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City of Bayonne v. Palmer

Decided: February 4, 1966.


Matthews, J.s.c.


This is a consolidation of two essentially similar civil actions. One was instituted by the City of Bayonne and a resident and taxpayer of the city. The other was instituted by the Township of Hillside and four resident property owners and taxpayers thereof. The actions have been consolidated. The two actions generally question the constitutionality of two acts of the Legislature and the validity of certain contracts between the defendant Commissioner and the defendant railroads executed under those statutes. The complaints also ask judgment enjoining certain activities carried on under the statutes and contracts, and ask an adjudication of the rights of certain of defendants under the statutes in question and related laws.

In general, all of the contentions in these actions pertain mainly to a rail rerouting program which is popularly known as the "Aldene Plan." In gross, this is a track interconnection plan to route the Central Railroad Company of New Jersey commuters into the Pennsylvania Railroad Company station in Newark to connect there with the Port Authority Trans-Hudson Corporation (PATH) rapid transit system running between New Jersey and New York.

The two major statutes in question are L. 1962, c. 191, N.J.S.A. 48:12A-17 et seq., which authorized the Commissioner of the State Highway Department and the Division of Railroad Transportation to enter into contracts to implement the Aldene Plan, appropriating $3,000,000 therefor, and L. 1964, c. 88, N.J.S.A. 48:12A-16.1 et seq., which replaced the basic 1960 statute on railroad passenger service contracts with an expanded authorization to take action to preserve and improve rail passenger service. The capital improvement contracts in question were executed under the authority of

the first of the two statutes, i.e., L. 1962, c. 191, and provided for the implementation of the Aldene Plan.

At the suggestion of the court, and with the consent of counsel, this matter has come up on cross-motions by the parties for summary judgment. The court is requested to decide the matter on the basis of (a) the exhibits filed with the court, (b) transcripts of depositions together with exhibits used in connection therewith, and answers to written interrogatories, and (c) supplementary documentary items, including all past and present passenger service contracts between defendant railroads and the State, as were submitted with the motions.

The questions presented for resolution here may best be placed in focus by referring to the allegations advanced by the two groups of plaintiffs in their complaints and in the pretrial order. Plaintiffs City of Bayonne and Bonner contend that the Central Railroad Company of New Jersey (hereinafter Central) furnishes rail passenger transportation service to and through the City of Bayonne and has done so for many years. That passengers have become dependent upon such service for transportation between Bayonne and New York City, and that the welfare and economy of the City of Bayonne are accordingly dependent upon the availability of such rail service. They contend that by virtue of the contract which is purported to be dated June 29, 1964, between the State (by the State Highway Commissioner) and the Central, such rail service to Bayonne will terminate, in that the Central, acting under the authorization of the State Highway Commissioner, will abandon certain of its rail facilities and discontinue rail passenger service at a point midway between the northerly and southerly boundaries of Bayonne and thereby effectively remove rail passenger service between Bayonne and New York City. These plaintiffs, who it is contended would thereby be adversely affected, further contend that for various reasons said contract is invalid, that the parties acted without lawful authority, that the legislation bearing upon the subject is unconstitutional, and that the

entire program of state subsidies to private railroads is unconstitutional. With respect to the claim of unconstitutionality, these plaintiffs specifically contend that the underlying statute, L. 1960, c. 66, as amended and supplemented, is unconstitutional in that it authorizes state subsidies to private railroads; that it is a private and special law and contains inadequate standards to control the legislative agent in the exercise of the delegated powers. For the same reasons plaintiffs further contend that L. 1964, c. 88, purporting to authorize subsidies to private railroads is also unconstitutional.

These plaintiffs further contend that the contract in question, purported to be dated June 29, 1964, was, in fact, entered into after the repeal by the Legislature of L. 1960, c. 66, because the contract was not validly executed and delivered prior to the effective date of said repealer; further, that it was executed without corporate approval. They further contend with respect to the contract, that it lacks the support of the legislation upon which it purports to rest and is illusory in that it is conditioned upon service agreements which the Central may choose not to make or which may be nullified by federal agencies.

Plaintiffs Township of Hillside, Tittel and Kleiman contend that the Lehigh Valley Railroad Company (hereinafter Lehigh) has operated a line through Hillside for many years, the operation being confined to the carriage of freight. The Lehigh rail line bisects the township and provides but three crossings. At the northern end it underpasses North Broad Street and at the southern end it overpasses Conant Street. About halfway between, it crosses Long Avenue at grade. Further, that the Central has operated a passenger and freight railway line between Bayonne and Hampton through Cranford, Roselle Park and Elizabeth for a great many years. They contend that in or about July 1964 the State, through the Highway Commissioner, entered into written contracts with the railroads to effect what is known as the Aldene Plan. This plan broadly contemplates the discontinuance of practically all passenger services on the Central between a point

east of Cranford called Aldene and Bayonne, and the diversion of said passenger service at Aldene over the Lehigh line to a point called Hunter and thence over the Pennsylvania line to Pennsylvania station at Newark. They contend that the Aldene Plan includes, among other things, the dead-ending of Long Avenue in Hillside which would create a hazardous condition in that it would effectively interfere with police and fire protection and would cause a heavy traffic load on the already overburdened crossings at the ends of the township. Further, that such dead-ending would create a hazard in that pedestrians, especially children, would be tempted to cross the railroad tracks in prohibited areas. They also contend that the dead-ending would contribute to a great depreciation of property values in the vicinity of the Lehigh railroad right of way.

In their allegations as to the unconstitutionality of the supporting legislation, these plaintiffs join in the arguments raised by the plaintiffs in the Bayonne action.


Before adverting to the arguments advanced by the defendants, reference, through a brief analysis, should be made to the legislation which has brought about the questions presented here.


L. 1959, c. 14, N.J.S.A. 27:24-1 et seq. This statute creates the Division of Railroad Transportation in the State Highway Department under the immediate supervision of a director who is answerable to the State Highway Commissioner. Section 1 sets forth the legislative findings that many railroads are seeking to curtail commuter and passenger service; that railroad transportation is the most efficient means for the movement of people especially during rush hours; that adequate commuter and passenger railroad service is essential to the welfare of the State, and that the State should lend its assistance to the solution of these problems.

The duties of the Division are set out in section 5, which calls for the examination and study of existing facilities and arrangements and accords by the railroad operators so that commuter and passenger services may be improved. The Division is to give assistance to the operators in developing plans for additional facilities as well as any activity which will tend to improve service. Finally, the Division is to engage in continuous study of commuter and passenger railroad operations to seek solutions to the various problems including the need for services, the need for extension of existing services, deficit operations and the railroad tax situation. This act was to expire on January 1, 1962.

L. 1960, c. 66. This was the first major legislation aimed at meeting the problems of railroad commuter and passenger service. Section 1 of the act set forth the legislative findings and policy which included the following: that use of commuter and suburban passenger rail service has been declining; that this decline has been caused by increased use of other methods of transportation; that the result has been a curtailment of service by the railroads; that a continuation of such trends can lead only to substantial highway congestion which will require expenditure of many millions of dollars for additional road facilities; that economic values will be adversely affected throughout the State, and that it is essential to the public health, safety and welfare and industrial potential of the State that such commuter and passenger rail service be preserved and increased, if possible, at least until it is determined whether more efficient and desirable alternative means of transportation can be economically provided. It was further determined that it would be in the best interest that railroad facilities for necessary commuter and suburban rail passenger service be preserved by the payment of certain subsidies to contracting railroads of compensation not exceeding the value to the State of the consideration it received for the service. Section 2 consists of definitions. Section 3 sets forth bases upon which the Commissioner shall determine what passenger service is essential to the public interest for the coming year.

In making his determination he was required to consider, among others, the following factors: (1) the State's need of time and money to develop an orderly program of substitutes for passenger service in danger of discontinuance; (2) the likelihood of curtailment of passenger service in the area affected by the contract and alternative means of transportation; (3) comparisons of those contributions made by the State toward the cost of transportation of passengers by rail under the act or by vehicles operated on highways, bridges or tunnels; (4) the effect on other transportation facilities of further curtailment of passenger service; (5) the current trends of population in the State and the economic loss to the State if passenger service is not preserved or expanded as needed; (6) the danger to the public health, safety and welfare of adding more vehicles to highways, bridges and tunnels and (7) the effect on tax revenues and economic values in any area of continued highway, bridge and tunnel construction. In aid of such investigation, the Commissioner was required to hold hearings and conferences where interested parties could be heard.

Section 4 provides the technical contract requirements and sets forth the following: each contract shall limit the amounts to be paid by the State to a sum not exceeding the amount of the appropriation for the fiscal year made pursuant to this act and shall contain provisions for the ratable reduction or limitation of amounts payable by the State; no contract shall provide for payments in excess of the maximum rate determined with respect to a fiscal year; every contract shall describe the service required to be operated, together with the plan for operation, including timetables, train consists and fare tariffs, and specific rates to be collected for all passenger service.

Section 5 obligates the carrier to operate a schedule of passenger service as described in the contract, at rates included in the contract; to abide by all requirements by any state or federal agency or court necessary to fulfill its obligations; not to initiate, take or prosecute, and to resist actively

any proceedings before any agency or court that will impair the operation of the contracted service or authorize the discontinuance of any service or the increase of any rate during the contract term, and to maintain passenger service in a safe, adequate and proper manner.

Under section 6, the State is obligated to pay a specified rate for each car mile of contracted service. Section 7 provides for technical provisions of the contract concerning determination of car miles, deduction of penalties, auditing of accounts, waivers, releases and other matters of public interest. Section 8 provides for amendment of the contract, and Section 9 provides the mechanism for establishing rates charged the users of all passenger service.

Section 10 obligates the carrier to continue all its passenger service, approved or unapproved, during the term of the contract, except that after six months the Commissioner may re-evaluate the unapproved service to determine whether the same be reasonably required during the remainder of the contract. He is required to study and make a determination, and shall hold a hearing and take into consideration such factors as may be brought out at the hearing and those other factors contained in section 3 above. Any action taken pursuant to such a determination shall be for the duration of the contract only, unless extended by future contracts or determinations. Any carrier which does not enter into a contract under this statute is required to provide passenger service in accordance with law.

Section 11 suspends all statutes, regulations or order of any state or federal agency, or any court, made prior to or during the period of the contract, and states that compliance with the contract constitutes compliance with all laws relating to the subject matter of the contract.

Section 12 empowers the Commissioner to make rules and regulations, conduct investigations, and spend money received from any federal or state agency in addition to that appropriated by the Legislature.

Section 13 makes all evidence, material and documents received by the Commissioner in the process of performing his duties under the statute not evidential in any proceeding and neither the Commissioner nor his employees shall be required to testify with regard to such information at any time.

Section 14 provides that the statute is intended to protect and promote the public health, safety and welfare, and shall be liberally construed. Section 15 relates to severability.

L. 1962, c. 1. This statute amends L. 1960, c. 66 merely by inserting as an additional area of regulation that of ferry service, and the appropriate sections are amended to include that. There are no other substantial amendments.

L. 1962, c. 191. This statute is supplementary to L. 1960, c. 66. In section 1, the Legislature determines that it is necessary to authorize the Division of Railroad Transportation to undertake improvements to capital facilities set forth in the prior statute; to protect the State's investment in the master plan for highway construction; to coordinate with interstate transportation improvements and achieve greater efficiency in rail passenger service. Section 2 authorizes the Commissioner to undertake improvements to capital facilities to provide connecting passenger service between the Central PATH by rerouting the Central passenger trains to operate between Pennsylvania Railroad Station in Newark and terminal stations on the Central right of way by utilizing the Lehigh tracks and the Pennsylvania system east of Cranford Junction; to consolidate the passenger service now operated between the Central and Pennsylvania over the right of way of the New York and Long Branch Railroad by eliminating the service operated from Bay Head Junction by the Central and supplementing that operated by the Pennsylvania and rerouting all passenger trains over the Pennsylvania right of way to Newark or New York, providing that the public's share of the cost of these improvements does not exceed $3,000,000.

Section 3 relates to the conditions to be specified in the contract; that the carrier take immediate action to commence

the required improvements; that the State make the required payments subject to the conditions that the work on the improvements has been done in accordance with the contract, and that the carrier enter into a contract to provide approved passenger service under L. 1960, c. 66.

Section 4 is a section of definitions, and section 5 appropriates the sum of $3,000,000 for carrying out the provisions of the act.

L. 1962, c. 198. This is a general though partial revision of Title 48 concerning public utilities. A great portion of this statute is not applicable in any way to railroads, and of those sections applicable to railroads, few created any appreciable change in the then existing law. The major changes which might be thought to affect the present railroad situation relate to the areas of eminent domain and discontinuance.

With respect to the former, section 48, N.J.S.A. 48:3-17.6, permits a public utility to take such property or interest which may be reasonably necessary for the purposes of such utility. Section 49, N.J.S.A. 48:3-17.7, provides, among other things, that the utility must obtain the approval of the Board of Public Utility Commissioners (Board) in order to exercise condemnation, except where a governmental agency having jurisdiction has granted the utility the permission to take all acquired property or any interests for the utility's purposes. (According to a legislative memorandum submitted by Deputy Attorney General William Gural, the revision with respect to condemnation centralizes matters and renders uniform the procedure to be followed by specified utilities endowed with eminent domain powers.)

With respect to discontinuance of service, there was no advance approval required under R.S. 48:2-24 until the enactment of L. 1959, c. 55, which required a railroad maintaining passenger service to obtain permission from the Board after notice and hearing before they would be permitted to discontinue, curtail or abandon service. Section 16 of chapter 198 merely extends the requirements of prior permission to all public utilities rather than just railroads. All amendments

to R.S. 48:12-1 et seq., "Railroads," are primarily technical in nature relating to bridges, tunnels, construction and maintenance of railroads, grade crossings, safety measures and the like.

L. 1964, c. 58. This statute amends and supplements N.J.S.A. 48:2-24. The statute originally provided that discontinuance, curtailment and abandonment by a public utility required Board permission, and that the Board might deny the permission if the proposed action would adversely affect public convenience and necessity. Section 1 of the statute provided that the Highway Commissioner would have the power without the approval of the Board to authorize a discontinuance, a curtailment or abandonment or change in passenger service, to extend during the term of a contract entered into by the Highway Commissioner and a railroad for passenger service pursuant to L. 1960, c. 66. Section 2 ratified and confirmed any discontinuance, curtailment or abandonment previously approved by the Highway Commissioner without the approval of the Board.

L. 1964, c. 88. This statute repealed L. 1960, c. 66 and substituted in its place a new law concerning passenger railroad and ferry service.

Section 1 repeats in some measure the legislative findings of the prior statute and finds, in addition, that railroad and ferry carriers are operating passenger service at a financial loss; that a continuation of these losses will lead to attempts at discontinuance of vital rail passenger and ferry service as well as increased fares, and that contracts should be made by the State to provide for necessary commuter and suburban rail passenger and ferry service.

Section 3 requires an annual investigation by the Commissioner of rail and ferry service showing the financial results of such service, together with a determination for action to be taken to offset the losses shown. The Commissioner may recommend changes in service, fares, procedures and routings, improvements to capital facilities and compensation by the State for the service to be rendered under a contract.

The determination shall list the service to be operated, fares to be collected, and projects to carry out the objectives of the act. The Commissioner is required to hold hearings and meetings to make known his recommendations and to receive material and recommendations from others.

Section 4 provides for the contracting power to be reposed in the Commissioner and is the same as under the prior act, with the exception that provisions for capital improvements shall be described.

Section 5 is, in most respects, the same as under the prior statute, except that it provides for the initiation and completion within the stated time of all capital improvements required under the statute.

Sections 6, 7 and 8 are also exactly or substantially the same as the prior statute.

Section 9 replaces section 10 of the prior statute relating to obligations to provide for passenger service. The carrier is required to continue all passenger service during the term of the contract but shall have the right to petition the Commissioner for changes during such term. If the petition requests a decrease or change in schedules or increase in fares, a public hearing on notice must be held. Based on information and evidence obtained at the hearing or on any other information available as the result of investigation or study, and with consideration of the factors listed in section 3, the Commissioner shall make a determination as to whether such change shall be made effective. Any such change shall be for the duration of the contract only, unless extended by future contracts. Sections 10, 11, 12, 13 and 14 correspond to sections 11, 12, 13, 14 and 15 of the prior statute and are exactly the same.

Section 16 repeals L. 1960, c. 66, and further states that the repealer does not in any way affect any contracts, agreements, determinations, orders, rules or regulations of the Commissioner, but such of the above shall continue with full force and effect until otherwise amended, repealed or terminated pursuant to this statute.

L. 1964, c. 89, N.J.S.A. 48:12A-21. This act supplements L. 1962, c. 1 relating to the improvement of capital facilities. It empowers the Division of Railroad Transportation to undertake directly or by contract the entire expense of eliminating or relocating such highway or railroad crossings at grade as shall be necessary or desirable to carry out the purposes of L. 1962, c. 191. The Commissioner may expend such funds as have been appropriated in the past or will be appropriated in the future. The act further appropriates from the sum previously appropriated to the State Highway Department in its capital construction account for grade crossing elimination, notwithstanding any existing allocation of such sums, so much as shall be required to carry out the provisions of this act.


The objectives of the pertinent legislation which have been briefly described hereinabove, are graphically set forth therein. Throughout there are consistent legislative findings that adequate commuter and passenger railroad service is essential to the welfare of the people of the State and constitutes, on a comparative basis, the most efficient means for the movement of people during rush hours (L. 1959, c. 14, ยง 1). These legislative determinations and findings are buttressed by particular studies. In April 1960 the Division of Railroad Transportation in the New Jersey Highway Department, in a report to the Governor and the Legislature,*fn1 found that suburban railroads are an essential part of the State's transportation network and that it is in the public interest, in terms of convenience, economy and safety, to continue and improve rail passenger service. It was noted therein that New Jersey highways had reached the point of "over-saturation" and that suburban train service was being curtailed, thereby increasing commuter use of highways. The history and causes

of increased highway congestion and its correlation to passenger patterns was chronicled. Commuter trends in the northern metropolitan areas were studied and detailed in depth. Substantial deficits incurred in passenger railroad service were documented. Further, it was noted that:

"* * * In New Jersey dependence on the rails for passenger service is primarily commutation -- 'rush hour service.' The railroads are providing a service that sustains a way of life to which more than 100,000 of our citizens and their immediate dependents are committed and on whom many thousands more are indirectly dependent. The consequences to our economy would be serious and should be of concern to all -- commuters and non-commuters alike -- should these citizens find it necessary to move out of our State, or even should the State find it necessary to attempt to accommodate them on the highways during peak periods -- which it obviously could not do. Economic studies recount that our rail ...

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