Grenewicz v. Ligham

• Decision Date: 06 January 1955
• Docket Number: No. A--142,A--142
• Citation: 111 A.2d 293,34 N.J.Super. 1
• Parties: John GRENEWICZ, Petitioner, v. Chester K. LIGHAM, Director of the Office of Rent Control, Department of Conservation and Economic Development of the State of New Jersey, et al., Respondents. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 1

34 N.J.Super. 1

111 A.2d 293

John GRENEWICZ, Petitioner, v. Chester K. LIGHAM, Director of the Office of Rent Control Department of Conservation and Economic Development of the State of New Jersey et al., Respondents.

No. A--142.

Superior Court of New Jersey Appellate Division.

Argued Dec. 13, 1954.

Decided Jan. 6, 1955.

Mortimer Neuman, Jersey City, for petitioner.

Harold Kolovsky, Asst. Atty. Gen., for respondent Director of the Office of Rent Control (Grover C. Richman, Jr., Atty. Gen., Chester K. Ligham, Deputy Atty. Gen., Benjamin C. Van Tine, Trenton, of counsel).

George F. Losche, Hackensack, for respondent Rilost Realty Co., Inc. (Joseph Feinman, West New York, Attorney).

Before Judges CLAPP, JAYNE and FRANCIS.

The opinion of the court was delivered by

FRANCIS, J.A.D.

Plaintiff seeks a declaratory judgment under R.R. 4:88--10 as to the validity of certain regulations of the Director of the Office of Rent Control which were promulgated under the State Rent Control Act of 1953, L.1953, c. 216, N.J.S. 2A:42--14 et seq. N.J.S.A. The particular regulations attacked were filed with the Secretary of State on July 30, 1953; amendments thereto were registered in the same office on April 23, 1954, during the pendency of this proceeding. Both original and amended regulations will be considered.

At the outset of our consideration of the matter, attention is called to the question of the timeliness of the filing of the 'petition' for declaratory judgment, the date being more than four months after the effective date of the original regulations. See R.R. 4:88--1 (defining proceeding in lieu of prerogative writ); 4:88--15. However, since it was not raised by the parties we shall pass it in order to determine the substantive merits of the case.

Prior to July 16, 1947, Rilost Realty Co., Inc. was the owner of premises known as 819--825--22nd Street, Union City, N.J. For several years the building thereon was vacant and unfit for habitation. On the date referred to a contract was executed under the New Jersey Veterans' Emergency Housing Act (N.J.S.A. 55:14G--1 et seq.) between the Administrator of Public Housing and Development Authority and Rilost for ithe rehabilitation and conversion of the building in order to create additional housing space for veterans. Under the contract also, the premises were leased to the Administrator for a period of five years (the duration of the emergency asserted by the Act, N.J.S.A. 55:A--14G--12) to begin on the date of the first tenant occupancy after the completion of the conversion.

The remodeling, which resulted, in the creation of 26 self-contained family dwelling units, was finished in April 1948 and the term of the lease began on April 28 of that year.

The original cost of the conversion was $85,412.07, which was paid by the State under the Emergency Housing Act. The lease provided for the recapture of 50% Of this sum out of the income derived from the premises. The rents to be paid by the tenants were in the control of and to be fixed by the Administrator throughout the period. N.J.S.A. 55:14G--12, subds. b, c. Apparently the rents for the dwelling units were established by him prior to the inception date of the lease and a computation of the net amount to be produced thereby over the five-year period showed that the full 50% Of the State's investment would not be recovered. Accordingly, by a supplemental agreement Rilost agreed to pay approximately $2,000 to make up the difference.

It was further provided in the agreement that in consideration of the recapture of 50% Of the cost, the premises would be surrendered to the owner with all the improvements thereon at the end of the term. Pursuant thereto, on April 29, 1953, the Administrator made the return to the Realty Company.

The Federal Housing and Rent Act of 1947 as amended (50 U.S.C.A.Appendix, § 1881 et seq.) expired on July 31, 1953. In anticipation thereof, our Legislature adopted the present State Rent Control Act, effective July 7, 1953, to be operative until December 31, 1954. L.1953, c. 216, N.J.S. 2A:42--14 et seq., N.J.S.A.

Under this act a State Rent Control Office was created headed by a Director, and he was given authority to promulgate rules and regulations 'to effectuate the purposes' thereof with respect to rent control. N.J.S. 2A:42--15, 20, N.J.S.A. Section 9 (N.J.S. 2A:42--22, N.J.S.A.) further provides that 'The rules and regulations to be made and promulgated * * * may contain such classifications and differentiations and may provide for such adjustments or Reasonable exceptions, according to the use or character of an area or of property, or both, as in the judgment of said director are necessary or proper in order to effectuate the purposes of this act. * * *'

On July 30, 1953 the Director issued the following regulation which is under attack in this proceeding:

'Part I, Article III, Section 2.

'2. Pursuant to the provisions of the Act, particularly section 9 thereof, the following additional housing space shall be totally excepted from the operation of the act and the regulations:

'(a) Particular housing space in controlled areas under the Act and these regulations which has heretofore been decontrolled under the Federal Housing and Rent Act of 1947, as amended, even though such housing space may have been recontrolled by reason of having been situated in a critical area under Federal Law; * * *

'(c) Housing space constructed, converted, operated, managed and maintained under the Veterans' Emergency Housing Act of the State of New Jersey (c. 323, P.L.1946, as amended and supplemented); * * *.'

Thereafter the tenants of the premises in question were notified by the Realty Co. that as of September 1, 1953 their monthly rent would be increased from $47 to $60. Presently the tenants are paying the increase which is being held in escrow pending the outcome of this action by Grenewicz, one of their number.

Grenewicz claims that the increase is unlawful because the housing space is subject to the State Rent Control Act which, upon its adoption, automatically established as the base rental the amount being paid as of July 31, 1953. § 19, N.J.S. 2A:42--32, N.J.S.A. Since the rent as of that time was $47 monthly, he urges there was no right to change it upward, unless it was done by an authorized rent control agency under §§ 16, 17 and 18, N.J.S. 2A:42--29, 30, 31, N.J.S.A.

Realty Co., Inc. answers that its housing space is excepted from rent control under the act by virtue of the regulations set forth above.

The Federal Housing and Rent Act of 1947, supra, excluded from control 'additional housing accommodations created by conversion on or after February 1, 1947 * * *.' 50 U.S.C.A.Appendix, § 1892(c)(3)(A). The purpose of this exclusion was to encourage the creation of a greater number of dwelling units available for rental and thus lessen the economic pressure which brought about the need for the restrictions. Bancroft Realty Co. v. Alencewicz, 7 N.J.Super. 105, 107, 72 A.2d 360 (App.Div.1950).

It is obvious that the housing space here qualified for decontrol or exclusion under the quoted section of federal law. And no suggestion is made that the Federal Housing Expediter ever took any action with respect to the establishment of a rent ceiling therefor at any time subsequent to the completion of the remodeling work. Consequently, the premises are not subject to the State Rent Control Act by virtue of section 2(a) of article III of the Director's regulations unless the exception is invalid.

The tenant argues that it is an Ultra vires act of the Director because: (a) section 9 of our statute specifically enumerates the exceptions to be allowed, and (b) if the specific enumeration does not represent the limits of the authority, then section 2(a) is not a 'reasonable exception' within the legislative intendment.

The specific listing of the exceptions referred to appears in the second sentence of section 9 immediately following the bestowal of the authority, outlined above, to provide for reasonable exceptions. There it is provided that the regulations prescribed Shall except certain types of housing space, namely, that rented or leased for seasonal use, or situated on a farm and occupied by a tenant farmer, or space providing living quarters for domestic servants, caretakers, janitors, managers, or other employees as all or part of their compensation for work done in connection with the premises of which the space is a part, and luxury housing space for which there is no shortage. Manifestly, these legislative specifications are simply a mandate to the Director that such space shall be excluded from control under his regulations; they do not confine his authority. Nor do they demonstrate, as seems to be claimed, that the legislative intent was to permit the Director to make reasonable exceptions only with relation to procedures and methods of accomplishing control and administering the control of housing space which is subject to the Act. On the contrary, the context of the entire section 9 exhibits an aim to permit an overall exercise of discretion in the Director in the field of exceptions both as to procedure and housing accommodations.

The second basis for the challenge, i.e., that the exemption of these premises from control on account of their conversion after February 1, 1947 is not a reasonable exception, in our judgment stands on no firmer footing.

The guides laid down by the Legislature for the exercise of the Director's discretion in establishing exceptions are that they shall be 'reasonable' and 'necessary or proper' in his judgment 'to effectuate the purposes' of the act. That these are adequate and lawful...