This is a declaratory judgment action to determine whether the City Council of the City of East Orange has exclusive power to acquire, sell or otherwise dispose of any right, title or interest in lands constituting the water reserve of the City of East Orange, or whether that power rests in the board of water commissioners of that city. The action was instituted by the City of East Orange, a municipal corporation of the State of New Jersey. Thereafter, by court order the City Council of the City of East Orange, consisting of the ten above-named individuals, was added as a party plaintiff. At the pretrial conference permission was granted to serve and add as party defendants the four individual members of the Board of Water Commissioners of the City of East Orange.
One of the issues raised at the pretrial was whether or not the board of water commissioners is an entity that can be sued. For the purpose of this action the question must be answered in the affirmative. This is due to N.J.S. 2A:16-53 and 56 which respectively provide that
"A person [including a municipal corporation Bergen County v. Port of N.Y. Authority , 32 N.J. 303 (1960)] interested under a deed, will, written contract, or other writing constituting a contract, or whose rights, status, or other legal relations are affected by a statute * * * may have determined any question of construction or validity arising under the * * * statute * * * and obtain a declaration of rights, status or other legal relations thereunder."
"When declaratory relief is sought, all persons having or claiming any interest which would be affected by the declaration shall be made parties to the proceeding." (Emphasis added)
The main question arose in 1960 when defendant board of water commissioners, acting without the consent and approval of the city council, executed an easement and a lease affecting water reserve lands of the City of East Orange.
In a resolution adopted March 28, 1960 the board of water commissioners authorized its president and secretary to execute a 40-year easement to defendant Transcontinental Gas Pipe Line Corporation (Transcontinental). The easement, which was executed on that date and approved by the mayor on March 30, 1960, gives Transcontinental the right to use a strip of land 30 feet wide across the water reserves owned by the City of East Orange in the Borough of Florham Park, Township of Livingston, Town of Millburn and Village of South Orange, for the purpose of constructing, operating and maintaining a 36-inch pipeline for the transportation of natural gas. This agreement was never submitted to the city council for its approval.
On or about May 5, 1960 the board of water commissioners entered into a 35 1/2 year lease with defendant Jersey Central Power & Light Company (Jersey Central), wherein Jersey Central was given a right of way of a width of 50 feet across East Orange water reserve land located in the Township of Livingston, for the purpose of constructing, operating and maintaining one or more circuits for the transmission and distribution of electrical energy. This lease was also entered into without the consent and approval of the city council.
There is no suggestion that the board of water commissioners did not obtain a fair price for the use of the land as set forth above, or that the particular uses were in any way harmful to the city. It is plaintiffs' contention that any purported action which will affect the right, title or interest of the city in its water reserve lands must be approved by the city council. It is argued that only the city council has authority to empower the board of water commissioners to take such action. Therefore, plaintiffs
seek to restrain the board of water commissioners from hereafter acting in any manner which might affect the right, title or interest of the water reserve lands until and unless the city council has first duly authorized and approved such action. They also seek to require the board of water commissioners to submit for city council approval both the easement and lease set out heretofore.
The board of water commissioners denies plaintiffs' contentions and by way of counterclaim asserts the right to make such contracts in connection with the waterworks and water supply system as are necessary or expedient in the proper conduct of its business without obtaining the approval or concurrence of the city council. The board of water commissioners seeks a judgment that it and not the city council has exclusive executive, legislative and supervisory jurisdiction over the waterworks and the water supply system of the City of East Orange, and that it has power and authority to lease, acquire, sell or create any interest in lands comprising the waterworks or water supply system of the City of East Orange. It also seeks a determination that the agreements already entered into without city council approval are valid and subsisting.
Defendants Transcontinental and Jersey Central deny that the action of the board of water commissioners in executing the easement and lease was ultra vires , and contend that the action taken by the board of water commissioners was a valid exercise of the authority and power granted to it. By way of affirmative defense, Transcontinental raises the doctrine of estoppel against the plaintiffs. It is alleged by Transcontinental that by reason of the city council's failure to take appropriate action to prevent the execution of the March 28, 1960 easement, and by reason of the consideration paid and assumed by Transcontinental (coupled with its construction of the natural gas pipeline), plaintiffs are estopped from maintaining and prosecuting their civil action for the declaratory judgment demanded by the complaint. (The pretrial order states
that defendant Jersey Central takes no position as to the powers here being construed but "will be happy to have the matter determined." Jersey Central was represented at the trial, but no argument was made in its behalf.)
In the pretrial order all defendants admit that the lands constituting the water reserve were acquired over a period of nearly 60 years dating back to 1903, a date well prior to the establishment of the board of water commissioners. Lands have been acquired either in the name of the City of East Orange or in the name of the Mayor of the City of East Orange and City Council of the City of East Orange. The bulk of the lands was acquired out of the proceeds of bond issues authorized by ordinances adopted by the City Council of the City of East Orange. The principal and interest of these bond issues have been met from revenues from the sale of water, which revenues were collected by and deposited with the Board of Water Commissioners of the City of East Orange.
All parties have stipulated in the pretrial order that for the purpose of this action the past course of conduct of the board of water commissioners or the city council with respect to the sale, lease or acquisition of land in the water reserve is immaterial and irrelevant, the powers which each body possesses being a question of law unaffected by such conduct.
On June 2, 1908 the City of East Orange did adopt by referendum L. 1908, c. 250 (R.S. 40:103-5) as the city charter of the City of East Orange. It is provided in section 5 that the officers of the city shall be "A City Council consisting of two members from each ward," "An Engineer of the Water Department," and "The members of the Board of Water Commissioners, if and when appointed." Section 31 (31) provides:
"* * * Whenever a Board of Water Commissioners is established, pursuant to the provisions of this act, the city officer herein provided for and designated as the Engineer of the Water Department, shall thereafter be appointed by such Board of Water Commissioners and his duties shall be prescribed by such board."
The words "Whenever a Board of Water Commissioners is established pursuant to the provisions of this act," refer to section 37(38) of the act:
"37. The City Council shall have power to pass and adopt ordinances for the following purposes:
(38) To establish, maintain and abolish, from time to time, a Board of Water Commissioners. Said Board of Water Commissioners, when established and appointed, shall have the custody, control and management of the waterworks and water supply of the city; and the said board shall have power and authority to maintain, repair, equip and extend the waterworks and water supply system of the city and each and every part thereof; and the said board shall have power and authority to establish and, from time to time, to change the rates to be charged for water supplied to the inhabitants of the city or others, and also to adopt and establish rules and regulations with respect to the use and protection of the water supply and waterworks and each and every part thereof.
Every rule, regulation or resolution of the Board of Water Commissioners shall, after its adoption by the Board, be submitted to the Mayor of the city; if he approve it he shall sign it and thereupon it shall become effective, and if he disapprove it he shall indorse thereon his disapproval and his reason for so doing and return it to the clerk of the board; and the board shall then reconsider the same at its next regular meeting, if upon such reconsideration it receives the affirmative votes of all members of the board, then it shall become effective, notwithstanding the disapproval of the Mayor.
The Mayor shall return to the board every rule, regulation or resolution presented to him within ten days after he receives it, otherwise the same shall become effective without the action of the Mayor thereon on the day following the expiration of said period of ten days.
The board shall have power and authority to employ a superintendent, water registrar, engineers and such other assistants as may be necessary, who shall thereby be and become city employes and also to make such contracts as are necessary or expedient in the conduct of the business intrusted to its care.
The moneys received from the inhabitants of the city or others for water supplied or other service performed by the water department and also the moneys raised by taxation or the issue of bonds in such city for the uses or purposes of the water department shall be paid to the Collector of Taxes, and shall be paid over to the City Treasurer to be kept by him in a special Fund to be known as the Water Department Fund which shall be paid out only on warrants signed by the Chairman or President of the Board of Water Commissioners and the Mayor.
The said board shall, on or before a certain day in each year, to be fixed by the said board, cause a careful estimate to be made of the interest on the water debt and cost of managing, of keeping in repair and operation of the works for the ensuing year, and of the amount to be received during the same year for the use of water and water rents, and of the deficiency, if any, of such receipts for the payment of such expenditures, and shall report the same, in writing, to the City Council of said city, and the said deficiency said City Council shall raise by tax as other city taxes are assessed, levied and collected."
It is apparent that a board of water commissioners created pursuant to this section would be but a temporary body; one capable of being abolished at the whim of the city council. There is however, a section in the charter act which provides a method for the creation of a board of water commissioners whose existence is subject only to the will of the people. Section 37(39) provides:
"Whenever a petition shall be filed with the City Clerk, signed by at least one hundred citizens, who were enrolled as legal voters of the city at the time of the last preceding general or city election, requesting the submission to the voters of the city of a proposition to create or establish in such city any one or more of the aforesaid boards, then the City Council shall provide that such proposition or propositions be submitted to the legal voters of the city, either at the next general or city election or at a special election, in accordance with the prayer in said petition; and in the event that such proposition or propositions are submitted at a special election then the same shall be held within a period of sixty days from the date of the presentation of such petition to the City Council on a day to be fixed by it. * * *
If at an election held as hereinabove provided any such proposition be assented to by a majority of those of the legal voters of the city, who shall vote either for or against the adoption thereof, then it shall be the duty of the City Council to forthwith create and establish a Board of Water Commissioners, or other board, according to the proposition so submitted and adopted; any board created and established pursuant to any such vote may be abolished in a like manner and by a like vote and not otherwise."
On May 4, 1909, at a special election held in the City of East Orange, the establishment of a permanent board of water commissioners was authorized by the voters. Thereafter on June 15, 1909 the city council, acting pursuant to
subsection (39) just quoted, enacted Ordinance No. 29 establishing a board of water commissioners. A reading of that subsection indicates that a board of water commissioners contemplated by the subsection is not endowed with any greater power than a board created pursuant to section 37(38), supra.
The powers of the city council are specifically enumerated in section 36 of the Charter Act. Those powers which are relevant to ...