Sacramento & San Joaquin Drainage District v. Riley

RICHARDS, J. The petitioners herein apply to this court for the issuance of a writ of mandate to be directed to the defendant Ray L. Riley, as Controller, and to Charles G. Johnson, as Treasurer, of the state of California, commanding each of these state officials to severally do and perform certain acts as set forth in said application. The official acts thus sought to be compelled are such, according to the averments of the petitioners, as have arisen in the course and as the result of a long and involved series of events which have attended the history and development of that vast project having for its purpose the reclamation and flood control of the region lying along the course of the Sacramento River and which has become known as “Sutter-Butte By-Pass Project No. 6.” The details of the legislative and judicial history of that project have been already several times set forth in recent decisions by this court and need not be again reviewed for the purposes of the instant case. (Sacramento & San Joaquin Drainage Dist. v. Johnson, 192 Cal. 211 [219 Pac. 442] ; Sacramento & San Joaquin Drainage Dist. v. Riley, 194 Cal. 624 [229 Pac. 957].) The petitioners here are “The Reclamation Board of the State of California,” and Sacramento and San Joaquin Drainage District, a state agency under the management and control of said Reclamation Board. The petitioners, after setting forth the progress of the plans for reclamation and flood, control — 673 — within said district and the steps taken toward the levy and collection of an assessment upon the lands within the same for the purpose of paying the cost thereof, and the validation of such assessment by judicial proceedings conducted in accordance with law, and the proceedings undertaken for a bond issue in aid of such assessment and the validation thereof by such further judicial action as was provided by law for such purpose, proceeded to allege: “That for purposes of co-operation in the construction of the public works included in and provided for by the Reclamation Board in said ‘ Sutter-Butte By-Pass Project No. 6,’ the state of California did by an act approved May 27th, 1919, and which became effective July 27th, 1919 (Stats. 1919, c. 556), appropriate out of any moneys in the state treasury not otherwise appropriated for the benefit of the Sacramento and San Jo an quin Drainage District in connection with said ‘Sutter-Butte By-Pass Project No. 6’ the sum of $3,000,000.00 ‘to bo applied as it is now or may hereafter be provided by law by the said Reclamation Board in connection with said Sutter-Butte By-Pass Project No. 6 of the said Sacramento and San Joaquin Drainage District. ’ ” The appropriation of $3,000,000 provided for in the foregoing act was to be payable in certain annual installments of $300,000, extending over a period of ten years, commencing on July 1, 1921, and to be payable on the first day of July during said successive years down to and including the year 1930. The petitioners allege that there is at present in the state treasury the sum of $590,920.92 derived from such appropriation and from the last two installments which have become available therefrom in pursuance of said act, which said sum of money the petitioners assert the Reclamation Board is presently entitled to have deposited to its credit in the state treasury and in a certain special fund therein and to be thus made available to said Board for the purpose to which the successive installments of said appropriation were to he applied under the terms of the act making such appropriation. The act of 1919 above referred to expressly provided both by its title and by the terms of section 1 thereof that the purpose of the state in making said appropriation of $3,000,000 was that of “co-operation in the construction of the public — 674 — works included in and provided for by that certain project heretofore adopted by the Reclamation Board known as ‘ Sutter-Butte By-Pass No. 6 of Sacramento and San Joaquin Drainage District. ’ ” The act further provided in section 4 thereof that, “The controller of the State of California shall . . . during the fiscal year commencing on the first day of July, 1925, draw his warrant in favor of said Reclamation Board for the sum of three hundred thousand dollars; and shall . . . during the fiscal year 1926, commencing on the 1st day of July, 1926, draw his warrant in favor of said Reclamation Board for the sum of three hundred thousand dollars.” The act further and in the same section provides that, “The treasurer of the State of California is hereby directed to pay each of said warrants out of any moneys in the State treasury not otherwise appropriated. All of said sums shall be applied by the Reclamation Board in the manner as provided by section 1 of this act.” Recurring to section 1 of said act we find that the closing clause thereof reads as follows: “There is hereby appropriated the sum hereinafter set forth out of any moneys in the State treasury, not otherwise appropriated, to be paid to the said Reclamation Board, for the benefit of the said Sacramento and San Joaquin Drainage District, in connection with the Sutter-Butte By-Pass Project No. 6, or any modifications or amendments thereof that may hereafter be made, in accordance with law, the same to be applied as it is now or may hereafter be provided by law by the said Reclamation Board, in connection with said Sutter-Butte By-Pass Project No. 6 of the said Sacramento and San Joaquin Drainage District.” It would appear from the foregoing provisions of said appropriation act that it is the present duty of the state Controller to draw and deliver to the Reclamation Board his warrant in favor of said Board for such sums as have been made available for the uses of said Board by virtue of the fact that the installments of said total appropriation for the fiscal years 1925 and 1926 have become payable. It is not denied that the sum of $590,920.92, being approximately the aggregate of these two installments, is presently available in the state treasury. . We can, therefore, see no reason wh;r the state Controller should not be required to draw his warrant for such aggregate sum in — 675 — favor of the Reclamation Board; nor can we discover any valid reason why the state Treasurer should not be directed to pay said warrant out of such available funds, the same to be applied by the Reclamation Board in the manner provided by the last above-quoted provision of section 1 of said appropriation act. Thus far we can see no objection to granting this writ, but when we look to the further purposes for which the petitioners seek to have a writ of mandate issue herein we are confronted with a more serious situation. The petitioners in substance aver that as the result of operations carried on in the course of the work of reclamation and flood control by said Reclamation Board for the benefit of said Sacramento and San Joaquin Drainage District with special reference to Sutter-Butte By-Pass Project No. 6 prior to July 27, 1913, there were issued and are now outstanding and unpaid warrants drawn against Sutter-Butte By-Pass Assessment No. 6 in the sum of $1,390,509.59 principal, upon which the interest accrued prior to February 6, 1926, amounts to the sum of $716,747.91; that subsequent to July 27, 1919, in pursuance of the further prosecution of said work warrants against said Sutter-Butte By-Pass Assessment No. 6 have been issued by said Reclamation Board in the further sum of $7,475,375.22 principal, upon which sum interest up to February 4, 1926, had accrued in the sum of $1,921,607.62; that the authorized bonds of the Sacramento and San Joaquin Drainage District which are based upon and are secured by Sutter-Butte By-Pass Assessment No. 6 amount to the sum of $7,133,000 and that said bonds to the extent of said last named sum remain unsold; that the owners and holders of certain of the earliest registered unpaid warrants issued prior to July 27, 1919, are desirous of purchasing the said bonds of said Sacramento and San Joaquin Drainage District at par to an amount which would be redeemable through the use of the said sum of $590,920.92 available out of the installments which have become payable during the years 1925 and 1926 on account of said appropriation, provided said bonds so purchased by them to that amount are forthwith redeemed by such use of said moneys; that the petitioners herein have approved said plan and proposition on the part of said warrant-holders and have accordingly adopted a resolution — 676 — so providing, in which resolution it is further provided that the Controller of the state of California be and is hereby directed to immediately draw his warrant or warrants in favor of said Reclamation Board in the sum of $590,920.92, and that the Treasurer of the state of California be and he is thereby directed to pay said warrant or warrants out of any money in the state treasury not otherwise appropriated and that thereupon said money shall be deposited with the • state Treasurer as a special fund for the redemption of such bonds; and. that when said bonds have been sold as aforesaid that the state Controller be and he is thereby directed to authorize the state Treasurer, and the state Treasurer be and is thereby directed to place the money derived from the sale of said bonds, less certain expenses of sale, to the credit of the construction fund of said assessment as provided in section 40 of the Bonding Act (Stats. 1919, p. 1092), and that said state Treasurer be and he is thereby further directed to pay warrants payable out of said fund in the order of their registration. The foregoing averments of the petitioners suggest a number of interesting problems, but we seriously question whether they present an aspect of the situation with which this court is either required or permitted presently to deal. Section 4 of the Appropriation Act of 1919, after providing for the amounts and times of payment of the annual installments on account of said appropriation proceeds to state that “all of said sums shall be applied by the Reclamation Board in the manner as provided by section one of this act.” Section 1 provides that said appropriation is “to be applied as it is now or may hereafter be provided by law by the Reclamation Board in connection with said Sutter-Butte By-Pass Project No. 6 of the Sacramento and San Joaquin Drainage District.” The appropriation act of 1919 was adopted by the legislature of that year contemporaneously with two other acts having application to the affairs of the Sacramento and San Joaquin Drainage District. This béing so, these three acts are for purposes ' of interpretation to be read together. (Sacramento etc. Drainage Dist. v. Johnson, 192 Cal. 211-218 [219 Pac. 442].) The first of said acts to be considered is the act approved May 27, 1919 (Stats. 1919, p. 1122), purporting to — 677 — amend the general Reclamation Board Act approved December 24, 1911 (Stats. 1911, Ex. Sess., p. 117), and the several later amendments made thereto. By its terms a new section was added to said enactment numbered section 34, and in which new section it was provided that “all moneys which may be hereafter paid to the said Reclamation Board under and by virtue of the provisions of an act entitled an act” etc. (referring to the appropriation act contemporaneously adopted), “shall be applied on said Sutter-Butte By-Pass Assessment No. 6 by said Reclamation Board, to the pro rata payment of such portions of said assessment as are based upon flood control benefits.” The said added section further provides that, “The moneys so received by the Reclamation Board from the state shall, unless bonds based upon said assessment shall have been authorized by law, be by the Reclamation Board paid over forthwith to the state Treasurer, to be used and expended in the same manner as funds collected from land owners upon said assessment. But if at the time of the receipt of any such money by the Reclamation Board from the state, bonds based upon said assessment shall have been authorized by law, the money so received from the state shall be deposited by the Reclamation Board with the state Treasurer to be held as a special fund for the redemption of such bonds and shall, under the direction and as required by the Reclamation Board, be applied to the payment and cancellation of such bonds in the manner following, to-wit”: The foregoing provision of said act as enacted in 1919 has direct reference to the other of said three enactments contemporaneously adopted, viz., the act entitled “An act to authorize the issuance and sale of bonds of the Sacramento and San Joaquin Drainage District based upon assessments levied by the Reclamation Board upon lands in said district.” (Stats. 1919, p. 1092.) The above enactment embraces the details of a procedure for the authorization, •issuance, sale and redemption of bonds of said district in aid of the endeavor of the Reclamation Board to finance the already accrued cost of the work of reclamation and flood control, which had been in progress during several .previous years in connection with Sutter-Butte By-Pass Project No. 6, through the issuance and sale of the bonds of said district to an amount .substantially corresponding — 678 — to the cost of said work and which bonds were to be redeemed out of funds to be collected by the Reclamation Board by means of the assessment already levied upon the lands of the property owners in said district, but which had thus far for several reasons remained uncollected, and also out of such other moneys as might come into the hands of said Board from such sources as are designated in the provisions of one or the other of said contemporaneously adopted enactments. When the bonds of said district have been duly authorized, validated and executed in accordance with the earlier provisions of said bonding act, section 33 thereof provides: “The state treasurer shall receive and place the said bonds to the credit of said Sacramento and San Joaquin Drainage District, and shall when and as directed by the Reclamation Board sell any of said bonds, for the best price obtainable therefor, but in no event for less than ninety-five per cent of the face value of such bonds and the accrued interest thereon. Before making a sale of any of said bonds, notice shall be given by the state treasurer that he will sell a specified amount of said bonds, stating the day, hour and place of said sale. Such notice shall state that sealed proposals will be received by him for the purchase of said bonds or any part thereof at the day and hour named in the notice. Such notice shall be given by publication once a week for three successive weeks in a newspaper of general circulation published in the city-of Sacramento. At the time and place appointed in said notice the state treasurer shall open the bids and shall award the purchase of the bonds or any part thereof to the highest responsible bidder, or if the highest bid is not equal to par and accrued interest he shall notify the Reclamation Board of the amounts of the highest bids received, and reject any or all bids if so required by said board.” It is further provided in section 34 of said bonding act: “The money derived from the sale of any of said bonds shall be received by the state treasurer and shall be by him safely kept and placed to the credit of the Sacramento and San Joaquin Drainage District in a fund to be designated as the ‘construction fund of (giving name and number of the assessment upon which the bonds are based),’ and may be drawn and expended upon warrants drawn by the state controller at the request of the Reclamation Board — 679 — upon and payable out of said construction fund, in the same manner as provided by section fifteen of the said reclamation board act with reference to the expenditure of moneys collected upon assessments as in said reclamation board act provided.” It will thus be seen from an examination of the foregoing and the other provisions of these three contemporaneous enactments that a complete statutory method of procedure was therein provided for the procurement of the moneys required to finance said work of reclamation and flood control within said district; that in • accordance with such method when an assessment had been levied and duly validated and when the issuance of bonds to the amount thereof had been duly authorized, and when the validation of such bonds had been judicially accomplished, such bonds, or such amount thereof as may by the Reclamation Board be deemed advisable are to be offered for sale by the state Treasurer under the direction of the Reclamation Board in accordance with the method provided by section 33 of the said bonding act. The method thus provided for the sale of such bonds is as follows: Before making such sale, notice shall be given by the state Treasurer that he will sell a specified amount of said bonds, stating the day, hour and place of such sale and at which time and place sealed proposals will be received by him for the purchase of said bonds or any part thereof. At the time and place appointed in said notice he shall open the bids and award the purchase of the bonds, or any part thereof, to the highest responsible bidder. If the highest bid is not equal to par and accrued interest he shall notify the Reclamation Board of the amounts of the highest bids received and reject any and all bids if so required by the Reclamation Board. If the bonds are sold to the highest responsible bidder the money received therefor from such bidder by the state Treasurer shall be by him placed to the credit of the Sacramento and San Joaquin Drainage District in a fund to be known as the “construction fund,” and may be drawn and expended upon warrants drawn by the state Controller at the request of the Reclamation Board in the same manner as is provided by section 15 of the Reclamation Board Act (Stats. 1913, p. 272), amended by (Stats. 1925, p. 615), with reference to the expenditure of moneys collected upon assess — 680 — ments as in said act provided. When such bonds have been thus sold and transferred to the purchaser or purchasers thereof, upon receipt by the state Treasurer of the purchase price they are subject to redemption in the manner provided in the succeeding sections of said bonding act by the application thereto of the money received by the Beclamation Board through the collection of the assessment already levied upon the lands within said district and from such other moneys as may have been received by the Reclamation Board from the state under the provisions of the contemporaneous appropriation act and in accordance with the provisions of section 34 of the Act Amendatory of the Beclamation Board Act. It will thus be apparent from a consideration of the foregoing provisions of these several acts as they existed prior to the year 1923 that a precise statutory mode of procedure had been designated for the provision of the funds required to pay the cost of the work done in the way of reclamation and flood control within said Drainage District. It requires no authority to sustain the proposition that the mode thus provided is the measure of the powers and duties of those state agencies and officials who are charged with the prosecution of said work and with the disposition of the funds derived from the fore- ' going several sources in payment of the cost of such work and of the outstanding warrants which evidence such cost. It is to be noted at this point in the discussion that section 34, which was added to the Beclamation Board Act in the year 1919, was amended in the year 1923 by the adoption, as an emergency measure, of an act (Stats. 1923, p. 640), which had for its purpose, as expressly set forth therein, the making available of certain moneys which had come into the state treasury since the year 1919 from the receipt of certain installments payable and paid under the provisions of the said appropriation act of that year, in order to carry forward the constructive work upon Sutter-Butte By-Pass Project No. 6, The provisions of said amendment to said section 34, as adopted in the year 1919, were the subject of comment and construction by this court in the two cases of Sacramento and San Joaquin Drainage Dist. v. Johnson, 192 Cal. 211 [219 Pac. 442], and Sacramento and San Joaquin Drainage Dist. v. Riley, — 681 — 194 Cal. 624 [229 Pac. 957]. The petitioners herein do not, however, rely upon any of the provisions of said act of 1923 in support of their claim of right to the issuance of the writ sought herein by any averment in their petition; while in their briefs and also in the briefs of auvicus curiae in support of their said claim reliance upon the terms of said amendment is expressly disclaimed. In other words, the petitioners herein have based their asserted right to the remedies sought herein solely upon the provisions and procedure of the several enactments of the legislature adopted in the year 1919, to which reference has above been made. Keeping in mind, therefore, the foregoing provisions of these several enactments, we may again recur to the averments of the petitioners’ application herein for the purpose of determining whether the procedure outlined therein has been so far followed by these petitioners as to entitle them to still further invoke the processes of this court so as to compel the respondents herein, or either of them, to take any further present action in the due performance of their official duties than that which they have either taken or have been thus far directed to take. By so doing we discover that neither these petitioners nor the warrant-holders in whose interest they are assuming to act have complied or even attempted to comply with the provisions and procedure outlined in said enactments of 1919, and which are essential prerequisites to the remedies they herein seek to invoke. The following are some of the most serious defects of their petition in the foregoing regard: The petitioners, after alleging the due authorization for the issuance of the bonds of said district under the aforesaid bonding act and also the due execution and deposit of said bonds in the office of the state Treasurer as required by said act; and the termination of judicial proceedings validating said bond issue, proceed to aver that the Reclamation Board thereupon proceeded to direct the state Treasurer to offer for sale said bonds; that “notice of said sale of said bonds was given by the state Treasurer from time to time as directed by the State Reclamation Board, but notwithstanding said offers of sale no offer has been made for the purchase of said bonds except as hereinafter specifically set forth.” In another portion of their application the petitioners aver that “the board has not — 682 — been able to sell said bonds or any of them.” Before proceeding to further consider what offer or offers to purchase said bonds, or any of them, have been made according to the averments of the petition herein, it is important to take note of the only mode and method by which offers to purchase said bonds could be made under the provisions of the bonding act above set forth. That mode or method consists in the submission of scaled proposals or bids for such portion of such bonds as the bidder or bidders wish to purchase at the time and place fixed for the sale of said bonds in the notice of such sale given by the state Treasurer. “At the time and place appointed in said notice -the state treasurer shall open the bids and award the purchase of the bonds or any part thereof to the highest responsible bidder.” Such bid or bids for such bonds may be in a sum above par, or at par with accrued interest; but if the highest bid is not equal to par and accrued interest the state Treasurer shall notify the Reclamation Board of the highest bids received and may, if directed by it, reject all bids. Do the petitioners herein allege that any such procedure has been pursued f They do not, but in lieu thereof they proceed to allege, “That the owners and holders of certain of the said registered unpaid warrants drawn against 'Sutter-Butte By-Pass Project No. 6, prior to July 27, 1919, have offered to purchase bonds of said Sacramento and San Joaquin Drainage District based upon and secured by ‘ Sutter-Butte By-Pass Assessment No. 6,’ at par to an amount equal to the amount which can be redeemed out of said moneys so accrued to date as aforesaid under said state appropriation provided that proceeds from said bond sale are deposited for the liquidation of 'warrants draivn against ‘Sutter-Butte By-Pass Assessment No. 6’ in the order of their registration, and that said bonds so purchased be forthwith redeemed out of said $590,920.92 so available, as aforesaid, for bond redemption.” It is plainly to be seen that the foregoing averment of a conditional offer upon the part of the “owners and holders of certain warrants” to purchase the amount of such bonds specified therein utterly fails of even a semblance of compliance with requirements of the bonding act regulating the mode and manner by which the said bonds of the district may be bid for and sold. The warrant-holders in — 683 — respect to the purchase of said bonds are in no different position as bidders therefor than any other would-be purchaser of said bonds, and it cannot surely be contended that either the state Treasurer or the Reclamation Board would be justified in selling and issuing these bonds to any person who might happen to offer to purchase the same at par without any regard for or attempted compliance with the foregoing rigid requirements of these statutes regulating the mode and manner of their disposal. One of the main reasons why bonds of public bodies or agencies are required to be sold at public bidding, after notice is that they may be sold, if possible, for a sum above par if a responsible bidder in such sum can thus be secured. It thus becomes apparent that the proposed purchasers of these bonds have in no respect complied, in either letter or spirit, with the provisions of said statute regulating the mode and method of their sale. But, even if they had done so, or if the petitioners herein had so alleged, they would still have come far short of being shown to be entitled either to receive said bonds as the purchasers thereof, or to have any action taken in the way of the redemption of said bohds, since it nowhere appears that the would-be purchasers of said bonds have paid into the state treasury the sum of money they are alleged to have proposed to pay as the purchase price thereof; on the contrary, it appears from the express averments of the petition herein that the aforesaid proposed purchasers of said bonds do not intend to pay any sum whatever into the state treasury, since by the very terms of their conditional bid for said bonds, the procedure that they propose is that of turning over the warrants owned and held by them to the amount in value of $590,920.92 in payment for said bonds, equaling in par value said amount, when and whenever the state Controller and the state Treasurer shall consent to pay over to them said sum of money in redemption of said unsold, undelivered and as yet unpaid-for bonds. The further specific relief which the petitioners herein demand in the prayer of their petition is that said respondents and each of them be directed “to place all moneys derived from sale of bonds based upon and secured by Sutter-Butte By-Pass Assessment No. 6, after retaining such sums as may be necessary in accordance with the provisions of section 36 of said — 684 — bonding act, to the credit of the construction fund of said assessment as provided in section 40 of said bonding act.” In view of the fact, as affirmatively shown by the petition herein, that thus far no moneys derived from any sale of bonds have yet been received by respondents or either of them for the reason that no bonds have been sold, it seems plain that the petitioners are not presently entitled to the relief above demanded. The further prayer of the petitioners is that the respondent Charles G. Johnson, as state Treasurer, be directed “to pay warrants payable out of such Sutter-Butte By-Pass Assessment No. 6 as funds become available therefor in their proper order of registration .as provided in section 15 of the ‘Reclamation Board Act’ and of section 40 of said Bonding Act.” But since, as we have hereinbefore sought to make plain, these provisions of said act are not available for such purpose when the bonds of the district have been authorized and are subject to sale for the provision of funds for the payment of such warrants ; and since such bonds have been so authorized but still remain unsold, the petitioners herein are not, upon the facts as set forth in their said petition, entitled to any present writ embracing the direction which they last above seek. It follows from what has heretofore been stated in this opinion that the petitioners herein are entitled to the issuance of a writ of mandate directing the respondent herein Ray L. Riley, as state Controller, to forthwith draw his warrant or warrants in favor of the petitioner Reclamation Board in the sum of $590,920.92, and further directing the respondent Charles G. Johnson, as state Treasurer, upon the due presentation of said warrant or warrants to deposit said sum of $590,920.92 in the state treasury to be held as a special fund for the redemption of bonds based upon and secured by Sutter-Butte By-Pass Assessment No. 6; but that said petitioners are entitled to no other and further relief upon the facts as set forth in their petition herein. Let a writ of mandate accordingly issue. Shenk, J., Curtis, J., Seawell, J.s and Waste, C. J., concurred.