On appeal from the Superior Court, Chancery Division, Camden County.
For affirmance -- Justices Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- Justice Heher. The opinion of the court was delivered by Wachenfeld, J.
The inquiry here is whether a covenant in a deed for real estate, given by a municipality, releasing the property from further assessment for benefits, is legal or ultra vires. The question is centered in an action brought by owners of premises in the Township of Pennsauken, wherein they seek an order restraining the township officials from collecting the subject assessment and its cancellation as to them; they ask also damages for the amount already paid and for the additional sums due in the event it be determined the other relief sought cannot be granted.
The allegations of the complaint set forth the plaintiffs are owners of premises formerly held by the defendant township; that the lands, along with other property, were conveyed by the township to Capital Development Corporation in 1941, and by Capital to plaintiffs' predecessors in title in 1943, and thence to plaintiffs in 1945. The deeds from the defendant township to Capital contained the following covenants and agreements running with the land:
"Subject to all existing restrictions of record, easements and right if any of public utilities. The above described lands and premises shall not be subject to assessment for the cost of any municipal sewerage facilities which shall be erected or constructed for the purpose of permitting the use of any sewer lines or mains now laid in the streets upon which the above described lands and premises abut. However, the above described lands and premises shall be subject to assessment for municipal improvements and municipal services where the facilities for said services and said improvements are not presently installed in said streets or in or upon the lands and premises above described. The above described lands and premises together with any improvement or improvements to be erected thereon, shall be free and clear of taxes to and including December 31, 1941, but shall be subject to the payment of taxes thereafter."
The complaint reveals, further, that over 27 years ago the township embarked upon the construction of sanitary sewers; however, they were not connected to the township sewerage system and were not put into operation until 1950. During that same year the township undertook to put in certain new sanitary connecting sewer lines, sanitary trunk sewer lines and two new sewage pumping stations. The pumping stations, in addition to being used in conjunction with the new sanitary connecting lines, were also to make usable the sanitary sewers installed as part of the earlier project.
The substantial cost of all this necessary work was in 1950 assessed against the benefited property owners, including the plaintiffs. Thereupon they challenged the legality of the assessments, joining with 129 other plaintiffs in filing a complaint in lieu of prerogative writ against the township. The attack was not timely. This court, in upholding their validity, declared the assessments could properly be challenged under R.S. 40:56-54, within the time limited therein, and not by way of an action in lieu of certiorari, where the charge of illegality was founded, inter alia, in covenants in deeds. Holloway v. Township of Pennsauken, 12 N.J. 371 (1953).
Having failed in the earlier suit, the plaintiffs instituted this action based on the theory that the levy and assessment for the sewer improvements by the defendants are a breach of the covenants and warranties referred to, and they demand judgment in the form set forth above.
The Chancery Division granted summary judgment in favor of the defendants on the grounds that the matters and things complained of are res adjudicata; that the plaintiffs failed to take an appeal from the assessment within the time and manner provided by law; that the plaintiffs failed to seek a review of the assessment by a proceeding in lieu of prerogative writ or otherwise within the time provided by law; that the plaintiffs are guilty of laches; that the covenants are ultra vires the township and void; and that plaintiffs, having failed to include an application for injunctive
relief and damages in the Holloway suit, are barred from seeking that relief here; and the complaint fails to state a claim upon which relief can be granted and there is no genuine issue as to any material fact.
The present cause was certified here on the court's own motion. R.R. 1:10-1.
All of the bases of the lower court's decision have been briefed and argued before us. Inasmuch as our conclusion turns upon the substantive defense of ultra vires, a consideration of the others presented is rendered unnecessary.
That the defense is available to a municipal corporation is no longer open to question. In Hill Dredging Co. v. Ventnor City, 77 N.J. Eq. 467 (Ch. 1910), the court pointed out a municipal corporation cannot be bound by an engagement which it had no power to make and its corporate powers ...