Artesian Water Co. v. Cynwyd Club Apartments, Inc.

297 A.2d 387, 1972 Del. LEXIS 314
CourtSupreme Court of Delaware
DecidedOctober 13, 1972
StatusPublished
Cited by2 cases

This text of 297 A.2d 387 (Artesian Water Co. v. Cynwyd Club Apartments, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Artesian Water Co. v. Cynwyd Club Apartments, Inc., 297 A.2d 387, 1972 Del. LEXIS 314 (Del. 1972).

Opinion

HERRMANN, Justice:

This appeal involves the scope of authority and duty of the Public Service Commission relative to discontinuance of service by a public utility for non-payment by the consumer.

I.

Artesian Water Company (hereinafter “Artesian”), contracted to deliver water to Cynwyd Club Apartments, Inc. (hereinafter “Cynwyd”) in 1966. Cynwyd complained that the water supplied during the first nine months of service contained foreign particles and was rusty and corrosive; that the deleterious nature of the water caused pipes to burst and resultant damage to Cynwyd’s property. Consequentially, Cynwyd has refused to pay its water bills for the nine month period.1

In 1968, Artesian threatened to discontinue service because of non-payment of the delinquent bills. Cynwyd sought injunctive relief in the Court of Chancery to prevent Artesian from discontinuing service on the theory that, by reason of damage to its pipes and other property, Cynwyd had a set off. There wás no evidence in that proceeding that the water supplied was not of adequate quality. The Chancery Court denied relief; and the case was transferred to the Superior Court under the Statute. 10 Del.C. § 1901.

Cynwyd then filed a complaint with the Public Service Commission against Arte-sian, a utility subject to the Commission’s jurisdiction, requesting a stay of the still-threatened discontinuance of service and seeking an adjudication that it was not required to pay the established rate for deleterious water. After ordering service continued pending the proceedings, and after full hearing, the Commission ruled in 1969 as follows:

“ * * * the corrosion encountered by Cynwyd in its apartment project was the result of, in part at least, corrosive water supplied to its system, for a period ending in 1968. Since that time the water has been of acceptable standards. There is no basis in law for the Commission to award damages to Cynwyd because of any deleterious water received by it prior to 1968. Accordingly, we find that Cynwyd’s continued failure to pay the delinquent bill unwarranted and Artesian may proceed to implement its tariff by discontinuance of service for non-payment of that bill.”

The Commission concluded that it

“ * * * does not sit as a court of law, but rather as a quasi-legislative body for the purpose of requiring utilities to adhere to state law. Having required Artesian to perform its duty in this matter (by providing water of adequate quality), we must decline to go further with the assessment of damages.”

Cynwyd appealed the Commission’s decision to the Superior Court. Pending the appeal, the Superior Court stayed the order of the Commission authorizing termination of service, conditioned upon Cynwyd’s bond to secure the debt.

The Superior Court upheld the Commission in part and reversed in part. It affirmed the Commission’s finding that water supplied by Artesian prior to 1969 did not meet acceptable standards and was of such corrosiveness as to constitute one of the causes of damage to Cynwyd’s pipes; but it reversed the Commission “insofar as it permitted the Artesian Water Company to discontinue service prior to legal resolution of a bona fide dispute over payment for prior service.”

The Superior Court held that while a private supplier of water to the public may generally terminate service for non-payment, it may not do so where a bona fide dispute exists as to liability for, or correct[389]*389ness of, the bill. The Superior Court noted that the bona fides of the dispute between the parties was demonstrated by the Commission’s finding that, prior to 1969, Artesian supplied Cynwyd with corrosive water which was not of acceptable standards.

From those findings and conclusions of the Superior Court, both parties appeal.

II.

The crux of Artesian’s appeal is the contention that the Superior Court erred in finding that there is a bona fide dispute between the parties as to liability for, and correctness of, the water bills.

The record before the Commission clearly shows such bona fide dispute. In those proceedings, Cynwyd contended that it should not be required to pay the established rate for deleterious water that did not meet the standards; Artesian contended that its water always met the standards. The Commission decided that, prior to 1969, Artesian supplied Cynwyd with corrosive water which was not of acceptable standards or of adequate quality. No other reasonable conclusion may be drawn from the Commission’s holdings that “the corrosion encountered by Cynwyd * * * was the result, in part at least, of corrosive water supplied to its system, for a period ending in 1968”; that since “that time [1968] the water has been of acceptable standards”; and that the Commission fulfilled its function by requiring “Artesian to perform its duty in the matter (by providing water of an adequate quality), ‡ ijs

The Commission’s findings as to corro-siveness and the sub-standard quality of the water, supplied prior to 1969, is supported by sufficient competent evidence; thus, those findings may not be disturbed. We agree, therefore, with the Superior Court’s conclusion that the record before the Commission shows a bona fide dispute as to liability for, and correctness of, the water bills for the period prior to 1969.

The question then becomes this: in view of the showing of a bona fide dispute between utility and consumer regarding the bill, did the Commission have the authority and the duty, under its general supervisory powers over the utility, to restrain termination of service pending the resolution of the dispute before the appropriate tribunal? The answer, we think, is affirmative.

The Public Service Commission has “general supervision and regulation of all public utilities.” The Commission “may investigate, upon its own initiative or upon complaint in writing, any matter concerning any public utility.” The Commission may, after hearing, “fix just and reasonable standards * * * regulations, practices * * * or services to be furnished, imposed, observed and followed thereafter by any public utility”; and may “require every public utility to furnish safe, adequate and proper service.” 26 Del.C. §§ 121, 124, 131, 135. These statutory powers unquestionably authorize the Commission to regulate the termination-of-services practices of a utility, and, in a specific case, to prohibit discontinuance for nonpayment where a bona fide dispute as to the bill is shown to exist.

The authority being manifest, it' is also clear that, in this case, the Commission had the duty to intervene and to restrain discontinuance, pending determination of the dispute. That duty arose upon the administrative finding that the service, rendered during the period prior to 1969 covered by the bills in controversy, was inadequate and sub-standard. The Commission correctly recognized that it “does not sit as a court of law.” Application of Wilmington Suburban Water Corporation, Del.Supr., 211 A.2d 602 (1965). Therefore, it correctly avoided adjudication of the debt controversy between the parties. But the Commission should have exercised its authority to maintain the status quo as to service, pending disposition of the controversy before a court of competent jurisdic[390]*390tion. Failure so to do was an abuse of discretion.

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297 A.2d 387, 1972 Del. LEXIS 314, Counsel Stack Legal Research, https://law.counselstack.com/opinion/artesian-water-co-v-cynwyd-club-apartments-inc-del-1972.