BP BHEAD INT S

AN ACT Relating to a judicial proceeding for validating bond issues of public agencies; amending RCW 12.20.020; adding a new section to chapter 4.72 RCW; and adding a new chapter to Title 7 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds and declares that public agencies should be able to issue bonds, and the investing public should be able to purchase those bonds, with the certainty that they are legally valid and binding; that there is a need for an efficient judicial procedure for public agencies to ensure that their bonds are validly issued; that an efficient judicial procedure for ensuring the validity of public agencies' bonds will protect the investing public and will assist in the reduction of public agencies' borrowing costs by, among other things, increasing the marketability of public agencies' bonds, protecting public agencies' credit ratings, and helping public agencies obtain more favorable interest rates, all of which will result in more efficient financings and reduced costs to taxpayers and ratepayers; and that we therefore desire to provide public agencies with an efficient judicial procedure for ensuring the integrity of the bonds of public agencies.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter:

(1) "Authorization date" means the date of adoption by the governing body of a public agency of a resolution or ordinance authorizing the issuance or execution of any bonds.

(2) "Bonds" means bonds, warrants, notes, lease or installment purchase obligations or other evidences of indebtedness of a public agency, or contracts related to any of the foregoing.

(3) "Public agency" means any county, city, town, district, school district, municipal corporation, taxing district, or any agency, instrumentality, or public corporation thereof, or other governmental agency or public body created by or under the laws of this state and authorized to issue or execute bonds.

NEW SECTION. Sec. 3. A public agency may bring an action to determine the validity or legality of its bonds in the manner provided in this chapter. If no proceedings have been brought by the public agency under this chapter, any interested person may bring an action to determine the validity or legality of the public agency's bonds in the manner provided in this chapter. An action brought by a public agency or an interested person as provided in this chapter must be brought no later than sixty days after the authorization date of the bonds in the superior court of the county in which the public agency or its principal office is located. The action shall be in the nature of a proceeding in rem.

In an action brought by an interested person as provided in this chapter, the public agency shall be a defendant and shall be served with the summons and complaint in the action in the manner provided by law for the service of a summons in a civil action. In such an action the summons shall be in the form prescribed in section 5 of this act, except that in addition to being directed to "all persons interested in the matter of [specifying the matter]," it shall also be directed to the public agency. If the interested person bringing such an action fails to complete publication in accordance with section 4 of this act and to file proof thereof in the action within sixty days from the filing of the complaint, the action shall be immediately dismissed on the motion of the public agency.

NEW SECTION. Sec. 4. Jurisdiction of all interested persons may be had by publication of a summons as specified in section 5 of this act in accordance with chapter 65.16 RCW once each week for two successive weeks, with the second publication being not more than thirty days nor less than ten days prior to the date set for hearing, in the official newspaper of the public agency, if any, and in a legal newspaper, as defined in RCW 65.16.020, published or circulated in the county in which the public agency or its principal office is located. Prior to completion of such a publication, the public agency shall, to the extent that the court finds reasonably practicable, give notice of the pendency of the proceeding to interested persons by mail or other means ordered by the court.

NEW SECTION. Sec. 5. The summons shall be directed to "all persons interested in the matter of [specifying the matter]" and shall contain a notice to all persons interested in the matter to appear and answer the complaint not later than the date specified in the summons. Except as otherwise specified in this chapter such a summons shall be in the form prescribed in RCW 4.28.110.

NEW SECTION. Sec. 6. Jurisdiction shall be complete after the date specified in the summons. Any party interested may, not later than the date specified in the summons, appear and contest the validity or legality of the bonds.

NEW SECTION. Sec. 7. If more than one action is pending concerning similar contests which may be brought under this chapter, they shall be consolidated for trial.

NEW SECTION. Sec. 8. The court hearing the action shall disregard any error, irregularity, or omission that does not affect the substantial rights of the parties.

NEW SECTION. Sec. 9. Actions brought under this chapter shall be given preference over all other civil actions before the court in the matter of setting these actions for hearing or trial, and in hearing these actions, to the end that these actions shall be speedily heard and determined.

NEW SECTION. Sec. 10. The costs of any proceeding or action under this chapter may be allowed and apportioned between the parties or to the losing party in the discretion of the court.

NEW SECTION. Sec. 11. No contest of bonds, except by the public agency or its officers or agents, shall be made other than within the time and in the manner set forth in this chapter. The availability to any public agency or its officers or agents of the remedy provided by this chapter does not preclude the use by that public agency or its officers or agents of mandamus chapter 7.25 RCW, or any other remedy to determine the validity or legality of the bonds.

NEW SECTION. Sec. 12. (1) The judgment, if no appeal is taken, or if taken and the judgment is affirmed, shall immediately become and be forever binding and conclusive, as to all matters therein adjudicated or which at the time could have been adjudicated, against the public agency and against all other persons, and the judgment shall permanently enjoin the institution by any person of any action or proceeding raising any issue as to which the judgment is binding and conclusive.

(2) An appeal shall not allowed from any judgment entered under this chapter unless the appeal is brought by an answering party and a notice of appeal is filed within thirty days after the notice of entry of the judgment.

NEW SECTION. Sec. 13. A new section is added to chapter 4.72 RCW to read as follows:

This chapter does not apply to judicial proceedings for validating bond issues of public agencies under chapter 7.-- RCW (sections 1 through 12 of this act).

Sec. 14. RCW 12.20.020 and 1915 c 41 s 1 are each amended to read as follows:

When the defendant fails to appear and plead at the time specified in the notice, or within one hour thereafter, judgment shall be given as follows:

(1) When the defendant has been served with a true copy of the complaint, judgment shall be given without further evidence for the sum specified therein;

(2) In other cases, the justice shall hear the evidence of the plaintiff, and render judgment for such sum only as shall appear by the evidence to be just, but in no case exceed the amount specified in the complaint.

(3) The justice shall have full power at any time after a judgment has been given by default for failure of the defendant to appear and plead at the proper time, to vacate and set aside said judgment for any good cause and upon such terms as he shall deem sufficient and proper. Such judgment shall only be set aside upon five days notice in writing served upon the plaintiff or the plaintiff's attorney and filed with the justice within ten days after the entry of the judgment. The justice shall hear the application to set aside such judgment either upon affidavits or oral testimony as he may deem proper. In case such judgment is set aside the making of the application for setting the same aside shall be considered an entry of general appearance in the case by the applicant, and the case shall duly proceed to a trial upon the merits: PROVIDED, That, no justice of the peace shall pay out or turn over money or property received by him by virtue of any default judgment until the expiration of the ten days for moving to set aside such default judgment has expired.

(4) This section does not apply to judicial proceedings for validating bond issues of public agencies under chapter 7.-- RCW (sections 1 through 12 of this act).

NEW SECTION. Sec. 15. Sections 1 through 12 of this act shall constitute a new chapter in Title 7 RCW.