Opinion
Every public utility is entitled to a fair return upon the fair value of the property used in providing its service. The requirement that a deposit be posted in order to secure the extension of a public utility service is neither unreasonable nor illegal. To procure extensions of water mains into its new development, the defendant was required by the plaintiff to execute contracts guaranteeing minimum annual returns from the extensions and to make deposits to secure the guarantees. Held that such contracts were not in violation of the plaintiff's charter or the general statutes. The amounts of the yearly guarantees were established in accordance with published rules and regulations of the plaintiff filed with the public utilities commission. The defendant could have questioned the reasonableness of the charges in an administrative proceeding under 5410. Since it did not appear that the administrative remedy was inadequate or inappropriate, the question of reasonableness could not now be raised collaterally in defense of the present action to recover the amounts due under the contracts.
Submitted on briefs November 6, 1956
Decided December 27, 1956
Action to recover sums alleged to be due under certain contracts concerning the extension of water mains, brought to the Court of Common Pleas in New Haven County, where the defendant filed a counterclaim for the cancellation of the contracts and for other relief and the issues were tried to the court, Sidor, J.; judgment for the plaintiff on the complaint and the counterclaim and appeal by the defendant. No error.
Franklin Coeller, on the brief for the appellant (defendant).
Donald F. Keefe and John J. Pentz, Jr., on the brief for the appellee (plaintiff).
This action was brought by the plaintiff, a public utility company supplying water, to recover a balance claimed to be due from the defendant, a building contractor, on five contracts entered into between them for the extension of water mains. The defendant denied any obligation under the contracts on the ground that they were illegal and were entered into by it under protest and duress. In a counterclaim it demanded that the contracts be canceled and that the plaintiff be required to repay the sums already paid to it by the defendant under them. The court rendered judgment for the plaintiff on its complaint and on the counterclaim, and the defendant has appealed. The case was submitted on briefs.
The following facts are either admitted in the pleadings or appear from so much of the finding as is not subject to attack. For about twenty years the defendant has been engaged in the general contracting business. In East Haven it planned and built the Glenmoor project, which contains a number of homes for families of low and moderate income as defined by 436d (t) of the 1955 Cumulative Supplement to the General Statutes. Included in the development are five principal streets: River Street, Manor Road, Glenmoor Drive, Warwick Lane and Nicholas Drive. The plaintiff supplies water to areas in and around New Haven, including the Glenmoor development. Along route 80, to the west of the development, is a four-foot main which lies about 1600 feet from the first house on River Street. The distance from the main to the other streets in the development is farther. To secure the extension of water mains into the development, the parties entered into five "Agreement[s] for Water Main Extension [s]" which guaranteed annual minimum returns as follows: for Manor Road, $287.97; for River Street, $1081.20; for Glenmoor Drive, $1582.66; for Warwick Lane, $337.42; for Nicholas Drive, $917.72. These amounts were established in accordance with published rules and regulations for the installation of water mains in real estate developments which had been filed by the plaintiff with the public utilities commission. In each of the ten years succeeding the installation of the service, the stated amount was to be paid, in semiannual installments, "less such amounts as shall have been paid to (the plaintiff) during said six months' period, at prevailing rates, for water sold on the line of said extension, including [the defendant's] payments." Each contract also required the defendant to deposit with the plaintiff, or give a bond for, an amount equal to the yearly guarantee. By the terms of the contracts and the regulations, the defendant was not entitled to a return of any deposit until the termination of the contract requiring that deposit. The amount of the guarantee in each of the contracts was based upon the estimated cost of laying the water main extension provided for in it. In the event that the actual cost in any instance was less than the estimated cost, an adjustment on the basis of actual cost was to be made. Because it was necessary for the defendant to have the plaintiff agree to extend its mains into the Glenmoor development in order to complete some arrangements with the state of Connecticut for housing for veterans and eligible persons in a low income bracket, the defendant made application to the plaintiff for the extension of water mains on a street-by-street basis in the Glenmoor development.
The appeal presents two questions for determination. The first is whether the plaintiff had the right to require, by contract, payments from the defendant for the extension of water mains into the Glenmoor development. It is to be noted at the outset that the payments required under the contracts were for the purpose of guaranteeing annual minimum returns and that the stipulated periodical payments would be reduced by the amounts received from those who bought the houses to be erected and who paid the water company for service to those houses. As has previously been pointed out, the defendant was required to place deposits with the plaintiff to be held pending the expiration of the period of the guarantees. The defendant argues that the charter of the plaintiff placed upon it the duty of providing water to Glenmoor without making a charge, as it did, for each extension into the development. It is true, as claimed by the defendant, that the plaintiff has the duty of supplying water within the area where its charter grants it the privilege of doing so. General Statutes 5410; 4 Spec. Laws 1369, as amended; 6 Spec. Laws 91. This does not mean, however, that a public utility company such as the plaintiff must provide a service without a reasonable payment therefor. Every public utility company is entitled to a fair return upon the fair value of the property used in providing its service. Cedar Island Improvement Assn. v. Clinton Electric Light Power Co., 142 Conn. 359, 370, 114 A.2d 535; Levitt v. Public Utilities Commission, 114 Conn. 628, 631, 159 A. 878. The trial court was correct in concluding that the plaintiff was not required to put in the extensions without charge and that the contracts were not in violation of its charter and therefore illegal.
The next question for consideration is whether, in this action, the defendant can question the reasonableness of the amounts fixed by the contracts. It appears that the plaintiff's established charges for extensions had been placed on file with the public utilities commission. The defendant could have questioned their reasonableness in an administrative proceeding before that commission under 5410 of the General Statutes. There is nothing in the finding or in the additional facts which the defendant claims should have been found to show that the administrative remedy was either inadequate or inappropriate. Under the circumstances, the reasonableness of the amounts charged for the extensions cannot be questioned in a collateral proceeding such as this. Levitt v. Public Utilities Commission, supra, 634; see Far East Conference v. United States, 342 U.S. 570, 573, 72 S.Ct. 492, 96 L.Ed. 576; Boston v. Edison Electric Illuminating Co., 242 Mass. 305, 311, 136 N.E. 113; Purcell v. New York Cent. R. Co., 268 N.Y. 164, 172, 197 N.E. 182; New England Telephone Telegraph Co. v. Kennelly, 75 R.I. 422, 431, 67 A.2d 705. The requirement that a deposit be posted in order to secure the extension of a public utility service is neither unreasonable nor illegal. See Board of Water Commissioners v. Bloomfield, 84 Conn. 522, 529, 80 A. 794.
The conclusions of the court that the plaintiff was within its rights in requiring the deposits, that the contracts were legal and enforceable, and that the defendant could not, in this action, challenge the reasonableness of the rates charged, were correct.
The defendant complains of certain rulings on the exclusion of testimony. These need no comment other than that the questions propounded by the defendant dealing with the reasonableness of the amounts charged by the plaintiff were properly excluded for the reasons hereinbefore stated.