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New Jersey Turnpike Authority v. Parsons

Decided: December 5, 1949.

NEW JERSEY TURNPIKE AUTHORITY, PLAINTIFF-RESPONDENT,
v.
THEODORE D. PARSONS, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT, AND SPENCER MILLER, JR., STATE HIGHWAY COMMISSIONER OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT



On certification to the Superior Court, Law Division.

For modification -- Chief Justice Vanderbilt, and Justices Case, Oliphant, Wachenfeld and Ackerson. For affirmance -- Justices Heher and Burling. The opinion of the court was delivered by Vanderbilt, C.J. Heher, J. (dissenting in part). Mr. Justice Burling joins in this dissent.

Vanderbilt

The New Jersey Turnpike Authority filed a complaint in the Law Division of the Superior Court for a declaratory judgment to determine the constitutionality of the New Jersey Turnpike Authority Act (P.L. 1948, c. 454, as amended and supplemented by P.L. 1949, cc. 40 and 41; R.S. 27:23-1 et seq.). The Attorney General and the State Highway Commissioner were made defendants. The trial judge sustained the constitutionality of the act, and the State Highway Commissioner petitioned for certification, which has been granted.

By the terms of this legislation, there is created "in the State Highway Department a body corporate and politic, with corporate succession, to be known as the 'New Jersey Turnpike Authority,'" consisting of three members appointed by the Governor, with the advice and consent of the Senate, R.S. 27:23-3. The Authority is created for the purpose of facilitating "vehicular traffic * * * and to provide for the construction of modern express highways." It is authorized to construct, maintain, repair and operate turnpike projects "at such locations as shall be established by law" and empowered "to issue turnpike revenue bonds of the Authority, payable solely from tolls and revenues, to finance such projects," R.S. 27:23-1. It is provided that the turnpike revenue bonds "shall not be deemed to constitute a debt or liability of the State * * * or a pledge of the faith and credit of the State," and unless payment is made by refunding, the principal and interest thereof "shall be payable solely from the * * * (tolls and revenues) pledged for their payment," a legend to this effect being required to be set forth expressly on the face of the bonds, R.S. 27:23-2.

In addition to an explicit grant of customary corporate powers, the Authority is authorized specifically and generally to do all things which may be necessary and incidental to the construction, maintenance, repair and operation of turnpike projects, including that of acquiring "by purchase or otherwise * * * or by the exercise of the power of eminent domain and in accordance with the provisions of law, in so far as such provisions may be applicable, such public lands * * * highways or parkways * * * and any fee simple absolute or any lesser interest in private property," R.S. 27:23-5. The State Highway Department is "authorized in its discretion to expend out of any funds available for the purpose such moneys as may be necessary" for preliminary engineering, traffic and other expert studies, as well as to use its own personnel, in connection with any turnpike project or projects, the funds so expended to be "reimbursed by the Authority to the department from the proceeds" realized from the sale of bonds for said turnpike project or projects, R.S. 27:23-17.

The Legislature having authorized the construction of a specific turnpike project (P.L. 1949, c. 41; R.S. 27:23-23, 24) and the preliminary engineering and other studies for it having already been commenced, the Authority is desirous of issuing its turnpike revenue bonds in a sum not less than $175,000,000 to finance the project. In this connection questions have been raised as to the constitutionality of the Turnpike Authority Act that would seriously affect the marketability of the proposed bond issue. To settle these doubts the Authority thereupon initiated the present proceeding under the Declaratory Judgments Act (R.S. 2:26-66 et seq.).

The first question that confronts us is whether or not a proceeding under the Declaratory Judgments Act is available here. The remedial purpose of the Act is "to settle and afford relief from uncertainty and insecurity with respect to rights, status and other legal relations," R.S. 2:26-67. The Act merely broadens the rationale of remedies long cognizable in equity, such as those "to settle doubts about the construction of a will * * *; or * * * to quiet title,

or a bill of peace," In re Van Syckle, 118 N.J.L. 578, 580 (E. & A. 1937). To serve these ends it is provided that "All courts of record in this state shall * * * have power to declare rights, status and other legal relations," R.S. 2:26-68, and particularly to determine "any question of construction or validity arising under * * * (a) statute * * *," R.S. 2:26-69. The remedy thus provided, however, is circumscribed by the salutary qualification that the jurisdiction of the courts may not be invoked in the absence of an actual controversy. "Not only must the plaintiff prove his tangible interest in obtaining a judgment, but the action must be adversary in character, that is, there must be a controversy between the plaintiff and a defendant, subject to the court's jurisdiction, having an interest in opposing his claim." Borchard, Declaratory Judgments (2 d ed. 1941), p. 29; Cf. New Jersey Bankers Ass'n v. Van Riper, 1 N.J. 193 (1948). We use the phrase "salutary qualification" because of the understandable policy of the courts to refrain from rendering advisory opinions, from deciding moot cases, or generally from functioning in the abstract, and "to decide only concrete contested issues conclusively affecting adversary parties in interest," Borchard, pp. 34-35.

In the present proceeding highly significant issues that vitally affect the state and its citizens are presented for determination. That the plaintiff, New Jersey Turnpike Authority, has a clear interest in all phases of the challenged legislation sufficient to enable it to maintain this suit is too obvious to require comment. Similarly the State Highway Commissioner in the light of his general supervision over the construction and maintenance of state roads and highways, R.S. 27:1-1 et seq., is an indispensable defendant. His adverse interest is evident not only from the fact that the legislation under attack is generally in derogation of his jurisdiction but also because of his peculiar interest arising from the section making it possible for the Turnpike Authority to use the personnel and funds of his department for preliminary studies, R.S. 27:23-17. The Attorney General who, in effect, concedes the constitutionality of the legislation is a necessary

party by virtue of R.S. 2:26-72, which requires that he "shall also be served with a copy of the proceeding and be entitled to be heard" whenever a statute shall be alleged to be unconstitutional.

The first point to be considered in any proceeding for a declaratory judgment is whether or not the controversy that is presented in the briefs and at the oral argument is actual and bona fide or is merely one in which "the semblance of judicial proceedings and the form of due process are present," New Jersey Bankers Ass'n v. Van Riper, 1 N.J. 193, 198 (1948). We have studied the briefs and have considered the oral argument of the parties and we are satisfied that within the limits of the issues here raised a justiciable controversy exists that is ripe for judicial determination.

The main challenge to the constitutionality of the Turnpike Authority Act is predicated on the provisions of Article VIII, Section II, paragraph 3, of the Constitution of 1947, the pertinent portion of which reads as follows:

"3. The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State, which together with any previous debts or liabilities shall exceed at any time one per centum of the total amount appropriated by the general appropriation law for that fiscal year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. Regardless of any limitation relating to taxation in this Constitution, such law shall provide the ways and means, exclusive of loans, to pay the interest of such debt or liability as it falls due, and also to pay and discharge the principal thereof within thirty-five years from the time it is contracted; and the law shall not be repealed until such debt or liability and the interest thereon are fully paid and discharged. No such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon."

The Turnpike Authority Act, however, makes no pretense of attempting to comply with the terms of this paragraph of the Constitution. If the bonds sought to be issued under the Act were held to be within the scope of the quoted constitutional provision, they would manifestly be void because the contemplated amount of indebtedness greatly exceeds one per

centum of the total state appropriation for the fiscal year. The Act, moreover, has not been submitted to the people by referendum; indeed, there is no provision in it or elsewhere in the statutes authorizing any such referendum.

To bring the proposed bond issue under the ban of the Constitution it must first appear that the bonds will "create * * * a debt or debts, liability or liabilities of the State." This the Turnpike Authority Act does not do. On the contrary, the explicit and unambiguous language of the statute entirely negatives any possibility of the proposed bonds being an any manner debts or liabilities of the State by providing in so many words that the bonds of the Turnpike Authority "shall not be deemed to constitute a debt or liability of the State * * * or a pledge of the faith and credit of the State." To dispel any lingering doubts, the Legislature expressly provided that "such bonds, unless refunded by the bonds of the Authority created in this Act, shall be payable solely from the funds pledged for their payment as authorized herein," R.S. 27:23-2. The funds so pledged are stated in section 7 of the Act to be the "tolls and revenues of all or any part of the turnpike project financed in whole or in part with the proceeds of such issue or with the proceeds of bonds refunded or to be refunded by such issue." Any opportunity for the slightest misunderstanding on the part of any purchaser of the bonds has been obviated (R.S. 27:23-2):

"All such turnpike revenue bonds shall contain on the face thereof a statement to the effect that the Authority is obligated to pay the same or the interest thereon only from the tolls or revenues pledged for their payment and that neither the State nor any political subdivision thereof is obligated to pay the same or the interest thereon and that neither the faith and credit nor the taxing power of the State or any ...


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