McCutcheon v. State Bldg. Authority

• Decision Date: 08 June 1953
• Docket Number: No. A--131,A--131
• Citation: 97 A.2d 663,13 N.J. 46
• Parties: McCUTCHEON v. STATE BUILDING AUTHORITY et al.
• Court: New Jersey Supreme Court

Page 46

13 N.J. 46

97 A.2d 663

McCUTCHEON v. STATE BUILDING AUTHORITY et al.

No. A--131.

Supreme Court of New Jersey.

Argued April 27, 1953.

Decided June 8, 1953.

Walter H. Jones, Hackensack, argued the cause for the plaintiff-appellant.

George Warren, Trenton, argued the cause for the respondent State Building Authority.

Theodore D. Parsons, Atty. Gen., pro se and for respondents William J. Dearden, Walter T. Margetts, Jr., and Fred V. Ferber, in their respective official capacities, and Frederic G. Weber, Deputy Atty. Gen., joined in the appellant's brief (Arthur J. Sullivan, Jr., Passaic, on the brief).

The opinion of the court was delivered by

HEHER, J.

The basic question here is the constitutional integrity of chapter 255 of the Laws of 1950, as amended by chapter 224 of the Laws of 1952. L.1950, p. 873; L.1952, p. 760; N.J.S 52:18A--50, et seq., N.J.S.A.

The contention is that the act infringes Article VIII, Section II, paragraphs 1, 2 and 3 of the State Constitution of 1947, forbidding loans of the State's credit, regulating the appropriation of monies for the support of the State Government, and prescribing a debt limitation; Article IV, Section I, paragraph 1, vesting the legislative power in the Senate and General Assembly; and Article IV, Section VII, paragraph 8, banning 'private, special or local law' save on public notice.

As stated in the amended title, the act is designed 'to provide additional buildings for the use' on the State 'and departments, agencies, and instrumentalities of the State, in connection with the conduct of the State's business and functions and of the business and functions of such departments, agencies, and instrumentalities of the State and to establish the State Building Authority for that purpose;' and to authorize 'such departments, agencies, and instrumentalities of the State to enter into leases and contracts with the State Building Authority relating to such structures, space, buildings and facilities.'

There was 'created and established in the Department of the Treasury' a body corporate and politic with 'corporate succession,' to be known as the 'State Building Authority.' The Authority was constituted 'an instrumentality exercising public and essential governmental functions'; and it was provided that 'the exercise by the Authority of the powers conferred' by the act 'shall be deemed and held to be an essential governmental function of the State.' Section 2. These are the specific purposes of this statutory creation: The acquisition, construction, furnishing and operation of 'a State office building' in Trenton, an administrative building or buildings 'for the use of the offices of the State Department of Education on the campus of the New Jersey State Teachers College' at Trenton, 'motor vehicle inspection stations at a site or sites specified by the Director of the Division of Motor Vehicles and approved by the Attorney General and the State House Commission, State Police barracks at a site or sites specified by the Superintendent of State Police and approved by the Attorney-General and the State House Commission,' and 'housing for employees of State Institutions operated by the Department of Institutions and Agencies at a site or sites specified by the Commissioner of Institutions and Agencies and approved by the State Board of Control of Institutions and Agencies and the State House Commission.' And the Authority 'shall lease or otherwise contract for the use of space in projects or parts thereof, but such leases shall be only to, and such contracts only with, the State or any departments, agencies, and instrumentalities of the State.' Section 3.

The Authority consists of three members, appointed by the Governor with the advice and consent of the Senate, and removable by the Governor for cause after a public hearing. Sections 4, 6. It has capacity to sue and be sued in its own name, to contract in the performance of its duties and the execution of its powers, and to use a common seal: and it is empowered to issue bonds, and 'to provide for the rights of the holders thereof as provided' in the act; to acquire, hold and dispose of personal property in the exercise of its powers and the performance of its duties, and to acquire by purchase or otherwise, or by the exercise of the right of eminent domain as therein provided, 'any land and other property which it may determine is reasonably necessary for any project, including public lands, parks, playgrounds, reservations, highways,' and so on, and 'to hold and use the same and to sell, convey, lease or otherwise dispose of property so acquired, (when) no longer necessary' for its corporate purposes; to acquire, construct, maintain, furnish and operate 'a project or projects;' to lease 'any project or part thereof'; to 'contract for the use' of space and 'for services to be rendered' by the Authority 'in connection with any project,' but 'such leases shall be only to, and such contracts only with, the State or any departments, agencies, and instrumentalities of the State;' to 'establish, alter, charge and collect rents and other charges for the use of any project or part thereof or for any services rendered' by the Authority 'in connection therewith at reasonable rates to be determined' by the Authority 'for the purpose of providing for the payment of the expenses' of the Authority, 'the construction, improvement, repair, equipping, furnishing, maintaining and operation of its facilities and properties the payment of the principal of and interest on its obligations and to fulfill the terms and provisions of any agreements made with the purchasers or holders of any such obligations;' to adopt by-laws for the regulation of its affairs and the conduct of its business, and to establish rules and regulations for the use of any project; to hire personnel and all necessary administrative and technical skills and services, and fix compensation for the same; and, subject to approval by the Governor, apply for and accept federal grants 'to meet any expenses connected with the purposes' of the act. Sections 10, 11.

The departments, agencies, and instrumentalities of the State are severally empowered 'by proper resolution or act, or acting by or through its director or other chief executive officer,' to 'enter into any lease with the Authority for any project or part thereof,' or contract for the use of space in a project, or for the services to be rendered by the Authority in connection with a project, 'for such period of time, specified or unlimited, and upon such terms and conditions as are deemed necessary in order to provide the space or service contemplated by such lease or contract,' and undertake the payment to the Authority of 'any rents or other charges' for the facility. Such department, agency or instrumentality of the State is 'authorized and directed to do and perform any and all acts or things necessary, convenient or desirable to carry out and perform every such contract and to provide for the payment or discharge of any obligation thereunder in the same manner as other obligations of such department, agency, or instrumentality of the State'; and 'Any such contract shall be valid and binding upon the department, agency, or instrumentality of the State, notwithstanding that no appropriation was made or provided to cover the cost or estimated cost of the contract.' Section 12.

The Authority is empowered to issue its negotiable bonds 'from time to time * * * for any of its corporate purposes'; and, except as may be 'otherwise expressly provided by the Authority, every issue of bonds shall be general obligations payable out of any moneys or revenues of the Authority, subject only to any agreements with the holders of particular bonds pledging any particular moneys or revenues.' Section 17(a), (b). The bonds shall be authorized by resolution of the Authority, and shall mature at such time or times, bear interest at such rate or rates not exceeding 6% Per annum, and be subject to such terms of redemption as such resolution may provide. Section 17(e). In order to secure the payment of its issued bonds, the Authority is given power, as a constituent part of the contract with the bondholders, these among others, to 'pledge all or any part of its rents or revenues to which its right then exists or may thereafter come into existence, and the moneys derived therefrom, and the proceeds of bonds'; to 'covenant against pledging all or any part of its rents or revenues, or against mortgaging all or any part of its real or personal property then owned or thereafter acquired, or against permitting or suffering any lien or (sic) such rents, revenues or property;' to 'covenant with respect to limitations on its right to sell, lease or otherwise dispose of any project or any part thereof, or any property of any kind;' to 'covenant as to the payment of the principal of or interest on the bonds, or any other obligations, as to the sources and methods of such payment, as to the rank or priority of any such bonds or obligations with respect to any lien or security or as to the acceleration of the maturity of any such bonds or obligations;' to 'covenant against extending the time for the payment of bonds or interest thereon;' to 'covenant as to the rates of rents and other charges to be established and charged, the amount to be raised each year or other period of time by rents or other revenues and as to the use and disposition to be made thereof;' to 'create or authorize the creation of special funds or moneys to be held in pledge or otherwise for construction, operating expenses, payment or redemption of bonds, reserves or other purposes and to covenant as to the use and disposition of the moneys held in such funds;' to provide 'for the rights and liabilities, powers and duties arising upon the breach of any covenant, condition or obligation;' to 'vest in a trustee or trustees such property rights, powers...