Caffall Bros. Forest Products, Inc. v. State, 41530

• Decision Date: 29 April 1971
• Docket Number: No. 41530,41530
• Citation: 79 Wn.2d 223,484 P.2d 912
• Parties: CAFFALL BROS. FOREST PRODUCTS, INC., Appellant, v. The STATE of Washington and Bert L. Cole, Commissioner of Public Lands, Respondents.
• Court: Washington Supreme Court

Page 223

79 Wn.2d 223

484 P.2d 912

CAFFALL BROS. FOREST PRODUCTS, INC., Appellant, v. The STATE of Washington and Bert L. Cole, Commissioner of Public Lands, Respondents.

No. 41530.

Supreme Court of Washington, En Banc.

April 29, 1971.

Klingberg, Houston, Reitsch, Cross & Frey, Judson T. Kingberg, Longview, for appellant.

Slade Gorton, Atty. Gen., Harold T. Hartinger, Sp. Deputy Atty. Gen., Tacoma, for respondents.

FINLEY, Associate Justice.

In 1968, the State Department of National Resources authorized a sale of timber from state-owned normal school lands. See RCW 79.01.004. The published notice of sale listed Approximate quantities of Douglas fir, hemlock and cedar which were to be sold at the public auction. This notice expressly indicated that the recited timber quantities were Not based on a timber cruise by the state. Although such cruises are normally conducted by the state prior to sale, none was conducted before the instant auction, apparently because of the timber industry's request for accelerated timber sales, the state's need for immediate revenue, and a then favorable timber market.

During the auction, bids were accepted on a 'weighted' basis. In essence, 'weighted' bidding operates in the following manner: prior to the auction, the state sets minimum per-board-foot appraised values for each species of timber to be offered. Bids beneath this minimum appraised value are not accepted. During the actual course of the bidding, individual bidders enter separate per-board-foot bids on each separate species. These separate bids are then multiplied against the estimated quantity of each species and are tallied to arrive at the bidder's 'total' bid. This 'total' bid is used as the basis for awarding the auction sale of state timber. The 'total' bid is not necessarily the amount to be paid by the successful bidder to the state. The instant sale was made on a log scale basis which meant that the successful bidder would pay the state, at the rate of his per-board-foot bid, upon the Actual quantity of timber eventually removed from the sale area.

Bidding at the oral auction was spirited and, when the hammer fell, appellant Caffall Bros. Forest Products, Inc. was the apparent high bidder with an offer of $683,785. Thereafter, however, the department became suspicious of the high bidding on hemlock, ¹ and ordered confirmation of the sale delayed pending a post-sale cruise. The completed cruise disclosed that the state had seriously erred in its presale estimates, and that the proportionate quantities of the three species were greatly different than that originally estimated. As a result of this error, it appeared that Caffall Bros. was Not the high bidder. Rather, due to the differences in 'weighted' bids of other bidders, the apparent third highest bidder (based on presale uncruised estimated quantities) was, in actuality, the highest bidder (based on post-sale cruised quantities).

As a result of this information, the Commissioner of Public Lands refused to confirm the sale to the appellant, and entered an order rejecting the sale on the ground that it 'would not have served the best interest of the State.' The commissioner's action was reviewed, and affirmed, by the State Board of Natural Resources. Appellant then filed an application for writ of mandamus to compel the commissioner to confirm the sale in appellant's favor. Shortly thereafter, the state reoffered the timber for public bid and awarded a contract on a bid of $1,899,815--a figure some $1,216,030 higher than appellant's bid. The appellant then amended its action to ask for damages. This action was dismissed with prejudice by the trial court, and the instant appeal followed.

The appellant assigns several errors to the trial court's denial of relief. Initially, appellant challenges the trial court's refusal to declare RCW 79.01.212 unconstitutional as an unlawful delegation of legislative authority under Wash.Const. art. 2, § 1, insofar as this statute empowers the commissioner to determine whether the 'best interests of the state may be subserved' by a given sale. RCW 79.01.212 provides If no affidavit showing that the interest of the state in such sale was injuriously affected by fraud or collusion, shall be filed with the commissioner of public lands within ten days from the receipt of the report of the auctioneer conducting the sale of any public lands, or valuable material thereon, and it shall appear from such report that the sale was fairly conducted, That the purchaser was the highest bidder at such sale, and that his bid was not less than the appraised value of the property sold, and if the commissioner shall be satisfied that the lands, or material, sold would not, upon being readvertised and offered for sale, sell for at least ten percent more than the price at which it shall have been sold, and that the payment, required by law to be made at the time of making the sale, has been made, And that the best interests of the state may be subserved thereby, the commissioner of public lands shall enter upon his records a confirmation of sale and thereupon issue to the purchaser a contract of sale, deed or bill of sale, as the case may be, as in this chapter provided.

(Italics ours.)

In measuring the constitutionality of delegated administrative power, we adhere to the following standards:

Amendment 7, of the state constitution, provides in part that 'The legislative authority of the state of Washington shall be vested in the legislature, * * * ' It is unconstitutional for the legislature to abdicate or transfer to others its legislative function. It is not unconstitutional for the legislature to delegate administrative power. In so doing, the legislature must define (a) what is to be done, (b) the instrumentality which is to accomplish it, and (c) the scope of the instrumentality's authority in so doing, by prescribing reasonable administrative standards.

Keeting v. Public Utility District No. 1, 49 Wash.2d 761, 767, 306 P.2d 762, 766 (1957).

Contending that the 'best interests' language of RCW 79.01.212 is an insufficient standard, the appellant cites several instances wherein this court has determined delegated administrative power to lack sufficient standards: State v. Gilroy, 37 Wash.2d 41, 221 P.2d 549 (1950) (invalidating legislation conferring upon the Director of Social Security power to grant or refuse certificates to individuals caring for foster children, and requiring the director to be satisfied that 'the methods used and the disposition made of the children will be in their best interests and that of society.'); Peterson v. Hagan, 56 Wash.2d 48, 351 P.2d 127 (1960) (invalidating, for lack of sufficient standards, legislation empowering the Director of the Department of Labor and Industries to promulgate regulations as to minimum wages and hours for women and children); United States Steel Corp. v. State, 65 Wash.2d 385, 397 P.2d 440 (1964) (invalidating legislation authorizing the Tax Commission to assess late payment penalty without prescribing standards); State ex rel. Makris v. Superior Court, 113 Wash. 296, 193 P. 845 (1920) (invalidating Tacoma city ordinance allowing commissioner to revoke soft drink license "whenever the preservation of public morality, health, peace or good order shall in his judgment render such revocation necessary"). Additionally, appellant cites Gelling v. Texas, 343 U.S. 960, 72 S.Ct. 1002, 96 L.Ed. 1359 (1952), wherein the United States Supreme Court invalidated a film licensing standard denying the licensing of films 'of such character as to be prejudicial to the best interests of the people of said...