Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.
Plaintiff seeks a declaratory judgment under R.R. 4:88-10 as to the validity of certain regulations of the Director of the Office of Rent Control which were promulgated under the State Rent Control Act of 1953, L. 1953, c. 216; N.J.S. 2 A:42-14 et seq. The particular regulations attacked were filed with the Secretary of State on July 30, 1953; amendments thereto were registered in the same office on April 23, 1954, during the pendency of this proceeding. Both original and amended regulations will be considered.
At the outset of our consideration of the matter, attention is called to the question of the timeliness of the filing of the "petition" for declaratory judgment, the date being more than four months after the effective date of the original regulations. See R.R. 4:88-1 (defining proceeding in lieu of prerogative writ); 4:88-15. However, since it was not raised by the parties we shall pass it in order to determine the substantive merits of the case.
Prior to July 16, 1947, Rilost Realty Co., Inc. was the owner of premises known as 819-825 22nd Street, Union City, N.J. For several years the building thereon was vacant and unfit for habitation. On the date referred to a contract was executed under the New Jersey Veterans' Emergency Housing Act (N.J.S.A. 55:14 G -1 et seq.) between the Administrator of Public Housing and Development Authority and Rilost for the rehabilitation and conversion of the building in order to create additional housing space for veterans. Under the contract also, the premises
were leased to the Administrator for a period of five years (the duration of the emergency asserted by the Act, N.J.S.A. 55:14 G -12) to begin on the date of the first tenant occupancy after the completion of the conversion.
The remodeling, which resulted in the creation of 26 self-contained family dwelling units, was finished in April 1948 and the term of the lease began on April 28 of that year.
The original cost of the conversion was $85,412.07, which was paid by the State under the Emergency Housing Act. The lease provided for the recapture of 50% of this sum out of the income derived from the premises. The rents to be paid by the tenants were in the control of and to be fixed by the Administrator throughout the period. N.J.S.A. 55:14 G -12, subds. b, c. Apparently the rents for the dwelling units were established by him prior to the inception date of the lease and a computation of the net amount to be produced thereby over the five-year period showed that the full 50% of the State's investment would not be recovered. Accordingly, by a supplemental agreement Rilost agreed to pay approximately $2,000 to make up the difference.
It was further provided in the agreement that in consideration of the recapture of 50% of the cost, the premises would be surrendered to the owner with all the improvements thereon at the end of the term. Pursuant thereto, on April 29, 1953, the Administrator made the return to the Realty Company.
The Federal Housing and Rent Act of 1947 as amended (50 U.S.C.A. App. § 1881, et seq.) expired on July 31, 1953. In anticipation thereof, our Legislature adopted the present State Rent Control Act, effective July 7, 1953, to be operative until December 31, 1954. L. 1953, c. 216; N.J.S. 2 A:42-14 et seq.
Under this act a State Rent Control Office was created, headed by a Director, and he was given authority to promulgate rules and regulations "to effectuate the purposes" thereof with respect to rent control. N.J.S. 2 A:42-15, 20. Section 9 (N.J.S. 2 A:42-22) further provides that:
"The rules and regulations to be made and promulgated * * * may contain such classifications and differentiations and may provide for such adjustments or reasonable exceptions , according to the use or character of an area or of property, or both, as in the judgment of said director are necessary or proper in order to effectuate the purposes of this act. * * *"
On July 30, 1953 the Director issued the following regulation which is under attack in this proceeding:
"Part I, Article III, Section 2.
2. Pursuant to the provisions of the Act, particularly section 9 thereof, the following additional housing space shall be totally excepted from the ...