Court Opinion

ID: 9585371
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:59:45.251553+00
Date Added: 2024-06-11T15:41:42.778997
License: Public Domain

*599LENT, LINDE, and ROBERTS, JJ.,
concurring.
The proponents of the validity of the challenged transactions contend that the plaintiffs’ action is barred by laches or estoppel. Some members of the court believe that the issue of laches need not be reached if the plaintiffs’ claim loses on the merits. We believe that it should be decided first. The court also is divided on the correct analysis.
“Laches” and “estoppel” are not different words for the same issue. A defendant’s claim of laches arises from a plaintiffs prejudicial delay in asserting a claim for equitable relief, while conduct that gives rise to equitable estoppel, whether or not involving delay, vitiates the merits of the estopped party’s claim. A defendant’s assertion that a plaintiff is barred by laches from pursuing the claimed relief therefore should be dealt with before deciding the case on its merits. When laches is correctly seen as a time bar to plaintiffs action, like a statute of limitations, the claim must be disposed of before reaching the merits, not as a final obstacle to otherwise proper relief. If the only plaintiff or all plaintiffs in a case are disqualified by delay in commencing litigation, there is no party in a position to press the case. Litigation of the merits then is wasted time and effort and, on appeal, would reduce an opinion on the merits to dicta.
Here the opponents of the transaction argue that laches does not apply against governmental agencies, or if it sometimes can apply, then not under the circumstances of this case. This court has never arrived at a coherent analysis of Oregon law on this issue. It does not agree on a coherent analysis today. Statement of a rule is not simple, because Oregon law has developed partly from statutory policy and partly from cases that follow no consistent principle. Nevertheless, a principle emerges from the statute and past holdings that is sufficient for the present case. Because we believe it essential to identify one or more plaintiffs who are not barred by laches before the court reaches the merits, we analyze the court’s past opinions and the applicable premises in some detail. We conclude that laches does not bar litigation solely between governmental units or officials that is designed to determine the legality of a governmental program or activity.
“Laches” means neglect or inaction, as in “laxness” or “laxity.” The statutory time period within which to commence an action at law presumptively indicates what is *600reasonable or unreasonable also for equitable relief, but the presumption can be overcome. Albino v. Albino, 279 Or 537, 553, 568 P2d 1344 (1977); Wills v. Nehalem Coal Co., 52 Or 70, 90, 96 P 528 (1908).
It may be that if a private party had entered into a formal transaction as far-reaching and important as the one before us, on the strength of which others had irreversibly committed themselves to large and irrecoverable expenditures, and if the party waited five and one-half years to sue to be released from that transaction on grounds that it could not properly enter into it, the party’s request for equitable relief would be barred by laches even though the statute allows six years to commence actions “upon a contract or liability.” ORS 12.080. This is not an action upon a contract but to declare that no legal contract was made. But the cities and the PUDs are not private parties, and the ratepayers, who are private persons, were not parties to the challenged transactions. We therefore must examine how delay affects their rights to equitable relief.
Laches is often described as a “doctrine,” and “doctrines,” as compared with rules of law, are distinguished more by broad statements than by sharp cutting edges. This court’s experience with fitting the doctrine of laches to the powers and duties of government is no exception.
The court early postulated that statutes of limitation do not run against the state, a postulate it found in the Latin nullum tempus occurit regi, unless the statute provides otherwise. State of Oregon v. Warner Valley Stock Co., 56 Or 283, 308, 106 P 780, 108 P 861 (1910). The statutes did in fact provide otherwise from the enactment of section 13 of Deady’s Code in 1862 until its amendment in 1903, Gen Laws § 13, p 18 (1903). See State Land Board v. Lee, 84 Or 431, 435-436, 165 P 372 (1917). The present statute, ORS 12.250, provides:
“Unless otherwise made applicable thereto, the limitations prescribed in this chapter shall not apply to actions brought in the name of the state, or any county, or other public corporation therein, or for its benefit.”
In the Warner Valley Stock Co. case, the court held that the state had failed adequately to allege and prove an excuse for its delay in suing to set aside certain deeds but should be allowed to amend its pleading, thus implying without discussion that the state’s suit otherwise would be barred. *60156 Or at 304, 312. On the strength of the implication in that case, the court in the next such suit said that it was “committed to the principle that the doctrine of laches is applicable to the state,” but it held that laches was not shown. State of Oregon v. Hyde, 88 Or 1, 40, 169 P 757, 171 P 582 (1918). Whether or not the quoted statement was justified when applied to suits to undo past conveyances, those cases gave no occasion to consider its wider implications, for instance for suits directed at preventing continuation of an unlawful condition or activity.
Nevertheless, the court later quoted the broad sentence that “the doctrine of laches is applicable to the state” in cases in which the name of the state appeared only pro forma in actions by private relators to challenge the legality of school districts. State ex rel v. School District No. 23, 179 Or 441, 461, 172 P2d 655 (1946); State ex rel School District No. 9, 148 Or 273, 287, 31 P2d 751, 36 P2d 179 (1934). See also State v. Union High School, 152 Or 412, 53 P2d 1047 (1936). To apply the doctrine there the court had to turn what the statutes denominated as an “action at law” back into the extraordinary writ of quo warranto which the statutes had abolished and about which the court earlier had said that “[i]t is seldom that laches are imputed to a State in a quo warranto action to test the legality of an incorporation where the rights of the public are involved.” State ex rel v. Port of Tillamook, 62 Or 332, 344, 124 P 637 (1912). The opinion in the School District No. 9 case, supra, distinguished quo warranto actions brought to assert a public interest, in which the state is the real party in interest, from others brought in the name of the state by private parties in their own interest, and the court found the case to be of the latter kind. 148 Or at 276-278. Again, in the School District No. 23 case, supra, the court found that “the relator, and not the state, is the interested party,” before holding that a delay of one year barred a taxpayer with knowledge of the facts from challenging the legality of the district and causing what the court described as “deplorable consequences.” 179 Or at 458-462.
The school district cases were treated as private actions by virtue of the characteristics of the relators and their interests. But when the state sued to set aside a probate order and to declare the decedent’s property escheated to the state, the court rejected a defense of laches on the ground that it was *602not available against a suit by the government “to enforce a public right or to protect a public interest.” State v. Vincent, 152 Or 205, 214, 52 P2d 203 (1936).
Two decisions of that period involved the defense of laches against suits on behalf of local governments. In Amer. Surety Co. v. Multnomah County, 171 Or 287, 138 P2d 597 (1943), plaintiff sued as subrogee of Marion County and defendant claimed laches. Plaintiff apparently conceded that “the sovereign is not exempt from the defense of laches,” but the court found it unnecessary to consider the defense because the action was at law. 171 Or at 324-328. City of Pendleton v. Holman, 177 Or 532, 164 P2d 434 (1945), was a suit to foreclose the lien of a street improvement assessment. Most of the opinion was devoted to rejecting defendants’ argument that the statutes of limitations, though by then expressly excluding actions brought by governmental plaintiffs, nevertheless should apply against a city acting in its “private or proprietary capacity.” The opinion described the street improvement as a “proprietary activity,” and it again assumed without discussion that the foreclosure suit would be barred by laches, although the court held that the defendants had failed to plead the factual basis of this defense. 177 Or at 548. But in a third case, a school district’s action to recover funds paid out by a bank, the court stated that it was “not here concerned with private dealings but with matters affecting the public,” and referred to the “ ‘well-settled’ ” doctrine that “ ‘no laches can be imputed to a municipal corporation, acting ... in a public and governmental capacity.’ ” School Dist. 47 v. U.S. Nat’l Bank, 187 Or 360, 383-384, 211 P2d 723 (1949), quoting Common School Dist. No. 61 v. Twin Falls Bank & Trust Co., 50 Idaho 711, 4 P2d 342 (1931).
The most recent discussion of laches as a defense against a belated claim by the state occurred in Corvallis Sand & Gravel v. Land Board, 250 Or 319, 439 P2d 575 (1968). That was a suit by a private company to enjoin an ejectment action brought against it by the State Land Board in order to establish the state’s title to a riverbed, and the court noted that ejectment is an action at law and “laches is available only against a party seeking the aid of equity.” 250 Or at 324. Nevertheless, Justice Lusk, for the majority, proceeded with an extended review of the foregoing precedents, quoting from State v. Vincent, supra, that laches will not bar a suit “to *603enforce a public right or to protect a public interest,” 250 Or at 332, and concluding that the state’s action sought to establish a title held in the state’s governmental rather than its proprietary capacity. The opinion denied that the Warner Valley Stock Co. case had involved a “proprietary” rather than “governmental” claim and declared the statement in the Hyde case that the court was “committed” to applying laches against the state to rest “upon an insecure foundation.” 250 Or at 326-338.1 Justice O’Connell, dissenting, maintained that these distinctions could not decide the fairness of allowing the government a delayed claim against a private party. Because the real controversy was over the right to gravel, which the state dealt with in the same manner as private persons, he would have applied laches in the same manner as in litigation between private parties. 250 Or at 330, 342.
Undeniably the distinctions between “public” and “private” rights or between “governmental” and “proprietary” functions are inexact tests for barring delayed suits by the state or local governments. As Justice O’Connell wrote, they may serve to label easy cases but fail in difficult ones. 250 Or at 341, n. 4. Moreover, those phrases are employed in other contexts where other rules or policies may cause these lines to be drawn differently than in the context of defenses against belated assertions of legal claims. Little is gained by describing an activity, for instance the construction, operation, and maintenance of streets or other public facilities, as “proprietary” for purposes of one legally correct outcome and “governmental” for purposes of another. Nor is it self-evident why an action to escheat a decedent’s property asserts a “public” interest but an action challenging the legality of a school district asserts only a “private” interest when initiated by a taxpayer. Compare State v. Vincent, supra, with State ex rel. v. School District No. 23, supra.
Shortcomings in judicial formulas, however, do not prove error in the holdings they seek to express. The foregoing *604cases show that in barring suits by government for laches, lines sometimes have been drawn by the characteristics of the plaintiff, by the interest asserted, or by the relief sought. The lines obviously seek to accommodate competing policies, to preserve the legal responsibilities of government on one hand and fairness to those against whom government litigates on the other, but it does not follow that a balance between these policies simply is struck for each case. Without attempting a comprehensive statement in this case, we find in the past decisions elements for an analysis besides those already discussed.
First, the fact that “laches” is an equitable doctrine rather than statutory law tends to mask the fact that its application against the government nonetheless is as much a question of law as the application of a statute of limitations. Even when government sometimes acts like a private party, the two differ insofar as the state, unlike a private party, can legislate for itself whether to be bound by periods of limitation. Cf. Wiggins v. Barrett & Associates, 295 Or 679, 700-701, 669 P2d 1132 (1983) (concurring opinion). The legislature has done so in ORS 12.250, previously quoted, which exempts both the state and local entities from general periods of limitation. Obviously, the state’s policy toward delayed private litigation is not its policy toward delayed litigation by governmental plaintiffs.
To interpret a statute of limitations which is silent with respect to government as not binding the state attributes that policy choice to the state itself. In Withers et al. v. Reed, 194 Or 541, 243 P2d 283 (1952), which concerned a statute terminating unused water rights, the court concluded that although the statute did not expressly apply to rights held by the state, its dominant policy was to return the water to potential beneficial use by others. Justice Lusk’s lead opinion for three members of the court observed that “nullum tempus occurrit regi” depends on policies implied in the face of legislative silence. Relevant here is his quotation of “the classic exposition of the doctrine” by Justice Story in United States v. Hoar, 2 Mason 311, 313 (1821):
“ ‘The true reason, indeed, why the law has determined, that there can be no negligence or laches imputed to the crown, and, therefore, no delay should bar its right, (though sometimes asserted to be, because the king is always busied for *605the public good, and, therefore, has not leisure to assert his right within the times limited to subjects,) is to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers. And though this is sometimes called a prerogative right, it is in fact nothing more than a reservation or exception, introduced for the public benefit, and equally applicable to all governments. * * *’ ”
quoted in 194 Or at 544-545.
The “great public- policy of preserving the public rights, revenues, and property- from injury and loss, by the negligence of public officers,”; sometimes requires belated legal action by those officers, or by their successors. Sometimes it requires legal action by private citizens in the name of the state or in other forms of action provided for the purpose. If a policy governing laches is to allow for preserving public property as well, as public rights, it cannot well' exclude the “proprietary” activities of public agencies. Some public agencies, like the people’s utility districts in this case, exist only for “proprietary” functions of delivering goods and services; they do not “govern” people.
Why should the government, or an interested citizen, ever be barred from confining governmental action within legal bounds and from calling upon a court to declare and enforce those bounds? As this court’s past opinions show, the early generalization that “the doctrine of laches is applicable to the state” was too broad. Yet the opposite need not be true, that laches never applies.'
When the state'sends its agencies into the market to engage in ordinary commercial and property transactions indistinguishable from those of private enterprises, the state’s implied policy may be to give those transactions the same security against belated litigation of ordinary disputes. Early decisions stretched concepts such as “proprietary activity” in order to extend that security to private interests in property, particularly real property. This may explain barring the city’s belated lien foreclosure in City of Pendleton v. Holman, supra, as well as the suits to set aside deeds in the Warner Valley Stock Co. and Hyde cases, supra. There is less reason to assume such a policy toward actions seeking declaratory or prospective relief from continuing a disputed transaction or condition, as in Corvallis Sand & Gravel v. Land Board, supra.
*606Assuming there is a policy implicit in the state’s commercial or property transactions to secure private parties against the belated assertion of ordinary legal claims, this policy does not bar the present litigation for laches. The parties to this litigation are governmental entities, except for the ratepayers.2 WPPSS is a statutory agency and municipal corporation of the State of Washington, composed of other public agencies of that state. See Chemical Bank v. WPPSS, 99 Wash2d 772, 666 P2d 329 (1983). The Participants’ Agreements are not ordinary transactions with private parties in the commercial marketplace. They were designed for governmental entities, with the active participation of the federal Bonneville Power Administration (BPA), and with conscious concern about the legal powers of the participating agencies. They are agreements between governmental officials to create and conduct a publicly administered program. The implicit policy of protecting existing property interests of private persons against delayed lawsuits when a public agency has dealt with them in a conventional commercial or property transaction simply does not apply to this program. The larger policy that normally excludes laches in actions brought to assert a public interest in the conduct of a public program does apply, at least as to the municipalities that are challenging the program.
A few cases elsewhere contain statements to the contrary. In a dispute between a county and certain municipalities over the distribution of fuel taxes, an Arizona court stated the rule that “neither laches nor its generic parent, estoppel, can be asserted to gain rights against the public or to defeat a public interest.” But the court then continued that “the reason for the rule denying the defense disappears when the contest is solely between two public bodies.” Maricopa County v. Cities & Towns of Avondale, Et Al, 12 Ariz App 109, 113, 467 P2d 949 (1970). It appears that the court was influenced by the idea that some taxpayers might gain and others might lose by a judicial examination of the financial distribution. Such a rule would prevent challenges to governmental illegality merely because the private interests of the *607taxpayers of the government which acted illegally would be adversely affected by ending or correcting the illegality. That is not a persuasive reason why alleged governmental irregularities should escape scrutiny.
The Arizona court cited two other cases. In State ex rel v. Clay County, 226 Iowa 885, 285 NW 229, 235 (1939), a dispute about which county was liable for a person’s support in the state hospital, the opinion recognized the general rule against applying “laches” to the acts of governmental agents to be “for the protection of the public,” but as between two counties the court saw “no good reason why public policy should require that the people of one be penalized for the laches of the representatives of another.” This Iowa opinion discussed both estoppel and laches without making a clear distinction between them. It appears that in the quoted sentence, the court addressed the effect of an earlier neglect by one county on the merits of its position rather than the procedural effect of delay in commencing the suit.
The other precedent cited by the Arizona court, Royal Oak Tp. v. School District No. 7, 322 Mich 397, 403, 33 NW2d 908 (1948), states that Michigan law applies the doctrine of laches between municipal corporations. But the Michigan court’s full statement also rejects the rule that laches does not bar a municipality’s enforcement of “public rights,” apparently against anyone. Oregon law differs from Michigan. This court’s decisions recognize the “public rights” exception to laches in suits by the state, State v. Vincent, supra, or initiated by local relators, as in the School District No. 9 and Port of Tillamook cases, supra.
The three cases from other states do not state the law in Oregon. The directive of ORS 12.250, that the general limitation periods “shall not apply to actions brought in the name of the state, or any county, or other public corporation therein, or for its benefit,” applies to actions by governmental bodies in their “proprietary” capacities. City of Pendleton v. Holman, supra, citing American Surety Co. v. Multnomah County, supra, Seeck v. City of Lebanon, 148 Or 291 (1934). About the contention that actions by municipalities should be time-barred if they concerned “proprietary activities,” the court wrote:
“Had it been the intention of the legislature to subject municipalities to the operation of the statute of limitations in *608their proprietary activities, it could have accomplished its purpose in one of two ways. Either it could have repealed outright § 13 of the 1862 Code of Civil Procedure, or, in the amendment of that section in 1903, it could have exempted municipalities from the operation of the statute only to the extent of their public or governmental functions. It did neither.”
177 Or at 541. In a fairly recent case, Chizek v. Port of Newport, 252 Or 570, 450 P2d 749 (1969), the court cited ORS 12.250 and the quotation from State Land Board v. Lee, supra, that the principle of denying limitations against government is “to preserve public rights, revenues and property from injury and loss by the negligence of public officers.” 84 Or at 434. The court allowed the port belatedly to set aside an adverse title gained by an invalid tax foreclosure, obviously a “proprietary” issue:
“When the property of one division of government is lost to another division of government and then sold to a private party, the public is not served. The only party who gains is the purchaser at the foreclosure and there is no policy reason to prefer him over a public body.
“We hold that the Port, as a public body, is not barred by the statute of limitation and the tax foreclosure proceeding is invalid and, therefore, the plaintiffs secured no title to the disputed property.”
252 Or at 578.
The law in this state is that actions by the state or municipalities are not barred by the statute of limitations, irrespective whether they concern “proprietary” activities, as most civil actions do. ORS 12.250. That is the state’s announced public policy on the question, and this court so treated it as recently as 1969.
It makes no sense to draw a line for imposing time limitations on declaratory judgment proceedings by a governmental plaintiff that would depend on whether the proceeding is characterized as being “in law” or “in equity.” If an action under chapter 28 simply asks for a declaration of the legal rights, status, or relations of the parties, ORS 28.010, no limitation under ORS chapter 12 would apply irrespective whether the subject matter concerns “proprietary” activities. Nor would it apply to a damage action for breach of contract, *609fraud, negligence, or whatever. ORS 12.250. Moreover, insertion of such a line around equitable relief arising from “proprietary” activities, as the Chief Justice’s concurring opinion proposes, then carries with it a further exception for claims by governmental plaintiffs that their past actions were “ultra vires,” forcing trial courts to litigate that difficult and imprecise issue at the initial stage of determining whether the plaintiff is barred by time from maintaining the litigation.
Despite expressions in some of the early opinions we have reviewed, the court’s holdings do not establish such a rule. The holdings generally have rejected claims of laches against public plaintiffs asserting public rights. The few exceptions have been cases protecting a private party’s reliance on past governmental property or business transactions. With governmental agencies on the opposing sides, this is not such a case. As to these contending agencies, the applicable principle, recognized in ORS 12.250 and quoted by Justice Lusk, is “ ‘the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers.’ ” Withers et al v. Reed, supra, 194 Or at 545 (quoting United States v. Hoar, 2 Mason 311, 313.) That principle prevents barring the cities from pursuing this declaratory judgment action against WPPSS, despite the undoubted “proprietary” character of their electric utility functions.

The court found it difficult to explain its then recent decision in Johnson v. Tax Commission, 248 Or 460, 435 P2d 302 (1967), which held an assessor estopped, in his obviously public function of tax collection, to insist on a filing deadline which the taxpayer missed because the assessor sent him an outdated form. The court simply described it as an “exception.” 250 Or at 329. In any event, as the lead opinion in Wiggins v. Barrett & Associates, 295 Or 679, 669 P2d 1132 (1983) makes clear, Johnson and its successor, Pilgrim Turkey Packers v. Dept. of Rev., 261 Or 305, 493 P2d 1372 (1972), dealt with estoppel, not with a defense of laches based on delay.

None of the rural electric cooperatives that have fractional participation in the Participants’ Agreements are parties here, and their characterization as private or government-sponsored entities is immaterial to the present point. Nor are private lenders or suppliers to WPPSS parties to this litigation.