No. 5,479 | Mont. | Jun 10, 1924
delivered the opinion of the court.
The plaintiffs, who are stockholders in the Low Line Irrigation Company, divert water for irrigating their lands from the Low Line canal south of the line dividing townships 1 north and 1 south, range 3 east, in Gallatin county. The point of diversion is referred to in the testimony as the Post place. The defendants, except the Low Line Irrigation Company, are stockholders in that company who take water from the canal north of, or below, the Post place. Other stockholders of the company take water from the canal above, while still others not parties to this action take their water below, the Post place.
The plaintiffs allege that they are entitled to priority over the defendants, and each of them, in the use and enjoyment of the waters mentioned in the complaint. They pray that “the defendants, their officers, agents and employees, be enjoined and restrained from interfering with plaintiffs’ use and enjoyment” of the waters of plaintiffs mentioned in the complaint, and from prorating the same with the defendants, or either of them.
It will not be useful to set forth even an epitome of the substance of the pleadings. Incidental mention of some features of them will be made later. The plaintiffs’ theory is that while they severally had the right to demand and receive water from the Low Line Company upon the basis of one inch of water to one share of stock the defendants oversold the capacity of the canal and then compelled the plaintiffs to receive water upon a pro rata basis with all other stockholders. The sufficiency of the complaint is attacked vigorously by the defendants; they have pleaded that there is a misjoinder of parties plaintiff, of parties defendant; that there is a defect of parties defendant; that causes of action are improperly united,
The court made findings of fact and entered conclusions of law thereon in favor of the defendants. Decree followed accordingly. The plaintiffs appealed.
The controlling facts are that the West Gallatin Irrigation Company was organized in 1889 for the purpose of acquiring lands and water rights and selling and disposing of the same. In furtherance of one of its purposes it obtained title to several thousand acres of land. To provide water for irrigation and for sale, rental and distribution, the company in 1890 constructed what has since been known as the High Line canal which tapped the West Gallatin River on its west bank, running thence in a general northwesterly direction to near the town of Manhattan, a distance of about forty miles. To augment the flow of water in the lower end of this canal the company in 1901 constructed what was known as the Short Line canal, running from the river to a junction with the Pligh Line. Later the Short Line and that part of the High Line below the junction became known as the High Line canal. It was the intention of the company from the beginning ultimately to irrigate substantially all of the lands which have been irrigated from these canals.
In the year 1909 the company sold its lands to the H. S. Buell Land Company, hereafter referred to as the land company. During that year the district court of Gallatin county, by a decree which determined the rights of the appropriators
Shortly thereafter the owners of the land company incorporated the High Line Irrigation Company and the Low Line Irrigation Company, hereafter frequently referred to as the Low Line Company. To the Low Line Company the land company conveyed the Low Line canal with 3,400' inches of the 1890 water and 1,500 inches of the 1901 water; the High Line canal, and the remainder of the water it had purchased from the West Gallatin Irrigation Company, it conveyed to the High Line Irrigation Company. After the sale by the land company to the Low Line and High Line Irrigation Companies, each company separately controlled and operated its own property.
The West Gallatin Irrigation Company had sold to some persons the right to purchase water from its canals perpetually at the rate of $2 per inch, and to others by contracts executed annually it had leased water for use in the irrigating season, which was considered from June 1 to September 1, although some of the leases were for shorter periods of time. When the Low Line Company purchased the Low Line canal and water rights, as is told above, it agreed to complete and fulfill all contracts theretofore made and then in existence between the West Gallatin Irrigation Company and any and all users of water who by their contracts were entitled to water service by means of the Low Line canal. A few of the plaintiffs in this action formerly were owners of the so-called “perpetual rights” but most of them were merely lessees from year to year.
The capital stock of the Low Line Irrigation Company consists, and always has consisted, of 7,500 shares of stock of the par value of $20 each. This company was incorporated primarily for the purpose of acquiring the Low Line canal, its easements and appurtenances, to enlarge it, and to “lease, sell, convey, or
It was the purpose of the Low Line Company to acquire 7,500 inches of water and to put that amount of water into the canal at the headgate. To make up this amount of water it appropriated 2,500 inches from the West Gallatin River and on July 3, 1914, a decree was entered by the district court awarding the Low Line Company that amount of water. Whether this right was or is of any especial value is of no consequence in this action, as will presently appear.
Here it is well to record the fact that at various times there had been trouble betwen the West Gallatin Irrigation ■Company and the water users because of insufficiency of water ■and the water users had brought numerous suits against the company on that account. There were many appropriations from the West Gallatin River prior in right to those owned by the West Gallatin Irrigation Company, and consequently as the water in the source of supply grew less that in the canals diminished.
After the Low Line Irrigation Company acquired the Low Line canal it expended over $70,000 in renovating this waterway. It put in concrete headgates at the intake at the Gallatin River, cleaned out and enlarged the canal throughout a great part of its length, and rebuilt flumes and pipes. However, practically all irrigation by means of the canal has been below what is known as the Yellow Dog siphon, and the inadequacy of this siphon is and has been the cause of trouble. Except for this the canal probably would have carried at all times the full amounts of water which the Low Line Company was entitled to divert from the river. The court found, and the finding is not challenged, that the canal “has not at the present time the capacity to carry as much as 7,500 inches of water, or more than 5,000 inches above the point where the delivery of water to its shareholders commences.” As a matter of fact, the Yellow Dog siphon will not carry to exceed 4,500 inches of water, if it will carry that much. Shortage in the river during
It was the policy and practice of the West Gallatin Irrigation Company when there was not sufficient water in the canal to supply users in full.to apportion the water available between them. The deeds whereby it conveyed the right to the use of water from its canals provided that, if for any reason the supply of water should be insufficient to supply the holders of rights to water then outstanding with the amount needed by them and which but for such insufficiency they would be entitled to receive from the company, it should have the right to distribute such water as should flow through the canal to the holders of such water rights pro rata, and for the purpose of so doing might establish and enforce such rules and regulations as it might deem necessary or expedient. Substantially the same provision was included in leases which the company gave to water users. This same policy was pursued by the Low Line Company. It is provided in its by-laws: “That in case there be from any cause less than the full amount of water belonging to the company in the canal, each stockholder shall, without complaint, accept his pro rata share of what there is, the same to be determined, and the headgate set accordingly, by the superintendent or his assistants.”
Before the land company acquired the lands and water system of the West Gallatin Irrigation Company practically all the irrigation from the respective canals was done south of the Post place, although the first irrigation from the High Line, the original canal, was far north of that point, and in fact practically at the end of the canal, 'but that irrigation had not been continued. Just how much land was irrigated south of the Post place before 1910 does not appear, although eounsed for plaintiffs contends the amount was approximately 4,000 acres; that matter is of no especial importance now.
It seems that 4,117 shares of stock were issued for use upon lands south, and 3,333 for use upon lands north, of the Post place. It also appears that the Low Line Company holds 752 shares to protect “old rights” — the rights of those who have
It is useless to discuss the “rights” of those who were merely lessees from the West Gallatin Irrigation Company by virtue of leases which were executed each year and expired each year. As to these the court concluded correctly that “such temporary use as was given by such leases absolutely terminated at the end of the period in each year for which such leases were given. ” The cases cited by plaintiffs to sustain their contentions as to the rights of these lessees are wholly inapposite to the conditions at bar. These eases arose under special constitutional or statutory provisions unlike any we have in Montana, or the facts were very different from those in this ease.
Borne of the plaintiffs in this action were the holders of contracts éxecuted by the West Gallatin Irrigation Company which provided that they should be entitled to water at $2 per inch in perpetuity. All of these contracts were surrendered by the plaintiffs in exchange for stock in the Low Line Irriga- ■ tion Company. In their complaint the plaintiffs pleaded that they made this exchange because of fraudulent representations made to them and fraudulent inducements held out to them by agents of the land company. But the plaintiffs have not
The court found, and the evidence does not preponderate against the finding, that one share of the capital stock of the defendant Low Line Irrigation Company represents, and always represented, V7500 part of the water flowing in the Low Line canal; and a share does not, and never did, represent any fixed or certain number of inches of water which the Low Line Company is or has been obligated to deliver. Other findings determined: (a) That at the time when each of the plaintiffs acquired capital stock of the Low Line Company either by purchase or exchange, he did so with knowledge that each share of the capital stock of the company represented and would entitle him to the use of 1/7500 part of the water which might from time to time be flowing in the Low Line canal, and no more; (b) that at the time when each of the plaintiffs acquired capital stock of the company either by purchase or exchange, he did so without either asking for or receiving any promise or agreement that he should have a greater right than any other stockholder in the company; (c) that at the time when each of the plaintiffs acquired capital stock of the company either by purchase or exchange he did so without any understanding, promise or agreement as to whether any of the capital stock of the company was to he sold for use upon lands lying north of the Post place, and without any promise or agreement on that subject at all, and without reserving any right or privilege which he might have had or claimed to obtain or receive water from the Low Line Canal because of any deed or lease from the West Gallatin Irrigation Company or otherwise; (d) that
The court also made an appropriate finding in favor of the defendant Low Line Company upon the subject of prescription. A careful consideration of the evidence in the case warrants us in saying that the evidence does not preponderate
Respecting laches and prescription, what is said in Verwolf v. Low Line Irr. Co., post, p. 570, 227 P. 68" court="Mont." date_filed="1924-06-10" href="https://app.midpage.ai/document/verwolf-v-low-line-irrigation-co-8024055?utm_source=webapp" opinion_id="8024055">227 Pac. 68, is directly applicable to the instant case, and need not be repeated here.
The assertion of counsel for plaintiffs that the Low Line Company is but “a trustee for those it serves who own the equitable title,” that is, its stockholders, is directly contrary to the holding of the court in Hyink v. Low Line Irr. Co. 62 Mont. 401, 205 Pac. 236, in which' it was held that the stockholders in a mutual irrigation company are not tenants in common but that their relation to the company is one of contract.
Whatever may be the rule as to the rights of a prior purchaser of the capital stock of an irrigation company which
Upon the facts presented in the record the judgment of the court was right, and it is affirmed.
Affirmed.