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DRISCOLL v. BURLINGTON-BRISTOL BRIDGE CO.

February 25, 1949

DRISCOLL et al.
v.
BURLINGTON-BRISTOL BRIDGE CO. et al.



The opinion of the court was delivered by: FORMAN

A civil action in the form of an 'Information and Complaint' was originally filed in the Superior Court of New Jersey, Chancery Division, Burlington County, by Alfred E. Driscoll, Governor of the State of New Jersey, and Walter D. Van Riper, Attorney General of the State of New Jersey (hereinafter referred to as plaintiffs). It was removed to this court on the petition of two of the defendants, Chemical Bank and Trust Company and B. J. Van Ingen & Company, Inc., (referred to herein as petitioners) who rested their claim to the right of removal upon the ground that it is a civil action of which this court has jurisdiction wherein the matter in controversy exceeds the sum of $ 3,000 exclusive of interest and costs and arises under the Constitution and laws of the United States and Acts of Congress regulating commerce. Subsequently the following defendants consented to joinder with the latter in their petition for removal: Sarjem Corporation; Richard C. Nongard, Tuthill Ketcham and Rowland H. Murray, individually and as partners trading as Ketcham and Nongard; Robert M. Sherritt; Thomas J. Christensen; Irene E. Powell; Paul A. Powell; Mildred O. M-ader; Clifford R. Powell; Robert K. Bell; Theodore R. Hanff; Richard W. Parks; Gladys A. Parks; Burlington-Bristol Bridge Company; Tacony-Palmyra Bridge Company; Burlington County Bridge Commission; Daniel Lichtenthal; Fred C. Norcross, Jr., and Howard R. Yocum, individually and as members of the Burlington County Bridge Commission; and the Board of Chosen Freeholders of the County of Burlington. *fn1"

The matter is now before the court on the motion of the plaintiffs to remand the case to the State court.

 Because the 'frame of reference' in this type of motion is contained within the four corners of the complaint, it is necessary to refer at considerable length to the 'Information and Complaint' filed by the plaintiffs in which they allege, among other things, as follows:

 That the Tacony Bridge Company was incorporated June 25, 1926 under Chapter 247 of the New Jersey Laws of 1925 entitled 'An Act to authorize the formation of companies for the purpose of constructing, maintaining and operating bridges over the Delaware river, and regulating the same,' N.J.S.A. 48:5-13 et seq.; that the Burlington Bridge Company was incorporated on March 27, 1928 under the same law;

 That the Tacony Bridge Company was authorized by an Act of Congress, Chapter 56, Session II, Jan. 25, 1927, 44 Stat. 1024, to construct a bridge across the Delaware River between Palmyra in the County of Burlington, New Jersey and Tacony, in the City of Philadelphia, Pennsylvania and that it constructed the Tacony-Palmyra Bridge completing it on August 14, 1929 pursuant to the said Act of Congress and the law of the State of New Jersey as aforesaid:

 That Burlington Bridge Company, as assignees of Joseph R. Cheeseman and Clifford A. Anderson, who were authorized by an Act of Congress, Chapter 351, Session I, March 21, 1926, 44 Stat. 588, to construct a bridge between the City of Burlington, New Jersey and the City of Bristol, Pennsylvania, completed the Burlington-Bristol Bridge on May 1st, 1931, pursuant to the said Act of Congress and the law of the State of New Jersey;

 That the Burlington Bridge Company and Tacony Bridge Company, pursuant to Section 9 of said Chapter 247 of the New Jersey Laws of 1925, N.J.S.A. 48:5-22 to 24, gave their lawful consents to the State of New Jersey acting in conjunction with any adjoining state or municipality thereof to acquire said bridges subject to the acquisition of the same by the State of New Jersey or by any political subdivision thereof pursuant to the terms and conditions stated in the aforementioned Acts of Congress;

 That under Chapter 318, Laws of New Jersey 1946, N.J.S.A. 27:19-26 et seq., Boards of Freeholders of any County were authorized to create Bridge Commissions with authority as set forth in said legislation; that by Chapter 288 of New Jersey Laws of 1948, the Legislature of New Jersey unconstitutionally amended Chapter 318 of New Jersey Laws of 1946, N.J.S.A. 27:19-26, et seq., in that the said amendment of 1948 is an abrogation and violation of the compact or agreement made between the Commonwealth of Pennsylvania and the State of New Jersey creating the Delaware River Joint Commission as a body corporate and politic, as set forth in N.J.S.A. 32:3-1 to 18, which compact was approved by the 72nd Congress of the United States by Public Resolution No. 26, June 14, 1932, 47 Stat. 308 and the said amendment of 1948 purports to grant to Bridge Commissions the right to acquire bridges as may be in part within the limits of the Commonwealth of Pennsylvania or of the Delaware River Joint Commission.

 The 'Information and Complaint' further charges that defendants Theodore R. Hanff, Clifford R. Powell, Tuthill Ketcham, Richard C. Nongard, Rowland H. Murray, Thomas J. Christensen, Robert K. Bell, Richard W. Parks, Fitzgerald & Co., Inc., B. J. Van Ingen & Co., Inc., and the Srjem Corporation, between September 1, 1946 and the date of the filing of the 'Information and Complaint', December 3, 1948, schemed and conspired to acquire and purchase all of the outstanding stock of the Burlington Bridge Company and of the Tacony Bridge Company and all the rights of the two companies in and to the said bridges respectively with the purpose thereafter to sell the said two bridges and the outstanding stock of the said two companies at an excessive and unconscionable price to a Bridge Commission which they and their agents would cause to be created for the County of Burlington by means of exercising coercion and undue influence upon the members of the Board of Freeholders of Burlington County and upon the members of the Burlington Bridge Commission that would be and afterward was created by the Board of Freeholders; by causing the creation of a bridge commission consisting of persons who would be entirely subservient to them and who would act obediently to their directions and would accept from them and their agents without using independent study and judgment legal opinions prepared by them and their agents as to the validity of the contemplated transactions and the value of the bridges and would thereupon adopt and pass resolutions prepared by them and their agents purporting to be resolutions of the Burlington Bridge Commission approving the purchase of the two bridges and the capital stock of the two bridge companies for the sum of $ 12,000,000 and issue bonds aggregating $ 12,400,000 to obtain the funds for the purpose of such purchases and would act in secrecy and with speed concealing the transaction from the public, the Government of the State and others lawfully and properly interested therein; and by means of fraud and misrepresentations, offer and promise of reward, and by counselling, aiding and abetting the members of the said Bridge Commission to act in violation of their public trust and in disregard of their duties to the public, the County of Burlington and State of New Jersey.

 That pursuant to the alleged conspiracy, on May 1, 1948, Ketcham and defendant Robert M. Sherritt, President of the defendant Sarjem Corporation, agreed among themselves and proposed to purchase the capital stock of the Tacony-Palmyra Bridge, and Sherritt was authorized by defendants Hanff, Ketcham, Nongard and Powell to proceed with the negotiations for option rights for the purchase of the capital stock of that company;

 That Powell, on or about September 7, 1048, approached Frank Snover, a member of the Board of Freeholders, and proposed to him that Burlington County, by means of the appointment of a bridge commission, should purchase the two bridges for the sum of $ 12,000,000.

 That on October 20, 1948 Powell met defendants Snover, Leroy Church, Stanley Russ and Clarence G. Price, members of the Board of Freeholders and represented to them that the purchase of the two bridges for $ 12,000,000 would be of great financial profit and benefit to Burlington County and that it could make the purchase without any investments or obligations and that $ 12,000,000 was a fair price for the bridges; Powell allegedly well knowing that the County could not derive under the Statutes of New Jersey and the Act of Congress then in force any financial or pecuniary benefit from the purchase of said bridges and allegedly knowing that the said price of $ 12,000,000 was excessive, unconscionable and exorbitant; at the said conference Powell acting in concert and in conspiracy with other defendants concealed from the members of the Board of Freeholders material facts pertaining to the value of the said bridges and the price paid by the defendants and their associates for the acquisition of the bridges and the manner and method applied in the acquisition thereof;

 That Powell called upon Thomas D. Begley on October 20, 1948 and advised him of the proposed meeting with the Freeholders of the County of Burlington later in the day, at which time it would be necessary to seek the advice of Begley in his capacity as counsel of the Board of Freeholders, and at the said conference Powell gave Begley a legal opinion theretofore prepared and suggested and directed Begley to rely upon and use the opinion upon the occasion of his advice to the Board of Freeholders, which Begley did;

 That the following day, October 21, 1948, Snover met defendant Lichtenthal, and advised ,im of the plan to create a bridge commission, to appoint him as a member of it and attend a meeting which would be held at the Hotel Barclay in Philadelphia the same day; that Powell informed defendant Howard R. Yocum in the City of Camden of the plan to create a bridge commission and to appoint him, defendant Lichtenthal, and the defendant Fred C. Norcross, Jr., as members thereof and advised Yocum to accompany Norcross to the meeting in the Hotel Barclay in Philadelphia, that on October 21, 1948 Powell and Snover promised Yocum, Norcross and Lic,tenthal their appointments as members of the bridge commission at an annual salary of $ 3,000, it being then and there understood that they would approve and do all necessary acts for the accomplishment of the purchase of the two bridges by the bridge commission planned to be created, for the sum of $ 12,000,000, and that they would approve and take the necessary steps for the issuance of bonds to provide the funds for such purposes:

 That on October 22, 1948 the Board of Freeholders appointed Yocum, Norcross and Lichtenthal as members of the Bridge Commission, whereupon they took oath of office as such members, went into session in the presence of several of the defendants and their associates, organized the Bridge Commission, appointing the necessary officers and immediately adopted and passed the series of resolutions theretofore prepared by Powell and his associates purporting to be the resolutions of the Bridge Commission, which showed submission of the proposal to purchase the bridges for the sum of $ 12,000,000 and to issue bonds to provide funds for such purchase, submission of same to the Board of Freeholders and purporting to show the consent and approval of the proposals and project by the Board of Freeholders, whereas Yocum, Norcross, Lichtenthal and Begley well knew the proposed project to purchase the bridges and to issue bonds therefor had not theretofore been submitted by the Bridge Commission to the Board of Freeholders as required by law and they had not received a duly enacted or adopted resolution or approval of the Board of Freeholders consenting to and approving the proposed purchase, project, and the issuance of bonds therefor;

 That on the same day, October 22, 1948, Yocum, Norcross, Lichtenthal, Ketcham, Wood, Powell, Begley, Christensen, Hanff, Nongard, Sherritt, Russell Sherman, B. J. Van Ingen & Co., by its treasurer, the Chemical Bank and Trust Company, by its vice president, the Sarjem Corporation, by its officers and agents, met at the offices of the Chemical Bank and Trust Company in New York City and consummated the transaction for the purchase of the stock of the Burlington Bridge Company, which by previous merger and consolidation included the stock of the Tacony Bridge Company, for the price of $ 12,000,000, and Yocum, Norcross and Lichtenthal signed and delivered bonds in the sum of $ 12,400,000 of the Bridge Commission for the purchase thereof;

 The the defendants Yocum, Norcross and Lichtenthal did not at any time as members of the Bridge Commission give due consideration to the matters proposed before them, did not submit the matters for approval and consent to the Board of Freeholders, did not receive such consent and approval of the Board of Freeholders and in all their actions purporting to be the official acts as members of the Bridge Commission they acted under the influence, coercion and will of Powell and his associates, having in fact and in effect totally abdicated their functions and duties as members and officers of said commission and that the Board of Freeholders did not in fact approve or consent to the proposal to acquire the said two bridges and to issue bonds for such purpose, as required by law;

 That the said Yocum, Norcross and Lichtenthal, purporting to act as a Bridge Commission adopted resolutions for the purchase of the capital stock of the Burlington Bridge Company, whereas under the laws of the State of New Jersey they had no authority to purchase the capital stock of bridge companies, their authority being confined and limited to the purchase of bridges, wherefore, their resolutions for the purchase of the stock of the bridge company were void and did not form a lawful basis for the issuance of the bonds which are null and void and the action of the said members of the Bridge Commission in purchasing the capital stock of the Burlington Bridge Company resulted in burdening the said commission with all the liabilities of both the Burlington Bridge Company and the Tacony Bridge Company.

 The following defendants were alleged to have either directly cooperated by concert of action in the formation or accomplishment of the conspiracy described in the 'Information and Complaint', or with full knowledge of the nature of the transactions involved and the manner and method by which the said transactions were accomplished, wilfully participated in the profits, benefits, advantages and emoluments derived from said transactions: Leroy Church, Frank Snover, Clarence Price, Stanley Russ and Albert C. Jones, who were members of the Board of Freeholders; Yocum, Norcross and Lichtenthal, who were members of the Bridge Commission; Begley, counsel for the Board of Freeholders as well as the Bridge Commission; The Sarjem Corporation, an Illinois corporation; Sherritt, Ketcham, Nongard and Murray, investment bankers with offices in Chicago, who controlled and managed The Sarjem Corporation; Powell, director of Burlington Bridge Company; Robert K. Bell, legal advisor and director of the Burlington Bridge Company; Theodore R. Hanff, officer and large stockholder of the Burlington Bridge Company, and also an officer of T. R. Hanff & Co., allegedly used as a corporate device for the acquisition of securities; Christensen, stockholder and officer of Burlington Bridge Company; Richard W. Parks, Gladys A. Parks and Fitzgerald & Co., Inc., were stockholders of Burlington Bridge Company. The defendants B. J. Van Ingen & Co., Inc.; Buckley Securities Corporation; Stranahan, Harris & Co.; Blair & Co., Inc.; Bacon, Stevenson & Company, a partnership; Braun, Bosworth & Company, Inc., a corporation; Dolphin & Co., a partnership; Estabrook & Co., a partnership; Equitable Securities Corporation; Harris, Hall & Co., Inc., a corporation; John Nuveen & Co., a partnership; R. W. Pressprich & Co., a partnership; Tripp & Co., Inc., a corporation; Welsh, Davis & Co., a partnership; R. D. White & Co., a partnership; Robert Showers, individually; and Lyons & Shafto., Inc., a corporation, were corporations, firms and individuals engaged in the investment and banking business and were organizers and in control of the syndicate for the purchase, underwriting and marketing of the bonds, which were prearranged to be issued by the Bridge Commission in the sum of $ 12,400,000, the said members of the syndicate having themselves subscribed in part for such issue.

 The plaintiffs claim that any attempt or proposal to apply the provisions of Chapter 401; New Jersey Laws of 1947, N.J.S.A. 48:5-18, to bridges or any constructions by companies organized under Chapter 247, New Jersey Laws of 1925, N.J.S.A. 48:5-13 et seq., would be unconstitutional in that it would be in violation of Article IV., Section VII, Paragraph 11 of the Constitution of New Jersey of 1844, as amended, N.J.S.A., which is the same as Article IV, section 7, paragraph 9, subparagraph (8) of the new Constitution of 1947 N.J.S.A.; and Article I, Paragraph 20 of the Constitution of 1944, as amended, having the same effect as Article VIII, Section III, Paragraph 3 of the 1947 Constitution;

 That the members of the Board of Freeholders and the purported members of the Bridge Commission acted in a fiduciary capacity in the negotiation and consummation of the transactions hereinbefore described;

 That at most the transactions were under consideration by the Board of Freeholders and the Bridge Commission only during the period beginning the evening of October 20, 1948 and ending at 10 a.m. on October 22, 1048;

 That the Bridge Commission was established and the transactions were purportedly authorized by resolutions adopted by the Board of Freeholders and by the Bridge Commission at meetings held during the morning of October 22, 1948;

 That the various documents, described in the agenda, Exhibit B, attached to the 'Information and Complaint', were executed and the transactions were consummated at the office of the defendant Chemical Bank and Trust Company, New York City, during the afternoon and night of October 22, 1948 and early morning of October 23, 1948, with extreme speed and absolute secrecy, free from the exercise of any discretion, initiative or independent judgment on the part of the members of the Bridge Commission and that the Board of Freeholders and the purported members of the Bridge Commission, acting in their respective fiduciary capacities, did not have or seek free and independent advice with respect to the transactions, but relied solely upon information furnished and representations made by the defendant Powell and his associates and upon information, opinions and advice furnished by lawyers, accountants and engineers employed and compensated by the defendant, the Burlington Bridge Company;

 That the purchase price paid by the Bridge Commission in the consummation of the transaction was unconscionable, exorbitant, and ...


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