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Gloucester Township Municipal Utilities Authority v. Garden State Water Co.

Decided: January 31, 1979.

GLOUCESTER TOWNSHIP MUNICIPAL UTILITIES AUTHORITY AND TOWNSHIP COMMITTEE OF THE TOWNSHIP OF GLOUCESTER, PLAINTIFFS-RESPONDENTS,
v.
GARDEN STATE WATER COMPANY, A CORPORATION, DEFENDANT-APPELLANT, AND PHILLIPSBURG NATIONAL BANK & TRUST COMPANY, AS TRUSTEE; CONSUMER'S WATER COMPANY: STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION; AND WASHINGTON TOWNSHIP MUNICIPAL UTILITIES AUTHORITY, DEFENDANTS



On certification to the Superior Court, Appellate Division.

For reversal -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman, Clifford and Handler. For remandment -- None. The opinion of the court was delivered by Sullivan, J.

Sullivan

Garden State Water Company (Garden State), a defendant herein, pursuant to certification granted by this Court, appeals from a ruling by the Appellate Division which reversed a judgment of the trial court dismissing plaintiffs' complaint in condemnation.

The case has a factual background as follows: Garden State is a privately owned water utility serving some 3300 customers in Gloucester Township, Camden County and Washington Township, Gloucester County. Each township has a municipal utilities authority established under N.J.S.A. 40:14B-1 et seq., an act known as the "municipal and county utilities authorities law." The Act, so far as is here pertinent, provides that the governing body of a municipality may create a municipal utilities authority which is empowered, in the manner provided in the act and subject to the limitations therein specified, to acquire, construct, maintain, operate or improve systems for the accumulation, supply or distribution of water.*fn1

On January 15, 1976, the Gloucester Township Municipal Utilities Authority and the Township Committee of the Township of Gloucester, plaintiffs herein, filed a complaint in condemnation to acquire the lands and premises of Garden State "within the franchise of said Gloucester Township." The complaint sought the appointment of condemnation commissioners and further proceedings in the manner provided by N.J.S.A. 20:3-1 et seq.

Named as defendants were, inter alia, Garden State, Phillipsburg National Bank & Trust Company (as trustee for Garden State bondholders) and Washington Township Municipal Utilities Authority (Washington Authority). The complaint named the Gloucester Municipal Utilities Authority as the condemning party and cited N.J.S.A. 40:14B-34, the eminent domain section of the municipal and county utilities authorities law, as statutory authorization for the condemnation proceedings.

The bank, as trustee for Garden State's bondholders, answered, asserting a priority claim over any proceeds of the condemnation. Washington Authority also filed an answer alleging that a portion of Garden State's property was located in Washington Township and that it (the Washington Authority) possessed exclusive power of eminent domain over Garden State property within the confines of Washington Township.

Defendant Garden State moved to dismiss Gloucester Township as a party plaintiff on the ground that the only statutory authority for the suit alleged in the complaint was N.J.S.A. 40:14B-34, which authorizes condemnation by utility authorities, not by townships. Garden State also moved to dismiss the entire complaint on the ground that N.J.S.A. 40:14B-34, barred condemnation to a municipal utilities authority where the system of water supply sought to be condemned served 50 or more parcels of real property. Garden State also argued that the complaint should be dismissed because plaintiffs had failed to make any showing that a valid public purpose would be served by the taking.

Following argument of the Garden State motion, and prior to a decision thereon, plaintiffs filed an amendment to their complaint so as to include within the area to be condemned not only Garden State's land and premises in Gloucester Township, but also its property in Washington Township.

The trial judge did not rule on plaintiff Township's standing as a proper party plaintiff. Instead, he dismissed the entire complaint on the ground that since Garden State admittedly served 3300 parcels of real property, suit was barred by N.J.S.A. 40:14B-34 which prohibits a municipal utilities authority from condemning private water facilities which serve 50 or more parcels of real property.

On appeal by plaintiffs, the Appellate Division in an unreported opinion, upheld the trial ruling that plaintiff authority lacked the power under N.J.S.A. 40:14B-34 to condemn the whole of a system of water supply which actually served 50 or more parcels of real property. However, the Appellate Division noted that the Township was also a party plaintiff and that it had independent powers of eminent domain which it could exercise in a cooperative effort with its own utilities authority pursuant to N.J.S.A. 40:14B-24 as amended. The Appellate Division found in the amendment to Section 24 an expression of clear legislative intent that a ...


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