author: Simpsox, J. C. C.

text:
    BERGEN COUNTY BOARD OF TAXATION, PLAINTIFF, v. BOROUGH OF BOGOTA, ET AL., DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided February 17, 1969.

      Mr. Charles H. Landesman for plaintiff (Mr. Arthur J. Sills, Attorney General of New Jersey, attorney).

      Mr. V. Michael Rossi for defendants Borough of Fairview and John LaMarca, Carmine Pellechio and Patrick DeSena, members of the borough board of assessors.

      Mr. Ralph W. Ghandless fox defendants City of Garfield and Philip Gannuscio, its tax assessor (Messrs. Chandless, Weller & Kramer, attorneys).

      Mr. John J. Cariddi for defendants City of Hackensack and Bussel T. Wilson, its tax assessor.
   Simpsox, J. C. C.

(temporarily assigned). The Bergen County Board of Taxation brought this action in lieu of prerogative wriis, in the nature of mandamus, to compel the governing bodies and tax assessors (or boards of assessors, as appropriate) of seven municipalities to comply with its orders of August 18, 1967, the significant thrust of which were to require complete revaluation programs whereby each parcel of real estate in the respective municipalities would be appraised. Most of the facts were stipulated, and the testimony of the only witness, Dante Leodori, secretary of the Bergen County Board of Taxation, was undisputed. Consent orders for revaluation were entered with respect to four boroughs, so that the trial proceeded against only the Borough of Eairview, and Cities of Garfield and Hackensack. Because of the passage of time, plaintiff amended its complaint to require the revaluations to be effective for the year 1970 instead of 1969.

Pursuant to N. J. S. A. 54:4—2.27 plaintiff has established the percentage level of taxable value of real property for assessment purposes in Bergen County at 100 % of true value. It also has made continuing studies and determined "average assessment ratios” and "coefficients of deviation” for the 70 municipalities in the county. An "average assessment ratio” is an average of percentage ratios of assessed values to selling prices, while a “coefficient of deviation” is the ratio of the average deviation to the average assessment-sales ratio. The figures are not disputed, and for the three municipalities were as follows:

Average Assessment Coefficient of
Municipality Ratio Deviation
Eairview 21.00% 72.59%
Garfield 19.26% 82.84%
Hackensack 16.12% 84.42%

Plaintiff then decided that municipalities would be ordered to proceed with revaluation programs where their average assessment ratio was less than 85% and their coefficient of deviation exceeded 10%. By the time of the trial, figures were available for a subsequent sampling period, but in none of the three municipalities did the average assessment ratio reach 85%, and in all three the coefficients of deviation were in excess of 10%. Although plaintiff acted in a formal manner, with minutes and resolutions supporting its actions and orders, there has been no approval by the Director of the Division of Taxation, Department of the Treasury, State of New Jersey (hereinafter “Director”) of either the orders to revalue or the 85% and 10% figures which were the basis for the orders. On the other hand, the “Rules of the Bergen County Board of Taxation” have been so approved, including rule XIV which provides as follows:

“The Assessor or Secretary of the Board of Assessors of any faxing district which has commenced a revaluation or reassessment program, shall submit to the Secretary of the County Board of Taxation reports of the progress of the revaluation or reassessment program at intervals of not less than every thirty days.”

Plaintiff introduced into evidence chapter VIII of the Handbook for New Jersey Assessors (issued by the Local Property Tax Bureau, Division of Taxation, February 1964, as revised July 1965), entitled “Revaluation Programs”. The following statement appears at page 203 :

“A coefficient of deviation of less than 20 percent is usually considered good.”

Confronted with this, Leodori, testified that the handbook was outdated and he and the Bergen County Board of Taxation felt that a 10% coefficient of deviation was applicable to Bergen County conditions.

The history of New Jersey’s real property tax assessment problems is detailed in Switz v. Middletown Tp., 23 N. J. 580 (1957), and Village of Ridgefield Park v. Bergen Cty. Board of Taxation, 31 N. J. 420 (1960), and the public interest in and constitutional requirement of uniform assessment of all real property within a county is no longer open to question. These landmark cases, together with Board of Taxation of Essex Cty. v. Town of Belleville, 92 N. J. Super. 338 (Law Div. 1965), affirmed 95 N. J. Super. 327 (App. Div. 1967), make it clear that uniform assessment will not be thwarted by procedural niceties concerning mandamus or the recalcitrant refusal of municipal officials to pay for the cost thereof. The powers of plaintiff, however, as a county board of taxation created by the Legislature, are limited to those conferred by statutes or necessary implication therefrom. Baldwin Constr. Co. v. Essex Cty. Board of Taxation, 28 N. J. Super. 110, 116 (App. Div. 1953), affirmed 16 N. J. 329 (1954). Plaintiff contends it lias the power to order complete revaluations by municipalities, relying upon N. J. S. A. 54:3-13, 54:4-47 and the Belleville case, supra; while defendants say the orders are unenforceable because they lack approval of the Director (referred to in some of the statutes as “State Tax Commissioner”) required by N. J. S. A. 54:3-14 and 54:3-16. The statutes are as follows:

“54:3-13. Secure taxation at taxable value
Each county board of taxation shall secure the taxation of all property in the county at its taxable value as prescribed by law, in order that all property, except such as shall be exempt by law, shall bear its full and just share of taxes.”
“54:4-47. Revision and equalization; functions of county board The county board may adjourn from time to time in the discharge of its duties, and may, after investigation, revise, correct and equalize the assessed value of all property in the respective taxing districts, increase or decrease the assessed value of any property not valued at its taxable value, assess property omitted from any assessment, as provided by law, at its taxable value, and in general do everything necessary for the taxation of all property in the county at its taxable value.”
“54:3-14. Records, rules and orders
Each board shall keep a full record of its proceedings, and, subject to the approval of the state tax commissioner, may make all rules, regulations and orders not inconsistent with the rules, regulations and orders of the commissioner, and issue such directions as may be necessary to carry into effect the provisions of this title.” “54:3-16. Supervision of assessors; rules and regulations; approval
Each county board of taxation shall have supervision and control over all officers charged with the duty of making assessments for taxes in every taxing district in the county. Such officers shall be subject to, and shall, in making assessments, be governed by such rules, orders or directions as may be issued by the county board, in the enforcement of the objects of this title. Before making any such rules, orders or directions, the county board shall submit them to the state tax commissioner, and no rule, order or direction shall be considered adopted by the county board until approved by him.”

Statutes relating to the same subject matter, both special and general, must he construed together as a unitary and harmonious whole, so that each will be fully effective. City of Clifton v. Passaic Cty. Board of Taxation, 28 N. J. 411, 421 (1958). Viewed in this light, the approval of the Director is a prerequisite to a valid order by a county board of taxation to a municipality and its assessing officials to completely revalue its real property assessments. N. J. S. A. 54:3-13 is a broad generalization comparable to the mission paragraph of a typical military operations order, and is of no help in resolving the issue presented. Except for the last clause, “and in general do everything necessary for the taxation of all property in the county at its taxable value,” N. J. S. A. 34:4-47 refers only to things the county board of taxation may itself do, rather than things it may order others, such as assessors or municipalities, to do. The rule of ejusdem generis therefore applies to the general words in the last clause of this statute, and being general words following specifically named things of a particular class (things it may do, such as “revise,” “correct,” “equalize,” “increase,” and “decrease” assessed values of properties) it must be understood as limited to things of the same class or general character, i. e., things it may do. Transcontinental Gas Pipe Line Corp. v. Dept. of Conservation, etc., 43 N. J. 135, 146 (1964); Denbo v. Moorestown Tp., 23 N. J. 476, 482 (1957). Even assuming, however, that this statute is a broad enough grant of power to include orders to others to revalue, it throws no light on the question of the manner of the exercise thereof.

N. J. S. A. 54:3—14 and 54:3—16, on the other hand, permit rules, regulations, orders and directions to emanate from comity boards of taxation (the former as may affect all concerned, and the latter as affects municipal officers with the duty of assessing), subject to approval of the Director (“State Tax Commissioner”). These statutes are clear, have a plain meaning, and there is no room for judicial construction or interpretation. Watt v. Mayor, etc., of Franklin, 21 N. J. 274, 277 (1956); Albert F. Ruehl Co. v. Board of Trustees, etc., 85 N. J. Super. 4, 12-13 (Law Div. 1964). Plaintiffs recognition of the required approval appears by its obtaining the same for its own rules, including rule XIV dealing with revaluation problems. No reason appears why approval should be required in connection with ministerial and perfunctory matters and not required for more important matters like an order for complete revaluation.

Notwithstanding the foregoing, plaintiff relies upon the Belleville case, supra, and this court is, of course, bound by the holding of the Appellate Division therein. The reliance, however, is principally upon the opinion in the Law Division. There are several reasons why the case is not dispositive of the issue in the present situation. First of all, appeals are taken from judgments and not opinions, Clark v. Wichman, 72 N. J. Super. 486, 494 (App. Div. 1962), and the Appellate Division’s affirmance was based upon its construction of the mandate of that judgment: “* * * to direct the municipality and the assessor to perform their respective duties as prescribed by the applicable statutes.” 95 N. J. Super., at p. 328. Although most of the facts of Belleville and the present case are similar, there are crucial differences. From the opinions in Belleville it does not appear that the issue of required approval by the Director of the county board of taxation’s order to revalue was even raised. Furthermore, the assessor admittedly had failed to assess properly, had failed to correct proven assessment errors, and had himself indicated the need for revaluation. In the present ease it was stipulated that the Director did not approve the orders to revalue, and this issue was raised by defendants. And although there are obviously variances of sales prices from assessed valuations, resulting in the reported average assessment ratios and coefficients of deviation, there is no showing of a complete breakdown in assessments and assessing procedures of the magnitude and scope found in Belleville.

Secondly, although the Belleville case is authority for the broad proposition that a county board of taxation may order revaluation and a municipality cannot prevent same by withholding required funds, this is not to say that the power is absolute, unlimited, and beyond the control of the Director. I hold that the power is not only subject to his direction, but the exercise thereof requires his approval pursuant to N. J. 8. A. 54:3-14 and 54:3-16. Such approval is not only necessary, it is desirable. Complete revaluations of the real properties of municipalities are expensive undertakings. As of January 10, 1969 there were 15,547 line items, or taxable properties requiring appraisal and study in the event of complete revaluation, in the three defendant municipalities. The Director’s approval, either in specific cases or of a formula to determine the necessity of revaluation, will serve at least two salutory purposes. First, it will directly involve the expertize of the state agency which reports to the Legislature in the complex field of taxation. N. J. 8. A. 54:1-13. Second, it will necessarily resolve the existing dichotomy between plaintiff and the Handbook for New Jersey Assessors, supra, as to whether a coefficient of deviation in excess of 10% or 20% indicates a need for revaluation.

Finally, plaintiff argues that revaluation should be ordered because the figures conclusively prove that defendants have not assessed each parcel at the required 100% of true value, so that neither approval by the Director nor even an order by plaintiff is necessary. The fallacy hero is self-evident. A single sale of a piece of property at other than the exact assessment thereof will increase or decrease aggregate valuations to something over or under 100%. If this “was the test, every municipality would have to revalue every property every year. Taxing statutes, like all others, will not be interpreted or construed in a manner leading to absurd or unreasonable results. Clifton v. Passaic Cty. Board of Taxation, supra, at p. 421; State v. Gill, 47 N. J. 441, 444 (1966).

Judgment for defendants.


source: Caselaw Access Project

author: Simpsoít, J. C. C.

license: Public Domain

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. DONALD F. CHELSON, DEFENDANT.
    Bergen County Court Law Division
    Decided February 18, 1969.

      Mr. Francis X. Burke, attorney for defendant-petitioner.

      Mr. P. Franklyn Boggia for plaintiff (Mr. Guy W. Galissi, Bergen County Prosecutor, attorney).
   Simpsoít, J. C. C.

Defendant petitions the court for an order to expunge the records of all evidence of a criminal conviction pursuant to N. J. 8. 2A :16¿U28. The records reveal guilty pleas on January 19, 1955 to a petit larceny charge and a traffic violation. Sentences, on the same date, were 10 and 15 days and jail, respectively, totalling the exact 15 days defendant had been in jail awaiting trial. There was a subsequent conviction for petit larceny on February 1, 1951 in another county, and a separate petition to expunge that record will be filed in that county. The Bergen County prosecutor does not object on the merits, but contends that the statute does not cover this situation. Because the records reveal these convictions, both more than ten years old, defendant has been refused employment as a taxi driver.

Expungement under the statute is discretionary, but with no objection on the merits by the prosecutor or chief of police of the municipality where the earlier offense was committed, that discretion might be exercised in favor of petitioner. On the other hand, sentence was not suspended, so that the petition might be summarily dismissed on this basis. Although an inference may be drawn that the sentence for the exact jail time awaiting trial is the practical equivalent of a suspended sentence, a literal reading of N. J. 8. 2A: 164-28 would appear to preclude expungement.

More important, however, is the question of the availability of expungement where there is more than one conviction. Even assuming the sentence, fine or nature of the offense do not bar relief, and the required ten years have elapsed since the conviction, the petition is only lawful if “no subsequent conviction lias been entered against such person * * In the ease of a multiple offender, the plain meaning of these words is that the record of no conviction, except possibly the last, can be expunged.

The legislative history of the statute furnishes additional evidence of the limited availability of the relief. The statement accompanying a bill which in 1936 amended the original 1931 statute was as follows:

“The purpose of this act is to assist only those persons who have one single conviction against them, and from the time of the conviction and for a period of ten years thereafter have lived exemplary lives during that time and are able to show by their petition that they have made a complete moral change. It will rest with the judge hearing the matter to decide by the exercise of his discretion whether the petitioning party would be entitled to this relief. This act reduces the period from twenty to ten years and provides notice to the chief of police of the municipality in addition to the prosecutor”

There is also evidence that the Executive Branch concurred in this interpretation of N. J. 8. 2A :164r-28. Commenting on this statute in a January 12, 1960 message accompanying his veto of an act (Assembly Bill 480, introduced February 9, 1959) which would permit expungement of records relating to dismissed or withdrawn criminal complaints or accusations, Governor Robert B. Meyner stated:

“In addition, the language of the present act indicates that there is an intention to limit it to cases where the record shows but a single conviction.”

Recent legislation and legislative activity, together with other judicial decisions referring to N. J. 8. 2A :16-t-28, suggest that this statute may need revision and clarification. In the present case, however, it is clear that no expungement may be ordered.

Petition dismissed.

        S. J. S. 2A:16SA-1 to 3, and 2A:169-11, all effective September 4, 1968.

        Report of Joint Legislative Committee to Study Crime and the System of Criminal Justice in Sew Jersey, April 22, 1968.

        Waterfront Commission of New York Harbor v. Pasquale, 65 N. J. Super 498, 503-504 (App. Div. 1961) ; State v. Garland, 99 N. J. Super. 383 (Cty. Ct. 1968).


author: OoN'í'orj), S. J. A. D.

text:
    OXFORD CONSUMER DISCOUNT COMPANY OF NORTH PHILADELPHIA, A CORPORATION, PLAINTIFF-RESPONDENT, v. ANTHONY E. STEFANELLI AND THERESA A. STEFANELLI, DEFENDANTS-APPELLANTS, AND ARTHUR J. SILLS, ATTORNEY GENERAL OF NEW JERSEY, INTERVENOR, AND FIRST MERCANTILE CONSUMER DISCOUNT COMPANY, INTERVENOR.
    Superior Court of New Jersey Appellate Division
    Petition for Rehearing Argued December 16, 1968—
    Decided February 24, 1969.

      Before Judges Contord, Labrecque and Halpeen'.

      Mr. Arnold X. Mytelha argued the cause for intervenor First Mercantile Consumer Discount Company (Messrs. Clapp & Eisenberg, attorneys; Mr. Alfred C. Clapp, of counsel).

      Mr. Morris L. Weisberg, of the Pennsylvania Bar, admitted pro hac vice, argued the cause for plaintiff-respondent (Mr. Merman J. Ziegler, attorney).

      Mr. Clive 8. Gummis argued the cause for amicus curiae. Middle Atlantic Finance Association {Mr. Alan J. Gutter-man and Mr. 8teven 8. Radin, on the brief).

      Mrs. Annamay T. Sheppard argued the cause for defendants-appellants {Mr. Edward Carl Broege, Jr., on the brief).

      Mr. Joseph A. Hoffman, First Assistant Attorney General, argued the cause for Attorney General, intervenor {Mr. Arthur J. Sills, Attorney General of New Jersey, attorney; Mr. Stephen STcillman and Mr. Douglas J. Harper, Deputy Attorneys General, on the brief).

      Mr. Jade B. Kirsten argued the cause for amici curiae, Paul V. Durkin and Ellen Durkin {Messrs. Kirsten & Solomon, attorneys).
   The opinion of ihe court was delivered by

OoN'í'orj), S. J. A. D.

On September 11, 1968 this court held the Secondary Mortgage Loan Act of 1965 {N. J. 8. A. 11:11/1-1 el seq.; A. 1965, c. 91) to be, in the main, a valid enactment, constitutionally applicable in relation to the enforcement of the obligation on a secondary mortgage loan to Nqw Jersey borrowers, secured by real property situated in this State, although the loan agreement was executed in Pennsylvania and the loan repayable in that state to a lender which was a Pennsylvania corporation carrying on a loan business in that state under authority of a licensing statute there in effect. Oxford Consumer Dis. Co. of No. Phila. v. Stefanelli, 102 N. J. Super. 549. We consequently barred recovery by plaintiff lender of any part of the loan or interest due thereon, finding that the loan agreement called for interest in excess of that allowed by the New Jersey act and was violative of the act in one other respect. We acted under the mandate of section 29 of the act, which provides that no obligation arising out of a secondary mortgage loan (as defined by the act) shall be enforceable in the courts of this State unless negotiated and made in full compliance with the provisions of the act. Certain other allegations by defendants as to violations of the act were not passed upon, as they involved disputes of fact which had not been duly tried.

Thereafter, we denied an application by the plaintiff for rehearing. At the same time, however, we granted a petition of First Mercantile Consumer Discount Company (“First Mercantile”), another Pennsylvania small loan company, for leave to intervene in the cause for the purpose of permitting it to be heard to contend on petition for rehearing that the September 11, 1968 decision of the court should be held not to have retroactive effect as to loam transactions entered into before the effective date of that decision by Pennsylvania corporations licensed in the State of Pennsylvania to make such loans, where the loans were not only made there but were also repayable there and in all other respects in conformity with Pennsylvania law.

We allowed the intervention, although such action on appeal is quite rare and granted only in extraordinary circumstances — see Hurd v. Illinois Bell Telephone Company, 234 F. 2d 942, 944 (7 Cir. 1956); McKenna v. Pan American Petroleum Corporation, 303 F. 2d 778, 779 (5 Cir. 1962) — on the basis of the following showing.

First Mercantile and another Pennsylvania loan company had been sued by certain of their New Jersey borrowers, prosecuting a class action in the Chancery Division, for an injunction to restrain enforcement of all secondary mortgage loans made on the security of New Jersey realty by such corporations, although the loan agreements of plaintiffs in those actions were all executed and provided to be repaid in Pennsylvania. Pending the appeal in the instant case we had granted First Mercantile leave to appeal an order of the Chancery Division permitting the continued prosecution of the suit as a class action.

First Mercantile filed proofs on its petition for intervention in the present case, showing it had made secondary mortgage loans secured by New Jersey realty amounting to approximately §5.5 million, all of which, would bo uncollectible if our decision of September 11, 1968 were applied retrospectively; that such a result would be catastrophic, causing insolvency of First Mercantile’s parent corporation, throwing 50 of its employees out of work, and jeopardizing loans of about $8 million to these corporations made by various banks, insurance companies and other lenders; that unless an early judicial declaration as to the inapplicability of the decision retrospectively to Pennsylvania lenders in First Mercantile’s position were forthcoming, its many New Jersey borrowers would repudiate their obligations and cause ruin to the company; and that it had made loans on secondary mortgages on New Jersey realty, notwithstanding enactment of the New Jersey act in 1965, on the basis of advice of both Pennsylvania and New Jersey counsel that these loans were Pennsylvania transactions subject to Pennsylvania law and not subject to the Secondary Mortgage Loan Act of 1965 or any other New Jersey law.

Upon inquiry by the court, amicus curiae Middle Atlantic Finance Association advises that nine of its Pennsylvania members had made out-of-state secondary mortgage loans secured by New Jersey real estate, prior to September 11, 1968, aggregating $4,460,881.96 (not inclusive of loans by First Mercantile but including loans by plaintiff). An undeterminable additional amount of such loans has been made by other .Pennsylvania members of that organization.

In addition to the original parties and amicus, Paul V. Durkin and Ellen Durkin, plaintiffs in the aforementioned pending class action against First Mercantile, have been admitted herein as amici curiae to file a brief and to argue in opposition to the position of that intervenor. Plaintiff supports the position of intervenor, having considerable stake in the issue by virtue of other loans outstanding affected by our September 11, 1968 decision. However, as noted, we have already denied its petition for rehearing of this case in relation to the effect of the decision in relieving the Stefanelli defendants of liability, taking the view that the latter are entitled to retain the fruits of their victory regardless of our conclusion as to the pending request for restrictive application of the decision to other loans. See Goldberg v. Traver, 52 N. J. 344, 347 (1968). The Stefanellis nevertheless join the Attorney General and the Durkins in opposition to the position of the intervenor.

The proponents of intervenor’s position rest their basic argument on the alleged unfairness and injustice of applying the September 11, 1968 holding to loans made prior thereto so as to wipe out all their equity in these loans, but they concede that they should justly be confined to recovery of the principal sums and to such interest and other charges (so far as agreed to in the loan transaction)' which do not exceed the maximum permitted by New Jersey or Pennsylvania law, whichever is lower. Cf. Ditmars v. Camden Trust Co., 10 N. J. 471, 494-98 (1952). The Attorney General adamantly opposes judicial extension of any consideration to intervenor and contends for literal application of section 29 of the act, barring any recovery at all on secondary mortgage loans violative of the act in any respect, whenever made. He takes the position that the public policy declared by the Legislature should not be modified to any degree because the principle of prospective application of judicial decisions is not properly invocable in the existing circumstances.

Intervenor and plaintiff contend that they reasonably relied, after adoption of the act in 1965, upon what they urge was the then generally held view that loans made in a particular state by a lender organized in that state, to be repayable there, were governed as to validity by the law of that state, even if secured by lien on real estate situated elsewhere. That general principle enjoys some color of support in Proposed Official Draft of the Restatement, Conflict of Laws (1968), § 195, “Contracts for Repayment of Money Lent/’ comment (a). (This section and comment are also found in earlier drafts.) The contention is, further, that the reliance by this court in its decision of September 11, 1968, on § 6 (1) of the 1967 Restatement draft, as to the controlling effect of a direction as to choice of a law contained in a statute of the forum, was novel and surprising in that there is no express provision in the New Jersey act as to choice of law and in that this court found an implied direction in the act for control of the questioned transaction by the provisions of the act — an implication which intervenor’s advisers should not be blamed for not having also drawn from the act. See 102 N. J. Super., at pp 563-564. It is argued that average, competent counsel would not have predicted this court’s decision on the choice of law question but rather would have concluded that Pennsylvania law controlled as to the validity of the loan in the circumstances presented.

It is further maintained by the supporters of the intervenor’s position that none of the Pennsylvania corporate lenders could have complied with the requirement of section 3 of the act that holders of at least 50% of the stock in corporate applicants for lending licenses should have been residents of New Jersey for two years prior to the application. Although we held that provision of the act unconstitutional (and severable from the remainder) (102 N. J. Super., at pp. 560-562), it is argued that the existence of the requirement in the act as passed nevertheless contributed to the reasonable overall impression of Pennsylvania corporate lenders not owned to the extent of 50% by New Jersey residents, and thus not capable of qualifying as licensees under the act, that they would surely not he held to come under the confiscatory sanctions of the act as to loans made and repayable in Pennsylvania although secured by secondary mortgages on New Jersey realty.

Finally, although the point is not made in any of the briefs on the intervenor’s side, there was discussion at the oral argument as to whether there was some element of surprise or novelty in tlie determination of this court in the September 11, 1968 decision that application of the statute to such transactions as are here involved did not offend the Commerce Clause of the Federal Constitution, in view of the court’s substantial reliance in that regard on the 1965 dismissal for want of federal jurisdiction of the appeal in Fairfax Family Fund, Inc. v. California, 382 U. S. 1, 86 S. Ct. 34, 15 L. Ed. 2d 6 (1965) (102 N. J. Super., at pp. 570-572), and in further view of the general constitutional prohibition of local state licensing requirements in relation to exclusively interstate transactions. See Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U. S. 276, 81 S. Ct. 1316, 6 L. Ed. 2d 288 (1961).

There is no question but that appellate courts in this State and elsewhere have long regarded themselves as empowered and justified in confining the effect of a decision of first impression or of novel or unexpected impact to prospective application if considerations of fairness and justice, related to reasonable surprise and prejudice to those affected, seemed to call for such treatment. Great Northern R. Co. v. Sunburst Oil & Ref. Co., 287 U. S. 358, 53 S. Ct. 145, 77 L. Ed. 360 (1932); State v. Johnson, 43 N. J. 572, 582-583 (1965), affirmed sub nom. Johnson v. New Jersey, 384 U. S. 719, 86 S. Ct. 1772, 16 L. Ed. 2d 882 (1966); Goldberg v. Traver, 52 N. J. 344 (1968); Irwin v. Irwin, 433 P. 2d 931 (Okl. Sup. Ct. 1965); Johnson v. Stoveken, 52 N. J. Super. 460 (App. Div. 1958); State v. Koonce, 89 N. J. Super. 169, 185 (App. Div. 1965). The decision in Wangler v. Harvey, 41 N. J. 277 (1963), illustrates the variations in viewpoint reasonably entertainable by different judges as to whether justifiable reliance on a previous notion of the law could be found in reference to a particular case of judicial reformulation of the law (the majority of the court held there was no justifiable prior reliance).

While most of the decided cases on prospective effect concern decisions expressly overruling previous holdings and announcing explicit changes in the law, see Levy, “Realist Jurisprudence and Prospectivo Overruling,” 109 U. Pa. L. Rev. 1 (1960), passim, the practice is not limited to such cases but may also apply to situations where a court renders a first-instance or clarifying decision in a murky or uncertain area of the law but under circumstances where members of the public or public entities could be found to have previously and not unreasonably relied on a different conception of the state of the law. See Goldberg v. Traver, supra (52 N. J., at pp. 346-347) ; Irwin v. Irwin, supra (433 P. 2d, at p 934); Coffey v. Anderson, 371 S. W. 2d 624, 626 (Ky. Ct. App. 1963) ; Nani v. Zoning Board of Review of Town of Smithfield, 242 A. 2d 403 (R. I. Sup. Ct. 1968). It is noteworthy that in all of the first three of the last-cited eases the new determination of the state of the law, held applicable only prospectively, involved matters of statutory construction. This suffices to refute any notion that the doctrine of prospective effect is necessarily inapplicable to determinations of statutory or constitutional construction as distinguished from those of common law.

We thus turn to consideration of whether members of the public in the position of First Mercantile, that is to say, Pennsylvania corporations making loans in Pennsylvania, repayable there, and complying in all respects with applicable Pennsylvania regulatory statutes, but secured by secondary mortgages on New Jersey realty, will be unfairly and unjustly treated if such loans, made prior to the effective date of our September 11, 1968 decision, are rendered totally uncollectible in this State by virtue of that decision.

The Attorney General points to certain evidence, collected ex parte and set forth in his appendix, tending to show that principals in the plaintiff corporation and First Mercantile, or in associated corporations, were active in inquiries of the New Jersey Department of Banking and Insurance concerning the reach of the act shortly after its adoption. The president of First Mercantile, appearing on behalf of a New Jersey corporation, attended a hearing relating to adoption of proposed rules and regulations of the Department implementing the act, one of which, Rule 1, declared that notwithstanding the place of execution of a secondary mortgage loan, it would be deemed subject to the act if the real property is located in this State (a rule held invalid in the September 11, 1968 decision, 102 N. J. Super., at p. 564).

The Attorney General further shows that a Pennsylvania finance association lawyer testified at the departmental hearing in opposition to the residency requirements in section 3; also that an officer of a company associated with the present plaintiff corporation inquired as to the effect of the act as against Pennsylvania licensed discount companies, and was sent a response calling attention to Rule 1 and various sections of the act, including section 29. On December 6, 1965 a corporation associated with the present plaintiff and a Pennsylvania association of finance companies, of which the parent corporation of First Mercantile was a member, sued the Commissioner of Banking and Insurance in the Chancery Division to enjoin enforcement of a number of provisions of the act (but not Rule 1), and on March 17, 1966 judgment was entered in that action holding section 3 to be unconstitutional. It is also shown that New Jersey corporations associated, respectively, with First Mercantile and plaintiff, obtained licenses under the act, and that one of them has made some New Jersey loans pursuant thereto.

We regard the foregoing data as of rather limited significance in relation to the issue before us. It evidences at most that certain of the Pennsylvania small loan interests were conscious of and concerned about the possible effect of the New Jersey act upon loans they might make in Pennsylvania secured by secondary mortgages on New Jersey realty. But this does not necessarily manifest that they were unreasonable in relying upon legal advice that if made in Pennsylvania, and repayable there, the loans would be governed as to legality solely by the law of Pennsylvania, in which state the lending corporations were organized and licensed to make such loans. See 102 N. J. Super., at p. 559. The intervenor agrees with the Attorney General that, in principle, the existence of reliance by laymen on prior law should be judged by what “competent legal counsel” would have advised. We would add the qualification, “legal counsel of average competence.”

It is difficult for a court which has examined at length into the merits of the conflict of laws and interstate commerce questions and formulated conclusions thereon, as we did in the September 11, 1968 decision, now retrospectively to hypothesize the advice that counsel of average legal competence would have given the Pennsylvania companies as to their right to enter into these transactions free from imperilment of their investment because of the 1965 New Jersey statute. But we think that in arriving at an ultimate decision herein we should weigh the probabilities in relation to the foregoing factor in the light of the magnitude of the potential losses of the lenders as compared with the amount of gains to individual borrowers consequent upon a rejection of the doctrine of prospective application in this case.

Applying that approach, we have concluded that on the basis of the showing of the intervenor and plaintiff, overall considerations of fairness and justice call for some degree of restriction of retroactive application of our September 11, 1968 decision in relation to loans by licensed Pennsylvania lenders made prior to the effective date thereof, where the loans comported with the regulatory Pennsylvania law, the agreements were executed in that state, and the obligations were repayable there. We are satisfied that there could be said to have been sufficient doubt in advance of our decision that the New Jersey act applied to such loans, whether constitutionally, with relation to choice of law, or otherwise, especially as to lending corporations having less than 50% of shareholders resident in New Jersey, that, weighed against the potential catastrophic effect thereof on some of such lenders, unrestricted retroactive operation of the decision should be disallowed.

The question remains as to precisely what restrictions on retroactivity should be imposed.

We have concluded that we should not now go beyond adjudicating relief from retroactivity in respect of transactions where there was no intermediation of any kind by others, operating in this State, between Pennsylvania lender and New Jersey borrower.

We are clear, first, that Pennsylvania lenders obtaining New Jersey loan business on a regular, continuing basis by or through agents, brokers, or representatives operating in this State, whether or not technically independent contractors, could not reasonably have been advised in advance that choice of law and interstate commerce factors would immunize the loans from the effect of the New Jersey act. As to such loans, therefore, the decision of September 11, 1968 will remain fully retroactive. As to any other type of case involving some degree of causal intermediation between the lender and the borrower by operatives functioning in this State, the court should appraise the particular facts of the individual case for determination as to whether considerations of fairness and justice call for relief from retro-activity of the September 11, 1968 decision in such instance, according to the criteria discussed above.

It is next necessary to decide whether there should be any curtailment of the lender’s claim to interest and other charges where it ultimately qualifies otherwise for relief from retroactivity. As heretofore noted, plaintiff and intervenors contend that fairness would be served by requiring the borrowers to pay the interest rates and other charges (if specifically agreed to in the loan contract) allowed for such transactions by either the New Jersey or Pennsylvania statute, whichever is the lower. We think some further curtailment of recoverable interest is appropriate in order to give a degree of substantial effect to the circumstance that, in finality, the lenders have violated New Jersey law as substantively determined by our prior decision. Therefore recovery will be limited to 6% per annum simple interest computed on principal balances outstanding on funds actually advanced.

In relation to other loan charges, in view of the fact that, by and large, aggregate allowable charges to borrowers are heavier under the New Jersey statute than that of Pennsylvania (102 N. J. Super., at pp. 556, 560), we regard it as fair to allow the lender to retain any charges contracted for which are allowable under the Pennsylvania statute.

The opinion of the court heretofore rendered in the cause is to be taken as supplemented by this determination on the petition for rehearing of the intervenor.

       Subject to their reserved right to challenge the entire decision on its merits on appeal to the New Jersey Supreme Court.


author: Pee Cueiam. Lewis, J. A. D.

text:
    RICHARD H. LISCHIN, PLAINTIFF-APPELLANT, v. NATIONWIDE MUTUAL INSURANCE COMPANY, A CORPORATION, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued January 20, 1969
    Decided February 28, 1969.

      Lewis, J. A. D., dissented.
    Before Judges Sullivan, Eoley and Lewis.

      Mr. Isaac O. Ginsburg argued the cause for appellant (Messrs. Feinberg & Ginsburg, attorneys).

      Mr. Ronald I. Bloom argued the cause for respondent {Messrs. Finn & Rimm, attorneys).
   Pee Cueiam.

This case involves the interpretation of a coverage clause of an automobile owner’s comprehensive insurance policy issued by defendant. The clause in question, under “Supplementary Payments,” provides:

“(b) if the automobile is stolen, pay $10.00 per clay, subject to a maximum of $300, for loss of use until settlement for such theft is offered by the Company. Such loss of use shall begin 48 hours after the theft is reported to the Company and police; * * *”

Plaintiff, the insured, had his automobile stolen on June 18, 1966. He reported the loss to the police and defendant. The police found the ear on June 20, 1966 in a damaged condition and removed it to a police garage. Plaintiff and tlie insurance company were notified the same day.

Defendant immediately undertook to repair the automobile under its comprehensive coverage and, with plaintiff’s consent, removed it to a repair shop on the following day. However, repairs were not completed until July 22, 1966. Plaintiff claimed loss of use coverage under the policy and, when defendant rejected his claim, the instant suit was commenced.

The trial court found in favor of defendant, holding that the policy coverage was for “loss of use occasioned by theft and not loss of use occasioned by repair time.”

We agree and affirm substantially for the reasons expressed by the trial court in its written conclusions of law.

While the clause in question is not entirely free from ambiguity, we do not understand it to extend coverage for loss of use due to repairs on the automobile even though the repairs were of damage done to the automobile while it was stolen.

The purpose of the clause is to require the insurer to settle a stolen automobile claim promptly at the risk of paying a penalty for every day (after 48 hours) that an offer of settlement of the theft claim is not made. Assuming that damages done to an automobile during its theft be held to come under this clause, it is undisputed that defendant immediately undertook to repair the car. This would constitute an offer of full settlement within the meaning of the clause. Moreover, plaintiff accepted such offer.

Affirmed. No costs.

Lewis, J. A. D.

(dissenting). While the policy provision in controversy may be construed as stated in the majority opinion, it appears to mo that it is both ambiguous and susceptible, within a fair contemplation of the contracting parties, to a reasonable and logical interpretation that favors the contention of the insured. Accordingly, I respectfully disagree with the conclusion reached by my colleagues.

It is common knowledge that a substantial number of stolen automobiles are recoverd in a damaged and immobile, yet repairable, condition; meaningful statistics are, no doubt, available to interested insurance companies. To say, argues plaintiff, that the liability of an insurance carrier, under a policy theft provision for “loss of use” terminates upon the police recovery of a stolen vehicle in a damaged and inoperable condition, is to ignore the purpose for which such “loss of use” insurance is normally sought by an insured owner. There is some merit to that argument. If defendant had intended the limited coverage it now urges, it readily could have so provided by clear, qualifying language to the effect that its “loss of use” liability would cease upon recovery of a stolen car, whether or not it was damaged beyond use and time was required to restore its usability. The purchasing public is entitled, at least, to that much frankness and policy certainty.

In Kievit v. Loyal Protect. Life Ins. Co., 34 N. J. 475, 482 (1961), it was observed, “When members of the public purchase policies of insurance they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations.” Generally speaking, insurance policies are to be strictly construed against the insurer and we sustain coverage where the language will support two meanings, one favorable to the insurer and the other favorable to the insured. Mazzilli v. Acc. & Cas. Ins. Co. of Winterthur, 35 N. J. 1, 7 (1961). Accord, Allen v. Metropolitan Life Ins. Co., 44 N. J. 294, 305-306 (1965); Cooper v. Government Employees Ins. Co., 51 N. J. 86, 93 (1968). In sum, the insured is entitled to the widest possible coverage. Moreover, in evaluating a claim of an insured, consideration should be given as to whether alternative or more precise language, if used, would have put the matter beyond reasonable question. See Kook v. American Sur. Co. of N. Y., 88 N. J. Super. 43, 51 (App. Div. 1965); Mazzilli v. Acc. & Cas. Ins. Co. of Winterthur, supra.

Here, it is uneontroverted that plaintiff’s car was stolen and, as a direct consequence thereof, was damaged beyond immediate use. Under the comprehensive coverage provisions of the policy, the insurance company elected to make the necessary repairs and took possession from the police for that purpose; the extent of the damage and why approximately a month was required to make the repairs does not appear in the record. The fact remains, however, that plaintiff was deprived of the possession and use of his car from June 18, the date of the theft, until after July 22, when his vehicle was returned to him by the insurance company. Coverage for that “loss of use” occasioned by the theft, was a contingency and insurable interest which plaintiff could have reasonably contemplated under the supplementary theft provisions of his policy.

The majority opinion, after noting that the insurance company undertook to repair the car, concludes in substance that that event constituted an offer of full settlement which plaintiff accepted. I am unable to agree. The insurer took possession, with plaintiff’s permission, in order to satisfy an obligation to repair under the comprehensive provisions of its contract. There is nothing before us to suggest that the insurance company, prior to July 22 when it rejected plaintiff’s claim for “loss of use,” ever mentioned settlement for any possible liability under the “supplementary” theft clause.

Eor the foregoing reasons I would reverse and remand for entry of judgment in favor of plaintiff for an amount, not to exceed $300, representing $10 a day from the time plaintiff’s car was stolen until it was returned to him by the insurance company in operational condition, less $20 for the excludable deduction period of two days.


author: Fbitz, J. S. O.

text:
    WILLIAM BAUER, AN INFANT, BY HIS GUARDIAN AD LITEM, THEODORE BAUER, AND THEODORE BAUER AND ELSIE BAUER, PLAINTIFFS, v. ALEX T. GRIFFIN, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided February 14, 1969.

      Mr. Michael A. Cohan “for -plaintiff (Mr. Edwin A. Kolodziej, attorney).

      Mr. William T. McElroy for defendant (Messrs. Pindar, McElroy, Connell •£ Foley, attorneys).
   Fbitz, J. S. O.

William Bauer, the infant plaintiff herein, moves to vacate an order approving settlement, pursuant to B. B. 4:56A, on which judgments totalling $125,000 were entered in 1963 after a hearing.

On October 6, 1962 William Bauer, then 16 years of age, was walking on or near a public road when he was struck by an automobile operated by defendant. Because the matter was settled, the facts surrounding the accident do not appear of record. That some question with respect to these facts does exist is indicated by the respective statement of facts and eounterstatement of facts submitted with the briefs on this motion. In the former, the allegation appears that defendant “veered off the road, striking Billy,” while in the latter it is said, “There was some indication that William Bauer was struck * * * somewhere in the right hand traffic lane * * In the transcript made at the time of the approval of the settlement, the late Judge Mills commented: “The Court realizes that there are grave questions of negligence and grave questions of contributory negligence.”

There is no question that the consequent injuries were extraordinarily severe, not the least of which was deep brain damage. Nor does it appear to be disputed that William Bauer went into immediate coma which persisted through and after the approval of the settlement on August 20, 1963.

On February 5, 1963 Theodore Bauer, father of William, instituted suit as guardian ad litem against defendant for personal injuries said to have resulted from the accident. William’s parents also sued individually for their consequent damages. Defendant’s insurance company settled all claims for $125,000, and on August 20, 1963 Judge Mills granted the application for approval of the settlement. In the interim there had been preparation for trial.

We are advised in the counterstatement of facts appearing in defendant’s brief in opposition to the motion that:

“In the course of preparation for the case, the defense attorneys deposed the parents of the boy, had a neurological examination and employed other discovery devices. More particularly, on May 3, 1963 Theodore and Elsie Bauer, the parents of William, were deposed, the testimony was recorded and the transcript was reviewed by Judge Elden Mills. Unfortunately, no transcript of the deposition is in existence today. Due to passage of more than five years, the Court’s copy has been destroyed; defense counsel’s copy has been destroyed along with the entire defense file; and the stenographer’s notes have been destroyed.”

Judge Mills, since deceased, made reference at the hearing to having had “the benefit * * * of reviewing the depositions of some of the parties to this matter, which was [sic] held on May 3, 1963.”

On August 16, 1963 there was a pretrial conference before Judge Mills. The transcript of the hearing reveals that Judge Mills had “the benefit of extensive discussions with counsel concerning the possibility of an amicable settlement” both at the time of this pretrial and on the morning of the hearing.

Mr. and Mrs. Bauer and Dr. Ernest S. Matthews, the “attending physician” of William Bauer, were the only ones to testify at the hearing.

Mr. Bauer testified to the composition of his family, and to William’s age. He stated that as a result of injuries which his son sustained in an accident on October 6, 1962, young William had been taken to a hospital unconscious, and that he had remained in the hospital in an unconscious state ever since. At this point in the testimony, the following appears:

“Q And you are aware of the fact that your son has been critically injured, are you not? A Tes, that’s right.”

Mr. Bauer said that accrued expenses approximated $30,000 and were continuing at the rate of about $100 a day. He acknowledged a complete awareness of the actions which had been instituted and their purposes, and of his position as guardian ad litem for William. He said that he had been made “fully familiar * * * with all of the circumstances surrounding this particular case.” Then:

“Q You are now in court for the purpose of accepting a settlement in this ease. A Yes.
Q You are aware of that. A Yes.
Q And that settlement which has been offered and accepted is $125,000. A Eight.
Q You are aware of that. A Yes.
Q Have you carefully discussed this matter with your wife and other members of your family? A Yes.
Q And are you satisfied that that sum is fair, just and reasonable under all of the circumstances? A Yes.
Q Has your attorney, meaning myself, explained to you all questions concerning this matter? A Yes.
Q Is this acceptance of the offer of settlement of your own volition, without any outside influences? A Yes.
Q Are you aware of the fact that upon the acceptance of this settlement of $125,000 that regardless of the outcome of your boy’s injuries or in the event that he may die that no further sums of money will be paid to you concerning this case? A Yes.
Q You fully understand that. This is a full and final settlement. A Eight.
Q Of all claims which arose out of this entire transaction. A Yes.”

At this point a discussion was had off the record, after which two further questions were asked on direct examination.

“Q Now, as a result of this settlement, Mr. Bauer, it is anticipated that additional expenses will be incurred during the lifetime of your infant son and under the circumstances it was agreed that a settlement should be effected in two parts, one of which was to be for the benefit of your son for the injuries sustained to him and the other for the benefit of you and your wife as a result of damages and moneys expended in his behalf, and in that regard $65,000 has been set aside for the entry of a judgment in behalf of your son William and $60,000 in behalf of you and your wife for such moneys expended. Are you satisfied with that distribution? A Yes.
Q For yourself, for your wife and for your infant son? A Yes.”

There was no cross-examination. The court inquired:

“THE COUKT: Do you want me to approve it, Mr. Bauer?
THE WITNESS: Yes.”

Mrs. Bauer then testified as to her awareness of the accident, her son’s continuing unconscious condition, and the fact that his injuries were of a serious and critical nature. She confirmed her husband’s estimate of the expenses. At this point the following questions and answers occurred:

“Q And you heard the questions concerning the settlement of this case for $125,000 to be distributed in the manner which was stated earlier? A Yes, I did.
Q And you heard. Are you satisfied with such a settlement? A I am. * * !\
Q And you are fully satisfied with this settlement, that it is just and reasonable? A Yes.”

She expressed satisfaction with the legal fees which were agreed upon.

The entire cross-examination was comprised of four questions. We believe their import is significant.

“Q Mrs. Bauer, you understand that should the Court approve this settlement that has been proposed to the Court that regardless of what may occur in the future nothing further can ever be done by way of any claim? A Yes.
Q That the proceeding today is to completely end this matter. A Yes.
Q Regardless of future outcome? A Yes, I understand.
Q And knowing that yon are satisfied to ask the Court to approve the settlement as proposed. A Yes.”

Dr. Matthews, whose qualifications were stipulated, then testified that he was the attending physician “concerning the injuries sustained to William Bauer on October 6, 1962.” He said that he had continued to treat the infant plaintiff, and that he was familiar with the history of the case.

When asked for his opinion of the severity of the injuries, his diagnosis and his prognosis, the following appeared:

“A This boy was admitted, as has been in testimony earlier, in a state of coma. At that time our clinical diagnosis was that of an acute subdural hematoma, plus injuries to the deeper brain structures, namely, the thalamic structures and the structures that connect the higher centers with the lower reflex centers of the brain.
Following correction of his airway he was taken immediately to the operating room where burr boles, or trephination, was carried out and an acute subdural on the right was evacuated. The brain was also punctured in an attempt to rule out the existence of an intercerebral hematoma that might in some way help his condition.
This was not the case. Following the closure of the wounds and the closure of the laceration that had also been sustained during this boy’s injury he was placed in refrigeration for approximately two weeks, which is the accepted method of treatment. Since that time he has been kept on intravenous and living tube feedings.
He has continued a downhill course. He has never regained consciousness and I would say his prognosis and outlook is poor or ominous.
Q His prognosis is grave? A Very grave.
Q His life expectancy'—that’s uncertain, is it not, Doctor? A It certainly is.
MR. GOULD: No further questions.
MR. McELROY: I have no cross-examination, sir.
THE COURT: That’s all, Doctor.
MR. GOULD: That’s the case, your honor.”

Mr. McElroy, on behalf of the defendant, offered the report of Dr. Howard E. Medinets, the examining physician for the defendant, which the court found to he “substantially the same as the testimony of Dr. Matthews.” Dr. Medinets’ report concluded as follows:

“REMARKS: This patient suffered cerebral lacerations and contusions as a result of the accident. Deep brain structures were irreversibly damaged. Ilis survival to this time has resulted only on account of excellent neurosurgical and nursing care. His brain functions on a reflex level. There is no consciousness. The prognosis is grave.”

Affidavits were filed in connection with the instant motion on behalf of both the infant plaintiff and defendant. An affidavit of the parents of William Bauer and of one Dr. John F. Lutterworth, said to be the treating physician “for William Bauer, age 21,” revealed, and it is apparently beyond dispute, that William has survived, that he has not yet recovered from the severe brain damage resulting from the accident of October 6, 1962, and that he is unable to care for himself or to manage his own affairs. The parents’ affidavit avers, and we accept as factual, that at the time of settlement the medical bills were in excess of $30,000 and were continuing at the rate of about $100 a day. This is substantiated by the testimony of Mr. and Mrs. Bauer at the hearing, reproduced above. Their present affidavit also avers, and we accept as factual, that the infant’s medical bills to date exceed $90,000. This affidavit also claims that, because of the cost, the parents have had to discontinue the extensive physical and speech therapy that the infant was obtaining and that he does, in fact, need. This statement is not controverted by any affidavit of defendant, and no reason appears to disbelieve it.

The parents claim in their affidavit that:

s3* sjs j»s sfc * 3. At the time of the settlement in this matter in August of 1963, both of us had been informed by all of the doctors who were taking care 'of Billy that, in their opinion, he was definitely going to die and that there was no chance that he would live.
4. We were also informed by our attorney at that time that if Billy did die the ease would be worth a lot less because of the fact that we could only recover for any actual financial loss that we sustained.
6. Although we wanted the insurance company to continue paying all of Billy’s medical bills without settling the ease, they refused to do so and insisted that we take one lump sum at that time if we wanted to settle.
7. Although we did settle the case while Billy was still unconscious and with the belief that he was going to die, Billy did in fact regain consciousness and he required continued medical care for an extended period of time and he is now living at home with us.” .

In this respect, the affidavit of one Robert J. McLaughlin, who “was involved in settlement attempts * * * through William T. McElroy, Esquire, on behalf of defendant” as a representative of the defendant’s insurance company, submitted by the defendant, alleges the following:

4. In the above-entitled action a settlement offer of One Hundred Twenty Five Thousand ($125,000.00) Dollars was made on August 19, 1963 for the following reasons:
(a) the ultimate determination of liability against the defendant was uncertain because of evidence of contributory negligence;
(b) the injury suffered by William Bauer to Ms brain was permanent;
(c) the special medical expenses to that date amounted to about §30,000.00;
(d) William Bauer at the time of the accident was a sixteen year old unemployed male. If he died a short time after August, 1963 without having regained consciousness, the ascertainable damages probably would not have exceeded §40,000.00. On the other hand, if he survived and regained consciousness, ascertainable damages for such an injury would have been substantially greater than $40,000.00; and,
(e) In view of the uncertainty with regard to liability, and more importantly to the amount of probable damages, the defense made the above-described offer which was accepted.
5. The defense did not enter the settlement with the firm expectation that William Bauer faced imminent death.”

It should be noted that these latter contentions of the parents and of the insurance company are not necessarily inconsistent with each other, and both may be accepted as factual. We question the relevance of self-serving declarations of intention, not claimed to have been communicated as between the parties, appearing five years after the fact.

The infant plaintiff now moves to set aside the judgment, essentially on three grounds: first, that mistake as to the nature of the injuries resulted in an improvident judgment; second, that the court in approving the settlement made insufficient inquiry into the facts surrounding it; and third, that a conflict between the interests of the father as an individual plaintiff and as guardian ad litem for the infant fatally infects the judgment. His application is bottomed on “mistake, neglect, and newly discovered evidence,” in addition to particular reliance on B. B. 4:62-2 (f).

The questions thus presented appear not to have been heretofore decided by our appellate courts. Before we reach these, however, we are confronted with a procedural problem of some magnitude.

B. B. 4:62-2 invests the court with the power, in an exercise of sound discretion, to “relieve a party * * * from a final judgment * * * for the following reasons: (a) mistake, inadvertence * * *; (b) newly discovered evidence which would probably alter the judgment * * * and which by due diligence could not have been discovered in time to move for a new trial under Rule 4:61-2; * * *(f) any other reason justifying relief from the operation of the judgment or order.” It is said in the same rule that a motion invoking such relief shall be made within a reasonable time and in cases of subsections (a) and (b) “not more than 1 year after judgment.”

R. R. 4:62-2 is a rule addressed to the sound discretion of the trial court, guided by equitable principles. “The rule is designed to afford a remedy in the rare situation in which for some equitable reason a judgment or order pronounced by a competent court should not be enforced.” Greenberg v. Owens, 31 N. J. 402, 405 (1960). The discretion of the trial court is not unlimited. Eor instance, “mistake,” within the purport of this rule, has been held not to embrace trial errors. Hodgson v. Applegate, 31 N. J. 29 (1959). An all-encompassing definition of “mistake” does not appear in reported cases.

It would appear from a reading of the plain language of 4:62-2 in the light of the Hodgson decision that plaintiff’s motion is far out of time insofar as it is brought under subsections (a) and (b) of the rule. However, a number of considerations convince us that we should determine the whole matter on its merits and as though the rule had been timely invoked.

Eirst, despite the fact that the “other reason [s]” of subsection (f) are said to be exclusive of “mistake” as specified in subsection (a) (Doyle v. Chase Manhattan Bank, 80 N. J. Super. 105 (App. Div. 1963), certification denied 40 N. J. 508 (1963)), it is conceivable that mistake, other than trial error, might be sufficiently egregious in any given case so as to qualify as an “other reason”; should, under those circumstances, qualify for the policy considerations which permit subsections (d), (e), and (f) of the rule to be applied without time considerations beyond reasonableness; and should, therefore, not be limited by the one-year provision. Accord Simons v. Schiek’s, Inc., 275 Minn. 132, 145 N. W. 2d 548 (Sup. Ct. 1966) (but note dissent which believes the “other reason” clause to be reserved for “exceptional situations.” Minnesota’s civil procedure rule relating to vacating judgments is like that of New Jersey and the federal practice.) Second, the meaning of “mistake” as used in the rule not having been definitively determined, it might be said in the context of the present matter to have been misinterpreted even by astute counsel, particularly where, as here, the infant plaintiff has just attained his majority. Hodgson v. Applegate, supra. To impose upon plaintiff the devastation of the one-year limitation or not, according to whether his rather unique situation is labelled a “mistake” or an “other reason,” or to require from him a semantic election, seems in the circumstances of this particular factual complex neither wise nor just. Third, the present matter in our view involves novel questions of substantial public importance and, therefore, ought not to be avoided on a technical procedural ground. Compare Ciocca v. Hacker, 4 N. J. Super. 28, 33 (App. Div. 1949), where the “ever-broadening policy against the procedural frustration of just determinations between parties on the ultimate merits” is said to be a wholesome one.

In any event, the application for relief under subsection (f) removes a one-year limitation by the express terms of the rule and limits the time only in terms of reasonableness. While we have substantial question as to whether a delay of five years under the circumstances is reasonable, we are loath to avoid the determination of the significant questions presented on this basis. In connection with this latter consideration, it should be noted that B. B. 4:62-2 is substantially the same as Federal Buie of Civil Procedure 60(5), as amended. “It is therefore proper to draw on the experience of the federal courts with that rule to aid in the solution of comparable problems that arise under our rule.” Hodgson v. Applegate, supra, p. 35. Klapprott v. United States, 335 U. S. 601, 69 S. Ct. 384, 93 L. Ed. 266 (1949), cited in Hodgson, indicates that the residuum in the “other reason” clause is to provide an appropriate procedure for the accomplishment of justice. See Hogan v. Hodge, 6 N. J. Super. 55 (App. Div. 1949); Wilford v. Sigmund Eisner Co., 13 N. J. Super. 27 (App. Div. 1951).

Accordingly, we turn first to the matter of the alleged mistake. Plaintiff insists that all concerned believed that death was imminent for the infant plaintiff, and that this mistaken belief, proved by “newly discovered evidence” (i. e., the infant in fact lived), justifies relief from the judgment.

No New Jersey cases relating 'to the reopening of a judicially approved infant settlement on these grounds appear.

Plaintiff argues from analogy with the release cases, that since “mutual mistake” will serve to avoid the bar of a release, it should serve to support the vacation of a judgment. There is little solace for plaintiff in these cases for they consistently hold that absent fraud or overreaching (both of which are notably absent in the instant matter), a misconception of the seriousness of the injuries alone is not the type of mistake which will avoid a release. Raroha v. Earle Finance Corp., Inc., 47 N. J. 229 (1966). See Aiello v. Myzie, 88 N. J. Super. 187 (App. Div. 1965), certification denied, 45 N. J. 594 (1965). Cf. Acevedo v. City of New York, 15 A. D. 2d 899, 225 N. Y. S. 2d 584 (App. Div. 1962), cited by plaintiff.

We believe the sound and extant rule is succinctly stated in Spangler v. Kartzmark, 121 N. J. Eq. 64 (Ch. 1936):

“* * * in order to invalidate a release on account of mutual mistake, the mistake must relate to a past or present fact material to the contract and not to an opinion respecting future conditions as a result of present facts.” (at p. 68)

It is to be observed that Spangler involved a known physical injury concerning the future effects of which all were incorrect. The factual resemblance to the matter here under consideration is striking.

The reason for the rule is amplified in Reinhardt v. Wilbur, 30 N. J. Super. 502 (App. Div. 1954):

“The question to be determined is whether a duly executed general release may be invalidated upon the ground of mutual mistake of fact merely because an injury subsequently becomes more serious than the releasor believed it to be, or because she sustained injuries of which she was not aware, at the time of the execution of the release. The very suggestion of invalidation for such cause is contrary to firmly imbedded principles of law. We cannot shut our eyes to the realities of everyday practice. Persons involved in accidents or their representatives carry on and conclude negotiations precisely because there is irncertainty as to the extent of injuries or liability or both, and because of the uncertainty as to the outcome of any ensuing litigation. A general release duly executed and fairly obtained is a complete bar to further recovery for injuries sustained. Otherwise, the floodgates would opon and not only persons like the plaintiff would seek avoidance, but also those who had paid substantial sums if supposedly serious injuries later proved to be minor.” (at p. 505)

Irrespective of this, the infant plaintiff has brought to our attention a respectable body of opinion elsewhere holding that an erroneous view of the nature of the injuries at the time of the entry of judgment or the signing of a release is reason enough to set that judgment aside or bar the release as a defense. Elsen v. State Farmers Mutual Ins. Co., 219 Minn. 315, 17 N. W. 2d 652 (Sup. Ct. 1945); Wilson v. Davidson, 219 Minn. 42, 17 N. W. 2d 31 (Sup. Ct. 1944) ; Larson v. Stowe, 228 Minn. 216, 36 N. W. 2d 601, 8 A. L. R. 2d 455 (Sup. Ct. 1949) ; Clark v. Gronland, 221 Minn. 505, 23 N. W. 2d 169 (Sup. Ct. 1946); Simons v. Schiek’s, supra; Ranta v. Rake, 91 Idaho 376, 421 P. 2d 747 (Sup. Ct. 1967); Casey v. Proctor, 59 Cal. 2d 97, 28 Cal. Rptr. 307, 378 P. 2d 579 (Sup. Ct. 1963) (release case; local statute involved); Clancy v. Pacenti, 15 Ill. App. 2d 171, 145 N. E. 2d 802, 71 A. L. R. 2d 77 (App. Ct. 1957); Denton v. Utley, 350 Mich. 332, 86 N. W. 2d 537 (Sup. Ct. 1957).

None of these cases is apposite. In each of the cited cases the injury which manifested itself subsequent to the judgment or release was previously unknown and different anatomically from those recognized or realized at the time of the judgment or release.

The fact is that at the time of entry of judgment here there was no mistake regarding the nature of the injuries. It was abundantly clear to all who participated that the infant plaintiff sustained severe and serious cerebral lacerations and contusions whereby the deep brain structures were irreversibly damaged. The very certainty of the nature and seriousness of the injuries paved the way for plaintiff’s present contention that the prognosis for almost immediate death was such a foregone conclusion that the judgment should be set aside because of the mistake, not with regard to the nature of the injuries, but in the conclusion which was drawn.

We do not agree. In the first place, the record does not support the argument. There is no question but that the prognosis was a dire one. No medical degree is needed to understand from the most general description of the injuries sustained that the future for young Bauer held no promise. But it is to be noted as well that in the area of life expectancy, where medical opinion was necessary, no opinion of imminent death appears of record. When Dr. Matthews was asked, “His life- expectancy—that’s uncertain, is it not, Doctor ?”, he replied, “It certainly is.” As much to be presumed from the opinions which were expressed such as “poor or ominous,” and “grave,” is the likelihood of continued life, if only from the absence of such typical expressions as “terminal.”

To speculate, after five years, upon considerations dehors the record, or to attribute meanings to words beyond their reasonable import, would seem to be reaching for a result. While in a given case justice and fairness might so require, we incline to the opinion that this is not such a case. Beyond the obvious premise that such speculation might be in error, it would have to be undertaken at the expense of the important policy considerations inherent in the sanctity of final judgments, and at a risk of unfairness to the defendant whose substantial voluntary payment for his final judgment is unquestionably entitled to some regard. An unthinkable alternative is that we now, at this late date, become involved in the collateral determination, as a question of fact, whether the doctor meant “terminal” when he said “very grave.” Or worse, that we travel in quest for that which existed only in the minds of the various persons concerned.

Bennett v. Ryan, 206 Iowa 1263, 222 N. W. 16 (Sup. Ct. 1928), cited by plaintiff, also seems inapposite with respect to his contentions relating to mistake regarding the nature of the injuries. In other respects Bennett contravenes plaintiff’s argument.

Even were plaintiff’s hypothesis accepted, i. e., that everyone concerned anticipated almost immediate death, the fact that all were wrong in their “opinion [s] respecting future conditions as a result of present facts” (Spangler v. Kartzmark, supra) does not, in our opinion, support plaintiff’s application. Reinhardt v. Wilbur, Aiello v. Myzie, both supra. To permit judgments to stand or fall according to an examination in the bright noonday sun of hindsight invokes policy considerations far less meritorious than those which augur for finality by judgment. Finality of judgments and an end to litigation are said to be objects of public policy and sound jurisprudence. Paradise v. Great Eastern Stages, Inc., 114 N. J. L. 365, 367-368 (E. & A. 1935) ; State by State Highway Com’r. v. Speare, 86 N. J. Super. 565, 585 (App. Div. 1965). While fairness and justice are lodestars without peer, the subordination of finality in a judgment to considerations of the way things actually worked out seems warranted only for the most compelling reasons. We do not believe this to be such a case.

It is at once apparent that to hold otherwise would potentially compromise every judgment entered on a settlement of an infant’s claim. The judgment would be binding only so long as things went as they were expected to go. We believe that the requirement of approval by the court is some acknowledgment of the hard fact that risks exist, and that they are to be objectively assayed toward the salutary end that the proposed solution be approved or disapproved, and if approved, the matter be finally put to rest.

Other cases cited by plaintiff concern themselves with fraud, misrepresentation, overreaching, lack of competent advice, lack of knowledge or understanding by the court, and so forth. Picciano v. Duluth, M. & N. Ry. Co., 102 Minn. 21, 112 N. W. 885 (Sup. Ct. 1907); In re Clark’s Estate, 318 Mich. 92, 27 N. W. 2d 509 (Sup. Ct. 1947); Missouri-Kansas-Texas R. Co. of Texas v. Pluto, 138 Tex. 1, 156 S. W. 2d 265 (Sup. Ct. 1941); Rebic v. Gulf Refining Co., 122 Pa. Super. 149, 186 A. 236 (Super. Ct. 1936). None of these elements is here present. All parties, with full knowledge of the nature of all injuries to an extent where the matter had been pretried and a trial calendar call date a month hence had been set, were adequately represented by competent counsel. Pull disclosure was made to the court. The judge gave the matter serious, studied, and conscientious consideration and acted accordingly. Nor is there any complaint even now in these directions. Plaintiff contends in this respect only that he is entitled to the relief sought because the known injuries did not result in the immediate death of the infant plaintiff.

The argument that the court made “insufficient inquiry” into the circumstances surrounding the settlement is, in our view, so patently without merit that it requires little comment. Judge Mills required the testimony of the attending physician (compare R. R. 4:56A(c) which permits such proof by affidavit), who graphically described, for instance, the complex brain surgery which was performed, and his subsequent treatment, including the placing of the infant plaintiff in refrigeration for two weeks. Plaintiff now complains that “the Court made no inquiry as to whether or not Dr. Matthews was any more than a general practicing physician.” I11 addition, Judge Mills read and considered the report of a physician who examined for the adverse party, which he found to be “substantially the same” as the testimony of the treating doctor. Almost six years later, criticism is levelled at the court’s alleged failure to examine hospital records or the reports of “consulting” physicians. Judge Mills reviewed depositions, pretried the action, and “had the benefit of extensive discussions with counsel.” That he was entirely conversant with all the circumstances can be gleaned not only from his participation as noted above, but from his comments in approving the settlement where he said first, “* * * being mindful of the condition of the defendant [sic: obviously he meant plaintiff] * * *” and later, “* * * mindful of this situation * * We believe Judge Mills’ “inquiry” was completely sufficient. His thoroughness in this regard produces confidence in the soundness of the exercise of his discretion in approving the settlement.

Finally, the infant plaintiff now contends that a conflict of interest between his interests and those of his parents, one of whom was the infant’s guardian ad litem, justifies the reopening of the judgment. Were this postulate sound, an approval of settlement would be vulnerable in every infant’s action in which the guardian ad litem was one of the parents and which involved in part medical expenses for which the parent was at least initially responsible (the usual case). It seems apparent that the summary procedure set forth in B. R. 4:5QA bespeaks an intent to provide an inexpensive, expedient method for the consideration of the settlement of infant’s claims which might well be totally frustrated by the requirement for a strange and compensated guardian ad litem in the typical case.

In a consideration of whether B. B. 4:30-2 (or B. B. 4:56A) does include such a requirement, it should be noted that B. B. 4:30-2 (b)(3) contains no limiting conditions with relation to a conflict of interests such as those found in B. B. 4:30-2(a), (b)(1) and (b)(2). The fact that a guardian ad litem may be appointed simply “upon motion of the court” indicates a reliance upon the discretion of the Judge to weigh such matters as conflicts of interest, among other things, at least in his selection of a guardian ad litem. While the authority of this subsection (B. B. 4:30-2(b) (3)) was not here required, it would seem reasonable that the same reliance is inherent in B. B. 4:561 and is expressly invoked by the purpose of that Rule in mandating the approval of the Judge before any settlement may harden into a judgment.

In sum, after a consideration of both Rules, and with respect for the ends to be achieved including substantial justice, we conclude that circumstances may and do exist where conflicts of interest, normally abhorred in the law, when properly supervised, are lesser evils than some of their alternatives. The injunction of the law is not against conflicts, but against conflicts which disserve the interests of justice. Compare, Canon 6, Canons of Professional Ethics of the American Bar Association.

We are confident from a review of the record that the alleged conflict so apparent to the moving party here was equally apparent to Judge Mills and was competently regarded and considered. This is all that the law requires toward the end of achieving the significant purposes of B. B. 4:561.

The infant plaintiff now argues, apparently from the springboard of his true assertion that he was unconscious at the time of the settlement and had been so ever since the accident, he “could not and did not benefit by the settlement * * * while he was still lying unconscious in Morristown Memorial Hospital.” While some argument is advanced that his parents were being throttled with great medical bills, and thus might have been thought to bo particularly anxious to settle the case in order to secure their own economic position, no argument is advanced for the fact that “no one really considered the interests of Billy” and that he “was the one person involved who could not benefit by his case being settled” beyond those bald statements. While no proof appears in this regard, it might as easily be speculated that it was the availability of substantial hard cash which made the maintenance of the infant plaintiff’s life possible. As with the question of injuries, it would seem that the vital issue is whether Billy’s interests were then considered, not whether such consideration and conclusions worked out as was anticipated. There is no proof whatsoever that Billy’s interests were not considered in 1963. The recriminations of counsel six years later, predicated upon that which in fact occurred subsequent to the determination, do not derogate against our conviction that if, as counsel argues, Billy’s interests were not considered by the guardian ad litem,, they most certainly were considered by the Court.

We are satisfied that the Court fully and faithfully performed its function pursuant to Buie 4:56A despite our deep human compassion elicited by the eventualities.

The soundness of all the foregoing may be tested by examining the alternative to Judge Mills’ approval of the settlement. The matter would have gone to trial and a jury would have considered essentially the same evidence as was available to the Court on the hearing below. We have no doubt that their verdict would have remained immune from any of the attacks here launched, although the same arguments might well have been made. We fail to see any policy considerations in the circumstances here presented, including the substantial sum paid, sufficient to distinguish between the finality to be accorded in either of the two events.

The motion is denied. An order shall be presented consented to as to form or settled on notice.

       It is to be noted that the “tables of mortality and life expectancy” were included as among the legal issues under paragraph 7 of the pretrial order of August 16, 1963.