WASHINGTON STATE DAIRY PRODUCTS COMMISSION ‑- POWER TO CONTRACT ‑- METHOD OF PAYMENT

WASHINGTON STATE DAIRY PRODUCTS COMMISSION ‑- POWER TO CONTRACT ‑- METHOD OF PAYMENT

The Washington State Dairy Products Commission may contract with the American Dairy Association for national programs of advertising, merchandising, research, education and publicity, and make payments under such an agreement on a six-month, rather than twelve‑month, basis, with payments being made during the months of July to December of each year.

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                                                                 October 4, 1954

Washington State Dairy Products Commission
120 Sixth Avenue North
Seattle 9, Washington                                                                                                              Cite as:  AGO 53-55 No. 330

Gentlemen:

            You have requested advice from this office as to the legality of a new schedule of payments to the American Dairy Association, under an agreement with that association for national programs of advertising, merchandising, research, education and publicity.  The plan suggested pro-rates [[prorates]]the payments to the American Dairy Association on a six-month, rather than twelve‑month basis with payments being made during the months of July to December of each year.

            It is our opinion that such a method of payment is within the powers of your commission.

                                                                     ANALYSIS

            You have advised that the Washington State Dairy Products Commission has an agreement with the American Dairy Association whereby the Commission participates with the Association's programs sponsoring and promoting the sale of dairy products not only in this state, but on a national basis.  The proportionate share of the association's program paid by the Commission is based on a pro rata formula and applied to the annual budget of the national association.  Because of differences in the bookkeeping systems used by each organization, the commission, with the advice and consent of the national association, has devised the above plan, which you have referred to this office for approval.

             [[Orig. Op. Page 2]]

            Although we agree that your proposal is unique in nature, there is sufficient authority to support your actions.  The commission is organized under the authority of chapter 219, Laws of 1939 (chapter 15.44 RCW).  RCW 15.44.020 provides that the commission shall have the power to enter into contracts and shall have and possess all the powers of a corporation.  The powers and duties of the commission are specifically set forth in RCW 15.44.060, which provides, among other things, that the commission shall have the power to:

            "* * *

            "(2) Administer and enforce the provisions of this chapter and perform all acts and exercise all powers reasonably necessary to effectuate the purpose hereof;

            "* * *

            "(4) Establish offices and incur expenses and enter into contracts and create such liabilities as are reasonable and proper for the proper administration of this chapter;

            "* * *

            "(7) Make in its name such advertising contracts and other agreements as are necessary to promote the sale of dairy products on either a state or national basis; * * *"

            The commission, although not a municipal corporation, is in the nature of a public or quasi-public corporation.  In many respects the commissioners enjoy a large number of the contractual powers granted to boards of directors or trustees of private corporations.  It is a generally accepted rule that, where a contract is made in pursuance to a statutory power expressly conferred by the legislature and has been duly entered into, the courts will consider only the validity of the statute and the scope of the administrator's authority.  Questions of whether the contract is wise, or whether its terms are advantageous for the corporation and the public are matters for the discretion of the administrative officers.  However, courts will strike down such contracts for fraud, an abuse of discretion on the part of the authorities executing it, or if it is inequitable or unreasonable.  The facts brought to our attention by your request do not indicate the presence of the exceptions to this general rule.

            We wish to point out, however, that, although the powers granted to the commission are in many instances the same as those granted to a private corporation, the moneys disbursed by the commission are public moneys.  RCW 15.44.050  [[Orig. Op. Page 3]] requires that the secretary-treasurer of the commission sign all vouchers and receipt for all moneys received by the commission.  In addition, RCW 42.24.010 requires all state, county, city and precinct officers charged with the disbursement of public moneys to take fully itemized vouchers in duplicate for such disbursements.  The section further provides that:

            "Said vouchers shall contain a certificate by the responsible officer, certifying on honor that the materials furnished, labor performed, or services rendered, for which the disbursement is made, have been actually delivered, rendered or performed."  (Emphasis supplied)

            Since the statute requires that expenditures be supported by fully itemized vouchers, it follows that the commission may make such contract payments upon a duly authenticated voucher such as submitted with your request.

            We hope that the foregoing information will be of assistance to you.

Very truly yours,

DON EASTVOLD
Attorney General

PHYLLIS DOLVIN
Assistant Attorney General