Jersey City v. Hague

• Decision Date: 13 June 1955
• Docket Number: No. A--137,A--137
• Citation: 18 N.J. 584,115 A.2d 8
• Parties: JERSEY CITY, a municipal corporation, Plaintiff-Appellant, v. Frank HAGUE, Defendant-Respondent, and Frank Hague EGGERS et al., Defendants.
• Court: New Jersey Supreme Court

Page 584

18 N.J. 584

115 A.2d 8

JERSEY CITY, a municipal corporation, Plaintiff-Appellant, v. Frank HAGUE, Defendant-Respondent and Frank Hague EGGERS et al., Defendants.

No. A--137.

Supreme Court of New Jersey.

Argued April 25, 1955.

Decided June 13, 1955.

Mortimer Neuman, Jersey City, for appellant (John B. Graf, Corp. Counsel, Jersey City).

Thomas McNulty, Jersey City, for respondent, Frank Hague (Milton, McNulty & Augelli, Jersey City, attorneys).

The opinion of the court was delivered by

VANDERBILT, C.J.

Defendant Frank Hague moved, without supporting affidavit, to dismiss the complaint 'for failure to state a claim upon which relief can be granted' and the trial court granted the motion. The plaintiff appealed to the Appellate Division of the Superior Court and we certified the case on our own motion while it was pending there.

I. The Facts of the Complaint.

No principle of pleading is better established, not only under our rules of court but under the practice that preceded it, Kelly v. Hoffman, 137 N.J.L. 695, 61 A.2d 143, 5 A.L.R.2d 951 (E. & A.1948), 41 Am.Jur., Pleading, § 336, that on an attack on a complaint all the facts and all the reasonable inferences and implications therefrom are to be considered most strongly in favor of the plaintiff since the remedy sought by the defendant is a drastic one. It is with this necessary principle in mind that the complaint is to be read.

The first count of the complaint alleges that (1) the plaintiff is a municipal corporation; (2) the defendant Frank Hague was mayor of Jersey City from 1917 to 1947; (3) the defendant Frank Hague Eggers was mayor from 1947 to 1949 and a member of the board of commissioners from 1942 to 1949; (4) the defendant John F. Malone was deputy mayor from 1917 to 1949, and

'5. The defendants Hague, Eggers and Malone were political associates, and close political confederates and collaborators, and closely associated together in the government of the City of Jersey City continuously for at least twenty-five years prior to May 17, 1949.

'6. From May 15, 1917 to May 17, 1949, the defendants acting at times singly and at other times in combination with each other, in their capacities as individuals and as officials of the plaintiff City, did steal and did unlawfully, fraudulently, corruptly and with gross breach of trust, extort and appropriate to themselves property of the City, to wit, money, in the amount of not less than fifteen million dollars ($15,000,000). The said thefts and defrauds of moneys of the City were accomplished by the means of the extortion from employees of the City of three percent (3%) of the annual salary of each said employee during each year from 1917 to 1949 as aforesaid. The said thefts, defrauds, and extortions were committed in such manner and at such times as to have constituted, in law, thefts, defrauds and extortions from the city payroll funds, which were the property of the City, in that the three percent of salary of each city employee was extorted by threats and force by the defendants from the said city employees on a systematic annual basis, and was made payable to and was taken by the defendants directly out of the salary moneys paid or payable by the City to the said employees for services. The systematic basis on which the said thefts, defrauds and extortions were organized and carried out by the defendants, amounted in law to an unlawful charge upon, and theft, defraud and extortion from, the City's treasury and budgeted appropriations for each such year, in the amount of three percent of city treasury funds and budgeted appropriations set aside or held or appropriated for salaries of City employees.'

The second count of the complaint repeats the allegations of the first six paragraphs of the first count of the complaint and then states:

'2. Under the laws of New Jersey and the ordinances and resolutions of the City of Jersey City in force during the period May 15 1917 to May 17, 1949, it was unlawful for any paid employee of the City of Jersey City to give or pay to any person any money or other valuable consideration by way of bribe, 'Kick-back' or otherwise as a condition of obtaining or holding such City employment or of obtaining City funds as salary therefor. All such moneys extorted by the defendants from City employees under defendants' three percent extortion scheme were and are subject to be forfeited to the City for its own use and benefit, or as trustee for the use and benefit of the defrauded employees (or their heirs and administrators) from whom such moneys were extorted. Defendants are required to forfeit all such moneys to plaintiff, in the amount of $15,000,000. as aforesaid.'

The complaint then concludes:

'Wherefore, plaintiff demands judgment against the defendants, jointly and severally, in the amount of $15,000,000. plus interest; and for the impressment of a trust in the amount of $15,000,000. plus interest, upon the property and assets of the defendants for the use and benefit of the plaintiff as beneficiary, or in the name of plaintiff as trustee for the use and benefit of all employees (or their heirs and administrators) of the plaintiff from whom the defendants extorted payroll percentage amounts as alleged herein; and for the costs of this suit; and for such other relief as may be just, equitable and proper.'

The complaint will be examined first with respect to the substantive law and then in its procedural aspects.

II. The Substantive Law of the Complaint.

The complaint in effect alleges that the defendants by force of their official positions systematically extorted from the employees of the plaintiff municipality 3% Of their official income from 1917 to 1949 as a condition of their employment and continued employment and retained these funds for their own use. The substantial question before us is whether they can be permitted in law to do this.

We do not have to look far for any answer. In Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, at page 474 et seq., 86 A.2d 201, at page 221 (1952), this court said without dissent:

'The members of the board of chosen freeholders and of the bridge commission are public officers holding positions of public trust. They stand in a fiduciary relationship to the people whom they have been elected or appointed to serve. Rankin v. Board of Education, 135 N.J.L. 299, 303, 51 A.2d 194 (E. & A.1947); Trist v. Child, 21 Wall. 441, 88 U.S. 441, 450, 22 L.Ed. 623, 625 (1875); Edwards v. City of Goldsboro, 141 N.C. 60, 53 S.E. 652, 653, 4 L.R.A., N.S., 589 (Sup.1906); Tuscan v. Smith, 130 Me. 36, 153 A. 289, 294, 73 A.L.R. 1344 (Sup.Jud.1931); State ex rel. Fletcher v. Naumann, 213 Iowa 418, 239 N.W. 93, 99, 81 A.L.R. 483 (Sup.1931); In re Marshall, 363 Pa. 326, 6. A.2d 619, 625 (Sup.1949); 42 Am.Jur., Public Officers, § 8, p. 885; 43 Id. § 260, p. 77--78; 67 C.J.S., Officers, § 6, p. 118. As fiduciaries and trustees of the public weal they are under an inescapable obligation to serve the public with the highest fidelity. In discharging the duties of their office they are required to display such intelligence and skill as they are capable of, to be diligent and conscientious, to exercise their discretion not arbitrarily but reasonably, and above all to display good faith, honesty and integrity. City of Newark v. N.J. Turnpike Authority, 7 N.J. 377, 381--382, 81 A.2d 705 (1951); Ryan v. (City of) Paterson, 66 N.J.L. 533, 535--536, 49 A. 587 (Sup.Ct.1901); Schefbauer v. Board of Township Committee of Kearney, 57 N.J.L. 588, 601, 31 A. 454 (Sup.Ct.1895); Ames v. Board of Education of Montclair, 97 N.J.Eq. 60, 65, 127 A. 95 (Ch.1925); United States v. Thomas, 15 Wall. 337, 82 U.S. 337, 342, 21 L.Ed. 89, 91 (1873); Paschall v. Passmore, 15 Pa. 295, 304 (Sup.1850); Cumberland County v. Pennell, 69 Me. 357, 365, 31 Am.Rep. 284 (Sup.Jud.1879); Speyer v. School Dist. No. 1, 82 Colo. 534, 261 P. 859, 860, 57 A.L.R. 203 (Sup.1927); 43 Am.Jur., Public Officers, §§ 260--261, pp. 77--78; 43 Id. § 267, p. 82; 67 C.J.S., Officers, § 114, p. 402. They must be impervious to corrupting influences and they must transact their business frankly and openly in the light of public scrutiny so that the public may know and be able to judge them and their work fairly. When public officials do not so conduct themselves and discharge their duties, their actions are inimicable to and inconsistent with the public interest, and not only are they individually deserving of censure and reproach but the transactions which they have entered into are contrary to public policy, illegal and should be set aside to the fullest extent possible consistent with protecting the rights of innocent parties. Brooks v. Cooper, 50 N.J.Eq. 761, 26 A. 978, 21 L.R.A. 617 (E. & A.1893); Cameron v. International, &c., Union No. 384, 118 N.J.Eq. 11, 176 A. 692, 97 A.L.R. 594 (E. & A.1935); Girard Trust Co. v. Schmitz, 129 N.J.Eq. 444, 20 A.2d 21 (Ch.1941); Allen v. Commercial Casualty Insurance Co., 131 N.J.L. 475, 477--478, 37 A.2d 37, 154 A.L.R. 834 (E. & A.1944); Stone v. William Steinen Mfg. Co., 133 N.J.L. 593, 595, 45 A.2d 486 (E. & A.1946); Pan American Petroleum & Transport Co. v. United States, 273 U.S. 456, 500, 47 S.Ct. 416, 71 L.Ed. 734, 745 (1927); Mammoth Oil Co. v. United States, 275 U.S. 13, 48 S.Ct. 1, 72 L.Ed. 137 (1927); Edwards v. City of Goldsboro, supra, 141 N.C. 60, 53 S.E. 652 (Sup.1906); Tuscan v. Smith, supra, 130 Me. 36, 153 A. 289 (Sup.Jud.1931); 43 Am.Jur., Public Officers, § 291, p. 101.

'These obligations are not mere theoretical concepts or idealistic abstractions of no practical force and effect; they are obligations imposed by the common law on public officers and assumed by them as a matter of law upon their entering public office. The enforcement of these obligations is essential to the soundness and efficiency of our government, which exists for the benefit of the people who are its sovereign. Constitution of 1947, art. I,...