Source: http://courts.mrsc.org/supreme/112wn2d/112wn2d0456.htm
Timestamp: 2019-04-20 04:59:20+00:00

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Municipal Corporations - Powers - Implied Powers - In General. A municipal corporation has such powers as are necessarily or fairly implied in or incident to those powers expressly granted by statute.
 Municipal Corporations - Powers - Proprietary Function Right To Contract. In exercising the proprietary power of conducting a statutorily authorized business, a municipal corporation's right to contract is coextensive with that of a private business or individual under similar circumstances.
 Municipal Corporations - Powers - Proprietary Function Standard of Review. A municipal corporation's exercise of its proprietary power will be upheld on review unless the action taken is arbitrary, capricious, or unreasonable.
 Public Utility Districts - Powers - Lien To Secure Payment for Electricity. A public utility district's power to contract (RCW 54.16.090) includes the implied power to contract with its customers for a lien on real property to secure the payment of electricity charges.
NATURE OF ACTION: Customers of a public utility district sought a declaratory judgment invalidating a lien against their land for unpaid electricity. The district counterclaimed to foreclose the lien.
Superior Court: The Superior Court for Grant County, No. 86-2 00212-6, Evan E. Sperline, J., granted a summary judgment in favor of the customers on September 30, 1987.
Court of Appeals: The court at 51 Wn. App. 704 AFFIRMED the judgment, holding that the district had no authority to create the lien and that the customers were not estopped from challenging the lien.
Supreme Court: Holding that the district had implied authority to include a lien provision in its contract with the customers, the court REVERSES the decision of the Court of Appeals and the judgment, GRANTS judgment in favor of the district, and REMANDS the case for further proceedings.
COUNSEL: RAY A. FOIANINI, for petitioner.
GARTH L. DANO and JILL IRENE LUNN, for respondents.
ELIZABETH THOMAS and THOMAS ELI BACKER, amici curiae for petitioner.
«1» HITE v. PUD 2, 51 Wn. App. 704, 754 P.2d 1274, REVIEW GRANTED, 111 Wn.2d 1018 (1988).
The plaintiffs later entered into a second agreement with the same lien provision, that one being dated February 9, 1976.
In 1980 the plaintiffs sold the property on contract. The plaintiffs did not, however, terminate the irrigation power agreement but transferred their irrigation account to the buyer. The buyer then failed to pay the District's electric bills in 1984 and 1985. After the buyer defaulted on its purchase contract and forfeited its interest in the property, the plaintiffs retook possession and asked the District to provide electricity to irrigate the property. The District agreed to do so, but only if the plaintiffs paid the delinquent bills. The District also threatened to foreclose the lien if the delinquent bills were not paid.
«2» HITE v. PUD 2, SUPRA.
We then granted discretionary review. One issue is presented.
May a public utility district enter into a contract that contains a lien provision as security for the payment of electricity charges?
CONCLUSION. The lien provision is a lawful exercise of a public utility district's statutorily granted power to contract. The powers of a municipal corporation are not limited to those expressly granted by statute, but also include powers necessarily implied in such express powers.
«3» WASHINGTON NATURAL GAS CO. v. PUD 1, 77 Wn.2d 94, 97, 459 P.2d 633 (1969); RCW 54.04.020.
«4» PORT OF SEATTLE v. STATE UTILS. & TRANSP. COMM'N, 92 Wn.2d 789, 794-95, 597 P.2d 383 (1979); TACOMA v. TAXPAYERS, 108 Wn.2d 679, 692, 743 P.2d 793 (1987).
Under RCW 54.16.040, a district has "full and exclusive authority" to sell, regulate and control the use, distribution, rates, service, charges and price of electricity. RCW 54.16.090 gives a district the power to "make contracts . . . and do all other things necessary to carry out the provisions of this title." No statute, however, expressly grants a district authority to create a lien on real property to secure payment of its customers' utility bills. The issue thus is whether a district's power to create a lien must be statutorily spelled out, or whether it may be implied from a district's other powers.
«5» TAXPAYERS, at 693; PUGET SOUND POWER & LIGHT CO. v. PUD 1, 17 Wn. App. 861, 863, 565 P.2d 1221 (1977).
«6» STATE v. O'CONNELL, 83 Wn.2d 797, 834, 523 P.2d 872, 77 A.L.R.3d 874 (1974); SCOTT PAPER CO. v. ANACORTES, 90 Wn.2d 19, 28, 578 P.2d 1292 (1978).
«7» PUD 1 v. NEWPORT, 38 Wn.2d 221, 227-28, 228 P.2d 766 (1951); SEE ALSO 12 E. McQuillin, MUNICIPAL CORPORATIONS 35.27, at 545 (3d rev. ed. 1986).
«8» 2 E. McQuillin, MUNICIPAL CORPORATIONS 10.22, at 1061 (3d rev. ed. 1988); SEE ALSO BAYHA v. PUD 1, 2 Wn.2d 85, 98, 97 P.2d 614 (1939).
«9» TAXPAYERS, at 694; SEE, E.G., METROPOLITAN SEATTLE v. SEATTLE, 57 Wn.2d 446, 460, 357 P.2d 863 (1960).
«10» PUGET SOUND POWER & LIGHT CO., at 864; SEE ALSO 12 E. McQuillin 35.32, at 562.
«11» STOVER v. WINSTON BROS. CO., 185 Wash. 416, 422, 55 P.2d 821, APPEAL DISMISSED, 299 U.S. 508 (1936); SEE ALSO 10 E. McQuillin, MUNICIPAL CORPORATIONS 29.05 (3d rev. ed. 1981).
«12» PACIFIC POWER & LIGHT CO. v. NORRIS, 194 Wash. 91, 94, 77 P.2d 379 (1938).
«13» SEE HITE v. PUD 2, 51 Wn. App. 704, 707-08, 754 P.2d 1274, REVIEW GRANTED, 111 Wn.2d 1018 (1988).
«14» SEE ALSO RCW 35.21.300.
seeking here to fasten upon the property any lien whatever.
METROPOLITAN LIFE INS. CO. v. HANSEN, 179 Wash. 537, 543, 38 P.2d 387 (1934). Since the shutoff right authorized by RCW 35.21.290 is not an actual lien, extending such a right to cities and not to public utility districts does not mean that a public utility district has no authority to agree to a contractual lien on property to secure payment of charges.
«16» WASHINGTON NATURAL GAS CO. v. PUD 1, 77 Wn.2d 94, 100, 459 P.2d 633 (1969).
«17» PEOPLE FOR PRESERV. & DEV. OF FIVE MILE PRAIRIE v. SPOKANE, 51 Wn. App. 816, 822, 755 P.2d 836 (1988).
We agree with the District that its power to contract would be relatively insignificant if contractual provisions were confined to those expressly authorized by statute.
the utility to the discretion of municipal authorities.
or capricious, or unreasonable, . . . (Citations omitted.) TACOMA v. TAXPAYERS, 108 Wn.2d 679, 695, 743 P.2d 793 (1987); BAYHA v. PUD 1, 2 Wn.2d 85, 98, 97 P.2d 614 (1939). SEE 12 E. McQuillin, MUNICIPAL CORPORATIONS 35.27, at 545 (3d ed. 1986).
 Since public utility districts have express authority to make contracts, we perceive no persuasive basis for concluding that the insertion of a lien provision into a contract to secure the eventual payment of start-up costs and other charges is an arbitrary, capricious or unreasonable action or one beyond the scope of the enabling statute.
We therefore conclude that the lien provision in the plaintiffs' irrigation power agreement was a valid exercise of the District's authority to contract. The decisions of the trial court and the Court of Appeals granting summary judgment in favor of the plaintiffs and awarding them attorneys' fees are reversed, and plaintiffs' request to this court for attorneys' fees is denied. The case is remanded to the Superior Court for resolution of any remaining issues.
CONCURRING JUDGES: Callow, C.J., and Utter, Brachtenbach, Dolliver, Dore, Pearson, Durham, and Smith, JJ., concur.

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