Town of Gila Bend v. Walled Lake Door Co.

• Citation: 107 Ariz. 545,490 P.2d 551
• Decision Date: 12 November 1971
• Docket Number: No. 10435,10435
• Parties: TOWN OF GILA BEND, a body politic, Appellant, v. WALLED LAKE DOOR COMPANY, a Michigan corporation, Appellee.
• Court: Arizona Supreme Court

Page 551

490 P.2d 551

107 Ariz. 545

TOWN OF GILA BEND, a body politic, Appellant, v. WALLED LAKE DOOR COMPANY, a Michigan corporation, Appellee.

No. 10435.

Supreme Court of Arizona, In Banc.

Nov. 12, 1971.

Rehearing Denied Dec. 7, 1971.

Peter A. Neisser, Phoenix, for appellant.

J. William Moore and Patrick E. Burke, Phoenix, for appellee.

UDALL, Justice:

On August 20, 1968, Walled Lake Door Company (hereinafter the 'Company'), a Michigan corporation qualified to do business in Arizona, filed suit against the Town of Gila Bend (hereinafter the 'Town'), a body politic organized under the laws of this State, a number of individuals who were members of the Town Council of Gila Bend, and one A. H. Stout, dba Stout Water Works (hereinafter 'Stout'), in the Superior Court for Maricopa County. The complaint asserted that the Town breached a contract with the Company to construct and install a ten inch water main from the Southern Pacific Railroad Company (hereinafter 'Southern Pacific') water tank in Gila Bend for approximately six thousand feet to the Company's plant in Gila Bend. Trial before the Court, sitting without a jury, resulted in judgment for the individual defendants but against the Town for costs of suit, money damages in the sum of $24,381.00, and specific performance of the contract. Said judgment ordered the Town to:

'* * * forthwith commence construction and installation of a ten inch water main beginning at the Southern Pacific Tanks in Gila Bend, Arizona, and proceeding a distance of approximately 6,000 feet to the Plaintiff's facility in Gila Bend, and the defendant Town is further ordered to complete said construction within a reasonable time; and it is further ordered that the approval of the construction plans and specifications be obtained from the defendant A. H. Stout, dba Stout Water Works, provided, however, that the said A. H. Stout, dba Stout Water Works, shall not unreasonably withhold his approval of said construction plans and specifications'.

From this judgment the Town appealed. The facts necessary for a determination of this matter are as follows: For a number of years prior to eruption of this dispute, the Company has owned and operated a processing or cut stock plant in Gila Bend. In April of 1966, the Company's Gila Bend plant was substantially destroyed by fire, resulting in approximately $335,000.00 damage. Reconstruction of the plant was begun in March or April of 1967. At that time, Dale C. Campbell, vice-president of the Company, flew in from Michigan to attempt to 'negotiate with the City for the providing of water or, in failing to do that, remain here to find a new location for the plant.' (T.R. 90). Mr. Campbell met with the Town, through its Mayor and Town Council, and demanded that the Town provide the Company with assurance that adequate fire protection would be provided for the Company. He informed the Town that the Company could not absorb the high premiums it was forced to pay for fire insurance, resulting from the lack of an adequate water supply for fire protection, and that the Company would be forced to cease reconstruction of its plant and relocate elsewhere if negotiations failed.

In May or June of 1967, the Company entered into an agreement with the Town, whereby the Town agreed to construct and install a ten inch water main from the Southern Pacific water tanks, a distance of approximately 6,000 feet, to the Company's plant. In return, the Company agreed to rebuild the destroyed portion of its plant, replace equipment ruined by the fire, install additional equipment, and contribute $8,000.00 towards the purchase of a 'pressure booster pump' to insure continued pressure even in the event of a power failure. To date, the Company has fulfilled the duties and obligations imposed upon it under the terms of the contract. ¹ The Company has expended approximately $300,000.00 in rebuilding the fire-ravaged portions of its plant, it has installed new and additional equipment, it has continued its operations in Gila Bend and, as a direct result of the Town's failure to install the water main, has incurred many thousands of dollars extra expense in the form of increased fire insurance premiums. The Town, on the other hand, has not carried out its part of the bargain. At the time the contract was entered into, no funds had been budgeted for any such purpose; although approximately one month later, when the succeeding year's budget was drawn up, $7,500.00 was budgeted for beginning construction of the water main.

In furtherance of the above-mentioned agreement the Mayor called a special meeting of the Town Council on May 19, 1967, at which council meeting Resolution No. 37 was 'passed, adopted and approved' by unanimous vote. Resolution No. 37 stated that because the increased cost of fire insurance had made it impractical for the Company to continue its operations in Gila Bend, the Town would 'proceed without unnecessary delay with the installation of a 6000 foot, 10 inch water main to run from the base of the water tank at the water company to the 4 inch hydrant at the Walled Lake Door Company'. It further resolved that plans and specifications for said water main be secured immediately, ordered an immediate review of available sources of financing said project and declared an emergency to exist.

Resolution No. 38, approved and adopted by unanimous vote on May 24, 1967, ordered that a special election be held on June 16, 1967, for the purpose of approving the Town's contract. The election was held on June 16, at which time the electorate, by majority vote, authorized the Town to proceed with construction of the water line.

Subsequently, a proposed agreement between Stout and the Town was drawn up and submitted by the Town to the Arizona Corporation Commission for approval. This agreement was approved and notice thereof was mailed to the parties on November 2, 1967. Said agreement was to allow installation and connection of the water main to Stout's existing water lines and established the future ownership, operation and control thereof. The agreement was, however, entered into with the understanding that it was to be subject to Stout's 'right to review all plans for installation of said lines and to approve or deny such plans within reason.' (A.R. 87.) To date, Stout has approved neither of the two plans submitted.

On August 20, 1968, negotiations for construction and installation of the water main having reached an impasse, the Company filed suit. Trial before the court, sitting without a jury, resulted in judgment for the Company. From this judgment the Town appealed. The issues presented on appeal are as follows:

I. The lower court exceeded its jurisdiction when it ordered specific performance with respect to Stout Water Works, a public service corporation.

In sum and substance, the Town argues that only the Arizona Corporation Commission has the authority to supervise and regulate a public service corporation and the Superior Court, therefore, had no jurisdiction to substitute itself for the Commission in ordering Mr. Stout not to 'unreasonably withhold his approval' of construction plans and specifications submitted to him. While we agree that only the Corporation Commission has the authority to supervise and regulate the activities of a public service corporation, we fail to see how the court's action, in ordering Stout not to unreasonably withhold his approval of a project which the Corporation Commission had already approved, ² constituted an illegal attempt to regulate the public service corporation.

II. The lower court exceeded its jurisdiction in ordering specific performance affecting a public service corporation which had not been joined as a party.

The argument is advanced that Southern Pacific, the owner of the water tank to which the Town plans to connect the water line, is an indispensable party and the court erred in failing to order its joinder.

An indispensable party, under Rule 19, Rules of Civil Procedure, 16 A.R.S., is one who has such an interest in the subject matter that a final decree cannot be made without either affecting his interest or leaving the controversy in such condition that a final determination may be wholly inconsistent with equity and good conscience. The test of indispensability in Arizona is whether the absent person's interest in the controversy is such that no final judgment or decree could be entered, doing justice between the parties actually before the court and without injuriously affecting the rights of others not brought into the action. Bolin v. Superior Court, 85 Ariz. 131, 333 P.2d 295 (1958); Siler v. Superior Court, 83 Ariz. 49, 316 P.2d 296 (1957).

Southern Pacific's absence from the action presented no impediment to final adjudication of claims raised under the contract. It was not a party to the contract, nor was it to be involved in or affected to any substantial extent by this action. Its sole involvement with this action is that the water main is to be hooked into its water tank. Since water, to be drawn from the tank, is to be used solely for fire protection purposes the only time that the Company will draw water Through Southern Pacific's tank is if a fire should break out in the Company's plant.

Clearly, the court could have and did enter a final judgment in the action, doing justice between the parties actually before the court, without injuriously affecting the rights of others. The fact that the court ordered the Town to commence construction of the water main from the Southern Pacific tank did not, in any sense of the word, make Southern Pacific an indispensable party.

III. The agreement violated Article 9, Section 7 of the Arizona Constitution.

Counsel for the Town contend that the Town cannot lawfully construct the water line without violating Article 9, Section 7 of the Arizona Constitution, A.R.S. This section provides, in essence, that a town may not make gifts,...