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

text:
    IN THE MATTER OF THE ADOPTION OF A CHILD BY R. D. AND V. D.
    Superior Court of New Jersey Appellate Division
    Argued March 4, 1973—
    Decided March 22, 1974.

      Before Judges Coneord, Handler and Meanor.

      Mr. Stuart L. Pachman argued the cause for plaintiffs-appellants (Messrs. Clapp & Eisenberg, attorneys; Mr. George S. Fischler, of counsel).

      Mr. Claude J. Minter argued the cause for defendant-respondent (Messrs. Schenck, Price, Smith & King, attorneys; Mr. Edward W. Ahart, on the brief).
   Tho opinion of the Court was delivered by

Conford, P. J. A. D.

This is an appeal from an order in an adoption proceeding directing that plaintiffs, intended adopting parents, surrender custody of the child in question to defendant K., its natural mother. The order in effect dismissed the adoption proceedings.

The child was born to Miss K., a Pennsylvania resident, in a Philadelphia hospital January 6, 1973, and was turned over to plaintiffs, New Jersey residents, by Miss K. and B., the natural father, at the hospital on January 9, 1973, the latter both signing affidavits expressing a present intent to give np the child for adoption because they “were not married and [were] unable to care for the child.” Plaintiffs have had custody of the child ever since, the order under appeal having been stayed pending the appeal. No issue of choice of law is raised in this appeal, and we apply New Jersey law.

When K. was given notice of the pendency of this proceeding in July 1973 she decided to resist the adoption and engaged counsel to contest it. It appears that K’s doctor during pregnancy and delivery, a Dr. B., was instrumental in indicating the possible availability of BAs child for adoption to the plaintiffs through Mrs. D.’s mother, a Philadelphia church acquaintance of Dr. B. Moreover, he made the physical arrangements for the actual delivery of the child to plaintiffs at the hospital. The trial judge found that B. was under such “pressure” under the attending circumstances, partially contributed to by the acts of Dr. E. both before and after the birth of the child, as to compel the conclusion that her surrender of the child was not “full, free and understanding.” Although the judge expressly found that the best interests of the child would be served by leaving it with plaintiffs, he felt that the adoption statute precluded severance of the natural mother’s right to the child unless she could bei found to have “forsaken parental obligations,” N. J. S. A. 9:3-24(0), a finding he could not make in the absence of a showing of a voluntary, free and understanding surrender by her of the child.

We agree with the trial judge’s concept of the law but disagree with his factual conclusion that the surrender by K. of the child was not voluntary, free and understanding, in the context of the statutory purposes and objectives. Our decision is not affected by considerations of appraisal of credibility of witnesses, as to which the superior vantage point of the trial judge ordinarily carries considerable weight. We accept the judge’s conclusion that Dr. E.’s testimony was in some instances not deserving of credence and his implication that Dr. E. was biased in favor of plaintiffs. We also accept the judge’s favorable impression of the general credibility of K. But objective facts and circumstances apparent to us from the record as a whole impel the conviction that although K. was unhappy about her decision at the time she acted on it and over the considerations which motivated her to make it, the decision was nevertheless deliberate, long under consideration, and with clear knowledge of its probable consequences. In such circumstances we are satisfied that the statutory factor of protection of the adopting parents “from later disturbance of their relationships to the child by the natural parents”, N. J. S. A. 9 :3—17(c), ought to have weighty effect.

I

Plaintiffs argue.that the “best interests of the child” control in adoption and that that factor is here determinative, whether or not the. trial court erred in finding the surrender of the child involuntary. Conceding that the best interests of the child seem to lie with her retention by plaintiffs as against her return to the immature and financially insecure K., we are persuaded that the analysis of the statute and the implications of the opinion in In re Adoption of Children by B., 61 N. J. 89 (1972), preclude a cutting off of the parental rights of a natural parent under .the aegis of the adoption statute unless that parent has forsaken his parental obligations. Id. at 94. While it is true that the court there qualified its construction of N. J. S. A. 9:3-24 to require a prerequisite determination at the preliminary hearing that the natural parent has forsaken parental obligations, by use of the phrase, “at least in the divorced parents’ situation,” Ibid., we can discern no rational basis for not requiring that prerequisite in the instant situation. The statutory language makes no distinction, in this regard, as to the case of an adopting parent who is not related to either of the natural parents. And considerations of natural justice would seem to militate against a construction of the statute which could deprive a natural parent of her child without the showing of an abandonment or forsaking of the child by that parent, regardless of whether the child would be better off with others. See In re N., 96 N. J. Super. 415, 421-423 (App. Div. 1967); which was cited in In re Adoption of Children by B., supra, 61 N. J. at 93, for its statement that “The child’s relationship with the parent is of such significance that all doubts are to be resolved against its destruction” 96 N. J. Super, at 425.

Any reported eases reflecting a different viewpoint must be regarded as disapproved by the Supreme Court’s holding and admonition in In re Adoption of Children by B., supra. See 61 N. J. at 95.

In relation to the question of the fitness of the plaintiffs to rear this child, it may be noted that Mr. D. is an administrative officer at a college. Mrs. D. was a school teacher but gave up the job to take over the care of this child and another, about a year older, which they shortly thereafter accepted for adoption. The D’s are about 30. The probation report and testimony by physicians and others demonstrate that optimum conditions for the welfare of the child exist in the D. home. There was expert testimony by a psychiatrist as to the possibility of serious permanent psychological injury to the child if she were removed from Mrs. D’s care at her then age. Cf. In re P. and wife, 114 N. J. Super. 584, 593 (App. Div. 1971).

II

We turn to the question whether the trial court’s determination that the surrender of the child was not voluntary can be sustained.

K., 18 years of age, unmarried and a recent high school graduate who lived with her mother, consulted Dr. R. on August 1, 1972 and was informed by him that she was four months pregnant. They discussed her plans. She did not want an abortion and told the doctor she would discuss adoption with R., the child’s natural father, who was 19. Although R. was upset at the news of the pregnancy, he at first agreed to marry K., but within two weeks he changed his mind, and from that time forward, although he continued to see K., adamantly rejected her repeated requests that he undertake to support or “be a father” to the child after its birth. He thought that would interfere with his plans for the future.

K. informed Dr. R. of R.’s decision. Dr. R. recommended that if she was thinking of adoption she consult Catholic Social Services concerning arrangements therefor. She went there October 6, 1972 and discussed her “plan” for adoption with a case worker for about an hour. She indicated to the case worker that she had done some library research on the subject of adoption. However, she did not like the approach of the case worker and never went back to the agency. K. testified that when she next visited Dr. R. and told him she was not going to proceed through the Catholic agency he informed her that she would need an attorney in adoption proceedings and that she told R. that he should obtain one. (Dr. R. testified he did not advise IL to seek legal advice.) At the same time the doctor told K. he knew of a young married couple in New Jersey who would be willing to take and adopt the child. Ho had reference to plaintiffs, Mrs. D. being the daughter of an acquaintance of the doctor, a Mrs. M., who had previously asked the doctor for help in finding a child for her daughter to adopt.

K. testified that she authorized Dr. E. to inform the prospective adopters that he had a “single mother” but told him she was not sure what she was going to do. It depended on E. Dr. E. testified that K. unqualifiedly agreed to adoption by this couple and never signified a change of mind to him. By November 1972 K. admittedly was aware that the couple had been told about the child and were ready to take it at birth. She testified that Dr. E. requested that if she changed her mind about the adoption before the birth she should so advise him. There was testimony that she told one of her friends that Dr. E. was arranging an adoption. There is no indication in the record that she ever told the doctor she had a change of mind, although it is a fair conclusion from all the testimony that she entertained an inner resolution to keep the Child if E. should change his mind about accepting and caring for it. But he never did. She was also influenced by the fact that her relations with her mother were not good. The mother had told her she could stay at homo with the child but only if she gave up E.

IP. went into labor about January 4 or 5, 1973 and was delivered of the child January 6, 1973. She testified that Dr. E. informed her in the hospital that “once [she] signs the baby over, it is forever.” He asked her whether “it is O.K. to go through with the plans that we’ve made.” She said she was not sure; she wanted to talk to E. Dr. E. asked whether she could obtain a notary for the execution of the adoption consent papers. When she responded that this was “up to E.,” he told her he would ha,ve the other people get one. E. visited her in the hospital every day but continued to reject her continued tearful entreaties that he accept the child. He said “I don’t want the baby * * * It’s better this way” (adoption).

Dr. R. had told K. before the confinement that if she was going to surrender the child it would be better that she not see it, and he arranged with the hospital that the child be kept on another floor. It was arranged that the mother and child be discharged from the hospital on January 9, 1973. An attorney for the D’s had prepared affidavits of consent to the adoption, and both K. and R. signed them before a notary public who first read the document to them. K. was weeping softly during this procedure. She testified that she understood when she signed the document that she was surrendering the child forever but had done so only when R. rebuffed a last-minute effort by her to change his mind. The baby was handed to R. by a nurse in the presence of K. and by him to Mrs. M., mother of Mrs. D., and the D’s took the child away.

K. testified she began to entertain thoughts of recovering the child in May or June 1973. (She had gone to live with R. in April.) Nevertheless, when she received a request for the child’s birth certificate from the D.’s through Dr. R. she sent it to him on June 6, 1973 with a request that he inform “the baby’s parents” that the officials wanted a first name of the child for their records. Overt action on K.’s part to recover the child occurred only after she received notice of these proceedings. A post-hearing probation report indicates that K. is now residing in New Jersey with an aunt and uncle of R. who indicate they will support K. and the child in their home if it is returned to her. What K.’s prospects with R. may be in any such event is not reflected by the record.

We cannot agree with the trial judge that Dr. R. exercised any undue pressure on K. While his wisdom in participating in the arrangements for the turn-over of the child may be questionable, the objective facts of record refute undue pressure by him. His first advice to K. when she discussed adoption with him was the sound recommendation to avail herself of the Catholic Social Services, apparently an approved adoption agency in Pennsylvania. Only after she rejected that recourse did he volunteer the availability of the D/s to adopt the child. And in that regard (according to her) he recommended that she obtain legal advice. Accepting her testimony, she tentatively agreed to that proposal when it was proffered and never rejected it. The trial judge described her as a headstrong person. There is no fair basis for a conclusion that she was coerced by anyone into surrending the child — certainly not Dr. R. The fact that she would have preferred to have a family with R. and the child, and was upset over his refusal to acquiesce, cannot derogate from the entirely rational and volitional nature of her decision to give up the child — underscored symbolically by her signature on a document she thought signified surrender of the child "forever.” If the normal emotional distress of a surrendering parent or the inherent pressures of a situation involving the giving up of her child by an unwed mother shortly after its birth were held sufficient, months later, to vitiate an otherwise voluntary decision, few surrenders for adoption by unwed mothers would stand. See In re Surrender of Minor Children, 344 Mass. 230, 181 N. E. 2d 836, 839 (Sup. Jud. Ct. 1962); In Re Adoption of F—, 26 Utah 2d 255, 488 P. 2d 130, 131, 134 (Sup. Ct. 1971).

The entirety of K.’s conduct, before, at, and after the physical surrender of the child, constitutes a forsaking of parental obligations within the intent of N. J. S. A. 9 :3-24(C). There should therefore bo an adjudication that K. "has no further right to [the] custody of the child.” Ibid. In so holding, we read the statutory criterion of "forsaking” etc. in pari materia with all the other provisions of the act, including, as noted above, the need for protection of adopting parents from “later disturbance of their relationships to the child by the natural parents.” N. J. S. A. 9:3--17(c).

The order under appeal is reversed and the cause is remanded to the county court further to be proceeded with consistently with this opinion. No costs.

       In the “D” case tlie adopting parent had married the divorced wife of the natural father of the child.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    CHANDLER MOTORS, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. JOHN E. DUNHAM AND FRANKLIN STATE BANK, DEFENDANTS-RESPONDENTS, v. CONCORD INSURANCE COMPANY, THIRD-PARTY DEFENDANT.
    Superior Court of New Jersey Appellate Division
    Submitted March 12, 1974—
    Decided March 22, 1974.

      Before Judges Kolovsky, Eritz and Crake.

      Messrs. Kaplowitz and Wise, attorneys for appellant (Mr. Robert Frank, of counsel and on the brief).

      Messrs. Winetsky and Winetsky, attorneys for respondent Dunham (Mrs. Charles N. Winetsky, on the brief).

      Messrs. Eichler and Forgosh, attorneys for respondent Franklin State Bank (Mr. Peter A. Forgosh, on the brief).
   Per Curiam.

On May 28, 1970 defendant Dunham purchased an automobile from plaintiff under a retail installment contract. He delivered to plaintiff, as part of the purchase price, a draft which had been issued by Concord Insurance Company to Dunham and Franklin State Bank in the sum of $2250.

The draft, dated May 25, 1970, read in pertinent part as follows:

Upon acceptance by Concord Insurance Company, Fidelity Union Trust Company, Newark, New Jersey, will pay and remit without charge to the order of Dunham and Franklin State Bank the sum of $2250.

Before delivery to plaintiff, the draft was indorsed by Dun-ham and by the Franklin State Bank.

Plaintiff deposited the draft in its bank. When that deposit was made does not appear. However, it does appear that the draft did not reach the Fidelity Union Trust Company until June 15, 1970, at which time it was dishonored because the drawer and acceptor named therein, Concord Insurance Company, had had its assets frozen by order entered on June 12, 1970 by the Commissioner of Banking and Insurance.

Two years later, in June 1972, plaintiff instituted this action seeking to recover $2250 from both Dunham and Franklin State Bank based on their indorsement of the draft and seeking to recover $2250 from Dunham as the alleged balance of the purchase price due under the underlying obligation, the retail installment sales contract.

Plaintiff appeals from the judgment for defendants entered by the court after trial without a jury. Concomitant judgments finding no cause for action on a third-party complaint and cross-claims filed by defendants are not involved in this appeal.

We affirm. The trial court’s finding that timely notice of dishonor of the draft was not given to defendants-indorsers is fully supported by the record and mandated its conclusion that plaintiff is not entitled to recover.

Timely notice of dishonor was required to be given the indorsers, N. J. S. A. 12A :3-501 (2) (a), there being no legally recognized excuse for not giving it. See N. J. S. A. 12A :3—511. The failure to give timely notice of dishonor discharged the indorsers from any liability on the draft. N. J. S. A. 12A :3-502 (1) (a).

Plaintiff’s argument that no notice of dishonor was required because allegedly the indorsements made by defendants were made “after maturity,” see N. J. S. A. 12A :3-501 (4), lacks merit. The last cited section applies only where the indorsement was made after the instrument was “over due,” a situation which did not exist in this case where the draft was indorsed by defendants within three days of its date of issue and 18 days before it was presented for acceptance. Here defendants had indorsed the draft before, not after, maturity.

Finally, contrary to what plaintiff argues, Dunham’s discharge of liability on the draft because of the failure to give him notice of dishonor also discharges him from liability with respect to the amount thereof on the underlying obligation, the retail installment sales contract. N. J. S. A. 12A :3—802(1) (b); Shipman v. Cook, 16 N. J. Eq. 251 (Ch. 1863) ; Orange, Screen Co. v. Holmes, 103 N. J. L. 560 (Sup. Ct. 1927).

The judgment is affirmed.


text:
    PUBLIC ACCEPTANCE CORPORATION, PLAINTIFF-APPELLANT, v. WILLIAM TAYLOR, JOHN SIMMONS AND DOROTHY SIMMONS. DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued January 8, 1974—
    Decided March 25, 1974.

      Before Judges Kolovsky, Fritz and Crane.

      Mr. James Greenberg argued the cause for appellant (Messrs. Greenberg, Shmerelson & Greenberg, attorneys).

      Mr. John F. Vassallo, argued the cause for respondents (Mr. Steven Warm, attorney).
   Per Curiam.

Plaintiff brought an action in the Burlington County District Court to recover on a promissory note. At the end of the presentation of plaintiff’s case, the judge granted a motion to dismiss.

The promissory note dated April 28, 1969 was given pursuant to an installment contract to purchase an automobile; it obligated defendants to make 48 consecutive payments. The transaction, which took place in Pennsylvania, included the giving of a second mortgage on the Simmons’ residence in New Jersey as additional security for the amount due on the installment contract. The face amount of the note included the cash price of the vehicle, Pennsylvania sales tax and an advance for credit life insurance and health and accident insurance as well as collision insurance on the vehicle.

The trial judge held that plaintiff was barred from recovery because the transaction violated the Secondary Mortgage Loan Act of 1965, N. J. S. A. 17 :11A—1 et seq., the statute which was in effect at the time of the purchase of the motor vehicle. Cf. N. J. S. A. 17 11A-35 et seq., a superseding statute which took effect in 1970. The trial court relied on Oxford Consumer Dis. Co. of No. Phila v. Stefanelli, 102 N. J. Super. 549 (App. Div. 1968), supplemented 104 N. J. Super. 512 (App. Div. 1969), aff’d as modified 55 N. J. 489 (1970), app. dism. 400 U. S. 808, 91 S. Ct. 45, 27 L. Ed. 2d 38 (1970).

The pivotal question is whether the transaction in this case was a “loan” within the meaning of that term as used in the Secondary Mortgage Loan Act of 1965. That act defined a secondary mortgage loan as “a loan made to an individual * * * which is secured in whole or in part by a mortgage upon any interest in real property used as a dwelling * * *, which real property is subject to the lien of one or more prior mortgages.” N. J. S. A. 17 :11A-1. The statute did not include sales or other such transactions within the definition of loan. "We note but do not deal with the fact that the statute has been repealed, L. 1970, c. 205, §30, since that issue has not been raised here or in the trial court by any of the parties. See Nieder v. Royal Indemnity Ins. Co., 62 N. J. 229, 234 (1973).

In Tiernan v. Carasaljo Pines, 51 N. J. Super. 393 (App. Div. 1958), a loan was defined as follows:

* * * A loan of money is a lending, on one side, and a borrowing on the other. The conception of loaning money is well understood and the incidents pertaining to an agreement for the loan of money are few and simple: an advancement of money by the lender at the time of agreement, and a stipulation or agreement to repay it and generally with interest, at a future' date, by the borrower. Freeman adsm. Brittin, 17 N. J. L. 191, 231 (S. Ct. 1839). * * * [at 40ih-405]

The distinction between an installment sale and a loan has been recognized in connection with the enforcement of the usury statute, N. J. S. A. 31 :1—1. In Steffenauer v. Mytelka and Rose, Inc., 46 N. J. 299 (1966) it was held that a transaction in which plaintiff purchased dry cleaning equipment under an installment contract was a sale, and, that even though a credit service charge exceeding 6% was made, the usury statute did not' apply. Similarly, in Sliger v. R. H. Macy & Co., Inc., 59 N. J. 465, 469 (1971), it was held that an increase in price for a credit sale over a cash sale price “is not a loan or forbearance of money.” See also, In re Oakes, 267 F. 2d 516 (7 Cir. 1959).

In the instant case plaintiff made an advance of money to pay for automobile collision insurance, creditor life insurance and creditor health and accident insurance. That did not, however, change the basic nature of the transaction. The advance of moneys for insurance premiums was incidental to the main purpose of the transaction, the sale of the automobile. The situation here is virtually identical with that in Girard Acceptance Corp. v. Boyle, 109 N. J. Super. 317, 324 (App. Div. 1970) where, although an advance for insurance' premiums was made, it was held that the Secondary Mortgage Loan Act of 1965, N. J. S. A. 17 :11A-1, did not control.

The judgment of the trial court is reversed and remanded for trial on the remaining issues.


author: Seidman, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. OSCAR McGREW, JR., DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued February 26, 1974—
    Decided March 25, 1974.

      Before Judges Carton, Lora and Seidman.

      Mr. Wilbert J. Martin, Jr., argued the cause for appellant.

      Mr. William F. Hyland, Attorney General of New Jersey, attorney for respondent, submitted on brief (Mr. George F. Kugler, Jr., former Attorney General of New Jersey, and Mr. Julian Wilsey, Deputy Attorney General, on the brief).
   The opinion of the court was delivered by

Seidman, J. A. D.

In December 1972 defendant was found

guilty in municipal court of operating a motor vehicle while under the influence of intoxicating liquor, contrary to N. J. S. A. 39 :4-50(a). When he appeared later for sentence, a record was produced of a conviction for drunk driving in 1966. The municipal court judge declined to receive offered testimony'- that defendant was indigent at the time and had not been advised of his right to free counsel (case law then did not so provide), and imposed the mandatory three-month term of imprisonment and revocation of driving privileges for ten years.

On appeal to the County Court, limited to the sentence, the trial judge permitted defendant to testify to his alleged indigency and lack of counsel on the prior occasion, but ruled that the evidence was not material to a determination of the propriety of the sentence and affirmed.

Defendant argues on this appeal, as he did below, that because of his indigency at the time of the earlier conviction, and the failure to furnish him counsel, he should not now receive the mandatory statutory sentence as a second offender. We disagree.

In the case of Rodriguez v. Rosenblatt, 58 N. J. 281, 295 (1971), it was held that in municipal court matters involving disorderly conduct or other petty offenses, .

* * * as a matter of simple justice, no indigent defendant should be subjected to a conviction entailing imprisonment in fact or other consequence of magnitude without first haying had due and fair opportunity to have counsel assigned without cost.

The court noted that the case of State ex rel. Argersinger v. Hamlin, 236 So. 2d 422 (Fla. Sup. Ct. 1970), cert. granted 401 U. S. 908, 91 S. Ct. 887, 27 L. Ed. 2d 805 (1971), was before the United States Supreme Court, and said that pending further enlightenment there would be “no inflexible constitutional compulsion” to assign counsel without cost in the municipal court in disorderly conduct and other petty cases, 58 N. J. at 294, and that the municipal court judges would have broad discretion to assign counsel whenever justice so required.

Argersinger v. Hamlin, 407 U. S. 25, 92 S. Ct. 2006, 32 L. Ed. 2d 530 (1972), held that “absent a knowing and intelligent waiver, no person may be imprisoned for any offense, whether classified as petty, misdemeanor, or felony, unless he was represented by counsel at his trial.”

Although under Rodriguez, “whenever the particular nature of the charge is such that * * * other consequence of magnitude is actually threatened or is a likelihood on conviction, the indigent defendant should have counsel assigned to him unless he chooses to proceed pro se with his plea of guilty or his defense at trial,” 58 N. J. at 295, it is clear from Argersinger that an indigent’s right to counsel in municipal court cases does not attain constitutional dimension unless conviction may lead to imprisonment. In other matters the assignment of counsel represents the kind of policy ruling which, “though not constitutionally or legislatively compelled, [has] served to protect the proper interests of the defendant and to advance the sound administration of justice in our courts.” 58 N. J. at 294.

In this ease, the fact is that defendant’s first conviction did not result in a custodial sentence; consequently, he cannot now claim the denial of a constitutional right. Moreover, there is nothing in Rodriguez to suggest an intent that the holding should apply retroactively. It should be observed that in Berry v. Cincinnati, 414 U. S. 29, 94 8. Ct. 193, 38 L. Ed. 2d 187 (1973), Argersinger was given retroactive effect to persons convicted of misdemeanors only if they alleged a bona fide existing case or controversy sufficient to invoke federal court jurisdiction.

We perceive no need to determine at this time what should be done in second offender drunk driving cases where the defendant was jailed upon his conviction of the first offense. It can await an appropriate case. However, where, as here, imprisonment was not involved, and "the conviction was obtained as the result of a procedure not considered fundamentally unfair at that time, and subsequent judicial decisions cast no substantial doubts upon the reliability of the determination already made, no compelling reason exists for disturbing a decision no longer subject to direct appeal.” State v. Johnson, 43 N. J. 572, 585 (1965). See also, State v. Hall, 89 N. J. Super. 361, 364 (App. Div. 1965); State v. Blanchard, 98 N. J. Super. 22, 30 (Law Div. 1967).

Defendant does not challenge the merits of the previous finding of guilt, nor does he contend that the result might have been otherwise had he had the assistance of counsel. He admits that he had been drinking and a police officer seems to have given sufficient testimony to support the conviction.

Thus, in the absence of “some countervailing considerations of The deepest sentiments of justice’,” State v. Johnson, supra 43 N. J. at 584, we hold that in a ease such as the one before us a second conviction fox driving while under the influence of intoxicating liquor mandates the imposition of a three-month term of imprisonment and revocation of license for 10 years, notwithstanding the fact that defendant, at the time of the earlier pre-Rodriguez conviction, was indigent and without counsel.

Affirmed.


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

text:
    SARAH BRODY, EXECUTRIX OF THE ESTATE OF EUGENE BRODY, DECEASED, AND SARAH BRODY, INDIVIDUALLY, PLAINTIFF-RESPONDENT, v. OVERLOOK HOSPITAL, A CORPORATION OF THE STATE OF NEW JERSEY, AND ESSEX COUNTY BLOOD BANK, DEFENDANTS-APPELLANTS, AND BERNARD ERDMAN, HELEN BENJAMIN AND EASTERN BLOOD BANK, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS, AND WILLIAM U. CAVALLARO, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued December 19, 1973—
    Decided March 26, 1974.

      Before Judges Leonard, Allcorn and Crahay.

      Mr. Bartholomew A. Longo argued the cause for appellant Essex County Blood Bank (Messrs. Ryan, Saros, Davis and Stone, attorneys).

      Mr. William P. Ries argued the cause for appellant Overlook Hospital.

      Mr. Ira J. Zarin argued the cause for respondent Brody (Messrs. Zarin and Maran, attorneys).

      Mr. Robert J. McGoid argued the cause for respondent Cavallaro (Messrs. Morgan, Melhuish, Monaghan, McCoid and Spielvogel, attorneys; Mr. Henry Spielvogel, of counsel).
    An amicus curiae brief was filed on behalf of New Jersey Hospital Association by Messrs. McCarter & English, attorneys (Mr. Woodruff J. English and Mr. Eugene M. Haring, of counsel; Mr. Frederick B. Lehlbach, on the brief).
    An amicus curiae brief was filed on behalf of New Jersey Blood Bank Association by Messrs. Shanley & Fisher, attorneys (Mr. John J. Francis, Jr., of counsel; Mr. Albert L. Strunk, III, on the brief).
   The opinion of the court was delivered by

Leonard, P. J. A. D.

Defendants Overlook Hospital (Overlook) and Essex County Blood Bank (County Blood Bank), with leave first granted, appeal from a judgment as to liability only, entered upon a jury verdict against them and in favor of plaintiff.

On December 18, 1966 decedent Eugene Brody was admitted to Overlook for the treatment of a severely com-minuted fracture of his right femur. On the same day defendant William V. Cavallaro, an orthopedic specialist, performed an open reduction. At the doctor’s order two pints of blood were transfused during the operation and one pint post-operatively. Two of the pints of blood were obtained from the hospital’s blood bank and one pint from the County Blood Bank. Brody was discharged on Eebruary 1, 1967.

On Eebruary 14, 1967 he was re-admitted to Overlook with a final diagnosis of "serum hepatitis secondary to blood transfusion in December, 1966 with shock and renal failure.” Three days later he was transferred to Mt. Sinai Hospital in New York for an exchange transfusion and expired there the next day.

On February 10, 1969 plaintiff filed her complaint as executrix of the estate of her deceased husband and in her own right against defendants Overlook, County Blood Bank, Dr. Cavallaro and others (not presently involved in this appeal), charging them with negligence and breach of warranty.

On the day fixed for trial the trial judge first rendered a “Decision” (reported at 121 N. J. Super. 299) which determined, among other things, that if the jury found that decedent died of viral hepatitis due to contaminated blood supplied by the hospital and County Blood Bank, the theory of strict liability would apply to these two defendants. Thereupon, the matter was tried with a jury on the issue of liability alone and was submitted upon the following special interrogatories and instructions:

1. Was serum hepatitis communicated to the decedent, Eugene Brody, by virtue of blood transfused into him at the Overlook Hospital in December of 1966?
2. If the answer to number 1 is “no” then you will go no further but will return a verdict of no liability.
3. If the answer to number 1 is “yes,” then did this contaminated blood proximately cause the death of the decedent, Eugene Brody?
4. If the answers to 1 and 3 are “yes,” then you will return a verdict that the defendants Overlook Hospital and Essex County Blood Bank are liable.

The jury unanimously answered 1 and 3 in the affirmative and accordingly rendered a verdict holding the hospital and County Blood Bank liable to plaintiff.

The primary question to be resolved is whether, under the circumstances existing herein, the trial judge properly applied the doctrine of strict liability to these two defendants.

Preliminarily, it is to be noted that in arriving at the answer to the foregoing question we do not find it necessary to resolve the issue of whether the transfer of blood in the instant case was a sale or á service. But see, Perlmutter v. Beth David Hospital, 308 N. Y. 100, 123 N. E. 2d 792 (Ct. App. 1954). If it is otherwise determined that the basic policy considerations which lead to the application of the doctrine of strict liability are here present, that doctrine will be applied regardless of whether such activity by either defendant be characterized as a sale or a service. See Newmark v. Gimbel's Inc., 54 N. J. 585, 593-595 (1969); Cintrone v. Hertz Truck Leasing, etc., 45 N. J. 434, 446 (1965); Jackson v. Muhlenberg Hosp., 96 N. J. Super. 314, 324 (Law Div. 1967), rev'd on other grounds, 53 N. J. 138 (1969); Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A. 2d 867, 870-871 (Sup. Ct. 1970).

Thus, we turn to ascertaining whether those basic policy considerations are here present. Eecently, in this State, in our rapidly expanding commercial society, the doctrine of strict liability has been applied to the manufacturers and suppliers of mass-produced products (automobiles, carpeting, homes and motorcycles) who have placed these products in the stream of trade and promoted their purchase by members of the public through the use of large scale advertising programs in and on all existing media of communication. Cintrone v. Hertz Truck Leasing, etc., 45 N. J. 434 (1965); Schipper v. Levitt & Sons, Inc., 44 N. J. 70 (1965); Santor v. A. & M. Karagheusian, Inc., 44 N. J. 52 (1965); Henningsen v. Bloomfield Motors, Inc., 32 N. J. 358 (1960); Sabloff v. Yamaha Motor Co., Ltd., 113 N. J. Super. 279 (App. Div. 1971), aff’d 59 N. J. 365 (1971). The policy consideration which makes those manufacturers strictly liable in tort for harm caused by defective products is well stated by the court in Santor, supra, as follows:

Such doctrine stems from the reality of the relationship between manufacturers of products and the consuming public to whom the products are offered for sale ® * *. [W]hen the manufacturer presents his goods to the public for sale he accompanies them with a representation that they are suitable and safe for the intended use. * * * [Sluch representation must be regarded as implicit in their presence on the market. * * *. The obligation of the manufacturer thus becomes what in justice it ought to be — an enterprise liability. * * *.
The purpose of such liability is to insure that the cost of injuries or damage * * *, resulting from defective products, is borne by the makers of the products who put them in the channels of trade, rather than by the injured or damaged persons who ordinarily are powerless to protect themselves. [44 N. J. at 64-65]

See also Henningsen, supra at 384 of 32 N. J.; Schipper, supra at 90 of 44 N. J. and Cintrone, supra at 446 of 45 N. J.

Here the relationship between the hospital and County Blood Bank and decedent was the antithesis of a commercial enterprise. Overlook is a private, nonprofit institution, and County Blood Bank is a charitable, voluntary organization. The former charged $50 a pint for the blood, $25 of which was a service charge for typing, cross-matching and all operations pertaining to its own blood bank; and the remaining $25 was a refundable credit when the blood was replaced in its blood bank on behalf of the patient. The latter, in turn, furnished the pint of blood to the hospital, free of charge, .except for testing costs.

As previously noted, the blood was administered upon the orders of decedent’s orthopedic specialist. He was of the opinion that the blood was needed during the operation because of decedent’s pre-existing medical problems, and postoperatively, by reason of the patient’s falling blood pressure and rising pulse rate, to prevent “irreversible shock.”

In this case the experts for both sides all agreed that in December 1966 (when the blood was transfused) there was no known scientific or medical test for determining whether blood drawn from a donor contained serum hepatitis virus. Further, Dr. Eobert Goodman, a pathologist and medical director of County Blood Bank, testified that as of that date the overall incidence of transfusion hepatitis was “about 1.3 in a hundred cases transfused” and that “the carrier rate, the people who remain with residual virus after infection, is five percent.” This testimony was uneontroverted.

Under these circumstances, the following language of the court in Newmark v. Gimbel’s, Inc., supra, at 596-597, is most appropriate:

Defendants suggest that there is no doctrinal basis for distinguishing the services rendered by a beauty parlor operator from those rendered by a dentist or a doctor, and that consequently the liability of all three should be tested by the same principles. On the contrary there is a vast difference in the relationships. The beautician is engaged in a commercial enterprise; the dentist and doctor in a j)rofession. The former caters publicly not to a need but to a form of aesthetic convenience or luxury, involving the rendition of non-professional services and the application of products for which a charge is made. The dentist or doctor does not and cannot advertise for patients; the demand for his services stems from a felt necessity of the patient. In response to such a call the doctor, and to a somewhat lesser degree the dentist, exercises his best judgment in diagnosing the patient’s ailment or disability, prescribing and sometimes furnishing medicines or other methods of treatment which he believes, and in some measure hopes, will relieve or cure the condition. His performance is not mechanical or routine because eaeh patient requires individual study and formulation of an informed judgment as to the physical or mental disability or condition presented, and the course of treatment needed. Neither medicine nor dentistry is an exact science; there is no implied warranty of cure or relief. There is no representation of infallibility and such professional men should not be held to such a degree of perfection. There is no guaranty that the diagnosis is correct. Such men are not producers or sellers of property in any reasonably acceptable sense of the term. In a primary sense they furnish services in the form of an opinion of the patient’s condition based upon their experienced analysis of the objective and subjective complaints, and in the form of recommended and, at times, personally administered medicines and treatment. * * * Practitioners of such callings, licensed by the State to practice after years of study and preparation, must be deemed to have a special and essential role in our society, that of studying our physical and mental ills and ways to alleviate or cure them, and that of applying their knowledge, empirical judgment and skill in an effort to diagnose and then to relieve or to cure the ailment of a particular patient. Thus their paramount function—the essence of their function—ought to be regarded as the furnishing of opinions and services. Their unique status and the rendition of these sui generis services bear such a necessary and intimate relationship to public health and welfare that their obligation ought to be grounded and expressed in a duty to exercise reasonable competence and care toward their patients. In our judgment, the nature of the services, the utility of and the need for them, involving as they do, the health and even survival of many people, are so important to the general welfare as to outweigh in the policy scale any need for the imposition on dentists and doctors of the rules of strict liability in tort. [54 N. J. 596-597]

See Magrine v. Krasnica, 94 N. J. Super. 228 (Cty. Ct. 1967), ail’d sub nom. Magrine v. Spector, 100 N. J. Super. 223 (App. Div. 1968), aff’d 53 N. J. 259 (1969), wherein the doctrine of strict liability was not imposed on a dentist sued by a patient who was injured when a hypodermic needle, being used to administer a local anesthetic, broke off in his jaw. See also, Baptisia v. Saint Barnabas Medical Center, 109 N. J. Super. 217 (App. Div. 1970), in which case the court refused to extend the doctrine to a situation where incompatible blood was transfused, resulting in the patient’s death.

The only case reported in this State, involving a suit against a hospital and blood bank by a patient who allegedly contracted hepatitis as a result of blood transfusions, is Jackson v. Muhlenberg Hosp., 96 N. J. Super. 314 (Law Div. 1967), rev’d on other grounds, 53 N. J. 138 (1969). Therein, the trial court concluded, among other things, that “[T]he unavoidable presence of hepatitis virus in the blood furnished does not give rise to strict liability for the resultant harm.” 96 N. J. Super, at 333 (emphasis added). That conclusion was based in part upon the court’s finding that the blood was “a highly useful and desirable product attended with a known but reasonable risk” and it was not “unreasonably dangerous.” Id. at 329. The Supreme Court did not reverse on the merits. Rather it said:

» *■ iphe issue [strict liability] is a very important one involving highly significant policy considerations and obviously should not be decided on the wholly inadequate record before us. * *
* * * We are satisfied that it [partial summary judgment] should now be vacated and that the entire matter should proceed to trial. * * * At the trial, a complete record should be made, including not only detailed testimony as to the nature of the defendants’ operations, but also expert testimony as to the availability of any tests to ascertain the presence of viral hepatitis in blood, the respective incidences of hepatitis in blood received from commercial blood banks and other sources, and such other available testimony and materials as may be relevant to any of the questions presented by the parties, including such economic and other factors as may bear on the question of whether the doctrine of implied warranty or strict liability should apply to deliveries and transfusions of blood.

In the instant case such a record has been made. As previously noted, it has been unequivocally established that in 1966 there was no known test available to ascertain the presence of viral hepatitis in blood. (The blood containers used herein had a warning of this fact attached thereto). Likewise, it was not disputed that, at the time, the incidences of this disease being present in the blood were very slight.

As a prerequisite to the application of the doctrine of strict liability a plaintiff: must show that the product he alleges was defective was unreasonably dangerous for its intended use. Jakubowski v. Minnesota Mining and Mfg. Co., 42 N. J. 177, 182 (1964); Restatement, Torts 2d, § 402A (1966). Comment (k) to that section of the Restatement discusses “Unavoidably unsafe products,” particularly drugs, which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use. The comment notes that the use of such drugs is fully justified notwithstanding a medically recognizable risk by reason of the probable serious consequences of the disease or illness for which they are administered. It concludes that such products, properly prepared and accompanied by proper directions and warnings, are not unreasonably dangerous and the seller thereof

* * r is not to be held to strict liability for unfortunate consequences attending their use, merely because he has undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk.

Upon the evidence present in this record we conclude that the blood transfused to decedent herein falls within the category of an "unavoidably unsafe product” and thus was .not "unreasonably” dangerous. See Prosser, Law of Torts, (4th ed 1971), § 99, at 661-662.

Cunningham, v. MacNeal Memorial Hospital, 47 III. 2d 443, 266 N. F. 2d 897 (Sup. Ct. 1970), which held to the contrary, has been widely criticized for its narrow construction of Comment (k). See Notes, 69 Mich. L. Rev. 1172, 1181-1182 (1971); 24 Vand. L. Rev. 645, 653 (1971); 16 Till. L. Rev. 983, 1002-1003 (1971); 66 N. W. U. L. Rev. 80, 88-90 (1971); 32 Ohio 8. L. J. 585, 597-598 (1971). We agree with that criticism.

Community Blood Bank, Inc. v. Russell, 196 So. 2d 115 (Fla. Sup. Ct. 1967), relied upon by the court below, is not .directly contrary to our determination herein. Rather, it involved a review of a trial court’s order dismissing a complaint charging strict liability in a similar situation, and the reversal of that order by an intermediate appellate court. The majority opinion, in affirming but revising the appellate determination, merely held (as did our Supreme Court in Jackson, supra, 53 N. J. 138) that the question of whether there is a recognized method of detecting serum hepatitis in whole blood was prematurely determined by the appeals court, since there were no facts in the record to support that conclusion. The court specifically reserved for decision the question of whether such a conclusion, if it were established by the facts, would constitute a legal defense (196 So. 2d at 118). Further, that opinion contains no reference to Comment (k) of the Restatement. Such a reference is found only in a concurring opinion. We find this reference to be subject to the same criticism as was Cunningham, supra. Likewise, Rostocki v. Southwest Florida Blood Bank, Inc., 276 So. 2d 475 (Fla. Sup. Ct. 1973), cited by plaintiff, rests .principally on the concurring opinion in Community Blood Bank and suffers the same infirmities.

In any event, these three out-of-state eases — Cunningham, Community Blood Banlc and Bost'ochi — are not binding upon us.

Next, we consider the trial court’s finding that “loss spreading” or “allocative effect” is an important policy justification for applying strict liability to the hospital and County Blood Bank. The court concluded that if these defendants bear the loss resulting from hepatitis-infected blood, they “will tend to spread the loss amongst all parties, i. e., donors, blood banks, perhaps its patients,” increasing their charge for each unit of blood actually used. This theory was evaluated in Magrine v. Krasnica, supra, 94 N. J. Super. at 238-239, the court noting that it “has some weight, but not nearly enough when laid beside other more basic considerations. It plays ‘only the part of a makeweight argument’ * * Id. at 239. Eurther, in the instant case there are no facts in the record supporting the trial court’s conclusion.

Based upon all of the above, we conclude that the doctrine of strict liability in tort should not be applied to the hospital or County Blood Bank in the instant case. This conclusion makes it unnecessary to consider appellants’ other contentions.

Eeversed.

      In 1972, when this ease was tried, the testimony indicated that the most effective test yet devised was the Australian Antigen Test which was then only about 25% effective.

      Following the decisions in Cunningham and Community. Blood Bank, tile legislatures in Illinois, Florida and 39 other states adopted legislation abolishing strict liability in tort in cases involving blood transfusions. 24 Vand. L. Rev. 645, 649-650 (1971) ; 24 Stan. L. Rev. 439, 474, n. 203 (1972). Rostocki involved a cause of action that arose prior to the passage of the Florida statute.

       Since plaintiff does not challenge the dismissal of her complaint against defendant Cavallaro, that portion of the judgment is not disturbed.


author: Demos, J. S. C.,

text:
    THE AMELCO WINDOW CORP., A CORPORATION, PLAINTIFF-APPELLANT, v. FEDERAL INSURANCE COMPANY, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted February 13, 1974—
    Decided March 26, 1974.

      Before Judges Carton, Seidman and Demos.

      Messrs. Heller and Laiks, attorneys for appellant (Mr. Richard K. Rosenberg, of counsel and on the brief).

      Mr. Louis Auerbacher, Jr., attorney for respondent.
   The opinion of the court was delivered by

Demos, J. S. C.,

Temporarily Assigned. Plaintiff The Amelco Window Corp. (Amelco) instituted an action against Federal Insurance Company (Federal) to recover, as a third-party beneficiary, on a surety bond provided by Federal for a construction project. In its answer Federal denied plaintiff was within the class of persons who were entitled to protection under the bond, asserting that it, had only agreed to indemnify the owner for any loss resulting from a default by the general contractor and not to secure payment to subcontractors for labor and materials.

The parties filed cross-motions for summary judgment. The court below granted Federal’s motion and entered judgment in its behalf. Amelco appeals from that decision.

The facts are not materially disputed. Amelco entered into a written subcontract with Frank W. Bogert, Inc (Bogert), the general contractor, for the installation of windows and doors on a project known as “Ho. 1 University Plaza.” Bogert had furnished a performance bond, with Federal as surety, in accord with Bogert’s contract with the owner, Fairleigh Dickinson University (University). The construction contract between the University and Bogert contained the following:

7.5 PERFORMANCE BOND AND LABOR AND MATERIAL PAYMENT BOND
The Owner shall have the right prior to signing the Contract, to require the Contractor to furnish bonds covering the faithful performance of the Contract and the payment of all ogligations [sic] arising thereunder in such form and amount as the Owner may prescribe and with such sureties as may be agreeable to the parties. If such bonds are stipulated in the bidding requirements, the premiums shall be paid by the Contractor; if required subsequent to the submission of quotations or bids, the cost shall be reimbursed by the Owner. The Contractor shall deliver the required bonds to the Owner not later than the date of execution of the Contract, or if the work is commenced prior thereto in response to a notice to proceed, the Contractor shall, prior to commencement of the work, submit evidence satisfactory to the Owner that such bonds will be issued.
.-]■ * a* * * *
Section 4:4-1. Unless otherwise specifically noted, the Contractor shall provide and pay for all labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation, and other facilities and services necessary for the proper execution and completion of the work.

The surety agreement stated that it was “in accordance with the terms and conditions of said contract [Bogert-University] which is hereby referred to and made a part hereof as if fully set forth herein”. It also stated;

NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the above bounden Principal [Bogert] shall well and truly keep, do and perform each and every, all and singular, the matters and things in said contract set forth and specified to be by said Principal kept, done and performed at the times and in the manner in said contract specified, or shall pay over, made good and reimburse to the above named Obligee [University], all loss and damage which said Obligee must sustain by reason of failure or default on the part of said Principal so to do, then this obligation shall be null and void; otherwise shall remain in full force and effect.

A subsequent rider substituted University Plaza Realty Corporation in place of University as obligee. The substitution has no effect upon this controversy.

Bogert went into bankruptcy before the building was completed, thereby creating a default under its contract with the University.

The essential issue involved here is whether a subcontractor may avail itself of a surety bond conditioned for the faithful performance by the principal of a prime construction contract containing no express provision for payment of unpaid claims of subcontractors, where the general contract requires the principal to pay all claims for labor and materials. Appellants’ position is grounded upon the fact that the surety bond and the construction contract are expressly integrated and therefore recovery is permitted under the bond for its unpaid claim.

There is no dispute that the execution of the bond in question established a suretyship, with Bogert as the principal, Pederal as the surety and University (later replaced by University Plaza Realty Corporation) as the obligee.

Suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be answerable for the debt, default or miscarriage of another, the principal. While the contract of a surety is, in a sense, accessory or collateral to a valid principal obligation contracted by another person, either contemporaneously or previously, his obligation to the creditor or promisee of the principal is direct, primary and absolute. The surety contract is not that the obligee will see to it that the principal pays the debt or fulfills the contract, but rather that the surety will see that the principal pays or performs. 50 Am. Jur., Suretyship, § 2 at 903-904.

Surety bonds are commonly used in construction projects. Accordingly, our courts have been presented with situations involving the surety relationship and the rights, duties and liabilities flowing therefrom. While no previous reported decision in our courts meets the precise issue presented in the matter before us, several principles have been enunciated which control its disposition.

Before considering these decisions it is helpful to acknowledge some general points set forth in 4 Corbin on Contracts, § 798 at 162-164 (1951). Therein it is stated that a third party to a surety agreement need not stand in “privity” with the contracting parties. He need not be a “promisee” or give consideration in order to become a beneficiary under the surety agreement. The law recognizes that the third party has an enforceable right if the surety promises in the bond, either in express words or by reasonable implication, to pay money to him. If there is such a promissory expression, there need be no discussion of “intention to benefit.” These points are cited with approval in Schlanger v. Federal Ins. Co., 44 N. J. 17, 20 (1965).

Supported by these principles is the doctrine that where, as here the surety bond incorporates the prime construction contract by reference, the two, being integrated, must be considered together. Graybar Electric Co. v. Continental Cas. Co., 50 N. J. Super. 289, 295 (App. Div. 1958); Acoustics, Inc. v. Hanover Ins. Co., 118 N. J. Super 361, 364 (Law Div. 1971). Therefore a surety bond that is conditioned on full performance of his contract by the principal will operate in favor of such third parties as the principal, by his contract with the promisee, undertakes to pay. The bond need not be more specific. 4 Corbin on Contracts, supra. § 799 at 168.

In the prime contract Bogert was obligated to pay his subcontractors as a condition of his full contractual performance. Bogert was further required to provide and pay for all labor and materials needed for the full completion of the work. These duties are not disputed. Consequently, the bonds recital that it is “conditioned” [construed as “promised,” Schlanger v. Federal Ins. Co., supra] that Bogert would “well and truly keep, do and perform each and every, all and singular, the matters and things in said contract,” is interpreted to mean that it secured the payment of those subcontractors supplying Bogert with materials or labor as an element of the performance of his contract with University.

Federal argues that since the prime contract gave the University the right to require bonds “covering the faithful performance of the contract and the payment of all obligations,” and since only a “Performance Bond” was executed, plaintiff as a third party is precluded from holding it liable. The argument does not reach the question. We must consider what the executed bond provided.

Our courts have adopted Restatement, Security, § 165, which provides:

Where a surety for a contractor on a construction contract agrees in terms with the owner that the contractor will pay for labor and materials, or guarantees to the owner the promise of the contractor to pay for labor and materials, those furnishing labor or materials have a right against the surety as third party beneficiaries of the surety’s contract, unless the surety’s contract in terms disclaims liability to such persons. [Emphasis supplied]

See Graybar Electric Co. v. Continental Cas. Go.; supra, 50 N. J. Super, at 295; Acoustics, Inc. v. Hanover Ins. Co., supra, 118 N. J. Super, at 365.

A consideration of the two illustrations appended to the section is helpful.

1. The A Construction Company contracts with the city of X for the building of a retaining wall in a park. In the construction contract the company makes no promise to the city to pay laborers and materialmen. In connection with the contract, the company furnishes the obligation of S, a surety, in the penal sum of $10,000 guaranteeing that the company will satisfactorily complete the work and will pay all valid claims for labor and materials. S is liable to unpaid laborers, materialmen, and subcontractors.
2. Same facts as Illustration 1, except that the company promises the city it will pay laborers and materialmen. S guarantees that the company will perform its contract, without specially mentioning the various promises and duties of the company. S is liable to unpaid laborers, materialmen, and subcontractors.

In the present case it is clear that the bond does not expressly exclude subcontractors furnishing materials and labor from its purview. Therefore, defendant is not entitled to exclude plaintiff as a person who may benefit thereunder.

Further, the finding of the court below that the bond only provided the University with indemnity against loss and did not extend to third parties is in error. The bond not only held the University harmless against loss but it also secured performance by Bogert. It was not, therefore, merely an indemnity contract. See Royal Indem. Co. v. Alexander Industries, Inc., 211 A. 2d 919 (Del. Sup. Ct. 1965).

Federal also contends that section 5.4.1 of the prime contract affords it a complete defense to plaintiff’s claim. The pertinent part of the section states:

The Contractor shall pay each Subcontractor, upon receipt of payments from the Owner, an amount equal to the percentage of completion allowed to the contractor on account of such Subcontractors work.

The provision is capable of two constructions. A strict construction would insulate defendant from liability, since the subcontractor’s right to be paid would be contingent upon the contractor being paid, which in this case was not done because he entered bankruptcy before the job was completed. The other view would hold that the section means no more than that the subcontractor could not accelerate payments.

Consideration must be given to (1) as a matter of policy, the law favors materialmen and laborers, and (2) a fair reading of the prime contract could “lull” them into the conclusion that it was unnecessary to comply with the terms of the Mechanics Lien Law (N. J. S. A. 2A :44-64 et seq.) in order to be assured payment for services. See Schlanger v. Federal Ins. Co., supra. Hence, the broader construction of the provision is the more appropriate and effectuates a more just result.

In Royal Indem. Co. v. Alexander Industries, Inc., supra, the owner contracted with Construction Unlimited, Inc. to erect certain buildings. The contract provided that (1) Construction would furnish everything necessary to build the structure, and (2) Alexander could request Construction to secure a labor and material payment bond. A “contract bond” was executed with appellant as surety. It incorporated the construction contract by reference, and in language essentially identical to the clause appearing in the bond before us it stated that it secured performance of the construction agreement. It also assured Alexander that it would bear no loss from a breach by Construction.

Burger Acoustical Co., Inc., performed its subcontract with Construction, and not having received payment brought an action against the surety, during which it moved for and was granted summary judgment.

The court stated that a surety bond will not be construed strictly in favor of a paid surety and the .bond and the contract should be read together since the former incorporated the latter by reference. It disagreed with the surety’s argument that the bond was purely an “indemnity” agreement, holding that it also secured performance of the construction contract. The court concluded that the matter was controlled by Restatement, Security, § 165. In affirming the court below, it held that Burger was a third-party beneficiary under the bond, by virtue of the incorporated construction contract. See also, Westinghouse Electric Corp. v. Mill Elevator Co., 254 Iowa 874, 118 N.W. 2d 528 (1963).

On the basis of the foregoing we hold Ameleo to be a third party beneficiary under the bond and it may properly proceed against the surety for any unpaid balance due under its subcontract with Bogert. Accordingly, the determination of the court below is reversed.

The affidavits filed in support of the cross-motions for summary judgment indicate a dispute existing between the parties as to the amount of Amelco’s claim which remains to be resolved. Therefore, the matter is remanded for further proceedings, consistent with this opinion.


author: Per Curiam: Allcorn, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. EDDIE RUIZ, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted January 7, 1974—
    Decided March 26, 1974.

      Allcorn, J. A. D., dissented in part, with opinion.

      Before Judges Leonard, Allcorn and Crahay.

      Mr. Stanley C. Van Ness, Public Defender, attorney for appellant (Mr. David R. Arrajj, Assistant Deputy Public Defender, of counsel and on the brief).

      Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney for respondent (Mr. Robert J. Genatt, Deputy Attorney General, of counsel; Steven Leonard Strelitz, Deputy Attorney General, on the brief).
   Per Curiam:

In three indictments defendant was charged with a variety of drug offenses allegedly committed on separate dates. Following his convictions multiple sentences were imposed aggregating a term of not less than five nor more than seven years in New Jersey State Prison. His appeals therefrom are addressed to the convictions in part and the sentences in their totality and, on his motion, we have consolidated them. They will be treated separately since different arguments are addressed to each.

1. Indictment 722-71-M in its first count charged that on April 6, 1972 defendant possessed heroin, contrary to N. J. S. A. 24:21-20. The second count charged that on the same day defendant possessed heroin with intent to distribute it, contrary to N. J. S. A. 24:21-19, subd. a(l). Following a nonjury trial, defendant was found guilty of both offenses and sentenced on each count to concurrent three to five year terms in New Jersey State Prison. Defendant’s motion urging essentially that both counts involved a single offense was denied, the trial court being of the opinion that the Legislature intended that the offenses were distinct and separately punishable.

The sole point of appeal addressed to the convictions under this indictment is that the court erred by imposing separate sentences. In a word, defendant argues that the charges here merged and we agree.

The record reflects that the proofs were sufficient to support the conviction of possession of heroin with intent to distribute it. While possession of heroin is a crime in and of itself, in the prosecution of this indictment, it was an essential element of the charge of possession with intent to distribute and must therefore be treated as an included offense. Defendant may not stand convicted of both charges. State v. Thomas, 118 N. J. Super. 377 (App. Div. 1972), certif. den. 60 N. J. 513 (1972); State v. Hill 44 N. J. Super. 110 (App. Div. 1957). Accordingly, the conviction on the first count of Indictment Ho. 722-71-M and the sentence imposed thereon are hereby vacated. The judgment of conviction on the second count is affirmed.

2. Indictment Ho. 729-71-M charged in the first count that on June 13, 1972 defendant possessed heroin with intent to distribute it contrary to N. J. S. A. 24 :21-19, subd. a(l) and in the second count that on the same day he distributed heroin contrary to N. J. S. A. 24 :21-19, subd. a(l).

This indictment was tried to a jury which found defendant guilty of both counts. He was sentenced therefor on the first count to not less than three nor more than five years in New Jersey State Prison and on the second count to not less than five nor more than seven years. It was ordered that the terms were to be served concurrently with each other and also with the sentences imposed on Indictment Ho. 722-71-M.

Originally, the only point of appeal directed to this indictment was that the trial court erred in not granting defendant’s motion for a mistrial generated by allegedly improper comments by the prosecutor during his summation. Thereafter by reply brief (the point was not raised below) defendant argues that his possession conviction merged into the conviction for distribution and should be vacated.

On summation the prosecutor alluding to the heroin which had been marked into evidence, invited the jury’s attention to the destructive character of the drug—“ * * * cute little package * * * incredible how much destruction in that little package.” A defense objection was interposed and the statement was withdrawn. Thereafter, reference was again made to the “little package” — “this little baby” and its potential. At the conclusion of the State’s summation, defense counsel moved for a mistrial. The motion was denied, and we think properly. The allowance of mistrials resides in the discretion of trial courts and should be granted only where manifest injustice looms. State v. DiRienzo, 53 N. J. 360, 383 (1969). Our review of the challenged remarks satisfies us that while they were better left unsaid (again we have an instance of a prosecutor’s zeal overriding his responsibility, State v. Farrell, 61 N. J. 99, 104 (1972)), but we do not find that in context they were of a quality which constituted meaningful prejudice to defendant. The trial judge in his final instructions to the jury was meticulous and vigorous in charging them to disregard the allegedly offensive comments. He stated —

Now, there were certain statements made in the closing statement by the Prosecutor with respect to the potential or the effects of heroin. I am instructing you to disregard them completely. That was not part of the evidence in this case. It is not something for you to consider at all. You are concerned only with the two charges that are brought against the defendant and not of the potential effects or the effects that heroin has, and I very strongly tell you to completely disregard any of those statements which dealt with the potential or the effects of heroin.

We are satisfied that the cited instruction effectively eradicated whatever prejudicial impact the prosecutor’s remarks may have generated. State v. Knight, 63 N. J. 187 (1973). Whatever prejudice may have resulted from the remarks themselves or which may have remained after the court’s instruction was not in our view of a quality to warrant reversal. Here, there was ample proof of defendant’s guilt. Stale v. LaPorte, 62 N. J. 312 (1973).

We need not consider whether defendant’s argument on the merger of offenses is timely since we are satisfied that on the record here the possession of heroin charge was separate and distinct from the distribution charge and, as such, separately punishable.

The record reflects that on the night of the offense, one Botsko ■— a police officer — was engaged in an undercover narcotics mission. Accompanied by an informer and attired in a manner appropriate to the milieu he was entering, he was approached by defendant on a public street. Defendant claimed that he had the ‘Test dope” and that he and another had “just copped an ounce from New York.” Others on the scene noticed that Botsko was carrying an automatic weapon in his pants. Botsko was apprehensive that the weapon might be a giveaway that he was a police officer. To avoid compromising his cover he removed the weapon and inquired as to how much dope might be procured for it. Botsko testified that defendant stated he would give four “bags” in exchange for the weapon. Botsko countered that he would want seven or eight bags and went on to inquire of defendant as to the cost of a single bag. Defendant stated the price to be ten dollars. Botsko gave defendant ten dollars whereupon defendant left the scene, returning in about one minute and handed him one bag containing a substance later proven to be heroin. After further unfruitful bartering for drugs in exchange for the weapon the engagement broke off. Botsko positively identified defendant in court as the person who sold the narcotics to him.

Defendant’s belated assertion that the crime of possession of the bag of heroin with intent to distribute it merged into his conviction for distribution of the drug employs for its support two cases, recently decided by this Division, but unreported. We do not now regard that those decisions control and are satisfied that the Legislature intended that the act of possession with intent to distribute narcotics and the act of distributing them to be distinct offenses and separately punishable. Each activity is a separate evil which the Legislature determined to combat.

Rejecting a similar argument in State v. Booker, 86 N. J. Super. 175 (App. Div. 1965) we held:

If defendant’s control had been ‘fleeting and shadowy in its nature’ there might be merit in this argument. However, we are not called upon to express an opinion on this point in this case because the evidence shows that defendant’ss contact with and control over the narcotics was not a mere fleeting and shadowy incident of the sale. In each of the three episodes, he had the nareoiics on his person when he offered them for sale. In short, the possession antedated and was separate and distinct from the sale, and was a separate crime. * *' * fat 17cS; emphasis added]

On the record here Boolcer, supra,., to which we subscribe, is operative.

In Gore v. United States, 357 U. S. 386, 78 S. Ct. 1280, 2 L. Ed. 2d 1405 (1958) defendant, as the result of engaging in the single sale of narcotics, was convicted of violating three federal enactments. He was sentenced therefor to three consecutive custodial terms. It was held that the multiple punishment imposed was not offensive to the constitutional prohibition against double jeopardy.

Justice Frankfurter, for the majority, said:

*' * * rpjle £aet an 0ffen(ier violates by a single transaction several regulatory controls devised by Congress as means for dealing with a social evil as deleterious as it is difficult to combat does not make the several different regulatory controls single and identic. * * *
■r * * of course the various enactments by Congress extending over nearly half a century constitute a network of provisions, steadily tightened and enlarged, for grappling with a powerful, subtle and elusive enemy. If the legislation reveals anything, it reveals the determination of Congress to turn the screw of the criminal machinery ■—■ detection, prosecution and punishment — tighter and tighter. The three penal laws for which petitioner was convicted have different origins both in time and in design. * * s-'

Possession of controlled dangerous substances is a vice unto itself and legislatively proscribed. The crime is compíete and the guilt of it established when it is proven that a person knowingly and intentionally possessed a controlled dangerous substance be it for his own use or distribution to others. A subsequent distribution encompasses an added element and brings into being a new and separate offense.

Analyzing earlier legislation, albeit in a different factual context, Justice Proctor in State v. Reed, 34 N. J. 554 (1961) succinctly addresses the issue of possession and provides the legislative rationale:

=>• * * Why theu was the unqualified term “possess” used? Undoubtedly, to facilitate enforcement. It is well known that it is extremely difficult to apprehend and convict drug traffickers. Illegal transfers do not take place under the eyes of the police. They are clandestine operations carefully guarded from official scrutiny. The proscription of possession, without more, facilitates the enforcement of the law against traffickers by eliminating the burden of proving a transfer. If possession is interpreted not to include possession for imminent personal use, the purpose of facilitating enforcement against traffickers would be seriously hindered. * * * (at p. 565)

We find nothing in our current New Jersey Controlled Dangerous Substances Act, N. J. S. A. 24 :21-1 et seq. (effective 1971) which either expressly or impliedly evinces a legislative intendment to modify or otherwise dilute the viability of the concept of Reed and Booker. See State v. Siebert, 126 N. J. Super. 534 (App. Div. 1974), decided February 8, 1974.

3. In Indictment 735-71-M defendant was charged, in the third count, with aiding and abetting another to distribute heroin on June 27, 1972, contrary to N. J. S. A. 24 :21-19, subd. a (1) and 2A :85-14. The fourth count alleged that defendant and another conspired to distribute heroin, contrary to N. J. S. A. 2A :98-1 and 2 and N. J. S. A. 24 :21-24.

On September 18, 1972, pursuant to a bargained plea, defendant pled guilty to the third count. The prosecutor then reported to the court that at the time of sentence he would move to dismiss the fourth count. On October 13, 1972 defendant appeared before the court for sentencing on the convictions as entered in the three indictments here under review. No motion for dismissal was made as to the fourth count of Indictment 735-71-M and the trial court sentenced him on the third and fourth counts of it to not less than three nor more than five years in New Jersey State Prison, to be served concurrently with each other and the sentences imposed on the other indictments. Defendant did not move to correct the sentence or to enforce the bargained plea. On this appeal defendant urges that the sentence imposed on the fourth count was the product of inadvertence. The State agrees. Accordingly, we exercise our original jurisdiction R. 2:10-5, and vacate defendant’s conviction and consequent sentence on the fourth count of Indictment 735-71-M.

Lastly, defendant asserts that the sentences imposed were manifestly excessive. In view of the nature of the offenses and defendant’s participation in them, we are satisfied that, as modified, rather than being excessive the custodial terms were eminently appropriate and did not constitute an abuse of the trial court’s sentencing discretion. State v. Yormark, 117 N. J. Super. 315 (App. Div. 1971), certif. den. 60 N. J. 138 (1972).

The judgments under review, as modified, are affirmed.

Allcorn, J. A. D.

(dissenting, in part). By the two counts set forth in Indictment 729-71M defendant was charged with unlawful distribution (sale) of heroin and with unlawful possession of heroin with intent to distribute. The proofs disclosed the sale by the defendant of a single bag of heroin and the possession by him of the same bag of heroin.

In the factual setting here present, defendant literally could not have distributed this single bag of heroin without having had possession of it with the intention of selling it. The evidence introduced by the State indicated that, after defendant and the undercover police officer had struck their bargain and the latter had paid defendant for the one bag of heroin, defendant (as the majority notes) “left the scene, returning in about one minute and handed him [the officer] one bag” of heroin. There was no evidence that the defendant had any drugs in his possession on that occasion other than the bag of heroin that was the subject of the sale.

Quite plainly, under such circumstances possession of the bag of heroin by defendant was necessarily incidental to and an integral part of the distribution. The possession was momentary and passing, simply for the purpose of consummating the sale and for the period of time essential to complete it — the “fleeting” possession perforce accompanying the sale, which this court in State v. Booker, 86 N. J. Super. 175, 178 (App. Div. 1965), suggested would merge with the sale as an integral and inseparable part thereof. As such, defendant was subject to conviction for either the offense of distribution or the offense of possession with intent to distribute, but not both.

Fundamentally, in the resolution of this issue, we deal with the constitutional proscriptions against double jeopardy. The underlying design and effect of the prohibition contained in N. J. Const. (1947), Art. I, par. 11, has been declared to be for the purpose of “justly [assuring] that the State with its great resources will not be permitted to harass and oppress the individual by multiple prosecutions or punishment for the same offense.” State v. Currie, 41 N. J. 531, 536 (1964). In this context, same offense “is not limited to the same offense as an entity and designated as such by a particular name. It comprehends also any integral part of such offense which may subject the offender to prosecution and punishment.” State v. Dixon, 40 N. J. 180, 185 (1963); State v. Marie, 23 N. J. 162 (1957). To prosecute and to punish this defendant for the offense of sale and for the offense of possession with intent to sell the very same bag of heroin, is a clear violation of this constitntional protection. Compare State v. Wilkinson, 126 N. J. Super. 553 (App. Div. 1973), certif. denied 63 N. J. 562 (1973); compare also, the disposition by this conrt in the present case of the charges of possession and possession with intent to distribute the same drugs, under Indictment 722-71M.

The current of authority elsewhere is in accord, whether the controlling principle derives immediately from constitution or statute, and whether dealing with multiple prosecution and punishment for possession and sale of the same drugs or, more commonly, with possession and transportation of the same drugs. the drug illegally sold, neither offense was a necessary element in or constituted an essential part of the other offense — a situation not present in our case, since possession with intent to sell in violation of the statutory prerequisites is unlawful, whether initial possession was acquired legally or illegally.

Notwithstanding the integral nature and inseparability of the two offenses, the majority of the court takes the position that "the Legislature intended that the act of possessing with intent to distribute narcotics and the act of distributing them to be distinct offenses and separately punishable.” The section in question, in its entirety, provides (N. J. S. A. 24 :21-19):

Prohibited acts A. — Manufacturing, distributing, or dispensing —• Penalties
a. Except as authorized by this act, it shall be unlawful for any person:
(1) To manufacture, distribute, or dispense, or to possess or have under his control with intent to manufacture, distribute, or dispense, a controlled dangerous substance; or
(2) To create, distribute, or possess or have under his control with intent to distribute, a counterfeit controlled dangerous substance.
b. Any person who violates subsection a. with respect to:
(1) A substance classified in Schedules I or II which is a narcotic drug is guilty of a high misdemeanor and shall be punished by imprisonment for not more than 12 years, a fine of not more than $25,000.00 or both; or
(2) Any other controlled dangerous substance classified in Schedules I, II, III or IV is guilty of a high misdemeanor and shall be punished by imprisonment for not more than 5 years, a fine of not more than $15,000.00 or both; or
(3) A substance classified in Schedule V is guilty of a misdemeanor and shall be punished by imprisonment for not more than 1 year, a fine of not more than $5,000.00, or both.

A reading of the cited section, either alone or in the context of the whole of the Controlled Dangerous Substances Act, discloses no indicia of such intent, and the opinion of the court makes reference to none of significance. Absent a clear and unambiguous indication that a legislative body intended to authorize multiple punishment in such a situation, the enactment will be construed against expanding a single integral transaction into multiple offenses. Bell v. United States, 349 U. S. 83, 83-84, 75 S. Ct. 620, 99 L. Ed. 905 (1955). In any event, were the cited section to be interpreted as authorizing multiple conviction and punishment in the circumstances here present, it would run counter to the constitutional provisions barring double jeopardy.

Reliance is placed also on Gore v. United Slates, 357 U. S. 386, 78 S. Ct. 1280, 2 L. Ed. 2d 1405 (1958), and State v. Reed, 34 N. J. 554 (1961). Gore is inapposite, since the three offenses there charged were not necessarily incident to or integral parts of the sales transaction. Here, in contrast, it was literally impossible to consummate the sale without possession of the drug. Moreover, in determining the breadth of protection afforded by the provisions of the double jeopardy clause of the New Jersey Constitution, we are not bound by an interpretation of the double jeopardy clause of the Federal Constitution of a more limited or restricted dimension. Cf. State v. Currie, supra.

The decision in State v. Reed, supra, has no applicability whatever. The single issue in that ease was whether, in prohibiting unauthorized possession of drugs under section 4 of the Hniform Narcotic Drug Law (N. J. S. A. 24 :18-4, since repealed), the Legislature intended to proscribe all unauthorized possession, including possession for imminent personal use. The question of double jeopardy was not involved, nor was it discussed.

In the construction and application of our prohibition against double jeopardy, “the emphasis should be on underlying policies rather than technisms. The primary considerations should be fairness and fulfillment of reasonable expectations in the light of the constitutional and common law goals.” State v. Currie, 41 N. J. 531, 539 (1964). To subject this defendant to prosecution and punishment on the two charges, is eminently unfair and defeats reasonable expectations.

For these reasons, the conviction of defendant for possession of heroin with intent to distribute, charged in count one of Indictment 729-71M, should be vacated and set aside. On all other issues, I am in accord with and join in the views expressed in the opinion of the court.

      (a) § 4705(a) of the 1954 Internal Revenue Code (sale of narcotics not in pursuance of a written order).
      (b) § 4704(a) of the 1954 Internal Revenue Code (sale of narcotics not in their original stamped package).
      (c) § 2(c) of the Narcotics Drugs Import and Export Act (facilitation of concealment and sale of drugs).

        Booker involved convictions under N. J. S. A. 24 :18-4 which provided: “It shall be unlawful for any person to manufacture, possess, have under his control, sell, prescribe, administer, dispense or compound any narcotic drug, except as authorized by this chapter.” N. J. S. A. 24:21-19, subd. a(l), here involved, treats distribution and possession with intent to distribute controlled dangerous substances disjunctively and unlike our .dissenting brother, we perceive no meaningful alteration of legislative intent. State v. Spindel, 24 N. J. 395 (1957), State v. Kress, 105 N. J. Super. 514 (Law Div. 1969).
      Assuming defendant had been charged with “simple” possession under N. J. S. A. 24 :21-20(a), and distribution contrary to N. J. S. A. 24 :21-19(a) (1), Booker would be fully operative. We fail to see “fleeting” possession in this record. Defendant clearly had control over heroin notwithstanding it was not on his person when he made the arrangement with Botsko. His intention to sell the heroin should not give him the windfall of “merger.”

       Unlike Boolcer, the defendant’s possession here did not antedate the sale; he did not have the bag of herion “on his person when he offered [it] for sale.” 86 N. J. Super, at 178.

      See e.g., State v. Price, 106 Aria. 433, 477 P. 2d 523 (Sup. Ct. 1970) ; People v. Roberts, 40 Cal. 2d 483, 254 P. 2d 501 (Sup. Ct. 1953) ; Yost v. State, 243 So. 2d 469 (Fla. App. Ct. 1971) ; Thompson v. State, Ind., 290 N. E. 2d 724 (Sup. Ct. 1972), cert. den. 412 U. S. 943, 93 S. Ct. 2788, 37 L. Ed. 2d 403 (1973) ; State v. Miller, Or. App., 513 P. 2d 508 (Or. App. 1973) ; 1 Wharton’s Criminal Law and Procedure (Anderson ed. 1957), § 32 at 68.

        Contra, Gee v. State, 225 Ga. 669, 171 S. E. 2d 291 (Sup. Ct. 1969) ; State v. Cameron, 283 N. C. 191, 195 S. E. 2d 481 (Sup. Ct. 1973). Both cases involved the offenses of sale and simple possession; and held that the two offenses were separable and independent, principally on the theory that because a person could legally possess


text:
    ESSEX CLEANING CONTRACTORS, INC., A CORPORATION, PLAINTIFF-APPELLANT, v. RAYMOND AMATO AND JOHN AMATO, INDIVIDUALLY AND PARTNERS T/A A & H COMPANY, A PARTNERSHIP, DEFENDANTS-RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued March 11, 1974—
    Decided March 27, 1974.

      Before Judges Collester, Lynch and Michels.

      Mr. Jacob M. Goldberg argued the cause for appellant (Mr. Gerald B. Goldberg, attorney).

      Mr. Frank La Morte argued the cause for respondents (Messrs. Beninati & La Morte, attorneys).
   Per Curiam.

Plaintiff instituted this action against defendants to recover for janitorial services furnished by it in three commercial buildings in East Orange, New Jersey. Originally plaintiff was hired by United States Eealty Company, managing agents for Dr. Lindsey Scott, the owner of these three buildings, to perform janitorial services therein at $1500 a month. The buildings were purchased by Dr. Scott from defendants, who took back a second purchase money mortgage. When Dr. Scott defaulted in his pay-meats on his mortgage, defendants were authorized to collect the rents. At about this time United States Realty Company notified plaintiff to discontinue its services because the ownership of the buildings was about to be changed and that if it desired to continue servicing the buildings it would have to see defendants.

The trial court held, after considering the testimony of two of the officers of plaintiff and Mr. Raymond Amato, one of the defendant partners, that all three witnesses were completely honest. He also found that Amato informed plaintiff to continue with the work and the plaintiff in fact performed the work in November, December and up to January 12, 1973. However, the trial court held that even though Amato advised plaintiff to continue on with the work, the court stated that it could not make this into a contract with Amato. In reaching this decision the trial court found that Dr. Scott still owned the buildings and therefore was primarily responsible for them, and appeared to ground its decision on the fact that since defendants had not yet received the deed, defendants could not be liable legally for the work done by plaintiff.

Our careful review of the trial court’s, opinion indicates that the trial court misconceived the responsibility of a mortgagee in possession for contracts entered into in connection with the property., A mortgagee who goes into possession of the mortgaged property assumes responsibility for the management and preservation of the property. Zanzonico v. Zanzonico, 2 N. J. 309, 316 (1949), cert. den. 338 U. S. 868, 70 S. Ct. 143, 94 L. Ed. 532 (1949). The duty of a mortgagee in possession is that of a provident owner. Merchants’, &c., Realty Co. v. Stern, 101 N. J. Eq. 629 (Ch. 1927), aff’d 102 N. J. Eq. 290 (E. & A. 1928). While no New Jersey case has been found specifically holding that a mortgagee in possession is liable for services rendered to him during his occupancy, it has been held that he is answerable for its torts. See Scott v. Hoboken Bank for Savings, 126 N. J. L. 294, 298 (Sup. Ct. 1941), aff’d 127 N. J. L. 564 (E. & A. 1942). In Osborne, Law of Mortgages (2 ed. 1970), 283, it is stated:

When a mortgagee goes into possession questions as to his personal liability arising out of his relations with third parties arise. Since he is the person in possession of the premises he is personally liable in tort for injuries resulting either through his actionable fault in utilizing the property or by reason of his failure to perform duties imposed by law upon the owner of the land. Even more clearly he is liable for goods and services furnished to him during his occupancy. [Emphasis added!

See also, Baumgard v. Bowman, 31 Ohio App. 266, 167 N. E. 166 (App. Ct. 1928), app. dism. per curiam 120 Ohio St. 614, 169 N. E. 303 (Sup. Ct. 1929); First Nat’l Bank v. Matlock, 99 Okl. 150, 226 P. 328, 36 A. L. R. 1088 (Sup. Ct. 1924).

We are of the view that a mortgagee in possession may be liable for the services rendered to him in connection with the property during his occupancy thereof on the basis of an express or implied contract. Since defendants were mortgagees in possession of the three commercial properties owned by Dr. Scott, they would be liable for the contracts entered into for the furnishing of services for these buildings. Accordingly, we remand the matter to the trial court to enable it, on the basis of the evidence heretofore presented, to make the following specific findings of fact: (1) whether plaintiff and defendants entered into an express contract to perform the janitorial services for the three buildings owned by Dr. Scott; (2) if so, the price agreed upon for performing said services; (3) whether the work was performed in accordance with said contract, and (4) the amount of money, if any, defendants owe to plaintiff in accordance with said contract.

While plaintiff also sought recovery in this action on the theory of implied contract, we are satisfied that it failed to sustain its burden of proving the reasonable value of such janitorial services. We therefore specifically point out to the trial judge that in remanding the matter for findings of fact we do so solely with respect to the claim based on express contract.

The matter is remanded with directions that the trial court make findings of fact with respect to the aforementioned questions, which are to be- filed with this court on or before May 15, 1974. We retain jurisdiction.


text:
    DIVAN BUILDERS, INC., A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT, v. PLANNING BOARD OF THE TOWNSHIP OF WAYNE, ET ALS., DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued January 21, 1974—
    Decided February 8, 1974.

      Before Judges Lynch, Mehler and Michels.

      Mr. Robert S. Moraff, argued the cause for appellant.

      Mr. Ronald B. Sokalski, argued the cause for respondent (Messrs. Corrado, Corcoran & Sokalski, attorneys; Mr. Sokalski, of counsel and on the brief).
   Per Curiam.

The judgment of the Law Division is affirmed essentially for the reasons set forth in the opinion of Judge Schwartz, 122 N. J. Super. 508 (Law Div. 1913).

We also point out that even though respondent did not challenge the adequacy of the standard established by Ordinance No. 69 for the allocation of the costs of the off-site improvement to properties in the area to be served by the improvement, counsel for appellant conceded at oral argument that as a result of the bond ordinance (No. 108) other properties to be developed in the future and serviced by such improvement may not be assessed or charged a proportionate share of the cost of the off-site drainage improvement here involved. The bond ordinance (Uo. 108) expressly provides that the drainage system improvement is a general improvement, and that “no part of the cost thereof has been or shall be specially assessed on property specially benefited thereby.” Thus, only respondent and one other sub divider which also paid $20,000 as required by appellant have been or will have been required to pay any portion of the cost of the off-site drainage improvement even though other undeveloped properties will be equally benefited thereby. This obviously is discriminatory, and this case, therefore, does not present a proper factual pattern to consider the argument advanced by appellant that the Municipal Planning Act, N. J. S. A. 40 :55-1.1, ei seq., empowers a municipality to impose upon a subdivider as a planning matter the requirement to install or contribute to the cost of off-site improvements. Cf., Longridge Builders, Inc. v. Planning Bd. of Princeton Tp., 52 N. J. 348, 350 (1968).