On rule to show cause why a peremptory writ of mandamus should not issue.
For the petitioners and Adams & Mueller, intervenors, McDermott, Enright & Carpenter (James D. Carpenter, Jr., of counsel).
For the municipal finance commission of the State of New Jersey, William A. Stevens (E. J. Dimock, Arnold Frye and V. L. Visscher, of counsel).
For the defendant city of Asbury Park, Ward Kremer and Harry Cassman.
Before Justices Trenchard, Bodine and Heher.
The opinion of the court was delivered by
HEHER, J. Since March 7th, 1935, the municipal finance commission, created by chapter 340 of the laws of 1931 (Pamph. L., p. 830), as amended, has, in virtue of an appropriate order, exercised its statutory function in relation to the business and affairs of the defendant municipality, city of Asbury Park.
The petitioners represent the holders of unpaid matured bonds and notes aggregating in excess of the principal sum of $1,500,000. Their claims so arising have not been reduced to judgment. They are all residents of this state. They seek a peremptory writ of mandamus commanding the defendant municipality and its proper officers to make an "assessment, levy, and collection of a sum sufficient to pay all interest owing by the city at the contract rate, in arrears, less the amounts appropriated in past budgets, and which will accrue through 1936, or in the alternative at least $700,000, to be applied on account of the principal and interest of the obligations" of the municipality "for the year 1936, and for an annual levy, assessment, and collection of taxes by" it "for the equal and ratable payment of installments of principal and interest" among its creditors, "in an amount sufficient to discharge in such time as may be fixed by the court the debt of such city." The petition was filed on January 4th, 1936, pursuant to an order entered herein on notice to the finance commission, under section 352 of the cited statute, as amended by chapter 50 of the laws of 1936 (Pamph. L., p. 134), authorizing petitioners to institute, for the benefit of all creditors, mandamus proceedings to compel the levy of taxes necessary for the enforcement of their claims. The instant rule, directing the defendant municipality and certain of its officers
to show cause why the writ should not issue, was allowed on the same day, but was not brought on for argument until the current term. It contained a provision making the finance commission and all other creditors of the municipality parties to the proceeding.
On December 14th, 1936, the finance commission, in accordance with the authority conferred by section 201 of the statute, as amended by chapter 192 of the laws of 1935 (Pamph. L., p. 467), formulated and certified to the governing body of the municipality resolutions providing for the refunding of the indebtedness in question by the issue of bonds under a plan calling for a debt service levy in the year 1937, and each year thereafter, sufficient to render an actual annual yield of $630,000, but adoption of the plan by the municipality has not yet been had.
On December 29th, 1936, the United States District Court for the district of New Jersey, in an action brought by the non-resident bondholders, granted a peremptory writ of mandamus to compel an annual tax levy, supplementing "regular" taxes, in the sum of $87,381, the non-resident security-holders' proportionate share of the yearly debt service levy thus proposed by the finance commission. Thereafter, the commission filed a petition herein, setting forth these facts and praying for a mandamus directing the municipality to make an additional annual tax levy of $542,619, the balance of this debt service levy. The commission, in the presentation of the petition, invoked the authority conferred upon it by section 352 of the statute, supra, to institute mandamus or other appropriate proceedings "for the assessment, levy or collection of taxes by such municipality for the payment of principal and/or interest of the indebtedness of the municipality found to be outstanding * * *."
It is to be observed here that judicial sanction of "a plan of adjustment or composition" of the outstanding claims, submitted by the creditors under chapter 331 of the laws of 1933 (Pamph. L., p. 866), is conditioned, among other things, upon the joint approval of the municipality, the finance commission, and ...