Petition of Gardiner

• Decision Date: 09 May 1961
• Docket Number: No. A--907,A--907
• Citation: 67 N.J.Super. 435,170 A.2d 820
• Parties: Petition of Rose GARDINER, a citizen of the City of Jersey City, County of Hudson, and State of New Jersey, appealing from the certification of the Director of the Division of Local Government relating to the 1960 municipal budget of the City of Jersey City. Rose GARDINER, Petitioner-Appellant, v. CITY OF JERSEY CITY, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 435

67 N.J.Super. 435

170 A.2d 820

Petition of Rose GARDINER, a citizen of the City of Jersey

City, County of Hudson, and State of New Jersey, appealing

from the certification of the Director of the Division of

Local Government relating to the 1960 municipal budget of

the City of Jersey City.

Rose GARDINER, Petitioner-Appellant, v. CITY OF JERSEY CITY, Defendant-Respondent.

No. A--907.

Superior Court of New Jersey

Appellate Division.

Argued March 27, 1961.

Decided May 9, 1961.

Robert Greenberg, Union City, for petitioner-appellant.

Meyer Pesin, Jersey City, for defendant-respondent City of Jersey City (Ezra L. Nolan, Corp. Counsel, Jersey City, attorney).

Lee A. Holley, Deputy Atty. Gen., for defendant-respondent Division of Local Government (David D. Furman, Atty. Gen., attorney).

Before Judges CONFORD, FREUND and KILKENNY.

The opinion of the court was delivered by

CONFORD, S.J.A.D.

This is an appeal from an order of the Local Government Board, Division of Local Government, affirming the determination of its Director in rejecting an attack by the petitioning taxpayer of the City of Jersey City upon a single line item in the Jersey City municipal budget for the year 1960.

The item in question reads: '141--Contract--Seton Hall College of Medicine and Dentistry--1960 Appropriation--$320,000.00; 1959 Appropriation--$120,000.' (Only the 1960 expenditure is attacked; the reference to the 1959 item is for comparison purposes only.)

The objection here advanced to the certification and approval by the Director, acting under N.J.S.A. 40:2--53, of the 1960 budget, is founded upon the claim that the inclusion in the budget of the specific item mentioned does not comply with the requirements of chapter 2 of Title 40 of the Revised Statutes, does not 'permit the exercise of the comptroller function within the municipality,' and in other respects fails to comply with 'the requirements of law,' all of these criteria being set forth in the cited section (paragraphs (b), (d) and (e)) as conditions for such budget approval.

The item attacked is intended to meet the expense for the year 1960 attendant upon the city's performance in that year of an 'Affiliation Agreement' entered into July 17 1958 between the city and Seton Hall College of Medicine and Dentistry, the city's action having been duly approved by a resolution of the governing body. The agreement recited that the College had (previously) leased from the city certain space in two of the buildings of the Jersey City Medical Center (owned and controlled by the city), referred to the mutual advantages of affiliation between a medical and dental school and a public hospital, and bound the parties for a term of 47 years, the College to render manifold services to the city of detailed description not necessary for recital here, and the city to make monthly payment to the College of its 'audited costs' for performing such services, determinable in accordance with a formula set forth in the agreement. The first monthly payment was provided to be paid January 31, 1959 and fixed at $10,000, subject to later audit. The entry by municipalities into contracts of precisely this nature, not to exceed terms of 50 years, is specifically authorized by statute. L.1955, c. 22 (N.J.S.A. 30:9--23.6 to .14).

The gravamen of the argument of the taxpayer is that the 1960 budget item is illegal because the making of the 1958 contract was not preceded by inclusion in the annual city budget for The year 1958 of the Total cost of the contract to the city for its Full term or by the previous adoption of an ordinance authorizing an appropriation for that total sum. The contention is alleged to rest upon N.J.S.A. 40:2--29, stemming from the Local Budget Law, and N.J.S.A. 40:50--6, whose source is the legislation governing municipal contracts included in the Home Rule Act of 1917. Reliance is mainly placed upon the construction of these enactments in Samuel v. South Plainfield, 136 N.J.L. 187, 54 A.2d 717 (E. & A.1947). The position taken is that since the allegedly prerequisite appropriation ordinance was not adopted, no money may ever be legally expended by the city in performance of the contract.

We observe, preliminarily, that this affiliation contract has been the subject of previous unsuccessful litigation in the courts by another taxpayer wherein several grounds of illegality were asserted and found not to be well taken. The present petitioning taxpayer purports to concede, for purposes of this case, the legality of the contract, as such, but her position, if sustained, would obviously prevent the city from paying its obligations under the contract and thus prejudice the rights of the College, and this without the latter's having been made a party and given an opportunity to be heard. In view of our conclusions, however, we need not be concerned about the absence of the College as a party.

The Local Government Board rested its dismissal of the proceeding on the ground that petitioner, while purporting only to challenge a line item in the 1960 budget, was actually attacking the contract itself, since she was relying upon N.J.S.A. 40:50--6, which prohibits the making of a contract where its provisions are not complied with, and upon N.J.S.A. 40:2--29, which declares null and void a contract made in violation of its terms and prohibits the payment of any money thereon. The Board concluded that the determination of the legality of contracts entered into by a municipality is not within its jurisdiction, but rather a matter for the courts. We agree with the general soundness of this viewpoint.

Petitioner's reliance for jurisdiction of the Director and the Board upon paragraph (b) of N.J.S.A. 40:2--53 is not apt. That provision refers to approval of 'specific items of appropriations enumerated in section 40:2--52.' But none of the specific items so enumerated involve non-mandatory contract expenditures. As to paragraph (d) of section 40:2--53, the Director's authorized inquiry is whether, 'in itemization, form, arrangement and content, the budget will permit the exercise of the comptroller function within the municipality.' Petitioner's argument in this regard, as stated in her brief, is that the comptroller function is not exercised when a 1960 appropriation is made for expenditures under a 1958 contract. But petitioner is at pains to state in this connection, that she is not, for this purpose, attacking the validity of the 1958 contract. Our only response to these assertions, if we understand them, is that they are totally irrelevant to the exercise of the 'comptroller function'; and if they are simply another form or argument that without a prior appropriation in the year of the making of a contract no valid appropriation may ever be made therefor in later years, the merits of the argument will be considered and shown to be unsubstantiated, infra. As to the Jurisdiction of the Director and Board to entertain this kind of inquiry, a fairly debatable issue is presented.

Paragraph (e) of N.J.S.A. 40:2--53 requires the Director to determine whether 'in all other respects the budget complies with the requirements of law * * *.' Moreover, N.J.S.A. 40:2--52 calls for the Director to 'examine the budget for * * * compliance as to form, arrangement and content with the provisions of this chapter * * *.' Insofar as N.J.S.A. 40:50--6, in and of itself, is concerned, we find nothing which, in the context of this case, would vest any jurisdiction in the Director to pass upon a 1960 budget item. Rather does petitioner's argument go to a construction of that statute as invalidating a 1958 contract because the 1958 budget contained no appropriation therefor. But we incline to the view that N.J.S.A. 40:2--29 does establish a basis for jurisdiction. That provision is a part of the original Local Budget Law, L.1936, c. 211, § 301, thoroughly revising municipal budget practices and vesting general supervisory control over local budgets in the state Commission of Local Government (now the Director of the Division of Local Government). Section 40:2--29 prohibits the expenditure of any money, the incurrence of any liability, or entrance into any contract (with specified exceptions) contrary to its terms. 'No moneys' may be paid on any contract made in violation of the section. It is consequently our view, although we have decided to determine this case on its merits from the standpoint of both of the statutes invoked by petitioner, that there was probably jurisdiction in the Director to entertain this petition, within his authority under sections 40:2--52 and 53, to review the content of budgets in respect of compliance with any positive regulations concerning the expenditure of money contained in any part of chapter 2 of Title 40, and sections 40:2--52 and 53 constituting part of that chapter.

But even assuming the foregoing, it would seem that a taxpayer should raise a question based upon the alleged illegality of a municipal contract with the Director at the first available opportunity. The same objection here raised as to the 1960 budget could have been submitted to the Director with respect to the 1959 budget, which also contained an item for meeting the affiliation contract. Another taxpayer was attacking this contract in the courts on the same ground in 1958 and 1959, and this was a matter of public knowledge. See infra. Under petitioner's theory, she might have held her fire until the city budget for the year 1980, or, for tht matter, that for 1990, was presented to the Director for approval, the city and College in the meanwhile carrying out the terms of the allegedly illegal agreement. A serious question as to petitioner's laches is presented, but we regard the public importance of the issues presented to impel a decision on the merits.

So far as here material, N.J.S.A. 40:2--29 reads as follows:

'Except as may be otherwise provided in section 40:2--31 of this Title, no...