Yardville Estates, Inc. v. City of Trenton

• Decision Date: 28 February 1961
• Docket Number: No. A--450,A--450
• Citation: 66 N.J.Super. 51,168 A.2d 429
• Parties: YARDVILLE ESTATES, INC., a corporation of New Jersey, Plaintiff-Appellant, v. CITY OF TRENTON, a municipal corporation of the State of New Jersey, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 51

66 N.J.Super. 51

168 A.2d 429

YARDVILLE ESTATES, INC., a corporation of New Jersey Plaintiff-Appellant, v. CITY OF TRENTON, a municipal corporation of the State of New Jersey, Defendant-Respondent.

No. A--450.

Superior Court of New Jersey

Appellate Division.

Argued Jan. 16, 1961.

Decided Feb. 28, 1961.

Samuel Leventhal, Trenton, for appellant.

Harvey Stern, Trenton, for respondent (Louis Josephson, Trenton, attorney and on the brief).

Before Judges GOLDMANN, FOLEY and FULOP.

The opinion of the court was delivered by

FULOP, J.C.C. (temporarily assigned).

This is an appeal from a judgment of the Chancery Division denying the plaintiff the right to recover the cost of water mains installed by plaintiff to connect its development in the Township of Hamilton with the water distribution system of the defendant City of Trenton.

The City of Trenton has owned a public water supply system since about 1859. Goldmann, History of Trenton (Trenton Historical Society). Prior to 1941, the city extended water service to parts of the adjacent Townships of Hamilton, Ewing and Lawrence. By resolution of February 6, 1941, the Board of Commissioners of Trenton laid down a policy with respect to the further extension of water mains in these townships. Under this resolution, main feeder lines were to be laid by the city at its own expense. The city also undertook to extend water lines for new developments at the rate of 1,000 feet of main for each 14 houses. For fewer houses or greater distances, the owner was to pay in advance the cost of the mains.

This resolution was rescinded by a new resolution dated June 4, 1953, setting a new policy requiring all owners, developers and builders in the townships to install water main extensions and related connections at their own expenses, or to pay for them if installed by the city. The resolution recites the extensive development of tracts of land in these municipalities and that 'it has become an unbearable financial burden for the City of Trenton to continue water main extensions,' etc.

Thereafter the city recognized and performed all commitments for extensions made prior to the adoption of the 1953 resolution. Applications for extensions made after June 4 1953 were granted only upon the terms of the resolution of that date. The performance of prior commitments, the laying of new trunk lines and other enlargements and improvements of the system were covered by a series of ordinances and bond issues, involved large expenditures of money on the part of the city, and have taken a number of years to complete. Some were not completed at the time of the trial of this case.

In 1954 plaintiff negotiated with the superintendent of the water works for the extension of mains to a proposed development of dwelling houses in Hamilton Township. Its representatives were informed of the terms imposed by the 1953 resolution and that plaintiff would be required to install the mains at its own expense. Plaintiff agreed to and did lay the mains at a cost of $44,667. It built and sold 263 dwelling houses supplied with water by this means.

These mains were installed between November 1954 and June 1955. During the summer of 1955 plaintiff's representatives discussed with the superintendent of the water works the possibility of obtaining reimbursement from the city for all or part of the cost of installing the mains. He told them that the city planned to apply to the Board of Public Utility Commissioners for an increase in water rates and suggested that plaintiff might obtain reimbursement by application to that board. Plaintiff made no such application. The water rates were increased effective October 1, 1956.

The present action sought specific performance of an alleged agreement to reimburse plaintiff, for an accounting of water revenues from the houses constructed by plaintiff, and other ancillary relief. In short, plaintiff sought to compel defendant to repay to plaintiff out of water revenues all or a substantial part of the cost of the installation of the mains, under a formula applied to privately owned water utilities by the Board of Public Utility Commissioners. Relief was denied after a full trial in the Chancery Division. Since no question is raised with respect thereto, we express no opinion as to the propriety of bringing this type of action in that court.

The trial judge held that there had been no agreement by defendant to reimburse the plaintiff for the cost of the water mains. We agree with that finding of fact. The discussions of reimbursement were held after installation of the mains had been completed or nearly so. There was no promise of reimbursement by anyone. In any event, any statement on the subject that might have been made by the superintendent of the water works would have been contrary to the policy adopted in the 1953 resolution, was unauthorized by the governing body, and could not bind the city.

However, the plaintiff further contends that:

1) The city discriminated against plaintiff and others in requiring them to pay for their water mains while itself paying for other extensions;

2) The resolution of June 4, 1953 was abandoned or vitiated by the city's subsequent conduct and disregard thereof;

3) The sale of water outside of the City of Trenton is a proprietary function and the city is governed by the law applicable to privately owned public utilities;

4) The resolution of June 4, 1953 was without statutory authority and Ultra vires.

Upon these premises, plaintiff claims an equitable right to reimbursement without regard to any alleged contract between the parties.

The record reveals that after June 4, 1953 the City of Trenton installed no water main extensions in the townships at its expense except (a) pursuant to commitments made before the date of that resolution, (b) to a public school, (c) trunk lines (mains over 12 inches in diameter) for the enlargement of the supply system and (d) it reconstructed a previously existing line to a General Motors plant. On the other hand, mains were installed at the expense of developers from June 1953 to March 1, 1958, amounting to $280,494. There is no single instance shown of an extension of a supply line to a development or dwelling house outside of Trenton except in accordance with this policy. Most of the work done at the public expense was projected as part of the city's application for a rate increase and as a condition thereof. Upon a review of the record, we find there was no discrimination in fact between users in like situations. Nor did the city, by anything it did after June 4, 1953, disregard, vitiate, or abandon the policy it had adopted by resolution of that date.

We find nothing to support plaintiff's argument that the city was engaged in a proprietary function and thereby subjected itself to the laws governing privately owned utilities. Plaintiff refers us to R.S. 40:62--24, N.J.S.A., which provides that:

'Every municipality in supplying electricity, gas, steam, or other product beyond its corporate limits is hereby declared to be a public utility * * *.'

This section appears as part of R.S. 40:62--12 thru 25, N.J.S.A., constituting Article 5, of Title 40, Chapter 62, entitled 'Power, Heat And Light Plants.' It was expressly held not to include water supplied by a municipal corporation. In re Glen Rock, 25 N.J. 241, 135 A.2d 506 (1957).

Trenton's municipally owned and operated water utility is not subject to the jurisdiction, rules and regulations of the Board of Public Utility Commissioners, except for the Fixing of rates to be charged consumers who reside outside the city limits, L.1947, c. 295, N.J.S.A. 40:62--85.1 (applying to second class cities of not less than 120,000 population--Trenton was within this category under the 1950 census but will not be when the 1960 census is officially promulgated). The provisions of R.S. 40:62--49(f), N.J.S.A. subject to the jurisdiction of the Board of Public Utility Commissioners only such municipalities as, subsequent to the adoption of that law, acquired a water utility that had previously served outlying areas. Trenton acquired its water utility long before the passage of the latter act. Cf. In re Glen Rock, 25 N.J. 241, 135 A.2d 506 (1957). Accordingly, we hold that the city was not subject to any law applicable to privately owned public utilities with respect to the water main extensions.

The power of a municipality operating a water supply system to require users to pay for the cost of main extensions Within the municipality was questioned by Dictum in Reid Development Corporation v. Parsippany-Troy Hills Tp., 10 N.J. 229, 89 A.2d 667 (1952), and decided adversely to the power in Reid Development Corporation v. Parsippany Troy Hills Tp., 31 N.J.Super. 459, 107 A.2d 20 (App.Div.1954). The latter case also held, however, that the municipality may refuse to extend mains when in its fairly exercised discretion it deems it uneconomic to do so. In Mongiello v. Borough of Hightstown, 17 N.J. 611, 112 A.2d 241, 243, 48 A.L.R.2d 1216 (1955), the Supreme Court held:

'Within its territorial borders the municipality must ordinarily extend its water service to all of its inhabitants on like terms; there are, however, many decisions which recognize that even when dealing with its own inhabitants a municipality has discretionary authority to decline to extend its water mains or enlarge its water system where the cost to the community would be grossly disproportionate to the individual needs presented. * * * Neither in the Reid case nor in any of the other cited cases is there any suggestion that the public utility aspect of the municipal water system may be extended to compel service outside the municipal borders; and there are decisions indicating the contrary.'

The Mongiello case may be distinguished, however, because the Borough of Hightstown had not undertaken to serve East Windsor or its residents generally and never sought or acquired any...