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Adams v. Jersey Central Power & Light Co.

Decided: February 20, 1956.


On appeal from the Superior Court, Law Division, Morris County.

For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Oliphant, J.


This is an appeal by the defendant-appellant, by leave of the Appellate Division, R.R. 2:2-3(b), from that portion of an interlocutory order of the Superior Court, Law Division, and judgment entered thereon in favor of 157 of the 161 plaintiffs-respondents herein, on the question of the defendant-appellant's liability only, leaving open the amount of damages for determination by trial. The entry of the order and judgment followed an argument of cross-motions for summary judgment made by the appellant and respondents. We certified the cause here on our own motion under R.R. 1:10-2(d)(e).

The appellant is a New Jersey public utility corporation and on June 3, 1952 was engaged in the manufacture, production and sale of gas and electricity in this State. It was

a subsidiary of the Associated Gas and Electric Company which had been required to dissolve and dispose of certain of its properties by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935, 15 U.S.C.A., sec. 79 et seq. The various steps undertaken to carry out that mandate are set forth with particularity in the opinion of the court below. 36 N.J. Super. 53.

In compliance with this order the appellant entered into a contract with the New Jersey Natural Gas Company and sold its gas business to that company. Under this agreement all the appellant's employees who were solely engaged in the gas operation were to be given the opportunity to continue their employment with the purchaser, New Jersey Natural Gas Company. Among other things that agreement provided that there shall be "no general assumption by Purchaser of liabilities of any nature whatsoever of Seller." This agreement contained a section dealing specifically with the conditions under which the employees were transferred. This was Article IX, section 1, which provided:

"Section 1. Employees. Seller and Purchaser are desirous that, in the operation of the properties which are the subject of this agreement by Purchaser, Purchaser will endeavor to employ the personnel presently employed by Seller in such operation and Purchaser will endeavor to make due provision therefor. As promptly as practicable Purchaser will advise Seller of any such employees of Seller which Purchaser will be unable thus to employ. Nothing herein set forth shall obligate Seller to release any of its personnel for employment with Purchaser nor to obtain the acceptance, by any of its employees, of employment by Purchaser. Purchaser will give credit under its pension plan to all of Seller's employees transferred to it for all periods of service rendered by such employees to Seller and its predecessors and affiliates as if such service had been rendered to Purchaser, and it is Purchaser's intention that the benefits to be provided under Purchaser's pension plan for the employees thus transferred to it will be substantially comparable to those provided under Seller's pension plan as in force at the date of this agreement."

This cause involves essentially a controversy between the appellant and New Jersey Natural Gas Company as to whether an obligation of severance pay rests upon the appellant or New Jersey Natural Gas Company.

Prior to June 2, 1953 all the employees in the gas division of the appellant were working under a collective bargaining agreement which had certain provisions respecting severance pay depending upon the amount of service with the appellant-company. This contract was entered into on February 11, 1947 and had been renewed year to year up to the day of the sale. These particular provisions are in section 6.6 of the said collective bargaining contract and read as follows:

"Severance pay benefits shall be applied as follows:

Regular Employees who have completed one (1) year or more of continuous service and who are permanently released from employment because of reasons beyond the control of the employees concerned, shall be given an allowance of one (1) week's base pay at the rate of ...

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