Court Opinion

ID: 9623726
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:41:48.486391+00
Date Added: 2024-06-11T09:52:59.822098
License: Public Domain

Utter, J.
(dissenting) — I dissent from the majority's conclusion that this court should not review its holding reached in Chemical Bank v. WPPSS, 99 Wn.2d 772, 666 P.2d 329 (1983). The provisions of RAP 2.5(c)(2) clearly authorize reconsideration.
The appellate court may at the instance of a party review the propriety of an earlier decision of the appellate court in the same case and, where justice would best be served, decide the case on the basis of the appellate court's opinion of the law at the time of the later review.
The history of this rule indicates it was adopted by this court for precisely the situation we now face, a situation where adherence to the earlier ruling as the rule of the case would be both unwise and a perpetuation of earlier error. As of the date of this opinion, at least four scholarly publications have reviewed the court's initial opinion and all four are critical of its conclusion and the reasoning used to justify it. Comment, Chemical Bank v. WPPSS: A Case of Judicial Meltdown, 5 J. Energy L. & Pol'y 273 (1984); Comment, Chemical Bank v. Washington Public Power Supply System: An Aberration in Washington's Application of the Ultra Vires Doctrine, 8 U. Puget Sound L. Rev. 59 (1984); Note, A Cry for Reform in Construing Washington Municipal Corporation Statutes, 59 Wash. L. Rev. 653 (1984); Note, Chemical Bank v. Washington Public Power Supply System: The Questionable Use of the Ultra Vires Doctrine To Invalidate Governmental Take-or-Pay Obli*914gations, 69 Cornell L. Rev. 1094 (1984). Events occurring since publication of our first opinion make clear it will in no way spare the people of this state continuing costs of litigation and exposure to liability. On October 15, 1984, investors who bought bonds for WNP 4 and WNP 5 filed a claim for $7.25 billion against the State of Washington. The entire populace of the state is now potentially liable, including those areas that specifically rejected participation.
The majority fails to convincingly deal with the question of how this court can make a finding of fact on disputed evidence contrary to all our previous case law. The appellants will undoubtedly ask for federal review on this ground. In the event they do, the United States Supreme Court should exercise its discretion and accept this case for review. Our court's action is similar to that taken by many state courts in the Reconstruction era which were reversed on constitutional grounds by the United States Supreme Court.
In Gelpcke v. Dubuque, 68 U.S. (1 Wall.) 175, 17 L. Ed. 520 (1863), the Supreme Court rejected the Iowa Supreme Court's refusal to enforce railroad bonds.
[I]f the contract, when made, was valid by the laws of the State as then expounded by all departments of the government, and administered in its courts of justice, its validity and obligation cannot be impaired by any subsequent action of legislation, or decision of its courts altering the construction of the law."
Gelpcke, at 206. Many subsequent decisions during the Reconstruction era went even farther. See generally C. Fairman, History of the Supreme Court of the United States 918-1116 (1971).
The Supreme Court continues to invoke the takings clause and the contracts clause to protect citizens from the transfer of private property to public purposes by governmental action. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 66 L. Ed. 2d 358, 101 S. Ct. 446 (1980); Energy Reserves Group, Inc. v. Kansas Power & Light Co., *915459 U.S. 400, 74 L. Ed. 2d 569, 103 S. Ct. 697 (1983). In this century, most takings and contracts clause cases respond to legislative, not judicial action. Nonetheless the United States Supreme Court continues to recognize that state courts may not "redefine" as public what had been vested private rights. Webb's Fabulous Pharmacies, Inc. v. Beck-with, 449 U.S. at 164 (restraining Florida Supreme Court from " transform [ing] private property into public property without compensation").
I
I disagree with the majority on a number of grounds in its ruling that the Washington public utility districts (PUD's) and Washington municipal participants lacked authority to enter into their respective agreements. Although it is difficult for this court to admit it was in error in the largest case to come before this court in its history, we should do so now. By so doing we would let the normal legal processes resolve this dispute on the facts and the law which should be applied.
A
The majority opinion throws into confusion a body of municipal law carefully developed over many years prior to this case which granted to municipalities broad authority in the exercise of their police powers. This power to manage their own affairs, subject to broad legislative guidance, has been carefully built into our constitution, statutes and case law. Our own recent cases, not mentioned by either majority opinion, confirm this. Issaquah v. Teleprompter Corp., 93 Wn.2d 567, 611 P.2d 741 (1980) and United States v. North Bonneville, 94 Wn.2d 827, 621 P.2d 127 (1980).
Prior to Chemical Bank I, this court liberally construed powers given to first class and code cities. Winkenwerder v. Yakima, 52 Wn.2d 617, 622, 328 P.2d 873, 878 (1958). RCW 35.20.900. In determining whether municipalities were given certain powers to act, we have liberally applied the "reasonable necessity test" where police power actions are involved. Scott Paper Co. v. Anacortes, 90 Wn.2d 19, 29, *916578 P.2d 1292, 1298 (1978); Hunter v. North Mason High Sch., 85 Wn.2d 810, 817, 539 P.2d 845, 849 (1975).
By finding no express authority to enter into the participants' agreement (PA) in Chemical Bank I, this court did not comment on several earlier accepted rulings. In the majority opinion, first class and code cities were given the same restrictive interpretation of their statutory authority as were other cities. This is contrary to our own consistent line of earlier authority. Winkenwerder v. Yakima, supra.
The majority inadequately deals with our previous holdings which have placed actions involving public works within the liberally interpreted police powers of cities, counties and towns. Housing Auth. v. Seattle, 56 Wn.2d 10, 15, 351 P.2d 117, 120 (1960); Kaul v. Chehalis, 45 Wn.2d 616, 625, 277 P.2d 352, 357 (1954); and Morse v. Wise, 37 Wn.2d 806, 810-11, 226 P.2d 214, 216 (1951).
The court in its majority opinion also erroneously interprets the legislative intent expressed in our statutes that authorize certain municipal corporations to construct, acquire and operate electric generating facilities. RCW 35.92.050 and 54.16.040. These statutes focus on control over the electricity produced, rather than on control over the facilities, as emphasized by the majority.
The legislative declaration requiring broad construction of joint operating agency statutes is ignored by the majority. See RCW 43.52.910. Instead, its opinion strictly construes RCW 43.52 to achieve what I believe is a nonexistent distinction between powers of a joint operating agency and powers of its participants. RCW 43.52.910.
I also disagree with that portion of the majority opinion dealing with implied statutory authority. Contrary to our general liberal interpretation of police power statutes, the court relied on taxation, not police power decisions, to hold that the test for implied powers is legal necessity instead of the fairly implied or reasonable necessity test. See, e.g., Scott Paper Co. v. Anacortes, 90 Wn.2d 19, 29, 578 P.2d 1292, 1298 (1978). Taxation cases are totally inapplicable inasmuch as they rely on different constitutional provisions *917than the police power cases. Const. art. 7, §§ 5, 9; art. 11, § 12. In Hillis Homes, Inc. v. Snohomish Cy., 97 Wn.2d 804, 809, 650 P.2d 193, 195 (1982), the court required express statutory authority under the wording of article 11, section 12, a taxation provision. On the other hand, Const. art. 11, §11 provides:
Any county, city, town or township may make and enforce within its limits all such local police, sanitary and other regulations as are not in conflict with general laws.
This section is effective without legislative enactment and is a more direct grant of authority than that found in the taxation sections. Patton v. Bellingham, 179 Wash. 566, 570, 38 P.2d 364, 365 (1934). This court's earlier attempt to distinguish Municipality of Metro Seattle v. Seattle, 57 Wn.2d 446, 460, 357 P.2d 863, 872 (1960) fails, due to its basic error which confuses tax cases with police power cases.
Serious questions remain regarding the impact of our decision, if unchanged, on future Washington law. Note, A Cry for Reform in Construing Washington Municipal Corporation Statutes, supra at 667-69. Any action not backed by the clearest express authority may well be found to be ultra vires. Legal opinions regarding municipal authority will be difficult to give and municipal projects, without legislative or judicial approval of municipal authority, difficult to market. Municipal corporations are deprived of the opportunity for innovative solutions to their problems in the absence of a clear expression of legislative or judicial approval. The decision provides a fertile ground for judicial challenge to major municipal undertakings and limits the ability of municipal corporations to work between themselves to solve their common problems. Declaratory judgment proceedings will increase, of necessity, adding to overcrowded court dockets, diversion of scarce judicial resources and increased cost to taxpayers of time and money.
Most seriously, municipal corporations will be required to increasingly ask for legislative clarification of their *918authority. Given the Legislature's limited schedule, significant time lags between identification of problems and legislatively authorized solutions will be commonplace.
B
There are some 28 Washington municipalities and PUD's as participants involved in Washington Public Power Supply System (WPPSS). The question of whether they had statutory authority to enter into their respective agreements was the subject of Chemical Bank I. Of these participants, 19 are PUD's and 9 are Washington cities of various classes. PUD's are granted authority to purchase electricity under the terms of RCW 54.16.040.11 Each class of municipal participant had similar grants of authority to purchase electricity. See, e.g., RCW 35.23.440(43); RCW 35.24.290(3); RCW 35.27.370(4); and RCW 35A.80.010.
In addition to the previously cited authority, the statutes creating WPPSS add an additional layer of statutory *919authority to purchase electricity. Creation of a joint operating agency is authorized which "shall have authority" (1) to generate, produce, transmit, deliver, exchange, purchase or sell electric energy and to enter into contracts for any and all such purposes, RCW 43.52.300(1); (2) to construct, condemn, purchase, lease, acquire, operate, develop and regulate facilities for the generation of electric energy, RCW 43.52.300(2); (3) to enter into contracts for sale, exchange, transmission or use of electric energy, RCW 43.52.300(3), (4); (4) to act as agent for the purchase and sale at wholesale of electricity for any city or district whenever requested to do so, RCW 43.52.300(7). The Legislature mandated that these statutes be liberally construed to effectuate their purposes. RCW 43.52.910.
A third category of statutes grants cities and PUD's the authority to enter into joint operating agencies for the purpose of developing nuclear power. RCW 54.44.020 requires that the utility or city
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.
That chapter also limits the participant's liability to its own acts and forbids the participant from assuming any of the other participants' debt or obligation. RCW 54.44.030.
A fourth category grants cities and PUD's authority to construct energy facilities on their own. They are authorized by RCW 35.92.050 to construct, condemn, purchase and acquire facilities for the purpose of furnishing the city or town or its inhabitants with electricity.
The court's opinion in Chemical Bank I reasoned that the participants' agreement with WPPSS failed to satisfy the statutory scheme governing public participants for a number of reasons. The majority held: (1) The agreement is not a standard contract for the purchase of power because the payments are due irrespective of whether any electric current is delivered. (2) It is not the type of acquisition or *920construction of a generating project authorized by the statutes or previously recognized by this court, because the participants retain no ownership interest, except in any excess assets upon termination, and a very limited role in management of the project. (3) It is not an exercise of an implied power to pay for municipal services because there was no guaranty the services would be provided and we perceive no legal necessity for such powers. (4) Finally, it is not a joint operating agreement within the provisions of RCW 43.52 because those provisions limit the participants' ability to buy anything more than "electric energy". Chemical Bank I, at 798-99.
I have previously stated why, as a matter of law, I believe the majority was incorrect. The majority in Chemical Bank I is also in error when it assumes, as a matter of fact, that ownership, or its equivalent in terms of control, did not exist under the facts of this case. In Chemical Bank I, at pages 787-88, the majority, in referring to the complexity of budgets and construction decisions, states that it was "unlikely that a part-time committee . . . could provide significant input" and asserts that the participants' committee "apparently served as a rubber stamp".
For the majority to resolve these issues as factual conclusions violates Washington Constitution article 4, section 6, which gives to the trial courts the sole authority to decide factual issues.
Factual disputes are to be resolved by the trial court. . . . The power of this court is appellate only, which does not include a retrial here but is limited to ascertaining whether the findings are supported by substantial evidence or not. If we were so disposed, but we are not, we are not authorized to substitute our judgment for that of the trial court.
Stringfellow v. Stringfellow, 56 Wn.2d 957, 959, 350 P.2d 1003 (1960).
The majority in Chemical Bank I, and today, incorrectly relies on Kelly v. Aetna Cas. & Sur. Co., 100 Wn.2d 401, 670 P.2d 267 (1983) to justify this court's authority to *921resolve issues of ownership control by characterizing them as questions of law rather than fact. The interpretation of the participants' agreement, the majority asserts, is solely a matter of law. Its statement of the law contained in Kelly is incomplete, however, for the interpretation or legal effect of a contract is a matter of law for the court only in the absence of disputed facts. Yeats v. Estate of Yeats, 90 Wn.2d 201, 580 P.2d 617 (1978); Epperly v. Seattle, 65 Wn.2d 777, 399 P.2d 591 (1965). See generally 4 S. Williston, Contracts § 616 (3d ed. 1961); 3 A. Corbin, Contracts §§ 554, 595 (1960 & Supp. 1984).
In Kelly, an insurance law case, the Washington Supreme Court found summary judgment appropriate where a complete factual record had been developed and no dispute other than the legal meaning of a term contained in an insurance policy existed. The court found the interpretation of the term "owner" to be a question of law. The decision in Kelly is consistent with the established legal principle that the interpretation or legal meanings of specific terms within insurance contracts is generally a question of law. See Pacific Indem. Co. v. Bloedel Timberlands Dev., Inc., 28 Wn. App. 466, 624 P.2d 734 (1981); see generally E. Farns-worth, Contracts 515-17 (1982). In Kelly, we engaged in no weighing of evidence or trying of facts.
Unlike Kelly, the present case presents numerous factual disputes which go well beyond the mere legal definition of terms. Since numerous factual questions relating to the actual operation of the participants' agreement exist, consistency with both Washington contract and constitutional law requires that a full factual record be developed and that all factual disputes be resolved at the trial level.
Even if the majority correctly resolved the issues of ownership and control, however, it did not by so doing answer all of the necessary issues that remained before the court for decision. As a matter of statutory interpretation, not all the statutes pertaining to the PUD's and municipalities require ownership. Some, such as RCW 35.92.050, on their face authorize schemes similar to the participants' agree*922ment. While the first portion of RCW 35.92.050 speaks to ownership interests, the statute also states that a city or town may
authorize the construction of such plant or plants by others for the same purpose, and purchase gas, electricity, or power from either within or without the city or town for its own use and for the purpose of selling to its inhabitants and to other persons doing business within the city or town and regulate and control the use and price thereof.
This provision was an integral part of Judge Coleman's decision at the trial level, is not adequately dealt with by the majority, and provides authority for the participants to act.
As another alternative, were this court to find the majority's conclusions in Chemical Bank I correct, appellants argue that, on the record, 20 of the participants had control by virtue of their membership in WPPSS. Those 20 participants represent 68 percent of the project's shares and held 88 percent of the voting power on WPPSS. As to these participants, the statutes governing WPPSS grant them both ownership and management control over the projects. See RCW 43.52.370 and 43.52.374 (management and control of joint operating agency vested in a board composed of member utilities and outside directors); RCW 43.52.360 (after dissolution, members hold assets as tenants in common). The majority in Chemical Bank I also failed to address itself to this argument. Given this degree of control over the projects by the large majority of the participants, this court was in error in concluding as a matter of law, without further factual inquiry, that these participants lacked sufficient control over the projects to protect their ratepayers.
Even if the majority's conclusion that the participants did not have an ownership interest in WNP 4 and WNP 5 was correct, the participants' committee provided the participants with a vehicle to exert their management control. Although I cannot disagree with the majority's determina*923tion that "the participants' committee apparently served as a rubber stamp for WPPSS' decisions," Chemical Bank I, at 788, courts have consistently recognized in securities litigation that investors who fail to exercise opportunities for control available to them cannot later claim they lacked control. See, e.g., Mr. Steak, Inc. v. River City Steak, Inc., 460 F.2d 666 (10th Cir. 1972), aff'g 324 F. Supp. 640 (D. Colo. 1970). Absent documentation that their attempts to control debt exposure through the WPPSS participants' committee were frustrated, this court and the federal courts should not permit the participants to argue they had no management control.
For all the above stated reasons, I would affirm the summary judgment granted by the trial court in all respects. Our failure to find authority exists for the participants to enter into the agreements raises serious questions as to the basis upon which Washington nuclear power plants 1, 2 and 3 were built. These plants were built with the same basic agreements as those entered into by the participants in WNP 4 and WNP 5, with the added benefit of net billing. If the participants did not have authority to enter into the agreements for plants 4 and 5, they could not now assert the right to participants' shares in a working plant. Such a conclusion could well force the Bonneville Power Authority to seize the participants' interests in plants 1, 2 and 3.
C
By ruling only on the authority issue, the court in Chemical Bank I did not address the other issues before the court in that case. The lower court's ruling should be discussed on these matters inasmuch as it was correct in every respect and the factual issues remaining to be resolved should proceed to trial.
The trial court did not abuse its discretion in deciding to strike the jury demand. Its reliance on Brown v. Safeway Stores, Inc., 94 Wn.2d 359, 617 P.2d 704 (1980) was proper. There we noted, "[i]n determining whether a case is primarily equitable in nature or is an action at law, the trial *924court is accorded wide discretion, the exercise of which will not be disturbed except for clear abuse." Brown, at 368. The trial judge explicitly applied in his analysis the factors required in the Brown case. He first considered that the issues raised were an affirmative defense, but looked beyond the pleadings to the true nature of the allegations and concluded that this was, in fact, an action for rescission.
The court acted within its authority and no showing has been made that there was a reversible abuse of discretion. The record supports its conclusion that the participants' equitable affirmative defense was to seek rescission of the contract and that this is not a case of a defendant attempting to destroy the right to a jury by asserting equitable defenses; that participants seek both equitable relief and a jury; that the main issues are equitable; that the equitable issues are complex; that only the equitable issues remain to be tried if the other aspects of its ruling are upheld; that the overall nature of the action is not doubtful; and lastly, that the real issues in dispute are equitable.
The trial court also properly determined that the liabilities incurred by the participants did not exceed statutory or constitutional debt limitations. The determinative issue is whether the participants' liabilities are a debt for constitutional debt limitation purposes. This court has defined "debt" in the context of article 8 to mean "borrowed money; it denotes an obligation created by the loan of money, usually evidenced by bonds but possibly created by the issuance of paper bearing a different label." State ex rel. Wittier v. Yelle, 65 Wn.2d 660, 668-69, 399 P.2d 319 (1965). We have in the past consistently held that the provisions of article 8, section 6 of the Washington Constitution do not apply under revenue financing conducted through the bases of the "special fund" doctrine. The rationale behind this exemption is that obligations payable not from general tax revenues but from a special fund are not debts of the municipality in a constitutional or statutory sense. State ex rel. State Fin. Comm. v. Martin, 62 *925Wn.2d 645, 661, 384 P.2d 833 (1963). The parties designed this revenue bond program to conform to the requirements of the special fund doctrine. The source of the payments on the bond are either (1) revenues generated from the projects, or (2) revenues pledged by participating public utilities. As such, according to our previous rulings, the participants' obligations do not fall within the constitutional or statutory debt limitations.
Finally, the trial court properly held that the contracts obligate the participants to pay costs of decommissioning in debt service. Decommissioning costs refer to payments to contractors for work done on the projects as well as payments to settle contracts interrupted when the projects were terminated. PA § 13(a)(ii), at 36-37. Debt service refers to the principal and interest payments to the bondholders.
To resolve whether the trial court correctly interpreted the obligation of the participants to pay the costs of decommissioning in debt service requires an examination of the participants' agreement and bond resolution (BR). Interpretation of the agreement is governed by the fact that the projects were terminated pursuant to section 13 of the participants' agreement but that termination occurred prior to the completion of the projects. Project financing was structured so that payment sources depended upon whether the project was under construction, operating or terminated. There are three key definitions involved: "contract year", "billing statement" and "annual budget".
"Contract year" as defined in the participants' agreement starts on the earliest of three dates: "(i) the earlier of the Dates of Continuous Operation of any of the Plants or (ii) on July 1, 1988, or (iii) the date one year after the date of termination of the Project as provided in Section 13". PA § 1(g), at 7. These trigger dates represent the possible commencement of participant payments. After the contract year begins, the monthly billing statement determines the amount to be paid the supply system by the participant. PA § 1(b), at 4-5. That amount is calculated by multiplying *926the participant's share by the amount of the annual budget less payments from other sources, and adding the cost of fuel. Finally, annual budget is defined as:
"Annual Budget" means the budget adopted by Supply System pursuant to Section 8(b) with respect to the Projects and which itemizes the estimated costs of each Project, commencing with (i) the Date of Continuous Operation of the Plant related to such Project, or (ii) July 1, 1988, or (iii) the date one year after the date of termination of a Project as provided in Section 13, whichever is earliest, exclusive of costs of construction as defined in the Bond Resolution, and costs of fuel, applicable to the respective Contract Year . . . The Annual Budget, as amended from time to time, shall make provision for all such Supply System's costs, including accruals and amortizations, resulting from the ownership, operation and maintenance of the Projects, repairs, renewals, replacements, and additions thereto and costs of termination thereof as provided in Section 13, together with the amounts over or under billed in accordance with subsection (b) below. The Annual Budget shall include, but not be limited to, (i) the amounts which Supply System is required under the Bond Resolution to pay in each Contract Year into the various funds provided for in the Bond Resolution from the Revenue Fund, as therein defined, for debt service and all other purposes . . .
PA § 1(a), at 3-4.
Prior to the three possible trigger dates, which were (1) 1 year after the termination of the project; or (2) July 1, 1988; or (3) the date of continuous operation of a plant, payment of the project's costs were not made by participants. Instead, bond proceeds were used. However, after the so-called trigger dates, participant payments are required to begin through the annual budget.
The trial court correctly determined that under the applicable provisions of the participants' agreement, decommissioning costs are unequivocally included in the annual budget. The projects were correctly terminated pursuant to section 13 of the participants' agreement which requires WPPSS to begin decommissioning the projects and make monthly accounting statements to the partici*927pants. The annual budget definition expressly includes "costs of termination thereof as provided in Section 13". PA § 1(a), at 4. The final accounting section 13 requires is a final report to the participants as to any remaining decommissioning costs.
The agreements established successive sources of payments to the bondholders for the costs of debt service. First, when bonds are being sold to finance the projects, BR § 6.8A2, at 42-43 requires WPPSS to pay from bond proceeds into the bond fund amounts necessary to provide for payment of interest on the bonds. These payments are defined as a "cost of construction." BR § 6.9F, at 46. It is apparent these provisions were drafted to anticipate ongoing construction and bond sales. Inasmuch as these two activities are not indefinite, the parties provided for three "trigger" dates at which time alternative means of funding would be used. Under section 6.2 of the bond resolution, that date is the earliest of: (1) 1 month from the date of continuous operation (at which time operating revenues, at least in part, would begin to pay for the debt); or (2) July 25, 1988 (the presumed latest date for construction to be completed); or (3) 1 year after the date of termination. BR § 6.2A(l)-(3), at 29-31. As structured, there were "successive" sources of payment depending upon whether the projects were under construction, operating or terminated. Because the plants were terminated in January of 1982, the third alternative source would apply.
Under this latter provision, WPPSS must pay from the revenue fund to the bond fund "cost[s] of termination", i.e., amounts necessary to satisfy the debt payments. BR § 6.2A(3), at 31. The definition of annual budget in the participants' agreement expressly includes "debt service", PA § 1(a), at 4, which means the participants must pay these amounts.
Respondents make several arguments. Their argument that the documents do not provide for "dry hole" risks is erroneous. The bond resolution provides for payment from "money pledged hereunder" which includes, by necessity, *928participants' revenues and does not depend on revenues generated by the project or general obligation bonds. Appellants argue that the costs of construction are explicitly exempted from the annual budget, PA § 1(a), at 3, which means that debt service is payable only from amounts properly payable into the revenue fund. The trial court correctly found that BR § 6.2A(3) resolves this problem. Finally, respondents argue they are not obligated to pay for any debt service because the annual budget definition limits debt service to payments from the "revenue fund". PA § 1(a), at 4. Respondents correctly point out that section 6.1 only defines what goes into the revenue fund, but that under section 6.2, WPPSS is required to pay for all unfunded debt service. Participants' pledged revenues must be used to pay those obligations.
For the foregoing reasons, I would affirm the initial ruling of the trial court which leaves for trial the equitable defenses asserted by the respondents. I would also deny bondholders' motion to intervene.
II
While I agree with a major part of the discussion by the majority regarding the history of the development of equitable remedies, it is important to first note that the history of our legal system suggests several general principles which shape the application of equitable relief. First, although lawyers generally speak of law and equity as separate concepts, history belies this characterization. Law and equity had common origins and goals. See generally W. deFuniak, Modern Equity 6 (2d ed. 1956); F. Maitland, Equity 15 (1949). They were brought to England via the Normans, diverged as the need arose to preserve individual jurisdiction and merged again as that need abated. F. Maitland. Second, each legal system attempted to do justice within the confines of its procedural limitations and each, at some point, was more rigid in its rules than the other. G. Keeton & L. Sheridan, Equity 3 (1969). Third, both legal systems seem to have borrowed from each other during the period *929in which they had separate identities. Since that time, both systems have adopted concepts wholesale. One rule, common to both, is the proposition that the law will enforce promises.
Washington has consistently recognized equitable principles and enforced promises in specific circumstances. Our courts have stated: Equity will not suffer a wrong to be without a remedy, Rummens v. Guaranty Trust Co., 199 Wash. 337, 346-47, 92 P.2d 228 (1939); equity treats that as done which by agreement is to be done, Fleishbein v. Thorne, 193 Wash. 65, 72, 74 P.2d 880 (1937); and he who comes into equity must come with clean hands, Langley v. Devlin, 95 Wash. 171, 187, 163 P. 395 (1917). To enforce these maxims, our legal system developed specific rules recognized in Washington law and elsewhere and described in part in the discussion in the majority.
There are two equitable theories which I believe warrant recovery by the appellants. Although the majority correctly concludes that RCW 62A.8-201 is inapplicable, RCW 62A.8 and our history of common law estoppel point to another theory of recovery raised by implication in the briefs of appellants. That theory, recognized long ago in English courts of equity, and now embodied in Restatement (Second) of Contracts § 90 (1981), states that a promise which the promisor should reasonably expect to induce action on the part of the promisee is binding if injustice can be avoided only by enforcement. Like equitable estoppel, our courts have acknowledged that under the right facts, the doctrine may be applied against a municipality. See State v. Northwest Magnesite Co., 28 Wn.2d 1, 26, 182 P.2d 643 (1947). See also Annot., Promissory Estoppel, 48 A.L.R.2d 1069, 1086 (1956).
Promissory estoppel has four elements: a promise, foreseeability of reliance on that promise, actual reliance, and a finding that the reliance was justified. Comment, Promissory Estoppel in Washington, 55 Wash. L. Rev. 795 (1980). We find each element present here.
Appellants have repeatedly alleged, and respondents *930cannot deny, that they made unequivocal promises to pay these debts. Section 6 of the participants' agreement states in clear, definite language that the participants would make payments under the agreement whether or not any of the projects were completed. Reliance on that promise was not only foreseeable, it was intended. In the bond resolution (approved by the participants), potential bondholders were told that the plants were being developed for the participants, and that the participants pledged their revenues as security for the bonds. Each bond resolution was approved by the participants through their committee. See BR, at 9. That there was actual reliance on the participants' promises cannot be doubted. The bondholders' collective purchase of $2.25 billion worth of bonds amply demonstrates that fact.
The final promissory estoppel prerequisite, that the reliance be justifiable, must, when viewed against the parties' course of conduct for the 5 years prior to termination, be answered in the affirmative. Until the plants were terminated, all concerned assumed that the parties had the requisite statutory authority. The bonds were freely traded and interest payments timely made. Only when the plants were actually terminated did the participants attempt to avoid their promise to the bondholders. And, only with this court's opinion in Chemical Bank I, was the issue of statutory authority resolved.
Under these circumstances, I believe the participants' promise must be enforced to the extent that justice requires. My conclusion rests not only on the Restatement § 90 provision but also upon the public policy embodied in RCW 62A.8-201. While I reject the notion that the participants' agreement constitutes a security, I recognize that RCW 62A.8-202 reflects a clear legislative intent that municipalities as well as individuals be held responsible for their promises and actions.
I believe the same general limitations contained in RCW 62A.8 and cases concerning equitable estoppel should be adopted in applying the doctrine of promissory estoppel. Thus, the promise must be within the promisor's general *931power. See RCW 62A.8-201(2). Such is the case here. In this court's original majority opinion, we acknowledged the participants' general authority to enter into contracts to build nuclear power plants and to take the actions necessary to fund those plants but held that the participants had acted improperly in entering the dry hole contract. Chemical Bank I, at 784. Also, we recognize that the statutes contemplate general authority to act in this area. See RCW 35.92.050; RCW 43.52.300(1).
The majority concludes that the doctrine of unjust enrichment does not apply because the acts of the appellants were substantively ultra vires. The majority concludes that Chemical Bank I has already decided the issue of whether the contracts were procedurally or substantively ultra vires. I cannot agree.
When the term "substantive authority" was used in Chemical Bank I, it was not used in the sense of deciding whether it was procedurally or substantively ultra vires because that issue was not before us. In the past, this court has differentiated between substantive and procedural ultra vires through use of the adjectives primary and secondary. The first classification (substantive or primary) refers to acts a municipality has no authority whatsoever to perform. In the second classification fall those acts which are within the lawful powers of the municipal corporation, but which are void because of an irregularity in the procedure leading up to the act. Jones v. Centralia, 157 Wash. 194, 218, 289 P. 3, 11 (1930). Whether these acts were primary or secondary ultra vires should not be decided summarily and requires further discussion.
The classic application of the primary ultra vires doctrine involves the invalidation of actions that directly contravene express constitutional or statutory provisions. The doctrine's harsh results make sense upon examination of the common law basis for the doctrine. Premised on the fundamental difference between the private and public sectors, application of the doctrine exhorts a private contractor to ascertain the authority and limitations of a municipal *932corporation. See Comment, Chemical Bank v. Washington Public Power Supply System: An Aberration in Washington's Application of the Ultra Vires Doctrine, 8 U. Puget Sound L. Rev. 59, 60-76 (1984).
One of the earliest cases concerning ultra vires is Osborne, Tremper & Co. v. King Cy., 76 Wash. 277, 136 P. 138 (1913). In Osborne, the plaintiff sued King County for services performed under a contract with the river and harbor commission. A number of King County residents, operating upon the belief that the United States intended to construct the Lake Washington Ship Canal, petitioned the county commissioners for appointment of the river and harbor commission and it was thereafter appointed. The river and harbor commission then contracted with the plaintiff for preparation of an assessment roll. Payment for these services was to come from the property assessments. A few months later, the county commissioners rescinded the authority of the river and harbor commission. In the plaintiffs action to collect for services, the court denied recovery, noting the general rule that
where there is a want of power to make a contract or a want of power on the part of the body of officers making the contract to bind the municipality, there can be no estoppel against the municipality to defeat payment by reason of accepting the benefit conferred by the contract.
Osborne, at 285-86. The court reasoned that the county commissioners did not have authority to create the assessment district, and therefore did not have authority to incur risks incident to the district's creation.
In Edwards v. Renton, 67 Wn.2d 598, 409 P.2d 153 (1965), the court confronted mixed substantive and procedural statutory violations, but approved recovery against the City of Renton. Renton had contracted with plaintiff for the installation of a traffic control signal, but failed to follow bidding procedures. The City neglected to properly budget funds for the installation. The court found that this contract represented a borrowing of funds which the City of Renton had no power to do. The court then went on to dis*933cuss the policy reasons for statutory municipal budget requirements and concluded that the contract ran afoul of these policies. Nonetheless, the court allowed a limited recovery where the contract was for a "public improvement furnished to and retained by the municipality [and where it was] within the scope of its authority to provide". Edwards, at 604. Edwards therefore moved the secondary ultra vires doctrine toward fulfilling the reasonable expectations of private parties contracting with public entities, consistent with the decline of the sovereign immunity doctrine. See RCW 4.92.090, 4.96.010.
The Edwards rule was further explained in Finch v. Matthews, 74 Wn.2d 161, 443 P.2d 833 (1968). Finch involved the power of King County to acquire and dispose of property in order to build roads. Although the facts are complicated, it appears that the county exchanged some worthless property for a road right of way. The City of Seattle then sought to annex the property, arguing that the County had no power to dispose of it because the property exchanged was dedicated '"to the use of the public forever'". Finch, at 163. The City urged a narrow interpretation of equitable estoppel against a municipality, arguing in essence that the doctrine could be valid "only when the governmental act is strictly within the recognized and established powers of government." Finch, at 169. The court rejected this view of equitable estoppel, holding instead that the distinction was between acts done "wholly without legal authorization" or in "direct violation of existing statutes" and "those acts which are within the scope of the broad governmental powers conferred, granted or delegated". (Italics mine.) Finch, at 172.
In Noel v. Cole, 98 Wn.2d 375, 655 P.2d 245 (1982), the court most recently affirmed the Edwards analysis. In Noel, the court concluded that the Department of Natural Resources had authority to sell timber, but not without preparing an environmental impact statement. However, regulations in effect required no EIS be prepared. Finding the sale a procedural violation and because both the DNR *934and the purchaser had acted in good faith, the court held that recovery for the purchaser was necessary to prevent unjust enrichment. Noel, at 381.
I believe the instant case falls within the Edwards-Noel rule. The majority concluded in Chemical Bank I, "the Washington statutes authorize the participants to purchase power or to own electric generating facilities." Chemical Bank I, at 799. To that end, and to fulfill their statutory duty to develop sufficient energy sources, the participants entered into the agreements and subsequently pledged their revenues. Those acts were within their general powers as contemplated by Noel, Finch, Edwards and Osborne. Thus, as the action of the State or municipalities in entering into the agreements was only procedurally ultra vires, restitution may be obtained if a benefit was in fact given.
As to the remaining arguments of respondents, the common law doctrines which released their contractual obligations contemplate restitution if one party receives a benefit. For example, Restatement (Second) of Contracts § 272 (1981) states the remedy to be given if frustration occurs:
(1) In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in §§ 240 and 377.
(2) In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.
Similarly, as noted in Simonson v. Fendell, 101 Wn.2d 88, 93, 675 P.2d 1218 (1984), mutual mistake entitles the parties to rescission and return to their original position. As a
general principle . . . rescission contemplates restoration of the parties to as near their former position as possible or practical. J.I. Case Credit Corp. v. Stark, 64 Wn.2d 470, 392 P.2d 215 (1964); Yount v. Indianola Beach Estates, Inc., 63 Wn.2d 519, 387 P.2d 975 (1964).
Here, however, it would be impossible to return the parties to their positions prior to the contract given the lack of *935statutory authority of those participants released by Chemical Bank I. Those participants represent approximately 70 percent of the total monetary obligation. Justice requires some sort of restitution to the bondholders. Because the public utilities and municipalities also have equitable obligations, the remaining discussion concerning remedy, benefit and equitable distribution of loss will apply equally to those released by our original decision, and those released on common law contractual grounds.
As noted above, the Restatement's definition of benefit is quite broad. Thus, the task here is to determine whether any asserted benefits fall within this definition. I conclude they do.
WPPSS asked for and received $2.25 billion in bond revenues on the request of the participants. The participants received exactly what they bargained for through their representatives on WPPSS. As noted in comment a to Restatement (Second) of Contracts § 370 (1981), receipt by a party of performance bargained for is regarded as a benefit. I believe the facts of this case amply demonstrate that proposition.
Further, this arrangement by which participants purchased shares of the plants' electrical output in return for their pledge of revenues satisfied the utilities' duty to develop sufficient energy resources for their ratepayers. The pertinent statutes contemplate that electrical needs of a city or public utility district will be filled. To do this, the participants must spend significant sums of money to develop alternative resources to meet future demands. Amicus on behalf of the City of Seattle observes that the City has spent $37 million for various small projects, and will spend $21 million annually for settlement of the High Ross Agreements. The total cost of projects now in progress is $164 million. Several of these projects have been terminated and, as a result, the City of Seattle has absorbed the entire loss. Brief of Amicus Curiae on behalf of City of Seattle, at 19. Clearly, most of the participants involved in WNP 4 and WNP 5 could not absorb similar development *936costs. To the extent that the nuclear plant projects relieved the participants of their immediate costs, while allowing them to fulfill their statutory duty, they received benefits from the bondholders.
Finally, it was for the participants' benefit that the plants were being built in the first place. By entering into these agreements, pledging their revenues as security and inducing the bondholders to lend money to WPPSS, the participants anticipated that they would be able to guarantee their consumers electricity at the low rates projected for nuclear power. Without such an arrangement, each utility would have had to either develop other sources of electricity or purchase electricity at whatever would be the then current market price. The bond revenues allowed them to avoid consideration of both of these alternatives.
Moreover, I am not persuaded by respondents' theory that the benefits of the bond revenues flowed to WPPSS and no further. As discussed in detail above, WPPSS existed as a joint venture of the member utilities and the participants. Despite the majority's conclusion that the participants lacked the statutorily required ownership interest, I believe that the real interested parties to this transaction were the participants. To them, the benefits flowed and, from them, restitution is therefore proper. These factors lead me to the conclusion that justice requires some relief to the bondholders.
Remedy
The appellants have established two theories of recovery — promissory estoppel and unjust enrichment. Restatement (Second) of Contracts § 90 (1981) states that the remedy for a breach of promissory estoppel may be limited as justice requires. Similarly, the Restatement (Second) of Restitution § 1 (Tent. Draft No. 1, 1983) provides:
A person who receives a benefit by reason of an infringement of another person's interest, or of loss suffered by the other, owes restitution to him in the manner and amount necessary to prevent unjust enrichment.
*937Appellants contend that principles of restitution entitle the bondholders to the entire $2.25 billion plus interest. I disagree. This figure would grant the bondholders their expectancy interest on the contracts. The majority has held that those contracts are void, however. Moreover, appellants' suggested remedy ignores the realities of the bond market. Much of the loss suffered by the bondholders is the result of panic-trading, speculation, and other forces that cannot be attributed solely to the participants' breach of promise. For instance, even before the participants disputed their legal obligation, prices quoted in the Wall Street Journal indicated the bonds were trading at levels substantially below par.
Also, appellants' argument for full restitution confuses the amount loaned WPPSS with the amount of benefit received by the participants. Just as the bondholders' investment was diluted by market forces, the participants' benefit was diluted by rising interest rates and market forces which made completion of the plants impossible.
Finally, among the people who now hold these bonds are numerous individuals who purchased their bonds after this court clearly stated that no statutory authority existed to enter the contracts. Those individuals do not come to equity with "clean hands" and I believe no equitable considerations weigh in favor of granting these individuals a windfall.
Given the complexity of this case and the posture in which it is now before this court, I am unable to discern the proper amount of recovery to the bondholders. I believe that equitable principles, however, require that we recognize the complex forces that led to the bondholders' present loss. Those principles convince me that the proper measure of restitution in this case may not exceed the value of the bonds on the day prior to our decision in Chemical Bank I. After that date, investors were clearly on notice that no authority existed. Prior to that date, much of the bondholders' investment was dissipated by forces unrelated to the participants' promises. Moreover, I also believe that *938individuals purchasing their bonds after that date should be entitled to the purchase price of those bonds and no more. It would be inequitable to allow these individuals to profit from the losses of bona fide bondholders and the participants' ratepayers. Finally, I believe that the participants are entitled either to an offset of any value contained in the plants or to the plants themselves.
This award sets only the maximum amount of recovery I would allow under the legal theories herein discussed. The trial judge could reduce this amount by other equitable considerations and may make such provisions for payment of the judgment as are just and equitable, considering the relative positions of the bondholders and ratepayers.
For the foregoing reasons, I dissent.
Dolliver, J., and Alexander, J. Pro Tern., concur with Utter, J.
Reconsideration denied December 17, 1984.

RCW 54.16.040 provides:
"A district may purchase, within or without its limits, electric current for sale and distribution within or without its limits, and construct, condemn and purchase, purchase, acquire, add to, maintain, conduct, and operate works, plants, transmission and distribution lines and facilities for generating electric current, operated either by water power, steam, or other methods, within or without its limits, for the purpose of furnishing the district, and the inhabitants thereof and any other persons, including public and private corporations, within or without its limits, with electric current for all uses, with full and exclusive authority to sell and regulate and control the use, distribution, rates, service, charges, and price thereof, free from the jurisdiction and control of the utilities and transportation commission, in all things, together with the right to purchase, handle, sell, or lease motors, lamps, transformers and all other kinds of equipment and accessories necessary and convenient for the use, distribution, and sale thereof: Provided, That the commission shall not supply water to a privately owned utility for the production of electric energy, but may supply, directly or indirectly, to an instrumentality of the United States government or any publicly or privately owned public utilities which sell electric energy or water to the public, any amount of electric energy or water under its control, and contracts therefor shall extend over such period of years and contain such terms and conditions for the sale thereof as the commission of the district shall elect; such contract shall only be made pursuant to a resolution of the commission authorizing such contract, which resolution shall be introduced at a meeting of the commission at least ten days prior to the date of the adoption of the resolution: Provided further, That it shall first make adequate provision for the needs of the district, both actual and prospective."