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

text:
    LEONA TROTTA, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT, v. MAURICE TROTTA, DEFENDANT-RESPONDENT AND CROSS-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued September 30, 1968
    Decided October 29, 1968.

      Before Judges Coneord, Kilkenny and Leonard.

      Mr. Hermcm W. Kapp argued the cause for appellant-cross-respondent.

      Mr. Edward 8. Snyder argued the cause for respondent-cross-appellant (Messrs. Rudd, Ackerman, Breitkopf & Goodman, attorneys).
   The opinion of the court was delivered by

Conford, S. J. A. D.

We have here for review an appeal and cross-appeal by a wife and husband, respectively (who were living separately under a consent judgment of separate maintenance entered October 36, 1960), from an order dated June 13, 1967 which determined various motions and petitions filed by the parties against each other during the years 1965 and 1966. The disputes relate mainly to matters of money, property and accounting.

We observe at the outset that the appendices furnished the court in this matter are most unsatisfactory, consisting of a mass of uncoordinated bits and pieces of the proofs, colloquy and exhibits from the record before the trial court, of a nature such as to render a fair understanding by the court of the factual background of the controversies between the parties almost impossible. Further adding to our difficulties is the fact that the parties represented themselves pro se in the trial court, and one cannot tell, as to much of the material incorporated in the appendices, whether it constitutes argument, as by counsel, or sworn testimony, as by a party-witness. However, we have attempted to deal with the data presented as best we could in deciding the issues presented.

The prime subject of present contention is whether the plaintiff is the sole equitable owner of the Lake Mohawk property to which the parties hold title jointly as tenants by the entirety under a deed dated December 21, 1953. This property was purchased by the parties for a consideration of $15,000, $5,000 having been paid in cash and $10,000 through a mortgage made by them jointly. The property was originally acquired as a place of recreation for the family, which at the time included two children; later it was leased to various tenants.

It is plaintiff’s contention that she advanced the $5,000 down-payment out of her personal funds and that it was her understanding at the time, as gained from defendant, who is admitted to the New York bar (but does not practice law), that legal technicalities required the title to be taken in both names, and that he arranged the transaction in that manner although he knew she expected the property to be hers alone. She also asserts breach by defendant of a fiduciary relationship to her in the transaction. She consequently contends for the existence of a resulting or constructive trust in the property for her benefit. The trial court held plaintiff failed to establish that the $5,000 came from her own funds and that, in any case, the contention of trust was not substantiated as a matter of law.

We eschew a review of the contested question of fact as to the source of the money on the blurred and incomplete record before us as it is our conclusion that the determination of the trial court on this point must be affirmed even if the purchase funds emanated from plaintiff. Preliminarily, any special equity to the property in the plaintiff could not exceed the $5,000 contribution asserted since both parties joined in the bond and mortgage by -which the remainder of the purchase price was realized. Eurther, the factual assertion in plaintiff’s brief that plaintiff and defendant both intended at the time of purchase that she was to be the sole beneficial owner of the property is not supported by one iota of proof in plaintiff’s appendix supplied on this appeal. Plaintiff’s factual assertions in this regard in her brief were totally unsupported by reference to the record. See R. R. 1:7-1 (d).

Assuming, arguendo, that plaintiff did contribute the $5,000 down-payment from her separate funds, the controlling presumption by the weight of the best reasoned authority, there being no proof in the record of a contrary intention on the part of the parties, is that the husband takes exactly that interest in the property which the deed on its face purports to give him — in this case a joint estate by the entirety with his wife. Annotation 43 A. L. R. 2d 917, 918-19 (1955), and numerous cases cited therein; and see Restatement of Trusts 2d, § 441, comment (e) (1959). Plaintiff admits she knew that title was taken in both names.

A distinction must be drawn between the type of situation presented here, i. e., investiture of title in the names of both spouses, and that where title to the property acquired with the wife’s funds is placed in the name of the husband alone. In the latter instance the predominant view holds that the applicable presumption (rebuttable) is of a resulting trust in favor of the wife. 4 Powell on Real Property, § 592, p. 564.111 (1968); 5 Thompson, Real Property, (1959), § 2343, p. 106; Restatement of Trusts 2d (1957) § 442, comment (a), p. 403; 5 Scott on Trusts, § 442, p. 3337 (1967).

As to the case where the title to the property is knowingly taken in both names, as pointed out in the well-considered Annotation, 43 A. L. R. 2d, supra:

“The case of a conveyance running to both husband and wife on a consideration supplied by the wife (the situation within the instant title) is, however, quite clearly distinguishable [from that where title is placed in the husband alone], since if the wife’s name appears as grantee on the deed, in a purchase made by herself, she can ordinarily have no purpose in also including her husband’s name unless to vest in him such an interest in the property as the conveyance on its face imports.” (at p. 918)

Examination of the cases discussed in the cited annotation fully supports the proposition stated in the quoted text. More recent decisions are also in accord. Kiplinger v. Kiplinger, 148 Cal. App. 2d 862, 307 P. 2d, 677 (Ct. App. 1957); Hurt v. Jones, 147 Cal. App. 2d 164, 304 P. 2d 786 (Ct. App. 1956); United States v. Trilling, 328 F. 2d 699 (7 Cir. 1964) (alternative ground, applying Illinois law) ; Gionfriddo v. Palatrone, 196 N. E. 2d 162 (Ohio Prob. Ct. 1964); Wilber v. Wilber, 312 S. W. 2d 86 (Mo. Sup. Ct. 1958) (dictum). Restatement of Trusts 2d, supra, applies the presumptive rule even beyond the case of husband and wife taking title together, comment (e) under § 441 reciting:

“e. Where title, taken, in joint names of payor and another. The fact that the payor takes title to property in the name of himself and another jointly is an indication of an intention of the payor to make a beneficial gift of an undivided interest in the property to the other person; and in the absence of evidence of a different intention of the payor, the other person does not hold his interest upon a resulting trust for the payor. This is true whether the transfer was made to the payor and the other person as joint tenants or as tenants in common.”

The Supreme Court has in two earlier cases expressly left open the question whether a purchase of realty in the names of husband and wife jointly by use of the wife’s money creates a presumption of gift pro tanto to the husband or a resulting trust in favor of the wife of the husband’s legal interest. Rayher v. Rayher, 14 N. J. 174, 182 (1953); Graham v. Onderdonk, 33 N. J. 356, 365 (1960). The opinions purported to find more than one viewpoint in the authorities on the subject. In both cases, however, the court found affirmative evidence of intent by the parties that the wife was to retain the entire beneficial interest. See the earlier case of Pieretti v. Seigling, 134 N. J. Eq. 105, 106 (Ch. 1943), where the presumption of gift was applied.

The question left unresolved in Graham and Rayher does require decision in the present case, since, as we have held, there is nothing affirmative in the record before us to indicate the actual intention of the parties in the matter one way or the other. When this property was acquired in 1953 the family was, insofar as anything in this record indicates to the contrary, a normal family unit acquiring a recreation spot for the use of the family as a whole. We are satisfied that based upon both the pronounced weight of authority and sound public policy the rule is and should be that where title is knowingly taken in both names and the wife provides the purchase money the appropriate presumption is gift by the wife to the husband of that undivided joint interest in the property which the deed purports to vest in him.

In modern society it is not at all unusual for a wife to command more capital assets or income than the husband. Further, the drive today toward parity of the sexes in many social and economic relationships conduces to the view that it should no longer be regarded as necessary, in the ordinary case, as once it may have been, to protect the wife from overreaching by her husband by nourishing an artificial presumption against the natural inferences as to her intent to be drawn from her settling a parcel of realty in their joint names. See 5 Scott on Trusts, supra, at p. 3340.

From the standpoint of the adjudicated cases, as has been already suggested above, the actual holdings on point almost uniformly are for a presumption of gift where title is knowingly taken in both names. The case cited most often for the contrary view, Schwarz v. United States, 191 F. 2d 618 (4 Cir. 1951), is dictum in that regard, the court having placed strong reliance on the fact that the grantees were not in fact husband and wife, the putative husband having concealed from the wife a prior undissolved marriage to another woman.

We thus conclude that there was no resulting trust in favor of plaintiff for her $5,000 advance toward the purchase price of the Lake Mohawk property, if in fact she supplied those funds.

Nor can we find anything at all in the record before us to support the contention of a violation by defendant of any fiduciary relationship to plaintiff in the circumstances attending the acquisition of the property. It is to be noted that plaintiff is evidently an intelligent and well-educated woman, engaged as an instructor at Eairleigh Dickinson University. Moreover, the contention was not raised at trial level, and we see no reason to entertain it here.

[The court here disposes of other contentions raised by appellant and cross-appellant.]

The judgment is in part affirmed, and in part reversed, as specifically hereinabove determined, and the cause is remanded to the trial court further to be proceeded with as hereinabove directed. No costs to either party on this appeal.


source: Caselaw Access Project

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

license: Public Domain

text:
    ELMORA SAVINGS AND LOAN ASSOCIATION, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. ALFRED V. D’AUGUSTINO AND CLARA D’AUGUSTINO, HIS WIFE, AND ANGELO F. ABARCA, DEFENDANTS, AND PATRICIA K. ABARCA, HIS WIFE, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued October 21, 1968
    Decided October 29, 1968.

      Before Judges Goldmann, Kolovsky and Cabton.

      Mr. Robert C. Gruhin argued the cause for appellant.

      Mr. John A. Lyons argued the cause for respondent (Mr. Richard B. O’Connor, attorney).
   The opinion of the court was delivered by

Goldmann, S. J. A. D.

May the wife of a career serviceman claim the benefit of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U. S. C. A. App. § 510 et seq.) in a foreclosure action where the mortgage on the marital home was assumed by her and her husband while he was in service and he in writing stated that he did not wish to oppose the action, and where the wife, asserting her rights as a dependent, made no other defense or showing? We agree with the Chancery Division judge that she may not.

Defendants Abarca were married in 1951. Abarca was then in the United States Navy. He served in the Navy from 1947 to 1956, at which time he joined the United States Air Force. He is still in that branch of the service.

The Abarcas purchased 52 Bayberry Court, Port Beading, N. J., from defendants D’Augustino on July 27, 1964, subject to a mortgage the D’Augustinos had given plaintiff in 1962 and which the Abarcas by separate instrument under seal assumed and agreed to pay according to its terms. Mrs. Abarca presently resides in the mortgaged premises together with the three children of the marriage.

Mortgage payments being in arrears, plaintiff instL tuted foreclosure proceedings against the Abarcas and the D’Augustinos. Only Mrs. Abarca filed an answer. She admitted that the mortgage was in default, as stated in the complaint, but by way of separate defense asserted that she was entitled to the benefits of the cited federal act by reason of her husband’s military service, so that plaintiff was prohibited from proceeding with foreclosure while he continued in the armed forces.

Plaintiff’s attorney mailed a copy of the summons and complaint to Abarca, postage prepaid, registered mail, return receipt requested. The letter was returned marked “Be-fused.” He then resorted to publication of notice to absent defendant in a local newspaper and mailed a copy of the notice and the complaint to Abarca, postage prepaid, registered mail, return receipt requested. The letter was returned marked “Unknown.”

In due course an attorney was appointed for Abarca. The attorney wrote him fully explaining the pending action and inquiring whether he desired to be represented or to make any defense. Abarca received that letter, sent certified mail, and receipted therefor. Shortly thereafter he appeared at the assigned attorney’s office, advised him he did not wish to oppose the foreclosure action, and signed a statement so stating. All this was reported to the trial judge. Plaintiff then moved for summary judgment, which was granted. This appeal by Mrs. Abarca followed.

We first note that defendant-appellant’s brief was filed out of time, without application having been made for an extension of time, R. R. 1:7—13, and without the consent of opposing counsel. Ordinarily, this would be cause for imposing sanctions, including the dismissal of the appeal. Abel v. Elizabeth Board of Works, 63 N. J. Super. 500, 509 (App. Div. 1960); Little v. Little, 35 N. J. Super. 157, 162 (App. Div. 1955). R. R. 1:7-12 mandates the filing of an appellant’s brief within 30 days after the filing of the notice of appeal. Under R. R. 1:7—13 the time so fixed may not be extended by the court except for good cause shown. In view of the defense raised, we shall nonetheless proceed to determine the appeal on the merits.

In her two-page brief, Mrs. Abarca relies upon 50 U. S. C. A. App. § 536 of the Soldiers’ and Sailors’ Civil Relief Act of 1940. That section reads:

“Dependents of a person in military service shall be entitled to the benefits accorded to persons in military service under the provisions of this article [sections 530-536 of this Appendix] upon application to a court therefor, unless in the opinion of the court the ability of such dependents to comply with the terms of the obligation, contract, lease, or bailment has not ben materially impaired by reason of the military service of the person upon whom the applicants are dependent.”

Counsel overlooks the provisions of section 532 of the act, which deals with mortgages, trust deeds, or other security in the nature of a mortgage:

(1) The provisions of this section shall apply only to obligations secured by mortgage, trust deed, or other security in the nature of a mortgage upon real or personal property owned T>y a person in military service at the commencement of the period of the military service and still so owned by him which obligations originated prior to such person’s period of military service.
(2) In any proceeding commenced in any court during the period of military service to enforce such obligation arising out of nonpayment of any sum thereunder due or out of any other breach of the terms thereof occurring prior to or during the period of such service the court may, after hearing, in its discretion, on its own motion, and shall, on application to it by such person in military service or some person on his behalf, unless in the opinion of the court the ability of the defendant to comply with the terms of the obligation is not materially affected by reason of his military service — (a) stay the proceedings as provided in this Act [sections 501-548 and 560-590 of this Appendix] ; or (b) make such other disposition of the case as may be equitable to conserve the interests of all parties. * * *” (Italics ours)

As noted, the Abarcas assumed the mortgage debt by separate agreement executed under seal when they purchased the property from the D’Augustinos in 1964. At that time Abarca had been in military service for more than 16 years. He has since continued in the service, making it a career. Since the property was not owned by the Abarcas at the commencement of the period of military service and the mortgage assumed by them did not originate prior thereto, section 536, providing for an extension of benefits to dependents, does not apply in light of section 532. As was said in Whitaker v. Hearnsberger, 123 Colo. 545, 233 P. 2d 389 (Sup. Ct. 1951), section 532 bj7 its plain provisions does not prevent the foreclosure of any obligation pursuant to a written agreement of the parties executed during the period of military service. And see Corbin, “Effect of Civil Relief Act on Existing Mortgages,” 66 N. J. L. J. 81 (1943).

Since Mrs. Abarca did not satisfy the requirements of the federal act in its application to the case at bar, the remaining question is whether the pleadings and affidavits filed in connection with the motion for summary judgment created any genuine issue as to any material fact such as would preclude the trial judge from granting the motion. R. R. 4:58-3. The only defense raised to plaintiff’s right to proceed with the foreclosure and its right to possession of the mortgaged premises is the husband’s military service. All other essential elements of plaintiff's cause of action stand undisputed. Since section 536 is not available as a defense, summary judgment was properly granted.

The judgment is affirmed.


author: Horn, J. S. C.

text:
    THE WESTERN SAVINGS FUND SOCIETY OF PHILADELPHIA, PLAINTIFF, v. JEAN N. GOODMAN, ET AL., DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided October 17, 1968.

      Mr. David Baker for defendants Seaboard Finance Company, Hazel L. Pietras and Fesbitt Sales Company.

      Mr. Ohaunkey L. Barrett for defendant New Jersey Bell Telephone Company.

      Mr. James 8. Gafiero for defendant J. J. Hone, a corporation (Messrs. Gafiero & Ballielte, attorneys).

      Mr. John Gorino for defendant David A. Elliott (Messrs, Kay & Gorino, attorneys).

      Mr. Joseph. Tenenbaum for defendants Robert Hepburn and Elizabeth Hepburn.

      Mr. Palmer M. Way, Jr. for defendant Thomas B. Benner, .Jr.
   Horn, J. S. C.

The issue before me deals with the priorities of judgment creditors in surplus funds arising from a sheriff's sale resulting from a mortgage foreclosure. R. R. 4:82-4 provides that an application may be made for surplus moneys in foreclosure actions at any time after the sale, and may be heard by the court on motion or notice to all defendants whose claims are not directed in the mortgage foreclosure execution to be paid out of the proceeds of the sale. All of the claimants to the fund are holders of judgments which were liens upon the lands covered by the foreclosed mortgage.

The facts are not in dispute. If they were, findings of fact would be required. R. R. 4:44-4; Paterson Stove Repair Co. v. Ritzer, 123 N. J. L. 145 (Sup Ct. 1939); Van Dine v. Sussex, 5 N. J. Misc. 1066, 139 A. 342 (Sup. Ct. 1927). On May 14, 1968 final judgment in the foreclosure action was entered, and on May 20, 1968 a writ of execution was issued out of this court commanding the sheriff of Cape May County to sell lands and premises of defendant Goodman in order to satisfy the amount due to plaintiff on its mortgage, and in case more money should be raised by such sale than would be sufficient so to do, then to deposit the surplus money with the clerk of this court.

On July 2, 1968 the sheriff sold said land pursuant to the writ and deposited with the clerk of this court the sum of $1,913.35 as the surplus money arising from such sale.

None of the judgment creditors issued execution upon their respective judgments except J. J. Hone, a corporation, (Hone) as hereinafter related.

Since the sum total of the judgments recorded before Hone’s would exhaust the surplus fund, Hone will receive no payment from the fund unless it is entitled to the priority of payment claimed by it in this proceeding.

Orders to show cause why distribution of the fund in court should not be made were issued in July 1968 and served upon the parties in interest. However, due to an objection to the sale made by the purchaser, no disposition of the application was made. The objection was settled and the disposition of the objection was evidenced by an order entered on August 7, 1968.

On September 9, 1968 a petition was filed by New Jersey Bell Telephone Co., one of the judgment creditors, for distribution of the surplus moneys, and an order to show cause based upon said, petition was issued on the same date, directing all judment creditors, including Hone, to show cause "why an order should not be made directing the withdrawal and payment of the surplus moneys deposited with the Clerk of the Court.” On September 16, 1968 copies of the petition and order to show cause were mailed to each judgment creditor and interested party, including Hone, pursuant to the terms of said order.

Subsequently another judgment creditor served notice of motion upon each of the others for the same purpose of obtaining an order determining the priorities and directing distribution. Both the order to show cause and the motion were made returnable October 4, 1968.

•It Cannot be disputed that 'all of the activity 'recited - abové with respect to the Hone judgment; frdm‘the time of the docketing of the judgment in the Superior Court tó the tiihe: the levy was made, was precipitated by the realization that’ ordinarily there were insufficient funds on deposit with thé clerk to apply toward the Hone judgment. None of this, activity took placé until after service of the order to show cause. 1 x , - " ,, • ■.«?j /,•< ^ ,, '■ t- : 1 ■,. ■ -, - r 1 /> ¡ issued upon the, application of .the Kew Jersey Bell. Telephone Company.

.Hone,relief Vineland Savings & Loan Ass’n v. Felmey, 12 N. J. Super. 384 (Ch. Div. 1951.) as, support,fqr,j£s( claim of priority.. In that case Judge (now Justice.) Hajieman had before him an application for surplus moneys whiphalso arose from , a, sale held in a., mortgage f preclosure yon June 21, 1950. -He, dealt with the issue, of the,relatiye :pyi-,, ority of the liens¡ of two. judgment er,editors,-,1 One ,qf them,,; Corn Exchange, National Bank-and Trust. Co., (Corn, Ex-’, change), was joined , as a party defendant by reason- of; a, judgment which had been docketed in the office of, the clerk, of the county, on August 18, 1949.' Subsequently .this judgment was assigned: to the UnitedtStates/of America, . ,/'

The judgment of the other creditor, Millville National Bank (Millville), was docketed in the County Court on June 22, 1950 and in the Superior Court on August 2, 1950.

On August 10, 1950, execution on the judgment of Millville was issued and levy made by the sheriff of Mercer County on the surplus moneys which had been deposited with the clerk of this court. Neither Corn Exchange or the United States of America had caused execution to be issued.

Justice Haneman held first, that following Fredd v. Darnell, 107 N. J. Eq. 249 (Ch. 1930), money on deposit with the court clerk is considered to be in custodia legis; but notwithstanding that, could be levied upon if substantial confusion or embarrassment would not result. He found that the levy would not create confusion or embarrassment.

Second, he recognized the effect of R. S. 2:26-137 (now N. J. S. 2A:17-39). This statute has long been interpreted to direct that the mere execution and levy on real estate by a judgment creditor results in a priority for such judgment creditor over all other judgment creditors, regardless of the date of docketing. Clement v. Kaighn, 15 N. J. Eq. 47 (Ch. 1862).

Third, he recognized the rule that surplus funds resulting from a sale under a mortgage foreclosure of realty are deemed to retain the character of land “insofar as the liens or the vested rights in the realty are concerned.”

Accordingly, he held that Millville secured a priority of payment solely as the result of the levy upon the “right, title and interest” of the mortgagors in said fund as well as the “rights and credits.”

Vineland Savings & Loan Ass’n v. Felmey, supra, has been cited with approval. Silver v. Williams, 72 N. J. Super. 564 (App. Div. 1962); Naglieri v. Trabattoni, 20 N. J. Super. 173 (App. Div. 1952) (where funds on deposit with a court were levied on but which did not involve priorities of creditors).

In Silver v. Williams it was held that a junior judgment creditor secured a priority of payment with respect to mortgage foreclosure sale surplus funds by reason of a levy on the right, title and interest of the mortgagor in the subject lands while the foreclosure action was pending and before final judgment was entered. See also Riverside Building and Loan Ass’n v. Bishop, 98 N. J. Eq. 508 (Ch. 1925).

Our cases, including Fredd v. Darnell, supra, generally hold that the “confusion or embarrassment” referred to where a levy is made upon funds in custodia legis result from levies made by virtue of executions issued out of a different court or courts than those whose officers are in possession of the funds.

Crane v. Freese, 16 N. J. L. 305 (Sup. Ct. 1837), which first enunciated the rule followed by our courts, involved money in a sheriff’s hands as the result of one levy, which was then sought to be taken by another levy to satisfy a different execution in his hands against the judgment creditor plaintiff in the first execution and defendant in the second.

Chief Justice Hornblower said:

“* * # [TJ]pon reflection, I am satisfied the proceeding is wrong upon principle — wrong, not only, because the money is not the money of the defendant in attachment, until it has been paid over to him by the sheriff, or in some other way definitively designated as his, or appropriated exclusively to his use; but wrong, because it would lead to embarrassment and confusion, to permit one process of the court to intercept moneys raised on another, while in the hands of the officer. But more than this, it might frequently lead to injustice.”

In Conover v. Ruckman, 33 N. J. Eq. 303 (E. & A. 1880), the court explained the effect of the holding in Crane v. Freese, supra, and stated:

“* * * [T]he court also adjudged that the writ of attachment was well served on the moneys due the plaintiff in the execution and in the sheriff’s hands, as rights and credits of the defendant in attachment in the hands of the sheriff; and the duty of the officer, in that event, was pointed out. He was to obey the command of the writ of execution under which he raised the money — bring the money into the court out of lohich the execution issued, and give notice to the plaintiff in the attachment, or to the creditors, that he had done so; and the court would then control the application of the funds and protect its officer in the discharge of h,is duty.” (Emphasis added)

See also Hoffman v. Kahn, 119 N. J. Eq. 171 (Ch. 1935); Bernstein v. New Jersey Bankers Securities Co., 115 N. J. Eq. 347 (Ch. 1934).

In 33 C. J. S. Executions § 55 c., p. 187 (1942), it is stated:

“The doctrine is well settled that money realized by an officer by virtue of an execution, or money paid into court, cannot be levied on as the property of the judgment creditor, it being regarded as in custodia legis.”

N. J. S. 2A:17-39, upon which is based the authority to give priority to a judgment creditor who first levies, was not intended to be operative in a case such as the one at bar. Once the funds are paid into court it is only a matter of proper distribution, not a matter of securing a lien or obtaining a priority. The confusion or embarrassing referred to in Crane v. Freese, supra, was with respect to dealings between courts; not in determining priorities; where the liens and the priorities thereof were already established before the courts officer received the moneys and they came under the control of the court.

No doubt when the surplus moneys arose in this case, they stood in a place of the land, Vineland Savings & Loan Ass'n v. Felmey, supra; otherwise, judgment creditors. would have lost their liens completely. The liens which existed automatically attached to the suplus funds.

In a case such as here presented, where money is paid into court, it seems that since a judgment entered even after the deposit but before distribution would establish the right to participate in the fund, equitably a levy upon it should not be recognized as effecting a priority to payment against other lien holders.

Crane v. Freese went no further than to establish that where a levying judgment creditor had caused a fund to be placed in the hands of the sheriff, in which he had an interest, a levy upon his rights and credits therein by his own judgment creditor would be recognized. In such case the officer of the court would be guided by the court in making disbursement, and the officer would thereby obtain the protection of the court.

In the case at bar, for all practical purposes the mortgagor had no interest whatever in the fund. There was no attachable right or credit.

In 59 C. J. S. Mortgages §800 b, p. 1531 (1949), it is stated:

“Piens inferior to the lien of the mortgage foreclosed attaeh to the surplus proceeds of sale in the same order and relative,.priority| which they held with reference to'the premises before 'the foreclosure, and must be paid in that order, unless some equitable right demands a different order of payment, as in the case where one, creditor can found a claim, to preference on his superior vigilance' and activity * * * "

Why,' therefore, should this* court 'coúhtenhnce a race to secure a priority when the method of acquiring it, to wit, by issuing execution and levying upon á fund in' court, is only an empty gesture from the, standpoint of actually reducing the funds to possession? Under our mod? ern concepts, equitably a priority in payment should not rest upon an artificial,, hollow, and .unsubstantial act. , .... ■

Hone, in this instance, knew that its levy would not result in the, deli very,, of.'.the funds or any, part ¡thereof, fq. if, as,.a, direct, result of this action,. It ¡knew fiat it would, jn n.o way accelerate the distribution of the funds either to it ;or any others. Its sole and only purpose was to endeavor to obtain a priority in payment to which it would not otherwise be. entitled-'■ . V : . ¡ '■ ", ; - ‘ y,'U '■

Vineland Savings & Loan Ass’n v. Felmey, supra, is clearly distinguishable from the case at bar because in this case the levy was not made until after parties already entitled to distribution had moved to obtain the release of the deposited funds.

Although N. J. S. 2A :17-39 encourages the “vigilant” judgment creditor ‘to gain - “the proper effect and fruits thereof,” it does not contemplate that a party should he rewarded by causing a levy to be made after judgment creditors already have initiated proceedings to obtain distribution. Cf. Bogert v. Lydecker, 45 N. J. L. 314 (Sup. Ct. 1882); Williams v. Gilbert, 37 N. J. Fq. 84 (Ch. 1883) and Lovejoy v. Lovejoy, 31 N. J. Eq. 55 (Ch. 1879).

■These, other, judgment, creditors,. in pjjy^uingifherir,¡-rights to distribution, fver-e -even more v-igilant,¡than ¡Hone,sand are, entitled to -the- “proper-, effect r¡and .fruits /of fheiiy.vigilaneq.Their applications and efforts toward securing payment were tantamount to a levy. Confusion and embarrassment might well result if the court should uphold Hone’s claim to priority.

A fair interpretation of Vineland Savings & Loan Ass’n v. Felmey, supra, does not require that Hone should succeed in its attempt to accomplish a priority of payment.

The Proposed Revision of the Rules Governing the Courts of the State of New Jersey, submitted November 1966 by the Supreme Court’s Coordinating Committee on the Revision of the Rules of Court, contains in the part pertaining to foreclosure of mortgages and tax certificates the following:

“4:64-2(b) Effect of Action on Priorities. The priorities of defendants’ liens or encumbrances shall be fixed and determined as of the date of the commencement of the foreclosure action, unless the parties have otherwise agreed.”

It is hoped that this proposed rule will ultimately be adopted.

For these reasons I conclude that distribution of the surplus moneys should be made in accordance with the priorities existing when the funds were deposited with the clerk of this court.


text:
    MARY FORIS, PLAINTIFF, v. NICHOLAS FORIS, DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided October 22, 1968.

      Mr. Morgan E. Thomas for plaintiff.

      Mr. Lawrence M. Perskie for defendant (Messrs. Perskie & Neustadter, attorneys).
   Horn, J. S. C.

This is a motion to dismiss on the ground that jurisdiction over defendant is lacking.

Plaintiff brought an action to enjoin her husband from proceeding with his divorce action in the State of Nevada, on the ground that the courts of said state did not have jurisdiction over the subject matter, neither of the parties being domiciled there. Plaintiff never entered an appearance in the foreign action.

A verified complaint and order to show cause containing appropriate restraint were issued and served by registered mail upon defendant in Nevada, pursuant to the terms of said order. He received these papers four days before a divorce decree in his favor was entered by the Nevada court. He failed to heed the restraint against proceeding with that action on the advice of his Nevada counsel. Defendant returned to New Jersey two days after the decree was handed down.

Defendant cites Meeker v. Meeker 52 N. J. 59 (1968), as support for his position that the service in Nevada was ineffective. Meeker presents a question as to whether an absent New Jersey domiciliary may be served by registered mail, return receipt requested, as permitted by R. R. 4:96-4 and R. R. 4:4-5, so as to constitue due process upon a defendant in an action enjoining him from obtaining a declaratory judgment as to the existence nor nonexistence of a marriage.

In Meeker the court stated:

“An action to adjudge the existence or p^nepstence"of a^arltdl status involves a right personal to the 'pártiáá. -Ii'-can'-he entertained only if there is such service as would support a judgment in personam. To permit resolution of that-rig-h-t — by service under R. R. 4:4-5 (service on absent defendants) rather than by personal service under R. R. 4 4-4 would, in our view amount to a denial of due process."

Defendant relies primarily on this language for his contention that this court never obtained jurisdiction over him.

As demonstrated hereinafter, our decisions have for many years recognised the validity of the kind of service pursued in the present cased. Our rules of procedure, as hereinafter shown, were obviously fashioned on the principles enunciated by our case law in recognition of such service outside the State.

However, the quoted language of Meeker is such as reasonably to raise the question of the validity of such service.

R. R. 4:93 to 4:98, inclusive, apply to matrimonial actions. R. R. 4:93-2 defines the term “matrimonial actions" as "all actions brought under the inherent jurisdiction of the court for the annulment of marriage, for the protection of the status of marriage by injunction or otherwise, and for the confirmation or otherwise of the validity of marriage by declaratory judgment * * R. R. 4:85-3, which provides for service on order to show cause -in lieu of summons, in pant states, “Service [of the copy of the order to show cause] may be made outside the State, by mail, publication ,or otherwise, all as the court may by order direct, providing the nature of the action is such that the court may thereby acquire jurisdiction.”

A finding of fact has already been made in this case that defendant’s domicile remained in'this State at all times. None of the cases which have upheld such service is cited or discussed' in any manner in Meeker. Notably absent from discussion was Kempson v. Kempson, 58 N. J. Eq. 94 (Ch. 1899), affirmed 63 N. J. Eq. 783 (E. & A. 1902).

In Kempson complainant wife sought to enjoin defendant husband, ‘from proceeding with a suit he had commenced in one of the .courts- of the State of North Dakota for a divorce against her. Upon exhibiting of the complaint and affidavits, the vice-chancellor issued an order to show 'cause containing a restraint similar to that in the instant case, and directed' that the order be served upon defendant where-ever he might be found.

Defendant proceeded with the prosecution of the foreign suit, obtained a áeereé oí divorcr, and then attacked the jurisdiction of the New Jersey court to hold him in contempt for the reasons, among others, that “defendant was not served'with either the order to show causé‘Or the injunction, and that such notice as he actually had of it was pot sufficient to place him in contempt for failure to obey it”; also, “jurisdiction of his person was not obtained by service of process within the state, and hence service of either the order or the writ, or both, out of the State was a mere nulity, because the" court had acquired no jurisdiction to make any order against him.”

The vice-chancellor (at page 309) held that in accordance with precedents followed by our courts,

“* * * proceedings with regard to the validity or dissolution of marriage are in rein. They actually operate upon the matter; they affirm, constitute or dissolve the marriage relation * * *. The difference between the present suit and one for divorce is that the object of the one is to preserve - and of the other to destroy marital relation; and I think that the one for preservation is quite as clearly within the spirit and reason of the rule laid down by Chancellor Zabriskie [in Addington v. Addington, (Coddington v. Coddington) 20 N. J. Eq. 263 (Ch. 1869)] and Mr. Justice Adams in Harvey v. Harvey [Hervey v. Hervey], 56 N. J. Eq. 424 (E. & A. 1897) as that for the destruction of the relation.”

The rule established in Kempson was:

“It seems to me that where the spouses are both domiciled in this State, and one of them seeks to destroy the marriage relation by a suit in a foreign jurisdiction, the right of this court at the instance of the one who desires to preserve it against the other, to protect the marriage relation by its extraordinary process, although it is unable to make service of its jurisdictional process within the State, is quite as clear as it would be to use such extraordinary process against a party who was threatening to inflict irremediable mischief on ordinary visible property situate within the State, although it may be powerless to serve him with jurisdictional process within the State. The spouse who was domiciled in the State and who fears irremediable mischief to the marriage relation is as much entitled to judicial protection as the owner of ordinary property situate within the State.” (at p. 310)

In the opinion affirming this holding, the Court of Errors and Appeals, stated:

“It may be regarded as settled, by a long train of adjudications, culminating in Atherton v. Atherton, 181 U. S. 155, 21 S. Ct. 544, 45 L. Ed. 794 that the state wherein are the matrimonial domicile and also the domicile of the complaining spouse, has the right to confer upon the courts jurisdiction over the matrimonial status, no matter where the other spouse may be. In such circumstances the matrimonial status is deemed to have a situs within the State,, resembling for the time being, the situs of land, and the proceeding respecting that status is quasi in rem. This power is recognized and upheld by foreign states, provided the state exercising it has made and carried out reasonable provision for giving to the defendant notice and an opportunity to be heard.” (63 N. J. Eq., at p. 784)

Finally, the court said:

“In the ease now before us, the matrimonial domicile and the domicile of the complainant being- actually within the State when the bill was filed, the court had the right to proceed to final decree against the defendant, even though he remained absent from the State, and therefore to require his obedience to the injunction, of which he had notice.”

Meeker was an action brought only to determine whether the marital status existed. In the case at bar the action was brought to preserve the marital relation. A declaratory judgment neither creates, destroys nor preserves; It merely clarifies. So far as it clarifies it affects personal rights. But in such a case there is no res. In overruling Morrissey v. Morrissey, 1 N. J. 448 (1949) and Floyd v. Floyd, 95 N. J. Eq. 661 (E. & A. 1924), Meeker made it clear that the court could determine the marital status, if either party were domiciled in the State. Additionally, Meeker held that fraud on our courts was not a prerequisite to the entertainment of such action.

In Perlman v. Perlman, 113 N. J Eq. 3 (Ch. 1933), defendant husband went to Nevada for the sole purpose of obtaining a divorce against his wife, having no intention to remain in Nevada and making it his home. He proceeded to obtain the divorce in that jurisdiction despite an injunction obtained by the wife in New Jersey prohibiting him from pursuing his cause of action in Nevada. He admitted receiving the New Jersey order restraining and enjoining him in Nevada. The court held:

“Where one of the parties seeks to destroy the marriage relation by a suit in a foreign jurisdiction, the right, of this court, at the instance of the one who desires to preserve it against the other, to protect the marriage relation by its extraordinary process although it is unable to make service of its jurisdictional process within the state is clear. The spouse who is domiciled in the state, and who fears an irremediable mischief to the marriage relation, is as much entitled to judicial protection as the owner of ordinary property situate within the state, and it is well settled that it is a matter of no consequence how the fact of the issuing of the injunction is brought to the knowledge or the notice of the defendant * * *.”

See discussion of the New Jersey rule in Annotation, “Enjoining Divorce Suit in Another State,” 128 A. L. R. 1467, 1477 (1955), as supplemented in Annotation, “Injunction - Foreign Divorce Action,” 54 A. L. R. 2d 1240, 1252 (1955).

As already stated, this court found as a fact that defendant Dr. Foris was a domiciliary of New Jersey. Had it been found that he had effectively become a Nevada domiciliary at the time he received notice and sought his divorce, then the court would have been obliged to find that the Nevada divorce was valid and he could not be punished for contempt. Brown v. Brown, 24 N. J. Super. 198 (App. Div. 1953).

From the time of Kempson in 1899 (and even before it) to Famely v. Famely, 90 N. J. Super. 128 (App. Div. 1966), our courts have assumed that service as was made in the instant case was valid and sufficient for the purpose of acquiring jurisdiction to make a determination as to the validity of the foreign decree, and to compel defendant to abide by the court’s judgment.

The view taken in these cases and the permissiveness of our rules of civil procedure appear to be in accord with the holding of the United States Supreme Court in Milliken v. Meyer, 311 U. S. 457, 61 S. Ct. 339, 85 L. Ed. 278 (1940). The court there held, in language which leaves no room for interpretation, that:

“* * * the authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties. * * * That relationship is not dissolved by mere absence from the state. * * * One such incidence of domicile is amenability to suit within the state even during sojourns without the state, where the state has provided and employed a reasonable method for apprising such an absent party of the proceedings against him.” See discussion in Goodrich on Conflicts, “Jurisdiction of Courts,” § 73, p. 118 (1964).

If personal service within this State in a divorce action is not required, the public or State’s interest in preserving the marriage should not be encumbered by requiring such service in a ease such as the one at bar.

In the commercial world, the complications of obtaining jurisdiction over an absent or out-of-state defendant have diminished to a point where service by mail is permissible on a showing of “minimum contact” or “substantial connection.” All through these cases there runs the concept of compliance with traditional notions of fair play and substantial justice. International Shoe Co. v. State of Washington, 326 U. S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1946); McGee v. International Life Ins. Co., 355 U. S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1953); Roche v. Floral Rental Corp., 95 N. J. Super. 555 (App. Div. 1967); Roland v. Modell's Shoppers World of Bergen County, 92 N. J. Super. 1 (App. Div. 1966); Hoagland v. Springer, 75 N. J. Super. 560 (App. Div. 1962).

Reference to the “loug-arm” cases demonstrates the policy of our State to obtain, within constitutional limits, jurisdiction over a party defendant in the commercial world in the interest of protecting its citizens. If it is in the State’s interest in the commercial sphere to protect its citizens by diminishing the harsh and arbitrary effect of state boundaries, it is of less importance in the area of law now before us. Certainly there is no violation of traditional notions of fair play and substantial justice.

J must conclude, thereto in, that the court in Meeker purposely did not cite any of the Kempson cases because it was not intended to overrule the precedents thereof. Additionally, Meeker made it abundantly clear that not only did it not consider that the ease before it was a “matrimonial action”, it also made it clear that there had never been a matrimonial domicile in New Jersey.

Consequently, the holding of Meeker is not applicable to the case at bar. The service of the complaint and order to show cause in this case constituted a good and valid service upon defendant by virtue of which jurisdiction over him was acquired. R. R. 4:85-1 et seq.


author: Lynch, J. S. C.

text:
    HARRY L. TILLBERG, t/a RITZ BILLIARD ACADEMY, PLAINTIFF, v. TOWNSHIP OF KEARNY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, AND THE MAYOR AND COUNCIL OF THE TOWNSHIP OF KEARNY, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided October 15, 1968.

      Mr. Stanley 8tern for plaintiff (Mr. David 8. Greenberg, attorney).

      Mr. Paul J. McCurrie attorney for defendants.
   Lynch, J. S. C.

Plaintiff is the owner and operator of a billiard parlor in the Town of Kearny, New Jersey, and has been such since on or about March 15, 1964. In 1929 the town had adopted an ordinance providing for the licensing and regulating of billiard parlors. Prior to plaintiff’s acquisition of the business involved, he applied to the town council and received a license to operate. Having thus secured the license, plaintiff purchased the business. It is conceded that the premises were then, as they are now, in violation of section 8 of the ordinance which provides that no license shall be issued to conduct such a business where the place where it is to be conducted is below the surface of the adjoining street, and also in violation of section 6 in that the interior of the premises are not open to full view by the public, either from the street or the hall or corridor of the place where the business is conducted. It is further conceded that the same conditions had existed in violation of the ordinance since 1936, but annual licenses had nevertheless been issued ever since. On June 1, 1964- plaintiff entered into a new five-year lease agreement for the premises at a monthly rental of $110. The license was renewed for the years 1965, 1966 and 1967.

On January 2, 1968 plaintiff applied for renewal of the license for that calendar year, whereupon he was advised that a public hearing would be held on February 4, 1968 concerning his application. Such a hearing was held, and on May 8, 1968 the mayor and council adopted a resolution refusing to renew plaintiff’s license. Essentially, four reasons were given for the denial: (a) the premises attract young people who create disturbances, trespass on adjacent property and generally have a detrimental effect upon the peace and welfare of the town; (b) the premises violate the subject ordinance in that the interior is not open to full view by the public from the street or hall or corridor of said premises, as required by section 6 of the ordinance; (c) the premises are situated below the surface of the adjoining street, a violation of section 8, and (d) plaintiff had been fined for permitting a 15-year-old boy to play billiards on the premises on May 6, 1967, in violation of N. J. S. 2A :170-54.

Plaintiff attacks the action of the town in refusing renewal of the license, essentially on these grounds: (1) the subject ordinance constitutes an unreasonable and arbitrary exercise of the delegated powers of the town; (2) it fails to contain appropriate standards to guide the town authorities in the issuance or renewal of a license; (3) the licensing provisions, being invalid, are so intimately related to the ordinance as a whole as to render it void; (4) the town is estopped from refusing to renew the license because of noncompliance of the premises with the physical requirements of the ordinance, sections 6 and 8, and (5) the denial of plaintiff’s application for a billiard parlor license was arbitrary, unreasonable and capricious. Plaintiff’s contentions will be treated in order.

(1)

The reasonableness of the ordinance as a regulation of billiard parlors

Plaintiff’s first argument rests in part on the contention that in modern times it is unreasonable to regulate billiard parlors and that their alleged capacity for evil is a relic of bygone days. He would thus belittle the alleged evils of “pool” parlors, much as was so delightfully done by the show-tune, “Trouble in Kiver City,” whose lyrics equated “trouble” with “pool,” but by hyperbolic artistry clearly carried the message that such relationship existed only in the minds of the credulous and naive. Defendant town, on the other hand, cites Murphy v. State of California, 225 U. S. 623, 32 S. Ct. 697, 56 L. Ed. 1229 (1912), which held that billiard parlors have inherent possibilities for evil arising from the tendency of young people to loiter therein, the encouragement of idleness and with attendant further possibilities of wrongful conduct clandestinely carried on.

It may be that the potentials for evil in billiard parlors today are not the same as they were in 1912. The difference may be only in kind. We cannot be blind to the possibility that public pool parlors may be the situs of gambling (cf. Feder v. McCaffrey, 110 N. Y. S. 2d 488 (Sup. Ct. 1952)), lottery or, more relevant to today’s problems, perhaps the purveying or use of drugs. Though there is no evidence of such use here, the feasibility thereof is the relevant consideration. The concept of Murphy v. State of California, supra, has been endorsed as the public policy of this State by N. J. S. 2A :170-54, which ordains that billiard parlors are not appropriate for the attendance of young people under the age of 16. To that end they may be regulated by facilitating surveillance by the police.

Despite the entertaining appeal of “Trouble in River City” that only the credulous find evil in pool, ordinances such as that here involved are aimed, as was said in Murphy, not at the game but at the place. In anjr event, N. J. S. A. 40:52-1(f) expressly delegates to municipalities the power to regulate billiard parlors. The exercise of legislative judgment in this respect is not subject to judicial superintendence unless plainly beyond the realm of police power or palpably unreasonable. State v. Mundet Cork Corp., 8 N. J. 359 (1952). The reasonableness is committed in the first instance to the municipal authorities. Schmidt v. Board of Adjustment of City of Newark, 9 N. J. 405 (1952).

The court cannot say that the regulation of billiard parlors contained in this ordinance, particularly sections 6 and 8 concerning the physical characteristics of the premises, is palpably unreasonable. Such provisions as that the premises be open to view from outside and be at street level may serve to provide better surveillance by the police and prevent clandestine acts inimical to the general welfare of the municipality. The provisions are in furtherance of the policy established by N. J. S. 2A :170-54, supra. Whether this is desirable legislative judgment is for the local governing body to decide, and not this court.

(2)

The sufficiency of “standards” for licensing

With respect to plaintiff’s contention that the ordinance is lacking in sufficient “standards” for the issuance of a license, it is noted, first that sections 2(2) and 2(3) provide that no license may issne unless “the Chief of Police approves in writing and application,” and that the Council “approve said application.”

It is well settled that a licensing ordinance vesting discretion in municipal officials to issue or deny a license must contain appropriate standards to govern such decisions. Moyant v. Borough of Paramus, 30 N. J. 528 (1959); Weiner v. Borough of Stratford, County of Camden, 15 N. J. 295 (1954); Finn v. Municipal Council of City of Clifton, 136 N. J. L. 34 (E. & A. 1946); Lipkin v. Duffy, 119 N. J. L. 366 (E. & A. 1937); Jersey City Merchants Council v. Jersey City, 71 N. J. Super. 156 (App. Div. 1961); Gross v. Allan, 37 N. J. Super. 262 (App. Div. 1955); Mister Softee v. Mayor and Council of City of Hoboken, 77 N. J. Super. 354 (Law Div. 1962).

In Gross v. Allan, an ordinance of the Town of Kearny provided for the licensing of the business of selling motor vehicles on vacant land. It provided that the license shall not issue until after approval by the building inspector, the superintendent of the fire prevention bureau and the town council “after hearing thereon.” The court said:

“There is no escape from the essentiality of specific provisions plainly stating the norms or standards which are to guide and control the designated officials in determining whether the license shall be granted or denied. Weiner v. Borough of Stratford, 15 N. J. 295, 299 (1954); Township of Raritan v. Hubb Motors, Inc., 26 N. J. Super. 409, 410 (App. Div. 1953); Finn v. Municipal Council of City of Clifton, 136 N. J. L. 34 (E. & A. 1947); Rosenberg v. Board of Com’rs of City of Camden, 137 N. J. L. 505 (Sup. Ct. 1948). Defendants urge that tbe requirements for approval by the building inspector and the superintendent of the fire prevention bureau sufficiently imply an intent that the statutes and ordinances committed to their administrative enforcement should constitute the standards applicable. Cf. Kurinsky v. Board of Health, Lakewood Township, 128 N. J. L. 185, 187 (Sup. Ct. 1942). While the nature of the subject matter regulated may in a particular case warrant fairly broad standards, Adams Theatre Co. v. Keenan, 12 N. J. 267, 274 (1953); Ward v. Scott, 11 N. J. 117, 123, 124 (1952), the legislative language should not leave any doubt as to what the standards are. The mere requirement of the approval of particular administrative or police officers does not spell out the standards, particularly where, as here, there is overlaid the requirement of approval by the governing body ‘after hearing’, unaccompanied by specification of any kind of criterion upon which the decision at the hearing is to hinge. Finn v. Municipal Council of City of Clifton, supra (136 N. J. L., at pages 36, 37). Section 4 of this ordinance is defective on its face and invalid.” (37 N. J. Super., at p. 268; emphasis added)

Defendants point to section 9 of the ordinance which reads as follows:

“Any license granted pursuant to the terms of this ordinance may be revoked by resolution of this Council upon hearing and for due cause such as failure to comply with any of the provisions of this ordinance * ® (Emphasis added)

Defendants urge that since this section provides for revocation “for due cause,” there is thereby established a sufficient standard for licensing, citing In re Berardi, 23 N. J. 485 (1957), and Ward v. Scott, 11 N. J. 117 (1952). In Berardi a private detective license had been issued to appellant, and after he had pleaded nolo contendere to a charge of having made a false and fraudulent income tax return, the license was revoked pursuant to N. J. S. A. 45 :19-12 which authorized such revocation “for cause.” The court there held that the statute providing for the granting of the license required certain standards with respect to character, competency and integrity of the person applying for the license, and that a sufficient standard was the testing of the known facts against the ordinary and generally accepted meaning of the words “good character, competency and integrity.” In Ward v. Scott, supra, it was held that the question of “standards” must be decided in the light of the objects of the ordinance.

Measured by either of the tests suggested by Berardi and Ward, the instant ordinance is deficient. There is no requirement in the ordinance that before a person be granted a license he must be of good character. All that is required upon the application is that he give his name, the names of the persons intending to conduct the business, their age and residence and, if a corporation, the names of the officers responsible for the conduct of the business. The granting of the license is entirely contingent upon the approval of the application by the chief of police and then the council. Their discretion is unbridled, and apparently could be withheld with or without any reason.

further, section 9 provides for revocation after the license has been issued and after presumably some provision of the ordinance has not been complied with. Such regulations apply to the conduct of the business and provide for revocation after such conduct has failed to comply with certain provisions of the ordinance, such as permitting persons under the age of 16 on the premises (section 10) or prohibition of gambling (section 11). Such provisions can have no relation to the issuance of the license. Since the renewal of the license is subject entirely to the whim of the chief of police and the council in approving or not approving the application, in this respect it must be held that the ordinance is deficient as to standards.

(3)

Is the. entire ordinance invalid because of deficiency in standards?

Having thus decided that the licensing provisions of the ordinance are invalid, there remains the question as to whether those provisions are so intimately related to the ordinance as a whole so as to render the entire ordinance invalid. The test of total invalidity was stated in Gross v. Allan, supra:

‘‘The question of severability of the invalid provision is one both of legislative intent, * * * and of whether the remaining provisions are functionally self-sufficient as containing the essentials of a complete enactment, * * *. The two criteria must coexist.” (37 N. J. Super., at p. 269)

See also, Tagmire v. Atlantic City, 35 N. J. Super. 11 (App. Div. 1955). As said in Mister Softee, supra:

“In the ordinance in question the intent that the sections be sever-able is clear, but the problem is whether without the licensing provisions the ordinance makes sense. Without the licensing provisions, the ordinance is not self-sufficient. To eliminate the word license or licensee from the separate paragraphs of section 21:29 would leave the regulations a meaningless shell. To substitute another word in the place of licensee, such as vendor or peddler, to make the regulations meaningful, would be to rewrite the ordinance. This is not the duty of the courts but belongs strictly to the realm of the municipality. The words of Judge Goldmann are clearly applicable to this ordinance, ‘Since all the sections are intimately related and form an integrated whole, the entire ordinance must be held invalid.’ Tagmire v. Atlantic City, supra." (77 N. J. Super., at pp. 378, 379)

An examination of this ordinance clearly leads to the conclusion that it is a licensing ordinance and that the regulatory portions, such as they are, are directly related to a “licensed” place. When the licensing provisions fall, so do the regulatory aspects. Section 1 of the ordinance prohibits the conduct of the pool business without a license. The regulations contained in sections 3, 7, 8, 9, 10, 11 and 14 govern the place which is “licensed” by express reference to the license or place licensed. Without the licensing provision the ordinance is not self-sufficient, and it is therefore concluded that the entire ordinance is invalid.

(4)

Assuming that sections 6 and S of the ordinance are severable, is the municipality estopped from refusing a license because of violations thereof?

If it be argued that sections 6 and 8 are severable and remain viable despite the holding above that the entire ordinance is invalid, we come to plaintiff’s contention that, granting that the physical condition of the premises violated those sections, defendant town is nevertheless estopped to assert such violations as ground for refusal to renew the license. The basic factual support for plaintiff’s contention 'lies in the fact that for at least 31 years a license has been issued lor the premises although they were in violation of sections 6 and 8; that before plaintiff invested his money in the business involved he obtained a license and thereafter entered into a five-year lease for the premises, after which the license was renewed for the years 1965, 1966 and 1967 — during all of which time the premises were in the same condition now asserted as one of the grounds for refusing renewal.

The town asserts that a governmental body cannot be (‘stopped “by acts of its officers and agents” for violation of positive law. It cites Adler v. Department of Parks, etc., Irvington Tp., 20 N. J. Super. 240 (App. Div. 1952), and Giordano v. Mayor and Council of Borough of Dumont, 137 N. J. L. 740 (E. & A. 1948).

The line between acceptance of the doctrine of estoppel against a municipal corporation and the inherent aversion thereto is not clear. Some of this confusion springs from the dichotomy created by the decision in Freeman v. Hague, 106 N. J. L. 137 (E. & A. 1929), and such cases as Dickinson v. Inhabitants of Plainfield, 13 N. J. Misc. 260, 176 A. 716 (Sup. Ct. 1935), affirmed 116 N. J. L. 336 (E. & A. 1936); Home Fuel Oil Co. v. Borough of Glen Rock, 118 N. J. L. 340 (Sup Ct. 1937); Giordano v. Mayor and Council of Borough of Dumont, supra, and Adler v. Department of Parks, etc., Irvington Tp., supra.

In Freeman, by a vote of 8 to 6, the Court of Errors and Appeals hold that where a board of commissioners of a city recommended the granting of a building permit, even though improperly, and the permit had been granted, the board is without lawful power to revoke the permit after the owner had acted upon the faith of it by expenditure of moneys in the prosecution of work, and had entered into contractual relations with builders for the erection of a building pursuant to the permit.

Freeman was followed by the opinion of then Justice Case in Dickinson v. Inhabitants of City of Plainfield, supra. In that case the property .owners applied for and were granted a permit by the 'building inspector to make alterations to convert their automobile showroom use to a service station. After s.ome moneys were expended and alterations were made the permit was rescinded as improperly allowed because in violation of the .local ordinance. It was held that the building inspector had no authority to grant such permit and the town was not estopped from rescinding the permit. Justice Case distinguished Freeman v. Hague by saying that in the latter case the permit had been issued “by a duly qualified municipal body” but in the case before him the permit had merely been issued by an officer who did not have the authority to issue it.

Home Fuel Oil Co. v. Borough of Glen Rock and Adler v. Department of Parks, etc., Irvington Tp., likewise are cases in which an official, as distinguished from a governing body itself, had issued permits, after which they were revoked by the governing bodies. In both of those cases Freeman was distinguished by specific reference to Justice Case’s distinction of Freeman, made in Dickinson v. Inhabitants of City of Plainfield, supra.

In Giordano v. Mayor and Council of Borough of Dumont, supra, the building inspector of the town issued a permit for the erection of a gasoline station in violation of the zoning ordinance which prohibited such use. Relying on that permit, the property owner incurred obligations. Thereafter, when a new building inspector took office, the violation was noticed and the permit was revoked. Plaintiff claimed that the municipality was estopped from denying the validity of the action of the building inspector in issuing the permit, relying on Freeman v. Hague. Again the court distinguished Freeman by saying: “That decision does not apply to the instant matter as it dealt with the building permit granted by a duly qualified body prior to the passage of the Zoning Act, R. S. 40:55-1 et seq.” (Emphasis added).

An analysis of the foregoing decisions suggests that the decision in Freeman subsists, unrepudiated, insofar as it holds that where a permit has been granted by a “duly qualified municipal body,” as distinguished from an unauthorized issuance of a permit by an officer or agent of a municipality, the municipality is estopped from revoking the permit (assuming, of course, that the elements of estoppel, such as reliance and change of position, are shown).

In this case the license for these premises had been issued for the prior 31 years, not by a mere officer or agent of the municipality, but, pursuant to section 13 of the ordinance, after approval by the town council itself. Therefore, Freeman v. Hague is applicable and estoppel is not precluded by the decisions in Dickinson, Home Fuel Oil, Giordano, or Adler.

The court is not unmindful of the fact that it has been said by respectable authority that Freeman v. Hague has been “repudiated” in later cases, Adler v. Department of Parks, etc., Irvington Tp., supra, and that though it “has never been overruled * * * it has been distinguished into disgrace.” 9 Rutgers L. Rev. 716 (1954-55); 13 Rutgers L. Rev. 90 (1958-59). The latter article recognizes the confusion in this area. On the other hand, in Kurowski v. Board of Adjustment of City of Bayonne, 11 N. J. Super. 433 (1951), the Appellate Division, quoting verbatim the opinion below of then Law Division Judge Brennan, adopted his suggestion, based on citation of Tim v. City of Long Branch, 134 N. J. L. 285 (Sup. Ct. 1946), affirmed 135 N. J. L. 549 (E. & A. 1947), that the doctrine of Freeman v. Hague may apply where the proofs are convincing of the good faith of expenditures made on the strength of an unauthorized permit and where the equities dictate application of estoppel. In 9 Rutgers L. Rev. 717 (1954-55) it was said that there was reserved for the future the question whether the rule enunciated in Adler is qualified by the exception suggested in Kurowski. So far as this court has beeen able to discover this doubt has not yet been relieved. It may be that this case, at this or another level, may serve to shed some light.

Whatever doubt may remain, it is clear that Judge Brennan’s suggestion, that Freeman be applied where the equities are served, is consonant with the polestar established by the later decisions of our Supreme Court, i. e., that estoppel will apply against a municipal corporation where the interests of justice, morality and common fairness clearly dictate that course. See 405 Monroe Co. v. City of Asbury Park, 40 N. J. 457, 463 (1963); Gruber v. Mayor, etc., of Raritan Tp., 39 N. J. 1, 13 (1962), and Palisades Properties, Inc. v. Brunetti, 44 N. J. 117 (1965). Conversely, estoppel will not apply where the permittee is not in good faith. As Judge Brennan said (quoted at 11 N. J. Super. 441) the Dickinson, Home Fuel Oil and Lynch v. Hillsdale, 136 N. J. L. 129 (Sup. Ct. 1947), aff’d 137 N. J. L. 280 (E. & A. 1948) opinions all emphasize the undue speed and implicit bad faith with which the landowners in those zoning cases incurred obligations and expenses on the strength of the unauthorized permits. If we apply this measure to the acts of plaintiff here, no such opprobious connotation can be laid to them. On the other hand, in this court’s view, justice, morality and common fairness dictate that defendant municipality should be estopped to claim that the physical characteristics of the premises, which it had accepted for 31 years, may now be asserted as ground for refusal to license the premises.

In V. F. Zahodiakin, etc., Corp. v. Zoning Board of Adjustment of City of Summit, 8 N. J. 386 (1952), an “exception” to the zoning ordinance had been granted with the approval of the governing body of the City of Summit and when, nine years later, continuance of that exception was refused by that governing body, it was held by the Supreme Court that the city was not estopped to terminate the exception. However, the court there made the distinction between those actions of a municipal body which are wholly beyond its statutory, power, and therefore ultra vires in the primary sense, and those actions which are within the municipality’s delegated power but irregularly exercised, and therefore ultra vires in the secondary sense. As to the former, there can be no estoppel. As to the latter, there may be. As Mr. Justice Heher said in Zahodiakin, the agreement made in 1952 by the City of Summit, whereby the landowner was purportedly granted an “exception” to the zoning ordinance, was clearly beyond the power of the municipality because it violated the statute which authorized the granting of such an exception. The action was “extra” the statute and was not even professed to be in exercise of the statutory power. It was not a mere irregular exercise of a function residing in the local authority but was “wholly beyond the statute.” Therefore the action constituted an excess of jurisdiction, was utterly void and there could be no estoppel against the municipality’s revocation of its prior action. The distinction thus made was stated in Summer Cottagers’ Ass’n of Cape May v. City of Cape May, 19 N. J. 493 (1955):

“There is a distinction between an act utterly beyond the jurisdiction of a municipal corporation and the irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The former are ultra vires in the primary sense and void; the latter, ultra vires only in a secondary sense which does not preclude ratification or the application of the doctrine of estoppel in the interest of equity and essential justice. Compare Jersey City Supply Co. v. Jersey City, 71 N. J. L. 631 (E. & A. 1905) ; Los Angeles Dredging Co. v. City of Long Beach, 210 Cal. 348, 291 P. 839, 71 A. L. R. 161 (Sup. Ct. 1930); Continental Construction Co. v. City of Lawrence, 297 Mass. 513, 9 N. E. 2d 550 (Sup. Jud. Ct. 1937), 111 A. L. R. 699; Town of Holbrook v. Girand, 52 Ariz. 291, 80 P. 2d 695, 118 A. L. R. 1203 (Sup. Ct. 1938); State ex rel. Bayer v. Funk, 105 Or. 134, 199 P. 592, 209 P. 313, 25 A. L. R. 625 (Sup. Ct. 1922); Bell v. Kirkland, 102 Minn. 213, 113 N. W. 271, 13 L. R. A., N. S., 793 (Sup. Ct. 1907).” (at pp. 504-505)

In Summer Cottages’, a sale of public lands was made in violation of the governing statute (N. J. S. A. 40:60-26). It was held that, while the sale was in violation of the statute, it was “within the municipality’s essential jurisdiction” (p. 506) and estoppel applied, especially where “equity and elemental justice” dictated application of estoppel.

Likewise, in the instant situation, the granting of the license through the several years by the defendant municipality was within its delegated power. The power to license and regulate billiard parlors is expressly granted to the municipality by our N. J. S. A. 40:52-1. It therefore was not an act ultra vires in the primary sense, but rather only in the secondary sense and estoppel should be applied where equity and justice require it.

It is true that mere failure to enforce an ordinance against a violator, without more, will not estop a municipal corporation from later enforcing it. Leigh v. City of Wichita, 148 Kan. 607, 83 P. 2d 644, 119 A. L. R. 1503 (Sup. Ct. 1938). But as said in the annotation to that case, 119 A. L. R., at p. 1511:

“It was pointed out [in Leigh] that the case was not one in which the application of the doctrine of estoppel against a municipality was required by justice and right, as where positive acts of city officials induced the action of the persons against whom the city was proceeding.”

And see Kennedy v. City of Newark, 29 N. J. 178 (1959), where mere failure to enforce an ordinance requiring city residence of its employees was held not sufficient to estop the city from enforcing it at a later time. But Chief Justice Weintraub carefully pointed out that the facts therein did not suggest the issue: “There is no evidence of a studied policy not to enforce the ordinance. * * * Quite obviously the missing link is official knowledge of violations of the ordinance.” (at p. 192). Not so here. The positive acts of defendant governing body in granting the license for many years despite noncompliance with sections 6 and 8 were clearly acts which induced plaintiff to invest in his business, and the annual attention to renewal for those years did indicate a studied policy not to enforce the ordinance against plaintiff. It cannot be said that there was a “missing link” of official knowledge of the violation.

In Feder v. McCaffrey, 110 N. Y. S. 2d 488 (Sup. Ct. 1952), petitioner had operated a billiard parlor for six years and had received annual licenses. The commissioner of licenses denied renewal because of three arrests over the last four years, all of which were dismissed. The court, reversing the denial of the license, said:

“The harshness and unfairness of respondent’s arbitrary act is manifest from the fact that the license was renewed each year after respondent was cognizant of the complaints and arrests and alleged character of the neighborhood; that after the arrests of petitioner’s brother in 1950 the license was at first suspended and then reinstated; that thereafter, relying on such reinstatement, petitioner committed himself to a five year lease and that since such reinstatement there was no complaint or arrest made, but, on the contrary, the Police survey revealed no evidence of gambling or illegal activities. Though the issuance of a license affords no contractual rights, petitioner is entitled to the aegis of and protection by the Court and to have it intervene and shield him from the arbitrary, capricious and unreasonable conduct of the respondent,” (at p. 494; emphasis added)

So here, this court believes that the overriding principle which governs with respect to estoppel is that stated in the more recent decisions of our Supreme Court as cited above and as put in Palisades Properties, Inc. v. Brunetti, 44 N. J. 117 (1965):

“Municipalities, like individuals, are bound by principles of fair dealing, Hankin v. Hamilton Twp. Bd. of Education, 47 N. J. Super. 70, 78 (App. Div. 1957). Equitable principles of estoppel will be applied against municipalities ‘where the interests of justice, morality and common fairness clearly dictate that course.’ 405 Monroe Co. v. City of Asbury Park, 40 N. J. 457, 463 (1963); Gruber v. Mayor and Tp. Com. of Raritan Tp., 39 N. J. 1, 13 (1962); Tremarco Corporation v. Garzio, 32 N. J. 448, 458 (1960); Vogt v. Borough of Belmar, 14 N. J. 195, 205 (1954).” (at p. 131)

Under the circumstances of this case, the foregoing standards postulate that defendant municipality is estopped from asserting violations of sections 6 and 8 of the subject ordinance as a ground for denying renewal.

(5)

Assuming the validity of the ordinance, on the evidence below, was the action of the municipality arbitrary, unreasonable and capricious?

Last, this court holds that the denial of the renewal of plaintiff’s license was arbitrary and capricious insofar as it is based on the testimony at the public hearing of February 14, 1968, to the effect that plaintiff’s billiard room is an “attraction for young people who frequently and regularly create disturbances, including the use of obscene language, obscene actions, arguments, fights, trespassing on adjacent premises and littering said premises with beer cans and other debris and in general detrimentally affecting the peace, tranquility and welfare of the Town’s residents.” The testimony in this respect, given by neighbors living in the vicinity of the pool parlor, was very vague. Some of them testified that after young people came out of the plaintiff’s premises, indecent language was heard; that somewhere in the neighborhood indecent acts were observed; that on one or two occasions fights developed, and that autos driven by youths sped through the streets of the neighborhood. There was also some testimony that there was littering of the neighbors’ premises.

In measuring the action of the local authority below as to whether it wis arbitrary or capricious there is necessarily incorporated that aspect of defendants’ actions referred to in point (4) above, namely, refusal to renew by reason of violations of sections 6 and 8 of the ordinance though licenses had been issued despite such violations since 1936. This, too, is relevant as to whether the action below, in the entire context, was arbitrary or capricious.

With respect to the testimony of the neighbors as to “disorderly conduct” in the neighborhood of plaintiff’s premises, the following language in Feder v. McCaffrey, supra, is pertinent :

“* * * There is no factual showing that this petitioner is in any manner connected with or responsible for this alleged condition. * * * If it is respondent’s theory that pool rooms per se are responsible for the breeding of crime, they should all be suppressed, but by legislative action after a proper legislative investigation. The remedy is not by the refusal by an administrative officer to renew a specific license of a pool room of an operator who has not been shown by facts to have been guilty of any wrongdoing. * * *” (110 N. Y. S. 2d, at p. 493; emphasis added)

So here, there is no proof connecting this plaintiff with the conditions described. They were conditions that occurred in the neighborhood, but were not causally related to plaintiff’s conduct of the pool parlor. Several police officers testified. The complaints received by the police were minimal. In fact, Sergeant Comer testified that the complaints from the neighbors were no more frequent in this neighborhood than in other places. Chief Mulligan testified that, while there were problems in this neighborhood related to ears -racing through the streets, noise, screaming, hollering, etc., they were conditions which were common in other neighborhoods as well as this one. Police had never been called to the interior of the premises and, while they7 responded to several complaints of the neighbors, investigation failed to substantiate them. Chief Mulligan expressly testified that, if it were not for the physical aspects of the building, he would have to approve renewal of plaintiff’s license.

The last asserted ground for the failure to renew the license was the fact that, on one occasion, plaintiff had been convicted of a violation of N. J. S. 2A :170-54, for allowing a 15-year-old boy to play pool on the premises. Such conviction occurred only once in the four years of plaintiff’s conduct of the pool parlor, and he testified that it was difficult to say whether the particular boy was in fact over 16. Such an isolated violation was not, in this court’s view, sufficient to de. prive plaintiff of his means of livelihood.

In Katz v. Moss, 184 Misc. 133, 55 N. Y. S. 2d 131, aff’d 269 App. Div. 854, 56 N. Y. S. 2d 539 (Sup. Ct. 1944) plaintiff was denied a renewal of a license to operate a billiard parlor for which, he had received annual licenses for the previous 13 years. The asserted ground for the refusal to renew was that there had previously been several arrests made in the pool parlor for various illegal activities and that the Police Department had recommended that the license not be renewed. Of 15 arrests and one summons over a period of the years, on only two occasions were the patrons found guilty of disorderly conduct. The court reversed the denial of the license and said, at pp. 134, 135:

“Petitioner, as stated, has held this license under annual renewals since 1930. Into the business he has put his life’s savings, presumably, for him, a considerable investment. Por aught that appears to the contrary, he is a reputable citizen and member of the community, a married man with three children, one of whom is now serving as a member of our armed forces overseas. He remains liable under a four-year unexpired term, of his lease at a substantial rental, for the premises occupied by him are at a location on Pitkin avenue, which is as busy as Pulton street, Broadway or any of the most important thoroughfares in Brooklyn. Property values there are as high as in exclusive shopping centers anywhere in the city. It is difficult to conceive of such a location as an attractive hide-out or lure for criminals, unless all poolrooms may be so deemed. In that event, none should be sanctioned. If the circumstances are otherwise, the police have proven singularly ineffective for, beyond abortive arrests which in themselves mean nothing, they have been able to establish nothing to the contrary in the past fourteen years.” (Emphasis added)

The considerations stated by the court in Katz are likewise applicable here. So far as it is here made to appear plaintiff is a reputable citizen, married, with family, and his means of livelihood are involved in the subject pool parlor.

The court therefore holds that, based on the testimony below and in the context of the entire circumstances, the action of the Town Council was arbitrary, unreasonable and capricious.

CONCLUSION

Eor the foregoing reasons the action of the Town Council in denying renewal of a license to plaintiff herein is set aside and vacated.

       From The Music Man.

       But see point (4) below.

       The approval of the chief of police and town council here does not provide even for a hearing.


author: Simpson, J. C. C.

text:
    CHRISTINA DEBLON, GENERAL ADMINISTRATRIX AND ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF CHARLES DEBLON, DECEASED AND CHRISTINA DEBLON, INDIVIDUALLY, PLAINTIFF, v. LESLIE BEATON AND CATHERINE FOLEY AND JERSEY INSURANCE COMPANY OF NEW YORK OF THE PACIFIC OF NEW YORK GROUP, DEFENDANTS.
    Superior Court of New Jersey Law Division
    Decided October 23, 1968.

      Mr. David F. Toomey, Jr., for plaintiff (Messrs. Breslin and Breslin, attorneys).

      Mr. Albert F. Fershing for defendant Jersey Insurance Company of New York of the Pacific of New York Group (Messrs. Bennett & Bennett, attorneys).
   Simpson, J. C. C.

(temporarily assigned). Christina Deblon, widow of Charles Deblon, instituted suit against the owner and driver of a motor vehicle in which her decedent was a passenger, charging negligence and claiming per quod damages individually, Survival Act damages as general administratrix of decedent’s estate, and Wrongful Death Act damages as administratrix ad prosequendum. Allstate Insurance Company’s [“Allstate”] liability policy, with a $50,-000 limit of bodily injury liability for one person, covered the named insured owner, Catherine Foley, and also covered the driver, Leslie Beaton, under the usual omnibus clause. Leslie Beaton was also the named insured under a liability policy issued by Jersey Insurance Company of New York of the Pacific of New York Group (“Jersey”), which policy, if effective, would be “excess insurance” up to its $10,000 limit, after the primary Allstate insurance, under the standard “other insurance” clause. Jersey apparently denies coverage and has filed a disclaimer, for reasons not germane to the present inquiry, but if its policy is effective, it is only as excess insurance and there is no question of mutually repugnant excess coverage clauses as in Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N. J. 554 (1959).

Christina Deblon, in all three capacities as a plaintiff, executed a “covenant not to sue on claim,” reciting a consideration of $46,500 and purporting to release only Leslie Beaton, Catherine Foley and Allstate Insurance Company while “reserving unto her as general administratrix and administratrix ad prosequendum of the estate of Charles Deblon the right to proceed against * * * the Jersey Insurance Company of New York * * *.” Additional language of the instrument stated that “Christina Deblon in no way releases (Jersey) and no rights are waived against said parties [Beaton and Foley] as named assureds under * * * said policy * *

Plaintiff originally sought an order construing the covenant as effectively preserving her rights against defendants Beaton and Foley as named assureds under the Jersey policy, and this court directed that Jersey be added as a party defendant and indispensable to such a binding determination. R. R. 4:32-1 and 4:34. A count was added to the complaint and directed to Jersejq resulting in the latter’s motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to R. R. 4:12-2(e). Matters outside the pleadings, such as insurance policies, have been presented to the court by the parties; there is no genuine issue as to any material fact and the questions presented are matters of law, so that the motion under R. R. 4:12-2(e) is treated as one for summary judgment under R. R. 4:58.

Jersey contends that the wording of the covenant released its assured, Leslie Beaton, thus precluding any effective reservation of rights against it; and further contends that regardless of the efficacy of the words used, the goal of plaintiff to release the individuals and the primary insurance carrier, while retaining the right to recover from the excess insurance carrier, is legally impossible and a nullity.

I

The first question is the meaning of the words used in the covenant not to sue. Taken out of context, as Jersey reads the instrument, certain clauses appear to release Leslie Beaton and Catherine Foley generally, so it is argued that the result is to preclude any claims against Jersey. The entire instrument, however, clearly reveals an intention to release Beaton and Foley only to the extent of their personal assets and their Allstate insurance coverage, while retaining a claim to their Jersey coverage. The intention of the parties to the instrument governs, of course, and that intention binds strangers to the instrument. Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N. J. 293, 301 (1953). Even if there was any doubt as to the meaning of the words used, the intention is clear when the general tenor and purpose of the instrument is considered in the light of the surrounding circumstances. Casriel v. King, 2 N. J. 45, 53 (1949). The circumstances are claims against an owner and driver, both covered by a primary insurer up to $50,000, with an excess carrier disclaiming as to coverage. Furthermore, the excess coverage is a maximum of $10,000, and plaintiff has settled with all except the excess carrier for $46,500 of the $50,000 available primary coverage.

The intention of the parties is therefor crystal clear, with a question only raised because of the clumsiness of the language employed in the instrument. Doubtless this results from the common law distinction between a covenant not to sue and a general release, with the additional aspect of an attempt to reserve only a right to proceed against what might be described as the excess insurance portions of alleged tortfeasors.

The covenant in question is therefore construed to release Beaton and Foley to the limit of their personal assets and the protection of their Allstate coverage, with a reservation of rights against any coverage afforded by Jersey.

II

Jersey also contends, however, that plaintiff simply con-not release the personal assets and primary insurance coverage of Beaton and Eoley and in effect proceed only against the excess insurance carrier. The question appears to be novel in New Jersey; indeed, no reported opinions in the United States have been found, except where statutes permitted partial releases or direct action against insurers.

Farmers Mut. Automobile Ins. Co. v. Drane, 383 S. W. 2d 714 (Mo. Sup. Ct. 1964), is illustrative of cases wherein a tortfeasor and one insurer settle with a claimant, and the claimant proceeds against another insurer, under a statute permitting a contract to limit recovery to specified assets or insurance contracts. Similarly, in Futch v. Fidelity & Casualty Company, 136 So. 2d 724 (La. Ct. App. 1961), affirmed 246 La. 688, 166 So. 2d 274 (La. Sup. Ct. 1964), under a Louisiana direct action statute it was held that a release given by a claimant upon settlement with a primary insurer, without prejudice to rights against the excess insurer, did not preclude further recovery against the excess insurer even though the release stated it released the claims against the insured. To the same effect, Benroth v. Continental Cas. Co., 132 F. Supp. 270 (U. S. D. C. La. 1955).

In the present case Jersey raises all the arguments rejected in the afore-cited Missouri and Louisiana cases, the disposition of which did not turn upon the particular statutes in those states. New Jersey jurisprudential guideposts point to similar rejection. Thus, Jersey argues that plaintiff is precluded because its- liability under its policy is "to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages,” and its insured cannot become ‘legally obligated to pay” anything because of the covenant not to sue. Such a conclusion might be tenable if the policy was one of indemnity against loss, rather than insurance against liability. Under New Jersey law the distinction is clear, Viddish v. Hartford Acc. and Ind. Co., 41 N. J. Super. 221, 225 (App. Div. 1956), and there is a strong public policy in this State favoring the availability to injured persons of the liability insurance of those whose negligence is the cause of their plight. Sneed v. Concord Ins. Co., 98 N. J. Super. 306, 321 (App. Div 1967). Furthermore, upon the happening of an accident an injured party acquires an interest in an insurance policy which may be available, In re Estate of Gardinier, 40 N. J. 261, 265 (1963), and that construction of such policy should be adopted which will afford the widest possible coverage. American Policyholders Ins. Co. v. Portale, 88 N. J. Super. 429, 439-440 (App. Div. 1965). Accordingly, the policy clause, “legally obligated to pay,” cannot receive the narrow construction sought by Jersey, grounded as it is in the rather metaphysical approach that the covenant not to sue released Jersey’s insured in toto, despite its clear intention not to do so. All that is required is a jury verdict of negligence and damages in excess of the primary coverage, with Jersey retaining its right to a judicial determination on its disclaimer. Manukas v. American Ins. Co., 98 N. J. Super. 522 (App. Div. 1968).

Meaningless technicalities aside, the public interest points toward resolution of the competing interests to permit plaintiff to settle claims against the assets of two of the three exposed entities without releasing the third. The interest of a plaintiff is full compensation, and from his viewpoint it makes no difference whether a recovery is paid by a tortfeasor, his primary insurance carrier, his excess carrier, or any combination of the three. Insurance, of course, is an instrument of social policy that victims of negligence be compensated, and such compensation is in the public interest. Cooper v. Government Employee’s Ins. Co., 51 N. J. 86, 94 (1968). The interest of defendant tortfeasors is to conclude the ease within the limits of their insurance coverage. As noted in Bowers v. Camden Fire Ins. Ass’n, 51 N. J. 62, 71 (1968), the purpose of liability insurance is to protect the assured from liability within the limits of an insurance contract, and an insurer cannot frustrate that policy by a selfish decision as to settlement which would expose an insured to a judgment beyond the purchased protection. Plaintiff, of course, could ordinarily not recover from Jersey any more than its policy limits. Since a carrier has a duty to act in good faith where its interests conflict with those of the insured in connection with settlement negotiations, it certainly cannot complain about the partial settlement, as in the present case, after disclaiming and refusing to negotiate at all. The law, in addition, favors settlements, Liguori v. Allstate Ins. Co., 76 N. J. Super. 204, 213 (Chan. Div. 1962), and the partial settlement achieved in this case does not prejudice Jersey. As a matter of fact, it aids Jersey in the sense that the release of the individual defendants as to their personal assets will preclude any exposure of Jersey to liability beyond its policy limit, as in Bowers, supra.

Finally, Jersey argues that permitting plaintiff to settle with the individual defendants and the primary insurance carrier, without releasing the excess carrier, will encourage collusion between claimants and insureds. The answer is that insurers can always rely on the required “cooperation” clauses of their liability policies, as well as disclaimer procedures always available. The fact is, in the present case, that the primary liability insurer, to effect a saving on its policy limits, has settled with plaintiff, and such carrier could not settle its exposure without obtaining a release as to its assureds’ personal assets. Uo obligation runs from the primary carrier to the excess carrier, nor is the latter prejudiced by the partial release in favor of the paying carrier and the concomitant release of its insured. This accords with the modern view that the legal effect of a release on strangers thereto should be determined by the intent of the parties to the release and the extent of compensation paid to the releasor rather than upon outmoded concepts of ancient times. Breen v. Peck, 28 N. J. 351, 357 (1958).

Defendant, Jersey’s motion is denied.