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City of Camden v. South Jersey Port Commission

Decided: January 13, 1949.

THE CITY OF CAMDEN, A MUNICIPAL CORPORATION, PLAINTIFF,
v.
SOUTH JERSEY PORT COMMISSION, SOMETIMES REFERRED TO AS SOUTH JERSEY PORT DISTRICT, DEFENDANT



Civil action. On complaint.

Haneman, J.s.c.

Haneman

[2 NJSuper Page 284] This is an action by the plaintiff seeking (1) discovery and accounting for the operation and management by the defendant of a certain pier situate in the City of Camden, New Jersey, which will hereafter be referred to as the

Spruce Street Pier, and incidental thereto, to charge defendant with dereliction of its duties as an agent; (2) to have an agreement entered into between the plaintiff and defendant, dated June 28, 1928, declared ultra vires , illegal and void, and to obtain a judgment for the full amount of the sums thus far advanced under said agreement, regardless of whether held valid or invalid, and (3) seeking to obtain an order directing the defendant to determine and report the proportion of benefit which accrued from the construction of a pier hereafter referred to as the Beckett Street Pier, to each county or municipality within the South Jersey Port District, and to require such counties and municipalities to pay the respective and proportionate shares thus found.

The defendant denies the several claims of the plaintiff and demands as affirmative relief a judgment against the plaintiff for a breach of the contract dated June 6, 1928, in a sum allegedly due under the terms of said contract to date, but unpaid.

The facts in connection with this litigation may be generally stated as follows:

P.L. 1926, c. 336 (R.S. 12:11-1, et seq.), created the South Jersey Port District, comprising the counties of Mercer, Burlington, Camden, Gloucester, Salem, Cumberland and Cape May, and declared the same to be "a public corporation and body politic." As a governing body of said District, the act created a commission to be known as the South Jersey Port Commission. This act, generally stated, granted the commission power and authority over the survey, development, control and operation of port facilities in the district and the coordination of the same. It as well granted it power and authority to acquire real property and to construct such port facilities as it might deem necessary.

As originally designed, the act provided for the payment of construction charges in the following manner: Whenever the Port Commission should determine that it should construct any port or transportation facilities, the cost should be estimated on the basis of definite plans and specifications. The Commission should as well determine and report the proportionate

benefit which would accrue from such improvements to each county or municipality within the said district. After public hearing upon these findings the respective counties and municipalities were to be advised of their proportionate share, which sum should then be raised by a tax on all of the taxable property in such county or municipality, but not to exceed in any one year ten cents on each $100 of each taxable property in such county or municipality. The said several counties or municipalities were thereupon required to submit the question of the levy of the tax by referendum. (R.S. 12:11-16 to R.S. 12:11-25, inclusive.)

By P.L. 1928, c. 64 (R.S. 12:11-26 to R.S. 12:11-39) an alternative method of financing such proposed construction was provided. Under this statute, the South Jersey Port Commission was authorized to enter into contracts with any county or municipality in the district, under the terms of which the municipality would agree to finance the construction of the facilities. R.S. 12:11-26, 27 provide as follows:

R.S. 12:11-26. "The commission is hereby authorized to enter into contracts with any county or municipality or several of them within the district and from time to time amend or supplement the same, and any such contract may contain any or all of the following terms and provisions:

"a. An agreement by the commission to undertake any project or projects which it may be authorized to undertake.

"b. An agreement by the county or municipality to appropriate and pay to the commission such sums in such years and at such date or dates in each year, as may be agreed for the purpose of financing such project or projects. Without intending to restrict the broadest construction of the words 'financing such project or projects' such words shall include the payment of the cost of construction and reconstruction of any improvement, the acquisition of property, the cost of maintenance, operation and repairs, and the payment of interest and principal of debt incurred for any of said purposes.

"c. An agreement by the commission upon such terms and conditions as may be stated to repay to the county or municipality the amounts paid in pursuance of said contracts or any part thereof, with interest thereon at not exceeding four per cent per annum. This agreement shall be subject to the obligations of the commission to:

"1. Pay or provide for the payment of its indebtedness and the setting apart of moneys therefor according to the terms upon which the indebtedness may be incurred; and

"2. Pay or provide for the payment of all amounts needed for operation, repairs, maintenance, replacements, reserves for such purposes and for improvements and extensions required for the highest efficiency of such project or projects."

R.S. 12:11-27. "No county or municipality shall agree to pay in any one year under any such contract or contracts an amount which shall exceed ten cents on each one hundred dollars of assessed valuation of property subject to taxation in the county or municipality at the date of the contract. This section shall be construed as a limitation on the right to contract and not on the power to levy taxes."

On June 6, 1928 the City of Camden was the owner of and operating property commonly referred to as the Spruce Street Pier. On that date the plaintiff entered into a contract with the defendant under the last above referred to statute, the terms of which said contract, in brief, provided an agreement on the part of the defendant to " build, construct, maintain, operate, equip and repair within the City of Camden, a marine or port terminal, together with all the necessary wharves, docks, buildings, roadways, railroad tracks and all other construction for the proper operation of said marine or port terminal." Then followed a description of the exact land upon which said port facility was to be constructed, and reference to the plans and specifications already prepared, with a general description of the facilities thereon. The City of Camden further agreed as follows:

"The City agrees to appropriate and pay to the Port Commission for the purpose of financing said project the following sums in the following years and at the following dates in each year, namely; Sixty-five thousand dollars ($65,000) on the first days of March and September in each of the years 1929 to 1933, both inclusive, and Forty-five thousand dollars ($45,000) on the first day of March, and One hundred and Forty-five thousand dollars ($145,000) on the first day of September in each of the years 1934 to 1973, both inclusive."

The Port Commission further agreed as follows:

"On or before the 31st day of December of each year, the Port Commission shall ascertain the amount of money in its hands, either derived from the payments made to it by the City, as provided by Article II, or derived from the earnings of the project described in Article 1, which are not necessary for the following purposes; namely,

"(a) to pay or provide for the payment of its indebtedness and the setting apart of moneys therefor, according to the terms upon which said indebtedness may be incurred, and

"(b) to pay or provide for the payment of all amounts needed for operation, repairs, maintenance, replacements, reserves for said purpose and for improvements and extensions required for the highest efficiency of such project."

"All moneys which in the uncontrolled discretion of the Port Commission are then in its hands and are not required for the said purposes shall on or before said 31st day of December be paid by the said Port Commission to the City until the total amount so paid shall equal the amounts paid by the City to the Port Commission with interest thereon at the rate of four per centum per annum. The amounts so paid shall first be applied to the payment of interest and the balance thereof shall be applied to the payment of the principal."

The City of Camden further agreed, by Article IV, paragraph 3, as follows:

"The City covenants with the Port District and with the holders of the bonds of the Port District proposed to be issued, that it will insert the amount of the payments required by this contract in its annual budget and unless moneys are available from other source, will raise by tax in each year an amount sufficient to make said payments."

The defendant did thereupon sell its bonds and with the proceeds constructed the Beckett Street Pier.

Thereafter, and more particularly on June 28, 1928, the City of Camden adopted the following resolution referring to the Spruce Street Pier, which was then owned and had been operated for some time by it:

"Whereas, the City of Camden has assumed control of the Spruce Street Pier, the Board of Commissioners of the City of Camden, hereby appoints the South Jersey Port Commission as Operating Agent of said pier and yard, the City receiving all Revenue and bearing all expenses in connection therewith;

"Therefore, be it resolved, by the Board of Commissioners of the City of Camden, N.J., that said pier be placed under the jurisdiction of the Department of Revenue and Finance, as a public enterprise, and that there be appropriated from the revenues of said pier sufficient funds to operate the same, and that the proper officers of the City are hereby authorized to borrow in anticipation of said revenue, return any surplus to the City Treasury, and provide for any deficit in subsequent budgets of the City.

"And be it further resolved, that a contract be entered into between the City and the Port Commission concerning the operation thereof and the proper officers of the City of Camden be and are hereby authorized to sign and execute same in behalf of the City of Camden."

On June 1, 1931 the city entered into a formal contract with the South Jersey Port District in further pursuance of the resolution of June 28, 1928. This agreement reads as follows:

"This agreement made and entered into this first day of June, 1931, between the South Jersey Port District, hereinafter referred to as the 'Port District', a public corporation and body politic of the State of New Jersey, party of the first part, and the City of Camden, hereinafter referred to as 'City', a municipal corporation of the State of New Jersey, party of the second part, witnesseth:

"Whereas, on the sixth day of June, 1928, an agreement was entered into by and between the parties hereto for the acquisition of land and the constructing, maintaining, operating, equipping and repairing, with the 'City', of a marine or port terminal, together with all the necessary wharves, docks, buildings, roadway, railroad tracks and all other construction, for the proper operation of said marine or port terminal, more particularly set forth and described in said contract above referred to and a copy of which contract is attached hereto and made a part hereof and marked Exhibit 'A', and which said property is now nearing completion, and is about ready for public operation; and,

"Whereas, on the 28th day of June, 1928, a resolution was passed by the 'City' authorizing the proper officers of the 'City' to enter into and execute a contract on behalf of the said 'City' with the said 'Port District', the purpose of the last mentioned resolution and the purpose of the said 'City' and 'Port District' being to authorize the said 'Port District' to act as operating agent of property owned by the said 'City' and known as the 'Municipal Pier Property', and to authorize said 'Port District' to fix rates to regulate shipping both in and out of said pier, to arrange for the storage of materials in transit on or in said property; and for the necessary assistants and labor for the proper conduct of such business, and to make regular accountings of said business to the 'City' from time to time as may be required by the 'City', and otherwise to handle all such business and property in the best interests of the 'City' in all respects, in order to avoid any conflict in rules, regulations, operating charges or other elements relating to management or service of both said properties and the business conducted therein and thereon,

"Now, therefore, in consideration of the premises herein the parties hereto agree as follows:

"1. The 'City' hereby authorizes and appoints the said 'Port District', and the said 'Port District' hereby agrees, to act as the agent of the 'City' in all respects for the purposes and in the manner hereinabove recited with full authority in said 'Port District' to do any and all things necessary to be done to carry out the intent of said recitals.

"2. Said 'Municipal Pier Property' shall be under the jurisdiction of the Department of Revenue and Finance of the City, as a public municipal enterprise.

"3. This contract shall continue in force and the 'Port District' shall exercise its authority hereunder, continuously, unless and until terminated by mutual agreement; provided, however, shall the said 'Port District' be divested of the powers conferred upon it by the existing laws of the State of New Jersey, or be merged into or be supplanted by any other commission or agency of the State, or should said 'Port District' lease or otherwise dispose of the property first herein referred to, or should said 'Port District' be unable for any reason, to continue to carry on the operation of the said property first herein referred to, then and in that event this agreement and the authority conferred by it upon said 'Port District' shall automatically cease and terminate.

"In witness whereof, the South Jersey Port District, acting by the South Jersey Port Commission, and the City of Camden, have caused this agreement to be executed by their duly authorized officers the day and year first above mentioned."

In pursuance of the said resolution and agreement of June 1, 1931, the defendant has been operating the Spruce Street Pier since June 28, 1928.

On September 1, 1946 the sum of $145,000 became due under the contract of June 6, 1928, but plaintiff refused payment thereof. This precipitated an action by defendant in the then New Jersey Supreme Court which, upon the filing of plaintiff's present suit in the then Court of Chancery, was enjoined. Subsequently the Supreme Court action was discontinued and defendant filed its answer and counterclaim in the Chancery suit.

Therefore, it is to be noted that the defendant operates two piers, (1) the Spruce Street Pier by reason of the resolution of June 28, 1928 and the contract of June 1, 1931, and (2) the Beckett Street Pier, which it not only operates but owns as well.

The first complaint of the City of Camden to the conduct of the Spruce Street Pier is that the defendant has reserved certain funds for repairs to the Spruce Street Pier without the authority of the city; that since the plaintiff has refused further payments under the contract of June 6, 1928, the defendant has illegally set off these reserve funds against the moneys so allegedly due it; that the income from

both piers has been commingled; that defendant breached the duty owed plaintiff by itself conducting a competing business at the Beckett Street Pier, and that the defendant has violated its duty as an agent by directing an undue amount of business to the Beckett Street Pier.

The defendant states, among other things, that it is not the agent of the plaintiff in connection with the Spruce Street property, but ...


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