New Jersey Mortg. Finance Agency v. McCrane

• Court: New Jersey Supreme Court
• Writing for the Court: PROCTOR
• Citation: New Jersey Mortg. Finance Agency v. McCrane, 267 A.2d 24, 56 N.J. 414 (N.J. 1970)
• Decision Date: 06 July 1970
• Parties: NEW JERSEY MORTGAGE FINANCE AGENCY and James C. Brady, Jr., Commissioner of Banking, Plaintiffs-Respondents, v. Joseph M. McCRANE, Jr., Treasurer of the State of New Jersey, Defendant-Appellant.

Page 414

56 N.J. 414

267 A.2d 24

NEW JERSEY MORTGAGE FINANCE AGENCY and James C. Brady, Jr. Commissioner of Banking, Plaintiffs-Respondents, v. Joseph M. McCRANE, Jr., Treasurer of the State of New Jersey, Defendant-Appellant.

Supreme Court of New Jersey.

Argued June 16, 1970.

Decided July 6, 1970.

William Miller, Princeton, for defendant-appellant (Allen D. Porter, Princeton, of counsel and on the brief).

Stephen G. Weiss, Asst. Atty. Gen., for plaintiffs-respondents (George F. Kugler, Jr., Atty. Gen., attorney, Stephen G. Weiss, Asst. Atty. Gen., and Arthur Abba Goldberg, Deputy Atty. Gen., on the brief).

The opinion of the court was delivered by

PROCTOR, J.

Plaintiffs, New Jersey Mortgage Finance Agency and James C. Brady, Jr., The Commissioner of Banking (hereinafter Agency) brought this action to obtain a declaratory judgment (N.J.S.A. 2A:16--50 et seq.) that the New Jersey Mortgage Finance Agency Law (hereinafter Law), L.1970, c. 38, N.J.S.A. 17:1B--4 et seq., is valid and constitutional. The action was filed after the defendant State Treasurer refused to lend money authorized by the Law for the use of the Agency. The Treasurer's refusal was based on his doubts of the Law's constitutionality. The case was tried on stipulated facts, and on cross motions for summary judgment the Law Division held for the plaintiffs. We certified the defendant's appeal directly to this Court. R. 2:12--1.

The Law was signed into law by Governor Cahill on May 4, 1970, and is the result of the Legislature's determination that New Jersey is experiencing a severe shortage of housing and a decline in 'housing starts' caused in large part by 'the lack of funds available to finance housing by the private mortgage lending institutions.' N.J.S.A. 17:1B--5. In order to channel additional funds into the mortgage market, the Legislature established the Agency and empowered it to raise funds from private investors through the sale of tax exempt bond issues. These funds are then to be made available to private lending institutions for residential mortgage loans.

The Agency is a public corporation organized under the Department of Banking. N.J.S.A. 17:1B--7(a). Its members include the Commissioner of Banking, the Commissioner of Community Affairs, the State Treasurer, and two persons to be appointed by the Governor with the advice and consent of the Senate. N.J.S.A. 17:1B--7(b). The Law designated the Commissioner of Banking as the Chief Executive Officer. N.J.S.A. 17:1B--7(d). The Agency is authorized to sue and be sued, to make and alter bylaws for its internal organization and management, to make rules and regulations for the conduct of its business, to borrow money and to issue negotiable bonds or notes and to provide for and secure the payment thereof, to make loans to mortgage lenders for the making of new residential mortgages, and to take all necessary steps to carry out the purpose of the Law. N.J.S.A. 17:1B--8.

Rules and regulations made by the Agency 'shall be designed to effectuate the general purposes of this act and the following specific objectives:

(i) the expansion of the supply of funds in the State available for new residential mortgages; (ii) the provision of the additional housing needed to remedy the shortage of adequate housing in the State and eliminate the existence of a large number of substandard dwellings; and (iii) the effective participation by mortgage lenders in the program authorized by the act and the restriction of the financial return and benefit thereto from such program to that necessary and reasonable to induce such participation.'

N.J.S.A. 17:1B--9(b)(7).

The Legislature appropriated to the account of the Agency the sum of $200,000 designed to defray initial expenses. L.1970, c. 38, § 23. The Agency was obligated to reimburse the State Treasurer from the proceeds of bond sales within a period of five years. Id. Pursuant to this section, The Commissioner of Banking certified to the State Treasurer that the sum of $100,000 was required by the Agency in order to commence preliminary operations. The Treasurer refused to release the funds for the reasons previously expressed, and the present suit resulted.

In his answer to plaintiffs' complaint, the Treasurer set up separate defenses contending: 1) that the case is not justiciable; 2) that the Law does not meet the constitutional requirement of fulfilling a public purpose; 3) that even if the Law meets a public purpose, the means employed to carry out the purpose require a declaration of invalidity; 4) that the title of the Law fails to comply with constitutional requirements; and 5) that the Law constitutes an invalid delegation of legislative power to the Agency. We shall consider these questions in the order presented.

Defendant urges that the case is not justiciable since the suit is essentially a friendly one in which he has a mere difference of legal opinion with the plaintiffs. We cannot accept the argument. The suit, of course, does not seek an advisory opinion upon some hypothetical matter. A statute does exist and the defendant has refused to comply with it because of doubts he asserts. Specifically, he has refused to make available to the Agency funds already appropriated by the Legislature, and the Agency cannot function without these funds. Such a refusal constitutes the basis of a true controversy. Moreover, the policy behind refusing to entertain suits where the parties do not stand in truly adversary positions is not threatened in this case. That policy is to avoid rendering decisions where it is unlikely that both sides will receive adequate representation before a court. In the present case special counsel was appointed for the defendant pursuant to N.J.S.A. 2A:1--10 which provides:

'In any action involving the constitutionality or validity of a statute providing for the expenditure of public moneys by the State or any instrumentality thereof where the legal issues concerning the constitutionality or validity thereof are genuine and a question arises as to whether the interests of the parties may not be truly adversary, and the issues are of public importance and an adjudication thereof is in the public interest, the Chief Justice of the Supreme Court, or the Supreme Court en banc, may appoint counsel specially to represent any party or interest as may be deemed necessary and appropriate to assure the full presentation of adversary positions and interests with respect to the issues.'

This statute insures that both sides will receive adequate representation and, more importantly, that the public interest will be protected. And there is no question but that this case is precisely what was contemplated by the statute. The 'issues are of public importance and an adjudication is in the public interest.' We cannot be blind to the realities of government and commercial enterprise. Private lenders will not participate in this program until its constitutionality is adjudicated. There is no purpose in delaying adjudication which is inevitable where all interests are adequately represented. Only the public will suffer from a delay. Moreover this kind of case has been entertained by our courts before. E.g. Clayton v. Kervick, 52 N.J. 138, 244 A.2d 281 (1968). In short, there is no doubt that this case presents a justiciable controversy.

The main thrust of defendant's arguments on the merits is that the Law does not sponsor a valid public purpose since it provides for the appropriation of public funds for private purposes in violation of Art. VIII & III, par. 3 of the New Jersey Constitution. He urges that 'aid for the housing problems of the public generally, unrelated to any particular social evil' is not a valid public purpose. We disagree. The concept of 'public purpose' is broad and is merely a reflection of the changing needs of society. As the needs change, the area of permissible governmental activity must change to meet those needs. Roe v. Kervick, 42 N.J. 191, 207, 199 A.2d 834 (1964). For it is elementary that the very purpose of government is to provide for the health, safety and general welfare of the people. When a particular condition arises which poses a threat to the fulfillment of that function, the government has the power to take whatever steps are necessary to check the threat subject only to applicable constitutional limitations. Id. at 212, 199 A.2d 834.

The question of whether a citizenry has adequate and sufficient housing is certainly one of the prime considerations in assessing the general health and welfare of that body. See, E.g., Romano v. Housing Authority of Newark, 123 N.J.L. 428, 10 A.2d 181 (Sup.Ct.1939), aff'd 124 N.J.L. 452, 12 A.2d 384 (E. & A. 1940); Ryan v. Housing Authority of Newark, 125 N.J.L. 336, 340, 15 A.2d 647 (Sup.Ct.1940); Redfern v. Bd. of Com'rs of Jersey City, 137 N.J.L. 356, 59 A.2d 641 (E. & A. 1948). In the present case, the Legislature made a determination that there was 'a critical shortage of adequate housing,' that 'a large and significant number of New Jersey residents have and will be subject to hardship in finding adequate, safe and sanitary housing unless new facilities are constructed,' and that 'a major cause of this housing crisis is the lack of funds available to finance housing by the private mortgage lending institutions of the State.' ¹ There is no doubt that the 'crisis' referred to by the Legislature exists. Indeed, defendant does not deny it. Exhibits jointly stipulated to by the parties indicate that the present housing production rate of about 47,500 new dwelling units per year must be more than doubled if the State's housing needs are to be met. The state-wide vacancy rate has dropped to an estimated 1.1% With some northern cities well below the 1% Mark even with substandard housing included in the estimates. The minimum acceptable rate is said to be 3% With a range of 4% To 6% 'healthy.' Housing choice is virtually non-existent at rates...