Court Opinion

ID: 3991777
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:51:28.654189+00
Date Added: 2024-06-11T13:53:51.836534
License: Public Domain

In giving my reasons for dissenting, I shall proceed upon the assumptions contained in the majority opinion with reference to the facts in the case. In the ultimate, the facts are as follows: Fisher Flouring Mills Company does a large flouring mill business throughout the United States. The extent of its business territory requires it to make different types of flour, which, consequently, require different types of wheat and other grains. In order, therefore, that the company may have available at all times a sufficient quantity of the necessary types, grades, and qualities of desired grains, it is essential that it operate, or co-operate with, a chain of warehouses in the wheat areas. It was for that purpose that the relator, Milwaukee Grain Elevator Company, was organized and the surety bond here in question subsequently given. The financial responsibility of the two sureties is admitted by the state authorities and is conceded in the majority opinion.
I. At common law, a private corporation had the power to act as surety, whether expressly authorized so to do or not, if the exercise of such power was reasonably necessary or proper in the conduct of its business. Wheeler, Osgood  Co. v. Everett LandCo., 14 Wash. 630, 45 P. 316; Woods Lumber Co. v. Moore,183 Cal. 497, 191 P. 905, 11 A.L.R. 549; Mercantile Trust Co. v.Kiser  Co., 91 Ga. 636, 18 S.E. 358; Central Lumber Co. v.Kelter, 201 Ill. 503, 66 N.E. 543; Kraft v. West Side BreweryCo., *Page 571 219 Ill. 205, 76 N.E. 372; Winterfield v. Cream City Brewing Co.,96 Wis. 239, 71 N.W. 101; VI Fletcher Cyc. of Law of Private Corporations (Permanent Edition), p. 379 et seq., §§ 2591, 2592.
In the Wheeler, Osgood  Co. case, there was involved a lumber company which was empowered by its charter to carry on the manufacture and sale of lumber in various forms and to do anything and all kinds of business that corporations were permitted to do by the laws of this state. It was held in that case that such corporation was authorized to become surety upon the bond of a contractor to whom it furnished building material, when such was the custom of manufacturers of lumber in the same locality. The court said:
"Much of the business of the country is done by corporations and it would be contrary to a sound public policy to impose limitations upon them in the control of their affairs not clearly imposed by statute or their articles of incorporation. Such being the custom, and it having been necessary for appellant to conform thereto to sell the material, we think it had authority to become surety under the provision aforesaid, authorizing it to carry on the manufacture and sale of lumber and everything connected therewith and to do anything and all kinds of business allowed to corporations, as provided for under the laws of the territory. It thereby asserted to itself the right to do all kinds of business connected with the manufacture and sale of lumber, and to do every and all kinds of business allowed to corporations under the laws of the territory, using the most general language under the apparent desire and intention expressed to the public that it should not be hampered and restricted in any way in the conduct of its affairs. . . . In construing the powers of corporations the tendency is toward a more liberal interpretation than formerly, and in holding that appellant had authority to execute this bond under the circumstances we are but following several prior decisions of this court *Page 572 
(Tootle v. First National Bank, 6 Wash. 183, 33 P. 345;Allen v. Olympia Light and Power Co., 13 Wash. 307,43 P. 55), and are sustained by a number of cases cited by respondent from other states."
II. This power at common law extends to the execution of statutory bonds, under the same conditions, unless there is some statutory prohibition. Horst v. Lewis, 71 Neb. 365,98 N.W. 1046, 103 N.W. 460; Munoz v. Brassel, 108 S.W. (Tex.Civ.App.) 417; Sturdevant Bros.  Co. v. Farmers  Merchants Bank,69 Neb. 220, 95 N.W. 819; Best Brewing Co. v. Klassen, 185 Ill. 37,57 N.E. 20, 76 Am. St. 26, 50 L.R.A. 765.
In the Horst case, supra, a brewing corporation had executed a statutory surety bond on behalf of a liquor dealer who was a tenant of the corporation and handled its products. The court, in holding that the brewing company had the power to become surety and was eligible as such, said:
"We take it that there is no better settled principle of law, in this country, than that a grant of express powers includes within it implied authority to do any and all things necessary and convenient for the carrying of them into execution. In order that the company shall obtain revenues from its buildings, `in connection with its business,' it must have tenants engaged in vending its products; and, in order that a tenant shall so engage, it is indispensable that he have a local license under the statute, and he can procure such a license only by giving a bond like that in suit. The procuring of the bond is the initial and an indispensable step towards procuring a tenant for the company's property and a customer for its beer, and is, we think, clearly within its charter powers."
III. The statutes of this state do not prohibit private corporations from executing such bonds. It is upon this phase of the case that the majority opinion seems to rest its conclusions. *Page 573 
Rem. 1935 Sup., § 6996 [P.C. § 2659], which is the section under which the state withheld its approval of the bond, reads as follows, in so far as it is material here:
"Each person, firm, corporation . . . operating any public warehouse . . . shall . . . give a bond to the state of Washington with surety to be approved by the director of agriculture . . . and the attorney general, conditioned upon the faithful performance of the duty to keep in such warehouse for the holder of any warehouse receipt the commodity described in such receipt. . . ."
The phrase "a bond to the state, with surety to be approved," contains the language calling for construction.
The majority opinion prefaces its analysis and interpretation of this section with the statement that this phrase is ambiguous, requiring the examination of, and comparison with, other sections of the statute. The majority then appear to base their conclusions upon four considerations: (1) the light afforded by Rem. Rev. Stat., §§ 6980, 6981 [P.C. §§ 2644, 2645]; (2) the fact that Rem. Rev. Stat., § 6982 [P.C. § 2646], and Rem. 1935 Sup., § 7000-1 [P.C. § 2663-1], which deal with actions and proceedings on surety bonds, refer to the surety on the bond, from which it is deduced that the statute had reference to only one surety, rather than to two or more, and that, therefore, a suretycompany bond was intended to be required; (3) that the legislative history of the regulation of warehouses for the storage of grain indicates that Rem. 1935 Sup., § 6996 [P.C. § 2659], was intended to require surety company bonds; and (4) the practical necessity of such construction.
Taking up the first argument advanced by the majority, it is to be observed that Rem. Rev. Stat., *Page 574 
§§ 6980 and 6981 [P.C. §§ 2644, 2645], refer to bonds to be executed by the chief inspector and his subordinates. These officials are specifically required "to give a surety company bond," to be approved by the commission and the AttorneyGeneral. Warehousemen, however, under Rem. 1935 Sup., § 6996 [P.C. § 2659], are merely required to "give a bond to the state of Washington with surety to be approved" by the director of agriculture and the Attorney General. Nothing whatever is said about a surety company bond in Rem. 1935 Sup., § 6996 [P.C. § 2659].
The majority argue that, if the legislature, by express language, designated surety company bonds in the first two of these sections, it must have intended to require the same kind of bond in the last section, although it is not so expressed. The answer to this line of reasoning is that, if the legislature deliberately uses particular language in two sections, expressive of its intent, the use of different language in a third section evidences a different intent in that respect. These three sections were all originally part of the same act (Laws of 1919, pp. 590-598). The act was drafted by skillful hands and clearly shows that a distinction was intended.
The second argument lays emphasis on the word "the," in connection with the word "surety," used in Rem. Rev. Stat., § 6982 [P.C. § 2646], and Rem. 1935 Sup., § 7000-1 [P.C. § 2663-1], as showing that the bond was to be executed by a single surety and, therefore, by a surety company. In the first place, the appellants themselves attach no importance and lay no emphasis on the article "the," as used in these two sections. But apart from that, I think that the majority have labored the statute to yield a forced construction resting upon an insignificant word. The *Page 575 
phrase, "a bond with surety approved," which is the heart of Rem. 1935 Sup., § 6996 [P.C. § 2659], has reference, not merely to personal status, but to adequacy of protection and security as well. Moreover, the word "surety" is used in a collective, and not in an individual, sense. Had the legislature intended to convey any such refined meaning as the majority contend for, it naturally would have, as it easily could have, done so in one of two ways, either by expressly providing for the requirement of asurety company bond or else by requiring bond with a surety, thereby indicating singularity of suretyship.
The third argument proceeds upon the legislative history of Rem. 1935 Sup., § 6996 [P.C. § 2659]. I am wholly unable to comprehend the court's reasoning on this phase of the matter. The opinion first points out that, prior to 1911, the statute did not require warehousemen to give any bond at all. Then, it is shown that, under the law enacted in 1911 (Laws of 1911, chapter 91, p. 398 [407]), a new and more comprehensive act was passed, requiring, for the first time, that warehousemen give a bond, with "good and sufficient surety," as the commission might require. In 1919, another comprehensive law was passed (chapter 189, Laws of 1919, p. 589 et seq.) repealing the 1911 act. Under § 18 (Rem. Comp. Stat., § 6996) of the 1919 act, p. 598, warehousemen were required to give "a surety bond," to be approved by the commission and the Attorney General. Then, in 1923, the law was once more revised (Laws of 1923, p. 330, § 1), but the same language, "a surety bond," was retained. Again, in 1931 (Laws of 1931, p. 149, § 3, Rem. Rev. Stat., § 6996), the law was revised to read "a bond to the state of Washington with surety approved." From these premises, the court draws this surprising conclusion: *Page 576 
"It will thus be seen that, from 1919 to 1931, there had been a consistent specific requirement for a surety company bond."
(Italics mine.)
This conclusion is a paralogism. There was no specific, nor any, requirement in any of these sections of the statute for asurety company bond. In this language, the majority opinion assumes the fact that is in dispute and then establishes its conclusion upon the fact thus assumed. This is simply a begging of the question. The fact still remains that the legislature has never provided that a warehouseman shall give a surety company
bond, but only a surety bond. There is no rule that, nor any reason why, a surety bond can be executed only by a suretycompany.
The majority finally rest their conclusion upon the argument that the construction given by them to the statute is necessary, because, otherwise, in certain cases, the state might approve bonds where the surety is inadequate. The argument advanced by the majority would be persuasive if it were not for the fact, frankly conceded, that the financial responsibility of the sureties in this case is adequate. I concede that, if there were any question of adequacy, then it would be within the discretion of the state officials to disapprove the bond. That is the very reason for clothing them with discretion. But in the absence of any such question, and in the face of an admission that the bond is adequate, it is an arbitrary exercise of power not to approve it.
Being unable to agree with the majority, I dissent.
MITCHELL, J., concurs with STEINERT, J. *Page 577