Bier v. Clements

167 P. 903, 98 Wash. 310, 1917 Wash. LEXIS 938
Washington Supreme Court·Decided September 18, 1917·No. No. 13930·Published·Cited by 3 cases

Opinion

Morris, J.

Appellant, who is a .taxpayer of 'Benton county, commenced this action below, seeking to enjoin re[311] spondents, as county officers, from issuing or negotiating certain county bonds in the amount of $125,000 for the purpose of erecting a courthouse. The facts, so far as they pertain to the determinative feature upon which we rest our conclusion, are these: Prior to November 11, 1916, the board of commissioners of Benton county consisted of James B. Clements, A. G. McNeil and F. L. Bash. On that day the board met in regular session for the transaction of such business as might properly come before it. The business of the day being apparently concluded, but before any formal adjournment, commissioner Bash departed for his home, thereupon the other two commissioners, no one else being present, adopted the following resolution:

“It appearing to the board that the lease on the courthouse will expire on the 31st day of December, 1916, it is ordered that commissioners Clements and McNeil be authorized to go to Spokane and see what terms can be obtained upon a renewal of the present lease of the courthouse. If no lease can be obtained, to investigate and find out what other quarters can be secured.”

Pursuant to the resolution, commissioners Clements and McNeil, on November 20th or 21st, went to Pasco and consulted with E. A. Davis, an attorney of that city, who, at their request, accompanied the commissioners to Spokane for a conference with Messrs. Zent and Powell upon the legal phase of the scheme then in contemplation. The result of the Spokane conference was a determination to issue county bonds and, out of the proceeds, erect a courthouse. Up to this time no action had been taken by the board of county commissioners relative to the construction of a courthouse, nor had any discussion taken place at any of their meetings suggesting the issuance of county bonds in any form for that purpose; no plans had been adopted looking to the erection of a courthouse; in fact, so far as the board of commissioners was concerned, the idea of erecting a courthouse was yet unborn.

[312] It was further determined at the Spokane meeting that the success of the scheme then contemplated depended upon its being kept secret from all persons other than the moving parties and such financial agents and bond buyers as they might take into their confidence; the necessity of secrecy arising, according to the testimony of the participants in the Spokane conference, in order to avoid litigation and attempts to frustrate the issuance of the bonds upon the part of those residents of the county who were thought tó be opposed to the erection of a courthouse at Prosser, the contention being that such attempts would interfere with the salability of the bonds and materially affect their value. The two commissioners returned to their homes, leaving the matter of arranging the details of the bond issue and the procurement of a buyer with their attorneys. The next meeting of the board of commissioners of Benton county was to take place on December 4th. Between the adjournment of the Spokane conference and December 4th, all parties interested were successful in maintaining the desired secrecy. There was no leak. Outside of Clements and McNeil, so far as the record advises us, no one in Benton county knew what had transpired nor what was contemplated, the two commissioners not even taking Bash into their confidence nor giving him any inkling of present or coming events as related to the contemplated bond issue.

On Sunday, December 3d, Mr. Zent, of counsel employed by Clements and McNeil, appeared at Prosser with the bonds issued in serial number from 1 to 250, inclusive, aggregating $125,000. The bonds were dated December 4th, and contained an unsigned certificate of registration. On December 3, Mr. Zent and commissioner Clements, the chairman of the board, appeared at the home of county treasurer Harper, and there commissioner Clements signed the bonds as chairman of the board, and the county treasurer, at the request of Clements, attached his signature to the certificate of registration. On the same day, the county auditor was re[313] quested to attest the bonds and was informed that the bonds had been sold and that the board at its meeting the next day would pass a resolution authorizing the issue and another resolution confirming the sale to the purchaser, who was then upon the ground all ready to complete his part of the transaction. On Monday morning the board of commissioners met and a resolution, previously prepared, was introduced authorizing the issuance of the bonds in the form and manner already determined upon. This resolution was adopted upon the vote of commissioners Clements and McNeil, commissioner Bash, who testified that this was the first intimation of the whole matter coming to his knowledge, voting in the negative. Commissioner McNeil then presented two letters and one telegram in which offers were made to take the bonds at par with interest at 5% per cent per annum. A fourth bidder, Geo. B. Keeler, appeared in person and submitted a written bid offering the same amount as the other bidders, accompanied by a sight draft on his firm of $5,000. Commissioner McNeil moved that the last bid be accepted, and Mr. Keeler then presented a formal resolution evidently, like the bonds and prior resolution, prepared in advance, setting forth the adoption of the prior resolution to issue the bonds, the receipt and canvass of bids, a finding that'the bid of Keeler Brothers was the highest and best bid, and formally accepting the same. This resolution was adopted by commissioners Clements arid McNeil. During this time objections were made to all the procedure on the part of appellant and others, who had been advised by the county auditor on Sunday of what was sought to be accomplished.

At the trial, witnesses on behalf of appellant, representing reputable bond buyers and the state board of finance, testified that, based upon market conditions and actual sales of like municipal securities at the time, these bonds, if advertised and offered for sale on the open market, would have brought par at 4% or 4%, and if sold at 5% would have brought a premium of at least eleven points. ■ Respondents [314] offered proof to the effect that the sale was made at a fair price, but the evidence of the witnesses so testifying is not reliable, not being based upon knowledge of market conditions for like securities, but being advanced largely as an opinion based upon the supposition that the price of the bonds would be affected by litigation, a supposition which is not borne out by the record, except as it may have been intimated to the four bidders interviewed by the attorneys for respondents and who, with strange unanimity, bid exactly the same price, permitting one of them to attend in person and accompany his bid with a sight draft on his own firm of $5,000. There was no reason why Benton county securities should bring a less price than like securities of other municipalities. The county was in excellent financial condition. It had at the time a valuation in excess of $12,000,000, and was on a cash basis with no indebtedness.

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Bier v. Clements, 167 P. 903, 98 Wash. 310, 1917 Wash. LEXIS 938 (Wash. 1917).

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