Riddlestorffer v. City of Rahway

• Decision Date: 02 March 1964
• Docket Number: No. L--25661--62,L--25661--62
• Citation: 197 A.2d 883,82 N.J.Super. 423
• Parties: Sidney RIDDLESTORFFER, Jr. and Maude Riddlestorffer, Plaintiffs, v. CITY OF RAHWAY, Robert Henderson, as Mayor, Robert Schrof, as Clerk and as Business Administrator, James J. Kinneally, as Treasurer, Eugene Kenna, as Chief Auditor, and Clifford E. Comer, as President of the Council of the City of Rahway, and Massachusetts Mutual Life Insurance Company, Defendants. P.W.
• Court: New Jersey Superior Court

Page 423

82 N.J.Super. 423

197 A.2d 883

Sidney RIDDLESTORFFER, Jr. and Maude Riddlestorffer, Plaintiffs, v. CITY OF RAHWAY, Robert Henderson, as Mayor, Robert Schrof as Clerk and as Business Administrator, James J. Kinneally as Treasurer, Eugene Kenna, as Chief Auditor, and Clifford E. Comer, as President of the Council of the City of Rahway and Massachusetts Mutual Life Insurance Company, Defendants.

No. L--25661--62 P.W.

Superior Court of New Jersey Law Division.

March 2, 1964.

Orlando H. Dey, Rahway, for plaintiffs.

Joseph M. Feinberg, Rahway, for defendants City of Rahway, Robert Henderson, Robert Schrof, James J. Kinneally, Eugene Kenna and Clifford E. Comer (Feinberg & Feinberg, Rahway, attorneys; Fred Dubowsky, Rahway, on the brief).

Eugene M. Haring, Newark, for defendant Massachusetts Mut. Life Ins. Co. (McCarter & English, Newark, attorneys).

FELLER, J.S.C.

On December 20, 1963 this court rendered its opinion in the above-captioned matter. 82 N.J.Super. 36, 196 A.2d 550. It was held that (1) this suit was started within the time limitation required by the rules of court; (2) the action of the municipality did not constitute a donation of public money in violation of the N.J.Const.1947, Art. VIII, Sec. III, par. 2; (3) the amendment to the proposed budget of the City of Rahway was in conformity with the statutes; (4) the city had the authority to enter into a contract with the insurance carrier and (5) the contract executed by the business administrator of the city was ratified by the governing body. However, several questions were reserved for further oral argument. The matters left undisposed of are whether or not the members of the city council and the office of mayor are included within the definition of the term 'employee,' and whether the contract is severable since the statute does not cover retired employees and perhaps does not include the office of mayor and members of the city council. Oral argument was heard on these matters on January 31, 1964.

As to the first question, this court is of the opinion that N.J.S.A. 40:11--15.1 does not contemplate the inclusion of the mayor and members of the city council within the term 'employees.' There is no definition of the term in question in the statute itself; thus it is assumed that the ordinary and usual understanding of it was intended. It would seem that the members of the city council and the mayor would not be included, since these individuals act as the representatives of the people in the administration of government, and are in reality employers rather than employees. These people act as trustees for the people, administering the trust committed to their charge for the benefit of the corporation and its inhabitants as a whole. 1 McQuillin, Municipal Corporations (3d ed. 1949), sec. 1.108, p. 391. It is an established principle that a municipal or other governmental body is for certain purposes a representative of its citizens and taxpayers. The relation between them is analogous to that between a trustee and his Cestui que trust. Pate Hotel Co. v. Morris, 205 N.C. 484, 171 S.E. 779, 780 (1933). Furthermore, the mayor and councilmen acting together for the municipal corporation possess and exercise all legislative and executive powers conferred upon the city. This court cannot conceive of broader powers. They are not only the agents of the city, but the principal--the city itself. See Mason v. Williams, 194 S.C. 290, 9 S.E.2d 537, 542 (1940). Also, where it is in the nature of employment that a contract exist between employer and employee, such is not the case with the governing body and the mayor. In the latter situation the relationship existing between the governing body and the mayor and the people is based, not on contract, but on public trust and confidence, and as a result the relationship can be terminated at the will of the constituency.

Therefore, on the first question it is the opinion of this court that the mayor and members of city council are not included within the statutory definition of the term 'employees.'

The remaining question concerns the severability of the invalid parts of the contract (parts relating to elected officials and retired employees).

That a contract which includes some prohibited parts is enforceable as to its valid provisions, if the prohibited and the valid provisions are severable, is undisputed. Bauer v. City of Newark, 7 N.J. 426, 81 A.2d 727 (1951); 2 Restatement, Contracts, sec. 603, p. 1119 (1932). The determination of whether it is severable depends upon the intention of the parties. Rothman Realty Corp. v. MacLain, 16 N.J.Super. 280, 84 A.2d 482 (Ch.Div.1951), affirmed 21 N.J.Super. 172, 91 A.2d 101 (App.Div.1952). Their intention is to be gathered from the language and subject matter of the agreement. It has been said that a contract is entire when the promise of one party is conditioned on entire performance of the contract by the other, and is divisible when the part to be performed by one party consists of several distinct and severable items respecting which consideration is apportioned to each item or is left to be implied in law. Rothman Realty Corp. v. MacLain, supra.

Applying this formula to the case Sub judice there can be no doubt that the agreement here is divisible or severable. In the first place, a group insurance policy is uniquely adapted to severability by reason of the fact that many individuals are covered by it, any number of whom might be dropped from coverage without affecting the coverage of the other members of the group. For instance, if one member happens to die, his coverage is terminated and his premium is no longer paid, but the coverage of all others continues unaffected. If this be the case where one of the group should die, why should not the same results obtain where it is determined that the coverage of certain members is illegal? Furthermore, the policy itself shows that the consideration for the insurance coverage is apportioned as to each person covered by the policy. It is not a lump sum coverage. Thus, the insurance policy consists of several distinct and severable items (each member of the group). Also, the agreement itself sets out that the consideration is apportioned to each item. In view of this, it must be found that the parties intended the contract to be severable, and that the legal provisions may stand. Coverage of retired employees and elected officials may be terminated by amendment of the contract or by merely deleting from the contract any reference to these individuals.

On the foregoing, as well as on other issues in this case, it is evident there is no genuine issue as to a material fact and that the same may be disposed of on motions for summary judgment. See Judson v. Peoples Bank and Trust Co. of Westfield, 17 N.J. 67, 110 A.2d 24 (1954).

A point not raised during the hearing, but which has occurred to the court, remains to be discussed. This point may be presented as two questions, as follows:

(1) Is the payment by the city of the premiums to be considered a salary increase requiring the passage of an ordinance by the governing body? (N.J.S.A. 40:46--23);

(2) If so, what is the effect of there not having been such an ordinance?

N.J.S.A. 40:46--23 recites that:

'The governing body may, by ordinance, notwithstanding any maximum or minimum limitation fixed by statute, fix and determine the salaries, wages or compensation to be paid to each officer and employee of the municipality * * *.'

The power to 'fix and determine' salaries includes the power to increase the same, and the latter would also require an ordinance of the governing body. Howard v. Mayor, etc., of Paterson, 6 N.J. 373, 78 A.2d 893 (1951). Furthermore, when the statute provides that an ordinance is required, a resolution will not suffice. Ibid., at p. 377 of 6 N.J., at p. 894 of 78 A.2d. Since it has been held that the payment of the insurance premiums by the city is additional compensation to the employees (see the opinion in this case in 82 N.J.Super. 36, 196 A.2d 550; see also N.J.S.A. 40:11--16.1), it logically follows that this amounts to an increase of their salaries, thereby requiring the passage of an ordinance.

The vote adopting the budget was not an ordinance fixing salaries. Councillors of Brockton v. Gildea, 343 Mass. 631, 180 N.E.2d 77 (Sup.Jud.Ct.1962). N.J.S.A. 40:46--23 contemplates prior action, independent of the consideration of the budget. It is therefore the opinion of this court that a salary increase by way of the payment of insurance premiums requires the passage of an ordinance just as an ordinary cash increase would.

The next inquiry is whether the failure to pass an ordinance affects the insurance contract here involved. In the opinion previously rendered it was said that the city clerk was not an authorized person to contract for the city; that this rendered the contract Ultra vires in the secondary sense, but that through ratification of his action the contract could still stand. It is the opinion of this court that the present question is to be resolved in much the same manner. For, as was already said, the contract was one the City could lawfully enter. The failure to pass an ordinance increasing the employees' salaries does not detract from the power of the city to enter the contract, but is merely an improper way of proceeding. In such a case the courts have applied the doctrine of estoppel. In fact, ratification and estoppel are often intermixed by the courts, one being mentioned when the other is intended.

Both doctrines are spoken of in City Affairs Committee v. Bd. of Com'rs of Jersey City, 134 N.J.L. 180, 46 A.2d 425 (E. & A.1946), in which it was contended that a contract was entered into without a budget appropriation having been made. The court there observed:

'* * * It is the general rule that even a contract Ultra vires for failure of an appropriation or other act made a condition precedent by stat...