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New Jersey Bell Telephone Co. v. Town of West Orange

Decided: December 16, 1982.


On appeal from Superior Court of New Jersey, Chancery Division, Essex County.

Bischoff, J. H. Coleman and Gaulkin. The opinion of the court was delivered by J. H. Coleman, J.A.D.


The novel question raised by this appeal is whether plaintiff can lawfully provide a service covered by a filed tariff at less than the tariff rate. The trial judge held that it would be inequitable not to enforce the contract price even though it did not conform to the filed tariff. We disagree and reverse.

The facts essential to our determination are not disputed. Plaintiff contracted with defendant to install a more sophisticated fire alarm system known as the emergency voice reporting (EVR). The old pull-box alarm system was to be replaced with a system of telephones located along different streets. The EVR system is used to report an emergency by simply picking up one of the phones, which will be answered by a central dispatcher, and reporting the emergency.

The contract for rental, installation and maintenance of the EVR system which consisted of 100 units was submitted to public bidding pursuant to N.J.S.A. 40A:11-1 et seq. Two bids were submitted. Plaintiff's bid price for the 100 units was $15,571.68 a year. Since this was the lowest responsible bid, plaintiff was awarded the contract. After the units were installed and operational for sometime, plaintiff discovered that its bid price was not in accordance with the filed tariff for the EVR service which was initially filed with the Board of Public Utility Commissioners (PUC) in 1960. The tariff covering the present contract was filed with PUC in 1976, which established a rate of $18,128.64 for the 100 units a year. Hence, plaintiff's bid was $2,556.96 less than the filed tariff.

Plaintiff's numerous attempts to have the contract price adjusted to conform to the tariff were to no avail. In early 1979 plaintiff's tariff for the EVR system was increased and defendant was made aware of the increase. Plaintiff commenced this

action in the Chancery Division seeking a declaratory judgment determining that defendant was required to pay the prevailing tariff rates for the EVR system. Defendant raised estoppel and reliance on plaintiff's lowest bid in conformity with the Local Public Contract Law (N.J.S.A. 40A:11-1 et seq.). Defendant also filed a counterclaim seeking damages for being "potentially exposed to substantial financial losses due to plaintiff's negligence, fraud and/or mistake." Following a nonjury trial, the judge dismissed the complaint but made no reference to the counterclaim.*fn1 He found that there was a clear violation of the tariff although it was completely inadvertent and was not anybody's fault. In his decision he stated,

Here, the town commission put out a contract and all of the citizens were relying upon the town commission to get the services for the lowest amount. They got the services for the lowest amount and it just seems to me it would be inequitable at this particular posture to upset the contract.

So that's the way I'll rule, . . . defendant should prevail because of the principles of estoppel, of fair dealing and the general equities of the proposition and consequently I'll find in favor of the defendant.

Plaintiff contends that defendant is obligated to pay for the ERV services at the prevailing tariff rates irrespective of the contract price. This issue brings into sharp focus the distinction between contract rates for services and the filed tariff rate for the same services. A tariff is a published schedule of rates, filed by a public utility and, thereafter, "applicable equally to all customers." In re Saddle River Application, 71 N.J. 14, 29 (1976). It is undisputed that plaintiff is a public utility. A contract, on the other hand, is an agreement individually negotiated between a public utility and a particular customer with rates that may differ according to differences in

the particular service provided to that particular customer. Id. at 29-30. Our Supreme Court recently held in City of Plainfield v. Public Service Elec. and Gas Co. 82 N.J. 245, 252 (1980) that the Public Utility Act of 1911, L. 1911, c. 195, § 18, codified as amended (L. 1930, c. 35, § 1) at N.J.S.A. 48:3-1 and ...

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