Chemical Bank v. Washington Public Power Supply System

worthy to be admitted Wright proven Mr. has himself I therefore dissent. practice. JJ., Pearson,

Utter, Dolliver, concur with Wil- liams, C.J. En November 49868-7. Banc. 1984.]

[No. Bank, v. Public Chemical Appellant, Supply System, Appellant, Public Power Utility al, et District No.

Respondents. by Betts, P.S., Mines Mines, Patterson & Michael (Robert Ralph Mullen, Simmons, F. L. S. McAfee, Richard counsel), appellant Cravath, Moore, and Swaine & for Chemical Bank. Dwyer, by

Culp, Grader, Guterson & Richard C. Yar- muth, Coad, Marritz, Michele Earle Robert O. J. appellant Sup- Jr., for Public Power Hereford, ply System. Honeywell, Thomas, Malanca,

Gordon, Peterson & O'Hern, Malanca, Kieffer, Albert R. Kenneth G. respondent Washington Cohen, Donald S. for Public Utili- Group. ties Hokanson,

Helsell, Fetterman, Martin, Todd & Rich- Jurca, Cochran, White, David F. and Linda J. for ard S. respondents Association, Inc., et Columbia Rural Electric al. Lowery, Burt Bullitt, John D. and Thomas W.

Stimson (of Walkinshaw), Riddell, Williams, & Bullitt for respondents. Grey Bayley, by Hugo Jr., P.S., Oswald, E.

Jones, & Pageler, Margaret L. A. Goldfarb, A. Richard and James Hanigan; McNally George Miller; F. and James P. McNally respondents City Ellensburg, Stewart, et & al. Tomlinson, H. Powell, Miller, R.

Lane, Moss & John Timothy respondents Sorg, Jr., Brown, and F. for Peter Oregon PUD's. Phillips, Martin, P.S., and Cairncross, Clark &

Hillis, Gregory E. Schumacher, Hillis, F. and L. Michael Jerome respondents. Keller, 9for Ingvalson,

Dwight for Halstead & Halstead and A. respondent Association. Rural Electric Benton Thayer Brown, M. for Drummond, Robert

Brown, & Light respondent Co. Inland Power and Berry, Mat- and Ernest C. Thoreson, Yost & Matthews (Robert Schlesinger, & H. and IV thews Jaffe Jaffe counsel), intervenors. Armstrong, Alan Allison, S. P. Sharon John R. City Seattle, amici curiae. on behalf of Sherbrooke McKay Charles Webb III on D. behalf Michael Committee, amici 4 and 5 Bondholders WPPSS National curiae. court in case first came before our J. This Rosellini, WPPSS, 99 Wn.2d 666 P.2d 329 Bank v.

Chemical I) (1983) (Chemical issue of Bank for resolution of the public utility municipalities districts whether 28 (PUD's) statutory authority agreements to enter into had (WNP) plants Washington We nuclear and 5. to build authority, express implied, statutory existed that no held for action accordance with the case and remanded opinion. summary judgment of all favor entered

The trial court (respondents) On WNP and WNP 5. Sys- Supply appeal, appellants Public Power (WPPSS) trustee, Chemical and the bondholders' tem judge's multiple challenges to the trial order Bank, raise summary judgment.

Appellants in Chemical our decision review of also seek Appellate Procedure of Rule of Bank I under the terms 2.5(c)(2). background, legal in Chemical discussed This factual and primary legal complex. exceedingly issues I, Bank opinion length can be summarized at this discussed follows: Questions

Procedural in Chemical its decision 1. court reconsider Should this I? Bank summary judgment judge's granting

2. Did the order trial proper scope of the in favor of all defendants exceed declaratory judgment Bank? action initiated Chemical any Are to intervene

3. bondholders entitled stage proceeding? action at this in the Obligation Contractual Washington municipalities 4. Do the and PUD's have statutory authority, implied, express either to enter into impose dry rate- contracts which holes on their risk of payers? Washington municipalities If the and PUD's did not

5. initially statutory authority con- have to enter into these subsequently ratify agree- Legislature tracts, did the ments? holding judge that, err in because the

6. Did the trial Washington munici- to the contracts were unenforceable as they palities PUD's, as to the were also unenforceable (a) remaining theories: under of these three defendants (c) (b) indivisibility commer- contract? mutual mistake? impracticability? frustration and cial Availability Equitable Remedies contractually obligated If the are not 7. deny- they estopped from bondholders, are nonetheless obligation

ing law notions under either common estoppel Code? 8 of the Uniform Commercial article invalid, the bondholders none- If the are

8. contracts participants? entitled to restitution from theless Claims Constitutional obliga- participants' contractual 9. Did the release rights? violate the bondholders' constitutional tion case as follows: of this is Our resolution ggQ

I Procedural Preliminaries below, we believe reconsidera- For the reasons discussed appropriate. Bank I decision Chemical We tion our scope summary judgment order did not exceed find the declaratory judgment the bond- action and conclude denied. motion to intervene should be holders' II Obligations

Contractual Bank I and in Chemical We herein affirm our decision Legislature appellants' arguments reject ratified judge's We also affirm the trial the ultra vires contracts. obligation remaining participants' release of the 60 grounds frustration and mutual mistake. of commercial

III Obligations Equitable equitable origins estoppel review of the historical Our applied the doctrine should not be to the us that convinces statutory equivalent case. We find that the facts of this estoppel equitable Code, under the Uniform Commercial inapplicable. 62A.8-202, is RCW

IV Claims Constitutional appellants' violation of state federal con- We find no rights. stitutional the Case

Statement Procedurally, following before the court this case comes summary grant judgment judge's the trial decision to defendants/participants in WNP and WNP 5. of all favor I extensive factual recitation. Chemical Bank contains an pertains following addition, In information present action. agency municipal corpo- joint operating and

WPPSS is public utility composed districts of 19 ration provisions was 1957 under the and four cities. It formed public util- That statute allows cities or RCW 43.52.360. operating thereof to form an ity districts combinations operat- agency purpose acquiring, constructing, "for . . . and other facilities ing owning plants, systems electric generation, energy transmission of and/or after power." provides The statute further such an formed, any may or PUD agency city other become and affirmative vote of a upon application majority member may its members. A withdraw provided member "[t]hat all contractual incurred while a obligations member shall in full agency may remain force and effect." The be dis- solved upon agreement unanimous of its members and members, "the after for the making provisions payment of thereupon all debts and shall hold the obligations, assets thereof as tenants in common." 1970's, early WPPSS started construction of three 1, 2,

nuclear power plants, WNP WNP and WNP 3. The developed were projects conjunction with the Bonneville Although plants Power Administration. those also ran into trouble, it is subsequent financial the fate of two plants, 4WNP and WNP which concerns us here. Plans for these were plants developed when 88 participants, respondents, joined with WPPSS and Pacific Power and (WNP Light Company only) to obtain Each financing.1 an identical participant signed 63-page participants' agree- (PA) July ment dated 1976. adopted provided

WPPSS then a bond resolution which for the of and the issuance rev- plants construction both many parties' enue bonds. As of the claims stem from PA, analysis a detailed interpretation of this docu- necessary.2 ment is I, in Chemical Bank the PA provided

As noted that each participant purchase Project Capability" a "share of tives; 1Respondents and Oregon PUD's; include 9 PUD's. Washington irrigation Washington cities; district; ^[7] Oregon 43 rural electric cities; 5 Idaho cities; coopera ^[19] appendix page 2A11 references are to the bound volume submitted as appeal. record on any capability share of the right purchase and "a System plants Supply other undertaken generating [the] PA, ..." at 2. was defined as Project capability if energy, any, electric which power the amounts of any capable particular at Projects generating the time Plants times either or both of the (including when operation operable operating or the thereof are suspended, with, reduced or cur- interrupted, interfered tailed, any or in for reason part each case whole whatsoever), Project less station use and losses. par- addition, agreement gave each participants' individually rep- rights, through certain both

ticipant As appellants committee. participants' resentatives on a con- granted significant committee participants' claim of its function is participants, analysis to the detailed trol appropriate. than composed was be of not less

The committee were participants nor more than seven members and two would their representative which vote designate entitled 15(a). was participants' PA The committee shares. § during least the construction quarterly to meet at required 15(b). be PA Committee could projects. meetings of the § however, with representatives percent if anytime, called Casting individual requested. shares so participant com- they represented, each share participant's votes for in the to vote the shares required members were mittee PA represented. they requested by manner 15(b), at 40. § procedures also detailed participants' agreement

The to the committee of information from WPPSS the transfer participants' participants. and interested members was the commit- provide that WPPSS agreement stated requested follow- so any participants who tee and ing information: Capability. of Minimum

Determination (Section therein budgets changes Construction 8(a)). order, any approval change contract or

Award con- $2,000,000, or such other in excess of in either case Committee. by Participants' as determined tracts (Section annual costs and revisions thereof Budgets of 8(b)). therein, relat- Plan, and determinations changes

Fuel (Section 9). thereto ing (Section 10). schedules

Operating limits and choice coverage, including Insurance (Section 11). insurers if in to a repair damage Project

Estimates of costs of $5,000,000, repair excess of recommendation whether in in part whole or or to remove from service and con- repair struction budget Project. minimum in salvage

Sales of materials excess of such by Participants' amount as is established Committee. an Change architect-engineer.

Proposed Bond Resolutions.

Any proposal by Participants' made Committee mem- representing Participants' bers Shares voting rights of or more. 20% acquisition

Construction or of Nuclear Project No. 5 22(b) to Section of the pursuant Ownership Agreement. Repair pursuant of Nuclear No. 5 Project to Section 16(b) Ownership Agreement. Supply System's

Increase ownership interest Project pursuant Nuclear No. to Section 20 of the Ownership Agreement.

PA 41-42. 15(c), at § committee, participants'

Members of the representing 20 shares, or more of the could percent disapprove of in the action WPPSS above areas and could force the project Using matter to be reviewed consultant.3 the participants' the record indicates that commit- power, disapproved budget disapproved tee the 1983 annual damages a contract settlement because the allocation of "inequitable." 5 was between WNP 3 and WNP Finally, granted rights were certain They project were a share of completed plants. given plants' have the capability, right output adjusted and the PA If termina- projects to meet their needs. 9. were § consultant, project his task was to determine 3If a matter went before a utility practice. prudent PA 16. whether WPPSS's actions conformed with § participants' projects' ted, to the assets were credited agreement, §PA 13. to this WPPSS accounts. Pursuant worth in 14 series. When billion of bonds $2.25 issued projects overruns, WPPSS to ran massive cost decided into completion. Many par- plants prior the the to terminate ticipants obligations. repudiated then their Bank, bondholders, filed a the trustee for the Chemical County declaratory King Superior judgment in action seeking legal May 1982, in determination that the Court contractually payments participants to were bound to make pursuant participants' agreement payment to the WPPSS schedule. judge granted Bank's

In late the trial Chemical summary partici- judgment. He for held that the motion pants required respective were to fund their shares of the projects bonds, if even were never debt service on completed. were He also ruled decommissioning required the termina- to fund costs of Supply System projects. and further that the ted He found statutory authority Washington participants had judge participants' agreements. The trial into the enter obligations municipal participants' were that the concluded Washington's incur- constitutional limit on violative of not ring power delegation debt, unlawful and were an discretionary authority. granted and review This court Washington judge's rejected conclusion that trial authority municipalities these to enter into contracts. had court for action case returned to trial The was opinion. Several defendants moved with the accordance summary judgment mandate. based on court's summary judgment judge in favor all the ordered provided, part: The order defendants. Washington Washington compliance the mandate of 1. Supreme Court, the defendants which municipalities Washington

public utility districts or Agreement authority as to into said and to enter lacked them the Agreement invalid, vires, initio, ab is ultra void unenforceable; ineffective and

gg5 ultra is Participants' Agreement 2. Inasmuch as the unenforce- initio, invalid, ineffective and vires, ab void public Washington which are to the defendants able as municipalities, and utility districts or is also inef- thereof, Participants' Agreement reason defend- moving as to all other unenforceable fective and (a) defendants, grounds on the all participant ants and the condition of sub- indivisibility and failure of contract stantially (b) mutual mistake as participation, 100% and utility districts public of Washington the municipalities tration of (c) frus- Agreement, enter into the impracticability. purpose 11, 1983, 2-3. at Judgment, August Order and contentions objections then all rejected The court by Chemical Bank and to this motion opposition raised WPPSS, concluding any participant other moving

none of the defendants make payment ... obligated defendant defendant, to Chemical or WPPSS, any or to other or . . . by issued WPPSS or holder of bonds purchaser 11, 1983, at 3. Judgment, August Order set out review to resolve the issues granted This court above.

I Procedural Preliminaries Bank I A. Reconsideration Chemical of in Chem- statutory authority was addressed The issue of Nonetheless, seek review of that appellants Bank I. ical 2.5(c)(2). of RAP provisions decision under the is appropriate that reconsideration Appellants urge case, by the issues raised importance of the because by the reconsideration is authorized Rules and because Procedure. Appellate 2.5(c)(2) states:

RAP (2) appellate Court Decision. The Prior Appellate the propriety review may party at the instance of court of an earlier decision court in the same appellate of the served, decide the and, best be justice where would case opinion of appellate court's case on the basis of review. at the time of the later law this application this rule notes that A comment by best served when would be mandatory justice is section of the later review. the law at the time a reexamination of law, predecessor to the referring states prior The comment discretionary, superseded. is rule as author statutory complexity

We conclude the this to thousands importance litigation issue and the ity final principles between a balance require of individuals and the Procedure Appellate in the Rules of ity embodied Moreover, we note consideration those involved. interests of appeal in this second the first time raised for of issues in Chemi decided discussion of issues necessity involve reevaluate our decision I. therefore first cal Bank We will to those issues new Bank I and then turn in Chemical so, however, procedural two other doing Before appeal. must be addressed. matters

B. Intervention a motion six bondholders issue arises from The final base their motion on Intervenors intervene this action. 7.24.010. CR and RCW provisions permitted, upon be rule, intervention should By court timely application, right an unconditional (1) confers when a statute claims an interest

intervene; applicant when the or is the sub- transaction which property to the relating disposi- he is so situated of the action and ject impair matter may practical as a of the action tion interest, unless protect ability his impede by existing represented adequately interest applicant's parties. 24(a), part. in pertinent

CR declara- governing rule specific states the 7.24.110 RCW provides: It tory judgments. shall be persons is all declaratory sought, relief

When would any interest which have or claim who parties made be affected shall declaration, no declaration and by the pro- to the parties not persons rights prejudice ceeding.

887 636, Ass'n, Wn.2d Tel. 87 v. Poulsbo Rural In Williams (1976), was characterized this statute P.2d 1173 555 an failure to include The held that court jurisdictional. required remand i.e., party, an essential party, affected Williams, sought This is the relief at 643. case. bondholders. this action Court remand requests "that this

The motion an give proceedings trial court for further to the back holders of the Bonds holders and former for all opportunity The inter- proposed party plaintiffs." this action as to join will be proceedings they further such venors suggest which Chemical Bank has claims position litigate in a may precluded pur- be from made, various reasons but for court, The or both. in state court or federal either suing, not previ- would also add claims in intervention complaint in new bring and would litigation, made in this ously states, example, negligence complaint defendants. attorneys. against engineers claims malpractice 241, P.2d Pickering, v. 85 Wn.2d 533 Martin Relying on it to the motion note that (1975), responses the various timely. is not does note, however, declaratory statute judgment

We Williams, Also, in this court's timely exception. have a parties join the failure to interested characterization defect jurisdictional sug- as a action declaratory judgment hand, necessary. On the other timely element no gests even when timely application, clearly requires CR This to intervene. right an unconditional confers statute has way the statute conflict between apparent an leaves rule. and the court interpreted been rules of court statutory provisions When conflict, rule gov the court Supreme Court by adopted P.2d 96 Wn.2d King Cy., v. Emwright erns. much however, is not so (1981). Here, the conflict our it is between the court rule as statute and between believe rule. We and our court of the statute interpretation timely requiring in favor of resolved must be this conflict right is a matter intervention even when application, by granted statute. management litigation

First, efficient can be achieved only by timely application.4 Here, instance, the bond- require reevaluation of holders' motion to intervene would already by parties by argued matters determined require duplication in the trial court. This would turn by attorneys judicial system staggering at a work cost to all. principles finality weigh requiring

Second, in favor timely application. potential here, Where, as thousands of intervenors/plaintiffs exist, the defendants to the action by expected brought each bond- cannot be to defend action with the initial result. holders dissatisfied timely application required Our conclusion that dis- poses motion, of the bondholders' which was not filed until stages appellate process. reached the late this action subsidiary question whether We turn now to by litigation. bondholders are bound the results of this The judge's including claims, trial order released all the bond- declaratory against participants. holders', raised party judgment statute, however, states that an interested prejudiced by joined who is not cannot be the results of the certainly parties Since the bondholders are who declaration. litigation, interest in the we must decide whether have an interpreted literally. so, If of the statute will be this section portion pertaining of the order to the bondholders that must be struck. improper,

We believe that this result would be designated parties here, have where, the interested representative. stated that the bond The bond resolution represent trustee, i.e., Bank, was to all bondholders.5 Chemical capacity for the ical Bank has served Chem Ass'n, language v. Poulsbo Rural Tel. in Williams 4To the extent result, opposite supra, suggests the it is overruled. provided, 5The bond resolution inter alia: Trustee; by Direction of Action Bondhold 11.4. Suits Bond Fund "Section ers; Receivership; Relinquishment Projects; If an Event of Control. Possession of action, pressed the history vigorously entire of this circumstances, bondholders' claims. Under these the bond- by their desig- holders must abide the results obtained representative. Finally, nated claims intervenors raise being to the securities' action that is now tried pertain claims, intervenors federal court. For relief on those actions, seek relief that forum. As to the contract should representative we has fulfilled the designated hold contemplated by function the intervenor representative statutes. The motion to intervene is therefore denied. remedied, happen and shall not have been waived or then and in of Default shall Trustee, every case the Bond Fund either in its own name or as trustee of an such trust, attorney express or as in fact for the holders of all the and the Bonds cou- thereto, any pons appurtenant capacities, agents or in more one or of such its attorneys, empowered proceed and shall be entitled and forthwith to institute suits, proceedings equity and at in such actions law or for the collection of all protect rights in with sums due connection the Bonds and to and enforce its rights specific per- the the holders of the of Bonds under the Resolution for the contained, any any formance of covenant herein or in aid of the execution of power granted, System accounting against herein or for an the as trustee of an trust, any express legal equitable right in the enforcement of other or as the Trustee, by counsel, being Bond Fund advised shall deem most effectual any Bonds, rights rights perform enforce of its or the of the holders of the or to any of its duties under the Resolution. The Bond Fund Trustee shall be entitled trust, empowered, express in either its own name or as a trustee of an or as an attorney coupons appurtenant in fact for the holders of the Bonds and the thereto, any capacities, proof debt, in to file one or more of such such claim, debt, petition may proof of or other document as be neces- amendment of sary to have the claims of the Bond Fund Trustee and of the or advisable order coupons appurtenant any the Bonds and of the thereto allowed in holders of equity, receivership, insolvency, bankruptcy, liquidation, readjustment, reorgani- System. proceedings purpose the zation or other similar relative to the For this attorney hereby irrevocably appointed true Fund Trustee is and lawful Bond coupons appurtenant respective the Bonds and of the in fact of the holders of (and coupons appurtenant of the Bonds and of the thereto successive holders conclusively by taking holding the shall be deemed to have so thereto same Trustee) respec- appointed Fund to make and file the Bond coupons appurtenant thereto tive names of the holders of the Bonds and of debt, debt, claim, petition proof proof any or other doc- amendment of such any becoming any proceedings, payment of such and to receive sums ument thereof, papers and docu- and to execute such other distributable on account ments ..." Judgment Scope C. summary judgment Appellants order entered contend the scope their declar- in this case exceeded the court complaint sought atory judgment Chemical Bank's action. System obligated Supply was a determination payments and that the Partic- the bond holders make Supply payments ipants System obligated make to the were Participants' Agreement. the terms of under August Decision, 17, 1983. Oral pleadings original its now asserts that Bank

Chemical relationship only judicial sought of the determination parties, affirmative claim of rather than an between theory argument First, this without merit. relief. This scope expansion ignores of the own Chemical Bank's action, Bank moved for sum- In that Chemical first action. summary variety mary judgment When of issues. granted judgment issues, Chemical in its favor on these was proper allege exceeded the order Bank did not pleadings. scope of the proceedings original by expanding with its

Moreover, summary judgment motion, Bank invited a Chemical obligations. parties' legal entire determination complain that the determina- Bank cannot now Chemical improper. against it tion was

II Obligations

Contractual Statutory Authority A. challenge appellants' above, first substantive As noted Washington prior munic- conclusion that this court's to statutory authority ipalities to did not have and PUD's addressing spe- agreements. their Before these enter into statutory arguments, review is order. a brief cific authority participants: statutory issue involves 28 This One cat- cities of various classes. and 9 PUD's grants egory these 28 relevant statutes electricity. granted authority purchase with PUD's are to pro- authority 54.16.040, RCW which the terms of under vides: limits, or without its may purchase,

A district within with- for sale and distribution within or electric current construct, limits, purchase, and condemn and out its to, maintain, conduct, operate add and purchase, acquire, works, and distribution lines and plants, transmission current, either operated electric generating facilities for by methods, steam, within or with- or other power, water district, limits, furnishing purpose out its for any persons, and other inhabitants thereof and the including public without within or private corporations, and uses, with limits, electric current for all its to sell and and con- authority regulate full and exclusive distribution, rates, service, use, and charges, trol thereof, free from the and control of price jurisdiction commission, things, all transportation utilities together motors, handle, sell, or lease right purchase, with the to transformers and all other kinds of lamps, necessary and accessories and convenient for equipment use, distribution, . . . and sale thereof: municipal participant grants Each class of has similar See, electricity. e.g., RCW 35.23- authority purchase to 35.27.370(4); .440(43); 35.24.290(3); RCW RCW 35A- RCW .80.010. an addi- statutory provisions creating grant WPPSS purchase electricity. layer statutory

tional a joint operating agency allow creation of Those statutes (1) authority" generate, produce, which "shall have transmit, energy or sell electric deliver, exchange, purchase purposes all such contracts for and to enter into (2) construct, condemn, (RCW 43.52.300(1)); purchase, for regulate facilities lease, operate, develop acquire, (RCW (3) 43.52.300(2)); energy of electric generation or use sale, transmission exchange, into contracts for enter (RCW 43.52.300(3), (4)); to act as energy of electric electricity at wholesale of and sale purchase for agent (RCW do requested whenever so any city or district 43.52.300(7)). liberally are to be construed These statutes RCW 43.52.910. purposes. their to effectuate PUD's cities and grants of statutes category A second authority agencies pur- joint operating for the to enter into developing power. pose 54.44. RCW of nuclear RCW 54.44- utility city percentage "shall a of states that the own .020 facility money any equal percentage of the common to the supplied by property it for the furnished or the value of acquisition own and and construction thereof and shall output percentage like of the electrical thereof." control a participant's liability to 54.44.030 limits a its own RCW any participant assuming from of acts forbids participants' obligation. debt or other may energy also facilities on Cities and PUD's construct city or town con- their own. RCW 35.92.050 authorizes purchase acquire struct, condemn, facilities for city purpose furnishing the or town or its inhabitants electricity. PUD's have similar to construct generating facilities under RCW 54.16.040. reviewing participants' agreement in rela

After I statutes, we Chemical Bank tion to these concluded satisfy statutory agreement not scheme this does (1) public participants. agreement governing the purchase power not a standard contract for irrespective payments due whether because any (2) type It current is delivered. is not the electric acquisition generating project or construction of a auth- previously recognized orized the statutes ownership court, retained no because except upon termination, interest, assets excess project. to very management and a limited role implied power pay an for It is an exercise of guaranty municipal was because there provided no services legal perceive we no services would be (4) Finally, joint necessity powers. it is not such provisions agreement operating 43.52 within the of RCW participants' ability provisions limit the because those energy." buy anything more than "electric I, Chemical Bank at 798-99.

Appellants arguing conclusion, that the court attack this important facts which established control did not address ownership alternatively, and, is a that the issue control requires hearing the merits. which a full on factual one statutory participants argue Appellants had first that all statutory authority. the critical issue to establish As appellants project, cite several is control over the agreement support provisions participants' to theory suffi- exercised control their statutory authority projects. We over the cient to establish supply agreement recognize did some control but that the appellants' position disagree that it was control still ratepayers protect interests of their as con- to sufficient by templated these statutes. upon the reasons set in is based out

Our conclusion Also, I. evidence the limited Chemical Bank additional by respondents gleaned can be from com- control exercised ownership complete paring and, indicia of there- the more present agreement in Pacific fore, control between Power) (Pacific Company Light and WPPSS. Power by percent 5, was, Power, as a 10 owner of WNP Pacific rights ownership agreement, given significant virtue of its participants. granted those to the For over and above participants usually request instance, while the had to keep obligated information, Pacific Power WPPSS was prior significant matters, to confer with it informed on all "any developing proposals and all other and to furnish opera- relating planning, construction, to the information Project." Pacific Power and tion or maintenance of 3(a). Ownership Agreement § WPPSS gave participants' agreement Moreover, where the any pro- proposed rights respondents actions, WPPSS posal to Pacific Power had to include submitted WPPSS reports supporting and all itemized cost estimates 3(c). 15-day analyses. take-it-or- Rather than Section participants, applicable provision Pacific leave-it days approve proposals, given and certain Power was proceed Power's without Pacific could not matters any 3(d). changes approval. in included These Section system, supply type following: architect- site, steam 3(e). Disputes manager. engineer Section construction in between WPPSS and Pacific Power were to be resolved partic- the same manner as those WPPSS and the between 4(e). contract, ipants. The unlike the ownership Section PA, specifically required also WPPSS to award contracts Finally, approval a cost effective fashion. Pacific Power's $500,000. required was contract excess of Section 7(e). hand, participants' on the other was approval, required only on those contracts excess of million. $2 In summary, ownership the Pacific Power and WPPSS than that agreement gave greater control to Pacific Power granted participants. to the Our reevaluation of the statu- tory authority question thus leads us once to the again the participants' agreement grant conclusion did not statutory ownership contemplated control therefore, statutory authority, scheme. No existed.

Moreover, we that reject appellants' assertion ownership essentially of control is a factual question inquiry. participants' agreement and Pacific Power's ownership create the contractual agreement rights of those is a of parties. Interpretation agreements question Co., 401, v. Aetna Cas. & Sur. Kelly law. 100 Wn.2d P.2d 267 agreements next contend that were a

Appellants authority joint operating valid exercise of under the stat- assert, first, They They offer three that arguments. utes. legislative to the statutes demonstrate recent amendments municipalities' authority, citing RCW recognition of 43.52.410, city may that no or district enter which states in portion a purchase participate into a contract "to Appellants conclude that generating project." an electrical and therefore legislative recognition is a this amendment Next, cite an amend- appellants ratification of these debts. provides repay- for a ment to RCW 43.52.550 which now Third, such as these. ment for contracts provision construction the court that the narrow appellants urge their purpose. statutes defeats joint operating on placed appellants' arguments ignore note that Respondents specific which mechanisms for con- provides RCW 54.44 in detail in Chemical plants. As discussed structing nuclear I, addition, attempts we appellants' Bank we find agree. be, at find the above cited amendments to best, statutes. interpretation Nothing a strained those history or the statutes legislative appellants cited most, At themselves authorizes these contracts. specifically attempt amendments represent legislative provide utilities are found to liable for orderly repayment be if does not include the logically the debts. That conclusion were that the debts themselves valid. proposition erred in concluding next contend the court Appellants purchase elec- these were not contracts that contracts states, that tricity. they urge cases from two other Citing statutes, electricity, are to purchase these providing broadly. adequately This issue was addressed be construed I repeated in Chemical Bank will not be here. Simi- legislative interpretation larly, arguments pertaining offer no implied powers previously. Appellants were raised points. reasons alter our decision these compelling Finally, it has been the court in Chemical argued Bank I ignored general powers granted the broad to cities under article 11 of our state constitution. This section persuasive. First, argument has no argument the participants to two-thirds of application governed utility public original our decision. Those within consequently districts and do not come the terms Second, sug 11. the argument improperly Const. art. § be city may exercised general powers gests statutory schemes. derogation specific limitation contemplates Article section 11 itself this are only regulations "as in that it cities to make such allows Here, the Legislature laws." general conflict the governing developed legislation extensive for into contracts utility and districts enter public cities the ownership generating purchase electricity the I, statutes in Chemical Bank those As discussed plants. were ratepayers which protect safeguards contained cannot now be subverted safeguards Those ignored. misplaced general provisions. reliance on constitutional summary, appellants' arguments we find that "new" statutory authority unpersuasive. prior Our decision is therefore affirmed.

B. Ratification Appellants' argument Legislature subse quently agreements equally ratified these without merit. general requires rule, aAs ratification that the act to be specifically acknowledged by ratifying legis ratified be generally Municipal Corpora lation. See E. McQuillin, (3d 1981). tions § 29.10 ed. by appellants

The amendments cited contain no such acknowledgment. adopt appellants' Moreover, we cannot suggestion that the amendments ratification. Ratifica- infer ambiguous dangerous tion inference is an rule and doc- requiring guess Legislature. trine that a court second This we decline to do. Obligation Remaining Respondents

C. Contractual Appellants' challenge judge's next is to the trial order granting summary judgment in favor of those utilities obligations whose contractual were not before court Chemical Bank I. participants, governed by

Out of the total of 88 28 are statutory scheme described above. Since we had con- acting scope cluded that these utilities were not within the authority, judge of their the trial on remand was faced with question municipalities of what effect release of the obligation remaining PUD's had on the utilities. On respondents' summary judgment, judge motion for precedent, ruled that the doctrines of failure of condition impossibility commercial frustration or mutual mistake applied. judge doctrines, concluded, all These released remaining participants' obligations. contractual Appellants challenge arguing order, the trial judge's ignores plain language decision of the contract applicable agree judge and the law. We that the trial incor- rectly precedent analysis, relied on the condition but find

897 the doctrines of mutual mistake and commercial frus- his conclusion that support remaining par- tration both ticipants were not under the contract. obligated (Second)

1. Failure Condition. The Restatement Contracts an event not defines condition as § certain to occur which must performance occur before under a contract An may becomes due. event become a by agreement may condition be a term supplied court. Section 226. The trial ruled judge that section 3 of participants' agreement precedent created a condition to the formation of the contract. That section states that

This Agreement upon shall be effective execution delivery Participants' Agreements by Supply System and Participants Participants' Preliminary whose Shares total 1.0 or more. [100%] this,

PA 3. From the trial judge reasoned that the 100 § (or that) percent substantially of the were required authority to have to enter into the contracts before a duty perform could imposed any partici- be pant. We disagree. authority Section 3 does not establish enter into the contract precedent as a condition the obli- gation of all. Section 3 states simply that the contract takes effect when the participants' agreements are executed. Authority to enter into the contract not mentioned this section and was thus precedent not made a condition to the participants' obligation.

Furthermore, respondents' attempt to establish stat utory authority as a condition of the contract conflicts with the accepted definition of the word "condition". The ques tion of does not involve an event not certain to they rather occur but a status of certain the time parties at above, reason, entered into the contract. For this and that we conclude the trial erred in 3 of judge viewing section participants' agreement as a condition.

2. Commercial Impossibility. Respondents Frustration — assert that section con- participants' 3 of agreement templates percent participation as a part material They the contract. this court's excuse urge decision to g98 participants, obligation percent of the whose was power shares,

total result the contractual release should remaining participants under the doctrine of com- impossibility. agree. mercial frustration We (Second) Both Restatement of Contracts our recognize impossibility case law commercial frustration and may, independent legal occasion, excuse theories that on party's obligations. Recently, contractual this court rec ognized applied Weyerhaeuser and commercial frustration. Stoneway Concrete, 558, Inc., Real Co. v. Wn.2d Estate 96 (1981). 562, 637 P.2d 647 may

The doctrine of be sum- commercial frustration marized as follows: object possibility or forms Where the assumed of a desired by party effect to be attained either to a contract parties it, and on into this the basis which both enter promi- surely object sor frustrated, a or effect is will be causing frustration, in who is without fault duty thereby, discharged from the of who is harmed is contrary promise performing his unless intention appears. (1932). 288, § at 426-27 See of Contracts Restatement also 18 S. Corbin, (3d 1978); Williston, § 1954 ed. 6 A. Contracts (1962). 1356 §§ Contracts plants, finance, these the munici- build or terminate To pality participants vital. Their share of the PUD were projects represents approximately percent 70 of total obligation. Bank I excused these in Chemical Our decision any remaining participants obligations. did not As the purpose, way of we believe frustration contribute this required. obligation of release their is contractual judge held that Mistake. The trial also Mutual 3. parties all were excused because could be municipalities. This mistaken about the applied in Simonson mutual mistake court the doctrine of (1984). 88, 91, 1218 Fendell, v. 675 P.2d 101 Wn.2d requirements: court the doctrine's described agreement party seeking basis A rescind an by cogent clear, and con- mistake show mutual must

ggg evidence that was vincing independently mistake Harris, parties. made both Beaver v. Estate (1965); v. Wn.2d ments, Inc., 409 P.2d 143 Carson Isabel Apart- (1978). 293, 296, 20 Wn. P.2d 1027 App. A is a mistake belief not accord the facts. (Second) Restatement of Contracts § (Second) over, respondents the 60 in involved this issue did not assume the risk that no existed. If anyone 154,6 assumed the risk under the terms of section They bondholders did so. were in position a to obtain judi- cial determination of the authority question, and did not seek such resolution. We respon- conclude release of the 60 dents is therefore warranted.

Ill Availability Equitable of Remedies discussing equitable Before obligations parties, 6 party "A bears the risk of a mistake when "(a) by agreement parties, the risk is allocated to him "(b) aware, made, only limited he is at the time the contract is that he has knowledge respect his to the facts to which the mistake relates but treats sufficient, knowledge limited as "(c) by ground him reason- risk allocated to the court on the that it is (Second) able the circumstances to do so." Restatement of Contracts § (1981). remedy, equi- however, we believe this as well as the other respondents, against Bank I claims the Chemical table placed perspective. must be historical History Equity's

A. dispute equitable result, sides to this seek but Both equity? what is One commentator notes that the term is implies first, In in two distinct senses. the word used right, justice quality. 2.1, Dobbs, § D. Remedies at or moral (1973). judicial sense, the word refers another related entirely separate body judicial to "what was once an separate procedures, rules, remedies, and to the courts juridical Dobbs, 24. D. at administered this mass." Types Equitable Remedies B. Estoppel. Estoppel law as 1. at common existed principle person of affairs a state that a who asserted deny of that state the existence should not be allowed to Equity Lewis, Out- J. thereafter. extended this doctrine. by adopted Equity was The extension lines century English by both law law; and, the 19th the common estoppel equity where: there would be held that (a) by representation words or con- there had been duct, (b) opposed existing law, fact, which was (c) (d) upon, intended to be acted by person upon his detriment was acted whom it was made. Lewis, at 100.

J. history legal recognized English two distinct forms of estoppel acquiescence. estoppel estoppel: promissory Promissory estoppel England as fol- has been described lows: party a transaction words or conduct

Where to the other which— makes an assurance (a) relationship existing legal affect the is intended to them; and between (b) party upon by who thus alters the other is acted position detriment; his to his party in a manner will allowed to behave the first not be promise Having given his his assurance. inconsistent validity. denying estopped its from he is Lewis, 101. J. at estop- English estoppel cases, type in

A found second person acquiescence, may pel by incurs arise "where a expenditure, prejudices belief, himself, in the or otherwise actively passively encouraged by other, that had he property obtain a would sufficient interest justify expenditure." Lewis, at 102. This form of such J. estoppel only can used as a be as a defense but also right Lewis, action. J. at 102.

Estoppel in American law is well but case established estop- unevenly analyzed. appears It that several forms English counterpart, estoppel pel Like Ameri- exist. its limited defensive use can law has been sometimes case affirmatively. used sometimes including Washington's, recognize First, courts, American (Second) promissory estoppel. It is defined Restatement 90(1) (1981): § of Contracts (1) reasonably promise promisor which should A part expect to induce action or forbearance on the person

promisee or a third and which does induce such binding injustice if can be action or forbearance is avoided remedy only promise. enforcement justice requires. granted may limited as breach be equivalent, however, the Restatement Unlike its British estoppel promissory use defense. Nor limit as does not Washington's v. See Famous case law done so. Klinke has Recipe Chicken, Inc., Fried 94 Wn.2d 616 P.2d (1980). equitable estoppel.7

Second, discuss courts promissory estoppel Klinke, this court described both thereafter three elements: represented statement or v. 58. Pasco, As Appellants, discussed asserted; by appellants. Wn.2d act; who (1) above, however, (2) an rely action admission, 611 P.2d 1252 injury on to such the other we find theory, statement or act inconsistent other view party party concept Brief of equitable arising the faith of such more appellant estoppel from admission. complicated WPPSS, with the claim as containing admission, than at 57- Beggs ^[902]

and equitable estoppel:

Equitable estoppel upon representation is based a facts, past promissory while existing estoppel requires promise. Equitable estoppel the existence of a also is defense, only promissory available estoppel as a "shield" or while can used as in a be a "sword" cause of action for damages. Promissory estoppel based on Restatement in long recognized Contracts 90 has been this § may state and serve as the basis for an action for dam- ages.

(Footnotes omitted.) Klinke, and citations at 258-59. Pro- Dobbs, (1973), in Remedies equitable fessor 2.3 agrees § estoppel may only be used as a defense. He notes "estoppel is, statement, shield, according to usual a not a sword. claims, It does not furnish a for a damages basis but Dobbs, defense the claim of the D. against stopped party." at 42. all have strictly

Not cases adhered to instance, Pasco, in v. Beggs rule. For 93 Wn.2d 611 (1980), acknowledged P.2d 1252 this court that the doctrine in and then it estoppel applied municipalities applied Moreover, appears what to be an affirmative manner.8 many estoppel equitable with mingle promissory cases Co., v. estoppel. Magnesite See State Northwest 28 Wn.2d (1947). 1, 182 P.2d 643

Third, specialized estoppel a form of arises a series of by bond cases decided our court and the United States Court at the end of the last This form of Supreme century. by which for we will term estoppel, clarity's estoppel sake recital, prohibits municipality validity a from denying specific of its bonds under circumstances. As these cases are hand, factually similar to the one at a closer look at this estoppel form of is warranted. Pasco, however, Beggs supra, 8A v. reveals that close examination statutory City estopped denying court's conclusion that was from retirement unchallenged plaintiffs court that benefits to the came concluded after squarely Beggs,

findings placed plaintiffs fact within the terms of the statute. at Consequently, provided upon relief was 688. the affirmative court based statute, estoppel. not the doctrine of v. Coloma recital cases is estoppel by early of the One Eaves, In L. Eaves, Ed. 579 92 U.S. purchased who plaintiff a judgment Court affirmed The bonds stated municipal corporation. bonds from law of the of the under and virtue had been issued they the electors with a vote of accordance state noted the Court finding plaintiff, for the township. beyond look purchaser obligated fide was a bona the follow- approval, The Court quoted, recitals. such (16 U.S. Rogers, v. Joseph Township St. rule from ing (1872): Wall.) 644, L. Ed. 328 to aid the construction to issue bonds "Power in a municipality upon conferred frequently is

railroad special condi- manner, certain subject regulations, or recitals if it their tions, appears but qualifications; or these conformity reg- with were issued that ulations, tions, the bonds qualifica- and those conditions pursuant and recitals were incorrect all of these proof that in a suit corporation a defence for the constitute will not the that it was it appears coupons, the bonds or if the who executed municipal the province sole officers had been an ante- not there whether or bonds to decide condition, regulation, compliance cedent was not alleged which it is qualification, fulfilled." cases, the Court (Italics ours.) Eaves, subsequent In at 492. were rule, it even when the bonds applying reaffirmed this debt constitutional municipality's in excess of a issued 255, Rollins, v. 173 U.S. Comm'rs Cy. See Gunnison limit. (1898). Accord, v. Stur- Cuddy 689, L. 19 S. Ct. 390 43 Ed. 304, 190 P. 909 tevant, 111 Wash. noted rationale, in Gunnison the Court its explaining

In recitals makes the on who depended the rule The reliance. public's position justifies their whether noted: Court bonds, a condi- upon issue authorized to

If the officers tion, fact, decide the tribunals the appointed are not will not be condition, their recital which constitutes words, In other where proof. a substitute for accepted as estoppel, an depends upon the bonds validity of instrument, the recitals upon to arise claimed ^[904] them, the existence of to issue

question being power as to executing it is to establish that the officers necessary had lawful to make the recitals and to bonds very ground estoppel make them conclusive. The are the statements those to is recitals official the law authentic public whom final refers for on the subject." information (Italics ours.) Field, Gunnison, Cy. Dixon v. (quoting at 267 (1884)). 83, 360, L. 111 U.S. Ed. S. Ct. 315 promissory estoppel, equitable estoppel addition recital, estoppel by applied our case law has the con representations. to foreclose denial of certain facts or cept then, estoppel the court has evoked prevent injustice To (See gen and laches. estoppel by misrepresentation, pais, Melani, 147, 908, v. P.2d erally Arnold 75 Wn.2d therein.) P.2d 450 P.2d 815 and cases cited than of these terms has obscured rather multiplicity law, however, applicability clarified the and is of dubious therefore, discussion to this case. We to confine our prefer, the courts clearly recognized by of estoppel the three forms and to the the separate and the Restatements doctrines below. ory unjust enrichment discussed "estoppel" 2. Enrichment. Just as the term has Unjust actions, variety widely legal been used to describe a amorphous. equally term enrichment" "unjust that, law, in the common English John Dawson notes many dif- relief enrichment can be found under unjust land, names, remedies for disseisin of including ferent in an action for debt and reme- quid pro quo requirement trust or transfers for equity enforcing canceling dies (1951). Dawson, Enrichment 9 Unjust fraud and duress. J. called restitution. frequently Relief for enrichment unjust circumstances, variety of will be granted Restitution mis- relief for mutual involving those contractual including (Second) See frustration. Restatement take or commercial Fendell, (1981); v. 101 Wn.2d Simonson of Contracts § (1984). 88, 675 P.2d 1218 principles of application general turn now to the

We equity specific to the facts of this case. Application

C. Doctrines 1. Equitable Estoppel. previously As suggested, appellants general principle contend that of equitable estoppel applies to their case because the made representations which were upon by relied the bondholders and resulted in injury. We need not decide whether equita estoppel may properly ble be used an affirmative man ner, we First, conclude the doctrine is inapplicable. equitable although estoppel applied is sometimes to munic ipal corporations, such application is not favored. 1 v. PUD 909, 918, 69 Wn.2d Cooper, 421 P.2d 1002 This dis favor has led courts to conclude that equitable establish estoppel, every particular must proven by be plaintiff clear, cogent convincing evidence. PUD 1 v. Coo per, supra. We believe that plaintiffs have not met burden.

We find the inapplicable doctrine is because the representations relied upon by the bondholders were repre law, questions sentations as to questions of fact. As such, the bondholders should have resorted to a declaratory action to judgment determine the issue of authority. Fur ther, if representations even factual, the doctrine of equitable estoppel will not be applied where parties both have the same opportunity to determine the truth of those Consequently, facts. we have observed: estoppel order to create an it is necessary that:

"The party claiming to have been influenced conduct or declarations of another to his injury, was only himself not destitute of knowledge of the state of facts, but was also destitute any convenient available means acquiring such knowledge; and that where the are known to both parties, facts both have the same means there can be no ascertaining truth, 11 Am. & estoppel." Eng. Ency. Law (2d ed.), p. 434. (Italics ours.) Inc., Leonard v. Employers, Wn.2d 461 P.2d 538 Wechner v. (quoting ^[906] (1915)).

Dorchester, Wash. 145 P. 197 83 question opinion, suggested in the the stat- As earlier utory authority in a have been resolved could and should par- declaratory judgment done, the this not action. As was consequences complain of of their ties cannot now the neglect reason, in the we find that the the matter. For same by participants estopped in the not their recitals bonds. (dis by Estoppel by Estoppel 2. Recital. recital above) is the the doctrine cussed leads us to conclusion that very concept applied limited in narrow circumstances. application. requirements the There are three doctrine's authority municipality into First, must have to enter the Perkins, v. U.S. the See South Ottawa transaction. plaintiff Second, if seeks to L. Ed. the estab estoppel bond, the on individual or lish based recitals entity making authorized to such recitals must be both public recitals, should be and one on whom the make those rely representation. Gunni for the truth of the entitled Cy. supra. recital, Rollins, Third, v. Comm'rs as son concerning estoppel equitable cases, be facts must one only Appellants' of these law. meets one rather than case requirements. Although municipalities did have three authority general transactions, we find enter into participants on the are not the final statutory interpretation by question created these con representation legal rather than tracts, and that was prop in this are factual and are Those issues case factual. erly jurisdiction law. We conclude that the of a court of developed estoppel by recital, as the last doctrine applied century, not be here. should appellants Estoppel Statutory Both 62A.8. 3. —RCW provisions Commercial of article 8 of the Uniform

offer prohibit theory support that our statutes of their Code in obligations. payment denying these from rejected argument judge he believed because The trial precluded I. This Bank conclusion Chemical it was analysis required Thus, a detailed our decision. is in the issue order. repeated

This from the reference argument arises court's municipal participants guarantors. Chemical I, was repeatedly agreement Bank the court stated that essentially payment. an unconditional of Chemi- guaranty 62A.8-201(2) I, 784, 786, Bank cal at 798. provides RCW a an "guarantor that is issuer to the extent of his guaranty obligation security." whether or not his is noted on the The guarantor that a issuer is important conclusion an provisions it the triggers because of RCW 62A.8-202. That provides: section purchaser Even a against for value and without

notice, security the terms aof include those stated the security and made part security by those of the reference instrument, to another indenture or document a or to constitution, statute, ordinance, rule, or regulation, order the like to the extent that the so terms referred to not do conflict with the stated terms. Such a reference does purchaser itself a charge for value with notice aof defect going validity security to the expressly though even security the person states that a it accepting admits such notice.

(2)(a) A other than security one issued a govern- ment or governmental or unit even agency though issued with a defect to its going validity is valid the hands purchaser a for value and without particular notice defect defect unless the involves a violation of constitu- provisions security tional hands of in which case the is valid in the subsequent purchaser for value and without notice of the defect.

(b) (a) subparagraph applies The rule of to an issuer is a government governmental agency which or unit only if compliance either there has been substantial issue legal requirements governing the has received a substantial consideration for the issue as a or the issuer and a particular security purpose whole for the stated the issue for which the has power is one issuer to bor- money security. row or issue the 62A.8-202(1), the rule

RCW Comment 6 to states that recital estoppel by the rule is based on cases discussed comment this section that above. states statute has two criteria for the recital substituted compliance requirement. First, must be there substantial municipality governing Second, issue. with the statute's the stated received consideration and must have substantial power purpose issuer. See Com- must within the be ment, 62A.8-202. RCWA They inapplicable.

Respondents that this statute is assert argue participants Several are not issuers. first support proposition, none of are offered to theories They alleged, persuasive. instance, for we find which only guarantors basis because the are not relationship participants' finding guarantor is the for agreement already ruled invalid. which this court has supported by Respondents' arguments are circular and not authority. evading

Respondents' argument next the terms of 62A.8-202(2)(b) no been chal- RCW is that securities have everyone validity lenged, the bonds. because admits agree- repudiated only participants' Respondents have already agreement not ment, this has been determined security by judge. a the trial Because this conclusion to be appeal, respondents challenged on that it is was not assert appealingly argument sim- the of the case. This is now law history ignores, ple. however, which, case It of this discretionary originally, court on review of an came to this interlocutory appellants obligated such, order. As were not against appeal every adverse decision them. Further- narrowly in review more, court tailored issues on preclude unjust Thus, it Bank I. would be Chemical Respondents' argument procedural grounds. argument is rejected. therefore agree

Nonetheless, PA fall within that the does not we PA conclude the does of RCW 62A.8-202. We the terms security. 62A.8-102 RCW definition of a meet statute's narrowly. security very It states: the word defines requires Article unless the context otherwise In this (a) (i) "security" instrument which A is an registered form; or is in bearer issued (ii) commonly upon type in dealt securities of a is commonly recognized exchanges area in markets or or in for dealt as a medium in which it is issued or investment; (iii) by its terms is series or is either one of a class or instruments; and divisible into a class or series of (iv) participation share, interest evidences a or other enterprise obligation property the issuer. an an or evidences (Italics ours.) participants' agreements bearer, are not issued to

they registered commonly a medium are not dealt fact, investment, for and are not one of a class. (iv) partici- requirements, only applies above pants' agreement. Appellants argue, nonetheless, that participants' component agreement integral of the was an falling bonds within and therefore should be considered as parameters Appellants cite no case of this statute. authority9 pol- proposition compelling for this and offer no icy security extending reasons to this the definition of agreement. participants' agreement

We does not conclude that the inappli- meet this definition. RCW is therefore 62A.8-202 cable. Unjust

D. Enrichment party above, when he As noted must make restitution expense unjustly of another. enriched at has been § Restitution The Restatement Restatement of 1983) (Tent. (Second) con- § Restitution Draft No. princi- general slightly of this tains a different formulation ple. It states: 62A.8-201(2) par support allegation 9Appellants RCW their cite

ticipants' part security. agreement That section states: (2) security guarantor respect obligations to a a is With to on or defenses guaranty obligation is noted an issuer the extent of his whether or not his security. on the address, where, here, invalidity however, a situation as This section does not therefore, decline, separate security. agreement read in rather than the We by appellants. suggested this section as by person of an in- A who a reason receives benefit person's fringement interest, or of suf- loss another to him in the manner other, restitution fered owes unjust necessary prevent enrichment. and amount statements, however, involves the transfer of Each of these require, party It one to another. does benefit from respondents infer, As in the benefit still exist. noted (1937), 1§ of Restitution comment b to Restatement person upon gives if he [a] a benefit another confers money, possession in or other interest the land, chattels, eficial to or at the a some other performs action, in services ben- or choses request other, satisfies debt or any way duty other, to the adds other's only security advantage. He confers a benefit not property another, but also where where he adds to the he expense The "ben- from or loss. word saves other advantage. therefore, efit," denotes form Restatement, at 12. appellants' argu-

The definition of benefit is critical to respondents allege did ment because that the bondholders participants. argument and not confer a benefit on the This question justice requires the related of whether restitution opinion. in this will be later We turn case addressed pertains only argument however, first, to an those which respondents obligations whose contractual were held to be Bank I. ultra vires our decision Chemical Municipal Respondents, citing E. McQuillin, Corporations Matthews, § Finch v. 29.04 (1968), unjust Wn.2d 443 P.2d 833 contend that theory against municipality applied be enrichment cannot substantively agree and, ultra vires. We where the acts substantively below, find the acts for the reasons set out ultra vires. dichotomy virtually substantive/procedural appears in

A every general rule, stated most re- ultra vires case.10 against throughout opinion, grant relief a munici 10As this courts often noted equitable equitable pality Each doc various theories discussed above. under the dichotomy, adopt procedural however. versus substantive trine seems to Thus, though is contained in this section of the discussion of the distinction (1982), cently P.2d 245 Cole, Wn.2d in Noel v. may acting good party, faith, private that states agency agency governmental "had if the recover from power merely it in sought . . . exercised exercise but it procedural means", irregular manner or unauthorized an prohibitum or se, in malum malum action was not and the surpris- policy. manifestly against public Noel, Not at 381. posi- supports ingly, rule their that this both sides assert municipalities Appellants argue had broad that tion. general pur- statutory authority to enter into contracts They plants. electricity generating conclude chase of only procedural is, one, the con- error was a that the ownership clearly interest a sufficient did not set out tracts allega- ratepayers. Respondents protect with the counter already decides the issue Bank I that Chemical tion substantively procedurally were whether the contracts vires. ultra rule. As we within this

We believe the instant case falls Washington I, "the statutes concluded Chemical Bank participants purchase power own or to authorize the generating If I, at 799. Chemical Bank electric facilities." purposes, had been for these contracts They authority. statutory were not. would have had activity precludes substantively thus ultra vires doctrine of recovery. definition above, the Restatement's

As noted quite determine Thus, task here is to our is broad. benefit We within this definition. fall asserted benefits whether they do not. conclude theory respondents' persuasive that the benefits

We find further. and no to WPPSS revenues flowed of the bond bondholders, their received WPPSS contracted purposes. money appropriated can see no its We it for participants in these circumstances. to the benefit respon- passed summary, to the benefit we find no applies only procedurally ultra vires opinion, were the acts the conclusion herein discussed. the other theories 9X2 require justice thus, restitution. More- and, does

dents respondents against released over, our those restitution precluded I their Chemical Bank because decision substantively ultra vires. were activities

IV Claims Constitutional Appellants that the United States Constitu assert would vio State Constitution be tion and the rely they Appellants do not if denied relief. lated provision directly constitutions but of the on one general principles the from cases under instead extract takings 10, 1; clause, 1, cl. the § art. U.S. Const. contract process 1; clause, 14, § and the due Const.. amend. U.S. arguments Appellants' clause, 14, § amend. 1. U.S. Const. reading together. depend upon case the various No clauses appellants' Moreover, in cited briefs has done so. theory. support instance, v. Aetna For Kaiser do not their States, 332, Ct. 444 U.S. 62 L. Ed. 2d 100 S. United simple application takings a involved government. Petitioner, the federal Kai clause to action improved private pond a Aetna, leased and tidal which ser petitioner dredged After had no access to ocean. gov pond, marina, and a created ocean access federal public sought right enforce a access ernment Supreme pond. Court held that this could not done The be compensation petitioner. supports Kaiser thus without may only government proposition take that not compensation. taking private property Here, without no occurred. impaired obliga- a

Likewise, not contract the State has statutory specific city beyond its acts author- tion. When ity, obligation The void. is created. contract is no contract Chemical Bank I. argument equally unpersua-

Appellants' process is due ruling, held a court's as matter sive. cases have that No process. unenforceable, violates due law, contract is that a by appellants summary, suggested effec- would the rule This ability invalidate contracts. tively vitiate a court's we decline to do. ade- interests been find bondholders' have

We intervene in this Their motion to represented case. quately on decision attacks our reject appellants' denied. We The trial arguments. their equitable Bank I and Chemical decision is affirmed. judge's Dore,

Williams, C.J., Brachtenbach, Dimmick, and JJ., concur. Pearson, majority's from the (dissenting) J. dissent

Utter, —I court its holding this should review conclusion WPPSS, Bank v. 99 Wn.2d reached Chemical 2.5(c)(2) clearly RAP provisions P.2d 329 The authorize reconsideration. party appellate may

The court at instance of a appel- of an decision propriety review earlier and, case best justice late court the same where would served, appellate the case the basis of the be decide the law at the time of the later review. opinion court's history rule it was this adopted indicates face, precisely the situation we now a situation court for earlier as the the case ruling adherence to the rule of where of error. be both unwise and a earlier perpetuation would scholarly publi- four opinion, As of the date of this at least all opinion have initial and cations reviewed court's reasoning its conclusion and the used four critical of A Case Comment, Chemical Bank v. WPPSS: it. justify of (1984); Meltdown, L. & 273 Pol'y 5 J. Energy Judicial Comment, Washington Bank Public Power Chemical v. Washington's System: Applica- An Aberration in Supply L. Rev. Doctrine, Puget the Ultra Vires 8 U. Sound tion Washing- (1984); Note, Cry Construing A 59 for Reform L. Rev. 653 Statutes, 59 Wash. Municipal Corporation ton Power Note, Bank Public (1984); v. Chemical Vires the Ultra Questionable The Use System: Supply Take-or-Pay Obli- To Invalidate Governmental Doctrine 914 (1984). occurring

gations, Events L. Rev. 1094 69 Cornell opinion publication in no make clear it will first of our since litiga- continuing people way spare costs of this state liability. exposure 15, 1984, invest- On October tion and bought filed a claim and WNP 5 bonds for WNP who ors Washington. against The the State of billion for $7.25 potentially populace liable, is now of the state entire rejected partici- specifically including areas that those pation. question convincingly majority deal with

The fails disputed finding of fact on can make a this court of how appel- contrary previous law. The our case to all evidence undoubtedly federal review on ask for lants will Supreme they ground. do, the United States In event accept this case its discretion should exercise Court by many to that taken action is similar review. Our court's were reversed era which in the Reconstruction state courts Supreme by grounds the United States constitutional Court. (1 Wall.) Gelpcke Dubuque, 175, 17 L. Ed. v. 68 U.S. Supreme (1863), Supreme rejected the Iowa Court railroad bonds. refusal to enforce

Court's made, the laws of contract, was valid when [I]f the gov- departments expounded of the all then State as justice, its in its courts of ernment, administered by any impaired validity obligation subse- cannot be legislation, quent alter- of its courts or decision action of ing law." the construction during Many subsequent

Gelpcke, decisions 206. at generally C. See farther. went even era Reconstruction History Supreme the United Court Fairman, States 918-1116 takings Supreme invoke the Court continues protect from the citizens clause to contracts clause and the by govern public purposes property private transfer Pharmacies, Inc. v. Beck Fabulous action. Webb's mental (1980); S. Ct. 446 155, L. Ed. 2d with, 449 U.S. Light Group, Co., & Energy Kansas Power Inc. v. Reserves

[915] (1983). In this 569, 103 S. Ct. 697 400, L. Ed. 2d 74 459 U.S. respond takings century, to clause cases contracts most judicial legislative, the United action. Nonetheless recognize Supreme that state to Court continues States public may vested what had been not "redefine" courts Pharmacies, Inc. v. Beck- private rights. Fabulous Webb's Supreme (restraining Court Florida at 164 with, 449 U.S. " public property property private [ing] into transform from compensation"). without

I grounds majority disagree a number of on I with the utility public Washington ruling districts its (PUD's) municipal lacked respective agreements. authority enter into their to Although it was error this court to admit it is difficult for history, largest this court in its to come before in the case By doing we would let the normal now. so should do so we legal dispute processes the facts and the law this resolve applied. be which should

A body opinion majority throws into confusion years many prior carefully developed municipal over law municipalities granted broad this case which powers. power manage police This of their the exercise guidance, subject legislative has affairs, to broad their own carefully constitution, and case our statutes built into been major- by either cases, not mentioned recent law. Our own ity opinion, Corp., Issaquah Teleprompter v. confirm this. States v. and United 567, P.2d 741 611 93 Wn.2d 827, P.2d 127 Bonneville, 621 94 Wn.2d North liberally construed I, court Bank to Chemical Prior v. powers given Winkenwerder code cities. first class and (1958). RCW 873, 878 617, 622, P.2d Yakima, Wn.2d municipalities determining were whether 35.20.900. liberally applied powers given act, have we certain police power necessity actions test" where "reasonable 29, Paper Anacortes, 90 Wn.2d Co. v. Scott involved. (1978); High Hunter v. North Mason 578 P.2d (1975). 845, Sch., 810, 817, 85 Wn.2d 539 P.2d 849 By finding express authority partici- enter no into (PA) pants' agreement I, in Chemical Bank this court did accepted rulings. earlier In the not comment on several given majority opinion, first class and code cities were statutory authority interpretation of their same restrictive contrary were cities. This is to our own consistent as other supra. authority. Yakima, Winkenwerder v. line of earlier previous majority inadequately deals with our hold- The involving public placed ings which have actions works liberally interpreted police powers cities, of within the Housing Seattle, 10, Auth. v. 56 Wn.2d and towns. counties (1960); Chehalis, v. 15, 117, Kaul 45 Wn.2d 351 P.2d 120 (1954); Wise, 352, Morse v. 37 616, 625, P.2d 357 and 277 (1951). 810-11, 214, 806, P.2d 216 Wn.2d 226 erroneously opinion majority inter- in its also The court expressed prets legislative intent our statutes corporations municipal construct, authorize certain generating acquire operate facilities. RCW electric and These statutes focus on control and 54.16.040. 35.92.050 electricity produced, over rather than on control over the majority. emphasized facilities, as requiring legislative declaration broad construction major- agency ignored joint operating is statutes of strictly opinion ity. Instead, con- its See RCW 43.52.910. what I believe is a nonexistent RCW 43.52 to achieve strues agency powers joint operating between distinction powers participants. RCW 43.52.910. of its opinion portion majority disagree

I with that also Contrary implied statutory authority. dealing to our with police power interpretation general statutes, liberal police power decisions, taxation, to hold not court relied on necessity implied powers legal instead of is that the test for e.g., necessity fairly implied See, test. or reasonable Paper 19, 29, Anacortes, 90 Wn.2d 578 P.2d Co. v. Scott (1978). totally inapplicable 1292, cases are Taxation 1298 provisions they rely different constitutional as inasmuch

[917] power 9; 11, § police 7, 5,§§ art. art. cases. Const. than the Cy., 804, Wn.2d v. 97 Homes, Inc. Snohomish 12. Hillis express (1982), required court 809, 193, P.2d 195 650 authority wording statutory 11, section article under the provision. 11, hand, Const. art. 12, other a taxation On the provides: §11 may Any county, township city, make and town or sanitary police, within limits all local

enforce other its such general regulations laws. in conflict legislative This enactment section effective without grant in the than that found is more direct Bellingham, 566, v. Patton 179 Wash. taxation sections. attempt 364, P.2d This court's earlier 365 distinguish Municipality Seattle, v. Metro Seattle (1960) fails, 446, 460, to its Wn.2d P.2d due police power basic error which confuses tax cases with cases. impact questions regarding the of our

Serious remain unchanged, Washington Note, A decision, if law. future Cry Washington Construing Municipal Cor- for Reform poration supra Any Statutes, at action not backed 667-69. authority may express be well be found to clearest municipal authority Legal opinions regarding ultra vires. municipal leg- projects, give will be to and without difficult authority, municipal judicial approval islative of difficult corporations deprived Municipal to market. problems

opportunity their for innovative solutions to expression legislative judicial of the absence of clear judicial approval. provides ground The a fertile decision major municipal challenge undertakings and limits to ability municipal corporations to them- work between Declaratory judg- problems. selves solve their common to necessity, adding proceedings increase, to will ment judicial dockets, scarce court diversion of overcrowded taxpayers and of time resources and increased cost money. required seriously, municipal corporations will be Most legislative increasingly their clarification of ask for schedule, authority. signifi- Given the limited Legislature's problems legis- cant time between identification of and lags latively commonplace. authorized solutions will be

B municipalities There and PUD's Washington are some 28 Public Power Washington Sup- involved (WPPSS). they of whether had ply System question statutory authority respective to enter into their agree- I. partic- ments was the Chemical Bank Of these subject of ipants, 19 are PUD's and 9 are cities of various authority classes. PUD's are granted purchase electricity under the Each class munici- terms of RCW 54.16.040.11 pal participant authority purchase had similar grants See, 35.23.440(43); 35.24.290(3); electricity. e.g., RCW RCW 35.27.370(4); RCW and RCW 35A.80.010. previously authority, cited the statutes addition to layer statutory add an additional

creating WPPSS provides: 11RCW54.16.040 limits, may purchase, "A district within or without its electric current for sale limits, construct, pur- and distribution within or its and condemn and without chase, to, maintain, conduct, works, purchase, acquire, operate plants, and add current, generating transmission and distribution lines and facilities for electric steam, methods, operated power, either water or other within or without its limits, district, purpose furnishing for the and the inhabitants thereof and persons, public private corporations, including other within or without its uses, limits, with current for all with full and exclusive to sell electric use, distribution, rates, service, regulate charges, price and control thereof, transportation jurisdiction and control of the utilities and free from handle, sell, commission, things, together right purchase, or lease in all motors, equipment lamps, and all other kinds of and accessories transformers Provided, use, distribution, necessary and convenient for the and sale thereof: privately utility supply water to a owned for the That the commission shall not indirectly, may supply, directly production energy, or to an instru- of electric but any publicly privately mentality government or owned of the United States or public, any energy public amount of utilities which sell electric or water to control, energy contracts therefor shall extend over electric or water under its and years period for the sale thereof as of and contain such terms and conditions such elect; only pursu- shall be made the commissionof the district shall such contract contract, authorizing such which resolution ant to a resolution of the commission days prior meeting to the at least ten shall be introduced at a of commission further, adoption That it shall first make the resolution: Provided date of the of district, prospective." adequate provision and the needs of the both actual for joint operat- electricity. authority purchase Creation of a to (1) authority" ing agency which "shall have is authorized exchange, purchase generate, produce, transmit, deliver, any energy enter into contracts for or sell electric and to (2) 43.52.300(1); purposes, construct, and all such RCW develop purchase, acquire, operate, condemn, lease, and regulate generation energy, of electric facilities for (3) 43.52.300(2); sale, RCW to enter into contracts for exchange, energy, or use of electric RCW transmission (4) 43.52.300(3), (4); agent purchase to act as for the electricity any city sale at wholesale of or district when- 43.52.300(7). requested Legislature so, ever to do RCW The liberally mandated that these statutes be construed to purposes. effectuate their RCW 43.52.910. category grants

A third of statutes cities and PUD's the authority joint operating agencies pur- to enter into for the pose developing power. requires nuclear RCW 54.44.020 utility city that the any percentage facility equal shall own a common percentage money the property supplied by furnished or the value of acquisition it for the and construc- percentage

tion thereof and shall own control like output of the electrical thereof. chapter participant's liability That also limits the its participant assuming any own acts and forbids the from participants' obligation. the other debt or RCW 54.44.030. category grants A fourth cities and PUD's energy They construct facilities on their own. are author- purchase construct, condemn, ized RCW 35.92.050 to acquire purpose city furnishing facilities for the electricity. or town or its inhabitants with opinion The court's in Chemical Bank I reasoned that participants' satisfy agreement with WPPSS failed to statutory governing public participants for a scheme (1) majority agreement held: The number of reasons. purchase power not a standard contract for the because irrespective payments of whether electric are due type acquisition is delivered. It is not the current ^[920] by project generating stat- the

construction of a authorized previously recognized court, the utes or this because ownership except interest, in retain no very upon in termination, and limited role excess assets a (3) management project. of an It is not an exercise municipal implied power pay for because there services provided guaranty we was no perceive the services would be (4) powers. Finally, necessity legal it is no for such joint agreement provisions operating of not a within the participants' provisions the RCW 43.52 because those limit ability buy anything energy". Chem- more than "electric I, ical Bank at 798-99. why, previously law, I

I have as a matter of believe stated majority majority Bank in Chemical was incorrect. The assumes, fact, I also in when it as a matter is error ownership, equivalent control, did not or its terms of I, Chemical at under facts of case. In Bank exist majority, referring complexity pages 787-88, to the budgets decisions, was states that it construction "unlikely provide part-time . . . committee could that a input" significant participants' com- and asserts stamp". "apparently rubber mittee served as a majority conclu- to resolve these issues as factual For 6, article section sions violates Constitution authority gives decide trial the sole which to the courts issues. factual disputes trial are to be resolved Factual only, appellate power . . . this court is

court. The is limited to does include a retrial here but which not findings supported by ascertaining sub- are whether disposed, we If we were so but stantial evidence or not. judgment our not, we to substitute are authorized court. for that the trial

Stringfellow Stringfellow, 957, 959, P.2d v. Wn.2d 350 56 1003 incorrectly today, majority I, in Chemical Bank

The Kelly Co., & v. Aetna Cas. Sur. Wn.2d relies on justify this court's P.2d by characterizing ownership control them resolve issues interpretation questions fact. of law rather than majority solely participants' agreement, asserts, is Kelly law. Its statement of law contained matter of interpretation legal incomplete, however, effect of for the only in the is a matter of law for the court contract disputed Yeats, Yeats v. Estate 90 absence of facts. of (1978); Epperly Seattle, v. 201, 65 Wn.2d 580 P.2d 617 generally 4 See S. 777, P.2d Willis Wn.2d 399 591 (3d 1961); ton, Corbin, Contracts § 616 ed. 3 A. Contracts 1984). (1960 Supp. & §§ 595 Kelly, Washington Supreme case,

In an law insurance summary judgment appropriate a Court where com- found plete developed dispute record no factual had been and legal meaning a other than the of term contained in an policy interpretation insurance existed. The court found the question of the term "owner" to be a of law. The decision Kelly principle legal is consistent with the established interpretation legal meanings specific or terms within generally question insurance contracts is of law. See Dev., Inc., Indem. Co. v. Bloedel Timberlands 28 Pacific (1981); App. generally Wn. see E. P.2d 734 Farns- (1982). Kelly, engaged worth, Contracts we 515-17 no trying weighing evidence or of facts. Kelly, presents present case numerous

Unlike factual disputes go beyond legal which well mere definition of questions relating numerous factual to the terms. Since operation participants' agreement exist, con- actual sistency

with both contract and constitutional developed requires that a law full factual record be and disputes resolved at the trial level. that all factual be majority correctly if the resolved issues own- Even by doing ership control, however, it did not so answer necessary the court all that remained before of the issues statutory interpretation, not all for As matter of decision. municipalities pertaining the PUD's and statutes ownership. require 35.92.050, on their Some, such as RCW participants' agree- to the schemes similar face authorize portion speaks ment. While the first of RCW 35.92.050 ownership city interests, the statute also states that a or may town plant plants by authorize the construction of such or purpose, purchase gas, others same electric- ity, power city from either within or without the purpose selling town for its own use and for the to its persons doing inhabitants and to other business within city regulate or town and and control the use and price thereof. provision integral part Judge

This was an Coleman's adequately level, decision at the trial is not dealt with majority, provides authority participants for the act. major- alternative,

As another were this court to find the ity's appellants conclusions in correct, Chemical Bank I argue that, the record, 20 of the had control membership partic- virtue of their in WPPSS. Those 20 ipants represent percent project's of the shares and held percent power voting on WPPSS. As to these participants, governing grant the statutes WPPSS them ownership management projects. both control over the (management See RCW 43.52.370 and 43.52.374 and con- joint operating agency composed trol of in a vested board directors); member utilities and outside RCW 43.52.360 (after dissolution, members hold assets as in tenants com- mon). majority in Chemical Bank I also failed to argument. degree address itself to this Given this of control projects by large majority participants, over the the concluding this court was in error in law, as a matter of inquiry, participants without further factual that these projects protect lacked sufficient control over the to their ratepayers. majority's participants if

Even the conclusion that the ownership did not have an in 4 interest WNP and WNP 5 participants' provided par correct, was ticipants the committee the management with a vehicle to exert their control. Although disagree majority's I cannot with the determina

[923] "the committee served as participants' apparently tion that I, decisions," Bank stamp a for WPPSS' Chemical rubber in liti 788, consistently recognized at have securities courts opportunities who fail to exercise for gation investors they to them cannot later claim lacked control available Inc., Steak, Steak, Inc. v. See, e.g., City Mr. River control. (D. (10th 1972), aff'g F. Supp. 324 640 460 F.2d 666 Cir. 1970). to attempts Absent their documentation Colo. the WPPSS exposure through participants' debt control frustrated, this court and the federal courts committee were they had no permit participants argue should not the to control. management reasons, I above would affirm sum- all the stated

For in the trial court all mary granted by respects. judgment authority participants to find exists Our failure for questions into the raises as to the agreements enter serious 1, nuclear upon power plants basis which These were the same plants were built. built with basic in participants as those entered into agreements net billing. WNP and WNP with the added benefit of If have enter authority did not into 5, they now plants 4 and could not assert agreements in plant. participants' working shares Such right Authority Power conclusion could well force the Bonneville interests and 3. participants' plants seize the C issue, Chem- only the court By ruling I issues before the ical Bank did not address other dis- ruling in that case. The court's should be court lower every these matters inasmuch it was correct cussed on issues to be resolved remaining factual respect to trial. proceed should in deciding its court not abuse discretion

The trial did v. Safeway reliance on Brown demand. Its jury strike P.2d was Inc., proper. 704 Stores, 94 Wn.2d noted, pri- a case is determining whether we There "[i]n law, trial in is an at the nature or action marily equitable will discretion, exercise of which wide the court is accorded except Brown, at 368. disturbed for clear abuse." not be applied analysis judge explicitly in the factors his The trial required the first considered that in the Brown case. He defense, but looked raised were an affirmative issues allegations beyond pleadings the true nature of the the rescis- was, fact, in an action for that this and concluded sion. showing has and no acted within its

The court reversible abuse of discretion. made that there was a been participants' supports its conclusion that the The record equitable the was to seek rescission of affirmative defense attempt- case of a defendant and that this is not a contract ing by asserting equitable destroy right jury to a participants equitable defenses; relief and that seek both equitable; equitable jury; main issues are that that the only equitable complex; remain to issues issues are upheld; aspects ruling if of its are be tried the other lastly, doubtful; and nature of the action is not overall dispute equitable. in real issues that the properly determined that liabili The trial court also statutory by did not exceed ties incurred The determinative issue constitutional debt limitations. participants' liabilities are a debt for constitu whether the purposes. This court has defined debt limitation tional mean "borrowed context of article 8 to "debt" by money; obligation created the loan it denotes an possibly money, usually created bonds but evidenced paper bearing ex label." State a different the issuance of 660, 668-69, P.2d 319 Yelle, v. 65 Wn.2d rel. Wittier pro consistently past held that the We have Constitu article section 6 of visions of financing apply conducted revenue under tion do "special through fund" doctrine. the bases of payable obligations exemption is that behind this rationale special general fund are from a tax revenues but not from municipality or statu a constitutional not debts tory Martin, Fin. Comm. v. State ex rel. State sense. parties designed 645, 661, The

Wn.2d 384 P.2d 833 requirements program to the this revenue bond to conform payments special The of the of the fund doctrine. source (1) generated the either revenues from on the bond are pledged by participating public projects, or revenues previous rulings, according such, the utilities. As to our participants' obligations do not fall within the constitu- statutory tional or debt limitations.

Finally, properly the trial court held that the contracts participants obligate pay decommissioning in the costs of payments Decommissioning debt service. costs refer to projects pay- well contractors work done on the as as interrupted projects ments settle contracts when the 13(a)(ii), PA § were terminated. at Debt service 36-37. principal payments refers to the and interest to the bond- holders. correctly interpreted

To resolve whether the trial court pay obligation the of the the costs of decommissioning requires in debt service an examination of (BR). participants' agreement the and bond resolution Interpretation agreement governed of the is the fact that projects pursuant the the were terminated to section 13 of prior participants' agreement but that occurred termination completion projects. Project financing to the was payment depended upon whether structured so that sources project operating construction, or termina- was under key "contract ted. There are three year", "billing definitions involved: budget". statement" and "annual year" participants' agreement in the "Contract as defined "(i) the earlier of the starts on the earliest of three dates: (ii) Operation the Plants or Dates Continuous (iii) year July 1988, the date of or the date one after provided Project §PA 13". as Section termination of possible represent trigger 1(g), com- These dates at 7. participant payments. After contract mencement monthly billing year begins, statement determines system by participant. paid supply to be amount by multiplying 1(b), amount is calculated §PA at 4-5. That budget participant's of the annual share the amount adding payments cost of sources, from other less Finally, budget defined as: annual fuel. adopted by Supply budget Budget" means the "Annual 8(b) respect pursuant System to the Pro- with to Section

jects of each itemizes the estimated costs and which (i) commencing Project, the Date of Continuous (ii) Project, Operation the Plant related to such (iii) year July date of 1, 1988, after the the date one Project provided as Section of a termination whichever is earliest, construction exclusive of costs of appli- fuel, Resolution, and costs defined the Bond respective . . . Annual Year to the Contract cable pro- Budget, time, make shall as amended from time including System's Supply costs, vision for all such ownership, resulting amortizations, the from accruals and operation repairs, Projects, the and maintenance of replacements, thereto and costs renewals, and additions together provided in Section termination thereof as in accordance under billed with the amounts over or (b) Budget include, Annual shall below. The subsection (i) Supply Sys- to, the amounts which be limited but not tem is pay required in each Resolution to under the Bond provided in the for the various funds Year into Contract Fund, as therein the Revenue Resolution from Bond defined, purposes . . . service and all other for debt 1(a), at 3-4. §PA (1) trigger possible dates, were which the three

Prior to (2) July project; 1, 1988; year or termination of after the (3) plant, payment operation of a of continuous the date or by participants. project's were not made costs of the proceeds However, after so- were used. Instead, bond required payments participant trigger are dates, called begin budget. through the annual correctly that under determined

The trial court agreement, participants' provisions applicable unequivocally decommissioning in the included are costs correctly pur- projects budget. terminated were The annual agreement participants' which section 13 suant to projects decommissioning begin requires WPPSS to partici- accounting monthly statements and make includes expressly definition budget The annual pants. in Section 13". provided thereof as termination "costs of is a requires section 13 accounting final 1(a), at 4. The PA § decom- any remaining as to to the report final costs. missioning pay- sources successive established agreements debt service. the costs of for to the bondholders

ments BR projects, finance the sold to First, being when bonds are pro- bond pay from 6.8A2, requires WPPSS at 42-43 § necessary to provide fund amounts ceeds into bond payments These the bonds. of interest on payment 6.9F, It is BR at 46. of construction." defined as a "cost § anticipate ongo- were drafted provisions these apparent as these two Inasmuch and bond sales. construction ing for three indefinite, parties provided activities are funding means of which time alternative dates at "trigger" resolution, 6.2 of the bond Under section would be used. (1) the date of 1 month from earliest of: that date is the revenues, at (at operating time which operation continuous (2) debt); July for the pay would part, begin least to be (the date for construction presumed latest BR termination. after the date of year completed); structured, were "succes- there 6.2A(l)-(3), at 29-31. As § pro- upon whether depending payment sources of sive" construction, or terminated. operating were under jects 1982, the January terminated plants were Because apply. would source third alternative pay must from WPPSS provision, this latter Under termination", i.e., fund to the bond fund "cost[s] revenue BR satisfy payments. the debt necessary to § amounts par- in the budget of annual 6.2A(3), The definition at 31. service", PA includes "debt expressly § ticipants' agreement these pay must means the 4, which 1(a), at amounts. argument Their arguments. several make

Respondents risks is "dry hole" for provide do the documents from payment for provides resolution The bond erroneous. necessity, includes, by which hereunder" "money pledged participants' depend revenues revenues and does not generated by project obligation general bonds. Appellants argue explic- that the costs of construction 1(a), itly exempted budget, PA § from the at annual payable only from which means that debt service is properly payable trial amounts revenue fund. The into the 6.2A(3) prob- correctly § court found that BR resolves this Finally, respondents they obligated argue lem. pay are not budget any debt service the annual defini-

for because payments the "revenue tion limits debt service to from 1(a), Respondents correctly point PA 4. out that § fund". at only goes fund, the revenue section 6.1 defines what into required pay 6.2, but that under section WPPSS is Participants' pledged revenues all unfunded debt service. pay obligations. must be used to those foregoing reasons, I the initial rul- For the would affirm ing equitable the trial which trial the court leaves for deny respondents. I would also defenses asserted bondholders' motion to intervene.

II major part agree While I with a of the discussion equi- majority regarding history development important history remedies, table it is to first note that the system general principles legal suggests which of our several equitable although shape application First, relief. speak equity separate lawyers generally of law and as con- equity cepts, history belies this characterization. Law and generally origins goals. deFuniak, See W. had common (2d 1956); Equity Equity Maitland, F. Modern ed.

(1949). They England brought Normans, were via preserve jurisdic- diverged individual as the need arose merged again F. that need abated. Maitland. tion and system attempted justice legal do within Second, each procedural each, at limitations and some the confines of its rigid point, in its rules than the other. G. Keeton was more legal systems Equity Third, Sheridan, both & L. during period each other have borrowed from seem to

[929] they separate time, both identities. Since that had in which systems adopted concepts rule, com- wholesale. One

have proposition that the law will enforce both, is the mon to promises. princi- consistently equitable recognized

Washington has specific promises ples Our in circumstances. enforced Equity wrong to not suffer a be will have stated: courts Guaranty remedy, Co., Trust 199 v. a Rummens without (1939); equity that as 337, 346-47, P.2d treats 92 228 Wash. by agreement v. done, Fleishbein is to be which done (1937); 72, he 65, P.2d and who Thorne, 193 Wash. 74 880 Langley equity hands, v. into must come clean comes (1917). 171, 187, P. To enforce Devlin, 163 395 95 Wash. system developed specific legal rec- maxims, rules these our ognized in in described law and elsewhere and part majority. in the in the discussion equitable I which believe warrant

There two theories correctly recovery by appellants. Although majority inapplicable, RCW 62A.8 concludes that RCW 62A.8-201 is history point estoppel and our of common law another recovery theory by implication raised in briefs appellants. theory, English recognized long ago That in (Sec- equity, courts of and now embodied Restatement ond) (1981), promise § Contracts which states a promisor reasonably expect should induce action promisee part binding injustice if can be only by estoppel, equitable our Like avoided enforcement. acknowledged right facts, courts have that under municipality. may applied against See State be doctrine Magnesite Co., P.2d v. 28 Wn.2d Northwest (1947). Promissory Estoppel, Annot., See 48 A.L.R.2d also (1956). 1069, 1086

Promissory promise, estoppel fore- elements: has four seeability promise, reliance, and a of reliance on that actual justified. finding Comment, Promis- reliance was that the Washington, sory Estoppel L. Rev. 795 55 Wash. present here. each element We find respondents repeatedly alleged, Appellants have unequivocal promises pay deny, they made cannot participants' agreement states these debts. Section 6 of language make clear, that the would definite payments agreement under the whether or promise completed. projects was not Reliance on that were only resolution foreseeable, it In the bond was intended. participants), potential (approved were bondholders the partici- developed plants being for the that the were told pants, participants pledged revenues as their that the approved security was the Each bond resolution for bonds. participants through BR, at 9. See their committee. the promises participants' reliance on the That there was actual purchase of collective be doubted. The bondholders' cannot amply that fact. demonstrates worth of bonds billion $2.25 prerequisite, promissory estoppel reli- that the The final parties' against justifiable, must, the when viewed ance be years prior termination, be for the 5 of conduct course plants were termina- in the Until the affirmative. answered requi- parties the had the ted, assumed that all concerned freely authority. statutory traded and were The bonds site Only plants timely payments the were when made. interest actually attempt participants to avoid did the terminated only promise And, the their bondholders. opinion I, the issue of statu- Bank was in Chemical

court's tory authority resolved. participants' circumstances, I believe

Under these justice promise the extent that be enforced to must only My requires. on the Restatement rests not conclusion public policy upon in provision embodied but also § partici- reject that the While I notion RCW 62A.8-201. security, recognize pants' that agreement I constitutes legislative that intent clear reflects a RCW 62A.8-202 responsible municipalities held individuals be as well as promises their and actions. general in RCW limitations contained

I believe the same estoppel equitable concerning be should 62A.8 and cases adopted estoppel. promissory applying the doctrine in promisor's general promise within Thus, must be 62A.8-201(2). power. Such the case here. See RCW acknowledged majority opinion, original we this court's authority participants' general to enter into contracts power plants to take the neces- actions build nuclear sary plants had that but held to fund those dry improperly entering Chemi- in hole contract. acted recognize Also, I, the statutes cal Bank at we 784. contemplate general RCW to act this area. See 43.52.300(1). 35.92.050;RCW unjust majority the doctrine of concludes appel- apply the acts

enrichment does not because majority substantively vires. The concludes lants were ultra already I has the issue that Chemical Bank decided substantively procedurally whether the contracts were agree. ultra I vires. cannot authority"

When the term was used "substantive deciding I, Chemical Bank it was sense of not used substantively procedurally whether it was vires ultra past, court because that issue was not before us. In the procedural has differentiated ultra between substantive and primary secondary. through adjectives vires use the of (substantive primary) The first classification or refers authority municipality perform. acts a no has whatsoever to In the which within second classification fall those acts powers municipal corporation, the lawful of the but which leading irregularity procedure are void because of an up the 218, Centralia, 194, v. 157 289 to the act. Jones Wash. (1930). primary 3, sec P. 11 Whether these acts were ondary summarily vires should be decided ultra requires further discussion. application primary doctrine

The of the ultra vires classic directly of contravene involves the invalidation actions statutory provisions. express The constitutional upon harsh sense examination doctrine's results make the common law basis for the doctrine. Premised the private public sec- the fundamental difference between private application tors, the doctrine exhorts a contrac- municipal authority and limitations of a tor to ascertain the 932 Washington

corporation. Comment, Bank v. See Chemical Washing Supply System: An Aberration in Public Power Puget Application Doctrine, the U. ton's Ultra Vires (1984). 59, L. Sound Rev. 60-76 concerning ultra vires is One of the earliest cases King Cy., Tremper P. Osborne, & Co. v. Wash. County plaintiff King Osborne, for In the sued performed river and har- services under a contract with the County oper- King residents, A bor commission. number of upon ating the belief that the United States intended Ship petitioned Canal, construct the Lake county appointment the river and commissioners for appointed. The and it was thereafter harbor commission with the commission then contracted river and harbor Payment plaintiff preparation of an assessment roll. for for property assessments. services was to come from these county later, commissioners rescinded A few months authority In the river and harbor commission. plaintiffs services, the court denied action to collect recovery, noting general rule that power want of to make a contract or a where there is a want of body part making power of officers on the municipality, there can be no the contract to bind estoppel payment by municipality against to defeat accepting the benefit conferred the contract.

reason of county Osborne, reasoned that at 285-86. court authority to create the assess- did not have commissioners district, have to incur and therefore did not ment the district's creation. risks incident to Renton, 409 P.2d 153 Edwards v. 67 Wn.2d proce- (1965), substantive and confronted mixed the court recovery against statutory approved violations, but dural plaintiff City had Renton. Renton contracted signal, failed to a traffic control but for the installation of properly City neglected procedures. bidding to The follow budget that this The court found for the installation. funds City borrowing represented which the of of funds contract a power dis- The court then went on to Renton had no to do.

933 statutory municipal budget policy for cuss the reasons requirements the contract ran afoul of concluded that and policies. Nonetheless, limited a the court allowed these recovery "public improvement the contract was for a where by municipality where it [and to retained furnished the scope authority provide". Edwards, was] within the of its secondary vires at 604. Edwards therefore the ultra moved fulfilling expectations of doctrine reasonable toward the parties private contracting public entities, consistent immunity sovereign See with the the decline of doctrine. 4.92.090, RCW 4.96.010. explained v.

The Edwards rule was in Finch further Matthews, P.2d Finch 74 Wn.2d acquire dispose power King County of involved property Although the facts are of complicated, order build roads. appears county exchanged some

it that way. City property right a The worthless road sought property, arguing then to annex that Seattle County dispose property power had of it because the no exchanged public use of the for- was dedicated '"to the interpreta- City urged Finch, The a ever'". at 163. narrow equitable estoppel against municipality, arguing in tion "only that the doctrine be valid when essence governmental could strictly recognized act is within powers government." Finch, at 169. established holding rejected equitable estoppel, view of court "wholly distinction was between acts done instead legal authorization" or "direct violation without existing which within the

statutes" and "those acts governmental granted scope powers conferred, the broad mine.) (Italics delegated". Finch, 172. at (1982), Cole, In Noel v. P.2d 98 Wn.2d recently analysis. Noel, Edwards most affirmed the court Department of Natural the court concluded timber, without Resources had sell but not impact preparing However, statement. an environmental Finding required prepared. regulations in effect no EIS be procedural DNR and because both the sale violation 934 purchaser good faith,

and the had acted the court held recovery purchaser necessary prevent that unjust for the was Noel,

enrichment. at 381. I believe the instant case falls within the Edwards-Noel majority rule. The concluded in I, Chemical Bank "the participants purchase statutes authorize the power generating or to own electric facilities." Chemical statutory I, Bank end, at 799. To that and to fulfill their duty develop energy participants sources, sufficient agreements subsequently pledged entered into the general powers their revenues. Those acts were within their contemplated by Noel, Finch, as Edwards and Osborne. municipalities Thus, as the action of the State or in enter- ing agreements only procedurally into the vires, was ultra may given. restitution be obtained if a benefit was fact remaining arguments respondents, As to the the com- obliga- mon law doctrines which released their contractual contemplate party tions restitution if one receives a benefit. (Second) example, For Restatement § Contracts (1981) remedy given states the if to be frustration occurs: (1) any governed by In case the rules stated in this Chapter, party may either have a claim for relief includ- ing restitution under §§ the rules stated in 240 and 377. governed by case the rules stated in this Chapter, together if those rules with the rules stated in Chapter injustice, may grant 16 will not avoid the court justice requires including protec- relief on such terms as parties'

tion of the reliance interests. Similarly, Fendell, as noted Simonson v. 101 Wn.2d (1984), 88, 93, 675 P.2d 1218 mutual mistake entitles the parties original position. to rescission and return to their As general principle contemplates . . . rescission restoration parties position possible to as near their former practical. Corp. Stark, J.I. Case Credit v. 64 Wn.2d (1964); 470, 392 P.2d 215 Yount v. Indianola Beach

Estates, Inc., Wn.2d 387 P.2d 975 impossible parties Here, however, it would be to return the positions prior given to their to the contract the lack of statutory authority Chem- released of those participants represent approximately I. ical Bank Those requires monetary obligation. percent of the total Justice Because the sort of to the bondholders. some public restitution municipalities equitable also have obli- utilities and remedy, concerning gations, remaining bene- discussion equally equitable apply fit and distribution of loss will original decision, those released our and those released grounds. on common law contractual above, noted benefit is As Restatement's definition of quite Thus, whether broad. the task here is to determine I asserted benefits fall within this definition. conclude they do. in and received billion bond rev- $2.25

WPPSS asked for request participants. participants of the The on the enues they exactly through rep- bargained for their received what in a noted comment to resentatives on WPPSS. As (Second) (1981), receipt by § Restatement of Contracts party performance bargained regarded is a of for as bene- amply fit. I believe the facts of this case proposition. demonstrate that pur- arrangement by participants Further, which plants' output in return shares the electrical for chased duty pledge revenues the utilities' their develop satisfied energy ratepayers. their sufficient resources for contemplate pertinent needs of a statutes that electrical public utility city this, filled. do the district will be To money participants spend significant sums must develop to meet future demands. alternative resources City that of the of Seattle observes the Amicus on behalf spent City projects, million various small has for $37 annually spend High for settlement of the $21 will million projects progress Agreements. The total now Ross cost projects been termi- million. Several of these have is $164 City and, result, the of Seattle has absorbed the nated City loss. Amicus Curiae behalf entire Brief of Clearly, participants Seattle, most involved at 19. development 4 and 5 could not absorb similar WNP WNP plant projects the costs. To the extent that nuclear relieved participants allowing costs, the of their immediate while statutory duty, they them to fulfill their received benefits the bondholders. from

Finally, participants' it that was for the benefit plants place. being By entering were in the first into built agreements, pledging security these inducing their revenues as money WPPSS, bondholders lend participants anticipated they guaran- would be able to electricity projected their consumers at the low tee rates utility power. arrangement, such nuclear Without an each develop have had to either other sources of electric- would ity electricity purchase at the then whatever would be price. The current market bond revenues allowed them consideration of both of these alternatives. avoid theory persuaded by respondents' Moreover, I am not of the bond revenues flowed to WPPSS benefits above, WPPSS and no further. As discussed detail joint as a venture of member utilities and existed participants. Despite majority's conclusion that ownership statutorily required lacked parties to this interest, I believe that real interested participants. them, the benefits were the To transaction proper. and, them, restitution therefore flowed from justice that factors me to the conclusion These lead requires the some relief to bondholders.

Remedy appellants of recov- two theories The have established estoppel unjust ery promissory Restate- enrichment. — (Second) that § states ment of Contracts estoppel may promissory remedy be limited for breach (Second) requires. Similarly, justice the Restatement 1983) provides: (Tent. Draft § No. Restitution by person reason of an receives a benefit A who person's infringement interest, suf- or of loss in the another by him manner other, owes restitution fered and prevent unjust necessary enrichment. amount principles entitle Appellants restitution contend that plus I interest. the entire billion $2.25 the bondholders grant figure their disagree. the bondholders would This majority expectancy has held on the contracts. interest appel- Moreover, void, however. contracts are that those remedy ignores suggested the bond the realities of lants' by is the the bondholders loss suffered Much of the market. speculation, panic-trading, forces that and other result of solely participants' breach of to the attributed cannot be promise. instance, dis- even before For prices quoted legal obligation, puted in the Wall their trading at levels the bonds were indicated Street Journal substantially par. below appellants' argument for full restitution confuses

Also, of benefit WPPSS with the amount loaned the amount by participants. Just as the bondholders' received participants' forces, the market investment was diluted by rising rates and market interest benefit was diluted impossible. completion plants made which forces people Finally, among these bonds who now hold purchased their bonds after who numerous individuals statutory authority clearly existed that no stated court come to Those individuals do not contracts. enter the equity equitable con- I no hands" and believe with "clean granting weigh individuals a these favor of siderations windfall. posture complexity and the of this case

Given court, I to discern am unable now before this which it is recovery I proper believe to the bondholders. amount recog- require principles, equitable however, that we that present complex the bondholders' that led to nize the forces proper principles measure me that the convince loss. Those may the value of not exceed this case of restitution day prior Bank I. in Chemical decision to our bonds on clearly that no on notice date, investors were After that date, much of the bond- existed. Prior to dissipated forces unrelated was investment holders' promises. participants' Moreover, I also believe purchasing should after that date their bonds individuals purchase price no bonds and of those entitled to the be inequitable these individuals to allow more. It would be profit and the bona fide bondholders from the losses of partici- Finally, ratepayers. participants' I that the believe pants value contained either to an offset of are entitled plants plants to the themselves. in the recovery only I amount of the maximum This award sets legal herein discussed. under the theories would allow equitable judge other could reduce this amount trial payment may provisions for and make such considerations considering equitable, just judgment as are ratepayers. positions relative bondholders foregoing reasons, I dissent. For the Tern., J., J. Pro concur Alexander, Dolliver, J. Utter, December 1984.

Reconsideration denied Restatement of Contracts notes § that a contract is voidable for mutual mistake when (1) Where a mistake of both at the time a con- parties assumption tract was made as to a basic on which the contract was made has a exchange agreed material effect on the performances, contract is voidable adversely affected party unless he bears the risk of the mistake under the rule stated in 154. § (2) In determining whether the mistake has a material effect agreed on the exchange performances, account taken by way reformation, restitution, relief otherwise. We find that assumption the municipalities PUD's had statutory authority assumption was a mistaken material to the contract. As opinion, discussed later all parties assumed statutory authority existed. More-

Case Details

Case Name: Chemical Bank v. Washington Public Power Supply System

Court Name: Washington Supreme Court

Date Published: Nov 6, 1984

Citation: 691 P.2d 524

Docket Number: 49868-7

Court Abbreviation: Wash.