text:
    DOROTHY FEDER, PLAINTIFF-APPELLANT, v. BANKERS NATIONAL LIFE INSURANCE COMPANY, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued April 8, 1968
    Decided April 25, 1968.

      Before Judges Conford, Collester and Labrecque.

      Mr. Marvin A. Sachs argued the cause for appellant (Messrs. Feuerstein & Sachs, attorneys; Mr. Allan Maitlin, of counsel; Mr. Peter S. Valentine, on the brief).

      Mr. Roger H. McGlynn argued the cause for respondent (Messrs. McGlynn, Stein & Eberiel, attorneys).
   Pee Curiam.

The judgment of the Law Division is affirmed. For the facts of the case see the opinion of the trial court, 96 N. J. Super. 483 (Law Div. 1967).

The question of lapse of the policy for nonpayment of premiums is controlled by the reinstatement clause of the general provisions of the policy, the material provisions of which are mandated by the life insurance statute, N. J. S. A. 17:34-15, subd. I., see N. Y. Life Insurance Co. v. Weiss, 133 N. J. Eq. 375, 382 (E. & A. 1943), opinion of Heher, J., dissenting on another point. The material portions of the clause read as follows:

“If this policy shall lapse in consequence of default for more than 31 days in payment of any premium, it may (unless the cash surrender value has been paid or the extended term insurance has expired) be reinstated at any time within 5 years of such default, upon the production of evidence of insurability satisfactory to the Company, and upon the payment of all overdue premiums with interest at 5% per annum, compounded annually, * * (Emphasis added.)

There is no ambiguity in this clause. Its clear effect is that reinstatement is conditioned upon payment of all premiums previously due on the policy and not paid during the period between lapse and reinstatement. Under the jury verdict and the evidence in this case, the only premiums paid after the failure of payment, as of September 4, 1962 (end of grace period), of the monthly premium due August 4, 1962, were the two monthly payments made September 11, 1962 and September 14, 1962. Eeinstatement of the policy took place September 24, 1962. Under the Eeinstatement clause, those payments were inexorably applicable to the unpaid installments originally due August 4 and September 4, 1962. The premium installment originally due October 4, 1962 can thus not be considered to have ever been paid, and the insured died November 10, 1962, more than the grace period of 31 days thereafter. The policy was consequently automatically in a state of lapse on the date of death.

The New Jersey cases are consistent with this rationale, Acacia Mutual Life Assn. v. Kaul, 114 N. J. Eq. 491, 492 (Ch. 1933); N. Y. Life Insurance Co. v. Weiss, supra. While the agreement to reinstate is, in a sense, a separate undertaking from the original policy agreement to pay on death, so that fraud in obtaining reinstatement is subject to an action for rescission, ibid., the reinstated policy, once validly reinstated, revives the original, with all of its terms and benefits to the insured.

Under plaintiff’s contentions, the premium payment made September 11, 1962 “covered the initial grace period which went into effect on August 4 and * * * the payment on September 14 covered the period from September 24 to October 24 and upon the nonpayment of the October 24 premium a grace period went into effect which expired on November 24.” The difficulty with this analysis is that it fails to provide for payment for the whole of the premium period from September 4 to October 4 established under the original policy, and a portion of that period — September 4 to September 24 — would never thereafter be payable or paid. That result clearly contravenes the Reinstatement clause requirement that all overdue premiums shall have been paid upon reinstatement (with interest).

Plaintiff argues that literal enforcement of the Reinstatement clause as postulated above is unjust in that the insured would be required to have paid retroactively a premium for a period of time during which coverage for death did not in actuality exist, the policy having during that period been in a state of lapse. While that fact is true, so far as it goes, the result is not unfair, and the Reinstatement clause clearly contemplates it, since the insured does get the major benefit of preservation of the original age-determined premium rate — a benefit which can be very substantial if lapse and reinstatement take place some years after original issuance or in any case where reinstatement is had close to the expiration of the five-year period allowed therefor after lapse. There are other collateral policy benefits to the insured in the retroactive character of the reinstatement. The policy reinstatement clause obviously must be given a uniform construction, even in cases where lapse and reinstatement follow within a relatively short period after original issuance.

There is no merit in plaintiff’s alternative contention of waiver by defendant of the previously consummated re-lapse of the policy as reinstated. The furnishing by the company agent of a proof of claim shortly after death and its immediate signature by tbe plaintiff, with no attendant trouble, delay or expense on her part, or prejudice to her, represent circumstances which must, as a matter of law, be deemed insufficient to constitute a waiver by the company of its already vested right of exculpation from liability on this $50,000 policy. Cf. Bruni v. Prudential Insurance Company of America, 51 N. J. 408 (1968), reversing on dissenting opinion in Appellate Division, 100 N. J. Super. 154 (App. Div. 1967). It could not reasonably be found on this state of facts that there was an intentional surrender by the company of a known immunity on the policy. Considerations of reliance by or justice to the assured and his beneficiary do not call for a conclusion of waiver on these facts. The negative jury finding on the special interrogatory as to whether the average person would realize from the language of the claim form that the company was not admitting by having the proof executed that there was insurance in force is irrelevant to our conclusions. They would be the same even if the form had no such protective language. The trial judge was correct in his implied post-trial conclusion that the special finding could be disregarded as immaterial. The interrogatory obviously was submitted to the jury out of an excess of caution at a point before the trial judge had had time to arrive at a definitive conclusion as to legal materiality.

We cannot accept the additional argument of the plaintiff that she was prejudiced in the submission to the jury of the last mentioned interrogatory. The argument (as expanded on oral argument) is that the jury might have gotten the impression from the judge’s instructions as to the law of waiver that their negative answer to that interrogatory would insure plaintiff’s recovery in the action regardless of their negative verdict on the other special interrogatory — that as to whether plaintiff had paid another premium installment on November 7, 1962 —• and that they consequently might not have been particularly careful in their deliberations on the latter interrogatory. This is argued as plain error, as the point was not made below at any time, nor did plaintiff object to the substantive instructions to the jury on the law of waiver or to the submission of the interrogatories. Moreover, there has been no motion to set aside the verdict on either interrogatory.

We agree with plaintiff only to the limited extent of the observation that it is ordinarily unnecessary and improper for a trial judge to instruct the jury as to the law or the legal effect of their factual findings if all that is to be submitted to them for determination are factual interrogatories, with the legal conclusions thereon to be made by the court alone. Thedorf v. Lipsey, 237 F. 2d 190, 193 (7 Cir. 1956); Ward v. Cochran, 71 F. 127, 134 (8 Cir. 1895). But we cannot agree that there was any prejudice to the plaintiff, much less plain error, in the course here followed. We conclude that it may not be surmised that the jury exercised anything but their tona fide best judgment on the proofs in arriving at their special verdict that the alleged November premium payment was not in fact made.

Judgment affirmed.


source: Caselaw Access Project

author: Labrecque, J. A. D.

license: Public Domain

text:
    ASA F. WARREN AND VERNA M. WARREN, PLAINTIFFSAPPELLANTS, v. THE EMPLOYERS’ FIRE INSURANCE COMPANY, BOSTON, MASSACHUSETTS, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued April 8, 1968
    Decided April 25, 1968.

      Before Judges Conford, Collester and Labrecque.

      Mr. William J. Hughes argued the cause for appellants (Messrs. Loveland, Hughes & Garrett, attorneys).

      Mr. Manuel H. Greenberg argued the cause for respondent (Messrs. Arkus & Cooper, attorneys).
   The opinion of the court was delivered by

Labrecque, J. A. D.

Plaintiffs appeal from a judgment of involuntary dismissal of their suit to recover for losses allegedly compensable under a homeowner’s insurance policy issued by defendant Employers’ Eire Insurance Company, Boston, Massachusetts.

The policy in question covered “all risks” to plaintiffs’ home located in Egg Harbor Township, Atlantic County, and certain specified perils including “sudden and accidental damage from smoke” to its contents. It was purchased through plaintiffs’ friend and neighbor, one Murray, a New Jersey licensed insurance broker who also was authorized to act as defendant’s agent in the Commonwealth of Pennsylvania (his agency was terminated in June 1966). The policy was in a standard form, N. J. S. A. 17:36-5.20, and contained a clause which provided:

“No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.”

On December 26, 1964, when plaintiffs returned to their home after an absence over Christmas, they found that considerable damage, in the form of staining, discoloration and scorching, had been done to the building and its contents by reason of malfunctioning (overheating) of their electric baseboard heating system. Between that time and some time in May 1965 (after which the units were replaced) the heating system allegedly misbehaved in a similar manner some five to seven times.

Plaintiffs testified that upon being notified of the December damage, Murray came to their home and, after in-Jspécting it, told them “not to worry, that we were covered for this in our policy and he would take care of it.” Notice of the loss was thereafter given to defendant (by letter from Murray dated March 6, 1965) and the claim was assigned to one Costan, an employee of General Adjustment , Bureau, for investigation on the company’s behalf. He made an inspection and Mrs. Warren testified he said that the total damage to the interior and contents was $900 but told her there was no coverage. When the Warrens told Murray of this, he said he would “check” for them. He then telephoned Costan who, he said, called back in early February 1965 to tell him “that he thought he had this matter settled with the Warrens * * * and he said he was offering them $900 and that there was a question about the drapes which he would adjust at a later time.” Costan denied making the ■offer and testified he was not assigned to the case until March 15, 1965. Plaintiffs also consulted one Maguire, another friend, who presumably had a familiarity with insurance matters.

Costan was subsequently transferred to another state and the handling of the claim was turned over to one Baldwin. Estimates of $173.65 for cleaning the walls and $189.60 for cleaning the contents were later obtained, whereupon Baldwin .informed the Warrens on April 22, 1965 that he was offering $173.65 in full settlement of the claim for damage to the house but that the damage to the contents was not covered. In response to a later request from Mrs. Warren, Baldwin returned to the premises, but he again allegedly told them that the icompany would pay only the cleaning cost of $173.65. On August 30, 1965 Baldwin wrote Mrs. Warren, impliedly confirming that offer (plaintiffs contend it was received somewhat later).

In the meantime, Murray had been attempting to induce the company to make an offer satisfactory to plaintiffs but had been unsuccessful. Warren testified that some time in tiré “middle” of November 1965 (Murray thought it was .apound Thanksgiving) Murray reported his lack of success and advised them to secure an attorney. At the end of tVo>; or three weeks they retained counsel who wrote the company ¡ under date of December 20, 1965 but received no reply. He; wrote again on January 13, 1966, after which, at theiatrs torney’s request, there was a meeting at his office with. Baldwin at which the latter renewed his offer of $173.65 for¡ the damage to the house and again disclaimed liability for, the damage to the contents, although indicating that he; would discuss the matter again with the company. At no time during the efforts to obtain settlement was there any¡ reference to the 12-month clause. . .;

There was no change in the company’s position and plaintiffs tiled the present suit on May 24, 1966. Defendant’s-answer denied coverage for the loss to the contents and pleaded the failure to sue within the 12-month period as a defense to the entire claim. Plaintiffs set up waiver and estoppel as a bar to invocation of the 12-month limitation.

At the conclusion of the taking of testimony, defendant’s' motion for involuntary dismissal was granted on the ground that the action was barred by plaintiffs’ failure to institute suit within the 12-month period and that defendant had not waived, and was not estopped, by the conduct of its agents from asserting its right to invoke the limitation.

In substance, plaintiffs seek reversal of the judgment on the following grounds: (1) defendant waived its right to rely upon the 12-month suit limitation contained in the policy; (2) the proofs on the issue of estoppel required submission of that issue to the jury; (3) since the single loss claimed resulted from a series of incidents which took place between late December 1964 and May 1965, the institution of suit on May 24, 1966 was a sufficient compliance with the policy. We find none of them to be meritorious.

An insurer may waive the provisions of its policy or be estopped by its conduct from asserting defenses which would otherwise be available to it. 16A Appleman, Insurance Law and Practice, § 9081, p. 287 (1968). Such a waiver has been defined as the voluntary, intentional relinquishment of a known right. Ibid., at p. 279. Here, in the absence of proof from which it could be inferred that such a waiver took place before expiration of the 12-month period (December 26, 1965), plaintiffs rely upon Baldwin’s conference with their attorney in late January or early February 1966 concerning the claim, and his representation that he would take the matter up again with the carrier. However, proof to support the intent necessary to constitute a waiver is entirely lacking. Ibid., §§ 9081, 9084, pp. 288, 300. The law favors settlements. Rynar v. Lincoln Transit Co., Inc., 129 N. J. L. 525, 528-29 (E. & A. 1943). Plaintiffs were represented by counsel who had requested a conference. The damage claimed was alleged to have resulted from a series of occurrences, the last in May 1965. Defendant could negotiate to buy its peace” without waiving its rights. Further, no additional offer was made at the time or thereafter, and the disclaimer of liability for the damage to the contents of the house was reiterated. Baldwin’s promise to submit the matter once more to the company cannot support an inference that the company was thereby intentionally relinquishing its right to take advantage of plaintiffs’ failure to timely sue for the damage which was then more than a year old. Cf. Central Radiator Co. v. Niagara &c Co., 109 N. J. L. 48, 51-52 (E. & A. 1932) ; compare Bruni v. Prudential Ins. Co., 51 N. J. 408 (1968), reversing on dissenting opinion in Appellate Division 100 N. J. Super. 154 (App. Div. 1967); Martin v. State Ins. Co., 44 N. J. L. 485, 487 (Sup. Ct. 1882).

Nor did the facts adduced make out a case for the jury as to estoppel. Considering the testimony in the light most favorable to plaintiffs and drawing from it the inferences most favorable to them, the most that could be said was that although the company as far back as April 1965 had consistently adhered to its intention to deny the claim for damage to the contents and to pay no more than $173.65 for the damage to the building, Murray had been endeavoring to Secure a better offer for them. As noted, Warren testified that in the middle of November 1965 Murray finally told him “they [defendant] weren’t going to do any more for us and * * * to get an attorney.”

Assuming, arguendo, that Murray had been acting as the company’s representative in inducing plaintiffs to delay obtaining an attorney while he endeavored to induce the company to make a settlement satisfactory to them, there was still a reasonable period (at least a month) remaining during which timely suit could have been instituted. In such a case estoppel is no defense. Jersey Discount Co. v. Aetna Insurance Co., 128 N. J. L. 293, 294-295 (Sup. Ct. 1942); Ettman v. Continental Insurance Co., 116 N. J. L. 399, 401-402 (E. & A. 1936); Sherwood Jewelers-Newark, Inc. v. Philadelphia National Insurance Co., 102 F. Supp. 103 (D. N. J. 1952); Smith v. Commercial Travellers Mut. Acc. Ass’n, 158 F. 2d 65, 67-68 (7 Cir. 1946), certiorari denied 331 U. S. 860, 67 S. Ct. 1751, 91 L. Ed. 1867 (1947); Annotation, 29 A. L. R. 2d 636, 650 et seq. (1953). There is no proof of anything said or done on defendant’s behalf between the middle of November and December 26, 1965 which could reasonably have induced plaintiffs to defer suit beyond the latter date. The delay was entirely of plaintiffs’ own making. It follows that defendant was not estopped from setting up the 12 month limitation.

Higgins v. Fidelity-Phoenix Fire Insurance Co., 107 N. J. L. 175 (E. & A. 1930), and Fredericks v. Farmers Bel. Ins. Co. of New Jersey, 80 N. J. Super. 599 (App. Div. 1963), on which plaintiffs rely, are inapposite. In Higgins plaintiffs were lulled into security throughout the entire limitation period, while in Fredericks the estoppel was based on the wrongful withholding from the insured by the insurer of a copy of the policy, whereby the latter was not alerted to the policy provision limiting the time for the institution of suit.

Plaintiffs cite no case to support their final contention that, since the damage for which they sued was the result of a number of oecurrenees the last of which took place subsequent to the date suit was filed, they were not out of time. The case was tried on the assumption that the occurrence which resulted in most of the damage took place on either December 25 or 26, 1964. The clause in the policy was unambiguous and required that suit for that loss be instituted within 12 months thereafter. The fact that subsequent failures of the heating system (the dates of which are not stated) increased the damage or caused additional damage did not extend the time for filing suit for the original loss. Sager Glove Corp. v. Aetna Insurance Co., 317 F. 2d 439 (7 Cir. 1963), certiorari denied 375 U. S. 921, 84 S. Ct. 266, 11 L. Ed. 2d 165 (1963). The only losses for which defendant continued liable were those which occurred within 12 months prior to May 24, 1966. Id., at p. 442. The burden of proving the date and amount of any loss sustained during that period was upon plaintiffs. Id., at pp. 442-443. There was no proof from which the jury could have ad-measured any identifiable part of the claimed loss as having been sustained during the 12 months which preceded the suit and at the oral argument it was conceded that the damages could not be segregated.

We find it unnecessary to consider the remaining reasons urged in support of the judgment.

The judgment of the Law Division is accordingly affirmed.


author: Per Curiam.

text:
    VIRGINIA DE LORENZO, APPELLANT, v. BOARD OF REVIEW, DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR AND INDUSTRY, STATE OF NEW JERSEY AND M&S KNITWEAR, RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued March 4, 1968
    Decided April 26, 1968.

      Before Judges Conford, Collester and Labrecque.

      Mr. Irving Leuchter argued the cause for appellant (Messrs. Kapelsohn, Lerner, Leuchter & Reitman, attorneys).

      Mr. Edward A. Kaplan argued the cause for respondents.
   Per Curiam.

Claimant Virginia DeLorenzo appeals from a decision of the Board of Review, Division of Employment Security, Department of Labor and Industry, which affirmed a determination of the Appeal Tribunal that the claimant was disqualified from receiving unemployment benefits as of October 7, 1966 under N. J. S. A. 43:21-5 (a) for leaving work voluntarily without good cause attributable to such work and that she was liable for a refund of benefits received in the sum of $685.

Claimant, aged 65, a sewing machine operator employed by M & S Knitwear, terminated her employment on October 7, 1966 when she became disabled due to high blood pressure, a gall bladder condition and appendicitis. No claim was made that her ill health was attributable to her employment. Thereafter, she was paid temporary disability benefits for 81/2 weeks under the employer’s private plan established pursuant to the Temporary Disability Benefits Law, N. J. S. A. 43 :21-25 et seq. During the period of her illness claimant applied for federal social security benefits and received her first monthly benefit of $100.60 in December 1966.

On December 15, 1966 claimant filed a claim for unemployment benefits, and thereafter weekly benefits were paid to her through the week ending April 20, 1967, totalling $685. On May 27, 1967 claimant’s former employer, in response to an inquiry from the local employment office of the Division of Employment Security, said he was willing to rehire the claimant. She returned to her job on June 6, 1967.

On June 1, 1967 a deputy of the Division determined that when claimant left her employment due to illness on October 7, 1966 she left her job voluntarily without good cause attributable to her work. A demand was made by the Division for a refund of the $685 paid in benefits.

Claimant appealed to the Appeal Tribunal which conducted a plenary hearing. Contrary to claimant’s testimony that she had been told in December 1966 that there was no work available for her, her employer testified that there had been work for the claimant ever since she left on October 7, 1966. He said that when she called at his plant in December she informed him she was completely retired from work. She told him she would be willing to work no more than one or two days a week because she was then receiving social security benefits. He said it was impossible to tie up a machine for only one or two days a week and could not rehire her on that basis.

The Appeal Tribunal held claimant was disqualified under the provisions of N. J. S. A. 43:21-5 (a) and was liable for the refund of $685. The Board of Review affirmed and this appeal followed.

The appellant alleges that the Board of Review erred in its conclusion that the disqualification provisions of the Unemployment Compensation Law precluded her from receiving benefits. The statute, N. J. S. A. 43:21-5 (a) provides,

“An individual shall be disqualified for benefits: (a) For the week in which he has left work voluntarily without good cause attributable to such work, and for each week thereafter until he has earned in employment * * * at least 4 times his weekly benefit rate * * *”

Claimant alleges she did not quit her job voluntarily; that her leaving was involuntary because she was ill and physically unable to work. Since her quitting was involuntary she claims she should not have been disqualified from receiving: unemployment benefits.

Tn Stauhs v. Board of Review, etc., 93 N. J. Super. 451 (App. Div. 1967), we held that a claimant who quit his job because his work duties were detrimental to an existing physical condition which did not have a work-connected origin left his work voluntarily without good cause attributable-to such work and therefore was disqualified from receiving-benefits. The appellant alleges Stauhs is distinguishable because the court there was not asked to and did not consider whether the claimant’s resignation was voluntary or involuntary but based its opinion only on whether the cause of the claimant’s leaving was attributable to his work.

The main thrust of the appellant’s argument is that there are two elements in the statute which must be considered separately before an employee is disqualified, namely, (1) the leaving must be the voluntary act of the employee, and (2) the voluntary leaving must be without good cause attributable to her work. She claims that since she did not leave her job voluntarily, but involuntarily due to illness, the disqualification provision does not apply and it was immaterial and unnecessary to consider the second element, i. e., the determination of the question of whether she left without good cause attributable to her work.

We do not agree with the argument made, deeming the result to defeat the basic intent of the statute to prevent benefits, under the particular disqualification here involved, whenever the claimant has left his employment without just cause attributable to the work. In other words, in the statutory phrase, “voluntarily without good cause attributable to such work,” the word “voluntarily” is not a separate and additionally requisite criterion of disqualification, but rather a legislative characterization of the action of a worker who leaves work without just cause attributable to the work. It may have been incorporated in the statutory language to exclude leaving because of discharge by the employer. To indulge appellant’s argument disqualification would be prevented in any case where the worker’s free will was to any extent affected by extraneous events, whether or not properly determinable to constitute good cause attributable to the work.

In Krauss v. A. & M. Karagheusian, Inc., 13 N. J. 447, 464-65 (1953), dealing with the statute as of a time before the 1961 statutory amendment which added the words, “attributable to such work” to the disqualification section, the court equated the voluntariness or involuntariness of the leaving to the “good cause” which prompted it, although indicating that the “good cause” factors which would represent involuntariness would be broader than those cognizable under statutes requiring that the good cause be attributable to the work. We deem this reasoning to militate against the soundness of appellant’s approach.

Other states have reached the same conclusion as we have on the same or similar statutory language. See Bussmann Manufacturing Co. v. Industrial Commission, Division of Employment Sec., 335 S. W. 2d 456 (Mo. Ct. App. 1960); Howley v. State, 107 N. H. 180, 219 A. 2d 450 (Sup. Ct. 1966); Wolf's v. Iowa Employment Security Commission, 244 Iowa 999, 59 N. W. 2d 216 (Sup. Ct. 1953); State v. Hix, 132 W. Va. 516, 54 S. E. 2d 198 (Sup. Ct. 1949).

Erom our review of the record we conclude that there was substantial evidence to support the findings and conclusions of the Board of Beview that claimant left her employment voluntarily without good cause attributable to her work and accordingly was disqualified from receiving unemployment benefits.

Affirmed.


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

text:
    W. BRYCE THOMPSON, IV, TRADING AS THOMPSON REALTY CO., PLAINTIFF-APPELLANT, v. RAYMOND S. HOAGLAND AND ROXENE HOAGLAND, HUSBAND AND WIFE, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued March 11, 1968
    Decided May 7, 1968.

      Before Judges Conford, Collester and Labrecque.

      Mr. Joseph L. Stonaker argued the cause for appellant (Messrs. Baggitt and Stonacker, attorneys).

      Mr. Richard A. Koerner argued the cause for respondents (Messrs. Skillman and Koerner, attorneys).
   The opinion of the court was delivered by

Conford, S. J. A. D.

Plaintiff, a real estate broker, appeals from the dismissal by the Law Division at the end of plaintiff’s case, in an action tried to the court without a jury, of his complaint for commissions earned in procuring a purchaser for defendants’ real estate. Defendants had refused to enter into a contract of sale with the proposed purchaser. The action of the trial court was based upon the alleged failure of plaintiff to inform defendants that the purchaser was an individual with whom plaintiff had a number of joint investments in real estate.

There must be a reversal for the reason that there was some testimony on plaintiff’s case which, if believed, would have permitted the court to find that plaintiff made substantial revelation to defendants of his relationship with the purchaser. It is true that under R. R. 4:42-2(b) the trial court was authorized, if it chose to do so, to decide the motion for involuntary dismissal at the end of plaintiff’s case on its merits. But its remarks on granting the motion indicate that it was not purporting to find the facts against the plaintiff on the merits, but rather dealing with the motion as though the case were being tried before a jury. The court stated it was viewing the record “in its most favorable terms” to the plaintiff and not weighing the credibility or probative value of plaintiff’s proofs but accepting them “all as true.” On this approach, as will be demonstrated hereinafter, the plaintiff’s proofs required a denial of the motion. Since the ease must be retried, however, we will deal with another ground of reversal argued by plaintiff as well as with alternative grounds of affirmance advanced by defendants.

The following facts were developed on plaintiff’s case. On June 11, 1963 plaintiff entered into a written, exclusive right-to-sell agreement with defendants for their 76-acre tract of land in Franklin Township for a period of 365 days. Sale was authorized at a price of $65,000, with terms specified. Commission was to be 10% of the 'sale price. In the agreement plaintiff undertook to advertise, offer and show the property for sale. Advertising was to be for a sale price of $70,000. Plaintiff advertised and showed the property to prospects, but without early success. Six to eight weeks later defendants sought an alteration of the agreement to fix the sale price at $80,000, but plaintiff refused. He did agree, however, to change the asking price to $80,000.

On April 22, 1964 one Dr. Abrams offered plaintiff $60,000, which was refused by defendants. On June 8, 1964 he offered $65,000. Again defendants refused. On or about June 8, 1964 plaintiff tendered defendants for execution Dr. Abrams’ signed contract to purchase the property for $65,000, with terms as specified in the sales agreement. Dr. Abrams also deposited a $6,500 earnest-money cheek with plaintiff. Defendants rejected the contract. There was proof from which it could have been found that defendants at that time were resolved not to sell the property to anyone for $65,000, being satisfied that it was worth more.

As of the time of Dr. Abrams’ offers, he and plaintiff jointly held three or four tracts of land which they had purchased for speculative purposes, and they were both stockholders, along with a number of other investors, in an active real estate investment corporation of which they were officers and directors. Plaintiff testified that when he was negotiating the brokerage agreement with defendants he informed them of his purchase with Dr. Abrams of a nearby tract, as the price was relevant to the question of the price to be fixed for the subject property. He gave equivocal testimony as to whether he told defendants about his other land investments with Dr. Abrams at the time the latter submitted his offers, but on cross-examination by the court he testified:

“The Court: So, then, you say you did tell the Hoaglands that Dr. Abrams was interested in the property and that you and he had some prior business relationships or partnership arrangements in properties you had bought in the past?
The Witness [plaintiff] : Right.
The Court: And that he had offered $60,000?
The Witness: That’s correct.”

We conclude that this testimony created at least a fact issue as to plaintiff’s revelation to defendants of his association with Dr. Abrams, calling for controversion by the defense, and that it was therefore error to dismiss, at least in the absence of any purported decision of the factual merits pursuant to R. R. 4:42-2 (b). See supra.

Plaintiff argues that it is immaterial in any event whether he ever informed defendants of his association with Dr. Abrams since the proof is clear that that circumstance was not material to their refusal to sell — they having decided to sell to no one at the figure listed in the agreement. We do not agree. If the failure to apprise defendants of the relationship bore upon a circumstance which could have generated a fair suspicion as to whether plaintiff had exercised his very best efforts as defendants’ agent to obtain the best price possible for the property, this constituted an absolute defense to any action for a commission, whether or not defendants were in fact prejudiced by the nondisclosure. Eor reasons to be indicated, we are satisfied that plaintiff’s relationship to Dr. Abrams was of a character requiring full apprisal of defendants thereof and their consent, express or implied, to the submission of an offer by him, in consequence of the fiduciary status of plaintiff toward defendants inherent in the broker-principal relationship.

Only recently the Supreme Court restated the fundamental relationship between broker and principal as follows:

“The broker was and is looked upon as a fiduciary and is required to exercise fidelity, good faith and primary devotion to the interests of his principal. 1 Wilcox v. Reynolds, 169 Okla. 153, 36 p. 2d 488 (1934); Haydock v. Stow, 40 N. Y. 363 (1869). He cannot permit his interests to interfere with those of his principal. As the Court of Errors and Appeals said in Young v. Hughes, 32 N. J. Eq. 372, pp. 384-385 (E. & A. 1880), the rule which applies to trustees has been equally applied to the relation between the real estate broker and his principal. He must show perfect good faith and openness of dealing. The rule was not intended to be remedial of actual wrong done alone, but also to be preventive of the possibility of it.” (Emphasis ours)

Ellsworth Dobbs, Inc. v. Johnson, 50 N. J. 528, 553 (1967). See also Silverman v. Bresnahan, 35 N. J. Super. 390, 391, 396 (App. Div. 1955); Carluccio v. 607 Hudson St. Holding Co., Inc., 141 N. J. Eq. 449, 453 (E. & A. 1947); Remer v. Fox, 141 N. J. Eq. 430, 431 (Ch. 1948).

It is a corollary of the principle discussed above that failure of the broker to inform the principal that the purchaser he produces is an alter ego of the broker or a relative or partner renders the transaction voidable as between broker and principal at the option of the principal. 12 Am. Jur. 2d, Brokers, § 95, pp. 846-47; 12 C. J. S. Brokers, § 42, pp. 102-103. The rule is prophylactic in purpose, and, by the better view, not qualified by the actual lona fides of the broker in the matter or the absence of harm to the principal. See Annotations, 26 A. L. R. 2d 1302, 1314 (1952). In this context the principal is entitled to be informed of “any circumstance that might reasonably be expected to influence the complete loyalty of the agent to the interest of his principal.” MacGregor v. Florida Real Estate Commission, 99 So. 2d 709, 712 (Fla. Sup. Ct. 1958).

We are satisfied that the close and continuing business relationship between plaintiff and Dr. Abrams, amounting in substance, although not with legal technicality, to a partnership in land speculation, was such as to foster a temptation on the part of plaintiff to favor the interests of his associate at the expense of undivided loyalty to defendants in submitting a purchase offer by the former. This brought the case within the spirit of the rule cited above making an undisclosed partner of the broker an impermissible source of an offer of purchase to be submitted to a principal-seller in purported satisfaction of the brokerage undertaking.

In view of the foregoing, if plaintiff failed - to make the necessary disclosure it would be inconsequential that defendants refused to accept the offer because they did not desire to sell at the stipulated price to anyone at all.

Defendants’ alternative ground for sustaining the judgment in their favor — that they had revoked the brokerage agreement by their letter requesting a change in the selling price from $65,000 to $80,000 — is not borne out by the evidence. Plaintiff’s testimony was that defendants requested the modification but he refused to accede thereto. Moreover, it is doubtful whether in the case of an “exclusive right” agreement for a fixed period the principal can defeat the broker’s right to earn a commission during that period by revoking the authorization. See Rose v. Minis, 41 N. J. Super. 538, 544 (App. Div. 1956).

We are not in agreement with defendants’ added argument that the Abrams’ offer was not tendered to both defendants within the 365-day period. The proofs would have permitted an affirmative finding by the court on that issue.

Judgment reversed; the cause is remanded for a new trial.


author: Gaulkin, S. J. A. D.

text:
    IN THE MATTER OF THE TRANSFER INHERITANCE TAX ASSESSMENT IN THE ESTATE OF CHARLES P. WALLACE, DECEASED. JOSEPH C. CORNWALL AND FIDELITY UNION TRUST COMPANY, A NEW JERSEY BANKING CORPORATION, EXECUTORS OF THE LAST WILL AND TESTAMENT OF CHARLES P. WALLACE, DECEASED, APPELLANTS, v. WILLIAM KINGSLEY, ACTING DIRECTOR, DIVISION OF TAXATION, DEPARTMENT OF THE TREASURY, STATE OF NEW JERSEY, RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued January 29, 1968
    Decided April 25, 1968.

      Before Judges Gaulkin, Lewis and Kolovsky.

      Mr. F. Earl Walter, Jr. argued the cause for appellants (Messrs. Shanley & Fisher, attorneys; Mr. John Kandravy, on the brief).

      Mr. Stephen G. Weiss, Deputy Attorney General, argued the cause for respondent (Mr. Arthur J. Sills, Attorney General of New Jersey, attorney; Mr. Elias Abelson, Deputy Attorney General, on the brief).
   The opinion of the Court was delivered by

Gaulkin, S. J. A. D.

The Transfer Inheritance Tax Bureau of the Division of Taxation, Department of the Treasury (hereafter the State) ruled that (a) the testamentary transfer of the residue of the estate of Charles F. Wallace to the “Trustees of the Florence Murray Wallace Fund” is subject to an inheritance tax of $993,606.29, and (b) the proceeds of certain refund annuity contracts which, upon the death of the testator, passed to The Eljabar Foundation are subject to a transfer tax of $22,065.65. The executors appeal, claiming that the transfers are exempt under N. J. S. A. 54:34-4(d). We agree and reverse.

N. J. S. A. 54:34-4(d) exempts from transfer inheritance tax

“That part of the estate of any decedent which passes to, for the use of or in trust for any educational institution, church, hospital, orphan asylum, public library or bible and tract society or to, for the use of or in trust for any institution or organization organized and operated exclusively for religious, charitable, benevolent, scientific, literary or educational purposes, including any institution instructing the blind in the use of dogs as guides, no part of the net earnings of which inures to the benefit of any private stockholder or other individual or corporation; provided, that this exemption shall not extend to transfers of property to such educational institutions and organizations of other States, the District of Columbia, territories and foreign countries which do not grant an equal, and like exemption of transfers of property for the benefit of such institutions and organizations of this State.”

Testator died in 1964. The Eljabar Foundation (hereafter the Foundation) was organized in 1933 as a nonprofit corporation pursuant to N. J. S. A. 15:1-1 et seq. Its certificate of incorporation provided that it was “* * * to collect and expend funds exclusively for philanthropic and welfare work, either directly or through other philanthropic and welfare organizations.” The Florence Murray Wallace Fund (hereafter the Fund) is a trust created April 24, 1958 by a trust agreement between testator’s three daughters, grantors, and testator, the husbands of the three grantors and one Parry, trustees. The trust agreement provided:

“THIRD: The FUND shall be a public charitable trust created under the laws of the State of New Jersey and shall be governed by, and construed in accordance with, the laws of the State of New Jersey. The FUND is organized and shall be operated exclusively for religious, charitable, scientific, literary or educational purposes or for the prevention of cruelty to children or animals and no part of the FUND’S activities shall be the carrying on of propaganda or otherwise attempting to influence legislation, or participating in or intervening in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office.”

The State concedes that both the Foundation and the Fund are organized and operated for charitable purposes. The United States Internal Revenue Service has classified them as tax exempt charitable organizations under 26 U. S. C. A. § 501(c)(3).

The State argues that the transfers nevertheless are not exempt under N. J. S. A. 54:34-4(d) but taxable under N. J. S. A. 54:34-2(d).

I

The State points out that the trustees of the Fund have absolute discretion in the selection of the religious, charitable, scientific, literary or educational institutions which are to receive money from the Fund; and that the trust agreement provides that the contributions shall be made “* * * in such amounts and to such extent as the Trustees, in their sole and exclusive judgment and discretion, shall determine to be reasonable in order to carry out the purposes of the FUND,” and gives the trustees complete discretion in investing the assets and wide discretion in what shall be considered income and what principal. The State therefore calls the Fund a “conduit trust,” which seems to us an apt description. Such trusts, says the State, are not exempt because “in order for a gift to be exempt * * * it must be identified with a particular institution.” We understand the State’s argument to be that a gift directly to a charitable institution to help it carry on its work would be exempt; a gift to X in trust for the institution would be exempt; a gift to X in trust for a charitable institution to be selected by the trustee from a number named by the grantor would be exempt; but a gift to X in trust for any charitable institution he chose would not be exempt.

We find nothing in the statute which makes the distinction urged by the State. However, the State argues that a study of the history of the statute and its various changes and amendments proves that the Legislature intended not to grant exemption to conduit trusts. The State shows that conduit trusts have been severely criticized in many speeches, reports and other writings which have received wide publicity. It argues that in 1962, when N. J. S. A. 54:34-4 (d) was recast into its present form, the criticism of conduit trusts was well publicized, and the Legislature must have known of it. Therefore, says the State, we should assume that the Legislature intended to avoid giving conduit trusts exemption.

The State points out that conduit trusts are not required to account, are not supervised, and (except in the rare case in which something causes the Attorney General to ask for one) render no accounting to anyone because there are no named beneficiaries to call the trustees to account. Consequently, such trusts are easily manipulated for and diverted to other than charitable purposes, and frequently they may be merely devices to insure control of corporate enterprises and endow individuals, usually relatives, with the power and the incidental benefits which control of large sums, tax free, gives. Legislation may be needed to require accounting by conduit trusts, but that does not justify condemning all such trusts.

Where a conduit trust is so administered as not to truly serve the charitable purposes for which it was created, the trust is, of course, not exempt. Here, as we have said, the State has examined the statement of receipts and disbursements of the Fund and the Foundation and concedes that both have been operated for the charitable purposes for which they were created. Consequently they are entitled to whatever exemption the language of the statute allows.

Some of the severest criticism of conduit trusts has been made in the federal Congress, and yet the federal law has not excluded conduit trusts from exemption. And the statement which accompanied Senate Bill No. 177 (1962), which became the present N. J. S. A. 54:34-4(d) said:

“New Jersey is one of the few States which subjects churches, hospitals and other charities to taxation on gifts received by will.
The purpose of this bill is to exempt our charities from such taxation and thereby make the New Jersey law uniform with that of the other States and with the exemptions accorded by Federal law.” (Emphasis added)

In short, we find nothing in the statute which supports the distinction urged by the State. The Fund’s activities come squarely within N. J. S. A. 54:34-4 (d) and therefore the transfer to it was exempt.

II

The State’s argument against exemption of the transfer of the balances due under the annuity contracts to the Foundation is the same as its argument against exemption for the gift to the Fund. What we have said with reference to the gift to the Fund applies to the gift to the Foundation.

The assessments are set aside.


author: Carton, J. A. D.

text:
    BOARD OF EDUCATION OF THE BOROUGH OF CLIFFSIDE PARK IN THE COUNTY OF BERGEN, PETITIONER-RESPONDENT, v. MAYOR AND COUNCIL OF THE BOROUGH OF CLIFFSIDE PARK IN THE COUNTY OF BERGEN, RESPONDENT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued April 22, 1968
    Decided May 3, 1968.

      Before Judges Goldmann, Kilkenny and Carton.

      Mr. Paul L. Basile argued the cause for appellant.

      Mr. Eznick Bogosian argued the cause for respondent (Messrs. Bauer, Bogosian & Whyte, attorneys).

      Mr. Cassel R. Ruhlman, Jr. argued the cause for New Jersey Education Association, amicus curiae.

   The opinion of the Court was delivered by

Carton, J. A. D.

The Borough of ClifEside Park appeals that part of the determination of the State Board of Education which restores to the local board of education school budget an item of $17,000 for premiums on Blue Cross — Blue Shield and Major Medical insurance covering all employees of the local board.

The facts are not in dispute. The voters rejected the local board’s proposed 1967-68 budget at the annual election held on February 14, 1967. They also rejected the board’s second budget proposal at the election held on Eebruary 28. It then became the duty of the governing body of the appellant municipality to fix the amount required for school purposes (N. J. S. 18A:22-37, formerly N. J. S. A. 18:7-82). Pursuant to that statute, on March 11, 1967 appellant certified to the county board of taxation a school appropriation of $1,270,908, $110,000 lower than the board’s second budget proposal. The local board appealed to the Commissioner of Education requesting, among other things, reinstatement of the $17,000 item. The Commissioner sustained the board’s contention as to this item. The State Board affirmed the Commissioner’s decision. This R. R. 4:88-8 appeal followed.

The single issue presented is whether the Commissioner erred in restoring the $17,000 item to the local school budget.

N. J. S. A. 18:5-50.7a expressly authorized a local board of education to enter into an agreement with its employees to provide them with hospitalization insurance coverage:

“[T]he board of education * * * may pay as additional compensation to the individual members of the group or groups [of employees desiring to participate in a group hospitalization insurance plan], a part or all of the premiums on the group policy or policies * *

This provision was substantially re-enacted as N. J. S. 18A :16-10. Consequently, it is clear that the local board was permitted to include in its budget proposal the amount necessary to carry out the agreement it had made.

It is equally clear that once the board entered into the agreement, it was bound by its terms for two years as to all of the members of its full-time teaching staff. N. J. S. 18A :29-4.1 (formerly N. J. S. A. 18:13-5.1 and 5.2) provides, in pertinent part:

“A board of education of any district may adopt a salary policy, including salary schedules for all full-time teaching staff members * * *. Such policy and schedules shall be binding upon the adopting board and upon all future boards in the same district for a period of two years * * *. Every school budget adopted, certified or approved by the board, the voters of the district, * * * the governing body * * * or the commissioner, as the case may be, shall contain such amounts as may be necessary to fully implement such policy and schedules for that budget year.” (Emphasis added)

Thus, the local board is bound as to such employees for a two-year period by its “salary policy” and must provide funds “to fully implement such policy.”

Ignoring the broader, more inclusive phrase “salary policy,” appellant urges that “salary schedule” does not contemplate payment of hospitalization insurance premiums. While this fact may be conceded, and indeed appears obvious from the statutory definition of “salary schedules” (N. J. S. 18A :29-6, formerly N. J. S. A. 18:13-13.1), it is difficult to see how appellant’s position is advanced.

The term “salary schedules” clearly refers to only one facet of “a salary policy” and the plain meaning of the latter phrase would seem to include what are commonly called “fringe benefits” of employment. Any other construction of the scope of N. J. S. 18A :29-4.1 would render the reference to “salary policy” mere surplusage.

We hold that “salary policy” includes, in addition to “salary schedules,” such “fringe benefits” of employment as payment of hospitalization insurance premiums. The board having undertaken to pay such premiums, N. J. S. 18A :29-4.1 requires that funds be provided therefor and appellant was without authority to remove that item from the budget.

Appellant argues, however, that even if N. J. S. 18A :29-4.1 binds the local board to its salary policy for two years, it does so only with respect to “full-time teaching staff members” and has no effect upon policies made applicable to other board employees. While this argument may have some merit, we find no valid basis for making such a distinction between the teaching and non-teaching personnel in this case.

We note that when appellant resolved to eliminate the $17,000 from the local school budget, it did so without the slightest explanation or itemization of any categories of employees which would warrant making a distinction between them. This failure to do so would, in our estimation, justify a determination by the Commissioner that elimination of the entire item was arbitrary and therefore improper. See Board of Education of Township of East Brunswick v. Township Council of Township of East Brunswick, 48 N. J. 94, 105-106 (1966), where Justice Jacobs said:

“The governing body may, of course, seek to effect savings which will not impair the educational process. But its determinations must be independent ones properly related to educational considerations rather than voter reactions. * * * Where its action entails a significant aggregate reduction in the budget and a resulting ap-pealable dispute with the local board of education, it should be accompanied by a detailed statement setting forth the governing body’s underlying determinations and supporting reasons. This is particularly important since, on the board of education’s appeal under R. S. 18:3-14, the Commissioner will undoubtedly want to know quickly what individual items in the budget the governing body found could properly be eliminated or curbed and on what basis it so found. * * *”

The record before us does not show what part of the $17,000 item is attributable to the non-teaching personnel, or any specific factual basis supporting appellant’s claim that this portion should be eliminated. We shall not, therefore, exercise our original jurisdiction in this case to make independent findings. Uor do we believe the public interest requires or will be served by a remand to the Commissioner for the purpose of affording appellant an additional opportunity to bolster its claim for the elimination of a sum which, in terms of the total budget, is extremely small. The budget in question is the operating budget for the current year and should not be disturbed at this late hour to resolve a dispute of such limited effect.

Affirmed.


author: Kolovsky, J. A. D.

text:
    HUMBLE OIL & REFINING CO., A DELAWARE CORPORATION, PLAINTIFF-APPELLANT, v. DAGNEY G. CHURCH, DEFENDANT-RESPONDENT, AND GEORGE M. GALE, DEFENDANT.
    Superior Court of New Jersey Appellate Division
    Argued March 25, 1968
    Decided April 30, 1968.

      Before Judges Gaulkin, Lewis and Kolovsky.

      Mr. Richard R. Arvidson argued the cause for appellant (Messrs. Schneider & Morgan, attorneys).

      Mr. Louis Ruprecht argued the cause for respondent (Messrs. Gaffey, Webb & McDermott, attorneys).
   The opinion of the court was delivered by

Kolovsky, J. A. D.

On August 3, 1964 a truck and trailer owned by plaintiff Humble Oil & Refining Co. (Humble) and automobiles owned and driven by defendants Church and Gale collided. Eileen A. Keiffer, a passenger in the Church automobile, was killed.

In late 1964 or early 1965 a negligence action was instituted under the Death Act against Church, Gale, plaintiff herein and its driver to recover damages for Mrs. Keiffer’s death. The only cross-claims asserted by defendants in that action were claims for contribution under the Joint Tortfeasors Contribution Law (N. J. S. 2A:53A-1 et seq.).

The Keiffer action was settled and on June 13, 1968 a consent judgment for $25,000 without costs was entered in favor of Mrs. Keiffer’s administrator ad prosequendum against Church, plaintiff herein and its driver. The complaint was dismissed as to Gale.

On October 13, 1966 plaintiff instituted the present negligence action against Church and Gale to recover for damage to its truck and trailer. Church moved to dismiss the complaint for “failure to state a claim upon which relief can be granted.” In fact, the motion was dealt with as a motion for summary judgment, R. R. 4:12-2, the parties and the court relying on matters outside the pleadings, viz., the prior Keiffer action, its settlement and the entry of the consent judgment therein. Church’s motion was granted. Plaintiff appeals.

Initially we note that the order appealed from is not a final judgment from which an appeal lies of right. The action still pends undetermined against defendant Gale. However, under the circumstances and since the parties have argued the appeal on the merits, we deem it advisable to grant plaintiff leave to appeal nunc pro tunc and to reach the merits of the controversy.

The trial court gave two reasons for its ruling:

“1. The consent judgment entered in the [Keiffer action] * * * was an admission of negligence and precluded Plaintiff herein from now taking the position it was free of negligence. Public Service-Electric & Gas Co., Inc. v. Waldroup, 38 N. J. Super. 419 (App. Div. 1955).
2. The accident which forms the basis of this suit was in litigation in the prior suit and the Plaintiff herein may not now seek to do what it could have done in the prior suit. Falcone v. Middlesex County Medical Society, 87 N. J. Super. 486, 490, 491 (App. Div. 1965).”

We find neither reason valid and reverse.

Defense of the Keiffer action was furnished Humble and its driver by Humble’s insurance carrier, as called for by its liability insurance policy. The policy provided, inter alia, that the insurance company might “make such investigation, negotiation and settlement of any claim or suit as it deems expedient,” and that the insured should cooperate with the carrier and assist, among other things, “in effecting settlements.”

Settlement of the Keiffer action was effectuated by the insurance company. There is no proof that Humble’s approval thereof was either sought or obtained and nothing to suggest that “the insurer acted as the agent of the insured in consummating the settlement.” Isaacson v. Boswell, 18 N. J. Super. 95, 99 (App. Div. 1952). Hor are those facts to be inferred from the circumstance that about a month prior to the settlement of the Keiffer action Humble retained for prosecution of its property damage claim the same firm of attorneys as the insurance company had designated to defend Humble and its driver in the Keiffer action.

The insurance company, not Humble, authorized settlement of the Keiffer action — this under its reserved power to make “such settlement of any claim or suit as it deems expedient.” In consummating the settlement the attorneys acted under authority granted not by Humble but by the insurance company.

The insurance company’s settlement of the Keiffer action does not preclude Humble from prosecuting the present action for property damage allegedly caused by defendants’ negligence. Klotz v. Lee, 36 N. J. Super. 6 (App. Div. 1955), appeal dismissed 21 N. J. 148 (1956); Isaacson v. Boswell, supra.

We hold that the rule of Klotz v. Lee is applicable even though the mechanics of settlement adopted in the Keiffer ease included entry of a consent judgment in favor of the administrator ad prosequendum against Church, Humble and its driver and filing of a warrant for satisfaction thereof instead of, as in Klotz, execution of a release without entry of a consent judgment.

Public Service Elec. & Gas Co. v. Waldroup, 38 N. J. Super. 419 (App. Div. 1955), upon which the trial court relied, is inapposite. That case involved a consent judgment which had been entered on settlement of a negligence action in which Public Service was the sole defendant and a subsequent action instituted by Public Service seeking common law indemnification. The court held that the consent judgment constituted an admission or judicial determination of negligence, applying the doctrine of collateral estoppel.

That doctrine has no relevancy here where the settlement and the consent judgment concerned only the Keiffer claim and not such independent claims as defendants therein might have against each other and where the decision to use the device of a consent judgment was made by Humble’s insurance company, not by Plumble.

We do not agree with the trial court that plaintiff’s failure to assert its property damage claim in addition to its claim for contribution in the cross-claim filed by it in the Keiffer action bars the maintenance of the present action. The “entire controversy” doctrine (see Falcone v. Middlesex County Med. Soc., 87 N. J. Super. 486 (App. Div. 1965), affirmed 47 N. J. 92 (1966)) is inapplicable.

A property damage claim, a personal injury claim and a claim for contribution under the Joint Tortfeasors Contribution Law constitute separate claims for relief even though they all arise by reason of one tortious incident. Joinder of such claims is permissive, not mandatory. R. R. 4:31-1; Ochs v. Public Service Railway Co., 81 N. J. L. 661 (E. & A. 1911); Smith v. Fischer Baking Co., 105 N. J. L. 567, 568 (E. & A. 1929); Sodowich v. Heimert, 108 N. J. L. 59, 60 (Sup. Ct. 1931), affirmed o. b. 109 N. J. L. 265 (E. & A. 1932); Smith v. Red Top Taxicab Corp., 111 N. J. L. 439, 441 (E. & A. 1933).

The rule of the Ochs case has been adhered to in the later decisions of our highest court cited supra, with full realization that the rule in a number of other states is to the contrary. See Smith v. Red Top Taxicab Corp., supra, 111 N. J. L., at p. 441.

The Ochs rule is the law of this State. We as an intermediate appellate court are bound by it. Bacon v. Atlantic City Transp. Co., 72 N. J. Super. 541, 547 (App. Div. 1962), affirmed o. b. 38 N. J. 529 (1962). Further, we do not agree with the suggestion in Reardon v. Allen, 88 N. J. Super. 560, 563 (Law Div. 1965), that the rule of Ochs should be modified or repudiated.

The order dismissing the complaint as to defendant Church is reversed and the cause remanded to the trial court for further proceedings consistent with this opinion.


text:
    WILLIAM J. ROGALSKY, PLAINTIFF-APPELLANT, v. PLYMOUTH HOMES, INC., A CORPORATION OF NEW JERSEY, AND WALTER H. SMITH, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued April 8, 1968
    Decided April 30, 1968.

      Before Judges Gaulkin, Lewis and Kolovsky.

      Mr. Herbert M. Strulowitz argued the cause for appellant (Messrs. Tiernan, Strulowitz & Cooperman, attorneys).

      Mr. John B. Stone, Jr. argued the cause for respondents (Messrs. Ryan, Saros, Davis & Stone, attorneys; Mr. Bernard L. Davis, on the brief).
   The opinion of the court was delivered by

Kolovsky, J. A. D.

Plaintiff appeals from the judgment for defendants entered on a jury verdict of “no cause for action” in an automobile negligence action.

Three of the four points argued by plaintiff charge error in the admission of evidence. We agree that the challenged evidential rulings were erroneous and find that the impact thereof was so prejudicial as to mandate, in the interest of substantial justice, cf. R. R. 1:5-3(6), a reversal and remand for a new trial.

The case was tried before the effective date of the pertinent Rules of “The Evidence Act, 1960” (hereinafter referred to by Eule number). However, in the respects here involved, the Eules effected no change in the preexisting law.

The collision between plaintiff’s northbound Volkswagen automobile and the southbound fiat-bed lumber truck owned by defendant Plymouth Homes, Inc. and driven by its employee, defendant Smith, occurred on H. S. 206, a two-lane highway in Stanhope, Sussex County. The basic factual dispute related to the point of impact, whether on the northbound or southbound half of the road. Plaintiff and Smith each testified that the other came over onto the wrong side of the center lane.

Only two other witnesses testified on the issue of liability. A Mr. Walters, who had been driving northerly some 200 feet behind plaintiff’s auto, did not see the actual impact but testified that prior thereto plaintiff “was in his own' lane” and that defendant’s truck, when some 500 to 700 feet from Walter’s vehicle, was on the white line and appeared thereafter to be “going over the white line” into the northbound lane.

The other witness was the police chief of Stanhope. He had learned of the collision by “police radio from Morris County” and had proceeded to the scene some five or six blocks away. It was during the Chief’s testimony that all the criticized evidential rulings were made.

The first of those rulings permitted the Chief to relate, in response to a question of defendants’ attorney, that defendant Smith, when questioned at the scene after plaintiff had been removed to the hospital, had told the Chief

“that he was proceeding south on 206 and this Volkswagen was proceeding north and seemed to slowly edge its way over into the left-hand lane. He pulled to the right to avoid a head-on automobile accident and the Volkswagen just seemed to continue on to the truck and he said that when the Volkswagen sideswiped the truck that he immediately pulled off the edge of the road and parked his vehicle.”

The court overruled plaintiff’s objection to the recital of defendant’s self-serving statement, holding it admissible as part of the res gestae. The court erred. The statement was not admissible under the “spontaneous declaration” or "res gestae” exception to the hearsay evidence rule. See Riley v. Weigand, 18 N. J. Super. 66, 73 (App. Div. 1952); Lieberman v. Saley, 94 N. J. Super. 156, 161 (App. Div. 1967); Anastasio v. Rust, 128 N. J. L. 426, 428 (Sup. Ct. 1942); cf. Rule 63(4), Rules of Evidence.

Defendant Smith’s statement was a mere narration of past events; a response to the police officer’s questioning. The record would not support a finding that the statement was made

“(a) while the declarant was perceiving an event or condition which the statement narrates, describes or explains, or (b) while the de-clarant was under the stress of a nervous excitement caused by such perception, in reasonable proximity to the event, and without opportunity to deliberate or fabricate.” Rule 63(4).

See also cases cited supra.

It was also error to permit the police chief to express his opinion as to the “approximate point of impact.” He based his opinion not only on the physical evidence which he had observed — including debris and tire marks — but also on what defendant Smith had told him.

We do not reach the question of whether the opinion of a qualified expert is admissible to prove the point of collision between two automobiles, see generally Annotation, Opinion Evidence — Point of Collision, 66 A. L. R. 2d 1048 (1959), because defendants acknowledge, as they did in the trial court, that the police chief did not qualify as an expert.

Defendants contend, however, that the Chief’s testimony as to the probable point of impact was admissible ‘day. opinion” testimony under the evidence rule codified in Rule 56 (1). Not so. Priest v. Poleschuk, 15 N. J. 557, 562 (1954); Brindley v. Firemen's Ins. Co. of Newark, 35 N. J. Super. 1, 8 (App. Div. 1955); Annotation, 66 A. L. R. 2d 1048.

As the Court said in Priest v. Poleschuk, supra, at pp. 562-63:

“Knowledge is requisite to testimonial qualification. In assaying opinion evidence, for competency, the distinction is generally between the expert and the nonexpert' — • the witness who is skilled and specially experienced in the particular field, and the witness who has only the common knowledge and experience of mankind. Prom the latter, only facts perceived by the use of their senses, and not mere opinion, inferences, or conclusions based upon the facts supposedly within their knowledge, are adducible in evidence, for the assessment of the facts involving common knowledge and experience is the exclusive province of the jury or other fact-finding authority. The witness in the latter category cannot offer his opinion of the probative worth of the facts. But he has more leeway where the facts are incapable of reproduction and comprehension by mere description. * * *
* * * The * * * conclusion * * * [of] a lay witness who has no greater skill than the jury in drawing inferences, * * * [is] inadmissible when the jury can be put into a position ‘of equal vantage for drawing them.’ Wigmore, sections 1918, 1924.”

This is not a case where “the facts are incapable of reproduction and comprehension by mere description.” On the contrary, the Chief detailed to the jury all the facts on which he relied for his opinion as to the point of impact, including the statement he had obtained from defendant Smith. His testimony as to the probable point of impact was nothing more nor less than expert testimony, given by one who concededly is not an expert. The inference as to the point of impact to be drawn from the properly admitted evidence, including the Chief’s testimony as to what he saw, was for the jury, not for a lay witness. Further, even if the Chief had qualified as an expert, his opinion as to the point of impact would have been inadmissible since it was based, in essential part, on what defendant Smith had told him. Annotation, 66 A. L. R. 2d 1048, 1063; cf. Rule 56(2). Plaintiff’s objection to the Chief’s opinion testimony should have been sustained.

So, too, should have plaintiff’s objection to the admission into evidence of the writing prepared by the Chief captioned “Police Report of Motor Yehicle Accident.” The report contained much of what the Chief had testified to, including matters we. have held to be inadmissible — Smith’s statement to the Chief and a diagram depicting the Chief’s opinion as to the point of impact.

The report was not admissible as “past recollection recorded” under what is now Rule 63(1) (b). The Chief had sufficient recollection to testify and did testify fully as to everything in the report. The report itself should therefore not have been admitted on defendants’ motion. Springer v. Labow, 108 N. J. L. 68, 71 (Sup. Ct. 1931); Wigmore on Evidence, § 763, p. 111 (3d ed. 1940).

In view of what the report contained and the fact that the Chief had testified to what was set forth therein, there is no substance in defendants’ argument that the report was admissible as a business record under either N. J. S. 2A :82-34, et seq. or present Rule 63 (13).

Our determination that there must be a reversal because of the prejudicial evidential rulings makes it unnecessary to determine the validity of appellant’s criticism of the supplemental instruction given in response to the jury’s question and whether, if there was error, it was prejudicial. The problem is not likely to arise on the retrial.

The judgment is reversed and the cause remanded for a new trial.


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

text:
    RITA YOUNG, PLAINTIFF, v. JULIUS STEINBERG AND COSMO BOOK DISTRIBUTING CO., DEFENDANTS. WARREN W. STEINBERG, DEFENDANT-APPELLANT, v. CAROLINE MAGLE, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued February 19, 1968
    Decided May 1, 1968.

      Before Judges Sullivan, Foley and Leonard.

      Mr. William T. McElroy argued the cause for defendant-appellant (Messrs. Pindar, McElroy, Connell & Foley, attorneys; Sonia Napolitano, on the brief).

      Mr. John J. Gaffey argued the cause for defendant-respondent (Messrs. Gaffey, Webb & McDermott, attorneys).
   The opinion of the court was delivered by

Sullivan, S. J. A. D.

Defendant Warren W. Steinberg (Steinberg) appeals from an order of the trial court dismissing his cross-claim against defendant Caroline Magle (Magle) for contribution under the Joint Tortfeasors Contribution Law.

The appeal is presented under an agreed statement of the case as follows:

The present appeal has its foundation in an automobile accident which occurred January 13, 1964 on Walnut Street in Livingston, New Jersey. The issue presented is a purely legal one, and the facts which give rise to it are completely undisputed. Many of the facts involve the circumstances in which the plaintiff’s case was disposed of and, therefore, do not appear as a matter of record. The facts contained in this Statement of the Case have been agreed to by and between counsel for the appellant and counsel for the respondent as representing what truly occurred during the transaction which resulted in this appeal.
The accident occurred during a snowstorm. The plaintiff Bita Toung was a passenger in an automobile operated by her sister Caroline M. Magle, which automobile was proceeding south on Walnut Street. This vehicle was in collision with a motor vehicle operated by defendant Warren W. Steinberg and owned by Julius Steinberg, which vehicle had been proceeding north on the same road. The defendant Cosmo Book Distributing Company was the employer of defendant Warren W. Steinberg, and plaintiff asserted that the Steinberg vehicle was being used on its business at the time of the accident.
As a result of these negotiations, in which all counsel participated, plaintiff, through her attorney, agreed to accept the sum of $50,000.00 in full settlement of her claims. The carrier for the defendant Caroline M. Magle refused to contribute to this figure, and the carrier for the defendants W. Steinberg and Cosmo Book Distributing Company thereupon settled the case with plaintiff and her attorney for the above figure. Thereafter, the court was advised by William T. McElroy, Esq. and Fred A. Napolitano, Esq. that the defendants Warren W. Steinberg and Cosmo Book Distributing Co., having amicably settled their differences with the plaintiff, a Release would be given by plaintiff to defendants Warren W. Steinberg and Cosmo Book Distributing Co. in consideration of the payment of $50,000.00; that the Release would contain language reserving the rights of releasees against defendant Caroline M. Magle. Plaintiff’s attorney stated to the court that he was dismissing his action with prejudice as to the defendants Caroline M. Magle and Julius Steinberg. The attorney for the defendant Warren W. Steinberg stated to the court that he desired to proceed on his crosselaim for contribution as well as on crosselaim of Cosmo Book Distributing Co. against Caroline M. Magle as a joint tortfeasor. The court was advised that while the Belease given by the plaintiff to Warren W. Steinberg would also include the defendant Cosmo Book Distributing Co., in fact, Cosmo was not contributing to the settlement. Whereupon the court, on motion of attorney for defendant Magle, directed that further participation on behalf of Cosmo, by its attorney, was not necessary. Thereupon, the attorney for Cosmo Book Distributing Co. withdrew from the case. A motion was then made by the attorney for defendant Caroline M. Magle to dismiss the crossclaims of the defendants Warren W. Steinberg and Cosmo Book Distributing Co. against defendant Magle under the Joint Tortfeasors Act based upon the aforesaid settlement announced to the court by its attorney. This motion was argued before the court by the respective attorneys for the parties and at the conclusion thereof, the attorney for Warren W. Steinberg and Cosmo Book Distributing Co. requested an adjournment for a short period of time in order that he could procure the attendance in court of the attorney for the plaintiff so that a consent judgment in the sum of $50,000.00, without costs, could be entered upon the records of the court in favor of the plaintiff and against the defendants Warren W. Steinberg and Cosmo Book Distributing Co. The court granted this request over objection of attorney for defendant Magle.
Shortly thereafter, and on that same day, the attorney for the plaintiff and Mr. McElroy, representing the defendants Warren W. Steinberg and Cosmo Book Distributing Co., entered upon the records of this court a consent judgment in favor of the plaintiff and against the said defendants in the sum of $50,000.00, without costs. The aforesaid motion of the attorney for the defendant Magle was renewed and decision reserved by the court. Thereafter, a new jury was empaneled and a trial conducted (over objection of attorney for defendant Magle) on the issue of whether or not the defendant Magle was a joint tortfeasor with Warren Steinberg and Cosmo with respect to the accident involving the plaintiff Young. This jury returned a verdict finding that the defendant Magle was such a joint tortfeasor. Thereafter, the motion of the attorney for the defendant Magle aforementioned to dismiss the crossclaims of the defendants Warren W. Steinberg and Cosmo Book Distributing Co. under the Joint Tortfeasors Act was reviewed, decision reserved and briefs submitted to the court.
Argument on the motion was heard by the court on March 9, 1967 and after consideration of same and the briefs of counsel, the court granted the motion of the defendant Magle to dismiss the cross-claim for contribution under the Joint Tortfeasors Act asserted by the defendants Warren W. Steinberg and Cosmo Book Distributing Co.
The second count of the crossclaims by Julius Steinberg was dismissed at the request of Mr. MeElroy.
The consent judgment was paid by or on behalf of Warren Stein-berg and Warrant for satisfaction thereof filed with the clerk of the court.
(The consent judgment for $50,000 in favor of plaintiff and against defendants Steinberg and Cosmo Book Distributing Co. also dismissed with prejudice the cause of action asserted by plaintiff against defendant Magle.)”

Following oral argument on the appeal, counsel, by agreement, submitted a partial transcript of the aforesaid proceedings to the court. The transcript shows that the trial of appellant’s cross-claim against Magle for contribution was commenced shortly after the settlement of plaintiff’s claim was announced. (The cross-claim also included a count for property damage, not involved in this appeal.) On the following morning, during the course of the trial of the cross-claim, counsel for Magle made his motion to dismiss, after which the consent judgment in favor of plaintiff was entered.

The transcript also shows that just prior to the commencement of the trial on the cross-claim, counsel for Magle refused to stipulate that the settlement was fair and reasonable in amount. During the colloquy the trial judge ruled that the only issue to be submitted to the jury would be liability, and the question of reasonableness and fairness of the amount of the settlement would be determined by the court. This latter question was never decided by the trial court, apparently because of its ruling that no basis for contribution existed.

The issue is whether Steinberg, by virtue of the consent judgment, has standing to claim contribution. This involves the construction of the Joint Tortfeasors Contribution Law, N. J. S. 2A :53A-1 et seq., and particularly section 3 thereof which provides as follows:

“2A :53A-3. Judgment against joint tortfeasor; contribution Where injury or damage is suffered by any person as a result of the wrongful act, neglect or default of joint tortfeasors, and the person so suffering injury or damage recovers a money judgment or judgments for such injury or damage against one or more of the joint tortfeasors, either in one action or in separate actions, and any one of the joint tortfeasors pays such judgment in whole or in part, he shall be entitled to recover contribution from the other joint tortfeasor or joint tortfeasors for the excess so paid over his pro rata share. * * *” (Emphasis added)

Specifically, the issue, is whether a consent judgment against a paying tortfeasor, entered into as the result of a settlement between plaintiff and such tortfeasor, which judgment discharges the liability of another tortfeasor, satisfies the statutory requirements of the recovery of a money judgment under section S, supra, and entitles the settling tort-feasor to recover contribution from the other tortfeasor.

The argument made by appellant Steinberg is that by virtue of the consent judgment he has settled plaintiff’s entire claim against all tortfeasors, and that the settlement has resulted in a judgment of dismissal with prejudice in favor of defendant Magle as to plaintiff’s claim. On this basis Steinberg contends that it is only fair that Magle be required to contribute her pro rata share of the settlement if she be found to be a joint tortfeasor.

This argument is not without some merit. Under the Uniform Contribution Among Tortfeasors Act (both the original 1939 act and the 1955 revised act) contribution is not bottomed on recovery of a judgment. A settling tortfeasor is entitled to contribution from other joint tortfeasors if the settlement extinguishes such joint tortfeasors’ liability for the claim, but contribution may not be had in respect to any amount paid which is in excess of what is reasonable. (1955 revised act, § 1(d)). A similar result has been reached in some jurisdictions which have interpreted the statutory requirement of a “judgment” to encompass a consent judgment entered on settlement. Carolina Coach Co. v. Cox, 337 F. 2d 101 (4 Cir. 1964); Callihan Interests, Inc. v. Duffield, 385 S. W. 2d 586 (Tex. Civ. App. 1964).

In New Jersey, when our act was adopted in 1952, the Legislature omitted any reference to a right of contribution based on a settlement. Rather, application of the act is limited to a situation where the person suffering injury or damage “recovers a money judgment.” A tortfeasor who pays such judgment in whole or in part may then recover contribution from other joint tortfeasors for the excess paid over his pro rata share.

The precise issue of whether a consent judgment entered on a settlement comes within the purview of the act has never been sqnarely considered in this State. In Pennsylvania Greyhound Lines v. Rosenthal, 14 N. J. 372, 383 (1954), the court stated that our act did not provide for contribution where the payment was made in fulfillment of a voluntary compromise or settlement. In Theobold v. Angelos, 44 N. J. 228 (1965), Chief Justice Weintraub, referring to a Pennsylvania case, decided under that state’s contribution statute, said:

‘‘We do not cite this ease to hold that our statute authorizes an action for contribution by a tortfeasor who pays under an agreement of settlement rather than a judgment.” (at p. 240)

In Nilson v. Moskal, 70 N. J. Super. 389 (Cty. Ct. 1961), the trial judge held that a settlement extinguishes any basis for contribution under the New Jersey act. By way of dictum the court also reasoned that putting the settlement in the form of a consent judgment would not give the settling tortfeasor status to seek contribution since “a litigated adversary proceeding in good faith leading to a judgment is undoubtedly essential to establish the right to contribution.” (at p. 396).

We are not unmindful that the original settlement between plaintiff and Steinberg, as announced to the trial court, did not contemplate the entry of a consent judgment. It was not until defendant Magle moved to dismiss Stein-berg’s cross-claim for contribution that the idea of a consent judgment was conceived. Admittedly, the consent judgment was an after thought, its sole purpose being to attempt-to qualify Steinberg to seek contribution under the act.

However, beyond the “afterthought” aspect of the judgment herein, we conclude that entering a consent judgment is not the recovery of a judgment within the meaning and scope of our present act since the amount of the judgment is fixed, not by jury verdict, but by agreement between plaintiff and the settling tortfeasor. The legislative intent would appear to encompass only a judgment entered in a true adversary proceeding.

There does not appear to be much dispute but that the original settlement announced to the trial court (without entry of a consent judgment) did not give appellant standing to seek contribution under the act, even though he settled plaintiff’s entire claim for damages and caused plaintiff’s claim against Magle to be discharged., We do not see how putting the same settlement in the form of a consent judgment changed the basic situation.

Appellant suggests that in the trial of the claim for contribution the jury could decide not only the issue of joint liability, but also pass upon the reasonableness of the amount of the settlement. There are too many practical difficulties involved to make this feasible. This would appear to be the reason why the Legislature excluded settlements from the scope of the act.

Affirmed.

Foley, J. A. D.

(dissenting). I disagree with the majority’s basic holding that the consent judgment here involved did not constitute the recovery of a money judgment under section 3 of the Joint Tortfeasors Contribution Law (N. J. S. 2A:53A-3) because in my view such determination restricts the plain wording of the enactment and tends to defeat its purpose.

The policy of the Joint Tortfeasors Contribution Law is stated in N. J. S. 2A :53A-2:

‘‘The right of contribution exists among joint tortfeasors.”

It was designed to correct the “obvious lack of sense and justice in a rule which permits the entire burden of a loss, for which two defendants were equally, unintentionally responsible, to be shouldered onto one alone * * Kennedy v. Camp, 14 N. J. 390, 400 (1954). Obviously, the law is remedial and should be broadly construed to effectuate its purpose. See Frueh v. Kupper, 54 N. J. Super. 296 (Law Div. 1959).

Having in mind the mischief the Legislature sought to remedy, I can see no valid reason for, in effect, reading into the law a legislative intention that the recovery of a money judgment entered by consent and resulting from a settlement, could not be made the basis of an action for contribution where, as here, there was a jury finding that the parties before us were joint tortfeasors and the noncontributing tort-feasor has the opportunity to contest the reasonableness of the amount of the judgment.

In this case defendant tortfeasor Magle has not by formal proceeding challenged the reasonableness of the amount for which judgment was entered. She should be permitted to do so. If, as a result of a proceeding initiated by her, the money judgment is found to be reasonable in amount, I would enter judgment for Warren W. Steinberg on his cross-claim. If not, judgment should be entered for such sum as represents Magle’s pro rata share of what is determined to be reasonable compensation for the plaintiff’s injuries.

I would reverse and remand for proceedings and disposition not inconsistent with this opinion.