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Port of New York Authority v. Hackensack Water Co.

Decided: November 6, 1963.


Hackensack Water Company: For affirmance -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall and Haneman. For reversal -- None. Public Service Electric and Gas Company and New Jersey Bell Telephone Company: For reversal -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall and Haneman. For affirmance -- None. The opinion of the court was delivered by Weintraub, C.J.


[41 NJ Page 93] Improvements undertaken by the Port of New York Authority (herein Port Authority) with respect to the George Washington Bridge, Holland and Lincoln Tunnels, and Port Newark Marine Terminal required the relocation of facilities of utility companies in the public streets. The question is whether the Port Authority or the utility companies must absorb the cost of relocation. The work was done under agreements reserving that issue. In its suit against Hackensack Water Company, the Port Authority prevailed. Port of New York Authority v. Hackensack Water Co., 73 N.J. Super. 332 (Law Div. 1962). In its suits

against Public Service Electric and Gas Company and New Jersey Bell Telephone Company, another judge of the trial court took a different view and held for the companies. Port of New York Authority v. Public Service, etc., Co., 76 N.J. Super. 359 (Law Div. 1962). We certified the appeal in the first case on our own motion and granted the Port Authority's petition for certification in the other matters. 39 N.J. 468 (1963).

In 1921 the States of New Jersey and New York entered into a compact with the consent of the Congress whereby they pledged their faithful cooperation in the planning and development of the Port of New York and created the Port Authority "as an instrumentality or agency of the two states to effectuate such pledge of co-operation." R.S. 32:1-25. The States adopted a comprehensive plan for the development of the port, which plan contemplated bridges, tunnels, and sundry terminal facilities. R.S. 32:1-26 et seq. The States agreed, R.S. 32:1-33:

"The Port of New York Authority is hereby authorized and directed to proceed with the development of the port of New York in accordance with said comprehensive plan as rapidly as may be economically practicable and is hereby vested with all necessary and appropriate powers not inconsistent with the constitution of the United States or of either state, to effectuate the same, except the power to levy taxes or assessments. * * * The port authority shall be regarded as the municipal corporate instrumentality of the two states for the purpose of developing the port and effectuating the pledge of the states in the said compact, but it shall have no power to pledge the credit of either state or to impose any obligation upon either state, or upon any municipality, except as and when such power is expressly granted by statute, or the consent by any such municipality is given."

In 1931 the States by concurrent legislation agreed "in the interest of the users of such bridges and tunnels and the general public" that the bridges and tunnels then or thereafter authorized be unified as to construction, maintenance, operation and control "to the end that the tolls and other revenues therefrom shall be applied so far as practicable to the costs of the construction, maintenance and operation" of such facilities

as a group, "it being the policy of the two said states that such bridges and tunnels shall as a group be in all respects self-sustaining." R.S. 32:1-118. The Port Authority was authorized to levy "such tolls and other charges as it may deem necessary to secure from all of such bridges and tunnels as a group, at least sufficient revenue to meet the expenses of the construction, maintenance and operation of such bridges and tunnels as a group, and to provide for the payment of the interest upon and amortization and retirement of and the fulfillment of the terms of all bonds and other securities and obligations which it may have issued or incurred in connection therewith." R.S. 32:1-121. The States declared, R.S. 32:1-131:

"The construction, maintenance and operation of vehicular bridges and tunnels within the said Port of New York District (including the said Holland tunnel and the said Midtown Hudson tunnel), are and will be in all respects for the benefit of the people of the states of New York and New Jersey, for the increase of their commerce and prosperity and for the improvement of their health and living conditions; and the port authority shall be regarded as performing an essential governmental function in undertaking the construction, maintenance and operation thereof and in carrying out the provisions of law relating thereto, and shall be required to pay no taxes or assessments upon any of the property acquired or used by it for such purposes."

Two small items here involved relate to the Port Newark Marine Terminal, operated by the Port Authority under a lease from its owner, the City of Newark, pursuant to legislation of the States of which the New Jersey counterpart is N.J.S.A. 32:1-35.28 et seq. These terminal facilities are in the public use. See Port of New York Authority v. City of Newark, 20 N.J. 386 (1956).

The utility companies placed their property in the public ways under the authority of acts of the Legislature. We find no language in any of them which controls the issue before us, and hence it is enough merely to cite the statutory sources as they presently exist. R.S. 48:7-1, 2; 48:17-8, 10, 11, 12; 48:19-17.


The companies contend they have a "vested right" in the streets which may not be taken except by condemnation and may be burdened, short of a taking, only by the exercise of the police power as in the case of property rights generally. Although the companies agree a utility may be required to relocate at its own cost (subject to constitutional limitations to which we will later refer), they say the obligation can arise only when an order to relocate is given by an authority that possesses the police power to give the order. They say the power so to order rests in the State as the ultimate sovereign over public roads, Hackensack Water Co. v. Ruta, 3 N.J. 139, 146 (1949), and that although the power may be delegated to the State's subdivisions and agencies, it has not been delegated to the Port Authority in express terms. And, the argument continues, a delegation ought not to be implied in view of the doctrine of strict construction heretofore expressed in another connection with respect to the powers of another agency in Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 490 (1952), cert. denied 344 U.S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952).

If the case turned upon a delegation of such power, we would find it, but we think the utilities misconceive the source of their obligation to relocate. That obligation does not originate in a specific order to relocate. Rather it antedates the occasion for relocation and rests upon the common law's view of the rights and responsibilities of the recipient of a so-called franchise to use the public streets. A utility company is permitted to locate its lines within the public right of way as a use ancillary to the principal and primary use of the way by the public. Nicoll v. New York & New Jersey Telephone Co., 62 N.J.L. 733, 735 (E. & A. 1899); Laurel Garden Corp. v. New Jersey Bell Telephone Co., 109 N.J.L. 171 (E. & A. 1932). It is permitted to use the public way because it serves a public interest, but since its venture is for gain and since in any event the primary purpose of the

public easement is the public's own use of it, the utility's interest in the public way is subordinate to the public's enjoyment of it. Hence the utility runs the risk that the public welfare may require changes in the road which will call for relocation of its facilities. New Orleans Gaslight Co. v. Drainage Comm., 197 U.S. 453, 461, 25 S. Ct. 471, 49 L. Ed. 831, 835 (1905).

This view of the subject was clearly expressed a century ago in Jersey City v. City of Hudson, 13 N.J. Eq. 420 (Ch. 1861), and was later restated in Postal Tel. Cable Co. v. Delaware, L. & W.R.R., 89 N.J. Eq. 99 (Ch. 1918), affirmed o.b. 90 N.J. Eq. 273 (E. & A. 1919); see also Walker v. North Bergen, 84 N.J.L. 248 (Sup. Ct. 1913), and New Jersey Bell Tel. Co. v. Delaware River Joint Comm'n, 125 N.J.L. 235 (Sup. Ct. 1940). The thesis is well supported elsewhere. See Southern California Gas Co. v. City of Los Angeles, 50 Cal. 2 d 713, 329 P. 2 d 289, 290 (Sup. Ct. 1958); Los Angeles County Flood Control Dist. v. Southern California Edison Co., 51 Cal. 2 d 331, 333 P. 2 d 1, 3-4 (Sup. Ct. 1958); New York City Tunnel Authority v. Consolidated Edison Co., 295 N.Y. 467, 68 N.E. 2 d 445, 448 (Ct. App. 1946); New Rochelle Water Co. v. State, 10 N.Y. 2 d 287, 220 N.Y.S. 2 d 809, 177 N.E. 2 d 771, 772 (Ct. App. 1961); State v. Public Util. Dist. No. 1 of Clark County, 55 Wash. 2 d 645, 349 P. 2 d 426 (Sup. Ct. 1960); 18 Am. Jur., Eminent Domain § 161, p. 792 (1938); 12 McQuillin, Municipal Corporations (3 d ed. 1950), § 34.72, p. 240; Rhyne, Municipal Law § 24-6, p. 512 (1957).

In this area the authorities frequently refer to the police power. The true connection between the police power and the relocation of facilities is not, as the companies urge, that the duty to relocate is generated in each specific instance by a decision under the police power to impose it. Rather the meaning is that the utility's interest in the street was intended to be subordinate to the police power, that is to say, that government's authority to exert its police power in the street for the public welfare was not bargained away in the least by the

legislative grant to the utility company. Hence, if government undertakes an activity in the street in the exercise of the police power, the utility must figuratively move over at its own expense to the end that the exercise of the police power will not be impeded or burdened. And this the utility must do because the law governing the basic arrangement obliges it to do so.

The companies stress the statement found in some cases that a utility's interest in the public easement is a "vested right." Such labels may conceal as much as they reveal. It may be that a utility acquires a "vested right," at least when it makes an investment in the road on the strength of the legislative grant, as was said in Rockland Electric Co. v. Montvale, 104 N.J.L. 480, 484 (Sup. Ct. 1928); Phillipsburg Elec., etc., Co. v. Town of Phillipsburg, 66 N.J.L. 505 (Sup. Ct. 1901), and Hudson Tel. Co. v. Jersey City, 49 N.J.L. 303, 306 (Sup. Ct. 1887). But rights come in different sizes, and hence it does not end the inquiry to find the companies hold something of that undefined stature. As was said in Jersey City v. City of Hudson, supra, 13 N.J. Eq., at p. 424, granted the utility holds a "property" interest, "the question still recurs, what is the limit of that right?" True, no doubt, a company's right in the street is protected against arbitrary action and in that sense its interest may be described as "vested," but it is not suggested that the Port Authority's plans unnecessarily or arbitrarily required the relocations. The question then is whether a utility company's "vested right" is equal to the public's right to use the public easement or is subordinate to it, and the answer given by our precedents is, we think, unequivocal.

And, we may add quickly, the cases we have cited are not questioned by others to which we are referred in which the utility's right of way was in private property rather than an interest in the public's right of way. Morris & Essex R.R. v. City of Orange, 63 N.J.L. 252, 270 (E. & A. 1899); Board of Chosen Freeholders v. New York Bay R.R., 84 N.J.L. 354 (E. & A. 1913); Public Service Ry. v. Hudson & Essex

Freeholders, 85 N.J. Eq. 290 (Ch. 1915). Nor is it significant that a utility may hold in addition to the legislative grant the consent of the owner of the underlying fee because it uses poles and lines within the public easement for purposes beyond those of the public easement. See Laurel Garden Corp. v. New Jersey Bell Tel. Co., supra, 109 N.J.L. 171; French v. Robb, 67 N.J.L. 260 (E. & A. 1902); R.S. 48:7-1, 48:17-8; N.J.S.A. 48:3-17.1. The public's right in the public easement antedates and is superior to the additional interest the utility obtains from the owner of the fee. Accordingly, when the public claims its paramount right in the public easement, the utility cannot resist that right on the basis of the subordinate grant from the abutting owner.

Nor is the issue affected by statutes which impose an "in lieu of" excise tax because the tax is stated in part to be payment "for the franchise to use such public streets," N.J.S.A. 54:30A-18, or "for the privilege of exercising its franchises and using the public streets," N.J.S.A. 54:30A-54. Those statutes do not reveal a legislative intent to enlarge the utility's property ...

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