On appeals certified by this court on its own motion while pending in the Appellate Division of the Superior Court.
For affirmance -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- Justice Heher. The opinion of the court was delivered by William J. Brennan, Jr., J. Vanderbilt, C.J., and Wachenfeld, J., concurring in result. Heher, J. (dissenting).
The Appellate Division, under the authority of R.R. 3:5-5(b)(6)(a), allowed defendants Low and Antovel leave to appeal from an order of the Bergen County Court denying their motions to dismiss nine indictments. The opinion of Judge O'Dea in the County Court is reported sub nom. State v. Closter Village, Inc., 31 N.J. Super. 566 (1954). We certified the appeals here on our own motion under R.R. 1:10-1(a).
The indictments also name Closter Village, Inc., and Sidney V. Stoldt. Stoldt, Low and Antovel were the officers, directors and stockholders of Closter Village, Inc., the developer of a large-scale building project in the Borough of
Closter. The venture failed and persons who had made down payments under contracts with Closter Village, Inc., for the purchase of sites and the construction of homes thereon complained that their monies were fraudulently diverted from the purposes for which they were paid.
The complaints resulted in the indictments before us charging the corporation and the three individuals with offenses under R.S. 2:124-16 and R.S. 2:124-11. Between the dates of the alleged commission of the offenses charged in the indictments and the date the indictments were returned, the statutes were respectively superseded by N.J.S. 2 A:102-10 and N.J.S. 2 A:102-5 as part of the revision of Titles 2 and 3 of the Revised Statutes adopted upon the recommendation of the Advisory Committee on the Revision of Statutes, of which Judge, then Senator, Clapp was chairman. Title 2 A became effective on January 1, 1952 under the terms of L. 1951, first spec. sess., c. 344, sec. 12, p. 1455.
Seven of the indictments, varying only as to the complaining witnesses, lot and block numbers and amounts of money, charge the offense under R.S. 2:124-16, which provided:
"All moneys received by a contractor from the owner or mortgagee of real estate or any leasehold or other interest therein, while a building is being erected, constructed, completed, altered, repaired or having an addition made thereto, are hereby declared to be trust funds in the hands of such contractor to be applied to the amount of all claims due or to become due and owing from such contractor to all persons furnishing labor or materials to him for the erection, construction or completion of the building or any alteration, repair or addition thereto, and any other reasonable and necessary charge in connection with the carrying on and completion of the work on the building. Any contractor or any officer, director or agent of such contractor who pays or consents to the appropriation of such funds for any other purpose prior to the payment of all claims and charges for the payment of which such funds constitute a trust fund as above provided, shall be guilty of a misdemeanor."
The indictments for the offense are in the following form:
"That Closter Village, Inc., a corporation of the State of New Jersey, Sidney V. Stoldt, Carl C. Low and Louis Antovel, they then being officers and directors of the said Closter Village, Inc., * * *
on or about, during and between August 22, 1950 and July 1, 1951 * * * being then and there contractors, and that as such they did enter into a contract with (names of complaining witnesses) for the construction of a certain dwelling house upon certain lands known as Lot (number) Block (number) on 'Map of Closter Village, Section 4, Closter, Bergen County, N.J.,' and that they did receive from the said (names of complaining witnesses), purchasers under said contract, the sum of $(amount) in lawful money of the United States of America for the purpose of paying all claims due or to become due and owing from them the said contractors, for labor and materials incident to the construction of the dwelling house aforesaid, but despite the specific purpose for which the aforesaid sum of $(amount) was placed in their hands, the said Closter Village, Inc., a corporation of the State of New Jersey, Sidney V. Stoldt, Carl C. Low, and Louis Antovel, being then and there officers and directors of Closter Village, Inc., did willfully and unlawfully appropriate, or consent thereto, the aforesaid monies for purposes other than the payment of labor and material due or to become due from them for the construction of the aforesaid dwelling house prior to the payment of all claims and charges, for the payment of which such funds constitute a trust fund under the statute in violation of R.S. 2:124-16 * * *."
Defendants contend that the indictments were fatally defective in three respects: (1) That the allegation that the defendants entered "into a contract with" the complaining witnesses "for the construction of a certain dwelling house * * * and that they did receive" a sum of money from said complaining witnesses, "purchasers under said contract," does not charge the ingredient of the statutory offense that the accused received moneys "from the owner or mortgagee of real estate or any leasehold or other interest therein." (2) That there is no allegation negativing the existence of unpaid creditors in addition to laborers and materialmen, such, for example, quoting from Low's brief, as may have been concerned with "the necessary work of laying out roads, installing utilities and the like * * *, salaries for supervisory personnel, legal expenses incident to the search of title and financial expense for the obtaining of money." The argument is that such an allegation is requisite in the indictments as the funds constituted trust funds by the statute are held on trust not alone for claimants for labor and materials, but also for "any other reasonable and necessary charge in connection with the carrying on and completion of
the work of the building." And (3) that the indictments fail to allege that the defendants received the moneys, as the statute requires, "while a building is being erected." It is urged that this requisite is not met by the allegation that the moneys were received "for the purpose of paying all claims due ...