State ex rel. Bache & Co. v. Gainer

Citation177 S.E.2d 10,154 W.Va. 499
Decision Date20 October 1970
Docket NumberNo. 12983,12983
CourtSupreme Court of West Virginia
PartiesSTATE ex rel. BACHE & CO., Inc. v. Honorable Denzil L. GAINER, Auditor of the State of West Virginia.

Syllabus by the Court

1. Mandamus lies to require the discharge by a public officer of a nondiscretionary duty.

2. By the provisions of Sections 1 and 13 of Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969, the Governor is expressly authorized to issue and sell certain designated bonds in the amount of $90,000,000.00 and is vested with discretion as to the manner in which he exercises his authority in connection with the issue and the sale of the bonds and those statutes do not prescribe any specific directions, restrictions or limitations, or subject his actions to the supervision or approval of any other officer or any other governmental department, in the exercise of his discretion.

3. In issuing and selling bonds in the amount of $90,000,000.00, in entering into a financial advisor's agreement for services rendered in relation to such sale, and in determining and certifying that the charge for such services was a necessary expense of the sale of the bonds by the Governor, the Governor acted in the discharge of his official duties as provided by Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969, and such acts of the Governor are not subject to supervision or approval by the Auditor, or the Director of Purchasing, or the Attorney General, or the Commissioner of Finance and Administration of this State.

4. 'The office of governor is political and the discretion vested in the chief executive by the Constitution and laws of the State respecting his official duties is not subject to control or review by the courts. His proclamations, warrants and orders made in the discharge of his official duties are as much due process of law as the judgment of a court.' Point 1, syllabus, Hatfield v. Graham, 73 W.Va. 759. (81 S.E. 533)

5. When the Governor has incurred a necessary expense within the meaning of the provisions of Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969, and a requisition of the Commissioner of the Department of Highways, regular in form and properly itemized for the payment, as a necessary expense, of a claim for services rendered in connection with the sale by the Governor of the bonds authorized by those statutes, is duly submitted to the Auditor and there are sufficient unexpended funds in the State Treasury to pay such claim, it is the mandatory duty of the Auditor to honor such requisition and mandamus lies to compel him to perform that act.

Spilman, Thomas, Battle & Klostermeyer, Howard R. Klostermeyer, George G. Guthrie, Charleston, for relator.

Chauncey H. Browning, Jr., Atty. Gen., Cletus B. Hanley, Deputy Atty. Gen.,. Victor A. Barone, Asst. Atty. Gen., Charleston, for respondent.

HAYMOND, Judge.

This is an original mandamus proceeding instituted in this Court in June 1970. The petitioner, Bache & Co., Inc., hereinafter sometimes referred to as Bache, seeks a writ to require the defendant, Honorable Denzil L. Gainer, Auditor of the State of West Virginia, to issue a warrant upon the Treasurer of the State of West Virginia for payment to the petitioner of the sum of $81,000.00 from the State Road Fund of the State of West Virginia for services rendered by the petitioner in connection with the sale by the Governor of road bonds in the amount of $90,000,000.00 during the fiscal year ending June 30, 1970.

Upon the petition and its exhibits this Court issued a rule returnable September 2, 1970. By agreement of the parties the hearing of this proceeding was continued until September 22, 1970, at which time it was submitted for decision upon the petition and its exhibits, the answer of the defendant, the depositions of J. Henry Francis, Jr. and Edward F. Wrightsman, in behalf of the petitioner, and the deposition of John H. Kelly, Treasurer of the State of West Virginia, in behalf of the defendant, the motion of the petitioner to strike certain portions of the cross-examination of the witnesses in behalf of the petitioner and certain portions of the testimony of the witness in behalf of the defendant, and the briefs and the oral arguments of the attorneys in behalf of the respective parties.

The testimony in behalf of the petitioner was to the effect that the charge of the petitioner in connection with the sale of $90,000,000.00 face amount general obligation road bonds, pursuant to a financial advisor's agreement dated October 28, 1969, between the petitioner and the State of West Virginia, acting by its Governor, Arch A. Moore, Jr., was a necessary expense within the meaning of Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969; and the testimony in behalf of the defendant was to the effect that such charge was not a necessary expense and that the bonds could have been sold without such expense by the Treasurer of the State of West Virginia who had previously negotiated the sale of several previous bond issues of the State. Except for that conflict in the evidence, there is little, if any, dispute in the material facts in this proceeding.

The controlling question for decision is whether the defendant is required by law to issue his warrant on the State treasurer for payment to the petitioner of the sum of $81,000.00 which the State of West Virginia, by written contract dated October 28, 1969 between the petitioner and the State of West Virginia, acting by its Governor, agreed to pay the petitioner for services as financial advisor in connection with the issuance and sale by the Governor of $90,000,000.00 of general obligation bonds of the State of West Virginia.

Other pertinent questions for determination are: (1) Whether the expense incurred by the Governor in the sale of the bonds by him was a necessary expense within the meaning of Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969, and (2) whether the financial advisor's agreement of October 28, 1969, without the approval of the Director of Purchasing and the Attorney General of this State and without the signature of the Commissioner of Finance and Administration, is a valid agreement.

The petitioner contends that under the provisions of Chapters 125 and 126, Acts of the Legislature, Regular Session, 1969, the Governor is authorized to issue and sell general obligation bonds in the amounts of $20,000,000.00 and $70,000,000.00, or the aggregate of $90,000,000.00, and to incur the sum of $81,000.00 as a necessary expense for the services of the petitioner in connection with such sale and that the defendant, the Auditor of the State of West Virginia, is required to issue his warrant for the payment of that sum to the petitioner. On the contrary the defendant contends that the charge of the petitioner for such services was not a necessary expense for the sale of such bonds and that the agreement with respect to the services of the petitioner in connection with the sale is not valid because it lacks the approval of the Director of Purchasing and the Attorney General of this State and the signature of the Commissioner of Finance and Administration; and the defendant bases his defense against the claim of the petitioner on those two grounds.

By letter dated August 1, 1969, William S. Ritchie, Jr., then the State Road Commissioner of West Virginia but now Commissioner of the West Virginia Department of Highways, the office of West Virginia Commissioner of Highways having been created by Chapter 68, Acts of the Legislature, Regular Session, 1970, advised the Governor with respect to a forecast of the cash receipts and disbursements for the State Road Commission for the period June 1969 through December 1969 that the balance of cash and temporary investments would reach a critical level before October 31, 1969, unless additional funds were made available, recommended that immediate arrangements be made to sell State of West Virginia road bonds as authorized by the Legislature, and stated that in order to avoid the possibility of a cash shortage the funds from the sale should be available to the State Road Commission by September 15, 1969.

In October 1969, J. Henry Francis, a Charleston lawyer and a partner in a local municipal company which dealt in securities, and Edward F. Wrightsman, a Vice President of Bache & Co., Inc., both of whom were experienced in the negotiation and sale of bonds and other securities and were familiar with the financial condition of the State, met with Governor Moore and discussed with him the advantages of hiring a financial advisor in connection with the sale of the bonds because of the size of the issue, the unfavorable conditions in the bond market, and recent ratings of the general obligation bonds of the State. Subsequently the Governor, on October 28, 1969, signed a financial advisor's agreement in behalf of the State with Bache by which it was employed to serve as advisor in connection with the sale and delivery of the bonds in the amount of $90,000,000.00, $20,000,000.00 to be issued under the Constitutional Amendment ratified November 3, 1964, authorizing the issuance of bonds in the amount of $200,000,000.00, and $70,000,000.00 to be issued under the Constitutional Amendment ratified November 5, 1968, authorizing the issuance of bonds in the amount of $350,000,000.00. The agreement also provided that Bache & Co., Inc. was to receive as compensation the sum of ninety (90) cents for each $1,000.00 of the principal of the bonds sold, the aggregate of such compensation being $81,000.00, the amount of the claim of the petitioner for such services.

Pursuant to the agreement Bache & Co., Inc. prepared a comprehensive official statement dealing in detail with the financial condition of the State, its existing bond issues, the revenues available for the payment...

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