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City of East Orange v. Board of Water Commissioners

Decided: June 4, 1963.


Conford, Gaulkin and Kilkenny. The opinion of the court was delivered by Gaulkin, J.A.D. Kilkenny, J.A.D. (dissenting).


Plaintiffs (hereafter called East Orange) sue to have an extension of a lease, executed in 1952 and held by defendant East Orange Golf Association (hereafter called the golf club), declared void ab initio , or forfeited because of breach of the conditions of the lease. East Orange's motion for summary judgment was denied, and it appeals pursuant to leave granted.

The second count of the complaint alleges that the extension of the lease is void because it was executed in violation of various laws, the principal allegation being that "[t]he consideration paid for the lease was nominal and therefore constituted a gift of property and a donation of land by The City of East Orange to a private association contrary to the provisions of Article 8, Section 3, Paragraphs 2 and 3 of the Constitution of the State of New Jersey, * * *."

In the other counts the complaint alleges that, if the lease is not void ab initio , "defendant has nevertheless materially breached the conditions, terms and covenants of the said lease insofar as defendant has failed and refused to maintain the said course for the 'sole use of the residents of The City of East Orange and their guests' as required under the original lease of March 26, 1925 and, instead, the membership of the defendant association as of August 11, 1961 is composed of 505 members of all classes, of which only 82 are presently residents of East Orange, and that the said course is being maintained and operated for the benefit of the total membership and predominantly thereby for the benefit of non-residents of The City of East Orange."

The complaint says that this was done by the defendant in the following fashion:

"2. Defendant by its by-laws and by the membership application and selection procedure has subjected admission to the club to a rigidly-controlled, highly-selective procedure so that the persons receiving applications can be pre-determined by the club membership and so, in addition, the persons among the applicants selected are those and only those that the membership, acting by and through its committees and boards, desires to be so admitted.

3. The result of the procedures as alleged in the second paragraph is to deprive residents of The City of East Orange generally of access to applications for membership and to discourage and impede all except those deemed 'desirable' and 'wanted' by the defendant association from either applying or being considered for membership therein.

4. The aforementioned discriminatory process has operated generally against the interests of all of the citizens of The City of East Orange. On information and belief it has operated effectively and completely against certain ethnic and racial groups, particularly against Negro citizens such [so?] that requests from members of that race have been discouraged, diverted or sidetracked with the result that the Association has never entertained an application from a Negro citizen nor on information and belief has it ever had during its thirty-six years of operation a member of that race * * *.

5. The aforementioned practices, procedures and consequences have the effect of depriving a sizeable proportion of the population of The City of East Orange of access and the right to use and enjoy a recreation facility established for the benefit of the citizens of The City of East Orange."

Since we hold that the extension of the lease was void ab initio as an illegal gift to a private corporation, as alleged in the second count, it will not be necessary to go into the facts relating to the other counts except insofar as they pertain to the issue of gift. And, since this is an appeal from the denial of a summary judgment, we shall deal only with the admitted or plainly undeniable facts. Those facts are as follows:

The City of East Orange by action of the city council and of the board of water commissioners entered into a lease dated March 26, 1925, with the golf club, whereby they rented to the golf club approximately 151 acres of land in Millburn, for $1 per year. The underlying purpose of the lease was expressly set forth as part of the original resolution of the city council dated April 13, 1925 as follows:

"WHEREAS, a large group of citizens of The City of East Orange have formed an association for the purpose of encouraging golf and other athletic and recreational activities among the citizens of the City, and have made application to the City for a lease of a portion of the lands now used by the City as a water shed, for the purpose of constructing two or more golf courses and other athletic facilities, and

WHEREAS, the City Council desires to encourage such athletic activities on the part of its citizens and feels it is to the interest of the City to make such lease with the East Orange Golf Association. * * *."

The lease itself contained similar recitals and implemented the expressed intention by requiring the golf club "to build within two years on said lands a golf course of not less than nine holes, and * * * to extend the same to eighteen holes as soon as reasonably possible, and to maintain the said courses for the sole use of the residents of the City of East Orange and their guests."

The lease required the golf club to "maintain and keep the premises in proper condition," and to pay the taxes on the lands in excess of $1,500 per annum, East Orange to pay the initial $1,500.*fn1 The lease was for ten years with an option in the Golf Club to extend it for an additional ten years which the golf club exercised. The lease provided "that upon the expiration of this lease and its extension, the party of the second part shall turn over to the party of the first part, free and clear of all liabilities, all buildings and other appurtenances erected upon said premises." In case of default, the city had the right of re-entry.

A small additional parcel was added to the premises on January 13, 1927 and a second such parcel on March 28, 1936. On September 26, 1940, almost five years before March 26, 1945, the expiration date of the lease, East Orange extended

the lease upon the same terms to March 26, 1955. On June 16, 1952 the extension under attack in this case was executed. It extended the lease for an additional five years, from March 26, 1955 to March 26, 1960, with the further unilateral option in the golf club to again extend the lease to March 26, 1965. The golf club exercised this option on August 13, 1959, and claims the right to remain in the premises on the foregoing terms until March 26, 1965.

The 18-hole golf course was in full operation long prior to 1952. It is admitted that the golf club has paid the rent and the taxes and has adequately maintained the golf course and the buildings thereon. Beginning in 1957 difficulties arose between the golf club and the city about the alleged inability of East Orange residents to become members ...

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