People ex rel. City of Downey v. Downey County Water Dist.

• Citation: 202 Cal.App.2d 786,21 Cal.Rptr. 370
• Court: California Court of Appeals
• Decision Date: 25 April 1962
• Parties: The PEOPLE of the State of California upon the relation of CITY OF DOWNEY, a municipal corporation, Plaintiff and Appellant, v. DOWNEY COUNTY WATER DISTRICT, a public corporation, Defendant and Respondent. Civ. 25655.

Page 370

21 Cal.Rptr. 370

202 Cal.App.2d 786

The PEOPLE of the State of California upon the relation of CITY OF DOWNEY, a municipal corporation, Plaintiff and Appellant, v. DOWNEY COUNTY WATER DISTRICT, a public corporation, Defendant and Respondent.

Civ. 25655.

District Court of Appeal, Second District, Division 1, California.

April 25, 1962.

Rehearing Denied May 18, 1962.

Hearing Denied June 20, 1962.

Stanley Mosk, Atty. Gen., of California; Bonnie Lee Martin, Deputy Atty. Gen., Royal M. Sorensen, City Atty. of Downey, and Burke, Williams & Sorensen, Los Angeles, for appellant.

Alan M. Firestone, City Atty., San Diego, and Graham K. Fleming, Deputy City Atty., San Diego, as amicus curiae on behalf of appellant.

Burris & Lagerlof, C. F. Culver and H. Jess Senecal, Los Angeles, for respondent.

Kaminar, Sorbo, Andreen, Thorn & Gallagher and Robert Thorn, San Diego; Rimel & Johnston and Jack J. Rimel, Santa Ana; Schofield, Hanson, Bridgett, Marcus & Jenkins and Thomas M. Jenkins, San Francisco; and, Surr & Hellyer and James R. Edwards, San Bernardino, as amicus curiae on behalf of respondent.

LILLIE, Justice.

This is a quo warranto proceeding challenging the existence of the Downey County Water District. The People claim that by inclusion of the entire area of the district within the corporate boundaries of the City of Downey through annexation proceedings of December 6, 1957, the district, by operation of law was merged with the city and completely dissolved. Principally on stipulated facts the trial court concluded that the district is lawfully and validly in existence; the People appeal from the judgment.

In 1929 the Downey County Water District was incorporated under the County Water District Law (Div. 12, Water Code); since then it has operated and maintained a water production and distribution system serving water for domestic and industrial uses. On December 17, 1956, the City of Downey was incorporated; on October 21, 1957, it annexed approximately 99% of the area of the district and on December 6, 1957, the remaining 1%. Thus, on December 6, 1957, the entire territory of the district was contained within the corporate boundaries of the city. At this time the district had a bonded indebtedness in excess of $75,000 evidenced by noncallable general obligation bonds held by private owners within the district. On November 12, 1958, the City Council adopted a resolution declaring the merger of the district with the city. Thereafter, on May 19, 1959, the district annexed certain territory located outside the boundaries of the city; thus, since that date not all of the district has been included within the city boundaries.

The main issue is threefold--by virtue of the inclusion of the entire territory of the district by the city through annexation, was a merger effected and the district dissolved; if so, when did the merger occur, and at that time, did the assets and liabilities of the district pass to the city. Relying primarily upon Petition of East Fruitvale Sanitary District, 158 Cal. 453, 111 P. 368, appellant's position is that, in the absence of specific legislation to the effect that under such circumstances a county water district continues its separate existence, on December 6, 1957, when all of the territory of the district was annexed by and included within the city, the district automatically merged with the city and was completely dissolved, and all of its assets, properties, obligations and liabilities were transferred to the city.

We know of no reported case involving the complete inclusion of a water district within a city by annexation of the city, but the general rule in connection with other special districts is that when the territory of a public corporation of limited powers is annexed to and entirely contained within the boundaries of a municipal corporation which has power to exercise the same functions as well as others essential to municipal government, the public corporation of limited powers, in the absence of specific legislative enactment revealing an intention that it should continue its existence, of necessity automatically merges with the municipal corporation and ceases to exist. (Petition of East Fruitvale Sanitary District, 158 Cal. 453, 111 P. 368; People ex rel. Cuff v. City of Oakland, 123 Cal. 598, 56 P. 445; Pixley v. Saunders, 168 Cal. 152, 141 P. 815; City of Escalon v. Escalon Sanitary District, 179 Cal.App.2d 475, 3 Cal.Rptr. 889; City of Roanoke v. Fisher, 193 Va. 651, 70 S.E.2d 274.) This doctrine of merger by operation of law is predicated on the theory of duplication of functions--otherwise two distinct local governmental bodies claiming to exercise the same authority, powers and franchises simultaneously over the same territory would 'produce intolerable confusion, if not constant conflict.' (Petition of East Fruitvale Sanitary District, 158 Cal. 453, 459, 111 P. 368, 371; City of Escalon v. Escalon Sanitary District, 179 Cal.App.2d 475, 3 Cal.Rptr. 889; City of San Diego v. Otay Municipal Water district, 200 A.C.A. 670, 19 Cal.Rptr. 595.) Thus, for the rule of merger to apply herein, the Downey County Water district must constitute a public corporation of more limited powers than the City of Downey, and there must be an absence of legislative intent in the act creating the district that the district shall continue its existence as a separate entity after its territory has become completely embraced within the boundaries of a municipal corporation.

Respondent argues that in any event, the doctrine of merger cannot apply to proprietary functions, and that the conflict of power upon which the rule is based will not here occur since the City of Downey is free not to exercise its power to supply water and has not elected to do so. We find nothing in the rule, or the considerations upon which it is based, that requires an actual existing conflict or an 'unavoidable' or 'inevitable' clash of authority. That the doctrine of merger contemplates a potential conflict is born out by the authorities. Dictum in People ex rel. Cuff v. City of Oakland, 123 Cal. 598, 56 P. 445, later cited and approved in Pixley v. Saunders, 168 Cal. 152, 141 P. 815 and Petition of East Fruitvale Sanitary District, 158 Cal. 453, 111 P. 368 declared: 'But, if the statute permits territory embraced in or covered by a sanitary district to be annexed to a city,--a municipal corporation of a higher class, and capable (emphasis added) of exercising the same functions as well as others essential to municipal government,--such statute contemplates, ex necessitate rei, a cession of the powers of the inferior corporation to the greater, and a consequent dissolution of the former as a result of the annexation' (123 Cal. pp. 600-601, 56 P. at pages 445, 446); and the court in Petition of East Fruitvale Sanitary District, 158 Cal. 453, 111 P. 368, 370, held '* * * where a public corporation having powers more limited than those of a municipal corporation is annexed to a city, which possesses all of the powers of the corporation which has been annexed to it and others in addition,' a merger is effected. (p. 457, 111 P. 368.) (Emphasis added.) And the terms 'probability of a potential conflict' are employed in discussing the exercise of dual functions by a municipal water district and a city in the recent case of City of San Diego v. Otay Municipal Water district, 200 A.C.A. 670, 19 Cal.Rptr. 595. Nothing in the cases supporting the rule of merger requires that the two governmental entities must be exercising the same powers at the same time over the same territory before a merger takes place, as long as the municipal corporation is 'capable' of exercising of 'possesses' all of the powers of the public corporation which has been annexed or there is a 'probability of potential conflict' between them; sufficient then is a potential conflict, one which would arise should the city engage in the water business and it is this capability of conflict that is the basis of the doctrine.

While a municipality acts in a proprietary capacity in supplying water (South Pasadena v. Pasadena Land, etc., Co., 152 Cal. 579, 93 P. 490), the cases supporting the rule of merger fail to make any distinction between governmental and proprietary functions or impose any such limitation upon its application. Moreover, there can be just as much capability of, or potential, conflict involved in the exercise of a proprietary function as in the exercise of a governmental one. In fact an actual conflict is imminent. On November 12, 1958, the city council adopted a resolution declaring a merger of the district with the city, and demanded the property and assets, operation, control and maintenance, and facilities and appurtenances of the former. The district's refusal resulted in the within action. In the Fruitvale case, supra, the city had a right to construct, establish and maintain sewers but was not compelled to do so (§ 38900, Gov.Code) and had not done so; and while this was a governmental function. and the power of a city to provide water is of a proprietary nature, nevertheless the practicalities of the two situations appear to be the same. The city has the right or the power to supply water to its inhabitants (Art. XI, § 19, Calif.Const.; South Pasadena v. Pasadena Land, etc., Co., 152 Cal. 579, 593, 93 P. 490) and to operate a water system (City of North Sacramento v. Citizens Utilities Co., 192 Cal.App.2d 482, 13 Cal.Rptr. 538); but as in the Fruitvale case, supra, there is no duty on the part of the city to engage in the water business. To discredit the applicability of the Fruitvale decision (158 Cal. 453, 111 P. 368), appellant cites authority to the effect that a city has an obligation to provide sanitary facilities as distinguished from the right to do so; but a reading of the case cited (People v. City of Los Angeles, 83 Cal.App.2d 627, 189 P.2d 489) makes it clear that while a city is obligated to...