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Jersey City Sewerage Authority v. Housing Authority

Decided: May 6, 1963.


For affirmance -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Schettino, J.


Plaintiff, the Jersey City Sewerage Authority (Sewerage), brought an action in the Superior Court, Law Division, Hudson County, against the defendant, the Jersey City Housing Authority (Housing), to recover service charges for treating defendant's sewage. In its answer defendant relied primarily on two lines of defense: (1) that the Local Housing Authorities Law, N.J.S.A. 55:14A-1 et seq., exempts the defendant from sewerage charges, and (2) that inasmuch as the City of Jersey City (City) has agreed, by written contract with Housing, to furnish the services referred to without charge, liability, if any, for these charges rests with City. Defendant impleaded City as a third-party defendant in order to obtain indemnification in the event plaintiff prevailed. City denied any obligation to indemnify Housing.

The case was tried on two stipulations of facts. The trial court found for Sewerage and City and against Housing. 70 N.J. Super. 576 (Law Div. 1961). Defendant appealed, and while the case was pending in the Appellate Division, we certified it on our own motion.

In 1939 City and Housing signed a cooperation agreement relating to specified housing projects to be erected by the latter. Under the agreement Housing was to pay City an annual sum "in lieu of taxes and in lieu of other fees or charges," and in return City was to provide municipal services "of the same character as those furnished for other dwellings and inhabitants of the City." In 1950 these parties executed another cooperation agreement relating to additional housing to be erected. Once again Housing was to make annual payments "in lieu of such taxes and special assessments and in payment for services, improvements and facilities" which, at the date of the contract and thereafter, City furnished "without cost or charge to other dwellings and inhabitants in the City." Both contracts expressly included sewerage service within the examples of municipal services to be rendered. Until 1957

City provided, without charge, sewerage service to all its property owners, including Housing.

By ordinance dated December 20, 1949, City, in response to a mandate of the Interstate Sanitation Commission, dated July 7, 1949, directing City to take steps to construct proper treatment facilities for the sewage it dumped into navigable streams, created the Jersey City Sewerage Authority. In 1954 City entered into an agreement with Sewerage to have the latter treat and dispose of all sewage and other wastes originating in Jersey City by means of the Sewerage's "Sewage Disposal System" which it was then about to construct and put into operation. The sewage disposal system was to be complementary to the "Sewer System" then in existence and being maintained by City for the collection and disposal of sewage. The agreement called for the connection of City's sewer system and the sewage disposal system, the former delivering and discharging sewage into the latter. It was also agreed that Sewerage would charge a fee for direct or indirect connection with, or for the use of, its disposal system, with the service fee "charged to and collected from any person contracting for such connection or use of the services or from the owner or occupant, or both of them, of any real property which directly or indirectly is or has been connected with the Sewage Disposal System, or from or on which originates or has originated Sewage which directly or indirectly has entered or may enter into such Sewage Disposal System." The sewage disposal system became operative, and as of October 1, 1957, Sewerage billed Housing for treating its sewage pursuant to a rate schedule, based on the amount of water used, adopted the previous month. Housing has refused to pay for the reasons mentioned earlier.


Section 20 of the Local Housing Authorities Law (N.J.S.A. 55:14A-20) declares all housing projects of housing

authorities to be public property devoted to an essential public and governmental purpose and exempts such property from

"all taxes and special assessments of the State or any political subdivision thereof * * * provided, however, that in lieu of such taxes, the public body which owns or holds such property may agree to make payments to a political subdivision for the services, improvements or facilities furnished by it for the benefit of a housing project, but in no event shall such payments exceed the amount last levied as the annual tax of such political subdivision upon the property included in said project prior to the time of its acquisition by the aforesaid public body."

Defendant argues that within the context of this statutory provision any sewerage charge would be a ...

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