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Driscoll v. Burlington-Bristol Bridge Co.

Decided: January 21, 1952.

ALFRED E. DRISCOLL, GOVERNOR OF THE STATE OF NEW JERSEY, ET AL., INFORMANTS AND PLAINTIFFS-RESPONDENTS,
v.
BURLINGTON-BRISTOL BRIDGE COMPANY, A NEW JERSEY CORPORATION, ET ALS., DEFENDANTS-APPELLANTS, AND SARJEM CORPORATION, AN ILLINOIS CORPORATION, AND ROBERT M. SHERRITT, DEFENDANTS



On appeal from the Chancery Division of the Superior Court.

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

Vanderbilt

These appeals are before this court by way of certification granted on the petitions of the several defendants-appellants to review the judgment of the Chancery Division of the Superior Court entered in the cause. The facts, which it is necessary to recount in some detail, present a disillusioning picture of public officials surrendering their independence and abnegating their obligation of public trust under the influence of prominent persons seeking to further their private interests.

I.

This action was instituted on December 3, 1948, by the Governor and the Attorney-General of the State of New Jersey to set aside the acquisition on October 22, 1948, by the Burlington County Bridge Commission of two toll bridges across the Delaware River between points in Burlington County and Pennsylvania. One of these bridges between Burlington, New Jersey, and Bristol, Pennsylvania, is known as the Burlington-Bristol Bridge, and the other between Palmyra, New Jersey, and the Tacony section of Philadelphia as the Tacony-Palmyra Bridge. The construction of these bridges was authorized by separate special acts of Congress, the Burlington-Bristol Bridge by chapter 351, Session I, 69th Congress, 1926 (44 Stat. Part 2, p. 588), and the Tacony-Palmyra Bridge by chapter 56, Session II, 69th Congress, 1927 (44 Stat. Part 2, p. 1024). The pertinent provisions of each of these special acts of Congress are identical, and for convenience they are here set forth at length:

"Sec. 4. After the date of completion of such bridge, as determined by the Secretary of War, either the State of New Jersey, the State of Pennsylvania, any political subdivision of either of such States within or adjoining which any part of such bridge is located, or any two or more of them jointly, may at any time acquire and take over all right, title, and interest in such bridge and approaches, and interests in real property necessary therefor,

by purchase, or by condemnation in accordance with the law of either of such States governing the acquisition of private property for public purposes by condemnation. If at any time after the expiration of twenty years after the completion of such bridge it is acquired by condemnation, the amount of damages or compensation to be allowed shall not include good will, going value, or prospective revenues or profits, but shall be limited to the sum of (1) the actual cost of constructing such bridge and approaches, less a reasonable deduction for actual depreciation in respect of such bridge and approaches, (2) the actual cost of acquiring such interests in real property, (3) actual financing and promotion costs (not to exceed 10 per centum of the sum of the cost of construction of such bridge and approaches and the acquisition of such interests in real property), and (4) actual expenditures for necessary improvements.

Sec. 5. If such bridge shall be taken over and acquired by the States or political subdivisions thereof under the provisions of section 4 of this Act, the same may thereafter be operated as a toll bridge; in fixing the rates of toll to be charged for the use of such bridge, the same shall be so adjusted as to provide as far as possible a sufficient fund to pay for the cost of maintaining, repairing, and operating the bridge and its approaches, to pay an adequate return on the cost thereof, and to provide a sinking fund sufficient to amortize the amount paid therefor within a period of not to exceed thirty years from the date of acquiring the same. After a sinking fund sufficient to pay the cost of acquiring such bridge and its approaches shall have been provided, the bridge shall thereafter be maintained and operated free of tolls or the rates of toll shall be so adjusted as to provide a fund not to exceed the amount necessary for the proper care, repair, maintenance, and operation of the bridge and its approaches. An accurate record of the amount paid for acquiring the bridge and its approaches, the expenditures for operating, repairing, and maintaining the same, and of the daily tolls collected shall be kept, and shall be available for the information of all persons interested."

The two bridges were constructed pursuant to these grants of authority from the Federal Government by the Burlington-Bristol Bridge Company and the Tacony-Palmyra Bridge Company, respectively, New Jersey corporations organized and existing under and by virtue of chapter 247 of the Laws of 1925 (R.S. 48:5-13 et seq.) 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." Section 9 of this act (R.S.

48:5-22) provides for the acquisition by the State of New Jersey of any bridge constructed by a company organized thereunder:

"The state reserves to itself the right, acting in conjunction with any adjoining state or municipality thereof, to acquire any bridge constructed by any such company at the following times and upon the following terms:

a. At the expiration of five years after the opening of any bridge for public use, for the total costs thereof of whatever nature and upon assumption of all obligations or liabilities of the bridge company, for the construction of the bridge, with the approaches thereto and appurtenances thereof, plus fifteen per cent of the cost;

b. At any time thereafter, at such total cost and upon assumption of such obligations or liabilities, plus fifteen per cent of the cost, less two per cent per annum of the total cost for each year after the expiration of five years from the date of the opening of the bridge for public use.

Every company organized under this article consents to the acquisition by the state pursuant to this section of any bridge constructed by the company."

While it does not appear that the Secretary of War has ever certified the date of completion of either of the bridges, the Burlington-Bristol Bridge was actually completed and opened for traffic on about May 1, 1931, and the Tacony-Palmyra Bridge on about August 15, 1929. Since those dates the bridges were continuously owned and operated by their respective companies until the time of their acquisition by the Burlington County Bridge Commission on October 22, 1948.

Some time in 1946 the defendants Robert K. Bell, Thomas J. Christensen, Theodore R. Hanff, Tuthill Ketcham, Richard C. Nongard, Rickard W. Parks, and Clifford R. Powell became interested in purchasing the stock of the Burlington-Bristol Bridge Company, then owned by a small group of stockholders in Pittsburgh, with an eye toward selling the bridge to some public agency. Toward this end they organized themselves into a syndicate with a specific role intended for each. Bell, counsel for the Cape May Bridge Commission, was to render advice with respect to the acquisition,

operation and resale of the bridge. Christensen and Parks, who were in the investment business, were to sell preferred stock to assist in the financing, although as the matter developed this became unnecessary. Hanff, a bridge-painting contractor, was acquainted with the Pittsburgh stockholders and was to conduct the negotiations with them. Ketcham and Nongard, members of a Chicago firm specializing in bridge securities, were to arrange the mortgage financing for the purchase. Powell was to put through the resale of the bridge to Burlington County, a role for which he was peculiarly well equipped. Long the dominating political figure in Burlington County, he had for years represented it in the Legislature, first as a member of the Assembly and as Speaker of that body, later in the State Senate, where he also served as President. For 35 years he was active in the State National Guard and from 1939 until 1948 he was its commanding general. At the trial of this action he professed to have lost his political influence following his return from military service abroad, but nonetheless he stepped in as chairman of a group seeking to correlate the efforts of the various factions of his party in the county. More conclusive as to his political control and influence in the county, however, is the manner in which the members of the board of chosen freeholders and of the bridge commission responded without hesitation to his every request in effectuating the transaction here under scrutiny.

In December, 1946, Hanff, who had been authorized by the syndicate to offer as much as $1,500,000 for the Burlington-Bristol Bridge Company stock, completed arrangements with the Pittsburgh owners for its purchase at a price of $1,350,000. This was to be financed by the placing of a $1,000,000 mortgage on the bridge and by giving to the sellers notes for $350,000 secured by a pledge of the bridge company stock. No cash was required to be advanced by the syndicate to meet the purchase price, although subsequently the mortgagee called on it to contribute $25,000 to the company for use as working capital, and in addition some $25,000 was paid

out by the syndicate for the expenses incurred in the transaction. These contributions were paid in by the members of the syndicate pro rata in accordance with their respective stock interests, Hanff, the firm of Ketcham and Nongard, and Powell each having a one-quarter interest, the other one-quarter interest being divided among the other members of the syndicate. The time for the closing of the transaction was to depend upon the placing of the mortgage, a task assigned to Ketcham and Nongard.

To represent it in the purchase of the bridge, its financing and its resale to Burlington County, the syndicate retained the firm of Hawkins, Delafield and Wood, New York municipal bond attorneys. In the spring of 1947 Henry E. Russell of that firm called the attention of the syndicate to the fact that there were statutory obstacles to the accomplishment of its plan, namely, that under the Delaware Bridge Companies Act it was doubtful whether a bridge company had the power to sell its bridges or to merge, consolidate, or dissolve (R.S. 48:5-18), and that the act reserved to the State of New Jersey, acting in conjunction with the State of Pennsylvania, the right to acquire the bridge at a cost prescribed by a statutory formula (R.S. 48:5-22). To remove these obstacles to the planned resale of the bridge, the syndicate had Russell prepare for introduction in the New Jersey Legislature a bill, the purpose and effect of which, among other things, was to deprive the State of its right of acquisition when and if a bridge became the property of a public body. In due course, but not without the intervention of Powell on its behalf, this legislation was enacted into law in the form of an amendment to R.S. 48:5-18 and became effective on July 2 as chapter 401 of the Laws of 1947. In the same legislative session a bill was passed (Senate Bill No. 44) amending R.S. 27:19-28 so as to permit a county bridge commission to acquire or construct interstate bridges without the consent of the other state involved, preventing the construction or transfer of ownership of any other bridge within a ten-mile radius thereof without the consent of the commission,

and providing that the obligations of a county bridge commission would be legal investments for all purposes. This bill was vetoed by the Governor because of its provisions as to legal investments. Notwithstanding the failure of the selling syndicate to have this legislation approved, they were able to complete the arrangements for financing. On October 29, 1947, the transaction was closed and the members of the syndicate, who with their nominees were now the company's sole stockholders, elected certain of their number directors and officers of the company and took over the operation of the Burlington-Bristol Bridge.

The syndicate next turned its attention to the Tacony-Palmyra Bridge which is considerably larger and more heavily travelled than the Burlington-Bristol Bridge. From 1940 to 1942 Robert M. Sherritt, who was engaged in the business of buying and selling bridges and other public utilities and who operated through the Sarjem Corporation, an Illinois corporation of which he was the president and principal stockholder, had been interested in the acquisition of the Tacony-Palmyra Bridge. In late 1947 he again became interested and actively began to negotiate for the purchase of the stock of the Tacony-Palmyra Bridge Company, which was then held by some 1,300 persons scattered over a wide area. This activity by Sherritt was noted in financial circles and was also the subject of rumors within Burlington County. It so happened that Hanff, the newly elected president of the Burlington-Bristol Bridge Company, early in 1948 also became a stockholder of the Tacony-Palmyra Bridge Company and that for years both Ketcham and Nongard had been personally acquainted with Sherritt. While it appears that the syndicate must have contemplated the acquisition of the Tacony-Palmyra Bridge for some time previously, the testimony is that it was not until May, 1948, that Ketcham first discussed with Sherritt the purchase of the Tacony-Palmyra Bridge Company and arranged for Hanff to introduce Sherritt to the president and principal stockholder of the company. In the following months plans

were developed for the purchase of the stock of the Tacony-Palmyra Bridge Company by the Sarjem Corporation and for its resale to the Burlington-Bristol Bridge Company. On September 7, 1948, Sherritt sent out letters to all the stockholders of the Tacony-Palmyra Bridge Company offering to purchase their stock at virtually twice the price at which it was then selling on the Philadelphia Exchange, the total offer amounting to $6,487,500. By October 5, 1948, Sherritt had secured options expiring on November 1, 1948, to purchase 80 per cent of the stock, an amount more than sufficient to compel a reorganization of the company and thereby to effect the acquisition of the complete ownership of it, R.S. 14:11-1 et seq. made applicable by N.J.S.A. 48:5-18 f. Immediately thereafter, on October 6, 1948, Sherritt met with Ketcham and it was finally agreed that the Burlington-Bristol Bridge Company would purchase all of the Tacony-Palmyra Bridge Company stock for $6,700,000 plus certain expenses, provided the transaction could be consummated by October 22, 1948.

During the period in which Sherritt and Ketcham were negotiating for the purchase of the stock of the Tacony-Palmyra Bridge Company, the members of the syndicate were at work making plans and arranging the details for the sale of both bridges to a Burlington County Bridge Commission. Senate Bill No. 44, which had been vetoed by the Governor in 1947, was reintroduced in the 1948 legislative session through the efforts of the syndicate and was again passed by the Legislature, but this time it was approved by the Acting Governor, becoming chapter 288 of the Laws of 1948 effective August 8, 1948. In March, 1948, Ketcham and Nongard, through the office of their Chicago attorneys, Winston, Strawn, Shaw, and Black, retained David M. Wood of the New York law firm of Wood, King and Dawson, New York municipal bond attorneys, to prepare the legal documents relating to the bond issues which they explained to him would be involved in the sale of the two bridges to a bridge commission to be created in Burlington County. By the

summer of 1948 the discussions with Wood had crystallized to the point where he began to prepare drafts of the necessary resolutions, bonds, and other documents required to create a bridge commission and to complete the bond issue of the planned transaction. In July, 1948, Ketcham visited William G. Laemmel, a vice-president of the Chemical Bank and Trust Company of New York, who proved at the trial to be a most reluctant witness, and explained to Laemmel that he, Ketcham, was to be the underwriter of a bond issue necessary for the acquisition of the two bridges by a Burlington County Bridge Commission. Laemmel was the officer in charge of the bank's investment portfolio and Ketcham discussed with him the possibility of the bank purchasing some of the bonds when issued. At the same time that these arrangements were being made to handle the legal and financial phases of the intended resale of the bridges to the county, the syndicate was also securing appraisals of the bridge properties and audit, traffic and engineering reports from recognized experts in these particular fields. It is highly significant that throughout this whole period of intense activity by the syndicate and despite the various arrangements being made by it, some of them in the name of the Burlington County Bridge Commission, neither the members of the board of chosen freeholders nor any one else in the county except the members of the syndicate itself were aware of the forthcoming transaction, and no bridge commission was in existence or even contemplated by the county authorities.

It was not until September 7, 1948, that the syndicate breathed a word of its plans to any public official in the county. On the evening of that day Powell mentioned to Freeholder Frank A. Snover, while the two of them were riding home together from a political meeting, that he had "a business transaction which would be of benefit to Burlington County." Although he gave no details as to the nature of the transaction -- Snover testified that Powell did not even tell him it involved the bridges -- Powell nonetheless took care to caution Snover "not to talk about it" even to his colleagues [8 NJ Page 455] on the board of chosen freeholders. Powell explained to Snover that he was not privileged to go into details, but that in a few days he would be in touch with Snover and would introduce him to some of his associates. Snover heard no more of the matter until almost a month later, when on October 3, a Sunday, Powell called for him at his home and drove him to the Hotel Barclay in Philadelphia. There Snover met Hanff and Ketcham for the first time and they, with Powell, explained to him in detail the proposition for selling the two bridges at a price of $12,000,000 to a bridge commission to be created by the board of chosen freeholders. They told Snover that the purchase by the bridge commission was to be financed by revenue bonds, which would be an obligation neither of the county nor of the bridge commission and not even a lien on the bridges themselves, and they represented to him that these bonds would not only be completely amortized out of toll revenues within 12 years, but that there would then be available to the county a surplus or profit well in excess of $4,000,000. At this meeting Snover was given an amortization table demonstrating how this would come about, a physical survey of the bridges made by the engineering firm of Modjeski and Masters, and a traffic survey by the engineering firm of Coverdale and Colpitts showing past and estimated future traffic and revenues. He was also told that an appraisal of the bridges to be made by the American Appraisal Company would show the bridges to be worth in excess of $13,000,000. Two additional observations on what transpired at this meeting are important. While Snover was told that Hanff was president of the Burlington-Bristol Bridge Company and that Ketcham was representing it in financial matters, and while Snover was aware that Powell was counsel for the company, it was not revealed to Snover what their interest in the company or the proposed transaction was. Moreover, although they knew Snover was not familiar with matters of this sort -- Powell himself testified that Snover "had never heard of revenue bonds" and that the appointment of bridge commissions

"was novel to him" -- they cautioned him to keep the entire matter confidential. Subsequent events revealed Snover to be deserving of the syndicate's confidence, though not of the trust imposed upon him by the people of Burlington County when they elected him a member of their board of chosen freeholders.

At the same time that the ground work for the imposition of the syndicate's plan on the county was being laid by the taking of Freeholder Snover into its confidence, the legal and financial arrangements were being completed to the last minute detail for the consummation of the entire transaction on October 22, 1948. A final agreement was reached with Sherritt on the purchase of the Tacony-Palmyra Bridge Company stock. Wood completed the preparation of the voluminous legal papers required for the closing, even to the extent of having the names of two of the three members of the proposed bridge commission -- these names he had received from Powell in advance of their appointment -- inserted in the bond resolution prior to the document being sent to the printer. On October 2, B. J. Van Ingen, president of the New York bond house bearing his name, was requested to form a syndicate for the sale of the bridge commission revenue bonds, and by October 13, 1948, his firm had completed a preliminary draft of the prospectus. A preliminary appraisal report was received from the American Appraisal Company expressing the opinion that the fair value of the two bridges, including both tangible and intangible assets and an initial working capital of $400,000 (which exceeded by $325,000 the working capital which the commission by its contract was to acquire), was not less than $13,000,000 under the ownership of a tax exempt authority. This preliminary appraisal report did not reveal, however, what method was utilized to arrive at this valuation, nor did it include any figures showing the breakdown of the appraisal as between the two bridges or as between tangibles and intangibles. The subsequent final appraisal report, which was not received until after the entire transaction had been consummated, [8 NJ Page 457] showed, however, that intangibles had in fact been valued in excess of $3,500,000. A legal opinion as to the validity of the bonds was rendered by the New York law firm of Caldwell, Marshall, Trimble and Mitchell for the benefit of a life insurance company which was a prospective purchaser of the bonds. The Caldwell-Mitchell opinion is significant: it points out the manner in which the purchase of the bridges by the bridge commission was to be effected; it provides the figures from which the amount of profit which the Sarjem Corporation and the selling syndicate will realize on the transaction can be computed; it states that the bridges are subject to condemnation in 1950 and 1951 at an approximate cost, including $1,000,000 for estimated expenses of condemnation proceedings, of $6,300,000; it erroneously estimates that the present acquisition of the bridges by the commission at a price of $12,400,000 will result in a saving to the commission in excess of $1,600,000 (on the basis of the figures set forth in the opinion itself it should have indicated that the proposed acquisition by purchase would result in a loss of $2,168,872 over subsequent acquisition by condemnation); it sets forth the names and holdings of the stockholders of the Burlington-Bristol Bridge Company; and it calls attention to the dangers inherent in the almost simultaneous creation of a bridge commission and its authorization and execution of the contract for the acquisition of the bridges by stating: "Such procedure is not contrary to law, in our opinion, but does have some bearing on the question of improvident purchase in view of the limited time available to the commission to exercise its discretion with respect to the amount of the purchase price. We do not believe, however, that this factor alone is sufficient to cast doubt upon the legality or propriety of the purchase price, or arrangements with respect thereto, in view of the previous knowledge of and discussions concerning the subject matter by the Board of Chosen Freeholders and the persons to constitute the membership of the commission." Obviously Caldwell, Marshall, Trimble and Mitchell were misinformed as to the part being

played by the freeholders and the bridge commissioners. Laemmel of the Chemical Bank inspected the bridge properties. He, as well as loan and trust officers of the bank, discussed various financial phases of the transaction with Ketcham and Nongard, with William C. Mulligan of Winston, Strawn, Shaw and Black, the Chicago law firm representing the selling syndicate in corporate and financial matters, with Wood who was handling the bond issue for the syndicate, and with Sherritt. As a result of these conferences the Chemical Bank committed itself to purchase a sizeable block of the bonds, to make the several closing and clearing loans that would be required, and to handle the closing on October 22. It is interesting that despite the negotiations participated in by the various officers of the Chemical Bank prior to the closing on October 22, they had no contact at all with any official of Burlington County. They testified that they simply assumed that the freeholders and the prospective bridge commissioners were being kept informed by the selling syndicate and were actively participating in the negotiations with it. Such was not the fact, however, and in the circumstances it appears naive on the part of the officers of the Chemical Bank to have so assumed. All of these steps were taken by and at the instance of the selling syndicate prior to the appointment of any one to membership on a bridge commission, prior to the creation of a bridge commission by the board of chosen freeholders, and even prior to any of the members of the bridge commission-to-be or of the board of chosen freeholders, with the exception of Snover who was pledged to secrecy, having any knowledge whatsoever of the pending transaction.

The Burlington County Board of Chosen Freeholders held meetings on October 7 and October 15. Although Freeholder Snover had previously been told about the selling syndicate's proposition by Powell on September 7 and had had it explained to him in detail by Hanff, Ketcham and Powell in Philadelphia on October 3, and although he had been in almost daily contact with Powell thereafter and knew that

the plan was to be presented to the board for final action on October 22, he made no mention of it to the other freeholders when they met on October 7 and October 15. His excuse for failing to make disclosure of this matter which so vitally concerned the county was that the sellers were not ready, that he "had not been told that they had everything in shape." He assumed, however, that the sellers "had everything in shape to go ahead" and complied without hesitancy, when Powell telephoned him requesting that he call a conference of the freeholders at his home on the night of October 20. On the afternoon of October 20, moreover, preparatory to the meeting of the board of chosen freeholders that night, Powell went to the office of Thomas D. Begley, the county solicitor and as such legal adviser of the board of chosen freeholders. Begley was also acting as chairman of the county committee supporting Freeholders Snover and LeRoy Church who were then running for reelection. These candidates, incidentally, were also supported by Powell in his capacity as chairman of a harmony group consisting of representatives of the various factions of the party in the county. On this occasion Begley learned for the first time about the syndicate's plan to sell the bridges to the county. Powell gave him the preliminary appraisal report, the amortization table, the Caldwell-Mitchell opinion, and also a copy of an address on the subject of municipal revenue bonds which Wood had delivered two years before at a meeting of a section of the American Bar Association. In this address Wood advocated secrecy in the consummation of deals of this kind, stating that "while 'open covenants openly arrived at' is an excellent idea in theory, in practice you find it impractical."

That evening four of the five members of the board of freeholders, Snover, Church, Clarence C. Price, and Stanley I. Russ -- Freeholder Albert C. Jones was absent and testified that no effort was made to get in touch with him -- assembled at Snover's house. Before beginning to confer, however, they awaited the arrival of Powell who, along with Snover, [8 NJ Page 460] explained the details of the selling syndicate's proposition. The freeholders present were told, among other things, that the proposition had to be accepted "as is" and that the entire transaction had to be concluded in less than 48 hours. It was also misrepresented to them that "it would be a great opportunity for Burlington County to make $4,000,000 over a period of 12 years" and that the municipalities of Burlington and Palmyra would not suffer from a loss of ratables since provision would be made for payments to them by the bridge commission in lieu of taxes. Thus the masterminds of the selling syndicate sought to lull to sleep two groups which might otherwise be inclined to raise objections to their scheme. Copies of the various reports and other documents that had been prepared for or obtained by the syndicate were circulated. During the course of the evening Begley arrived and gave his approval as to the legal aspects of the transaction, although he himself was not experienced in matters of this sort and had only been able to study the complicated documents of the planned transaction for a few hours. Begley further expressed the opinion that it was not feasible for the county to condemn the bridges, since it had a statutory debt limit of $2,500,000 of which only about $2,000,000 was then available, and that as a practical matter revenue bonds could not be utilized to finance condemnation proceedings. No consideration was apparently given to the relative advantages to be gained through condemnation by the State itself or by some other public agency, even though Snover at least was acquainted with the fact that acquisition by a port authority was already under consideration by the State. Neither did any of the freeholders evidence any desire to go behind or beyond the reports furnished them by the sellers or to bargain over the price. For example, when asked whether he should not have made inquiries to determine what the value of the bridges was in the hands of private owners who were subject to taxation and condemnation, Freeholder Price testified "I didn't make inquiries; I just wasn't

interested enough to go and take the time to do it when we had these other reports."

Before the end of the meeting the discussion turned to the selection of bridge commissioners. Snover proposed the names of Fred C. Norcross, Jr., and Howard R. Yocum. Norcross had previously been a freeholder, but had resigned to serve in World War II and upon his return had gone to the freeholders and requested that he be considered for some future political appointment. Yocum, an attorney, was interested in politics and had been proposed for political office by his local political organization. More important, Yocum was known to Powell, having served as Powell's personal military aide for over a year while both were on active duty with the army in World War II. Snover had previously discussed the subject of appointments with Price -- without, however, revealing that a bridge commission was involved -- and with Powell and they had decided on these two men: in fact, their names were already printed in the bond resolution of the still-to-be-created bridge commission. This document was among the papers distributed to the freeholders that night. Begley pointed out that under the statutes one of the three bridge commissioners had to be a member of the opposing political party, and so it was mutually agreed that Daniel Lichtenthal, a former county prosecutor, would be the third appointee. It was decided that Powell was to notify Norcross and Yocum of their selection and that Snover would notify Lichtenthal. Powell informed the freeholders that there would be a meeting in Philadelphia on the following day, and with an admonition to secrecy the meeting concluded.

On the afternoon of the next day, October 21, the newly selected bridge commissioners-to-be journeyed in accordance with instructions to the Hotel Barclay in Philadelphia, where they were joined by Freeholder Price -- the other freeholders were too preoccupied with other matters to attend -- County Solicitor Begley, Syndicate Members Bell, Hanff, Ketcham and Powell, and Wood, the syndicate's attorney. This was [8 NJ Page 462] the first time that Wood had come in contact with the county officials and prospective officials. He testified that up until this time he had been under the impression that they were aware of and had been taking part in the preparations, but that he then realized that this was not the case. Doubt is cast on this avowed ignorance of Wood prior to this meeting as to the participation by the prospective bridge commissioners by the fact that less than a week before Powell had been unable to furnish Wood with the name of the third commissioner for inclusion in the bond resolution. In any event, Wood was not deterred from later giving an opinion unqualifiedly approving the bond issue and from advising the various persons interested in it that everything was entirely proper and legal, action that was in accord with Wood's published philosophy on such transactions. At this meeting the syndicate members and Wood explained the details of the transaction to the prospective appointees and presented them with the numerous and voluminous reports, opinions and other papers pertaining to the transaction which they as sellers had secured or prepared. It was made clear to the bridge commissioners-to-be that this was "a one package deal" which had to be accepted " in toto." Strangely enough the commissioners-to-be were even content to accept the interest rates on the bonds as fixed by the syndicate without making independent inquiry as to whether or not they were reasonable -- inexcusable neglect in view of their knowledge that Ketcham and Nongard were in charge of the financial aspects of the transaction for the selling syndicate and were also to be the purchasers of the entire bond issue. Nor was any question raised and independent advice sought as to whether $355,710 was a reasonable amount to be paid to Ketcham and Nongard for bond discount. In fact, no independent inquiry or investigation was made or advice sought with respect to any phase of the whole complex transaction. Not a single change in the entire proposal was made or even suggested by the commissioners-to-be or for that matter by the freeholders; they were all apparently quite willing to

go along with anything and everything the syndicate proposed to them. The commissioners-to-be did not even make an effort to ascertain what their duties and responsibilities as bridge commissioners would be. Although there was testimony that such was not the fact, the inference is nevertheless inescapable that their appointment as bridge commissioners was conditioned upon the willingness of the prospective appointees to go through with the plan as proposed. The commissioners-to-be were informed of the need for both haste and secrecy, attorney Wood explaining to them that the matter must be kept "absolutely private and confidential" to avoid the possibility of taxpayers' suits. Before the end of the meeting Yocum, Norcross and Lichtenthal apparently gave the plan their approval, for they agreed among themselves as to who the officers of the bridge commission would be, received instructions as to just how they were to proceed on the morrow and left prepared to assemble the next day at the Burlington County Court House to effectuate the transaction.

At 10:30 o'clock the next morning, Friday, October 22, the board of chosen freeholders met for its scheduled public meeting. As the first order of business and without discussion it unanimously adopted a resolution creating the Burlington County Bridge Commission, appointing Yocum, Norcross and Lichtenthal as members thereof and fixing their combined annual salary at $9,000, to be divided among them pursuant to statute. This action was taken notwithstanding the fact that three of the freeholders had first learned of the plan at the meeting at Snover's house only 36 hours before, and even though Freeholder Jones, who had been absent at that meeting, had not learned of the plan until a few minutes earlier when the freeholders had met in caucus. The willingness of Jones to "follow the leader" without exercising his own judgment and discretion is well indicated by the fact that when presented at the caucus with the various reports pertaining to the bridges he said, "I do not have time to digest all of these, but if these gentlemen say it's a good deal,

it is all right for me." The extent of Jones' lack of knowledge of the transaction is further revealed by his testimony to the effect that he did not even know there was a formula for purposes of condemnation and that if he had so known he would have acted differently. Incidentally, at the time Jones was running for Congress with the aid and support of Powell. It is to be borne in mind, moreover, in evaluating the conduct of the freeholders that none of them had secured advice or counsel independent of that urged upon them by the sellers, except the advice of Begley, who himself was unfamiliar with these matters, and all of them were inexperienced in transactions such as this.

The syndicate's plan was carried out with unparalleled speed. The prospective bridge commissioners, together with Begley, Ketcham, Powell and Wood, were already assembled in the Court House adjoining the Administration Building where the board of chosen freeholders was in session. When they received a certified copy of the board's resolution creating the bridge commission and appointing themselves as commissioners, they immediately and without discussion proceeded under the supervision of Wood to do that which they had been briefed to do the night before. They elected Yocum chairman, Lichtenthal vice-chairman, and Norcross secretary-treasurer of the commission. They at once adopted by-laws and a host of resolutions, reports and agreements which had been prepared for them in advance by the syndicate's attorneys. They appointed the selling syndicate's firm of traffic engineers, Coverdale and Colpitts, to be their own without their having been in touch with it or even being advised as to its fees, and they adopted the firm's report on traffic revenues which had been prepared for the sellers. They appointed Frank Masters of the firm of Modjeski and Masters as their ...


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