Opinion ID: 1194503
Heading Depth: 1
Heading Rank: 2

Heading: Taxpayer's Suit

Text: The first and second causes of action in the taxpayer's suit are disposed of by what has been said as to the unavailability of mandamus where the performance of the contract has proceeded as far as it has here. And as has been noted, mandamus could not be founded on these causes of action for the additional reason that the contracting authority had discretion to reject all bids, and plaintiff could not complain that such action would be arbitrary since the work has proceeded too far to enable the contract to be let on the original terms. As to the last cause of action, designated fourth, as above set out this presented the contention that the specifications were fatally defective, and that any award based thereon was void. This contention was presented solely by the taxpayer's suit. The contention made by defendant in this suit that injunctive relief was the proper remedy, not mandamus, was well taken. Castle v. Kapena, 5 Haw. 27, 38. Plaintiff argues that under the Hawaii Rules of Civil Procedure, Castle v. Kapena should no longer be followed. But as noted, by reason of the dismissal of Interstate Hosts, which dismissal was with prejudice after failure to amend, it has become the law of this case that the action is strictly a mandamus action. Plaintiff further contends that by the pre-trial order defendant waived the contention, made by the earlier motion to dismiss which the trial court denied, that a taxpayer's contention of invalidity of the specifications could not be presented by a mandamus suit. We find it unnecessary to decide whether the point has been waived. Assuming without deciding that notwithstanding the form of action and dismissal of Interstate Hosts with prejudice we could declare the contract void, we proceed to the question whether it is our duty to review the legality of the specifications and enter a declaratory judgment, in other words, whether declaratory relief is called for by the fourth cause of action though for reasons already stated no writ could be issued on the judgment. Cf., Detroit Free Press Co. v. Board of State Auditors, supra, 47 Mich. 135, 144, 10 N.W. 171, 175. The test to be applied was well stated by Mr. Justice Frankfurter writing for the Court in Eccles v. Peoples Bank of Lakewood Village, 333 U.S. 426, 431: A declaratory judgment, like other forms of equitable relief, should be granted only as a matter of judicial discretion, exercised in the public interest. [Citations.] It is always the duty of a court of equity to strike a proper balance between the needs of the plaintiff and the consequences of giving the desired relief. Especially where governmental action is involved, courts should not intervene unless the need for equitable relief is clear, not remote or speculative. Accord: Public Affairs Associates v. Rickover, 369 U.S. 111. This court held in Munoz v. Commissioner of Public Lands, supra, 40 Haw. at 682, that pecuniary damage to the plaintiff as a taxpayer and taxpayers as a class is a requisite of a taxpayer's suit. In some situations such damage may be presumed. Wilson v. Stainback, 39 Haw. 67, 72. Thus in Castle v. Kapena, supra, 5 Haw. 27, it was indicated that an injunction would have been issued, had it been sought, to restrain the defendant from issuing gold par bonds for silver half dollars worth 82% of gold dollars when under the statute the bonds were not to be issued at all unless they brought their par in gold dollars. And in Lucas v. American-Hawaiian Engineering & Constr. Co., 16 Haw. 80, the performance of a contract for public work was restrained when the specifications reserved the right to use in the new structure piles removed from the old structure, and in consequence bidders were uncertain as to the number of new piles called for. The court said: If there has been a violation or evasion of the law requiring the awarding of the contract to the lowest bidder, after a public advertisement for tenders, damage is presumed to result to all taxpayers. (p. 86). But the present case is one of sale of public property, i.e., the right of use of space in the new airport terminal. No expenditure of public money is involved. In such case it was held in Munoz that where there has been no fraud, actual or constructive, pecuniary damage to the taxpayers cannot be presumed, and in the absence of a showing of a loss of revenue which will result in an increase of tax burdens the case is governed by the rule that: Mere illegality is not enough. The requirement that a direct pecuniary injury be shown in a taxpayer's suit is generally recognized. Its importance is emphasized by the holding in Doremus v. Board of Education of the Borough of Hawthorne, 342 U.S. 429, where the court ruled that absent such showing no justiciable case or controversy was presented and the case would not be decided on the merits even if this point was waived in the court below. As stated in Doremus at page 434: The taxpayer's action can meet this [case or controversy] test, but only when it is a good-faith pocket-book action.    While the motives of the plaintiff taxpayer are not material if the taxpayer has shown a clear legal right to a remedy, [28] it is pertinent to note that the present taxpayer's suit was so framed as to serve the interests of Air Terminal Services  the last or fourth cause of action attacking the legality of the specifications repeats and realleges, among other allegations, the averment that Air Terminal's bid was the highest. The gravamen of the complaint was and is that the taxpayers have been deprived of the benefit of Air Terminal Services' bid, either by unjustified refusal to recognize that Air Terminal's bid was the highest, or by illegal indefiniteness of the specifications preventing an award. Assuming without deciding that the taxpayers represented by plaintiff were entitled to have the award so handled as to redound to their benefit, [29] plaintiff taxpayer could attack for indefiniteness specifications which failed to produce the highest financial return, if such was the case. The evidence offered, however, was all to the effect that Air Terminal's bid showed the highest financial return if a good bid. The asserted indefiniteness of the specifications does not prevent us from ascertaining this to be the fact. Whether injury was done to the taxpayers because Air Terminal's bid was not, or by reason of indefiniteness of the specifications could not be accepted, is the turning point. Dobbs House is not involved and any discussion of Dobbs House is outside the framework of the case as fixed in the trial court. [30] Taking the case as thus presented, and considering the matter as we do from the standpoint of what should be done when possession has been taken and part performance rendered under an executed contract, we are not convinced that the taxpayer has made out a case for exercise of the power to enter a declaratory judgment. The taxpayer should have shown that Air Terminal Services' bid was a good bid, backed by financial resources sufficient to assure payment of the guaranteed rent, [31] the loss of which has increased the burdens of the taxpayers. The latter point merits further consideration. The complaint alleged that the State had issued both Aviation Revenue Bonds, [32] and $5,385,601 in general obligation bonds for airport purposes; that the Aviation Revenue Bonds were a first charge on the revenues from airport operations (including concession revenues), and on the airport fund derived from aviation fuel taxes; that in the event of an insufficiency, after all expenditures for operation and maintenance of the airport and payments on the revenue bonds, of revenues for servicing the general obligation bonds, the burden thereof would fall on the taxpayers. The evidence showed, however, that the minimum rent guaranteed by Interstate Hosts, with other revenues, offered sufficient coverage for the bonds. The complaint further alleged that if revenues were insufficient to operate and maintain the airport and make payments on the Aviation Revenue Bonds, aviation fuel taxes or landing fees or both would be increased and this ultimately would be passed on to users of public air transportation, also represented by plaintiff Ellen Lowe Sham. These allegations are too speculative to merit consideration. [33] There having been no clear showing of direct pecuniary injury, the court will not accord relief at this stage of the case even though a less exacting standard of proof might perhaps have been applied under different circumstances. We deem it unnecessary to consider whether positive damage to the public would ensue should declaratory relief be granted, our position being rather that the case falls into the category where, as stated in Munoz v. Commissioner of Public Lands, supra, 40 Haw. at 685, quoting from Rushing v. Lynch, 22 S.W.2d 482, 484 (Tex. Civ. App.): The remedy of action against the wrongful sale would lay with the public, considered as a whole or in the collective sense, acting through duly constituted officers. Here the contest is between a taxpayer, seeking to represent all taxpayers, and a public officer defended by the Attorney General. To wrest the enforcement of the laws from the Attorney General into the hands of the taxpayers in a situation such as that with which we are here confronted, more must be shown than has been shown here.