Opinion
No. 27/778.
06-02-1921
MAYOR AND ALDERMEN OF JERSEY CITY v. JERSEY CITY WATER SUPPLY CO. et al.
John Bentley and John Milton, both of Jersey City, for complainant. Humphreys & Sumner, of Paterson, for defendant Jersey City Water Supply Co.
Suit by the Mayor and Aldermen of Jersey City against the Jersey City Water Supply Company and others, in which defendant named filed a suplemental bill. Supplemental bill dismissed.
See, also, 79 N. J. Eq. 215, 84 Atl. 572.
John Bentley and John Milton, both of Jersey City, for complainant.
Humphreys & Sumner, of Paterson, for defendant Jersey City Water Supply Co.
LEWIS, V. C. This matter is before the court on a supplemental bill, filed by the defendant, Jersey City Water Supply Company, against the complainant, the mayor and aldermen of Jersey City, and also against the Fidelity & Deposit Company of Maryland as a party defendant. Its object is to accomplish the release and payment to the Water Supply Company of a fund of $500,000, with certain deductions therefrom, retained and withheld by the city of Jersey City from the sum due the Water Supply Company under a contract to furnish the municipality with a water supply system, pursuant to the decree of this court, entered in the original cause June 4, 1908, and affirmed, with slight modifications, by the Court of Errors and Appeals, by its decree dated March 18, 1910.
The controversy arises out of a provision of the contract between the city and the Water Supply Company, dated July 8, 1901, which reads as follows:
"Fourth. Whenever the contractors shall deliver to Jersey City a valid release from the Morris Canal & Banking Company, and its lessee, releasing all their rights to divert the waters of the Rockaway river watershed out of said river above said proposed reservoir site, the same to take effect upon their abandonment of the navigation of said canal between Dover and Montville under legislative sanction, for a sum therein to be named and to be paid upon such abandonment, then there shall be paid over by Jersey City to said contractors all of said sum of $500,000, except the amount named in said release, which said lastmentioned amount the contractors authorize Jersey City to pay to said Morris Canal & Banking Company and its lessee, upon the actual abandonment aforesaid."
The Water Supply Company contends that the release called for by the fourth clause of the contract referred to has been delivered in accordance with the provisions quoted, and that therefore it is entitled to be paid the money withheld by the city, as above indicated. The city of Jersey City, however, asserts that such a release has not been obtained and delivered to it, and that therefore the moneys retained should not be paid over by the city to the Water Supply Company.
The Fidelity & Deposit Company of Maryland, which was the surety on the water company's contract, was made a party to this supplemental bill, so that its rights in the controversy might also be presented and adjudicated, but it has filed no answer, and a decree pro confesso has been taken and entered against it.
The proofs show that there has been delivered to the city of Jersey City a release from the Morris Canal & Banking Company and its lessee, which contains, among other things, the following terms:
"We, the said Morris Canal & Banking Company and Lehigh Valley Railroad Company, lessee of the Morris Canal & Banking Company, in consideration of the premises and of the sum of $1 to us paid upon the execution of this writing, and to be paid to us upon such abandonment of navigation, have released, and by these presents do release, upon the mayor and aldermen of Jersey City, their successors and assigns, forever, all our rights to divert the waters of the Rockaway river watershed out of said river above the proposed reservoir site, mentioned in said supplemental agreement of July 8, 1901, upon which site there has since been erected a reservoir below Boonton by the Jersey City Water Supply Company, under its contract with Jersey City.
"This release to take effect upon our abandonment of the navigation of the Morris Canal between Dover and Montville, under legislative sanction, and upon the payment by the mayor and aldermen of Jersey City to us of the sum of $1, as hereinbefore provided, upon such abandonment."
This the Water Supply Company contends is a release in literal compliance with the express terms of the fourth clause of the contract referred to.
Upon application of the Water Supply Company to settle certain matters referred to in the final decree in the original cause, the release mentioned was received in evidence, and Vice Chancellor Stevens was asked to adjudge the final decree that the release was a sufficient fulfillment of the terms of the fourth section of the contract of July 8, 1901, and that the sum of $500,000 should no longer be retained by Jersey City, but should he paid over with the rest of the contract price to the Water Supply Company.
Vice Chancellor Stevens filed an opinion upon this application, which is reported in 78 Atl. 391, the material portions of which are as follows:
"I do not think that the decree as it stands should be so modified as to direct the payment of the $500,000 reserved. After giving the contract of July 8, 1901, considerable study, I am not able to come to the conclusion that the release of May 12, 1909, is a sufficient compliance with its terms to entitle the water company to the immediate payment of the money. To so hold would be to nullify the general intent of the parties, as expressed in the instrument itself; but I do not think that the question should be finally passed upon at this time. If the contention of the Water Supply Company be correct, it would seem that the liability of the Fidelity & Deposit Company, the surety, would or might be considerably increased. If so, the company is interested in the question and should be heard.
"I cannot find among the papers any copy of the condition of this bond, but it would seem, from the terms of the contract of July 8, 1901, that it is under some liability for the flow of the Rockaway up to the limit of 70,000,000 gallons per diem. The question has been informally presented, and without any issue framed. In a question of such importance, the proper course would appear to be to present the matter by bill, and leave to file it should be reserved."
Later the matter again came before this court upon petition and affidavits of the Water Supply Company, whereby it again sought to obtain a decree for the payment of the $500,000 withheld by the city. After hearing upon that petition, Vice Chancellor Stevens filed the following opinion (79 N. J. Eq. 215, 84 Atl. 572):
"I have carefully considered the petition presented by the water company, asking leave to introduce evidence relative to the release of the Morris Canal Company to Jersey City, dated May 12, 1909. The question is of much importance, and the construction of the supplemental contract of July 8, 1901, as far as it bears upon that release, not without difficulty. It seems to me that this new controversy, involving the large sum of $500,000, should be determined on bill or supplemental bill, and that the signing of the final order or decree in this suit should not be postponed until the final determination of that controversy. The bill was filed August 1, 1905. The final decree was made I on June 4, 1908, and, except as to an unimportant detail, affirmed on March 18, 1910; and I so it appears that the question of the sufficiency of the release, which it is now sought to interject into the present suit, is one which did not arise until nearly a year after the issues made by the pleadings [in this suit], had been passed upon in this court. To introduce at this stage of the cause an entirely new issue, whose final determination will necessarily consume much time, would be not only Irregular, but unjust to complainant, whose rights have been established by the court of last resort."
From this decree, which was entered on or about November 15, 1910, an appeal was taken by the Water Supply Company to the Court of Errors and Appeals, and was there affirmed, in an opinion which is reported in 79 N. J. Eq. at page 216, 84 Atl. at page 573, which reads as follows:
"Per Curiam. So much of the decree as is involved in the present appeal will be affirmed upon the opinion delivered by the Vice Chancellor in the court below. We think that the petition of the appellant, praying that the making of the final decree in this cause be withheld until the determination of the question whether the $500,000, authorized by the third item of the contract between the parties, to be retained by the city until the performance by the contractor of one or other of the conditions therein recited, is now due and payable to the contractor, was properly refused, and we rest this conclusion upon the ground set forth in the memorandum opinion of the learned Vice Chancellor delivered in disposing of the application.
"The order denying the application will also be affirmed."
I cannot see that the situation, as presented by this supplemental bill, differs in any way from the situation as previously passed upon by this court and the Court of Errors and Appeals.
Vice Chancellor Stevens held that he was not able to come to a conclusion that the release of December 12, 1919, was a sufficient compliance with the terms of the contract of July 8, 1901, to entitle the water company to the immediate payment of the money. It is true that he said that the matter was informally presented to him, and that it should be brought on by bill or supplemental bill, owing to its importance; but he also speaks of the matter being premature, and to hold, he says, that the release is a sufficient compliance with the terms of the contract, would be to nullify the general intent of the parties as expressed in the instrument itself.
I am inclined to think that the views heretofore judicially expressed, as herein set forth, are binding upon me on this application. The city's real purpose doubtless was to acquire the flow of the watershed complete and free from claims or rights that might conflict with its untrammeled enjoyment of that unrestricted supply, required for the uses of its thickly settled area and highly congested population.
It is most likely that the city, in assentingto paragraph 4 referred to, did not have any intention of relinquishing any of its rights under the contract. It allowed the provision to meet the situation involved, but not to give up its valuable rights. Surely it did not contemplate the production of a release that was ultra vires and meaningless, lacking legislative sanction (and with which counsel for the water company in their closing argument have intimated the city may have to be satisfied), but rather, it seems to me, one which would effectually foreclose in the city's favor whatever rights and claims might in any way and at any time be asserted against its paramount rights in the complete flow of the watershed.
Until such rights and claims have been thus effectually extinguished and released, and acquiesced in by legislative sanction, I think that the true Intent and meaning of the fourth paragraph has not been met and complied with, and the application to release the $500,000 fund retained by the city is premature.
The supplemental bill will therefore be dismissed.