ANNEXATION - CITIES AND TOWNS - UNINCORPORATED TERRITORY - EFFECT OF ON WATER COMPANY FRANCHISE.
The annexation of unincorporated territory by a city or town would not abrogate a franchise previously granted by a board of county commissioners to a private water company operating solely within the unincorporated territory.
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March 14, 1967
Honorable Ernest Campbell
Bureau of Governmental Research
University of Washington
3935 University Way N.E.
Seattle, Washington 98105
Cite as: AGO 1967 No. 8
By letter previously acknowledged you have requested the opinion of this office on a question which we paraphrase as follows:
Would the annexation of unincorporated territory by a city or town abrogate a franchise previously granted by a board of county commissioners to a private water company operating solely within the unincorporated territory?
We answer your question in the negative.
RCW 35.13.280, which is the principal basis of your inquiry, provides as follows:
"The annexation by any city of any territory pursuant to those provisions of chapter 35.10 which relate to the annexation of a third class city or town to a first class city, or pursuant to the provisions of chapters 35.12 or 35.13 RCWshall cancel, as of the effective date of such annexation, any franchise or permit theretofore granted to any person, firm or corporation by the state of Washington, or by the governing [[Orig. Op. Page 2]] body of such annexed territory, authorizing or otherwisepermitting the operation of any public transportation, garbage collection and/or disposal or other similar public service business or facility within the limits of the annexed territory, but the holder of any such franchise or permit canceled pursuant to this section shall be forthwith granted by the annexing city a franchise to continue such business within the annexed territory for a term of not less than five years from the date of issuance thereof, and the annexing city, by franchise, permit or public operation, shall not extend similar or competing services to the annexed territory except upon a proper showing of the inability or refusal of such person, firm or corporation to adequately service said annexed territory at a reasonable price: Provided, That the provisions of this section shall not preclude the purchase by the annexing city of said franchise, business, or facilities at an agreed or negotiated price, or from acquiring the same by condemnation upon payment of damages, including a reasonable amount for the loss of the franchise or permit. In the event that any person, firm or corporation whose franchise or permit has been canceled by the terms of this section shall suffer any measurable damages as a result of any annexation pursuant to the provisions of the laws abovementioned, such person, firm or corporation shall have a right of action against any city causing such damages." (Emphasis supplied.)
Thus, it is initially necessary to answer the question of whether a private water company is an "other similar public service business or facility" within the meaning of the statute. If the statute is applicable, its express terms answer your question; if not, then the further question to be resolved is as to what, in the absence of a controlling statute, is the impact upon a utility franchise of city annexation of the territory served by the utility.
There is no question that a private water company is a "public service business." Our problem, in determining the applicability of RCW 35.13.280,supra, is simply whether a water company is "similar" to a "public transportation, garbage collection and/or disposal business."
[[Orig. Op. Page 3]] There is no apparent predecessor to this law which was enacted by the legislature in 1957, as § 1, chapter 282, Laws of 1957. There are no Washington cases which construe this relatively new statute. Therefore, in order to properly interpret the language of the statute, we must resort to well-established principles of statutory construction.
Certainly, one of the most fundamental principles of statutory interpretation is that effect must be given to every word. See,Murray v. Dept. of Labor & Industries, 151 Wash. 95, 275 Pac. 66 (1929). The rule is stated in Sutherland Statutory Construction (Vol. 2) § 4705, as follows:
"'It is an elementary rule of construction that effect must be given, if possible, to every word, clause and sentence of a statute.'"
Furthermore, the legislature is presumed to know the meaning of words written into its enactments. See,In re Raine's Estate, 193 Wash. 394, 75 P.2d 933 (1938).
Applying these principles to the interpretation of RCW 35.13.280, each word in the phrase "other similar public service business or facility" must be given some intended meaning. Thus, by including the word "similar" in RCW 35.13.280, the legislature must have intended to restrict, at least to some extent, the types of public service businesses that would fall within the purview of this statute.
In your letter you have called our attention to the case of Bremerton Municipal League v. Bremer, 15 Wn.2d 231, 130 P.2d 367 (1942). The problem there presented to the court was whether a wharf or dock was a public utility and thereby subject to the rules relating to the sale or lease of public utilities. The court set out § 9512, Rem. Rev. Stat., which provided as follows:1/
"'It is and shall be lawful for any city or town in this state now or hereafter owning any water works, gasworks, electric light and power plant, steam plant, street railway line, street railway plant, telephone or telegraph plant and lines, or any system [[Orig. Op. Page 4]] embracing all or any one or more of such works or plantsor any similar or dissimilar utility or system, to lease for any term of years or to sell and convey the same or any part thereof, with the equipment and appurtenances, in the manner hereinafter prescribed.' (Italics ours.)"
In concluding that this statute was applicable to a wharf or a dock, the court stated:
"The appellants point out that the statute specifically names a long list of utilities, but does not specifically mention wharves and docks. But the statute also says'or any similar or dissimilar utility or system.' This, we think, includes any kind of utility in whose operations the public has an interest, that is to say, any public utility."
By comparison, glancing at RCW 35.13.280, supra, we find that the word "similar" is the only word which modifies the phrase "other . . . public service business or facility." We think it evident that this modification is a legislative expression to restrict the operation of this statute to those businesses which are "similar" to public transportation or garbage collection and/or disposal businesses.
Another equally fundamental principle of statutory construction is that words must be given their ordinary meaning. Pacific Northwest Alloys v. State, 49 Wn.2d 702, 306 P.2d 197 (1957).
Webster's New Twentieth Century Dictionary (p. 1691) defines the word "similar" as follows:
"like; resembling; having a general resemblance but not exactly the same."
In the recent case ofMiller v. Allstate Insurance Co., 66 Wn.2d 871, 405 P.2d 712 (1965), our court encountered the problem of whether two insurance policies were "similar." In passing upon this question, the court stated:
"'Similar' is not synonymous with 'identical.' All that could possibly be required by the use of this word is a general resemblance in the essential elements and this is present in the two policies with which we are concerned. . . ."
[[Orig. Op. Page 5]] We do not believe it can reasonably be said that a water company has a general resemblance to a transportation, garbage collection and/or disposal business. It must be conceded that there are very few similar characteristics between a water company and a garbage company; that there are fewer like characteristics between a water company and a transportation company. It would seem that the only common denominator among these three businesses is that they all serve the public in general.
Another cardinal rule of statutory construction is that statutes in derogation of the common law must be strictly construed. Sutherland on Statutory Construction, (Vol. 3) § 6201. InGreen Mountain School District No. 103 v. R. S. Durkee, 56 Wn.2d 154, 351 P.2d 525 (1960), the court, speaking of its opinion in Marble v. Clein, 55 Wn.2d 315, 347 P.2d 830 (1959):
". . . we reiterated the settled rule that '". . . the common law must be allowed to stand unaltered as far as is consistent with the reasonable interpretation of the new law" . . .' We there held that statutes must be construed with reference to the common law, for it must not be presumed that the legislature intended to make any innovation on the common law without clearly manifesting such intent."
In 1941, this office was asked whether an annexation of certain territory by the city of Ellensburg would abrogate a franchise previously granted to the Puget Sound Power and Light Company by Kittitas county. We answered as follows:2/
"In conclusion therefor [sic], it is our opinion that the city of Ellensburg may not interfere with the franchise granted by the Board of County Commissioners of Kittitas County to the Puget Sound Power and Light Company for the purpose of constructing, operating and maintaining light and power service to the territory then under the jurisdiction of [[Orig. Op. Page 6]] Kittitas County and subsequently annexed by the city of Ellensburg. The city cannot interfere with any contracts which the Puget Sound Power and Light Company may have with subscribers to its service in this territory, although there is nothing to prevent the city of Ellensburg from installing a line for the purpose of legitimate competition with the private utility, or of acquiring the plant and facilities of the private utility by purchase."
43 Am. Jur., Public Utilities and Services, § 28, summarizes case law as follows:
". . . where the public service corporation is not serving the municipality, or under any existing contract obligation thereto, the general rule, despite some authority to the contrary, is that, in the absence of statutory regulation or express agreement, the annexation does not affect the contract rights of the public service corporation, since the municipality succeeds to both the rights and obligations of the annexed territory. . . ."
Thus, to the extent that it provides for the abrogation of previously granted utility franchises upon annexation of unincorporated territory by a city or town, RCW 35.13.280,supra, is in derogation of the common law and, hence, must be strictly limited to cases squarely falling within its expressed terms. For this reason, as well as those previously stated, it is our opinion that the statute is not applicable to a franchise previously granted by the board of county commissioners to a private water company operating within territory annexed to a city or town.
Having determined that the language of RCW 35.13.280 is not applicable in the situation about which you inquire, we must conclude that the franchise in question would not be affected by the annexation. As noted in this opinion, above, under the common-law rule the franchise is a property right not affected by annexation.3/ The common law is the law of this [[Orig. Op. Page 7]] state except where abrogated by statute. RCW 4.04.010. We therefore conclude that when a city annexes territory the franchise of a water company operating solely within the annexed territory, previously granted to it by the county, is not affected.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
THOMAS E. KELLY
Assistant Attorney General
*** FOOTNOTES ***
1/This statute was enacted as § 1, chapter 137, Laws of 1917. In the reenactment ofTitle 35 RCW by the legislature in 1965, the statute was repealed. See, § 35.98.040, chapter 7, Laws of 1965.
2/Opinion dated August 19, 1941, to the Division of Municipal Corporations, copy enclosed.
3/In thus concluding, we have not overlooked such cases as Western Gas Co. v. Bremerton, 21 Wn.2d 907, 153 P.2d 846 (1944);Peterson v. Tacoma R & Power Co., 60 Wash. 406, 111 Pac. 338 (1910);State ex rel. Dennison v. Seattle Etc. R. Co., 64 Wash. 167, 116 Pac. 638 (1911); andEttor v. Tacoma, 77 Wash. 267, 137 Pac. 820 (1914). However, in each of these cases, the utility was, at the time of annexation, operating under both a county-granted and a city-granted franchise. In holding that as to the territory annexed, the city rather than the county franchise would thereafter control, the court was simply giving effect to the terms of the prior city-granted franchise. In regard to your question, we are not dealing with such a situation.