Bayha v. Public Utility Dist. No. 1 of Grays Harbor County

• Decision Date: 27 December 1939
• Docket Number: 27789.
• Citation: 97 P.2d 614,2 Wn.2d 85
• Parties: BAYHA v. PUBLIC UTILITY DIST. NO. 1 OF GRAYS HARBOR COUNTY et al. (CITY OF ABERDEEN, Intervener).
• Court: Washington Supreme Court

97 P.2d 614

2 Wn.2d 85

BAYHA v. PUBLIC UTILITY DIST. NO. 1 OF GRAYS HARBOR COUNTY et al. (CITY OF ABERDEEN, Intervener).

No. 27789.

Supreme Court of Washington, En Banc

December 27, 1939

Action by John A. Bayha, on behalf of himself and all other taxpayers of the City of Aberdeen, Wash., similarly situated against Public Utility District No. 1 of Grays Harbor County a municipal corporation, and others, to enjoin the defendants from purchasing the electric utilities of the Grays Harbor Railway & Light Company without first submitting the question of such purchase to the voters of the district for their approval. The City of Aberdeen, Wash., a municipal corporation, was permitted to intervene. From the judgment the defendants appealed, and the plaintiff and intervener cross-appealed. The defendants filed an application in the Supreme Court for a writ of certiorari.

Reversed on defendants' appeal, and affirmed on cross-appeals of plaintiff and intervener.

Appeal from Superior Court, Grays Harbor County; Charles W. Hall, judge.

E. E. Boner, of Aberdeen, and F. A. LeSourd and Preston, Thorgrimson & Turner, all of Seattle, for relators and appellants.

Karl R. Bendetson and J. E. Stewart, both of Aberdeen (E. L. Skeel, of Stewart, of counsel), for respondent and cross-appellant.

Lester T. Parker, of Aberdeen, for intervener respondent and cross-appellant.

JEFFERS Justice.

This is an action instituted June 19, 1939, by John A. Bayha, on behalf of himself and all other taxpayers of the city of Aberdeen similarly situated, against Public Utility District No. 1 of Grays Harbor County, a municipal corporation, and C. B. Sherwood, H. E. Bailey and Oliver Morris, as commissioners of such district, defendants, whereby plaintiff sought to enjoin and restrain the defendants from purchasing or entering into any contract or commitment for the purchase of any of the electric utilities of the Grays Harbor Railway & Light Company, without first submitting the question of such purchase to the voters of the district for their approval. Injunctive relief was also sought by plaintiff relative to a contract entered into between the district and one Guy C. Meyers; to the inclusion in the district of the city of Aberdeen, for the purpose of supplying the inhabitants thereof with electricity; and to the rate of interest which the district had agreed to pay on bonds to be issued to finance the purchase of such utilities.

On June 22, 1939, a temporary restraining order and order to show cause were issued, returnable June 26th. The city of Aberdeen was permitted to intervene in the action, the city contending that it had spent over $125,000 on its own electric utility project, and is at present making expenditures upon such project; that to allow the utility district to operate in the city of Aberdeen would be to permit and authorize two municipal corporations to exercise the same powers within the same district, at the same time; and that the statute does not permit such competition.

Defendants filed a return to the show cause order, a motion to quash the temporary restraining order, and demurrers to the plaintiff's complaint and the complaint of intervener. Defendants also filed an answer to both the complaint of plaintiff and intervener.

While it does not appear what action was taken by the court on the motion to quash or the demurrers, the trial court continued the restraining order in force up to and during the trial, and then granted a permanent injunction. Defendants did not stand on their demurrers, but proceeded to trial, and no error is claimed herein, based upon the failure of the court to sustain such demurrers.

The entire matter came on for hearing on July 10th, Before Honorable Charles W. Hall, and all parties being present, the case was heard on the merits.

On September 8, 1939, the trial court entered its decree, wherein it permanently enjoined defendants from executing the contract in question for the purchase of the Grays Harbor Railway & Light Company's properties, for the reason that defendants had failed to adopt a plan and system resolution, as provided by Laws of 1931, page 22, chapter 1, § 7, and for the further reason that the question of such purchase had not been submitted to and approved by the voters of the district. The trial court decided in favor of defendants the other questions raised by plaintiff and intervener, holding that defendant district may exercise its statutory powers within the limits of the city of Aberdeen; that the contract between defendants and Guy C. Meyers, employing Meyers as fiscal agent of the district, is a valid and binding contract, and not contrary to public policy; that the utility bonds proposed to be issued and sold by defendants, taken together with the Meyers contract, do not constitute a proposed issuance and sale below par and above the rate permitted by law; that neither the proposed purchase price to be paid for the utility properties nor the interest rate on the proposed bonds, when considered separately or when considered in relation to the Meyers contract, are constructively fraudulent.

Defendants have appealed from that part of the judgment adverse to them; plaintiff has cross-appealed from that part of the judgment adverse to him; and intervener has cross-appealed from that part of the judgment which holds that defendant district may exercise its statutory powers within the limits of the city of Aberdeen.

Defendants will hereinafter be referred to as relators, plaintiff and cross-appellant as respondent, and intervener and cross-appellant appellant as intervener. The Grays Harbor Railway & Light Company will be referred to as the Grays Harbor Company.

On October 3, 1939, relators filed in this court their application for a writ of certiorari to review the decision of the trial court, and the matter is now Before us on this application.

All of the records in the case are Before us, and neither respondent nor intervener is making any particular objection to granting the writ, provided this court is of the opinion that it is a proper case for a review of the entire record.

In support of their application for the writ, relators show by way of affidavit, and it is not disputed, that the contract which the trial court enjoined relators from entering into will expire January 2, 1940, unless by that time relators can proceed to carry out the terms thereof; that an appeal cannot be perfected and heard in time to have the validity of this contract determined by this court Before the expiration of the contract; and that relators will therefore have lost any benefit to be derived from such contract, even though they should prevail in their appeal.

Rem.Rev.Stat. § 1002, states the grounds for granting a writ of certiorari, and among others, it is stated the writ shall be granted when, in the judgment of the court, there is no plain and adequate remedy at law.

In the early case of State ex rel. Smith v. Superior Court, 26 Wash. 278, 66 P. 385, 386, we find the following rule announced, which we believe has been consistently followed by this court: 'This court has held in a long line of recent cases that the extraordinary writs of certiorari, prohibition, and mandamus will not issue to correct the action of the superior court when the court is acting erroneously, either with or without jurisdiction, but always with the provision that there is an adequate remedy by appeal. This adequate remedy has not been construed to be as speedy a remedy as the remedy by extraordinary writ might be, but a remedy which preserves the fruits of the appeal when won. In other words, the status quo of the parties litigant must be preserved, and, if by awaiting the result of an appeal the fruits of the litigation would be lost, the remedy has not been considered an adequate remedy.'

See, also, State ex rel. Meredith v. Tallman, 24 Wash. 426, 64 P. 759; State ex rel. Kent v. Superior Court, 109 Wash. 336, 186 P. 851; State ex rel. Silver Basin Mining Co. v. Superior Court, 110 Wash. 559, 188 P. 384; State ex rel. Bayless v. Superior Court, 116 Wash. 535, 199 P. 977; State ex rel. Daigneault v. Superior Court, 124 Wash. 90, 213 P. 677; State ex rel. Turner v. Paul, 182 Wash. 261, 46 P.2d 1060.

We think the writ should issue.

We shall now proceed to a consideration of the case on the merits.

While a more detailed statement of the testimony will be made in connection with the different questions raised, we desire at this point to make a general statement of the facts, which we believe to be substantiated by the testimony.

Public Utility District No. 1 of Grays Harbor County was created by an election held in the fall of 1938, with boundaries coextensive with the boundaries of the county. At this election, the relator commissioners were elected, and they soon after their election, began to investigate the possibilities of acquiring electrical properties for the purpose of bringing about public ownership and distribution of electricity throughout the district. Apparently realizing the necessity of having a man familiar with financing projects of this character, and who was in contact with banking interests capable of furnishing such finances, the commissioners, acting upon the advice of J. D. Ross, entered into a contract with one Guy C. Meyers. This contract, among other things, provided that Meyers was to find a purchaser for the bonds to be issued, and was to act as financial agent of the district. The commissioners also procured the permission of Mr. Ross, who was then in charge of the Bonneville project, to allow a Mr. Beck to investigate and appraise the properties of the Grays Harbor Company. Mr. Beck, with his crew, made this investigation and appraisal, without cost...