On a petition for review of New Jersey Court Rule 4:48(A)(a), and an administrative directive of August 4, 1970.
For dismissal -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
[104 NJ Page 165] In this petition for review the Surrogate of Burlington County challenges Rule 4:48A(a), which pertains to the disposition of the proceeds of judgments for infants, and a Notice to the Bar dealing with the same subject, which was issued by Edward B. McConnell, former Administrative Director of the Courts, on August 4, 1970, and published on August 13, 1970, at 93 N.J.L.J. 537 (1970). The petition is opposed by the Attorney General. Because of the sparsity of the record and the essentially legal nature of the issues, we deem oral argument unnecessary, and proceed to dispose of the matter on the petition and briefs. The petition is dismissed for reasons that follow, but certain matters raised therein are referred to the Chief Justice and Administrative Director since the relief sought by petitioner is really a request for rule amendments and changes in administrative directives, to remedy certain perceived problems in the handling of minors' funds, and should be addressed through the normal rule-making and administrative processes. These processes are uniquely suited to assessing the extent and nature of the problems raised by petitioner and formulating any proposals for needed rule amendments, administrative directives, and legislation.
The Rule challenged by petitioner, which was adopted by the Court on July 7, 1971, and became effective September 13, 1971, now provides:
a) Infant. In the event of a judgment for an infant after trial or settlement, the court shall dispense with the giving of a bond, and, except as otherwise ordered by the court, shall direct the proceeds of the judgment, if it does not exceed $5,000 to be disposed of pursuant to N.J.S.A. 3B:12-6, and if it exceeds the same, then to be deposited in court pursuant to N.J.S.A. 3B:15-16 and 17. A copy of the order directing deposit of the proceeds shall be furnished by the court to the surrogate.
The August 1970 Notice to the Bar, which was issued prior to the adoption of Rule 4:48A, stated:
In the interest of preserving to an infant the principal of funds paid into court and deposited in interest-bearing accounts, pursuant to N.J.S. 3A:7-14.1 [now N.J.S.A. 3B:15-16], the court will, at the time of the entry of judgment, advise the infant and his parents that the money so deposited may be paid out of the court only for good cause until such time as the infant becomes 21 years of age; that they will not be required to retain an attorney to apply for release of the funds; and that there shall be available in the Surrogate's office of each county copies of the form of petition and order to be completed by the guardian and filed with the Surrogate when seeking withdrawal of the funds so deposited.
The Surrogate, upon the filing of the petition and order, will send them to the judge assigned to handle probate matters for appropriate action.
[93 N.J.L.J. 537 (1970) (emphasis and bracketed material supplied).]
Petitioner reads Rule 4:48A(a) as requiring the court to dispense with the giving of a bond and dispose of the proceeds of a judgment for a minor in accordance with N.J.S.A. 3B:12-6, if the amount is $5,000 or less, or N.J.S.A. 3B:15-16 if the amount exceeds $5,000. Based on this reading of Rule 4:48A(a), petitioner contends that the Court exceeded its rule-making power by requiring the deposit of judgments over $5,000 into court without bond and ignoring the statutory options set forth in N.J.S.A. 3B:15-1 (guardian retaining custody of minor's estate required to furnish bond) and N.J.S.A. 3B:15-11 and -12 (guardian depositing cash in bank required to furnish such bond as court deems sufficient under the circumstances). According to petitioner the Rule adopted by the
Court in 1971 infringes on the legislative power and thus violates the separation of powers established in the State Constitution. He calls upon the Court to amend the Rule and require notice to guardians that they have the three statutory options for the safekeeping of their wards' funds. The Attorney General, on the other hand, argues that petitioner has misconstrued Rule 4:48A(a), because the words "except as otherwise ordered by the court" permit the court to use any of the three statutory options, and that consequently there is no conflict between the Rule and the statutes.
We agree with the Attorney General. Rule 4:48A did not come into being until 1971. Prior to 1969 the Rules did not touch upon the statutory options for disposing of the proceeds of judgments in favor of minors. See R. 4:56A, which governed "friendly" proceedings involving judgments for minors and incompetents. In 1968, at the request of the Supreme Court, the Committee on County District Courts studied the bonding procedures with respect to friendly suits and recommended that the hardships imposed on guardians by the requirement of surety bonds then contained in N.J.S.A. 3A:7-1 and 3A:7-10, the antecedents for N.J.S.A. 3B:15-1 and 3B:15-11 respectively, be mitigated by encouraging surrogates to use N.J.S.A. 3A:7-14.1, the source of today's N.J.S.A. 3B:15-16, which permitted the court to dispense with the bond requirement where the judgment proceeds did not exceed $10,000 and were deposited into court. 91 N.J.L.J. 177 (1968). Rule 4:44-3, adopted as part of the 1969 revision, accepted that recommendation and provided, in pertinent part, that if a court approved of a settlement of $10,000 or less for a minor or incompetent, it should enter an order "directing, in lieu of a guardian's bond, disposition of the proceeds thereof pursuant to N.J.S. 3A:7-14.1." Judge Pressler, in her comment to the current version of Rule 4:44-3 refers to the Committee's 1968 recommendations and notes that
[w]hile the statute is permissive in its terms [referring to N.J.S. 3A:7-14.1] it was the evident intent of the rule that the deposit in lieu of surety bond
provided for by the statute should be made mandatory in such cases in order to preserve the principal of the infant's or incompetent's funds without the ...