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August 7, 1963

Andrew CAPOROSSI, Plaintiff,
ATLANTIC CITY, NEW JERSEY, a municipal corporation of the State of New Jersey, Lester Warren, Inc., a corporation, of the State of New Jersey, and MollieGerber and Shepard Gerber, Defendants

The opinion of the court was delivered by: COHEN

This is a motion for judgment notwithstanding verdict, *fn1" and in the alternative for a new trial, *fn2" by the defendant, Atlantic City, a municipal corporation of the State of New Jersey, subsequent to a trial by jury and a verdict in favor of the plaintiff, Andrew Caporossi. Appropriate motions during trial were made by this defendant for a directed verdict, or judgment of involuntary dismissal, on all claims for damages asserted by all parties against it, which were denied. In addition to the legal, factual and argumentative bases advanced by defendant at time of trial, which it renews and commingles with its present motion, it urges specifically that the verdict of the jury was contrary to law, and against the weight of the evidence; that the amount of damages awarded was excessive; and that the actions of the court in failing to charge certain requested instructions and in ruling on motions of the codefendants constitute fatal judicial error warranting a new trial.

While many of the reasons assigned by the Court orally, in its disposition of certain motions at time of trial, are equally applicable now, the magnitude as well as the complexity of the legal issues presented and upon which it is compelled to rule as matters of law, requires renewed consideration and enunciation of its conclusions.

 This litigation, grounded in tort for personal injury and based upon diversity of citizenship and jurisdictional amount, *fn3" was instituted by plaintiff, Andrew Caporossi, a citizen of New York, against defendants, the City of Atlantic City, a municipal corporation of the State of New Jersey, Lester Warren, Inc., a New Jersey corporation, which operated the Commodore Hotel in Atlantic City, and Mollie *fn4" and Shepard Gerber, citizens of New Jersey, who owned and operated a parking lot in Atlantic City. The plaintiff alleged negligence and nuisance against the defendants who asserted cross-claims among themselves.

 At the conclusion of the plaintiff's proofs, and again at the conclusion of the entire case, all defendants moved for judgments of involuntary dismissal and directed verdicts, charging failure of the plaintiff to establish a prima facie case against each of them, in that no issue of fact existed for the jury's resolution, and that consequently as a matter of law their motions should have been granted.

 On such motions made at the end of the plaintiff's case, it is axiomatic that the trial judge must accept as proof all evidence supporting the position of the plaintiff, and must give him the benefit of all inferences that may logically and legitimately be drawn therefrom. *fn5" And again where any of the evidence would cause fair-minded men to differ, the issue is one for the jury's determination. Likewise, in passing upon a motion for judgment notwithstanding the verdict, or more properly to set aside the verdict, it should not be granted if the evidence produced at trial was sufficient to present a jury question, or if the verdict is supported by substantial evidence. *fn6" Whereas, on the motion for a new trial, though similar problems are involved, such a motion is addressed to the sound judicial discretion of the trial court, and it may only be granted where, despite substantial evidence, the verdict is clearly against the weight of the evidence, or is based upon evidence which is false, or would result in a miscarriage of justice. *fn7"

 So viewed, and having in mind these salutary principles, the testimony is considered.

 On August 24, 1960, the date of the injury herein, and for many years prior thereto, the defendant, Atlantic City, owned, operated, maintained, and controlled a public bathing beach within the confines of the city, bordering on the Atlantic Ocean, to which members of the public were invited. The portion of the beach in question lies at the foot of St. Charles Place between the Garden Pier and the Steel Pier, known as the Delaware Avenue section. This is a highly populated area, serviced by multitudinous hotels, many of which were supplied with pipe lines conveying salt water from the ocean to these hotels providing salt water baths for their guests. In the event of abandonment, fire, or other reasons for disuse, the pipes, referred to throughout the testimony as 'dead pipes', were exposed and protruded, above the sand, but below the surface of the ocean, constituting a known dangerous condition and an admitted hazard to bathers.

 The Commodore Hotel owned and operated by the defendant, Lester Warren, Inc., is situated on the northerly side of Pacific Avenue, facing St. Charles Place, the broadwalk, and the beach. Gerbers' parking lot, formerly the new Davis Hotel destroyed by fire in 1952 and acquired by them in 1954 after mesne conveyances, is located on the easterly side of St. Charles Place, between Pacific Avenue and the boardwalk.

 In March, 1944, pursuant to a resolution of the defendant City, a permit was issued to the then owner of the New Davis Hotel, Rose Fleischer, for the installation of salt water intake pipes, leading from the ocean to the said hotel. One terminal of these pipe lines, in disuse since 1952, was located on the beach at St. Charles Place, and for a considerable period of time prior to the occurrence of August 24, 1960, was exposed, the extent of the exposure varying with the height of the tide; at times completely exposed, at others partially exposed, and at still others completely submerged in the ocean entirely invisible to public bathers. The hazardous condition created by the presence of these pipe lines on the beach was known to the beach personnel and to at least two of the City Commissioners, as well as to many other employees of the City.

 The many pipe lines on the beach, and specifically the one in question, resulted in injuries of various kind and degree to lawful bathers almost daily. Such occurrences were reported to and acknowledged by the employees and officials of Atlantic City. Despite these circumstances, these pipes remained without safeguards or other precautionary measures and without any warning signs whatsoever. Recommendations for their removal, prior to the accident, were repeatedly made and as often refused. However, after the incident giving rise to the plaintiff's cause of action, the pipes, belatedly, were removed. Evidence of their removal was proper since control of same was in issue.

 Although no charge was made by the City to persons using the beach, luxury taxes were imposed upon hotels and merchants which were passed on to guests and consumers, of $ 1,797,457.40 for the year 1959, and $ 1,781,531.07 for 1960, resulting in economic benefit to the City. In furtherance of its endeavors to solicit and attract people to the resort, the City for many years advertised extensively in newspapers, national magazines, on television and radio as far west as Kansas City, up to Canada and down into the South appealing to one-third of the national population to use its beach. The City maintained its own public relations department and employed the services of the Dorland Advertising Agency to whom it paid, in 1959, the sum of $ 206,587.96 and, in 1960, the sum of $ 197,243.26.

 Shortly prior to August 24, 1960, the plaintiff and his prospective bride, seeking to spend their honeymoon in Atlantic City, communicated with the Commodore Hotel, owned and operated by defendant, Lester Warren, Inc., requesting information concerning its facilities. In response the plaintiff received a brochure, the design of which was authored by the President of the defendant hotel-corporation. The brochure listed 'free surf bathing from hotel to beach' as one of its features. It also contained a map of the hotel in relation to the beach, as well as a picture of persons bathing in the surf. The plaintiff sent a money order to the hotel in August, 1960, making reservation for himself and his fiancee, commencing August 23, 1960. After marriage they arrived on August 23, 1960, at 6:00 P.M. and registered at the Commodore Hotel. That evening they attended Steel Pier, an amusement pier situated on the boardwalk abutting the beach. On August 24, 1960, about 4:00 P.M., they prepared to go to the beach; neither had ever been there before, nor were they aware of its site. Upon checking his valuables with the Room Clerk, the plaintiff made inquiry as to the location of the hotel beach and was directed to walk down St. Charles Place, which the plaintiff and his wife proceeded to do. Upon arrival at the beach, they selected a location and placed a blanket on the sands, near a lifeguard stand. Shortly thereafter, the plaintiff and his wife entered the ocean and after a few minutes of splashing at each other playfully, the plaintiff trod into the surf and dove into an incoming wave. His head struck a submerged object. A pool of blood appeared on the water's surface at the site of the plaintiff's entrance into the surf and at the location of the pipe in question; after calls for help, lifeguards and others ran into the surf, removed the plaintiff therefrom, and summoned medical assistance. The plaintiff sustained severe and permanent injuries to his spine and spinal cord, resulting in quadriplegia.

 At the conclusion of the evidence, the motion for dismissal of defendant, Gerber, was granted on the ground that there was insufficient testimony upon which liability in negligence or nuisance could be predicated on either fact or law. *fn8" The most that was proved was a record easement for the laying of the pipes, which easement was not within 60 years of defendant's chain of title of record. Actual knowledge was categorically denied by the defendant, and remained uncontradicted. The motion of defendant, Lester Warren, Inc., the owner-operator of the Commodore Hotel, was taken under advisement by the Court, and the question of its negligence together with that of defendant, Atlantic City, was submitted to the jury. The jury ultimately returned a verdict for plaintiff in damages in the amount of $ 600,000.00 against defendant, Atlantic City, and a verdict of no cause for action in favor of defendant, Lester Warren, Inc. Thereafter, the motions of defendant, Lester Warren, Inc., directed to plaintiff's claim and to the cross-claim of defendant, Atlantic City, were granted by the Court.

 In contravening the plaintiff's claim for damages for injuries sustained as a proximate result of defendant Atlantic City's negligence in operating a public beach, or on the basis of the maintenance of a nuisance, defendant interposed by pleading and argument of its motion that as a municipal corporation it is immune from tort liability under common law principles and by statute conferring such immunity, Revised Statutes of New Jersey Title 40:9-2, N.J.S.A., which reads as follows:

 'No municipality or county shall be liable for injury to the person from the use of any public grounds, buildings or structures, any law to the contrary notwithstanding.' (L. 1933, c. 460, approved Jan. 10, 1934.)

 Defendant concedes that if injury to a person results from the use of 'any public grounds, buildings or structures' which is devoted to a proprietary activity, as distinguished from governmental, there is no statutory immunity against municipal tort liability and common law principles apply; but contends that if the function is governmental, then under statutory immunity there is no liability whether the alleged tort is based upon simple negligence, active wrongdoing, or nuisance.

 The primary thrust of defendant's argument is that the area involved in this case is that of a 'public park', hence within the language of the immunity statute in question, in that it is within 'public grounds' therein enumerated. In support of this contention defendant places great reliance upon the character of the land in question, beach front property, as being determined by the nature of its acquisition, conditioned upon its purpose and use as a 'public park, or place for public resort and recreation.' By its Charter Provisions (P.L.1854 p. 278) the territorial limits of Atlantic City extend into the Atlantic Ocean to the exterior line of the State's riparian jurisdiction. Pursuant to permissive but not mandatory legislative authority, (P.L.1894 c. 93, R.S. 40:179-98 et seq., N.J.S.A.) the defendant, on October 13, 1899, passed a municipal ordinance 'to lay out and open a public park or place for public resort and recreation along the beach or ocean front of Atlantic City, establishing the interior or inland line of such park or place of public resort and recreation, and the limits and boundaries thereof, and providing for the issuing and sale of bonds to defray the costs, damages and expenses incurred in the opening and laying out of such park and acquiring the lands, property and rights necessary therefor, and for the assessment of property benefited thereby.' The ordinance further provided for the condemnation of lands desired by the municipality for such public purpose which were not so dedicated by the private owners thereof. To avoid condemnation proceedings by the municipality the then private owner of the beachfront area here in question, now known as St. Charles Place, a James B. Riley, joined with other beachfront owners, and by deed dated February 6, 1900 conveyed to defendant municipality 'all their and each of their right, title and interest, in and to the above described tract of land (embracing the area in question) and every part and parcel thereof, including such parts and parcels thereof as are or may be covered by water.' There was reserved to the grantors, their heirs and assigns, the right to lay beneath the surface of their respective lands so conveyed, a pipe or pipes from their remaining and adjoining lands to and into the ocean for the purpose of obtaining and conveying sea water to their lands.

 Thereafter, and pursuant to the Act of April 8, 1903 which was a supplement to the Act of April 11, 1864, Laws 1903, p. 387, defendant on February 13, 1907 secured a riparian grant from the State of New Jersey Riparian Commissioners, for lands under water lying between the highwater line of the westerly shore of Absecon Inlet and the exterior lines established by the Riparian Commissioners, and for lands under water lying between the highwater line of the Atlantic Ocean and the exterior line as established by the Commission, which included the area in question. This riparian grant was made expressly subject to a prior grant by the State of New Jersey, through its Riparian Commissioners, to the United States of America on August 17, 1878. Further, the grant to the municipality provided that should public purpose cease, the lands were to revert to the State.

 Such then was the title of defendant, Atlantic City, when in 1944 it issued a permit for the laying of salt water intake pipes to Gerbers' predecessor in title, pursuant to a 'Resolution' of its Board of Commissioners, which resolution provided, inter alia, for the laying of pipes and intakes at sufficient depth under the sands of the 'public park' so that neither pipe nor intakes shall protrude above the beach; that the permittee was to assume sole responsibility for damage to street construction or to the public using the beach caused by the same becoming uncovered on the beach; and that such permittee was to post bond to assure all repairs, and to lower the pipe line when such were necessary 'to protect the public property and people using the beach.' No grant of easement of record was ever properly lodged to give notice of such resolution or construction permit which would appear upon a search of the title to the lands in question.

 Defendant, Atlantic City, strenuously argues that the Court departed from the obligatory duty imposed upon it by the Federal Rules of Decision Act (28 U.S.C. § 1652), as interpreted by Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188, 114 A.L.R. 1487 (1938), and by subsequent United States Supreme Court decisions, in holding that the city in its operation of 'the beach park' was engaged in a proprietary function, and in refusing to base its determination of the substantive law of New Jersey on the decisions of the New Jersey Court of last resort, as then constituted, in Bisbing v. Asbury Park, 80 N.J.L. 416, 78 A. 196, 33 L.R.A.,N.S., 523 (E. & A.1910), and Kuchler v. New Jersey & N.Y.R.R. Co., 104 N.J.L. 333, 140 A. 329 (E. & A. 1928), which cases it contends hold that the operation of a 'public park' is a governmental function.

  The legal compulsion to apply state substantive law under the Federal Rules of Decision Act, *fn9" and as developed by the United States Supreme Court since Erie, is well established in diversity actions in the Federal District Courts. *fn10" In such actions, as here, the Federal District Court is but another forum of the state courts and is compelled to make such determination as would a state court on the precise issue presented to it. *fn11" Its function is not to speculate as what the law will be in the future, or apply a rule of law which it considers better or wiser. *fn12" And conversely, the Federal District Court in a diversity case must accept a binding ruling of the state court of last resort, or lacking such, its intermediate appellate courts, even though in its opinion it is an erroneous one. *fn13" As was stated in West v. Amer. Telephone & Telegraph Co. (1940), 311 U.S. 223 at pp. 236, 237, 61 S. Ct. 179 at p. 183:

 'True, as was intimated in the Erie Railroad case, the highest court of the state is the final arbiter of what is state law. When it has spoken, its pronouncement is to be accepted by federal courts as defining state law unless it has later given clear and persuasive indication that its pronouncement will be modified, limited or restricted. * * * But the obvious purpose of § 34 of the Judiciary Act is to avoid the maintenance within a state of two divergent or conflicting systems of law, one to be applied in the state courts, the other to be availed of in the federal courts, only in case of diversity of citizenship. That object would be thwarted if the federal courts were free to choose their own rules of decision whenever the highest court of the state has not spoken.

 'A state is not without law save as its highest court has declared it. There are many rules of decision commonly accepted and acted upon by the bar and inferior courts which are nevertheless laws of the state although the highest court of the state has never passed upon them. In those circumstances a federal court is not free to reject the state rule merely because it has not received the sanction of the highest state court, even though it thinks the rule is unsound in principle or that another is preferable. State law is to be applied in the federal (court) as well as the state courts and it is the duty of the former in every case to ascertain from all the available data what the state law is and apply it rather than to prescribe a different rule, however superior it may appear from the viewpoint of 'general law' and however much the state rule may have departed from prior decisions of the federal courts.'

 At the outset it should be understood that although the statute imports to grant blanket immunity to municipalities in its operation of public buildings, lands, etc., the New Jersey courts have interpreted this immunity to apply only when a ...

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