Defendants are landlords and owners of property at 418 Cliff Street, Fairview, New Jersey. The plaintiffs rented an apartment from the defendants on March 1, 1952 and occupied the same until the present time. They institute suit on 56 counts, claiming treble damages for overcharge of rent for 56 months, under N.J.S. 2 A:42-38. It is conceded that the rent is $65 per month and that said premises were originally registered under the federal law for $25 per month.
The facts were originally stipulated by the parties. The defendants admit ownership of the property and the deed was placed in evidence covering said ownership. The premises were 418 Cliff Street, Fairview, New Jersey. Under the federal law in existence some years ago, 50 U.S.C.A. Appendix , § 1881 et seq. , the premises were registered at $25 per month and neither party was a party to the original registration. The defendants paid $4,500 for the property and spent some $8,000 to repair the premises. They were then occupied by a member of the family for a period of more than two years.
The defendants, to be certain that the premises were decontrolled under a provision of the federal law that premises occupied by a member of the family for more than 24 months are decontrolled, applied to the federal agency for an opinion. A legal opinion was rendered by the agency that if the facts stated therein were correct, the premises were decontrolled. Both parties agree that this type of opinion was the method used by the federal agency and there is no challenge that the premises were decontrolled by reason of the facts and the opinion rendered.
At or about March 1, 1952, the premises, by now vastly improved over those originally registered, were rented to the plaintiff for $65 per month and occupied to date and the rent paid.
The opinion was given under the provisions of section 202(c) of the 1948 Federal Housing Act, chapter 161 of 62 Statutes at Large 93. The opinion is dated March 29, 1949.
The plaintiff contends that despite the decontrol, on March 30, 1949 under chapter 42 of 63 Statutes at Large 18, every apartment that was decontrolled was recontrolled and that it became the duty of the landlord to rent the premises at the registered price or secure an increase by reason of the repair of the premises.
It is admitted that Fairview is still under rent control and municipal control is in existence.
The defendant contends that plaintiff cannot recover because the premises originally registered were different than those rented to the plaintiff. They state that at the time of the registration in October 1943 the premises consisted of a retail store across the front of the premises occupying more than one third of the ground floor. The store was used as a retail vegetable market and in the rear of the premises there were three dwelling rooms and a toilet, with access thereto through the store or a small entrance from the rear yard. At the time defendants purchased in May 1945, the store was used as a commercial radio repair shop.
The premises were extensively rebuilt by installing central heating, hot water service, sewer service, new bath rooms, modern kitchens, insulation, new siding on outside, new roofs, made extensive repairs and improvements. They changed the front and incorporated the entrance ways outside the store into the apartment, altered the hallways and at the rear constructed a room. What was three rooms behind a store became an up-to-date 5 room apartment. The store area became the new living room.
Under the case of Addiss v. Logan Corp. , decided January 1957, 23 N.J. 142, which held a two-year statute of limitations applied, the court dismissed the first 32 counts, leaving the last 24 counts. It is conceded that the triple penalty would bring the total amount to $2,880 if a verdict was to be granted for the full amount.
It would appear that the defendants acted in good faith under an honest belief the premises were decontrolled. The defendants are not rent gougers and there is no evidence or dispute that the rent was reasonable for the premises.
1. Our first question is whether, despite the reluctance of the courts to inflict penalties, we are bound to grant a verdict for $2,880 by reason of a technical interpretation of the law.
In Friedman v. Podell , 21 N.J. 100 (1956), the court permitted the imposition of a penalty holding that though this civil penalty required strict construction, it could not stifle legislative design, in view of a liberal construction to effect the purposes of the State Rent Control Act. The court also held that the one-year rent limitation upon recovery was applicable to each month's violation. The court permitted a ...