Eastern Oregon Land Co. v. Willow River Land & Irrigation Co. , 122 C.C.A. 636 ( 1913 )

GIT,BERT, Circuit Judge.

The parties herein will be designated as they were in the court below; the plaintiff in error here having been the defendant in the action. The action was brought by the plaintiff to condemn rights of way for canals, laterals, ditches, and siphon lines necessary for an extensive irrigation scheme over the lands of the defendant in Malheur county, in the state of Oregon. The several parcels so sought to be condemned comprised in the aggregate 67.3 acres. A jury trial was waived by stipulation of the parties, and the cause was heard before the Circuit Court. The court found in favor of the plaintiff on all issues involved, and a judgment was entered condemning the lands to its use on the payment to the defendant of the sum of $2,375 and costs.

The issues raised by the pleadings involved two principal questions: First, whether the plaintiff was a corporation such as to be entitled to exercise the right of eminent domain; second, if it were such • a, corporation, whether prior to the commencement of the suit it had taken the steps which under the law it was required to take as preliminary to the exercise of that right. Upon these issues the trial court found for the plaintiff. In so far as the findings involve the decision of questions of fact, they are conclusive here, unless they are wholly unsupported by testimony.

The defendant, in support of its contention that the use to which the plaintiff proposes to devote the water is not a public use, cites the recent decision of the Supreme Court of California in Thayer v. California Development Co., 128 Pac. 21. In that case the court held that the right acquired in California by appropriation and diversion of water from a stream is private property, unless, after appropriation, there is an additional act of dedication to the public use, and that an appropriation notice which claimed water for the ap-pi-opriator and others for the purpose of developing power and for the irrigation of land “in the New River country” was not sufficient to show that it was claimed for use by the public; that the Constitution of California (article 14, § 1), which provides:

“The use of all water now appropriated, or that may hereafter be appropriated, for sale, rental, or distribution, is hereby declared to be a public use, and subject to the regulation and control of the state, in the manner to be prescribed by law”

—does not mean that water taken for the irrigation of a fixed tract is appropriated for public use, but that it was intended to regulate the use of water appropriated and dedicated generally for sale and distribution among an indefinite number of users. Accordingly the court ruled that the defendant corporation could not be compelled by mandamus to furnish water to the plaintiff, who owned lands in the ■ vicinity of the lands irrigated by the corporation, and incidentally the court remarked that -it would follow as a matter of course that the corporation possessed no power of eminent domain. The decision in that case requires no comment here, further than to say that it construes a provision of the Constitution of California, and does not aid us in determining what is the law of Oregon. What constitutes a valid appropriation of water to beneficial uses is a question of local law.

[1] The act of February 18, 1891 (Daws 1891, p. 52, § 1; section 6525, Lord’s Oregon Laws) provides:

“That the use of the water of the lakes and running streams of the state of Oregon, for general rental, sale or distribution, for purposes of irrigation and supplying water for household and domestic consumption, and watering live stock upon the dry lands of the state, is a public use, and the right to collect rates or compensation for such use of said water is a franchise. A use shall be deemed general within the purview of this act when the water apropriated shall be supplied to all persons whose lands lie adjacent to or within the reach of the line of the ditch' or canal or flume in which said water is conveyed, without discrimination other than priority of contract, upon payment of charges therefor, as long as there may be water to supply.”

The second section (Lord’s Oregon Laws, § 6526) gives to the corporation described in the first section the right to condemn lands for reservoirs, ditches, rights of way, etc. Upon the evidence in the case the court below found as follows:

“Plaintiff is engaged, in the general sale of water for irrigation and domestic purposes, and has sold water rights in said irrigation system for approximately 2,400 acres to divers and sundry persons.”

But it is said that the plaintiff should have been denied the right to condemn lands for reservoirs and rights of way, for the reason that it has not complied with the statute; that it is not supplying water to all persons whose lands lie adjacent to or within reach of the line of its canal without discrimination other than priority of contract, upon payment of charges therefor; that the water is not for general rental, sale, or distribution; that the plaintiff does not propose to supply the same to persons whose lands lie adjacent to or within the line of its ditch; that the finding of the court in that respect is not supported by the evidence, and that about 4,500 acres of land belonging to that corporation will be supplied with water by its system.

We think that the evidence fully sustains the findings of fact of the court below. The fact that the plaintiff will irrigate 4,500 acres of land which it owns, does not, in view of the other purposes it has in view, render it any the less a public service corporation. Walker v. Shasta Power Co., 160 Fed. 856, 87 C. C. A. 660, 19 L. R. A. (N. S.) 725; Van Dyke v. Midnight Sun Mining & Ditch Co., 177 Fed. 85, 100 C. C. A. 503; Matter of Niagara Falls & Whirlpool R. Co., 108 N. Y. 375, 15 N. E. 429; Lake Koen Nav. R. & I. Co. v. Klein, 63 Kan. 484, 65 Pac. 684; Cole v. County Commissioners, 78 Me. 532, 7 Atl. 397; State ex rel. Harlan v. Centralia, etc., Co., 42 Wash. 632, 85 Pac. 344, 7 L. R. A. (N. S.) 198; State ex rel. Shropshire v. Superior Court, 51 Wash. 386, 99 Pac. 3. The evidence shows, moreover, that the lands which were purchased by the corporation were not purchased to be used and farmed by it, but in order to create a market for its water by selling the land with water rights attached. The purpose of the purchase is fully explained in the testimony. The plaintiff had contracted to deliver to the Oregon Fruit Farmers’ Company water at $55 an acre for 5,000 acres of land. It found it could not afford to furnish the water at so low a price. Said Mr. Hibbard:

“We should very much have preferred to have sold the water at a fair price than to hold the land, as it took some 8200 an aero to buy this land, a bonus to these people who already owned it of just about twice what they had paid for it, the increased value owing to our improvements. I consider it would have been a loss to have sold water at $55 an acre, a loss of $50 in good round figures. It is going to cost us at least $100 or more.”

The president, Mr. W'ayman, testified:

“There are also about 45 water users who take water from this system. * * * The amount of lands for which water has been sold other than the plaintiff is from 3,500 to 4,000 acres. * * * All tlie land of tlie plaintiff is for sale, and it lias already sold some of it. * * * We anticipate tUat water will be supplied for irrigating eventually from 15,000 to 18,000 acres.”

Mr. Brown, the secretary and treasurer of the corporation, testified :

“The intent of the company is to sell water for tlie lands under the canal as now constructed, just as rapidly as we can get customers for it. If it has water for more land than lies under the canal as now constructed, we will carry the water on down the valley for sale.”

The assertion is made that the plaintiff has devised a scheme whereby it appropriates to itself, under the name of a water right, the entire value of the land to which the water is to be appropriated, whether the land is owned by itself or another. If this were true, it would be no ground for reversing the judgment. But such is not the evidence. The testimony is that the unimproved barren land in that region without water has but a nominal value of from $1.25 to $5 an acre; that lands which are “good tillable lands” are worth with the water $125 to $150 an acre; that the plaintiff is selling its lands, which without the water would be valueless, at $200 an acre on 16 annual payments; that, while the charge for water is $125 an acre, it is on the basis of 16 annual payments; that it would be sold for less for cash; and that it was offered to the defendant for cash at $90 an acre, although the actual cost thereof to the plaintiff was $100 per acre.

[2] But it is said that the plaintiff must be denied the right to condemn private property to its use, for the reason that it proposes, at some time hereafter, to turn its irrigation system over to an operating corporation, to be known as the Orchards Water Company, the stockholders of which are to be the purchasers of. the water, each stockholder to have one share of .stock in the operating company for each acre for which he shall have acquired the right to use the water; and cases are cited such as Barton v. Riverside Water Co., 155 Cal. 509, 101 Pac. 790, 23 L. R. A. (N. S.) 331, and Burr v. Maclay Rancho Water Co., 160 Cal. 268, 116 Pac. 715, in which it is held that a corporation engaged in procuring water for its stockholders and delivering it only to stockholders in proportion to their respective amounts of stock, to be used upon their respective tracts of land is not, under the laws of California, a public service corporation delivering water for a public use.

The same might perhaps be said to be true of corporations formed under the Oregon act of 1891 and the amendments thereto. But that proposition is not involved in the present case. In the first place, the Orchards Water Company is not a corporation formed for the purpose of procuring water, nor it is here seeking to exercise the right of eminent domain. It is not even before the court, and it is not proposed to transfer the system to that company until after all the water which the system is capable of furnishing shall have been sold, which it is testified will be “four or five” years hence. In the second place, the future transfer of the system by the plaintiff to an operating corpora-lion, the shareholders of which are to be the owners of the water rights, will not absolve either corporation from any obligation which is now imposed upon it to observe the laws of the state of Oregon. The use of its water so long as either corporation shall have water to supply to others will still be a general use, and it will be required to supply such waters to all persons whose lands lie adjacent to or within reach of the line of the ditch or canal, without discrimination other than priority of contracts, upon payment of the charges. So far as the record shows, no landowner and no purchaser of water has ever objected to the proposed transfer. Doubtless all parties interested regard it as an advantageous scheme, a scheme which is in line with the ultimate purpose of the similar projects of the United States for, the irrigation of arid lands. All the information which the record gires us of the Orchards Water Company is that it is a co-operative corporation, and “not a corporation for profit,” and that it is formed on the theory that it affords a desirable and satisfactory plan by wbicli the purchasers of the water may have the management and control of the system in their own hands.

Can any sound reason be suggested why a corporation formed under the laws of the state of Oregon for the appropriation of water for general irrigation purposes, after it has built its reservoirs, acquired its right of way, completed its system, and supplied all persons with water whose lands lie adjacent to or within reacli of its canal, without discrimination other than priority of contract, so long as there may be water to supply, may' not after it has done all of these things, and exhausted its capacity to supply water, turn over to an operating company, to be composed of the users of the water, with their consent, the system and the operation, maintenance, and care of thqsame? In Mutual Irrigation Co. v. Baker City, 58 Or. 306, 328, 113 Pac. 16. the court said:

“Though plaintiff furnishes water generally for irrigation only when there is a surplus in its ditches after supplying the needs of its stockholders, it is, in our opinion, a corporation impressed with a public character, and holds its property subject to an exercise of the police power of a state-to a greater degree than a private person. It would be improper to conclude, because a corporation, for a consideration, provides the means of communication, or furnishes transportation, or supplies heat, light, power, or water to its stockholders only, that it is not engaged in performing a public .service.”

Counsel for the plaintiff present a forcible argument in support oí the proposition that in 1909 the Legislature of Oregon adopted a new act, complete in itself, covering the entire subject of water rights anil water appropriations, and repealing by implication all other laws on the subject, and thereby gave to any corporation organized for the purpose of conducting water for irrigation purposes the right to condemn rights of way therefor. The act was enacted on February 23, 1909 (Laws 1909, p. 133). It declares (section 6838, Lord’s Oregon Laws) that a corporation organized for the construction of any ditch or flume, for the conduct of water for irrigation or domestic purposes shall have the right to enter upon any land within the termini thereof or elsewhere for the purpose of examining, locating, surveying. lines, etc.; and section 6839 provides that any corporation mentioned in the preceding section may appropriate so much of said land as may be necessary for the line of such ditch or flume, not exceeding 200 feet in width, and the same section further provides that such corporation shall have the right to condemn lands for the sites of reservoirs for storing water and for rights of way for feeders for carrying water to such reservoirs, and for ditches, canals, flumes, and pipe lines carrying the same away. This act is foreshadowed by the act of February 25, 1907 (Taws 1907, p. 289), which provides that the use of the water of the lakes and running streams of the state of Oregon, for the purpose of developing the mineral resources of the state, is declared to be a public beneficial use, and a public necessity. The Legislatures of several of the states in the arid regions have made the individual .use of water for irrigation purposes a public use, and such laws have been sustained by the courts. In Ellinghouse v. Taylor, 19 Mont. 462, 48 Pac. 757, the court said:

“What real distinction is there, so far as the term ‘public use’ is concerned, between the benefit that results to a state from the reclamation by artificial irrigation of ICO acres of agricultural land owned by one or two persons and the reclamation by the same means of thousands of acres, owned by many different persons living together in one subdivision of the state. We do not think there is any in principle. The reclamation of one small field by means of artificial irrigation promotes development and adds to the taxable wealth of the state, as well as the reclamation by the same means of a number of fields.”

Again, the court said:

“Persons have been allowed the right of eminent domain, on the theory of a public use, in the construction of dams for the operation of grist and sawmills, in the reclamation of swamp lands, and in other similar instances that might be enumerated, where the public had no direct interest in these operations, whose main end was mere private gain, and where the benefit to the people at large could result indirectly and incidentally only from the increase of wealth and the development of natural resources.”

It is asserted by the plaintiff, and it is not denied, that the Oregon act of 1909 was adopted from the law of Utah, which in 1904 had been construed by the highest court of that state in Nash v. Clark, 27 Utah, 158, 75 Pac. 371, 1 L. R. A. (N. S.) 208, 101 Am. St. Rep. 953, 1 Ann. Cas. 300. In that case the court 'held that the taking of property for the purpose of obtaining water for the irrigation of a farm and to render the same productive is a taking for a public use, and hence the owner óf a farm may condemn a right of way through another’s ditch for the purpose of carrying the water to his land for irrigation. The judgment in that case was affirmed by the Supreme Court in Clark v. Nash, 198 U. S. 361, 25 Sup. Ct. 676, 49 L. Ed. 1085, 4 Ann. Cas. 1171. The court, in view of the particular facts of the case, said:

“We are of opinion that the use is a public one, although the taking of the right of way is for the purpose simply of thereby obtaining the water for an individual, where it is absolutely necessary to enable him to make any use whatever of his land, and which will be valuable and fertile only if water can be obtained.”

The act of 1009 above quoted has not been construed by any decision of the Supreme Court of the state of Oregon, and in the present case it is not necessary, to consider whether, after its date, the rights of the parties hereto are ruled by that act, or by the prior act of 1891, for the reason that the plaintiff has clearly brought itself within all the requirements of either act, and it is a corporation authorized to condemn private property for the uses specified in its articles of incorporation.

[3] Did the plaintiff corporation, prior to commencing the action, take the necessary steps to acquire the water right, and to entitle it to condemn the property described in the complaint? At the time when the plaintiff initiated its proceedings to appropriate water for general rental, sale, and distribution for purposes of irrigation, which was in April, 1908, the statute which regulated such proceedings was that portion of the act of February 18, 1891, which is carried into Ford’s Oregon Daws as sections 6528 and 6529. The first section requires that the corporation “shall post in a conspicuous place” at the point of diversion “a notice in writing, containing a statement of the name of the ditch or canal or flume, and of the owner thereof. the point at which its headgate is proposed to be constructed, a general description of the course of said ditch or canal or flume, the size of the ditch or canal or flume in width and depth, the number of cubic inches of water by miner’s measurement, under a six inch pressure, intended to be appropriated, and the number of reservoirs” available; and the second section requires that, within 10 days from posting the notice, the corporation shall file for record in the office of the county clerk a similar notice “and at the same time shall file a map showing the general route of said ditch or canal or flume.”

It is said that the plaintiff failed to comply with this law, in that it omitted to file with the county clerk the map which is required by section 6529. In answer to this it is sufficient to point to the fact that before the present action -was commenced the “Water Code” of February 24, 1909 (Laws 1909, p. 319), had gone into effect. That act is entitled:

“An act providing a system for the regulation, control, distribution, use and right to the use of -water, and for the determination of existing rights thereto,” etc.

Section 7 of that act (section 6595, Lord’s Oregon Laws) provides:

“Where appropriations of water heretofore attempted have been undertaken in good faith, and the work of const ruction or improvement thereunder has been in good faith commenced and diligently prosecuted, such appropriations shall not he set aside or avoided, in proceedings under this act, because of any irregularity or insufficiency of the notice by law, or in the manner of posting, recording, or publication thereof.”

That act was intended to, and it does, cure all irregularities and informalities in proceedings taken to acquire appropriations of water under the previous laws, provided that the appropriations were undertaken in good faith, and construction in good faith had been commenced and diligently prosecuted. No question is here made of the good faith of the appropriation, or of the diligent prosecution of the work. It is not disputed that, aside from the expenditure for the purchase of land, the plaintiff has expended $1,200,000 on the irrigation system.

[4] Without merit, also, is the contention that the plaintiff should be denied the right to condemn the right of way described in the complaint, for the reason that the route thereof varies from that which is described in the notice of April 7, 1908. It is not the intention of the law that the appropriator, when it resorts to condemnation proceedings, shall be held to the exact line of the route described in its notice, or in the map of its general route. The law of 1891 provides that the notice shall contain “a general description of the course of said ditch or canal or flume,” and further provides that a map shall be filed “showing the general route.” The statute, therefore, does not require that the corporation shall, in its appropriation notice, fix upon a precise line, from which it shall not thereafter deviate in the slightest degree. The very language of the statute shows that the law is complied with if the notice and map contain no more than a general description. The notice in this case complies with the statute. It gave what it declared to be the “general courses and direction.” Having given such a general description of the course of its ditch, a corporation, when it comes into court in a condemnation suit for its right of way, is required for the first time to define the definite line of its ditch. That was done in the present case, and the defendant can claim no prejudice to it from the fact that the description in the notice was but the general description which is required by the act.

The evidence in the case shows that the line described in the complaint followed substantially the general route described in the notice, and that the deviations are not considerable. Such is the un-contradicted testimony of Collins, the engineer,' who said in substance that the notice was posted at a point 200 feet northeast from the present outlet or headgate. He testified that there was some deviation, owing to a change or two of grade, but that in general the line for which the right of way was sought to be condemned follows the original line as it was located; that he saw the survey stakes of the preliminary survey, and that the line of definite location coincides with and follows it in places; that the canyon through which the canal passes for the first 4 or 5 miles varies from 200 feet to 500 feet on the bottom, and that the canal is located on the west side of the canyon. He • testified that, while the notice provides that the canal shall run from the headgate through section 2, it does not run through section 2, but that it runs less than 500 feet therefrom; that the canyon runs through sections 2 and 3.

“Tlie ditch does not run through section 11. It runs a distance of a few hundred feet from section 11, probably 500 feet. The ditch does not run through section 13. It runs about 500 feet or 600 feet of section 14.”

By clerical mistake the notice says that the headgate to the upper reservoir is in the southwest quarter of the northwest quarter of section 27, when it should have said the southwest quarter of the southwest quarter of that section. That this is plainly a clerical error, as any one on the ground could see, is shown by Plaintiff’s Exhibit 6, a map whi.ch shows that the only portion of section 27 crossed or touched by the creek is the southwest quarter of the southwest quarter, and that the southwest quarter of the northwest quarter of that section is half a mile away from the creek. As was said by Judge Ross in Osgood v. Water & Mining Co., 56 Cal. 571, 579:

“By all the authorities, the notices are to he liberally construed.”

In Beckwith v. Sheldon, 154 Cal. 393, 97 Pac. 867, it was held that two notices, one of which was posted 200 feet distant from the place where another notice had been posted, both being intended for an extensive irrigation system, were posted substantially in the same place.

[5] The objection that the notice was defective for the misnomer of the appropriator is too technical and trivial to require extended discussion. It was passed by the court below as undeserving of attention. The notice begins by stating that the corporation, “the Willow River Land & Irrigation Company, has this day located,” etc. Below, by clerical inadvertence, the word “River” is omitted from the corporate name of the “owner” of the water right, and the same clerical error is found in the signature to the notice by D. M. Brogan, the president. But in the certificate, which Brogan as president attached thereto, he declared that the attached notice “is a true copy of the notice of appropriation posted on behalf of the Willow River Laud & Irrigation Company,” and that certificate bears the signature of Brogan as the president of the “Willow River Land & Irrigation Company.” The notice itself clearly shows by what corporation it was given, and it is identified by the amended complaint as the notice under which the plaintiff claimed its rights.

The plaintiff is engaged in constructing a large and comprehensive system to utilize waste waters of the state in the irrigation and reclamation of from 15,000 to 18,000 acres of arid and otherwise useless lands. In the development of its system it has expended large sums of money. It has sold to settlers water rights for the irrigation of more than 3,500 acres. It is the policy of the state, as expressed in its statute and the decisions of its courts, to encourage and favor such schemes of great public utility, and the plaintiff’s project should not be stayed or defeated upon purely technical and unsubstantial objections such as are here presented.

We find no error. The judgment is affirmed.