author: Koi/e, J. S. C.

text:
    THEODORE A. LOBSENZ, PLAINTIFF, v. MICUCCI HOLDINGS, INC., DEFENDANT.
    Superior Court of New Jersey Chancery Division
    Decided March 30, 1973.

      Mr. Theodore A. Lobsenz, pro se.

      Mr. Bernard Kimmel for Sic & Due, Inc., assignee of defendant mortgagor Mieucci Holdings, Inc. (Mr. Harvey Goldberg of counsel).
   Koi/e, J. S. C.

The sheriff’s sale in this mortgage foreclosure action took place on February 5, 1973. The mortgagee in possession was the purchaser at the sale.

On February 20, 1973 the moving party herein, Sic & Due, Inc., obtained an assignment from the mortgagor of certain items of personal property and “the premises located at 33-35 Monroe St., Garfield, N. J.,” the property in question. The consideration stated in the assignment is $5,000.

It is admitted, however, that the payment of the aforesaid $5,000 is contingent upon this court’s allowing the assignee to redeem. The mortgagor has received no moneys for the assignment and will receive none unless there is court approval of the relief sought by Sic & Due, Inc. — i. e., allowing it to exercise the mortgagor’s right of redemption. It should also be noted that the sum of $5,000 is not apportioned between the personal property and the premises in question. The “personal property” consists of several items which, taken together, apparently represent a heating system of indeterminate value on the facts presented but which was apparently 100% financed when installed.

Sic & Due seeks, as assignee of the mortgagor’s rights in the subject premises, to stand in the mortgagor’s, shoes in order to exercise the post-sale right of redemption recognized in Hardyston Nat'l Bank v. Tartamella, 56 N. J. 508 (1970). Under Hardyston the mortgagor is permitted to redeem “within the ten-day period fixed by B. 4:65-5 for objections to the sale and until an order confirming the sale if objections are filed under the rule.” (At 513).

B. 4:65-5 directs the sheriff to deliver a deed pursuant to the sale “unless a motion for the hearing of an objection to the sale is served upon him within 10 days after the sale or at any time thereafter before the delivery of the conveyance.”

There is a question here as to whether an “objection” was filed under the rule within the meaning of the Hardyston ease and, therefore, whether movant is out of time to redeem under the rule and Hardyston. This issue need not be dealt with since the purchaser at the foreclosure sale (who is also the-mortgagee), in opposing the redemption in this case, has not raised the issue. In view of the more significant question of policy hereinafter discussed, I shall assume, without deciding, that the movant has acted in time. Again, I shall assume, without deciding, the validity of the assignment of the- mortgagor’s interest in the real estate to the movant.'

In Hardyston the Supreme Court determined, as a matter of policy, that the mortgagor should be permitted to redeem his property after a foreclosure sale. In so holding the court observed:

“The situations are probably rare in which a mortgagor can profitably assert a right to redeem after the sheriff’s sale, but the right should be his unless some public interest would be significantly offended.”

I, of course, have sympathy for a defaulting mortgagor who will come out $5,000 ahead by being permitted to redeem. But such sympathy should not blind the court to the implications of the contingency type of assignment of the right to redeem here involved.

I conclude that in the present case allowing redemption would significantly offend a public interest — the exception stated by Hardyston. The principal of Sic & Due was present at the foreclosure sale, but did not bid. Subsequent to the sale he visited the mortgagee who had purchased the property at the sale and obtained information on the approximate rents and some expenses of the premises. Armed with this knowledge Sic & Due’s representative apparently considered the property a good investment. Some 15 days after the sale he obtained an assignment of the mortgagor’s rights in the premises for $5,000 contingent upon court approval of the transaction.

In effect, then, Sic & Due seeks court approval of a contingent private sale, negotiated with the mortgagor, of his right to redeem after the public sale, made with knowledge of the maximum bid and income and expense figures (obtained after the sheriff’s sale) and free from any competitive bids. The court’s approval of this practice could, in my view, seriously impede the judicial process in mortgage foreclosures and lend aid to disruption of orderly mortgage foreclosure sale procedures by speculators in mortgagors’ rights.

The situation presented seems closely akin to that which confronted the Supreme Court in Bron v. Weintraub, 42 N. J. 87 (1964). Bron involved certain speculators who had learned of a defect in the title to lands that had arisen some 20 years earlier in a tax foreclosure proceeding. The speculators had obtained quit-claim deeds from the heirs in whom title apparently lay, for a nominal amount. The Supreme Court condemned, on public policy grounds, the intrusion by third persons seeking only to further their own interests to the detriment of existing interests of owners of the land. In reaching its conclusion the court noted that, as distinguished from the initial sale for taxes, to which the statute seeks to attract third parties by means of public notice, there is no like policy to invite the public to participate with respect to the foreclosure of the right to redeem. Rather, the foreclosure process concerns only the holder of the tax sale certificate and the holders of existing interests in the property. 42 N. J. at 92.

On the facts in Bron it appeared that the speculators had learned of the title defect by virtue of a published notice intended to give notice to the heirs who might claim an interest in the premises and who could not be located for normal service. As the speculators had done nothing “illegal” under existing statute or case law, the householders seeking to quiet title to their properties appealed to public policy. After discussing the ever-changing dimensions of the concept of public policy, and conceding that no precedent was precisely in point, the court declared that “public policy is more than a mere summation of its past applications.” Finally, the court quoted from Latham v. Father Divine, 299 N. 7. 22, 85 N. E. 2d 168, at 170, 11 A. L. R. 2d 802 (Ct. App. 1949), as to the applicability of the concept of a constructive trust as being “limited only by the inventiveness of men who find new ways to enrich themselves unjustly by grasping what should not belong to them.” Concluding that the common conscience undoubtedly condemns the conduct of the speculators before the court, a constructive trust was imposed on the lands in question for the benefit of the homeowners, subject only to reimbursement of the $400 paid by the speculators to the heirs.

It should be observed that Bron involved substantial improvements to the lands in question by the homeowners in reliance on their title, many of which might have been lost had the speculators prevailed. In other words, there were significant equities in favor of the homeowners in Bron. Nonetheless, the holding has been interpreted as being based on public policy, not on a balancing of the equities. See Harvey v. Orland Properties, Inc., 108 N. J. Super. 493 (Ch. Div. 1970), aff’d 118 N. J. Super. 104 (App. Div. 1972).

In addition, as noted in Harvey, the Legislature has acted to prevent the intrusion of speculators into the tax sale redemption area by enactment of an amendment to N. J. S. A. 54:5-89.1 (L. 1967, c. 149), which added:

No person, however, shall be admitted as a party to such action, nor shall he have the right to redeem the lands from the tax sale whenever it shall appear that he has acquired such interest in the lands for a nominal consideration after the filing of the complaint, except where such transferee is related by blood or marriage to, or who, because of other close or personal relationship with the transferor, would in normal course be a party to an instrument for little or no consideration, or where such party acquired his interest at a judicial sale.

The “’statement” accompanying the bill which became the above part of the statute clearly reveals the purpose of the amendment to be elimination of the practice condemned in Bron. In summing up the existing situation, the sponsors wrote:

The scheme of these intermeddlers is simple. They permit the purchaser of the tax sale certificate to invest his capital, hold the lien for the statutory period, engage counsel to examine the title, make inquiry as to the whereabouts of the defendants, their heirs, devisees and personal representatives, prosecute the case up to the point of completion and upon being satisfied at that time that the defendants do not intend to redeem, such intermeddlers offer the defendants a nominal sum for a deed and they thereupon step into the shoes of the purchaser of the lien. At that stage they find the defendants very amenable to any suggestion that they might make because they have nothing to lose — the defendants have already determined to abandon their interests. In the meantime, the intermeddlers have made no investment of any kind and fully exploit the professional services of the attorney for the plaintiff at little or no cost. Obviously, this imposes a loss on the purchaser of the tax sale certificate.
This iniquitous practice constitutes a burden on the purpose of the Tax Sale Revision, namely — the collection of revenues. No one will purchase at tax sales under these conditions. [R. S. Cum. Suppl. 54:5-89.1 (L. 1967, e. 149)]

Of coarse, meaningful differences exist between tax and mortgage foreclosure practice. Nonetheless, the course of conduct which the movant herein would have this court approve is strikingly similar to that condemned by both our courts and Legislature in the tax field. Contingent assignments of the right of redemption after sale is but a different form of “traffic in the misfortune of others” than that discussed in Bron, even where, as here, more than a nominal amount is paid the mortgagor for his rights, including his right to redeem.

In a post-mortgage foreclosure sale redemption situation, as in the foreclosure of the right to redeem under a tax sale, there is no policy inviting the public to participate. Rather, the apparent purpose of the extension of the right to redeem for a time after the sheriff’s sale by the Supreme Court in Eardyston and under the rule is to benefit the mortgagor in those rare cases when he has the means to redeem. Similarly, as in Bron, the moving party here has acquired the knowledge on which it has acted from sources not intended to be so used and seeks to turn that information to its own again, thereby depriving the purchaser at the sheriff’s sale of the efficacy of his bid. This kind of practice does not accord with the purpose of Eardyston or B. 4:65-5.

Further, it seems clear that allowing redemption after a mortgage foreclosure sale by an intermeddler will have the long-term effect of discouraging bidding at sheriff’s sales. A prospective purchaser-bidder should be able to rely on the fact that by outbidding all others at the sale he will acquire the property, subject only to the relatively slight risk that in rare situations the mortgagor may be able to redeem. Cf. Hardyston, 56 N. J. at 513, wherein the court recognized that mortgagors probably could profitably redeem only in rare situations and expressed the belief that such a right of redemption would not discourage bidding at the sale.

Finally, I find the kind of conduct of the intermeddler in this case should not be countenanced by the court. Sic & Due’s representative attended the sheriff’s sale but did not bid. Thereafter he obtained certain financial data respecting the property in question from the purchaser at the sale, and finally transacted a “private” sale with the mortgagor whose bargaining position mut be presumed, at best, to have been very weak. This course of conduct — which is in practical effect simply a device to circumvent the sheriff’s sale —• cannot claim the benefits of the rule laid down in Hardyston. On the contrary, under the facts here involved, it demands immediate condemnation as an inappropriate endeavor to use an equitable remedy fashioned for an entirely different purpose. Cf. Bron, supra.

'The movant argues that the sale is void and should be set aside for failure to give notice thereof to the owner under R. 4:65-2. It is evident that the owner knew of the sale, when he gave the assignment to movant and in effect has abandoned the property. Failure to give notice under the circumstances did not prejudice the owner and certainly cannot benefit the movant.

Accordingly, the sale will be confined. The relief sought by Sic & Due, Inc. is denied.

       ln the present ease the mortgagee has argued that it would be inequitable to allow redemption by a stranger to the title because, as a mortgagee in possession from October Í, 1971 to September 30, 1972, he expended substantial time and effort and “improved” the property in question with the result that it now can be operated profitably. This contention is without merit, for if redemption were allowed the mortgagee would be entitled to a credit for all proper expenses in connection with the property in his accounting of the income received by him while in possession. This is merely a matter of ascertaining the actual amount due on the mortgage. Orange Land Co. v. Bender, 96 N. J. Super. 158, 165, 166 (App. Div. 1967). The mortgagee is, therefore, in the same position whether the property is sold at sheriff’s sale or redeemed.
      Accordingly, this case is not one of conflicting equities. Rather, it must be viewed purely in terms of public policy.


source: Caselaw Access Project

author: Stamlek, J. S. C.

license: Public Domain

text:
    ROXBURY STATE BANK, A BANKING CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF, v. THE CLARENDON, ROBERT S. DOUGLAS, LEONARD A. CODELLA, EVELYN PUTZ, WILLIAM PUTZ, LOTTIE PUTZ AND ERNEST PUTZ, AND THE TOWN OF HACKETTSTOWN, DEFENDANTS.
    Superior Court of New Jersey Chancery Division
    Decided April 5, 1973.

      Mr. Steven S. Radin for plaintiff Roxbury State Bank, (Messrs. Sills, Beck, Cummis, Radin <& Tischman, attorneys).

      Mr. Richard B. Thomas, Jr. for defendants Putz (Messrs. Schenck, Price, Smith & King, attorneys).

      Mr. Abraham Natovitz, attorney for Receiver of defendant The Clarendon.
   Stamlek, J. S. C.

A foreclosure complaint was brought by plaintiff Eoxbury State Bank against The Clarendon, a New Jersey corporation. Named as defendants, among others, were Evelyn, William, Lottie and Ernest Putz, holders of a mortgage subordinated to that of plaintiff. The complaint was tiled on August 16, 1971.

A related case is Putz v. Hook Mountain Industries, Inc. and The Clarendon (C-1660-70). The complaint in that ease was filed on August 2, 1971, alleging insolvency of both corporations and demanding appointment of a statutory receiver. The insolvency of both corporations was clear and on September 13, 1971 a statutory receiver for The Clarendon was appointed. Thereafter a statutory receiver was apr pointed for Hook Mountain.

The Putz family counterclaimed in the foreclosure suit, asserting that the bank’s mortgage was invalid in toto because it was the product of a fraud, and that their second mortgage should therefore be the first valid mortgage transaction to be recognized by the receiver and the court.

The receiver does not question the validity of the bank mortgage per se but questions the amount claimed to be legally due thereon as a secured claim. The receiver takes the position that the Putz mortgage is invalid and unenforceable for lack of consideration.

The property in question is the land and building which comprise The Clarendon Hotel located in Hackettstown, New Jersey. There, for many years prior to 1963, Ernest and Wiliam Putz operated a hotel and restaurant business.

Historically, the facts prior to the execution of the bank mortgage sought to be foreclosed reveal that Ernest Putz, his brother William and their respective wives were the owners of all the outstanding shares of capital stock of defendant Clarendon. Ernest and William operated the hotel and restaurant business prior to 1967, when Ernest retired and William continued. William’s wife had died at an earlieT date. At the time of Ernest’s retirement the hotel and restaurant business was placed with a real estate broker at an asking price of $500,000. Ho purchasers were found at this price. In the spring of 1970 William was advised by his physician to retire from the business for reasons of health, and in April of that same year listed the business with another broker,' Francis Tierella, at the price of $300,000.

In the summer of 1970 Tierella introduced prospective purchasers, Robert S. Douglas and Leonard Codella, to the Putz Brothers. Codella and Douglas, in anticipation of completing the transaction, approached the bank concerning the possibility of obtaining a mortgage loan. The purpose of the loan is best described by the bank in its trial brief: “They [Douglas and Codella] had apparently engaged in discussions with the Putz’s or their agents relative to the purchase of all the stock in The' Clarendon. It was for this potential purchase that they needed the loan.” The Putzes in the interim bad referred the proposals of Douglas and Codella to their attorney, Robert L. Schuman.

On September 28, 1970 the bank approved a mortgage loan to The Clarendon and issued a 30-day commitment letter for that loan. The commitment provided that the loan was to be in the amount of $160,000, with a 10% annual rate of interest plus “a mortgage origination fee of five percent (5 points).” Repayment was to be made on the basis of a 20-year amortization with a -10-year maturity which produced monthly installment repayments of $1,545 plus tax payments. There was to be a mortgage note executed by The Clarendon running to the bank which would be secured by the first mortgage. It would cover the real property and improvements that make up The Clarendon Hotel. This note was to be individually guaranteed by Douglas and Codella.

At the time of the application to the bank by Douglas and Codella there was outstanding an unsecured note of Rainbow Hills in the amount of $25,702!48 with interest from October 8, 1970 at thé rate of $5.90 a day, and an installment loan of Global Fabricators-in the’ amount of $8,092.58. Both loans were in a very precarious position. It-was acknowledged by the bank that both of these companies were solely owned by Douglas, the principal officer and stockholder of each. The bank was concerned at the time of the consideration of the application for the new loan that if the Rainbow Hills and Global Fabricators loans remained outstanding, the bank might be violating existing banking laws in exceeding the statutory limitations on loans as they related to the financial position of the lending institution.

The president of the bank forthrightly stated that both the Rainbow Hills loan and the Global Fabricators loan, although in corporate name, were in reality loans to Robert Douglas, and if the loan to The Clarendon was considered a loan to Robert Douglas as a principal and there were no provisions for repayment of the old outstanding loans, the bank would have exceeded its legal limit for it was not permitted to loan to any one borrower more than 10% of its capital surplus. Therefore the bank conditioned its loan of $160,000 to The Clarendon upon agreement by Douglas and Codella that from the proceeds of the loan the two outstanding and overdue debts, that of Rainbow Hills and that of Global Fabricators, would be fully repaid. This commitment letter with the conditions so attached was sent to Robert Douglas and to his then attorney. There is no question but that the bank was concerned about the collectibility of both Rainbow Hills and Global Fabricators loans.

Having received the commitment the negotiations between Douglas and Codella on the one hand and the Putzs continued. A contract of sale was entered into which was a contract for the purchase by Douglas and Codella in the name of Tlook Mountain Industries, a New Jersey corporation controlled by Douglas and Codella, of all of the outstanding capital stock in The Clarendon for a base purchase price of $300,000. The Putzs, knowing the requirements of the continuation of the business and knowing that they would not receive all cash for their stock asked their attorney, Schuman, to communicate with the bank and ascertain whether the mortgage commitment required by the contract of sale had been secured. President O’Neil of the bank, by letter dated October 9, 1970, responded as follows:

In accordance, with our telephone conversation,- please be advised that the Executive Committee of the Roxbury State Bank has approved a Mortgage Loan to The Clarendon (a New Jersey Corporation) in the amount of $160,000.00. The note to bear interest at the rate of 10% per annum plus five points, to be personally endorsed by Robert Douglas and Leonard Codella, and to be secured by property and improvements located at Route 46, Haekettstown, New Jersey, and known as the “Hotel Clarendon”. The note is to be amortized monthly over a period of twenty years; however, the entire balance shall be due and payable in ten years from date. Prepayment is subject to a penalty of 3% of the outstanding balance during the first three years, 2% during the fourth year, 1% during the fifth year, and nothing after the fifth year.

From tbe foregoing it is clear that the “five points” referred to would require a deduction from the proceeds of-the $160,000 by $8,000, leaving (at least insofar as Schuman was aware) a payment out from the bank of The Clarendon of $152,000. O’Neil in his letter to Schuman omitted what he had stated in a prior -letter to the attorneys for Codella and Douglas:

The borrowers have agreed to repay certain obligations from the proceeds of this loan. An unsecured loan of Rainbow Hills in the amount of $25,702.48 with interest from October 5, 1970 at the rate of $5.90 per day and an installment loan of Global Fabricators in the amount of.$8,092.58. This balance is good until October 31, 1970. Both companies are owned by Mr. Douglas, the principal.

The commitment letter containing the foregoing language, though directed to the attorney for Douglas, was sent to Douglas and not to The Clarendon, as might be inferred from the notation on the letter. William and Ernest denied seeing this letter until after the litigation had commenced.

On or about October 15, 1970 an agreement of sale was entered into between the Putzs and Hook Mountain Industries, pursuant to which the Putzs transferred to Hook Mountain all of the capital stock in The Clarendon. The agreement set forth a projected pay-off schedule. The Putzs were to be paid on closing for their stock $50,000 in cash —■ $32,500 to Ernest and $17,500 to William. There were also to be promissory notes from Hook Mountain of $107,500 to William and $92,500 to Ernest. These notes were to be secured by the escrow of the stock of The Clarendon, and in the event of default in any of the terms of the promissory notes by Hook Mountain the Putzs would be entitled to sell all the stock, the proceeds to be applied to the balance due on the notes. As additional security for the repayment of the notes Hook Mountain, as owner of the stock, agreed to have The Clarendon execute a second mortgage upon its real property in favor of the Putzs. This mortgage was to be second to “any first mortgage which may be placed upon The Clarendon real property in the principal amount not exceeding $160,000.”

O’Neil, whose recollection was hazy as to when he saw the sales agreement (either prior to making the loan, or at the closing), was well aware that a large portion of the proceeds of the bank loan would immediately go to the Putzs. He must have known this, for the sales price was $300,000 and the second mortgage from Clarendon to the Putzs was to be only for $196,000. Additionally, Eoxbury was the escrow holder of all of The Clarendon stock in the name of Hook Mountain, to be held for the benefit of Putz.

On November 13, 1970 closings were held, first at the office of Schuman on the sale, note and second mortgage, and later that day at the office of attorneys for the bank the first mortgagee.

At the closing Douglas, as president, and Codella, as secretary signed and delivered Clarendon checks drawn on the newly opened Eoxbury Bank account as follows:

Ernest Pul;z and Lottie Putz $ 32,500
(check designated “purchase of stock”)
William Putz and Evelyn Putz 17,500
(no designation on check)
William Putz 26,500
(cheek designated “repayment of loan”)
According to the hank mortgage closing statement on November 13, 1970 the following appears:
Proceeds of loan: $160,000
Deduct “Credit' The Clarendon Account”: 34,645.48
Deduct “Mortgage origination fee” 8,000.00
Balance Mortgage Proceeds to Borrower $117,354.52
On the same day Douglas, signing as president of The Clarendon, drew two checks:
To payee Rainbow Hills, Inc. $ 26,505.31
To payee Global Fabricators, Inc. 8,140.17
$ 34,645.48

The Rainbow Hills check carried the endorsement, “Payoff Unsee. Loan.” The Global Fabricators check carried the endorsement, “Payoff Truck Loan.”

The hank mortgage required consecutive monthly installments of $1,545. On the day the foreclosure complaint was filed (August 16, 1971) this mortgage was five payments in arrears. This meant that the note fell into default on or about April 1, 1971, less than five months after origination.

To recapitulate, on November 13, 1970 The Clarendon only received for its renovation and operation $40,854.52 while encumbering all of its assets for a total sum of $356,000, grossly in excess of the value of the property, with an overwhelming debt service on the respective mortgages which the corporation could not meet.

Hook Mountain was merely a shell and its only source of income was to he in the form of “rent” from its wholly owned subsidiary, The Clarendon.

During the few months after the sale and mortgages Codella and Douglas syphoned off into Hook Mountain substantial sums, including monies to pay for automobiles for their private use. (After being appointed the receiver operated The Clarendon. However, prior to trial he determined that the business was operating at a loss and that the property was disintegrating rapidly. The receiver upon appropriate application and notice to all parties, was directed to sell the property pendente lite, legitimate liens to attach to the proceeds. The sale produced $198,000.) In reality, both corporations were insolvent in a statutory and in an equiatble sense, on the day of the closing or shortly thereafter.

In first attending to the Putz second mortgage it is seen that this mortgage in the sum of $196,000 was security for the sale of all of the stock by the Putzs to Hook Mountain. It has been held that a mortgage by a corporation to secure the purchase price of stock sold by stockholders in a corporation is invalid as against a trustee in bankruptcy. It is fraudulent. In re Atlas Foundry, 155 F. Supp. 615 ( D. N. J. 1957) ; see also, Steph v. Branch, 255 F. Supp. 526, 530 (E. D. Okl. 1966), aff'd 389 F. 2d 233 (10 Cir. 1968) ; Martin v. General Finance Co., 239 Cal. App. 2d 438, 48 Cal. Rptr. 773, 776 (D. Ct. App. 1966). The same rule should apply to statutory receivers.

Hook Mountain, the purchaser, was a sham corporate vehicle for Douglas and Codella. The second mortgage was simply a fraudulent method to secure the useless Hook Mountain note, carrying the personal guarantees of Douglas and Codella, who were at the time of closing president and secretary of The Clarendon. A mortgage by a corporation to secure a personal debt of an officer is invalid. Catabene v. Wallner, 16 N. J. Super. 597 (1951).

Although a solvent corporation with power to purchase its own stock may mortgage property in order to raise funds to purchase stock of a dissident, disruptive shareholder, the burden is on the corporation to show the stock so purchased became treasury stock and that there has been no injury to creditors. Hook Mountain, The Clarendon, Douglas and Codella could not establish this fact. The imposition of the debt upon Hook Mountain which had no ability to pay, and the mortgage of $196,000 upon The Clarendon for the sole use and benefit of Codella and Douglas, was an unwarranted use of corporate credit. This mortgage was totally without consideration running to The Clarendon. Backus v. Finkelstein, 23 F. 2d 357, 362 (D. Minn. 1927). The second mortgage must be held to be invalid because of the manner in which the property and the rights of the corporation were made the convenient personal assets of Douglas and Codella, of which the second mortgagees were fully aware.

Attending to the first mortgage of the bank it is concluded that it is invalid in part. The bank president was fully aware that a substantial part of the loan was to be used to purchase all the stock of The Clarendon. It dealt with Douglas and Codella as principals, and the use of the corporate vehicle of a loan to The Clarendon, rather than a loan to Douglas and Codella directly, was to enable the bank to charge “points” and a higher rate of interest.

The general rule is that one who loans money to a corporation is required only to pay it to the proper officers of the corporation, and the lender is not called upon to follow the loan and see that it is properly used or applied. This rule cannot be applied in the case at bar.

In Gross Iron Ore Co. v. Paulle, 132 Minn. 160, 156 N. W. 268, 270 (Minn. Sup. Ct. 1916), it was held:

However, if it appears that money is borrowed, not for a corporate purpose, but for the private use of the officer of the corporation to whom it is paid and with intent on his part to divert it to such private use, and that the lender knows or is chargeable with knowledge of that fact, then the transaction, so far as the corporation is concerned, is a nullity.

See also Backus, supra, 23 F. 2d at 363.

Our Court of Errors and Appeals commented in Heidler v. Werner & Co., 97 N. J. Eq. 505 (E. & A. 1925), that although the question had not been raised below, a corporation may not lawfully execute a bond secured by a mortgage on corporate property, to the detriment of its creditors, as a pure accommodation to one or more of its stockholders.

Vice-Chancellor Van Fleet in Holt v. Creamer, 34 N. J. Eq. 181 (Ch. 1881), expressed his view of a not dissimilar transaction:

The legal rules to be applied in settling the rights of the parties to this controversy are firmly established. There can be no doubt that to the extent that the real debt, which this mortgage purported to secure, was false, the mortgage was without consideration, and consequently fraudulent as to creditors. Nor can it be doubted that if a mortgage be given with the fraudulent intent to cover and conceal from the mortgagor’s creditors a part of his property, although, as to another part of his property, it is meant to be an actual security for an honest debt, that, as to creditors, it will be declared altogether void. Russell v. Winne, 37 N. Y. [591] 598. A deed which is fraudulent in part, as to creditors, will be declared void in toto. Mead v. Coombs, 4 C. E. Gr. 112. In such transactions, fraud vitiates absolutely whatever it infects. All the partialities of the law expire under its antipathy to fraud, [at 187]

A portion of the funds advanced by the bank went to pay off the personal past due indebtedness of Douglas’ solely held corporations. A portion was used to pay off part of the purchase price to the sellers. “Points” were charged on the total amount of the loan, including the Bainbow Hills and Global Fabricators loan. However, part of the proceeds were used to clear a legitimate earlier first mortgage of $18,925 and a note payable to William Putz in the sum of $26,500.

In Reed v. Helois Carbide Specialty Co., 64 N. J. Eq. 231 (Ch. 1902), it was held that a mortgage may be good for some component parts of the mortgage-money and bad as to the residue. Equitably, the bank should not be deprived of its prior secured position in toto. If the consideration of a mortgage is made up of several distinct transactions, some of which are illegal, and that part of the consideration which is legitimate can be separated with ease from that which was illegal, the mortgage may be held valid for that part of the consideration free from illegality. Feldman v. Gamble, 26 N. J. Eq. 494 (Ch. 1875).

Although “points” charged to a corporation may by inference be a legitimate charge, and “points” are only prohibited in mortgages covering dwellings (see N. J. S. A. 46:10B-1 et seq.), the five points referred to in the bank commitment can only be charged on the legitimate consideration advanced. Therefore that amount must be recalculated.

The bank purportedly advanced $160,000 for legitimate purposes and charged $8,000, or “five points.’ However, I conclude that the consideration to The Clarendon was an advance of only $75,354.52. This figure is arrived at by deducting the Rainbow Hills indebtedness of $26,505.31, the Global Fabricators indebtedness of $8,140.17 and the payment to Ernest and William of $50,000 (downpayment on stock) from the $160,000. Of each of these, the bank knew or should have knowu of the invalidity. To this may be reluctantly added the “five points,” or $3,767.72.

It is concluded that the first mortgage of the bank represents a prior secured lien in the sum of $79,122.24 with interest thereon at 10% from November 13, 1970. As set forth above, the Putz mortgage is totally unenforceable as against The Clarendon or Hook Mountain. This determination does not prevent the bank or the Putz family from proceeding against Douglas and Codella individually. However, it does preclude both the bank and the Putz family from asserting the validity of a claim as general creditors of The Clarendon. It does not decide the claim of Putz against Hook Mountain on the stock escrow agreement.

The receiver is to submit an order in conformity with this opinion, consented to as to form or pursuant to the five-day rule.


author: Botter, J. S. C.

text:
    STATE OF NEW JERSEY, PLAINTIFF, v. FRED J. KROPKE, ANNA M. FLYNN, MARIE C. BAUCH, DAVID STRAUS, FLORENCE DELANEY, FRANK A. CASADONTE, BERNHARD MILLER, ESTHER GOTTESMAN, RAYMOND F. GABRIEL, CELESTE A. SMITH, ALFRED E. DWORZANSKI, JOHN PERRY AND JOSEPH HAYES, DEFENDANTS.
    Superior Court of New Jersey Law Division (Criminal)
    Decided March 30, 1973.

      Mr. Gerald Miller for defendant, Esther Gottesman (Messrs. Miller, Hochman, Meyerson and Miller, attorneys).

      Mr. Frank L. Holstein, Deputy First Assistant Prosecutor, for plaintiff (Mr. Geofry Gaulkin, Hudson County Prosecutor, attorney).
   Botter, J. S. C.

This is a motion by defendant Esther Gottesman, pursuant to R. 3:15-2(b), to sever her trial from that of codefendants named in the same indictment. Her contention of improper joinder with codefendants is governed by R. 3 :7-7. She also contends that such joinder has a potential for undue prejudice. See R. 3 :15-2.

Count 10 of a 12-count indictment charges that defendant, between June 1970 and March 1971, knowingly and wilfully obtained over $2,000 from the County of Hudson to which she was not entitled because she rendered no services to the county “sufficient to entitle” her to said monies. Count 10 also charges that Fred J. Kropke, while holding the position of chief of the Hudson County Police Department, did obtain and did counsel, aid and assist Esther Gottesman in obtaining said monies, contrary to N. J. 8. A. 2A:135-3 and N. J. 8. A. 2A:85-14. Each count of the indictment charges the same offenses with respect to 11 other defendants, and all charges are the same except for the dates and dollar amounts.

Based upon grand jury minutes, the State asserts that all defendants were listed as employees of the Hudson County Police Department and were on payroll records certified by defendant Kropke. The State contends that department records list three defendants as part-time employees and the remaining nine as full-time employees. Defendants held various Civil Service titles, such as traffic safety coordinator, building service worker, garage attendant, etc. Defendant Gottesman was listed as a clerk. The State contends that seven of the defendants, including Gottesman, held “no-show” jobs, in that they performed no services for the Hudson County Police Department. The State will seek to prove that the remaining defendants performed minimal services for the department, not commensurate with the salary received.

Allegedly, each defendant signed county personnel application forms (described as “CS-6” forms), and defendant Kropke countersigned such forms. These were filed with the appropriate officials, so that the county treasurer’s office did in fact issue county payroll cheeks every two weeks to the defendants during various periods of time. Testimony before the grand jury indicates that while some defendants picked up their pay checks personally, others received theirs either by mail or from one of Kropke’s assistants or from Kropke himself.

The State has made no showing on this motion, after being given the opportunity, that there will be any proof of conspiracy or collaboration between defendant Gottesman and any other codefendant, except Kropke. Erom statements of her attorney, it appears that Mrs. Gottesman’s husband had performed services for the Hudson County Police Department for many years before his death. However, there has been no showing that Mrs. Gottesman knew any of the other defendants, other than Kropke, or was aware that they were receiving money from the county.

B. 3:7-7 provides as follows:

Two or more defendants may be charged in the same indictment or accusation if they are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses. Such defendants may be charged in one or more counts together or separately and all of the defendants need not be charged in each count. * *■ * Relief from prejudicial joinder shall be afforded as provided by R. 3:15-2.

This rule has not been interpreted in any reported decision in this State in a case comparable to the one at hand. In State v. Manny, 26 N. J. 362 (1958), defendants were separately indicted in connection with three transactions, each involving extortion of money from bidders on three municipal contracts. The'court held that even though the separate indictments did not charge joint participation, they could still be consolidated for trial where the bills of particulars alleged concerted action in the commission of the crimes. The court noted that the “identity of the acts or transactions” may appear from a comparison of the charges in the indictments and that “participation” of defendants in the “same acts or transactions” may be shown also by evidence outside the indictments themselves. 26 N. J. at 367-368.

In the case at hand there is no showing that defendant Gottesman performed any act in concert with any codefendant other than Kropke. Nor is there any indication that her involvement with Kropke was an aspect of a larger common scheme necessarily involving the codefendants. Whatever crimes she and Kropke may have committed appear to have been committed by conduct entirely independent of the conduct of the codefendants.

B. 3 :7—7 requires joint participation in “the same act or transaction or in the same series of acts or transactions” as the basis for joining several defendants in a single trial. An identity of acts or transactions and joint participation would appear to be the interpretation given by our Supreme Court in State v. Manny, supra, at 367-368. This comports with numerous federal cases which have interpreted the identical provision, Federal Rule of Criminal Procedure 8(b), to require severance in cases such as this.

Although a conspiracy need not be charged if the link between defendants is shown (United States v. Scott, 413 F. 2d 932, 934 (7 Cir. 1969), cert. den., 396 U. S. 1006, 90 S. Ct. 560, 24 L. Ed. 2d 498 (1970)), and allegation of conspiracy gives the joinder at least prima facie justification. Of course, the allegation must be made in good faith. United States v. Donaway, 447 F. 2d 940, 943 (9 Cir. 1971). The absence of a conspiracy charge places the burden on the government to show some connection between the parties or transactions. King v. United States, 355 F. 2d 700, 704 (1 Cir. 1966). Where no general conspiracy is alleged, and separate transactions, not part of a common scheme or series of interrelated events, are connected only by the presence of a common participant, a severance must be granted. Kotteakos v. United States, 328 U. S. 750, 66 S. Ct. 1239, 90 L. Ed. 1557 (1946); United States v. Varelli, 407 F. 2d 735 (7 Cir. 1969), cert. den. Saletko v. United States, 405 U. S. 1040, 92 S. Ct. 1311, 31 L. Ed. 2d 581 (1972); 8 Moore, Federal Practice, Rules of Criminal Procedure, (2d ed. 1969), § 8.06[2], See also, United States v. Hutul, 416 F. 2d 607 (7 Cir. 1969), cert. den. 396 U. S. 1012, 90 S. Ct. 573, 24 L. Ed. 2d 504, reh. den. 397 U. S. 1081, 90 S. Ct. 1519, 25 L. Ed. 2d 820 (1970); United States v. Jorgenson, 451 F. 2d 516 (10 Cir.), cert. den. 405 U. S. 922, 92 S. Ct. 959, 30 L. Ed. 2d 793 (1972).

In other words, to properly join several defendants, each must be charged with participation in the identical transaction or in a series of interrelated transactions, constituting an offense or offenses, in which other defendants have participated at least to some degree, whether or not all have joined in a conspiracy as well. United States v. Eagleston 417 F. 2d 11 (10 Cir. 1969); Metheany v. United States, 365 F. 2d 90 (9 Cir. 1966) ; Ward v. United States, 110 U. S. App. D. C. 136, 289 F. 2d 877 (1961); King v. United States, supra; United States v. Scott, supra; see also, Williams v. United States, 416 F. 2d 1064 (8 Cir. 1969). Separate conspiracies which are necessarily part of a larger common goal, such as violations of the gambling laws, can be joined, because participation of others is implicit in that type of crime. James v. United States, 416 F. 2d 467 (5 Cir. 1969), cert. den. 397 U. S. 907, 90 S. Ct. 902, 25 L. Ed. 2d 87 (1970). Also, it has been suggested that joinder would be proper where some defendants are charged with transporting stolen goods while others are charged with receiving the goods. See King v. United States, supra, 355 F. 2d at 704.

In Kotteakos v. United States, supra, a number of defendants were tried for conspiracy to obtain loans insured by the F. H. A. on the basis of false and fraudulent information. The trial court found that there were at least eight or more separate groups made up of various defendants, none of which had any connection with each other, although all dealt with one broker, Simon Brown, for placing the loans. There was proof that each group had independently conspired with Brown to falsely obtain F. H. A. backing, but there was no proof that any of the groups acted in concert with each other. Despite such a finding, the lower courts held that it was not prejudicial error to try the various conspiracies together. The Supreme Court, however, reversed. It found that the interests of the defendants were adversely affected by the joinder. The Court said:

* * * Numbers are vitally important in trial, especially in criminal matters. Guilt with us remains individual and personal * * *. It is not a matter of mass application. * * *
Here toleration went too far. We do not think that either Congress * * * or this Court * * *' intended to authorize the Government to string together, for common trial, eight or more separate and distinct crimes, conspiracies related in kind though they might be, when the only nexus among them lies in the fact that one man participated in all. * * * The dangers for transference of guilt from one to another across the line separating conspiracies, subconsciously or otherwise, are so great that no one really can say prejudice to a substantial right has not taken place. [328 77. S. at 772-774, 66 S. Ct. at 1252]

The rule in Kotteakos was implicitly accepted by the majority of the court in Schaffer v. United States, 362 U. S. 511, 80 S. Ct. 945, 4 L. Ed. 2d 921 (1960), and was explicitly applied by the minority in interpreting F. R. Cr. P. 8(b). In that case, two defendants named Schaffer, and throe defendants named Stracuzza, were charged in one count with transporting stolen wearing apparel from New York to Pennsylvania. A second count charged defendant Marco and the Stracuzzas with transporting similar stolen goods from New York to West Virginia. In count three defendant Karp and the Stracuzzas were charged with like shipments from New York to Massachusetts. A fourth count charged all defendants with a conspiracy to commit the substantive offenses named in the separate counts. At the end of the government’s case the conspiracy count was dismissed for lack of proof. The issue on appeal was whether the trial court erred in not severing the trial at that point on grounds of prejudicial joinder.

The court found that the initial joinder was proper under Rule 8(b), given the conspiracy count in the indictment. The court held, 5 to 4, that the defendants who were unrelated to each other were not prejudiced by the failure of the court to grant a severance after the conspiracy count was dismissed. Although the "three Stracuzzas were' “the-common center” of the scheme to transport the stolen goods (362 U. ¿Uat 514, 80 S. Ct. 945), since each of the remaining defendants was involved in separate interstate shipments, the court assumed that joinder in the first place without a charge of conspiracy or joint participation would have been improper. Once properly joined, however, the majority refused to apply !t.he mandatory severance rule retroactively so as • to .prevent continuation of the joint trial.- See 8 Moore, o'pcit., § 8:06 [3].

It should be noted .that R. 3:7-6 permits joinder of offenses -against a defendant if the offenses “are of the samé or similar character” or are connected together or constitute part of a common scheme or plan. R. 3:7-7, dealing with joinder of defendants, uses the phrase “the same act or transaction or in the same series of acts or transactions,’! but does not use the phrase “same or similar” as in R. 3:7-6. This serves to emphasize the need for identity or commonality of the acts, transactions or series of transactions where the State seeks to join two or more defendants in one trial. See 8.Moore, op. cit:, § 8.06[1], noting that the principal difference- between the federal rules for joinder of offenses and joinder of defendants is “the elimination of joinder of offenses of. The same or similar character’ ” in the rule providing for joinder of defendants. Moreover, R. 3:7-6 has been interpreted to mean- that even when a single defendant commits several similar offenses which are not part of a, common' scheme or plan,' a motion for severance normally should be granted to avoid the prejudice of trying a defendant at one time' on two unconnected crimes. State v. Harris, 105 N. J. Super. 319 (App. Div. 1969); see also, State v. Baker, 90 N. J. Super. 488 (App. Div. 1966), rev’d 49 N. J. 103 (1967), cert. den. 389 U. S. 868, 88 S. Ct. 141, 19 L. Ed. 2d 144 (1967). The potential for conveying the impiession' of- a “bad man” by trying a defendant simultaneously for several unrelated crimes parallels the potential for transference of guilt by trying several defendants together for similar but unconnected crimes.

B. 3:7—7 dictates severance in this case. The State’s contention that the common “employment” relationship furnishes a nexus between the various individuals and their crimes is not sufficient for joinder. The record is devoid of any suggestion that defendant Gottesman participated in the transgressions of the others or was part of a larger, common scheme which necessarily involved participation by eodefendants. Using the metaphor of Kolteakos, supra, 328 U. S. at 755, 66 S. Ct. 1239, unless a rim joins the spokes, mere connection to a single hub is insufficient to compel a joint trial. Costly and time consuming as it may be to conduct separate trials, especially when the same witnesses may have to testify repeatedly, this result is unavoidable where defendants and their transactions are wholly independent of each other.

Accordingly, the motion for severance is granted.


author: Stai.lbb, ,T. C. C.

text:
    SEA ISLE CITY, PLAINTIFF, v. CAROLINE M. CATERINA, DEFENDANT.
    Cape May County Court Criminal Division
    Decided March 30, 1973.

      Daryl F. Todd for plaintiff (Gibson, Previti & Todd, attorneys).

      Mr. Edward B. Doughty for defendant (Messrs. Perslcie & Callinan, attorneys).
   Stai.lbb, ,T. C. C.

Caroline M. Caterina appeals from a municipal court conviction for violation of section 3 of ordinance 465 of the City of Sea Isle City in that she refused to wear a beach badge on the beach in said city.

There is no disagreement as to the facts. Simply stated, Mrs. Caterina duly made application for, paid the requisite fee and secured the beach badge specified in the ordinance, but on the day she was accosted by the inspector she was not wearing it and she told the inspector, the supervisor of inspection and a police officer that she would not wear it because she considered the ordinance unconstitutional. She was removed from the beabh, charged with violating the pertinent section of the ordinance and, at the hearing, presented no testimony but argued the unconstitutionality of the ordinance, reserving her right to raise the constitutional issues on appeal. She was found guilty of the charge, fined $25 and assessed $10 as costs.

Defendant contends the following sections of the ordinance are discriminatory and do not apply equally to all persons or classes of persons:

§2. Fees and Charges
* * * the following fees shall be charged for [beach] facilities * * *
*T ********
(b) $2.50 per person per season provided that application is made to the proper authorities on or before May 31 of the bathing season.
(c) $5.00 per person in the event that application is made to the proper authorities subsequent to the 31st day of May of the bathing season.
(d) $1.00 per person per week for any week or fractional part thereof the bathing season. Weekly badges shall be valid from noon Saturday until noon of the following Saturday.
(e) Any person owning property within the City of Sea Isle City or occupying property within said City under a written lease may purchase additional seasonal badges under this section for use by members of their family. In addition thereto, any person owning property within the City of Sea Isle City or occupying property within said City under a written lease may purchase additional badges under this section for their non-paying guests so long as the number of badges purchased do not exceed six (6) in number. Any badges purchased pursuant to this subdivision must be made upon written application and upon a showing of proof of ownership of property or occupancy pursuant to a written lease within said City * » *.

At the very outset it is urged by Sea Isle City that defendant has no standing to contest the constitutionality of the ordinance because she admitted having purchased the beach badge as required by the ordinance but refused to wear it in violation of section 3 of the ordinance dealing only with the display of beach badges on the person. The city contends this is the only issue on appeal. It is to be noted that defendant argued constitutionality and reserved her right to present such questions on appeal. Moreover, she has been aggrieved by the ordinance, having been arrested and fined. Cine-Com Theatres Eastern State Inc. v. Lordi, 351 F. Supp. 42 (D. N. J. 1972) Edelstein v. Ferrell 120 N. J. Super. 583 (Law Div. 1972). Defendant has standing to contest the validity and constitutionality of all portions of the ordinance.

Ordinance 465, as amended by ordinance 478, was adopted pursuant to legislative authority granted by L. 1955, c. 49, and is known as N. J. S. A. 40 :61-22.20. The legislative enactment was created to enable municipalities to secure funds to improve, maintain and police their lands or easement rights in such lands bordering on the ocean, tidal water bays or rivers, for places of resort for public health and recreation.

Our Supreme Court, in Neptune v. Avon-by-the-Sea, 61 N. J. 296; 294 A. 2d 47 (1972), in holding Avon’s ordinance invalid as discriminatory between residents and nonresidents, discussed the statute and stated :

[W]e see no legislative intent therein to authorize discrimination in municipal beach fees between residents and non-residents. The statute amounts to a delegation to a municipality having a dedicated beach (dry sand area) of the State’s police power over that area and the tide-flowed land seaward of the mean high water mark; the proviso indicates an affirmation of the State's paramount interest and inherent obligation in insuring that such seaward land be equally available for the use of all citizens.

Presenting this decision, defendant contends the ordinance is unconstitutional in that it discriminates against nonresidents.

Specifically, she argues that subsections 2(b) and (c) discriminate in that they provide for a difference in costs of a seasonal badge depending on the date on which it is purchased (i. e. before May 31 the cost is $2.50; after May 31 the cost is $5). From this she reasons that nonresidents are discriminated against because it is easier for residents to make the purchase before May 31 than for nonresidents, thus violating the equal protection and due process of law.

In Washington National Ins. Co. v. Board of Review, 1 N. J. 545 (1969), the Supreme Court stated:

While the due process and equal protection guaranties are not coterminous in their spheres of protection, equality of right is fundamental in both. Each forbids class legislation arbitrarily discriminatory against some and favoring others in like circumstances.

This court’s determination of the constitutionality or uneonstitutionality of any municipal ordinance must be guided by certain principles governing the burden of proof to establish uneonstitutionality. The first principle is that a municipal ordinance will be presumed to be reasonable in the absence of clear proof to the contrary. State v. Ulesky, 100 N. J. Super. 287, 301 (Cty. Ct. 1968), rev’d on other grounds 54 N. J. 26; Johnson v. Montville Tp., 109 N. J. Super. 511, 519 (App. Div. 1970); Gilman v. Newark, 73 N. J. Super. 562, 582 (Law Div. 1962). Furthermore, the ordinance is cloaked with a strong presumption of constitutionality, and it should not be declared void by a County Court or any other court of limited jurisdiction unless its repugnancy to the Constitution is clear beyond a reasonable doubt. State v. Ulesky, supra, 100 N. J. Super. at 295-296. That is, where there are two possible interpretations, that which will uphold the ordinance is to be adopted in preference to one under which the ordinance would be unconstitutional. Gilman v. Newark, 73 N. J. Super. 562, 598-599 (Law Div. 1962). In fact, the cardinal principle of statutory construction must be to save and not to destroy, and the duty of the court is to strain if necessary to save an act or ordinance, not to nullify it. New Jersey Sports and Exposition Authority v. McCrane, 119 N. J. Super. 457, 591-592 (Law Div. 1971), aff’d but mod. on other grounds, 61 N. J. 1.

Specifically, in regard to the burden oí proving a violation of equal protection of the law, the governing principle is that stated in the recent case of Borland, Jr. v. Bayonne Hospital, 122 N. J. Super. 387 (Ch. Div. 1973):

The requirement of equal protection is satisfied if all persons within a class, reasonably selected, are treated alike. And a classification is reasonable if it rests upon some grounds of difference having a real and substantial relation to the basic object of the particular enactment or on some relevant consideration of public policy. If there is a reasonable distinction, there is no oppressive discrimination. The Legislature has a wide range of discretion in this area and distinctions will be presumed to rest upon a rational basis if there be any conceivable state of facts which would afford reasonable support for them.

In assailing the statutory scheme which compels different rates on the grounds that it violates the equal protection and due process clauses of the Fourteenth Amendment, the defendant must carry the burden of showing that the classification, which results in more favorable rates to people who buy season badges before May 31, does not bear a reasonable relation to a permissible legislative objective. Borland v. Bayonne Hospital, supra, at 397. This court interprets the word “legislative” in Borland, to apply to municipal ordinances as well as state legislative acts.

While defendant contends that section 2(b) and (c) unreasonably discriminate, the city states that it has reasonable grounds to use May 31 as a cut-oif date between the charging of $2.50 and $5 for seasonal badges. It contends that in order to adequately provide the financial means to keep up the beaches, guard them and otherwise police and maintain them, it must have some idea of the number of people who will avail themselves of this service. It therefore uses the May 31 date in order to estimate the number of people it will have to serve and protect during the summer, in order to provide financing and personnel for these services. People who apply for badges after May 31, then, will require protection and services not provided for initially, based on the pre-May 31 sales of badges. The May 31 deadline is therefore used as an incentive to the people who will visit Sea Isle City in the summertime to get their badges early so that they will be adequately protected and provided for when they wish to avail themselves of that city’s beaches.

There is no requirement in the ordinance, nor was there any evidence presented at the hearing on this appeal, that applications are required to be made in person to/the city. Applications may be made by mail for beach badges and the badges may be returned to applicants through the mails, so that nonresidents. may avail themselves of the pre-May 21 amount, thus benefitting themselves and the city.

Since there is reason for and process of administration of seasonal beach badges as provided in subsection 2(b) and (c) of the ordinance, a reasonable classification having a real and substantial relation to the improvement, maintenance, protection and policing of its beaches for the benefit of all users thereof exists, and this court finds that the differences in costs of seasonal beach badges purchased before and after May 31 is not discriminatory. The holding in Neptune v. Avon-by-the-Sea, supra, is inapposite as to section 2(b) and (c).

The next contention of defendant is that section 2(d) of the ordinance unreasonably discriminates, not on its face but in its application. The defense argues that the weekly badges’ starting time of noon on Saturday until the next Saturday noon unreasonably discriminates because it compels a person wishing to spend the entire weekend on the beach, from Eriday afternoon until Sunday evening, to buy two weekly beach badges. This court takes judicial notice of the fact that the beaches of our shore resorts are much more densely populated on weekends in the summer than on weekdays, and that the large majority of the weekend growth is due to people spending only the weekend at the shore.

To refute the charge of unreasonable discrimination in weekly badges, the city argues that its basis of noon Saturday as the beginning and end date of the weekly badges is the fact that most rentals of housing facilities begin and end on noon Saturday.

The argument of the city is not accepted by this court. Basing the beginning and end of the effectiveness of a weekly badge, so as to split up a weekend, thereby causing someone who uses the beaches of that city for one weekend to be forced to buy two weekly badges, is unreasonable both on its face and in its application. The second sentence of section 2(d) is unreasonable and discriminatory; it is therefore unconstitutional and invalid. See Borland v. Bayonne Hospital, supra, 122 N. J. Super. at 397.

The defense contends, further, that section 2(e) and any other portion of the ordinance referring to section 2(e), is discriminatory against nonresidents on its face. The city concedes that Section 2(e) is unconstitutional; and this court agrees. There is no rational basis for that section and it does indeed discriminate unreasonably against nonresidents. Neptune v. Avon-by-the-Sea, supra.

The contentions that sections 3, 5(d) and 7 are unreasonable are without merit. The requirement to display the badges is a reasonable way of enforcing and administering the statutorily permissible user fee, and the penalties of a maximum fine of $500 or maximum imprisonment of 90 days or both, fixed for violation of the various valid sections of the ordinance, are reasonable sanctions against offenders.

This court finds as unconstitutional and invalid the following portions of sections of ordinance 465 as amended by Ordinance 478:

The second sentence of section 2(d), section 2(e), section 5(a) commencing with the word “however” to the end of subsection (a), and section 5(b) commencing with the word “except” to the end of subsection (b).

The ordinance as amended contains no severability clause, and it is the contention of defendant that where parts of an ordinance have been declared invalid, and there is no provision saving the ordinance in the event a portion is declared invalid, the entire ordinance must fall.

It remains to be determined whether the declaration as invalid of the portions of the ordinance above referred to, has devitalized the ordinance to such a degree that it is no longer viable.

Our Supreme Court in Washington National Ins. Co. v. Board of Review, 1 N. J. 545 (1949), stated:

Severability is a question of intention .... The rule of severance is in aid of the intention; and to be capable of separate enforcement, there must be such manifest independence of the parts as to clearly indicate a legislative intention that the constitutional insufficiency of the one part would not render the remainder inoperative. The doctrine of separability is one to be applied with caution, for in the enforcement of valid elements of a statute containing invalid elements also, there is a danger of judicial usurpation of the legislative power, [at 556]

See also Affiliated Distillers Brands Corp. v. Sills, 56 N. J. 251, 265 (1970); 60 N. J. 342, 345-346 (1972). This rule also applies to municipal ordinances. Gilman v. Newark, 73 N. J. Super. 562, 600 (Law Div. 1962); Tagmire v. Atlantic City, 35 N. J. Super. 11, 23 (App. Div. 1955). Conversely, where the provisions of an ordinance are separable, the invalidity of one or more of the separate parts does not render the entire ordinance invalid, provided the remainder contains the essentials of a complete enactment. Gilman v. Newark, 73 N. J. Super. supra, at 601; Kennedy v. Newark, 29 N. J. 178 (1959).

Ordinance 465, as amended, with the provisions designated above as invalid deleted, still contains the essentials of á complete enactment under the authority of N. J. S. A. 40:61-22.20. Those provisions declared invalid are separable from the ordinance and the ordinance is not, thereby, devitalized. With those provisions deleted, it is still a valid ordinance; and it is, with those deletions, still in full force and effect in Sea Isle City.

Since ordinance 485, as amended, is valid, with the deletions enumerated above, and since defendant was arrested, charged and convicted under a section of that ordinance which has been held valid by this court, the conviction of defendant for failure to wear and display on her person, while on the beach in Sea Isle City on August 2, 1972, and the fine of $25 and the assessment of costs in the amount of $10 on such conviction, is affirmed.


author: Ckahay, J. A. D.

text:
    STATE OF NEW JERSEY v. GEORGE SOTTERIOU, JOSEPH SHAMY, JOHN SOTTERIOU, JOHN SANDONATO, MICHAEL MILLER, ROBERT MITTMAN AND JOANNE SANDONATO. IN RE COMMITTMENT OF MICHAEL MILLER.
    Superior Court of New Jersey Appellate Division
    Argued February 21, 1973
    Decided April 11, 1973.

      Before Judges Kolovsky, Matthews and Cbahay.

      Mr. William IS. Flynn argued the cause for the appellant, Michael Miller (Messrs. Antonio <$> Flynn, attorneys).

      Mr. John J. Pribish,, Assistant County Prosecutor of Middlesex County argued the cause for the respondent, State of New Jersey (Mr. John 8. Kuhlthau, Middlesex County Prosecutor, attorney).
   The opinion of the court was delivered by

Ckahay, J. A. D.

Michael Miller appeals, on leave granted, from an order confining him to the Middlesex County Jail for the duration of the trial or trials to be based on the open counts of Indictment No. 405-71, and providing further for Miller’s release on bail of $25,000 pending the beginning of those trials. The multi-count indictment charges Miller, Joseph Shamy and others with conspiracy to obstruct justice, obstruction of justice and aiding and abetting the obstruction of justice. Shamy, in counts not charging Miller, was accused of an additional conspiracy to commit bribery and bribery. Miller, who has filed a bail bond of $20,000 following an arraignment on the counts in the indictment involving him, seeks in the alternative a reduction of the $25,000 additional bail fixed in the order appealed from. By order of January 29, 1973 we granted leave to appeal and ordered Miller’s release from jail pending our disposition of this interlocutory appeal.

The record reveals the following. A fire occurred during the night of September 28, 1971 at the Zoo Tavern in Carteret, New Jersey. As a direct result two men were killed, including the owner of the tavern. During the police investigation early the next morning a strong odor of gasoline was detected inside the building and it was noted that a juke box had been placed in a manner to seemingly restrict access through the front door. Based on their investigation the officers concluded that the fire was of an incendiary nature. Sometime during the night of September 28, 1971, subsequent to the fire, one George Sotteriou, a named defendant in the indictment, was admitted to Middlesex General Hospital suffering from severe burns over the lower half of his body. The State alleges that he was implicated in the arson and escaped apprehension by fleeing the scene. Subsequent to his hospital admission Sotteriou was visited by Joseph Shamy, a business associate. During the visit appellant Michael Miller came to the hospital where, it is alleged, Joseph Shamy told him where Sotfceriou’s car was located. Miller then proceeded to the location as told to him, the home of one John Sandonato, another named defendant, and removed the car to the parking lot of the Barbary Coast Restaurant in Woodbridge. Miller returned to the lot with another man during the early morning hours of September 29, at which time he was apprehended by the police, who arrested him and held him as a material witness.

Prior to presenting the matter to the grand jury the prosecutor proposed to grant Miller immunity in return for his assistance. However, the • prosecutor was not satisfied with appellant’s cooperation. He was thereafter called before the grand jury. After being clearly advised of his right to remain silent, he chose to testify with specificity as to his participation and that of others in the involved offenses. He did so without seeking or being granted immunity. A motion to dismiss the counts in the indictment pertaining to Miller based on prior promises of immunity was dismissed. The dismissal was subject to renewal prior to trial of any count against Miller. Thereupon Miller was released on $20,000 bail. He has not yet been brought to trial on the three counts against him.

Miller was subpoenaed to testify at the trial of Joseph Shamy on counts 11 and 12, which charged conspiracy to commit bribery and bribery (two counts in which Miller was not named). The remaining counts were severed and pend trial. On January 18, 1973 Miller appeared at the trial on counts 11 and 12 and took the stand outside the presence of the jury. As soon as he was asked a question he invoked his Fifth Amendment privilege against self-incrimination, whereupon the State submitted a petition to compel testimony under N. J. S. A. 2A:81-17.3, the immunity statute.

The trial judge then signed an order compelling appellant to testify in all matters relating io Joseph Shamy and others in the multi-count indictment. After reviewing the petition counsel for appellant insisted that Miller be given transactional rather than nse immunity, which was denied. Because of that, denial, Miller refused to testify. See Kastigar v. United States, 406 U. S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972), reh. den. 408 U. S. 931, 92 S. Ct. 2478, 33 L. Ed. 2d 345 (1972) ; In re Zicarelli, 55 N. J. 249 (1970), aff'd 406 U. S. 472 (1972); “The Fifth Amendment’s Proxy-Transactional or Use Immunity?,” 3 Selon Hall L. Rev. 199 (1971). After being ordered to answer Miller again refused. He was held in contempt and committed to the Middlesex County Jail until ho purged himself of his contumacious conduct by testifying.

At the conclusion of the State’s case on January 25, 1973 a judgment of acquittal was entered in favor of Shamy. The next day counsel for appellant applied to the trial judge for the release of Miller, asserting that the testimony by which he might purge himself was now moot and, further, that the immunity statute did not provide for further incarceration. The court denied the request to release- the appellant, since there were remaining counts in the indictment to be tried, ruling that the only means by which Miller could purge himself was to testify in the pending matters. The court further ordered that pending the beginning of the trial of the open counts. Miller might he released on hail of $25,000. As noted, Miller contends that he should he released outright or that in the alternative he is entitled to a reduction of bail.

The New Jersey Witness Immunity Act, N. J. S. A. 2A: 81-17.3, was patterned after the Model State Witness Immunity Act. In re Addonizio, 53 N. J. 107 (1968). The New Jersey act provides:

In any criminal proceeding before a court or grand jury, if a person refuses to answer a question or produce evidence of any other kind on the ground that he may be incriminated thereby and if the Attorney General or the county prosecutor with the approval of the Attorney General, in writing, requests the court to order that person to answer the question or produce the evidence, the court shall so order and that person shall comply with the order. After complying and if but for this section, he would have been privileged to withhold the answer given or the evidence produced by him, such testimony or evidence may not be used against the person in any proceeding or prosecution for a crime or offense concerning which he gave answer or produced evidence under court order. However, he may nevertheless be prosecuted or subjected to penalty or forfeiture for any perjury, false swearing or contempt committed in answering, or failing to answer, or in producing, or failing to produce, evidence in accordance with the order. If a person refuses to testify after being granted immunity from prosecution and after being ordered to testify as aforesaid, he may be adjudged in contempt and committed to the county jail until such time as he purges himself of contempt by testifying as ordered without regard to the expiration of the grand jury; provided, however, that if the grand jury before which he was ordered to testify has been dissolved, he may then purge himself by testifying before the court. [Emphasis added]

Miller contends that the italicized portion of the statute provides a remedy for compelling testimony only where a party refuses to testify before a grand jury, and argues that the procedure is not available to a trial court. He urges, therefore, that his retention in custody for the purpose of compelling him to testify in pending trials is outside the statutory grant.

In order to accept Miller’s position, we would have to find that the immunity statute is the sole authority under which a court can commit a recalcitrant witness. Additionally, we would then have to rule that the legislative intent of N. J. S. A. 2A:81-17.3 did not contemplate the type of action taken by the trial court here. It is not necessary to discuss the authority • existing without the statute for commitment by a court, since we hold that the immunity statute encompasses the remedy employed here.

N. J. S. A. 2A:81-17.3 differs somewhat in wording from its federal counterpart contained in the Organized Crime Control Act, 28 U. S. C. A., § 1826 (1970), which provides:

Recalcitrant Witnesses
(a) Whenever a witness in any proceeding before or ancillary to any court or grand jury of the United States refuses without just cause shown to comply with an order of the court to testify or provide other information, including any book, paper, document, record, recording or other material, the court, upon such refusal, or when such refusal is duly brought to its attention, may summarily order his confinement at a suitable place until such time as the witness is willing to give sueh testimony or provide such information. No period of such confinement shall exceed the life of •—
(1.) the court proceeding, or
(2.) the term of the grand jury, including extensions,
before which such refusal to comply with the court order occurred, but in no event shall such confinement exceed eighteen months * * *. [Emphasis added]

But the intent and purpose of the two acts are the same. Clearly, the legislative intent of N. J. S. A. 2A:81-17.3 is that a witness

*• * * maj, nevertheless be prosecuted or subjected to penalty or forfeiture for any perjury, false swearing or contempt committed in answering, or failing to answer, or in producing, or failing to produce, evidence in accordance with the order * * * [Emphasis added]

The mandate crystallized in the quoted language is, that despite immunity, a witness may be “prosecuted or subjected to penalty * * * for any * * * contempt committed in answering or failing to answer.” Since the opening words of the immunity statute read, “In any proceeding before a court or grand jury * * (emphasis added), it is frivolous to argue that the failure of the Legislature to repeat the word “court” in the latter part of the statute, restricts the remedy enunciated to proceedings before a grand jury. To read the statute as appellant suggests would be to hold that the Legislature intended the grand jury to have a power su-r perior to that of a court and generate a result not grounded in law or logic.

Appellant’s semantic argument fails. As Chief Justice Weintraub has said:

It would be helpful if legislative draftsmen abided by our semantics, but we cannot insist that they shall. [In re ZieearelU, supra, at 271]

The employment of the term “penalty” in N. J. S. A. 2A:81-17.3 does not limit a court in its remedy to incarceration for a stated term. Interpreting a similar statute (N. J. S. A. 52:9M-17) in In re Ziccarelli, supra, the Supreme Court rejected an analogous argument in construing a section of that statute which provides in part;

* * * may nevertheless be prosecuted for any perjury committed in such answer or in producing such evidence, or for contempt for failing to give an answer or produce evidence in accordance with the order of the commission * *

In Ziccarelli the court examined the purpose of the legislation, which was to enable the State Commission of Investigation to obtain facts, and decided that mere punishment for a prescribed period would not serve that purpose, saying:

We can think of no reason why the Legislature would want to permit a witness to block the inquiry if he is willing to accept a penalty. Mindful, as we are, that the expression ‘prosecution for contempt’ has been used widely to describe a proceeding arising out of contumacy, whether the object of the proceeding is to compel compliance or to punish for noncompliance or hoth, we must seek the legislative design in that light, notwithstanding that the terms employed are not the ones we prefer. Here we have no doubt that the Legislature intended the S. C. I. to obtain the facts, whatever the wish of the person subpoenaed. The very provision for a grant of immunity repels the notion that a witness may choose to be silent for a price, [at 272]

So it is in the instant case. Nothing in the statute even suggests that a witness who has been granted immunity and ordered to testify, but refuses, may continue to refuse if he is willing to accept the penalty of incarceration for a fixed term for criminal contempt of court. Cf. State v. Craig, 107 N. J. Super. 196 (App. Div. 1969), cert. den. 55 N. J. 169 (1969).

Wo are satisfied that Lie legislative intent in enacting the immunity statute was to broaden the power of courts and grand juries to ascertain relevant facts by providing an additional remedy more effective than the preexisting power to punish a recalcitrant witness for criminal contempt.

Appellant Hiller also contends that his commitment was arbitrary and merely punitive since the trial of Joseph Shamy at which lie was called to testify has ended. His argument ignores, however, that there are still pending and awaiting trial several counts of the indictment against Shamy and others. The order compelling Miller to testify included "all matters” pertaining to Shamy and others enumerated in the indictment, and which ho testified to before the grand jury. The several charges against Shamy and others in the indictment all stem from one set of events in close proximity.

We hold that the trial court was empowered under N. J. S. A. 2A:81-17.3 to commit appellant Miller to the county jail pending the trial of the indictment against Joseph Shamy and others. To rule otherwise would sanction an unseemly charade and defeat the ends of justice.

As we have indicated, the trial court was empowered to, and pursuant to the immunity statute might well have insisted, that Miller remain in jail pending the trial of the open indictments against Shamy and others without fixing bail. Appellant has no cause to complain because the court, to avoid any punitive aspect stemming from the lack of a fixed trial date for the remaining open counts, decided to permit appellant to be released on bail of $25,000 pending the opening of the trial on those counts. The fixing of bail is not mandated by the immunity statute. In view of the uncertainty of trial dates on the pending counts of the indictment, the trial court did not abuse its discretion in setting bail. Nor was there an abuse of discretion in the amount of the bail. The purpose of the bail on this commitment is separate and distinct from that of the 'bail posted on Miller’s arraignment on the criminal charges against him.

Nothing in this opinion should be construed as limiting prosecution of appellant for criminal contempt for his refusing to testify.

Our order of January 29, 1973 directing that appellant Miller be released from the county jail is vacated. The order appealed from is affirmed.

       ln a recent case, the Federal District Court for the District of New Jersey held that incarceration to compel testimony for 14 months had reached the punitive stage where the grand jury, by which the defendants could purge themselves, was to be disbanded the following month. In re Patricia and Donald Grumbles, Criminal No. 722-71 (D. N. J., filed February 26, 1973). The order was affirmed by the Court of Appeals, No. 73-1174 (3 Cir., March 1, 1973). Previously the Court of Appeals had turned down appeals of refusals to free the defendants. 453 F. 2d 119 (3 Cir. 1971), cert. den. 406 U. S. 932, 92 S. Ct. 1806, 32 L. Ed. 2d 134 (1972), and No. 72-1013 (3 Cir., filed January 25, 1972).


author: Matthews, J. A. D.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. DANIEL JAY GOULD, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted March 27, 1973
    Decided April 12, 1973.

      Before Judges Kolovsicy, Matthews and Ckahay.

      Messrs. Noonan and Flynn, attorneys for appellant (Mr. John IF. Noonan, on the brief).

      Mr. Karl Asch, Union County Prosecutor, attornejr for respondent (Mr. Lawrence H. Posner, Assistant Prosecutor, on the brief).
   The opinion of the court was delivered by

Matthews, J. A. D.

Defendant seeks a reversal of his conviction by a jury for bookmaking. (N. J. S. A. 2A :112-3). He asserts three grounds: (1) the trial court improperly denied his motion to suppress; (2) the State failed to prove an act of bookmaking on the day alleged in the indictment; (3) the prosecutor’s comments on summation were highly prejudicial.

Evidence at the motion to suppress showed that police executed a search warrant which authorized a search of the person of Joseph Loiacono (a codefendant) and premises known as Lenny & Joe’s Barber Shop. Defendant was seated in a chair with a towel or nylon cloth about his shoulders when the raiding party entered the shop. During the ensuing search, a “comeback sheet” (record of money owed on bets) was found in (ho inside pocket of a suit jacket later identified as defendant’s which was hanging on the customers" coat rack. The coat rack also held defendant’s overcoat. a barber’s jacket and three hats. Two barbers and a shoeshine man were present in the shop. Defendant was the only customer at the time.

The trial judge found that no members of the raiding party knew the. jacket in which the “comeback sheet” was I'oimd was defendant’s until after it had been searched —• and that such lack of knowledge was reasonable under the circumstances. We find sufficient credible evidence in the record to support those findings.

Defendant also challenges the sufficiency of the State’s proof and the judge’s charge io the jury with respect to the lack of proof of an affirmative act of bookmaking on the date of his arrest. The slip of paper in defendant’s jacket pocket contained a record of bets placed during the week of February 15, 1970 and, on the reverse side, a record of money owed or still to be paid. The State’s expert witness testified that because defendant had not destroyed the paper, it was likely money was still owing March 5, 1970, the date of the bookmaking alleged in the indictment. The trial judge charged the jury that some current activity either actual or anticipated had to be proven, and that if defendant had taken bets in the past and if that money was still owing on March 5th and, if further, defendant had intention to collect that money March 5th, the jury could find him guilty of bookmaking. These instructions were proper. He did not inform the jury as defendant contends, that mere possession of the “comeback sheet” was enough to support a conviction. Bookmaking is an operation which involves both the placing of bets and the paying off (or collection of) bets.

Defendant’s final argument involves the following portions of the prosecutor’s summation which he claims to have been prejudically improper:

Incidentally, you had an opportunity during the trial to observe Daniel Gould and Joseph Loiaeono. From your common experiences as mature adults evaluate your observations. Look at Mr. Gould. How does he impress you?

Eollowing defense counsel’s objection, the prosecutor continued :

* * * observe Daniel Gould. Observe Joseph Loiaeono. Compare the two. Observe the demeanors. How does Mr. Gould impress you? Common experience as mature adults — bookmaker?

Again there was a vigorous objection from defense counsel, followed by the trial judge’s observations that “the jury may observe demeanor * * after which the prosecutor stated to the jury:

I-Iis demeanor alone can’t convict him. It is only one other indicia, when added to SS in evidence, gives you a conclusion to draw Daniel Gould is a bookmaker. [Emphasis added]

These remarks of the prosecutor were clearly improper and legally erroneous. We find no support for them in State v. Conyers, 58 N. J. 123 (1971), which the State cites as authority for their propriety.

Jurors are expected to use their common sense and experiences in evaluating evidence and arriving at a verdict. This process invariably requires a resolution of where the truth lies. Trial judges usually instruct jurors, as the trial judge did below, that they should observe the demeanor of all witnesses who testify as an aid in determining whether a specific witness testified truthfully. Here defendant chose not to testify as was his constitutional right. Despite this, and despite the fact that defendant’s conduct during the trial was proper, the prosecutor sought to have the jurors take into account his physical characteristics as an evidentiary fact of guilt. Demeanor becomes an issue for a jury only if a witness takes the stand and testifies before the jury, and may be used by the jurors as one of the tools to test the witness’ credibility. There is no known principle of law which permits jurors to judge innocence or guilt in this manner.

Whether improper comment by a prosecutor during summation necessarily calls for a reversal requires a consideration of whether trial counsel made timely objection and the action of the trial judge in response thereto. State v. Vaszorich, 13 N. J. 99, 119 (1953). Here, proper objection was made but the trial judge ignored it, erroneously observing that the jurors could “observe demeanor.” In addition, no corrective instruction was included in the charge.

The remarks clearly were drawn from outside the evidence adduced at trial and any reasonable inference that could have been drawn from such evidence. See State v. Johnson, 31 N. J. 489, 511 (1960) ; State v. Mayberry, 52 N. J. 413, 437 (1968). We find the remarks of the prosecutor to have been appeals to the prejudices of the jurors, State v. Bogen, 13 N. J. 137, 140 (1953), and therefore so grossly unfair and prejudicial as to have deprived defendant of a fair trial. Cf. Berger v. United States, 295 U. S. 78, 55 S. Ct. 629, 79 L. Ed. 1314 (1935).

The judgment of conviction is reversed and the cause remanded for a new trial.


author: .Per, Curiam.

text:
    RONALD J. NAFTAL, PLAINTIFF-RESPONDENT, v. TOWNSHIP COMMITTEE OF THE TOWNSHIP OF EASTAMPTON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Submitted March 19, 1973
    Decided April 4, 1973.

      Before Judges Coelester, Leokaro and IIalpese.

      Messrs. Apell, Forman and Howard, attorneys for appellant {Mr. Jerome J. Forman, on the brief).

      Messrs. Hartman, Schlesing&r, ScMosser and Faxon attorneys for respondent {Mr. Barrí W. Balderman, on the brief).
   .Per, Curiam.

This is an appeal from a summary judgment entered in the Law Division directing defendant township to maintain its public records at the town hall and to make them available for public inspection and copying.

Plaintiff filed a verified complaint in lieu of prerogative writs alleging that he had been denied accéss to certain planning board records and other public records because they were not kept at the town hall but in the private homes of public officials. He demanded judgment that (1) records required by N. J. S. A. 40:55-1 ett seq. be made available at the township clerk’s office; (2) township officials be required to maintain public records at the town hall rather than in' their homes, and (3) all municipal records be made available each day during regular business hours. Simultaneously therewith an order issued directing defendant to show cause 10 days later why the relief sought should not be granted. On the return day the township attorney appeared, a hearing was held, and summary judgment was entered.

Defendant has improperly included in its brief an affidavit by the township clerk which was not part of the record below. It will not be considered by the court on this appeal.

On appeal defendant raises two points, both of which were not urged below. It is first argued that the summary procedure followed was defective because no motion for an order to proceed summarily, supported by affidavits, was made, and that the return date of the order to show cause was prior to the expiration of the time within which defendant was required to answer the complaint. B. 4:67-2(b).

While the proper procedure was not followed below it is well settled that our appellate courts will decline to consider questions or issues not properly presented to the trial ■court when opportunity for such presentation was available, unless the questions so raised on appeal go to the jurisdiction ■of the court or concern matters of great public interest. Nieder v. Royal Indemnity Ins. Co., 62 N. J. 229, 234 (1973). It is clear that the procedural issue raised by defendant does not involve the jurisdiction of the court or the public interest.

In any event, the record indicates that defendant appeared below and argued the case as if the issues raised were matters for disposition by summary judgment. No objection was raised because of lack of compliance with B. 4:67-2(b) nor was an adjournment sought by defendant to submit affidavits on its own behalf. In fact, the core issue — that public records were not kept in the town hall ■— was not in dispute. We see no reason to remand the matter for a plenary hearing.

Defendant also argues in substance that there were insufficient facts before the trial court upon which to base the relief granted. We do not agree. The verified complaint alleged that planning board records were not kept in the town hall. N. J. S. A. 40:55-1.7 provides that such records shall be filed in the office of the municipal clerk and be made available for public inspection. It is undisputed that the municipal clerk’s office in this case is in the town hall.

The complaint further alleged that other municipal records were not kept in the town hall but in the homes of township officials. At the hearing defendant’s counsel conceded that this was true.

N. J. S. A. 40:48-6 provides that when any municipality maintains a municipal building “all books, records, data, accounts, maps and papers relating to the government or the conduct of municipal business and matters shall be kept therein.” It further provides that the governing body may designate some other place for the safekeeping of its records “affording equal or greater security against fire and theft.”

Neither at the hearing below nor on appeal is it alleged that defendant has designated a place other than the town hall for the safe-keeping of its records.

We conclude that the summary judgment should be affirmed.


author: Per Curiam.

text:
    STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT, v. WILLIAM CHARLES KORZENOWSKI, DEFENDANT-APPELLANT.
    Superior Court of New Jersey Appellate Division
    Argued March 5, 1972
    Decided April 12, 1973.

      Before Judges Fritz, Lynch and Trautwein.

      Mr. Frank P. Villanova argued the cause for the appellant {Mr. Humphrey Famularo, attorney.)

      Mr. Robert JD. Clarke, Assistant Prosecutor, argued the cause for respondent {Mr. Karl Asch, Union County Prosecutor, attorney.)
   Per Curiam.

A plea bargain was struck in this gambling ease. A careful comparison of the sentence with the bargain as disclosed in the plea transcript shows no breach. Indeed, defendant does not so contend but rather urges error on the grounds that

1. The sentence was excessive and unconstitutional because the court did not particpiate in the bargaining, thereby depriving defendant of effective assistance of counsel under the Sixth Amendment of the United States Constitution.
2. A Supreme Court directive excluding court participation in the bargain is unconstitutional and in this instance, prejudicial to the defendant.
3. N. J. S. 2A :112-3 is unconstitutional since it discriminates against bookmakers as a class in that they are exposed to a five-year maximum prison term and a fine of up to 85,000. while all other classes of misdemeanants can receive up to three years imprisonment and a $1,000. fine under W. J. S. 2A:85-7.

Defendant’s net custodial sentences ran concurrently for three to five years with a $5,000 fine on two of the live counts to which he pleaded guilty.

As to defendant’s contentions referrable to the absence of participation by the court in the bargaining procedure, there is clear authority mandating nonparticipation. United States v. Gilligan, 256 F. Supp. 244, 254 (S. D. N. Y. 1966); State v. Thomas, 61 N. J. 314, 321 (1972); State v. Taylor, 49 N. J. 440, 455 (1967); State v. Poli, 112 N. J. Super. 374, 379 (App. Div. 1970). Moreover, we eon-elude the directive in question merely iterates and implements these rulings for the benefit of trial courts.

With respect to the sentence being excessive and an abuse of judicial discretion, we have examined this contention within the totality of all of the circumstances revealed by the record and find no clear showing of the same. State v. Cox, 101 N. J. Super. 470 (App. Div. 1968), certif. den. 53 N. J. 510 (1969); State v. Provoid, 110 N. J. Super. 547 (App. Div. 1970).

Finally, we likewise conclude that bookmakers suffer no discrimination of constitutional dimensions in the area of statutory limits on sentences when compared with other misdemeanants. State v. Hampton, 61 N. J. 250 (1972); State v. Smith, 58 N. J. 202 (1971).

Affirmed.

       The text of the so-called “directive” is as follows:
      MEMORANDUM TO: ASSIGNMENT JUDGES AND COUNTY PROSECUTORS
      RE: Pleas in Criminal Cases
      This is to advise you that the Supreme Court has approved the following general policy with regard to acceptance of plea procedures developed at the meeting of Assignment Judges and Prosecutors on December 11, 1970:
      1. The prosecutor and defense counsel may engage in discussions relating to pleas and sentences, but the judge shall take no part in such discussions.
      2. Where the prosecutor and defense counsel reach an agreement as to the offense or offenses to which a defendant will plead on condition that other charges pending against the defendant will be dismissed, such agreement shall be placed on the record in open court at the time the plea is entered. If the plea is accepted by the judge in accordance with such agreement and subsequently the judge before whom a motion for dismissal of other charges is made pursuant to R. 3:25 in his discretion determines that the interest of justice would not be served by accepting such agreement, then and in that event the defendant shall be permitted to withdraw his plea.
      3. Where the prosecutor and defense counsel reach an agreement as to the sentence which the prosecutor will recommend, such agreement shall be placed on the record in open court at the time the plea is entered. If the plea is accepted by the judge and subsequently at the time of sentencing in accordance with R. 3 :21 the sentencing judge in his discretion determines that the interest of justice would not be served by accepting the prosecutor’s recommendation made pursuant to such agreement, then and in that event the defendant shall be permitted to withdraw his plea.
      4. The foregoing does not authorize a departure from the holding in State v. Reali, 26 N. J. 222 (1958), that a plea of guilty shall be refused if a defendant insists on his innocence. Accordingly, the plea procedures prescribed by R. 3:9-2 shall continue to be observed and, notwithstanding the recent decision in North Carolina v. Alford [400 U. S. 25, 91 S. Ct. 160, 27 L. Ed. 2d 162], (decided November 23, 1970), except in capital cases, a plea shall not be accepted from a defendant who does not admit commission of the offense.
      s/ Edward B. McConnell
      Copies to: Attorney General Kugler
      Public Defender Van Ness
      Director Jahos
      All Judges
      New Jersey Law Journal