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City of Clifton v. Passaic Valley Water Commission

Decided: January 5, 1960.

CITY OF CLIFTON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF,
v.
PASSAIC VALLEY WATER COMMISSION, A PUBLIC CORPORATION OF THE STATE OF NEW JERSEY, CITY OF PATERSON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, AND CITY OF PASSAIC, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS



Grimshaw, J.s.c.

Grimshaw

The plaintiff seeks a judgment declaring void a resolution of the defendant Water Commission, dated September 15, 1957, increasing the rate charged the Clifton Water Board for water purchased by it to $110 per million gallons on and after January 1, 1958. It also seeks a judgment declaring that the Water Board of the City of Clifton has a status equal to that of any other consumer within the cities of Passaic, Paterson and Clifton, entitling it to rates similar to those paid by other customers of the Commission within the designated area. And finally, it seeks a judgment directing the Commission to repay to it water fees charged in excess of those charged to other customers within the Commission's area between 1952 and this date.

The defendant Commission, which is joined by the cities of Passaic and Paterson, denies that the rate being charged the Clifton Water Board is excessive. It alleges that under the statute it is required to charge the Clifton Water Board the same rate as that charged non-participating municipalities outside of the Commission's area. And it seeks a judgment compelling the Clifton Water Board to pay to the defendant Passaic Valley Water Commission the difference between the amounts paid and the rate of $110 a month set as the rate for wholesale consumers.

The facts leading up to the present controversy are, briefly, as follows:

In 1931 the Legislature, by R.S. 40:62-108 et seq. , authorized the acquisition by two or more municipalities of privately owned waterworks which supply the respective

municipalities. Acting under the authority of the statute, the cities of Passaic, Clifton and Paterson proceeded to take over the waterworks and distribution system of the Passaic Consolidated Water Company. The area then being served by the Water Company was all of Paterson and Passaic, and a portion of the City of Clifton. That portion of Clifton not served by the Water Company was served by a distribution system constructed and operated by the City of Clifton, the water used in such system being purchased from the Water Company.

R.S. 40:62-127 provides:

"Such commission may prescribe and change from time to time rates to be charged for water supplied by the waterworks so acquired, and by any extension or enlargement thereof, but rates for the same kind or class of service shall be uniform in all the municipalities supplied by the waterworks. As soon as practicable after acquiring the waterworks rates shall be prescribed, and shall be revised from time to time whenever necessary, so that the waterworks shall be self-supporting, the earnings to be sufficient to provide for all expenses of operation and maintenance and such charges as interest, sinking fund and amortization, so as to prevent any deficit to be paid by taxation from accruing. * * *"

The statute also provides for the sale of surplus water by R.S. 40:62-134, as amended, which reads in part as follows:

"The commission or its successor may sell any surplus water not needed to supply the municipalities represented by it to any consumer or to any private water company in this State supplying water to consumers, or any municipality outside of the municipalities represented by the commission, as provided by contracts with the water company which the commission took over as part of the property condemned, and outside of any territory supplied in whole or in part by the water company at the time of taking over the water works. * * *"

Following its organization the Passaic Valley Water Commission promulgated a schedule of retail rates which generally provided for a sliding scale based upon the amount of water ...


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