Rutgers, the State University v. Kugler

• Decision Date: 25 May 1970
• Citation: 265 A.2d 847,110 N.J.Super. 424
• Parties: RUTGERS, THE STATE UNIVERSITY, Plaintiff, v. George F. KUGLER, Jr., Attorney General of the State of New Jersey, Defendant.
• Court: New Jersey Superior Court

Page 424

110 N.J.Super. 424

265 A.2d 847

RUTGERS, THE STATE UNIVERSITY, Plaintiff, v. George F. KUGLER, Jr., Attorney General of the State of New

Jersey, Defendant.

Superior Court of New Jersey,

Law Division.

May 25, 1970.

Clyde Szuch, for plaintiff (Pitney, Hardin & Kipp, Newark, attorneys).

Fred R. Gruen, Deputy Atty. Gen., for defendant (Stephen G. Weiss, Assistant Atty. Gen., of counsel).

BROWN, R.C., J.S.C.

This is a declaratory judgment suit instituted by Rutgers, the State University (hereinafter Rutgers) against the Attorney General of New Jersey seeking a determination that it is not bound by (a) the provisions of N.J.S.A. 52:32--2, which requires the letting of multiple contracts in connection with the construction of public buildings; (b) the provisions of N.J.S.A. 52:35--1 et seq., which requires the prequalification of bidders on such construction projects, and (c) the provisions of N.J.S.A. 52:34--6 et seq., which requires public bidding.

The Attorney General contends that each of these statutes applies to Rutgers and seeks a judgment that the University comply with them.

The case is now before the court on cross-motions for summary judgment.

In order to thoroughly understand the present problem and to aid the court in determining the applicability of these statutes a review of the history of Rutgers and the events leading up to the adoption of the Rutgers, the State University Law, L.1956, c. 61, N.J.S.A. 18A:65--1 et seq., is necessary. Such a history, up to 1956, is fully incorporated in the opinion of Judge (now Justice) Schettino in Trustees of Rutgers College in New Jersey v. Richman 41 N.J.Super. 259, 125 A.2d 10 (Ch.Div.1956), and need not be repeated here. Shortly after that opinion was rendered the Rutgers Trustees voted to reorganize under the above act. This then brought about the following important changes in the relationship between Rutgers and the State:

(a) The theretofore private governing board, the Board of Trustees, yielded virtually all management, control, administration and policy-making functions to a newly created and Publicly controlled Board of Governors, 6 of whose 11 voting members (majority control) are now appointed by the Governor of the State of New Jersey, with the advice and consent of the Senate. N.J.S.A. 18A:65--12, 14 (emphasis added);

(b) Rutgers' facilities and assets remained impressed with a public trust, their beneficial use being reserved for the higher education of New Jersey residents, and as the instrumentality of the State for the purpose of operating the State University. The corporation retains the legal title. N.J.S.A. 18A:65--2;

(c) The private Board of Trustees gave up most of its powers, retaining only:

(1) the power to manage and invest private assets or private gifts, with income therefrom channeled to the Board of Governors;

(2) the power to appoint 5 of the 11 voting members of the Board of Governors, and

(3) an 'advisory capacity' status (N.J.S.A. 18A:65--13, 15, 26), coupled with a right to withdraw the private assets should they be improperly applied by the Board of Governors or should insufficient state appropriations be forthcoming (N.J.S.A. 18A:65--27).

Contemporaneous with assumption by the State of New Jersey of effective control or hegemony over the University (after the Trustees' acceptance of the reorganization plan, N.J.S.A. 18A:65--37), the State undertook a massive annual funding program subsidizing in great part the school's operating budget and providing the bulk of its construction costs. This financial lifeline has grown; 1956: $10,356,303 appropriation for operating costs and $800,000 appropriation for capital construction; 1965: $24,537,924 appropriation for operating costs and $1,250,000 appropriation for capital construction; 1966: $28,816,161 appropriation for operating costs and $3,705,000 appropriation for capital construction; 1967: $33,696,587 appropriation for operating costs and $9,189,000 appropriation for capital construction; 1969: $39,292,265 appropriation for operating costs and $8,650,000 appropriation for capital construction; 1970: $47,319,840 appropriation for operating costs and $27,278,000 appropriation for capital construction.

From 1956 to June 30, 1969 Rutgers had an authorized building program in the total amount of $363,441,622. Of that sum, $191,409,841 has come from the State, as noted above. Rutgers has or will supply $85,422,953 from its own money or through borrowing, and the balance of $86,608,828 has or will come from other sources, including the Federal Government and private gifts.

Since 1956 eight buildings, having a total cost of $31,145,898, were or are being built entirely without state funds, and only three new construction projects, with a cost of $1,758,449, have been entirely with state funds. During that same period there have been only six instances involving the renovation of or addition to buildings that have been financed solely with state monies, at a cost of $2,215,863. There have also been four landscaping projects with a total cost of $730,565, paid for entirely out of state funds.

The State of New Jersey, then, through the Board of Governors, controls, operates and administers Rutgers. To the extent the private Board of Trustees, because of reserved powers, acts in concert or in partnership with the State in this endeavor, it is a very limited partner with very limited inconsequential leverage. In short, Rutgers' merger into the State and its assumption of state agency or state Alter ego status is undisturbed thereby. That the Board of Trustees retains a partial private character is not denied.

The limited supervisory powers of the State Board of Education (now the Board of Higher Education) were continued (N.J.S.A. 18A:65--7) but were not extended.

As a result, a very unique type of corporate structure was created.

Rutgers was not specifically given the power of eminent domain and may not create a debt of the State in borrowing money, N.J.S.A. 18A:65--8 and 18A:65--25(e). It is exempt from the Civil Service Law, N.J.S.A. 18A:65--25(i).

Rutgers argues that the 1956 act was a compact between the State and the University and contained all of the provisions governing the operation and control of Rutgers intended by both the State and the Board of Trustees to be applicable to it. It further contends that provisions, other than those of general application, not contained in the act, do not apply to it except for those statutes specifically applicable at the time of the act's adoption, which were incorporated therein by its 'existing provisions of law clause' (N.J.S.A. 18A:65--4) unless inconsistent therewith (N.J.S.A. 18A:65--9.1). None of the three statutes with respect to public bidding and here under consideration were specifically mentioned in the 1956 act. Accordingly, Rutgers contends that it is not subject to those statutes or any statutes applicable to state or public agencies unless the provisions were specifically incorporated therein.

It should be noted that the act of 1956 grants to the Board of Governors broad powers of authority and responsibility. N.J.S.A. 18a:65--25. This section provides in part as follows:

The board of governors shall have general supervision over and be vested with the conduct of the university. It shall have the authority and responsibility to:

b. Study the educational and financial needs of the university, annually acquaint the governor and legislature with the condition of the university, and prepare and, jointly with the board of higher education, present the anual budget to the governor and legislature, in accordance with law;

c. Disburse all moneys appropriated to the university by the legislature, moneys received from tuition, fees, auxiliary services and other sources, and from or by direction of the board of trustees;

d. Direct and control the expenditures of the corporation and the university in accordance with the appropriation acts of the legislature, and, as to funds received from the trustees and other sources, in accordance with the terms of any applicable trust, gifts, bequests, or other special provisions. All accounts of the university shall be subject to post audit by the state;

e. Borrow money for the needs of the corporation and the university, as deemed requisite by the board, in such amounts and for such time and upon such terms as may be determined by the board, with the consent and advice of the board of trustees; provided, that no such borrowing shall be deemed or construed to create or constitute a debt, liability, or a loan or pledge of the credit, or be payable out of property or funds (other than moneys appropriated for that purpose) of the state;

f. 1. Purchase all lands, buildings, equipment, materials and supplies; and

2. Employ architects to plan buildings; secure bids for the construction of buildings and for the equipment thereof; make contracts for the construction of buildings and for equipment; and supervise the construction of buildings; * * *

Rutgers further argues that the power to secure bids and make contracts is clear and unmistakable. At the time of the enactment of the 1956 act, Rutgers was not subject to the public bidding statutes because it was a purely private body selling educational services to the State. Not having been subject to those statutes, and because a provision is contained in the act on the specific subject, which provision does not incorporate the public bidding statutes, the freedom of Rutgers from the provisions of Title 52 was not altered by the 1956 act.

If the intent had been to incorporate the public bidding statutes into the 1956 act, the Legislature would have done so expressly. As stated in Garden State Parkway Employees Union v. N.J. Highway Authority, 105 N.J.Super. 168, 171, 251 A.2d 463 (App.Div.1969): It is to be noted that whenever the Legislature intended to include authorities within the ambit of certain legislation, it...