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Lehrhaupt v. Flynn

Decided: March 26, 1976.

MICHAEL LEHRHAUPT, ET AL., PLAINTIFFS-APPELLANTS,
v.
WILLIAM FLYNN, MAYOR AND TOWNSHIP COUNCIL OF THE TOWNSHIP OF MADISON, DEFENDANTS-RESPONDENTS



Lynch, Larner and Horn. The opinion of the court was delivered by Larner, J.A.D. Horn, J.A.D. (dissenting).

Larner

This appeal presents for consideration the validity of an ordinance adopted by the Township of Madison which requires certain designated officials of the municipality to file annual reports making full financial disclosure of assets, liabilities and net worth. The ordinance also requires information relating to the identification of any interest of these officials in an entity doing business with the municipality or its agencies and which may create conflicts of interest, real or potential.

Plaintiffs, members of the Madison Board of Adjustment and Planning Board, and the attorney for the Board of Adjustment

filed a complaint attacking the validity of the financial disclosure provisions of the ordinance. They do not question the legality of the disclosure requirements relating to conflicts of interest. The trial judge sustained the validity of the financial disclosure requirements of the ordinance except as they apply to the spouses and children of the officials. Lehrhaupt v. Flynn , 129 N.J. Super. 327 (Ch. Div. 1974).*fn1 It granted a stay of the enforcement of the ordinance pending the appellate process.

The major thrust of the plaintiffs at trial and on appeal is the assertion that the financial disclosure provisions are unconstitutional in that their overbreadth results in a violation of the fundamental right of privacy.

In order to focus our attention on this issue it is appropriate to set forth the pertinent portions of the ordinance:

Section 3-6.7. Full Disclosure

A. All members of the Township Council, Zoning Board, Class II and IV members of the Planning Board, and the Township Manager, Director of Law, Director of Finance, Treasurer, Tax Collector and Tax Assessor, Township Engineer, Building Inspector, Plumbing Inspector, Head of the Recreation Department, Head of the Department of Public Works, Chief of Police, Township Prosecutor, Health Administrator, Director of Welfare, Chairman of Industrial Commission, Zoning Board Attorney and Planning Board Attorney, shall file in accordance with the terms and provisions of this Ordinance, under oath, a disclosure statement of his or her net worth and the net worth of his or her spouse or minor children as of the first day of the month when said disclosure is filed in the form prescribed by the Township Attorney containing the following.

1. Cash.

a. Cash on hand in excess of $1,000.00

b. A listing of all bank accounts and the amounts of cash deposited in each account. In the event of multiple accounts, if the aggregate amount exceeds two thousand dollars ($2,000), that amount shall be listed.

2. Receivables in excess of $1,000.00.

3. A listing of all real property either fully or partially owned and the value of each such holding.

4. A listing of all stocks, bonds and other securities and the fair market value of same.

5. Equity interests in proprietorships or partnerships and the like.

6. The total value of all other assets (especially excluded are the value and cash surrender value of life insurance policies, vested interests in pension plans, all furnishings and fixtures, and motor vehicles valued less than $1,000.00.)

7. A listing of all liabilities when the sum total owed to individual creditors exceeds $1,000.00.

8. Total net worth which is defined as the excess of assets over liabilities of numbers 1 to 7 above.

9. Increase or decrease of net worth as defined above since previous disclosure filed.

10. A list of his or her offices, directorships, salary employment, self-employment and any offices, directorships, salary employment and self-employment of his or her spouse in which a remuneration of $1,000.00 or more was realized in a year next preceding the filing hereof, or, in the case of a corporation or partnership any interest in excess of 10% of a corporation's outstanding shares or a partnership interest. Excluded from this list are officerships and directorships in political, religious, charitable, benevolent or educational groups if the annual compensation of such office or directorship is less than $1,000.00. Nothing herein contained shall require anyone filing such a list to specify the actual salary for said employment, etc. . . .

Section 3-6.8. Filing of Disclosure Statements and Amended Disclosure Statements.

A. Disclosure statements filed pursuant to the terms and provisions of this Ordinance shall be filed annually with the Chairman of the Board of Ethics on or before the second Monday of January of each year except for the first filing which shall take place within 30 days of the effective date of this Ordinance. Upon filing, the Chairman of the Board of Ethics shall review each disclosure statement for possible conflicts of interests or other irregularities and may request, interview and obtain information and explanations from persons filing said disclosures in order to explain and clarify possible conflicts and irregularities. The Chairman of the Board of Ethics shall within 30 days of filing render a confidential report to the Township Mayor and Council concerning compliance with

this Ordinance and reporting as to possible conflicts and irregularities. Upon the reception of said report the Mayor and Council shall take whatever action they deem proper and shall advise the Chairman of the Board of Ethics as to whatever action may be taken.

B. A copy of disclosure statements filed pursuant to the terms and provisions of this Ordinance by members of the Township Council shall, after being reviewed by the Chairman of the Board of Ethics in accordance with this Ordinance be filed by the said Chairman with the Township Clerk, and upon filing with said clerk shall be deemed a public record. All other disclosure statements filed pursuant to the terms and provisions of this Ordinance shall be and remain confidential and the contents of such statements shall not be publicly divulged without the consent of the person filing same, except in judicial procedure brought by the appointing authority or by the Board of Ethics for the purpose of enforcing or enjoining violations of the Ordinance, and no such proceedings involving the divulgence of such a statement shall be instituted without prior notice to such person and where possible, opportunity afforded to him to secure the required compliance or avoid the violation as set forth in such notice.

C. Any person who willfully and knowingly and with intent to conceal or misrepresent any financial transaction or relationship required to be disclosed pursuant to this act, filing a disclosure which is false, inaccurate or incomplete in any material particular or who willfully and knowingly fails to or refuses to file any such financial disclosure statement when required to do so pursuant to the provisions of this act, is in violation of this act and the penalties contained in Chapter IV, section 4-16.1.

It is apparent from a perusal of the foregoing provisions that the local legislation seeks a comprehensive picture of the financial status of each of the listed officials. The purpose and motivation for this legislation, as expressed by counsel for the municipality, is the aim to avoid conflicts of interest and to guard against potential corruption and abuses of power by public officials.

In fact, the ordinance was allegedly introduced as an innovative measure in the wake of charges, indictments and convictions of officials of Madison Township for criminal offenses of bribery and extortion related to their public duties. The township thus points to this fact background

as a demonstrative local purpose and justification for the disclosure requirements.

Preliminarily, it should be observed that although there is no specific statutory authorization for municipal enactment of official financial disclosure ordinances, general power to adopt such local legislation is inherent in the broad delegation of police power contained in N.J.S.A. 40:48-2. Inganamort v. Bor. of Fort Lee , 62 N.J. 521 (1973); N.J. Builders Ass'n v. Mayor, E. Brunswick Tp. , 60 N.J. 222 (1972); Kennedy v. Newark , 29 N.J. 178 (1959); ...


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