Henry B. Byors & Sons, Inc. v. Board of Water Com'rs of Northborough

• Decision Date: 10 December 1970
• Parties: HENRY B. BYORS & SONS, INC. v. BOARD OF WATER COMMISSIONERS OF NORTHBOROUGH et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 657

264 N.E.2d 657

358 Mass. 354

HENRY B. BYORS & SONS, INC. v. BOARD OF WATER COMMISSIONERS OF NORTHBOROUGH et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Nov. 4, 5, 1970.

Decided Dec. 10, 1970.

David C. Hawkins, Worcester, for plaintiff.

Stanley G. Walker, Worcester, for the Board of Water Commissioners of Northborough.

Edward O. Proctor, Boston, for Sarno Construction Co., Inc.

Robert R. Gabriel, Northboro, for Northborough Housing Authority, submitted a brief.

Before TAURO, C.J., and SPALDING, KIRK, REARDON and QUIRCO, JJ.

TAURO, Chief Justice.

This is a bill in equity for a declaratory decree brought by the plaintiff, Henry B. Byors & Sons, Inc. (Byors), a plumbing subcontractor of the defendant Sarno Construction Co., Inc. (Sarno), the general contractor. Other defendants are the Northborough Housing Authority (the housing authority) and the board of water commissioners of the town of Northborough (the water commissioners). The bill seeks a declaration as to the validity of a 'demand charge' imposed by the water commissioners as a condition precedent to providing water service to the building units owned by the housing authority and constructed by Sarno; and if it is valid, whether Byors is legally obligated to pay the demand charge under the terms of the subcontract with Sarno and the terms of the general contract between Sarno and the housing authority.

The case was heard in the Superior Court upon a statement of agreed facts together with certain exhibits. A final decree was entered to the effect that the demand charge was valid; that Byors was liable for the charge; that the housing authority was justified in withholding payments from Sarno; and that Sarno was justified in withholding payments under its contract with Byors up to the amount of the charge. From this decree Byors appealed.

The facts are summarized: On or about July 17, 1968, Sarno and the housing authority entered into a general contract for the construction of a housing project for the elderly in Northborough. Byors and Sarno entered into a subcontract whereby for the sum of $99,000 Byors agreed to supply the labor and materials for the plumbing work on the project.

There was no item in the subbid of Byors or in the general bid of Sarno concerning the payment of a demand charge to the water commissioners as a condition precedent to providing water service to the project.

Byors requested permission of the water commissioners to connect the pipes of the project with the municipal water main. The water commissioners informed Byors that it could not bring water into the project from the municipal water main or make any connection for this purpose until a demand charge of $10,950 or $150 for each of the seventy-three units of the project was paid. The demand charge was voted by the water commissioners to pay a portion of the cost of supplying sufficient water at adequate pressure to meet the increasing demands for water by the cumulative effect of new household units being supplied with water. ¹

Byors at all times refused to pay the charge and informed Sarno about its dispute with the water commissioners. The water commissioners refused to permit the connection.

On June 3, 1969, Byors commenced the present suit. On or about June 3, 1969, Beacon Architectural Associates, the architect hired by the housing authority in connection with the construction of the housing project, in accordance with contractual provisions, notified Sarno of its decision that Byors was required to pay the demand charge under the subcontract with Sarno. ² Byors was notified of the architect's decision on June 8, 1969. Although the contract provides for an appeal from the architect's decision, Byors has not appealed.

On or about June 24, 1969, the housing authority paid the demand charge, informing Sarno at the same time of its intention to withhold the amount of the charge, $10,950, from its payment to Sarno. Sarno, likewise, has withheld the amount of the charge from payments to Byors under the subcontract.

VALIDITY OF THE DEMAND CHARGE.

The first issue to be determined is whether it was within the power and authority of the water commissioners to demand a charge of $10,950 before permitting a connection between the town water main and the housing project. We hold that the water commissioners had such authority. The relevant legislative provisions are c. 192 of St.1882, G.L. c. 40, § 42G, and G.L. c. 41, 69B. Each one has been accepted by the town of Northborough, acting through its town meeting.

Statute 1882, c. 192, provides that the water commissioners may fix and collect rents for the use of water. ³ General Laws c. 40, § 42G, states in part that a town 'may provide that an owner of land which receives benefit from the laying of water pipes in public and private ways upon which his land abuts or which by more remote means receives benefit through the supply of water of his land or buildings shall pay a proportionate part of the cost not already assessed of extending such water supply to his land.' General Laws c. 41, § 69B, grants to the water commissioners the authority to 'regulate the use of the water and fix and collect just and equitable prices and rates for the use thereof,' and to 'prescribe the time and manner of payment of such prices and rates.' These legislative provisions grant the water commissioners considerable discretion in determining the methods of fixing prices or rates related to the use of water. Although the demand charge in this case is not measured in terms of the amount of water received, it is still a permissible method of charging for water use, within the broad authority granted to the water commissioners. All water charges need not be based on the amount of water used in each instance and on nothing else. Souther v. Gloucester, 187 Mass. 552, 73 N.E. 558. As stated in Ladd v. City of Boston, 170 Mass. 332, 335--336, 49 N.E. 627: 'Considerable discretion in determining the methods of fixing rates is necessarily given by the statute to the water commissioner. Money must be obtained from water takers to reimburse the city wholly or in part for the expense of furnishing water. An equitable determination of the price to be paid for supplying water does not look alone to the quantity used by each water taker. The nature of the use and the benefit obtained from it, the number of persons who want it for such a use, and the effect of a certain method of determining prices upon the revenues to be obtained by the city, and upon the interests of property holders, are all to be considered.' Or as this court stated in Rounds v. Board of Water & Sewer Com'rs of Wilmington, 347 Mass. 40, 44, 196 N.E.2d 209. 'A municipality engaged in furnishing water service (subject to whatever statutory regulation there may be) is permitted to exercise a reasonable and fair discretion in determining whether and upon what terms to make extensions of its lines.'

Byors contends further that the demand charge is unreasonable and discriminatory. The burden of proof here is on Byors. Souther v. Gloucester, 187 Mass. 552, 556, 73 N.E. 558. Paragraph 24 of the statement of agreed facts provides the only evidence on this point. It clearly delineates the reasons for the demand charge and for the expenditure of large sums in order that adequate service might be provided to the units already built and those to be built. ⁴ We feel, therefore, that Byors has not sustained its burden of proof. See Souther v. Gloucester, supra, at 556, 73 N.E. 558; Brand v. Board of Water Com'rs of Town of Billerica, 242 Mass. 223, 228, 136 N.E. 389.

LIABILITY FOR THE DEMAND CHARGE UNDER THE CONTRACT.

The second issue raised requires a determination as to who is responsible for payment of the demand charge. At the trial both Byors and Sarno contended that the demand charge was an obligation of the housing authority. The architect and the trial judge, however, interpreted the contracts to require payment by Byors. The court below indicated in its decision that it found this determination 'troublesome.' ⁵

We believe that the trial judge erred in his conclusion that the terms of the contract documents require payment of the demand charge by Byors. In upholding the validity of the demand charge, this court and the court below necessarily accepted the contention that the 'demand charge' is a charge for use of water. A property owner, in the absence of a binding agreement, is obligated to pay for water service and for charges connected therewith. We believe that the contract documents in this case do not place this responsibility on a party other than the owner.

Both the architect and the trial judge cited the contract provision requiring Byors to '(o)btain all necessary permits and licenses and pay all connected fees.' In his decision the trial judge emphasized the word 'connected' and concluded that Byors is required 'to pay all legitimate charges of the Board of Northborough Water Commissioners for connecting the project water service to the town main.' The words 'permits and licenses' and 'connected fees' in their natural interpretation within the provisions of the general contract and subcontract refer only to those permits and licenses that the contractor or subcontractor is required to obtain before beginning the work under his contract. Byors did obtain ten permits to do the plumbing work. This requirement insures that the work will be done in accordance with the rules, regulations and ordinances of the municipality. Conversely, the words cannot be construed as requiring the subcontractor to pay the 'demand charge' which is a prerequisite to the sale of water by the water commissioners to the housing authority. In other words, we read the clause in question to require that Byors pay only the fees connected with the work and materials it is obligated to furnish under the contract. The demand charge of $10,950 is not such a 'fee.'

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