225 F. 584 | D. Idaho | 1915
This controversy grows out of the construction, under the Carey Act (Act Aug. 18, 1894, c. 301, § 4, 28 Stat. 422 [Comp. St 1913, § 4685]), of an irrigation system commonly known as the Salmon River project. The plaintiffs are severally in the possession of lands upon the project, and hold what are called settlers) contracts for water for the irrigation thereof; they bring this suit not only for themselves but in behalf of all other settlers. The defendant Twin Falls Salmon River Land & Water Company, hereinafter called the “Company,” is the corporation which, pursuant to the Idaho statutes, contracted with the state for the construction of the system and made agreements with the plaintiffs and others for water rights. It also issued bonds, to secure' the payment of which it assigned as collateral these settlers’ contracts to the defendant Rbbinson, and executed a trust deed on all of its interest in the system'to the defendant Commonw-ealth Trust Company of Pittsburgh, as trustee. All of its property rights are thus hypothecated as security for the payment of its bonds, the interest upon which has for some time been in default. The defendant Salmon River Canal Company is the corporation organized as provided in the state contract and the settlers’ agreements, for the purpose of ultimately talcing title to, and operating, the system; as yet it is but the creature, and is under the control, of the Company.
The contract with the state was executed April 30, 1908, and the .opening for entry to holders of water right agreements of '80,000 acres of land was advertised for June 1, 1908; and when this suit was commenced the Company had executed numerous agreements for water rights covering an aggregate of 73,000 acres. The gist of the plaintiffs’ complaint is not that the construction work has been improperly done, but that this acreage is greatly in excess of the area for which water is available, even during years of normal run-off. For that reason, they contend, the Company has failed to comply with the
It is quite impracticable here to follow in detail the elaborate argument by which the defendants seek to maintain their position. It is not convincing. In the first place, it is highly improbable that settlers would have signed a contract by which they must obligate themselves to pay at the rate of $40 per acre for the mere chance of sharing with an indefinite number of others in a projected irrigation system concerning the capacity and efficiency of which they could, in the nature of things, have but little information. As is well known, those who buy water lights upon these projects are generally men of small means, without irrigation experience, widely scattered, and often residing a long distance away They are not directly interested in the project as a whole, but they want, to know what 40 or 80 or 160 acres of land will cost with an adequate water right. They have no- means of determining whether a proposed reservoir will hold water, or whether the watershed is sufficient to fill it; these are matters pe
Upon the other hand, as bearing upon the probability or improbability of the willingness of the Company to sell a specific right or a definite quantity, it had full confidence in the adequacy of its supply. In a printed circular setting forth the advantages of the project, we have, among others, these statements :
“Water supply of the best and in abundance. * * * The water supply * * * is obtained from the Salmon river, which has a vast drainage area in the Cassia National Forest Reserve. The water right is perfect, and there is no land susceptible of irrigation' above the Salmon tract, and no water rights in contest. It carries water sufficient for the irrigation of more than 150,000 acres in normal years, and as a rule the spring run-off is far greater than the amount of water required for the irrigation of this amount of land for the full season.”
It will thus be seen that no doubt was entertained of an abundance of water, and, if it was confident of a supply sufficient in normal years for 150,000 acres, there is no apparent reason why it should not, for the purpose of selling rights for 80,000 acres, make its contracts attractive by incorporating therein an undertalcing to furnish a comparatively small specific amount; with such a margin of safety there could be no substantial risk.
Now as to the contracts themselves: A printed form was prepared by the Company and offered to the public, which is the form held by the plaintiffs and all other settlers. This recites the incorporation of the Company, its’ execution of the state contract, the commencement of construction work, notice from the State Land Board that it (the Company) migh proceed to sell or contract rights to the use of water, and thereupon it is agreed that in consideration of the payment of a' certain amount of money, and the covenants on the part of the settler, the settler “shall become entitled to -;— shares of the stock of the Salmon River Canal Company, Limited, the certificate thereof to be in form as follows”:
“...... Shares. .............................................190...
“This is to certify......is tbe owner of......shares of tbe capital stock of tbe Salmon River Canal Company, Limited.
“This certificate entitles tbe owner thereof to receive one-hundredth of a cubic foot of water per acre per second of time for tbe following described land: ......in accordance with the terms of tbe contract between tbe state of Idaho and tbe Twin Falls Salmon River Land & Water Company and this certificate also entitles tbe owner to a proportionate interest in tbe dam, canal, water rights and all other rights and' franchises of the Twin Falls Salmon River Land & Water Company, based upon the number of shares finally sold in accordance with the said contract between the said company and the state of Idaho.
“Salmon River Canal Company, Limited,
“By .............. President
“Attest: ..............Secretary.”
“Said certificate (that is, said certificate of stock) to be delivered as provided i'or in said state contract and under the conditions therein stated. * * ° This agreement is made in accordance with the provisions of said contract between the state of Idaho and the company, which, together with laws of the state of Idaho under which this agreement is made, shall be regarded as defining the rights of the respective parties, and shall regulate the provisions of the shares of stock to be issued to the purchaser by the Salmon River Canal Company, Limited. * * * This contract is made pursuant to and subject to the contract between the company and the’state of Idaho, and the existing laws of said state.”
The import of the instrument, standing alone, as it would be understood by an intelligent layman with no preconceived notions of its meaning, is not open to debate. It is a contract for the sale of a specific water right of one-hundredth of a second foot per acre for each acre of land described, and as an incident thereto a proportionate interest in the irrigation system. The holder of a certificate of stock, so the contract read’s, is entitled “to receive one-hundredth of a cubic foot of water per acre,” and “a proportionate interest in the dam, canal, water rights,” etc. The defendants’ contention wholly ignores the first of these co-ordinate clauses, and limits the right granted precisely to the second. But the clauses are neither inconsistent with each other nor identical in meaning, and no reason is apparent why they should not both be given effect. If the suggestion be made that in form the contract provides only for the transfer of the certificate of stock in the Canal Company, and does not in terms convey a water right at all, the answer is that the technical form is quite unimportant. The clear purport of the entire instrument is the sale of the water right, and that is undoubtedly the sense in which the Company expected it would be understood, and in which it was understood by the settler. One of the preliminary recitals is that the State Board had notified the Company that it could proceed to sell, not certificates of stock, but water rights; and paragraph 3 reads: “The consideration for the water rights hereby agreed to be conveyed is the sum of $-,” etc. It will not be assumed that the instrument was cunningly drawn to deceive the unwary, “to keep the word of promise to the ear and break it to the hope.”
‘‘Each of said shares or water rights shall represent a carrying capacity in said canal suilieient to deliver water at the rate of one-hundredth (Vioo) of one (I) cubic foot of water per acre per second of time, and each share or water right sold or contracted to be sold as herein provided shall also represent a proportionate interest in said canal and irrigation works, together with ail rights and franchises therein, based upon the number of shares finally sold in said canal.”
Standing alone, this language is susceptible to a construction tending to support the defendants’ contention; but it may also be read entirely in harmony with the settler’s contract. Under the familiar rule that a printed form of agreement will be construed most strongly against the party by whom it is prepared, the doubt here would have to do resolved against the Company, even if we had nothing but the state contract. And why, it is pertinent to ask, should the state have so carefully insisted upon a canal capacity of one-hundredth of a second foot per acre if the water was not to be supplied up to practically that capacity? It would seem to be wanton waste to build a canal twice the size needed. It is futile to say that an additional capacity might have been required for the rotation system of delivery, the possibility of which was contemplated, for, under such a system, the flow iu the main canals and laterals is not necessarily variable; the fluctuation or periodic use is only in the sublaterals and individual ditches.
“The certificate of shares of stock of the Salmon River Canal Company, Limited, shall be made to indicate and define the interests thereby represented in the said system, to wit: A water right of one-hundredth of a cubic foot per second for each acre of land irrigated, as provided in paragraphs IV and VIII of this contract, and a proportionate interest in the said canal and irrigation works, based upon the number of shares ultimately sold therein.”
Moreover, by its reference to paragraphs 4 and 8, this provision illuminates their meaning and brings them clearly into harmony with
A third view, and one which in many respects is identical with the or.e just discussed, but which covers the point last noticed, is that a right was contemplated sufficient to enable the settler to receive water at the rate of one-hundredth of a second foot per acre continuously during the season of actual irrigation needs, the amount of which the parties estimated and understood to be 2% acre feet; and this view ] am inclined to adopt. It is not at variance with any of the terms of the contract, it gives a measure of effect to all, and is in conformity with current and general irrigation practice in the state, with reference to which it may be assumed the parties contracted; and furthermore it entails no unreasonable results. The parties doubtless understood that, while it is provided that water could be demanded at any time between April 1st and November 1st, demands in April and (letober would be exceptional, and in May and September generally very light, and that it was therefore reasonable to assume that on the average a resource of 2% acre feet would be sufficient to- supply the settler’s right of a continuous flow, during the irrigation period, of one-lmndredth of a second foot per acre. Practically, therefore, and in effect, the provision in the state contract with regard to the 2:;4 acre feet is not inconsistent with or a limitation upon'the definition of the settler’s right embraced in his contract, namely, a right to receive one-hundredth of a second foot during the season of his need for water; it is merely the expressed understanding of the parties touching the total amount of water the Company must have available iu order safely to provide for this need and thus to comply with its contract. In effect it amounts to an agreement by the Company that it will make provision for that quantity, and an agreement upon the part of the state and the settler that such provision will be accepted as full compliance with the obligation to supply the settler up
There is no force to the argument by which the defendants attempt to array against this view the provisions of paragraph 10 of the state contract, authorizing rotation of use, and delivery “in such quantities and at such times as the condition of the crops and the weather may determine.” Note has already been made of the fact that these provisions are temporary only, and are in terms limited to the brief period of the Company’s control and administration of the system, and the whole argument might properly be dismissed with the suggestion that we are led into confusion rather than into clarity of reasoning by doing violence to the language of the contract and arbitrarily assuming that these provisions are upon the same footing with others of a permanent character. But, if for the sake of the argument we join with the defendants in indulging this unwarranted assumption, the general conclusion here reached is in no wise affected. It is plain that the two clauses, the one providing for one-hundredth of a second foot per acre, and the other for “such quantities * * * as the condition of the crops and weather may determine,” if they relate to the same subject-matter, cannot stand together; one is constant and the other variable, and plainly as measures of a single right or duty they are inconsistent. The one must be understood to pertain to the extent of the right and the other to the method of delivery. How can we say that the settler’s right is the right to receive such amounts of water and at such times during the irrigation season as the condition of his crops may require, and at the same time say that the water is to be delivered to him at the rate of one-hundredth of a second foot per acre? That would be a contradiction of terms. Upon the other hand, to say that the right is to1 receive water at the rate of one-hundredth of a second foot per acre, flowing continuously during the actual irrigation season, the amount thereof being estimated at 2% acre feet, and that this amount be delivered from time to time in suclr quantities as the conditions require, is to define the right and to prescribe a method of delivery involving no contradictions or inconsistencies, and no departure from the best irrigation practice. As already noted, this latter view is the only one under which these clauses in paragraph 10, treated as' permanent provisions, can be given effect without rendering inoperative other clauses of the contract, and in this view they are in no wise opposed to the theory of a definite and specific water right.
To summarize, the contract, as I have construed it, runs counter to no provision of the Constitution, no statute, and no principle of public policy. The right provided for is no more specific than that defined and established by a judicial decree or by a proceeding before the State Engineer in favor of an original appropriator. The construction no more authorizes or permits wasteful use than does a decree or a State Engineer’s permit. It eliminates inconsistencies and gives effect to all the provisions of the agreements. Not only is it in accord with the plain import of the language employed, but it is strongly supported by the surrounding circumstances. As we have seen, the Company had confidence that the stream would supply a sufficient amount for 150,000 acres, and it procured a permit sufficient to provide at the rate of oue-liundredth of a second foot per acre for that area. At that time water rights were customarily appropriated, decreed, contracted for, and sold, as definite quantities, and with rare, if any, exceptions, the amount deemed to be necessary, both popularly and by the courts, exceeded the amount here provided for. In the light of these circumstances, the contract must have appeared to he a reasonable one for the Company to make, and no argument of improbability is available as a ground for qualifying the meaning which the phraseology naturally imports.
Relief.
While, if the conclusions I have reached are correct, plainly the settlers are entitled to a measure of relief, a feasible remedy is not so clear. The obvious course would be to require the Company to supplement its existing water supply, but additional water is not to be had. If it be suggested that the area of -the tract be reduced by cutting off all contracts executed after the full capacity of the system had been sold, it is to .be said that, even should it be held that such a Course is legally possible, it could not be taken without the presence of all the contract holders;' and, furthermore, it is not impossible that some of those who contracted last have been more diligent in reclaiming their lands and placing improvements thereon than those who contracted earlier. So of the suggestion that all contracts be scaled down proportionately both in the amount of the water right and the consideration to be paid therefor—the practical difficulties are very great, and we have not before us the contract holders, who are admittedly indispensable parties to such relief. The Company should, of course, sell no more rights, and, if it be necessary, should be restrained from so doing. Furthermore, it should, -in so far as may be practicable, call in such outstanding contracts as are subject to rescission. It was represented'at the trial, as I understood, that so many contracts had been abandoned, and so many others are subject ‘to forfeiture, that the Company might, at its option, reduce the aggregate of the outstanding contracts from approximately 73,000 acres to approximately 55,000 acres. It should be required to exercise its right of rescission wherever it exists, and by negotiation it is reasonable to believe it may further reduce the irrigable area. It should also be restrained from attempting to collect overdue installments on contracts until there is reasonable assurance that the settlers will receive that for which they have promised to pay. For the present at least I do not look favorably upon the prayer for a receiver. The system is apparently being carefully and intelligently managed, and no relief is needed in that respect. The suggestion that a receiver collect the installments due, for the purpose