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Riley v. New Rapids Carpet Center

Decided: July 6, 1972.

ALFRED RILEY AND ALBERTA RILEY, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
NEW RAPIDS CARPET CENTER, A NEW YORK CORPORATION; IDEAL DESIGNS, INC., A NEW YORK CORPORATION; AND CHARGE ACCOUNT FACTORS, INC., A NEW YORK CORPORATION, SUED INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, DEFENDANTS-APPELLEES



For reversal -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Mountain. For affirmance -- None. The opinion of the Court was delivered by Weintraub, C.J.

Weintraub

This suit was brought as a class action. On pretrial applications the trial court granted judgment in favor of one defendant and denied authorization to maintain the suit as a class action, permitting it to proceed solely on behalf of the named plaintiffs against the remaining defendants. The refusal to authorize a class action denied the main thrust of the litigation. Plaintiffs moved before the Appellate Division for leave to appeal. The Appellate Division denied the motion. A motion for leave to appeal was then made before us and it was granted.

The complaint alleges fraud and sundry statutory violations in the sale of carpeting for household use. Defendant

Ideal Designs, Inc. (herein Ideal) advertised on WOR-TV that it would sell 150 square feet of nylon carpet for $77, with a "free gift" of an upright vacuum cleaner or an 8' x 12' rug. The complaint charges the commercial was merely bait, the advertised product being disparaged by the visiting salesmen who pushed more expensive products, and indeed without the advertised "free gift." In short, the complaint alleged bait-and-switch, a sales tactic denounced as unlawful by the Consumer Fraud Act. N.J.S.A. 56:8-2.2, added to that act by amendment in 1969, reads:

The advertisement of merchandise as part of a plan or scheme not to sell the item or service so advertised or not to sell the same as the advertised price is an unlawful practice and a violation of the act to which this act is a supplement.

The TV commercial was beamed to New Jersey as well as New York, listing telephone numbers in both States. New Jersey residents who called actually dealt, not with Ideal, but with defendant New Rapids Carpet Center (herein New Rapids). Plaintiffs alleged Ideal and New Rapids were engaged in a joint enterprise. Both defendants denied that relationship, urging positions which, absent further explanation, could be found to intensify the alleged pattern of fraud. New Rapids says Ideal sold it "leads" of persons interested in carpet. Ideal denies that it did, insisting the advertising agent, which it labels as "an independent advertising firm," merchandised the New Jersey leads on its own account. Thus, if plaintiffs are given the best view of the record as must be done at this stage, it could be found that Ideal never intended to sell carpet to New Jersey residents (indeed Ideal admits this is so), and that the commercial was intended only to obtain the names of New Jersey residents who were in the market for carpet to the end that Ideal could sell a list of those prospects to another vendor who would be free to exploit their interest without regard to the terms of offer in the commercial. And as to New Rapids, it could be inferred that it was indifferent to the advertised

basis upon which Ideal gathered the leads, intending only to seize an opportunity to sell to people who had been artfully led to reveal an interest in the commodity.

The foregoing seems to be a basic allegation of fraud applicable to the entire class of New Jersey purchasers. Plaintiffs, who are husband and wife, charge they were subjected to additional fraudulent acts. They say they refused to be switched to a more expensive carpet and signed an order calling for a total payment of $77, only to find later that additional charges were inserted for a total of $682. Plaintiffs deny they signed the "Security Agreement-Retail Installment Contract," insisting the signatures thereon are forgeries. Plaintiffs say they asked for but never received the advertised "free gift." They say too that the carpet installed was inferior to the sample, was wholly unfit, and was poorly installed. Plaintiffs also charge violations of sundry consumer laws, which we need not detail here. Affidavits of six other purchasers, who are not parties, were submitted on the motion. They lend support to the bait-and-switch allegation. They also charge sundry acts of fraud and overreaching which are diverse but which, it might be contended, are nonetheless joined by a common purpose to bilk buyers by any convenient stratagem.

The third defendant is Charge Account Factors, Inc., to which New Rapids transferred the resulting time obligations. It appears that a substantial number of suits have been instituted in New York against New Jersey residents, some by New Rapids and most by Charge Account Factors, Inc. The affiants who are defendants in such suits insist they were never served. None of the defendants were authorized to do business in New Jersey.

We of course are not deciding the ultimate factual issues in the case. We have summarized the record to reach the legal questions, and in doing so we accorded plaintiffs every favorable view, and this because the ...


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