Barber Lumber Co. v. Gifford , 25 Idaho 654 ( 1914 )

SULLIVAN, J.

This is an original proceeding brought in this court for a writ of mandate to Wilfred L. Gifford, as Secretary of State of the state of Idaho, to countersign and' affix the great seal of the state to a deed or contract of sale for certain timber standing on land owned by the state, alleged to have been sold to the plaintiff, the Barber Lumber Company, at public auction.

After formal allegations in said complaint to the effect that the Barber Lumber Company is a corporation, etc., and that Wilfred L. Gifford, the defendant, is the duly elected, qualified and acting Secretary of State of the state of Idaho, it is alleged that the Barber Lumber Company made due and legal application in writing to the register of the state board of land commissioners to cut certain trees standing upon about 12,000 acres of land described in said application, belonging to the state; that the Barber Lumber Company had paid all of the costs estimated by the state board of land commissioners as well as all the costs of all other proceedings directed by law to determine whether such trees could be lawfully cut; that the register of said state board caused the application of said Barber Lumber Company to be published for thé full period of thirty days in one or more weekly newspapers having such circulation as would fully advise the water users of the irrigation area upon the water-shed upon which said trees are growing of the pendency of the application, and that protests to the granting of the application must be made within twenty days from the date of the last publication of said notice; that upon the expiration of the time for filing such protests as therein provided, no protests having been made, the state board of land commissioners decided that the trees desired in said application might properly be disposed of and sold; that thereafter said board caused to be advertised in three or more newspapers designated by said board, one of which was published in the county in which such timber is located, for a period of more than four weeks, that said trees would be publicly sold at the State Capitol in the city of Boise on October 25, 1913, to the highest bidder for cash, and that if the highest bidder was some other person than the applicant, he should pay the costs and disbursements incurred by said applicant in the matter of said appli"cation; that on. said 25th of October, 1913, the said Barber Lumber Company did bid for said trees the sum of $100,000 in cash; that said board took the said bid under advisement and consideration, and on the 25th day of November, 1913, did by unanimous vote of the members of said board decide and declare that said bid of the Barber Lumber Company was the highest and best bid for said trees and did accept the bid of said Barber Lumber Company therefor; that on the 29th of November, 1913, the Barber Lumber Company presented to said defendant, Gifford, as Secretary of State, a deed or contract conveying from said state of Idaho to the said Barber Lumber Company the trees growing upon the said described tracts of land, which said deed or agreement was signed by John M. Haines as governor of the state of Idaho, and requested the said defendant Gifford to attest the same and affix thereto the seal of the state of Idaho, and that said defendant then and there refused so to do and will continue to refuse to attest the same or attach the seal of the state thereto unless ordered to do so by this court; that the Barber Lumber Company is now ready, willing and anxious to pay to said board the sum of $100,000 in cash, the amount to be paid for said trees, and to comply with all the rules, regulations and orders of said board in relation thereto.

It is also alleged that sec. 16 of art. 4 of the state constitution provides that “All grants and permissions shall be in the name and by the authority of the state of Idaho, sealed with the great seal of the state, signed by the governor and countersigned by the Secretary of State,” and that in order to procure a good and sufficient title to said trees so purchased it is necessary for the grant, deed or contract conveying the same to be countersigned by the said Gifford as Secretary of State of the state of' Idaho, and that the plaintiff has no adequate or any remedy at law except-such relief as may be obtained in this proceeding.

As a reason for presenting this application, it is alleged that if the Barber Lumber Company becomes the purchaser of said trees and procures a good and sufficient title thereto, it expects and intends to construct or have constructed a line of railway from the mouth of Moore’s creek up and into the vicinity and neighborhood of the lands upon which said trees are now standing, for the purpose of hauling and conveying the timber upon said lands to the Barber Lumber Company’s mill located near Boise, and that to accomplish this purpose it has procured subscriptions from divers and different persons in sums sufficient to enable it to construct said line of railway; that said subscriptions were entered into and made upon condition that said Barber Lumber Company become the owner of and obtain the good and sufficient title to the trees growing upon said tracts of land, and that said subscriptions would expire by limitation of time on January 1, 1914; and it is alleged that the Barber Lumber Company is unable to say under the present state of the financial market whether or not it could procure these subscriptions to be renewed; and for the further reason that the sum of $100,000 paid as aforesaid for said trees belongs to the school fund of the state of Idaho and that the same can be readily placed at interest immediately at the rate of seven per cent per annum, and that the act of the defendant in refusing to countersign the deed or contract is depriving the school fund of the interest it would obtain during said period of time on said sum of money, and plaintiff prays for a writ of mahdate as above stated.

Upon presenting said complaint or petition to this court, the court ordered an alternative writ of mandate to issue, which was done and served upon the Secretary of State, who thereupon made his return to said writ and set forth in said return the entire proceedings of said board of land commissioners, and admitted the facts in regard to the application of the Barber Lumber Company to purchase said trees and the proceedings of the board thereunder substantially as set forth above. Due notice was given of the sale of said trees as required by law, and said board reserved to itself the right to reject any and all bids for said trees and timber growing upon said lands. On October 25, 1913, the date fixed for receiving the bids for the purchase of said trees, the board met and the following is a part of the proceedings of said board:

“This being the date set for receiving bids on the timber on approximately 12,000 acres of land in the Boise Basin, the Board, through its State Land Commissioner, George A. Day, offered the said timber at public sale. There were but two bids, one by Lyon Cobb, acting for the Barber Lumber Com* pany for $100,000, and one by Edwin Snow for parties unknown for $101,000. There being no further bids, it was moved and carried that the Board take the bids under advisement until two o’clock P. M. of this day.

“Board convened at two o’clock P. M. for further consideration of the bids on timber. There was presented at this time an objection on the part of the Barber Lumber Company to the bid of Edwin Snow. Said objection reading as follows:

“ ‘Counsel for the Barber Lumber Company, the party who made the bid of $100,000 for certain timber in the Boise Basin at a sale conducted this 25th day of October, 1913, enters his protest to the State Board of Land Commissioners and objects to that body considering any other bid than the bid of the Barber Lumber Company for the reason that there was no other legal bid made at said sale and that no other bid was made at said sale wliich included the costs incurred by the applicant, Barber Lumber Company, in determining the right to cut the trees upon the lands described in the notice of sale.’ ”

Then and there the attorney for the Barber Lumber Company tendered to the board the sum of $100,000 in cashier’s certificates, $50,000 on the First National Bank of Boise, Idaho, and $50,000 on the Boise City National Bank of Idaho, and stated to the board that if there was any objection to the offer of the tender on the ground that it was in the shape of certified checks instead of cash, he desired to have the board so signify, and it was then and there stated by the president of the board that the tender was acceptable and sufficient.

Mr. Snow, who represented the unknown parties, thereupon stated that his bid did not include the expenses of ascertaining the amount of timber that would be included in the sale; that the $101,000 bid was for the timber alone and that the parties for whom he was bidding would pay in addition thereto the cost and expense which the applicants for the sale had paid.

Thereupon Mr. Eldridge, a citizen and taxpayer of the state, objected to the new bid of Snow for $101,000 plus the cost of the surveys as provided by statute.

Thereupon the attorney general, who is a member of the board, proceeded to ask the bidders a few questions. He asked Snow if the people he represented and for whom he had bid were willing to contract to construct a railroad up into the said timber and to begin the cutting of the timber. Thereupon Snow replied that his clients were not at that time prepared to enter into any definite agreement regarding the construction of a railroad or the cutting of the timber except under the terms specified in the law and the terms of the sale ; that his bid was a business proposition without reference to any collateral agreements and simply upon a basis of the timber offered for sale, and that his clients were not prepared to enter into a contract to build a railroad or to cut said timber.

The same question was propounded by the attorney general to the representative of the Barber Lumber Company, who stated that at the meeting of the stockholders of the company funds were subscribed to start the mill and build the railroad. Thereupon the attorney general stated as follows:

“One of the moving considerations in the question of the disposition of this timber, as it appeared to me and also to the other members of the board, was the building of the railroad into the Basin, the immediate operation of the sawmill just out here and the consequent activity in this district, and in the state, that would result from such railroad building and opening of the mill. That was one of the prime factors in offering this timber at this time.”

After some further suggestions by the attorney general, Fraser and Snow, it was suggested that an adjournment of the matter be had and Snow suggested that he would like at least thirty days if an adjournment was to be had. Thereupon, on motion of the attorney general to the effect that the consummation of the sale and the acceptance of the bids be postponed for a period of thirty days, the board adjourned the matter for thirty days, or to the 25th day of November, 1913, the motion being unanimously carried.

On November 25th the board again convened and the attorney general thereupon asked Snow if the parties whom he represented were prepared to offer any guaranty as to the manufacture and marketing of lumber or the building of a railroad. R. C. Buchanan, one of Snow’s clients, answered that he was one of the parties for whom Snow submitted the bid of $101,000 at the board meeting of October 25th, and that was the highest bid, he believed, and his associates should be awarded the timber, and that they should have the right to market the timber to their own advantage, there being no conditions attached at the time the timber was offered for sale, and that he had no other offer to make at that time. In answer to further questions by the attorney general, Snow stated that at the time the timber was offered for sale on October 25th, and prior thereto, he was familiar with the talk of the building of a railroad and the manufacturing of the timber into lumber and knew it was one of the considerations that the board had in mind in offering, the timber for sale. The attorney general stated as follows:

“The Barber Lumber Company has agreed to start the survey of a standard gauge railroad, to be used as a common carrier, within four months and to complete such road within twenty months, up Moore’s creek to the mouth of Grimes’ creek, and to begin the operation of its sawmill near Boise at as early a date as practicable, and to continue the operation of the mill without cessation for a period of not less than one year after beginning operations, a good and sufficient bond of $75,000 being filed to be forfeited to the state in the event the said Barber Lumber Company does not carry out its agreement.

‘ ‘ In consideration of the greatly increased value that would accrue to the state lands upon which the timber stands, that it is proposed to sell, by the construction of a standard gauge railroad which shall be a common carrier, and by reason of the enhanced value of other state lands and timber in that vicinity and by reason of the increased value of the timber now less than twelve inches in diameter which cannot be cut under the terms of the law and the proposed contract with the Barber Lumber Company, and in consideration of the deposit with the state land board of $100,000 in cash by the Barber Lumber Company, and in consideration of other vast benefits that would accrue to the state and its endowment funds which, in the opinion of the board, would be far in excess of the value of $1,000 offered by Mr. Snow over the Barber Lumber Company, and because there has not been and is not now a tender on the part of Mr. Snow, I move the acceptance of the bid of the Barber Lumber Company.”

Thereupon Snow tendered a certified check of $50,000 upon banks in St. Paul, Minnesota, and checks for $51,000, not certified, on banks in Idaho Falls, Idaho.

Fraser, counsel for Barber Lumber Company, thereupon objected to the board’s considering the bid made by Snow on October 25th, or at that time, on the ground that it contained no offer to pay the preliminary expense of cruising, surveying and advertising for the sale of said land, as required by law. The attorney general also objected to the -offer of the tender by Snow, especially as to the two checks dated November 25, 1913, one for $25,000 and one for $26,000, signed by R. C. Buchanan but not certified. Snow thereupon stated that his clients would tender currency if given time. Governor Haines stated that the board had never made objection to certified cheeks and that he objected to the bid of Snow because in making his tender no offer to pay the preliminary expense of cruising, surveying, advertising, etc., as provided by law, was made. Snow thereupon said that he wanted the record to show that the highest bidder wants to know the exact cost of the preliminary expenses and offers to pay the said expenses as required by law in addition to this bid of $101,000.

The attorney general moved to reject the bid made by Snow, which motion was based on the ground that his tender was not sufficient; that the personal checks uncertified and the certified checks on banks in Minnesota were not satisfactory to the board and the board rejected said bid for that reason. Thereupon Governor Haines directed the roll called upon the motion of Mr. Peterson that the bid of the Barber Lumber Company be accepted, which motion was carried by a unanimous vote of said board. The bid of the Barber Lumber Company was thereupon accepted.

After setting forth the above facts in the return, the Secretary of State alleges that on account of said proceedings and there being two bids at such sale for the purchase of said timber, and because the bid of Edwin Snow being on its face for a greater amount than the bid of the Barber Lumber Company, and the tender by said Snow of checks certified and uncertified in the total amount of $101,000, and the rejection of said tender and the acceptance of the bid of said Barber Lumber Company for said timber, that some question now exists on the part of the defendant as to the legality of said sale to the said Barber Lumber Company and of the right of the Secretary of State to countersign and attach the seal of the state to the deed mentioned in the petition, and for that reason the Secretary of State refuses to countersign and seal the same and asks that ho may go hence without day.

A general demurrer was filed to the return made by the Secretary of State and the ease was presented to this court upon that demurrer, and the question is directly presented as to whether the answer states facts sufficient to constitute a defense or shows any legal cause why the Secretary of State should not attest said deed or contract and attach the great seal of the state thereto.

It is first contended by counsel for the defendant that the state board of land commissioners has no authority to dispose of timber growing on the lands of the state of Idaho, for the reason that sec. 1594, Rev. Codes, under which said board assumed to sell said timber, is unconstitutional, in that it does not provide for a sale at public auction. Said section makes provision for the proceedings of the board on the sale of trees upon state lands, and provides for giving a certain notice and a public sale, which notice was given in this case and a sale at public auction was had. Said section contains, inter alia, the following provisions:

“Thereafter said trees shall be publicly sold at the State Capitol, in the City of Boise, or at some other place designated by said board in said notice, to the highest bidder, and if such highest bidder be some person other than the applicant, he shall pay the costs and disbursements incurred by said applicant in the matter of said application, as herein provided,” etc.

Land Commissioner Day met with the board at said meeting on October 25, 1913, and proceeded to offer said lands at public auction, and the bids as above indicated were made, so said sale was made in accordance with the provisions of sec. 8, art. 9, of the state constitution, which provides that state lands shall be held in trust “subject to disposal at public auction for the use and benefit,” etc. While said section of the statute does not use the words “public auction,” it uses the words “publicly sold.” An auction sale is a sale by public outcry to the highest bidder on the spot. This sale was made by public outcry and only two bids were received. It was the clear intention of the legislature to have such sales made at public auction in conformity with said provision of the constitution, and said sale was so made. There is, therefore, no merit in said contention of counsel for the defendant.

It is next contended that said board had no discretion in accepting bids, but that under the provisions of said sec. 1594 the timber must be sold to the highest bidder. This contention involves the extent of the discretion of the board in determining which bid is the highest. Counsel for defendant contends that the state in the sale of its lands is only interested in securing the highest price and in the ability of the purchaser to pay, and cites in support of his contention a number of authorities involving judicial sales of real estate. Counsel also contends that the only object under the law is that the state should receive the highest price for the timber and that the bid of $101,000 being the highest, the board was bound to accept it regardless of any other consideration whatever, or as to what effect such sale might have upon other timber lands belonging to the state in the vicinity where said timber is located.

The grant of lands for the various purposes by the federal government to the state constitutes a trust and the state board of land commissioners is the instrumentality created to administer that trust, and is bound upon principles that are elementary to so administer it as to secure the greatest measure of advantage to the beneficiary of it. To that end and of necessity the board must have a large discretionary power over the subject of the trust. Under sec. 7, art. 9, of the state constitution, the board is given “direction, control and disposition of the public lands of the state, under such regulations as may be prescribed by law.” See. 8 of art. 9 provides that “It shall be the duty of the state board of land commissioners to provide for the location, protection, sale or rental of all the lands heretofore, or which may hereafter be granted to the state by the general government, under such regulations as may be prescribed by law, and in such manner as will secure the maximum possible amount therefor,” and “the legislature shall provide for the sale of said lands from time to time and for the sale of timber on all state lands and for the faithful application of the proceeds thereof in accordance with the terms of said grants. ’ ’

The legislature has provided regulations for the control and disposition of such lands' and the statute law in regard thereto is found in Revised Codes, see. 1558 et seq., and the amendments to the various sections contained in said law. Sec. 1558, after naming the members of the board, provides that the board shall have direction, control and disposition of the public lands of the state, and is given power to manage and control the same to the best interests of the state under the law. Said board is a constitutional agency charged with the administration of a public trust and is vested with certain discretionary power in that behalf, and its discretion is invoked whenever it is called upon to “confirm or reject a sale or determine what bid for land is the highest,” and so long as the board is faithfully performing its duties under the law in the exercise of its discretion, this court has no authority to interfere and adjudge a sale of timber or land illegal or void, unless fraud appears in the sale or a clear abuse of its legal discretion is shown. The board in accepting or rejecting a bid for state timber or land acts quasi-judicially, and in the absence of manifest abuse of that discretion the courts will not interfere.

The supreme court of Montana in the case of State ex rel. Gravely v. Stewart (Mont.), 187 Pac. 854, had under consideration the question of the extent of the discretion of the board of land commissioners of that state, and in that opinion the court said:

“ .... and the state board of land commissioners, as the instrumentality created to administer that trust, is bound, upon principles that are elementary, to so administer it as to secure the largest measure of legitimate advantage to the beneficiary of it. To that end, and of necessity, the board must have a large discretionary power over the subject of the trust.”

Under the statutes of this state, said board is given a large discretionary power in the exercise of the trust.

Now, if we apply the rules of law above enunciated to the facts of this case, it is clear that the state board has acted in this matter only as a man of good business sense and judgment would act in regard to his own affairs. The board had two bidders at said auction sale for said timber, the state retaining the land on which said timber was situated, and it had much other land in the vicinity of said timber, and the state’s land, no doubt, would be greatly enhanced in value by the construction of a railroad into the other timber lands of the state.. And, too, the construction of a railroad not only will greatly enhance the value of other state lands in the neighborhood of such railroad, but will also add greatly to the value of the taxable property of the state, and if this were a private transaction, upon that state of facts, how would any. business man of good sense and judgment, occupying the position of the state, do otherwise than accept said bid of $100,000 for said timber, when evidently such bid would result greatly more to the financial benefit of the state than $1,000? The value of the other state lands in that region of country would be increased many thousands of dollars by reason of the construction of the railroad, and the value of said railroad for taxable purposes, when completed, would amount in a single year to a great deal more than said $1,000. And again, the young timber standing on the land that measures less.than twelve inches in diameter eighteen inches from the ground is to be carefully protected under said contract of sale, as the state owns the land and all such timber. Much of the timber on said land is already ripe and the removal of it from the land will no doubt be a benefit to the young timber left standing.

Taking all of these matters into consideration, the board was fully justified in rejecting said bid of $101,000 and accepting the bid of $100,000, but such rejection was not based primarily on said considerations. The land business o£ the state placed in the hands of the state board of land commissioners ought to be conducted on business principles so as to subserve the best interests of the people of the state.

The board was fully justified in rejecting the bid of Snow, for the reason that the sale was advertised as a cash sale and certified checks for $50,000 of the price offered were on banks in Minnesota, and $51,000, not certified, were on banks in a distant part of the state, and had the board accepted them, before the money could have been collected on them, the banks might have failed. The bid of the Barber Lumber Company was based on two certified cheeks on the leading banks of Boise City, only a few blocks from the State House where the board meeting was held, and the agent of the Barber Lumber Company stated to the board that if such checks were not satisfactory, within a few minutes’ time he would produce the cash and present it to the board, but the chairman of the board stated that certified checks were satisfactory, thereby intimating that uncertified cheeks were not.

In the case of Pike v. State Board of Land Commrs., 19 Ida. 268, Ann. Cas. 1912B, 1344, 113 Pac. 447, the court said:

“In the first place, the constitution vests the control, management and disposition of state lands in the state board of land commissioners. (Sec. 8, art. 9.) They are, as it were, the trustees or business managers for the state in handling these lands, and on matters of policy, expediency and the business interest of the state, they are the sole and exclusive judges so long as they do not run counter to the provisions of the constitution or statute. ’ ’

Now, if the state had no further interest in the matter and no further lands that would be in any wise affected, regardless of who the purchaser was, and the state was only interested in getting all the money possible for the timber sold, then a different rule might apply; but where the state is vitally interested in having the ripe timber taken off at as early a date as practicable, and in protecting the young timber,-the financial interest of the state ought to be considered in a way at least that an ordinarily prudent business man would consider and conduct his own private affairs.

The state in the sale of its timber, where it retains the land and has other lands surrounding the timber sold, is financially interested in making the sale of such timber as advantageous to the state as possible and to responsible parties.

Another cogent reason for rejecting the bid of Show is that the board had a right to know who the persons were for whom he was making the bid. He declined to- give their names, but finally at the adjourned meeting he gave the name of one, a Mr. Buchanan, but the associates of Mr. Buchanan were not made known to the board even at the adjourned meeting, so far as the record shows.

As before stated, the state was vitally and financially interested in the growth of the young timber that was to be left standing upon said land, and it was the duty of the board, under the circumstances of this case, to carefully guard the interests of the state in that regard and not sell the timber to irresponsible people or people who were not financially able to respond in damages resulting to the state from their failure to carry out their contract with the state in protecting the young timber, and burning or otherwise disposing of the tops and limbs of the trees cut, in a proper manner.

The Barber Lumber Company had several 'hundred thousand dollars’ worth of property located in the state and were evidently responsible for carrying out those provisions of the law embodied in, the contract. On such a deal, a thousand dollars, or one per cent of the purchase price, was not a sufficient advance over the bid made by the Barber Lumber Company to compel the board to accept it, in view of the fact that the board did not know whether such bidders were financially responsible for any damages that might result to the state from their negligence by fire or otherwise in protecting the state’s interest in the timber to be left on, said land, or the state’s interest in land adjoining the same. In this ease it was the duty of the board to get the highest cash price possible for the timber when taken into consideration with the other interests of the state closely connected with the sale of the timber, as above stated.

It is true, a bond is required for the faithful carrying out of the contract for the sale of the timber, but the board has the right to consider the character, reputation and ability of the parties to contract to carry it out without resorting to what might be a doubtful action on the bond to recover damages.

From all of the facts in this case, it is clear that the board did not exceed its discretion in making said sale, and as held in Pike v. State Board of Land Commrs., supra, said board is the trustee or business manager for the state in making the sale of said timber and on matters of policy, expediency and business interest of the state, they were the sole and exclusive judges, so long as they did not run counter to the provisions of the constitution or statute and no fraud was shown.

Under the law and the facts of this case, the board had the discretionary power to reject the bid made by Snow and accept the bid made by the Barber Lumber Co.

We therefore conclude that the sale was a legal sale made under the provisions of the constitution and the law, and that the peremptory writ of mandate must issue directing the defendant as Secretary of State to countersign said deed or contract of sale and attach the great seal of the state thereto, and that the demurrer should be sustained.

No costs are awarded in this case.

Stewart, J., concurs.