Court Opinion

ID: 9715213
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:57:42.66849+00
Date Added: 2024-06-11T18:23:32.557304
License: Public Domain

Francis, J.
(dissenting). A private enterprise supplying water for general use to the inhabitants of a municipality by means of a system which it owns and controls is a public utility, N. J. S. A. 48:2-13, and the rates charged the consumers are subject to regulation by the Board of Public Utility Commissioners, N. J. S. A. 48:2-21. When a municipality acquires such a system and undertakes to provide water not only for its own citizens but also for the residents of independent neighboring communities, it steps beyond the exercise of purely governmental functions and engages in a private or proprietary activity. Fay v. Trenton, 126 N. J. L. 52 (E. & A. 1941). Power to do this exists only by legislative grant, Mongiello v. Borough of Hightstown, 17 N. J. 611, 615 (1955), and when such sanction is given, the municipality’s assumption of the character of a private utility operator naturally imposes upon it the obligation to charge fair and reasonable rates for the service..
In the Mongiello case, supra, this court accepted the prevailing view to be that:
‘“[t]he distribution of water by a municipality to its inhabitants for domestic and commercial uses is a private or proprietary function’ and * * * a municipally-owned water facility may for the most part be treated as a ‘public utility established under legislative authority.’ ” (17 N. J. at page 616)
The village, the Board of Public Utility Commissioners, and the majority opinion recognize the jurisdiction of the Superior Court to review the reasonableness of water rates charged by a municipality by action in lieu of prerogative *253writ. However, the policy of committing that task in the first instance to an expert administrative agency has marked the conduct of law-making bodies in New Jersey as well as in our sister states for many years. This practice has had almost universal approval as a wise one, and it seems to me that when a municipal government operates as a private water utility, any existing statutes which are claimed to confer authority on the Board to regulate its rates ought to be liberally construed. Cf. Annotation, 127 A. L. R. 94, 96 (1940). Por example, in Lamar v. Wiley, 80 Colo. 18, 248 P. 1009, 1010 (1926), the Colorado Supreme Court said:
“When a municipality * * * in its operation of its own public utility * * * furnishes public service to its own citizens, and in connection therewith supplies its products to consumers outside of its own territorial boundaries, the function it thereby performs, whatever its nature may be, in supplying outside consumers with a public utility, is and should be attended with the same conditions, and be subject to the same control and supervision, that apply to a private public utility owner who furnishes like service.”
And see, Wheeling v. Benwood-McMechen Water Co., 115 W. Va. 353, 176 S. E. 234 (Sup. Ct. 1934); Shirk v. Lancaster, 313 Pa. 158, 169 A. 557, 90 A. L. R. 688 (Sup. Ct. 1933) ; Star Investment Co. v. Denver, P. U. R. 1920B 684 (1919) (Colo) ; Public Service Commission v. Helena, 52 Mont. 527, 159 P. 24 (Sup. Ct. 1916).
In 1921 Ridgewood purchased the water system of the Bergen Aqueduct Company, which at that time supplied the inhabitants of Ridgewood as well as those of the Boroughs of Glen Rock, Midland Park and a portion of Wyckoff. Since then it has continued to provide water for these users. A 1956 increase in rates produced the present complaint by the Borough of Glen Rock. As the majority opinion indicates, the Board dismissed the action for lack of jurisdiction.
When a municipality acquires a water works which is part of a system serving adjoining and other, municipalities, N. J. S. A. 40:62-49(/) provides:
*254“The municipality acquiring property as provided in paragraph ‘d’ of this section shall furnish and supply water to the adjoining municipality in which the connected distribution system is located and to any other municipality served from the same source or sources of supply when acquired, to the extent, for such length of time .and under such terms and conditions as may he ordered by the board of public utility commissioners.” (Emphasis added.)
The purpose of this statute seems perfectly clear. It was designed to protect those persons who do not reside within the territorial limits of the purchasing municipality but who had teen receiving their water from the source purchased. A mandate is imposed to continue their service “under such terms and conditions as may be ordered” by the Board. Manifestly, the prices to be paid for the water are within the connotation of “terms and conditions.”
The opinion of the majority does not deny that the language of the quoted section of the statute supports the claim of jurisdiction in the Board. It avoids this conclusion by pointing out that subsection (f) came into being in 1929, L. 1929, c. 222, eight years after Ridgewood become owner of the facilities under discussion. The majority declares it to be inapplicable here for two reasons: first, because laws generally operate prospectively and not retrospectively, and second, because the first sentence of the 1929 act shows an intended prospective operation.
The first sentence said:
“Any municipality not owning and operating a water-works system or plant is hereby authorized to acquire by purchase, lease or condemnation, an existing water-works system or plant * * * for the public and private uses of such municipality.”
When the statutes were revised in 1937, this sentence was excised by the Legislature. But my confreres say that such a change in the course of the revision cannot be considered indicative of an intent to alter the original forward thrust of the act. This may be accepted as generally true, since the Revised Statutes are to be construed as a continuation of prior laws in the absence of inconsistency. N. J. S. A. 1:1 — 4.
*255Oddly, the suggestion of prospective scope of the 1929 act is predicated upon a sentence which appears to authorize the acquisition of a water system earing for more than one municipality. Ridgewood became the owner of this type of system in 1921 and no contention is advanced that the purchase was ultra vires. Obviously, there is no sound reason why non-resident water customers of a municipal water works who became such by virtue of a pre-1929 acquisition should be treated any differently from or receive any less protection than those who assumed that status after 1929. So the revisers in preparing, and the Legislature in adopting, Article 8, entitled “Water Supply” (under the topic heading “Public utilities municipally owned”) with its subtitle “By a single municipality,” integrated L. 1929, c. 222, in its logical place in B. S. 40:62, namely, as subsection 49(/). The elimination of the first sentence of the 1929 act carried with it as an inevitable consequence the basis for the claim that the grant of jurisdiction to the Board related only to post-1929 acquisitions. Thus, under its present text the statute subjects a municipal water utility, whenever acquired, to the jurisdiction of the Board in the instances specifically covered, that is, when at the time of purchase it was functioning as the source of supply for other municipalities. That this broad sweep of the law is inconsistent with an intention to continue its application to post-1929 transactions alone does not seem open to question.
The argument has been advanced that if prior to 1947 the board had "general regulatory powers over rates” charged for water by one municipality to the inhabitants of another, there was no need for the special enactment in 1947 specifically giving the Board jurisdiction over rates fixed by a second class city of not less than 120,000 inhabitants which supplies water to the residents of another municipality. In this connection, it should be noted that no claim has been made that the Board has general regulatory power over all municipal water utilities by reason of N. J. S. A. 40:62-49(/). As has already been indicated, its jurisdiction *256is limited thereunder to cases where at the time of acquisition other municipalities are being supplied by the purchased system. When this is realized, it becomes apparent that the 1947 act, L. 1947, c. 295, N. J. S. A. 40:62-85.1, lends support for the view projected in this dissent.
Prior to 1947, if the service of a municipally owned waterworks had always been confined to its own inhabitants, manifestly subsection 49 (/) would not bring the facilities within the regulatory power of the Board. Neighboring communities were not being supplied at the time of acquisition. Then, if at a later time it began to serve them or contemplated doing so, 49(/) still would not be pertinent and the users in the foreign municipality could not take advantage of the protection against excessive rates provided thereby. Accordingly, a persuasive inference arises that in 1947 this realization came to the Legislature and it was decided to extend the beneficial jurisdiction of the Board to include regulation of rates imposed upon non-local users by any second class city of the type described. The wisdom of confining the'additional grant of authority to such second class cities (within constitutional limits) is not at issue in this proceeding.
Einally, the majority regards N. J. S. A. 40:62-85 as a most important consideration militating against the idea of legislative belief that regulatory power in this instance is in the Board. The cited statute prescribes that the proprietor municipality undertaking to furnish water to residents of another community must do so ,at the same or as favorable rates as those exacted from its own citizens. And the thought is expressed that such a stricture would act as “a very effective deterrent” against excessive rates because the self-interest of the voters of the owner municipality would protect the foreign consumers. But the self-interest may very well move in another direction. Suppose there are many more users in the foreign than in the local owner municipality. Under N. J. 8. A. 40:62-57, whatever surplus water utility revenue exists after expenses are met goes into the 'municipal treasury. Such a profit, of course, *257would be reflected iu the tax rate. Local water users might well close their eyes to rates which, in the long run, would bring them a greater benefit in the form of tax reductions. In any event, such hopes and hypotheses are not particularly significant or decisive of the problem before us.
Study of the statutes discussed has led me to the conclusion that original jurisdiction over the reasonableness of the water rates charged by Ridgewood is in the Board of Public Utility Commissioners. Consequently I must vote to reverse the order of dismissal.
For affirmance — Chief Justice Weintraub, and Justices Oliehant, Wacheneeld, Burling and Jacobs — 5.
For reversal — Justices Heher and Erancis — 2.