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State v. New Jersey Zinc Co.

Decided: July 30, 1963.


For modification -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None. The opinion of the court was delivered by Hall, J.


Is the holder of an option on real property which is the subject of a condemnation proceeding, not exercised before the commencement of the proceeding, entitled to be made or become a party and to participate therein? The Law Division held in the negative and the optionee's appeal to the Appellate Division was certified on our motion before argument there.

The question is a narrow one on its face and is even more limited under the facts of the case. Our decision thereon must be confined to the precise issue arising from the particular setting.

In July 1962 plaintiff (the State) instituted an action in the Law Division under the general eminent domain statute, R.S. 20:1-1, et seq., R.R. 4:92, to acquire 6,000 or more acres of forest, lake and wilderness land located principally in

Vernon Township, Sussex County, but extending in small part across the boundary into West Milford Township, Passaic County, and commonly known in total as the "Wawayanda tract." As later appeared, the acquisition was sought for state recreation and conservation purposes under the Green Acres Land Acquisition Act of 1961, N.J.S.A. 13:8A-1, et seq., which directed the use of the eminent domain act when property could not be acquired by purchase. The complaint sought a fee simple absolute in the property to be condemned, which was described in 24 separate tracts, by the metes and bounds of each according to old deed descriptions. Defendants New Jersey Zinc Co. (Zinc) and Fred Ferber and wife (Ferber) were designated as the sole owners, and made parties, R.R. 4:92-2, without specification as to the ownership of each particular tract as between the two. There was in fact no joint ownership of any portion of the premises. Although not disclosed by the complaint, Ferber then owned upward of 2,000 acres, represented by the large 24th tract and some of the other smaller tracts. He held an unexcised and unrecorded option on the balance by virtue of an agreement with Zinc, the owner thereof, which will be more fully discussed shortly. Ferber was made a party solely by reason of his ownership of part of the land and not because of his option on the balance. In accordance with the statute, N.J.S.A. 20:1-2, the complaint demanded the appointment of three commissioners to fix the compensation to be paid for the taking of the property, including the damage, if any, resulting from such taking to any remaining property. The prescribed process issued, R.R. 4:92-3(a), in the form of an order to show cause why judgment appointing commissioners should not be entered, returnable in September 1962.

As far as the record before us shows, Zinc did not file any responsive pleading and has never contested the right to condemn or the appointment of commissioners. Ferber, however, filed an answer in which the option was set forth in general terms and various defenses to condemnation asserted, N.J.S.A. 20:1-2, with which we are not presently concerned.

These included the constitutionality of the Green Acres statute, failure of the condemnor to comply with conditions precedent prescribed therein and alleged abuse of power by the State in seeking to acquire the lands in question. A proliferation of procedural and tactical motions ensued, depositions of state officials were authorized and commenced, and the return day of the order to show cause was consequently continued several times until it and the various motions finally came on for commencement of a full-scale hearing on November 30, 1962. R.R. 4:85-5.

The motion then heard which gave rise to the order appealed from was made by the State which sought leave to withdraw from the action condemnation of all land owned by Ferber and to continue it only as to the property of Zinc, to file an amended complaint accordingly, and to dismiss the action as to Ferber, thereby removing him as a party in the cause. The State's theory was that, since Ferber had not exercised his option with respect to any of Zinc's land prior to the institution of the condemnation action, he had no interest therein entitling him to remain as a party and to participate in the condemnation action either in the Law Division by way of contest of the right to condemn or before the commissioners or thereafter on the matter of the compensation to be paid for the taking. This thesis was vigorously opposed by Ferber, who contended that he had a sufficient interest even as the holder of an unexercised option. He did not contest the right of the State to abandon condemnation of the portion to which he had title, pursuant and subject to authority granted to do so by N.J.S.A. 20:1-30. Further, in affidavit proofs submitted to the court on November 30, he showed that on the previous day he had given Zinc notice of intention to exercise the option as to that portion of the land to which he was then entitled to act under the terms of the agreement and that he intended to exercise the option as to the balance as soon as he was permitted to do so under those provisions. He further claimed that the entire 6,000 acres plus constituted in fact a single entity or property and that,

regardless of the state of the title or rights as between him and Zinc with respect to any portion thereof, he was entitled to participate fully in the action as to the entire area at least because of the matter of remainder damage resulting from the taking to that part of the property which he then owned and which was not being taken.

It may be observed that, legally, the situation was no different from that which would exist if the State had originally sought to acquire only those tracts owned by Zinc but subject to the option and Ferber had moved to intervene, see R.R. 4:37-1, State v. Lanza, 74 N.J. Super. 362, 370 (App. Div. 1962), affirmed State by Bontempo v. Lanza, 39 N.J. 595 (1963), for the same reasons advanced in support of the contention that he was entitled to remain a party and participate.

At this point more detailed reference should be made to the agreement between Zinc and Ferber. Dated March 15, 1960, it divided the whole Wawayanda tract (then owned exclusively by Zinc) for purposes of the agreement into three parcels by brief general descriptions, not by metes and bounds or deed tracts, and referred to an outline thereof on an attached map. (This map is not included in the appendix and we have no way of knowing exactly how these parcels are related to the 24 tracts set forth in the complaint beyond the general information previously mentioned.) Parcel I was described as containing approximately 2,000 acres and as "including the so-called Rough Mountain area and the southerly portion of the main area"; Parcel II, as containing approximately 2,800 acres and as "including the northerly and easterly portions of the main area"; and Parcel III, as containing approximately 1,200 acres and as "including Lake Wawayanda and Laurel Pond and the westerly portion of the main area." The agreement constituted an agreement to sell Parcel I for $200,000, title to close not ...

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