PUBLIC UTILITY DISTRICTS ‑- OUT-OF-STATE INSTITUTION AS TRUSTEE OF CONSTRUCTION FUND

PUBLIC UTILITY DISTRICTS ‑- OUT-OF-STATE INSTITUTION AS TRUSTEE OF CONSTRUCTION FUND

A public utility district has the power, under RCW 54.24.050 and 54.24.110, to employ out-of-state institutions as trustees, depositaries and paying agents to handle construction and revenue funds.

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                                                               November 13, 1957

Honorable Cliff Yelle
State Auditor
Legislative Building
Olympia, Washington                                                                                                              Cite as:  AGO 57-58 No. 130

Attention:  Mr. A. E. Hankins, Chief Examiner

Dear Sir:

            We have your 1956 report dealing with the Columbia River Priest Rapids Hydroelectric Production System, Utility District No. 2, Grant County, Washington, prepared by the division of municipal corporations.  On page 5 of that report, you have asked for an opinion concerning the financing of the system.  We paraphrase your question as follows:

            "Is the use of an out-of-state institution as trustee of a public utility district's construction fund in violation of RCW 54.24.010 (§ 7, chapter 124, Laws of 1955), as amended by § 1, chapter 140, Laws of 1957?"

                                                                     ANALYSIS

            The public utility district law was enacted in chapter 1, Laws of 1931.  Sections 8 and 9 thereof were the subject of amendments in chapter 124, § 7, Laws of 1955, (RCW 54.24.010), to which you have made reference, and read as follows:

             [[Orig. Op. Page 2]]

            Section 8 in part:  ". . .  The county treasurer of the county in which such district is situated shall be the treasurer of the district, andall funds of the district shall be paid to himas such treasurer and shall only be disbursed by him on warrants drawn and signed by an auditor to be appointed by the commission, . . ."  (Emphasis supplied.)

            Section 9:  "The county treasurer of the county in which is located any public utility district shall be ex-officio treasurer of any public utility district in such county, and he shall create a fund for any public utility district to be known as public utility district fund, into which shall be paid all money received by him from the collection of taxes in behalf of such public utility district, and he shall also maintain such other special funds as may be created by the public utility commission, into which shall be placed such moneys as the public utility commissionmay be its resolution direct.

            "Allsuch public utility district funds shall be deposited with the county depositories under the same restrictions, contracts and security as is provided by statute for county depositories, and all interest collected on such public utility funds shall belong to such public utility district and be deposited to its credit in the proper public utility district funds."  (Emphasis supplied.)

            Section 8 and 9, of the Laws of 1931, taken together, are ambiguous.  On the one hand, § 9 might have been said to designate the moneys which were to be paid to the district treasurer, and § 8 to designate the capacity (i.e., as district treasurer) in which the county treasurer was to receive them.  On the other hand, § 8 might have been held to require all moneys to be paid to the treasurer, and § 9 to have established certain funds within the treasury.  It is not necessary to resolve the ambiguity, but only to point it out, as an explanation for the 1955 and 1957 amendments, to be discussed.

            Section 7 of the 1931 act provided that all bonds should be sold in such manner as the commission should deem best; and this, together with the first interpretation of §§ 8 and 9, could arguably have authorized out-of-state control of the proceeds of the bonds, i.e., of construction funds.  Any question was resolved by §§ 3 and 10, chapter 182, Laws of 1941, and § 2, chapter 143, Laws of 1945, now RCW 54.24.050 and 54.24.110, which provide in part as follows:

             [[Orig. Op. Page 3]]

            (RCW 54.24.050)

            "The resolution creating any such special fund and authorizing the issuance of revenue bonds or warrants payable therefrom shall specify the title of the bonds or warrants as determined by the commission, and may contain covenants by the district toprotect and safeguard the security and the rights of the holders thereof, including covenants as to, among other things:

            "(1) The purpose or purposes to which the proceeds of sale of the bonds or warrants may be applied and theuse and disposition thereof;

            "(2) Theuse and disposition of the gross revenue of the public utility, and any additions or betterments thereto or extensions thereof, the cost of which is to be defrayed with such proceeds, including the creation and maintenance of funds for working capital to be used in the operation of the utility and for renewals and replacements thereof;

            "(8) The appointment of trustees, depositaries, and paying agents to receive, hold, disburse, invest, and reinvest all or any part of the income, revenue,receipts, and profits derived by the district from the operation,ownership, and management of its utility."  (Emphasis supplied.)

            Section 10, chapter 182, Laws of 1941 (Cf. RCW 54.24.110)

            "The provisions of this act and the provisions of chapter 1, Laws of 1931,not hereby superseded, and of any resolution or resolutions providing for the issuance of any revenue bonds as herein set forth shall constitute a contract with the holder or holders of such bonds or warrants . . ."  (Emphasis supplied.)

            The express purpose of the 1941 amendment is to safeguard the bondholders by contract.  Such protection is no doubt necessary, to attract purchasers.  Consequently, the power granted in subsections (1) and (2) to covenant concerning the use and disposition of the proceeds of the bonds, and of the revenue of the utility authorizes the establishment, both of construction and revenue funds, to be held and disbursed in accordance with the bond resolution.

             [[Orig. Op. Page 4]]

            Subsection (8) was added in 1945.  Undoubtedly, this was done to eliminate any question concerning out-of-state trustees and custodians for those funds.  Although construction funds are not profits, income or revenue, as set forth in subdivision (8), nevertheless, the term receipts, together with the use and disposition clause of the 1941 amendment, may be construed to authorize out-of-state trustees and custodians for construction funds, as well as for revenue funds.  The statutory language and history, when taken together with the ultimate objective of the legislation, leave no doubt in the matter.

            The question is, then, whether the 1955 and 1957 amendments abrogate this authority.  Prior to the adoption of the 1955 amendment, the Revised Code of Washington, in order to resolve the ambiguity between §§ 8 and 9 of the Laws of 1931, codified these sections to read (RCW 54.24.010):

            "The treasurer of the county in which a utility district is located shall be ex officio treasurer of the district and all district funds shall be paid to him, and shall be disbursed by him only on warrants issued by an auditor appointed by the commission, upon orders or vouchers approved by it.  The treasurer shall establish a public utility district fund, into which shall be paidall district funds, and he shall maintain such special funds as may be created by the commission, into which he shall place all money as the commission may, by resolution, direct.

            "All district funds shall be deposited with the county depositaries under the same restrictions, contracts, and security as provided for county depositaries, and all interest collected thereon shall belong to the district and be deposited to its credit in the proper district funds."  (Emphasis supplied.)

            By § 7, chapter 124, Laws of 1955, the legislature enacted the foregoing provisions of RCW into law; adding a provision to authorize the district to require a bond of all persons handling district funds.  Thereafter, by § 1, chapter 140, Laws of 1957, the legislature practically restated the pertinent provisions of the Laws of 1955, with an additional provision for an alternative to the county treasurer, as district treasurer.

            In our opinion, the amendments of 1955 and 1957, do not affect the 1941 and 1945 provisions concerning out-of-state trustees, custodians and paying agents.  We think the legislature sought merely to resolve an ambiguity by adopting the RCW codification of the earlier laws, and to make certain additional provisions,  [[Orig. Op. Page 5]] not material to our question.  Nothing discloses an intent so to enlarge the treasurer's duties as to repeal the security for bondholders.

            This view is supported by the rule, that repeals by implication are not favored.  State v. Becker, 39 Wn. (2d) 94; Abel v. Diking and Drainage Improvement District No. 4, 19 Wn. (2d) 356;Tacoma v. Cavanaugh, 45 Wn. (2d) 500; State ex rel. Washington etc. Bank v. Bellingham, 8 Wn. (2d) 233.  Moreover, the Laws of 1941 and 1945 deal with certain classes of general district funds.  Consequently, our opinion accords with the rule that a special enactment limits a general enactment.  State v. Clausen, 63 Wash. 535; Hartig v. Seattle, 53 Wash. 432.  Furthermore, specific legislation controls the general, even where the latter is later in time.  State ex rel. Abbott v. Ross, 62 Wash. 82; State ex rel. Wenatchee Heights Reclamation District v. Banker, 179 Wash. 343;Callvert v. Winsor, 26 Wash. 368.  InState ex rel. Abbott v. Ross, supra, at p. 89, the court stated the rule as follows:

            ". . . a general statute does not repeal a special one, unless such is the plain legislative intent, even when they may contain somewhat inconsistent provisions. . . ."

            See also 2 Sutherland, Statutory Construction, (3rd Ed. 1943) § 5204, note 4, andIn re Williamson, 43 Cal. (2d) 651, 276 P. (2d) 593 (1954) there cited.

            We therefore conclude that a public utility district has the power, under RCW 54.24.050 and 54.24.110, to employ out-of-state institutions as trustees, depositaries and paying agents to handle construction and revenue funds, as long as their establishment is provided for in the bond resolution, and for the purpose of safeguarding the bondholders.

            We trust that the foregoing satisfactorily answers your question.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

FRANKLIN K. THORP
Assistant Attorney General