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Brandt Enterprises Inc. v. City of Camden and Parking Authority

Decided: July 10, 1962.


Schalick, J.s.c.


Plaintiff here seeks, by way of a proceeding in lieu of prerogative writs, to have an appropriation ordinance of the City of Camden (city) declared void. The ordinance provides for the appropriation of $650,000 and authorizes the issuance of $618,000 in bonds or notes of the city for parking improvements or purposes. The property sought to be acquired is described in the ordinance by metes and bounds. By stipulation filed by counsel, it appears that the described property is owned by the Parking Authority of the City of Camden (parking authority). A conveyance of these properties to the city would include substantially all of the capital assets of the parking authority, save a one-year lease on a parcel not included in the contemplated conveyance, an option to purchase still another parcel, the office equipment and furniture plus the working capital of the parking authority. It is further stipulated that the proposed conveyance is not pursuant to any plan to terminate the existence of the parking authority. At present the parking authority is indebted by a promissory note in the amount of $450,000, payment of which is pledged against revenues, plus contractual debts of some $32,000. Plaintiff attacks the ordinance by challenging the right of a municipality to appropriate money and issue securities in order to acquire the presently encumbered assets of a municipally-created parking authority.

Plaintiff contends that, pursuant to N.J.S.A. 40:11A-24, a parking authority may not convey any of its projects to the city until after all bonds and other obligations have been finally paid and discharged, thus any present appropriation by the city in an attempt to purchase the assets while still encumbered is ultra vires both

the city and the parking authority. N.J.S.A. 40:11A-24 provides:

"When any authority shall have finally paid and discharged all bonds or other obligations, which together with interest due thereon, shall have been secured by a pledge of any of the revenues or receipts of a project, it may, subject to any agreements concerning the operation or disposition of such projects, convey such project to the municipality or county creating the authority. * * *"

The purport of this section is to protect the interest of those holding revenue obligations of the authority by requiring payment and discharge before the conveyance is made. The time when this section becomes operative is when the obligations have been retired.

The inquiry thus presented is whether the outstanding note of the parking authority will have been retired at the time that a conveyance to the city is attempted. If the answer to the above inquiry is no, then the authority is powerless to act since N.J.S.A. 40:11A-24 makes payment and discharge conditions precedent to such a transfer. Since no transfer as yet has been attempted, the issue as to whether or not the obligation will, at some future time, be retired is, at this point, speculative and academic insofar as the present attack upon the appropriation ordinance is concerned. The payment of the parking authority note on this project simultaneous with the conveyance to the city may be reasonably contemplated, and although such a state of facts is not before the court, it would meet the statutory requirements. The result would be a compliance with N.J.S.A. 40:11A-24, cited supra.

No citations need be given to substantiate the proposition that a municipality may not legally authorize the expenditure of municipal funds if the object thereof is illegal. The salient fact remains, however, that the legality or illegality of a transfer such as this is determinable only at some future time, viz. , when a transfer by the parking authority to the city is attempted. In

accordance with sound judicial policy, this court declines to pass upon the validity of an act to take place in futuro.

The only vital issue then remaining is the legal efficacy of the city in passing the appropriation ordinance in the first instance. Plaintiff concedes that a municipality has the general power to acquire lands for public parking purposes. N.J.S.A. 40:60-25.1 empowers every municipality to "acquire, by gift, devise, purchase or condemnation or in any other lawful manner, lands, buildings or other property, or interests therein, for the purpose of making facilities available to the public for the public parking of vehicles." But, plaintiff contends, the city may not purchase parking lot sites from "its own" parking authority.

A parking authority created pursuant to the Parking Authorities Law, N.J.S.A. 40:11A-1 et seq. is not a subdivision or agency of the municipality creating ...

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