Norfolk Southern Railway Company v. Intermodal Properties, A-117 September Term 2011; Supreme Court; opinion by Hoens, J.; decided August 6, 2013. On certification to the Appellate Division, 424 N.J. Super. 106 (App. Div. 2012). [Sat below: Judges Yannotti, Espinosa and Kennedy in the Appellate Division.] DDS No. 37-1-0906 [45 pp.]

In this appeal, the court considers two statutory provisions relating to the eminent domain power vested in public utilities and railroads: (1) the limitation in N.J.S.A. 48:3-17.7 that a public utility's taking of private property be "not incompatible with the public interest"; and (2) the requirement in N.J.S.A. 48:12-35.1 that a railroad may only take property to the extent that the "exigencies of business may demand."

Plaintiff Norfolk Southern Railway Company owns and operates Croxton Yard, a large intermodal freight facility in Secaucus. The yard is typically at 80 percent capacity, and more than 1,500 trucks pass through it each day. In order to remain efficient, Norfolk Southern must limit dwell time within the yard, which is a measure of the time it takes a truck to enter and leave the yard, as well as how long a container stays in the yard between off-loading and pickup.

In 2004, Norfolk Southern decided to expand the yard by acquiring three adjacent properties, including one owned by defendant Intermodal Properties. Intermodal's property would provide 291 additional parking spaces and would connect Croxton with Norfolk Southern's land on the other side of Intermodal's property. The property's proximity to the tracks also would improve efficiency without increasing dwell time.

Intermodal rejected Norfolk Southern's offers, and the railroad initiated condemnation proceedings through a petition filed with the New Jersey Department of Transportation, which referred the contested case to an administrative law judge (ALJ).

Intermodal proposed to use the property as a parking facility for the Secaucus Junction passenger rail station, a use it contended was more compatible with the public interest. The ALJ precluded Intermodal from invoking the prior public-use doctrine because the property was not being used for a public purpose and was not zoned to permit a parking facility. Intermodal succeeded in having the property rezoned, but the ALJ deemed this irrelevant since Intermodal presented no evidence that any entity was willing to enter into a contract for public parking.

In contrast, the railroad's condemnation would advance the public interest in several ways, including alleviating highway congestion, reducing dwell time, and increasing railroad efficiency.

The ALJ also disagreed with Intermodal's contention that the statutory provision permitting a taking only "as exigencies of business may demand" required the railroad to demonstrate an urgent need. Instead, the ALJ found that the language permitted condemnation when necessary to meet business demands and concluded that Norfolk Southern had satisfied this requirement.

The Appellate Division affirmed, agreeing with the ALJ's factual findings and concluding that permitting the railroad to exercise its eminent domain power was not incompatible with the public interest. The panel also agreed that Intermodal was precluded from presenting evidence of its proposed future use and could not invoke the prior public-use doctrine. Finally, the panel adopted the ALJ's interpretation of "exigency," finding that the railroad's foreseeable future needs were reasonable business needs requiring acquisition of Intermodal's property.

The court granted Intermodal's petition for certification.

Held: Norfolk Southern's proposed use meets the requirement of N.J.S.A. 48:3-17.7 that the taking be "not incompatible with the public interest." Intermodal may not invoke the prior public-use doctrine because it lacks the power to condemn and its proposed use is neither prior nor public. As used in N.J.S.A. 48:12-35.1, "exigencies of business" does not necessitate an urgent need for land in order to justify a taking. Rather, it limits a railroad's power to condemn to those circumstances where the general needs or ordinary course of business require it.

N.J.S.A. 48:3-17.7 requires that a railroad's taking by eminent domain be "not incompatible with the public interest." New Jersey courts have found that railroads and their related facilities are public uses. The issue is whether a property owner can defeat a railroad's exercise of eminent domain by introducing proofs that the owner's proposed use would better serve the public interest, which requires analysis of the prior public-use doctrine. That doctrine prohibits condemnation where a proposed use will either destroy an existing public use or prevent a proposed one. The property owner invoking the doctrine also must have the power to condemn.

At the time the railroad sought to condemn Intermodal's property, Intermodal's use was not public, and its successful rezoning is irrelevant because there is no evidence the proposed future use would be anything but a private venture. Intermodal cannot invoke the prior public-use doctrine because it does not have condemnation authority and its proposed use is neither prior nor public. Finally, N.J.S.A. 48:3-17.7 focuses on the condemnor's proposed use and does not require consideration of any alternative proposals that may be more in the public interest. Norfolk Southern's proposed use meets the statutory requirement.

N.J.S.A. 48:12-35.1 limits a railroad's power to condemn to circumstances "as exigencies of business may demand." The statute in question was crafted more than a century ago. Modern-day definitions of "exigency" are inconsistent and lead to contrary conclusions, requiring consideration of related legislation and decisions published during the time frame when the phrase was chosen by the Legislature.

Review of these materials reveals that, in the past, the phrase "exigencies of business" was regarded as a term of art used to mean the general needs or ordinary course of business, rather than the modern-day suggestion of an urgent or pressing need. The phrase "exigencies of business" must be interpreted in accordance with the manner in which it was used when the language was chosen, in light of the way railroads are developed and built, which requires long-term planning. There is no basis on which to conclude that the Legislature intended to demand that railroads prove urgency, immediacy or emergency of their need for land as a prerequisite to exercising their statutory condemnation power.

The judgment of the Appellate Division is affirmed.

Chief Justice Rabner; Justices LaVecchia, Albin and Patterson; and Judges Rodríguez and Cuff, both temporarily assigned, join in Justice Hoens' opinion.

For appellant — Eric D. McCullough (Waters, McPherson, McNeill; McCullough and James P. Dugan of counsel). For respondents: Norfolk Southern Railway Co. — Alan P. Fox (Capehart & Scatchard; Fox and John K. Fiorilla of counsel); Commissioner of Transportation — Carl A. Wyhopen, Deputy Attorney General (Jeffrey S. Chiesa, Attorney General). For amici curiae The American Short Line and Regional Railroad Association et al. — Nancy Winkelman (Schnader Harrison Segal & Lewis).