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Velmohos v. Maren Engineering Corp.

Decided: June 18, 1980.

KONSTANTINOS VELMOHOS, ALSO KNOWN AS VELMOHOS KONSTANTINOS, PLAINTIFF-RESPONDENT,
v.
MAREN ENGINEERING CORPORATION, AN ILLINOIS CORPORATION, AND AIR CONVEYING, INC., AN ILLINOIS CORPORATION, DEFENDANTS-APPELLANTS, AND NADUSTCO, INC., A LOUISIANA CORPORATION, DEFENDANT



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 168 N.J. Super. 520 (1979).

For affirmance -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber and Pollock. For reversal -- Justices Sullivan and Handler. The opinion of the Court was delivered by Pashman, J. Sullivan, J., dissenting. Justice Handler joins in this dissent.

Pashman

This case raises the question whether the tolling provision of New Jersey's statutes of limitations, N.J.S.A. 2A:14-22, is unconstitutional as applied to foreign corporations that are not represented within the State but are amenable to long-arm service. Invalidation of the statute would render defendant corporations immune from suit in this State, since without the benefit of the tolling statute, the relevant limitations period has expired. We find the statute constitutional and accordingly uphold plaintiff's action as timely.

I

The facts are essentially undisputed. On June 4, 1976, plaintiff filed a complaint in the Superior Court, Law Division, seeking damages for personal injuries sustained by him on August 3, 1973,*fn1 as a result of an allegedly defective shredderbaler machine manufactured by Maren Engineering Corporation (Maren), an Illinois corporation.*fn2 The complaint was later amended to include claims against Air Conveying Corporation (Air Conveying), the designer of the machine, also an Illinois corporation.*fn3

Both Maren and Air Conveying raised as a defense plaintiff's failure to file suit within the applicable two-year limitations period for personal injury actions. N.J.S.A. 2A:14-2. Plaintiff asserted that because neither defendant maintained registered offices or agents for service of process in New Jersey, N.J.S.A. 2A:14-22 tolled the statute of limitations and plaintiff's claim was timely.

On motions for summary judgment defendants claimed that New Jersey's tolling statute employed an unconstitutional classification in distinguishing between foreign corporations represented in New Jersey and foreign corporations which were unrepresented but amenable to long-arm service. In support of this contention, they cited Cohn v. G.D. Searle & Co., 447 F. Supp. 903 (D.N.J.1978). In that case the federal district court found that the differing treatment lacked any rational basis. It therefore held New Jersey's tolling statute unconstitutional as applied to unrepresented foreign corporate defendants amenable to long-arm service.

The trial court adopted the reasoning of the Cohn decision. After requiring the defendants to demonstrate their amenability to long-arm service during the period in question,*fn4 the court granted their motions for dismissal. Plaintiff appealed to the Appellate Division.

Finding no basis for distinguishing the decision in Lemke v. Bailey, 41 N.J. 295 (1963), the Appellate Division considered itself bound by this Court's views on the tolling statute and held

N.J.S.A. 2A:14-22 constitutional, reversing the trial court. 168 N.J. Super. 520 (App.Div.1979). The court also observed that it was "not satisfied as to the correctness of the conclusion reached in Cohn " and noted that a later decision by a federal district court, Hopkins v. Kelsey-Hayes, Inc., 463 F. Supp. 539 (D.N.J.1978),*fn5 had reached the opposite conclusion on the same issue and had held the statute constitutional. 168 N.J. Super. at 526.

Defendants filed notices of appeal as of right;*fn6 Maren also petitioned this Court for certification, which was granted and merged with the appeals. 82 N.J. 288 (1980). We now affirm.

II

The effect of N.J.S.A. 2A:14-22 on corporate defendants was left unresolved by the Court in Lemke v. Bailey, supra. It has been the subject of lower court decisions with conflicting results. Compare Cohn v. G.D. Searle & Co., supra, with Hopkins v. Kelsey-Hayes, Inc., supra; Whalen v. Young, 28 N.J. Super. 543 (Law Div.1953), rev'd on other grounds, 15 N.J. 321 (1954) (tolling provision applicable to unrepresented corporate defendant in motor vehicle cases despite availability of substituted service under N.J.S.A. 39:7-2), with Ferraro v. Ferro Trucking Co., Inc., 72 N.J. Super. 519 (Law Div.1962) (same circumstances -- tolling provision inapplicable). A resolution of this conflict first requires analysis of the statute's application to unrepresented foreign corporations that are amenable to long-arm service of process. Finding the provision applicable, we next consider the constitutionality of the statute as applied.

A

The New Jersey tolling statute, N.J.S.A. 2A:14-22, provides:

If any person against whom there is any of the causes of action specified in sections 2A:14-1 to 2A:14-5 and 2A:14-8, or if any surety against whom there is a cause of action specified in any of the sections of article 2 of this chapter, is not a resident of this state when such cause of action accrues, or removes from this state after the accrual thereof and before the expiration of the times limited in said sections, or if any corporation or corporate surety not organized under the laws of this state, against whom there is such a cause of action, is not represented in this state by any person or officer upon whom summons or other original process may be served, when such cause of action accrues or at any time before the expiration of the times so limited, the time or times during which such person or surety is not residing within this state or such corporation or corporate surety is not so represented within this state shall not be computed as part of the periods of time within which such an action is required to be commenced by the section. The person entitled to any such action may commence the same after the accrual of the cause therefor, within the period of time limited therefor by said section, exclusive of such time or times of nonresidence or nonrepresentation. [Emphasis supplied]

It is undisputed that neither Maren nor Air Conveying maintained an agent for service of process in New Jersey. A literal reading of the tolling statute's terms would unavoidably lead to the conclusion that the statutory period of limitations never commenced to run on plaintiff's claims. Defendants contend, however, that in light of the expansion of long-arm jurisdiction by state courts over non-residents, we should construe the statute to provide that the period of limitations is tolled only when a foreign corporation cannot be served anywhere with process from a New Jersey court.

According to defendants the purpose of N.J.S.A. 2A:14-22 is to protect plaintiffs who might otherwise be barred from bringing their actions when certain classes of defendants are involved -- essentially defendants who are not subject to the jurisdiction of New Jersey courts. They point to the amendment of the statute in 1949, L. 1949, c. 125, which excluded represented foreign corporations from its tolling effect. This amendment was enacted shortly after a statutory revision that provided acquisition of personal jurisdiction over foreign corporations by personal service within the State on an "officer, director, trustee or a managing or general agent of the corporation * * *." L. 1948, c. 356. Defendants contend that the legislative intent of the two provisions was to compel plaintiffs to institute their actions within the relevant limitations period provided they

could obtain jurisdiction over and serve process on defendants. Since under present-day law defendants were amenable to "long-arm" service of process notwithstanding the absence of a representative in New Jersey, see R. 4:4-4(c)(1), ...


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