## Facts

- A New Jersey township owned and operated a municipally owned water system under statutory authority.
- A private developer owned land in the Intervale Lake area and was developing residential lots.
- Existing municipal water mains ran along Intervale Road; the developer requested an extension of mains 600 feet along a connecting street to serve its development.
- The township refused to extend the mains unless the developer replatted the project into 100-foot frontage lots approved by the planning board.
- The township justified the condition by asserting the area should have larger lots and citing prior problems with septic systems on smaller lots.
- The developer rejected the condition and filed an action in lieu of mandamus to compel the extension on the usual terms and conditions.
- The trial court ruled for the township, treating the decision as a discretionary governmental function and finding no abuse of discretion.

## Issues

1. Whether operation and extension of a municipally owned water system is a proprietary/public-utility function subject to judicial review for arbitrariness and discrimination, rather than a largely unreviewable governmental function.
2. Whether the township acted arbitrarily, unreasonably, or discriminatorily by conditioning a water-main extension on replanning lot frontages to 100 feet.

## Decision

- The Supreme Court of New Jersey reversed the judgment for the township.
- The court held that supplying water through a municipally owned system is a public-utility (proprietary) function, not a purely governmental function insulated from review.
- The court found the township’s condition tying water service to 100-foot lot frontage requirements was arbitrary and unreasonable.
- The court concluded the developer was entitled to compel the extension under proper, nondiscriminatory terms applicable to such service.

## Legal Principles

- A municipality operating a water system as a public utility must exercise its powers in a manner that is fair, reasonable, and free from oppression.
- Municipal discretion in providing or extending utility service is not absolute; courts may set aside arbitrary, unreasonable, or discriminatory utility decisions.
- A municipality may not use control over essential utility service to impose conditions extraneous to the utility’s legitimate operational and service considerations, including unrelated zoning or planning objectives.
- Selective or inconsistent conditioning of utility service supports a finding of unreasonable discrimination.

## Conclusion

The court required the township to treat water service as public-utility service: it could not leverage its monopoly over water-main extensions to coerce a developer into adopting preferred lot sizes, and its refusal on that basis was an abuse of discretion subject to judicial correction.


Reid Dev. Corp. v. Township of Parsippany-Troy Hills, 89 A.2d 667 (N.J. 1952)