State by McLean v. Lanza, A--137

• Decision Date: 27 June 1958
• Docket Number: No. A--137,A--137
• Citation: 143 A.2d 571,27 N.J. 516
• Parties: STATE of New Jersey, by Joseph E. McLEAN, Commissioner of Conservation and Economic Development, Plaintiff-Respondent, v. Silvio A. LANZA et al., Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 516

27 N.J. 516

143 A.2d 571

STATE of New Jersey, by Joseph E. McLEAN, Commissioner of Conservation and Economic Development, Plaintiff-Respondent, v. Silvio A. LANZA et al., Defendants-Appellants.

No. A--137.

Supreme Court of New Jersey.

Argued May 20, 1958.

Decided June 27, 1958.

Burrell Ives Humphreys, Jersey City, argued the cause for appellant Silvio A. Lanza.

Bernard Hellring, Sp. Counsel, Newark, argued the cause for the State (Philip Lindeman, II, Newark, on the brief; David Furman, Acting Atty. Gen., attorney).

The opinion of the court was delivered by

HEHER, J.,

We certified, sua sponte, the defendant landowner's appeal to the Appellate Division of the Superior Court from a judgment of the Law Division of the Court appointing commissioners under R.S. 20:1--1 et seq., as amended by L.1953, c. 20, N.J.S.A ., to assess the damages to be sustained by the taking and condemning by the State of lands and property deemed 'appropriate and useful for the future establishment of a water supply system,' pursuant to L.1956, c. 60, N.J.S.A. 58:20--1 et seq.

The enabling act, L.1956, c. 60, N.J.S.A. 58:20--1 et seq., authorizes and directs the Commissioner of Conservation and Economic Development, section 1, as amended by L.1957, c. 215, effective December 26, 1957, 'to acquire, in the name of the State, within 2 years from the effective date of (the) act, such part of the area commonly known as Round Valley, located in Hunterdon county, which in the judgment of the commissioner is appropriate and useful for the future establishment of a water supply system the source of which shall be either the Delaware river, exclusive of its tributaries, or the south branch of the Raritan river or both.'

The acquisition of the real property to that end, section 2, may be made by purchase or by the exercise of the power of eminent domain according to R.S. 20:1--1 et seq., N.J.S.A.; and real property thus acquired, section 4, as amended by L.1957, c. 215, 'shall be held primarily for use in connection with a water supply system the source of which shall be either the Delaware river, exclusive of its tributaries, or the south branch of the Raritan river or both, but shall also be made available, as a State reservation, for recreational and other State uses consistent with its primary use, in accordance with rules and regulations to be promulgated by the Commissioner of Conservation and Economic Development.'

And '(t)o the end that municipalities may not suffer loss of taxes by reason of the acquisition and ownership by the State * * * of property therein,' it is provided, Section 5, as amended by L.1957, c. 215, that the State Treasurer 'upon certification of the Commissioner of Conservation and Economic Development shall pay annually on October 1 to each municipality in which property is acquired pursuant to (the) act (a) a sum equal to that last paid as taxes upon such land for the taxable year immediately prior to the time of its acquisition and (b) in addition, for a period of 13 years beginning with the year 1958 the following amounts: in the first year a sum of money equal to that last paid as taxes upon improvements upon such land for the taxable year immediately prior to the time of its acquisition; and thereafter the following percentages of the amount paid in the first year, to wit, second year 92%; third year 84%; fourth year 76%; fifth year 68%; sixth year 60%; seventh year 52%; eighth year 44%; ninth year 36%; tenth year 28%; eleventh year 20%; twelfth year 12%; thirteenth year 4%.'

It is then provided that 'All sums of money received by the respective municipalities as compensation for loss of tax revenue pursuant to this section shall be applied to the same purposes as is the tax revenue from the assessment and collection of taxes on real property of the said municipalities, and to accomplish this end such sums shall be apportioned in the same manner as the general tax rate of the municipality for the tax year preceding the year of receipt'; that 'The State shall be reimbursed for payments required to be made by this section out of the proceeds received for the sale of water supplied by said system'; and that the State Treasurer 'shall also pay to any county or municipality the cost of relocating any municipal or county roads made necessary by reason of the acquisition or use of property pursuant to (the) act.'

And section 7 'appropriated' to the Department of Conservation and Economic Development 'for the purposes of this act, $3,000,000, or so much thereof as may be needed, from the Veterans Loan Guaranty and Insurance Fund' established pursuant to L.1944, c. 126, as amended, N.J.S.A. 38:23B--1 et seq., 'which is in excess of the total amounts of guaranteed or insured loans outstanding now or hereafter as obligations of the Veterans Loan Authority created pursuant' to that chapter.

The complaint alleges that 'Plaintiff has determined to acquire' lands of the defendant, therein described by metes and bounds, in fee simple absolute, together with all easements, prescriptive rights and rights of way, 'for public use in accordance with the * * * statutory authority vested in him, the said lands and premises being, in the judgment of the Commissioner of Conservation and Economic Development, appropriate and useful for the said statutory purpose,' but they are not purchasable by agreement with the owner because of disagreement as to the price.

The answer admits defendant's 'unwillingness to sell the lands,' denies plaintiff's 'right to acquire the same' as not founded on a constitutionally-sufficient statute, and asserts an irregular exercise of the statutory power on the contrary hypothesis.

The defenses were overruled and the commissioners were appointed after a summary hearing at which evidence was adduced; and the Appellate Division restrained the taking of possession until the determination of the appeal now before us.

The commissioners have made their report; and defendant's appeal from the award is now pending in the Superior Court.

I

The primary point made is that the Round Valley Act of 1956, N.J.S.A. 58:20--1 et seq., 'creates a debt or liability of the State to certain municipalities and counties without submitting the question to the voters as required' by Art. VIII, Sec. II, par. 3 of the 1947 State Constitution.

It is said in argument that the constitutional interdict is against 'the creation of any debt or liability 'in any manner' if it together with previous debts or liabilities exceeds 1% Of the total appropriation for any given year unless the same be authorized by the voters'; and that the statute 'obligated the State to pay certain municipalities an amount equal to the taxes lost as a result of the condemnation and to pay to counties and municipalities the cost of relocating any municipal or county roads.' McCutcheon v. State Building Authority, 13 N.J. 46, 97 A.2d 663 (1953), and Behnke v. New Jersey Highway Authority, 13 N.J. 14, 28, 97 A.2d 647 (1953), are deemed conclusive of the issue.

But the Legislature has not thereby, in any manner, created 'a debt or debts, liability or liabilities of the State' for the purchase price of the real property found essential to the consummation of the project, nor did it intend so to do; it has merely made provision for the replacement of the local tax losses, and the payment of the cost of relocating municipal or county roads made necessary by 'the acquisition or use of property' pursuant to the act, all attending the fulfillment of an undertaking in the interest of the general health and welfare, the 'payments required' by that 'section' to be eventually reimbursed from the proceeds of the sale of water thereby to be supplied, and thus it is an inherently voluntary subsidiary measure to avert economic crisis in the functioning of its own local subdivisions of government as a direct result of its own action for the common good of its inhabitants in a critical area of state responsibility, the basic object of the legislation. It was a secondary or minor means of warding off undue hardship and failure in local administration of government by its own agencies that would otherwise be an incident of a course taken to meet a great necessity of the people as a whole. The losses thus reimbursed have no direct relation to the compensation to be made for the real property to be acquired for the service of the general current and reasonably foreseeable needs. $3,000,000 was appropriated by the act for that purpose. And, moreover, the recompense thus provided for the loss of tax revenue shall be applied 'to the same purposes as is the tax revenue' from the assessment and collection of taxes on real property of the particular municipality, and 'apportioned in the same manner as the general tax rate' of the municipality 'for the tax year preceding the year of receipt,' a course of action in which the State is directly interested. And the direction to the State Treasurer to pay the cost of road relocations to the county or municipality, presumably from available moneys in the Treasury, involves voluntary payments of the same character to the same end. In this context, for the purposes of the instant case, there is no essential or qualitative difference between the reimbursement of tax revenue losses and the payment of the cost of relocating local roads.

Neither of these provisions gives rise to a 'debt' or 'liability' within the intendment of the constitutional limitation as interpreted and applied in McCutcheon and Behnke. There is no bargain or professed contractual, conventional or legal undertaking to recompense the given loss of tax revenue, but rather a truly 'voluntary appropriation' for a 'lawful object' according to the distinction made in Wilson Attorney General v. State Water Supply Commission, 84 N.J.Eq. 150, 93 A. 732 (E. & A.1915), and City of Passaic v. Consolidated Police and Firemen's Pension Fund Commission, 18 N.J. 137...