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City of Camden v. South Jersey Port Commission

Decided: April 24, 1950.


On certification to the Superior Court, Chancery Division.

For affirmance and modification -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, and Burling. For reversal -- None. The opinion of the court was delivered by Vanderbilt, C.J.


The South Jersey Port District comprising the counties of Burlington, Cape May, Camden, Cumberland, Gloucester, Mercer and Salem, was created by P.L. 1926, Chapter 336 (R.S. 12:11-1 et seq.), and thereby declared a public corporation and awarded the usual corporate powers. A Port Commission was also created to serve as the governing body of the district and was given the power to "determine upon the location, type, size and construction of requisite port facilities" as well as the power to "lease, * * * construct, make, equip and maintain port facilities in the district."

The act set up a plan for the payment of construction charges. Whenever the Port Commission should determine to construct any port or transportation facilities the cost should be estimated on the basis of definite plans and specifications. The Commission should determine and report the proportionate benefit which would accrue from such improvements to each county or municipality within the district. After public hearings on these findings the respective counties and municipalities were to be advised of their proportionate share, which would 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 one hundred dollars of taxable property in such county or municipality. The several counties or municipalities were thereupon required to submit the question of the levy of the tax to a referendum.

In 1927 the Port Commission decided to construct its own pier and warehouse at Beckett Street on lands adjoining a pier already owned and operated by the City of Camden at Spruce Street. It determined that the construction cost of the Beckett Street pier would be two million dollars, and that all the benefits thereof would accrue to the City of Camden. The question of levying a tax to support this project was submitted to the voters of Camden at the general election in November, 1927, and a majority voted in its favor.

Apparently because of questions raised by the bond attorneys with respect to the legality of the financing procedure under the 1926 Act, an alternative method of financing the proposed pier and warehouse was set up in P.L. 1928, Chapter 64 (R.S. 12:11-26 to 39). Under this new statute the Port Commission was authorized to enter into contracts with any county or municipality in the district, under which the municipality would lend to the Port Commission agreed sums of money for the purpose of financing the project. The Port Commission, however, had the power to issue bonds from time to time in anticipation of the payments to be made to it under any such contract, but these bonds would not be an indebtedness of the contracting county or municipality. The moneys loaned by any such contracting county or municipality were to be repaid by the Port Commission, together with interest at the rate of 4% annually.

Instead of proceeding further under the provisions of the 1926 statute, the City of Camden and the Port Commission on June 6, 1928, entered into an agreement under the provisions of the 1928 statute. Under the agreement the city agreed to appropriate and pay to the Port Commission for the purpose of financing the project $65,000 on the first days of March and September in each of the years 1929 to 1933, both inclusive,

and $45,000 on the first day of March and $145,000 on the first day of September of each of the years 1934 to 1973, both inclusive. Under the provisions of the agreement the Port Commission was required on or before December 31st of each year to pay to the City all moneys which, in the uncontrolled discretion of the Port Commission, were then in its hands and not required for purposes specified in the agreement. Until the total amount paid by the City to the Port Commission should be repaid with interest thereon at the rate of 4% per annum, the amounts so paid were to be applied first to the payment of interest and the balance to the payment of principal.

The parties operated under the terms of this agreement, apparently without difficulty, until September 1, 1946, when the City defaulted in its payment due on that day in the sum of $145,000. It has since refused to make any payments due under the contract, with the exception of $45,000 which it paid on March 1, 1947. An action at law brought by the Port Commission in the former Supreme Court to recover for the amount due on the contract was restrained on an order obtained by the City, and the action was later discontinued. The subject matter of it, however, is contained in the counterclaim in the instant case. At the present time the back payments due to the Port Commission under the contract total $525,000, together with interest in the sum of $46,769.18. As of December 31, 1947, the Port Commission was indebted to the City for money loaned under their agreement in the principal sum of $2,810,889.75, together with interest in the amount of $304,150.64. This sum represents the total annual amount advanced by the City to the Port Commission, less the sums repaid by the Port Commission to the City.

On June 28, 1928, the City adopted a resolution appointing the Port Commission as the operating agent of its own pier at Spruce Street, just about then completed at a cost of over $650,000, and this appointment was accepted by the Port Commission the following day. Under this resolution the City was to receive all revenues and bear all expense in connection

with said appointment. The resolution further provided that a contract should be entered into between the City and the Port Commission concerning the operation of the pier. This contract was signed on June 1, 1931. It thus appears that the Port Commission has been in possession of the City's pier property and has operated it since June, 1928. In the operation of the Spruce Street pier the Port Commission has seen fit to set up certain reserve funds for repairs and maintenance, without further authorization to do so by the City. These reserved funds total $155,824.54, and interest alleged to be due thereon amounts to $48,839.71.

This action was instituted by the plaintiff seeking (1) an accounting for the operation and management by the defendant of the Spruce Street pier and to charge the defendant with dereliction of its duty as an agent with respect thereto; (2) to have the agreement entered into between the plaintiff and defendant dated June 6, 1928, declared ultra vires, illegal and void, and to obtain a judgment for the full amount of the sums thus far advanced under the agreement, regardless of whether it be held valid or invalid, and (3) to obtain an order directing the defendant to determine and report the proportion of benefit that accrued from the construction of 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 denied the several claims of the plaintiff and demanded as alternative relief a judgment against the plaintiff for breach of the contract of June 6, 1928, in a sum allegedly due under the terms of that agreement to date, but unpaid.

The court below gave judgment to the City for the sum of $204,664.25, representing the reserve funds set up in the operation of the City's Spruce Street pier and interest thereon, and gave judgment to the Port Commission for the sum of $571,769.18, representing the payments due from ...

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