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A & B Auto Stores of Jones Street Inc. v. City of Newark

Decided: November 29, 1968.

A & B AUTO STORES OF JONES STREET, INC., A CORPORATION, ET AL., PLAINTIFFS,
v.
CITY OF NEWARK, DEFENDANT



Larner, J.s.c.

Larner

Approximately 450 suits were instituted against the City of Newark, involving thousands of claims for property damage resulting from riots alleged to have occurred in the city between July 12 and 17, 1967. All such actions were consolidated for trial pursuant to court order and in accordance with a cooperative plan whereby a representative committee of attorneys was designated to conduct all legal proceedings in the litigation. Under the terms of said order all parties are bound by the determination of the court in the consolidated proceeding.

In an effort to dispose of certain issues and clarify others prior to trial, counsel for both sides of the controversy brought on several pretrial motions. The determination of these motions at this time will serve to limit and clarify the factual and legal questions to be considered at the plenary trial, and this opinion is intended to encompass only the issues raised by these motions.

The major facet of plaintiffs' claims against the city is the statutory liability based upon the provisions of N.J.S. 2 A:48-1. In addition, plaintiffs found their claims upon a charge of common law negligence. The current motions and this opinion, however, do not involve the validity of the cause of action or defenses in negligence. The scope of the court's determination at this time is limited to the legal issues raised by the motions addressed to the statutory cause of action.

I

JUDICIAL NOTICE OF EXISTENCE OF RIOTS

The legal source of liability alleged by plaintiffs is N.J.S. 2 A:48-1, which provides:

"When, by reason of a mob or riot, any property, real or personal, is destroyed or injured, the municipality if it has a paid police force, in which the mob congregates or riot occurs, or, if not in such a municipality, the county in which such property is or was situate, shall be liable to the person whose property was so destroyed or

injured for the damages sustained thereby, recoverable in an action by or in behalf of such person."

The sine qua non for the city's responsibility by the City under plaintiffs' factual allegations is the existence of a "riot" in the City of Newark on the days in question and a causal connection between such riot and the claimed damages. Plaintiffs assert that the court should take judicial notice of the existence of "riots" in the city between July 12 and 17, 1967 so as to obviate the necessity of proof thereof at the trial.

It is manifest that the term "riot" in the statute is a word of art representing a determination based upon a mixed question of fact and law. "Riot" is not defined in the legislation creating the cause of action, and resort must therefore be had to the common law definitions developed under the criminal law.

In State v. Lustig, 13 N.J. Super. 149 (App. Div. 1951), the Appellate Division defined a riot in the context of an indictment for the common law offense of incitement to riot as follows:

"A riot is a disturbance of the peace by three or more persons unlawfully assembled together and acting in a violent and tumultuous manner." (at p. 152)

Feinstein v. City of New York, 157 Misc. 157, 283 N.Y.S. 335, 339 (Mun. Ct. 1935), involved a claim for property damage against the city under the New York counterpart of N.J.S. 2 A:48-1 et seq. The Municipal Court of the City of New York related and applied the definition of "riot" that had been applied by English courts under the English Riot (Damage) Act (49 and 50 Vict., c. 38, § 2):

"* * * a riot consists of the following elements: (1.) number of persons, three at least; (2.) common purpose; (3.) execution or inception of the common purpose; (4.) an intent to help one another by force if necessary against any person who may oppose

them in the execution of their common purpose; (5.) force or violence not merely used in demolishing, but displayed in such a manner as to alarm at least one person of reasonable firmness and courage."

Corpus Juris Secundum defines the term as follows:

"* * * a tumultuous disturbance of the peace by three or more persons, assembled and acting with a common intent, either in executing a lawful private enterprise in a violent and turbulent manner, to the terror of the people, or in executing an unlawful enterprise in a violent and turbulent manner." 77 C.J.S. Riot § 1 (1952).

Cf. 9 Halsbury, The Laws of England 471 (1912). See Marshall v. City of Buffalo, 50 App. Div. 149, 64 N.Y.S. 411 (App. Div. 1900).

At this juncture of the case the court is not called upon to verbalize the definitive language which will determine the meaning and limits of a riot within the intent of the applicable legislation. The foregoing definitions are reviewed rather for the purpose of setting the background for determining whether the court can or should take judicial notice of the existence of riots during the pertinent period.

Rule 9(2) of the Rules of Evidence (1967), N.J.S. 2 A:84 A -16, c. II, Rule 9(2), provides:

"Judicial notice may be taken, without request by a party, of (a) the decisional, constitutional, and public statutory law and rules of court of every other state, territory and jurisdiction of the United States, private acts and resolutions of the Congress of the United States and of the legislature of this State, and of every other state, territory and jurisdiction of the United States, and duly enacted ordinances and duly published regulations and determinations of governmental subdivisions or agencies of the United States, of this State, and of every other state, territory and jurisdiction of the United States; (b) records of the court in which the action is pending and of any other court of this State or federal court sitting in or for this State; (c) the law of foreign countries; (d) such facts as are so generally known or of such common notoriety within the area pertinent to the event that they cannot reasonably be the subject of dispute; and (e) specific facts and propositions of generalized

knowledge which are capable of immediate determination by resort to sources of reasonably indisputable accuracy."

Plaintiffs contend that the court should take judicial notice of the existence of riots pursuant to the discretionary authority of section (d) of the aforesaid rule.

Although it is generally known that there were civil disturbances in various sections of the City of Newark in July of 1967 (see State v. Chandler, 98 N.J. Super. 241, 243 (Cty. Ct. 1967)), knowledge of such occurrences in the generic sense does not suffice to obviate the necessity of proof of riots in the statutory sense. The relevant proofs would involve the nature and extent of the disturbance, the number of persons involved, the presence or absence of a common purpose, the time and place of a particular disturbance, and the causal connection between such disturbance and the damage. Whether such riots existed and whether they proximately resulted in the damages claimed by plaintiffs are thus ultimate issues in this case to be determined by the trier of the facts in accordance with the applicable law. This court should not take judicial notice of such an ultimate fact question which depends upon definitive legal criteria. Plaintiffs' application is therefore denied.

II

SUBROGATION CLAIMS

A substantial portion of the claims in these consolidated actions are subrogative in nature, having been instituted by insurance companies which covered the losses involved.

Defendant has moved to dismiss these subrogation claims on the ground that the statute contemplates payment only to the property owners who have suffered losses and should not be extended to afford recovery to insurance carriers in the absence of specific statutory authority. It is urged that since the statute is in derogation of common law, having created a cause of action which imposes liability without fault

upon the municipality where none existed before, it must be strictly construed and recovery limited only to the property owners who are affirmatively included in the legislation.

The insurance companies, on the other hand, point out that subrogation is a right arising aliunde the statute, and that their subrogative claims are founded upon general equitable principles and contractual rights contained in the policies of insurance.

Among the arguments advanced by the city in this connection is the assertion that N.J.S. 2 A:48-7, which is a part of the overall legislation under consideration, grants a right of subrogation to the municipality against the rioters after payment to the claimants. It is suggested that this express provision for subrogation negates a legislative intent to permit recovery by any other subrogee against the city. This contention is without merit. This statutory right of subrogation is created in favor of the city against the active tortfeasors; it has no bearing upon the subrogative interest of an assignee of the claimant against the city. Such a statutory right of subrogation to the city does not per se affirm or negate the subrogative rights of the insurance companies.

Whether or not the Legislature in 1864, when the statute was first adopted, even considered the question of compensation for subrogative claims is impossible to determine from the legislation or any available interpretive aids. As far as the court can ascertain, the express, implied or apparent intent of the Legislature on this issue cannot be derived from the statute itself. Does it therefore follow, as urged by defendant, that legislative silence on the subject bars subrogees from the benefits created by the legislation?

Subrogation has always been highly favored in the law, Brewster & Son v. Catalytic Construction Co., 17 N.J. 20, 30 (1954), and, as a general rule, "an insurer, on paying a loss, is subrogated in a corresponding amount to the insured's right of action against any other person responsible for the loss." 6 Appleman, Insurance Law and Practice, § 4051, p. 517 (1942).

As observed by the Supreme Court in Standard Accident Insurance Co. v. Pellecchia, 15 N.J. 162 (1954):

"Subrogation is a device of equity to compel the ultimate discharge of an obligation by the one who in good conscience ought to pay it, Camden Trust Co. v. Cramer, 136 N.J. Eq. 261, 264 (E. & A. 1944); Restatement of the Law of Security, § 141, comment (a). It is a right of ancient origin, having been imported from the civil law to serve the interests of essential justice between the parties, Sullivan v. Naiman, 130 N.J.L. 278, 280 (Sup. Ct. 1943). It is most often brought into play when an insurer who has indemnified an insured for damage or loss is subrogated to any rights that the insured may have against a third party, who is also liable for the damage or loss. In such a case it is only equitable and just that the insurer should be reimbursed for his payment to the insured, because otherwise either the insured would be unjustly enriched by virtue of a recovery from both the insurer and the third party, or in the absence of such double recovery by the insured the third party would go free despite the fact that he has the legal obligation in connection with the loss or damage." (at p. 171)

The statute in question created a new cause of action imposing strict liability upon a municipality for property damage caused by riots. Such a cause of action required legislative pronouncement because it eliminated in the field of municipal riot damage liability the negligence concept and the defense of governmental immunity. It represented a declaration of policy by the Legislature in this limited area in order to make the entire community responsible for the damage to innocent property owners resulting from a breakdown in law enforcement. Clark Thread Co. v. Board of Chosen Freeholders of Hudson, 54 N.J.L. 265, 266 (Sup. Ct. 1891); Wells Fargo & Co. v. Mayor, etc., of Jersey City, 207 F. 871, 874, 878 (D.N.J. 1913), affirmed 219 F. 699, 700 (3 Cir. 1915), certiorari denied, 239 U.S. 650, 36 S. Ct. 284, 60 L. Ed. 485 (1916); County of Allegheny v. Gibson's Son & Co., 90 Pa. 397, 412, 418 (Sup. Ct. 1879).

Whether a cause of action exists by common law or statute is of no significance on the right of a subrogee to enforce its claim against the obligor or tortfeasor. Accord, Dworak v. Tempel, 17 Ill. 2 d 181, 161 N.E. 2 d 258 (Sup.

Ct. 1959); 46 C.J.S. Insurance § 1209, n. 20 (1946). Similarly, it is clear that there is no significant distinction between the nature of the right of action created by this statute from other statutory causes of action or common law causes of action resulting from the development of judge-made law. If an insurance carrier has a right to enforce a claim of its assured against any tortfeasor, there would appear to be no valid reason for barring its claim against a municipality under the circumstances herein merely because the underlying cause of action is founded upon statute or strict liability. In fact, it would be unjust to permit the municipality to avoid its statutory responsibility because of the fortuitous circumstance that the injured person had insurance coverage. Standard Accident Insurance Co. v. Pellecchia, supra, 15 N.J., at p. 171; Also cf. the collateral source doctrine, Long v. Landy, 35 N.J. 44, 55 (1961); Durr v. Freehold Construction Co., 9 N.J. Misc. 267, 269 (Sup. Ct. 1931).

There are no reported cases in this State dealing with the right of an insurance company subrogee to recover under the civil right statute. The issue has been considered in a limited number of cases in foreign jurisdictions which have parallel legislation granting civil recovery against governmental entities for damages resulting from riots.

In Northern Assurance Co., Ltd. v. City of Milwaukee, 227 Wis. 124, 277 N.W. 149, 151 (1938), the Wisconsin Supreme Court sustained the subrogative cause of action under the statute in favor of an insurance company on the simple articulation that its right was no different from that of an insurance carrier under an automobile collision policy.

A similar conclusion was reached by the Supreme Court of California in a case involving an individual who had been assigned claims arising under a mob violence statute. Agudo v. Monterey County, 13 Cal. 2 d 285, 89 P. 2 d 400 (1939).

Defendant points to Sun Indemnity Co. of New York v. Board of Education of City of New ...


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