This is a case of first impression. It addresses the right of a municipality to deny a petition for annexation filed by property owners in an adjacent municipality, notwithstanding that the
adjacent municipality has consented to deannexation. All annexation cases reported to date have reviewed municipal decisions refusing to consent to deannexation as opposed to municipal refusals to consent to annexation.*fn1
This dispute involves a section of Cedar Run Dock Road which is located primarily in Stafford Township [hereinafter Stafford] but terminates in Eagleswood Township [hereinafter Eagleswood] at Little Egg Harbor Bay. Cedar Run Dock Road is approximately three and a half miles in length, the last half mile of which is in Eagleswood. The pro se plaintiffs reside in Eagleswood in the Cedar Run Dock Road neighborhood.
On August 2, 1991, those plaintiffs presented a petition to the Eagleswood Township Committee seeking to deannex the Eagleswood area of Cedar Run Dock Road and to annex it to Stafford. Pursuant to N.J.S.A. 40A:7-12, the petition was referred to the Eagleswood Township Planning Board for its review of the impact upon the municipality. Following receipt of the planning board report, the Eagleswood governing body adopted a resolution approving the annexation.
On August 20, 1991, the Stafford Township Council adopted an ordinance on first reading consenting to the annexation. The ordinance was considered on second reading on September 3, 1991. After heated public debate, the council voted to deny the petition for annexation. This appeal followed.
Disposition of this controversy requires an analysis of the development of our case law concerning deannexation and the legislative response to those decisions. For many years prior to the opinion of the Supreme Court in West Point Island Civic Ass'n v. Committee of Dover Tp., 54 N.J. 339, 255 A.2d 237 (1969), there was no reported litigation concerning efforts to
change boundary lines through deannexation. Perhaps that resulted from the view that municipalities had a broad discretionary right to deny a request for deannexation. That right was deemed to be purely legislative or political in nature and, absent extraordinary circumstances, not judicially reviewable. The Supreme Court in West Point Island dispelled that notion and established guidelines for municipalities faced with deannexation requests.
In West Point Island, the Court stressed that discretionary activities of municipal governing bodies traditionally have been subjected to judicial scrutiny in an effort to prevent arbitrary and unreasonable decisions. Action on a petition for deannexation was found to be a discretionary function. In interpreting N.J.S.A . 40:43-26, a predecessor of the present statute, the Court held that once a petition seeking deannexation has been presented, the objecting municipality "must come forward with reasons why such deannexation would be injurious to [its] social and economic well-being. . . ." Id. at 348, 255 A.2d 237. If the municipality is unable to demonstrate such injury, it should approve the request. Refusal to consent to deannexation would be subject to judicial review since an abuse of the delegated discretion would undermine the statutory scheme. Id. at 347, 255 A.2d 237.
In Ryan v. Borough of Demarest, 64 N.J. 593, 319 A.2d 442 (1974), the Court clarified the standards governing the deannexing municipality's exercise of discretion as enunciated in West Point Island :
Proof of either economic or social injury, substantial in nature, is sufficient to satisfy the municipality's burden of coming forward with the evidence and there need not be a showing of both. It is likewise conceivable that there be both economic and social detriment, neither of which standing alone would be considered 'substantial' but the total of which taken together would work a substantial injury on the community were deannexation allowed. Id. at 602, 319 A.2d 442.
Furthermore, the Court placed the burden of initially proving the unreasonableness of the requested deannexation on the municipality:
When the case reaches the trial stage, it is sufficient in the first instance for plaintiffs simply to introduce into evidence the petition by which they seek deannexation, together with evidence of the municipality's denial of consent. While we have held that plaintiffs have the burden of proving the arbitrary and unreasonable quality of the governing body's action, we are sensitive to the problem they face in proving what is essentially a negative, i.e., that deannexation will not result in social or economic harm. Therefore, the trial court here was correct in denying Demarest's motion for judgment at the end of plaintiffs' case, their proof of a petition and withholding of consent being sufficient to shift to the municipality the burden of coming forward with evidence to which it clearly had a superior means of access. Id. at 604-05, 319 A.2d 442; [emphasis added].
In Carton v. Borough of Tinton Falls, 177 N.J. Super. 404, 426 A.2d 1056 (App.Div.1981), the court followed both West Point Island and Ryan by squarely placing the burden of proof of social or economic injury on the municipality once a request for deannexation has been made and denied. Id. at 411-12, 426 A.2d 1056. Of course, the ultimate burden of proving that the municipality acted arbitrarily or unreasonably remains with the plaintiff. Ryan v. Borough of Demarest, 64 N.J. at 602, 319 A.2d 442.
It is important to recognize that these three cases were decided prior to the enactment of the present statutory scheme. West Point Island and Ryan involved an interpretation of N.J.S.A. 40:43-26. Carton was decided after N.J.S.A. 40:43-26 had been repealed and replaced by N.J.S.A. 40A:7-12 and 13. However, the Carton court stated that the new enactments made only minor changes which were not significant to the issues on appeal. The major changes related to procedural issues not involved in that case or in the case before this court.
In 1982, the Legislature substantially altered the common law governing annexation by adopting N.J.S.A. 40A:7-12.1. That section provides:
In any judicial review of the refusal of the governing body of the municipality in which the land is located or the governing body of the municipality to which annexation is sought to consent to the annexation, the petitioners have the burden of establishing that the refusal to consent to the petition was arbitrary or unreasonable, that refusal to consent to the annexation is detrimental to the economic and social well-being of a majority of the residents of the affected
land, and that the annexation will not cause a significant injury to the well-being of the municipality in which the land is located.
Thus, for the first time, the Legislature statutorily defined the burden of proof and consequently the scope of judicial review affecting the deannexing municipality, the annexing municipality and the affected land. The statute directs that the petitioners must establish three elements:
1. that the refusal to consent to the petition to deannex or annex was arbitrary or unreasonable;
2. that refusal to consent to the annexation is detrimental to the economic and social well-being of a majority of the ...