author: McGowan, J. C. C.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. JOHN ULESKY, DEFENDANT-APPELLANT.
    Monmouth County Court Law Division
    Decided March 28, 1968

      Mr. Harold Feinberg, attorney for plaintiff-respondent.

      Mr. Paul J. Feldman, attorney for defendant-appellant.
   McGowan, J. C. C.

This is an appeal from the Municipal Court of the Borough of Belmar on a trial de novo under the Rules governing such appeals. The defendant was convicted of violating Chapter 3 of the Revised Ordinances of 1966 of the Borough of Belmar, specifically section 3-1.1 through 3-1.6 of that Chapter. The ordinance requires that every person who has been convicted pf a misdemeanor or high misdemeanor in New Jersey or any other state within the past ten years and has not received a full executive pardon shall, upon residing in Belmar or remaining in Belmar for more than 24 hours, register with the chief of police. Revelation of pertinent details of the crime committed and his present residence are required. Fingerprinting and photographing are also required. The ordinance then provides for the issuance of a registration card to be carried at all times while said person is in the Borough. The ordinance also provides for a violation for failure to register, failure to carry a card or for giving false information.

The case was submitted on stipulation and no testimony was presented. It was stipulated that the defendant-appellant violated the terms of this ordinance and that he was convicted in the Hudson County Court on February 23, 1965 of Forgery and False Pretense in violation of N. J. S. 2A :109-1 and N. J. S. 2A :111-1, which is a crime within the ordinance definition of a crime. He also admitted that he had notice'of the ordinance and failed to register in accordance with its requirements. Similar ordinances of 19 other Monmouth County communities were also marked into evidence by consent of the parties. These contain varying residence requirements, and in some, immediate registration is required.

In this hearing the sole issue presented to this court is whether the ordinance of the Borough of Belmar requiring criminal registration is valid.

The defendant-appellant makes a broad frontal attack upon the validity and constitutionality of the ordinance in that, he asserts:

1. The Borough does not have the power to enact such an ordinance;
2. The ordinance violates defendant-appellant’s constitutional rights
in that;
(a) The ordinance violates the equal protection clause of the Federal and State Constitutions;
(b) The ordinance violates the right to travel and interferes with interstate commerce;
(c) The ordinance constitutes both an ex post faeto law and a bill of attainder.
(d) The ordinance violates the due process clause of the Federal and State Constitutions.
3. The ordinance is pre-empted by State Law.

The Borough denies each one of these positions and also affirmatively argues that the County Court does not have the power in this proceeding to determine constitutional questions.

Initially, it is important to note that the State was represented at trial and argument by the Borough Attorney of Belmar, the Attorney-General of New Jersey refusing to intercede at this level. It is also interesting to note that as of this date the research of counsel and of the court indicates that there is no reported decision in New Jersey regarding the validity of local criminal registration ordinances such as we have in this case and, therefore, this court is concerned with a novel question for solution.

The court takes judicial notice of the fact that Belmar is located on the Atlantic coast in central Monmouth County in an area whose economy is predicated largely on seasonal revenues; its winter population is just over 5,000 but during the summer months there is a tremendous increase. It is urged and the court finds that in such resort communities special problems arise involving the security, safety, and welfare of such a community and its inhabitants with a great influx of transient vacationers and employees of resort establishments; motels, restaurants, night clubs and other places of attraction to the tourist trade. The problems in Belmar are compounded by its close proximity to two race tracks. Monmouth Park and Preehold Raceway, which remain open during the greater part of the resort season, each year.

With this background in mind, we come to the overriding policy of the courts in any attack upon the validity of a municipal ordinance; that is, the strong presumption of constitutionality with which the ordinance is cloaked. See New Jersey Chapter American Institute of Planners v. New Jersey State Board of Professional Planners, 48 N. J. 581, 609 (1967); Roe v. Kervick, 42 N. J. 191, 229 (1964). A legislative act will not be declared void unless its re-pugnancy to the constitution is clear beyond a reasonable doubt. To declare a statute unconstitutional is a judicial power to be delicately exercised. Harvey v. Essex County Board of Freeholders, 30 N. J. 381, 386 (1959). Justice Francis, in discussing the presumption in Jones v. Haridor Realty Co., 37 N. J. 384 (1962) said:

“One of the basic functions of government is to safeguard the health, safety and welfare of its people. Upon the appearance of conditions detrimental to their welfare, it has the duty to apply remedial measures. The co\irts in turn are required to respect and sustain such efforts as an exercise of the legislative police power so long as they are not clearly arbitrary and are reasonably related to the objective sought to be attained.” (at p. 3931

The wisdom of the legislature of the means it selects are not subject to review or interference by the courts except in the protection of fundamental constitutional rights. Gundaker Central Motors v. Gassert, 23 N. J. 71, 81 (1956). The judiciary does not pass upon the wisdom of a municipal ordinance nor does it nullify decisions of a governing body on the subject of local welfare merely because a debatable issue is presented. Fred v. Mayor and Council of Old Tappan Borough, 10 N. J. 515 (1952).

This test of constitutionality and the presumption attending thereto is even greater at the trial level. Neeld v. Automotive Products Credit Association, 21 N. J. Super. 159 (Cty. Ct. 1952). In Neeld, supra, Judge Fulop, discussing a price fixing statute said:

“It is clear that it is not the function of this court to pioneer in the field of constitutional law. The presumption of constitutionality must be applied with greater force here than in the appellate courts. The pattern of the law must be drawn by the appellate courts. The trial courts, especially those of limited jurisdiction, must follow, not lead.” (at p. 161)

This judicial policy was also affirmed by the Appellate Division in State v. Cannarozzi, 77 N. J. Super. 236 (App. Div. 1962), in an appeal from an acquittal for violation of the Unemployment Compensation Law. That court commented that inferior courts should assume an act of the Legislature to be constitutional unless it so clearly conflicts with the Constitution as to leave no reasonable doubt of its defectiveness. Therefore, in order for this court to determine the ordinance under consideration to be invalid, it must be shown to be unconstitutional or an abuse of the power of the municipality beyond a reasonable doubt, and the court determines that the defendant has failed to make such a showing on this point.

Proceeding now to consider defendant’s argument that the Borough of Belmar does not have the statutory power to pass such an ordinance, I find that the governing body of every municipality derives its power from N. J. S. A. 40:48-1. It may make, amend, repeal and enforce ordinances to:

“Maintain order, to prevent vice, drunkenness and immorality; to preserve the public peace and order; to prevent and quell riots, disturbances and disorderly assemblages.”

This general power is broadened by N. J. S. A. 40:48-2, which reads:

“Any municipality may make, amend, repeal and enforce such other ordinances, regulations, rules and by-laws not contrary to the laws of this state or of the United States, as it may deem necessary and proper for the good government, order and protection of persons and property, and for the preservation of the public health, safety and welfare of the municipality and its inhabitants, and as may be necessary to carry into effect the powers and duties conferred and imposed by this subtitle, or by any law.”

The statute outlines a basic test which can be categorized as necessity or the public need and it has been held that:

A police regulation, in this regard shall not go beyond the demands of the public interest which vindicates its exercise, * * * ; an exercise of power that exceeds the bounds of reasonable necessity would run afoul of the fundamental common right to engage in a lawful pursuit and of the right of private property secured by the Fifth and Fourteenth Amendments of the Federal Constitution and (Art. I, par. 1) * * * of the State Constitution.” Reingold v. Harper, 6 N. J. 182, 191 (1951)

However, liberal construction of ordinances adopted under the statute is made mandatory by our Constitution of 1947 (Art. IV, § VII, par. 11) and there attaches to all such ordinances a presumption of validity not to be overcome unless the evidence clearly establishes its unreasonableness. Vickers v. Twp. Com. of Gloucester Twp., 37 N. J. 232 (1962). The leading case on the exercise of police power by a municipality and the limitations thereupon, is N. J. Good Humor, Inc. v. Bradley Beach, 124 N. J. L. 162 (E. & A. 1939) and it is stated by the court in the following language:

“There cannot be in the name of police regulation an unreasonable and oppressive curtailment of personal or property rights. A measure that goes fairly beyond the public need designed to be served does not take the category of a valid police regulation.” (at p. 168)

There are many cases which hold that a municipality has a legal right to pass an ordinance which promotes the safety, health, morals and general welfare of the community. Certainly a municipality has the necessary power to legislate as may be demanded by the public interest. In the present case problems of law enforcement and protection of the public are clearly proper for municipal confrontation and within the public need. The Borough acknowledges a need for this method of crime detection and prevention, even though the number of registrants is low. Here the peculiar problems of the resort community must be taken into consideration. With a population increase, the job of police officers in providing security and safety to its citizens becomes proportionally difficult. Surely, the municipality has the right to know who is presently residing therein. Rapidly climbing crime figures in small municipalities as well as the large metropolitan cities, evidence the need for greater police powers within the framework of the Constitution. The device of requiring individuals to register with local authorities appears to be one of those powers. The ordinance allows the police to have an instant and readily available list of suspects justified upon the theory of the great number of recidivists well known in modern criminology. The police are also supplied with a tool for preventing crime in that they can make a lawful arrest of one defined in the ordinance who has failed to register and has secreted himself in the community preparing to participate in illegal activity. Thus it can be said that it is in the public interest of Belmar to require those persons to register, and is well within the powers conferred by N. J. S. A. 40:48-1 and N. J. S. A. 40:48-2, and this court should not substitute its judgment for that of the governing body in such a situation. Amelchenko v. Borough of Freehold, 42 N. J. 541 (1964); Livingston Twp. v. Marchev, 85 N. J. Super. 428 (App. Div. 1964).

It is argued by the defendant-appellant basically that compliance with the terms of the statute places an undue burden upon the individual by requiring him to register and carry a registration card. Recently, in the case of State v. Kabayama, 98 N. J. Super. 85 (App. Div. 1967), Judge Carton commented upon a similar burden pertaining to the right of policemen to demand that a motorist exhibit his license and registration at a roadblock. He said:

“It is now generally recognized that there is a common need by all mankind to be left alone. Nearly all societies have characteristically granted every man a reservoir of utter security. Referring to the importance which the makers of the United States Constitution attached to this right, Mr. Justice Brandeis, dissenting, in Olmstead v. United States, 277 U. S. 438, 478, 48 S. Ct. 564, 572, 72 L. Ed. 944, 956 (1928), said:
‘They conferred, as against the government, the right to be left alone — the most comprehensive of rights and the right most valued by civilized men. To protect that right, every unjustifiable intrusion by the government upon the privacy of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment. * * * The individual’s basic claim to be alone is not an absolute one. It is recognized that certain intrusions on the privacy of the individual may be justified in the public interest’ ” (Emphasis added) (at p. 87)

The state of New Jersey has recognized a need for registration in at least one field of criminal law, that is in the detection and control of the narcotics offenders. N. J. S. 2A :169A-2 specifically provides that all New Jersey residents who were convicted of crimes relating to narcotic drugs shall register with the chief of police of the municipality in which he resides. Such requirement evidences the legislative intent that registration is a necessary tool of effective police work. Defendant argues in this regard, that the failure of the State to require any other criminal registration presents a negative legislative intent against other registration law. However, the municipality may exercise appropriate police power for the protection of purely local interests, by general or specific local legislation, where the local regulation relates to an aspect not already subject to state statute or regulation, or is not in conflict therewith, or where the state has not acted pursuant to powers granted to it. Mogolefsky v. Schoem, 50 N. J. 588, 598 (1967); Chaiet v. East Orange, 136 N. J. L. 375 (Sup. Ct. 1948).

There is no doubt that the requirement that one who comes within the statutory definition must register, casts a burden upon him. All restrictive legislation creates some hardship for some members of the community but this can easily be justified on the necessity of promoting the general welfare. Thus the fact that the ordinance burdens some individuals does not per se or factually here render it arbitrary or unreasonable.

Part of defendant’s objection to the ordinance is the fingerprint requirement. But fingerprinting no longer bears the odium of bygone days when generally only persons charged with crime were fingerprinted. Presently, many people in all walks of life, including civil servants and even private citizens seeking gun permits, freely submit to this beneficent identification process. Burton v. Sills, 99 N. J. Super. 459 (App. Div. 1968). Those covered by this ordinance certainly would not argue that this in any way involved self incrimination as they have already been convicted of crime. The Supreme Court, in upholding the rights of the individual especially those guaranteed by the Pourth Amendment, has done so with stated awareness of the practical needs of effective criminal investigagation and law enforcement in the States and hence in a local municipality. See State v. Dilley, 49 N. J. 460, 470 (1967). Here, we have an ordinance which conforms to that standard of aiding the practical needs of effective criminal investigation and law enforcement. Judge Kilkenny speaking for our Appellate Division in a recent opinion, upholding the validity of portions of the gun permit law, commented in language particularly appropriate to the matter before this court. He said:

“We find no substantial merit in the claim that this law wrongfully infringes upon the individual’s constitutional rights under any of the provisions specified. Under the State’s police powers, the common good talces precedence over private rights. One’s home may be destroyed to prevent a conflagration. One’s freedom of locomotion may be impeded to prevent the spread of a contagious disease. Our basic freedoms may be curtailed if sufficient reason exists therefor. Only in a very limited sense is a person free to do as he pleases in our modern American society. Regulation by the government is the price we pay for living in an organized community. From the day we are born, when a birth certificate must be filed, until the day we die, when official certification thereof must be recorded, we spend the intervening years obtaining licenses to marry, to drive a motor vehicle, to sell alcoholic beverages, to operate a barbershop, to practice the learned professions and to do countless other things, including the obtaining of a license to hunt and fish. These burdens we assume for the good that flows therefrom. We find no basic difference in a requirement to obtain a gun purchaser's identification card.” Burton v. Sills, supra. (Emphasis supplied)

This court finds no basic difference in applying the philosophy and reasoning in the case just cited to a requirement that a prior convicted criminal register in the Borough of Belmar vídien he is a resident or remains in the Borough for a period of 24 hours, as required. What is a reasonable period of residency prior to registration ? It would seem to be a question which would depend upon the surrounding requirements of a particular municipality and can very well vary by reason thereof. However, in this type of municipality, a resort community such as Belmar, and for the reasons hereinbefore mentioned, a residency requirement of 24 hours as determined by the local officials would not appear to be unreasonable and should not be disturbed as being unreasonable by this court. It should be mentioned, that this expression of the court’s opinion, does not constitute an opinion with respect to the residency requirements of similar ordinances which have been adopted in municipalities throughout Monmouth County (in which some are less than 24 hours and some are greater than 24 hours) as this court is now called upon to construe only the provisions of the Belmar ordinance and its particular application to this defendant.

The need for effective crime control and prevention outweighs the infringement upon the rights of the few, and is not an unreasonable exercise of the police power.

Another constitutional argument urged by the defendant is that the criminal registration ordinance interferes with the individual’s right to travel. The individual’s right of freedom of movement is one aspect of his more general right of privacy. That right of movement does not and, in the nature of things, cannot confer upon a traveler the right of untrammeled movement on a public highway. Considering the highly mobile nature of our society, such a right cannot be unlimited. Balancing the interest of the state as represented by the individual municipality in requiring prior convicted criminals to inform the municipality of their whereabouts against the minor inconvenience which may be caused to such person and the fleeting and minimal intrusion on his privacy, it cannot be said that the regulation represents an unreasonable infringement upon or erosion of his right of privacy. State v. Kabayama, supra at page 88.

Passing now to another of defendant’s contentions which is that the provisions of the ordinance in effect constitutes a violation of his rights as being an ex post facto law or bill of attainder. The ordinance cannot be considered to be bill of attainder because the individual has not been condemned. The burden imposed upon one who must register under the terms of the ordinance is not a substantial one, nor is it a violation of the due process clause. As to the ex post facto argument, the ordinance does not provide a punishment upon the individual resident who falls within the classification to wit: those previously convicted of crime, but merely provides for a small burden which has to be weighed against the benefit to the municipality as a whole. The ordinance can be compared with the provisions of the Habitual Offender Act, N. J. S. 2A :85-12, and Uniform Narcotic Drug Law, N. J. S. 24:18-1 et seq. in that some additional penalty or burden is placed upon a criminal after the original offense. These have been held not to be ex post facto laws, see Application of Caruso, 10 N. J. 184 (1952), and do not create a substantive crime. See State v. Washington, 47 N. J. 244 (1966); State v. Tyler, 88 N. J. Super. 396, 404 (App. Div. 1965) certiorari denied 384 U. S. 992, 86 S. Ct. 1898, 16 L. Ed. 2d 1008 (1966).

The defendant makes a strong argument that this ordinance is pre-empted by state law on one of two grounds; (1) the subject matter of the ordinance in question is inherently in conflict with existing state law; and (2) the subject matter of the ordinance while not actually and clearly in conflict with existing state law is a matter which is inherently in need of uniform treatment on a state-wide rather than a local level and as such does not permit local legislation. It is urged that the varying provisions in the ordinances now adopted by the several municipalities in the County, clearly indicates this. The case of Abbott v. City of Los Angeles, 53 Cal. 2d 674, 3 Cal. Rptr. 158, 349 P. 2d 974, 82 A. L. R. 2d 385 (Sup. Ct. 1960) is cited as authority for this pre-emption argument. In Abbott, one of the only two eases dealing with criminal registration ordinances, (the other case is Lambert v. People of State of California, 355 U. S. 225, 78 S. Ct. 240, 2 L Ed. 2d 228 (1957). the Supreme Court of California held that the ordinance was beyond the constitutional power of the city in that it attempted to legislate in a field already pre-empted by the State. California, however, has specific legislation dealing with the prosecution of crime and the apprehension of criminals, with the punishment of habitual criminals as defined by state law, with distinct treatment aimed at the prevention and detection of certain enumerated crimes apt to be recidivistic and with registration required only of sex offenders. New Jersey, on the other hand, has no specific registration laws for sex offenders nor any other criminal except of course under the parole and probation systems and also, N. J. S. 2A :169A-1 through 10 providing for registration of narcotic offenders. The court in Abbott, supra, found that even though the state legislature had not specifically declared itself to have entered the field in so many words, the legislative intent is found in a multiplicity of statutes rather than a single enactment. No such general legislative intent is apparent in New Jersey, as our courts have held that a municipality may legislate on a local level where such is not subject to state statute, in conflict with it, or the state has not acted pursuant to powers granted to it. Mogolefsky v. Schoem, supra at page 598. Where there is nothing incompatible in the particular state law and local ordinances and also no pertinent state enactment suggesting a legislative intent to pre-empt the field entirely, the ordinance will be upheld. Belleville Chamber of Commerce v. Town of Belleville, 51 N. J. 153 (1968). In Mogolefsky, supra, our New Jersey Supreme Court upheld the main part of an ordinance of the City of Clifton requiring real estate salesmen to obtain a local permit prior to soliciting sales listings. Most of the ordinance was declared valid even though the N. J. S. A. 45:15-1 et seq., provides for the licensing of all real estate brokers and salesmen at the state level. Justice Hall found that the ordinance had several legitimate purposes including affording the police a ready means of identification to salesmen in the solicitation area. The court decided as to those aspects of the ordinance which were not specifically covered by state, that the ordinance was valid. Thus mere entry into the field generally by the state does not preclude all local regulation.

It is fundamental that in the exercise of a delegated power, a municipality may not legislate in conflict with state statute. Kennedy v. City of Newark, 29 N. J. 178 (1959); Hertz Washmobile System, v. Tillage of South Orange, 41 N. J. Super. 110, 123 (Law Div. 1956), affirmed 25 N. J. 207 (1957). There is nothing in the State statutes which clearly evidences a legislative intent to preclude all local regulation over the registration of those defined in the ordinance presently under consideration. In this regard the court is particularly mindful of the language employed in Art. IV, § VII, par. 11 of our State Constitution dealing with the liberal construction to be given to constitutional and statutory provisions concerning municipal corporations and the powers of municipal corporations. The court is also mindful of the case of Kennedy v. City of Newark, supra, where Chief Justice Weintraub stated, among other things, that before it can be said that the police powers delegated to local government must remain inert, it must be clear that the Legislature intended to occupy the field or declared a policy contrary to a decision made by the local government. The delegated power may not be restrained upon the basis of speculation or dubious inference. The Constitution enjoys a liberal construction of legislation in favor of local authority. This principle, when taken with the strong presumption of the validity of the ordinance, requires that this court find that the ordinance in question is not pre-empted by the various components which make up the body of State penal law. There has been no clear showing made to this court that the intent of the Legislature is to occupy the field of crime prevention and investigation exclusively. On the contrary, there are certain areas including Disorderly Persons violations, licensing, and liquor and entertainment control. See State v. Greco, 86 N. J. Super. 551 (Cty. Ct. 1965); City of Newark v. Humphres, 94 N. J. Super. 384 (Cty. Ct. 1967) in which the municipalities have generally retained the power to regulate, even though the state has entered the field to some extent. This being the situation, it would appear however that those portions of the Belmar ordinance in question requiring the registration of narcotic offenders are invalid as the State has preempted the field. This determination in no way affects the legality of the ordinance as it pertains to the present defendant, he having been convicted of a crime other than a narcotic violation.

The court therefore concludes for the reasons hereinabove stated that the ordinance in question as it pertains to the present defendant is valid. The court further concludes and determines that in accordance with the stipulations made herein stipulating that the defendant has violated the ordinance, that the defendant is hereby found guilty of failing to register under the requirements of the ordinance, and will impose a penalty after opportunity has been-given to the defendant to be heard concerning the same.

       The pertinent portions of the Belmar Ordinance in question are as follows:
      “3-1 Registration of Persons Convicted of Crime.
      3-1.1 Registration. Every person who has been convicted of crime as defined in this section, if:
      a. He be a resident of the Borough of Belmar and has not previously registered or
      b. He shall have entered the Borough of Belmar and remained therein for more than 24 hours, or
      c. Pie shall move to a new address within the borough, shall, within 24 hours after his arrival within the borough, furnish to the chief of police a written statement signed by him and validated by his oath or affirmation, giving the information required by this section
      3-1.2 Information. The chief of police shall register all persons who have been convicted of crime within the meaning of this section and may require of such persons the following information.
      a. True name and all aliases.
      b. Pull and complete physical description.
      c. The kind, character and nature of each crime of which he has been convicted.

        d. The place where each such crime was committed and the place of conviction of the same.
      e. The name under which he was convicted in each instance and the date thereof.
      f. The name and location of each place of confinement and the dates and duration of such confinement.
      g. The location and address of his residence living quarters, stopping place or places, place or places of abode, together with a description of such residence, quarters or place, whether it be a hotel, rooming house, apartment or private dwelling, and a statement as to whether or not such residence or place is a temporary or permanent place of abode.
      h. Length of time he has occupied each such residence or place and the length of time he expects or intends to remain in the borough.
      i. At the time of furnishing the above information the registrant may be photographed or fingerprinted, or both, by the chief of police and said photographs and/or fingerprints may be made a part of the permanent record herein provided for.

        3-1.3 Definition of Persons Convicted of Crime. For the purpose of this section, a person convicted of crime shall mean a person who has been convicted of a misdemeanor or high misdemeanor under the laws of the State of New Jersey or of a felony under the laws of any of the several states or of the United States, or who has violated any national or state law relating to the possession, sale or transportation of any narcotic.
      This section shall not apply with respect to any of the above-named convictions or violations which have occurred more than ten years ago or with respect to any crime for which there has been a full executive pardon.
      3-1.4 Record of Registrations. The statements herein required shall at all times be kept by the chief of police in a file or files separate and apart from other files and records maintained and kept by the police department and shall not be open to inspection by the public or by any person other than the municipal governing body and members of the police department of the Borough of Belmar; provided, however, that the chief of police shall have the authority to transmit copies of records required herein to the sheriff of any county of the State, or the head of any organized police department of any municipality in the State, or the head of any state or federal law enforcement agency, upon written request and statement that such records are deemed necessary for crime investigation purposes and shall be used only for those purposes.
      3-1.5 Registration Card. Every person who registers under this section shall be furnished an identification card by the chief of police. Said card shall contain a photograph of the registrant, his registry number, the date of registration and the date or length of his proposed stay in the borough. Every registrant shall carry such identification card on his person at all times while in the borough.
      3-1.6 Violations. Every person who fails to register as required by this section, or who fails to carry his identification card on his person, or who supplies false, untrue or misleading information in connection with registering under this section, or who aids, assists or abets in the violation of any provision of this section, shall be guilty of a violation of this section.”

      . In 1965, there were no registrations (1965 being the year the original ordinance was adopted) ; in 1966 there were four registrations and in 1967 there were four registrations.

      . The Supreme Court decided this case on the narrow ground that the defendant had insufficient notice of his obligation to register and therefore his conviction was set aside. The problem of notice is not involved in the ease before me as it has been stipulated that the defendant had notiee of the provisions of the Belmar ordinance.


source: Caselaw Access Project

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

license: Public Domain

text:
    HARRY DVORKEN, TRUSTEE IN BANKRUPTCY OF RICHARD MICHAEL BARRETT, BANKRUPT, PLAINTIFF-RESPONDENT, v. BARBARA BARRETT AND RICHARD MICHAEL BARRETT, HER HUSBAND, ET AL., DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued April 1, 1968
    Decided April 15, 1968.

      Before Judges Sullivan, Foley and Leonard.

      Mr. Peter A. Benz argued the cause for defendant-appellant Barbara B. Barrett.

      Mr. Harry Dvorken argued the cause for plaintiff-respondent.
   The opinion of the court was delivered by

Sullivan, S. J. A. D.

This is still another appeal generated by the anomalous nature of an estate by the entirety.

On February 11, 1964 defendants Richard M. Barrett and Barbara Barrett, his wife, acquired title to a 3 1/2-acre tract of land in Mendham, New Jersey. Thereafter, Richard M. Barrett was adjudicated a bankrupt and Harry Dvorken was appointed his trustee in bankruptcy. The instant suit was filed by Harry Dvorken as such trustee in bankruptcy seeking a partition of the tract.

On motion of plaintiff trustee in bankruptcy for a sale of the tract, the trial court adjudicated (1) that the trustee in bankruptcy was “seized of an undivided one-half interest for the joint lives of Richard M. Barrett and Barbara Barrett and the remainder if Richard M. Barrett survives Barbara Barrett”; (2) that Barbara Barrett was “seized of an undivided one-half interest for the joint lives of Richard M. Barrett and Barbara Barrett and the remainder if she survives Richard M. Barrett.”

However, the court ordered that the tract be sold by the sheriff at public sale free of the interests of the parties. It also directed that the proceeds be paid to the clerk of the court to be held subject to the same interests as the parties had in the land. The trial court bottomed its order for “partition” on King v. Greene, 30 N. J. 395 (1959), and Schulz v. Ziegler, 80 N. J. Kq. 199 (E. & A. 1912). Defendant Mrs. Barrett appeals.

We conclude that the trial court was without power to order a sale of the property free of Mrs. Barrett’s entirety interest.

An estate by the entirety has been described as a remnant of other times (Weintraub, C. J. dissenting in King v. Greene, supra., at p. 413). Its anomalous nature has been fully set forth in numerous decisions. King v. Greene, supra; Mueller v. Mueller, 95 N. J. Super. 244 (App. Div. 1967). Suffice it to note that in an estate by the entirety, husband and wife in effect hold as tenants in common for their joint lives; that survivorship exists which is indestructible by unilateral action, and that the rights of each spouse in the estate are alienable, the purchaser becoming a tenant in common with the remaining spouse for the joint lives of the husband and wife and acquiring the fee if the grantor spouse becomes the survivor. Creditors of a debtor spouse can levy upon and sell the debtor spouse’s one-half interest in the life estate for the joint lives as well as that spouse’s right of survivorship. King v. Greene, supra at pp. 412-413. However, during coverture, neither spouse may have partition of an estate by the entirety. Gery v. Gery, 113 N. J. Eq. 59, 64-65 (E. & A. 1933); Mueller v. Mueller, supra. A levying creditor, or purchaser at an execution sale, acquires no greater rights in the property than those of the debtor spouse. In King v. Greene, supra, our Supreme Court held that the levying creditor could sell the debtor spouse’s one-half interest in the life estate for the joint lives as well as the debtor spouse’s right of survivorship. However, nowhere was it indicated that the fee could be sold free of the survivorship interest of the non-debtor spouse.

If Mrs. Barrett survives her husband, she will become the sole owner of the property in question. This right of survivorship cannot be taken away from her without her consent. All that plaintiff trustee in bankruptcy acquired was Mr. Barrett’s interest in the property. The trustee can sell such interest, i. e., the debtor spouse’s one-half interest in the life estate for the joint lives as well as that spouse’s right of survivorship, but he may not have partition of the fee by sale or otherwise. The reference in Schulz v. Ziegler, supra, at pp. 201-202, to partition between the purchaser of one spouse’s interest in an estate by the entirety and the remaining spouse only relates to partition of the tenancy in common during the joint lives of the husband and wife and expressly states that such partition shall be had “without affecting in any way the common-law right of survivorship.”

Actually, the order entered by the trial court is not a true order in partition but merely an order converting the real property into a fund subject to the same interests as the parties had in the land. We know of no legal precedent for such order.

■ The order for sale is hereby vacated and the matter remanded for further proceedings in conformity with this opinion.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. MICHAEL R. KOVACS, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued May 22, 1967
    Decided May 25, 1967.

      Before Judges Goldmann, Kilkenny and Collester.

      Mr. Leonard A. Coyle argued the cause for appellant.

      Mr. Bryan V. Moore, Assistant County Prosecutor, argued the cause for respondent (Mr. Vincent Panaro, Prosecutor, attorney).

      Mr. Joseph A. Hoffman, Assistant Attorney General, argued the cause amicus curiae (Mr. Arthur J. Bills, Attorney General, attorney; Mr. Thomas J. Savage, Deputy Attorney General, on the brief).
   Per Curiam.

The County Court found defendant guilty of drunken driving after a trial de novo on appeal from the municipal court. We conclude, on the basis of (1) what defendant said to the police officer on his arrival to investigate the rear-end collision; (2) the police officers’ and drunkometer operator’s direct observation of defendant’s physical condition and odor of alcohol, and (3) the drunkometer test result (.18 reading), that the State proved defendant’s guilt beyond a reasonable doubt. We do not consider the answers defendant gave when questioned by the drunkometer operator, although we disagree with :the trial judge’s ruling . excluding such answers.

Determination of whether defendant voluntarily consented — see N. J. S. A. 39 :4-50.1 as it read on July 16, 1966, now amended by L. 1966, c. 142 (see N. J. S. A. 39 :4-50.2 (e)) — to take the drunkometer test was for the trial j'udge. In light of the record, we will not disturb his factual finding that defendant so..consented. Accordingly, we find no violation of defendant’s constitutional rights. Schmerber v. State of California, 384 U. S. 757, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966); State v. King, 44 N. J. 346 (1965).

Affirmed.


author: John A. Ackerman, J. S. C.

text:
    VERNON FRANCIS, ETC., ET AL., PLAINTIFF, v. WILLIAM HARRIS AND JOSEPH SAMUEL WILLIAMS, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided April 8, 1968.

      Mr. Robert B. Turk, guardian for Vernon Francis, appearing pro se (Messrs. Cohn and Turk, attorneys for plaintiff).

      Mr. George W. Nicastro, Legal Assistant to Counsel to Essex County Welfare Board (Mr. John A. Matthews, Jr., Counsel to Essex County Welfare Board).
   John A. Ackerman, J. S. C.

This matter involves the construction and interpretation of N. J. S. A. 44 :10-4, the repayment provision of the act entitled “Assistance for Dependent Children”, (ADC), N. J. S. A. 44:10-1 et seq., and specifically deals with the question whether the Essex County Welfare Board may seek reimbursement for aid granted to a dependant child from the proceeds of a recovery in tort for personal injuries suffered by the child.

On September 21, 1962, Vernon Francis, also known as Vernon Witt, was struck by an automobile. He was then 12 year old and was living with his grandmother, Mrs. Marie Francis. He was treated at Newark City Hospital for about a month and was discharged on. October 23, 1962. On December 1, 1962, he began receiving assistance as a dependent child under the above statute and he has continued to receive such aid up to the present time. The assistance payments for his benefit were made to Mrs. Francis and on November 21, 1962, prior to the commencement of payments, the Essex County Welfare Board, pursuant to the provisions of N. J. S. A. 44:10-4(a), took from Mrs. Francis the customary form of repayment agreement under the terms of which, in consideration of the granting of such assistance, she promised to repay, the Welfare Board to the extent of any assistance granted and specifically agreed that “the purpose of this promise and agreement is to assure repayment to the County Welfare Board of the amount of such financial assistance as may be granted during the period pending my receipt,of certain funds which are anticipated by virtue of a claim against' State.of New Jersey Unsatisfied Claim and Judgment Fund, A. S. E. 25225-N, Code W, arising out of accident involving Vernon Witt who was hit by an automobile on 9/21/62.”

Thereafter Mrs. Francis, acting as Vernon’s guardian ad litem, instituted suit against the uninsured driver of the car which struck him. As is apparent from the formal agreement with the Welfare Board, prior notice had been given to the Unsatisfied Claim and Judgment Lund Board as required by law to perfect a claim against the Lund. See N. J. S. A. 39:6 — 65. On June 30, 1967, a judgment was rendered in favor of Vernon by his guardian ad litem, Mrs. Francis, against defendant Joseph Samuel Williams, the driver of the car, in the amount of $8,000, which was subsequently paid by the Lund. By the terms of the order for judgment, Vernon’s attorney, Robert B. Turk, Esq., was designated as his guardian for the limited purpose of preserving, maintaining and disbursing the funds received and, after payment of hospital and medical expenses and attorney’s fees in accordance with the judgment, a balance of $4,943.25 remained on hand. In the interim, the Welfare Board had given notice of its claim under the repayment agreement for reimbursement of the sum of $3,561.66, for assistance given to Vernon from December, 1962 through June, 1967, and the order for judgment directed Mr. Turk, as Vernon’s attorney and guardian, to direct an order to show cause to the Welfare Board to seek a determination as to why the entire balance of recovery in his. hands as guardian should not remain Vernon’s funds, free from any claim by the Welfare Board for reimbursement for payments made for Vernon’s benefit.

. The guardian’s claim is that funds recovered by a child for personal injuries are inviolate and cannot be used to buy ordinary necessities of life nor to reimburse welfare agencies for assistance granted. His argument is based primarily upon the holdings in the New York case of Application of Woods, 32 Misc. 2d 745, 222 N. Y. S. 2d 903 (Sup. Ct. 1961) and the recent decision in Essex County Welfare Board v. Hellams, 98 N. J. Super. 181 (Cty. Ct., Probate Div. 1967), which is now being appealed. Although, as is demonstrated hereinafter, both of these decisions are distinguishable, the rationale of the guardian’s argument is set forth in the following quotation from the Hellams case where the court, adopting the reasoning and philosophy of the Woods case, said (98 N. J. Super., at p. 185):

“The court held that the damages could not be used to reimburse welfare, noting that:
‘The infant’s money was awarded- to compensate for his pain, his suffering, and his incapacity occasioned by the accident, not to purchase necessaries for him during his minority. * * * When that money is withdrawn to purchase necessities, it is being misapplied. (DeMarco v. Seaman, 157 Misc. 390, 283 N. Y. S. 697.) * * * [T]he communal responsibility in the sense of public welfare, should not be permitted to be shifted to this infant, because, fortuitously, he was gravely physically injured and was successful in now having on hand what the family might consider a financial windfall. (Leon v. Walker, 1 Misc. 2d 219, 147 N. Y. S. 2d 331.)’ (at p. 906)
Even when such a child reaches 21 he -has a right to expect to receive the money awarded to him for his injury with interest and ‘not a bundle of court orders showing that his funds were spent for the ordinary necessities of life which others were obligated to furnish him.’ Gaffney v. Constantine, 87 N. Y. S. 2d 131, 132 (Sup. Ct. 1949).”

Although the guardian’s argument evokes sympathy, this court is compelled to conclude that it ignores the policy adopted by our legislature which is plainly expressed in the repayment statute and it accordingly holds that the Essex County Welfare Board is entitled to the reimbursement sought in this case.

Our statute providing for assistance to dependent children is designed, as are similar statutory programs in other states, to take advantage of federal funds available to the states for such programs under the federal Social Security Act. Although state plans must meet certain standards and conditions prescribed by federal law and must be approved by the Secretary of Health, Education and Welfare in order to qualify for federal grants-in-aid (see 42 U. S. C. A..§ 601, et seq.,), each state has wide latitude in deciding how the programs are to be organized and administered, who is eligible for aid, how much shall be granted to eligible persons, and what provisions shall be made for repayment and reimbursement from those receiving assistance. There are differences as well as similarities within the state programs, which reflect economic conditions in the individual states and the desires of the citizens thereof as expressed by their legislative representatives in state law and policy. There is considerable variety among the states in the provisions for repayment and reimbursement and, as stated above, this is a matter for each state to determine. See Oharacteristics of State Public Assistance Plans Under the Social Security Act (Public Assistance Report No. 50, U. S. Department of Health, Education and Welfare, 1964 Edition.)

Subsections (a) and (b) of N. J. S. A. 44:10-4 provide in specific terms for repayment from recipients of ADC payments. Subsection (a) is directly involved here. The statute provides:

“(a) Whenever any parent or relative with whom a child is living applies for or is receiving assistance for such child pursuant to this act, and it appears that there is pending a payment to the child or to either or both his parents of funds arising from a claim or interest legally or equitably owned by such child or by either or both his parents, the county welfare board may, as a condition of eligibility or continuation of eligibility for such assistance, require such parent or parents to execute a written promise to repay, from the funds anticipated, the amount of assistance to be granted. Upon any refusal to make repayment in accordance with such promise, the county welfare board may take all necessary and proper action under the laws of this State to enforce such promise, and the granting or continuing of assistance, as the case may be, shall be deemed due consideration therefor.
(b) Whenever any child with respect to whom assistance has been paid pursuant to this act shall die prior to the attainment of his twenty-first birthday, and shall leave an estate, the total amount of assistance paid with respect to such child pursuant to this act and pursuant to any of the acts hereby repealed, shall .be a valid and enforceable claim against such estate, with priority over all other unsecured claims except reasonable funeral expenses and terminal medical and hospital expenses, and the county welfare board shall take all necessary and proper action under the laws of this State to enforce such claim.
(c) The county welfare board may, with the consent and approval of the bureau of assistance, compromise and settle any claim for repayment of assistance granted under this act.
(d) The bureau of assistance shall determine and cause to be made such financial adjustments as are necessary to maintain a correct proportional participation in such repayments as among the counties, State and Federal Government, and shall pay to the Treasurer of the United States the determined Federal portion.”

It is clear that a cause of action to recover in tort for personal injuries suffered by a child is a “claim or interest legally or equitably owned by such child or by either or both of his parents” within the literal meaning of subsection (a) of the above statute. 7 Words and Phrases (Perm. Ed) “Claim”, p. 455 et seq; Friedrichsen v. Niemotka, 71 N. J. Super. 398 (Law Div. 1962).

Since its effective date in 1960, the statute has been so construed and applied by those charged with its administration. The Manual of Administration, promulgated by the Department of Institutions and Agencies as an official regulation to govern the administration of the ADC program by county welfare boards, provides in section 2273 as follows:

“2273. Written Promise of Repayment in ADC
1. Legal Authority
R. S. 44:10-4 as amended by Chapter 80, P. L. 1962, authorizes the county welfare board to require a written promise to repay from the natural or adoptive parent(s) in any instance where there is pending payment to the child or such parent(s) funds arising from a claim or interest legally or equitably owned by such child or such parent(s). This authority shall be exercised in accord with the following policy and procedure.
2. Statement of Policy
a. When at the time of application there is pending a claim for statutory benefits, such as OASDI, veterans benefits, workmen’s compensation, temporary disability benefits, or a suit or claim arising from a contract, legacy, inheritance, accident, etc., OWB shall require the natural or adoptive parent, or both such parents when available, to sien a written promise to repay for assistance granted from any funds subsequently received from such source. Form ADC-10, Promise to Repay, shall be used for this purpose. (See 2200 Appendix VIII for sample Form ADC-10)
b. When at any time during receipt of assistance it is determined that there is pending such a claim or suit, action shall be taken to secure a promise of repayment as in a. above.
c. When in relation to either a. or b. above there appears to be eligibility for benefits or compensation but no claim has been filed the parent(s) shall be expected to make such claim promptly.
d. Refusal of the parent(s) to comply with a. or b. above, or refusal to file a claim as in c. above renders the family ineligible for ADC.
3. Evaluation after Claim Settled
If and when a lump sum payment is received as a result of an approved claim or pending suit, etc., CWB shall evaluate the situation and, in accordance with the provisions of 502. of the Budget Manual decide
a. Whether to require repayment, and continue assistance with any necessary budget adjustment for recurring income, or
b. Whether the case is to be suspended or closed and the available funds used for current support.” (Emphasis added).

A similar administrative interpretation appears in the Categorical Assistance Budget Manual, also issued by the Department as an official regulation for use and application in determining need for assistance under the program and for budgeting the amount of payments to recipients. See Budget Manual, § 504.3 h. These regulations were promulgated in accordance with express authority granted by the statute, N. J. S. A. 44:10-3.

It is apparent from these regulations that in the administration of the program an uncollected tort claim vested in a dependent child is regarded as a potential rather than an actual resource and does not enter into budgeting or affect the amount of assistance to be granted to the child during the time when suit for recovery is pending, but that it is clearly looked upon as a source for repayment of the assistance provided while the claim is pending. After collection, the funds received, to the extent not used for repayment of assistance previously granted, are- deemed to be resources to be considered in budgeting the needs of a child for assistance or as a factor which justifies the termination thereof. Such administrative interpretation is clearly entitled to weight in the construction of the statute. Mastrobattista v. Essex County Park Commission, 46 N. J. 138, 146 (1965); Lane v. Holderman, 23 N. J. 304, 322 (1957); Lowden v. Bd. of Rev., Div. of Emp. Sec., 78 N. J. Super. 467 (App. Div. 1963); Cammarata v. Essex County Park Commission, 46 N. J. Super. 262 (App. Div. 1957), affirmed 26 N. J. 404 (1958).

Although there are no reported decisions other than Hellams, supra, which deal with the right of county welfare boards to reimbursement under N. J. S. A. 44:10-4(a) out of tort recoveries received for personal injuries sustained by dependent children who have received ADC assistance, judgments for repayment out of such funds have been entered in a number of unreported cases and these constitute judicial precedents as to the proper construction of the statute. See Essex County Welfare Board v. Freeman, Essex County Court, Probate Div., Docket No. 8496 (1965); Essex County Welfare Board v. Sims, Essex County Probate Court, Probate Div., Docket No. 8837-K (1965); Essex County Welfare Board v. Dalley, Essex County Court, Probate Div., Docket No. 8553-R (1965); Essex County Welfare Board v. Dula, Essex County Court, Probate Div., Docket No. 8672-H (1965); Essex County Welfare Board v. Morrison, Essex County Court, Probate Div., Docket No. 9495-G (1965); Essex County Welfare Board v. Lynch, Essex County Court, Probate Div., Docket No. 9499-A (1965).

New Jersey is not the only state which has provided by statute for reimbursement of ADC payments made to a dependent child out of funds received on claims for personal injuries. Pennsylvania, Illinois and, at least since 1964, New York provide for repayment from such funds.

■The original reimbursement act in Pennsylvania adopted in 1937, P. L. 2045, provided that “the real and personal property of any indigent person shall be liable for the expenses of his support, maintenance, assistance and burial incurred by any public body or agency, whether owned at the time such expenses were incurred or acquired thereafter * * *” By an amending act in 1939, P. L. 310, a limitation was imposed which permitted such recovery only “if such property was owned during the time such expenses were incurred, or if the right to ownership of such property existed or was acquired during the time such expenses were incurred.” It was held in Bronzo’s Estate, 51 Lack. Jur. 139 (Orphans Court, Lack. County, 1949) that a cause of action in tort for personal injuries was not “personal property” until reduced to judgment or paid and that the mere existence of a cause of action during the time when assistance was granted did not permit reimbursement of such payments from the tort recovery when ultimately received. See also Lopes Estate, 87 Pa. Dist. & C. O. R. 577 (Orphans Court, Berks County, 1953).

By P. L. 1455, 63 PS § 1974, adopted in 1951 the legislature of the State of Pennsylvania amended the statute to provide that “* * * the real and personal property of any person shall be liable for the expenses of his support, maintenance, assistance and burial * * * incurred by any public body or public agency, if such property was owned during the time such expenses were incurred, or if a right or cause of action existed during the time such expenses were incurred from which the ownership of such property resulted * * *” This statute is much similar to the New Jersey act and is still in force. Since its enactment it has been held that reimbursement for assistance payments for the benefit of a dependent child, made while he had a cause of action for personal injuries, may be recovered from the funds ultimately received on such cause of action. Lopes Estate, supra; Matter of Ackerman, 35 Pa. Dist. & C. O. R. 2d 166 (Orphans Court, Crawford County, 1961); see Matter of Lucas, 9 Pa. Dist. & C. O. R. 2d 584 (Orphans Court, Clinton County, 1956); Schellhamer Estate, 30 Pa. Dist. & C. O. R. 2d 675 (Orphans Court, Luzerne County, 1963); see Matter of Hoffman, 38 Pa. Dist. & C. O. R. 2d 577 (Or phans Court, Columbia County, 1966); see Ryan v. Hockinberry, 42 Pa. Dist. & C. O. R. 2d 578 (Orphans Court, Allegheny County, 1967); Marchiafara’s Estate (No. 2), 36 Pa. Dist. & C. O. R. 2d 319 (Orphans Court, Philadelphia County, 1965).

The Illinois reimbursement statute, S. H. A., Ch. 23, § 819, provides that the department “shall have a charge upon all claims, demands and causes of action for injuries to an applicant for or recipient of assistance for the total amount of assistance provided for the recipient and his dependents from the time of injury to the date of recovery upon such claim, demand or cause of action * * *” This act, similar in terms to New Jersey’s, has also been construed since its enactment to permit repayment of assistance granted to a dependent child out of funds received by him for his personal injuries. See Hardwick v. Munsterman, 15 Ill. 2d 564, 155 N. E. 2d 638 (Sup. Ct. 1959); Henson v. Johnson, 16 Ill. 2d 408, 158 N. E. 2d 27 (Sup. Ct. 1959); In Re Poole’s Estate, 26 Ill. 2d 443, 187 N. E. 2d 231 (Sup. Ct. 1962); see Beck v. Buena Park Hotel Corp., 30 Ill. 2d 343, 196 N. E. 2d 686 (Sup. Ct. 1964); see Donoho v. O’Connell’s Inc., 18 Ill. 2d 432, 164 N. E. 2d 52 (Sup. Ct. 1960); Grieves, v. Levy, 238 F. Supp. 759 (N. D. Ill. 1965); see Lalic v. Chicago B. & O. R. Co., 263 F. Supp. 987 (N. D. Ill. 1967).

The New York statute governing reimbursement for ADC payments has recently been amended and supplemented. Under the law as it existed in 1964, subsection 1 of Social Welfare Law, § 104 (52A McKinney’s Consol. Laws of New York, c. 55, p. 153) provided that a public welfare official “may bring action * * * against a person discovered to have real or personal property * * * if such person * * * received assistance and care during the preceding ten years * * *” Subsection 2 thereof provided that “No right of action shall accrue against an infant by reason of the assistance or care granted to him unless at the time it was granted the infant was • possessed of money-and property in excess of the reasonable requirements as described in section one hundred one.”

In Application of Woods, 32 Misc. 2d 745, 222 N. Y. S. 2d 903 (Sup. Ct. 1961), referred to above, the Court held that no portion of a $30,000 settlement of a personal injury claim made in 1957 on behalf of a dependent child could be claimed by a county welfare director under sections 101 and 104 of the Social Welfare Law as reimbursement for assistance payments made during the period from 1938 to 1960 for the benefit of the child and his mother. The case has not been cited in the New York courts in any subsequent decisions. However, in 1964, the Social Welfare Law was supplemented by the addition of section 104-a, which provides in part as follows:

“1. If a recipient of public assistance and care shall have a right of action, suit, claim, counterclaim or demand against another on account of any personal injuries suffered by such recipient, then the public welfare official for the public welfare district providing such assistance and care shall have a lien for such amount as may be fixed by the public welfare official not exceeding, however, the total amount of such assistance and care furnished by such public welfare official on and after the date when such injuries were incurred.
The welfare commissioner shall endeavor to ascertain whether such person, firm or corporation alleged to be responsible for such injuries is insured with a liability insurance company, as the case may be, and the name thereof.”

It now seems clear that funds received by a dependent child as a recovery for personal injuries may be used as a source of reimbursement to welfare officials in New York. See Neilson Realty Corp. v. Motor Vehicle Acc. Indem. Corp., 47 Misc. 2d 260, 262 N. Y. S. 2d 652 (Sup. Ct. 1965); Snell v. Wyman, 281 F. Supp. 853 (S. D. N. Y., 1968); Policies Governing the Administration of Public Assistance (City of New York, Department of Welfare) § 184. See also Oswego Hospital v. Kessler, 204 Misc. 596, 127 N. Y. S. 2d 224 (Sup. Ct. 1953); Fuller v. Galeota, 271 App. Div. 155, 63 N. Y. S. 2d 849 (App. Div. 1946); Hodson v. Bloise, 173 Misc. 69, 16 N. Y. S. 2d 49 (City Ct. 1939).

Other states have therefore adopted and enforced policies, similar to that of this state, of requiring reimbursement of ADC assistance out of funds recovered for personal injuries, including those recovered by dependent children. See also State v. Rodrigue, 19 Conn. Sup. 49, 109 A 2d 891 (Super. Ct. 1954).

There is nothing about funds recovered by an adult on a claim for his personal injuries, nor, indeed, about such funds recovered by a minor, which immunize them from use by or on behalf of the injured person for his general needs and maintenance or as a source for reimbursing the state for welfare aid received. In the case of an adult, no less than in the case of a child, the amount recovered, except for sums recovered for special damages such as medical expenses, loss of earnings or services, and the like, are awarded to compensate the injured person for his pain, his suffering and his disability. When received by an adult, however, the funds are assets in his hands to be used as he sees fit. He may squander them if he desires to do so. Like any other assets they are subject, among other things, to the claims of his creditors and they are not the subject of any exemption from execution. See N. J. S. A. 2A:17-1 et seq.

A child is afforded special protection under our law. The Court may be said to be a general guardian of all infants and every infant coming before it becomes a ward of the court. Although an infant may acquire property, the law does not generally entrust him with its custody or control. Under our rules, an infant must be represented in any court action, including a negligence action for recovery for personal injuries, by a guardian appointed in this state or by a guardian ad litem appointed by the court. R. R. 4:30-2. Property of an infant, including any amount recovered for personal injuries, is held by a natural or appointed guardian for the child and such guardian is a fiduciary, subject to all the general duties of fiduciaries and to the supervision of the court. N. J. S. A. 3A :6-17 through 34; R. R. 4:101, 103, 105, 106. Although an infant’s funds are shepherded for him and ordinarily cannot he used for his support and the necessities of life, it is clear that they may be so used if those responsible for his support cannot provide it. N. J. S. A. 3A:20-1, 3A:20-2; Walling’s Case, 35 N. J. Eq. 105 (Prerog. Ct. 1882); Aliling v. Alling, 52 N. J. Eq. 92 (Ch. 1893); In Re Vieweger, 93 N. J. Eq. 527 (Ch. 1922); 6 New Jersey Practice, Clapp, Wills and Administration (3d ed. 1962) § 1078, 1079. Normally, upon reaching his majority the child comes into the management and control of his own funds. Like any adult, he can use such funds, including any received and remaining from recovery for personal injuries sustained during his infancy, for any purpose he desires.

It must therefore be concluded that there is no reason why county welfare boards may not secure repayment of assistance payments made to a dependent child out of personal injury recoveries in accordance with the plain terms of N. J. S. A. 44:10-4 and the regulations construing and implementing the statute, as authorized by N. J. S. A. 44:10-3.

The problems of recipients of welfare aid who are faced with demands for repayment by welfare officials, acting in accordance with statute, cannot fail to evoke profound sympathy from fellow humans, including judges who must enforce the laws. It is not denied that strong and appealing policy arguments can be made that recovery should not be sought or permitted from funds received for pain, suffering and disability, whether sustained by an adult or a child. Under our system, however, these arguments are properly made to those who formulate our laws and not to the courts. As stated by Judge Prankel in the recent decision of Snell v. Wyman, 281 F. Supp. 853 (S. D. N. Y. 1968), where a three judge court, by a majority vote, sustained the constitutionality of the welfare laws and administration regulations of the State of New York, including those requiring reimbursement for ADC payments by recipients out of personal injury recoveries:

“. . ., we assume that rational men could agree fully with plaintiffs’ view that the painful consequences of the recovery statutes outweigh the measurable benefits the State seeks from them. We also accept without questioning the view of the scholar who testified in his deposition that ‘any social work purpose in the recovery provisions is quite beyond [his] comprehension’. The plain flaw that none the less destroys plaintiffs’ thesis is ithat it is brought to the wrong forum. Plaintiffs’ complaints might move us to vote for changes if we sat as state legislators . . .
Against plaintiffs’ views, as defendants point out, there are arguments of policy which can scarcely be dismissed as frivolous, whether or not we would find them convincing if the judgments of policy were for us. The State is entitled, they note, to consider relative need and available resources in distributing its limited welfare funds. Even ‘trivial’ recoveries . . . need not be deemed beneath notice. Whether they are correct or not, legislators could plausibly judge that a sense of obligation to contribute or repay if possible serves some function relevant to the concern for human dignity. Moreover, the objectives of rehabilitation and self-support are not seriously impeded at all; . . .
. . . If we were free to enforce what we may modestly deem our more enlightened view, we might seriously consider the changes plaintiffs propose. But we have no such power, and it is better in the end for everyone that this is so.”

See also Donoho v. O’Connell’s Inc., supra.

Our legislature has determined the policy as to reimbursement as set forth in the statute. It is the function and duty of this court to enforce that policy so long as it remains in force.

As stated above, the recent decision in Essex County Welfare Board v. HeTlams, supra, is clearly distinguishable. In that case the Court held that there could be no recovery of ADC payments under N. J. S. A. 44:10-4 out of funds received by a dependent child in settlement of his personal injury claim because, unlike this case, the welfare board had not taken a repayment agreement as provided for in the statute. The Court also held that the welfare board had no right of recovery under the provisions of N. J. S. A. 44:7-19. It seems clear that the Court adopted the reasoning and philosophy of Application of Woods, supra, in its construction of the latter statute, which is not involved in this controversy. To the extent that its holding in this regard may be deemed to apply to the construction of N. J. S. A. 44:10-4, this court feels that it should not be followed for the reasons herein set forth.

It is therefore concluded that on the facts of this case, the welfare board is entitled to the reimbursement sought. The evidence before this court is that there was no proof of the necessity of future medical treatment for Vernon which entered into the award in his favor and the order for judgment in his personal injury action did not allocate any sums for such treatment. See Marchiafara’s Estate (No. 2), 36 Pa. Dist. & Co. R. 2d 319 (Orphans Court, Philadelphia County, 1965) cited supra; N. J. S. A. 44:4-113, 114, 115.

An order shall be submitted in accordance with this opinion and any further necessary proceedings taken in accordance with the order for judgment entered in the cause.


author: Hand, J. S. C.

text:
    CONTINENTAL FINANCE, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF, v. CAMBRIDGE LEE METAL CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY AND UNITED STATES OF AMERICA, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided April 5, 1968.

      Mr. William S. Katchen for plaintiff (Messrs. Ravin & Ravin, attorneys, Mr. David N. Ravin of counsel).

      Mr. Donald A. Resnikoff, Assistant United States Attorney (Mr. Matthew J. Scola, Assistant United States Attorney, on the brief for defendant, United States of America, Mr. David M. Satz, Jr., United States Attorney).
   Hand, J. S. C.

This case involves a determination as to the relative priorities between Continental Finance, Inc., and the United States, to an available fund of $10,812 in the above-entitled case. Continental Finance is basing its claim to a first priority upon a security agreement, dated December 19, 1962, between it and Centre Trucking Co., Inc., Newark, New Jersey, providing for the assignment of accounts receivable now in existence or hereafter created or coming into existence for advances to be made by Continental and the filing, on January 11, 1963, of a financing statement executed in connection with the aforementioned security agreement. The United States is basing its claim to priority under the lien accorded it under Title 26 United States Code, Section 6321. The date on which the earliest tax assessments arose was February 4, 1964. Notices of Federal Tax Liens were recorded with the Register of Deeds, Essex County, Newark, New Jersey on February 10, 1964.

The following facts have been stipulated by the parties:

1. On or about December 19, 1962, Continental Finance, Inc. (herein “Continental”) entered into a financing arrangement with Centre Trucking Co., Inc. (herein “Centre”), whereby Continental purchased certain accounts receivable and choses in action of Centre.
2. Subsequently, and for valuable consideration, on January 10, 1963, Continental obtained a security interest, as defined under the Uniform Commercial Code, N. J. S. A. 124:1-201 (37), in all accounts receivable, all claims against third parties then in existence or thereafter created, together with all personal property, then owned or thereafter acquired, belong to Centre.
3. A Financing Statement, covering said collateral, was filed by Continental with the office of the Secretary of State of New Jersey on January 11, 1963.
4. Relying on its security interest in all of the personal property aforesaid, Continental, after January 10, 1963, continued to advance additional sums of money to Centre.
5. Among the contract rights collateralizing Centre’s indebtedness to Continental, were the proceeds of an executory contract made on or about October 17, 1962 between Centre and Garden State Steel Company (later named Cambridge Lee Metal Co., Inc.), for the trucking, warehousing, and storage of materials by Centre in consideration for Garden State Steel Company’s promise to pay at a fixed rate per ton.
6. All of the contract rights and proceeds, thereof, to be earned by Centre became the property of Continental by virtue of Continental’s security interest in said collateral and default under said agreement by Centre.
7. The parties stipulated that prior to the filing of the Federal Tax Lien, February 10, 1964, Continental Finance entered into and obtained a perfected security interest in the aforementioned collateral of Centre.
8. The proceeds of the contract between Centre and Garden State Steel aggregating $10,812 were earned by Centre after the date of filing of the tax lien, to the extent of Continental’s liens, were secured by virtue of the said Security Agreement.
9. Pursuant to its Security Agreement Continental continued to advance money to Centre; as of the date of the filing of government tax lien Continental was owed a sum in excess of $50,000, exclusive of interest.
10. The filed tax liens indicate unpaid taxes due to the government from Centre in an amount in excess of $59,000.
11. As of February 4, 1964 and continuing to the present date Continental is owed a sum in excess of the available funds of $10,812 from Centre.
12. Continental nor any of its officers, agents or servants had actual notice of the filed government tax lien prior to the advancement of funds from Continental to Centre, pursuant to the said Security Agreement.

Title 26, United States Code, Section 6321, states the following:

6321 LIEN FOK TAXES
“If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal belonging to such person.” August 16, 1954, c. 736, 68 A Stat. 779.

The Federal Tax Lien. Act was amended in 1966. The pertinent provisions of the amendment are as follows:

6323 VALIDITY AND PRIORITY AGAINST CERTAIN PERSONS
“(a) PURCHASES, HOLDERS OF SECURITY INTERESTS, MECHANIC’S LIENORS, AND JUDGMENT LIEN CREDITORS. — -The lien imposed by section 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic’s lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary or his delegate.
ETC. — -(e) PROTECTION FOR CERTAIN COMMERCIAL TRANSACTIONS FINANCING AGREEMENTS
(1) IN GENERAL — To the extent provided in this subsection, even though notice of a lien imposed by section 6321 has been filed, such lien shall not be valid with respect to a security interest which came into existence after tax lien filing but which —
(A) is in qualified property covered by the terms of written agreement entered into before tax lien filing and constituting —
(i) a commercial transactions financing agreement,
(ii) a real property construction or improvement financing agreement, or
(iii) an obligatory disbursement agreement, and
(B) is protected under local law against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation.
(2) COMMERCIAL TRANSACTIONS FINANCING AGREEMENT. — For purposes of this subsection—
(A) DEFINITION. — The term “commercial transactions financing agreement” means an agreement (entered into by a person in the course of his trade or business) —
(i) to make loans to the taxpayer to be secured by commercial financing security acquired by the taxpayer in the ordinary course of his trade of business, or
(ii) to purchase commercial financing security (other than inventory) acquired by the taxpayer in the ordinary course of his trade or business;
but such an agreement shall be treated as coming within the term only to the extent that such loan or purchase is made before the 46th day after the date of tax lien filing or (if earlier) before the lender or purchaser had actual notice or knowledge of such tax lien filing.
(B) LIMITATION ON QUALIFIED PROPERTY — The term “qualified property”, when used with respect to a commercial transactions financing agreement, includes only commercial financing security acquired by the taxpayer before the 46th day after the date of tax lien filing.
(C) COMMERCIAL FINANCING SECURITY DEFINED — The term “commercial financing security” means (i) paper of a kind ordinarily arising in commercial transactions, (ii) accounts receivable, (iii) mortgages on real property, and (iv) inventory.
« * * * * * * *
(b) DEFINITIONS — For purposes of this section and section 6324—
(1) SECURITY INTEREST — The term “security interest” means any interest in property acquired by contract for the purpose of securing payment or performance of an obligation or indemnifying against loss or liability. A security interest exists at any time (A) if, at such time, the property is in existence and the interest has become protected under local law against a subsequent judgment lien arising out of an unsecured obligation, and (B) to the extent that, at such time, the holder has parted with money or money’s worth.
& He sfc sjt # % jjs

Section 114 of Public Law 89-719, 80 Stat. 1146 provides that Section 6323, as amended, shall apply after November 2, 1966 regardless of when a lien or a title of the United States arose or when the lien or interest of any other person was acquired. This general rule as to the effective date of the 1966 Amendment has several exceptions which are not applicable to the case sub judice.

Perfected Federal Tax Liens attach to all after-acquired property of the taxpayer. Sea Board Sur. Co. v. United States, 306 F. 2d 855 (9th Cir. 1962). Under Section 6321, which provides for a Federal Tax Lien upon all property and rights to property, whether real or personal, the government has a lien upon the intangible property of a delinquent taxpayer and the tax lien is a continuing lien and will attach to obligations which come into existence thereafter. Beeghly v. Wilson, 152 F. Supp. 726 (D.C. Iowa 1957); see also Edison Bank v. Mayer, 202 F. Supp. 620 (D. C. N. J. 1962); United States v. Bailey, 137 F. Supp. 578 (D. C. Conn. 1955). As in the case sub judice, a Federal Tax Lien attaches to a claim for work and labor. Citizens State Bank v. Vidal, 114 F. 2d 380 (10th Cir. 1940). A property right of a delinquent taxpayer may be born with a Federal Tax Lien on it, but it is necessary that a property right be born to the delinquent taxpayer before there is anything to which the Federal Tax Lien can attach. Wolverine Ins. Co. v. Phillips, 165 F. Supp. 335 (D.C. Iowa 1958), appeal dismissed 283 F. 2d 518 (1960). The rights of the Federal Government can rise no higher than the rights of the delinquent taxpayer and state law determines whether the taxpayer has any property or right to property to which the Federal Tax Lien can attach. Acquilino v. United States, 363 U. S. 509, 80 S. Ct. 1277, 4 L. Ed. 2d 1365 (1960); U. S. v. Brosnan et al., 363 U. S. 237, 80 S. Ct. 1108 (1960). Spagnuolo v. Bonnet, 16 N. J. 546 (1954). The determination of priority of competing liens on the same property is however a federal question. United States v. Acri, 348 U. S. 211, 75 S. Ct. 239, 99 L. Ed. 264 (1954); United States v. Equitable Life Assur. Soc. of U.S., 348 U.S. 323, 86 S. Ct. 1561, 16 L. Ed. 2d 593 (1966). This does not mean that the “priority” issue can only be determined by a federal court. The case of United States v. Pioneer American Insurance Co., 374 U. S. 84, 83 S. Ct. 1651, 10 L. Ed. 2d 770 (1963) does not so hold, and state courts have regularly exercised their authority to determine in the first instance the question of priority in regard to federally created liens. In Re: Hiawatha Do It Yourself, Inc., 82 N. J. Super. 399, 405 (Cty. Ct. 1964).

Priority of a Federal Tax Lien provided by section 6321 as against liens created under state law is governed by the Common Law rule of first in time, first in right. United States v. Clinton, 260 F. Supp. 84 (D. C. N. Y. 1966); United States v. Roessling, 280 F. 2d 933 (5lh Cir. 1960). The first in time, first in right rule is applied even if the property against which the lien is sought to be enforced was after acquired. United States v. Beaver, 252 F. 2d 486 (3rd Cir. 1958). However, before the rule is applied the state created lien must be specific and perfected in the federal sense. United States v. Morrison, 247 F. 2d 285 (5th Cir. 1957). In determining the priority of Federal Tax Lien over competing liens there has been a persistent application of the “choate lien test” first in insolvency cases, then in statutory lien cases and finally in nonstatutory contractual lien cases. United Slates v. Bond, 279 F. 2d 837 (4th Cir. 1960).

A choate state created lien takes priority over later Federal Tax Liens. Crest Finance Co. v. United States, 368 U. S. 347, 82 S. Ct. 384, 7 L. Ed. 2d 342 (1961). Under law developed by federal decisions, to be fully choate, a lien must attach to specified property and the amount of the lien and identity of lienor must be established. United States v. Equitable Life Assur. Soc. of United States, Supra; United States v. Albert Holman Lumber Co., 206 F. 2d 685 (5th Cir. 1953). A competing state-created lien has no protection against a recorded Federal Tax Lien until it becomes choate in the federal sense. Fore v. United States, 339 F. 2d 70 (5th Cir. 1964), certiorari denied, 381 U. S. 912, 85 S. Ct. 1532, 14 L. Ed. 2d 433 (1965).

Section 6323 (c), as amended, supra, provides that security interests arising under commercial transactions financing agreements entered into before tax lien filing in certain cases are to be protected against Federal Tax Liens, even though the funds are advanced under the agreement, or the property referred to in the agreement comes into existence, after the tax lien filing. However, protection is afforded only where the loan is made not later than 45 days after the tax lien filing (unless actual notice or knowledge of the filing is obtained sooner) and only where the inventory, accounts receivable, etc., are acquired before 45 days have elapsed. The accounts receivable which made up the available fund of $10,812 were the result of invoices dated from April 1, 1964 to July 26, 1964. The Federal Tax Lien was filed February 10, 1964. As mentioned previously the Federal Tax Lien Act of 1966 controls the priority issue. In order to entitle Continental Finance to priority the accounts receivable must meet the statutory tax lien definition of “qualified property” which is security acquired by the taxpayer before the 46th day after the date of tax lien filing. Therefore, the critical date is March 26, 1964. It must be determined if the identity of the lienor, the property subject to the lien, and the amount of the lien, could be ascertained on March 26, 1964 which is 45 days after the filing of the Federal Tax Lien. If Continental’s lien meets this three part federal test then it is entitled to priority over the United States.

Applying the above rationale to the facts in the instant case, this Court observes that Continental Finance, as of March 26, 1964, has met the first and third tests, namely, the identity of the lienor and the amount of the lien. However, the Court further observes that the lien of Continental, as of March 26, 1964, fails to meet the second test, namely, that the property subject to the lien be specific and definite. It is clear that as of March 26, 1964, the various accounts receivable due from Cambridge Lee Metal Co. which comprise the present available fund of $10,812 were not in existence, the earliest of such accounts receivable not coming into existence, until April 1, 1964. Since Continental Finance fails to meet the three tests set forth above, it did not have a choate lien, and, lacking such a choate lien, its lien is inferior to the lien of the United States. It must be remembered that the proceeds of the contract between Centre and Garden State Steel aggregating $10,812 were earned by Centre AFTER the date of the filing of the tax lien.

The Federal Tax Lien Act of 1966 reaffirms the Federal Choate Test as regards the requirement that the identity of the property must be ascertained within the critical period. 26 U. S. C. A. § 6323 (h) (1) in defining a security interest states that a security interest exists at any time if at such time, the property is in existence and the interest is protected under local law against a subsequent judgment lien arising out of an unsecured obligation; and to the extent the holder has parted with money or money’s worth. (Emphasis added). For federal tax purposes a security interest is not considered as existing until these conditions are met even though local law may relate a security interest back to an earlier date and even though it might be an effective security interest as of the earlier date under the Uniform Commercial Code. Pub. L. 89-719, 1966 U. S. Code Cong. and Adm. News, p. 3734.

Continental Finance relies heavily upon the case of In Re Halprin, 280 F. 2d 407 (3rd Cir. 1960). This case dealt with a situation in which the taxpayer borrowed money and gave to his creditor as security an irrevocable assignment in writing of all sums to become due in the future under a then executory contract with a third party (purchaser of jackets). The third party consented to the assignment and agreed to pay the creditor directly when the taxpayer delivered. The Court found that the third party purchaser’s obligation to pay for the jackets was not property of the taxpayer and therefore not subject to the Federal Tax Lien. This conclusion seems logical since when the jackets were manufactured and delivered to the third party, its unqualified obligation to pay, as it then came into existence, ran solely to the creditor and therefore it did not constitute “property belonging to” the taxpayer. Under the factual situation existing in Halprin it is clear that the third party’s obligation to pay money was property of the creditor. As mentioned earlier in this decision state law determines whether the taxpayer has any property or right to property to which the Federal Tax Lien can attach. Acquilino v. United States, Supra; United States v. Brosnan, Supra; Spagnuolo v. Bonnet, Supra. Since all relevant transactions in Halprin occurred in Pennsylvania it is presumed that the Court was applying that state’s property law. Halprin did not deal with priority as between a Federal Tax Lien and one created under state law. On the contrary, in Halprin it was concluded that there was no Federal Tax Lien at all on the property (3rd party’s obligation to pay) which was the subject matter of that litigation.

Such is not the case sul judice. Here we have a valid Federal Tax Lien. The question presented is one of priority. As distinguished from Halprin, Garden State Steel (the third party) owed money directly to Centre (the taxpayer) after Centre performed under the contract between the parties. This obligation of payment on the part of Garden State Steel was a property right of Centre (the taxpayer) to which the Federal Tax Lien as well as Continental’s lien attached. The existence of both liens poses the question of priority and the application of federal law. Continental Finance has not shown that its lien upon the accounts receivable in question ripened into a choate lien, in the federal sense, within 46 days of the filing of the Federal Tax Lien.

Continental Finance argues that the Federal Choate Test has been met since the identity of the property which was the subject matter of its filed security interest was known. Continental contends that the property consisted of “contract rights” which came into existence the moment Centre Trucking Co. contracted to truck, warehouse and store materials for Garden State Steel (later named Cambridge Lee Metal Co., Inc.) in consideration for Garden State Steel Company’s promise to pay at a fixed rate per ton. This contract came into existence on or about October 17, 1962. Continental relies upon N. J. S. A. 12A :9-106 and 204. N. J. S. A. 12A :9-106 defines a contract right as any right to payment under a contract not yet earned by performance and not evidenced by an instrument or chattel paper.

N. J. S. A. 12A :9-204 reads as follows:

“WHEN SECURITY INTEREST ATTACHES; AFTER-XCQUIRED PROPERTY; FUTURE ADVANCES
(1) A securitj' interest cannot attach until there is agreement (subsection
(3) of 12A:1-201) that it attach and value is given and the debtor has rights in the collateral. It attaches as soon as all of the events in the preceding sentence have taken place unless explicit agreement postpones the time of attaching.
(2) For the purposes of this section the debtor has no rights.
(c) in a contract right until the contract has been made:
(d) in an account until it comes into existence.”

Based upon the two aforementioned statutes Continental reasons that a security interest in a contract right is recognized in New Jersey and that such a security interest attaches the moment the contract is made and therefore the identity of the property was ascertained before the existence of the Federal Tax Lien. In substance Continental is distinguishing an account and a contract right. N. J. S. A. 12.4: 9-106 defines an account as any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper. In other words an account is the ordinary commercial account receivable and contract rights are potential accounts. A contract right becomes an account as performance is made under the contract. New Jersey’s characterization of a lien as specific and perfected, however conclusive it may be as a matter of state law, is not conclusive upon the United States when asserting priority for its tax claims. United States v. Waddill, Holland and Flinn, Inc., 323 U. S. 353, 65 S. Ct. 304, 89 L. Ed. 294 (1945); United States v. Security Trust and Savings Bank, 340 U. S. 47, 71 S. Ct. 111, 95 L. Ed. 53 (1950).

A contract right, being a potential account receivable, is contingent. The Federal Courts, in determining whether a lien is choate, have ruled that a contingent lien or encumbrance is not entitled to priority over a Federal Tax Lien. A competing nonfederal lien is choate when nothing further needs to be done to make it enforceable. To be choate the competing lien must be definite at the critical time and not merely ascertainable in the future by taking further steps. Illinois Ex Rel. Gordon v. Campbell, 329 U. S. 362, 67 S. Ct. 340, 91 L. Ed. 348 (1946). With respect to a judgment lien on personal property, to be choate the creditor must obtain an execution or levy where state law requires it before the judgment becomes a lien on such property. Fore v. United States, 339 F. 2d 70 (5th Cir. 1964). Where a creditor sues a debtor-taxpayer and attaches property or garnishes credits, the lien of the attachment or garnishment is inchoate prior to judgment. United States v. Security Trust and Savings Bank, Supra; United States v. Hawkins, 228 F. 2d 517 (9th Cir. 1955). One reason why an attachment lien is inchoate before judgment is that the lien may be defeated if judgment is entered for the defendant. The Supreme Court of the United States, in United States v. Security Trust and Savings Bank, Supra, reasoned as follows:

“The attachment lien gives the attachment creditor no right to proceed against the property unless he gets a judgment within three years or within such extension as the statute provides. Numerous contingencies might arise that would prevent the attachment lien from ever becoming perfected by a judgment awarded and recorded. Thus the attachment lien is contingent or inchoate — merely a lis pendens notice that a right to perfect a lien exists. Nor can the doctrine of relation back — which by process of judicial reasoning merges the attachment lien in the judgment and relates the judgment lien back to the date of attachment — operate to destroy the realities of the situation.”

It has been held that an attachment lien, prior to judgment, is inchoate even though under state law an attachment lien is regarded as an execution in advance and as a perfected lien. United States v. Acri, Supra. Applying the Supreme Court’s logic in declaring an attachment lien inchoate it necessarily follows that contract rights are equally inchoate. That which is contingent must be inchoate. If Centre Trucking never performed the contractual obligations owed to Garden State Steel nothing would have ever come into existence upon which a lien could attach. Also, if Centre Trucking attempted to execute its duties which resulted in a breach of the contract or a non compliance with that called for, no right which could be considered property would have come into existence upon which a lien could attach.

Federal Courts have held that contingent rights of the taxpayer are not “property or rights to property” to which a Federal Tax Lien could attach. In Home Ins. Co. v. R. R. Rider Corp., 212 F. Supp. 457 (D. C. N. J. 1963) the issue was whether the federal government or two conditional vendors were entitled to the proceeds of a fire insurance policy issued to the taxpayer, the insured property having been destroyed by fire. The tax lien was filed before the fire. The court recognized the existence, before the fire, of a bilateral executory contract between the taxpayer insured and the insurer. Among the several holdings of the court was the proposition that prior to the time when a party to a bilateral contract performs and thereby obliges the other party to perform, the contract is wholly executory and promise to pay is contingent upon whatever performance was bargained for in exchange. Only by conferring an agreed equivalent benefit can the promisee acquire an enforceable right to the promised payment. The court concluded that where it is entirely uncertain whether the conditional promise to pay will ever become unqualified and enforceable, the interest of a party to the contract is purely contingent and therefore not “property and rights to property” to which a tax lien under Section 6321 could attach. The court pointed out that until the fire occurred no lien could arise in favor either of the government or any other claimant upon the interest, whatever it was, of the taxpayer in the fire insurance policies. So also, in City of New York v. United States, 283 F. 2d p. 829 (2nd Cir. 1960) the court held that a Federal Tax Lien attaches only to the extent of a taxpayer’s property interest, and is not a proper basis for a levy on contingent rights before they come into being.

Therefore since a taxpayer’s contingent interest is not property to which a Federal Tax Lien could attach it follows a debtor’s contingent interest is not property to which a security interest could attach and therefore meet the federal choate lien test.

Continental Finance Company’s security interest in the contract rights was a caveat of a more perfect lien to come. This Court concludes, applying the federal standard, that the Federal Tax Lien is superior to the security interest in the contract rights since such security interest is inchoate, it being based upon unborn accounts receivable as collateral security, which is a contingent obligation, which did not ripen into an indebtedness until after 45 days from the filing of the Federal Tax Lien.

Based upon the above reasoning this Court finds that the United States is entitled to first priority to the available fund of $10,812.

      Note: 1 N. J. S. A. 12A :9-106 expressly provides for security interest presently created in contract rights, to be earned in the future.