Public Utility District No. 1 v. Inland Power & Light Co. ( 1964 )

Hill, J.

(dissenting) — I dissent. The majority opinion is probably correct insofar as the practicalities of condemnation are concerned. Indeed, it is an understatement to say, as the majority does, that a survey of the loan contracts, mortgages and the Rural Electrification Act leads to the conclusion that “the United States has a substantial interest in the properties in Pend Oreille County which the District seeks to condemn.”

But substantial as that interest undoubtedly is, it is nonetheless the interest of a mortgagee and that interest can be terminated by the payment of all, or an agreed pro tanto portion of the amount due the mortgagee.¹

There is a provision in the mortgage to the United States which clearly contemplates the condemnation of portions of the mortgaged property.²

The trial court recognized that we are here concerned with only the first of the three phases of a condemnation action: (1) adjudication of public use and necessity; (2) determination of damages to be awarded to the owner; and (3) payment of the amount of the award and entry into possession. State ex rel. Lange v. Superior Court (1963), 61 Wn. (2d) 153, 377 P. (2d) 425, and cases there cited.

No contention is made here that the three interrelated essential findings in this phase of the proceeding have not been made: (1) that the proposed use is really a public use; (2) that the public interest requires it; and (3) that the property appropriated is necessary for the proposed public purpose. See State ex rel. Lange v. Superior Court, supra.

As stated in Mercer Island School Dist. No. 400 v. Victor Scalzo, Inc. (1959), 54 Wn. (2d) 539, 540, 342 P. (2d) 225,

“At the hearing on the first phase, the court is concerned only with evidence regarding the necessity for the taking, and whether the use for which the property is sought is a public use. ...”

The trial court recognized the apparent futility of the gesture the Public Utility District was making, in taking the first step in this eminent domain proceeding, but concluded that it was not its function to say that the District was attempting the impossible and that, consequently, it was entitled to its order of public use and necessity.

We ought to reach the same conclusion. Where the interest of the United States is one that can be terminated by the repayment of the money it has loaned or an agreed pro tanto portion thereof, that interest should not, in the first phase of the proceeding, be a bar to the condemnation. If and when it is established that the lien interest of the United States is so substantial that it cannot be removed by the condemner, will be the time to dismiss the proceeding.

. I cannot agree that because the United States has a mortgage lien on property it is ipso facto immune from a condemnation, even though the lien can be removed by payment; nor can I agree that, on the record before us, it is established that in this particular case such payment cannot be made.

I would affirm the trial court.

Hale, J., concurs with Hill, J.

Hamilton, J., concurs in the result of the dissent.

July 29, 1964. Petition for rehearing denied.

1 The exact amount of the advance made by the United States to Inland at this time, under its loan contract and the amendments thereto, can only be “guesstimated.” The borrowing limit, as of November 6, 1961, was in excess of ten million dollars.

2 “In the event that the Mortgaged Property, or any part thereof, shall be taken under the power of eminent domain, all proceeds and avails therefrom, except to the extent that all noteholders shall consent to other use and application thereof by the Mortgagor, shall forthwith be applied by the Mortgagor; first, to the ratable payment of any indebtedness by this Mortgage secured, other than principal of or interest on the notes; second, to the ratable payment of interest which shall have accrued on the notes and be unpaid; third, to the ratable payment of or on account of the unpaid principal of the notes; and, fourth, the balance shall be paid to whosoever shall be entitled thereto.”