On appeal from the Supreme Court, whose opinion is reported in 122 N.J.L. 54.
For the appellant, George W. C. McCarter.
For the town of Harrison, Michael J. Bruder.
The opinion of the court was delivered by
PERSKIE, J. This is a water rate case. Two major questions require decision.
First: Did the Supreme Court, as it is claimed, erroneously exercise its supervisory power and fail fully to discharge its duty in affirming an order of our Board of Public Utility Commissioners under date of October 4th, 1937, fixing a rate of $99 per million gallons of water?
Second: Is the rate so fixed and determined, as it is claimed to be, unjust, unreasonable and confiscatory?
Appellant, New Jersey Suburban Water Company, hereafter referred to as prosecutor (now insolvent and operated by a receiver in Chancery), entered into a contract on September 15th, 1903, with the town of Harrison, hereafter referred to as respondent, because it is conceded that it is practically the only party affected, for the supply of its water. This contract fixed the rate at $82.50 per million gallons and was for a period of fifteen years with an additional ten-year option which respondent exercised.
On August 5th, 1924, the prosecutor and respondent extended or renewed their contract of September 15th, 1903, for a further period of fifteen years, so that, as lastly extended or renewed, it will expire in 1943. The rate, however, was fixed at $104.25 instead of $82.50 per million gallons.
On September 27th, 1928, the Board of Public Utility Commissioners, hereafter referred to as the Board, fixed the rate at $99 per million gallons, effective January 1st, 1929.
On April 11th, 1930, prosecutor petitioned the Board for an increase in rate to $108.50 per million gallons; Chancery litigation followed, and, on April 2d, 1936, prosecutor amended its petition seeking an increase in rate to $140 with
a surcharge of $14 and with an additional charge of $8.40 as against respondent alone. For reasons presently unimportant, these applications were dismissed without prejudice.
Thereafter, on April 30th, 1936, prosecutor again petitioned the Board this time seeking a rate of $151.91 per million gallons. In addition thereto, prosecutor separately petitioned the Board for a surcharge of $22 for a period of ten years to make up past deficiencies.
The Board conducted formal hearings on both petitions which, by consent, were heard together. Upon consideration of the proofs offered by the respective parties, the Board, on October 4th, 1937, denied prosecutor's petition for the surcharge; and, on the same day, the Board separately found and determined that the "existing rate of $99 per million gallons is not unjust or unreasonable under all the circumstances, and that, all the circumstances considered, $99 per million gallons is hereby determined, fixed and prescribed as the just and reasonable rate to be observed, imposed and followed by the company."
On application to review each determination, Mr. Justice Parker denied a writ to review the Board's denial of prosecutor's petition for the surcharge but allowed a writ to review the Board's order fixing the rate of $99 per million gallons.
The Supreme Court affirmed the Board and dismissed the writ. 122 N.J.L. 54; 4 A.2d 47. In so doing, it said, inter alia (at pp. 55, 56):
"A careful examination of the testimony satisfies us that the Board was justified in its conclusions. No useful purpose is to be served in reviewing the testimony. Suffice it to say, that in our opinion there was ample testimony to support its findings as a reasonable conclusion and, therefore, this court cannot substitute its judgment for that of the Board. * * *
"Having concluded that the testimony justified the Board in fixing the rate complained of, it follows that there is no merit in the allegation of confiscation of property without due process of law."
Prosecutor challenges the propriety of the determination thus made. That challenge is divided into two major parts.
The first part claims that that the Supreme Court did not fully discharge its duty in the manner required by law when it affirmed the action of the Board. The second part claims that the rate of $99 per million gallons, as fixed and affirmed, is unreasonable, unjust and confiscatory.
1. In support of the first part of its challenge, prosecutor contends that the aforesaid quoted language of the Supreme Court fully justifies prosecutor's claim that the Supreme Court did not, as it was bound to do under the law in this type of case, make an independent finding of the facts in reaching its determination that the order of the Board was justified by the proofs. Public Service Gas Co. v. Public Utility Board, 84 N.J.L. 463; 87 A. 651, lastly affirmed, 87 N.J.L. 581; 92 A. 606; Erie Railroad Co. v. Public Utility Board, 85 N.J.L. 420; 89 A. 1001; West Jersey and Seashore Railroad Co. v. Public Utility Board, 87 N.J.L. 170 (at p. 178); 94 A. 57; Erie Railroad Co. v. Public Utility Commissioners, 89 N.J.L. 57 (at p. 68); 98 A. 13; affirmed, 90 N.J.L. 672; 103 A. 1052; Hackensack Water Co. v. Public Utility Board, 96 N.J.L. 184; 115 A. 528.
On the other hand, respondent claims that the Supreme Court did make an independent finding of the facts and correctly applied the law thereto. In addition, relying on the very cases cited by prosecutor and others presently cited, respondent claims that when conflicting proofs support the conclusion that the action of the Board is not arbitrary but is based upon legal proofs, the Supreme Court does not substitute its judgment for the judgment of the Board. For the Board, in finding a rate, acts as a legislative agency in the performance of a legislative duty. Cf. Interstate Tel. Co. v. Public Utility Board, 84 N.J.L. 184; 86 A. 363; Plainfield Union Water Co. v. Board of ...