State ex rel. Washington Toll Bridge Authority v. Yelle

• Decision Date: 01 October 1940
• Docket Number: 28207.
• Citation: 105 P.2d 813,5 Wn.2d 539
• Parties: STATE ex rel. WASHINGTON TOLL BRIDGE AUTHORITY v. YELLE, State Auditor.
• Court: Washington Supreme Court

105 P.2d 813

5 Wn.2d 539

STATE ex rel. WASHINGTON TOLL BRIDGE AUTHORITY v. YELLE, StateAuditor.

No. 28207.

Supreme Court of Washington, En Banc.

October 1, 1940

Original mandamus proceeding by the State of Washington, on the relation of the Washington Toll Bridge Authority, against Cliff Yelle, as Auditor of the State of Washington, for a writ of mandate requiring the State Auditor to sign and execute certain bridge revenue bonds.

Writ denied.

Smith Troy, Atty. Gen., and P. H. Winston, of Olympia, for petitioner.

Thos L. O'Leary, of Olympia, for respondent.

JEFFERS Justice.

This is an original mandamus action instituted by the Washington Toll Bridge Authority (hereinafter referred to as the authority) for a writ of mandate requiring the state auditor to sign and execute Tacoma Narrows Bridge revenue bonds (hereinafter referred to as Narrows bridge bonds) and Lake Washington Bridge revenue bonds, and to permit and authorize the use of a facsimile of his signature upon all the coupons attached to such bonds.The application for the writ is supported by the affidavit of P. H. Winston, assistant attorney general and acting secretary of the authority.The material facts shown by this affidavit, and which are admitted by respondent, may be stated as follows:

The authority was created by Laws of 1937, chapter 173, p. 654, Rem.Rev.Stat. §§ 6524-1 to 6524-21, and is a state agency composed of the governor, state auditor, director of finance, budget and business, director of highways, and director of public service.At the time of this action, the authority was composed of Clarence D. Martin, governor, chairman of the authority; Cliff Yelle, state auditor; Don G. Abel, director of public service; Lacey V. Murrow, director of highways; and Olaf L. Olsen, director of finance, business and budget.

By § 6524-3, supra, the authority is empowered to provide for the establishing and constructing of toll bridges upon any public highway of this state, whenever the same is considered necessary or advantageous and practicable for crossing any stream, body of water, gulch, navigable water, swamp or other topographical formation, whether the same is within this state or constitutes a boundary between this state and an adjoining state or county.The necessity or advantage and practicability of such toll bridge shall be determined by the authority, and the feasibility of financing any toll bridge in the manner provided by the act shall be a primary consideration, and determined according to the best judgment of the authority.

Section 6524-7, supra, provides for the issuance of revenue bonds, especially providing that such bonds shall constitute an obligation only of the authority, and shall not constitute a debt, liability or obligation of the state of Washington.Section 6524-8 provides that all bonds authorized under the terms of the act may be issued and sold by the authority from time to time, and in such amounts as may be deemed necessary, in the judgment of the authority, to provide funds for the construction of any toll bridge or bridges.This section gives to the authority the power to determine the form, conditions, denomination and maturity dates of such bonds, and further provides that all bonds issued under the terms of the act shall be negotiable instruments, and that all bonds issued and sold under or by authority of the act shall be sold on sealed proposals to the highest and best bidder, after such advertising for bids as the authority may deem proper.

It is provided in § 6524-17, supra, that the authority, the officials thereof, and all state officials, are empowered to do such acts and make such agreements not inconsistent with law as may be necessary or desirable in connection with the duties and powers conferred upon them respectively by law, regarding the construction, maintenance, operation and insurance of such toll bridges, or the safeguarding of the funds and revenues required for such construction and the payment of the indebtedness incurred therefor.

The act further provides that all bonds shall be signed by the state auditor and countersigned by the governor, and that all interest coupons shall bear the facsimile signature of the state auditor.

Pursuant to this act, the authority constructed the Narrows bridge (connecting a public street in the city of Tacoma and primary state highway No. 14) across the Narrows, a navigable body of water of Puget sound.The estimated cost of this structure was $6,400,000, which cost was met by procuring from the Public Works Administration an out and out grant of $2,880,000, and a loan from the Reconstruction Finance Corporation of $3,520,000 for which Narrows bridge bonds in the sum of $3,520,000 were issued to the R. F. C.These bonds bore interest at the rate of four per cent per annum, and all were to mature in thirty years.They were redeemable Before maturity upon payment of a specified redemption premium.

The authority constructed the Lake Washington bridge (connecting a city street of the city of Seattle with secondary state highway No. 2A, in King county), and to meet the cost of construction, the authority secured from the P. W. A. and out and out grant of forty-five per cent of the estimated cost of this bridge, or $3,794,400, and issued and sold to A. C. Allyn & Company bonds in the amount of $5,500,000, to meet the additional fifty-five per cent of the estimated cost.The Lake Washington bridge bonds all were to mature in thirty years, and provided for interest at four per cent per annum.These bonds also provided for a redemption premium.

The Narrows bridge was substantially completed and opened for traffic on July 1, 1940, and the Lake Washington bridge on July 2, 1940.

A reserve fund was provided for in each case.

At the time these bridges were opened to the public, there remained to be done some work on each bridge, which is necessary and could not have been anticipated, and it will be necessary to have a small amount of funds beyond that at the present time available.

In about two months operation, the tolls collected from these bridges exceeded the original estimates, and the authority began to consider the possibility of a refinancing program, by which some additional funds could be secured and at the same time both bridges could be refinanced on a more favorable basis.After some inquiry and investigation, an offer was obtained from A. C. Allyn & Company to furnish funds for the refinancing of both these bridges, and to accept toll bridge revenue bonds as security therefor.On August 26, 1940, the authority adopted a resolution accepting the offer of A. C. Allyn & Company.Under the new program, the Narrows bridge refunding bonds will mature in fifteen years, and the Lake Washington bridge bonds in twenty years.It is stated in the affiadvit, and not disputed, that under this new arrangement the reduction in annual interest and in redemption premiums, and the reduction of the inactive reserve fund, together with a shortening of the maturity dates of the bonds, will result in a great saving to the authority, and to the state of Washington.The saving under the agreement with A. C. Allyn & Company is estimated by the state auditor at $1,626,144.A considerable portion of this saving is due to the fact that A. C. Allyn & Company and associates have secured all the Narrows bridge bonds, in the amount of $3,520,000, and have made them available to the authority, under the agreement for refinancing, at a price of 100 3/4 instead of 105, as provided in the agreement between the authority and the R. F. C.

While no call for bids on the refinancing scheme was made by the authority, and no advertisement was ordered by the authority, information relative to the refinancing scheme and the purpose of the authority became known to the public, and was advertised through the medium of various newspaper articles, copies of such articles being attached to the affidavit.

The state auditor, in a letter to the authority, while expressing sympathy with the plan of refinancing, and recognizing the saving to be accomplished thereby, stated that he questioned the power of the authority to issue bonds for the purpose of refinancing toll bridges; that he also questioned the power of the authority to legally enter into such a refinancing plan upon an offer produced by negotiation rather than in response to a public call for bids; and that therefore he would refuse to sign any bonds issued and sold under the proposed refinancing plan, until the legality thereof was determined, or he was ordered so to do by a court of competent jurisdiction.

On August 26, 1940, an order was issued directing the state auditor to appear on September 9th and show cause why the writ should not issue.A return was filed by the state auditor, in which he demurred to the application, upon the ground that it did not state facts sufficient to constitute a cause of action, or to justify the issuance of the return applied for.

Two questions are presented for determination.The first question is whether or not the authority, having issued and sold revenue bonds for the construction of these two toll bridges, has the power, either express or implied, under the act, to subsequently issue bonds for the purpose of refinancing the cost of such toll bridges.The second question is: If the authority has the power to issue bonds for the above purpose, has the authority the power to sell the refunding or refinancing bonds by private negotiations, rather than pursuant to advertising for bids, as provided by the act?

As we have stated, the authority was created by chapter 173, Laws of 1937, and in State ex rel. Washington Toll Bridge Authority v. Yelle,195 Wash. 636, 82 P.2d 120, the act...