joint ownership of power plant by municipal corporations and private companies did not violate state constitution since the public shareholders retained veto power and, thus, were not “subject to the overriding control of a shareholder majority.”
How later courts described this case
- joint ownership of power plant by municipal corporations and private companies did not violate state constitution since the public shareholders retained veto power and, thus, were not “subject to the overriding control of a shareholder majority.”
Written by the judges who cited it.
The opinion
Rosellini, J.
(dissenting) — RCW 54.44.020, which authorizes public utility districts to enter into agreements with electrical companies for the undivided ownership of nuclear and other thermal power generating plants and for *732 the planning, financing, acquisition, construction, operation and maintenance thereof, provides:
It shall be provided in such agreements that each city or public utility district shall own a percentage of any common facility equal to the percentage of the money furnished or the value of property supplied by it for the acquisition and construction thereof and shall own and control a like percentage of the electrical output thereof.
If the public utility district owns a percentage of the facility, it owns a share of it. I can conceive of no substantial difference between the ownership of such a share and the ownership of stock in such a facility. The statute does not forbid the public utility district to delegate to the electrical company the right to manage the business, and that has been done in this case. An owner of shares in a corporation has essentially the same interest in the corporation and its property and the same right of control as the public utility district has in this case.
To my mind, it is inescapable that RCW 54.44 is a legislative attempt to avoid the prohibitions contained in Const. art. 8, § 7. That provision says that no municipal corporation shall become directly or indirectly the owner of any stock in or bonds of any association, company or corporation. I can read in this language nothing less than a clearly expressed intent that municipal corporations shall not become involved in projects with private enterprise. The majority concedes that it was the unfortunate experiences resulting from such involvements which prompted the adoption of the provision. They seem to take the view, however, that the dangers which existed in territorial days with regard to involvements with private enterprise no longer exist. This may be true, and it may also be true that it is extremely desirable that municipal corporations should be allowed to participate with private companies in the development and sale of nuclear power and in other projects. If so, that is cause for amendment of the constitution, but that amendment should be effected by the people, using the amendatory process prescribed in the constitution. *733 Amending that document is not a proper function of this court.
The principle upon which the majority rests its decision that RCW 54.44 does not offend Const. art. 8, § 7, appears to be this: A municipal corporation may join with a private company in the development of a resource or construction of a project if a public purpose is served thereby. Significantly, the majority cites no case so holding. On the contrary, this court has always refused to accept that concept when it has been argued. In Johns v. Wadsworth, 80 Wash. 352, 354 , 141 P. 892 (1914), it emphatically rejected a contention that the constitutional provision was intended only to forbid the aiding of private enterprises which serve purely private purposes. In that case a county proposed, pursuant to a statute authorizing it to do so, to give money to a county fair association for the holding of a fair which concededly would benefit the county. The statute provided that any buildings erected with the funds would become the property of the county. This court said:
If the framers of the constitution had intended only to prohibit counties from giving money or loaning credit for other than corporate or public purposes, they would doubtless have said so in direct words. That agricultural fairs serve a good purpose is not questioned, but the constitution makes no distinction between purposes, but directly and unequivocally prohibits all gifts of money, property, or credit to, or in aid of, any corporation, subject to the exception noted. In Rauch v. Chapman, 16 Wash. 568 , 48 Pac. 253 , 58 Am. St. 52, 36 L. R. A. 407, after referring to § 7, art. 8, of the constitution, this court said that a recurrence to the history of the times will show that many municipalities had become bankrupt because of liabilities incurred in aid of railroads, “and various other public improvements which were deemed advantageous” at the time.
That case was quoted with approval in State ex rel. Wash. Nav. Co. v. Pierce County, 184 Wash. 414 , 51 P.2d 407 (1935). Recently, in State ex rel. O’Connell v. Port of Seattle, 65 Wn.2d 801 , 399 P.2d 623 (1965), we held that a municipal corporation may not expend its funds to entertain prospective customers, even though such expenditures *734 may be considered beneficial in the conduct of the corporation’s duties and functions. We quoted at length from Johns v. Wadsworth, supra.
It is true that those cases involved the first clause of Const. art. 8, § 7, pertaining to giving gifts and lending credit. That clause does contain one exception, namely, gifts for the support of the poor and infirm. The second clause, dealing with the acquisition of an interest in a private corporation, contains none. What was said in those cases regarding the first clause is, if anything, even more applicable to the second clause.
The only Washington authority cited by the majority in support of its statement that jointly owned projects do not offend the constitution is Rands v. Clarke County, 79 Wash. 152 , 139 P. 1090 (1914). In that case this court held that the legislature might authorize a county to join with another county in the construction of a bridge. However, as that opinion pointed out, the other party to the enterprise was not a private corporation but rather a corporation whose functions were wholly public. Furthermore, the county had the right and duty to superintend and control the construction of its portion of the bridge. Thus, the case differed from this in at least two significant respects. It does not stand for the proposition that a public corporation may constitutionally enter into a joint enterprise with a private association, that enterprise to be superintended and controlled by the private association.
The majority appears to make some distinction between regulated private corporations and nonregulated corporations. The fact that a corporation is subject to governmental regulation does not make it any the less a private corporation. The constitution does not make the distinction drawn by the majority, any more than it draws a distinction between gifts for public and private purposes.
I would hold, in accord with the past opinions of this court and the clearly expressed intent of the framers of the constitution, that RCW 54.44 is contrary to the mandatory provisions of Const. art. 8, § 7, and cannot stand.
Hale, J., concurs with Rosellini, J.