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Rutan Estates Inc. v. Town of Belleville

Decided: June 25, 1959.


Gaulkin, Sullivan and Foley. The opinion of the court was delivered by Gaulkin, J.A.D.


[56 NJSuper Page 332] In this action in lieu of prerogative writ the Law Division set aside as invalid that portion of a local improvement ordinance for the installation of water mains which provided for the assessment of the cost

thereof upon abutting lands owned by Rutan Estates, Inc. (Rutan). The trial court held that since all other water mains throughout the town of Belleville had been installed at the expense of the town, it was arbitrary and discriminatory to assess Rutan's property for payment in this case. Belleville appeals.

Rutan is the owner of the last large undeveloped tract of land in Belleville, comprising approximately 200 building lots. Belleville owns and operates its own water utility under R.S. 40:62-47 et seq. , and the town stipulated that

"The water rates established by the Town of Belleville, pursuant to law, have been pegged at a figure to secure the collection of monies which have completely written off the entire cost of the installation and extension of water mains during the useful life of the water mains. The water system so operated by the defendant Township has been self-sustaining for the past 10 years. No proceeds of funds from general taxation have ever been needed in the operation of the Water Department. The water system has operated at a profit since its inception. No trend to the contrary is indicated for the future. Said profit has existed after all capital expenditures have been paid for, including the costs of any extensions that have been put in, in the past, and after the payment of any interest on indebtedness and all operating expenses."

When the ordinance in question was adopted there were water mains throughout practically all of Belleville, none of which had been assessed as a local improvement.

Rutan had purchased the property, known as the Plenge farm, to develop it for housing. It was informed by the Director of Public Works that Rutan would not be required to pay for the extension of the water mains. It prepared a map of "Rutan Estates, First Section" which was approved by Belleville on February 26, 1957, and a map of the "Second Section" which was approved April 19, 1957. It then signed contracts to build 50 to 60 houses, received building permits from Belleville, and began building. Thereafter, on May 28 there was introduced, and passed on first reading, an ordinance to install the water mains as a general improvement at a cost of $59,000. However, by that time sentiment had

begun to make itself felt that this large new development would add problems and expense to Belleville, and that Rutan should be made to pay for these mains to help meet what appellant's brief calls "the impact of school financing, etc." Consequently, two of the members of the governing body, when they voted for this general improvement ordinance on first reading, announced that they would not vote for its final passage. When it did come up on June 11, it was defeated.

On June 25, by a three to two vote, Belleville then passed a resolution that Rutan "shall immediately proceed with construction [of water mains] at its own expense * * * and that unless said Rutan * * * proceeds forthwith as aforesaid, * * * the Board of Commissioners will proceed therewith as a local improvement and assess the costs thereof against the property in question * * *."

Rutan ignored this resolution so, on July 9, Belleville passed on first reading the local improvement ordinance now before us, and on July 23 it was finally adopted. It, too, called for the expenditure of $59,000 for the extension of the water mains, but it provided that the cost be assessed upon the property benefited. On September 10, after competitive bidding, the contract to do the work was awarded; and, in December 1957, the installation was completed. Rutan, which had stood by and had done nothing since June 11, then filed this complaint, asking that there be set aside as invalid so much of the ordinance as provided for the assessment of the cost of the mains.

The trial court held that since (in addition to the facts set forth above) it was admitted that there are enough customers in this tract to make the expenditure a proper and profitable one for the water utility, Rutan was entitled to the extension of the water mains at the expense of the municipality, citing Reid Development Corp. v. Parsippany-Troy Hills Tp. , 10 N.J. 229 (1952) and Reid Development Corp. v. ...

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