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McCutcheon v. State Building Authority

Decided: March 4, 1953.

GEORGE J. MCCUTCHEON, PLAINTIFF,
v.
STATE BUILDING AUTHORITY, A BODY CORPORATE AND POLITIC OF THE STATE OF NEW JERSEY; THEODORE D. PARSONS, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY; WILLIAM J. DEARDEN, DIRECTOR OF THE DIVISION OF MOTOR VEHICLES OF THE STATE OF NEW JERSEY; WALTER T. MARGETTS, JR., TREASURER OF THE STATE OF NEW JERSEY; FRED V. FERBER, DIRECTOR OF THE DIVISION OF PURCHASE AND PROPERTY IN THE DEPARTMENT OF THE TREASURY OF THE STATE OF NEW JERSEY, AND PRENTICE REALTY CO. OF TRENTON, A N.J. CORP., DEFENDANTS



Smalley, J.s.c.

Smalley

This is an action brought by a taxpayer of the State of New Jersey seeking to set aside a resolution of the defendant State Building Authority providing for the issuance of certain bonds and to declare invalid certain leases entered into between the defendant Authority with the State of New Jersey, upon the grounds that the act creating the Authority, L. 1950, c. 255, as amended by L. 1952, c. 224, N.J.S.A. 52:18 A -50 et seq. , is unconstitutional as violative of Article VIII, Section II, paragraphs 2 and 3, and Article IV, Section 1, paragraph 1, of the New Jersey Constitution of 1947.

The second count of the amended complaint challenges the right of the State to enter into certain leases upon the grounds that the aggregate rental of such lease creates a debt or liability of the State in excess of the constitutional debt limit and that the lease obligates the State to make appropriations of state funds over a period of years in violation of paragraphs 2 and 3 of Article VIII, Section II , of the Constitution of this State and seeks the following relief:

(A) Enjoining the defendants and each of them from taking any action to carry the purported leases above referred to, into effect or to pay any rentals or other expenses due thereunder, or to issue or sell any bonds the financing or payment of which are dependent upon the validity of such leases.

(B) Declaring that L. 1950, c. 255, and the supplements thereto and amendments thereof are unconstitutional in that they violate Article IV, Section I, paragraph 1, and Article VIII, Section II, paragraphs 1, 2, and 3 of the Constitution of 1947.

(C) Declaring that the resolution or resolutions of the State Building Authority and the execution of the leases pursuant thereto are unconstitutional and void.

(D) Declaring and determining the validity and constitutionality of the actions of the several parties and the rights or obligations arising thereunder.

There appears to be no factual dispute and the following stipulation of facts, while not appearing to be at all inclusive, is as follows:

"1. That the State Building Authority is a body corporate and politic created pursuant to the provisions of R.S. 52:18 A -50, et seq.

2. That the State Building Authority has issued bonds in the amount of $675,000 and by Resolution adopted on December 18th, 1952 has provided for the issuance of $675,000 State Building Authority Revenue Refunding and Improvement Bonds Project A for the purpose of providing funds to redeem its general corporate bonds previously issued and to pay the cost of erecting the Somerville Barracks for the State Police on the site acquired or to be acquired therefor.

3. That the State Building Authority has entered into a lease with the State of New Jersey for 12 sites to be used for Motor Vehicle stations which lease runs for a period of 20 years at an annual rental of $33,374. or an aggregate rental for the 20 year period of $667,480. exclusive of other charges made in said lease.

4. That the lease referred to in Paragraph 3 obligates the State to pay for the maintenance and repair of the stations so rented and all costs incident to the ownership and operation thereof during the term including taxes, if any, and insurance premiums.

5. That the State Building Authority has entered into leases with the State of New Jersey for property known as "Princeton Barracks" and "Somerville Barracks" which leases obligate the State to pay, in addition to the rental set forth therein, all costs incident to the ownership and operation thereof during the term including taxes, if any, and insurance premiums.

6. That the total aggregate rentals of the leases above referred to when added to the debts and liabilities of the State of New Jersey exceed one per cent of the total amount appropriated by the general appropriation law for the year 1952."

It was orally stipulated for the record that the lease agreement entered into by the Director of the Division of Purchase and Property, acting on behalf of the Division of Motor Vehicles, with Prentice Realty Co. of Trenton, for the rental of certain premises as covered by the lease for a period of ten years is to be considered as part of the facts in this motion.

The State Building Authority is a body corporate and politic created pursuant to the provisions of N.J.S.A. 52:18 A -50 et seq. Among the purposes for which it was created are the acquiring, constructing, maintaining, equipping, repairing, furnishing and operating of motor vehicle

inspection stations at a site or sites specified by the Director of Motor Vehicles and approved by the Attorney-General and State House Commission, and state police barracks at a site or sites as specified by the Superintendent of the State Police and approved by the Attorney-General and State House Commission (N.J.S.A. 52:18 A -52).

In making leases the Authority is limited to making such leases only with the State or any departments, agencies and instrumentalities of the State. (N.J.S.A. 52:18 A -60, subd. b)

The rents and charges which the Authority is authorized to charge must be at reasonable rates to be determined by the Authority for the purpose of providing for the payment of the expenses of the Authority, the construction, improvement, repair, equipping, furnishing, maintaining and operation of its facilities and properties; the payment of the principal of and interest on its obligations, and to fulfill the terms and provisions of any agreements made with the purchasers or holders of any such obligations (N.J.S.A. 52:18 A -60).

Any department or agency and any instrumentality of the State is empowered to enter into a contract with the Authority for the use of any space in any project, and any such contract is declared to be binding upon the department, agency or instrumentality of the State, notwithstanding that no appropriation was made or ...


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