The opinion of the court was delivered by: FORMAN
The original plaintiffs in this cause were Albert G. Christmas, Nolan Harrigan and Edwin H. Barker, who recovered a judgment against the City of Asbury Park on February 21, 1935, in the sum of $1,419,104.63 damages and $28.71 costs, upon certain bonds and coupons issued by said City and which were then in default. A writ of execution was issued and returned unsatisfied.
In New Jersey the real and personal property of a municipal corporation, held and used by it for corporate purposes, is exempt from levy and sale under execution. The remedy for such a creditor is by way of a writ of mandamus and during the following period proceedings for this relief were sought by the plaintiffs and granted by this court. Upon appeal, however, on July 22, 1935, the United States Circuit Court of Appeals for the Third Circuit reversed the action of this court by vacating the order for the mandamus but at the same time directed that jurisdiction should be retained of the petition for the mandamus filed by the plaintiffs. 78 F.2d 1003.
Meanwhile, on March 7, 1935, an order was entered by the New Jersey Supreme Court placing the City under the control of the Municipal Finance Commission of the State of New Jersey pursuant to a petition filed by bondholders and their representatives resident in New Jersey, in accordance with the provisions of the statutes of New Jersey. N.J.R.S. 52:27-1 et seq., N.J.S.A.
On January 21, 1936, plaintiffs as relators field a supplemental petition with this court for the purpose of renewing their application for a peremptory writ of mandamus. The Municipal Finance Commission of New Jersey filed a petition for leave to intervene in the proceedings, which was granted. Answers were filed by the City, its officials and the Municipal Finance Commission, which alleged as a defense that a petition had been filed in the New Jersey Supreme Court seeking approval of a plan for the composition of the debts of the City and that the said court had assumed jurisdiction of the proceedings pursuant to the provisions of the New Jersey statutes concerned with the adjustment or composition of claims of creditors of municipalities. N.J.R.S. 52:27-34 et seq., N.J.S.A.
On December 29, 1936, an order was entered in this court directing the issuance of a peremptory writ of mandamus under which the respondents were required to assess and levy a tax for the year 1937 in an amount deemed sufficient to produce in that year the sum of $87,381, and to assess and levy a tax in an amount similarly computed in each succeeding year thereafter Until the principal amount of relators' judgment, plus interest thereon, or on the unsatisfied portion thereof, at the rate of six per centum per annum, is paid and satisfied." A peremptory writ of mandamus issued pursuant to the order on January 4, 1937.
The sum of $87,381 per annum was fixed because it represented the amount the holders of the bonds would have received annually based upon the refunding proposal then before the New Jersey Supreme Court. In fact, after this writ was granted that court was petitioned by other bondholders for a peremptory writ of mandamus requiring the City to make an additional levy for their benefit which was issued and all of the bondholders thus arrived on the same level. Rippel v. City of Asbury Park, 118 N.J.L. 45, 190 A. 489.
An amendment to the proposed plan for refunding had been offered in the proceedings in the New Jersey Supreme Court. On April 29, 1938, an order was entered approving the amended refunding plan. Under it the old bonds were to be exchanged by consenting creditors for new bonds which would be direct unlimited obligations of the City. Power was given to the City and it was legally obligated to levy ad valorem taxes upon all taxable property. The new bonds were to be dated December 1, 1937, and were to bear interest at the rate of 4% per annum, payable semi-annually.
In each of the years 1937 and 1938 the City paid the sum of $87,381 of the plaintiffs-relators, but on June 1, 1938, Central Hanover Bank & Trust Company of New York City, a depositor with the bondholders' committee consisting of the plaintiffs, notified them that it desired to withdraw the bonds deposited by it and participate in the amended refunding plan. At its request plaintiffs-relators released so much of the judgment with represented the proportion of the beneficial interest of the Central Hanover Bank & Trust Company in the said judgment, without prejudice to the balance of the judgment, and the bonds and coupons which it had deposited were delivered to the Bank as its request at the time of its withdrawal.
On June 14, 1938, plaintiffs-relators, City of Asbury Park and the Municipal Finance Commission of New Jersey, entered into a stipulation in which it was agreed that the annual payments under the writ of mandamus should be reduced from $87,381 to $45,718.79, the reduction being proportionate to the amount of the reduction of the judgment by the withdrawal of the Central Hanover Bank & Trust Company. When these bonds were voted by it in favor of the plan, it gave the total support of 85% of the bondholders required under the law for approval. The amended refunding plan went into effect one day after the execution of the stipulation -- June 15, 1938.
On December 10, 1938, the Municipal Finance Commission of New Jersey was ordered by the New Jersey Supreme Court to cease functioning in the City and its jurisdiction was terminated.
On June 5, 1939, the City paid the sum of $45,718.79 in accordance with the terms of the stipulation of June 14, 1938.
On April 22, 1938, Nolan Harrigan assigned his interest in the judgment in this cause to Albert G. Christmas and Edwin H. Barker. On April 3, 1940, they assigned the judgment to Wallace D. Bradford and Edwin T. Murdoch and November 27, 1941, Wallace D. Bradford assigned his interest in the judgment to Edwin T. Murdoch. Appropriate motions have been granted to amend the pleadings to show the assignments made by the original plaintiffs-relators with their interests terminating in Edwin T. Murdoch, and the succeeding officials of the City of Asbury Park as present respondents.
On June 19, 1940, the City paid the 1940 annual installment of $45,718.79, and the 1941 annual installment was paid on June 9, 1941, in the similar sum of $45,718.79.
Plaintiffs-relators in no way participated in the proceedings in the New Jersey Supreme Court and neither consented to nor accepted the plan as approved therein.
After the payment in 1941, a motion was made on behalf of the defendant City, and respondents, to perpetually stay enforcement of the original judgment, to vacate the order for mandamus and to quash the writ and to expunge both the judgment and the order for mandamus of record upon the delivery of certain refunding bonds by the City and the surrender of old bonds by the plaintiffs-relators or their ultimate assignee.
In October of 1941, the City passed an ordinance authorizing the issuance of new bonds for the purpose of paying, funding or refunding its outstanding obligations including the bonds issued pursuant to the 1938 amended refunding plan, the earlier bonds which had not been exchanged and the judgment claim of the plaintiffs-relators. A sale of the bonds so authorized provided the means whereby the refunding bonds and other obligations of the City were liquidated but again Edwin T. Murdoch, the ultimate plaintiff-relator, stood upon the judgment originally entered as the basis of his claim against the City and not upon the bonds and coupons upon which the judgment was taken.