author: Lynch, J. A. D.

text:
    CONTINENTAL PAPER COMPANY, PETITIONER-RESPONDENT, v. VILLAGE OF RIDGEFIELD PARK, RESPONDENT-APPELLANT. ALFORD INDUSTRIES, INC., PETITIONER-RESPONDENT, v. VILLAGE OF RIDGEFIELD PARK, RESPONDENT-APPELLANT. SIMKIN INDUSTRIES, PETITIONER-RESPONDENT, v. VILLAGE OF RIDGEFIELD PARK, RESPONDENT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued January 22, 1973
    Decided February 16, 1973.

      Before Judges Ekitz, Lynch and Ackerman.

      Mr. Martin T. Durkin argued the cause for appellant (Mr. Christian Bollermann on the brief).

      Mr. Richard Aloysius Walsh argued the cause for respondents (Messrs. Silverman, Bergstein & Walsh, attorneys).
   The opinion of the court was delivered by

Lynch, J. A. D.

The Village of Bidgefield Park (village) appeals from judgments of the Division of Tax Appeals reducing the 1969 and 1970 assessments upon certain real property owned by taxpayers of the community. The sole ground of the village’s complaint here is that the Division, after reducing the assessments on the basis of their true value, imposed an additional reduction of 15%, on the asserted authority of the decision in In re Appeals of Kents Atlantic Ave., Inc., 34 N. J. 21 (1961), for alleged “discrimination.”

In Continental’s petition of appeal filed with the Bergen County Tax Board for the tax year 1969, the only reason alleged for reduction of the assessment was “Not true value.” In the petition to the Division of Tax Appeals for the same year, the allegation of aggrievement was that “the said assessment is in excess of its true value” and the prayer was that the assessment “be reduced to the true value of the property.” Thus, in neither tribunal was there an allegation of “discrimination,” remediable under Kents. Because the issue was not raised, the claim of “discrimination” was not properly cognizable by the Division and its action in applying the 15% reduction on such basis as to the tax year 1969 is reversed. Cleff Realty Co. v. Jersey City, 41 N. J. Super. 465 (App. Div. 1956), certif. den. 23 N. J. 58 (1956); Matawan v. Tree Haven Apts. Inc., 108 N. J. Super. 111, 116 (App. Div. 1969).

The following capsulizes that portion of the decision of the Division which sets the framework of the issue of discrimination for our consideration as to the year 1970. The Division said:

A claim of discrimination has been made by the appellants. The allegation is based on Kents type discrimination and they request Kents type relief. The record shows that during the years 1969 and 1970, the Village of Ridgefield Park has been assessing at a common level of assessment which was less than 100 per cent. I find for that year the actual assessment was on the basis of 85 per cent of true value. I therefore find for the years 1969 and 1970 all of the assessments which have been determined here should be reduced by the sum of 15 per cent. [Emphasis added]

The “finding” that “for that [sic] year the actual assessment was on the basis of 85 per cent of true value” is somewhat obscure both as to “what year” was intended and as to whether it was a finding that the actual assessment of the subject property was at 85% of true value, or whether the finding referred to assessments generally. If the subject properties were indeed assessed at such percentage, there could have been no discrimination even on the Division’s theory (i. e. that the “common level” was at 85%). To reach the issue presented, we shall construe the language upon the assumption that this finding was meant to assert that the “common level” was at 85% of true value. In any event, we hold that the Division erred in granting Kents relief on the record here.

In order to make out a case of actionable discrimination, these elements must be proved: (1) that the real property generally in the municipality was asssesed at less than true value; (2) what the common assessment level was, and (3) the true value of the subject property upon which the common level percentage would operate. Reading Co. v. Woodbridge Tp., 45 N. J. 407, 426 (1965); Matawan v. Tree Haven Apts. Inc., supra, 108 N. J. Super. at 116; Feder v. Passaic, 105 N. J. Super. 157, 160 (App. Div. 1969). If there is no common level shown and there is none which the assessor is endeavoring to apply, and the assessment is substantially higher than the “average ratio” determined by the Director of Taxation, the “average ratio” may be applied under Kents, and the assessment reduced by that proportion. Matawan v. Tree Haven Apts. Inc., supra, 108 N. J. Super. at 116; Feder v. City of Passaic, supra, 105 N. J. Super. at 166.

As noted above, the Division’s decision found that

*' * *' The record shows that during the years 1969 and 1970, the Village of Ridgefield Park has been assessing at a common level of assessment which was less than 100 per cent. I find for that year the actual assessment was on the basis of 85 per cent of true value * * * [Emphasis added]

There is no evidential support in the record for so much of this finding as concerns assessment at a common level less than 100%. Indeed, there was no testimony by-taxpayers’ experts as to a common level, and the assessor’s uncontroverted testimony is that for his 12 years as assessor he has been assessing at true value.

Nor was there any showing that, as in Kents, there was no common level, toward the end that the average ratio from the Director’s Tables might be enlisted.

The Division erred in equating the “average ratio,” accepted by the assessor in his testimony for what it is and no more, with a “common level.”

The “average ratio” is quite a different concept from “common level.” In fact, the “common level” imports general equality in the incidence of the tax, and the “average ratio” necessarily makes for unequal proportions of value and thus for inequality of treatment and burden in the apportionment of the tax as between the several property owners. Delaware, Lackawanna and Western R. R. Co. v. Neeld, 23 N. J. 561, 573 (1957), and Switz v. Middletown Tp., 23 N. J. 580, 594 (1957).

In North Bergen Tp. v. Venino, 45 N. J. Super. 143 (App. Div. 1957), the Division of Tax Appeals attempted to apply the “average ratio” of the Director and the Hudson County equalization table to correct what it deemed, because of said tables, a discriminatory assessment. Judge (later Justice) Francis said:

May the tables described be used as the sole reason for a finding of discrimination? And, where such tables are offered or used as the sole means of demonstrating discrimination against an individual property owner, may the average ratio of assessment to true value as shown therein be applied to the actual true value of the individual parcel of realty in order to achieve equality and eliminate discrimination? The answers to these questions must be in the negative. Sueh treatment fails to take cognisance of the essential difference between the concepts of average ratio of assessment to tme value for equalisation table purposes and common ratio of assessment. The average ratio achieved in the statutory equalization process is the arithmetical mean of the varying percentages of true value applied by the local assessor in assessing properties in the taxing district. A common ratio signifies that the same standard of percentage of value is used in assessing each property in the district. If the same standard or common ratio were applied uniformly in all municipalities throughout the State, there would be no need for equalization tables (assuming, of course, that true value was ascertained honestly and in good faith), for then there would be no discrimination. Obviously, therefore, application of the average ratio, ascertained for purposes of equalizing the county tax burden among municipalities or for purposes of allocation of school aid, cannot bring about equality of tax burden among individual property owners within a given municipality. A common level of individual assessment cannot be achieved by that means alone. [At 147; emphasis added]

Ooncededly, Venino was decided before Kents, which did apply the “average ratio” on the facts there presented. But, as will be seen below, the record here does not comport with that in Kents. Venino was one of the cases cited in Kents (34 N. J. at 26) as an instance where efforts had erroneously been made to prove “common level” by relying on the average ratio. The court in Kents exposed the limitation of the “average ratio,” saying:

The question is whether the average ratio thus determined may be used to deal with the problem of intramunicipal inequality. If the sales data used to find the ratio in fact revealed some percentage of true value about which the bulk of individual assessments tended to cluster, one might accept that percentage as the common level of assessments. But the underlying sales material may reveal no such central figure, but rather widely varying assessment ratios within each of the four classes of property referred to above. [34 N. J. at 27]

After pointing out that the sales upon which the average ratio is based ranged, in that case, from 2.25% to 88% of the assessed value for land and comparable widely disparate percentages for residential and “other property,” the court demonstrated the irrelevance of the “average ratio” to “common level,” saying:

It is clear the average ratio is not a handy tool with which one seated at a desk can bring all assessments to full true value. The reason, of course, is that since the individual assessments vary within a wide range, the inequities would be aggravated if all assessments were brought to full true value upon the assumption that they reflect a uniform percentage of that value. Switz v. Middletown Twp., supra (23 N. J., at p. 604) ; Delaware, Lackawanna and Western R. R. Co. c. Neeld, supra (23 N. J., at p. 574). Nothing short of complete revaluation, parcel by parcel, plus appropriate measures to keep the rolls current can achieve equality, [at 27],

Nevertheless, in Kents the court strove to determine whether the average ratio may ever be used to reduce an assessment substantially above it. And it then, with several caveat references to the inherent weaknesses of the concept, laid down the limited circumstances where, as a last desperate measure to avoid inequality of treatment, reliance could be placed on the “average ratio.” Chief Justice Weintraub, speaking for the court, said:

Where, as here, the record of sales indicates there is no common level for all or any class of real property and the assessors disavow any effort to achieve one, the average ratio should be deemed sufficient evidence of the level to which reduction should be granted in the absence of circumstances indicating that the average should be modified for that purpose. The trier of the facts may properly consider any weakness which may appear as, for example, a paucity of sales in the municipality concerned or some imbalance caused by unusual experience, [at 31].

The court in Kents then noted that the record in that case justified the use of the average ratio. The proofs demonstrated there was no common level and the assessors disavowed any effort to achieve one. The sales underlying the average ratio were substantial, the assessments of new motels were “substantially” below the average ratio and the assessments of the property involved “substantially” exceeded the ratio. Thus it was that the court said: “* * * until some better technique appears or some other suitable one is provided by statute, we are satisfied to utilize the average ratio in eases such as the one before us” (at 33; emphasis added).

That is not the situation here. In 1963 a revaluation was made in Ridgefield Park. The assessor’s testimony here was that, while the assessments remained the same through 1970, they were “uniform” throughout the municipality. There was an effort by the assessor to maintain assessments at a common level of true value and a revaluation was again made for the tax year 1971. Moreover, the Division here gave no consideration to the inherent value of the “average ratio” in Ridgefield Park, or its possible weaknesses. Nor was there any showing that the assessment of the subject property was “substantially” higher than the “great hulk” of assessments in the municipality. Uniformity is the desideratum, inequality of tax treatment the evil to be prevented. There is no evidence in the record here to negate the former or to demonstrate the latter. The true thrust of Kenls is at “unequal treatment” (34 N. J. at 31). We find none of that here.

The judgment of the Division is reversed insofar as it reduced the assessments by 15% for reasons of “discrimination” for the tax years 1969 and 1970. The matter is remanded for entry of judgment in the Division for those years in accordance with views herein expressed.

       The property was owned by the Continental Paper Company (Continental) during the tax year 1969, and for the tax year 1970 part of it was owned by Alford Industries, Inc. (Alford), and part by Simkin Industries (Simkin). Except where specific reference is made to the various owners, they shall be referred to as “the taxpayers.”

       The merits of the claim of discrimination likewise would be applicable to the tax year 1969 if “discrimination” had been properly raised in the petitions of appeal.

       So far as pertinent this testimony was as follows:
      Q. All right. Now are you aware of the Table of Equalized Valuations as promulgated by the Division of Taxation, Department of the Treasury for the subject years 1968 and 1969?
      MR. DFRKIN: Your Honor, we'll admit it.
      A. Yes.
      MR. WALSH: You admit the average ratio as applied by the Director of the Division of Taxation?
      THE WITNESS: The average ratio is the result of the selling

        prices of all the properties in the Village, and those that didn’t sell would have the same treatment as those that sold. It would be no different.
      Q. Well, if I told you, assuming for the purposes of this hearing, that the Village of Ridgefield Park for the year 1969 had an average ratio of sale to true value of S.99% [sic] would you agree with that?
      A. I would agree with it.
      Q. Now, for the year 1968, would you agree that the average ratio was 83.53%?
      A. The ratio based on the selling prices of the properties that were used in this study was 83%.

        •Q. Now, if you assessed the subject premises at 100% of true value, do you believe that there was some discrimination in connection with that assessment in connection with the average ratio?
      A. I misunderstood your question before. All the properties in the Village were assessed’ at a hundred per cent in 1963, none of the values have changed. The assessment stayed for eight years in a row. So if the sales ratio based on a few of the selling prices we had reflected that in that space of time the ratio went from a hundred to eighty-three, then I must say that the value that -I have on that property record card is 83%, and not 100%.
      Q. You say it is not 100% now?
      A. Yes, sir.
      MR. WALSH: That’s all.
      REDIRECT EXAMINATION BY MR. DURKIN:
      Q. Mr. Howard, isn’t this ratio change due to inflation?
      A. That’s right.
      Q. And if we had a depression couldn’t it react the opposite way?
      A. It sure could.
      <J. You have in no way attempted to treat any of the properties in Ridgefield Park but in a uniform manner?
      A. All uniformly. [Emphasis added]


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    AIR ECONOMY CORPORATION, PLAINTIFF-APPELLANT, v. AERO-FLOW DYNAMICS, INC., DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted February 13, 1973
    Decided February 26, 1973.

      Before Judges Collester, Leonard and Halpern.

      Messrs. Winget and Keating, attorneys for appellant.

      Messrs. Wilentz, Goldman & Spitzer, attorneys for respondent (Mr. Francis X. Journich, on the brief).
   Per Curiam.

Plaintiff and defendant are foreign corporations authorized to do business in New Jersey. On July 1, 1968, by written contract, plaintiff agreed to sell its business to defendant and, among other things, the agreement provided in relevant part:

This Agreement shall be governed, construed and interpreted in all respects in accordance with the laws of the State of New York. The Supreme Court of the State of New York, in the County of New York, shall have jurisdiction to hear and determine any claims or disputes pertaining directly or indirectly to this Agreement or to any matter arising therefrom. Each of the parties hereby expressly submits and consents in advance to such jurisdiction in any action or proceeding commenced by the other in such Court, * * *.

While au agreement to be bound by the laws of a designated state cannot oust a state of judicial jurisdiction, it will be enforced unless it is unfair, unreasonable or against the public policy of the forum state. Restatement, Conflict of Laws, § 80 at 244 (1971); Central Contracting Co. v. Maryland Casualty Co., 367 F. 2d 341 (3 Cir. 1966); Mayer v. Roche, 77 N. J. L. 681 (E. & A. 1909).

Under the circumstances existing here, there is nothing unreasonable or unfair in the agreement to be bound by New York law. The trial judge properly exercised his discretion. in dismissing the complaint without prejudice, and with permission to reinstate it in New Jersey if, for any reason, the New York courts decline to take jurisdiction.

Affirmed.


author: Horn, J. S. C.,

text:
    STEPHEN SUSSNA ASSOCIATES, PLAINTIFF-RESPONDENT, v. RANDOLPH TOWNSHIP IN MORRIS COUNTY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted January 22, 1973
    Decided February 27, 1973.
    Before Judges Carton, Mintz and Horn.

      Messrs. Villoresi and Flanagan, attorneys for appellant (Mr. David J. Marshall on the brief).

      Mr. Victor Walcoff, attorney for respondent.
   The opinion of the court was delivered by

Horn, J. S. C.,

Temporarily Assigned. Defendant appeals from the determination of an amount allowed to it for attorney’s fee pursuant to B. 4:58-3, which reads as follows:

If the offer of a party other than the claimant is not accepted and the determination is at least as favorable to the offeror as his offer, he shall be allowed, in addition to costs of suit, a reasonable attorney’s fee, not exceeding $750.00, which shall belong to the client and constitute a prior charge upon the judgment. In an action for negligence or other unliquidated damages, however, no attorney’s fee shall be allowed to such offeror unless the amount awarded to the claimant is in excess of $750.00 and is less than 80 per cent of the offer.

Plaintiff filed a contract action for damages against defendant. On September 21, 1971 defendant submitted to plaintiff an offer to allow judgment for $3,500 pursuant to B. 4:58. Trial was held on November 22, 23 and 24, 1971, without a jury and resulted in a verdict in favor of plaintiff for $3,150.

Defendant requested attorney’s fees be awarded to it pursuant to B. 4:58-3 since the final determination was lower than the original offer made by defendant. Pursuant to the court’s direction, defendant’s counsel filed an affidavit listing the services rendered by his firm in behalf of defendant both before and after the offer of judgment was made.

After the date of the offer which was not accepted by plaintiff, the case was prepared for trial and a little over two days were spent in presenting the case before a judge without a jury. The affidavit of defendant does not show precisely how much time was spent in preparation for the hearing.

The issue raised is whether B. 4:58-3 restricts attorneys fees for only those services performed after the offer to allow judgment is made or whether allowance may be made for services rendered before as well as after the offer was made.

In order to determine whether the rule contemplated an allowance for services before the offer as well as after, we must consider the purpose of the rule.

There would not seem to be any sound basis in interpreting the rule to permit recovery for attorney’s services rendered before the offer of settlement. Since the purpose of the rule is to encourage disposition of cases by settlement, it is consistent with that purpose that the offer of settlement be made as early in he litigation as possible in the circumstances of each particular case.

If recovery-can be had under the rule for services rendered before the offer of settlement, it is no stimulus to a party to endeavor to settle until a time just preceding the 20 days before the first scheduled trial date or daily weekly call. B. 4:58-1.

Accordingly, we construe this rule to permit the recovery only for those services rendered after the offer.

The affidavit filed by counsel for defendant is not disputed. We find that for the services rendered at the trial, including reasonable preparation, an appropriate fee is $550.

Pursuant to B. 2:10-5 authorizing this court to exercise such original jurisdiction as is necessary to the complete determination of any matter on review, judgment entered below is hereby increased from $350 to $550.

Affirmed as modified.


text:
    THOMAS NORTON, JR., AN INFANT BY HIS GUARDIAN AD LITEM, THOMAS NORTON AND THOMAS NORTON, INDIVIDUALLY, PLAINTIFFS-RESPONDENTS, v. JOSEPH VENA AND MARY VENA, DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued December 11, 1972
    Decided February 21, 1973.

      Before Judges Eritz, Lynch and Joelson.

      Mr. Hcvrold I. Braff argued the cause for appellants (Mr. Brian C. Hands, of counsel; Messrs. Braff, Litvak, Ertag & Wortmann, attorneys).

      Mr. Charles C. Abut argued the cause for respondents (Mr. Albert G. Besser, of counsel; Messrs. Hannoch, Weisman, Stern & Besser, attorneys).
   Per Curiam.

In this negligence case the trial judge vacated a “friendly” judgment (B. 4:44) in favor of an infant entered after a settlement of the action. This was doné on plaintiffs’ motion and over defendants’ vigorous opposition. A subsequent plenary trial resulted in a jury verdict higher than the settlement (although somewhat suspect in itself because $2,000 or almost 25% of the verdict was to the father expressly for “loss of services” of this then four-year old infant plaintiff) and defendants appeal.

It appears that the only reason for the determination setting aside the previously entered judgment was the absence of a “free consent to the entry of” the judgment by the mother of the infant. The father, who was the guardian ad litem, had “fully and adequately indicated his approval.” On the motion the judge, who had also heard the friendly, acknowledged that at the time of the friendly he felt the settlement was fair and equitable. Even on the motion the judge felt that, “The amount involved [the settlement amount] is not of such a nature as the Court can say it is grossly out of line, either on the low side or on the high side.”

We are of the opinion that the absence of consent of a nonparty parent in circumstances such as exist here, where no fraud is demonstrated and where even now the settlement is not thought to have been unfair or opposed to the infant’s best interests, is insufficient reason to vacate a judgment. The respect due to regularly entered judgments and the importance, from a public policy standpoint, of their finality appears from Bauer v. Griffin, 104 N. J. Super. 530 (Law Div. 1969), aff’d 108 N. J. Super. 414 (App. Div. 1970), certif. den. 56 N. J. 245 (1970).

We are not to be understood to imply that the matter of the absence of a nonparty parent’s consent should be of no concern to a trial judge hearing a “friendly.” We here hold only that this alone is an insufficient reason to vacate an otherwise regular “friendly” judgment previously approved and entered.

Reversed and remanded for re-entry of the vacated “friendly” judgment.


author: Eritz, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. JAMES WILBELY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted December 4, 1972
    Decided February 21, 1973.

      Before Judges Eritz, Lynch and Barrett.

      Mr. Stanley G. Van Ness, Public Defender, attorney for appellant (Mr. John H. Bailiff, Assistant Deputy Public Defender, of counsel and on the brief).

      Mr. Joseph D. J. Gourley, Passaic County Prosecutor, attorney for respondent (Mr. Gary H. 8chlyen, Assistant Prosecutor, of counsel).
   The opinion of the court was delivered by

Eritz, J. A. D.

Defendant was convicted, after jury trial, of breaking and entering with intent to steal (N. J. 8. A. 2A:94^1). On this appeal he claims refusal of his offer to prove his financial resources in order to disprove an intent to steal was error. Additionally, he asserts as plain error complaints about the charge.

Neither the State nor defendant has brought to our attention any New Jersey precedent determining the question of the admissibility of testimony relating to financial resources designed to contradict an intent to steal, nor have we found any. State v. Smith, 32 N. J. 501 (1960), cert. den. 364 U. S. 936, 81 S. Ct. 383, 5 L. Ed. 2d 367 (1961), escaped a determination of the problem. State v. Mathis, 47 N. J. 455 (1966), treats with the converse and declares the inability of the State to prove financial need as motive for robbery. We cannot here say beyond a reasonable doubt that if (he exclusion below was error, it was harmless, so we must resolve the problem.

As related in Smith, supra, Professor Wigmore supports admissibility on the basis of relevancy, i. e., possession of money tends to negative a desire to obtain money by crime. 2 Wigmore, Evidence (3 ed. 1940), § 392 at 343. Interestingly, Wigmore also finds poverty relevant to the commission of a crime but declares this inadmissible for reasons of fairness, presumably to the defendant. With respect to the admissible affluence, Wigmore distinguishes from inadmissible poverty on the basis of “the foregoing objection [possible unfair prejudice] not being here applicable.” Were the sole consideration fairness to the defendant, we would agree. But it seems to us that as evidence of poverty might well “prove too much against too many” (Mathis, supra, 47 N. J. at 471), evidence of affluence might well result in a proving of too little against too few, and this to the very real detriment and prejudice of fair law enforcement.

With Wigmore we have no doubt of some relevance with respect to both poverty and affluence. Mathis concedes that, “Undoubtedly a lack of money is logically connected with a crime involving financial gain.” (47 N. J. at 471.) Plistory has taught that some poor steal for the sole purpose of rectifying that economic condition. Nor do we have any doubt at all that scoundrels exist whose larcenous propensities are restrained solely because affluence overcomes a running of the risks involved.

But it is equally evident, it seems to us, that there exist the honest poor as well the thieving wealthy. This being so, the matter becomes one of weighing the utility of the relevant aspects of the evidence, either of affluence or poverty, against reasons opposing admissibility, principally such as the likelihood of improper inferences being drawn, the opportunity for personal prejudices to be manifested, or, most significantly, the expansion of the fact issues to be tried, and this into an area where exculpating perjury might well be hard to disprove.

We believe that only after such a weighing and a considered initial determination in favor of admissibility from that weighing should that which Professor Wigmore calls “unfair prejudice” be considered as an exclusionary factor.

Perhaps this is what he suggests. But it would appear rather that admissibility is assumed from bare-bone relevancy, and only “unfair prejudice” prevents admission of evidence of poverty. With recognition that our Evidence Rule 7(f) is far reaching with respect to evidence in anywise relevant, and with a nod to the school which argues that only questions of weight, and not admissibility, exist after a determination of relevance, we record our disagreement that relevance mandates admissibility. As Evidence Rule 4 remains to assist the trial judge in excluding relevant evidence which for one good reason or another ought not to be considered by the factfinder, the phrase “by other law of this State” in the prefatory statement of Evidence Rule 7 enables us to determine those instances where evidence concededly relevant should not be admissible nevertheless, for one good reason or another.

In the specific context of the error here urged, we have undertaken the weighing process described above, and we conclude that in addition to the reasons bespeaking nonadmissibility mentioned above, evidence of affluence, while possibly relevant to negate an intent to steal, should not be admissible on account of the likelihood of the involvement of collateral concerns. Examples can be carried to an extreme: if a defendant is allowed to prove equity in improved real estate, how far can the State go to show that there is little cash to meet the mortgage payments to protect that equity? May defendant then demonstrate accounts receivable and the liquidity of his debtors to refute the prosecutor’s implications? And so on.

Further we incline to the view suggested above that even if evidence of affluence were otherwise admissible, it should be excluded on account of unfair prejudice to the State, whose rights and those of the people it represents are also entitled to protection, in the same manner as unfair prejudice to the defendant produced the Mathis exclusion.

We hold that evidence of the possession of money is not admissible to disprove intent, and that the exclusion below of such evidence was not error.

Nor do we find plain error in the following impugned portion of the judge’s charge:

After a consideration of all the evidence, if you are satisfied beyond a reasonable doubt that this defendant was not guilty of the crime charged, it is your duty to acquit him by returning him a verdict, finding him not guilty.

Quite obviously this statement is glaringly erroneous. But in the context of the whole charge, it appears as an inadvertence that we are satisfied had no capacity to influence the result to defendant’s detriment. From the whole charge it was made abundantly clear to the jury that the State had a continuing burden of proving defendant guilty beyond a reasonable doubt, and that nothing less than a sustaining of this burden would justify a conviction.

The other complaint relating to the charge, however, is meritorious, and warrants reversal.

The store which was entered in the crime here involved had a vestibule or an alcove leading to the door for entry. Defendant took the stand and testified he was in that vestibule, but not in the store, when the police arrived. He testified he was preparing to enter the store to buy cigarettes when the police started shooting and he “took off down the street.” It was within the framework of this testimony that the judge charged the jury, in defining an entering:

* * « an entry is accomplished if any part of the body and arm, a hand, a finger or a foot or even an instrument was inserted into the building or space. [Emphasis supplied.]

The proscription of N. J. 8. A. 2A:94-1 against unlawful entry into a building, structure or room means precisely what it says. We do not conceive this to embrace entry into an areaway in front of the door leading to a building, structure or room, at least in circumstances such as those here where that areaway could not conceivably have been a locus for the intended further unlawful activity.

But when the judge below included the words “or space” in the portion of the charge quoted above, he unquestionably and erroneously enlarged the proscription of the statute to include the vestibule.

The State does not contest this hypothesis. It argues instead from the facts that since the State’s case was totally predicated upon the presence of two negro males in the store, who were seen to bolt out of the door from within the store, the jury was “sufficiently appraised [sic] of the need to find an interior entry in order to return the guilty verdict,” and there was no plain error.

We disagree. We cannot say beyond a reasonable doubt that the jury might not well have understood the judge to mean presence in the alcove constituted an entering, and thus to have warranted defendant’s conviction on his own testimony. Such is the warp and woof of a “clear capacity to bring about an unjust result.” State v. Hock, 54 N. J. 526 538 (1969), cert. den. 399 U. S. 930, 90 S. Ct. 2254, 26 L. Ed. 2d 797 (1970).

Reversed and remanded for a new trial.

      We leave to the proper case such questions as are raised by an intent to pilfer goods stored in such an area or there to rape an occupant.


author: Per Curiam. Byrne, J. S. C.,

text:
    RICHARD P. COOPER, PLAINTIFF-RESPONDENT, v. MICHAEL R. IMBRIANI, PROSECUTOR OF SOMERSET COUNTY, AND THE COUNTY OF SOMERSET, DEFENDANTS-APPELLANTS. JOSEPH KARKOWSKI, PLAINTIFF-RESPONDENT, v. MICHAEL R. IMBRIANI, PROSECUTOR OF SOMERSET COUNTY, AND THE COUNTY OF SOMERSET, DEFENDANTS-APPELLANTS.
    Superior Court of New Jersey Appellate Division
    Argued January 8, 1973
    Decided February 21, 1973.

      Before Judges Losa, Allcohn and Byrne.

      Mr. William B. Eisart argued the cause for the appellants.

      Mr. Richard A. Norris argued the cause for the respondent Richard P. Cooper (Messrs. Norris, McLaughlin & Trucker, attorneys).

      Mr. Richard H. Thiele, Jr. aTgued the cause for the respondent Joseph Karkowski (Messrs. Wharton, Stewart & Dams, attorneys).

      Mr. George F. Kugler, Jr., Attorney General, filed a statement in lieu of brief on behalf of the Department of Civil Service.
   Per Curiam.

Each of the plaintiffs is a veteran and was appointed a county detective without a fixed term. Consequently, each is entitled to the protection afforded by the Veterans’ Tenure Act against discharge, “except for good cause shown after a fair and impartial hearing,” N. J. 8. A. 38:16-1 et seq., absent clear legislative intent to exclude such position from protection under the act. Brennan v. Byrne, 31 N. J. 333 (1960); Perrella v. Board of Education, Jersey City, 51 N. J. 323 (1968).

All indications here point to an intent to confer tenure protection. By the terms of N. J. 8. A. 2A :157-2 it is provided that “county detectives . . . shall be in the classified service” — a plain mandate that, in counties adopting civil service, county detectives were to have tenure. In contrast, section 10 of the same act (N. J. 8. A. 2A:157 — 10) stipulates that the “position of county investigator * * * shall be in the unclassified service,” and that all such investigators shall “serve at [the] pleasure [of] and subject to removal by” the prosecutor. Indeed, it was this very language and the juxtaposition of it in the two sections of the same act upon which the court relied in its determination that the Legislature intended to exclude county investigators from the protection of the Veterans’ Tenure Act in Brennan v. Byrne, 31 N. J. 333, 336 (1960). Cf. Bergen County v. Dept,. of Civil Service of N. J., 115 N. J. Super. 90 (App. Div. 1971).

Accordingly, the judgment of the Law Division setting aside the summary dismissal of the plaintiffs is affirmed — ■ without prejudice, however, to the right of the Prosecutor of Somerset County to initiate and to prosecute to a conclusion appropriate disciplinary proceedings against each of the plaintiffs for discharge or lesser penalties, for cause arising prior to the dismissal of each by defendant Imbriani in 1971. In the event that such disciplinary proceedings are commenced against either or both of the plaintiffs within 30 days after the filing date of this opinion, the affected plaintiff or plaintiffs shall not be reinstated or be paid back pay pending ultimate disposition of said disciplinary proceedings; otherwise, plaintiffs shall be unconditionally restored to the respective positions held by each of them at the time of their discharge by defendant Imbriani, and each shall bo paid his back pay for the period between his discharge and reinstatement, less appropriate mitigation, plus interest.

Byrne, J. S. C.,

Temporarily Assigned (dissenting). The problem here exists because Somerset County has not adopted civil service, as required by N. J. S. A. 11:19-2 in order for civil service to apply. I would assume, therefore, that non-veteran county employees in Somerset do not have tenure and are not protected by any provisions of the Civil Service Act.

The statute covering the appointment of county detectives reads:

2A:157-2. County detectives generally; appointment; salary; duties
The prosecutor in each of the several counties of this State may appoint such number of suitable persons, not in excess of the number, and at salaries not less than the minimum amounts, in this chapter provided, to be known as county detectives, to assist the prosecutor in the detection, apprehension, arrest and conviction of offenders against the law. Persons so appointed shall be in the classified service of the civil service and shall possess all the powers and rights and be subject to all the obligations of police officers, constables and special deputy sheriffs in criminal matters.

The reference in that statute to “the classified service” refers to N. J. 8. A. 11:22-3 et seq. where the term is defined. The tenure provisions of classified service are to be found in N. J. 8. A. 11:22-ll.l.

Plaintiff uses reference to classified service to indicate a legislative intent to give tenure. Paced with the absence of civil service in Somerset County, plaintiff turns to the Veterans’ Tenure Act, N. J. 8. A. 38:16-1 et seq., to supply that tenure for such detectives who are veterans.

The application of the Veterans’ Tenure Act should be tested by the terms of that act itself and judicial interpretations thereof. The act has consistently been interpreted so as not to grant tenure to persons in confidential positions. Thus, it has been held to apply neither to a county investigator in Brennan v. Byrne, 31 N. J. 333 (1960), nor to a legal assistant to a prosecutor in Cetrulo v. Byrne, 31 N. J. 320 (1960).

Without civil service, a detective and an investigator are indistinguishable. Neither is appointed or promoted on the basis of competitive examinations; there is no tenure absent veteran’s status, and there is no distinction as to the type of work done. No argument is even made that the job is not a sensitive one. The thrust of Cetrulo and Brennan would be to look to the job and not the title in determining whether Veterans’ Tenure applies.

Furthermore, the Veterans’ Tenure Act was passed for the protection of veterans in certain areas of public employment. It was not passed to assure a continuity in the office of the prosecutor’s staff of detectives, as was N. J. 8. A. 2A:157-2. Thus, plaintiff seeks to use a statute the legislative intent of which is to provide tenure for detectives to bolster his argument that the Veterans’ Tenure Act, enacted for the protection of individual veterans, should apply in this situation. Nor is it logical to use the Veterans’ Tenure Act to provide continuity to a detective staff only to the extent that the staff is composed of veterans.

The Veterans’ Tenure Act cannot supply what is lacking in Somerset County by reason of that county’s not having adopted civil service; it should not be strained to cover what it does not fit.

1 would reverse.


text:
    STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, v. JOHN F. OATES, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted January 30, 1973
    Decided February 22, 1973.

      Before Judges Kolovsky, Matthews and Ard.

      Mr. David Q. Lucas, Deputy Attorney General in Charge Bergen County Prosecutor’s Office, attorney for appellant (Mr. Vincent J. Sharkey, Jr., on the brief).

      Mr. Timothy J. Dunn, II, attorney for respondent.
   Per Curiam.

Defendant was found guilty at a jury trial on an indictment which charged that on or about July 25, 1970, in Dumont, Bergen County, he “did unlawfully and feloniously sell cigarettes without the stamps required by the laws of the State of New Jersey being affixed thereto contrary to the provisions of N. J. S. A. 54:40A-28.”

The State’s proofs were that a police officer and investigators employed by the State Division of Taxation, armed with a search warrant, were present outside defendant’s home when a mail truck arrived and delivered seven eases, containing 220 cartons of cigarettes, 44,000 cigarettes in all. After the delivery, the officers entered the home and seized the cases. None of the packs of cigarettes had any New Jersey cigarette tax stamps thereon. In addition, another group of cartons containing 3,000 untaxed cigarettes were found in the house.

No proof was offered that defendant had in fact sold any untaxed cigarettes. Bather, the State relied on the following portion of N. J. S. A. 54:40A-28, which the court read to the jury:

Possession of two thousand or more unstamped cigarettes by any person other than a licensed distributor shall be prima facie evidence that the possessor thereof has engaged in the sale of cigarettes without the stamp or stamps required by this act having been affixed thereto and such person shall be subject to the penalty provided by this section.

Eollowing tho 'jury verdict defendant moved for dismissal of the indictment or a new trial, contending that the quoted statutory provision permitting an inference of sale from proof of possession was unconstitutional and that the verdict was against the weight of the evidence. The trial judge thereafter filed an opinion in which he refused to pass on the constitutionality of the statute but nevertheless concluded that a judgment of acquittal should be entered, saying:

The court finds as a fact, that a jury could not reasonably find the defendant guilty of the sale of unstamped cigarettes on the evidence presented. The application of the statutory inference would bo unconstitutionally arbitrary. State v. DiRienzo, 53 N. J. 360, 380 (1969), State v. Humphreys, 54 N. J. 406, 413 (1969).
* * * No purpose would be served by a new trial, as the evidence necessary to sustain a conviction of sale of cigarettes with [sic-without] the requisite tax stamps, is not present.

The State appeals.

We affirm essentially for the reasons set forth in Judge Kuechenineister’s opinion, adding only the observation that the State’s reliance on Turner v. United States, 396 U. S. 398, 90 S. Ct. 642, 24 L. Ed. 2d 610 (1970), reh. den. 397 U. S. 958, 90 S. Ct. 939, 25 L. Ed. 2d 144 (1970) is un■warranted. In its pertinent aspects Turner is authority contrary to the State’s contentions. See 396 U. S. at 421, 90 S. Ct. at 654-655.

Turner would support the State’s position if our statute made it a crime to possess untaxed cigarettes with the intent to sell them and permitted an inference of intent to sell from proof of possession of 2,000 or more untaxed cigarettes. But our statute does not so provide.

Only a person who “sells [unstamped] cigarettes” is guilty of a misdemeanor. N. J. 8. A. 54:40A — 28. Absent proof of sale, the penalty which may be imposed for possession of unstamped cigarettes — in addition to confiscation of the cigarettes, N. J. 8. A. 54:40A-30 — is the civil penalty provided for in N. J. 8. A. 54:40A — 25.

The order appealed from is affirmed.


author: Per Curiam:.

text:
    DEREK THOMAS AKRIDGE AND THE BRONZE SHIELDS, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFFS-APPELLANTS, v. ANTHONY BARRES, CHIEF OF POLICE, CITY OF NEWARK, DEFENDANT-RESPONDENT.
    Superior Court of New Jersey Appellate Division
    Submitted January 22, 1973
    Decided February 23, 1973.

      Before Judges Lora, Alrcorn and Crane.

      Mr. John C. Jjove, attorney for the appellants (Mr. Joseph Charles, on the brief).

      Mr. William H. Walls, attorney for the respondent (Mr. Althear A. Lester, on the brief).
   Per Curiam:.

It is no longer open to question that

the members of a police department “in many respects constitute a military organization,” 16 McQuillin, Municipal Corporations (3d ed., 1972 rev’d vol.), § 45.16, at 621, and as such are necessarily subject to reasonable regulations having to do with discipline and morale. Ward v. Keenan, 3 N. J. 298 (1949); Rivell v. Civil Service Commission, 115 N. J. Super. 64 (App. Div. 1971), certif. den. 59 N. J. 269 (1971); Newark v. Massey, 93 N. J. Super. 317 (App. Div. 1967); N.J.S.A. 40A :14-118.

The police department has a proper and legitimate interest in the appearance of its members, including the' length and style of head and facial hair. Cf. Anderson v. Laird, 437 F. 2d 912, 915 (7 Cir. 1971), cert. den. 404 U. S. 865, 92 S. Ct. 68, 30 L. Ed. 2d 109 (1971). Contrary to plaintiff’s contention, such a regulation does not offend any Eirst Amendment rights of the members of the police department. As was stated in Richards v. Thurston, 424 F. 2d 1281, 1283 (1 Cir. 1971), in disposing of a similar contention with regard to a dispute concerning the hair length of a public school student:

* « * We recognize that there may be an element of expression and speech involved in one’s choice of hair length and style, if only the expression of disdain for conventionality. However, we reject the notion that plaintiff’s hair length is to a sufficiently communicative character to warrant the protection of the First Amendment. That protection extends to a broad panoply of methods of expression, but as the non-verbal message becomes less distinct, the justification for the substantial protections of the First Amendment becomes more remote. * * * [Citations omitted.]

See, United States v. O’Brien, 391 U. S. 367, 376, 88 S. Ct. 1673, 20 L. Ed. 2d 672 (1968), reh. den. 393 U. S. 900, 89 S. Ct. 63, 21 L. Ed. 2d 188 (1968); Raderman v. Kaine, 411 F. 2d 1102 (2 Cir. 1969), cert. dism., 396 U. S. 976, 90 S. Ct. 467, 24 L. Ed. 2d 447 (1969). See generally, Olff v. East Side Union High School District, 404 U. S. 1042, 92 S. Ct. 703, 30 L. Ed. 2d 736 (1972); Comment, 84 Harv. L. Rev. 1702 (1971). Compare, Friedman v. Froehlke, 470 F. 2d 1351 (1 Cir. 1972).

Affirmed.


author: Kimmelman, J. S. C.

text:
    IN THE MATTER OF MICHAEL CALLAN, HARRIS DAVID AND GERALD CLARK CHARGED WITH CONTEMPT OF COURT.
    Superior Court of New Jersey Chancery Division
    Decided January 23, 1973.

      Decided January 23, 1973.

      Ms. Annamay T. Sheppard, and Mr. Dickinson R. Debevoise, attorneys for respondents J. Michael Callan, Harris David and Gerard J. Clark (erroneously named Gerald J. Clark).

      Mr. Joseph P. Lordi, Essex County Prosecutor (Mr. Ralph Fusco, Jr., appearing).
   Kimmelman, J. S. C.

I

BACKGROUND

On November 21, 1972 Superior Court Judge Herbert ordered J. Michael Callan, Harris David and Gerald J. Clark to show cause why they should not be adjudged guilty of contempt of this court by reason of their conduct in an action entitled Newark Housing Authority v. Toby Henry, et al., Docket No. C-1640-70, then pending before Judge Herbert. Callan, David and Clark are attorneys on the staff of the Newark-Essex Joint Law Reform Project which is an agency established to furnish legal services to the indigent. David and Clark are members of the bar of this State; Callan is a member of the bar of the State of New York and was specially admitted for the purpose of the Newark Housing Authority (hereinafter “N.H.A.”) case. All three attorneys represented defendants in the N.H.A. case.

That action was instituted by the N.H.A. (a) to require the defendants to account for moneys allegedly paid to them by tenants of the Stella Wright housing project, the payments having been made as a substitute for rent payments to the N.H.A., and (b) to enjoin defendants from promoting and participating in the rent strike. Defendants answered and counterclaimed, citing deplorable and unsanitary conditions at the project as justification for their actions. As noted by Judge Herbert, the Tent strike fund, which totaled $94,460.89, was being withheld as a lever to move the N.H.A. toward doing what a good landlord should do.

On February 7, 1972 Judge Herbert refused to order that the rent strike fund be turned over to a receiver but ordered that the fund be retained by defendants in the same place, in the same form and in the same account as theretofore pending further order of the court. Although at that time the rent strike fund was held in various savings bank accounts, it was withdrawn and converted into as many individual money orders as equaled the contribution to the fund made by each tenant. On March 1, 1972 the fund was placed in a safe deposit box at the Fidelity Union Trust Company, American office, in the name of the Stella Wright Tenants Association, under the control of defendants Toby Henry, Thomas Comerford and another person. On March 29, 1972 Judge Herbert again entered an order directing that no funds be withdrawn or removed from the safe deposit box except pursuant to a further order of the court.

Thereafter, by written opinion dated October 12, 1972 which, as all other pleadings in the cause, listed Callan, David and Clark of the Newark-Essex Joint Law Reform Project as appearing for defendants, Judge Herbert concluded that the doctrine of Marini v. Ireland, 56 N. J. 130 (1970), did not entitle the tenants of the Stella Wright Homes to rent-free occupancy but at most may have entitled them to an abatement of rent because of a breach of the landlord’s implied warranty of habitability. Addressing himself to the rent strike fund he observed that "The money has been idle too long. It ought to be used for someone’s benefit.” Judge Herbert then ordered that all tenants who had paid money into the rent strike fund show cause why their contributions should not be turned over to the N.H.A. and to show the basis why they may claim to be entitled to a refund.

The tenants who would be affected by a turn-over of the rent strike fund were duly served with notice and, as scheduled, the matter came on for hearing before Judge Herbert on November 17, 1972.

After the hearing commenced and during the course of argument by counsel for the N.H.A. directed towards the merits of the case, the proceeding was interrupted by Callan who then for the first time informed the court by means of a prepared statement that the subject matter of the hearing, the rent strike fund, had been removed from the safe deposit box and was in the process of being returned to the tenants. Counsel for the N.H.A. immediately decried that action, terming it "a flagrant, brazen and unequivocal defiance of the laws of this country, the laws of this state and the obligation of officers of this court * *

II

CHARGE

Cognizant of the aforementioned factors, Judge Herbert cited Toby Henry and Thomas Comerford as well as the three attorneys involved in this proceeding for contempt of court. The matter was assigned to the undersigned for trial. Henry and Comerford each pleaded guilty to the charge and were sentenced to jail for 45 days. Callan, David and Clark were tried before this court commencing on January 5, 1973.

SUPERIOR COURT OE NEW JERSEY

CHANCERY DIVISION-ESSEX COUNTY

DOCKET NO.

IN THE MATTER OR )

MICHAEL CALLAN, HARRIS )

DAVID and GERALD CLARK ) ORDER TO SHOW CAUSE

charged with Contempt )

of Court. )

This matter being opened by Brach, Eichler, Rosenberg & Silver and it appearing to the Court from statements and representations made to it in ojien Court on November 17, 1972 by Michael Callan, Esq. in the presence of and with the knowledge of Co-Counsel Harris David, Esq. and Gerald Clark, Esq., that Toby Henry, Thomas Comer-ford and Edward Satterfield, named defendants in a certain action entitled Newark Housing Authority vs. Toby Henry, et als., Docket No. C-1640-70, did enter into and remove certain funds contained in Safe Deposit Box #1326 of the Fidelity Union Trust Co., and did distribute part or all of the said funds to other persons in violation of certain orders of this Court dated February 7, 1972 and March 29, 1972, and said orders having been entered after and upon express representations of said counsel for the named defendants made to the Court that said funds would be kept safely subject to further order of the Court, and the named attorneys having undertaken a responsibility as officers of the Court to take all steps within their power to prevent a violation of the said orders and to advise the Court jjromptly of any intention or disposition to enter upon any such violation so that said funds, totalling more than $94,000.00, could at all times be fully protected from loss or dissipation, and the Court being of the opinion that Harris David, Gerald Clark and Michael Gallan may be guilty of contempt of this Court,

It is, on this 21st day of November, 1972, ORDERED that Harris David, Gerald Clark and Michael Callan show cause before this Court, at the Essex County Hall of Records, Newark, New Jersey, on the 28th day of November, 1972, at 9 o’clock in the forenoon, or as soon thereafter as counsel may be heard, why they should not be adjudged guilty of contempt of this Court.

It is further ORDERED that Joseph P. Lordi, Prosecutor of the County of Essex or his duly designated assistant or deputy be appointed to prosecute these proceedings.

It is further ORDERED that a copy of this order be served upon the Prosecutor of Essex County and upon Harris David, Gerald Clark and Michael Callan personally within 3 days from the date hereof.

/s/ Ward J. Herbert

WARD J. HERBERT

J.S.C.

The essence of the charge and the substance of the contempt tried by this court was twofold: first, that the named attorneys undertook a responsibility as officers of the court to take all steps within their power to prevent the rent strike fund from being removed and disbursed in violation of the court’s previous orders; and second, that as officers of the court the named attorneys had a responsibility to advise or notify the court promptly of any intention or disposition of defendants to disburse the fund. Included within the second element of the charge was the failure on the part of the named attorneys to promptly advise the court of the actual removal and disbursement of the rent strike fund when that fact became known to them. The contempt thus charged was criminal in nature since it was concerned with conduct alleged to be directed against the authority or dignity of the court. It involved the element of public injury, and the citation had as its purpose the vindication of the court as a co-equal branch of government. N. J. Dept. of Health v. Roselle, 34 N. J. 331, 340 (1961); In re Bozorth, 38 N. J. Super. 184, 188 (Ch. Div. 1955); Cancellieri v. De Modica, 57 N. J. Super. 598, 603 (Law Div. 1959); see 17 Am. Jur. 2d, Contempt, § 78 at 72 (1964); 17 C. J. S. Contempt § 5(1) at 10 (1963). Thus, the attorneys were fairly informed in advance of the trial of the essential elements of the charge against them, In re Tiene, 17 N. J. 170, 180 (1954), and all concerned understood the nature of the charge and the fact that its possible consequences were penal in nature. The trial proceeded on that basis.

As directed by Judge Herbert, the summary contempt procedure was utilized, i. e., there was neither indictment nor trial by jury although the proceeding was plainly penal in nature. Cf. In re Buehrer, 50 N. J. 501 (1967). The presumption of innocence of the named attorneys prevailed and the burden of the prosecution was to prove their guilt on the charge of contempt beyond a reasonable doubt. Buehrer, supra, 50 N. J. at 516.

The responsibility undertaken by the court in the trial of this matter was indeed weighty. In re Mattera, 34 N. J. 259, 272 (1961); N. J. Dept. of Health v. Roselle, supra. Judges must and do appreciate that while the contempt power is to be used sparingly and with judicial self-restraint, it must nevertheless be exercised fearlessly when needed to uphold the dignity of the court and to encourage respect for its orders. McAllister v. McAllister, 95 N. J. Super. 426, 440 (App. Div. 1967); Cancellieri v. De Modica, supra.

Ill

FINDINGS OF FACT

Within that framework and in accordance with the requisite degree of proof the court has considered, weighed and deliberated upon the evidence and finds the facts as follows:

1. J. Michael Callan, Harris David and Gerald J. Clark are attorneys on the staff of the Newark-Essex Joint Law Reform Project. Together and individually they undertook and entered upon the legal representation of defendants and the Stella Wright Tenants Association in the N.H.A. case.

2. Each of the attorneys was fully aware of the terms of Judge Herbert’s orders of February 7, 1972 and March 29, 1972, which required that the rent strike fund was to be held in a safe place and not be disbursed or returned to the tenants, and as of March 29, 1972 each knew that the funds were in a vault at the Fidelity Union Trust Company. .

3. Each of the attorneys was fully aware of Judge Herbert’s written opinion rendered October 12, 1972, and the order to show cause which followed it returnable November 17, 1972 whereby the defendants and the tenants were ordered to show cause why the rent strike fund should not be turned over to the N.H.A. and why they (the tenants) may be entitled to a refund or abatement.

4. On the afternoon of Monday, November 13, 1972, Callan, David and Clark attended a meeting of the executive committee of the Stella Wright Tenants Association. Defendants Toby Henry and Thomas Comerford were present at the meeting. The purpose of the meeting was to discuss strategy with respect to the rent strike fund and the order to show cause returnable November 17, 1972. The attorneys heard enough at that meeting to indicate to them that the rent strike fund was in imminent danger of being disbursed in violation of the court orders. By reason of what was said they found it necessary then and there to advise the executive committee not to return the money and, further, that such action would constitute a contempt of court and would subject those responsible to up to six months’ imprisonment or a fine of not more than $1,000, or both.

5. The executive committee decided to call a general meeting the next evening, November 14, 1972, so that the tenants themselves could have the final say as to the return of the fund. The three attorneys knew that a general meeting was being called. Moreover, defendants Toby Henry and Thomas Comerford had already resolved to return the rent strike fund. They entered the vault at the bank at 9:42 a.m. on November 14, 1972 and withdrew the fund in order to have it available for the general meeting that evening.

6. That evening the tenants by acclamation voted that the funds be returned to them. Accordingly, Henry and Comer-ford commenced the distribution thereof.

7. According to Comerford’s testimony, and I so find, he telephoned one of the attorneys on either November 15 or 16 and advised that the rent strike fund had been withdrawn and was in the process of being returned to the tenants. By reason of his relationship with the three attorneys in their representation of the tenants’ association, Comerford was satisfied that notice to one attorney was notice to all three attorneys. Under all of the facts and cirumstances of the case, including the attorneys’ attendance at the November 13, 1972 executive committee meeting, the preparation of S-16 in evidence, their attendance in eonrt on November 17, 1972, and their preparation of 11 — 1 and R-2 in evidence, I find that Comerford’s telephone call to one attorney constituted notice to and knowledge of all three.

8. Regardless of whether notice was received by the attorneys on November 15 or 16, it is clear that the same was received well in advance of the November 17 return date of the pending order to show cause. Following receipt of such knowledge, and prior to the afternoon of November 17, neither Callan, David nor Clark undertook to notify either the court (Judge Herbert) or opposing counsel (William L. Brach, Esq.) that the rent strike fund had been removed and was in the process of being disbursed. I find from their conduct that the decision to forego advance notification prior to the return date in open court was consciously and knowingly made by all three attorneys and not merely by the one who received Comerforcks telephone call.

9. Following receipt of the facts conveyed by Comerford’s telephone call, the attorneys on either November 15 or November 16 prepared S-16 in evidence, which Comerford testified accurately portrayed the situation. S-16 reads as follows :

This statement has been prepared by us on the basis of information recently made available to us by the association.
We have been authorized by our clients to inform the court concerning certain action taken by the Association with respect to the rent strike fund. As the court is aware, all monies deposited in the strike fund by individual tenants were accepted by the Association with the understanding that they would be kept safe and secure until such time that the several tenants determined that the money should be returned to them.
On or about Friday, November 10, many of the tenants with money in the fund received by mail a notice which directed them to appear before this court today and show cause why their deposit should not be turned over to the Newark Housing Authority. We are informed that upon receipt of this notice, many of the tenants began to fear for the safety of their money.
At this point the Association was in a dilemma. On the one hand, they felt bound as a matter of good faith and personal trust to honor their agreement with each tenant depositor and to comply with a request by a tenant that his money be returned. On the other hand, to comply with such a request and to return the money would be inconsistent with this Court’s order to maintain the fund in the same place and in the same form.
Confronted with this problem, the Association undertook to determine the will of the majority of tenants with money in the fund. We are told that the tenants expressed a strong opinion with near unanimity that the fund must be safeguarded by returning it to its rightful owners — the tenants. The reasons given by the tenant body for their decision were as follows:
1. It was felt that the money belonged to the tenants who had paid it in and not to the NHA; for it was the NHA that was responsible for the intolerable conditions which led to the strike in the first instance.
2. It was felt that an order requiring payment of the fund to the NHA would be unjust and unfair to the people with money in the fund.
a. It was felt to be unfair because the NHA has attempted to single out and punish those with money in the fund while taking no action against striking tenants who had no deposits in the fund.
b. It was said to be unfair because of the substantial disparity in the amounts of each tenant’s deposit. Payment of the fund to the NHA would penalize those who had been most conscientious and had made the largest deposits in the fund.
c. It would be unfair because the NHA and HUD have taken no meaningful steps to alleviate the intolerable living conditions and have failed to demonstrate any commitment to seeking an effective long term solution to the problems at Stella Wright.
3. It was felt that the question of the strike fund became an obstacle to productive interchange of ideas and common effort toward the basic issue of improved conditions at Stella Wright. It was hoped that the dispute over the fund could be layed to rest and that both the NHA and the tenants could get down to the crucial task of improving the living conditions at the project.
Por the reasons just stated and in view of the position expressed by the overwhelming number of tenants, the Association felt compelled to honor the will of the people at Stella Wright. Accordingly, we are informed that the Association has removed the strike fund from the depository to redistribute to the various tenants the full amount of deposits made by such tenants to the fund.

10. By reason of the particular wording of S-16 that “the Association has removed the strike fund * * * to redistribute to the various tenants the full amount of deposits made by (them) * * the three attorneys knew as early as November 15 or November 16 that while the rent strike fund had been removed from the vault it had not yet at that time or even on November 17 been completely redistributed to the various tenants.

11. The delay by the three attorneys in conveying notification of the disbursal of the rent strike fund to the court and to counsel was plainly for the knowing purpose of buying sufficient time to enable defendants Toby Henry and Thomas Comerford to complete their wrongful distribution of the funds (money orders) to the various tenants.

12. On the return date of the order to show cause, the afternoon of November 17, 1972, all three attorneys, along with counsel for the N.H.A., conferred with Judge Herbert in his chambers prior to the open court hearing. Although ample time and opportunity was then available and had been all morning, none of the three attorneys saw fit to advise Judge Herbert or opposing counsel that the rent strike fund had been removed and was at that time being dissipated, thereby rendering moot the hearing about to be held in open court.

13. At the conclusion of the conference in chambers Judge Herbert ascended the bench in a court room which, according to S-10 in evidence (the transcript of that day’s court proceeding) was jam-packed by the tenants of the Stella Wright project. All seats were occupied and standing tenants lined the walls. After some brief prefatory remarks Judge Herbert inquired: “Who speaks first?” Again, none of the three attorneys who were present made any effort to apprise-the court and counsel of that which they well knew. Mr. Braeh rose and began to address the court concerning the merits of the application to require the rent strike fund to be turned over to the N.H.A. His remarks took up what now amounts to over three full pages of transcript. He was interrupted while on his feet by J. Michael Callan, who obviously then believed that point in time propitious to read to the court a statement “prepared by us.” He then proceeded to read S-16 in evidence.

14. At the conclusion of the reading of the statement counsel for the N.H.A., as heretofore indicated, denounced what he had just heard as “a flagrant, brazen and unequivocal defiance of the laws of this country, the laws of this state and the obligation of officers of the court. * * *”

15. Judge Herbert then noted the waste of the court’s time and his own embarrassment over what had occurred with the following remarks:

We came here this afternoon, I thought, insofar as the docket of the Court shows, we came here for the purpose of hearing the parties and trying to reach a determination of the rights of the plaintiff and of the person or persons paying therein, but I find that the defendants, or any of them who were responsible for the safekeeping of this fund, and whom, I must say, I trusted to obey the order of the Court, have not done so, and the fund no longer exists.
I should think that counsel for the defendants, if they have influence with their clients, might well advise them to correct the situation which the defendants have produced, but I see nothing more than we can do this afternoon. I’m very sorry about this.

16. Later that day Harris David prepared and addressed the following communication (R-l in evidence) to Toby. Henry:

NEWARIC-ESSEX JOINT LAW REFORM PROJECT
463 Central Avenue
Newark, New Jersey 07107
(201) 485-3800
November 17, 1972
Toby Henry
254 Prince Street
Tenant Room 1R
Newark, New Jersey
Dear Toby:
At the hearing in court Judge Herbert suggested that we use our influence to urge compliance with the court order, and to urge that all steps be taken to retrieve the money distributed from the fund, and to place that money back into the safe deposit box. We strenuously urge that you take all steps necessary to comply with the ■ court order, and to obtain the money distributed, and to place it back in the safe deposit box.
Very truly yours,
/s/ Harris David
Harris David
cc: The Honorable Ward Herbert
William Braeh, Esq.

17. On November 28, 1972 all three attorneys prepared and addressed the following commnnication (R-2 in evidence) to the tenants’ association and the individual defendants :

NEWARK-KSSEX JOINT LAW REFORM PROJECT
163 Central Avenue
Newark, New Jersey 07107
(201) 485-3800
November 28, 1972
Stella Wright Tenants Association
254 Prince Street
Apt. 1R
Newark, New Jersey
To: Stella Wright Tenants Association
Toby Henry
Edward Satterfield
Thomas Comerford
Reference is made to the Order to Show Cause issued by Hon. Ward J. Herbert on November 21, 1972, directing the above-mentioned defendants and their counsel to take certain action specified therein concerning monies removed from a safe deposit box maintained by the Stella Wright Tenants Association.
As you know, wo have previously advised both orally and by correspondence dated November 17, 1972 that all parties affected by the foregoing Order comply therewith to the fullest extent. Here again we reaffirm this advice and strongly urge that any and all steps necessary to ensure full compliance with the Order be undertaken promptly.
Very truly yours,
/s/ Harris David
By JMC
/s/ J. Michael Gallan
/s/ Gerald J. Clark

18. Neither communication, i. e., R-l or R — 2 in evidence, had or has the effect of lessening or in any way detracting from what had theretofore occurred.

All of the foregoing facts and the inferences 1 have drawn therefrom have been found by me as trier of the facts beyond a reasonable doubt from the proofs adduced.

IY

LAW

The court is next required to evaluate and judge those facts within the structure of what the law defines to be a contempt.

A contempt is a disobedience of the court by acting in opposition to its authority, justice and dignitjr. It comprehends any act which is calculated to or tends to embarrass, hinder, impede, frustrate or obstruct the court in the administration of justice, or which is calculated to or has the effect of lessening its authority or its dignity; or which interferes with or prejudices parties during the course of litigation, or which otherwise tends to bring the authority and administration of the law into disrepute or disregard. In short, any conduct is contemptible which bespeaks of scorn or disdain for a court or its authority. In re Bozorth, 38 N. J. Super. 184, 188 (Ch. Div. 1955); In re Clawans, 69 N. J. Super. 373 (App. Div. 1961), cert. den. 36 N. J. 296 (1962) ; 17 Am Jur. 2d, Contempt, § 3 at 6 (1964); 17 C. J. S. Contempt § 2 at 5, § 25 at 66 (1963).

Y

DECISION

Upon applying the law to the facts it clearly appears that the conduct of Callan, David and Clark was contemptuous.

(a) As of November 15 or November 16 the three attorneys had definite knowledge that defendants Toby Henry and Thomas Comerford had invaded the safe deposit box at the Fidelity Union Trust Company and were in the process of disbursing the funds to the various tenants in violation of a court order. Had they acted promptly to notify court and counsel, steps could have been taken to prevent a further dissipation of the funds. They elected to allow the pending litigation to be prejudiced. They allowed and even coum tenanced a continuing violation of a court order. The court and counsel were entitled to act in reliance upon the reasonable belief that the lawful orders of the court would not be violated; nevertheless, the three attorneys suffered court and counsel to labor under a misapprehension of the true facts. They aided and abetted the continued contempt of Henry and Comerford. In short, not only did they participate in the commission of a fraud upon the court and counsel but their conduct itself was fraudulent and deceitful.

(b) As of November 17 all their wrongful conduct continued as aforesaid and was aggravated by their willingness to disrupt the court’s calendar by permitting a moot proceeding to be commenced. The most glaring and aggravating circumstance of their behavior was their unwillingness to reveal that the rent strike fund had been violated until such time as it appeared to them to be a dramatic moment for disclosure before a packed courtroom. Very clearly, they demeaned the court, counsel and even themselves. At a crucial moment in the history of the pending litigation they made a mockery of the proceeding to the laughter, cheers and applause of the spectators, as the stenographic record unhappily shows.

I find all of the foregoing to be conduct constituting contempt within both the letter and spirit of the order to show cause which is the charging document in this proceeding. Beyond that, their conduct would appear to violate the following Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association as adopted by the New' Jersey Supreme Court: DR 1-102(A) (4), (5); DR 7-102(A) (1), (7); DR 7-102(B) (1), and DR 7-106(C) (6).

In defense of their behavior it is urged that Callan, David and Clark, who did not take the stand in their own defense, wrere bound to observe the attorney-client privilege, Evidence Buie 26, and thus could make no disclosure to court or counsel concerning the activities of Toby Henry and Thomas Comerford. The privilege, however, does not extend to a communication in the course of legal service sought or obtained in aid of the commission of or furtherance of a crime or a fraud. Evidence Rule 26 (2) (a); McCormick, Evidence, § 99 at 200 (1954); 8 Wigmore, Evidence, § 2298 at 572 (McNaughton rev. 1961). No one rationally expects the law to protect from disclosure a deliberate plan to defy the law and deprive another party of his rights whatever the precise nature of those rights may be.

There can be no doubt that Comerford’s telephone call to counsel put them on notice that Comerford and Henry were in the process of the commission of a fraud upon the court, counsel and the N.H.A. The telephone call was sufficiently extensive to enable counsel to record all of the detailed information which counsel then translated into a typewritten statement now known as S-16 in evidence. The preparation of the statement for future use only at the opportune moment was the legal service which was sought by the client and rendered by the attorneys in aid of the commission of an ongoing fraud. The telephone call to the attorney was not in furtherance of legitimate purposes which are protected by the scope of the privilege but was a frank disclosure of what was happening in the commission of a continuing wrong.

Confederating with clients to allow court and counsel to labor under a misapprehension as to the true state of affairs; countenancing by silence the violation of a court order and aiding and abetting the continued contempt of another, are all frauds within the meaning of Evidence Buie 26(2) (a). There is no reason to believe that the use of the word “fraud” in that rule is to be limited to conventional notions of tortious frauds. Acts constituting fraud are as broad and as varied as the human mind can invent. Deception and deceit in any form universally connote fraud. Public policy demands that the “fraud” exception to the attorney-client privilege as used in Evidence Buie 26 be given the broadest interpretation.

The conduct .of the participants here sharply dispells any right to claim the attorney-client privilege. . Professor McCormick states:

Since the policy of the privilege is that of promoting the administration of justice, it would be a perversion of the privilege to extend it to the client who seeks advice to aid him in carrying out an illegal or fraudulent scheme. Advice given for such a purpose would not be a professional service but participation in a conspiracy. [McCormick, op. cit., § 99, at 200-201]

While the claim of lawyer-client privilege clearly belongs to the client, the privilege pales and loses the law’s protection in the face of a client’s fraudulent object or purpose. In the Matter of Stein, 1 N. J. 228, 236 (1949); In re Selser, 15 N. J. 393, 406 (1954). Comerford and Henry having thus lost the privilege, it was of no avail to the three attorneys. Obviously, an attorney’s duty of good citizenship ought to heavily outweigh his fidelity to clients whose actions have proved themselves unworthy of that faith. The comment of the Supreme Court in Stein has particular significance here:

Where there is revelation of a fraud about to be perpetrated upon a Court, of which an attorney is an officer, there is a definite obligation upon and we conceive it to be the duty of that attorney to communicate and make a full disclosure of such to the Court * *’ [1 N. J. at 236]

VI

CONCLUSION

In conclusion, it must be strongly emphasized that the courts and the public are entitled to the highest standard of conduct on the part of members of the bar. As officers of the court assisting it in the exercise of its jurisdiction and the performance of its functions, attorneys owe to the court the duty of greater fidelity and respect than is expected of litigants. I can understand but not condone the outrageous behavior of Toby Henry and Thomas Comerford. I cannot begin to comprehend similar behavior on the part of the three attorneys. They completely lost touch with the reality of the situation. As attorneys they turned their backs on the court and have rebuffed the very forum and institution of government which in recent years has been singular in extending its aid and protection to that very segment of society which Callan, David, Clark and the Newark-Essex Joint Law Reform Project here represented.

Eor all of the foregoing reasons I find J. Michael Callan, Harris David and Gerald J. Clark guilty of contempt of court as charged. The Prosecutor of Essex County is directed to draw an appropriate judgment of conviction. Callan, David and Clark are directed to appear before me at 9 a. at. on February 8, 1973 for sentencing.

       Written opinion dated October 12, 1972.


author: VanTassel, J. D. C.,

text:
    GULF CHEMICAL AND METALLURGICAL CORPORATION, A TEXAS CORPORATION, PLAINTIFF, v. SYLVAN CHEMICAL CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT.
    Superior Court of New Jersey Law Division
    Decided February 5, 1973.

      Messrs. RiTcer, Danzig, Scherer & Brown, attorneys for plaintiff.

      Mr. Francis B. Rusch, attorney for defendant.
   VanTassel, J. D. C.,

Temporarily Assigned. This action is brought by plaintiff Gulf Chemical and Metallurgical Corp. against defendant Sylvan Chemical Corp. for breach of a contract for goods sold and delivered. Defendant counterclaims, alleging a breach by the seller and nondelivery of two installments.

In its complaint plaintiff alleges that defendant owes it the full purchase price of the goods delivered. Defendant’s answer alleges that the goods were nonconforming; that the purchase price of the goods was the subject of a modification by the parties, and that plaintiff is estopped from claiming the full amount because the quality of the goods did not meet the original specifications.

It is clear that the contract in question is an installment contract as defined by N. J. 8. A. 12A :2-612(l), which states:

An “installment contract” is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract” or its equivalent.

It is undisputed that this action arose as a result of a series of negotiations culminating in one contract which contemplated the delivery of the goods in three separate lots to be separately accepted. This was evidenced by three purchase orders sent by defendant to plaintiff together on the same date.

N. J. 8. A. 12A:2-709, dealing with an action for the price, states that:

(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price
(a) of goods accepted * * *

The facts are clear that defendant-buyer did accept the shipment of the first installment from plaintiff. N. J. S. A. 12A:2-606 indicates that the acceptance of goods occurs when the buyer does any act inconsistent with the seller’s ownership. Such an act was done when Sylvan sold the' shipment to its customer.

Such a sale, of course, does not preclude a revocation of the acceptance by defendant. However, as indicated by N. J. S. A. 12A:2-608, a revocation of acceptance presupposes that the goods were nonconforming. Since the court finds as a fact that Sylvan made a valid express waiver as to size specification with respect to the shipment in question, and that such shipment was in conformity with the contract specifications agreed upon, defendant must pay at the contract rate for the goods it has accepted. N. J. S. A. 12A:2-607(1).

notwithstanding defendant’s obligation to pay the full purchase price which accrued upon acceptance, the subsequent agreement between the parties modified defendant’s obligation with respect to the price. Testimony reveals that Gulf agreed to allow five cents on the contract price of 42 cents a pound, thereby reducing defendant’s obligation to 37 cents a pound for the total pounds delivered in the first installment. This adjustment was a valid modification of the contract. The New Jersey Study Comment to N. J. S. A. 12A:2-209 states that “subsection 2-209(1) permits parties acting in good faith and for good business reasons to modify their contract without danger of frustration on grounds of lack of consideration.” There is no evidence that either party acted in bad faith in effecting this modification, and therefore the court will take cognizance of its effect upon plaintiff’s damage for defendant’s failure to pay for the goods sold and delivered, and enter judgment in favor of plaintiff for $9,372.35.

Defendant counterclaims for damages based on plaintiff’s failure to deliver two shipments which it was obligated to do under the terms of the installment contract. The seller argues that its obligation to deliver the two remaining shipments was terminated because of defendant’s failure to pay for the first shipment. Gulf contends that if a buyer withholds payment of an installment in order to coerce the seller into completing delivery with respect to the balance of the contract, the seller will no longer be bound to do so. Plaintiff cites 46 Am. Jur. Sales, § 270 at 455 (1943), and 75 A. L. R. 616 (1931), for that proposition. The persuasiveness of these authorities is questionable in view of the fact that the cases that posit this point were all decided in jurisdictions other than New Jersey and all arose prior to the adoption of the Uniform Commercial Code in this State.

There is, however, a New Jersey case which is in point and, though decided prior to the adoption of the Uniform Commercial Code, is consistent with current New Jersey law. In Empire Rubber Mfg. Co. v. Morris, 77 N. J. L. 498 (E. & A. 1909), the seller claimed that the refusal of the buyer to pay for goods already shipped pursuant to an installment contract released the seller from any obligation of further performance on their part. The court in that case states the rule that

When the seller has agreed to deliver the goods sold in installments, and the buyer has agreed to pay the price in installments which are proportioned to and payable on the delivery of each installment of goods, then the default by either party with reference to any ■ one installment will not, ordinarily, entitle the other party to abrogate the contract.

• The current policy of New Jersey with respect to the above rule is reflected in the Uniform Commercial Code’s section dealing with installment-contracts. N. J. 8. 12A:2-6l2(3) states:

AVhenever non-conformity or default with respect to one or m.ore installments substantially impairs the value of the whole contract there is a' breach of the whole. But the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments.

That this subsection is in line with the rule as expressed in Empire Rubber with respect to'the continuance of an installment contract is demonstrated by Uniform Commercial Code Comment (6) to N. J. 8. A. 12A:2-612:

[This subsection] is designed to further the continuance of the contract in the absence of an overt cancellation . . . AVhether the non-conformity in any given installment justifies cancellation as to the future depends, not on whether such non-conformity indicates an intent or likelihood that the future deliveries will also be defective, but whether the non-conformity substantially impairs the value of the whole contract. (As indicated further in the Comment, ‘prior policy is continued, putting the rule as to the buyer’s default on the same footing as that in regard to seller’s default’) ... If only the seller’s security, in regard to future installments is impaired, he has the right to demand adequate assurance of proper future performance but has not an immediate right to cancel the entire contract ....

In order for the seller to relieve itself of its obligation to continue the contract, there must be a showing by the seller that buyer’s failure to pay for the first installment “substantially impaired” the value of the whole contract. There is no such proof in this case. Furthermore there was never -an overt cancellation of the entire contract by the seller. Therefore plaintiff is liable to defendant for non-delivery of purchase orders 8640 and 8641.

As to defendant’s damages for non-delivery, N. J. 8. A. 12A:2-713(1) states that

The measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Chapter (12A:2-715), but less expenses saved in consequence of the seller’s breach.

This section cannot be applied to the case at bar since there is no proof on behalf of defendant that the market price for the goods purchased was any different than the price contracted for with plaintiff. This does not, of course, preclude the defendant from suing for consequential damages.

V. J. S. 12A:2 — 715(2) (a) states:

Consequential damages resulting from the seller’s breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise ; * * *.

As indicated by the Comment to this section:

Under section 2-715, consequential damages would be allowed in this case if the breaching seller at the time of contracting had reason to know that a resale was contemplated. But the section does not seem to permit speculative damages, and, consequently, expected profits are not allowed by it, unless they clearly would have been earned. By the same token, the buyer should not be permitted to speculate as to the loss of profits resulting from the alienation of customers. This is all taken care of by imposing upon the buyer the burden of proving the extent of the loss by way of consequential damages.

Defendant did prove that it had entered a contract with one of its customers for the resale of the goods. As indicated in Pope v. Ferguson, 82 N. J. L. 566 (E. & A. 1912) :

if at the time of sale, the existence of a sub-contract is not made known to the seller, a knowledge on his part that the buyer is purchasing with a general intention to resell will not render him liable for special damages resulting from the resale.

As stated by the New Jersey Study Comment to N. J. 8. A. 12A :2-715,

Only one serious inroad has been made on the Pope v. Ferguson statement of the law. Marcus & Co. v. K. L. G. Baking Co., Inc., 122 N. J. L. 202 (E. & A. 1938), held that special damages can be recovered where the making of a resale was contemplated by the parties, even though the resale contract was not in existence at the time when the contract of sale was made.

Therefore, if the court finds as a fact that Gulf had reason to know that Sylvan would resell the material contracted for and that Sylvan did, in fact, enter a resale contract, defendant would be entitled to any consequential damages, including loss of profits, which it could prove were a result of plaintiff’s breach.

As indicated by a letter dated January 29, 1971 from Joseph J. Darvin, consultant to Sylvan Chemical Corporation, to Edward E. Bryan, manager, commercial development, of Gulf Chemical Metallurgical Corporation, plaintiff-seller was apprised of Sylvan’s desire for a five-or ten-pound sample of black cupric oxide, “for samples to our various buyers.” Two purchase orders from Sea Board Supply Co. in evidence, as well as the testimony of Mr. Darvin, demonstrate that Sylvan did, in fact, have contracts for the resale of the cupric oxide. Therefore, plaintiff will be liable to defendant for the former’s failure to deliver the second and third shipment, but only to the extent that Sylvan has proved resale contracts for those shipments.

The proofs reveal that Sylvan would have paid Gulf $20,160 for 48,000 pounds of cupric oxide, calculated at 42 cents a pound. With the addition of freight charges and the cost of pallets, the total cost to Sylvan for the second and third shipments would have been $22,024.08. If Sylvan had made a resale contract for the entire 48,000 pounds, it would have been paid $26,400, with a resulting loss of profits amounting to $4,375.92. However, defendant was only able to prove contracts for the resale of 75% of the cupric oxide which plaintiff failed to deliver. Any loss of profits with respect to the balance of the undelivered material for which no resale contract was proved would be speculative. Therefore, the court enters judgment in favor of defendant for $3,281.94, which represents the loss of profits sustained by Sylvan as a result of plaintiff’s failure to deliver the second and third shipment of cupric oxide.

With respect to the issue of plaintiff’s standing to maintain this lawsuit, the court finds that Gulf Chemical & Metallurgical Corporation, a Texas corporation, has standing to bring this suit despite the fact that it has not qualified to do business in the State of New Jersey under N. J. 8. A. 14A :13 — 3. It is clear under that statute that if plaintiff is transacting business in New Jersey it has no standing to bring this lawsuit since it is not qualified to do business in this State. However, the court finds that under the facts in this case and the applicable case law, plaintiff is not transacting business in New Jersey. Plaintiff’s responses to interrogatories posed by defendant regarding plaintiff’s business in New Jersey show that Gulf has no substantial business contact with the State of New Jersey. The holding in United States Time Corp. v. Grand Union Co., 64 N. J. Super. 39 (Ch. Div. 1960), supports plaintiff’s argument that since it was not transacting business in New Jersey, it need not qualify in New Jersey in order to bring this lawsuit.