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

text:
    CONSOLIDATION COAL CO., ET AL., PETITIONERS, v. ROSCOE P. KANDLE, COMMISSIONER, ET AL., RESPONDENTS.
    Superior Court of New Jersey Appellate Division
    Argued June 17, 1968
    Decided March 13, 1969.

      Before Judges Goldmann, Kilkenny and Carton.

      Mr. Theodore W. Geiser argued the cause for petitioners (Messrs. Pindar, McFlroy, Gonnell & Foley and Messrs. McLaughlin, Dawes & Abbotts, attorneys).

      Mr. William J. Brennan, III argued the cause for respondents (Mr. Arthur J. Sills, Attorney General, attorney).
   The opinion of the court was delivered by

Goldmann, S. J. A. D.

Petitioners instituted this declaratory judgment proceeding under B. B. 4:88-10 and N. J. S. A. 26: 2G-20 seeking judicial review of the validity of chapter X-A of the New Jersey Air Pollution Control Code (Code) promulgated by the State Commissioner of Health (Commissioner) on March 4, 1968 pursuant to the authority conferred on the State Department of Health (Department) by the Legislature under N. J. S. A. 26 :2C-8.

I

On August 9, 1967 the Commissioner gave a notice of a public hearing on proposed chapter X of the Code, entitled “Control and Prohibition of Air Pollution Prom Sulphur Dioxide Caused by the Combustion of Fuel.” (Section 3, dealing with coal, later became chapter X-A.) Accompan}'ing the notice was the text of the proposed regulations, together with a foreword, an outline describing the effect of the regulations, an explanation of the basis for their promulgation, a data appendix and a bibliography.

Four days of hearings in the fall of 1967 produced the extensive record now before this court for review. Testimony was received from representatives of citizens interested in clean air, the fuel industry, collateral enterprises and groups likely to be affected by the Code (e. g., railroads, labor, users of fuel such as utility companies), as well as experts in air pollution and fuels generally. Chapter X-A, as promulgated, was substantially as had been proposed in the notice of hearing and dealt with the control and prohibition of air pollution from sulphur dioxide caused by the combustion of coal. Scheduled to become effective May 6, 1968, we stayed enforcement of the chapter pending final determination of the present proceeding.

Petitioners are concerned with bituminous coal, defined in section 1.3 of the regulations as coal “containing 70-85 percent carbon having usually more than seven percent volatile matter.” Section 2-2 prohibits the sale or use of bituminous coal after May 6, 19-68 containing sulphur in excess of 1% by weight. However, the limitation imposed by that section is subject to exceptions. Thus, section 2.3(a) makes section 2.2 inapplicable in any case where, by use of an approved stack gas-cleaning process, it is demonstrated to the Department that sulphur dioxide emissions into the atmosphere from any stack or chimney can be controlled to levels that do not exceed at any time 1.5 pounds of sulphur dioxide per 1,000,000 BTU gross heat input. And section 2.3(b) provides that the Department may authorize a less restrictive percentage than 1% of sulphur by weight in the case of specific steam or electric power generating facilities, but in no case more than 1.5%. (The record shows that large consumers of coal for power purposes, such as electric utilities, consume approximately 87% of the bituminous coal used in New Jersey.)

Chapter X-A further provides, under section 2.4, that on and after October 1, 1971 bituminous coal containing sulphur in excess of 0.2% by weight shall not be sold for use or used in New Jersey. Here, again, the Department may authorize a less restrictive standard in the case of specific steam or electric power generating facilities (section 2.5(b)), and where sulphur dioxide emissions are controlled by the cleaning of stack gases to a prescribed minimum (section 2.5(a)).

The Air Pollution Control Act (1954), as amended by L. 1967, c 106, gave the Department broad powers to abate the air pollution menace to public health of which this court took judicial notice in Department of Health v. Owens-Corning Fiberglas Corp., 100 N. J. Super. 366 (1968), affirmed per curiam 53 N. J. 248 (1969). N. J. S. A. 26 :2C—8 provides:

“The department shall have power to formulate and promulgate, amend and repeal codes and rules and regulations preventing, controlling and prohibiting air pollution throughout the State or in such territories of the State as shall be affected thereby * *

Before any such code, rule or regulation is promulgated, there must be 30 days’ notice of a hearing at which opportunity shall be given the public to be heard with respect thereto. The statute further requires that no code, rule or regulation shall become effective until 60 days after adoption.

The testimony given at the 1967 hearings was not produced in adversary fashion. Bather, the sessions were conducted in the same manner as legislative hearings: anyone interested was allowed to make a statement or presentation and speakers were sometimes questioned by the hearer. Citizen groups and legislators commended the Department for its efforts in controlling air pollution. Those opposed to the proposed regulations complained of the severe effect they would have on the state, and, to some extent, the national economy in general, and on their specific enterprises or interests in particular. Various witnesses indicated that there was not presently available any material quantity of bituminous coal which could meet the required sulphur content level in the immediate future. The economic impact of chapter X-A upon railroads, railroad labor, the coal industry and labor in Appalachia, a distressed area, would be immediate and substantial. The cost to the utility fuel companies of conversion, as well as higher fuel costs, would increase the cost of electrical energy to consumers. Some of the witnesses stated that stack gas-cleaning is presently not effective enough to permit combustion of higher sulphur content fuels so as to emit sulphur dioxide into the atmosphere within the prescribed levels established by the proposed regulations. However, they indicated that the technology is improving and that such systems may soon be generally and practically available. Thus, some opposition spokesmen called for a relaxation in the tolerance levels while others wanted an increase in lead time to permit technological development.

In essence, those who sought to justify delay in the implementation of a program specifically designed to protect the public health and welfare did so on economic grounds. In Owens-Oorning we said:

“* * s- Assuredly, it is not unreasonable for tbe State, in the interest of tbe public health and welfare, to seek to control air pollution. Even if this means the shutting down of an operation harmful to health or unreasonably interfering with life or property, the statute must prevail. But no such drastic measure was called for in this case.” (100 N .J. Super., at page 394)

The air pollution controls called for by chapter X-A are indeed drastic, but necessary—a fact fully realized by the Department. The information contained in the materials accompanying the notice of public hearing—as well as the testimony and proofs adduced in support of the regulations— fully supports what was said in the foreword:

“While the burning of fuel produces a number of pollutants such as smoke, fly ash, carbon monoxide, aldehydes, etc. the chief villain is considered to be sulfur dioxide. This invisible gas results from the burning of sulfur which is naturally contained in coal and oil.
Ninety percent of all sulfur dioxide in our north metropolitan atmosphere comes from fuel-burning; the other ten percent comes from the chemical processes of industry which are already under regulation by Chapter VIII of the Air Pollution Control Code. Of the ninety percent which is caused by fuel burning about 1/3 results from the generation of electricity .by public utilities, 1/3 from industrial heat and power generation, and 1/3 from the heating of homes, stores, and offices.
According to the United States Public Health Service the New Jersey-New York Metropolitan area is considered to have higher levels of sulfur dioxide contamination than any other metropolis in the nation. Our own air testing confirms that the levels are high. This contaminant has been statistically associated with respiratory diseases. It has been argued—not conclusively but very persuasively—that the current levels are harmful to health.
Because human health and perhaps life itself are at stake, we can’t wait for a long-term epidemiology to prove irrefutably that such harm is being done. Control should be undertaken now.
Because we do not yet have economical methods of removing sulfur dioxide from the combustion products in the stack, the method of regulation is to limit the amount of sulfur contained in the fuel in tlie first place.
Two important things can be said about the proposed code Chapter:
1. Compliance with its standards will effectively deal with the problem of sulfur dioxide pollution.
2. Compliance is possible, at a price—a high price. The price includes increased cost of fuel, the expense of equipment conversion, and all the economic dislocations caused by the required changes in fuel use patterns.”

II

Petitioners do not challenge the constitutionality of the Air Pollution Control Act (1954), as amended, noting the recent unsuccessful attempt to do so in Owens-Coming where it was argued that the statute unlawfully delegated legislative power to the former Air Pollution Control Commission, whose functions and powers have now been taken over by the Department. They concede that the act represents a proper exercise by the Legislature of the State’s police power, designed to serve an essential and vital interest of the New Jersey public. The grounds on which petitioners challenge chapter X-A are, in brief, that (1) its requirements are unreasonable; (2) the regulations are void by reason of the failure of the Department to observe due process of law; (3) their promulgation exceeded the authority delegated to the Department by the Legislature, and (4) the regulations constitute an unreasonable burden upon interstate commerce, in violation of the United States Constitution.

Initially, we observe that chapter X-A, promulgated pursuant to the authority expressly conferred by N. J. S. A. 26 :2C-8 and which seeks to prevent, control and prohibit air contamination by sulphur dioxide emissions into the atmosphere, is well within the scope of the legislative grant. Department of Health v. Owens-Corning Fiberglas Corp., above; Department of Health v. Roselle, 34 N. J. 331, 347-348 (1961). Quite understandably, petitioners cannot claim that the Air Pollution Control Act (1964), as amended, is constitutionally invalid as an unreasonable response to an evil within the Legislature’s power to regulate. As we said in Owens-Coming, “The menace to the public health by air pollution is so much a matter of common experience as properly to be a subject of judicial notice.” (100 N. J. Super., at page 381)

The main thrust of petitioners’ attack is on the procedure followed in promulgating chapter X-A. In their view, the hearings leading to its adoption should have been conducted in judicial fashion, with examination and cross-examination of witnesses called by either side. The Commissioner should then have made findings of fact so as to permit of an informed judicial review. In short, petitioners would have us review the validity of chapter X-A as we would a judgment or an administrative order under R. R. 4:88-8. Their argument is wide of the mark, for they wholly misconceive the procedure to be followed in promulgating an administrative rule or regulation, legislative in nature, and the proper scope of this court’s review thereof under R. R. 4:88-10.

Indeed, we find it difficult to follow petitioners’ presentation in light of the concessions made in their brief and at oral argument. They say that “philosophical considerations aside, there can be no doubt that the label to be applied to the action under review here is ‘quasi-legislative.’ ” (Petitioners realistically recognized this to be so by bringing their action under R. R. 4:88-10.) They also state that “Though ‘findings of fact’ are not, in terms, required by the enabling act, the task of the court is greatly magnified by their absence.” The fact is that well established law compels these concessions.

Specifically, petitioners complain that they were denied due process because the hearing officer limited the presentations of interested parties to statements only and would not permit any dialogue or debate on the merits of the proposed chapter. They cite only one case in support of their position —■ Application of Plainfield-Union Water Co., 11 N. J. 382 (1953). The court there was concerned with the adjudicatory role of the administrative agency. The matter in issue was one of “judicial inquiry” where the agency was concerned with “the application of the statutory policy and rule of action.” The court likened the matter before it to “judicial proceedings.” What was said in Plainfield-Union has no application here. No one has ever suggested that the same rules apply to legislative-type hearings. In its rule-making capacity, an administrative agency is nothing more than a minor legislative body considering proposed legislation under a grant of power:

“* * * Administrative rule-making remains in essence, however, the enactment of legislation of general application prospective in nature. The object is not legislation ad hoc or after the fact, but rather the promulgation, through the basic statute and the implementing regulations taken as a unitary whole, of a code governing action and conduct in the particular field of regulation so those concerned may know in advance all the rules of the game, so to speak, and may act with reasonable assurance. * * *” Boller Beverages, Inc. v. Davis, 38 N. J. 138, 151-152 (1962).

When an administrative agency acts legislatively, it should conduct its proceedings as does a legislature. The strictures of judicial procedure are wholly unrelated and unadapted to the promulgation of rules and regulations. See generally, Euchs, “Procedure in Administrative RuleMaking,” 52 Harv. L. Rev. 259 (1938); Gellhorn and Byse, Administrative Law, Cases and Comments (4rt ed. 1960), p. 725 et seq.

The real question in this case is whether the challenged regulations are reasonably related to the State’s power to preserve and protect the health of its citizens. The fact that the regulations find their expression in an administrative code rather than in a legislative enactment is of no consequence. In either ease, facts sufficient to justify the regulation must he presumed. The burden is not upon the Commissioner to establish that the requisite facts exist; Rather, the burden is on petitioners to establish that they do not.

Pacific States Box and Basket Co. v. White, 296 U. S. 176, 56 S. Ct. 159, 80 L. Ed 138, 101 A. L. R. 853 (1935), directly supports these views. In that case an Oregon statute empowered the Chief of the Division of Plant Industry, after investigation and public hearing and subject to the approval of the Director of Agriculture, to promulgate “official standards” for containers of horticultural products, “in order to promote, protect, further and develop the horticulture interests” of the state. Pursuant to the legislative power so conferred, and after a public hearing, there was promulgated an order prescribing certain standard containers for raspberries and strawberries — the only type of containers lawful for use in Oregon after June 15, 1933. Plaintiff manufactured a container which did not conform to the regulations. Among other things, it asserted that the expense of installing requisite machinery to manufacture conforming containers made it impracticable for it to do so. Plaintiff claimed — much as petitioners do here with respect to bituminous coal •— that the effect of the regulations was such as to exclude its containers from use in Oregon. It characterized the order under attack as arbitrary and as not reasonably necessary for the accomplishment of any legitimate purpose of the state’s police power.

The Supreme Court rejected the argument. After holding that the order was not arbitrary or capricious, and that it did not conflict with any standard established by Congress, grant a monopoly to those manufacturing the standard containers or unduly burden interstate commerce, the court said:

“*• * * The order here in question deals with a subject clearly within the police power. See Turner v. Maryland, 107 TJ. S. 38 [2 S. Ct. 44, 27 L. Ed. 370]. When such legislative action ‘is called in question, if any state of facts reasonably can be conceived that would sustain it, there is a presumption of the existence of that state of facts, and one who assails the classification must carry the burden of showing by a resort to common knowledge or other matters which may be judicially noticed, or to other legitimate proof, that the action is arbitrary.’ Borden’s Farm Products Co., v. Baldwin, 293 U. S. 194, 209 [55 S. Ct. 187, 79 L. Ed. 281] * * (at page 185, 56 S. Ct., at page 163)

Accord, United States v. Rock Royal Co-Operative, Inc., 307 U. S. 533, 567-568, 59 S. Ct. 993, 83 L. Ed. 1446 (1939).

In answer to Pacific States’ contention that while a legislative enactment might be entitled to the benefit of the presumption that facts existed which supported its constitutionality, a regulation adopted by an administrative body was not. the court said:

“® * * The contention is without support in authority or reason, and rests upon misconception. Every exertion of the police power, either by the legislature or by an administrative body, is an exercise of delegated power. Where it is by a statute, the legislature has acted under power delegated to it through the Constitution. Where the regulation is by an order of the administrative body, that body acts under a delegation from the legislature. The question of law may, of course, always be raised whether the legislature had power to delegate the authority exercised. Compare Panama Refining Co. v. Ryan, 293 U. S. 388 [55 S. Ct. 241, 79 L. Ed. 446] and A. L. A. Schechter Poultry Corp. v. United States, 295 U. S. 495 [55 S. Ct. 837, 79 L. Ed. 1570], But where the regulation is within the scope of authority legally delegated, the presumption of the existence of facts justifying its specific exercise attaches alike to statutes, io municipal ordinances, and to orders of administrative bodies. Compare Aetna Insurance Co. v. Hyde, 275 U. S. 440, 447 [48 S. Ct. 174, 72 L. Ed. 357J. v * *” (296 U. S., at pages 185-186, 56 S, Ct., at page 163)

Accord, Commonwealth v. Sisson, 189 Mass. 247, 252, 75 N. E. 619, 621, 1 L. R. A., N. S. 752 (Sup. Jud. Ct. 1905).

The court went on to reject the argument, identical to petitioners’ here, that the order was void because the administrative agency made no findings of fact. The challenged regulation, it said, was adopted after notice and public hearing, as required by the statute. The statute did not require special findings, “doubtless because the regulation authorized was general legislation, not an administrative order in the nature of a judgment directed against an individual concern.” (at page 186, 56 8. Ct., at page 164).

In Jones v. District of Columbia, 116 U. 8. App. D. C. 301, 323 F. 2d 306 (D. C. Cir. 1963), property owners challenged the constitutionality of the fire provisions of the District of Columbia building code which required the owner of a building over 30' in height to equip it with suitable means of egress, fire extinguishers and such other appliances as the District Commissioner might deem necessary. The regulations were adopted after a public hearing had been held, as required by the enabling statute. As in the present case, the hearing was conducted in a legislative and not judicial manner. Like the present petitioners, plaintiffs in that case claimed that the fire regulations were invalid because the Commissioners had not held an adjudicative hearing and because the hearings as held failed to disclose facts warranting and supporting the regulations as promulgated. After observing that the public hearing was for the purpose of advising the public of the proposed regulations and affording its members an opportunity to show by evidence, or otherwise, that the regulations, or some of them, were not in the public interest, the court said:

“* * * There is no requirement that the facts developed at these quasi-legislative hearings support each and every provision of the regulations which result therefrom.
* * A legislative hearing relates to ‘the making of a rule for the future’ [citing Holmes, J., in Prentis v. Atlantic Coast Line Co., 211 U. S. 210, 226, 29 S. Ct. 67, 69, 53 L. Ed. 150 (1908)]. As distinguished from a judicial inquiry, it is a non-adversary proceeding which seeks to devise broad policy applicable to the public generally, or a substantial segment thereof, rather than to individual parties. In such hearings, ‘it is not necessary that the full panoply of judicial procedures be used.’ Hannah v. Larche, 363 U. S. 420, 442, 80 S. Ct. 1502, 1515, 4 L. Ed. 2d 1307 (1960). While fact finding may to some extent be involved in the process, the due process requirements of confrontation and cross-examination, the hallmarks of the judicial inquiry, are not necessarily present. Bather the quasilogislative inquiry tends to consult broad relevant data available from surveys, studies and published experience, free from the limitations of confrontation and cross-examination. Initially, the quasi-legislative inquiry depends on staff work. As here, the staff report often is presented to the interested public with the invitation to appear at a public hearing to oppose or praise. From a practical standpoint, with respect to some forms of quasi-legislative inquiries, such as one related to the proposed promulgation of a building code, this is the only feasible way to proceed.” (at pages 308-309)

The court further held that the constitutionality of the regulations was to be measured by the standard to be applied to a legislative enactment:

'‘The provisions of the Building Code, like municipal ordinances passed for the protection and the safety of the public, are themselves protected by a strong presumption of constitutionality. They cannot be declared unconstitutional unless their provisions are clearly arbitrary and unreasonable and have no rational relationship to the purpose intended. Cf. 5 McQuillin, Municipal Corporations (3rd Ed.) §§ 19.05-06. Measured by this test, the regulations under attack here are not only constitutional as promulgated, but also as applied.” (at page 310)

The procedure followed in the public hearings held under Department auspices here has long been recognized by our cases, which hold that the elements attendant upon judicial proceedings, including findings of fact based upon the record, is entirely inappropriate to administrative proceedings of a legislative nature. See, for example, State Board of Milk Control v. Newark Milk Co., 118 N. J. Eq. 504, 523 (E. & A. 1935); In re Port Murray Dairy Co., 6 N. J. Super. 285, 293-294 (App. Div. 1950); Welsh Farms, Inc. v. Bergsma, 16 N. J. Super. 295, 301 (App. Div. 1951); Garden State Farms v. Armstrong, 31 N. J. Super. 61, 77-78 (App. Div. 1954); Bayonne v. Division of Tax Appeals, 49 N. J. Super. 230, 240 (App. Div. 1958); Schinck v. Board of Education, etc., 60 N. J. Super. 448, 468-469 (App. Div. 1960); Wilson v. Long Branch, 27 N. J. 360, 389 (1958).

Findings of fact, with the necessary due process elements of examination and cross-examination, are required only when the administrative process is adjudicatory in nature or when the Legislature requires that such findings be made before the agency can act. Cf. In re Plainfield-Union Water Co., above, 11 N. J. 382, 392, 395 (1953); Abbotts Dairies v. Armstrong, 14 N. J. 319, 331-334 (1954). N. J. S. A. 26:2C7—8 does not require the making of findings of fact in support of any code, rule or regulation promulgated under the authority therein delegated. The public has a right to be heard, but the statute does not grant those who may be affected by the administrative action the right to argue or cross-examine.

The Legislature contemplated the very procedure followed. The Commissioner’s promulgation of chapter X-A was within the authority delegated by the Legislature; it was entirely correct to conduct a legislative-type hearing, and due process was not denied petitioners.

We turn to the question of whether there was a rational basis for the action taken. Were the regulations reasonably related to the State’s power to preserve and protect the health of its citizens? Petitioners contend there is no realistic standard for the minimum sulphur content in bituminous coal fixed by chapter X-A. Additionally they claim, as hereinbefore noted, that there is not presently available any material quantity of bituminous coal such as would meet the 1% and 0.2% requirements. Further, they emphasize the severe impact that chapter X-A would have upon the railroad and coal industries and upon labor. They also insist that the May 6, 1968 and October 1, 1971 dates fixed by the chapter are not prudent.

Petitioners concede, as they must, that the administrative action taken must be accorded a presumption of reasonableness and that they have the burden of satisfying the court that the regulations are unreasonable. As was said in Pacific States, above, quoting from Borden’s Farm Products Co., Inc. v. Baldwin, 293 U. S. 194, 209, 55 S. Ct. 187, 79 L. Ed. 281 (1934), when legislative action taken by an administrative agency is called into question, “if any state of facts reasonably can be conceived that would sustain it, there is a presumption of the existence of that state of facts * * Those who oppose it “must carry the burden of showing by a resort to common knowledge or other matters wdrich may be judicially noticed, or to other legitimate proof, that the action is arbitrary.”

It may be assumed — in fact, the Department’s own research and available authoritative studies show — that the Department had knowledge of information in the public domain. (The material attached to the proposed text of the regulations, to which die notice of public hearing called attention, makes this manifest.) The combustion of bituminous coal admittedly results in the emission of sulphur dioxide into the ambient air. The Department was aware of New Jersey’s great population density, particularly in the northern, central and southwestern parts of the State, and the high concentration of industry, especially in the northern area. It was also aware of the fact that air pollution had reached dangerously high levels on several recent occasions in this State and its immediate neighboring areas to the north and west, and that in some instances people had succumbed, probably as a result of such conditions. Considering all this, there was justification for the Department taking prompt and drastic steps to reduce air pollution and in directing any action it took toward those elements — here, fuel oil and coal — whose combustion is a major source of such pollution. In Owens-Coming, above, we took judicial notice of the menace to the public health of air pollution. Public health is more than ever a paramount concern of government. Abelson’s, Inc. v. N. J. State Board of Optometrists, 5 N. J. 412, 420 (1950).

Applying the test set out in the Pacific Slates case as to whether there exists a state of facts sufficient to justify the exercise of the State’s police power, we are entirely satisfied from the record that sulphur dioxide emissions into the atmosphere are, or tend to be, in the words of N. J. 8. A. 26:2C-2, “injurious to human health or welfare, animal or plant life or property, or would unreasonably interfere with the enjoyment of life or property throughout the State and in such territories of the State as shall be affected thereby * *

What our Supreme Court said in Abels on’s regarding the statute there under attack, is applicable to the air pollution regulations challenged here:

“* * * ^ measures invoked tend to serve a legitimate interest of society, the wisdom of the course taken is not ordinarily a justiciable question. When the subject lies within the police power of the State, ‘debatable questions as to reasonableness are not for the courts but for the legislature, which is entitled to form its own judgment.’ * *■ * The range of the State’s discretion in promoting the security and well being of the public ‘accords with the subject of its exercise.’ * * * Where the end is one to which legislative power may properly be directed, it is enough ‘if it can be seen that in any degree, or under any reasonably conceivable circumstances, there is an actual relation between the means and the end. * * (5 N. J., at page 420; citations omitted)

The presumption of the existence of facts sufficient to sustain the departmental action here taken stands until rebutted. We are satisfied from a careful reading of the entire record that petitioners have failed to rebut the presumption of validity which attends chapter X-A.

IY

Although what we have said disposes of the question of whether chapter X-A represents a proper exercise of the State’s police power, some brief reference to the evidence adduced is not inappropriate. In March 1967 the Public Health Service of the H. S. Department of Health, Education and Welfare issued its “Air Quality Criteria for Sulphur Dioxide.” This document was frequently referred to at the departmental hearings. It is listed in the bibliography accompanying the notice of public hearing, and was inserted in the record by the hearer. The Public Health Service found that the use of sulphur-containing fossil fuels, snch as coal and oil, for power and heat, results in sulphur oxides, their acids and acid salts, being among the most commonly occurring of the atmospheric pollutants in this country. Above certain levels, such pollution unquestionably has adverse effects on the respiratory system and general health, rednces visual range, prolongs fogs, damages materials and injures vegetation.

The chairman of the Special Committee of Air Pollution Control of the New Jersey Medical Society, Dr. Itoslyn Barbash, supported the Department’s proposals for limiting sulphur dioxide caused hy the combustion of fuel and strongly urged the adoption of the time schedules contained in the regulations. Her testimony is especially significant from a medical point of view:

“Sulfur oxides are irritants to the tender membranes of the eyes, nasal passages, sinuses, trachea, bronchial tree and air sacs of the lungs. In addition to the direct irritating effect of sulfur dioxide, its conversion to sulfur trioxide and sulfuric acid mist puts it inlo an aerosol form which permits deep penetration into the lung and absorption into the blood stream. Any person can see the corrosive effects of the sulfur oxides by examining our outdoor sculptures, stone facing of buildings, the famous obelisk in Central Park, When you see the dissolution of the stone carvings you get some idea of what goes on within the delicate structures of the body. Confronted with the forced exposure to the noxious sulphur oxides, man fights back physiologically. His eyes tear in an attempt to wash away this foreign element, the hairlike sweepers in his bronchial apparatus (the cilia) wave valiantly in an effort to sweep out the intruding gas, his glands pour forth mucus to protect his tissues, he coughs to rid himself of the intruder. The irritations of this defensive battle cause swelling of the lining of the bronchial tree, spasm of the irritated bronchial muscles, and with frequent repetition of such onslaughts, permanent scarring of his lungs. He must work harder for his birthright—the right to breathe freely. As he presses harder to get air in and out of his lungs, his poor heart must labor and strain 1o provide additional blood for this extra work load. Such tissue changes make man more vulnerable and susceptible to infection and to tumor formation.
I pass over the other effects: assailment of senses of smell, visual acuity, blurred by the irritations and tearing, the aesthetic depression from the many phases of land and commodity deterioration from pollution. All such depressing factors have a detrimental action on mental well-being and consequently on the physical state. * * *”

Susceptibility to the adverse effects of sulphur oxides, she said, is not limited to sick people only. She went on to describe important segments of the population who are neither old nor sick, but are sickened by air pollution. Dr. Barbash’s only criticism of the regulations was that “if anything, they are too liberal.”

Immediate action to regulate pollution from sulphur dioxide emissions was urged by legislators, representatives of citizens groups, and individual citizens who spoke at the hearings. Additionally, a letter from S. Smith Griswold, Associate Director for Abatement and Control Programs, National Center for Air Pollution Control, U. S. Public Health Service, was read into the record. He commended the proposed regulations as an effective response to air pollution from sulphur dioxide, but was of the opinion that they were not sufficiently restrictive and proposed tighter regulation.

As to the reasonableness of the regulatory scheme, it should be pointed out that, contrary to the impression one may get from some of those who opposed the regulations, chapter X-A does not entirely forbid the use of bituminous coal in New Jersey. The electric utilities, which burn 87% of such coal used in this State, are granted an exception. As mentioned above, they may burn bituminous coal with a sulphur content of 1.5% by weight if they can establish to the satisfaction of the Department that a lower sulphur content coal is unsuitable for their boilers. In this connection, it is appropriate to note that, in contrast to statements made at the hearings, there is presently available substantial quantities of bituminous coal which would meet the 1% requirement of chapter X-A. In their report on “Coal Resources of West Virginia and Their Importance to Our State’s Economy,” presented before the West Virginia Coal Mining Institute on April 21, 1961, Paul H. Price, Director and State Geologist of West Virginia, and Ira S. Latimer, Jr., Geologist and head of the Geologic and Data Section, stated that West Virginia alone has 41 billion tons of coal haying a sulphur content of 1% by weight or less. In addition, there are 35 billion tons with a sulphur content of 1.1-2.0%.

Discussing methods useable in the control of sulphur oxides emitted by electric power generating stations, James B. Garvey, president and research director of Bituminous Coal Research, Inc., testified at the October 6, 1961 hearing that a process permitting of high sulphur coal being burned without giving off any appreciable amounts of sulphur dioxide would be developed and in use within three or four years — that is, by October 1, 1911, the date when the 0.2% restrictive regulation would go into effect. It follows from this expert opinion that utilities able to show the Department that they could not meet the 1% limit could, before that date, burn 1.5% by weight sulphur coal, and smaller units would burn 1%. With sufficient resources of low sulphur coal apparently available until October 1, 1911, chapter X-A would serve as a spur to the industry to develop the process of which Garvey spoke. Such was the testimony of C. Howard Hardesty, executive vice-president of the Consolidation Coal Company. Although he considered the proposed regulations unrealistic, he said, "I would be less than honest if I didn’t admit [that] industry, from time to time, needs a whip on its back. Industry will meet the demands of society if you have a target to shoot for.”

Chapter X-A is, of course, only part of the Department’s integrated plan to abate all sources of air pollution. The full scope of that plan is revealed by an examination of the Now Jersey Air Pollution Control Code, whose substantive provisions regulate open burning (chapter II), black smoke (chapter IV), fiy ash (chapter V), air pollution as statutorily defined in N. J. 8. A. 26:2(7-2 (chapter VI, and see Department of Health v. Owens-Coming Fiberglas Corp., above), particulate matter (chapter VII), sulphur oxides from industrial processes (chapter VIII) and incinerator operation (chapter IX). The Department is presently moving to control automobile exhaust emissions.

V

Petitioners argue that the adoption of chapter X-A exceeded statutory authority. They readily admit that N. J. S. A. 26 :2C-8 evidences a broad and pervasive grant of power to the Department with respect to promulgating codes, rules and regulations preventing, controlling and prohibiting air pollution throughout the State. However, they claim that N. J. 8. A. 26 :2C-8 must be read with N. J. 8. A. 26:2C-3.2, establishing a Clean Air Council in the State Department of Health, and N. J. 8. A. 26:20-3.3, setting out the Council’s powers and duties. The legislative scheme, they say, is that the Department and the Council act coordinately in dealing with the problems of air pollution control. Petitioner would have us hold that the Council is intended to act as a limiting force upon the Department’s power to promulgate rules and regulations dealing with air pollution.

N. J. 8. A. 26 :2(7-3.2 calls for a clean Air Council consisting of 17 members: three from the State Government — the Commissioner of Labor and Industry, the Commissioner of Community Affairs and the Secretary of Agriculture, or their respective designees — to serve ex officio j six citizens of New Jersey representing the general public, at least one of whom shall be a medical doctor licensed to practice in this State, and eight members to be named by the Governor from organizations specifically listed in the act. The appointments so called for had not been made at the time chapter X-A was promulgated. Petitioners therefore contend that the Department, in adopting chapter X-A, proceeded without the benefit of the knowledge and understanding of the Council members, and its action is therefore invalid.

The argument is specious. Petitioners concede that the statute does not condition the authority of the Department to adopt rules and regulations upon the formation, advice and action of the Clean Air Council. Xothing in N. J. 8. A. 26 :2(7-3.3, dealing with the powers of the Clean Air Council, expressly or as much as impliedly gives it the right to limit departmental action. Thus, even had the Council been in existence at the time of the hearings on and the adoption of chapter X-A, the Department would have been under no obligation to consult and advise with it. Although N. J. 8. A. 26 :20-3.3 (c) permits the Council — were there one — to submit to the Commissioner of Health recommendations it deemed necessary for the proper conduct and improvement of the air pollution control program, such recommendations would in no way have been binding upon him.

In this connection, we note that L. 1967, c. 106, amending the Air Pollution Control Act (1954), abolished the Air Pollution Control Commission which had been created under the 1954 act (N■ J. 8. A. 26:2C-3 to 8) and which had the power to promulgate rules and regulations. It provided for a Clean Air Council in place of the Commission, but the latter’s rule-making power was transferred to the Department of Health itself under N. J. 8. A. 26 :2C-8. One must draw the conclusion that the Legislature, faced by the increasingly serious and indeed emergent problem of air pollution, was not satisfied with the progress made by the former Commission.

Moreover, the various points of view that might have been reflected in the Clean Air Council, had it been set up, were more than adequately represented by those who spoke at the 1967 hearings as representatives of government, industry and the citizenry of this State.

VI

Finally, petitioners contend that chapter X-A constitutes an unreasonable burden upon interstate commerce, and thus violates the Commerce Clause of the United States Constitution, Art. I, Sec. 8, clause 3.

Not all state regulations affecting commerce are invalid. The eases which petitioners cite in support of their argument all illustrate direct regulation of commerce itself, or the instruments thereof — e. g., Bibb v. Navajo Freight Lines, 359 U. S. 520, 79 S. Ct. 962, 3 L. Ed. 2d 1003 (1957); Southern Pacific Co. v. Arizona, 325 U. S. 761, 65 S. Ct. 1515, 89 L. Ed. 1915 (1944). None is concerned with incidental effects upon commerce which are permissible, as in Head v. New Mexico Board of Examiners in Optometry, 374 U. S. 424, 83 S. Ct. 1759, 10 L. Ed. 2d 983 (1963), or Huron Portland Cement Co. v. Detroit, 362 U. S. 440, 80 S. Ct. 813, 4 L. Ed. 2d 852 (1960).

In Huron the City of Detroit had passed a smoke abatement code that included criminal sanctions. The code applied to ships operating in interstate commerce but docked in the Port of Detroit. The court held that in matters of air pollution the states may in many areas of commerce act concurrently with the Pederal Government. The touchstone is whether the state or local regulation is even-handed; if so, and if it serves a legitimate local public interest and has not been preempted by Congress, it has to be left standing unless some undue burden on commerce can be shown.

“In determining whether the state has imposed an undue burden on interstate commerce, it must be borne in mind that the Constitution when ‘conferring upon Congress the regulation of commerce, * * * never intended to cut the States off from legislating on all subjects relating to health, life, and safety of their citizens, though the legislation might indirectly affect the commerce of the country. Legislation, in a great variety of ways, may affect commerce and persons engaged in it without constituting a regulation of it, within the meaning of the Constitution.’ Sherlock v. Alling, 93 U. S. 99, 103 [23 L. Ed. 819] [1876] * * (at pages 443-444, 80 S. Ct., at page 816)

The court went on to hold that the local interest in the abatement of air pollution and its attendant dangers to public health and welfare preponderate over the interest arising under the Commerce Clause, and that federal ship inspection provisions did not preempt the field.

Congress recognized as long ago as 1955 that air pollution is a matter for state regulation. The Senate Committee considering the matter reported that

“The committee recognizes that it is the primary responsibility of State and local governments to prevent air pollution. The bill does not propose any exercise of police power by the Federal Government and no provision in it invades the sovereignty of States, counties or cities.” (Sen. Rep. No. 389, 84th Gong., 1st Sess.)

This view was reaffirmed by the Air Pollution Control Law, 42 U. 8. C., § 1857 et seq., as amended by the Air Quality Act of 1967, P. L. 90-148. Section 101(a)(3) states that “the prevention and control of air pollution at its source is the primary responsibility of states and local government * * Federal action to abate air pollution will be taken only when states have failed to act:

“Consistent with the policy declaration of this title, municipal, State, and interstate action to abate air pollution shall be encouraged and shall not bo displaced by Federal enforcement action except as otherwise provided by or pursuant to a court order under subsection (c), (h) or (k).” (Section 108(b))

This act, which has been ignored or overlooked by petitioners, makes it clear that the states have full responsibility for air pollution abatement. Of necessity, regulation of the kind here involved is impossible without having some indirect effect on interstate commerce, as in Huron. (We note, incidentally, that chapter X-A affects only the sale or use of bituminous coal within the borders of New Jersey and carefully avoids dealing with such sale or use beyond our borders.) The Commissioner, in promulgating the chapter, acted strictly within the letter and spirit of the federal legislation, so that the validity of chapter X-A under the Commerce Clause is unassailable. Panhandle Eastern Pipe Line Co. v. Public Service Comm’n of Indiana, 332 U. S. 507, 520-521, 68 S. Ct. 190, 92 L. Ed. 128 (1947).

Accordingly, we sustain the validity of chapter X-A of the New Jersey Air Pollution Control Code. The stay heretofore granted is dissolved. No costs.


source: Caselaw Access Project

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

license: Public Domain

text:
    MAYOR CHARLES T. MC CUE AND ROBERT NIVISON, PLAINTIFFS-RESPONDENTS, v. THOMAS A. ANTISELL, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 10, 1969
    Decided March 14, 1969.

      Before Judges Cofford, Kilkbffy and Leofarb.

      Mr. Stanley 7acker argued the cause for appellant.

      Mr. Herbert B. Bierman argued the cause for respondents.
   The opinion of the court was delivered by

Cofforb, S. J. A. D.

The question presented is whether defendant, a Class IV (N. J. S. A. 40 :55-1.4) member of the Marlboro Planning Board, lost that office automatically on January 1, 1969, the statutory date for commencement of the term of office of township councilman (to which office defendant had been elected in November 1968), notwithstanding defendant’s refusal to be sworn into the office of councilman on or after January 1, 1969.

The cited statute provides that 'Class IV members of a planning board (chosen from citizens other than municipal officials) “shall hold no other municipal office” (with exceptions not here material). The election in which defendant was chosen councilman in 1968 resulted from a vacancy in that office created on January 1, 1968 by the resignation of a previous incumbent of the office. One Youngman had thereupon been appointed to fill the vacancy “temporarily * * * to serve until the qualification of” the person elected to fill the unexpired term at the next general election, as required by N. J. 8. A. 40:69A—73.

On January 1, 1969 defendant delivered to the council president a letter explaining that he would not be present to assume the office of councilman that day as he had not yet decided whether to take the office as opposed to remaining on the planning board, but that he would communicate a decision as soon as possible. A week or so later he announced a decision to forego the councilmanic office and to stay on the planning board. In the meantime, on January 1 plaintiff, Mayor McCue, appointed plaintiff Nivison to the planning board to fill the “vacancy” assumed to have arisen from the commencement of defendant’s term of office and from his letter, received earlier that day, declining to assume the councilmanic office for the time being.

Plaintiffs contended in the Law Division, and do so here, that since N. J. 8. A. 40:69A-71 declares that elected members of the council “shall serve” their terms “beginning on the first day of January, next following their election,” defendant necessarily “held” the office automatically on and after 12 noon of January 1, when the council reorganized, regardless of absence of assumption of and qualification for the office by him, and that such holding of office ipso facto voided his tenure of office as a Class IY planning board member by reason of the provisions of N. J. 8. A. 40:55—1.4 mentioned above. The Law Division agreed, and held defendant had vacated his office as planning board member. We disagree.

First, we hold that defendant never “held” the office of councilman to which he was elected because he never assumed the office by qualifying for it. This conclusion results from two basic considerations: (a) the general and better rule is that one elected to an office does not become an incumbent of it until he assumes it by qualilying therefor — which in this case called for being sworn. N. J. 8. A. 41 :l-3; 40A :5—33; 42 Am. Jur., Public Officers, § 122, p. 968; State ex rel. Rhinesmith v. Goodfellow, 111 N. J. L. 604, 606 (E. & A. 1933); Hayter v. Benner, 67 N. J. L. 359, 360 (Sup. Ct. 1902); and see Kohler v. Cobb, 31 N. J. 369, 375 (1960); (b) by virtue of N. J. S. A. 40:69A-73, mentioned above, Youngman was and continued as the incumbent of the office of councilman until defendant should qualify therefor. Defendant not having qualified on January 1 or thereafter, Youngman continued in legal contemplation to hold the office on and after that day. Since two persons cannot hold the same office simultaneously, Youngman’s statutory prior incumbency precluded the inception of defendant’s. For either stated reason, defendant never held the office of councilman on January 1, 1969 or thereafter.

Secondly, even if one could conclude for a theoretical “holding” of the office of councilman by defendant on January 1, in the sense argued for by plaintiffs, this would not justify the additional conclusion of automatic vacation of the incompatible office of planning board member. Only where the dual office holder can be said to have accepted both incompatible offices will he be held to forfeit one of them. See DeFeo v. Smith, 17 N. J. 183, 190 (1955). In appropriate circumstances, moreover, he will be afforded an opportunity to choose which office he will accept and which reject. McDonough v. Roach, 35 N. J. 153, 159-160 (1961).

In the present case, of course, defendant never accepted the office of councilman. He could therefore not be deemed ever to have forfeited that of planning board member. Defendant is still a member of the planning board. Nivison’s designation thereto was invalid.

Beversed.

       We need not say whether or when Youngman’s tenure terminated.


author: Lora, J. S. C.

text:
    JACK MC MINN AND ANNA M. MC MINN, HIS WIFE, PLAINTIFFS, v. JAMES P. DAMURJIAN AND MARY A. DAMURJIAN, HIS WIFE, DEFENDANTS, v. CHICAGO TITLE INSURANCE COMPANY, HOME TITLE DIVISION, AND CHELSEA TITLE & GUARANTY COMPANY, THIRD-PARTY DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided March 13, 1969.

      Mr. Leonard Rothman, attorney for plaintiffs.

      Mr. Alfred D. Fierro, attorney for defendants Damurjian.

      Mr. Bernard Dorfman, attorney for third-party defendant Chicago Title Insurance Company, Home Title Division {Mr. Rlliol W. Urdang appearing).

      Mr. John R. Weigel, attorney for third-party defendant Chelsea Title & Guaranty Company.
   Lora, J. S. C.

This action was originally instituted by plaintiffs Jack and Anna McMinn for injunctive relief against alleged encroachments and continuing trespass by their neighbors James P. and Mary A. Damurjian who had removed a portion of plaintiffs’ concrete rear entrance platform and who were breaking up plaintiffs’ walk, claiming it encroached on their property. The title companies were brought into the case as third-party defendants.

After pretrial conference all parties agreed to be bound by an independent survey which, when completed, disclosed plaintiffs and not the Damurjians were, in fact, the encroachers. Consequently, there remained for disposition by this court only plaintiffs’ damage claims under the title policy which had issued to them by the Chelsea Title & Guaranty Company.

Defendant title company during trial consented to a judgment for the reasonable cost of replacing the walk and platform within the newly established property lines, which costs of $200 and $350, respectively, were testified to at the trial and agreed to as being reasonable and necessary.

Plaintiffs, however, seek additional damages by way of counsel fees and expenses incurred in connection with this litigation, and for diminution of property and market value due to reduction in the area of the side yard concomitant upon the binding independent survey. Defendant title company contends there is no liability for these additional claims since plaintiffs instituted a baseless suit against the Damurjians and the policy requires only that the insurer defend, not institute, an action; it is defendant’s further contention that the independent survey has confirmed that plaintiffs do have title to a 50-foot lot and hence there has been no actual loss of total area, albeit the side yard has been narrowed. Furthermore, defendant contends the policy says nothing about reasonable access and egress, and the title policy survey extends only to structures as set forth therein; that the survey referred to in the policy does not show a side entrance into plaintiffs’ house and the location of the house on the survey, and in fact is within the plaintiffs’ property lines.

There are three surveys here involved, the first of which was shown to plaintiffs at the closing of title by the closing attorney. That survey was thereafter superseded by a second survey, referred to in the rider to the policy and which shows a side yard of 3.56 feet at the front of plaintiffs’ house and 3.57 feet at the rear thereof, while the independent or binding third survey shows the side yard to be 2.59 feet at the front of the house and 2.55 feet at the rear. It follows the side yard is actually 1.02 feet narrower than shown on the second survey.

The Me Minns had wanted to erect a fence along the property line to protect an infant daughter from the potential danger of a 12-ineh drop between their property and that of the Damurjians.

However, plaintiffs’ side entrance door opens up on steps leading to the cellar and steps running up to the second floor. The side door was, before this suit and binding determination of the property line, used by plaintiffs to take out and bring in items such as a baby carriage and lawn mower which are stored in the cellar, there being no garage. The 30-ineh door clears the new property line by only 1 inch, the total side yard now being only 2.55 feet, and hence such items can no longer be taken in or out of the door without trespassing on the neighbors’ property. Then, too, if a fence were erected, the door which swings outward and which cannot open inward because of the inside steps could not be opened all the way.

In any event, it is clear that any access or egress is considerably more difficult due to the loss of the one foot of side yard. True, the survey which plaintiffs saw for the first time at the closing of title in January, 1967 showed a side yard of only 2.80 feet at the front of the house and 3.00 feet at the rear, but it did indicate plaintiffs’ walk was entirely within their property line and the rear platform was only 0.33 feet over. It is not clear why the title company did adopt the second survey, but they did do so by the aforesaid rider to the policy.

I give credence to the uncontradicted testimony of the expert witness Alexander Me Mahon, a carpenter-contractor produced by plaintiffs, and find that the problem of ingress and egress can be resolved by replacing the present side door with a new one on the south side of the house. This alteration would also require construction of a drain and eight to ten feet of walk with an apron to link up with the rear walk, all of which would and could be done at a cost of $410. (Plaintiffs produced no evidence as to loss in market value, but if the defendnat title company is liable, it is this court’s opinion that the reasonable cost of the remedy is an acceptable, alternative method of computing damages.)

Under the terms of the policy Chelsea Title and Guaranty Company agreed to “indemnify, keep harmless and guarantee * * * from all loss or damage not exceeding the arnounl of insurance * * * by reason of defects in the title of the Party Guaranteed to the estate, mortgage, or interest described in Schedule A * * * or because of liens or incumbrances * * *; saving the estates, defects, objections, liens and incumbrances except in Schedule B * * *”.

Schedule B of the title insurance policy dated January 18, 1967 sets forth a list of exceptions from coverage. The survey of November 22, 1966 was incorporated into Schedule B as Item 10, which was amended on October 31, 1967 to substitute the revised survey of October 27, 1967 for the earlier one. Said rider reads:

“The above policy is hereby amended as follows: Item 10 of Schedule B is to read as follows: Subject to facts shown on survey * * * which discloses: encroachment of fence along northwesterly rear portion of subject premises.”

The revised survey thus became an integral part of the contract. Broadway Realty Co. v. Lawyers’ Title Ins. & Trust Co., 171 App. Div. 792, 157 N. Y. S. 1088 (App. Div. 1916). Said revised survey shows no encroachments by plaintiffs’ concrete platform and side walk on the Damurjians’ property, and shows the west side yard is 3.55 feet wide at the rear of plaintiffs’ dwelling and 3.56 feet wide at the front. Defendant contends the side yard discrepancy is not covered since it does not constitute a title defect.

Eesearch of both counsel and the court has not revealed any New Jersey cases dealing with the issues here involved.

In Pennsylvania Laundry Co. v. Land Title and Trust Co., 74 Pa. Super. Ct. 329 (1920) the policy read:

“Saving such estates, defects, objections, liens and encumbrances as may be set forth in Schedule B, or excepted by the conditions of this policy hereto annexed and hereby incorporated in this contract.”

Schedule B set forth the defects and encumbrances which were excepted out of the covenants of the policy and against which the defendant did not undertake to indemnify the assured and went on to say:

“Accuracy of descriptions and dimensions and any other objections which an official survey would disclose * * * Dot insured partly fenced and fence on the east off the line and encroaches on Dot insured.”

A year or so later plaintiff laundry company secured a survey and began construction in accordance with such survey. Thereupon the owners of property adjoining the western line of the lot filed suit claiming they had acquired by adverse user the right to use as a passageway a strip of ground 2' 6" wide along the westerly portion of plaintiff’s lot. The title company declined to defend on the ground that the claim fell within the exception of defects which an official survey would disclose.

The court held that it very clearly appeared by the covenants of the policy that the physical conditions existing upon the ground were within the contemplation of the parties, for it was plainly stipulated that one of the encumbrances for which defendant would not be liable was any that might arise out of the fact that the fence to the east was off the line and encroached on the lot insured. The Pennsylvania court went on to say:

“The plaintiff was the owner of this property at the time the policy issued, the defendant covenanted for a valuable consideration to indemnify it against defects in title or encumbrances which might impair its value and the deprivation of the right to use a part of the property for the purposes which the plaintiff contemplated was a loss for which the plaintiff is entitled to be indemnified: Foehrenback v. German-American Title & Trust Co., 217 Pa. 331. The appellant contends, however, that even if the plaintiff is entitled to recover it can only recover the value of the strip of ground taken and the cost of defending the equity proceeding: Anderson’s Admrs. v. Washabaugh, 43 Pa. 115; Robinson v. Bakewell, 25 Pa. 424. The rule undoubtedly is that the plaintiff in such a case is entitled to be reimbursed for the loss sustained: German-American Title & Trust Co. v. Citizens’ Trust & Surety Co., 190 Pa. 247. When a property consists of farming land one acre of which is as valuable as another, then if a corner of the farm be lost, the measure of damages is the value of the part lost. When, however, we come to consider the case of city lots which are to be used for building purposes, it is very clear that the mere value of the strip of ground taken is not the proper measure of damages. A strip of ground three feet wide taken out of the middle of a twenty-foot building lot would diminish the value of the parts thus separated. The alley in question in the present case not only diminished the width of the front on Wallace Street, but rendered it necessary to make an offset in the west wall of the building, thus adding to the cost of construction. Anything which renders it necessary to spend more money in using a lot impairs the value of the land. All the specifications are overruled.”

Cf. Kuhlman v. Title Ins. Co. of Minnesota, 177 F. Supp. 925 (W. D. Mo. 1959) for a fact pattern most similar to that of the case at bar, but where the defect was effectively excepted from insurance coverage. The title policy there provided that it did not insure against “facts which would be disclosed by an accurate survey of the premises herein described.” Some time after the purchase of the tract plaintiffs erected an industrial building thereon with a GO-foot clearance between its loading dock and what they thought to be their east boundary line, to permit the largest of trucks to load and unload at the loading dock.

Prior to erecting the building plaintiffs had caused a survey of the land to be made which located their oast and west boundary lines. It was with this survey in mind that they designed and located the building.

Thereafter the purchaser of the land adjoining plaintiffs’ east boundary line caused a survey to be made which revealed the true boundary was approximately 3.25 feet west of where plaintiffs had supposed it to be and which had been designated by their survey. Plaintiffs’ neighbor erected a fence which left only 57 feet clearance within which trucks could approach the loading dock. All parties agreed that the neighboring owner’s survey was the correct one.

The Kulilmans contended their property had been damaged because the 57-foot area was not sufficient to enable trucks to load and unload properly at their dock, and they sued to recover the face value of their title policy issued by defendant insurer against defects of title to the premises. However, the court held defendant was under no obligation to cause a survey to be made prior to the issuance of the policy; that it insured title only to such property as plaintiffs actually acquired, and that the exclusionary clause was binding upon them.

Blacks Law Dictionary (4th ed.), p. 506, defines a defect as “|t]he want or absence of something necessary for completeness or perfection; a lack or absence of something essential to completeness; a deficiency in something essential to the proper use for the purpose for which a thing is to be used.” (Emphasis added)

The title company’s reliance on the fact that the plaintiffs have actually lost no land area (retaining their 50-foot frontage) is unpersuasive in light of the nature of plaintiffs’ claim. The damage claimed is the restricted if not precluded use of the entrance facing the westerly side yard. It is the westerly strip of land which is in dispute and to a portion of which plaintiffs have been shown to lack title. The fact that plaintiffs may have an additional one-foot strip along their easterly property line can in no way serve to alleviate the damage complained of. The title defect complained of is as to the particular one-foot strip on the westerly property line.

The court finds that the restricted use of plaintiffs’ side entrance constitutes a title defect, and is accordingly covered by the policy. Since this defect did not appear on the revised “Location Survey” of October 27, 1967, it was not excepted from coverage by the terms of the policy and more particularly Schedule B thereof.

When defendants Damurjian began to destroy the Mc-Minns’ side walk, plaintiffs requested their title company to take action against the Damurjians. However, the company declined to act, whereupon plaintiffs instituted this action for injunctive relief against the Damurjians. Plaintiffs now claim damages for counsel fees and costs incurred in prosecuting this action which they allege should have been undertaken by defendant Chelsea pursuant to the insurance contract. The policy states:

“Chelsea Title and Guaranty Company will at its own cost defend the party guaranteed in all actions of ejectment or other proceedings founded upon a claim of title or incumbrance prior in date to this Guaranty, and hereby guaranteed against. No claim shall arise under this Guaranty unless (1) the party guaranteed has been actually and lawfully evicted from the premises covered by this Guaranty or from some part or undivided share or interest therein under an adverse title guaranteed against or (2) there has been a final judgment or decree against the party guaranteed upon or because of a defect, lien or incumbrance not excepted in this Guaranty ; * *

Defendant title company argues that plaintiffs’ claim cannot he sustained because the policy of title insurance is one of indemnity and the terms of the contract do not obligate it to undertake the prosecution of an action but only to defend the insured, and because the action against the Damurjians was baseless in fact.

In Lawyers Title Ins. Corp. v. McKee, 354 S. W. 2d 401 (Tex. Civ. App. 1962), the insured brought a trespass action against his neighbor, who claimed two acres of land which appeared by survey to belong to the insured. Prior to institution of the trespass action, plaintiff insured called upon his title company to clear his title, but the company did nothing. Appellant insurance company also declined the insured’s request to defend title in his trespass action, which finally was adjudicated against plaintiff and resulted in divesting Mm of his claim of title to the two acres involved. The insured thereafter brought suit against his insurer to recover the sum to which he was entitled, plus expenses and counsel fees incurred in the trespass action.

The Texas court framed the issue as follows:

“Third Question: Is the Title Company obliged, in an instance where its insured files a trespass to try title suit to recover the title to real estate which is covered by its policy of title insurance, to furnish at its own cost the expense necessarily incident to the prosecution of the suit as ‘a defense of the assured on a claim against or right to said land, or a part thereof, adverse to the title guaranteed’? We hold that it is ordinarily so obliged, and was in the instant ease.”

The policy in Lawyers Title stated that the company: [s] hall, at its own cost, defend said assured in every suit or proceeding on any claim against or right to said land, or any part thereof, adverse to the title hereby guaranteed * *

Judgment for the insured was affirmed on the ground that the import of the guaranty clause was for the defense of the title which was insured, and not confined solely to the insureds being a defendant in a legal action; that “his right to title was cast in issue the moment the defendants in said suit filed their answer and plead Mot guilty.’ ” (354 S. W. 2d, at p. 407.)

It is my opinion the reasoning of the Texas court is sound — the import of the indemnification extends to the insured’s title. Accordingly, it would be unreasonable to construe the indemnity as not covering the precise situation which exists here where the Damurjians employed self-help rather than legal process in destroying plaintiffs’ property and claiming title thereto. Such action by the Damurjians effectively put plaintiffs’ title in dispute. At this point it was incumbent upon the McMinns’ title company to defend that title, but it refused to do so. It is immaterial that the McMinns’ claim against the Damurjians proved to be baseless; the fact remains that defendant did nothing to protect plaintiffs’ title when it was put in dispute.

An award of damages against the title company for reasonable counsel fees incurred by plaintiffs in the proceedings against the Damurjians is predicated on its contractual obligation to defend title and a breach of its indemnity contract, and is therefore not interdicted by B. B. 4:55-7. Verhagen v. Platt, 1 N. J. 85, 91-92 (1948); cf. Jersey City Sewerage Authority v. Housing Authority of Jersey City, 70 N. J. Super. 576, 584 (Law Div. 1961).

Plaintiffs proceeded against their title company by way of third-party complaint (perhaps, more properly, an amended complaint). However, counsel fees incurred in connection with that third-party action and that phase of the total litigation, are distinguishable. Such counsel fees do not derive from the aforesaid contractual obligation; hence they are governed by B. B. 4:55-7 and may not be allowed. See Lawyers Title, supra, 354 S. W. 2d, at p. 407.

The only testimony on counsel fees adduced at the trial concerned the retainer agreement between plaintiffs and their attorney Leonard Rothman which provided for payment “on a time basis for conferences, telecalls, appearances in court, and preparing and processing complaint and order to show cause against the Damurjians.” The agreement further recited that plaintiffs had paid the sum of $250 as a retainer and part payment towards his legal services.

Since there was no proof as to the extent of the legal services rendered nor the reasonable value thereof, despite said issues being raised in the pretrial order, the court is constrained to limit such recovery to the $250 paid at the time of the retainer, which sum is a bare minimirm fee under any conceivable circumstances. See Bergen Builders, Inc. v. Horizon Developers, Inc., 44 N. J. 435, 438 (1965), Cohen v. Fair Lawm Dairies, Inc., 44 N. J. 450, 452 (1965).


author: Makiano, J. S. C.

text:
    EDWARD WOJCIECHOWSKI, PLAINTIFF, v. HARDWARE MUTUAL CASUALTY COMPANY, THOMAS SCHIAVONE, GERALD DAVIS AND NELLIE DAVIS, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided March 13, 1969.

      Mr. William A. Garrigle for plaintiff (Messrs. Moss and Powell, attorneys).

      Mr. Michael Patrick King for defendant Hardware Mntnal Casualty Company (Messrs. Kisselman, Devine, Deighan & Montano, attorneys).
   Makiano, J. S. C.

This is a declaratory judgment action brought by plaintiff for judgment declaring that an automobile which was involved in an accident was covered by an automobile liability policy issued by defendant. The parties have agreed that the issue involved be resolved upon the basis of the oral depositions of plaintiff and the oral depositions and testimony of Bichard E. Lukins.

On September 2, 1966 plaintiff was involved in an automobile accident in Winslow Township, Camden County, New Jersey. As a result two suits have been instituted in the Law Division: Thomas Schiavone v. Gerald Davis and Edward Wojciechowski, Docket L-4613-66, and Gerald Davis and Nellie Davis v. Thomas Schiavone and Edward Wojciechowski, Docket L—26672-66. These two cases were consolidated by order of the court dated July 13, 1967.

After considering the depositions and the oral testimony I find that the following facts have been amply established by competent evidence.

In 1962 or 1963 plaintiff purchased a new 1963 half-ton Datsun pickup truck. Defendant Hardware Mutual Casualty Co. issued its policy No. 29-15708-01 to plaintiff insuring the pickup truck. The policy was renewed on its anniversary date May 1, 1966, for a one-year period to expire May 13, 1967. On June 23, 1966 plaintiff acquired a 1964 Chevrolet Monza, which was the automobile involved in the accident of September 2, 1966.

The Datsun broke down in September 1965; it has not been operational since that time and plaintiff has made no use of it. Plaintiff did not renew the registration of the Datsun when it expired on March 31, 1966, but did on May 13, 1966 renew the insurance policy covering that car.

Plaintiff did not purchase another motor vehicle sooner than June 23, 1966 because of the lack of funds. The Chevrolet Monza was financed, and collision insurance thereon was secured by the dealer from an insurance company other than defendant.

On or about October 12, 1966 Richard E. Lukins, a representative of defendant, visited plaintiff at his home. Lukins obtained a statement from plaintiff which did not pertain to the manner in which the accident is alleged to have occurred or whether the Datsun was operational from the date of the purchase of the Chevrolet to the date of the accident. During the visit he merely made a cursory observation of the Datsun located on the premises. No inspection of the Datsun or inquiry was made to determine whether it was operable. It is an uncontroverted fact that from before the purchase of the Chevrolet to November 14, 1968 (date of depositions) the Datsun was not operable because the radiator had been removed, the distributor cap was cracked and the brakes were defective. License plates were still on the Datsun on the date of Lukins’ visit and they were not removed until two months later. Plaintiff failed to transfer the registration from the Datsun to the Chevrolet because the Datsun was registered as a commercial vehicle. Title to the Datsun remained at all times in plaintiff’s name.

It is admitted that plaintiff failed to notify defendant of the purchase of the Chevrolet, and that he did not at any time notify defendant that the Datsun had become in-1 operable.

Plaintiff’s contention is that although the vehicle was a newly acquired automobile, it was a replacement for the automobile described in the policy and therefore, under the terms of the policy, no notice was necessary. Defendant contends that the Chevrolet is a newly acquired automobile to which the policy does not extend coverage in the absence of notice as provided for in the policy.

The central question presented to the court for its determination is whether the Chevrolet was a replacement for the insured vehicle within the meaning of the following clause of the policy:

“IV Automobile Defined, Trailers, Private Passenger Automobile, Two or More Automobiles, Including Automatic insurance.
(a) Automobile. Except with respect to division 2 of coverage C, and except where stated to the contrary, the word ‘automobile’ means:
❖ # $ $ $ t-fi sfs
(4) Newly Acquired Automobile -—■ an automobile, ownership of which is acquired by the named insured or his spouse if a resident of the same household, if (i) it replaces an automobile owned by either and covered by this policy, or the company insures all automobiles owned by the named insured and such spouse on the date of its delivery, and (ii) the named insured or such spouse notifies the company within thirty days following such delivery date; but such notice is not required under coverages A,B and division 1 of coverage G if the newly acquired automobile replaces an owned automobile covered by this policy.’’ (Emphasis added).

There being no evidence that the word “replacement” has a meaning peculiar to the insurance field, or that the parties intended any different meaning, the ordinary meaning must govern. “Replace” as defined in 2 Shorter Oxford English Dictionary (3rd ed. Reprint 1947), 1706 is: “3. * * * b. To provide or produce a substitute or equivalent in place of (a person or thing) * * *.” Nationwide Mutual Ins. Co. v. Mast, 2 Storey 127, 153 A. 2d 893 (Del Super. Ct 1959), Continental Casualty Co. v. Employers Mutual Casualty Co., 198 Kan. 93, 422 P. 2d 560 (Sup. Ct. 1967).

Webster’s New International Dictionary (2d ed., defines “replacement” as follows:

“ ‘Replace’ means ‘To take the place of; to serve as a substitute for, or successor of; supplant; * * *. To fill the place of; to supply an equivalent for; * • *.
“ ‘Replacement' is defined as an ‘Act of replacing, or state of being replaced. * * *. A new fixed asset, or portion of an asset, which takes the place of a discarded asset, or portion of an asset.”

Ray v. State Farm Mutual Automobile Ins. Co., 152 So. 2d 566 (La. Ct. App. 1963).

A general case of replacement occurs when an old vehicle is disposed of and a new vehicle of equivalent use is substituted. A problem arises when the old vehicle is temporarily retained after the new vehicle has been procured.

Eetention of possession of the vehicle described in the policy does not, in itself, prevent the extension of coverage to the newly acquired automobile as a replacement within the meaning of the policy provisions. Nationwide Mutual Ins. Co. v. Mast, supra.

In Patrick v. State Farm Mutual Automobile Insurance Co., 90 N. J. Super. 442 (Law Div. 1966), it was held that the insured at no time within the period covered by the automobile liability policy owned more than one operable automobile, each vehicle was a replacement for its predecessor, so that the pick-up truck involved in the accident was not a newly acquired automobile within the exclusions of the policy but was a replacement vehicle covered by the policy. Main Investment Co. v. U. S. Fidelity & Guaranty Co., 29 N. J. Super. 221 (Ch. Div. 1953), is factually inapplicable to the case at hand. Because of the dearth of case law in our State concerning the issue, I deem it advisable to resort to reported decisions of other jurisdictions.

The court in Merchants Mutual Casualty Co. v. Lambert, 90 N. H. 507, 11 A. 2d 361 (Sup. Ct. 1940), 127 A. L. R. 483, 34 A. L. R. 2d 945, found the following facts: the old car covered by the policy remained in the insured’s garage, with license plates attached, after the purchase of the new car; it had not been used by the insured for several months prior thereto because it was worn out, out of repair, and not fit to be driven upon the highway. It was upon these facts that the court held that a transfer of insurance took place under the replacement clause despite the retention of ownership and possession of the old automobile by the insured.

5A Am. Jur., Automobile Insurance, § 85, p. 83, speaks as follows on the point:

“One of tlie primary questions to be determined in respect to a ‘replacement’ provision in an ‘automatic insurance’ clause is, of course, whether the newly acquired automobile ‘replaces’ an automobile described in the policy. In this respect, the fact that the car described in the policy was retained by the insured and was in a legally usable condition has been held not to preclude transfer of coverage to the newly acquired car, where such car was actually purchased to replace the first car for the same use.”

From a reading of this statement it is clear that retention of possession of a legally usable automobile does not preclude a transfer of coverage.

The instant case presents a stronger argument in favor of replacement because, unlike the automobile involved in the Merchants case, the Datsun was not legally usable in that plaintiff had failed to renew the registration.

In Maryland Indem. & Fire Ins. Exchange v. Steers, 221 Md. 380, 157 A. 2d 803 (Ct. of App. 1960), not only was a similar policy provision involved, but the factual situation was substantially the same as the factual situation in the case under consideration. A 1946 Oldsmobile was named in the policy; the accident occurred on November 1, 1957; the Oldsmobile became inoperable prior to April 1956; its registration was renewed after April 1956. On May 15, 1956 Steers purchased a Dodge automobile. The original policy was renewed in December 1956, repeating the designation of the Oldsmobile as being the insured vehicle. In March 1957 Steers renewed the registration on the Dodge but did not renew the registration on the Oldsmobile, so that after the registration of April 1956 had expired it was not only physically inoperable but also legally inoperable. On May 20, 1957 Steers sold the Dodge automobile, bought a Ford and caused the registration to be transferred thereto. The Ford was involved in the accident. The court found that the Ford was a replacement vehicle because the Oldsmobile was physically and legally inoperable at the time of the acquisition of the Eord car.

Based on the factual situation as found and the law applicable thereto, I conclude that the vehicle involved in the accident was a replacement within the meaning of the policy provision. Consequently notice of such replacement within 30 days was not required and coverage was automatic.


author: Leonard, J. A. D.

text:
    THE STATE OF NEW JERSEY IN THE INTEREST OF THOMAS STASILOWICZ.
    Superior Court of New Jersey-Appellate Division
    Argued June 24, 1968
    Decided July 3, 1968.
    See also 48 N. J. 224.

      Before Judges Sullivan, Foley and Leonard.

      Mr. Eugene P. Kenny, assigned counsel, argued the cause for appellant.

      Mr. William, J. Ounnane, Assistant Prosecutor, argued the cause for plaintiff-respondent (Mr. James A. Tumulty, Jr., Hudson County Prosecutor, attorney).
   The opinion of the court was delivered by

Leonard, J. A. D.

The Juvenile and Domestic Relations Court determined Thomas Stasilowicz to be a juvenile delinquent. The basis for the court’s ruling was its finding beyond a reasonable doubt that Stasilowicz had killed Deborah Coleman, a 10-year-old girl, in such a manner that if Stasilowicz were over 18 he would have been guilty of second degree murder. From that determination Stasilowicz appeals, contending: (1) that the lower court erred in denying his motion for dismissal made at the close of the State’s case; (2) that the lower court’s judgment was against the weight of the evidence; and (3) that the admission of the testimony of Albertus Crolins concerning a declaration of guilt that Stasilowicz had made to his parents constituted a deprivation of Stasilowicz’s right to due process of law.

The body of decedent was found under a door in a darkened unused portion of the cellar in the Jersey City tenement house in which Stasilowicz and his family lived. The girl had been strangled by a Venetian blind cord, and other pieces of cord were found near the body. There was evidence of trauma to decedent’s external genitalia. Her clothes were blood-stained, and dirt and debris were embedded in her clothing and body. She was found lying on a dress that had previously belonged to Thomas Stasilowicz’s mother.

Roughly 15 to 20 feet from where the body was found was a padlocked woodshed used by the Stasilowicz family and by Thomas Stasilowicz in particular. After finding the body, police forced open the shed and there found rugs bearing dirt, debris, and blood stains similar to those found on decedent. The shed also contained various articles of blood-stained clothing. The garments had been discarded by the Stasilowicz family and stored in the shed by Thomas. Mrs. Stasilowicz testified that she could not remember the clothing being stained when it was discarded.

On the door of the woodshed was a piece of cord similar to that used to strangle Deborah Coleman. Thomas Stasilowicz’s bicycle was also found within the shed, and a long piece of the same type of Venetian blind cord was removed therefrom. When Thomas was apprehended by the police, his shirt tail bore dirt stains similar to those found on decedent.

The State produced four witnesses who testified as to admissions of guilt that Stasilowicz allegedly had made in their presence. The State’s witnesses included two youths who had been incarcerated in the Hudson County Youth House with Stasilowicz and two men who had been Youth House attendants during that period. The Juvenile and Domestic Relations Court judge stated that he believed the testimony of all four witnesses. The lower court judge also believed the testimony of a neighbor of the decedent and Thomas who had seen the boy pulling the girl by the hand on the evening that Deborah Coleman had disappeared and who had heard the girl threaten to tell her mother if Thomas did not leave her alone.

The testimony of one of the Youth House attendants, Albertus Crolius, is significant. Crolius stated that he had been assigned by the Youth House Superintendent to conduct Stasilowicz’s mother and step-father to Stasilowicz’s detention room during the parents’ first visit to the Youth House. The attendant asserted that he had remained in the doorway of the detention room during the visit pursuant to instructions he had received from the Superintendent. There Crolius heard Thomas declare, when queried by his stepfather, that he had strangled Deborah Coleman.

During the course of defendant’s case, Thomas and his parents acknowledged that the boy had admitted his guilt to his step-father during the parents’ first visit to the Youth House. There was no effort made to deny that Crolius was present in the doorway at the time. In fact, Thomas conceded that he saw Crolius there while making his admission.

Thomas and his mother, though, both testified that after Thomas’s step-father had left the detention room, Thomas had told his mother that he had not killed Deborah. The admission to Thomas’s step-father was rationalized as being caused by difficulties existing between Thomas and Mr. Stasilowicz. The trial judge found this explanation to be "untrue and not worthy of credence.” Stasilowicz offered additional testimony designed both to rebut the other admission evidence introduced against him and to exculpate himself. This was discounted by the trial judge who "found the defendant * * * to be evasive on the stand, cool and composed throughout the trial, ready to match wits with the prosecution and lapsing into forgetfulness frequently and conveniently.”

I

Stasilowiez moved for dismissal at the close of the State’s case. The lower court, however, did not rule on the motion until after all the evidence had been introduced. Nonetheless, in determining the propriety of the lower court’s ruling, we may consider only evidence adduced during the course of the State’s case. See State v. Fiorello, 36 N. J. 80, 86-87 (1961), cert, denied 368 U. S. 967, 82 S. Ct. 439, 7 L. Ed. 2d 396 (1962). Viewing that evidence in its entirety and giving the State the benefit of all its favorable testimony and all the favorable inferences that could reasonably be drawn therefrom, a trier of fact could reasonably have found beyond a reasonable doubt that Stasilowiez had committed an act which if he were of age would have been second degree murder. Therefore, the lower court was correct in denying the motion for dismissal. State v. Reyes, 50 N. J. 454, 458-459 (1967).

The circumstantial evidence itself was sufficient to generate a belief of guilt beyond a reasonable doubt. Therefore, it alone justified the lower court’s ruling. See State v. Mills, 51 N. J. 277, 287 (1968). However, we are not remitted to having to consider whether the circumstantial chain presented by the State made out a prima facie case against Stasilowiez. The testimony concerning Stasilowicz’s own inculpatory declarations bolstered the inferences of guilt which could be drawn from the circumstantial proof. When we consider the admissions together with the circumstantial evidence, we have no doubt as to the propriety of the denial of Stasilowicz’s motion.

II

In considering whether the judgment was against the weight of the evidence, we are not limited to a consideration of the State’s case alone. Our task here is to examine the entire record. So doing, we believe that the defendant’s case strengthened the proof against Stasilowicz. Crolius’s testimony was fully corroborated by Thomas and his parents.

Moreover, in reviewing Stasilowicz’s allegation that the factual findings of the lower court were not supported by the evidence, we are obligated to give due regard to the opportunity of the lower court to assess the credibility of the witnesses. B. B. l:5-4(6); B. B. 2:5. We conclude that there is nothing in the record that would justify our disturbing the lower court’s decision to believe the State’s witnesses and to disbelieve Stasilowicz.

Accordingly, we find no reason for overturning the factual determination of the trial court.

Ill

Stasilowicz’s constitutional argument is without merit. There was nothing to compel the boy to admit his guilt in the presence of Crolius. Moreover, the attendant did not use surreptitious means to overhear Stasilowiez’s admission, for it is uncontroverted that Crolius was in open view of Thomas when the latter told his step-father of his participation in the crime. The constitution does not protect any mistaken notion Stasilowicz might have had that his voluntary admission of wrongdoing in the presence of Crolius could not be turned by the guard into evidence against the boy at trial. See Hofa v. United States, 385 U. S. 293, 302, 87 S. Ct. 408, 413, 17 L. Ed. 2d 374, 382 (1966).

Affirmed.


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

text:
    JOSEPH A. FEDER, ET AL., PETITIONER-APPELLANT AND CROSS-RESPONDENT, v. CITY OF PASSAIC, RESPONDENT-RESPONDENT AND CROSS-APPELLANT, AND STATE OF NEW JERSEY, ON BEHALF OF THE DIVISION OF TAX APPEALS, RESPONDENT; DAVIDOM REALTY CORP., PETITIONER-APPELLANT AND CROSS-RESPONDENT, v. CITY OF PASSAIC, RESPONDENT-RESPONDENT AND CROSS-APPELLANT, AND STATE OF NEW JERSEY, ON BEHALF OF THE DIVISION OF TAX APPEALS, RESPONDENT; SWANEE ESTATES, INC., PETITIONER-APPELLANT AND CROSS-RESPONDENT, v. CITY OF PASSAIC, RESPONDENT-RESPONDENT AND CROSS-APPELLANT, AND STATE OF NEW JERSEY, ON BEHALF OF THE DIVISION OF TAX APPEALS, RESPONDENT; BERTHA STEIN, PETITIONER-APPELLANT AND CROSS-RESPONDENT, v. CITY OF PASSAIC, RESPONDENTRESPONDENT AND CROSS-APPELLANT, AND STATE OF NEW JERSEY, ON BEHALF OF THE DIVISION OF TAX APPEALS, RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued January 27, 1969
    Decided March 19, 1969.

      Before Judges Coneoed, Kilkenny and Leonaed.

      Mr. Carl G. Weisenfeld argued the cause for appellants-cross-respondents (Messrs. Ilannoch, Weisman, Stern & Besser, attorneys; Mr. Joseph S. Seidel, of counsel).

      Mr. Ladislas F. Feher argued the cause for respondent-cross-appellant (Mr. Charles E. Miller, attorney).

      Mr. Arthur J. Sills, Attorney General of New Jersey, filed statement in lieu of brief on behalf of respondent Division of Tax Appeals (Mr. Charles II. Landesman, Deputy Attorney General, of counsel).
   The opinion of the court was delivered by

Coneoed, S. J. A. D.

These consolidated appeals concern the tax assessments on seven parcels of commercial realty in the downtown business section of Passaic, for the tax years 1964, 1965 and 1966. Both the city and the four taxpayers appeal from judgments of the Division of Tax Appeals which reduced assessed valuations on all the properties for all the years in question. The city’s brief, however, does not specify error in anjr judgment, but defends all the judgments against the taxpayers’ assault. At oral argument the position of the city was the same. We therefore assume an abandonment of the city’s appeals.

The taxpayers’ appeals are along two lines: (1) the true values of the respective properties are below the judgments entered by the Division; (2) assessments at 100% of true value would be discriminatory since the average Passaic ratio of assessments to true value as fixed by the State Director of the Division of Taxation (and adjusted by taxpayers’ expert), averaged for the years in question, is approximately 82%, and therefore whatever true values are determined for the properties in these appeals should be revised to the stated percentage thereof. Reliance is had upon In re Appeals of Kents 2124 Atlantic Ave. Inc., 34 N. J. 21 (1961) (“Kents,” hereinafter). The Division declined to award any relief on the discrimination phases of the appeals.

I

[The court here dealt with the valuation phases of the appeals, affirmed as to certain properties and remanded for further findings and conclusions with respect to others.]

The determinations of the Division as to true value are affirmed in all the appeals except for 692 Main Ave. and 75-79 Hoover Ave. As to those, ultimate determination will depend on the additional findings and conclusions on remand called for above.

II

We turn to consideration of the “discrimination” aspect of the appeals, summarized near the head of this opinion. Kents, supra, holds that where a taxpayer’s real property is assessed at a ratio to true value substantially higher than the common level, or, if there is none which the assessor is endeavoring to achieve, substantially higher than the average ratio determined by the State Director of Taxation, then such taxpayer is ordinarily entitled to a reduction of his assessment down to the valuation resulting from application of the Director’s figure for the average ratio. 34 IV. J., at pp. 33, 34.

The city does not argue before us that its assessor consciously and reasonably effectively undertook to assess all real property in the city at any particular common level for any of the years in question; nor would any fair appraisal of the evidence, which we need not here discuss in detail, allow of any such conclusion. There was some pretense by the assessor at the hearing that he attempted to assess all real property at 100%, but the evidence as a whole, and particularly the Director’s sales-ratio studies, belies that assertion. There may have been some effort to assess commercial and industrial property in the rough neighborhood of 100%, but the proofs compel the conclusion that residential properties were assessed (whether consciously or not) on the average at about 65% of their market value. We thus disagree with the finding of the Division that “every effort was made by the assessors to achieve a common level.” It is not supported by substantial credible evidence on the whole record. The city does not and may not argue that these commercial properties under appeal are to be limited to relief by the measure of the average ratios of assessment only of commercial properties in the city. Siegal v. City of Newark, 38 N. J. 57 (1962).

The official average ratios of the State Director of Taxation for the tax years here in question were:

1964—94.33

1965 — 84.27

1966 — 86.75

As will appear infra, the 1964 figure requires adjustment downward. It is obvious that, even accepting the Division’s judgments as representing 100% true value, the original city assessments, which were somewhat higher, were substantially above the official average ratios, and that therefore the present taxpayers qualify, generally speaking, for Kents-type relief.

The opinion of the Division assumed that appealing taxpayers have no grievance under Kents if the average ratios are not substantially below the 100% true value fixed on appeal by the Division. We do not so read Kents. The referent intended in that exposition is the original assessment, not the reduced valuation judgment of the Division. The logical point at which to measure the taxpayer’s aggrievement in terms of discrimination is that where he stands before he invokes the quasi-judicial review by the tax boards — i. e., when the city assessment is made in the first place. But even were the Division’s interpretation of Kents correct, we would characterize its 100% judgment figures as substantially above the official average ratios (after adjusting the ratio figure for 1964, as appears infra).

The Division also justified refusal of Kents-type relief on the ground that it had had many other appeals on Passaic commercial real estate for the years in question, on some of which large reductions had been granted, and that reductions were probable on other pending such appeals. It was implied that since such reductions were not reflected in the Director’s sales studies, they militated against the utility of the average ratios for present purposes. Quite the contrary. Were the original assessments of such other properties in the reduced amount of the judgments of the Division, and any of them the subject of sales involved, the effect would be to further depress the average ratios — a result strengthening the case for Kents-type relief to the present taxpayers rather than refuting it.

The final question for decision is precisely what average ratio figures to apply in these consolidated appeals. In the first place, it is clear that a single averaged figure should be used for all three tax years under appeal, in the interest of relative stability of assessments. City of New Brunswick v. Division of Tax Appeals, 39 N. J. 537, 541 (1963); Samuel Hird & Sons, Inc. v. City of Garfield, 87 N. J. Super. 65, 76 (App. Div. 1965). We find no probative weakness in the official overall average ratios of the State Director for 1965 and 1966, which are, respectively, as noted above, 84.27 and 86.75.

There is, however, a probative defect, for present purposes, in the corresponding official state figure for 1964 (94.33). To understand this, it is necessary to keep in mind that the final official ratio for a given year is arrived at by the use of sales not only during the transaction period applicable to that year (the year beginning July 1 of the prior calendar year) but also sales during the transaction period pertaining to the prior year. See City of Bayonne v. Division of Tax Appeals, 49 N. J. Super. 230, 236 (App. Div. 1958). This is done in order to broaden the sales sampling upon which the ratios are ultimately based. Did. But a problem arose in respect of 1964 because in prior years the assessments in Passaic had purportedly been on a 40% basis whereas in 1964 and thereafter they were purportedly on a 100% basis. Because of this special condition the Director, in arriving at his final Passaic 1964 ratios, which normally would have been based on sales for the two-year period preceding July 1, 1963, used sales for the three-year period preceding that date. Without further discussion of the rather complex, distorting effects of this procedure, which have been argued by taxpayers and not refuted by the city, we have concluded that the Director’s resulting official 1964 ratio is probably out of line to such extent as to be unreliable for tax equalization purposes. It will therefore be displaced by the 1964 ratio computed on the basis of sales for the transaction period applicable to that single year. This figure is 83.94. The more reliable nature of this statistic, as compared with the Director’s official 1964 figure (94.33), is indicated by its closeness not only to the approved figures for 1965 and 1966, noted above (84.27 and 86.75), but to the official ratio for 1967, which is 86.62.

Averaging the ratios we have found reliable for 1964, 1965 and 1966 produces an average of the three of about 85.00. The Division will apply this ratio to the true values ultimately determined in these cases for all tax years under appeal.

Reversed and remanded for further proceedings in the Division of Tax Appeals conforming with this opinion. We do not retain jurisdiction.

       Although, as held above, there was no genuine 100% common level applicable to all real property in 1964 and thereafter, the aggregate valuations in 1964 and subsequent years were without doubt substantially higher than in 1963 because of the purported change in valuation basis.