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Foti v. Heller

Decided: December 13, 1957.


Goldmann, Freund and Conford. The opinion of the court was delivered by Goldmann, S.j.a.d. Conford, J.A.D. (dissenting in part).


[48 NJSuper Page 58] Plaintiff tenants appeal from a county district court judgment in favor of defendant landlord in an action under N.J.S. 2 A:42-38, as amended, to

recover treble damages for alleged rental overcharges during the 18-month period, November 1955 through April 1957.

At the trial the following facts were either stipulated or established without contradiction: Defendant purchased a two-story property at 415 45th Street, Union City, in 1951 for $15,000. At that time, and up to July 1955, the premises consisted of a store on the first floor with three rooms in the rear, and a six-room apartment on the second floor. The registered rental for the apartment was $60.50 per month. Between July 1 and November 1, 1955 defendant reconstructed the second floor by adding a room to the rear, installing a kitchen and bathroom in the front portion (we were told this was done by converting the front of the hallway running the length of the second floor), physically separating the rear four rooms from the front three, and completely renovating and modernizing both apartments. This resulted in the creation of two distinct, self-sustaining apartments on the second floor, in place of the six-room apartment, the former occupying a greater area than the latter. The cost was $5,200.

After the completion of this work, and shortly before November 1, 1955, defendant rented the front apartment to plaintiff Foti at a monthly rental of $55, and the rear one to plaintiff Sottilaro for $65. They regularly paid these rentals up to March 1, 1957. Having ascertained that the registered rental of the former six-room apartment was $60.50 a month and that no decontrol order had been obtained from the Union City Rent Director, plaintiffs in March, and again in April 1957, together tendered $60.50 to defendant as their total rent. He refused the tenders and instituted disposes proceedings in the county district court, where judgment went against the tenants. They paid the $55 and $65 rents for March and April, and appealed from the judgments for possession. While that appeal was pending they quit the premises.

The treble damage action ended in defendant's favor, the district court judge holding that the premises rented to plaintiffs were not the same as those previously registered

with the local rent control board because they were "so completely changed in identity and composition from the original single 6 room premises." In his view, to allow plaintiffs to recover the $3,213 demanded (treble damages based on an overcharge of $59.50 a month for 18 months) "would result in not only unjust enrichment to the plaintiffs but in an unconscionable and intolerable result never contemplated by the treble damage statute." He further noted that in any event there could be no recovery for the period July 1956 to April 1957, inclusive, because the 1953 Rent Control Act (L. 1953, c. 216; N.J.S. 2 A:42-14 et seq. , as amended), which authorized treble damage suits, had expired on June 30, 1956. The subsequent permissive rent control statute, L. 1956, c. 146, adopted in Union City by ordinance on September 20, 1956, expressly granted to it the right to provide, by ordinance, for rent control violations. Section 6; N.J.S. 2 A:42-61. The September 20, 1956 ordinance contains no treble damage or other penalty provision; the only such provision, the court observed, was to be found in a prior rent control ordinance, adopted in June 1956, wherein penalties for violations were provided by way of fine and imprisonment. These penalties were the only ones the municipality could impose; it was without express legislative authority, and therefore beyond its power, to provide for treble damage suits and vest jurisdiction thereof in the district court.

Plaintiffs argue that the rents they had paid were in violation of the rent control laws and the rules and regulations adopted thereunder, absent a decontrol order obtained by the landlord. Defendant had, in fact, obtained no such order from the Union City Rent Director until March 18, 1957, effective March 28, 1957. Plaintiffs rely upon the following provision of the Union City Rent Control Ordinance dated August 15, 1956:


(c) Additional housing units created by a conversion on and after April 23, 1954, involving structural changes in particular housing

space by substantial alterations and remodelling and resulting in self-contained family units; Provided, however, that such housing space shall continue to be under control until after application on notice, an order of decontrol has been entered by the Director, after a determination." (Italics ours)

This provision, they say, was passed pursuant to L. 1956, c. 146, sec. 12 (N.J.S. 2 A:42-67), which states:

"Decontrols from rent control shall be provided for by any such ordinance so adopted in the same manner and to the same extent as they were provided for as of June 30, 1956, by the State Rent Control Act [ L. 1953, c. 216; N.J.S. 2 A:42-14 to 55, as amended] and by the rules and regulations made and promulgated thereunder, and the said provisions for such decontrol shall be deemed to be applicable whether specifically included in any such ordinance or not so included."

They contend there could be no automatic decontrol; housing space continued under control until a decontrol order was entered, and they quote from the Revised Rent Control Rules and Regulations (June 15, 1955) of the State Rent Control Director, adopted pursuant to the 1953 act, as amended:



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