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Passaic Valley Sewerage Commission v. City of Paterson

Decided: November 7, 1969.

PASSAIC VALLEY SEWERAGE COMMISSION, A PUBLIC CORPORATION, PLAINTIFF,
v.
CITY OF PATERSON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



Joelson, J.s.c.

Joelson

The Passaic Valley Sewerage Commission has filed a two-count complaint against the City of Paterson. In the first count it seeks judgment in the amount of $217,476.18, together with interest and costs, for the city's share of "maintenance, repair and operation." In the second count plaintiff alleges, in the alternative, that if it is not entitled to judgment on the first count for the cost of "maintenance, repair and operations," it is entitled to judgment under N.J.S.A. 58:14-13, which deals with "apportionment of cost of construction."

Defendant has filed an answer contending that the expenses are for capital improvements for which the Commission is not authorized by law to assess defendant. Defendant has also filed a counterclaim seeking a declaratory judgment that in the event it must pay the claim of the Commission, it may finance the cost through the issuance of municipal bonds.

The City of Newark has intervened in the matter in support of the position of the Commission.

It is undisputed that Paterson is a contracting member municipality of the Passaic Valley Sewerage Commission. That body was established pursuant to an act of the Legislature in 1902 (N.J.S.A. 58:14-1). Paterson, although denying any obligation to pay for the work for which it has been billed, does concede that if it is required to pay, then the sum of $217,476.18 for which it has been billed is an accurate computation of the amount it would owe for operation, maintenance and repairs.

Commencing in the fiscal year 1962, after consultation with its contracting member municipalities and apparently with their approval, the Commission created a so-called "retainage fund" which was contributed to by the member municipalities. This fund was created and utilized for the purpose of maintaining, repairing and improving the sewerage system. Since the inception of the fund in 1962, and until 1969, all contracting municipalities, including Paterson, have paid their assessed share into the fund. In

1969 all the members except Paterson paid their assessed share.

The record discloses that the items for which the city has declined to pay its proportionate annual share, and the total cost of such items, are as follows: additional grit chambers and screen, oil and scum handling facilities, $7,200,000; repair to trunk sewer at Gouverneur Street, $1,000,000; chlorination facilities, $1,050,000; land purchase, $450,000; basin repair and modifications, $500,000, and general work around plant, $300,000.

Paterson paid that portion of its assessed annual share which it considered to represent current operations, but asserted that it is not obliged to pay any portion of the cost of the items in the paragraph immediately above, which it claims to be capital improvements. The court finds the refusal of the city to pay its total assessed share not to be justified, and that plaintiff is entitled to a judgment of $217,476.18.

It appears from the reading of the pertinent statutory provisions that the Legislature, both when the Passaic Valley Sewerage Commission was created (N.J.S.A. 58:14-1 et seq.) and when it was enlarged and improved in 1953 (N.J.S.A. 58:14-34.1 et seq.), intended that each contracting municipality pay its share of the cost of work necessary to be done from time to time to keep the system in a state of efficient operation. The testimony reveals that the expenditures for the projects for which Paterson has been billed are major repairs involving what normally may be regarded as capital improvements. However, it is the opinion of the court that the Legislature's intent appears to include such items among those for which the contracting municipalities are financially responsible as maintenance, repairs and operations.

N.J.S.A. 58:14-13, which deals with the cost of the original construction of the sewer, plant and works, provides a formula for apportioning the construction costs among the ...


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