Every person or corporation bringing, instigating, exciting or abetting, any suit to obtain an injunction, restraining or enjoining the issuance, sale, offering for sale, or delivery, of bonds, or other securities, or the expenditure of the proceeds of the sale of such bonds or other securities, of any city, city and county, town, county, or other district organized under the laws of this state, or any other political subdivision of this state, proposed to be issued, sold, offered for sale or delivered by such city, city and county, town, county, district or other political subdivision, for the purpose of acquiring, constructing, completing, improving or extending water works, electric works, gas works or other public utility works or property, shall, if the injunction sought is finally denied, and if such person or corporation owns, controls, or is operating or interested in, a public utility business of the same nature as that for which such bonds or other securities are proposed to be issued, sold, offered for sale, or delivered, be liable to the defendant for all costs, damages and necessary expenses resulting to such defendant by reason of the filing of such suit.
§ 526b.Suit to Restrain Issuance, Sale Or Delivery of Bonds of City, Town, County Or Other District
Title 7. Other Provisional Remedies In Civil Actions · Chapter 3. Injunction · Enacted 1921 · no amendments on record · Last verified July 28, 2026
In one sentenceSection 526b makes a person or corporation that sues to enjoin a public entity's bond issuance liable for the entity's costs, damages, and expenses if the injunction is ultimately denied and the plaintiff owns or operates a competing public utility business.
Full Text of § 526b
Plain-English Summary
Section 526b is a narrow deterrent aimed at a specific kind of lawsuit: one brought to stop a city, county, town, district, or other political subdivision from issuing, selling, or spending the proceeds of bonds or other securities used to build or improve water works, electric works, gas works, or similar public utility property.
The statute does not bar these suits — a taxpayer can still sue under § 526a, and others can challenge bond issuances on other grounds. What it does is shift the financial risk for one narrow category of plaintiff. If someone brings, instigates, or even just encourages a suit to enjoin that kind of bond issuance, and the injunction is ultimately denied, and that same person or corporation owns, controls, operates, or has an interest in a competing public utility business, the entity is liable to the defendant for the resulting costs, damages, and necessary expenses.
Read together with § 526a's bar on enjoining municipal bond issuances for public improvements or utilities, § 526b is best understood as protecting local agencies against a specific pattern: a rival private utility using litigation to delay a competing public project, only to lose on the merits.
Frequently Asked Questions
Who can be held liable under § 526b?
A person or corporation who brings, instigates, or supports a suit to enjoin a local government's bond issuance for public utility works, if the injunction is denied and that person or corporation owns, controls, or has an interest in a competing public utility business.
What kind of bonds does this section cover?
Bonds or securities issued by a city, county, town, district, or other political subdivision to acquire, construct, or improve water works, electric works, gas works, or other public utility property.
What can the defendant recover if it wins?
Section 526b makes the plaintiff liable for the defendant's costs, damages, and necessary expenses caused by the lawsuit, but only under the ownership and outcome conditions the section specifies.
Does this section stop anyone from challenging a public bond issuance?
No. It does not prohibit the lawsuit; it imposes financial liability on a narrow category of unsuccessful plaintiffs with a competing utility interest.
Amendment History
Added by Stats. 1921, Ch. 384.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: liability for enjoining municipal bonds californiasuit to restrain public utility bonds california