Opinion
No. 45—464.
08-30-1919
MAYOR AND COUNCIL OF CITY OF BAYONNE v. EAST JERSEY WATER CO.
Humphreys & Sumner, of Paterson, for defendant.
Bill by the Mayor and Council of the City of Bayonne against the East Jersey Water Company. Decree for complainant.
James Benny, of Bayonne, and Gilbert Collins and Lindley M. Garrison, both of Jersey City, for complainant.
Humphreys & Sumner, of Paterson, for defendant.
LANE, Advisory Master. The suit is for an injunction restraining defendant from ceasing to supply water to Bayonne, and for a declaration of the rights of Bayonne and defendant under certain contracts. The case is submitted on bill and answer.
Prior to about September 6, 1918, Bayonne had been receiving its water supply from the New York & New Jersey Water Company under contracts. The New York & New Jersey Water Company obtained its water from the East Jersey Water Company under contracts. The parties hereafter will be denominated "City of Bayonne" as "Bayonne," "New York & New Jersey Water Company" as the "Water Company," and "East Jersey Water Company" as "East Jersey." On or about September 6, 1918, Bayonne purchased from the Water Company its plant and took an assignment of all of its contracts with East Jersey. On September 10th East Jersey notified Bayonne that at the expiration of 15 days it would no longer supply Bayonne, insisting that the assignment of the Water Company's rights to Bayonne relieved East Jersey of any further obligation. Thereupon this bill was filed.
There are three questions for determination, as stated by defendant in its brief:
(1) Did the purchase by the city automatically terminate the obligations of East Jersey arising out of its contract with the Water Company to supply Bayonne with water?
(2) If the obligation of East Jersey to supply Bayonne with water was not ended by the purchase, will that obligation terminate on September 6, 1919? (3) If the obligation of East Jersey was neither terminated by the purchase nor will terminate on September 6, 1919, but will continue until June 21, 1929, or October 6, 1929 (a subsidiary question), is East Jersey under any obligation arising out of its contract to supply Bayonne with water after June 21, 1929? This third question is subdivisible: (1) Is East Jersey under any obligation to furnish Bayonne with water after June 21, 1929, for municipal purposes? (2) Is it under any obligation to furnish Bayonne with water after that date for resale to outside consumers?
The bill is not filed solely for the purpose of compelling East Jersey now to refrain from cutting off the supply of water. It prays that the rights of Bayonne and East Jersey should be adjudged and determined, and that East Jersey should be compelled specifically to perform and fulfill its contracts and agreements made with the Water Company to which Bayonne has succeeded by assignment. In the answer defendant unites with complainant in submitting to the court its rights and obligations and those of complainant in the premises, to the end that the same may be adjudged and determined by the decree of the court. Both sides, therefore, by their pleadings pray for a determination of their contractual rights which grow out of written contracts. The case is very clearly, I think, within the provisions of section 7 of the Chancery Act of 1915 (P. L. 1915, p. 184), and the reasoning of In re Ungaro, 88 N. J. Eq. 25, 102 Atl. 244, and Renwick v. Hay, 106 Atl. 547. I will consider all of the questions mooted.
On September 6, 1894, Bayonne and Washington and Beall entered into a contract under the terms of which Washington and Beall agreed to furnish Bayonne an ample supply of pure and wholesome water equal to all of the requirements of Bayonne, at a certain price, for a period of 25 years. This contract contained no provision for renewal. Washington and Beall assigned their rights to the Water Company, and that Company on July 12, 1895, made a contract with East Jersey, under the terms of which East Jersey agreed to furnish to the Water Company an ample supply of pure and wholesome water in such quantity as would fulfill the conditions of the contract between Bayonne and Washington and Beall assigned to the Water Company, and "all the further requirements of the Water Company as therein provided." The Water Company agreed to take from East Jersey all the water required for fulfilling its contract with Bayonne, and for fulfilling any contracts which might thereafter be acquired for supplying water for consumption and use on Staten Island, in the state of New York, but not elsewhere. The compensation which was to be paid East Jersey by the Water Company was 35 per cent. of the entire gross receipts arising from the sale of the water. It was provided that the contract should continue for a period of 24 years and 2 months, with the continuing option to the Water Company and its assigns of renewing it upon like terms and conditions as therein provided for successive periods of 25 years each, forever, upon giving one year's written notice of such intention to renew to East Jersey, its successors or assigns. On May 29, 1902, an agreement was made between East Jersey and the Water Company providing for a modification of the contract of July 12, 1895. By the terms of this modification the Water Company was given the right to deliver water to consumers in Hudson county outside of Bayonne. It bound itself to take all water required for such consumers from East Jersey, and East Jersey bound itself to supply to the Water Company all the water that that company should require, to be paid for at the rates mentioned in the contract. The effect of this modification was to give to the Water Company the right to receive from East Jersey all water required for its consumers in Hudson county outside the limits of Bayonne. and undoubtedly gave it a right to successive renewals for periods of 25 years ad infinitum. Whether the argument of counsel for the defendant that this clause with respect to renewal did not cover the contract the Water Company had with Bayonne, which terminated in 25 years, and had in itself no provision for renewal, is sound or not, I find it unnecessary to determine, because by subsequent arrangements East Jersey bound itself to furnish all of the water the Water Company required to fulfill whatever contracts the Water Company had with Bayonne in existence at the time Bayonne took over the Water Company's plant, and this is sufficient in the view I have taken of the case. By a further agreement between the Water Company and East Jersey made July 1, 1903, the Water Company again bound itself to take all of its supply of water required for its then present and future uses and purposes in Hudson county, N. J., or in Staten Island, N. Y., from East Jersey, and at the price and under the terms of the contracts theretofore existing between East Jersey and the Water Company. On June 21, 1904, Bayonne passed an ordinance which was accepted by the Water Company on June 28, 1904. The ordinance recited the existence of the contract of September 6, 1894—that is, the Washington and Beall contract—the necessity for a further water supply, the offer of the Water Company to lay certain additional mains, and to pay the city a sum equal to $5 per million gallons for each and every million gallons of water which might be conveyed by the mains beyond the city, and that it was, in the judgment of the council, to the advantage of the city to accept the offer, and it was ordained that the offer be accepted, and the right granted to the Water Company to lay and maintain water mains, not exceeding two, for a period of 25 years from the date of the ordinance, to wit, Juno 21, 1904 (the 25 years expiring June 21, 1929); that the grant was on condition that the Water Company should maintain, throughout the time of the grant, 20 fire hydrants along the line of each of the mains, keep them in good repair, and furnish the city free water for their purposes. It further provided that the city might from time to time, during and after the construction ofthe said mains, designate the points at street crossings at which they might be tapped, and water drawn therefrom into the distributing pipes of the city, "for the purposes of supplying water to the manufacturers and other customers of the city, and for all other needs of the city, for full, complete, and efficient water supply." It was further provided that the amount charged to the city for water so drawn should be as provided for by the contract of September 6, 1894. The Water Company was given the right to convey water through the new mains beyond the city of Bayonne. Section 6 of that ordinance reads as follows:
"Nothing herein shall impair any right, option, or interest of the city, under the said contract of September 6, 1894, but every such right, option, and interest are hereby expressly saved and reserved to and for the city, and nothing herein shall be construed to extend the time of said contract of September 6, 1894, to any period beyond that specified therein, namely, twenty-five years of and from its said date."
It is argued for defendant that this contract, evidenced by the ordinancce and its acceptance by the Water Company, indicated that there was no intention to extend the term of the Washington and Beall contract. I am frank to say that, if there had been no further transactions between Bayonne and the Water Company, there might be some doubt in my mind. It was expressly provided that for the time of the grant, or a period of 25 years from June 21, 1904, the Water Company was obliged to maintain fire hydrants along the line of each of the mains it was permitted to build, and Bayonne was given the right to tap the mains and draw water therefrom into the distributing pipes of the city for the purpose of supplying water to manufacturers and other customers of the city, and for all other needs of the city for a full, complete, and efficient water supply, the water to be paid for at the same rates, and upon the same terms as to payment, as was provided for by the contract of September 6, 1894. While, therefore, it appears that the ordinance provided expressly that the contract of September 6, 1894, should not be considered as extended to any period beyond its date of expiration, nevertheless the city is given the right to draw from the two mains sufficient water to supply all of its inhabitants for a period of 25 years from June 21, 1904. It would seem as if the net effect of this is that although Bayonne was not under the obligation of taking water for a period exceeding the term of the contract of September 6, 1894, the Water Company was under the obligation of furnishing water for a period of 25 years from June 21, 1904. My view is that the provision with respect to the extension of the contract of September 6, 1894, was inserted solely for the protection of the city. It is quite clear, it seems to me, that if there is any doubt as to the construction of this contract, evidenced by the ordinance and its acceptance, it is cleared up by subsequent transactions between the parties. On October 6, 1909, a resolution was adopted by Bayonne requiring the Water Company to erect a duplicate supply main to extend from Kearny to Belleville (the intake), to Avenue B and Fifty-Sixth street, Bayonne, there to be connected with the mains of the city and agreeing, in consideration of the Water Company's building such a main, that Bayonne would purchase its entire supply of water from the Water Company at the same rates, and on the same terms, and for all of the purposes and periods, of the agreements made by the city with the Water Company dated September 6, 1894, and June 21, 1904. This resolution of Bayonne was accepted by the Water Company October 6, 1909. By it Bayonne agreed to purchase from the Water Company its entire supply of water for the period of the contract of June 21, 1904, 25 years. Its terms indicate quite clearly, I think, that while the Water Company was supposed to be under the obligation, under the contract evidenced by the ordinance of June 21, 1904, and its acceptance, of supplying Bayonne for a period of 25 years from June 21, 1904, it was recognized that Bayonne was under no obligation to take the water, and the purpose of this resolution and its acceptance was to place on Bayonne a reciprocal obligation to take. I think that it is quite clear, from a consideration of these agreements together, that Bayonne placed itself under the obligation to take all of its water from the Water Company for a period of 25 years from June 21, 1904, and that the Water Company placed itself under the obligation to supply the city water for that period, and that the terms of the contract of September 6, 1894, were in fact, although not in words, extended to June 21, 1929, On October 18, 1910, a resolution was adopted by Bayonne reciting the contracts between the Water Company and Bayonne of September 6, 1894, June 21, 1904, and October 6, 1909, and the provisions of the contract that, if it should be found necessary to condemn lands and water rights, the city would lend its name to the contractors for that purpose, and resolving and determining to acquire the right to divert an average daily amount of 8 1/2 million gallons per day in each year until October 6, 1929, at Little Falls, "the same being necessary for the purposes of the said contracts and for the use of the city of Bayonne for public supply." On May 18, 1911, an agreement was made between East Jersey and the Water Company. This agreement recited the resolution of Bayonne of October 18, 1910, and the fact that Bayonne had actually commenced condemnation proceedings under its terms. It provided that the supplyto be pumped by the Water Company should be taken by the Water Company under the authority conferred upon it by its municipal contracts, charter, and otherwise from the Passaic river at Little Falls, which source was designated and agreed upon for such purpose; and it was further provided that the supply should be continued therefrom during the period of the contracts between the Water Company and Bayonne, and that East Jersey should act as the agent and employe of the Water Company, to use its water power, mains and riparian and other facilities to accomplish the diversion which was authorized by the municipal contracts, and to receive, per million gallons for the water delivered through its main into the mains of the Water Company, the prices prescribed in its contract as compensation "not for water sold, but for services as agent," etc. It was expressly provided that nothing contained in the agreement should release East Jersey from its contract obligations "to furnish to the party of the second part (the Water Company) a supply of water sufficient to fulfill the requirements of the existing contracts between the party of the second part (the Water Company) and the mayor and council of the city of Bayonne from some available source, or from any other obligation or liability to the party of the second part (the Water Company) now existing thereunder, or otherwise." The agreement recited that East Jersey was then causing pumping to be done for the Water Company for its purposes, to wit, the providing of a supply to Bayonne under written contracts then existing between the parties, which contracts did not specify the source from which the water should be taken, and that the water had been in fact taken for more than 10 years from the Passaic river at Little Falls, and was then being obtained from that source. The resolution of October 18, 1910, which referred specifically to the contracts of September 6, 1894, and of June 21, 1904 (which gave the right to the Water Company to maintain the two mains until June 21, 1929), and of October 6, 1909 (which placed upon Bayonne the obligation of taking all of its supply from the Water Company until June 21, 1929), was referred to in the contract between the Water Company and East Jersey of May 18, 1911. By this contract East Jersey recognized its obligation to furnish the Water Company with sufficient water to supply Bayonne under its then existing contracts. It is quite clear to me that, irrespective now of whether, under the contract of September 6, 1894, East Jersey would have been obliged to furnish the Water Company with water necessary to supply Bayonne after September 6, 1919, or, in other words, whether the supply to Bayonne came within the provision permitting renewals of the contract of September 6, 1894, the subseqent dealings between East Jersey and the Water Company placed East Jersey under the obligation of furnishing the Water Company with such water and for such time as it (the Water Company) was bound to furnish Bayonne under contracts which existed May 28, 1911. I have already indicated that, in my opinion, the Water Company on that date was obliged to furnish Bayonne with water at least to June 21, 1929, at the rates provided for in the contract of September 6, 1894, and', the Water Company being under such obligation to furnish Bayonne, East Jersey was under the obligation to furnish a sufficient supply to the Water Company until that date.
It is insisted by complainant that the Water Company was under the obligation to furnish Bayonne until October 6, 1929, instead of June 21, 1929. This contention is based solely upon the fact that in the resolution of October 18, 1910, it was resolved that it was necessary to acquire the right to divert at Little Falls a certain amount of water per day in each year until October 0, 1929, and that by the contract of May 18, 1911, East Jersey and the Water Company recognized the obligation of the Water Company under this resolution. This date of October 6, 1929, apparently was imported in the resolution because of the fact that it was on that date that the Water Company accepted the resolution of the city by which the city bound itself to take water for all purposes and periods of the agreements made by the city with the company dated September 6, 1894, and June 21, 1904. That the 25-year period was not intended to run from the date of the acceptance by the Water Company of the resolution of October 6, 1909, the date upon which the city assumed its obligation, is indicated by the fact that in the resolution of October 18, 1910, the year of the expiration of contractual relations between Bayonne and the Water Company is considered to be 1929. My view is that the use of the date October 6th was a mistake. Its use cannot be considered as sufficient evidence that the parties intended to extend their contractual relations beyond the time fixed by the resolution of June 21, 1904, accepted by the Water Company June 24, 1904. It may be that it was deemed advisable from Bayonne's standpoint to secure the right of diversion for a short time after the expiration of the contract, but I doubt this. I think it a pure mistake. In any event, I can find no evidence that there was any agreement that the contract period should be extended.
I conclude, therefore, that the contractual relations between the Water Company and Bayonne as they existed prior to September, 1918, required the Water Company to furnish Bayonne with water up to June 21, 1929, and that the contractual relations between theWater Company and East Jersey required that East Jersey should furnish the Water Company with such water as it needed to supply Bayonne up to June 21, 1929.
My conclusion with respect to the time of the expiration of the contract between Bayonne and the Water Company is in accordance with the dictum of Vice Chancellor Stevens in Wilson, Attorney General, v. East Jersey Water Co., 78 N. J. Eq. 329, 341, 79 Atl. 440, 445. Speaking of the Washington and Beall contract of 1894 assigned to the Water Company, the Vice Chancellor said: "The assignment was ratified by Bayonne, when it afterwards agreed that the term of the supply should be extended until 1929." While, of course, neither the doctrine of res adjudicata nor stare decisis is available in this case, the East Jersey was a party to that litigation, and the remarks of the Vice Chancellor seem to be but a statement of a condition recognized to exist by all parties.
On September 6, 1918, the Water Company transferred its entire plant to Bayonne, and assigned all of its contract rights, including its contract rights with consumers and with East Jersey. It is insisted that this sale and assignment worked such an abrogation of the contract between the Water Company and Bayonne as relieved East Jersey from fulfilling its contract obligations to the Water Company so far as the Bayonne supply is concerned. It is argued with great vigor that the effect of the purchase by Bayonne was an extinguishment of the contract between the Water Company and Bayonne. It is claimed that the purchase by Bayonne must be considered as having been made under the sixth clause of the contract of September 0, 1894. Under that clause Bayonne is given the privilege of purchasing the waterworks of the Water Company at the expiration of any five-year period after the date of the contract, upon giving one year's written notice, at a certain price. It is provided that upon the receipt of the moneys the Water Company (and I am here making no distinction between the Water Company and Washington and Beall, who were the original contractors) should convey the waterworks, etc., and thereupon the contract should cease and be thereafter annulled. The difficulty with this argument is that the purchase was not made under this or any other clause of the contract. The Water Company not only had contracts to supply Bayonne, but also to supply other consumers; its contract with East Jersey required East Jersey to furnish water to it for all of its purposes, including, among others, the fulfillment of its contracts with Bayonne. The Water Company sold to Bayonne all of its rights. It transferred to Bayonne its right to receive water from East Jersey, to enable it to supply Bayonne and its other consumers. All of the transactions between the Water Company and Bayonne with respect to the purchase indicate that the intention of the parties was to keep alive the Bayonne contract, so far as it should be necessary to keep it alive, in order to substitute Bayonne in the place of the Water Company in the contract between the Water Company and East Jersey. East Jersey is in no wise concerned with the form the transaction took. The intent is clear. East Jersey is not injured unless the Water Company could not so act as to permit Bayonne to receive water directly from East Jersey in the place of the Water Company, paying for the water taken at the rates prescribed by the contract between the Water Company and East Jersey. That the Water Company could so act, I think, is beyond question. There is no difficulty in arriving at the amount which must be paid by Bayonne to East Jersey up to June 21, 1929. The contract between the Water Company and East Jersey provided that East Jersey should receive a certain proportion of the gross receipts of the Water Company as the proceeds of this contract. While technically speaking there will be no gross receipts of the Water Company, nevertheless the sum that these gross receipts would be is certain: for, by the contracts between Bayonne and the Water Company, Bayonne has agreed to pay a certain sum. Nor is there any difficulty caused by the fact that the contracts between the water companies require that payments should be made by the Water Company to East Jersey at its principal office in New York or New Jersey, as might be specified on the day next following "under" the receipt of the principal sums by the Water Company under such contracts as it might have. While it is true that in one sense there will be no receipts by the Water Company from Bayonne on any day, nevertheless the contracts between Bayonne and the Water Company provide for payment at certain times, and Bayonne will be obliged to settle with East Jersey as if such payments had been made at the time specified in the contracts.
After conclusion of the oral argument and submission of briefs, counsel with defendant filed a supplemental brief, in which they contend that, inasmuch as the contract between East Jersey and the Water Company, evidenced by the agreement of May 18, 1911, is a contract by which East Jersey agrees to act for the Water Company as agent in pumping water, it is personal in its nature, and therefore not assignable. The agreement of May 18, 1911, is but a modification of the contract of July 12, 1895, which contract bound East Jersey to the Water Company and its assigns. The relations between the Water Company and East Jersey, in substance, remain the same. The change in form was made because of the fact that itwas necessary to condemn rights of riparian owners, and it was deemed wise to fortify the legal position of the diverter by resort to the charter powers of the city available to the Water Company. There was no change in actual operation. The contract of May 18, 1911, contains a provision that nothing therein should release East Jersey from its contract obligations to furnish to the Water Company a supply of water sufficient to fulfill the requirements of the existing contracts between the Water Company and Bayonne from some available source, or from any other obligation or liability to the Water Company then existing or otherwise. I think the contract rights of the Water Company as against East Jersey were assignable.
Bayonne insists that under the renewal clause contained in the contract of July 12, 1895, it may compel East Jersey to furnish water to it for its municipal and other purposes, including sales to outside consumers, for successive periods of 25 years, ad infinitum, upon one year's written notice of such intention to renew to East Jersey, its successors or assigns. Bayonne gave notice to the Water Company on September 6, 1918, that it elected to renew the contract of July 12, 1895, for a period of 25 years, or until September 12, 1944, the original contract period being 24 years and 2 months. The contract of July 12, 1895, as I have before pointed out, was expressly made assignable. The option of renewal was given to the Water Company, its successors and assigns. In the notice to East Jersey the Water Company joined. I think this unimportant. The agreement of May 18, 1911, between the Water Company and East Jersey, did not release East Jersey from its contract obligations under the contract of July 12, 1895. Bayonne, as the assignee of the Water Company, was entitled, therefore, to exercise the option given to the Water Company. I think that no serious argument can be made that, assuming that the Water Company might assign to Bayonne, Bayonne did not have the right to exercise the option. The real question is not whether the contract between the Water Company and East Jersey is extended until September 12, 1944, but what, assuming such extension, in view of the changed conditions, the obligation of East Jersey is. I am still of the opinion, which I expressed on the oral argument, that Bayonne cannot compel East Jersey to furnish water to it for its municipal purposes under the contract of July 12, 1895, and its modifications and supplements, after June 21, 1929. By the terms of the contracts between the Water Company and East Jersey the amount of compensation to East Jersey was fixed at a certain percentage of the gross receipts of the Water Company. The amount of these gross receipts depended upon the amount which the Water Company would receive by virtue of contracts with others, including Bayonne. East Jersey was entitled to assume that the Water Company would make the best contract that it could with its customers. As the situation now stands, Bayonne is both buyer and seller. There is no way by which the amount to be paid East Jersey can be determined by reference to the amount which Bayonne would be obliged to pay the Water Company after June 21, 1929. It is suggested by complainant that the court ought not to determine, if it finds the attempted extension is legal, but may be inequitable, that it must be inequitable. Counsel do not quite precisely state the position. It is not a question of inequity nor of illegality. The question is whether the contract, in so far as it relates to the city of Bayonne, is possible of performance. I find it to be impossible because of the lack of a factor which is necessary to determine the amount which Bayonne would pay to East Jersey for water furnished to it for municipal purposes. The absence of the party with whom Bayonne could contract, so that there might be gross receipts of that party, upon the amount of which could be based the compensation to East Jersey, leaves a factor impossible to supply, but essential to the performance of the contract. For this reason East Jersey is not obliged to supply Bayonne with water for its municipal purposes after June 21, 1929. I need hardly point out that what I have said has no reference to conditions up to June 21, 1929, for up to that date the contract price between the Water Company and Bayonne has been fixed, and the only effect of the transaction between the Water Company and Bayonne is to substitute Bayonne as the direct purchaser from East Jersey.
The remaining question is whether Bayonne is entitled to a supply from East Jersey up to September 12, 1944, under the contracts between East Jersey and the Water Company, for the purpose of furnishing outside consumers. Counsel with defendant conceded upon the oral argument and in their briefs (page 34 of their original brief, pages 20, 21, and 22 of their supplemental brief) that Bayonne, occupying the position of assignee of the Water Company, might assert the right, under the contract of July 12, 1895, between the two water companies, to renew the contract of July 12, 1895, for successive periods of 25 years, forever, so far as consumers outside of Bayonne are concerned. Aside, now, from counsel's concession, I think there is no doubt but that Bayonne was and is authorized to exercise such right. By the modifying agreement between East Jersey and the Water Company of May 29, 1902, East Jersey bound itself to furnish the Water Company with sufficient water to supply its consumers in Hudson county outside of Bayonne. This modifying agreement became a part of the agreement of July 12, 1895, and the Water Company might renew under the optionclause. There is, of course, as conceded by counsel with defendant, no impossibility of performance so far as consumers outside of Bayonne are concerned. Bayonne must be assumed to deal with outside consumers precisely the same as the Water Company would, and the option was specifically made exercisable by assignees.
In the brief of counsel it is insisted that contracts for an indefinite or extremely long period or in perpetuity are not favored in the law (citing three Pennsylvania cases). There is no claim that the option of renewal provided for in the contract of July 12, 1895, contravenes any principle of law. In the decision of the Supreme Court on the application for a writ of certiorari to review the ordinance under which Bayonne purchased the rights of the Water Company in denying the writ the court said:
"The city is to acquire, not only the pipe lines and land, but the right practically, ad infinitum, to receive water from a responsible source at a fixed price, and has the right to add to the existing supply by condemnation."
It was suggested by counsel of defendant in the original brief that the question as to whether Bayonne, as assignee of the Water Company, might exercise the right of renewal, so far as customers outside of Bayonne are concerned, was not in this suit. But the bill prays for a determination of the rights of the parties with respect to the entire subject-matter. Notice of the exercise of the option had been given at the time of the filing of the bill. Defendant, by its answer unites with complainant in submitting to the court its rights and obligations and those of complainant, to the end that the same may be adjudged and determined. The rights arise under written instruments; they are cognizable in a court of equity. The subject-matter of the supply of water is of such a nature as that the aid of this court may properly be invoked to obtain the remedy either of specific performance or injunction. Section 7 of the Chancery Act of 1915 (P. L. 1915, p. 184) is relied upon by both sides. I have considered that statute in Renwick v. Hay, 106 Atl. 547, 551, and reiterate what I there said. In the oral argument and in their subsequent briefs counsel with defendant do not claim that this court ought not, in this litigation, determine all of the rights of the parties arising under these contracts.
I have not considered whether under the contract of July 12, 1895, as modified, East Jersey would be obliged, in case of the exercise of the option by the Water Company, to furnish water to the Water Company to enable it to fulfill contracts which it might have with Bayonne other than the contracts specifically referred to in the agreement of July 12, 1895, and subsequent agreements. Such determination is not necessary because of my conclusion that East Jersey is bound to furnish water to the Water Company necessary to enable it to perform its contractual relations with Bayonne up to June 21, 1929, and that a necessary factor is absent which would permit the performance of the contract so far as it relates to furnishing water to Bayonne for its municipal needs after June 21, 1929, even if the renewal clause applied.
I will advise a decree settling the rights of the parties as indicated by this opinion. I will determine that (1) Bayonne may require East Jersey to furnish water to it for its municipal purposes until June 21, 1929, at the rates prescribed by the contracts between the Water Company and East Jersey. The method of computing the amount payable to East Jersey and the method of payment may also be settled. (2) That Bayonne may require East Jersey to furnish water to it for sale to outside concerns until September 12, 1944. The method by which the amount to be paid and the method of payment may also be settled. (3) That Bayonne may, by the exercise of the renewal option contained in the contract of July 12, 1895, require East Jersey to furnish it with water for sale to consumers outside the city of Bayonne for continuing periods of 25 years each after June 12, 1944, ad infinitum. (4) That Bayonne may not require East Jersey to furnish water to it for its municipal purposes subsequent to June 21, 1929, under any contracts existing between the Water Company and East Jersey at the time Bayonne took over the Water Company's property.
Settle decree on two days' notice.