff’d 115 N. J. Eq. 170 (E. & A. 1933); Couse v. Columbia Powder Mfg. Co., 33 A. 297 (Ch. 1895) (not officially reported); Aetna, etc., Co. v. International, etc., Corp. 117 N. J. Eq. 190 (Ch. 1934); Fox v. Radel Leather Mfg. Co., 121 N. J. Eq. 291 (E. & A. 1936).

The Jackson court noted the dictum in the Parsons case:

In addition to discussing principles of novation and estoppel, the court said: “There is ample authority also to support the proposition that the defendant, having taken over the assets of the former company for the purpose of carrying on its business, without apparent change in the personnel .of the concern, is liable for the payment of the debts of the former concern * * *” [at 194]

However, the court questioned tho accuracy of the statement in light of the general rule that when, a sufficient consideration is paid for the assets of a corporation, there is no liability, in the absence of fraud or an agreement to assume the debts, even though the vendee corporation was in fact organized by the stockholders or members of the vendor corporation. See 19 Am. Jur. 2d, § 1546, at 922-923. The court concluded that the fact that the transferee is a continuation of the transferor corporation does not always mean that the transferee is legally liable for the transferor’s obligations:

Many facts and policy factors must be weighed in tho balance, most importantly, the policy protecting corporate creditors must be weighed against the equally important policy respecting separate corporate entities, [at 196]

Courts in other jurisdictions have repeatedly dealt with allegations of corporate continuations. In Kloberdanz v. Joy Mfg. Co., supra, 288 F. Supp. 817, the court stated:

Nor can the buyer be said to be a mere continuation of the seller. [The seller] continued to exist after the sale [for 8 months], and theer was no common identity of stock, directors, officers or stockholders between Joy and [the seller]. This exception covers a reorganization of a corporation. 15 W. Fletcher, Cyclopedia of the Law of Private Corporations, § 7122, at 194-196 and nn 41-43 (1961 Rev. Vol.) There is no evidence of this here, [at 821]

In Andres v. Morgan, supra, 62 Ohio St. 236, 56 N. E. 875, the court held:

* * * where a mere transformation is had,—parties remaining the same—and the property is transferred by members of the old company transferring their interest in it for an equal interest in it as property of the new, the transaction does not constitute a sale by the one and a purchase by the other. It is simply a change in the manner and form of carrying on the same business by the same persons. [56 K. E., at 877J

In Jones v. Eppler, Okl. 266 P. 2d 451 (1953), the Supreme Court of Oklahoma held that where there was no consideration other than the purchasing corporation’s stock issued to the individual executives of the selling corporation, all the assets of the purchaser were derived from the seller, the new corporation remained under the same management, and the business was continued in the same manner as before, liability for the debts of the seller would attach to the new corporation.

In the instant case there was presumably a continuity of actual manufacturing operations. The lands, buildings, machinery and tradenames were sold, and it is apparent that the purchaser intended to make use of all these in the manufacture of the same type of product. It was also stipulated in the contract of sale that the purchaser would employ the vice-president, secretary and treasurer of Seybold at the respective individual’s request. The length of required employment was one year. However, this provision was merely to insure the economic stability of those officers immediately after the transfer. The contract did not state the capacity in which they were to be employed. In short, there is no evidence of continuity of management. As stated previously, there was also no continuity of stockholder investment, and the selling corporation retained its separate identity well after the sale took place. Neither were there common directors or officers at the time of the sale. When one company purchases all the assets of another, it is to be expected that the purchasing corporation will continue the operations of the former, but this does not by itself render the purchaser liable for the obligations of the former. Eor liability to attach, the purchasing corporation must represent merely a “new hat” for the seller. Bergman & Lefkow Insurance Ag. v. Flash Cab Co., 110 Ill. App. 2d 415, 24 N. E. 2d 729 (App. Ct. 1969). The purchasermovant was not such a continuation of Seybold as to render it liable for the latter’s torts.

IV

Nor can the plaintiff impose liability under the fourth or fifth exceptions. There is no hint of fraud in the transaction, and the consideration paid for the transfer was in excess of the value of the assets received as set forth iu the balance sheet attached to the schedule. The main reason why the courts impose liability upon the purchasing corporation when it has not given adequate consideration is that the seller will be thereby rendered insolvent and unable to pay its debts. See West Texas Refining & D. Co. v. Comm’r of Internal Revenue, 68 F. 2d 77 (10 Cir. 1933). The court there stated:

It is equally well settled when the sale is a bona fide transaction, and the selling corporation receives money to pay its debts, or property that may be subjected to the payment oí its debts and liabilities, equal to the fair value of the property conveyed by it, the purchasing corporation will not, in the absence of a contract obligation or actual fraud of some substantial character, be held responsible for the debts or liabilities of the selling corporation, [at 81]

The court in Lamb v. Leroy Corp., supra, 454 P. 2d 24, held that where a purchasing corporation gives its stock as consideration paid to the selling corporation directly and not to its stockholders, liability is thereby avoided. In such transaction a valuable asset is given to the seller and is subject to creditors’ claims and the creditor cannot complain unless the consideration was not fair or adequate. The court also noted that it is immaterial whether the consideration was in the form of cash or stock. And in Pringle v. Hunsicker, 154 Cal. App. 2d 789, 316 P. 2d 742 (D. Ct. App. 1957), the court stated that continuity of management, absence of adequate consideration for the transfer and failure to leave enough assets with the vendor corporation for the payment of its debts, are factors essential to the application of the rule that the vendee corporation is liable for the vendor’s debts when the former is organized by the operators of the vendor corporation. See also Jackson, supra.

In Kloberdanz v. Joy Mfg. Co., supra, the court set forth the general rule applicable to a sale of corporate assets and the four exceptions to it. It did not place the absence of adequate consideration in a separate category but recognized its importance as a factor to be weighed.

Although the general rule speaks of a transfer of all a corporation’s assets, the emphasis should be on whether the sale was a bona fide one involving the payment of money or property to the selling corporation whereby it can respond in actions like the present one. The transfer of assets in this case was made for a good and valuable consideration * * * and there is not hint of fraud * * * it follows that unless the sale of (seller’s) assets to Joy falls into one of the four recognized exceptions, the general rule would apply. * * * [288 S. Supp., at 820-821]

Here, Seybold received almost $2 million and 5,500 shares of movant’s stock. In light of the value of the assets transferred, the consideration was sufficient and the transaction left Seybold well able to respond to the claims of creditors.

V

Plaintiff also contends that the movant is liable for its negligence in recommending defendant Hagman to repair the machine which allegedly caused the subsequent injury to the plaintiff. However, he cites no cases in support, and this court can find none. Defendant cites authority for a parallel position that a recommendation of one physician by another will not subject the latter to liability for the recommendation, absent a showing of partnership or employment or agency, unless the recommending physician did not exercise due care in making the recommendation. The recommended physician is treated as an independent contractor, liable for his own torts. Graddy v. New York Medical College, 19 A. D. 2d 426, 243 N. Y. S. 2d 940 (App. Div. 1963); Oldis v. La Societe Francaise Le Bien faisanes Mut., 130 Cal. App. 2d 461, 279 P. 2d 184 (D. Ct. App. 1955); Huber v. Protestant Deaconess Hospital Ass'n., 127 Ind. App. 565, 133 N. E. 2d 864 (App. Ct. 1956); Myers v. Holborn, 58 N. J. L. 193 (E. & A. 1895); 70 C. J. S. Physicians & Burgeons § 54, at 978. The singular and vital profession of medicine may be the main factor in the imposition of any duty at all upon a physician who, in the course of his treatment, recommends another physician.

However, presuming the application of this rule to the movant, it is clear from the proofs that there is no employment relationship existing between defendant Hagman and the movant. Nor is there the slightest evidence of agency or partnership. Hagman is an independent contractor who undertook to repair the machine in question, and any liability arising out of the alleged negligent repair should be exclusively visited upon him. Plaintiff has brought forward no proof whatsoever showing movant’s lack of due care in recommending Hagman. On the contrary, the testimony adduced at depositions supports a finding that Hag-man or his employee was well qualified to perform any repairs on a machine of this type. Once the movant has demonstrated a prima facie right to summary judgment, it is incumbent upon the movee to produce some proof in opposition thereto. N. J. Mtg. & Inv. Corp. v. Calvetti, 68 N. J. Super. 18 (App. Div. 1961). Such required proof is not here present.

VI

Plaintiff has also urged liability upon the movant on the ground that its “alter ego,” the Lawson Company (now a division of defendant Miehle-G-oss-Dexter, Inc.), designed and installed a defective safety device upon the machine in question. The Lawson Company was until the time of its acquisition by defendant Miehle-Goss-Dexter an individual corporate entity, distinct from the movant. The allegation, that it was the movant’s “alter ego” is a mere legal conclusion and suffers from the same lack of proof required to pierce the corporate veil.

The motion is therefore granted and judgment will be entered dismissing the amended complaint and the cross-claims as to defendant Harris.