Believing that respondent was impersonating a police officer, petitioner Haner, a Washington State Patrol officer, pursued and pulled over respondent's vehicle. While questioning respondent at the scene, petitioner Devenpeck, Haner's supervisor, discovered that respondent was taping their conversation and arrested him for violating the State's Privacy Act. The state trial court subsequently dismissed the charge. Respondent then filed this suit in federal court, claiming, among other things, that his arrest violated the Fourth and Fourteenth Amendments. The District Court denied petitioners qualified immunity, and the case went to trial. The jury was instructed, inter alia, that respondent had to establish lack of probable cause to arrest, and that taping police at a traffic stop was not a crime in Washington. The jury found for petitioners. The Ninth Circuit reversed, based in part on its conclusion that petitioners could not have had probable cause to arrest. It rejected petitioners' claim that there was probable cause to arrest for impersonating and for obstructing a law enforcement officer, because those offenses were not "closely related" to the offense invoked by Devenpeck at the time of arrest.
1. A warrantless arrest by a law officer is reasonable under the Fourth Amendment if, given the facts known to the officer, there is probable cause to believe that a crime has been or is being committed. The Ninth Circuit's additional limitation--that the offense establishing probable cause must be "closely related" to, and based on the same conduct as, the offense the arresting officer identifies at the time of arrest--is inconsistent with this Court's precedent, which holds that an arresting officer's state of mind (except for facts that he knows) is irrelevant to probable cause, see Whren v. United States, 517 U. S. 806, 812-815. The "closely related offense" rule is also condemned by its perverse consequences: it will not eliminate sham arrests but will cause officers to cease providing reasons for arrest, or to cite every class of offense for which probable cause could conceivably exist. Pp. 5-9.
2. This Court will not decide in the first instance whether petitioners lacked probable cause to arrest respondent for either obstructing or impersonating an officer because the Ninth Circuit, having found those offenses legally irrelevant, did not decide that question. Pp. 9-10.
333 F. 3d 972, reversed and remanded.
Scalia, J., delivered the opinion of the Court, in which all other Members joined, except Rehnquist, C. J., who took no part in the decision of the case.
GERALD DEVENPECK, et al., PETITIONERS v.
This case presents the question whether an arrest is lawful under the Fourth Amendment when the criminal offense for which there is probable cause to arrest is not "closely related" to the offense stated by the arresting officer at the time of arrest.
On the night of November 22, 1997, a disabled automobile and its passengers were stranded on the shoulder of State Route 16, a divided highway, in Pierce County, Washington. Alford v. Haner, 333 F. 3d 972, 974 (CA9 2003); App. 94, 98. Respondent Jerome Alford pulled his car off the road behind the disabled vehicle, activating his "wig-wag" headlights (which flash the left and right lights alternately). As he pulled off the road, Officer Joi Haner of the Washington State Patrol, one of the two petitioners here, passed the disabled car from the opposite direction. 333 F. 3d, at 974. He turned around to check on the motorists at the first opportunity, and when he arrived, respondent, who had begun helping the motorists change a flat tire, hurried back to his car and drove away. Ibid. The stranded motorists asked Haner if respondent was a "cop"; they said that respondent's statements, and his flashing, wig-wag headlights, had given them that impression. Ibid.; App. 96. They also informed Haner that as respondent hurried off he left his flashlight behind. Id., at 97.
On the basis of this information, Haner radioed his supervisor, Sergeant Gerald Devenpeck, the other petitioner here, that he was concerned respondent was an "impersonator" or "wannabe cop." Id., at 97-98. He pursued respondent's vehicle and pulled it over. 333 F. 3d, at 975. Through the passenger-side window, Haner observed that respondent was listening to the Kitsap County Sheriff's Office police frequency on a special radio, and that handcuffs and a hand-held police scanner were in the car. Ibid. These facts bolstered Haner's suspicion that respondent was impersonating a police officer. App. 106, 107. Haner thought, moreover, that respondent seemed untruthful and evasive: He told Haner that he had worked previously for the "State Patrol," but under further questioning, claimed instead to have worked in law enforcement in Texas and at a shipyard. Ibid. He claimed that his flashing headlights were part of a recently installed car-alarm system, and acted as though he was unable to trigger the system; but during these feigned efforts Haner noticed that respondent avoided pushing a button near his knee, which Haner suspected (correctly) to be the switch for the lights. 333 F. 3d, at 975; App. 108.
Sergeant Devenpeck arrived on the scene a short time later. After Haner informed Devenpeck of the basis for his belief that respondent had been impersonating a police officer, id., at 110, Devenpeck approached respondent's vehicle and inquired about the wig-wag headlights, 333 F. 3d, at 975. As before, respondent said that the headlights were part of his alarm system and that he did not know how to activate them. App. 52, 138-139. Like Haner, Devenpeck was skeptical of respondent's answers. In the course of his questioning, Devenpeck noticed a tape recorder on the passenger seat of respondent's car, with the play and record buttons depressed. 333 F. 3d, at 975. He ordered Haner to remove respondent from the car, played the recorded tape, and found that respondent had been recording his conversations with the officers. Devenpeck informed respondent that he was under arrest for a violation of the Washington Privacy Act, Wash. Rev. Code §9.73.030 (1994). 333 F. 3d, at 975; App. 144-145. Respondent protested that a state court-of-appeals decision, a copy of which he claimed was in his glove compartment, permitted him to record roadside conversations with police officers. 333 F. 3d, at 975; App. 42, 67-68. Devenpeck returned to his car, reviewed the language of the Privacy Act, and attempted unsuccessfully to reach a prosecutor to confirm that the arrest was lawful. Id., at 151-154. Believing that the text of the Privacy Act confirmed that respondent's recording was unlawful,1 he directed Officer Haner to take respondent to jail. Id., at 154.
A short time later, Devenpeck reached by phone Mark Lindquist, a deputy county prosecutor, to whom he recounted the events leading to respondent's arrest. 333 F. 3d, at 975. The two discussed a series of possible criminal offenses, including violation of the Privacy Act, impersonating a police officer, and making a false representation to an officer. App. 177-178. Lindquist advised that there was "clearly probable cause," id., at 179, and suggested that respondent also be charged with "obstructing a public servant" "based on the runaround [he] gave [Devenpeck]," id., at 157. Devenpeck rejected this suggestion, explaining that the State Patrol does not, as a matter of policy, "stack charges" against an arrestee. Id., at 157-158.
At booking, Haner charged respondent with violating the State Privacy Act, id., at 32-33, and issued a ticket to respondent for his flashing headlights under Wash. Rev. Code §46.37.280(3) (1994), App. 24-25. Under state law, respondent could be detained on the latter offense only for the period of time "reasonably necessary" to issue a citation. §46.64.015 (1994). The state trial court subsequently dismissed both charges. App. 10, 29.
Respondent filed suit against petitioners in Federal District Court. He asserted a federal cause of action under Rev. Stat. §1979, 42 U. S. C. §1983, and a state cause of action for unlawful arrest and imprisonment, both claims resting upon the allegation that petitioners arrested him without probable cause in violation of the Fourth and Fourteenth Amendments. 333 F. 3d, at 975. The District Court denied petitioners' motion for summary judgment on grounds of qualified immunity, and the case proceeded to trial. Alford v. Washington State Police, Case No. C99-5586RJB (WD Wash., Nov. 30, 2000), App. to Pet. for Cert. 40a. The jury was instructed that, for respondent to prevail on either his federal- or state-law claim, he must demonstrate that petitioners arrested him without probable cause, App. 199-201; and that probable cause exists "if the facts and circumstances within the arresting officer's knowledge are sufficient to warrant a prudent person to conclude that the suspect has committed, is committing, or was about to commit a crime," id., at 201. The jury was also instructed that, at the time of respondent's arrest, a State Court-of-Appeals decision, State v. Flora, 68 Wash. App. 802, 845 P. 2d 1355 (1992), had clearly established that respondent's taping of petitioners was not a crime, App. 202. And the jury was directed that it must find for petitioners if a reasonable officer in the same circumstances would have believed respondent's detention was lawful. Id., at 200. Respondent did not object to any of these instructions. The jury returned a unanimous verdict in favor of petitioners. 333 F. 3d, at 975. The District Court denied respondent's motion for judgment as a matter of law or, in the alternative, a new trial, and respondent appealed. Ibid.; App. to Pet. for Cert. 25a.
A divided panel of the Court of Appeals for the Ninth Circuit reversed, finding "no evidence to support the jury's verdict," 333 F. 3d, at 975. The majority concluded that petitioners could not have had probable cause to arrest because they cited only the Privacy Act charge and "[t]ape recording officers conducting a traffic stop is not a crime in Washington." Id., at 976. The majority rejected petitioners' claim that probable cause existed to arrest respondent for the offenses of impersonating a law-enforcement officer, Wash. Rev. Code §9A.60.040(3) (1994), and obstructing a law-enforcement officer, §9A.76.020, because, it said, those offenses were not "closely related" to the offense invoked by Devenpeck as he took respondent into custody, 333 F. 3d, at 976-977. The majority also held that there was no evidence to support petitioners' claim of qualified immunity, since, given the Washington Court of Appeals' decision in Flora, "no objectively reasonable officer could have concluded that arresting [respondent] for taping the traffic stop was permissible," 333 F. 3d, at 979. Judge Gould dissented on the ground that it was objectively reasonable for petitioners to believe that respondent had violated the Privacy Act. See id., at 980. We granted certiorari. 541 U. S. 987 (2004).
The Fourth Amendment protects "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." In conformity with the rule at common law, a warrantless arrest by a law officer is reasonable under the Fourth Amendment where there is probable cause to believe that a criminal offense has been or is being committed. See United States v. Watson, 423 U. S. 411, 417-424 (1976); Brinegar v. United States, 338 U. S. 160, 175-176 (1949). Whether probable cause exists depends upon the reasonable conclusion to be drawn from the facts known to the arresting officer at the time of the arrest. Maryland v. Pringle, 540 U. S. 366, 371 (2003). In this case, the Court of Appeals held that the probable-cause inquiry is further confined to the known facts bearing upon the offense actually invoked at the time of arrest, and that (in addition) the offense supported by these known facts must be "closely related" to the offense that the officer invoked. 333 F. 3d, at 976. We find no basis in precedent or reason for this limitation.
Our cases make clear that an arresting officer's state of mind (except for the facts that he knows) is irrelevant to the existence of probable cause. See Whren v. United States, 517 U. S. 806, 812-813 (1996) (reviewing cases); Arkansas v. Sullivan, 532 U. S. 769 (2001) (per curiam). That is to say, his subjective reason for making the arrest need not be the criminal offense as to which the known facts provide probable cause. As we have repeatedly explained, " 'the fact that the officer does not have the state of mind which is hypothecated by the reasons which provide the legal justification for the officer's action does not invalidate the action taken as long as the circumstances, viewed objectively, justify that action.' " Whren, supra, at 813 (quoting Scott v. United States, 436 U. S. 128, 138 (1978)). "[T]he Fourth Amendment's concern with 'reasonableness' allows certain actions to be taken in certain circumstances, whatever the subjective intent." Whren, supra, at 814. "[E]venhanded law enforcement is best achieved by the application of objective standards of conduct, rather than standards that depend upon the subjective state of mind of the officer." Horton v. California, 496 U. S. 128, 138 (1990).
The rule that the offense establishing probable cause must be "closely related" to, and based on the same conduct as, the offense identified by the arresting officer at the time of arrest is inconsistent with this precedent.2 Such a rule makes the lawfulness of an arrest turn upon the motivation of the arresting officer--eliminating, as validating probable cause, facts that played no part in the officer's expressed subjective reason for making the arrest, and offenses that are not "closely related" to that subjective reason. See, e.g., Sheehy v. Plymouth, 191 F. 3d 15, 20 (CA1 1999); Trejo v. Perez, 693 F. 2d 482, 485-486 (CA5 1982). This means that the constitutionality of an arrest under a given set of known facts will "vary from place to place and from time to time," Whren, supra, at 815, depending on whether the arresting officer states the reason for the detention and, if so, whether he correctly identifies a general class of offense for which probable cause exists. An arrest made by a knowledgeable, veteran officer would be valid, whereas an arrest made by a rookie in precisely the same circumstances would not. We see no reason to ascribe to the Fourth Amendment such arbitrarily variable protection.
Those who support the "closely related offense" rule say that, although it is aimed at rooting out the subjective vice of arrests made for the wrong reason, it does so by objective means--that is, by reference to the arresting officer's statement of his reason. The same argument was made in Whren, supra, in defense of the proposed rule that a traffic stop can be declared invalid for malicious motivation when it is justified only by an offense which standard police practice does not make the basis for a stop. That rule, it was said, "attempt[s] to root out subjective vices through objective means," id., at 814. We rejected the argument there, and we reject it again here. Subjective intent of the arresting officer, however it is determined (and of course subjective intent is always determined by objective means), is simply no basis for invalidating an arrest. Those are lawfully arrested whom the facts known to the arresting officers give probable cause to arrest.
Finally, the "closely related offense" rule is condemned by its perverse consequences. While it is assuredly good police practice to inform a person of the reason for his arrest at the time he is taken into custody, we have never held that to be constitutionally required.3 Hence, the predictable consequence of a rule limiting the probable-cause inquiry to offenses closely related to (and supported by the same facts as) those identified by the arresting officer is not, as respondent contends, that officers will cease making sham arrests on the hope that such arrests will later be validated, but rather that officers will cease providing reasons for arrest. And even if this option were to be foreclosed by adoption of a statutory or constitutional requirement, officers would simply give every reason for which probable cause could conceivably exist.
The facts of this case exemplify the arbitrary consequences of a "closely related offense" rule. Officer Haner's initial stop of respondent was motivated entirely by the suspicion that he was impersonating a police officer. App. 106. Before pulling respondent over, Haner indicated by radio that this was his concern; during the stop, Haner asked respondent whether he was actively employed in law enforcement and why his car had wig-wag headlights; and when Sergeant Devenpeck arrived, Haner told him why he thought respondent was a "wannabe cop," id., at 98. In addition, in the course of interrogating respondent, both officers became convinced that he was not answering their questions truthfully and, with respect to the wig-wag headlights, that he was affirmatively trying to mislead them. Only after these suspicions had developed did Devenpeck discover the taping, place respondent under arrest, and offer the Privacy Act as the reason. Because of the "closely related offense" rule, Devenpeck's actions render irrelevant both Haner's developed suspicions that respondent was impersonating a police officer and the officers' shared belief that respondent obstructed their investigation. If Haner, rather than Devenpeck, had made the arrest, on the stated basis of his suspicions; if Devenpeck had not abided the county's policy against "stacking" charges; or if either officer had made the arrest without stating the grounds; the outcome under the "closely related offense" rule might well have been different. We have consistently rejected a conception of the Fourth Amendment that would produce such haphazard results, see Whren, 517 U. S., at 815.
Respondent contended below that petitioners lacked probable cause to arrest him for obstructing a law-enforcement officer or for impersonating a law-enforcement officer. Because the Court of Appeals held that those offenses were legally irrelevant, it did not decide the question. We decline to engage in this inquiry for the first time here. Accordingly, we reverse the judgment of the Ninth Circuit and remand the case for further proceedings consistent with this opinion.
"Except as otherwise provided in this chapter, it shall be unlawful for any individual, partnership, corporation, association, or the state of Washington, its agencies, and political subdivisions to intercept, or record any . . . [p]rivate conversation, by any device electronic or otherwise designed to record or transmit such conversation regardless how the device is powered or actuated without first obtaining the consent of all the persons engaged in the conversation." Wash. Rev. Code §9.73.030(1)(b) (1994).
At least one Court of Appeals has adopted a variation of the "closely related offense" rule which looks not to the offense stated by the officer at the time of arrest, but to the offense given by the officer at booking. See Gassner v. Garland, 864 F. 2d 394, 398 (CA5 1989); but see Sheehy v. Plymouth, 191 F. 3d 15, 20 (CA1 1999) (holding that an arrest cannot be justified by an offense given at booking when the offense asserted by the officer at the time of arrest was not closely related). Most of our discussion in this opinion, and our conclusion of invalidity, applies to this variation as well.
Even absent a requirement that an individual be informed of the reason for arrest when he is taken into custody, he will not be left to wonder for long. "[P]ersons arrested without a warrant must promptly be brought before a neutral magistrate for a judicial determination of probable cause." County of Riverside v. McLaughlin, 500 U. S. 44, 53 (1991).


148 Wn.2d 929, N.H. Indem. Co. v. Budget Rent-A-Car Sys.
Argued November 12, 2002. Decided March 13, 2003.
NEW HAMPSHIRE INDEMNITY COMPANY, INC., Respondent, v. BUDGET RENT-A-Car SYSTEMS, INC., Petitioner.
K.C. Webster(of Phillips & Webster, P.L.L.C.), for petitioner.
Meriwether D. Williamsand Patrick J. Cronin (of Winston & Cashatt, P.S.), for respondent.
Janet G. Limon behalf of Washington State Auto Dealers Association, amicus curiae.
Lamont C. Looand Carol J. Cooper on behalf of Washington State Independent Auto Dealers Association, amicus curiae.
Linda B. Claphamand June K. Campbell on behalf of Car & Truck Renting & Leasing Association, amicus curiae.
SANDERS, J. - We must settle a dispute between two insurers over which party is primarily responsible for insurance coverage in an accident involving a rental car insured by Budget Rent-A-Car Systems, Inc. (Budget) but driven by a driver with personal liability insurance through New Hampshire Indemnity Co. (New Hampshire). Specifically, the question is whether the insurer of a vehicle is always primary, or whether the terms of the insurance contracts themselves are determinative. We hold that the conditions of coverage depend on the terms of the insurance contracts and that no per se rule requires the insurer of a vehicle to provide primary coverage.
Thomas Bentley, a Virginia resident, rented a car from Budget in Spokane on April 4, 1998. Mr. Bentley chose not to buy optional liability insurance through Budget, relying instead on his personal liability insurance policy with New Hampshire. On April 7 while driving in Idaho, he was involved in an automobile accident that injured members of the Reilly family. The Reillys submitted claims with Budget and New Hampshire.
only, and New Hampshire was entitled to reasonable attorney fees and costs and disbursements. Budget appealed. The Court of Appeals affirmed in a published opinion, holding Budget as owner of the vehicle was primary insurer. N.H. Indem. Co. v. Budget Rent-A-Car Sys., 109 Wn. App. 394, 396, 405, 35 P.3d 1180 (2001). The court awarded New Hampshire attorney fees on the appeal. Budget sought, and we granted, discretionary review under RAP 13.4.
Our review of the trial court's grant of summary judgment is de novo. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Interpretation of Budget's and New Hampshire's policies presents a question of law. State Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 480, 687 P.2d 1139 (1984). As such, our review of these policies is also de novo. McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 730-31, 837 P.2d 1000 (1992); Griffin v. Allstate Ins. Co., 108 Wn. App. 133, 137, 29 P.3d 777, 36 P.3d 552 (2001). We interpret insurance contracts as an average person would and in a manner that gives effect to each provision of the policy. Smith v. Cont'l Cas. Co., 128 Wn.2d 73, 78, 904 P.2d 749 (1995); McDonald, 119 Wn.2d at 733; Cook v. Evanson, 83 Wn. App. 149, 152-53, 920 P.2d 1223 (1996).
«1» Rental car agreements are treated as stand-alone policies of vehicle insurance. Van Vonno v. Hertz Corp., 120 Wn.2d 416, 425, 841 P.2d 1244 (1992) ("The rental agreement, in which Hertz contracted to indemnify Van Vonno, constitutes a motor vehicle liability policy.").
«2» "Other insurance" clauses attempt to make an otherwise primary insurer secondary or to relieve the insurer of responsibility for the risk altogether. 15 LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 219:2, at 219-8 to 219-9 (3d ed. 1999). "Super escape clauses" are one type of other insurance clause which provide that insurance will not apply to any liability for loss that is covered by primary, excess, contributory, or any other basis by other insurance. 15 RUSS & SEGALLA, supra, § 219:36, at 219-43. "Excess clauses" are another type of other insurance clause which provide that an insurer will pay a loss only after other available primary insurance is exhausted. Id. § 219:4, at 219-12.
A. BUDGET'S LIABILITY PROTECTION DOES NOT APPLY until after exhaustion of all automobile liability insurance and/or other protection available to the driver of the Vehicle (personal automobile insurance, employer's insurance and/or any other protection or indemnification whether primary, excess or contingent), and then Budget's protection applies only to the extent it is needed to meet, on a cumulative basis with all such liability insurance and/or protection available to the driver, the minimum financial responsibility limits required by applicable law.
If the insured has other insurance against a loss covered by Part I of this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance.
insurance. See, e.g., U.S. Fid. & Guar. Co. v. Hanover Ins. Co., 417 Mass. 651, 655, 632 N.E.2d 402 (1994); Ins. Co. of N. Am. v. Cont'l Cas. Co., 575 F.2d 1070, 1073 (3d Cir. 1978). This reasoning is troubling because it does not effectuate the language of the policies. The reasoning is also circular; whether it makes sense depends on which policy you read first. Other courts have found the two clauses are mutually repugnant, and therefore both insurers should pay on a pro rata basis. See, e.g., Dette v. Covington Motors, Inc., 486 So. 2d 805 (La. Ct. App. 1986); Brown v. Travelers Ins. Co., 610 A.2d 127 (R.I. 1992). Again this solution fails to give effect to the specific terms of the insurance policy when one policy contains a super escape clause. Other courts enforce the super escape clause to effectuate the parties' clear intent to exclude coverage if excess insurance is available. See, e.g., Farm Bureau Mut. Ins. Co. v. Alamo Rent A Car, Inc., 319 Ill. App. 3d 382, 388-89, 744 N.E.2d 300, 253 Ill. Dec. 18 (2000); Hodgen v. Forest Oil Corp., 862 F. Supp. 1567, 1577 (W.D. La. 1994), aff'd in part, 115 F.3d 358 (5th Cir. 1997); Hanover Ins. Co., 417 Mass. at 655. This approach most nearly effectuates the intent of the contracting parties.
C.J.S. Contracts § 211, at 1024 (1963)). We have never condemned super escape clauses; they are not prohibited by statute, nor are they contrary to "public morals," whatever those may be.
Both Budget and New Hampshire argue public policy supports making the other party's coverage primary. The cited statutes, the mandatory liability insurance act (MLIA), chapter 46.30 RCW, and the financial responsibility act (FRA), chapter 46.29 RCW, do not provide support for either party. The public policy behind the FRA and the MLIA is to protect the public from motorists who are unable to compensate the victims of accidents. Mendoza v. Rivera-Chavez, 140 Wn.2d 659, 999 P.2d 29 (2000). This policy is not implicated where coverage is a given and the only question is which insurance company must assume primary responsibility for coverage.
We hold that parties may, consistent with the law, contract for automobile insurance coverage that only becomes available after all other insurance available, including excess insurance, is exhausted. Here Budget's super escape clause does no more than this. Budget's super escape clause is effective to avoid primary coverage, and New Hampshire must provide coverage under the terms of its excess insurance provision.
«3» Also cited are two cases which have relied on the same sentence from Millers in their holding: Perez Trucking, Inc. v. Ryder Truck Rental, Inc., 76 Wn. App. 223, 232, 886 P.2d 196 (1994); Rasmussen v. Allstate Insurance Co., 45 Wn. App. 635, 726 P.2d 1251 (1986). Neither case analyzed the statement before applying it, however.
It will be recalled that Western insured Formanek, the nonowner driver of the truck, with a policy containing an "excessive insurance" clause, and that Farmers insured Hendrickson, the owner of the truck, with a policy containing a "pro-rata" clause. As between Western and Farmers, then, by virtue of the respective clauses, Farmers' policy, so far as covering a permissive and included use of the truck, would be considered the primary policy and Western's the secondary policy for subrogation, contribution, or apportionment purposes.
Id. The decision in Millers was rightfully decided on the terms of the policies.
Moreover, a rule that insurance on the vehicle must be primary does not make sense in the context of drivers of rental vehicles. A car rental customer is not in a position to sit down and carefully consider the coverage provided in the rental agreement, nor is the rental agency able to carefully examine the driving history of a customer renting its vehicles. Requiring rental insurance always to be primary would be inefficient and likely lead to higher costs for renters. On the other hand, when a customer buys coverage on their personal automobile, both customer and prospective insurer can reflect on the terms and investigate each other before signing a policy. Unsafe drivers will pay higher premiums and safe drivers lower premiums as is fair. Thus, if we were to invent a per se rule, which we do not choose to do, it would make more sense for the driver's personal liability insurance to provide primary coverage.
(2001) is inapplicable here. See N.H. Indem., 109 Wn. App. at 404-05. Diaz said in dicta that "the name given to an insurance policy by the insurer is not necessarily controlling as to whether the policy functions as an excess or primary policy. The functionality of the policy determines its character, not necessarily the name given it by an insurance company." Diaz, 143 Wn.2d at 63 n.2. This dicta from Diaz only establishes that titles are not determinative where language in the policies indicates a function other than that expressed in the title. Diaz does not give license to courts to ignore the terms of the policy. Ignoring the language of the super escape clause is not supported by Diaz and is contrary to this court's policy of interpreting insurance policies based on their terms.
Budget challenges the superior court's finding that it was responsible for the costs of defending Mr. Bentley in the underlying tort suit, arguing New Hampshire should be responsible for these costs. Significantly, Budget's policy does not promise a defense, but New Hampshire's policy specifically provides that New Hampshire will defend Mr. Bentley for occurrences involving either an owned or a nonowned vehicle.
Under Washington law the duty to defend and the duty to indemnify are separate obligations, the duty to defend being broader. Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 690, 15 P.3d 115 (2000). The insured should not be left without a prompt and proper defense and if a primary insurer fails to assume the defense, for any reason, the excess insurer which has a duty to defend should provide the defense and, to do justice, should be entitled to recoup its costs from the primary insurer. 7CAPPLEMAN ON INSURANCE LAW AND PRACTICE § 4682, at 33, 35 (Berdal ed. 1979).
recover the cost of the defense it provided to New Hampshire's insured.
We reverse. New Hampshire must indemnify to its limits and provide a defense to Mr. Bentley. Budget remains liable to provide excess coverage. Reasonable attorney fees, costs, and litigation expenses are awarded to Budget based on the stipulation of the parties that such an award to the prevailing party is appropriate. The award to New Hampshire of its reasonable attorney fees, expenses, and costs is reversed.
ALEXANDER, C.J., JOHNSON, MADSEN, IRELAND, BRIDGE, CHAMBERS, and OWENS, JJ., and SMITH, J. PRO TEM., concur.


Everett G. RANK et al. The DELANO-EARLIMART IRRIGATION DISTRICT et al., Petitioners, v. Everett G. RANK et al.
Archibald Cox, Solicitor Gen., for H. P. Dugan and others, petitioners.
B. Abbott Goldberg, Sacramento, Cal., for Delano-Earlimart Irr. Dist., and others, petitioners.
Claude L. Rowe, Fresno, Cal., for respondents.
This injunction suit, filed in 1947 by water right claimants along the San Joaquin River below Friant Dam, California, and against local officials of the United States Bureau of Reclamation, a number of Irrigation and Utility Districts and, subsequently, against the United States as well, sought to prevent the storing and diverting of water at the dam, which is part of the Central Valley Reclamation Project. 50 Stat. 844, 850 (1937). See United States v. Gerlach Live Stock Co., 339 U.S. 725, 70 S.Ct. 955, 94 L.Ed. 1231 (1950). The defense interposed was that the suit was against the United States and, therefore, beyond the jurisdiction of the courts, it not having consented to be sued. In 1956 the District Court ordered the injunction issued unless the Government constructed a 'physical solution'1 which would afford the landowners a supply of water simulating that of the past. Rank v. Krug, D.C., 142 F.Supp. 1. The Court of Appeals reversed as to the United States, finding that it had not consented to be sued. However, as to the officials, if affirmed on the ground that the United States had neither acquired nor taken the claimed water rights and that the officials were therefore acting beyond their statutory authority. California v. Rank, 9 Cir., 293 F.2d 340 and 9 Cir., 307 F.2d 96. No. 31 is the petition of the local Reclamation Bureau officials, and No. 115 is that of the Irrigation and Utility Districts. Both cases proceed from the same Court of Appeals opinion. The importance of the question to the operation of this vast federal reclamation project led us to grant certiorari. 369 U.S. 836, 82 S.Ct. 865, 7 L.Ed.2d 842 and 370 U.S. 936, 82 S.Ct. 1586, 8 L.Ed.2d 806. We have concluded that the Court of Appeals was correct in dismissing the suit against the United States; that the suit against the petitioning local officials of the Reclamation Bureau is in fact against the United States and they must be dismissed therefrom; that the United States either owned or has acquired or taken the water rights involved in the suit and that any relief to which the respondents may be entitled by reason of such taking is by suit against the United States under the Tucker Act, 28 U.S.C. § 1346. These conclusions lead to a reversal of the judgment insofar as suit was permitted against the United States through Bureau officials.
I. ASPECT OF THE CENTRAL VALLEY RECLAMATION PROJECT INVOLVED.
The Project was authorized by the Congress and undertaken by the Bureau of Reclamation of the Department of the Interior pursuant to the Act of August 26, 1937, 50 Stat. 844, 850. It is generally described in sufficient detail for our purposes in United States v. Gerlach Live Stock Co., supra, and Ivanhoe Irrigation District v. McCracken, 357 U.S. 275, 78 S.Ct. 1174, 2 L.Ed.2d 1313 (1958). See Graham, The Central Valley Project: Resource Development of a Natural Basin, 38 Cal.L.Rev. 588, 591 (1950), for a description and citation of federal authorizations.
The grand design of the Project was to conserve and put to maximum beneficial use the waters of the Central Valley of California,2 comprising a third of the State's territory, and the bowl of which starts in the northern part of the State and, averaging more than 100 miles in width, extends southward some 450 miles. The northern portion of the bowl is the Sacramento Valley, containing the Sacramento River, and the southern portion is the San Joaquin Valley, containing the San Joaquin River. The Sacramento River rises in the extreme north, runs southerly to the City of Sacramento and then on into San Francisco Bay and the Pacific Ocean. The San Joaquin River rises in the Sierra Nevada northeast of Fresno, runs westerly to Mendota and then northwesterly to the Sacramento-San Joaquin Delta where it joins the Sacramento River. The Sacramento River, because of heavier rainfall in its watershed, has surplus water, but its valley has little available tillable soil, while the San Joaquin is in the contrary situation. An imaginative engineering feat has transported some of the Sacramento surplus to the San Joaquin scarcity and permitted the waters of the latter river to be diverted to new areas for irrigation and other needs. This transportation of Sacramento water is accomplished by pumping water from the Sacramento-San Joaquin Delta into the Delta-Mendota Canal, a lift of some 200 feet. The water then flows by gravity through this canal along the west side of the San Joaquin Valley southerly to Mendota, some 117 miles, where it is discharged into the San Joaquin River. The waters of the San Joaquin River are impounded by a dam constructed at Friant, approximately 60 miles upstream from Mendota. Friant Dam stores the water in Millerton Lake from which it is diverted by the Madera Canal on the north to Madera County and the Friant-Kern Canal on the south to the vicinity of Bakersfield for use in those areas for irrigation and other public purposes.
The river bed at Friant is at a level approximately 240 Feet higher than at Mendota, 142 F.Supp. 173, which prevents the Sacramento water from being carried further upstream and replenishing the San Joaquin in the 60-mile area between Mendota and Friant Dam, thereby furnishing Sacramento River water for the entire length of the San Joaquin below Friant Dam. This 60-mile stretch of the San Joaquin—and more particularly that between Friant Dam and Gravelly Ford, 37 miles downstream—is the approximate area involved in this litigation. It has been the subject of cooperative studies by the state, local, and federal governments for many years. Indeed the initial planning of the Project recognized, as indicated by the engineering studies included in the plan, that the water flow on the San Joaquin between Friant Dam and Mendota would be severely diminished. See 18 Op.Cal.Atty.Gen. 31, 33—34 (1951). All of the parties recognized the existence of water rights in the area and the necessity to accommodate or extinguish them. Report No. 3, Calif. Water Project Authority, Definition of Rights to the Waters of the San Joaquin River Proposed for Diversion to Upper San Joaquin Valley, 1—2 (1936). The principal alternative, as shown by the reports of the United States Reclamation Bureau to the Congress and the subsequent appropriations of the Congress, was to purchase or pay for infringement of these rights. As early as 1939 the Government entered into negotiations ultimately culminating in the purchase of water rights or agreements for substitute diversions or periodic releases of water from Friant Dam into the San Joaquin River. Graham, The Central Valley Project: Resource Development of a Natural Basin, supra. As of 1952 the United States had entered into 215 contracts of this nature involving almost 12,000 acres, of which contracts some 100 require the United States to maintain a live stream of water in the river.
II. HISTORY OF THE LITIGATION.
The suit was filed in 1947 and has been both costly and protracted.3 It involves some 325,000 acres of land including a portion of the City of Fresno. See map in 142 F.Supp., at 40. Originally filed in the Superior Court of California, it sought to enjoin local officials of the United States Reclamation Bureau from storing or diverting water to the San Joaquin at Friant Dam or, in the alternative, to obtain a decree of a physical solution of water rights. The action was removed to the United States District Court for the Southern District of California. The named plaintiffs claimed to represent a class of owners of riparian as well as other types of water rights. In addition to the local officials of the Reclamation Bureau two of the Irrigation Districts receiving diverted water from Millerton Lake were originally made defendants and later the other Irrigation and Utility District defendants were joined.
The complaint challenged the constitutional authority of the United States to operate the Project. A three-judge court was impaneled pursuant to 28 U.S.C. § 2282, and it decided this issue presented no substantial constitutional question. Rank v. Krug, 90 F.Supp. 773 (D.C.S.D.Cal.1950). This left undecided the question of whether the Secretary of the Interior and Bureau of Reclamation officials had statutory authority to acquire the water rights involved. The issue remained dormant until the Delta-Mendota Canal was completed in 1951, 142 F.Supp., at 45, and the Government began to reduce the flow of water through Friant Dam. By consent, temporary restraining orders were entered controlling the releases covering the years 1951, 1952, and part of 1953. In June of the latter year the United States withdrew its consent with the approval of the Court of Appeals, United States v. United States District Court, 9 Cir., 206 F.2d 303. The District Court then ordered the United States joined as a party on the basis of the McCarran amendment, Act of July 10, 1952, 66 Stat. 560, 43 U.S.C. § 666, infra, n. 5. Friant Dam has, however, been operated by the United States without judicial interference since June 30, 1953.
'have been, now are, and will be entitled to the full natural flow of the San Joaquin River past Friant at all times * * * unless and until the physical solution hereinelsewhere described is erected and constructed (by the defendants) within a reasonable time, and thereafter operated as hereinelsewhere set forth.' Transcript of Record, Vol. III, p. 993.
The physical solution was a series of 10 small dams to be built at the expense of the United States along the stretch of river involved the the purpose of keeping the water at a level 'equivalent' to the natural flow, 142 F.Supp., at 166, or to simulate it at a flow of 2,000 feet per second. 142 F.Supp., at 169.
The Court of Appeals reversed as to the joinder of the United States, holding that it could not be made a party without its consent. It likewise found that the United States was authorized to acquire, either by physical seizure or otherwise, such of the rights of the claimants as it needed to operate the Project and that this power could not be restricted by state law. However, it found that no such authorized seizure had occurred because the Government had not sufficiently identified what rights it was seizing, and because of this equivocation of the federal officials, there was a trespass rather than a taking. It concluded, therefore, that the petitioner Reclamation Bureau officials had acted beyond their statutory authority and affirmed the injunctive features of the judgment. On rehearing, the injunction was modified to make it inapplicable to the petitioner Districts in No. 115 but the court refused to dismiss as to them.
III. THE UNITED STATES AS A PARTY.
We go directly to the question of joinder of the United States as a party. We agree with the Court of Appeals on this issue and therefore do not consider the contention at length. It is sufficient to say that the provision of the McCarran amendment, 66 Stat. 560, 43 U.S.C. § 666,5 relied upon by respondents and providing that the United States may be joined in suits 'for the adjudication of rights to the use of water of a river system or other source,' is not applicable here. Rather than a case involving a general adjudication of 'all of the rights of various owners on a given stream,' S.Rep.No. 755, 82d Cong., 1st Sess. 9 (1951), it is a private suit to determine water rights solely between the respondents and the United States and the local Reclamation Bureau officials. In addition to the fact that all of the claimants to water rights along the river are not made parties, no relief is either asked or granted as between claimants, nor are priorities sought to be established as to the appropriative and prescriptive rights asserted. But because of the presence of local Reclamation Bureau officials and the nature of the relief granted against them, the failure of the action against the United States does not end the matter. We must yet deal with the holding of the Court of Appeals that the suit against these officials is not one against the United States.
The Court of Appeals correctly held that the United States was empowered to acquire the water rights of respondents by physical seizure. As early as 1937, by the Rivers and Harbors Act, 50 Stat. 844, 850, the Congress had provided that the Secretary of the Interior 'may acquire by proceedings in eminent domain, or otherwise, all lands, rights-of-way, water rights, and other property necessary for said purposes * * *.' Likewise, in United States v. Gerlach Live Stock Co., supra, this Court implicitly recognized that such rights were subject to seizure when we held that Gerlach and others were entitled to compensation therefor. The question was specifically settled in Ivanhoe Irrigation District v. McCracken, supra, where we said that such rights could be acquired by the payment of compensation 'either through condemnation or, if already taken, through action of the owners in the courts.' 357 U.S., at 291, 78 S.Ct. at 1183, 2 L.Ed.2d 1313. However, the Court of Appeals, in examining the extent of the taking here, concluded that rather than an authorized taking of water rights, the action of the Reclamation Bureau officials constituted an unauthorized trespass. The court observed that the San Joaquin 'will not be dried up' below Friant because the Government has contracted with other water right owners to maintain 'a live stream,' and as the flow of water varies from day to day the respondents do not now and never will know what part of their claimed water rights the Government has taken or will take.
'A casual day by day taking under these circumstances constitutes day to day trespass upon the water right. * * * The cloud cast prospectively on the water right by the assertion of a power to take creates a present injury above what has been suffered by the interference itself—a present loss in property value which cannot be compensated until it can be measured.' 293 F.2d, at 358.
The court, therefore, permitted the suit against the petitioning Reclamation Bureau officers as one in trespass, which led it to affirm, with modification, the injunctive relief granted by the District Court.
Rather than a trespass, we conclude that there was, under respondents' allegations, a partial taking of respondents' claimed rights. We believe that the Court of Appeals incorrectly applied the principle of Larson v. Domestic & Foreign Corp., 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949), and other cases in the field of sovereign immunity. The general rule is that a suit is against the sovereign if 'the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration,' Land v. Dollar, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209 (1947), or if the effect of the judgment would be 'to restrain the Government from acting, or to compel it to act.' Larson v. Domestic & Foreign Corp., supra, 337 U.S. at 704, 69 S.Ct. at 1468, 93 L.Ed. 1628; Ex parte New York, 256 U.S. 490, 502, 41 S.Ct. 588, 591, 65 L.Ed. 1057 (1921). The decree here enjoins the federal officials from impounding, or diverting, or storing for diversion, or otherwise impeding or obstructing the full natural flow of the San Joaquin River. * * *.' Transcript of Record, Vol. III, p. 1021. As the Court of Appeals found, the Project 'could not operate without impairing, to some degree, the full natural flow of the river.' Experience of over a decade along the stretch of the San Joaquin involved here indicates clearly that the impairment was most substantial—almost three-fourths of the natural flow of the river. To require the full natural flow of the river to go through the dam would force the abandonment of this portion of a project which has not only been fully authorized by the Congress but paid for through its continuing appropriations. Moreover, it would prevent the fulfillment of the contracts made by the United States with the Water and Utility Districts, which are petitioning in No. 115. The Government would, indeed, be 'stopped in its tracks * * *.' Larson v. Domestic & Foreign Corp., supra, 337 U.S. at 704, 69 S.Ct. at 1468, 93 L.Ed. 1628.
The physical solution has no less direct effect. The Secretary of the Interior, the President and the Congress have authorized the Project as now constructed and operated. Its plans do not include the 10 additional dams required by the physical solution to be built at government expense. The judgment, therefore, would not only 'interfere with the public administration' but also 'expend itself on the public treasury * * *.' Land v. Dollar, supra, 330 U.S. at 738, 67 S.Ct. at 1012, 91 L.Ed. 1209. Moreover, the decree would require the United States contrary to the mandate of the Congress—to dispose of valuable irrigation water and deprive it of the full use and control of its reclamation facilities. It is therefore readily apparent that the relief granted operates against the United States.
'the action of an officer of the sovereign (be it holding, taking or otherwise legally affecting the plaintiff's property) can be regarded as so 'illegal' as to permit a suit for a specific relief against the officer as an individual only if it is not within the officer's statutory powers or, if within those powers, only if the powers, or their exercise in the particular case, are constitutionally void.' Id., at 701—702, 69 S.Ct. at 1467, 93 L.Ed. 1628.
Since the Government, through its officers here, had the power, under authorization of Congress, to seize the property of the respondents, as held by the Court of Appeals and recognized by several cases in this Court, and this power of seizure was constitutionally permissible, as we held in Ivanhoe, supra, there can be no question that this case comes under the rule of Larson and Malone, supra. The power to seize which was granted here had no limitation placed upon it by the Congress, nor did the Court of Appeals bottom its conclusion on a finding of any limitation. Having plenary power to seize the whole of respondents' rights in carrying out the congressional mandate, the federal officers a fortiori had authority to seize less. It follows that if any part of respondents' claimed water rights were invaded it amounted to an interference therewith and a taking thereof—not a trespass.
We find no substance to the contention that respondents were without knowledge of the interference or partial taking. Nor can we accept the view that the absence of specificity as to the amount of water to be taken prevents the assessment of damages in this case. From the very beginning it was recognized that the operation of Friant Dam and its facilities would entail a taking of water rights below the dam. Indeed, it was obvious from the expressed purpose of the construction of the dam—to store and divert to other areas the waters of the San Joaquin—and the intention of the Government to purchase water rights along the river.6 Pursuant to this announced intention the Government did in fact enter into numerous contracts for water rights, as we have previously noted. While it is true, as the Court of Appeals observed, that the Government did not announce that it was taking water rights to a specified number of 'gallons' or, for that matter, 'inches' of water, see 293 F.2d 340, 357—358, we do not think this quantitative uncertainty precludes ascertainment of the value of the taking. On this point we conclude that the Court of Appeals was in error. We find no uncertainty in the taking.
Damages in this instance are to be measured by the difference in market value of the respondents' land before and after the interference or partial taking. As the Supreme Court of California said in Collier v. Merced Irrigation District, supra, at 571—572, 2 P.2d at 797.
The right claimed here is to the continued flow of water in the San Joaquin and to its use as it flows along the landowner's property. A seizure of water rights need not necessarily be a physical invasion of land. It may occur upstream, as here. Interference with or partial taking of water rights in the manner it was accomplished here might be analogized to interference or partial taking of air space over land, such as in our recent case of Griggs v. Allegheny County, 369 U.S. 84, 89—90, 82 S.Ct. 531, 533—534, 7 L.Ed.2d 585 (1962). See United States v. Causby, 328 U.S. 256, 261—263, 267, 66 S.Ct. 1062, 1065—1067, 1068—1069, 90 L.Ed. 1206 (1946); Portsmouth Co. v. United States, 260 U.S. 327, 329, 43 S.Ct. 135, 136—137, 67 L.Ed. 287 (1922). See also 1 Wiel, Water Rights in the Western States (3d ed. 1911), § 15; 2 Nichols, Eminent Domain (3d ed. 1950), § 6.3. Therefore, when the Government acted here 'with the purpose and effect of subordinating' the respondents' water rights to the Project's uses 'whenever it saw fit,' 'with the result of depriving the owner of its profitable use, (there was) the imposition of such a servitude (as) would constitute an appropriation of property for which compensation should be made.' Peabody v. United States, 231 U.S. 530, 538, 34 S.Ct. 159, 160, 58 L.Ed. 351 (1913); Portsmouth Co. v. United States, supra, 260 U.S. at 329, 43 S.Ct. at 136—137, 67 L.Ed. 287.
In an appropriate proceeding there would be a determination of not only the extent of such a servitude but the value thereof based upon the difference between the value of respondents' property before and after the taking. Rather than a stoppage of the government project, this is the avenue of redress open to respondents. Since we have set aside the judgments of both the Court of Appeals and the District Court, it is appropriate that we make clear that we do not in any way pass upon or indicate any view regarding the validity of respondents' water right claims.
V. THE IRRIGATION AND UTILITY DISTRICTS.
Similar disposition must be made of No. 115. There the petitioners are 14 Irrigation and Utility Districts which have contracts with the Government for the use of water from Millerton Lake. The Court of Appeals, as we have noted, dissolved the injunction previously granted against them by the District Court. No other relief having been sought against the Districts, it appears that they should have been dismissed from the action. In any event, in view of our disposition of No. 31, dismissal of these petitioners is now in order.
The judgment as to the dismissal of the United States is affirmed; it is reversed as to the failure to dismiss the Reclamation officials and the Irrigation and Utility Districts, and the cases are remanded to the Court of Appeals with directions that it vacate the judgment of the District Court and remand the case with instructions that the same be dismissed. It is so ordered.
Judgment affirmed as to dismissal of the United States, reversed as to failure to dismiss Reclamation officials and Irrigation and Utility Districts, and cases remanded with directions.
See the Feasibility Report of Secretary Ickes to President Franklin D. Roosevelt, dated November 26, 1935, and approved by the President on December 2, 1935, reprinted in 90 F.Supp. 823—827 and in 1 Engle, Central Valley Project Documents, H.R.Doc.No.416, 84th Cong., 2d Sess. 562—567 (1956).
The last two sections of the judgment are dealt with in cause No. 51, City of Fresno v. California, 372 U.S. 627, 83 S.Ct. 996.
'(a) Consent is given to join the United States as a defendant in any suit (1) for the adjudication of rights to the use of water of a river system or other source, or (2) for the administration of such rights, where it appears that the United States is the owner of or is in the process of acquiring water rights by appropriation under State law, by purchase, by exchange, or otherwise, and the United States is a necessary party to such suit. The United States, when a party to any such suit, shall (1) be deemed to have waived any right to plead that the State laws are inapplicable or that the United States is not amenable thereto by reason of its sovereignty, and (2) shall be subject to the judgments, orders, and decrees of the court having jurisdiction, and may obtain review thereof, in the same manner and to the same extent as a private individual under like circumstances: Provided, That no judgment for costs shall be entered against the United States in any such suit.
'(b) Summons or other process in any such suit shall be served upon the Attorney General or his designated representative.
'(c) Nothing in this section shall be construed as authorizing the joinder of the United States in any suit or controversy in the Supreme Court of the United States involving the right of States to the use of the water of any interstate stream.' July 10, 1952, c. 651, Title II, § 208, 66 Stat. 560.
'. . . the Department will release from Friant Reservoir into the bed of the river a sufficient quantity of water (1) to meet all valid legal requirements for the reasonable and beneficial use of water, both surface and underground, by reasonable methods of diversion and reasonable methods of use in that area, and (2) to provide, in addition thereto, a continuous live stream flowing at a rate of not less than five cubic feet per second at specified control points throughout the Friant-to-Gravelly Ford area, the last one to be at a point approximately one-half mile below the head of the Gravelly Ford Canal.' Transcript of Record, Vol. VII, p. 388, n . 8.


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The Arkansas Supreme Court upended fifty-two years of financial practice by Arkansas cities and counties and numerous decisions of the Supreme Court when it ruled on March 3, 1986, that the Arkansas Constitution required the state and local governments to get voters’ approval before issuing bonds for capital improvements or any other purpose. The decision, in a case styled City of Hot Springs v. Tom Creviston, stunned local governments and financial institutions and briefly halted the issuance of financial instruments called revenue bonds, which were debts that were to be repaid from revenues generated by the project rather than from taxes. But a constitutional amendment to lift the election requirement was hastily drafted, petitions placed it on the ballot, and eight months after the decision, Arkansas voters ratified the amendment, allowing the issuance of revenue bonds to resume.
When state constitutions were written in the nineteenth century, particularly in the South, debt was viewed as dangerous and to be avoided. The national experience with railroad debt and the depression that followed the collapse of Jay Cooke & Company and the heavily bonded Northern Pacific Railway halted the rapid growth of municipal bonds. Constitutions imposed restrictions on how and for what purposes state and local governments could accumulate debt and how it could be amortized (gradually paid off with funds regularly set aside). After World War I, states began to experiment with municipal bonds again, both to improve public facilities and to stimulate industrial growth.
In Arkansas, the 1874 constitution prohibited the state, cities, or counties from issuing bonds without an election. In 1926, Arkansas voters approved Amendment 13, which authorized cities to issue bonds for a variety of projects, but only after an election, and to levy up to five mills of property tax to amortize them. None of the bond proceeds, however, could go to a railroad or any private enterprise. Two years later, however, voters approved Amendment 18, which permitted up to five mills of property taxes to amortize bonds for factories and transportation facilities, but again only after voters approved them at an election only in counties larger than a population of 105,000 (which was only Pulaski County at that time), and only under a number of other conditions. Amendment 25, approved in 1938, allowed counties to issue bonds to build courthouses, jails, and hospitals, but only after an election.
In 1936, Mississippi became the first state to issue revenue bonds for new industries. Arkansas followed in 1958 with Amendment 49, which allowed cities and counties to issue bonds for new industries and levy up to five mills of taxes. Act 9, passed by the Arkansas General Assembly in 1960, allowed cities and counties to issue bonds for industrial development and either lease the facilities to industries or loan the money to industries to build a plant.
Despite all the constitutional requirements for elections before issuing bonds, in 1934 the Supreme Court, in the case Snodgrass v. City of Pocahontas, created an exception for revenue bonds. The city of Pocahontas (Randolph County), without holding an election, passed an ordinance issuing bonds to improve the municipal waterworks. The Supreme Court opined that when the voters approved Amendment 13 in 1926, they did not intend to require an election if the bonds were to be retired not from taxes but from revenue pledged by the improvements, like the waterworks. Over the next fifty years, in more than a dozen cases, the court used that precedent to affirm the issuance of revenue bonds or to expand the exceptions to the election requirements in the state constitution.
In 1977, Chancellor Darrell Hickman, who had ruled as a trial judge that the election requirements for bonds were absolute, arrived on the Arkansas Supreme Court. He dissented in appeals of bond lawsuits. Finally, in 1981, in Purvis v. Hubbell, the Supreme Court again upheld an election exception, with Hickman dissenting, but it served notice that it might change its mind at the next instance. In Purvis, John Norman Harkey, a Batesville (Independence County) lawyer representing an old Marine buddy, Marshall W. Purvis, sought to invalidate a $27.4 million bond issued by the City of Little Rock (Pulaski County) to build the downtown convention center because there had been no election. The Supreme Court said its precedents validated the financial arrangement but signaled that it would take a fresh look at the issue at the next case. In a sharp dissent, Hickman observed that the chambers where the justices sat were built by bonds that were unconstitutionally issued because there was no election.
The next case, also brought by Purvis, who was again represented by Harkey (he also was the suing attorney in City of Hot Springs v. Creviston), challenged Little Rock’s issuance of $4 million in “tourism bonds” to build La Quinta Inn at Van Buren Street and Interstate 630 in Little Rock. In Purvis v. Little Rock (called by the Supreme Court Purvis II), the court was so badly splintered that it could render no majority decision. Five of the seven justices wrote opinions.
Harkey found the perfect case for the final challenge of the election exceptions. Garland County had issued $4 million in bonds in 1978 to help build the Magic Springs theme park at Hot Springs. The bonds were to be repaid by theme park receipts. But the park lost money from the outset, and the City of Hot Springs then issued another $3 million in bonds, which were used mainly to repay the theme park’s debts to two banks. Harkey sued, contending that bailing out the banks was not a legitimate public purpose and that the bonds should have been approved first by the voters. The chancellor and the Supreme Court agreed on both points.
Two justices, Steele Hays and Robert H. Dudley, dissented. They said the exceptions created by Snodgrass and the other decisions were reasonable and should not be reversed after the court had given them its blessing over so many years.
The decision caused momentary panic. Governor Bill Clinton spurred a drive to get a constitutional amendment written and petitions circulated before the deadline, which was only three months away. The petitions were approved, and the voters ratified the amendment at the general election, 318,894 to 275,877. Amendment 65 says that any governmental unit in Arkansas may issue revenue bonds for public facilities, industry, or agriculture under conditions set by the General Assembly. The amendment says the legislature can choose to require an election. As of 2016, it has not.
City of Hot Springs v. Tom Creviston (1986), 705 S.W. 2nd 415, 288 Ark. 286.
M. B. Purvis v. City of Little Rock [Purvis II], 667 S.W. 2d 936 (1984) 282 Ark. 182.
M. B. Purvis v. Webster Hubbell, Mayor [Purvis I], 620 S.W. 2d 282 (1981), 273 Arkansas 330.
“Ruling on Bonds ‘Blow to State’ Governor Says.” Arkansas Gazette, March 5, 1986, pp. 1A, 9A.
Snodgrass v. Pocahontas, 75 S.W. 2d 223 (1934) 189 Ark. 819.
Wells, Bob. “All Municipal, County Bond Issues Need Voter Approval, Justices Rule.” Arkansas Gazette, March 4, 1986, pp. 1A, 5A.
———. “Decision on Bonds May Go to Voters.” Arkansas Gazette, March 6, 1986, pp. 1A, 12A.

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