Sallee v. Commonwealth Trust Co. of Pittsburgh ( 1925 )

HUNT, Circuit Judge

(after stating the

facts as above). [1] Appellants argue that the case should have been dismissed for lack of indispensable parties, because, when the cause was submitted there remained lands for which water rights were outstanding for which settlements had not been made, and that the other settlers must be brought in as indispensable to adjudication of the various claims. Plaintiffs cite Commonwealth Trust Co. v. Smith, 266 U. S. 152, 45 S. Ct. 26, 69 L. Ed. 219, affirming our decision in 273 F. 1, but we think there is a clear distinction between this and the Smith Case. In the pleading herein ti# plaintiffs accept the action of the state land board and the Secretary oO the Interior, whereby there was a reduction of the project to 35,000 acres of irrigable lands, and have shown that, prior to the entry of the decrees appealed from, appellants acquired the stock from the excluded lands and have deposited with the clerk of the District Court shares representing 15A shares for each irrigable acre in the respective tracts owned or claimed to be owned by appellants. Thus, without regard to the claims of other settlers, each of the appellants has the same proportionate share and interest in the water rights of the project as he would have had if there never had been contracts outstanding for more than 35,000 irrigable acres. In the Smith Case the complaint was construed as disregarding the stipulations fixing the price of the water right at $40 per acre, on the theory that the lien claimed was to ho determined by distributing the total actual outlay for the works with interest, over all of the reclaimed lands on the acreage basis. Upon that theory the allegations of the complaint were considered as involving the determination of the total outlay and of the total area reclaimed, and, in view of the comprehensiveness of those questions, the Supreme Court said (266 U. S. 161, 45 S. Ct. 29):

“Every, contract holder has an interest in them and will be affected by their determination, however made. It is of concern to him, not merely whether his tract is held to have been reclaimed and to be chargeable with part of the general outlay, hut also whether and to what extent other lands are in the same situation. In this and other respects what is determined in respect of other holders is of direct concern to him. In short, the interests of the contract holders are so related that an effective and just determination of the questions can only be had in a proceeding to which all are parties.”

No such allegations are found in the present complaint, and the decree herein, as between the parties before the court, has determined their rights without injuriously affecting the rights of others not before the court. Waterman v. Canal Bank, 215 U. S. 33, 48, 30 S. Ct. 10, 54 L. Ed. 80.

Defendants next urge that the contract was for a specific quantity of water, and that no recovery by plaintiffs should be based upon the duty of water, and that evidence respecting the duty of water was erroneously received and considered. That question is no longer an open one, for in Twin Falls Salmon River Land & Water Co. v. Caldwell, 242 F. 177, 155 C. C. A. 17, Id., 272 F. 356, it was held that the settlors were entitled under their contracts to one-hundredth of a cubic foot per second per acre, provided such quantity could be beneficially applied, but were not entitled as a contractual right to 2% acre feet per second, as that amount was merely determined in an advance estimate made by the proposer of the plan as to the capacity of the system. In Idaho Irrigation Co. v. Gooding, 265 U. S. 518, 44 S. Ct. 618, 68 L. Ed. 1157, it was held that the provisions of the Idaho statutes (sections 5640 and 7033, St. 1919) must be read into the contract, and that the settlers are not entitled to a specific quantity of water equal to the contract rate of flow through the irrigation season, unless it is shown that such quantity is not in excess of the reasonable duty of water, giving due consideration to the character of the area and the limited quantity of water available for reclamation. In State v. Twin Falls, etc., Co., 30 Idaho, 41, 166 P. 220, the Supreme Court of Idaho laid down the same rule. The later state cases Tapper v. Idaho Irrigation Co., 36 Idaho, 78, 210 P. 591, modified on rehearing, Boley v. Twin Falls Canal Co., 37 Idaho, 318, 217 P. 258, State v. Twin Falls, etc., Co., 37 Idaho, 73, 217 P. 252, are not in conflict with the Ra.yl Case (State v. Twin Falls, etc., Co.), supra, for in none of them does it appear that the court .was called upon to decide claims by settlers for more water than could be used for beneficial purposes.

Appellants insist that no interest should be allowed to the plaintiffs upon recovery except from the date of the entry of the decree of foreclosure, and under no circumstances' from a time prior to the date patent was issued by the United States to the state, or January 13,1921. Again is the appellant confronted with a pertinent adjudication,- for in Glavin v. Commonwealth Trust Co. (C. C. A.) 295 F. 103, appellants therein made much the same argument as have the appellants herein, but we held that the purchase price of the amount of water received, though only 76 per cent, of the amount contracted for, being the same proportionate quantity received by all other irrigators under the system, should bear interest during the time the appellants received and used the water at the rate specified in. the contracts. See Twin Falls Oakley Land & Water Co. v. Martens (C. C. A.) 271 F. 428, certiorari denied 257 U. S. 637, 42 S. Ct. 49, 66 L. Ed. 410.

With respect to the period for which interest should be computed, the District Court found that, on April 12, 1911, the construetion Company gave notice that it was prepared to deliver water under a system of rotation to all entered lands upon the project, aggregating 70,000 acres. Section 3014, Idaho St. The settlers’ contract with the construction company provides that interest shall commence to run upon deferred payments on April 1, 1910. All interest accruing prior to the date upon which notice is given to the entryman that the company was prepared to furnish water under the contracts was expressly waived. With respect to the notice, inasmuch as the agreements with the settlers called for an ample supply of water for the entire irrigation season, no really effective notice could he given until the company was prepared to furnish water for the entire irrigation season and the full quantity required by the settlers’ contracts. It is plain that preparation to furnish water to some settlers, but not to others, was not compliance with the statutes. Nor was preparation to furnish by a “system of rotation,” not by continuous flow, using a supply insufficient to meet contract requirements in accord with the scheme of the legislation authorizing the Carey Act projects. The notice published by plaintiff on April 12, 1911, which was after April 1st, the agreed date of the beginning of the irrigating season, was presumably published with a view of fixing the beginning of the statutory period in which the settler was called upon to cultivate his land and make final proof thereon, and also to start the date of the running of the interest. But as a fact the company, not being prepared to furnish water for the full irrigating season under the terms of the contract with the state, was not in a position to give the notice required. Evidence that the company appreciated the position is furnished by a qualifying notice to settlers, published the same day, advising them that it was anticipated that water would be at or above the tunnel on April 12th, and that it was anticipated that there would be 30,000 acre feet of water available for use that season, and that the purpose was to give three irrigations of 10,-000 acre feet each to the tract, uhless subsequent experience should determine that that plan should be modified. Judge Dietrich, in his opinion, has shown that, upon its own estimate, the company would be able to deliver less than one-half acre foot for each acre of area for which there were outstanding contracts, and that such quantity would be far from enough to justify cultivation of the lands for any purpose. Surely it would not be equitable to oblige settlers to pay interest before the water was ready to be used, and, although there may have been some water furnished in 1911, it was of such minor account that the court was not in error in declining to regard it. For the time after 1911 interest was properly allowed upon the purchase price of the quantity of water actually available.

In allowing set-offs, the court proceeded upon this rule: Having found that the water supply was only 76 per cent, adequate for the area patented, the settler with a contract for 40 acres could get but approximately three-fourths of water needed in any season, and therefore might either partially irrigate the whole tract and get only part of a crop, or might apply all the water to three-fourths of his holdings and raise a full crop on 30 acres, raising nothing on the remaining 10 acres. Guided by experiences gained by evidence in other suits involving similar situations, the court concluded that, by allocating all the available water to three-fourths of the land, the equities could be adjusted more fairly than by following any other method. The plan as applied counted the improvements which the settler had put upon the 10 acres which received no water as useless, and obligated the plaintiff, to whose advantage the plan would result, to reimburse the settler for losses by reason of the failure' of the plaintiff to furnish the water. Such an adjustment is at best imperfect, but, considering the conditions, we believe the results will be as efficient as can be in protecting the rights of the parties.

Cross-appellants contend that, when the state board of land commissioners determined the area, 35,000 acres, for which water rights should be sold, there was no basis for jurisdiction in the courts to make determina,tion of that question. But the courts are not deprived of right to construe the limitations contained within the contract between the settlers and the construction company, or between the company and the state. For instance, no act of the hoard in reducing the amount of acreage could destroy the general provision in the contract that in no ease should the water rights or shares be dedicated to any lands mentioned or sold beyond the carrying capacity of the canal, or in excess of the appropriation therefor; nor could the board, by reduction of the area to 35,000 acres, definitely fix the right of the construction company to collect the full amount of the purchase price on the contracts, regardless of the quantity of water actually furnished. In Idaho Irrigation Co. v. Gooding, 265 U. S. 518, 44 S. Ct. 618, 68 L. Ed. 1157, the Supreme Court in referring to similar contracts with settlers, upheld the power of the District Court in allowing much less than the quantity of water stipulated in the contract, upon the ground that the Idaho statute requires that the amount of water allowed shall never bo in excess of what is used for beneficial purposes, and the statute which forbids the use by an owner of more water than good husbandry requires. Sections 5636, 5640, and 7033, Comp. St. Idaho.

In affirming the decree, wo are fully sensible of the difficulties which have confronted the court in reaching equitable and practicable solutions of the questions involved, not alone in this but in other litigation already referred to, which has arisen over rights of construction companies’ lienholders and settlers who have had to do with the Salmon river project. But it seems to us that the decree heroin affords as full a measure of protection of the rights of all concerned as could he made.

Affirmed; costs to be taxed in favor of appellee, and without costs on the cross-appeal.