This action raises the question whether it is ultra vires for a city to agree to pay its employee upon retirement 50% of her accumulated sick time.
The City of Camden entered into a collective bargaining agreement with Council No. 10, New Jersey Civil Service Association, acting in behalf of the supervisory personnel of the city, which, among other terms and conditions of employment, provided as follows:
Upon retirement from service to the City of Camden * * * the employee shall receive fifty percent (50%) of his accumulated sick time as additional severance pay said payment not to exceed $12,000.00.
Following the adoption of the agreement the city paid defendant upon her retirement the sum of $4,614.52 for her percentage of accumulated sick time.
Later, the city determined that it had no power or authority to so contract; that such a provision constituted an ultra vires act on its part, and it brought this suit to recover the money paid.
While the defense of ultra vires is available to a municipal corporation, Spoerl v. Pennsauken Tp., 14 N.J. 186, 189 (1954), the defense has its limitations. In Summer Cottager's Ass'n of Cape May v. Cape May, 19 N.J. 493 (1955), it was pointed out that
There is a distinction between an act utterly beyond the jurisdiction of a municipal corporation and the irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The former are ultra vires in the primary sense and void;
the latter, ultra vires only in a secondary sense which does not preclude ratification or the application of the doctrine of estoppel in the interest of equity and essential justice. [at 504]
Our courts have already recognized the "strong recent trend towards the application of equitable principles of estoppel against public bodies where the interests of justice, morality and common fairness clearly dictate that course." Gruber v. Raritan Tp., Mayor & Tp. Comm., 39 N.J. 1, 13 (1962); Hill v. Eatontown Bd. of Adjust., 122 N.J. Super. 156, 164 (App. Div. 1972).
The city urges that it had no authority to enter into the agreement concerning accumulated sick leave time. Maywood Ed. Ass'n. Inc. v. Maywood Bd. of Ed., 131 N.J. Super. 551 (Ch. Div. 1974), dealt with a ...