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District Court of Appeal, Third District, California.

Ralph AHLGREN et al., Plaintiffs and Appellants, v. John E. CARR, as Director of Finance, etc., et al., Defendants and Respondents.

Civ. 10323.

Decided: July 31, 1962

Landis & Martin, Sacramento, for appellants. Stanley Mosk, Atty. Gen., by Richard L. Mayers, Deputy Atty. Gen., Sacramento, for respondents.

This is an appeal from a judgment of dismissal entered after respondents' demurrer was sustained without leave to amend.

Plaintiffs, as taxpayers and citizens of the state of California, brought this action to enjoin John E. Carr, as Director of Finance of the State of California, and Alan Cranston, as Controller of the State of California, from taking action which would result in alleged illegal expenditures of state funds. The action involves the legality of the action of the Director of Finance in approving contracts between the state and certain textbook publishers for the purchase of textbooks in the schools and the legality of the disbursements of funds by the Controller in payment of the purchase price of the texts.

On March 10, 1960, the Board of Education of the State of California approved the purchase of certain textbooks at a total cost of over fourteen million dollars. Thereafter, the Legislature appropriated a sum to purchase such books but provided in item 361 of the Budget Act as follows: ‘[N]one of this appropriation shall be available to finance contracts in respect to the new textbooks adoptions set forth on page 956 of the Governor's Budget for the 1960–1961 fiscal year in which the unit price for any textbook or the total price for any series of textbooks submitted on a finished book basis exceeds by more than 10 percent, respectively, the average of the three highest unit prices for a competitive textbook or the average of the three highest total prices for a competitive series of textbooks submitted on the basis of leasing plates to the State.’

The foregoing provision was adopted on the recommendation of a legislative conference committee which reported to the Legislature as follows:

‘[R]ecommended the inclusion in Item 361 of respective language designed to insure that textbooks purchased by the State shall be available at reasonable and competitive prices. It is not intended to interfere with the State Board of Education's discretion to adopt and select textbooks.

‘The language contained in Item 361 will permit the State Board to contract for the purchase of finished textbooks or the printing and binding of books using leased plates so long as the contract price for finished textbooks does not exceed by more than 10 percent the cost of the highest priced competitive textbooks submitted on the basis of leasing plates to the State.

‘The Legislature has not been furnished comparative cost data which would show an adequate basis for the substantial difference in price between the amount budgeted for state textbooks under policies followed heretofore and the amount needed for the purchase of finished textbooks. This makes necessary the imposition of a reasonable ceiling on prices to conserve the financial interests of the State and to prevent improvidence, and the language of Item 361 is designed to serve this purpose.’

After this legislation was enacted the Board of Education of the State of California approved proposed contracts for the purchase of finished textbooks. Two contracts were submitted to the Director of Finance for his approval. This action was filed on August 1, 1960. The basic theory of the complaint was that the contracts as written exceeded the legislative limitation on such contracts. The complaint contained two causes of action. The first cause of action was to enjoin the officials as has been previously indicated. The second alleged that the adoption of the books as textbooks for use in the public schools did not comply with the law and that the contracts based on such adoptions are illegal.

The demurrer as to each count filed by the Attorney General on behalf of John Carr and Alan Cranston was on the ground that the complaint did not state facts sufficient to constitute a cause of action.

The demurrer raised the following points:

1. The standing of the plaintiffs to sue.

2. Whether the action was one against the officers in their official capacity or against the state itself, to which the state had not consented.

3. Whether the second cause of action stated sufficient facts to constitute a cause of action.

A fourth point was stated as follows: ‘In any event, facts, of which this court may take judicial notice, demonstrate conclusively that the three contracts challenged by plaintiffs are lawful and comply with the provisions of item 361 of the Budget Act of 1960–61.’

The learned trial judge in his ‘Memorandum Opinion’ stated that the crucial question in the case was whether or not a taxpayer as such had the right to maintain an action to enjoin allegedly improper expenditures of public funds by a state official. The court concluded that ‘the better rule and the one to which California in my judgment is committed, is that ‘a taxpayer has no standing as such to have the officers of the State enjoined from wasting public funds.’ (Mitchell v. Stephens, 285 Fed. 756 (S.D.Cal.), * * *' The court then stated that ‘In view of my holding as indicated above, I do not think it necessary to discuss other points made by the parties.’

The question whether a taxpayer has a sufficient interest to maintain an action against state officers to enjoin allegedly improper expenditures has never been directly decided in California, though without discussion of the plaintiffs' right to sue actions have been brought by taxpayers and have proceeded through the trial and appellate courts without that question being raised. (See Livermore v. Waite, 102 Cal. 113, 36 P. 424, 25 L.R.A. 312; Wheeler v. Herbert, 152 Cal. 224, 92 P. 353; Holloway v. Purcell, 35 Cal.2d 220, 222, 217 P.2d 665.)

While there seems to be a conflict of authority as to whether a taxpayer has the right to enjoin an illegal expenditure by a state official, we believe that the great weight of authority suggests the rule that the taxpayer does have such right.

In a very complete and informative annotation it is stated in 58 American Law Reports 588, at page 589: ‘In a majority of the jurisdictions in which the question of the right of a taxpayer and citizen to enjoin a waste or unlawful expenditure of state funds has been raised, that right has been upheld.’ And at page 599: ‘* * * But the real basis of the rule permitting suit by the individual taxpayer is the necessity of prompt action to prevent irremediable public injury; this reason applies equally as well where state funds are being misappropriated, and if jurisdiction can be sustained in one case it should be in the other, just as the majority of courts hold that it can be. The municipal or county taxpayer is allowed to maintain the suit, not because of an individual interest differing from other taxpayers, but because as such taxpayer he is so interested in the municipal funds that he may ask the court to protect them from misuse or misappropriation; the taxpayer bears the same relation to the state funds as to the municipal funds, except in degree, a point which should not enter into the question.’

And in 52 American Jurisprudence it is stated at page 4: ‘* * * However, as a general rule, when the question of the right of a taxpayer and citizen to enjoin a waste or unlawful expenditure of state funds has been raised, that right has been upheld.’

In 3 Davis, Administrative Law Treatise, section 22.09, at page 245, the author points out that a 1929 collection of cases showed 19 states which at that time held that state taxpayers could challenge state expenditures and only four that denied such standing to state taxpayers. Davis observed however that at the present time ‘probably at least thirty-two states uphold the standing of state taxpayers, and in not a single state is the law clear that state taxpayers have no standing to challenge state expenditures. This means that since 1929, about thirteen states have for the first time upheld such standing, and that each of the four states which previously had denied such standing has developed law which either upholds such standing or makes standing unclear.’

The rationale of the overwhelming acceptance of the principle of the right of a state taxpayer to maintain a suit to enjoin the illegal expenditure of state funds is set forth in a law review comment in 50 Harvard Law Review 1276, 1283, as follows: ‘The taxpayers' suit must then be understood as not only a means of vindicating individual rights but as a governmental device to safeguard the legal restrictions on state and local governments, which, if not subjected to the careful scrutiny of individual taxpayers, might well become dead letters. The importance of the latter factor is indicated by the enactment of statutes allowing such suits in those jurisdictions in which judicial interpretation of ordinary legal principles had denied the taxpayer's status to sue. The overwhelming acceptance of such suits is in keeping with the distrust of executive and administrative self-restraint in the use of the spending power and with the readiness to allow the courts to assume the role of arbiter in the governmental scheme.’

In the very recent case of Gogerty v. Coachella Valley Junior College Dist., 57 A.C. 774, 21 Cal.Rptr. 806, 371 P.2d 582, which was an action by a taxpayer to have the selection and acquisition of a school site declared void and that defendant district be permanently enjoined from acquiring or developing the site with public funds, our Supreme Court reversed a judgment predicated upon the sustaining of a demurrer to plaintiff's fourth amended complaint without leave to amend. The court said at page 777, 21 Cal.Rptr. at page 808, 371 P.2d at page 373: ‘A taxpayer may sue a governmental body in a representative capacity in cases involving fraud, collusion, ultra vires, or failure on the part of the governmental body to perform a duty specifically enjoined. Silver v. City of Los Angeles, 57 A.C. 13, 15[1], 17 Cal.Rptr. 379, 366 P.2d 651; Nickerson v [County of] San Bernardino, 179 Cal. 518, 522 et seq., 177 P. 465; Dunn v. Long Beach L. & W. Co., 114 Cal. 605, 609, 46 P. 607; Schaefer v. Berinstein, 140 Cal.App.2d 278, 289[12], 295 P.2d 113; Pratt v. Security Trust & Savings Bk., 15 Cal.App.2d 630, 636[1], 59 P.2d 862; 18 McQuillin, Municipal Corporations (3d ed. 1950) § 52.07, p. 23; cf. 124 A.L.R. (1940) pp. 1238–1240.’

The case of Mitchell v. Stephens, supra, which was relied on by the trial court and by respondents is clearly distinguishable from the case at bench. In that case a California taxpayer sought to recover on behalf of the state the loss resulting from the sale of certain bonds in violation of a constitutional amendment. Even though the court conceded that the sale was ultra vires and void, it nevertheless held that plaintiff as a California taxpayer, as distinguished from a taxpayer of a city or county, had no standing ‘to bring a suit in attempted and asserted enforcement of a claim or demand inuring to the state itself, * * *.’

In the instant case the action is not brought to enforce a claim inuring to the state itself but is one in which the taxpayer seeks to enjoin alleged illegal expenditures by state officials.

Likewise, the case of Elliott v. Superior Court, 180 Cal.App.2d 894, 5 Cal.Rptr. 116, cited by respondents is distinguishable from the case at bench. In that case this court held that a taxpayer could not maintain an action for damages for the benefit of the state against defendants because of allegedly unlawful practices in the operation of a gas field. This court stated that the matter had been called to the attention of proper state officials and they refused to join in the action and that in the absence of any showing of ‘fraud or bad faith in refusing to join in the action,’ it could not circumvent their decision.

Having concluded that the great weight of authority supports the right of a taxpayer to bring an action to enjoin the alleged illegal expenditure of public moneys by a state official, we believe the trial court erred in holding that a taxpayer had no right to maintain the instant action.

The second question is whether the action is one against the officers of the state in their official capacity or against the state itself to which the state had not assented. The answer is aptly stated in Rein v. Johnson, 149 Neb. 67, 30 N.W.2d 548, 551–552:

‘Generally, the applicable rule is that an action against state officers, attacking the constitutionality of a statute of the state and seeking to enjoin its enforcement by such officers, or otherwise obtain relief from an alleged invalid act or abuse of authority by them is not ordinarily a suit against the state, and is not prohibited as such under the general principles governing the immunity of the state from suit. That is true because acts of state officers not legally authorized, or which exceed or abuse the authority conferred upon them, are judicially regarded as their own acts and not acts of the state. 49 Am.Jur., States, Territories, and Dependencies, § 94, p. 307, § 95, p. 310; 59 C.J., States, § 465, p. 310; 43 C.J.S., Injunctions, § 109, p. 626; 32 C.J., Injunctions, § 389, p. 247.

‘As stated in Burke v. Snively, 208 Ill. 328, 70 N.E. 327, 328: ‘In equity the money in the state treasury is the money of the people of the state, and suits by a taxpayer to restrain the misappropriation by public officers of such money to an unauthorized purpose are not suits against the state.’

‘Also, as stated in White Eagle Oil & Refining Co. v. Gunderson, 48 S.D. 608, 205 N.W. 614, 617, 43 A.L.R. 397, quoting with approval from Mullen & Rouke v. Dwight et al., Regents of Education, 42 S.D. 171, 173 N.W. 645: ‘Likewise, state officials may be restrained or prohibited by appropriate action or procedure, in any court having jurisdiction, from performing unlawful acts as such officials, without the consent of the state, as such procedure is not deemed a suit against the state.’'

The next question is whether the second count of the complaint stated a cause of action. The plaintiffs alleged basically that after the adoption of the budget act for the 1960–1961 fiscal year the Board of Education accepted reduced bids from certain book sellers and entered into contracts with them; that the reduction in price was conditioned on changes in the content and quality of the books; and that the contracts were invalid because the manner of adopting the textbooks was invalid.

The demurrer to the second cause of action was on the ground that the second count of the complaint did not state facts sufficient to state a cause of action. The objection apparently was that the facts were not set forth which showed in what manner the adoption of the books did not comply with the law and was illegal. We believe that the second count of the complaint was subject to a general demurrer. If the conclusionary allegations as to non-compliance with the law and illegality were accompanied with an adequate statement of ultimate facts, they would be considered mere surplusage. But here the facts are not adequately stated and no cause of action is stated. (See Chadbourn, Grossman, Van Alstyne, California Pleading, sec. 891, and cases cited therein.) But in the instant case the ruling on the demurrer was general and no attack is made that the first count of the complaint did not state facts sufficient to constitute a cause of action. The rule applicable is that it is error to sustain a demurrer without leave to amend as to the entire complaint where one count of the complaint is good. (2 Witkin, California Procedure, p. 1497.)


Appellants' complaint is based upon the allegation that the textbook contracts violate the provisions of the 1960 Budget Act, and that the payments to the publishers under these contracts are illegal expenditures. In paragraph XII of the first cause of action plaintiffs allege facts setting forth eight specific grounds that the Director of Finance violated the Budget Act of 1960 in approving the textbook contracts. The issue presented by this pleading is whether or not these acts violated the Budget Act of 1960.

Respondents request this court to take judicial notice of certain facts stated in a number of exhibits filed in the trial court with the demurrer, and they assert that they demonstrate conclusively that the three contracts are lawful and comply with the budget act.

We do not think that it is appropriate under the circumstances for this court to take judicial notice of these documents. First, it is clear that the trial court did not in ruling on the demurrer take judicial notice of the documents or their contents. Secondly, appellants herein have never been apprised that the court will take judicial notice. As stated in McCormick on Evidence, section 330, page 708: ‘Fairness will ordinarily require that the court before making a final ruling that judicial notice will be taken of a given fact should notify the parties of his intention to do so and afford them an opportunity to present information which might bear upon the propriety of noticing the fact, or upon the truth of the matter to be noticed. The need for such opportunity would be more frequent in respect to adjudicative than as to legislative facts, and even as to the former there are many routine matters of common knowledge which the judge would notice as a matter of course. Common sense demands a reasonable discretion for the judge to determine whether fairness requires such notification.’

Furthermore, some of the facts presented in the documents respondents presented to the trial court were not properly the subject of judicial notice. There is a distinction between taking judicial notice of sources and documents without formal proof of authenticity and taking judicial notice of the facts recited therein. As stated in Stasiukevich v. Nicolls, 1 Cir., 168 F.2d 474, at page 479: ‘The official report of a legislative or congressional committee is admissible in evidence in a judicial proceeding, as an exception to the hearsay rule, where the report, within the scope of the subject matter delegated to the committee for investigation, contains findings of fact on a matter which is at issue in the judicial proceeding. See Wigmore on Evidence, §§ 1662, 1670. Indeed, the court could properly take judicial notice of the report, without its formal introduction into evidence. But though the court may receive the report in evidence, or may take judicial notice of its existence and contents, this does not mean that the court must accept the findings in the report as indisputable truth; the findings are merely evidence of the facts asserted. See United States v. Aluminum Co. of America, 2 Cir., 1945, 148 F.2d 416, 445, 446; Morgan, The Law of Evidence, 1941–1945, 59 Harv.L.Rev. 481, 485–86 (1946). The credibility of such evidence will vary according to the thoroughness and impartiality with which the committee conducted its investigation, the fairness of its procedure, the fullness of opportunity it afforded accused individuals or organizations to develop their side of the story; and, of course, the other party may introduce evidence tending to prove the contrary of the facts asserted in the official report.’

It is, of course, true that courts take judicial notice of matters of science and common knowledge (Code Civ.Proc. see. 1875, subd. 9), and while this court may take judicial notice of the existence of the interoffice memoranda, correspondence, documents and opinions and their contents, we do not, however, take judicial notice that everything stated therein is true. (59 Harv.L.Rev. 481, 486; McCormick on Evidence, p. 704; Stasiukevich v. Nicolls, supra; Williams v. San Francisco, 24 Cal.App.2d 630, 634, 76 P.2d 182.)

Therefore we cannot agree with respondents that the documents filed demonstrate that the complaint does not state a cause of action and that the court did not err in sustaining respondents' demurrer without leave to amend. The first cause of action of the complaint set forth eight particulars in which the director violated the Budget Act of 1960 in approving the textbook contracts. Such allegations present issues that cannot be disposed of by filing documents such as were filed by respondents because the court in ruling upon the general demurrer is not entitled to assume that everything stated in said documents is true. These allegations should be met by such defenses as respondents may have thereto, and the trial court should determine the issues of fact involved.

In view of the foregoing, we conclude that the court erred in sustaining the demurrer to both causes of action without leave to amend.

The judgment of dismissal is reversed.

SCHOTTKY, Justice.

PEEK, P. J., and PIERCE, J., concur.