State ex rel. Allstate Ins. Co. v. Union Public Service Dist.

• Decision Date: 15 November 1966
• Docket Number: No. 12584,12584
• Citation: 151 S.E.2d 102,151 W.Va. 207
• Court: West Virginia Supreme Court
• Parties: STATE ex rel. ALLSTATE INSURANCE COMPANY, a corporation, et al. v. UNION PUBLIC SERVICE DISTRICT, a public corporation, et al.

Page 102

151 S.E.2d 102

151 W.Va. 207

STATE ex rel. ALLSTATE INSURANCE COMPANY, a corporation, et al. v. UNION PUBLIC SERVICE DISTRICT, a public corporation, et al.

No. 12584.

Supreme Court of Appeals of West Virginia.

Submitted Oct. 5, 1966.

Decided Nov. 15, 1966.

Syllabus by the Court

1. Mandamus is a proper remedy to require the performance of a nondiscretionary duty by various governmental agencies or bodies.

2. Though the writ of mandamus will be denied where another and sufficient remedy exists, if such other remedy is inadequate or is not equally as beneficial, convenient and effective, mandamus will lie.

3. Under Section 17, Article 13A, Chapter 16, Code, 1931, as amended, any holder of the bonds of the Union Public Service District shall have the right by mandamus to enforce and compel the performance of all the duties required by the statute or undertaken by the district in connection with the issuance of bonds by such district.

Jackson, Kelly, Holt & O'Farrell, W. T. O'Farrell, R. G. Kelly, F. Paul Chambers, Alexander J. Ross, Charleston, for relators.

Homer W. Hanna, Jr., Henry C. Bias, Jr., Charleston, for respondents.

HAYMOND, Judge.

In this original proceeding in mandamus instituted in this Court in June 1966, the petitioners, Allstate Insurance Company, a corporation, Sun Life Insurance Company of America, a corporation, and Monarch Life Insurance Company, a corporation, holders of certain revenue bonds of Union Public Service District, seek a writ to compel the defendants, Union Public Service District, a public corporation and political subdivision of the State of West Virginia, herein referred to as the district, and Milton Hurley, Clarence Hill and Riley Propps, members of the Public Service Board of Union Public Service District, to establish charge and collect rates and charges for services rendered by Union Public Service District sufficient to provide for all expenses of operation and maintenance of the sewer facilities of the district and to provide remaining funds to pay, when due, the principal and interest of revenue bonds issued by such district and to provide a balance each year equal to at least 1.35 times the minimum amount required in any succeeding year to pay such bonds and their interest when due; to file tariffs reflecting such rates and charges with the Public Service Commission of West Virginia and to prosecute the requisite proceedings before such commission; and to take such further action as may be necessary to establish such rates and charges for such service.

Upon the petition and its exhibits this Court on June 27, 1966, awarded a rule returnable September 7, 1966, at which time the defendants filed their answer to the petition. By agreement of counsel and consent of this Court this proceeding was continued to October 4, 1966, to permit the petitioners to plead to the answer and to allow the parties to offer evidence by depositions. On September 12, 1966, the petitioners filed their joint and several motion to strike, and their demurrer and their reply to the answer of the defendants. On September 21, 1966, the petitioners took the depositions of witnesses in behalf of the petitioners, and on September 26, 27 and 28, 1966, the defendants took the depositions of witnesses in behalf of the defendants. Pursuant to written notice the defendants filed motions for a continuance of this case, which were denied, and on October 5, 1966 this proceeding was submitted for decision upon the petition and its exhibits, the answer of the defendants, the motion to strike, the demurrer and the reply of the petitioners to the answer of the defendants, the depositions and their exhibits in behalf of the petitioners and the defendants, and the written briefs and the oral arguments of counsel in behalf of the respective parties.

The allegations in the petition for the writ, in substance, are that the petitioners are foreign corporations; that the defendant Union Public Service District is a public corporation and a political subdivision of this State, existing by virtue of the laws of this State and an order of the County Court of Kanawha County entered at its regular October Term 1955, and the defendants Milton Hurley, Clarence Hill and Riley Propps are the duly appointed members of the Public Service Board of Union Public Service District; that the petitioners severally purchased in good faith and for value a total principal amount of $1,315,000.00 of sewer revenue bonds out of a total of $1,600,000.00 of such bonds issued by the district, all of which bear date February 1, 1962 and each of which is in the principal sum of $1,000.00, bears interest at the rate of 5 per cent per annum, is payable to bearer, and contains interest coupons payable on February 1 and August 1 of each year; that such bonds are serially numbered and mature at various dates, the last of which matures in the year 2000; that bonds numbered 1 through 11, each in the principal sum of $1,000.00, have been paid; that the principal amount of the bonds outstanding is $1,589,000.00, of which bonds in the aggregate principal sum of $1,304,000.00 are owned and held by the petitioners, the petitioner Allstate Insurance Company being the owner of such bonds in the principal amount of $704,000.00, the petitioner Sun Life Insurance Company of America being the owner of such bonds in the principal amount of $400,000.00, and the petitioner Monarch Life Insurance Company being the owner of such bonds in the principal amount of $200,000.00; that each bond contains, among numerous other provisions, this provision: 'Said service district covenants that it will fix such rates and charges for the services of its sewer facility and collect and account for revenues therefrom sufficient to promptly pay all cost of operation and maintenance thereof and the principal of and interest on this bond and the issue of which it is one as the same will become due.' that the bonds held by the petitioners were issued by the district pursuant to a resolution duly adopted by it on June 23, 1962, in full compliance with the Constitution and statutes of this State, including Article 13A, Chapter 16, of the Code of West Virginia, 1931, as amended; that the district used the net proceeds from the sale of such bonds to pay the cost of acquiring property and constructing a sewer system and sewage treatment facilities to serve persons residing within the boundaries of the district in Kanawha County; that approximately 1000 families are now being served by such system; that the schedule of rates and charges of the district now in effect is inadequate to pay the cost of maintenance, operation and depreciation of the sewer facilities and to pay the principal of and the interest on the bonds held by the petitioners; that on February 1, 1966, interest in the amount of $39,725.00 became due and payable on the bonds outstanding and the principal amount of $1,000.00 of each of seven (7) bonds also became due and payable and that the defendant district was unable to pay and did not pay to the State Sinking Fund Commission funds sufficient to pay the interest and principal due on February 1, 1966; that under Section 9, Article 13A, Chapter 16, Code, 1931, as amended, it is the mandatory duty of the public service board of the district to establish rates and charges for its services which shall be sufficient at all times to pay the principal of and the interest on the outstanding bonds as they become due and payable and to pay all reserve and other payments provided in the resolution authorizing the issuance of the bonds; that under the foregoing statute the district became obligated by covenants contained on the face of each of the bonds to fix such rates and charges for the services of its sewer facilities and collect and account for revenues therefrom promptly to pay all costs of operation and maintenance and the principal of and the interest on such bonds and also to make minimum monthly payments into the sinking fund created for the purpose of paying the principal and interest of and on such bonds; that the district has defaulted in each and all such obligations; that the total gross income of the district for the calendar year 1965 was $72,337.00; that the total operating expenses of such district for that calendar year were $35,998.00, leaving an operating profit available for bond service and payment into the reserve funds of approximately $36,339.00; that the amount required to pay the principal of and the interest on the bonds owned by the petitioners during that year was $85,750.00; that the district has not complied with its statutory duty under Section 10, Article 13A, Chapter 16, Code, 1931, as amended, to prepare and adopt a budget at least thirty days prior to the beginning of each fiscal year; that petitioners have made demand upon the district that it establish adequate rates and charges to provide for the payment of the interest on and the principal of the bonds held by petitioners and that it adopt a budget, as required by law, in order that the amount of the necessary increases in rates and charges may be computed but that the district has taken no action to comply with such demand.

The answer of the defendants either admits, or states that the defendants do not admit or deny, many of the material allegations of the petition. The answer, however, does deny the allegations of the petition to the effect that the petitioners are purchasers of their bonds in good faith and charges that the petitioners knew or should have known that the district would be unable to meet its obligations under such bonds and its obligation to construct and operate successfully the proposed sewer system and sewage treatment facilities; that information to that effect had been given to and was well known by an agent and representative of the petitioners; and that it was the duty of such agent and representative to give such information to the...