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City of East Orange and Mayor and City Council v. Board of Water Commissioners

Decided: October 21, 1963.


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


The Appellate Division, with one judge dissenting, directed that summary judgment be entered declaring the 1952 extension of the lease between the parties to be void ab initio as a gift of public property in violation of Article VIII, sec. III, paras. 2 and 3 of the New Jersey Constitution. 79 N.J. Super. 363 (1963). In the light of the dissent and the constitutional issue, the East Orange Golf Association appealed to this court as of right. See N.J. Const. Art. VI, sec. V, para. 1.

In 1925 the City of East Orange, by resolution, authorized the execution of a lease of city-owned land to the East Orange Golf Association. The land was part of the East Orange water reserve and consisted of 151 acres located in Millburn Township. The resolution noted that a large group of citizens

of East Orange had formed an association for the purpose of encouraging golf and other athletics and recreational activities among the citizens of the city, and that the City Council desired to encourage such athletic activities on the part of its citizens and felt it to the interest of the city to make the lease with the association. The lease itself referred to the formation of the association and the city's desire to encourage athletic activities on the part of its citizens, and it provided that the rent to be paid by the association would be in the nominal sum of $1.00 per annum and that the association would pay Millburn Township any taxes above $1,500 per annum, the city agreeing to pay the taxes up to $1,500 per annum.

The association expressly agreed in the lease to build a golf course of not less than 9 holes within two years, to extend it to 18 holes as soon as reasonably possible, and to maintain the course "for the sole use of the residents of the City of East Orange and their guests." It also agreed that it would maintain the property during the term of the lease and its extension and that, upon expiration, it would turn over to the city all buildings on the premises, free and clear of all liabilities. The lease provided that if the association defaulted in any of the conditions for a period of 30 days, then it and any renewal would become null and void at the option of the city which would have the right to re-enter. The parties agreed that any violations of the lease would not be cumulative and that a waiver of any violation at any time would not be construed as a waiver of any subsequent violation. The lease was signed on the city's behalf by its then Mayor Charles H. Martens, and by the Board of Water Commissioners of the City of East Orange through its president. See East Orange v. Board of Water Com'rs. of East Orange, 40 N.J. 334 (1963). It was signed by the East Orange Golf Association through its president, who was then a resident of East Orange, as were all of its incorporators and the members of its board of trustees which included Mayor Martens.

In due course the association, which had been incorporated as an association not for pecuniary profit (R.S. 15:1-1 et

seq.), proceeded with the raising of the necessary funds through the sale of bonds, and the building of the golf course at substantial cost. In 1927 a small additional parcel was added to the leased premises and a second parcel was added in 1936. The original lease was for 10 years, with an option to extend it for 10 years more which the association exercised. In 1935 East Orange submitted a project proposal to the Works Progress Administration for improvement of the golf course premises. The proposal was signed by Mayor Martens and stated that the project was being sponsored by officials of the City of East Orange "for the benefit of the public to enable the average citizen to enjoy the benefits of a public golf course which under ordinary conditions, would be prohibitive due to fees, dues, etc." When the Works Progress Administration disapproved the project, a reconsideration was requested in a communication signed by Mr. Walter C. Ellis who was counsel for the association as well as City Counsel for East Orange.

In his letter to the Comptroller-General at Washington, dated August 13, 1937, Mr. Ellis pointed out that the original undertaking was to construct "a municipal golf course to enable under-privileged men and women of the City to play golf at small expense" and that the city's lease with the association expressly provided that the golf course would be maintained "for the sole use of the residents of the City of East Orange and its guests." Mr. Ellis also noted that the Mayor of East Orange was president of the association's board of trustees, that the balance of the board membership was composed largely of city officials, and that any citizen of East Orange was permitted to play either by registering as a Class A or Class B member and paying an annual fee ranging from $7.50 to $25, plus a daily charge ranging from seventy-five cents to one dollar, or as a nonmember by paying a daily fee ranging from $1.00 to $2.00. Mr. Ellis' letter concluded with the following:

"The plan as outlined above, to provide a municipal golf course for the citizens of East Orange to whom golf was prohibitive because

they were unable to pay membership costs in private golf clubs, was undertaken by a large group of citizens who are willing to give generously of their time for the benefit of the under-privileged. It was desired to accomplish this without expense to other taxpayers of the City who do not play golf. It is obvious that to effect an efficient management of such a plan that it was necessary to organize the group, and this was done under a statute of this State entitled: 'An Act to incorporate associations not for pecuniary profit.' This organization, of course, serves as a temporary agent of the City until all bonds are retired and the completed course with all its appurtenances will be turned over to the Recreation Commission of the City."

Mr. Peer, the current secretary of the association, testified that he recalled the Class A and Class B registration groups of the 1930's but he did not recall any groups which were ever permitted to play simply on the payment of a daily fee. His recollection was that play was at all times confined to members and their guests. He stated that during the depression, the association was in dire need of members and vigorously sought them outside of East Orange as well as within East Orange. As a result the constituency of the association's membership shifted radically. Whereas in 1927 there were 465 members who were residents of East Orange and 92 members who were nonresidents, in 1938 there were only 135 resident members as compared to 251 nonresident members. In 1951 there were only 68 resident members in contrast to 406 nonresident members, and in 1961 there were only 82 resident members compared to 425 nonresident members. In 1959 the association fixed its maximum membership at the figure of 507 and, when in 1962 there were 56 vacancies, they were filled by 7 persons who resided in East Orange and ...

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