Schlossberg v. Jersey City Sewerage Authority

• Decision Date: 05 April 1954
• Docket Number: No. A--131,A--131
• Citation: 15 N.J. 360,104 A.2d 662
• Parties: SCHLOSSBERG et al. v. JERSEY CITY SEWERAGE AUTHORITY et al. THOUROT et al. v. TRUST CO. OF NEW JERSEY et al.
• Court: New Jersey Supreme Court

Page 360

15 N.J. 360

104 A.2d 662

SCHLOSSBERG et al. v. JERSEY CITY SEWERAGE AUTHORITY et al.

THOUROT et al. v. TRUST CO. OF NEW JERSEY et al.

No. A--131.

Supreme Court of New Jersey.

Argued April 5, 1954.

Decided April 5, 1954.

Isadore Glauberman, Jersey City, for appellant Thourot.

Victor S. Kilkenny, West New York, for appellant LaMort.

Jerome C. Eisenberg, Newark, for cross-appellant-respondent Trust Co. of New Jersey (Thomas E. Lynch, Jersey City, attorney).

Theodore C. Baer, Jersey City, for respondents Schlossberg and Famiglietti (John J. Hanlon, Jr., Jersey City, attorney).

David Stoffer, Newark, for defendants-applicants for intervention, Joseph Miele Const. Co., Inc. and C. Salvatore & Sons (Stoffer & Jacobs, Newark, attorneys).

John I. Breslin, Jr., Hackensack, for defendants-applicants for intervention, George M. Brewster & Son., Inc., Terminal Const. Corp. and LeFerra Contracting Co., Inc. (Breslin & Breslin, Hackensack, attorneys).

The opinion of the court was delivered by

WILLIAM J. BRENNAN, Jr., J.

These are three appeals, consolidated by the Appellate Division and certified by this court of its own motion. Two of the appeals are from an interlocutory order entered March 12, 1954 in the Law Division in the proceeding in lieu of prerogative writ in which Ben Schlossberg and S. John Famiglietti are plaintiffs and the Jersey City Sewerage Authority and its members, the City of Jersey City and ten construction contractors are defendants. The third appeal is from two interlocutory orders entered March 9 and March 18, 1954 in the Chancery Division in an action in which Harry J. Thourot, Peter LaMort and Thourot & LaMort, a partnership, are plaintiffs and the Trust Company of New Jersey and said Schlossberg and said Famiglietti are defendants. None of the orders appealed from is an interlocutory order appealable under R.R. 2:2--3; but, as matters of public importance are concerned, we concluded to consider the appeals upon the merits. See Sunbeam Corp. v. Windsor-Fifth Avenue Corp., 14 N.J. 235, 102 A.2d 32 (1953). Following oral argument of the appeals on April 5, 1954 we directed that all three orders be vacated and set aside, and announced that this opinion would be prepared and filed in due course. Cf Stevenson v. Gilfert, 13 N.J. 496, 100 A.2d 490 (1953).

The issues arise from the efforts of Schlossberg and Famiglietti as plaintiffs in the prerogative writ action to secure for the purpose of offering in evidence at the trial either the originals or photographs of checks drawn by Thourot or the partnership of Thourot & LaMort upon the Trust Company of New Jersey where each maintained a checking account. Schlossberg and Famiglietti subpoenaed Thourot as their witness. He and LaMort are licensed engineers and practice their profession as partners. Thourot is also Hudson County Engineer and the Mayor of Union City. He admitted that on June 2, 1950 he made a subcontract with Clyde Potts Associates, a consulting engineering concern which succeeded upon Clyde Potts' death to Potts' consulting engineering practice. Potts had entered into a contract with the Jersey City Sewerage Authority on April 19, 1950 to do the engineering work connected with the planning and construction of the Jersey City sewerage treatment plants and accessory projects. The Thourot subcontract was for part of this work, and Thourot testified that he had received partial payments thereunder from Clyde Potts Associates aggregating $171,500 and had deposited the payments in his personal account with the Trust Company of New Jersey. He further testified that he had made withdrawals therefrom. He refused, however, to produce the cancelled checks which the bank had returned to him. The trial judge cited him for contempt for such refusal and reserved decision after hearing.

Meanwhile Schlossberg and Famiglietti served a subpoena Duces tecum upon the bank to produce the records in its possession concerning the accounts. Thourot and LaMort moved unsuccessfully to quash the subpoena. The bank officer who appeared in response to the subpoena testified that the only records of the cancelled checks in the bank's possession were the microfilmed photographs thereof commingled with other photographs which numbered 8,000 upon each microfilm reel. He further testified that compliance with the subpoena would require the processing of the reels through mechanical viewers to identity the checks sought and then the reproduction by an outside photographic concern of enlargements from the photographs to obtain copies acceptable for purposes of being offered in evidence. Thereupon the trial court entered the order of March 12, under appeal, modifying the terms of the subpoena Duces tecum and directing the bank to produce 'enlargements or reproductions' of all checks of $500 or more drawn by Thourot or the partnership from June 1, 1950 to September 17, 1953, specifying that the Trust Company was to identify the checks from 'all reels of microfilm containing photographs' thereof and was to have the photographs processed to obtain such enlargements or reproductions. See Banking Act of 1948, L.1948, c. 67, sec. 247, N.J.S.A. 17:9A--247.

The Trust Company and Thourot and LaMort appeal from the order. None is a party in the prerogative writ action. We need not decide, however, the issue argued in the briefs whether Thourot and LaMort as nonparty witnesses have the standing to appeal from an order not directed to them. It suffices that no challenge is interposed to the standing to appeal of the Trust Company to which the order is directed.

The connection to these events of the action in the Chancery Division is that before the determination by the Law Division judge whether Thourot and LaMort or the bank should respond to the subpoenas Duces tecum severally served upon them, Thourot and LaMort instituted the Chancery Division action charging that the Trust Company had entered into an illegal agreement with Schlossberg and Famiglietti to provide the latter with enlarged reproductions of the microfilmed checks and seeking a restraint against performance of the alleged agreement. The Chancery Division on March 4, 1954 allowed them an interim restraint enjoining the Trust Company and Schlossberg and Famiglietti 'from carrying out' the alleged agreement to 'select the films of plaintiffs' checks and cause them to be printed and enlarged.' The orders of March 9 and March 18, appealed by Thourot and LaMort but not by the Trust Company, are modifications of the interim restraint deemed necessary and appropriate by the Chancery Division judge to evidence that the interim restraint was not in anywise to be construed to enjoin the bank from responding to the subpoena Duces tecum served upon it in the Law Division action.

The controversy as debated in the briefs is focused upon the relevancy of the evidence sought by Schlossberg and Famiglietti to the issues framed by the pleadings and pretrial order in the prerogative writ action. Only the Trust Company fully argues the additional questions whether a bank owes a duty to a depositor to resist divulging the information preserved by the microfilm recordations of a depositor's cancelled checks which have been returned to the depositor, and, if the information is to be divulged, whether the bank is to be required to pay the not unsubstantial labor and out-of-pocket costs involved in the viewing of the microfilms to identify the recordations sought from among the 8,000 recordations on each reel and the enlargement and reproduction therefrom of photographs of sufficient size to be practicably useful as evidence. We do not think, in the absence of any argument except that of the Trust Company, that this is an appropriate case for the decision of those additional questions, particularly as in our view the order of March 12 must at all events be set aside because it commands the production of proofs utterly irrelevant and immaterial to any of the issues framed by the pleadings and pretrial order.

Neither the contract between the Authority and Clyde Potts nor the subcontract between Clyde Potts Associates and Thourot is brought into question in the prerogative writ proceeding. That action was brought September 17, 1953 to set aside seven construction contracts aggregating in excess of $31,000,000 awarded September 10, 1953 by the Jersey City Sewerage Authority to various companies joined with the Authority as co-defendants in the action. Plaintiff Schlossberg sues as a Jersey City resident and taxpayer. Plaintiff Famiglietti alleges that he sues as a member of the Authority, a claim strongly disputed by the defendants who contend that his initial appointment was void and that in any event he resigned on August 19, 1953, prior to the action of the Authority in awarding the contracts.

The plaintiffs' primary contentions upon which the relief demanded is predicated may be summarized from the pretrial order as follows: (1) that the Authority met on September 10, 1953 'secretly without notice to and without the knowledge or presence of S. John Famiglietti, a member of said Authority'; (2) that the awards were made 'without adequate and proper advertising for bids * * * without the advice and assistance of Authority member Famiglietti, in arbitrary and unlawful exercise of discretion, and without transacting the aforesaid business frankly and openly in the light of public scrutiny so that the public of Jersey City might know and judge their acts fairly'; (3) that the Authority acted 'without receiving for the City, its taxpayers and sewer users the benefits of public competitive bidding, with the result that the bulk of the contracts-award is designed by the Authority to go to a single joint venture bidder consisting of five companies which joined for the purpose of limiting and excluding competitive bidding'; (4) that the 'awarding was made before the adoption of the bond resolution by the defendant Sewerage...