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Township of Deptford v. Woodbury Terrace Sewerage Corp.

Decided: June 21, 1968.

TOWNSHIP OF DEPTFORD, PLAINTIFF-APPELLANT,
v.
WOODBURY TERRACE SEWERAGE CORPORATION, DEFENDANT-RESPONDENT



Gaulkin, Lewis and Kolovsky. The opinion of the court was delivered by Gaulkin, S.j.a.d.

Gaulkin

The township sued for specific performance of defendant's agreement to sell to the township certain of its property, its sewerage system "and all rights, privileges and franchises in and pertaining to the tract." The Chancery Division held that the contract was invalid because it had not been approved by the Public Utility Commission (hereafter P.U.C.) and dismissed the complaint. The township appeals. At our request, the P.U.C. filed a brief amicus curiae.

The agreement was stated as a condition upon which the township, on August 8, 1955, granted to defendant (pursuant to R.S. 48:13-3, since repealed) the township's consent that defendant corporation be organized and that it "construct and operate a sewage disposal plant and system" in an area of the township known as Woodbury Terrace which was being developed by the organizers of defendant corporation.

R.S. 48:13-6 (repealed L. 1962, c. 198) provided that:

"The corporate authorities of the municipality may, by ordinance, provide that such consent shall be conditioned upon the payment to the municipality of a specified sum of money, or upon quarterly, semiannual or annual payment to the municipality of specified sums of money or a specified percentage of the gross receipts of the company. The corporate authorities shall annex to this consent any other terms and conditions upon which such consent is granted." (emphasis added)

R.S. 48:13-4 provided (until it was repealed by L. 1967, c. 156) that "The filing of the certificate of incorporation together with the consent of the municipality and the terms and conditions upon which the consent is granted, shall be

conclusive evidence that the company has assented to such terms and conditions, and the same shall be binding upon the company, its succesors and assigns."

The ordinance (which reenacted an earlier ordinance containing the same conditions for reasons stated infra) recited that the consent was "expressly conditioned upon the following":

"* * *

b. That the Woodbury Terrace Sewerage Corp. by acceptance of this consent makes an irrevocable continuing and unlimited offer to the Township of Deptford to sell, bargain, transfer and assign to the Township of Deptford, or its successors, all mains, meters, plants and pumping station and all and any other physical equipment of its sewerage system and all rights, privileges and franchises in and pertaining to the tract, for which consent is now given, for the sum of EIGHTY THOUSAND DOLLARS ($80,000.00) or a sum equal to the cost of the sewerage plant excluding the cost of mains, whichever sum is less; deducting nevertheless a sum equal to one-sixteenth (1/16) of the purchase price, as above provided, for each complete year of operation following the date when the said corporation commences operation of any part of the system, and for the sum of ONE DOLLAR ($1.00) at any time after the expiration of sixteen years from the date when the corporation commences operation of any part of the system. It is mutually agreed that upon the adoption by the Township of Deptford of an ordinance accepting the above offer, the Woodbury Terrace Sewerage Corp., shall forthwith without fraud or delay, sell bargain, transfer and assign the said facilities to the Township of Deptford for the agreed price as herein provided.

The title to be sold to the Township of Deptford for the price as above shall be free and clear of all charges, debts, liens, mortgages, bonds or other encumbrances or obligations whatsoever of the Woodbury Terrace Sewerage Corp. and the said utility company shall not in any way encumber or allow to be encumbered any of the facilities of the company upon which the Township may exercise its option, provided however, that the Woodbury Terrace Sewerage Corp. may encumber the plant and system in an amount not exceeding at any time that sum for which the Township may purchase the facilities as provided heretofore.

c. That the installation and construction of all mains, meters, plants and pumping stations and all and any other physical equipment and any additions, extensions or replacements thereof shall be installed under the direction and supervision of the township engineer."

Defendant admits that it sought this consent and agreed to its terms. The record of the hearings before the P.U.C. on April 25, 1955 and December 17, 1957 shows that the organizers of defendant corporation (hereafter "developers") were developing a large tract of vacant land in Deptford, bordering on the Borough of Westville, for the construction of about 250 one-family homes. The developers ...


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