On certification to the Appellate Division of the Superior Court.
For reversal -- Chief Justice Vanderbilt, and Justices Heher, Jacobs and Brennan. For affirmance -- Justices Oliphant, Wachenfeld and Burling. The opinion of the court was delivered by Vanderbilt, C.J.
This is an appeal from the dismissal by the Law Division of the Superior Court of a petition for a summary investigation into the affairs of Delaware Township under N.J.S.A. 40:6-1.
The pertinent provision of the statutes according to which the petition was presented (N.J.S.A. 40:6-1) provides that:
"A judge of the Superior Court may, in his discretion, make a summary investigation into the affairs of any county or municipality, whenever
(a) A petition for such investigation shall be presented to him signed by twenty-five freeholders who have paid taxes on real estate within one year, of the county or municipality, as the case may be, and such petition sworn to and subscribed by them sets forth that they have cause to believe that the moneys of such municipality or county are being, or have been, unlawfully or corruptly expended; * * *"
On April 15, 1955 27 freeholders of the Township of Delaware presented an application seeking a summary investigation into the affairs of Delaware Township primarily in connection with the construction and operation of a sewage treatment plant. The petition alleged
1. That the township was paying excessive fees to its engineer; that it was not receiving full measure of services of such fees; that township contracts require a fee of 5% to be paid by the contractor to the township engineer which is in addition to the 7% paid by the township; and that the position thus assumed by the township engineer is improper, unethical and illegal.
2. That the sewage treatment plant location was changed after the bids were accepted.
3. That the plant was not completed in April 1955 and that the township engineer failed to invoke the penalty clause against the contractor for failure to complete the plant by August 31, 1954.
4. That competitive bidding on the contract was thwarted when the township engineer, prior to bidding, ordered certain equipment and required bidders to allow a total of $24,950 for this equipment in their bids.
5. That provision for at least 680 feet of sewer lines was contained in the contract which were not contained in the enabling ordinance and therefore illegal.
6. That the sewage treatment plant was of antique design, highly overpriced and inefficient in operation and of faulty construction which will require excessive maintenance and power costs.
7. That the plant as constructed was a health menace and that the township officials were so notified by the State Department of Health.
Attached to the petition were 21 exhibits consisting in part of affidavits setting forth the information learned on inquiries made by some of the petitioners in attempting to learn the facts; photographs showing cracks in the walls of the settlement beds and reports and letters from the State Department of Health criticizing the maintenance and operation of the existing sewer plants in the township and pointing to the inadvisability of adding another of small capacity.
Prior to the granting of the order directing the township to show cause why the requested investigation should not be had, the judge directed each of the petitioners to appear personally before him and be examined in open court.
This was error as was the taking of testimony in the circumstances of this case of five witnesses in open court on behalf of the township in opposition to the petition and of two witnesses on behalf of the petitioners in support thereof, which we shall comment on later in this opinion. The court by so doing turned what was intended under N.J.S.A.
40:6-1 to be a "summary investigation" into a plenary hearing. The sole requirement of the statute is that 25 freeholders, who paid taxes on real estate within one year, subscribe and swear to a petition which sets forth that they have cause to believe that financial affairs of their municipality are being unlawfully or corruptly mismanaged. Once the court has determined the existence of these jurisdictional factors the discretion of the court is to be exercised. Any preliminary trial of the alleged charges with its incidents of cross-examination and rebuttal prior to the decision of the court to make a summary investigation is premature and has the tendency to devitalize an otherwise effective mechanism. The instant case furnishes a good example. As we said in In re Tiene, 13 N.J. 478, 490 (1953), "on the return of the order to show cause the municipality may, of course, submit affidavits in denial or in explanation of the applicant's charges." The inquiry, if any, should be limited to the determination of whether or not the court is being imposed upon by the petitioners, Park Ridge v. Reynolds, 74 N.J.L. 449 (E. & A. 1906). Nothing more is required to weigh the discretion of the trial judge in favor of the investigation than proof of the prima facie existence of reasonable "cause to believe that the moneys of such municipality or county are being, or have been, unlawfully or corruptly expended."
The comments made by the trial judge at the beginning of his preliminary inquiry give a clear indication of his purpose in following such procedure. He announced to the petitioners:
"THE COURT: Gentlemen, I have before me an application by a number of freeholders of Delaware Township for a summary investigation, and, having fortunately, or unfortunately, been through several of these before, I think I am somewhat experienced in them.
Frequently in the past, I have had persons, after the investigation has been started and taken up a lot of time, the signers of the petition come to me and say, 'Well, we didn't understand it, and we want to withdraw from it.' and I have just not permitted that.
Once, if the ball starts rolling in a thing like this, it is like a snowball; it accumulates, and you never know where it is going to stop.
It is up to me to direct the experts who do the actual investigating, but, on the other hand, I cannot stop them. They will start off on one lead, and they will keep going, and, since they are the ones most familiar with it, it would be in very poor taste for me to stop it.
Now, a thing like this -- I have read this petition carefully, and the exhibits attached to it -- if it is allowed, we get the investigators going, it is going to require at least two lawyers, I don't know how many engineers, an accountant or an accounting firm, and the stenographic services. I would put the minimum expense -- and yet, this does not and should not have anything to do with it -- but the minimum expense I would put at $10,000, and I would hope the maximum would be $100,000.
That, of course, is paid by the taxpayers of the municipality, if it is justified.
If the investigation is not justified, then it is paid by you gentlemen.
You will put up a bond, to take care of the expense, in the event the investigation does not justify the municipality paying for it.
Of course, by the municipality is meant all of the taxpayers in the municipality.
Now, I am going to have every signer of this petition sworn, and make certain that he appreciates, knows what he is doing and agrees to it, and is going to put up a bond sufficient to take care of this, in the event that it is not justified * * *"
All but three of the petitioners appeared and were examined. One of the three who did not appear, later withdrew and removed her name from the petition and by letter to the judge stated that in her opinion the action was purely political.
The testimony of the first witness examined by the court is characteristic of the court's approach to these petitioners:
THE COURT: Mr. Ries, you have signed this petition, and I have just outlined to you what it entails.
Now, is that your signature on that petition?
THE COURT: And you thoroughly understand, do you --
THE COURT: (continuing) -- what this is?
THE WITNESS: That's right.
THE COURT: And you are willing to put up a substantial bond, in case the investigation is not warranted, to go through with it?
THE WITNESS: May I ask this question?