89 Neb. 479 | Neb. | 1911
This is an action to quiet tbe title of plaintiff to certain water rights, and to enjoin the defendant the Tri-State Land Company from closing or obstructing the plaintiff’s
In 1887 W. R. Akers, Charles W. Ford, and John Richards incorporated the Farmers Canal Company in Cheyenne county, Nebraska. The articles of incorporation provided that the general nature of the business should be “to acquire, construct, operate and maintain a canal, taking water from the North Platte river in said county and state, and diverting and appropriating water from said river, sufficient at all times to fill said canal, as may be necessary for the use of persons taking water therefrom, and conducting water through said canal, and leasing, selling, and otherwise disposing of water rights to persons owning lands under said canal, for the purpose of irrigation, domestic use, manufacturing and other useful purposes.” The authorized capital stock was fixed at $80,000,in shares of $100 each. After the incorporation of the company, a notice of appropriation dated September 16, 1889, signed by the president and secretary of the corporation, was posted, setting forth that the company had appropriated a sufficient quantity of water to fill a canal 40 feet wide on the bottom and carrying water to the depth of 4 feet, and naming the point of diversion. Afterwards the incorporators with a number of other landowners in the vicinity subscribed for stock of the corporation. A small amount of the subscription price was paid in cash and the remainder in work upon the canal, for which receipts were given
Before this time (but after the plaintiff and others were taking water from the ditch under the contracts) the company executed a trust deed upon all its property and franchises to secure certain bonds. Default being made, the trust deed was in 1901 foreclosed in the circuit court of the
In the answer of the Tri-State Land Company, it insists and claims that it did not purchase the canal subject to these contracts and water rights and is not bound by the terms of the same; that the contracts are void; and that it owns the canal and appropriations unincumbered by any of these water-right contracts. Similar questions Avere raised, but not decided, in Clague v. Tri-State Land Co., 84 Neb. 499. A number of matters of defense pleaded are not supported by the evidence and it is unnecessary to notice them. At the trial defendant announced, and it was made a part of the record, “the Tri-State Land Company has at all times, a’nd now does, refuse to recognize, as valid and binding upon it, these water contracts, in the form, as drawn, providing for the preferential use of water, without assessments. But the company, * * * at all times and
It takes a similar position in this court. This concession materially narrows the inquiry, and takes away the necessity of considering a number of the points argued in the defendant’s brief. . An interesting and elaborate brief has been filed by the defendant containing a summary of the legislation in this state with respect to irrigation. It is argued that, under the statutes of this state, an irrigation company has always been a public service corporation having the right of eminent domain, and that consequently it must serve the public upon equal terms and without preference or discrimination; that the contracts in controversy here, in so far as they interfere with this statutory duty, are ultra vires and beyond the power of the corporation to enter into; that it was the intention of the legislature to depart from the principles governing the use of water in the arid states to the west of us; that in these states there were .always people and land waiting for water, but that in this state the first settlers were in the eastern portion and knew nothing of irrigation; that the legislature in the passage of the first act in relation to the subject in 1889 intended that a canal should be built in a new country as railroads had been built in a new country, and that settlement would follow the canal as it had followed railroads. On the other hand, the plaintiff claims that by the contract he acquired an easement in the canal for the purpose of conducting the amount of water specified in the contract to his land; that the consumer is the real appropriator from the natural stream and the canal company merely a common carrier of the water.
A number of interesting questions are presented and ably argued in the respective briefs, but it seems to us that the respective rights of the parties in this controversy may
At the time that the Farmers Canal Company was incorporated, tiiere was no statute in this state providing for the appropriation of water from the public streams of the state. The only statute then in existence was the act of 1877 (laws 1877, p. 168) which provided that corporations organized for irrigation or water-power purposes might acquire right of way necessary “in the same manner as railroad corporations may now acquire right of way for the construction of railroads,” and that such canals are declared to be works of internal improvement. In 1889 a complete act (laws 1889, ch. 68) evidently intended to cover the whole subject of irrigation was passed. The transfer of ownership of the Farmers Canal Company from the incorporators to Wright and his associates was made after the passage of the latter act, and the legality of the contracts must be measured by the law as it then stood, subject of course to any limitations subsequently made under the police pOAver of the state. Our attention has not been called to any provisions of the comprehensive statute of 1895 which denounce contracts of the nature of these, and hence we find it unnecessary to consider it, and have endeavored to determine the validity of the contracts under the law existing at the time that they were entered into.
It is an old and well-established principle that equity looks to the substance of things rather than the form. Even in a mandamus proceeding this court has looked at a stock corporation as being de facto a mutual irrigation company. Swanger v. Porter, 87 Neb. 764. It is clear from the evidence that it was the desire of Mr. Wright and his associates to obtain the advantage, either real or supposed, Avhich the Farmers Canal Company had procured by its prior appropriation of water and of the particular place on the river most suitable as the point of diversion for a
And so in Colorado, in the case of Grand Valley Irrigation Co. v. Lesher, 28 Colo. 273, which is very similar in its facts to this case, four landowners organized a corporation and constructed a ditch for the irrigation of their lands. Another corporation was later .organized by other parties for the irrigation of a larger tract, diverting the water at the same point on the river. The incorporators of the original company then agreed that, in consideration of the surrender of their franchise to the latter company, they should each receive a certificate to a water right of a
Whatever the form of the transaction whereby Wright and his associates obtained possession of the property of the original appropriators and the right of way for their proposed canal, in substance it was really an agreement that in exchange for the property the canal company would release these parties from the annual assessments. Suppose that instead of making such contracts they had paid to each stockholder, or to the company for distribution to the individual stockholders in proportion to their shares, a sum of money which placed at interest would furnish an annual fund sufficient to meet the necessary assessments for the upkeep of the ditch, or had agreed in consideration of the transfer to pay a certain sum annually to each stockholder, could such transaction he said to be against public policy, or to be void as discriminatory? The testimony is that the appropriation, the partially constructed ditch,
The question as to the validity of the preference given may prove to be merely academic, but we think it proper to give it some consideration. The contracts are alike in providing that each contract holder shall have water “first in preference over any and all subsequent stockholders in the canal.” Sections 12 and 13, act of 1889 (laws 1889, ch.
“Section 12. In case the volume of water in any stream is not sufficient to supply continually the wants for irrigating purposes of the owners or proprietors of land in any district or neighborhood in which customs exist for distributing the waters amongst such owners or proprietors, the waters diverted must in such case be held to be a common right in those accustomed to the participation in the use and enjoyment of such distribution, and such customs must be upheld in all courts as conferring such common right in the same. But this section does not affect any prior vested rights.
“Section 13. In case any person, company or corporation has constructed a ditch for the purpose of diverting the water of any river, creek, canyon, ravine or spring, for the purpose of selling the water thereof for irrigating purposes, the owners or cultivators of said land along the line of and covered by said ditch or canal, are entitled to and have the right to the use of water from said ditch or canal, for the purpose of irrigating said land, so owned or cultivated in the following order: First. All persons through whose land such ditch or canal runs are entitled to the use of the waters thereof in the order of their location along the line of said ditch or canal. Second. After those» through whose land the ditch or canal runs, those upon either side of the line of the ditch or canal are entitled to the use of the waters thereof, those equally distant from the line of said ditch or canal are entitled to priority in the order of their location along the line of said ditch or canal; provided, that in times of scarcity of water the same shall be equally distributed to the consumers thereof.”
Under these provisions it is plain that the rights of the original stockholders must be held to be a common right by virtue of their own previous custom and agreement, and that their priority, in the absence of any such agreement, would have been in the order of their location along the line of the canal. We must consider the contract holders
The argument that the corporation could not grant a perpetual water right we think js not tenable. The right to have the water from the river conveyed to the headgates of the respective contract holders and their assigns is of the nature of an easement in the 'ditch. This being so, it could be sold and conveyed, and may be granted in perpetuity. It is descendible and devisable, subject, however, to regulation under the police powers of the state, and appurtenant to the land for which it was appropriated or to which it has been applied. Farmers H. L. C. & R. Co. v. New Hampshire Real Estate Co., 40 Colo. 467; Stanislaus Water Co. v. Bachman, supra. In so holding, however, we must be understood as considering only the nature of the contract and the rights of the contract holders, and not the status of ordinary water users.
In conclusion, we believe the views expressed are in accord with the general principles adopted in the western states. In those states, as in this, a stock corporation formed for the purpose of constructing an irrigation canal, though private as to its manner of organization, is of the nature of a public service corporation. Its rights and duties are m fled by the nature of its functions. It cannot serve the public generally, but only the occupiers of land lying under the ditch. Its duties to the respective consumers may be modified and affected by the operation of rights of priority and by the operation of the police powers of the state. Cummings v. Hyatt, 54 Neb. 35; Castle Rock Irrigation Canal & Water Power Co. v. Jurisch, 67 Neb. 377; Farmers Canal Co. v. Frank, 72 Neb. 136; Wiel, Water Rights (2d ed.) secs. 411, 413, 416; Kinney, Irrigation, sec. 307 et seq.; Pomeroy (Black’s), Water Rights, sec. 194; Long, Irrigation, sec. 130.
The district court found for the plaintiff and the cross-petitioners, that the contracts were valid, and that the preference right and the right of relief from assessments therein contained were binding on the Tri-State Land Company. The decree seems to allow the contract holders to take water at any point on the ditch, and does not seem to protect and reserve sufficiently the right of the Tri-State Land Company or of the state to regulate the use of the headgates so as to prevent waste of water. The contract holders are not entitled to the use of water to their contract quantity irrespective of a beneficial use. •
We think the decree of the district court must be affirmed in the main, but modified so as better to preserve these rights.
Affirmed as modified.