author: Mehler, J. A. D.

text:
    JOHN BRUM, PETITIONER-APPELLANT, v. INTERNATIONAL TERMINAL OPERATING COMPANY, INC., SUBSIDIARY OF THE OGDEN CORPORATION, RESPONDENT-APPELLEE.
    Superior Court of New Jersey Appellate Division
    Submitted October 24, 1973
    Decided November 30, 1973.

      Before Judges Lynch, Mehler and Michels.

      Messrs. Seaman, Clark, Levine, Eger & Addy, attorneys for appellant (Mr. John M. Weber, of counsel).

      Messrs. Laurie, Jennings and Buggeln, attorneys for respondent (Mr. Leigh E. Buggeln, of counsel).
   The opinion of the court was delivered by

Mehler, J. A. D.

Petitioner John Brum, while employed by respondent, sustained a compensable injury when an overhead door fell on his right foot. The fall caused compound fractures of the right great toe and of the 2nd, 3rd and 4tli toes of the right foot with numerous jagged lacerations. He was taken to a hospital for emergency care and remained there for two days. After his hospitalization he came under the care of a physician. About a month later ho was readmitted to the hospital with a diagnosis of gangrene of two of his toes. Shortly thereafter his large toe and part of another were amputated.

Early in 1970 on his claim petition the Division of Workmen’s Compensation awarded petitioner $3,180.57 for temporary disability and $4,080 for partial permanent disability, consisting of 40% of the statutory right foot and 4% of partial total neuropsychiatric disability.

Petitioner and his wife brought an action against his physician for malpractice in the treatment of the injuries sustained in the accident. Late in 1971 that action was settled for $11,500. Thereafter petitioner filed a motion in the Division of Workmen’s Compensation to fix the amount of the workmen’s compensation lien to which respondent might be entitled out of the $11,500. He alleged that respondent was not entitled to any reimbursement. Respondent, on the other hand, alleged that it was entitled to the full amount of its workmen’s compensation payments, less counsel fees and the expenses of the action against the physician.

The judge of compensation compared the judgment in the workmen’s compensation case and the answers to interrogatories furnished by petitioner in the medical malpractice action and concluded that petitioner in each instance sought compensation for the same injuries, as the judge said he was entitled to do. He concluded that petitioner’s recovery in the workmen’s compensation case encompassed the damages sustained as the result of the malpractice.

Although no physicians testified before the judge, on the motion, he reached the conclusion, after a “consideration of the medical and factual proofs,” that because of the serious and complex injury it was impossible to separate the elements involved. Citing and relying on Bello v. Comm’r, Dep’t. of Labor and Industry, 56 N. J. 41 (1970), the judge held that respondent was entitled to reimbursement to the full extent of its workmen’s compensation payments, less expenses of the third-party suit and counsel fees. Judgment was thereupon entered in favor of respondent, fixing its workmen’s compensation lien in the sum of $6,515.80, which was based on total compensation payments including medical bills of $2,805.13, all aggregating the sum of $10,073.70, less one-third of this amount for petitioner’s counsel fees and $200 costs in the third-party action. It is from this judgment that petitioner appeals.

Petitioner first contends that respondent is not entitled to any reimbursement. He relies on Schmidt v. Revolvator Co., 46 N. J. Super. 232 (Cty. Ct. 1957), wherein reimbursement was sought by an employer out of a settlement of a suit for damages arising out' of a malpractice claim against a physician for negligent treatment of a compensable injury. The recovery for medical malpractice was for injuries subsequent to and independent of the injury for which compensation was awarded. The court held that the employer could not be reimbursed from this fund because N. J. S. A. 34:15-10 becomes operative only where a third party is liable for the same injury for which the employer is liable under the Workmen’s Compensation Act. The cited statute provides that where a third person is liable to an employee for an injury and the employee recovers from and is paid by the third person any sum in release or in judgment on account of his liability to the injured employee, the liability of the employer is reduced as provided in this section of the statute. See Bello, supra, 56 N. J. at 44. The concept of N. J. S. A. 34:15-40 preserves to an injured workman his right of action against a third-party tortfeasor for an injury caused by the latter, while at the same time it prevents a workman from recovering twice for the same industrial injury. Thus, if the employer has already paid to the employee compensation for an industrial injury and a third-party claim is successful for the same injury, the employer may be reimbursed for its expenditure. Schmidt, supra, at 46 N. J. 236. Hence, until it is determined whether and to what extent petitioner in the case before us received payment from the physician for an injury for which respondent is liable, it cannot be said that respondent is not entitled to any reimbursement from the settlement proceedings.

Petitioner next contends that even if respondent is entitled to reimbursement out of the settlement fund for the amount paid out by it as the result of the malpractice, the damage done by the malpractice can be separated from the injuries sustained in the accident. He argues that the proofs before the Division were not complete and that the judge of compensation was in error when he concluded that it was impossible to separate the elements involved. Petitioner urges that the cause should be remanded for a hearing to determine the amount of disability and expenses related to the medical m alpractice. We agree. See 2 Larson, Workmen’s Compensation Law, § 72.65(a).

Bello is not to the contrary. It held that the Two Percent Eund, which is the equivalent of an employer, was by virtue of N. J. S. A. 34 :15-40 entitled to reimbursement and credit out of a third-party recovery for an injury which gave rise to the workmen’s compensation liability, and that such reimbursement and credit were not limited to compensable items and could be based on the total amount of the recovery, regardless of its component elements. It held, as we do here, that the reimbursement and credit can come out of the entire fund. We limit reimbursement, however, in this case to the amount of disability and expenses paid by respondent for the injury caused by the medical malpractice.

It cannot be gainsaid that respondent was liable to petitioner for his initial injuries. Just as it would be improper to permit a workman to recover twice for the same injury, so would it be inequitable for the employer to avoid liability, at its employee’s expense, for an injury for which it is unquestionably responsible under the Workmen’s Compensation Act. Our determination obviates such an inequity.

The judgment below is reversed and the cause is remanded to the Division of Workmen’s Compensation to take proofs só as to enable the Division to ascertain and determine what part of the award for compensation was for the injury caused by the physician and to allow the employer a credit in that amount, less fees and expenses. Cf. Schmidt, supra, at 237.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    FEDERAL INSURANCE COMPANY, PLAINTIFF-RESPONDENT, v. PIPECO STEEL CORPORATION, DEFENDANT, v. PIPECO STEEL COMPANY, INC., DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted November 7, 1973
    Decided December 7, 1973.

      Before Judges Halpern, Matthews and Bischoff.

      Messrs. Stryker, Tams & Dill, attorneys for appellant (Mr. Richard V. Jones, of counsel).

      Mr. Robert G. Saliba, attorney for respondent.
   Per Curiam.

Defendant appeals from a summary judgment entered in favor of plaintiff in the sum of $3,533.29.

Pipeco Steel Corporation, a New Jersey corporation (hereinafter New Jersey Pipeco) imported three separate shipments of steel from Japan which were subject to import duty. In order to obtain immediate possession of the steel without waiting for a determination by Customs officials as to the amount of duty owed, New Jersey Pipeco furnished three bonds to the United States as principal, with plaintiff as surety.

In October 1969 additional duties were assessed on two lots of the steel. The United States made unsuccessful attempts to collect the duty from New Jersey Pipeco, and after such attempts plaintiff was compelled to pay in February 1970.

In June 1971 an additional assessment was levied on the third shipment, and again plaintiff was compelled to pay the United States the amount thereof.

By agreement dated June 3, 1970 New Jersey Pipeco agreed to sell certain of its assets to Pipeco Steel, Inc., a Delaware corporation (hereinafter Delaware Pipeco). The agreement fell within the provisions of N. J. S. A. 12A :6-101 et seq., dealing with bulk transfers.

Pursuant to the provisions of N. J. S. A. 12A :6-104(1) (a), New Jersey Pipeco prepared and furnished to Delaware Pipeco a list of its creditors. Feither the United States nor plaintiff were on the list of creditors, and accordingly no notice of the bulk transfer was given to them by defendant Delaware Pipeco, as is required by N. J. S. A. 12A :6-105. The agreement of June 3 providing for the transfer of assets was consummated on June 30, 1970.

Plaintiff instituted this action against both New Jersey Pipeco and Delaware Pipeco, seeking to recover sums paid by it to the United States. New Jersey Pipeco is in default. Plaintiff contends Delaware Pipeco is personally liable as the transferee of the assets of New Jersey Pipeco in bulk for the debts of New Jersey Pipeco for the reason that the bulk sale was not effective as to plaintiff since neither plaintiff nor the United States received notice of the transfer as is required by the statute.

The trial judge agreed and on cross-motions for summary judgment entered a judgment for plaintiff and against Delaware Pipeco for the sums paid by plaintiff.

The statute places responsibility for the preparation of the list of creditors squarely on the transferor. N. J. S. A. 12A :6-104(3):

Responsibility lor the completeness and accuracy of the list of creditors rests on the transferor, and the transfer is not rendered ineffective by errors or omissions therein unless the transferee is shown to have had knowledge.

There is nothing in the record to suggest that Delaware Pipeco had knowledge of the claim of the United States or the plaintiff, and plaintiff does not argue or suggest that it had knowledge.

Plaintiff argues - that since New Jersey Pipeco was partly engaged in importing, Delaware Pipeco had constructive knowledge that some import duty might be due to the United States and should have inquired into that situation. We disagree. The statute does not render a transfer ineffective unless the transferee is shown to have had knowledge that the list of creditors was incomplete. This statutory language does not embrace the concept of constructive notice or constructive knowledge. Actual knowledge is required.

The word ‘Tmowledge” as it is used in the Commercial Code (of which the Bulk Transfer Law is a part, N. J. S. A. 12A:6-101) is defined as follows, “A person Tmows’ or has ‘knowledge’ of a fact when he has actual knowledge of it * * N. J. S. A. 12A:1-201(25); 6C Bender’s Uniform Commercial Code Service, § 6-102, comment at 2-1280 (1973); cf. Silco Automatic Vending Co. v. Howells, 102 N. J. Super. 243 (Ch. Div. 1968), aff’d 105 N. J. Super. 511 (App. Div. 1969).

Since Delaware Pipeco did not have knowledge of plaintiff’s claim, there is no basis upon which liability can be imposed upon it.

The judgment entered in favor of plaintiff and against defendant Delaware Pipeco is reversed and the matter remanded to the trial court with directions to enter a judgment in favor of Delaware Pipeco on its cross-motion for summary judgment.


text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. N. J., A JUVENILE, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted November 20, 1973
    Decided December 10, 1973.

      Before Judges Halpern, Matthews and Bischoff.

      Mr. Stanley C. Van Ness, Public Defender, attorney for appellant (Mr. David H. Ben-Asher, Designated Counsel, on the brief).

      Mr. Joseph P. Lordi, Essex County Prosecutor, attorney for respondent (Mr. Kenneth P. Ply, Assistant Prosecutor, of counsel).
   Per Curiam.

Defendant appeals from an adjudication of juvenile delinquency, contending said adjudication was based upon an erroneous interpretation of N. J. S. A. 2A :170-3.

Evidence disclosed that the juvenile was standing in line to board a bus on the corner of Market Street in Newark. While standing in line he was observed, by a police officer, reaching his hand into the purse of a woman standing ahead of him in line. He was arrested on the spot and charged with violation of N. J. S. A. 2A :170-3, which reads in pertinent part as follows:

Any person who * * * is found in or near * * * any place of business resort or assemblage for business, travel, worship, amusement or other lawful purpose, with intent to steal any goods or chattels, is a disorderly person.

Defendant argues that a bus stop does not come within the description of places mentioned in the statute. We recognize that as a penal statute it should be strictly construed. State v. Angelo’s Motor Sales, Inc., 125 N. J. Super. 200 (App. Div. 1973); 3 Sutherland Statutory Construction (3d. ed. 1943) § 5604 at 49, and that all doubts as to the meaning of a statute should be resolved in favor of a defendant charged with a violation thereof. State v. Blackman, 125 N. J. Super. 125 (App. Div. 1973).

However, penal statutes must also be construed with common sense consonant with the objectives of the Legislature. United States v. Universal C. I. T. Credit Corp., 344 U. S. 218, 73 S. Ct. 227, 97 L. Ed 260 (1952); see State v. Provenzano, 34 N. J. 318 (1961); 3 Sutherland Statutory Construction (3d ed. 1943), § 5606 at 57. And a court should interpret a penal statute with relation to the mischief and the evil to he suppressed. State v. Meinken, 10 N. J. 348, 352 (1952); State v. Angelo’s Motor Sales, Inc., supra.

A reading of the statute in question, with these principles in mind, leads to the inescapable conclusion that defendant’s conduct at the bus stop is clearly included within the ambit of the statute and is such conduct as the Legislature intended to prohibit.

Affirmed.


text:
    THE CITY OF ELIZABETH, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. RICHARD J. SULLIVAN, COMMISSIONER OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION, AND THE DEPARTMENT OF ENVIRONMENTAL PROTECTION, AND GREEN ACRES PROGRAM OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted November 27, 1973
    Decided December 11, 1973.

      Before Judges Halpern, Matthews and Bischoff.

      Mr. Frank P. Trocino, City Attorney, attorney for appellant (Mr. Raymond S. Londa, Assistant City Attorney, on the brief).

      Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney for respondent (Mr. Joseph M. Clayton, Jr., Deputy Attorney General, on the brief).
   Per Curiam.

Defendant Commissioner of the Department of Environmental Protection (DEP) rejected a grant application filed under the New Jersey Green Acres Land Acquisition Act of 1971, N. J. S. A. 13:8A-19 et seq., by plaintiff City of Elizabeth. The city requested, pursuant to N. J. S. A. 13:8A-22, state assistance in acquiring a 10-foot strip of land running 11 miles on either side of the Elizabeth River. See also, N. J. S. A. 13:8A-28 and 29. Plaintiff complains that the Commissioner deprived it of due process because he neglected to prescribe rules and regulations defining standards to be used for evaluation of Green Acres grant applications; he failed to afford a hearing on the application, and his rejection of the application was arbitrary.

Green Acres legislation empowers the Environmental Protection Commissioner to use the proceeds of the sale of bonds authorized by New Jersey voters “to acquire lands for recreation and conservation purposes and to make grants to assist local units to acquire lands for such purposes * * N. J. S. A. 13 :8A-22. The Legislature did not elect to appropriate at once the entire $80 million authorized. N. J. S. A. 13 :8A-20(g), (h) and (i).

The lawmakers did establish standards to guide the Commissioner in disbursing available limited funds. Under the Green Acres Act he is to allocate money for acquisition of lands for recreation and conservation with the objective of achieving a reasonable balance of facilities throughout the State to meet present and future needs. To the extent practicable the Commissioner is to assist in acquiring land already open and natural, land that can be obtained and converted to statutory purposes at minimum expense, and land suitable for a combination of recreation and conservation. N. J. S. A. 13 :8A-23(a), (b) and (e). He is to give special attention to providing open spaces in cities. N. J. S. A. 13 :8A-20(e). The lawmakers have also established a Joint Legislative Review Committee to oversee the Commissioner’s administration of Green Acres funds.

Green Acres legislation nowhere requires the DEP Commissioner to prescribe rules and regulations articulating criteria he will use to distinguish successful from unsuccessful grant applications. Likewise the legislation nowhere gives a disappointed grant applicant the right to a hearing. Rules and regulations and a hearing are unnecessary and perhaps impractical as well, because the Legislature supplied adequate standards for evaluation of applications and because not all qualified applicants can expect to receive a part of the limited funds available. These facts distinguish the present ease from Goldberg v. Kelly, 397 U. S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970), and Boller Beverages, Inc. v. Davis, 38 N. J. 138 (1962).

In addition, the advisability or necessity of placing broad discretion in an administrator charged with disbursing limited public funds among worthy applicants does not square with a requirement that he formulate specific rules and regulations that would bind him in advance. In re Hollywood, 124 N. J. Super. 50, 53-54 (App. Div. 1973). Furthermore, plaintiff was given ample opportunity to show itself a worthy competitor for Green Acre funds through information conveyed in its application and supplemental correspondence. A hearing, which would have exhausted scarce resources with the result that less money would be available for acquisition of land for recreation and conservation, was unnecessary. The absence of administrative rules and regulations defining standards to be used for evaluation of Green Acres grant applications and the absence of an administrative hearing on the application did not deprive Elizabeth of due process of law.

The final question, whether the Commissioner’s rejection of the city’s application was arbitrary, necessitates a further look at the facts. First, however, it must be made clear that plaintiff bears an especially heavy burden of proof because of the limited scope of review of agency action challenged as arbitrary. That Elizabeth must do more than merely show it was a worthy applicant adds to the great weight it must attempt to carry. There is a presumption that an administrative decision was reasonably justified — that discretion legislatively delegated was soundly exercised. The court must indulge fair arguments in support of the decision. The court cannot substitute its judgment for that of the administrator- when intelligent and conscientious men could differ about its wisdom. United Hunters Ass'n of N. J., Inc. v. Adams, 36 N. J. 288, 292 (1962); Flanagan v. Civil Service Dep't, 29 N. J. 1, 12 (1959).

The city’s grant application discloses that recreation and conservation would be secondary results of acquiring slim strips of land along the Elizabeth River. The primary purpose of acquisition would be to make possible a flood control project managed by the United States Army Corps of Engineers (Corps). In fact, plaintiff sought help in obtaining no more land than the necessary minimum for the Corps project. While nothing in the Green Acres Act renders this coincidence fatal to Elizabeth’s grant application, it is certainly an adverse fact the Commissioner could legitimately take into account. In addition, the city’s application did not specify the recreational facilities it intended to provide along the river. Finally, the money requested by plaintiff, nearly $4 million, represented a very large portion of the total funds the Commissioner was charged with distributing to assist local governments throughout the State.

These facts are sufficient to convince us that Elizabeth has not overcome the presumption of administrative reasonableness.

Affirmed.


author: Huot, J. D. C.

text:
    BECA REALTY, INC., A N. J. CORPORATION, PLAINTIFF, v. WILLIAM EISBERG AND RITA EISBERG, DEFENDANTS.
    District Court, Bergen County
    Decided November 15, 1973.

      Messrs. Freint and Jacobs, attorneys for plaintiff.

      Messrs. Ryan & Sommers, attorneys for defendants.
   Huot, J. D. C.

This is an action for a real estate brokerage commission. Defendants listed premises known as 17 Ross Avenue, Demarest, Bergen County, New Jersey, with plaintiff and agreed to pay a commission of 5% of the sale price. It was an exclusive listing requiring payment to plaintiff if the property were sold within six months of the expiration date of the listing. The property was sold after the listing expired but within six months thereafter; however, plaintiff did not receive a commission. The merits of the dispute are not now before the court.

After the sale of the property defendants left New Jersey and established residency in Florida. Thereafter, plaintiff attempted service on the defendants in Florida by registered mail. Defendants did not respond to this service and a default judgment was entered in this court for $2,034. Defendants now move to vacate entry of the default judgment and to quash service of process. Initial examination of this transaction discloses that New Jersey has a sufficient interest in the dealings of the parties to enable it to entertain this action. At the time the parties entered into the contract both plaintiff and defendants were residents of and domiciled in New Jersey. The contract, regardless of forum, will be governed by New Jersey law.

Due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U. S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945).

It is clear that defendants have had sufficient contacts with New Jersey to satisfy the due process requirements so that the case may be heard in New Jersey. They argue, however, that even if the suit is proper in New Jersey, the county district court is not the proper forum. Thus, the question raised is whether the manner of service of process used by the plaintiff in this case is sufficient for this court to have jurisdiction.

The jurisdiction of the county district court is established by the Legislature by authority of our Constitution. N. J. Const. (1947), Art. VI, § I, par. 1:

The Judicial Power shall be vested in a Supreme Court, a Superior Court, County Courts and inferior courts of limited jurisdiction. The inferior courts and their jurisdiction may be from time to time established, altered or abolished by law.

“[The county district courts] are creatures of the Legislature and may be given such jurisdiction with regard to subject matter and territory as the Legislature sees fit.” Kappish v. Lotsey, 76 N. J. Super. 215, 222 (Cty. D. Ct. 1962). “The County district courts are inferior courts of limited jurisdiction, which the Legislature may establish, alter or abolish in its discretion as the public good may require.” Andriola v. Galloping Hill Shopping Center, Inc., 93 N. J. Super. 196, 199 (App. Div. 1966).

The territorial jurisdiction of the county district court as established by the Legislature is provided at N. J. S. A. 2A :6-32:

Except as otherwise provided by law, the territorial jurisdiction of every county district court shall be coextensive with the limits of the county wherein the county district court is established.

Case law holds that upon the establishment of a territorial jurisdiction, the county district court has not the jurisdiction to serve process beyond the territorial boundary of the county. Thus, “The district court in Burlington County has no jurisdiction to cause its process to be served beyond the confines of the county.” Wall Rope Works, Inc. v. Sperling, 116 N. J. L. 449 (Sup. Ct. 1936). See also, MacPhail v. Nassau, 14 N. J. Misc. 292 (D. Ct. 1936); Mohr v. Sonnet, 17 N. J. Misc. 226 (S. Ct. 1939); and also Globe Industrial Loan Corp. v. Caldwell, 20 N. J. Misc. 435 (D. Ct. 1942), where it was held that a district court has no jurisdiction to issue a wage execution which would be effective beyond the limits of the county wherein it is established.

The territorial jurisdiction of the county district court has been given limited expansion by the Legislature. Under N. J. S. A. 2A :6-33:

In any action brought in any county district court in this State against one or more defendants upon whom summons can be served within the county and against any additional defendant or defendants or third-party defendant or defendants upon whom summons cannot lie served within the county, the summons and complaint may be served in any other county in this State upon such additional defendant or defendants or third party defendant or defendants by any officer authorized to serve a summons issuing out of the county district court of that county. Service of such summons and complaint by such officer shall be as effectual to bring said additional defendant or defendants into court as though the same were served within the county in ivhich the county district court issuing such summons is located. [Emphasis added]

It is clear that the Legislature intended that any service of process outside of the county would be predicated on the ability of the county district court to obtain in personam jurisdiction over the original defendant in a third-party action, or a codefendant where there are two or more defendants. It is also clear that the county jurisdictional boundary was to remain as before except for this small exception.

This rule [2A:6-33] is procedural and not substantive in nature. [Citing cases]. It is a device whereby an original defendant to a pending suit may implead now defendants in the same action, to whom he seeks to pass on all or part of the liability asserted against him. [Kappish v. Lotsey, supra, 76 N. J. Super. at 221]

The jurisdiction of the county district court is also subject to regulation through the types of actions the court may hear and a dollar limit upon the amount in controversy. The regulation of the subject matter in this case is not an issue since the type of action (breach of contract) and the dollar amount both fit within the jurisdictional bounds of N. J. S. A. 2A :6-34.

When utilizing the device of constructive service it must be remembered that “substituted or constructive service is in derogation of the general common law requirement that there be personal service [citing cases]. Statutes or rules of court providing for such service must be strictly construed and fully carried out in order to confer jurisdiction.” A. & S. Manufacturing Co., Inc. v. Wetzler, 110 N. J. Super. 565 (Ch. Div. 1970)

Plaintiff cites the court rules for the authority that the county district court has the use of this “long arm statute” for service of process. The county district court service of process is governed by R. 6 :2-3. R. 6 :2-3 (a) outlines who may make service of process and designates the “sergeants-at-arms of the court and such other persons authorized by law to serve such process as the presiding judge designates. * * * If the process is to be served in a county of this State other than that in which the action is instituted, the clerk of the county district court in which the action has been instituted shall forward it to the clerk of the county district court of the county in which service is to be made and it shall be delivered by that clerk to a person authorized to serve such process in his county.” Prom this rule the court draws the following conclusions: (1) service of proceess is to be by the sergeants-at-arms of the court in most circumstances; (2) the ability of the process server to serve process ends at the county line, the jurisdiction of the court; (3) the alternative .method of service provided for out-of-county actions is limited to service arising within the State and does not include out-of-state service; (4) the rule is silent on the question of out-of-state service by the county district court because no out-of-state service is contemplated.

Under R. 6 :2-3(b) the manner of service of process “shall be made in accordance with R. 4 :4-4 or, if applicable, R. 4 :4-5.” The tentative draft comment to R. 6 :2-3(b) states, “by its reference to R. 4 :4-4 and R. 4:4-5, it lays to rest any lingering question as to the applicability to district court actions, where appropriate, of substituted and constructive service as authorized by these rules.” (Emphasis added).

Before examining R. 4 :4-4 it is important to note that R. 4:4-3, which denotes by whom service is to be made in an action in the Superior and County Courts, states that “wherever service by mail is permitted by these rules, such mailing may be made by the attorney or a party appearing pro se.” R. 6 :2-3 does not contemplate service by an attorney in county district court actions. The limitation on who may make service of process, as noted above, also limits where process may be served.

R. 4 :4-4(e) states that

Whenever it shall appear by affidavit of the attorney for the plaintiff of any person having knowledge of the facts, that, after diligent inquiry and effort, an individual cannot be served in this State under any preceding paragraphs of this rule, then, consistent with due process of law, service may be made by mailing, by registered or certified mail, return receipt requested, a copy of the summons and complaint to the individual addressed to his dwelling house or usual place of abode or, with postal instructions to deliver to addressee only, to his place of business or employment. * * *

The court concludes that R. 4 :4-4(e) is only appropriate for use in the county district court in those situations wherein substituted service may be made in this State.

The court bases its conclusion on the following: The territorial jurisdiction of the county district court is established by statute and the court may not effect process beyond the county boundary unless there exists a specific statutory exception. The court rules (R. 6 :2-3 (a)) provide that service of process in county district court is to be made by certain individuals (sergeant-at-arms, usually), and they are limited to service within the county only, and the additional provisions (i. e., by mail to the county clerk) allows service of process within the State, only. Finally, the tentative draft comments to R. 6 :2-3 indicate that R. 4 :4-4 is applicable only “where appropriate.” Thus, the court finds that the provisions of R. 4 :4-4(e) dealing with process out-of-state are not appropriate within the confines of the county district court rules. R. 6 :2-3.

The case of Roth v. Jackson, 99 N. J. Super. 546 (App. Div. 1968), dealt with a situation whereby a plaintiff brought suit in a county district court and a codefendant could not be served personally. The codefendant was then served at his residence within the county by registered mail under B. 4:¿U4(J) (now(e)). The contention of the codefendant was that R. 4:4-4(J) was. solely for the service of process beyond the confines of the state border. The court found otherwise and stated that constructive service could be utilized within the border of the State. However, the court did not hold that constructive service could be used by parties in the county district court to effect service outside the county. The facts of the case also support this contention. The codefendant, constructively served by registered mail, was a resident of the county in which the action was brought.

Mention must be made of Winberry v. Salisbury, 5 N. J. 240 (1950), which holds “that the rule-making power of the Supreme Court [Art. YI, § II, par. 3] is not subject to overriding legislation but that it is confined to practice, procedure and administration as such.” Since the service of process is considered a procedural matter (Kappish v. Lotsey, supra), it may be considered exclusively the province of the rules of the Supreme Court. However, there are several considerations, some of which have been discussed supra, which indicate that the Supreme Court rules are not completely dispositive in this case.

The county district courts are statutory courts which can be abrogated at the whim of the Legislature, the Supreme Court rules notwithstanding. Although, as noted in Winberry v. Salisbury, supra, the rule-making power of the Supreme Court cannot be made subject to overriding legislation, it must be presumed that the Supreme Court, when drafting R. 6 :2—3 and R. 4:4-4, had knowledge of the statutes already in existence. With this presumption in mind, the intent of the Supreme Court was either that (1) the rules and statutes are to be complementary and the intent of the statute is to be given effect where the rule is silent, or (2) the rule takes clear precedence over the statute.

The statutes in question are the jurisdictional statutes which deal with the territorial jurisdiction of the county district courts (N. J. S. 2A :6-32) ; the service on defendants in other counties, where one or more defendants are served within the county (N. J. S. 2A :6-33), and the specialized service in other actions (N. J. S. 2A :6-34). The intent of the Legislature is to contain the jurisdiction of the county district courts at the boundary of the county. It is doubtful that the Supreme Court intended to contravene the above statutes without any mention of such intent. It is more probable that the Supreme Court intended the rules and the statutes to be complimentary, with service of process limited to within the county for county district courts. This argument becomes increasingly persuasive when one considers the discrepancy in the rules concerning who shall serve process (R. 4:4-3 and R. 6:2-3 (a) in the different courts, indicating that the intent of the rules is to maintain the territorial jurisdiction of the county district court as conferred by the statutes.

If the court follows the position • advocated by plaintiff, the result would be to transform the county district court from a court of limited territorial jurisdiction into a court that would have not only statewide powers of service of process but, in addition, would have the power of service of process beyond the confines of the state border as well. Adopting this position would effectively place the legislatively created courts of limited jurisdiction on an equal footing with the constitutional courts and erase the geographic limitations imposed on such inferior courts by specific statutes.

The court cannot conclude that the Supreme Court of this State intended to invalidate an act of the Legislature (N. J. 8. 2A:6-32) by the adoption of R. 4:4r-4(e). Such conclusion would have to be based upon an inference drawn from the mere adoption of the rule. Before this court will destroy the geographic boundaries established by the Legislature for its jurisdiction, a clear expression of such determination should be made by the Supreme Court of this State.

Therefore, it is the conclusion of this court that it did not have jurisdiction over the defendant in this matter. Defendants’ motion to quash service of process and to vacate the default and judgment entered therein is granted.


author: Allcorn, J. A. D.

text:
    BOROUGH OF CRESSKILL, PETITIONER-APPELLANT, v. NORTHERN VALLEY EVANGELICAL FREE CHURCH, RESPONDENT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued November 5, 1973
    Decided November 29, 1973.

      Before Judges Leonard, Allcorn and Crahay.

      Mr. Marvin H. Gladstone argued the cause for the appellant (Gladstone, Hart, Kronenberg, Mandis, Rathe & Shedd, attorneys).

      Mr. Raymond G. Betsch argued the cause for the respondent.
   The opinion of the court was delivered by

Allcorn, J. A. D.

The pertinent portion of N. J. S. A. 54:A-3.6 exempts “the buildings, not exceeding 2, actually occupied as a parsonage by the officiating clergymen of any religious corporation * * *” It has been stipulated between the parties that the building in question was occupied by the youth director of the church and his wife. The respondent concedes that the youth director was a seminary student and had not been ordained as a minister.

In our view, the youth director of a church who is not an ordained minister is not one of the “officiating clergymen” of the religious corporation which employs him, within the meaning of those terms in the context of the statute. Webster defines “clergyman” as, “a member of the clergy: an ordained minister: a man regularly authorized to preach the gospel and administer its ordinances: one in holy orders”; and “clergy” as, “the body of men and women duly ordained to the service of God in the Christian church: the body of ordained ministers: clergymen and clergywomen.” Webster's Third New International Dictionary (1966). The property having been occupied by a person who was not a clergyman, officiating or otherwise, it is not entitled to an exemption as a parsonage. Compare In re Murtha, 115 N. J. Super. 380, 385 (App. Div. 1971), certif. den. 59 N. J. 239 (1971).

The respondent asserts that, in addition to its use as the residence of the youth director and his family, the building was utilized also in the general religious work of the church as a meeting place for Sunday school classes and various youth activities, among others. Quite aside from the fact that the record contains no evidence with respect to such use, and assuming the use of the building for the stated purposes, it is of no aid to the respondent. In order to qualify for an exemption as property used for religious worship or religious purposes, the property must be used “exclusively” for such purposes. N. J. S. A. 54 :4-3.6. A building that is used in the religious work of a church and which is additionally utilized as the residence of an employee of the religious corporation (other than one of the officiating clergymen), quite obviously is not being devoted exclusively to religious purposes in the ongoing work of the church.

Accordingly, the judgment of the Division of Tax Appeals is reversed, and the assessment against the property in question for the year 1970 is reinstated, in the amounts of $9,300 on the land and $15,700 on the building, for a total assessment of $25,000.


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

text:
    STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. RAYMOND ADAMS, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued October 10, 1973
    Decided December 3, 1973.

      Before Judges Kolovsky, Fritz and Crane.

      Mrs. Sara A. Friedman, Assistant Prosecutor, argued the cause for appellant (Mr. Joseph P. Lordi, Essex County Prosecutor, attorney).

      Mr. Donald S. Goldman argued the cause for respondent (Messrs. Goldman, Goldman & Caprio, attorneys).
   The opinion of the court was delivered by

Kolovsky, P. J. A. D.

The State appeals, upon leave granted, from an order suppressing evidence found on defendant’s person when he was frisked by a deputy United States marshal at the boarding area at Eastern Airline Gate 14 of the Newark Airport and evidence thereafter found when the attache case he was carrying was opened.

We reverse because we are satisfied that the marshal acted reasonably and lawfully in conducting a pat-down of defendant and then in placing him under arrest and searching his attaehé case when the pat-down disclosed incriminating evidence.

It is uncontradicted that the marshal was stationed in the boarding area in furtherance of the “anti-hijacking” program developed by the Federal Aviation Administration (F.A.A.). The F.A.A. program has uniformly withstood constitutional challenge. See United States v. Slocum, 464 F. 2d 1180 (3 Cir. 1972); United States v. Lopez, 328 F. Supp. 1077 (E. D. N. Y. 1971).

The program contemplates an initial screening of passengers by airline personnel to see whether they exhibit characteristics included within the “profile” of potential hijackers developed by the F.A.A. through the utilization of statistical, sociological and psychological data and techniques. If a passenger conforms to the profile, the airline personnel alert a deputy United States marshal or other personnel in the boarding area of the presence of a “selectee.”

In the boarding area is installed a magnetometer, an electronic metal detector, through which all passengers must pass. A passenger who matches the profile and who causes the magnetometer to light up, thus indicating the presence of metal on his person, is interviewed by the marshal. If the interview is less than satisfactory, the program calls for a frisk or pat-down by the marshal, either with or without the passenger’s consent. (For a fuller description of the F.A.A. program, see United States v. Slocum, supra, and United States v. Lopez, supra.)

Courts which have dealt with challenges to searches of airplane passengers who have entered the boarding area of airports have taken varying approaches in ruling on the validity of the search.

In United States v. Skipwith, 482 F. 2d 1272 (5 Cir. 1973), defendant, who had a ticket bearing the name “S. Jackson,” had been detained by airline personnel at a boarding gate of the Tampa airport “because he met the F.A.A. anti-sky jack profile and stated he had no identification.” A deputy United States marshal was called in. When the marshal insisted that defendant produce his wallet, defendant admitted that his name was Skipwith, saying that S. Jackson was his “traveling name.” Defendant was ordered to a private office. On the way there, another marshal called to the first marshal’s attention a visible bulge about three inches long and two inches thick in defendant’s right front trouser pocket. The wallet, when examined in the office, contained identification papers with the name “Skip-with.” According to the marshal, defendant “was very nervous and appeared to be under the influence of either alcohol or some other drug.” Defendant was ordered to stand up and empty his pockets. The search revealed a plastic bag containing powder later identified as cocaine. In upholding the validity of the search, the court, after noting the distinctive considerations applicable to a search in the general airport area (see United States v. Moreno, 475 F. 2d 44 (5 Cir. 1973)) and a search in a boarding area, said:

* * * Because of the widespread publicity given to the government’s efforts to cope with the piracy of aircraft, it was general knowledge that citizens boarding planes were subject to special scrutiny and to weapon searches. Unlike Moreno or Legato [United States v. Legato, 480 F. 2d 408 (5 Cir. 1973)] the officer did not go to Skipwith and stop and search him at a point where such a procedure was extraordinary or unexpected. Bather, Skipwith came to the specific part of the airport where he knew or should have known all citizens were subject to being searched.
Since Skipwith exhibited characteristics which corresponded to the F. A. A.’s likely skyjacker profile, it may be that this was all that was needed to validate his detention and search here. Undoubtedly this profile, developed from a distillation of characteristics attributable to previous skyjackers, is a valuable and useful tool in the hands of the airport security officers. However, the factual matrix of the case at bar makes it unnecessary for us to decide whether an airport search based on the profile alone would satisfy the test of reasonableness in all cases.
The government contends that, in light of the magnitude of the perils created by air piracy, searches of boarding passengers are con- • trolled by the same standard applied to customs searches at the national border — mere or unsupported suspicion. [United States v. McDaniel, 463 F. 2d 129, 132 (5 Cir. 1972)] Bitter experience has taught us that the physical dangers of mass kidnapping and extortion posed by air piracy are even greater than the dangers against which the usual border search is directed. Necessity alone, however, whether produced by danger or otherwise, does not in itself make all non-probable-cause searches reasonable. Beasonableness requires that the courts must weigh more than the necessity of the search in terms of possible harm to the public. The equation must also take into account the likelihood that the search procedure will be effective in averting potential harm. On the opposite balance we must evaluate the degree and nature of intrusion into the privacy of the person and effects of the citizen which the search entails, [at 1274-1275]
* Or * * $ $
Our conclusion, after this tripartite weighing of the relevant factors, is that the standards for initiating a search of a person at the boarding gate should be no more stringent than those applied in border crossing situations. In the critical pre-boarding area where this search started, reasonableness does not require that officers search only those passengers who meet a profile or who manifest signs of nervousness or who otherwise appear suspicious. Such a requirement would have to assume that hijackers are readily identifiable or that they invariably possess certain traits. The number of lives placed at hazard by this criminal paranoia forbid taking such deadly chances. * *’ [W]e hold that those who actually present themselves for boarding on an air carrier, like those seeking entrance into the country, are subject to a search based on mere or unsupported suspicion, [at 1276]
* * * The logic which supports the application of this border search distinction to the standards governing airport searches is readily apparent. The public is assured that the net can sweep no wider than necessary since the broad right to search is limited to the last possible point in time and space which could protect the aircraft, the boarding gate (or secure corridor entrance). Thus, no mere passerby will be subjected to this search—only those in the act of boarding planes could be involved. * * *. [at 1276-1277]

In United States v. Bell, 464 F. 2d 667 (2 Cir. 1972), the court sustained the denial of a motion to suppress evidence, a bundle of glassine envelopes containing heroin found in defendant’s raincoat pocket after the marshal who patted down defendant felt “hard objects about four or five inches long” in the pocket. Although the three judges who decided the case agreed on the result, the majority bottomed their conclusion that the pat down was reasonable on what Walsh, the marshal, then knew, saying:

At this point, Walsh knew that Bell fell into the small category of passengers designated as “selectees”; he had activated the magnetometer, he had no personal identification and he freely admitted that he was out on bail facing narcotics and attempted murder charges. Had Walsh failed to stop Bell he would have been derelict in his duties as a marshal, charged with the responsibility of detecting potential hijackers. His action was eminently sensible and reasonable under the test of Terry v. Ohio, 392 U. S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968). [at 672]

In a concurring opinion, Chief Judge Friendly first rejected any implication that searches of airplane passengers are lawful only in circumstances where the passenger matches a “profile” and activates a magnetometer, and then continued:

* * * At least so long as the present wave of airplane hijacking continues, permissible subjection of airline passengers and their baggage to a search for objects that might be used for air piracy or to cause or constitute a threat of an explosion goes far beyond this.
The Founders banned only “unreasonable searches and seizures.” Determination of what is reasonable requires a weighing of the harm against the need. When the object of the search is simply the detection of past crime, probable cause to arrest is generally the appropriate test. On the other hand, when “a police officer observes unusual conduct which leads him reasonably to conclude in light of his experience that criminal activity may be afoot and that the persons with whom lie is dealing may be armed and presently dangerous,” a lower standard prevails. Terry v. Ohio, 392 U. S. 1, 30, 88 S. Ct. 1868, 1884, 20 L. Ed. 2d 889 (1968). The threatened criminal activity in Terry was the burglary of a store. When the risk is the jeopardy to hundreds of human lives and millions of dollars of property inherent in the pirating or blowing up of a large airplane, the danger alone meets the test of reasonableness, so long as the search is conducted in good faith for the purpose of preventing hijacking or like damage and with reasonable scope and the passenger has been given advance notice of his liability to such a search so that he can avoid it by choosing not to travel by air.
Since all air passengers and their baggage can thus be constitutionally searched, there is no legal objection to searching only some, thereby lessening inconvenience and delay, provided there is no national or racial discrimination without a rational basis (such as the destination of a particular flight). I would thus have no difficulty in sustaining a search that was based on nothing more than the trained intuition of an airline ticket agent or a marshal of the Anti-Hijacking Task Force, as the Third Circuit did in United States v. Lindsey, 451 F. 2d 701 (1971). Moreover, the existence of a program does not preclude the search of someone outside it, whether for some reason, as in Lindsey, or because of pardonable error.
In other words, while the Federal Aviation Administration is to be commended for its efforts to devise a program that limits intrusions on privacy and reduces flight delays, this should be recognized as a self-imposed expedient for minimizing inconvenience to those not believed to constitute a danger, not as an element necessary to validate a jmrtieular search. And the courts should say nothing that would create doubt concerning the legality of wider or less precise measures when and if these should prove to be needed, [at 674-675]

Except for United States v. Skipwith, supra, other cases which have dealt with the issue have in substance adopted the approach of the majority in United States v. Bell, supra. See the following cases in which the searches were held valid: United States v. Lindsey, 451 F. 2d 701 (3 Cir. 1971), cert. den. 405 U. S. 995, 92 S. Ct. 1270, 31 L. Ed. 2d 463; United States v. Slocum, 464 F. 2d 1180 (3 Cir. 1972); see also People v. Botos, 27 Cal. App. 3d 774, 104 Cal. Rptr. 193 (Ct. App. 1972), and People v. De Strulle, 28 Cal. App. 3d 477, 104 Cal. Rptr. 639 (Ct. App. 1972) (in which the court also found consent to the search), and the following eases in which the searches were held invalid: United States v. Ruiz-Estrella, 481 F. 2d 723 (2 Cir. 1973); United States v. Kroll, 481 F. 2d 884 (8 Cir. 1973), aff’g 351 F. Supp. 148 (W. D. Mo. 1972); United States v. Lopez, 328 F. Supp. 1077 (E. D. N. Y. 1971); United States v. Meulener, 351 F. Supp. 1284 (C. D. Cal. 1973). To the extent that some of the latter eases cited give additional or other reasons for declaring the search invalid, those reasons will be dealt with later in this opinion.

As persuasive as we find the theory advanced by Chief Judge Friendly in his concurring opinion in United States v. Bell, supra, it is not necessary that we adopt it for a proper determination of this case. Nor need we even adopt the rule of United States v. Skipwith, supra, “that those who actually present themselves for boarding on an air carrier * * * are subject to a search based- on mere or unsupported suspicion.”

It suffices for the disposition of this ease that we are satisfied, from all the facts adduced at the hearing on the motion to suppress, that the suspicions of the marshal were reasonable and justified his action in first patting down and then searching defendant and this even if — as the court found, contrary to the testimony of the marshal — defendant had not consented to the pat-down.

From the testimony offered, at the hearing on the motion it appears that at about 10:30 a.m. on the day in question defendant, after purchasing a ticket for Eastern Airlines flight 655 from Newark to Lexington, Kentucky, left the general airport area and entered the boarding area for that flight at gate 14.

Situate in the boarding area, at a point near the door through which passengers walked to the steps leading up to the plane, and at a distance of some 50 of 60 feet from the steps, was a magnetometer through which passengers passed before leaving through the door.

Nemara, a federal marshal stationed at gate 14, was advised by a ticket agent that a “selectee who had a complete profile” was about to enter the boarding area. Stationing himself at the magnetometer Nemara observed that, as defendant passed through, he “set off the magnetometer”; a “high light” came on, indica! ing “that he had some sort of metal on his person.” Defendant looked “high,” appearing to be “under the influence of something [although Nemara] was not sure if it was narcotics or not.” Defendant talked “with a slur. His eyes were dilated.” (Defendant himself later testified that he had injected himself with seven or eight bags of heroin some four hours earlier, at 6:30 or 7:00 a.m.)

According to Nemara: he then identified himself and asked defendant whether he had any identification on him. After defendant answered “no,” he was asked whether he would consent to a “pat down search.” He said that he would and was taken to a less public area outside of gate 14 where a pat-down search revealed a small hard bulge in the left front pocket of defendant’s jacket. Nemara reached into the pocket and found an eye-drop type syringe and needle about three inches long and approximately a half ounce of heroin in a glassine envelope. Defendant was placed under arrest and taken to the United States Marshal’s ofHce in the airport where the attache ease he carried was opened and found to> contain various capsules and other items as well as $19,800 in cash. By that time defendant was “in a very high state * * * falling asleep while standing up.”

Defendant’s testimony at the hearing on the motion contradicted that of Nemara. Defendant denied that he had ever consented to a search. He disclaimed any knowledge of having passed through a magnetometer. According to him:

* * * upon getting ready to board the plane I was stopped [at a point outside the door through which he left to board the plane'! and told that 1 had set off a metal detective device and I would have to submit to a search. I stated at that time that everybody else had gotten onto the plane and had not been searched, so I said I do not feel that I should be searched. I said, “so therefore if you don’t want me on your plane I will give you your ticket back and leave the airport.”
This is when he identified himself as a United States Marshall. He told me that I had to be searched. This is when he proceeded to search me [and] * * * went into my [left hand] pocket * * ’r.

That is when “he found the heroin, syringe and also some methadone pills.” “He placed me under arrest.” Defendant then confirmed that he was taken to another gate where his person and his brief ease were searched. On cross-examination defendant admitted that at the time of the hearing he was serving a five-year sentence on a conviction for possession of narcotics.

The trial court, in granting the motion to suppress, credited defendant’s testimony that he had not consented to a- search and found that ‘Toth searches were made over defendant’s protest.” The court noted the State 'had offered no proofs as to the details of the “profile” and how it worked, or of the “mechanics of the [magnetometer’s] operation.” (Nemara had testified that he was barred, for security reasons, from divulging the details of the profile.) In view thereof, the court concluded:

* * * the behavior of the magnetometer cannot even be considered in weighing the reasonableness of the search just as I cannot credit in any way the role of the “profile.” I have no knowledge as to what either of these devices are. For all that appears T can only judge that this defendant was arbitrarily stopped.

The court then made the following additional findings in support of its ruling:

Even if I were to accept on faith the infallibility of the magnetometer I would have to conclude that in fact it did not react to the defendant’s person in incriminating fashion. The subsequent search disclosed no weapon on the man’s person or in the attache case. When I say weapon I have in mind a quantity of metal in an amount comparable to what would be found in a weapon. I.therefore reject the contention that it was relied upon by the Marshall as a reason to stop the defendant and pat him down. The defendant denies that the machine rang, and I doubt that it did.
Even assuming the legitimacy of the pat down, all that was thereby disclosed was a “small bulge,” something which is unremarkable in the clothing of the ordinary traveler. Without knowing more about the factual character of the bulge and what it implied to the Marshall I do not see how it brings the search which followed within any of the exceptions to the rule requiring the prior issuance of a warrant.
Furthermore, I find that the defendant declined to submit to a search in this case. He did not consent to it and he did request the opportunity to return his ticked and leave .without, boarding the plane. He said he did not want his person or his baggage searched. Having-stated his position, even assuming that we get by all these other objections, he had a right to have his privilege respected.

We shall assume for the purposes of this opinion the correctness of the trial court’s findings that defendant had not consented to a search and that he had requested “the opportunity to return his ticket and leave without boarding the plane.”

However, the record does not support the findings that (1) the magnetometer did not “react” when defendant passed through it, (2) the marshal did not rely on such reaction in stopping defendant and patting him down, and (3) the bulge in defendant’s pocket was not of a character to justify the marshal in reaching into the pocket and removing what was therein. We conclude that those findings were clearly mistaken ones, “so plainly unwarranted that the interests of justice demand intervention and correction,” State v. Johnson, 42 N. J. 146, 162 (1964), in the exercise of onr constitutional power “to review the fact determinations of a trial court in all cases heard without a jury and to make new or amended findings.” Johnson, supra, at 158.

The trial court’s statement that “defendant denies that the machine rang” is contrary to the record. There was no such denial; defendant professed not even to know whether he had passed through the magnetometer through which every passenger had to pass. Eurther, no “ringing” was involved in the operation of the magnetometer, only a light appeared to indicate the presence of metal.

The testimony indicating that for the purpose of their daily testing of the magnetometer marshals walked through .it wearing a pistol affords no justification for the court’s assumption that the machine would not react to a lesser quantity of metal or its conclusion that the marshal testified falsely when he said the machine did light up.

Significantly, the court’s findings make no reference to the fact that defendant appeared “high” and had admitted that he had injected himself with seven or eight bags of heroin some three to four hours earlier.

We find that the magnetometer did light up when defendant passed through it. Further, we are satisfied and find that the marshal, in concluding that a pat down was called for, relied not only on the information that defendant was a “selectee” who matched the pg^file, but also on the reaction of the magnetometer, defendant’s inability to produce any identification, and his drugged appearance.- Indeed, even if the reaction of the magnetometer be disregarded, the other circumstances gave rise to a reasonable suspicion mandating the action taken by the marshal. Had he not taken that action — and this whether defendant consented or not — “he would have been derelict in his duties as a marshal, charged with the responsibility of detecting potential hijackers.” United States v. Bell, supra, 464 F. 2d at 672.

Further, despite the rulings to the contrary in some of the cited federal cases, we do not deem it a prerequisite to a finding that the marshal’s suspicions were reasonable, that it he shown that the “profile” was valid and properly, applied and that the magnetometer was properly set up.

We are not here concerned with the use of evidence to convict a defendant at a trial. We are concerned only with whether the.officer acted reasonably •— whether the situation that confronted the officer justified the pat-down. It suffices that it appear that the marshal, in good faith, believed the “profile” information he received and had no reason to believe that the magnetometer was not operating properly.

Further, the record is contrary to the finding that the pat-down disclosed only a “small bulge, something which is unremarkable in the clothing of an ordinary traveler.” The finding ignores the uncontradicted testimony that the bulge, although small “felt very hard.” The size of the bulge is not the controlling consideration. “* * * [T]he weapon of the skyjacker is not limited to the conventional weaponry of the bank robber or of the burglar. His arsenal may well include explosives.” United States v. Bell, supra, 464 F. 2d at 674; United States v. Skipwith, 482 F. 2d at 1277; see also State v. Campbell, 53 N. J. 230, 238 (1969).

Once the marshal felt the bulge, he was clearly correct in proceeding to ascertain what object caused it. When his investigation revealed the narcotics and narcotic paraphernalia, he had reasonable cause to arrest defendant and, as an incident thereto, to search defendant’s attache case.

Finally, we do not agree with the trial court’s conclusion — based on its finding that defendant had requested “the opportunity to return his ticket and leave without boarding the plane” —• that “he had a right to have his privilege respected” so that the pat-down and search which followed were illegal. Although the rule applied by the trial court has some- judicial support — see United States v. Meulener, 351 F. Supp. 1284, 1289-1290 (C. D. Cal. 1972); United States v. Ruiz-Estrella, 481 F. 2d 723, 728-729 (2 Cir. 1973); People v. Hyde, 108 Cal. Rptr. 785 (Ct. App. 1973) — we find no justification therefor and reject it for the cogent reasons concurred in by all the members of the court in United States v. Skipwith, supra:

* * *' I do not accept defendant’s contention that, once he had reached the point of embarkation where inquiry and possible search procedures were openly in operation, he could choose to withdraw if lie found the inquiry addressed to him not to his liking. United States v. Meulener, C. D. Cal., 1972, 351 F. Supp. 1284. The rea soning in Meulener, that if he then changed his mind, and elected to leave, “ he would pose no danger to the passengers and crew on the aircraft,” 351 F. Supp. at 1289, greatly damages the prophylactic purpose of the search procedure. Such an option would constitute a one-way street for the benefit of a party planning airplane mischief, since there is no guarantee that if he were allowed to leave he might not return and be more successful. Of greater importance, the very fact that a safe exit is available if apprehension is threatened, would, by diminishing the risk, encourage attempts. Established search procedures are perhaps more valuable by what they discourage than by what they discover. I see no constitutional requirement, where a defendant knew by objective signs that he was incurring the possibility of a search, that he should thereafter be allowed to play heads-I-win, tails-you-lose. [482 F. 2d at 1281]

The order suppressing evidence is reversed.


author: Seidman, J. A. D.

text:
    NEWARK LABORERS’ PENSION-WELFARE FUNDS, PLAINTIFF-APPELLANT, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted October 30, 1973
    Decided November 27, 1973.

      Before Judges Carton, Seidman and Goldmann.

      Messrs. Apruzzese & McDermott, attorneys for appellant (Mr. Vincent J. Apruzzese, of counsel; Mr. Elwood J. Heerwagen, Jr., on the brief).

      Messrs. Bruck and Bigel, attorneys for respondent (Milton Bruch of counsel).
   The opinion of the Court was delivered by

Seidman, J. A. D.

The issue in this appeal is whether, in an action to collect an employer’s delinquent contributions to the welfare and pension fund of a laborers’ union, costs and reasonable attorney’s fees are recoverable from a surety company on payment bonds furnished in connection with the construction of two housing projects for which financing was provided by the New Jersey Housing Agency.

The trial judge hold that they were not and entered judgment in favor of defendant surety. Plaintiff appeals.

Novel questions are involved. Counsel have cited no New Jersey cases dealing with the problem and our own research has disclosed none.

The basic facts were stipulated below. In 1968 and 1969 Mid Center Development Corp. entered into construction contracts for two moderate-income housing projects in Newark, financed in part by loans from the New Jersey Housing Einance Agency.

To assure payment in full to all parties furnishing labor and materials for the projects, Mid Center Development Corp. as principal and defendant as surety made and executed “dual obligee” payment bonds to the Housing Finance Agency as lender-obligee and, respectively, to Zion Towers and 440 Elizabeth Avenue Corp. as owner-obligee.

Subsequently, Mid Center Development Corp. subcontracted to Arthur H. Padula Construction Corp. (Padula) a portion of the work to be performed on the contracts. Laborers were made available to Padula from local unions pursuant to a collective bargaining agreement which provided, among other things, that all employers should contribute for every hour of work performed by laborers the sum of 20fi to the Newark Laborers’ Welfare Fund and a like sum to the Newark Laborers’ Pension Fund. The sums were later increased to 4.0<¡¡ and 3Qj per hour, respectively. Provision was also made for a contribution of per hour to an Industry Advancement Program.

The agreement further provided that when an employer became delinquent in the payment of contributions to the funds such employer could be assessed for costs, attorney’s fees and other expenses incurred in endeavoring to collect the delinquent payments, such costs and expenses to be payable irrespective of whether litigation was commenced.

Padula became delinquent in the payment of contributions in the amount of $53,695.03, and plaintiff referred the matter to its attorneys for collection. Only partial payment was made and Padula was sued for the balance due, plus collection costs and expenses. A voluntary petition in bankruptcy resulted in an order restraining suits. by creditors. Plaintiff then filed notices of claim under defendant’s bonds for the sums of $17,935.78 and $19,048.09 due on the respective projects. After the institution of this suit defendant paid plaintiff $25,128.88 for the delinquent contributions but refused to pay the attorney’s fees, plus interest and costs, in the claimed sum of $12,403.14.

Defendant maintains, as it did below, that its bonds provided for the payment of labor and material furnished in the prosecution of the work and that the claim for legal fees and expenses is not encompassed within such labor and materials. In addition, it contends that the bond excludes the payment of any costs and expenses of a suit on the bonds.

It is plaintiff’s position that all labor furnished for the project is governed by the New Jersey Prevailing Wage Act, N. J. S. A. 34:11—56.25 et seq., and that the fees and expenses sought constitute part of the labor furnished for the projects. Plaintiff contends, further, that the fees and expenses were incurred in connection with the suit against Padula and not the one against defendant; and that, in any event, there is no provision in the bond prohibiting the award of such fees and expenses.

Defendant argues in rebuttal that the projects are not public works and therefore the Prevailing Wage Act does not apply.

The trial judge ruled that the labor and materials bonds in question, required by the New Jersey Housing Finance Agency Law of 1967, N. J. S. A. 55:14J-9(a) (4), were in amounts “related to the project cost,” but that attorney’s fees incurred in attempting to secure payment of basic labor and material costs were collateral to and formed no part of the project cost. He deemed as controlling the cases of Faulkner Concrete Pipe Co. v. United States Fidelity & Guaranty Co., 218 So. 2d 1 (Miss. Sup. Ct. 1969), and Davis Acoustical Corp. v. The Hanover Insurance Co., 22 A. D. 2d 843, 254 N. Y. S. 14 (App. Div. 1964).

We disagree with the conclusion reached by the trial judge as to the attorney’s fees and costs, and we consider the cited cases inapposite.

It is the declared public policy of this State “to establish a prevailing wage level for workmen engaged in public works in order to safeguard their efficiency and general well being.” N. J. S. A. 34:11-56.25.

There is no doubt that the housing projects covered by the surety bonds here in issue are public works within the purview of the New Jersey Prevailing Wage Act, N. J. 8. A. 34:11-56.25 et seq. “Public Works,” as defined in §56.26(5) of the statute, includes construction work done under contract and paid for in whole or in part out of the funds df a public body. The term “public body” includes any instrumentality or agency of the State. §56.26(4).

That the New Jersey Housing Finance Agency is an instrumentality of the State is clear from a reading of N. J. 8. A. 55:14J-4(a), which provides:

There is hereby established in, but not of, the Department of Community AfFairs a body corporate and politic with corporate succession, to bo known as the “New Jersey Housing Finance Agency.” The agency is hereby constituted as instrumentality exercising public and essential governmental functions, and the exercise by the agency of the powers conferred by this act shall be deemed and held to be an essential governmental function of the State. [Emphasis supplied].

The applicability of the Prevailing Wage Act to the labor provided at the construction projects involved herein is evidenced by N. J. S. A. 55:14J-37, which provides in pertinent part that housing sponsors (Zion Towers and 440 Elizabeth Avenue Corp. are so classed) granted a loan from the Housing Finance Agency, or builders, contractors or subcontractors engaged for the housing project, “shall pay the workmen employed in the performance of any contract for such construction or rehabilitation not less than the prevailing wage rate as determined by the Commissioner of Labor and Indus-■£j»y ^ if;

The collective bargaining agreement covering the labor furnished for the projects required the employees to make certain contributions to the union welfare and pension funds. Such employer contributions for employee benefits are part of the wage rate. N. J. S. A. 34 :ll-56.30 so states:

The commissioner shall determine the prevailing wage rate and forthwith shall establish the prevailing wage in the locality in which the public work is to be performed . . . The prevailing wage shall be determined and computed in accordance with rules and regulations issued by the commissioner as may be required to carry out the provisions of the act; provided, however, that employer contributions for employee benefits pursuant to a them existing bona fide collective bargaining agreement shall be considered, an integral part of the wage rate paid by employers * * *. [Emphasis supplied]

If any workman is paid less than the prevailing wage rate to which he is entitled, he or his designated agent or representative may recover in a civil action the full amount due, together with costs and such reasonable attorney’s fees as may be allowed by the court. N. J. S. A. 34:11-56.40.

In our view, the trial judge’s reasoning, which led him to conclude that attorney’s fees incurred in attempting to collect a wage claim formed no part of the project cost and therefore were not covered by the payment bonds, failed to take into account the clear public policy expressed in both the Prevailing Wage Act and the Housing Finance Agency Law, and was largely based on two cases which are clearly distinguishable.

One of the cases cited, Faulkner Concrete Pipe Company v. United States Fidelity & Guaranty Company, supra, involved an action by a materialman against a contractor and its surety for attorney’s fees due on an indebtedness. It was there held that where neither the surety bond nor the statute authorized the collection of attorney’s fees incurred because of the contractor’s default, the materialman was not entitled to recover such fees from the surety. A similar result was reached in the other case, Davis Acoustical Corp. v. The Hanover Insurance Company, supra, where a subcontractor sought to recover attorney’s fees from the general contractor’s surety company, relying upon a clause in his contract that in the event it was necessary to refer any claim to an attorney, plaintiff would be entitled to an additional 25% of the amount claimed.

Neither case, it should be noted, involved public works statutes or prevailing wage laws applicable thereto. However, United States v. Carter, 353 U. S. 210, 77 S. Ct. 793, 1 L. Ed. 2d 776 (1957), remarkably parallels the case here under consideration.

That case concerned the extent of the liability of the surety on a payment bond furnished by a contractor, as required by the Miller Act (40 U. S. C. A. § 270a et seq.), for the protection of persons supplying labor for the construction of federal public buildings. The collective bargaining agreement under which the laborers were hired obligated the contractor to pay them wages at specified rates and, in addition, to pay 7y2 cents an hour of their labor to the trustees of a health and welfare fund. When the contractor failed to pay in full the required contributions the trustees of the fund, pursuant to the Miller Act, sued the surety on the payment bond to recover the balance due, plus attorney’s fees, court costs and expenses.

In Garter the surety contended that since only the master labor agreement made mention of payment of legal fees for failure to make the required contributions, and no reference thereto appeared in the surety bond, it was not liable for costs and attorney’s fees.

The court rejected the argument, emphasizing that the Miller Act represented a congressional effort to protect persons supplying labor and material for the construction of federal public buildings, and that the essence of the stated policy was to provide a surety who must make good the obligation of a defaulting contractor to his suppliers of labor and materials. 353 U. S. at 217, 77 S. Ct. 797, 1 L. Ed. 2d at 782.

Moreover, said the court, not until the required contributions have been made will the employees have been “paid in full” for their labor, and so long as the employers’ obligations have not been satisfied, the Miller Act will not have served its purpose. The contractor’s obligation to pay such items as attorney’s fees, court costs and expenses, the court commented further, formed part of the consideration which he agreed to pay for his employees’ services, and these items must be included if the employees are to be “paid in full” the sums justly due them. 353 U. S. at 220, 77 S. Ct. at 798, 1 L. Ed. 2d at 784.

Since the Prevailing Wage Act is remedial in nature, Male v. Pompton Lakes Mun. Util. Auth., 105 N. J. Super. 348, 355 (Ch. Div. 1969), it is entitled to a liberal construction and application in order to effectuate the strong public policy of protecting those whose labor goes into public projects. Carter, supra, 353 U. S. at 216, 77 S. Ct. at 796, 1 L. Ed. 2d at 782.

It is evident that the Legislature sought to prevent the frustration of its declared policy by providing for the additional recovery of costs and reasonable attorney’s fees, thus assuring laborers full payment of the wages due them.

Defendant knew or should have known that its bonds were posted pursuant to N. J. S. A. 55:14J-9(a) (4). A surety’s liability on its bonds must be at least coextensive with the obligations imposed by the applicable statutes if the bonds are to have their intended effect. Carter, supra, 353 U. S. at 216, 77 S. Ct. at 796, 1 L. Ed. 2d at 782. See also Gypsum Contractors, Inc., v. American Surety Co., 37 N. J. 315, 320 (1962). While the amounts of the bonds were to be related to the project cost “as established by regulation,” the liability assumed was payment for all labor furnished in the prosecution of the work. Unless payment for such labor includes costs and reasonable attorney’s fees incurred in its enforcement, the aggrieved workmen will be deprived of full relief and the legislative purpose defeated. Cf. Male v. Pompton Lakes Mun Util. Auth., supra, 105 N. J. Super, at 359-360.

The trial judge’s concept that attorney’s fees incurred in attempting to secure payment of the labor costs were collateral to and formed no part of the project cost is, in our view, too narrow an interpretation of the payment bonds in light of the clear statutory policy that laborers are to be paid fully for their work.

Furthermore, as plaintiff points out, the fees and costs it seeks to recover are limited to those incurred in attempting to collect the delinquent contributions directly from Padula. It contends, and we think correctly so, that the exclusion of costs and expenses of suit from defendant’s liability applies, if at all, to suits on the bonds themselves. Paragraph 2 of the bonds, which refers to the institution of suit by claimants and the prosecution thereof to final judgment, provides “that the Obligees hereunder shall not be liable for the payment of any costs and expenses of any such suit” (Emphasis supplied). There is, thus, no need to consider the further issue raised whether the word “Obligees” was a mistake and should have been “Obligors.”

We are convinced that a result which will produce for the laborers represented by plaintiff full payment of their wages and included benefits is sound and will effectuate the clear legislative purpose. We hold, therefore, that defendant is liable to plaintiff on its bonds for the costs and reasonable attorney’s fees incurred in endeavoring to recover the delinquent contributions, and that the cause should be remanded for a determination of the reasonable amount of such fees and costs. N. J. S. A. 34:11-56.40.

Reversed and remanded for further proceedings consistent with this opinion.


author: Goldman, J. A. D.

text:
    SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, PLAINTIFF-RESPONDENT, v. PATRICK DOWNES, JR., d/b/a ROUTE 3 ESSO, DEFENDANT-APPELLANT. SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, PLAINTIFF-RESPONDENT, v. SHELL OIL COMPANY, INTERVENOR-APPELLANT. SHELL OIL COMPANY, PLAINTIFF-APPELLANT, v. SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT. PATRICK DOWNES, JR., d/b/a ROUTE 3 ESSO, INTERVENOR-APPELLANT, v. SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT. MOBIL OIL CORPORATION, PLAINTIFF-APPELLANT, v. SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT. EXXON CORPORATION, PLAINTIFF-APPELLANT, v. SIDNEY GLASER, DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Argued May 31, 1973
    Decided November 27, 1973.

      Before Judges Goldman, Matthews and Lora.

      Mr. Howard Stern argued the cause for appellant Patrick Downes, Jr. (Messrs. Shavick, Stern, Schotz, Steiger and Croland, attorneys).

      Mr. Michael D. Loprete argued the cause for appellant Shell Oil Company (Messrs. Mattson, Madden, Polito and Loprete, attorneys; Mr. Loprete on the brief; Mr. Andrew S. Polito of counsel).

      Mr. Augustus Nasmith argued the cause for appellant Mobil Oil Corporation (Messrs. Carpenter, Bennett and Morrissey, attorneys; Ms. Heather Mullett and Mr. Michael S. Waters on the brief).

      Mr. William L. Dill, Jr. argued the cause for appellant Exxon Corporation (Messrs. Stryker, Tams and Dill, attorneys; Mr. Richard B. Spencer, Jr. on the brief).

      Mr. Donald B. Kipp aTgued the cause for intervenor The Sperry and Hutchinson Company (Messrs. Pitney, Hardin and Kipp, attorneys).

      Mr. Harry Z. Haushalter, Deputy Attorney General, argued the cause for respondent (Mr. George F. Kugler, Jr., Attorney General of New Jersey, attorney; Mr. Stephen Skillman, Assistant Attorney General, and Ms. Virginia L. Annich, Deputy Assistant Attorney General, of counsel).
   Goldman, J. A. D.

Patrick Downes, Jr., d/b/a Eoute 3 Esso, appeals from a Chancery Division order permanently enjoining him from issuing trading stamps in conjunction with the sale of motor fuel in amounts exceeding one trading stamp for each $.10 of motor fuel purchased. Shell Oil Company, Mobil Oil Corporation and Exxon Corporation seek review of the action taken by Sidney Glaser, Director of the Division of Taxation, Department of the Treasury, on October 2, 1972, giving notice and determining, among other things, that giveaways, whether or not conditioned on the purchase of motor fuel, are deemed illegal and violative of the provisions of N. J. 8. A. 56:6-2(e). Shell has intervened in the Downes appeal, and Downes in the Shell appeal. The Sperry & Hutchinson Co., whose S & H stamps Downes issued in connection with his service station business, has also intervened in the appeals.

The appeals have been consolidated and the permanent injunction order stayed pending our determination.

Director Glaser brought an action against Downes seeking a permanent injunction prohibiting his distribution of more than one S & H or Plaid trading stamp for each $.10 of motor fuel purchased at his Esso Service Station. It is conceded that Downes had been issuing three trading stamps for each $.10 of motor fuel purchased. Following a three-day trial, the Chancery Division judge, in an opinion published in 120 N. J. Super. 476 (1972), held that Downes’ practice violated N. J. 8. A. 66:6 — 2 (e) in that it constituted an illegal rebate, allowance, concession or benefit, thereby unlawfully permitting motor fuel to be purchased from a retailer below the posted price or at a net price lower than the posted price applicable at the time of sale. He held that the issuance of three trading stamps for each $.10 of motor fuel purchased violated the cash discount standard 'allowed in Sperry & Hutchinson Co. v. Margetts, 25 N. J. Super. 568 (Ch. Div. 1953), aff’d 15 N. J. 203 (1954). Although the only issue before him for determination was the legality of Downes’ trading stamp practice, the trial judge went on to address himself to other trade devices which the evidence indicated were in use in defendant’s competitive area and elsewhere, and which he held fell plainly within the prohibition of N. J. S. A. 56:6-2(e). These were: (1) giveaways, whether or not connected with the purchase of motor fuel; (2) the issuance of bonus stamps in connection with the practice of punch cards, and (3) the giving of postage stamps with each purchase of motor fuel. The judge stated that “the Director must give gasoline retailers throughout the State ample written notice of the illegality of each of these competitive devices,” including excessive trading stamps. He went on to say:

* * * I leave to his discretion whether he takes this action by the adoption of appropriate regulations or the giving in some fashion of adequate written notice to all of the gasoline retailers operating in this State of the conclusions reached in this opinion.

The order permanently enjoining Downes, dated September 20, 1972, directed that the injunction was to become effective 15 days after the Director informed each retail motor fuels dealer in New Jersey, by written notice through regular mail, that the issuance of the following items was illegal under N. J. S. A. 56:6-2(e) : (1) trading stamps in amounts exceeding one stamp for each $.10 of motor fuel purchased; (2) bonus stamps in connection with the practice of card punching or any substantially similar practice involving the sale of motor fuel; (3) postage stamps, and (4) giveaways, whether or not conditioned on the purchase of motor fuel. This order is the basis for Downes’ appeal.

On October 2, 1972 Director Glaser sent written notice to all licensed retail motor fuels dealers in New Jersey that pursuant to the Chancery Division injunctive order of September 20, 1972, the issuance by retail motor fuels dealers of any of the four items mentioned in the order was deemed to be illegal and violative of N. J. S. A. 56:6-2(e). The dealers were advised that effective 15 days from the date of the notice, the issuance of any of the four items might subject the dealer to the penalties enumerated in N. J. S. A. 56:6-3, including the suspension of his license for not less than 5 nor more than 30 days, and a fine for each violation of not less than $50 nor more than $200. It is this action by the Director that forms the basis for the Shell, Mobil and Exxon appeals.

I.

Downes’ sole argument is that a retail motor fuels dealer is constitutionally free to give trading stamps with fuel purchases so long as the stamps are offered uniformly and the cost of such offerings does not reduce the sales price of the fuel below the dealer’s cost. Translated over into the factual frame of reference of this case, his claim is that he was not in violation of N. J. S. A. 56:6-2(e) in giving his customers three trading stamps for each $.10 of motor fuel purchased — the same contention projected at the trial. Although the trial judge said that it might very well be, as the State contended, that the theory of Margetts should be reconsidered and the giving of even one trading stamp for each $.10 of motor fuel purchased be deemed illegal under the statutory provision, he properly held that he was bound by the Supreme Court decision in that case. He observed, moreover, that the constitutionality of N. J. S. A. 56 :6—2 (e) was later upheld in Fried v. Kervick, 34 N. J. 68 (1961), and that the court, in effect, reaffirmed its decision in Margetts. Additionally, the judge pointed out, the Legislature apparently acquiesced in the Margetts holding that trading stamps should not be considered an unlawful rebate under a later statute involving the regulation of pharmacists. See Supermarkets General Corp. v. Sills, 93 N. J. Super. 326 (Ch. Div. 1966), involving L. 1965, c. 120 (N. J. S. A. 45:14-12(f))

In the State’s brief filed on behalf of the Director of the Division of Taxation, it is urged that the Margetts holding should be overruled and the issuance of single stamps declared illegal. That issue was not before the trial court; indeed, the pleadings clearly evidence the acceptance of the continued viability of the Margetts holding. The third count of the complaint, and the only count remaining at the time of the pretrial order, sought judgment enjoining Downes from “engaging in the issuance of such an excessive quantity of trading stamps * * *.” The pretrial order specified the question to be determined at trial as, “Is the issuance of triple trading stamps in violation of N. J. S. A. 56:6-2(e)”? Hitherto no one had questioned the implicit recognition of the validity of the practice of issuing one stamp for each $.10 purchase. The State now raises the validity issue for the first time in these appeal proceedings. It seizes upon the trial judge’s passing remark that the Margetts theory might well be reconsidered. Of course, appeals are taken from judgments and not from opinions, let alone dicta. Hughes v. Eisner, 8 N. J. 228 (1951). The judge went on to say that any reevaluation of Margetts could not be made by a trial court, for it is bound by the Supreme Court decision in that case. The order for a permanent injunction contains no reference to the issue litigated in Margetts; it refers exclusively to the issuance of more than one trading stamp.

Margetts is the clear answer to the contention now suddenly advanced by the State. Its holding is still binding upon the Director and this court. Accordingly, the injunctive order under appeal is affirmed.

II.

As we have just pointed out, the single issue before the trial judge was whether the practice of issuing triple stamps with each $.10 purchase of motor fuel violated N. J. S. A. 56:6-2(e) — that and nothing more. He was led into a consideration of such practices in Downes’ competitive area as giveaways, the issuance of bonus stamps in connection with punch cards and the giving of postage stamps with motor fuel purchases, when the State’s attorney indicated that the Director of the Division of Taxation was considering a change in the then existing regulation, in effect since May 1961, and which provides that:

(a) No motor fuel retail dealer shall give away anything of value when such “giveaway” is conditioned upon the purchase of motor fuel and would have the tendency to produce sharp and drastic price reductions, create price wars or foster price instability throughout the industry.
(b) Any such “give-away” in connection with so-called anniversaries, grand openings, or similar occasions is prohibited. [N. J. Administrative Code 18:19-2.8]

The discussion, of these matters was entirely extraneous to the sole matter for determination. It appears at the very close of the opinion, 120 N. J. Super, at 491-492.

Whatever was said about giveaways is surely not binding upon appellants Shell, Mobil and Exxon. They were not parties to the Downes litigation. Their interests were not represented by either of the parties thereto, and they were unaware of the pendency of the action or of the permanent injunction order eventually entered.

This brings us to the notice which the Director mailed to all licensed retail motor fuels dealers on October 2, 1972. It is uncontroverted that (1) the Director gave no notice of his intended issuance or mailing of that notification; (2) no opportunity was given to interested persons, prior to the sending out of the notice, to submit data, views or arguments, orally or in writing; (3) no hearing was held with regard to the notice; (4) the Director gave no consideration to any data, views or arguments of interested persons respecting the notice prior to issuance,'and (5) he never filed the notice with the Secretary of State.

All parties to these consolidated appeals have stipulated that in accordance with N. J. A. C. 18:19-2.8(a), quoted above, the policy of the Division of Taxation prior to the October 2, 1972 notice, has been to institute enforcement proceedings against only those retail dealers issuing giveaways conditioned on the purchase of motor fuels; that before that date it was not the policy of the Division to institute such proceedings against dealers issuing giveaways that were not conditioned on the purchase of motor fuels (with the exception of proceedings prosecuted under N. J. A. C. 18:19-2.3(d) involving lotteries, prizes and games of chance), and that in accordance with the latter policy, no enforcement proceedings were, in fact, ever instituted with respect to giveaways not conditioned on the purchase of motor fuels.

In reliance upon the policy followed by the Division, Shell, Mobil and Exxon have, through their retail dealers, for some years used free gifts (giveaways) as a means of publicizing their brands and encouraging the public to patronize their dealers. At the time the Director’s notice was received by dealers, all three companies were in the process of carrying out free promotions. Shell offered glasses (it had offered glassware^ salad bowls, steak knives and miniature automobiles in the six years preceding). Mobil was in the midst of a free promotion of four-ounce jars of jam or jelly (previous offerings were glasses, seasoning, plastic trash bags, thermoware, and tankards). Exxon’s promotion was thermoware plastic mugs. The companies had invested unusually large sums in planning, promoting and carrying out their giveaway programs when they were suddenfy confronted with the Director’s order.

In no case was the giveaway conditioned upon the purchase of gasoline or any other product available at the retail service stations of the respective companies. Company publicity and station signs stated that no purchase was required. All that anyone requesting the free article had to show was a driver’s license.

The order was in effect a rule or regulation. N. J. S. A. 52:14B-2(e) defines an administrative rule as an “agency statement of general applicability and continuing effect that implements or interprets law or policy * * *. The term includes the amendment or repeal or any rule * * The October 2 notice was precisely such an “agency statement,” and since it offered an interpretation of N. J. S. A. 56:6 — 2(e) different from that embodied in the existing regulation, N. J. A. C. 18:19-2(a), it also constituted a repeal or amendment of that rule. It was a directive of universal application, for it was mailed to all licensed motor fuels dealers in New Jersey.

What the Director did violated every requirement of N. J. 8. A. 52:14B-4(a), which deals with notice and hearing prior to the adoption, amendment or repeal of any rule. That section requires at least 20 days’ notice of the intended action; an opportunity afforded all interested persons to submit data, views or arguments, orally or in writing, and agency consideration of all such submissions. And N. J. S. A. 52 :14B-5 (a) directs that the agency file with the Secretary of State a certified copy of each rule it adopts.

N. J. 8. A. 52:14B-4(d) expressly provides that no rule is valid unless adopted in substantial compliance with the notice and hearing requirements. There was not so much as a shadow of compliance by the Director with the clearly stated requirements of the Administrative Procedure Act. What he did denied due prcoss of law to the three companies here involved.

It is argued in support of the Director’s action that the notice represented nothing more than conformance with the Chancery Division’s interpretation of the law. As already stated, the trial court was without jurisdiction to pass on the giveaway issue. Moreover, the court could not suggest to or order the Director to act in violation of the Administrative Procedure Act. That the Director knew precisely how ho must proceed is indicated by his attempt to amend N. J. A. G. 18 :19-14 in 1970. lie gave notice at that time in the New Jersey Register of his intention to amend the regulation to control giveaways. 2 N. J. R. 51 (June 4, 1970). The regulation was never adopted because of opposition to the proposal.

We conclude that the action taken by the Director on October 2 was invalid.

The injunctive order in Glaser v. Downes is affirmed; the October 2, 1972 order of the Director is set aside as without force and effect.