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In re Petition of Highpoint Development Corp.

Decided: February 28, 1961.

IN THE MATTER OF THE PETITION OF HIGHPOINT DEVELOPMENT CORP., SEABOARD REALTY CO., INC., MOUNTAINRIDGE CORP., AND WESTOVER REALTY INC. FOR AN ORDER REQUIRING MIDDLESEX WATER COMPANY TO EXTEND ITS FACILITIES TO SERVICE PROPERTY OF THE AFORESAID CORPORATIONS


Goldmann, Foley and Halpern. The opinion of the court was delivered by Halpern, J.s.c. (temporarily assigned).

Halpern

The appellant Middlesex Water Company appeals from an order of the Board of Public Utility Commissioners dated May 11, 1960, requiring it to install extensions of its water facilities, without charge, to service four contiguous housing developments of the respondents, Highpoint Development Corp., Seaboard Realty Co., Inc., Mountainridge Corp. and Westover Realty, Inc., and to return the deposits furnished by respondents to the appellant to cover the estimated cost of such extensions.

A brief recital of the facts leading up to the hearings before the Board is necessary for a better understanding of the issues involved. The respondents are 4 of 21 New Jersey corporations, the capital stock of which is owned and controlled by two individuals who formed separate corporations to build homes on 21 tracts of land in Edison Township. Early in 1959 the respondents requested appellant to extend its water facilities to their contiguous vacant lands upon which they contemplated building a total of 61 homes. The appellant refused to do so until respondents signed contracts for such extensions and deposited the estimated cost for such installations of $15,745.45. On September 8, 1959 respondents filed their petitions with the Board, pursuant to R.S. 48:2-27, to compel appellant to extend its facilities to their lands. On September 25, 1959 respondents entered into

written contracts with appellant under which the requested deposits were made. The agreements provided for refunds of the deposits under a formula of three and one-half times the annual revenue received for the first year only from each consumer. If sufficient consumers are not connected by the end of ten years, the balance of the money on deposit is retained by appellant. Under the agreements the total refunds could not exceed the deposits but could be less. Simultaneously with the delivery of the contracts and deposits, the respondents sent separate letters to appellant, dated September 24, 1959, objecting to the contracts and reserving their legal rights to litigate the issues involved. Since all four letters are similar in form, an abstract from Westover's letter will serve to illustrate such reservations:

"* * * We are putting up this deposit requested in your letter of August 28, 1959 with the explicit understanding that such deposit in no way should be considered as an offer by Westover Realty, Inc. to bear the cost of such extension to service the said property. Nor is such payment to be considered as a deposit under any formula agreement.

It is specifically understood that said deposit is made without prejudice to the legal rights of Westover Realty, Inc. to litigate the right of your company to impose any or all of the cost of the extension of such water facilities on said Westover Realty, Inc., either before proper administrative boards or the courts. * * *"

Thereafter, appellant, with full knowledge of such reservations, voluntarily extended its existing facilities, which were contiguous to respondents' four tracts, to service the premises in question. While the estimated cost of the total installation was $15,745.45, the actual cost was only $15,189.86. No refund or credit for the difference was ever given, or offered, by appellant. Hearings on the petitions were held on December 3, 1959, March 4, March 9, and April 14, 1960. By March 4, 1960, about 90% of the 61 home potential in the four tracts had been constructed; 55 houses had already been built, 40 of which were then occupied and receiving service from appellant. It should be noted here that the contracts of September 25, 1959,

entered into between respondents and appellant, followed some, but not all, of the suggestions in the general rules and regulations governing extensions promulgated by the Board in 1923 by virtue of its authority under R.S. 48:2-25(a) and 48:2-27. (The October 1, 1960 regulations of the Board recommend a refund formula of five times the annual revenue instead of three and one-half).

The Board's 1923 rules and regulations, and the formulae contained therein, are not binding on respondents, the appellant or the Board, but are merely suggested guides for all prospective consumers and utilities. The fact that some of the recommendations have been used for many years by appellant does not change the fact that R.S. 48:2-27 clearly and definitively sets forth the power of the Board to dispose of disputes between consumers and utilities. The 1923 rules and regulations are subordinate to the statute. In re Board of Fire Comm'rs of Fire Dist. No. 3, Piscataway Tp., v. Elizabethtown Water Company, N.J. , 27 N.J. 192 (1958).

The principal issues are whether the Board should have made its decision on the facts as they existed on September 8, 1959, when the petitions were filed and no homes had yet been erected, or on the facts existing on April 14, 1960, when the hearings were concluded; and whether the Board had jurisdiction to decide the issues raised in the respondents' petitions because of the agreements entered into on September 25, 1959.

The respondents having filed their petitions with the Board before signing the agreements with appellant thus invoked the jurisdiction of the Board. Having also reserved their rights to litigate the issues before the Board, or the courts, the signing of the agreements did not oust the Board of jurisdiction from determining the issues presented. Cf. Woodside Homes, Inc. v. Town of Morristown , 26 N.J. 529 (1958), wherein no formal protest or reservation was made by the developer and the court ...


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