241 P. 552 | Cal. | 1925
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This application is for a writ of mandate whereby the petitioner seeks to have the respondents commanded to allow and provide for the payment of certain sums of money alleged to be due from the respondent Sacramento and San Joaquin Drainage District to the petitioner, *486
arising out of the construction of certain levees constituting a portion of the Sutter-Butte by-pass system of the Sacramento and San Joaquin Drainage District, and the purchase by the latter thereof from said petitioner. The original application contained four counts. By the first of these the applicant sought to have the respondents directed to allow and order paid the sum of $1,876,556.66, being a balance alleged to remain due and payable upon a certain contract made and entered into between the said applicant and the Sacramento and San Joaquin Drainage District upon the purchase price of said levees as provided for therein, said contract being known and designated as contract "A." By the second count the applicant sought a like writ requiring the respondent to allow and order paid the sum of $858,665.42 alleged to be due and payable upon a certain contract made and entered into between said applicant and said drainage district, known and designated as contract "B." By the third count the applicant sought to have the respondents directed to allow and order paid the sum of $312,962.19, the same being the amount of interest alleged to be due as of the date of October 10, 1924, upon the said balance of the purchase price of said levees as set forth in the first count of said application. By the fourth count the applicant sought to have the respondents directed to allow and order paid the sum of $97,470.40 alleged to be due and payable as interest upon the principal sum of $1,000,000 which was paid to said applicant according to the averments of the first count. These several counts in the applicant's original and amended petition, with the responses made thereto, will be treated in the order of their presentation. The facts out of which these several claims are alleged to have arisen are quite fully set forth in the decision of this court in the case of Reclamation Dist. No.1500 v. Riley, etc.,
As to the amount claimed by the petitioner upon the item embraced in contract "A" designated as "Ajax Dredging Company Contract," the referee's report explains said item in substance as follows: In the year 1918 Reclamation District No. 1500 entered into a contract with Ajax Dredging Company for the construction of a certain portion of its levees in accordance with the plans of reclamation approved by the Reclamation Board. By the terms of said contract the district was to pay the contractor the cost of the agreed work plus twelve and one-half per cent and was to make such payments monthly as the work proceeded; and the contract further provided that if such payments were made in warrants issued to the contractor, the district was to make some arrangement by which said contractor should receive cash on account of these monthly payments. The district had at said time no cash with which to pay warrants and it therefore seemed to be necessary to the progress of said work that the district should, as it did, make arrangements for the discounting of its said warrants at the rate of 11.11 per cent. This resulted in an expenditure on account of the said percentage of profit to the contractor above cost of $58,679.60, and of a further expenditure on account of said discounts of the sum of $58,548.88, both of which said amounts were actually expended by said Reclamation District No. 1500 during the course of the fulfillment of its said contract with the Ajax Dredging Company for the construction of said levees. Both of these foregoing amounts were included within the terms of contract "A" after the bases therefor had been fully examined into by the officers and agents of the Reclamation Board. The respondents challenge the validity of the allowance only of the discounts in said contract "A" and that only upon the ground that discounts of this character constituted no part of the cost of construction of the levees and hence that the Reclamation Board had no power to allow or contract to pay the same.
Dealing first with the objections which the respondents urge against the validity of the claims of the petitioner for the items embraced within the total sum provided in contract "A" to be allowed for "Bank Protection," we find that said objections differ as to each of the said items included *493 within said total sum. As to the item of $138,509.47, which represents work done by Reclamation District No. 1500 upon its levees at a time when the doing of such work was included within the details of the original plan of the Reclamation Board upon the basis of which the assessment of Sutter-Butte by-pass project No. 6 was to be predicated, it is urged by respondents that the subsequent amendment of said plan by the Reclamation Board must be given the effect of eliminating this class of work from inclusion in the cost of construction of levees to be paid for out of the funds to be raised by said assessment. We are not disposed to look with favor upon this contention as to this particular item for the reason that it is conceded that at the time said Reclamation District No. 1500 actually made this expenditure in the course of the construction of its said levees it was conforming to the then existing plan approved by said Reclamation Board and hence that the latter board ought not to be allowed by any changes in its original plan to work an injury to the petitioner which had proceeded in good faith to do a particular and necessary kind of constructive work upon its levees in conformity with the then existing plan and purpose of said Reclamation Board. The objection which the respondents urge to the validity of the item of $129,448, part of the sum total allowed for "Bank Protection" is that the work for which said sum was agreed to be paid in contract "A" was never wholly included within the original plan of the Reclamation Board for the work to be done upon the south levee of the Tisdale by-pass, but only a small portion thereof and hence as to such excess it cannot be legally allowed. As to the item of $115,451.30 constituting the balance of said total sum allocated in said contract "A" to "Bank Protection" the objection of the respondents is that the particular work upon the Tisdale by-pass channel for which said charge is made was done under the express stipulation embodied in the order of the Reclamation Board dated September 16, 1919, approving the plans of said Reclamation District No. 1500 for the doing of said work, wherein it was provided that "all of the expenses of said work were to be borne by the district." It is to be noted, however, in respect to this particular objection to this item that the resolution of said Reclamation Board above referred to antedated contract "A" nearly three years and that the same *494 was, therefore, passed and adopted at a time when no contract existed for the purchase of said levees by the drainage district from Reclamation District No. 1500 and when the latter was proceeding to do its construction work as an independent entity operating in co-ordination with the general plans and purposes of the drainage district, and its governing body, the Reclamation Board, but bearing for the time being the whole expense and burden of levee and channel construction. Viewed in this light, the provision in the resolution of the Reclamation Board in the year 1919 cannot be held to be a limitation upon its power by later contract with the petitioner to agree to include in the purchase price of said levees the amount thus early expended by the latter for channel construction and covered by the aforesaid item of expense, provided always that said particular work comes fairly within the meaning of the phrase "actual reasonable cost of construction."
We are thus brought to a consideration of the controlling question underlying the allowance or disallowance of these several items embraced within the sum total agreed to be allowed and paid for "Bank Protection"; and also agreed to be allowed on account of the Ajax Dredging Company contract, by the terms and agreements embraced in contract "A." It is the question of the power of the Reclamation Board as the governing body of Sacramento and San Joaquin Drainage District to enter into contract "A" and to bind said drainage district to each and all of the terms of said contract. In its decision of the case ofReclamation District No. 1500 v. Riley, etc.,
"It was evidently not the intention of the legislature to vest in the reclamation board the sole power of carrying out the plan in detail, for it provided that any reclamation district, levee district, drainage district, or municipal corporation should have the right to acquire rights of way, or other easements, and to construct levees, cuts, canals, or gates, subject, of course, to the approval of the plans by the reclamation board, which works might be conveyed to the drainage district upon compensation being made of the actual reasonable cost. In other words, it was contemplated that the different owners and agencies interested in flood control and reclamation of the lands should work in conjunction with the drainage district; the drainage district supplementing the work of other agencies whenever necessary or desirable for the carrying out of the general plan." (Stats. 1913, sec. 18, pp. 268, 275; In re Sutter-Butte By-PassAssessment No. 6, etc.,
It was under the third of these methods that Reclamation District No. 1500 proceeded to function by virtue of an act of the legislature creating such reclamation district and defining its powers. (Stats. 1913, p. 130.) Having done so and having by so doing reached the point in the course of completion of its construction work when it could enter into a contract with the Sacramento and San Joaquin Drainage District through its governing body, the Reclamation Board, for the taking over of the results of its operation it became the duty of the Reclamation Board to investigate and determine as to what had been the actual reasonable cost of such construction work in order to arrive at the basis of compensation which should form the purchase price of the values thus to be taken over. Conceding, as is done in this case, that the work thus far done by the reclamation district had in all respects been legally, properly and skillfully performed, the duty of determining the "actual reasonable cost" thereof involved of necessity many details in the course of such construction and which would enter more or less intimately or necessarily into the outlay for such construction work; and this being so the performance of its duty by the Reclamation Board in the foregoing respect would necessarily involve a large measure of discretion in order to determine just what items of expenditure in the long and involved course of such constructive work were or were not within the range of meaning to be given to the clause in the statute "actual reasonable cost of construction." The exigencies of each particular case and class of constructive work would have to be considered; as, for example, whether "Bank Protection" was required to be done in this or that reclamation district in order to protect and preserve the levees from the action of the stream. Or, to take another example which might well arise out of the fact that reclamation districts undertaking to do construction work within their area and under the statute have at the outset no funds on hand for the prosecution of work which insistently must be begun and completed and which must in one form or another be paid for as the work proceeds in order that it may proceed at all, the expedients to which the particular district undertaking such work in advance of the collection of the moneys by assessment or otherwise, which was ultimately to provide the means of payment *497
therefor, might be driven, such as the discount of its warrants, are matters which from the peculiar nature of the case the Reclamation Board must consider in applying to the situation the provision as to "actual reasonable cost of construction." [4]
It was surely not the intent of the lawmakers in attempting to deal with the complicated problem of reclamation and flood control within the region affected by the overflow of our great central rivers and in committing to specially formed reclamation districts within such region the work of construction of levees, by-passes, channels, etc., to so limit their powers in performing such work, and also the powers of the Reclamation Board in taking over the work which such districts had struggled to skillfully and properly perform, to hamper these respective public agencies as to either the performance of the work or as to the reasonable and adequate payment of the cost thereof when so far performed as to be ready to be turned over to the general drainage district under such agreements as are to be found embodied in contract "A." In order to prevent such consequences we are of the opinion that it was the intent of the legislature to repose in the Reclamation Board the power and discretion of determining what particular items of expenditure in the course of construction came fairly within the meaning of the phrase "actual reasonable cost of construction"; and that the determination of said board upon that subject is final in the absence of any showing of want of good faith or of abuse of such discretion; and hence that the conclusion of said board thereon when expressed in their agreement to take over said work and to pay a stipulated sum as the actual reasonable cost thereof is not to be disturbed by us herein. (Carmichael v. Riley,
The second count in the petitioner's application for a writ of mandate herein involves the question as to the effect to be given to another contract between the parties to this proceeding known and designated as contract "B." Under the express terms of contract "A," above considered, after providing for the allowance and payment of the sum named therein as the principal sum due and payable as the actual reasonable cost of the said levees and rights of way transferred thereby, it was further provided "that the above-mentioned amounts or payments do not include in any way interest charges that may have accrued upon any payment or expenditures made for the cost of construction of these levees and rights of way by said Reclamation District at any time and that said Drainage District reserves unto itself the right to consider and act upon any claim which may in the future be presented by said Reclamation District for such interest and other charges, and said Reclamation District reserves unto itself all its claim and demand for such interest and other charges and enters into this contract without prejudice to said claim and demand for such interest and other charges to be hereafter presented." Thereafter and on November 9, 1922, that certain agreement known and designated as contract "B" was entered into between the parties hereto, wherein, after referring to the foregoing resolution in contract "A" and after reciting that the Reclamation Board had computed the amount of interest referred to in said former agreement and had found the same to amount to $858,665.42, it was agreed that the *499 drainage district should pay said sum as interest upon the principal amount expended for said levees and rights of way as of date of May 22, 1922. It is for the enforcement of this agreement that the petitioner has included the second count in its said application, and it therein alleges that the petitioner in seeking the issuance of said writ does not claim interest as such on any investment or by way of profit, but seeks reimbursement only for such payments and outlays as were actually and compulsorily made by it under the law requiring it to pay interest on its warrants issued for and during the construction of its said levees, and that the sum set forth and agreed to be paid in said contract "B" is wholly made up of such necessary outlay. The answer of the respondents to the second count of said application put in issue the allegations of the petitioner in the foregoing regard and hence upon the first hearing before this court this disputed matter was also referred to the referee for his report and findings thereon. According to the report and findings of said referee "the amount stipulated to be paid in Contract `B,' to wit, eight hundred fifty-eight thousand six hundred and sixty-five and 42-100ths dollars is the interest paid out by Reclamation District No. 1500 upon its warrants issued in payment of the items and each of the items included in Contract `A' from the date of the issuance of said warrants to and including May 22, 1922." It thus appears that the recitals of contract "B" as to the correctness of the amount agreed to be paid thereby and as to what said amount represents, and the report and findings of the referee, are in accord and must therefore be taken to be true. It is, however, the contention of the respondents that the question as to whether interest upon warrants issued by the reclamation district in the course of its construction work can be allowed as a part of the "actual reasonable cost of construction" is not a question of fact which the Reclamation Board had jurisdiction to determine and allow, but is a question of law for this court to determine, and that as a matter of law interest is not allowable as a part of cost of construction, and hence that contract "B" in so far as it undertook to allow and provide for the payment of the same is void. The respondents cite certain cases from other jurisdictions holding that in ordinary cases of contracts for construction of various structures interest has not *500 been allowed as part of the cost of such construction. We have no quarrel with the conclusion arrived at in these cases, but we are of the opinion that these cases have no application to the unique situation presented in the instant proceeding. Under the several acts of the legislature providing for the formation of a number of reclamation districts for the furtherance of the work of levee construction under the general plan of reclamation and flood control in accordance with which the Reclamation Board and the Sacramento and San Joaquin Drainage District came into being, these several reclamation districts were organized for the purpose of promoting intensively the much needed work of flood control in that region. Under these statutes governing their organization and activities they were empowered to proceed at once with this construction work but were provided with no immediate funds with which to so proceed, their only resource being that of levying assessments upon the lands within their respective districts pursuant to the provisions of chapter 1 of article I of title VIII of part 3 of the Political Code. Confronted with the actual and present necessity of engaging in the work of levee construction and of pushing said work to completion as rapidly as the exigencies of the situation would permit, and confronted also with the practical compulsion of financing said work as the same proceeded, there was no other recourse open to these districts than that of either using such credit as they might have in the way of borrowing money to pay for such work as it went on or of issuing interest-bearing warrants therefor against the fund to be secured at some future time through the levy and collection of assessments within their respective districts to be benefited by the prosecution and completion of the work of levee construction and of flood control. In such a situation we are of the opinion that the question as to whether the sums actually expended by these reclamation districts in dealing with an urgent situation through the issuance and eventual liquidation of interest-bearing warrants in payment for the work of levee construction were to be properly classed as costs of such construction was a question of fact for the determination of the Reclamation Board in concluding to take over such levees and other properties acquired in the course of such construction work. Having so determined and having fixed the amount of such expenditures *501 in the way of interest as the sum named in contract "B," and there being in view of the report and findings of the referee no further question as to the correctness of said amount, it is our conclusion that a writ should issue requiring the respondents to allow and to issue a proper warrant for the payment of the same.
This brings us to a consideration of the three remaining counts in petitioner's application and as to these a different situation arises. By the third count therein the petitioner seeks to have the writ of mandate issued to compel the allowance and payment of the sum of $312,982.19, being the amount of interest which the petitioner claims to be due and payable upon the balance of the purchase price of said levees as set forth in said contract "A" and which accrued thereon between May 22, 1922, the date of said contract "A," and the tenth day of October, 1924, and also for such further sum as has accrued thereon since said last-named date. By the fourth count in its said application the petitioner seeks to have a like writ issued to compel the allowance and payment of the sum of $95,470.40 claimed to have accrued as interest upon the sum of the $1,000,000 which was paid to the petitioner by warrants issued and registered on October 3, 1923, in accordance with the terms and agreements of said contract "A" which was made and entered into on May 22, 1922, and by which it was provided that said sum of $1,000,000 should be immediately allowed and paid by the issuance of such warrants therefor. By the fifth count to its said application, added by its amended and supplemental application, the petitioner seeks to have a like writ issued to compel the allowance and payment of the sum of $180,319.73 claimed to be due and payable as interest upon the sum of $858,665.42 agreed to be allowed and paid by the terms and agreements of contract "B," said interest being computed thereon from May 22, 1922, to May 22, 1925, together with such further sum as may be found to be due and payable thereon after said last-named date and up to the time of the issuance of said writ. It is to be observed that these three last counts in the petitioner's original and amended applications relate to several sums of money which are claimed as accrued interest upon certain principal sums of money which the respondents agreed to allow and issue warrants for the payment of by and in *502
contracts "A" and "B," but for portions of which the issuance of interest-bearing warrants was for some time delayed and for other portions of which no warrants have as yet been issued. The petitioner urges at considerable length and with much apparent show of fairness that the petitioner is entitled to receive these several allowances of interest upon said principal sums heretofore in said two contracts agreed upon for the reason that the principal sums upon which it is claimed such interest is due are ultimately to be payable out of the assessment (or the bonds issued in lieu thereof) which has been levied upon the property owners of the entire drainage district of which the land lying within petitioner's reclamation district is a part and that since such assessment, or bonds, is presently drawing interest which the land owners within petitioner's district will eventually have to pay, they should presently be allowed interest upon the several principal sums which the said drainage district has already agreed to pay petitioner on their account, otherwise the interest which these land owners will eventually have to pay upon their assessment or upon the bonds issued or to be issued in lieu thereof will have eaten up the principal sums now and for some time past due and payable to the petitioner on their account. To these equitable considerations the respondents make an equally long and learned reply in the endeavor to show that these matters will eventually work out the equities which the petitioner now invokes. It seems to our minds, however, that these argumentspro and con are largely speculative and that the proposition thus presented is one which it is not our province at this time to attempt to solve; and that there is a more direct answer to the petitioner's present contention. It is this, the petitioner insists upon the application of the rule laid down in sections 1915 et seq. of the Civil Code, relating to the payment of interest for the detention or forbearance in the payment of liquidated sums of money. This rule, while doubtless applicable to ordinary debtors, has no application to state agencies or political subdivisions, the liabilities of which are entirely regulated by the statutes providing for their creation and the limitations of their powers. This question is practically set at rest by the decision of this court in the case of Engebretson
v. City of San Diego,
Let a writ issue in accordance with the conclusions arrived at in the foregoing decision.
Myers, C.J., Lawlor, J., Seawell, J., Waste, J., Shenk, J., and Lennon, J., concurred.
Rehearing denied.