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Riddlestorffer v. City of Rahway

Decided: December 20, 1963.

SIDNEY RIDDLESTORFFER, JR., AND MAUDE RIDDLESTORFFER, PLAINTIFFS,
v.
CITY OF RAHWAY, ROBERT HENDERSON, AS MAYOR, ROBERT SCHROF, AS CLERK AND AS BUSINESS ADMINISTRATOR, JAMES J. KINNEALLY, AS TREASURER, EUGENE KENNA, AS CHIEF AUDITOR, AND CLIFFORD E. COMER, AS PRESIDENT OF THE COUNCIL OF THE CITY OF RAHWAY, AND MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, DEFENDANTS



Civil action. In lieu of prerogative writs.

Feller, J.s.c.

Feller

This is a suit in lieu of prerogative writs, brought by two taxpayers of the City of Rahway against the city, various city officials and the Massachusetts Mutual Life Insurance Company, a Massachusetts corporation authorized to do business in New Jersey.

Plaintiffs contend a contract between the city and the insurance company is unconstitutional, ultra vires , illegal and null and void. They seek rescission and repayment of any moneys paid. The contract complained of was an insurance contract providing hospitalization benefits for employees of the city, their spouses and children, with premiums to be paid by the expenditure of public moneys. It is alleged that this contract is unconstitutional in that it involves a giving of public moneys in aid of individuals, thereby violating N.J. Constitution 1947, Art. VIII, Sec. III, par. 2. In addition, it is also alleged that the money for the contract was unlawfully appropriated and that the contract was entered into unlawfully.

Defendants have denied all the material allegations of the complaint and the case is now before the court on cross-motions for summary judgment.

I.

Defendant city, in support of its motion for summary judgment, urges that the time limitations imposed upon the bringing of in lieu suits has expired. The limitations may be found in R.R. 4:88-15. R.R. 4:88-15(a) states that proceedings in lieu of prerogative writs shall be commenced within 45 days of the accrual of the right to such review, hearing or relief, except as provided in R.R. 4:88-15(b) and in R.R. 1:3-1 (time to appeal).

In the first place, it is felt that the applicable section of R.R. 4:88-15 is section (a) and not (b). R.R. 4:88-15(b)(2) and (11) refer to review of assessments or awards made for municipal improvements and review of ordinances for improvements. "Improvement" has been defined generally as a valuable addition to property. See Black's Law Dictionary (3 d ed.), page 927. An insurance policy providing certain benefits (hospitalization, medical-surgical and major medical) is not within the purview of the word "improvements" as used in R.R. 4:88-15(b)(2) and (11). Neither would such contract come under the definition of local improvements found in N.J.S.A. 40:56-1. Since the instant action is not covered by any other provision of R.R. 4:88-15(b), it would have to come under R.R. 4:88-15(a), the general time limitation for bringing in lieu suits.

Without delving into the question of when plaintiffs' right of review arose, and whether the suit was commenced after the time for review had expired, the court notes that enlargement of the time limitation is permitted, although this should be done only in exceptional cases and where the most persuasive circumstances exist. Testa v. Town of Bloomfield , 71 N.J. Super. 66 (Law Div. 1961); Robbins v. Jersey City , 23 N.J. 229 (1957). Thus, it has been recognized that

the time limitation on the in lieu procedure may not apply where substantial constitutional questions are raised. Holloway v. Pennsauken , 12 N.J. 371 (1953); McKenna v. New Jersey Highway Authority , 19 N.J. 270 (1955). It is to be noted that the waiver of the time limitation in cases presenting constitutional questions was utilized even before the liberalizing provision of R.R. 4:88-15, section (c) was added in 1957.*fn1

The time limitation of R.R. 4:88-15(a), even if applicable here, should not be a bar to the instant action since a constitutional question, seemingly novel in New Jersey, is presented by the complaint.

II.

The complaint alleges that the statute authorizing counties and municipalities to pay the premiums on group insurance policies for their employees, their spouses and children, violates the New Jersey Constitution. The constitutional provision involved is Art. VIII, Sec. III, par. 2:

"No county, city, borough, town, township or village shall hereafter give any money or property, or loan its money or credit, to or in aid of any individual, association or corporation, or become security for, or be directly or indirectly the owner of, any stock or bonds of any association or corporation."

The statutory authority for group insurance plans covering city employees is contained in N.J.S.A. 40:11-15.1 and N.J.S.A. 40:11-16.1, which read as follows:

"40:11-15.1 Deductions from salaries for group insurance

In any county, municipality, school district, or agency thereof where the employees of the county, municipality, or agency thereof, or the employees of the school district who are in the classified service of civil service, have or shall have formed themselves into groups for the purpose of obtaining the advantages of a group plan of life insurance,

a group plan of health and accident insurance, a group plan for any hospital service or a group plan for medical and surgical insurance, or 1 or more of them, for themselves, or for themselves and their husbands or wives and dependent children under 19 years of age, the governing body of the county, municipality, school district, or agency thereof, when written petitions and authorizations signed by the employees as individuals, are filed with the receiving and disbursing officer of the county, municipality, school district, or agency thereof, may authorize, by resolution, the deductions specified in the written petitions and authorizations, and the payment of them to the designated fiscal agent of the group. Nothing herein contained shall be deemed to authorize coverage of dependents of an employee under a group life insurance policy or to allow the issuance of a group life insurance policy on which the entire premium is to be derived from funds contributed by the insured employees." (L. 1960, c. 180, p. 723, sec. 1)

"40:11-16.1 Part payment of premium by governing board of counties, etc.; limitation

Whenever a group has or shall have been established in accordance with the provisions of section 1 of this act, the governing body of the county, municipality, school district, or agency thereof in which the group or groups are formed, may pay, as additional compensation to the individual members of the group or groups, a part or all of the premium on the group policy or policies covering themselves, or themselves and their husbands or wives and dependent children under 19 years of age.

Nothing herein contained shall be construed as compelling the governing body of any county, municipality, school district, or agency thereof to pay any portion of the premium on such group or groups." (L. 1960, c. 180, p. 724, sec. 2; emphasis added)

There is no case in New Jersey construing the cited statutes. Whether they are in conflict with the constitutional provision is a novel question. It is elementary that the courts will incline to a construction favoring the validity of a statute unless its invalidity plainly appears. All presumptions favor the validity of legislative enactments, and a statute should not be held unconstitutional unless its repugnancy to the Constitution is so manifest as to leave no room for reasonable doubt. Behnke v. New Jersey Highway Authority , 13 N.J. 14, 25 (1953); Stothers v. Martini , 6 N.J. 560, 567 (1951); Trustees of Rutgers College in New Jersey v. Richman , 41 N.J. Super. 259 (Ch. Div. 1956).

The historical purpose of Art. VIII, Sec. III, par. 2, was to prevent aid to private corporations not constituting public agencies controlled by the State. City of Camden v. South Jersey Port Commission , 2 N.J. Super. 278 (Ch. Div. 1949), affirmed 4 N.J. 357 (1950). It has also been said that the reason that this provision was put in the Constitution was because of a practice that had grown up, very largely in the West, in the furtherance of aid to railroads and other private corporations. Carr v. Borough of Merchantville , 102 N.J.L. 553 (Sup. Ct. 1926). Our Supreme Court was faced in Hoglund v. City of Summit , 28 N.J. 540 (1959), with the question of whether an ordinance of the City of Summit, proposing the use of public moneys to lay out and improve a new street to be opened on a tract upon which a corporation not for pecuniary profit was erecting a housing project, was violative of Art. VIII, Sec. II, par. 2. After citing the Carr case, supra , the court went onto say:

"The basic test is whether the municipal action under attack may fairly be characterized as primarily a ...


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