Wayne Township owns and operates a water distribution system pursuant to R.S. 40:62-47 et seq. As the owner of such a utility it has the power to fix rates R.S. 40:62-77. Plaintiffs are the owners of garden apartments located within the municipality and served by the municipally-owned water system.
On December 6, 1960 the governing body of the township amended its former schedule of water rates by adopting an ordinance to which the plaintiffs take vigorous exception upon the ground that it discriminates against the owners of garden apartments. This ordinance, as well as its predecessor, follows the generally accepted practice of fixing (1) a
volume charge graduated downward as consumption increases, and (2) a minimum quarter-annual charge increasing with the size of the meter. Prior to 1960 an owner of a one-family residence and an owner of a garden apartment each paid a minimum charge of $7.50 per quarter. The garden apartments were so constructed that a single meter and a single connection provide for distribution to a large number of separate apartments within the complex, and until the adoption of the new ordinance the rate schedule, as mentioned above, was the same with respect to such an apartment house complex and a single-family residence. It became obvious that the owner of a multi-tenant building would in general pay much less for water per unit than would be the case with respect to the owners of single-family residences. A typical example, as suggested by defendant, is the following, where it is assumed that each residential dwelling unit and each garden apartment unit consumes 10,000 gallons per quarter:
20 one-family dwellings 20 garden apartment units
served through 20 meters served through 1 meter
Amt. pd. per quarter: Amt. pd. per quarter:
20X7.50 (min. chg.)=$150 200,000 X .20=$40
This result being deemed unsatisfactory by the municipality, the ordinance in question was adopted. It imposes a minimum charge of $20 a year on each multi-tenant residential building for each tenant unit over and above the first tenant unit, this minimum charge entitling the consumer to 5,000 gallons per quarter. Plaintiffs contend that this rate is discriminatory to such an extent as to be in violation of the equal protection clause of the Fourteenth Amendment of the Federal Constitution.
The issue presented appears to be one of novel impression in New Jersey although it has been passed upon by courts of several other states. The great weight of authority supports such a classification. Knotts v. Nollen, 206 Iowa 261, 218 N.W. 563 (Sup. Ct. 1928); Lewis v. Mayor, etc. of Cumberland, 189 Md. 58, 54 A. 2 d 319 (Ct. App. 1947);
Land v. City of Grandville, 2 Mich. App. 681, 141 N.W. 2 d 370 (App. Ct. 1966); Caldwell v. City of Abilene, 260 S.W. 2 d 712 (Tex. Civ. App. 1953); City of Kermit v. Rush, 351 S.W. 2 d 598 (Tex. Civ. App. 1961). To the contrary see Kliks v. Dalles City, 216 Or. 160, 335 P. 2 d 366 (Sup. Ct. ...