Summary
commenting on limitation period imposed by Pierson Act
Summary of this case from Petition for Referendum to Repeal Ordinance 2354-12 of the Twp. of W. Orange v. Twp. of W. Orange, Corp.Opinion
No. 45/282.
09-17-1918
WATTERS et al. v. MAYOR AND COMMON COUNCIL OF BAYONNE et al.
Robert Carey, of Jersey City, for complainants. James Benny, of Bayonne, and Gilbert Collins, of Jersey City, for defendants.
(Syllabus by the Court.)
Bill by William Watters and another against the Mayor and Common Council of Bayonne and others. On motion to strike out answers filed by defendants in lieu of pleas. Granted, with leave to file answers on the merits within 10 days.
Robert Carey, of Jersey City, for complainants.
James Benny, of Bayonne, and Gilbert Collins, of Jersey City, for defendants.
LANE, V. C. This is a motion to strike out answers filed by defendants in lieu of pleas. Under the old practice the defense would be set up by pleas, and the pleas would be set down for hearing to test their legal sufficiency. Under the present practice the objection is made by motions to strike out. Rules 67, 68, and 75 (100 Atl. xil, xiii). The question is whether the answers present a legal defense.
The bill is filed upon the authority of McKinley v. Chosen Freeholders of Union County, 29 N. J. Eq. 164, and McCormick v. Mayor and Common Council of the City of New Brunswick, 83 N. J. Eq. 1, 89 Atl. 1034, to enjoin the city of Bayonne from purchasing a waterworks system at a price alleged to be so excessive as to shock the conscience. In such a case the Chancellor, in McCormick v. New Brunswick, said that this court might properly interfere by injunction to save the city's money from willful waste or fraudulent diversion. The answers set up that proceedings were taken by the city under the provisions of chapter 252 of the Laws of 1916 (P. L. 1916, p. 525), as amended by chapter 240 of the Laws of 1917 (P. L. 1917, p. 803), to raise moneys, through a bond issue, for the purchase of the waterworks, and that all proceedings were in strict accordance with the act, and that more than 20 days having elapsed after the publication of the statement signed by the clerk in accordance with the provisions of section 2 before the commencement of this suit, the complainant is barred under the provisions of section 2, subdivision 3, from questioning the validity of the ordinance or of any bonds issued in accordance therewith.
No bonds have actually been issued, nor do I think it would make any difference if they had been. The purpose of the act, commonly called the Pierson Act, is to provide for a uniform method of issuing bonds by municipalities. The purpose of subdivision 3 of section 2 is to prevent any action after the expiration of the 20-day period which would cast a cloud upon the validity of the bonds. It is true that subdivision 3 forbids an attack upon the ordinance or resolution after the expiration of the period fixed which ordinance or resolution, in the language of the subdivision, shall be conclusively presumed to have been duly and regularly passed, and to comply with the provisions of this or any other act. The ordinance or resolution referred to, however, will be found by reference to the act to be an ordinance or resolution authorizing the issuance of bonds, not an ordinance or resolution authorizing the making of the improvement, or what not, for which the proceeds of the bonds are to be used. While the ordinance in the instant case authorizing the purchase of the waterworks was incorporated in the same document as the ordinance authorizing the issuance of bonds, there is in reality two distinct steps in the procedure.
My conclusion is that the provisions of subdivision 3, section 2, prevents only an attack upon the regularity and validity of so much of the ordinance as provides for the issuance of bonds. Assuming that the ordinance providing for the issuance of bonds has been regularly passed and is valid, and that any bonds issued under it would be valid obligations of the municipality, there is nothing, I think, which will prevent a court of equity from enjoining the city from using the proceeds of the bonds in such manner as will violate any equitable right of the inhabitants of the municipality. Nor do I think that, assuming the regularity and validity of the ordinance directing the issuance of bonds and that the city has the power to issue the bonds, there is anything to prevent a court of equity from enjoining the municipality from exercising the power which it has derived through the passage of the ordinance in an unconscionable manner, and that therefore, if the bonds have not yet been issued, their issue may be restrained, notwithstanding that the period provided for in subdivision 3 of section 2 within which an attack must be made upon the ordinance has expired. By so holding, the rights of holders of bonds issued under the act will be fully protected, and yet the court will not be precluded from preventing a fraudulent diversion of funds. In many cases the fraud may not bediscovered, or be discoverable, until after the expiration of the short period fixed by the statute.
I will advise an order striking out the answers filed in lieu of pleas, and giving defendants 10 days within which to file answers on the merits. Will counsel kindly present orders at once.