On appeal from a judgment of the Supreme Court, whose opinion is reported in 120 N.J.L. 546.
For the appellant, Michael J. Bruder (Anthony P. Kearns, of counsel).
For the respondent, George W. C. McCarter.
For the Board of Public Utility Commissioners (by permission of the court), Frank H. Sommer and John A. Bernhard.
The opinion of the court was delivered by
HEHER, J. In our view, there is serious question as to whether the respondent utility designed the "petition" filed by it with the Board of Public Utility Commissioners on April 29th, 1936, as a schedule of increased rates fixed by the utility under the authority conferred by section 17 (h) of chapter 195 of the laws of 1911, as amended by chapter 150 of the laws of 1926 (Pamph. L. 1911, pp. 374, 380; Pamph. L. 1926, pp. 239, 240; R.S. 1937, 48:2-21d), and therefore effective, by the mere act of filing, until suspended, changed, or altered by the board pending the determination of the ultimate question of whether the rates so promulgated were "just and reasonable."
The presentation of the companion petition for a specified surcharge, based upon its alleged "failure to earn a fair return upon the capital invested in the property devoted to the public use," considered in the light of the dismissal by the board of a prior application by the utility for an increase of rates, "without prejudice" to the filing of petitions for an increase of rates and a surcharge, would seem to indicate a purpose to invoke the procedure outlined in section 16 (c) of the cited statute, as amended by chapter 50 of the laws of 1935 (Pamph. L. 1911, pp. 374, 377; Pamph. L. 1935, p. 129; R.S. 1937, 48:2-21b (1)), authorizing the board "to fix just and reasonable individual rates, joint rates, tolls, charges or schedules thereof," and so forth, "after hearing, upon notice." In the prior proceeding, there were two orders suspending the operation of the rate increase pendente lite. The second (the statute permitted but two, each for a period not exceeding three months) expired of its own limitation on October 15th, 1930. On September 24th, 1930, it was stipulated by the attorney for the utility that, "in the event that the present order of suspension expires and the hearings on the application of the company for increased rates have not been concluded, the New Jersey Suburban Water Company will continue to bill the municipalities at the same rate as at present, until such times as the rates are fixed by the Board." Due to the non-action of the utility, the matter was not again brought on for hearing until October 2d, 1935; and the proceeding was not concluded until 1936, with the result hereinbefore stated.
But, however this may be, the utility subsequently pursued a course of action that, if not to be deemed a clarification of the original purpose, certainly constituted an election to proceed under section 16 (c) of the statute, supra; and it is thus precluded by its own conduct from the enforcement of the rate increase embodied in the petition as regards water delivered during the pendency of the proceedings before the Utility Commission. The proceedings terminated in an order by the commission, entered on October 4th, 1937, adjudging the existing rate to be just and reasonable, and disapproving the proposed increase; and the utility now seeks to enforce, for water sold to the municipality in the interim, a rate thus deemed by the Utility Commission to be unjust and unreasonable. We entertain the view that, for reasons to be presently stated, the doctrine of estoppel in pais is operative against the utility.
On June 30th, 1936, the respondent utility dispatched this communication to the Utility Board:
"We beg to acknowledge receipt of your letter of the 24th instant, advising that every public utility will hereafter be required by the board to give not less than sixty (60) days' written notice, in advance, of any change or variation in the rate of depreciation.
"This Company, as you know, has filed with the Board, under date of April 29th, last, a new schedule of rates, effective June 1st, 1936, as to the rate, and presumably until after action by the Board as to the surcharge.
"By mutual consent we will continue to bill the towns at the old $99.00 rate until the new rate shall have been fixed by the Board. Likewise, we will make no entries on the books as to depreciation or amortization until action has been taken by the Board, in view of the imminence of the anticipated action by your Honorable body directing what amount shall be proper."
The utility continued to bill the municipality (its sole customer), and to receive payment, for water delivered, at the old rate. The bills thereafter submitted for the year 1936 contained this notation:
"Pending the determination of the rate to be fixed by the Board of Public Utility Commissioners under the application of this Company, dated April 29th, 1936, for an increase in rate, this bill is by mutual consent rendered at the old rate of $99.00 per million gallons, and is ...