112 F. 228 | U.S. Circuit Court for the District of Southern California | 1901
In a series of cases commencing with San Diego Hand & Town Co. v. City of National City, 74 Fed. 79, and ending with Mandell v. San Diego Land & Town Co., 89 Fed. 295, and including the cases of Lanning v. Osborne, 76 Fed. 319, and the first decision in’the present case, this court, being of the opinion that the question had never been decided by the supreme court of California, held that water appropriated, under and pursuant to the provisions of the constitution of California adopted in the year 1879, and of the statutes of the state passed in pursuance thereof, for sale, rental, or distribution, is charged with a public use, and that where a corporation appropriates'and furnishes water for such purposes the rates must be established in pursuance of law, and that no attempt to fix them by private contract with consumers is of any validity; that no such corporation, company, or person has the right to exact any sum of money or other thing; in addition to the legally established rates, as a condition upon which it will furnish consumers water so appropriated; and that, so long as a sufficient supply exists, every person within the flow of the system has the legal right to the use of a reasonable amount of the water in a reasonable manner upon paying the legal rate fixed for supplying it. In two of the cases—those of Mandell v. San Diego Land & Town Co. and Lanning v. Osborne
Th,e decree heretofore rendered by this court in the case having dismissed the original bill, and there having been no appeal by the complainants from that decree, the original bill stands dismissed, and the'oiiginal complainants, therefore, are here now only as defendants to the cross bill filed by the defendant to the original bill; so that the'issues now before the court are such as are made by the cross bill of the San Diego Flume Company, and the answer filed thereto by the defendants Souther and Crosby.
The cross bill alleges the commencement of the suit by Souther and Crosby on the 10th day of May, 1895, to procure the cancellation of'the contract in question, and to recover the sum of $2,160 paid as interest on the principal sum therein specified, with interest on the several installments from the date of their payment, together with $6,500.as damages alleged to have been sustained by them by reason of the breach of the contract on the part of the flume company, together with costs of suit; that the cross complainant was organized and empowered to appropriate, furnish, and supply water to others for irrigation and domestic use in the county of San Diego; that it owns a flume and' aqueduct by which it conveys the waters it impounds, Stores, and ' diverts ■ to and upon FI Cajon rancho, in San Diego
“That if said corporation’s supply of water be at any time shortened, or its capacity for delivering the same impaired, by the act of God or by the elements, or by drought or the failure of the average amount of rainfall in the mountains, or by operation of law. not, insurrection, or public enemies, or by accident or willful injury to any part of its system of waterworks, the above-descrihed land and the lands to which said ten inches of water [certain provisions for the use of 10 inches of water having theretofore been made in the contract], or any portion thereof, may be attached, as herein-before provided, shall, during the period of such shortage or impairment, be entitled to only snch water as can be supplied to and for it after the full supply shall have been furnished to all cities and towns that are or may be dependent either in whole or in part upon said system of waterworks for their supply of water for municipal purposes and for the use of their inhabitants. And the said party of the first part [the flume company] shall not be responsible for any deficiency of water occasioned by any of the above causes, but the party of the first part shall use and employ all due diligence at all times in repairing and protecting its said flume, and in maintaining the flow of water therein.”
The cross bill further alleges that on January 9, 1891, pursuant to the laws of California, more than 25 taxpayers of the county of San Diego duly petitioned the board of supervisors of the county to fix and establish rates to be charged by the flume company as annual rental for water furnished and distributed by it to consumers; that notice was given of the petition and its hearing as required by law, and that, upon the hearing of the evidence relating thereto, an ordinance was on March 9, 1891, duly adopted by the board of supervisors of the county, fixing the annual rental at the sum of $120 per inch; that thereby the rate agreed upon in the contract was abrogated and set aside; and that the defendants Souther and Crosby thereupon became liable to pay the sum of $120 an inch per annum for the 15 inches of water mentioned in the contract of March 12, 1890. It is further alleged:
“That during the winter of 1893-94 and the summer of 1894 a severe and prolonged drought prevailed throughout the said county of San Diego, and covering the entire watershed of your orator, and there was a failure of the average amount of rainfall in the mountains from which your orator obtained its water supply: and by reason of said drought and failure of the average amount of rainfall, and for no other reason, your orator was, without fault or neglect on its part, unable to supply to the consumers of its water, and to whom it had become liable to furnish water, the full supply to which they were entitled; and by reason thereof, and for no other or different cause, your orator duly notified all consumers, including the defendants,*232 .th’at, in 'order7 that all might Suffer as little as possible from the scarcity of. water, the supply to he furnished to all consumers during the continuance of' said drought, would be reduced one-half; and in pursuance thereof the gatesi ponnecting the flumes and pipes of your orator with the pipes and flumes of ■consumers, including the defendants herein, were so set and maintained as ■to furnish during said time only one-half of the full supply of water; but that immediately upon said drought being broken, and as soon as your* orator was able to do so, it gave notice to all said consumers, including the ¡defendants, that it was ready to and would again furnish the full supply of water.”
. , It is further alleged that from that time on the flume company was ready, able, and willing to furnish a full supply of water to the defendants Souther and Crosby and all other of its consumers, but that the defendants refused, and ever since have refused, to receive it, and so notified the defendant, and followed it by a notice of rescission of the contract. The cross bill further alleges;
“That there has not been an entire failure of the consideration for the obligation of said defendants to pay the sums of money agreed by said contract to be paid, or even a partial failure of said consideration, and that there has not been at any time an entire or total or partial failure or inability of your orator to furnish and supply in accordance with said contract the said 15 inches of water since on.or about the 7th day of June, 1894, as asserted in said last-named communication [the notice of cancellation],, but that it has at all times furnished to the said defendants the supply of water provided ■for in said contract, and in strict compliance therewith, and that it has not failed, except during the drought aforesaid, and in the manner, during the time, and for the reason above set forth, to furnish the full supply of said water, and that its failure to furnish said full supply during said time is authorized by said contract.”
■The cross bill also alleges that the contract has been in all things complied with on the part of the flume company, but that the defendants Souther and Crosby have not performed their part of the agreement, and that there was then due from them the principal sum mentioned in the contract, with interest thereon from May i, 1894, and interest on the installment of interest falling due March 12, 1895, and the further sum of $900 annual rental for the 15 inches of water for'the six months succeeding December 1, 1894, all of which sums, the cross bill alleges, constitute a lien upon the real property described therein.- The prayer of the cross bill is that the contract be held a valid obligation; that the cross complainants recover from the defendants Souther and Crosby the sum of $9,000, with interest as alleged, together with the sum of $900 annual rental, with costs of suit, and that the amount found due by the court be declared a lien upon the real property described in thq contract; and that upon default of such payments the land be sold under a decree of the court to satisfy thé same.
By their answer the defendants Souther and Crosby admit the ^commencement of the suit by them as alleged in the cross bill; the organization, purposes, and powers of the cross complainant as alleged; its appropriation, impounding, and diversion of the waters mentioned, to consumers, for purposes of irrigation and domestic use,—and.aver that all of the rights of the cross complainant in the . premises “were acquired by it as an appropriator under the consti- ,' tution and the statutes of the state of California and the acts of con
It will be noticed that, although the cross bill alleges the fact of the establishment of rates by the board of supervisors of San Diego county, it asks nothing by virtue of that ordinance. On the contrary, the prayer of the cross bill is for the annual rates specified and provided for by the contract, and the evidence introduced on the trial sustains the averments of the answer to the cross bill to the effect that the annual rates paid by the defendants and received by the cros^ complainant for the water during the years of its use were the rates-fixed by the contract, and that those established by the ordinance of the board of supervisors were never treated by either party to the contract as applicable to them. And this fact is alluded to by the circuit court of appeals in its opinion in Flume Co. v. Souther, supra, as'follows:
“It appears from the pleadings and from the evidence that neither of the parties to this suit deemed the rate so fixed by ordinance applicable to them, but continued to recognize the contract of March, 1890, as controlling their dealings, the one with the other. It is evident that the appellees considered the rate established by the contract more advantageous to them than the rate fixed by the ordinance, and that the appellant was content to rely upon the contract. In the cross bill no attempt is made to assert rights under the ordinance. The prayer of the bill is confined to petitions for relief under the contract.”
“The questions whether the contract has been rescinded by the parties ,thereto, or, if not rescinded, whether damages have been sustained through its breach, are properly cognizable as matters of defense to the cross bill.” 32 O. C. A. 550, 90 Fed. 171.
It seems quite evident from the first extract here quoted from the opinion of the court of appeals that, holding, as it did, the contract valid, the contract alone must, in its opinion, measure the rights and obligations of the parties. Accepting, as I must, the validity of the contract, I do not see how it can be otherwise; for it is, I think, impossible to maintain the validity of any contract, and at the same time concede that its provisions may be altered by the action of a third party, be it a board of supervisors or anybody else. In the brief of the learned counsel for the cross complainant it is said that, inasmuch as the defendants by their answer aver that the rights acquired by the complainant company “were acquired by it as an appropriator under the constitution and the statutes of the state of California, and the acts of congress of the United States,” the contract “cannot be treated as an ordinary contract between private individuals, and irrespective- of the duties and obligations of the defendant | the flume company] to all of its consumers.” But for the adverse rulings to my views hereinbefore referred to, I should readily concede the potency, and, to my mind, conclusiveness, of the suggestion that no “ordinary” contract nor any other sort of a contract with private individuals could be made in respect to water appropriated under the constitution of California of T879, and of the statutes of the state passed in pursuance thereof, and that the law alone measures the rights and obligations of all parties in interest. But, as this court, for the reason hereinbefore stated, is bound to uphold the right of such appropriators to contract with individuals for the use of such appropriated water upon such terms as the parties may agree upon, a contract embodying such an agreement is nothing more nor less than “an ordinary contract between private individuals,” and must be so construed and enforced. The very important question argued by counsel as to whether or not there is a priority of right as between consumers taking water from an appropriator whose system is governed and controlled by the provisions of the constitution and statutes of the state, and unaffected by any private contract, is therefore not involved in the present case. But, turning to the contract itself, it is seen that it shows upon its face that the flume company was engaged in furnishing water to others besides Souther and Crosby. That fact is also expressly set up in their answer, and is important to be borne in mind in construing the provisions of the contract. While the latter undoubtedly obligated the company to furnish Souther and Crosby, subject to such reasonable rules and regulations as it should from time to time adopt, 15 inches of water, continuous flow, measured under a 4-inch pressure, for use upon their lands therein described, which water should be appurtenant to and run with the lands, there were, according to the express provisions of the contract, certain excepted cases in which
I am of the opinion that the asserted right of rescission has not been proved, conceding it to have been properly pleaded, and that the cross complainant is entitled to the relief prayed. There will be a decree accordingly.