These are cross-motions for summary judgment by the parties on the first count of the complaint.
The action is for injunctive relief and damages based upon an allegation that water rates charged to plaintiff by defendant since July 1960 are in excess of the rates embodied in a 1942 contract and supplemental agreement entered into between defendant and plaintiff's predecessor, The Defense Plant Corporation. Defendant is a body politic created by R.S. 40:62-108 et seq. since it is owned by two or more municipalities. The owner cities are Passaic, Clifton and Paterson. A similar statutory scheme is provided in R.S. 40:62-47 et seq. whereby a single municipality may operate a public water supply. The original agreement between the parties provided that plaintiff's predecessor would bear the entire cost of acquiring a necessary right of way and constructing a 24-inch pipeline to its manufacturing plant from
defendant's existing 34-inch main in Garfield. Defendant constructed the pipeline and was paid $40,000 by plaintiff's predecessor. Title to the pipeline was vested in defendant together with the right to serve other customers from it. Plaintiff's affidavits allege that The Hackensack Water Co. and the Immaculate Conception Convent are presently being served by the pipeline.
The supplemental agreement provided as follows:
"WHEREAS, it is provided in Section 127 of the said Statute as follows:
40:62-127. Water Rates and Regulations
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 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. --
WHEREAS, the Corporation is desirous of having this agreement executed by the Commission to supply water not only to Wright Aeronautical Corporation but also to any subsequent owner or operator of said plant at Wood-Ridge, New Jersey, at rates fixed by the Commission in accordance with the said Statute.
NOW THEREFORE, this agreement witnesseth, that the said Commission in consideration of the premises, agrees that it will supply water not only to Wright Aeronautical Corporation, but also to any subsequent owner or operator of the plant at the above location at its published scale of rates for industrial consumers as may be fixed from time to time by the Commission in accordance with the provisions of the Statute above quoted."
Under N.J.S.A. 40:62-127, as it then existed, defendant had only two classes of rates, retail and wholesale, regardless of the location of the customer. For 18 years plaintiff was charged the same rates as the rates charged to other industrial customers, including those in Passaic, Clifton and Paterson. The rates were increased from time to time and plaintiff paid the increases.
On March 14, 1960 a bill was introduced in the New Jersey Assembly which was enacted into law as chapter 172 of the Laws of 1960 and became effective on January 5, 1961 as an amendment to N.J.S.A. 40:62-127. It authorized defendant to set different rates for customers located outside the owning municipalities from those within the owning municipalities. As amended, this section of the statute reads in pertinent part as follows:
"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. The supplying of water to locations beyond the boundaries of the municipalities owning the waterworks shall be basis for separate classification of service to permit reasonable differentiation of rates. 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. * * *" (Emphasis added)
Effective July 1, 1960 defendant "split" its retail rate schedule (at the same time increasing the rates) into a "three cities" and an "outside" class, thereby creating two different classes of industrial consumers, i.e. , insiders and outsiders.
In July 1960 defendant began charging plaintiff a higher rate than other industrial consumers in Passaic, Paterson and Clifton. Plaintiff has paid these rates under protest.
Plaintiff alleges that the amendment is prospective only and may not be interpreted to deprive it of the rate stipulated in the 1942 contract. Plaintiff also relies upon R.S. 40:62-139, which was in effect in ...