East Mill Creek Water Co. v. Salt Lake City

This action was brought by East Mill Creek Water Company, a corporation, and some of its stockholders on behalf of all similarly situated, against Salt Lake City, to obtain a declaratory judgment interpreting the provisions of a contract affecting an exchange of water, entered into between the company and the city on July 19th, 1923. In the trial court the city prevailed and the plaintiffs appeal to this court.

At the time the contract was entered into the company and its stockholders were the owners of the right to the use of both summer and winter waters in Mill Creek, for irrigation and culinary purposes, through three ditches which were known as the "Amos Neff Ditch," the "Franklin and John Neff Ditch" and the "Brigham Young Ditch." This was mountain water suitable for culinary purposes and constituted more than a third of all the waters of Mill Creek. Mill Creek is southeast of Salt Lake City, and the area on which this water had been used was adjacent to the city limits, roughly between 27th and 39th South Streets and 20th and 27th East Streets. Prior thereto, they had no water main or pipe-line system and both culinary and irrigation water was conveyed through open ditches. Salt Lake City had just passed through a period of rapid growth and was under the necessity of increasing its culinary water supply. For that purpose it approached the owners of these waters with a proposition to exchange other waters suitable for culinary and irrigation purposes for their water rights in Mill Creek. To effect such an exchange the corporation was formed, and the owners transferred all of their said water rights to the corporation in exchange for proportionate shares of stock therein, consisting of two classes of stock, one of which entitled them to the use of irrigation and the other to the use of culinary water.

After the company had been formed it entered into the contract in question with Salt Lake City. The parts thereof which are necessary for an understanding of the questions presented in this case are as follows:

"Contract. "This agreement made and entered into this 19th day of July, 1923, by and between East Mill Creek Water Company, a corporation * * * (hereinafter referred to as the ``company') and Salt Lake City, a municipal corporation * * * (hereinafter referred to as ``city'),

"Witnesseth:

"Whereas, the company is the owner of certain waters and water rights in Mill Creek, * * * and

"Whereas, the city is the owner of certain other waters which may be used for irrigation purposes, and

"Whereas, the city is desirous of securing the use of the waters owned by said company, and the company is willing to transfer to the city the right to use of its said waters upon the terms, conditions and provisions as hereinafter set forth.

"Now, therefore, * * *:

"Article I. "Said company hereby covenants, promises and agrees as follows:

"1. The said company hereby grants, sells, conveys and transfers to said city all the waters and water rights owned by said company, together with that certain water main system herein provided to be constructed by and under the direction of the city at the cost of the company.

"2. It is understood and agreed that all of the company's rights to the waters of Mill Creek, * * * are hereby vested in the city perpetually, subject only to the conditions herein specified.

"3. That the said company will deliver the waters herein specified at a suitable point in the bed of Mill Creek such that the same can be delivered by gravity into the City's conduit; * * *

"4. That said company will pay the entire cost of the proposed water main system hereinafter specified, with the understanding that the work will be done under the city's direction.

"5. That said company will secure all necessary franchises and rights-of-way for said water main system.

"Article II. "The city hereby covenants, promises and agrees as follows:

"1. To furnish and deliver irrigation water perpetually or so long as it may be demanded by said company, at the heads of the above mentioned ditches or at such other points along such ditches as may be mutually agreed upon; * * * in quantity and time as follows, to wit:

"During the months of April, May and June of each year, the quantity of water equal to the combined share of said ditches in the flow of Mill Creek, less the quantity of culinary water hereinafter specified;

"During the months of July, August and September, twenty per cent more water than the combined share of said ditches, less the quantity of culinary water specified.

"2. To construct and maintain perpetually at the point of delivery of irrigation water to the company suitable measuring devices for the measurement and delivery of the water.

"3. To install, at the cost of the company as herein provided, and maintain perpetually a suitable system of water mains of such size and capacity and under such pressure as will effectively deliver the water necessary for the use of the stockholders in a pure and wholesome condition; said water mains to be laid upon the following streets:

[Then follows a specification of the streets and other matters]

"4. To furnish and deliver in the water main system for the use of the company and its stockholders water entirely satisfactory for culinary purposes on the bases of 450 gallons daily per acre of water right or not to exceed in total 228,000 gallons daily during the months of April, May, June, July, August and September, and of 225 gallons daily per acre of water right, or not to exceed in total 144,000 gallons daily during the months of October, November, December, January, February and March, free of expense to the company; provided, that if the company or its stockholders at any time desire water in excess of the quantities specified herein, and the city has water in excess of its municipal needs, the city shall furnish to the company or its stockholders such water at the regular city water rates; said culinary water herein specified to be furnished free shall be so furnished only during the time that the territory served shall remain without the city limits and in no event for a longer period than twenty years from date hereof, after which time said water shall be furnished at the rates and under the conditions provided for the use of water by the inhabitants of the city. It is to be understood that the said culinary water to be furnished free is to be so furnished to stockholders owning at least one half acre water right; and that those stockholders owning less than that amount shall pay the regular city rates.

"5. * * *

"6. * * *

"Article III. "It is further understood and agreed that:

"1. * * *

"2. The water for culinary use, etc. to be delivered into the water main system is to be delivered into the various sections of the system substantially in proportion to the distribution of stock as at present owned by the stockholders.

"3. All service connections from the water mains to the various houses are to be made at the expense of the owners together with the first cost and maintenance cost of meters whenever the latter are deemed necessary by the city; provided that the work of tapping the mains shall be done entirely by the city at the expense of the owners.

"4. If at any time the company shall request the installation of fire hydrants, the city shall install such hydrants as may be furnished by the company, the type and size of which shall be mutually agreed upon, at such points as the company may designate, at the expense of the company. The water used through said hydrants may be chargeable to the company.

"5. The water furnished for culinary purposes may be any water that shall be as pure, free from pollution and as desirable for use as the waters of Mill Creek."

The territory served with culinary water under this contract is still without the limits of Salt Lake City, thus the free waters were delivered to the stockholders of the company up to July 19th, 1943. The city insists that under the contract it is only required to deliver culinary water, through master meters into the water main system provided for in the contract, and that all of such water which it does not deliver through that system to users other than the company and its stockholders (the city delivers water through this system to other users than the company and its stockholders) is thereby delivered to them and the company under the contract must pay therefor. Thus the company would have to read the individual meters, and collect from the stockholders, and would have to pay for all the waters lost in the system. The company contends that under the contract, after July 19th, 1943, the city was required to deliver the water to the individual stockholders through their individual meters and make collections therefor at the same rates and under the same conditions provided for the use of water by inhabitants of the city. To settle that and one other dispute, which will be considered later, this action was brought.

The city contends that this action is barred by a previous action involving a similar question commenced by the company on May 18th, 1938, in which the trial court entered judgment in favor of the city. In that action the company asked for a declaratory judgment interpreting this contract, and alleged, among other things, that a correct interpretation thereof would require the city to deliver the culinary water through the stockholders' individual meters, and make collections from the stockholders individually rather than from the company. In the former action the company alleged and relied on the general provisions of the contract and the provisions which were in effect during the time that the city was required to furnish free water. It did not allege or rely on any provision which took effect only after that period had ended. Since the suit was commenced before the free water period ended there could be no bona fide dispute at that time on the interpretation of provisions of the contract which would only take effect after that period had expired. The trial court decided in favor of the city, but expressly limited the effect of its judgment to the period prior to July 19th, 1943. The present suit asks only for an interpretation of the contract as applied to the period since that time.

In this case plaintiffs concede that they are bound by the interpretation placed on the contract in the former action for the period which that decision covered. They contend, however, that the provisions which took effect only after the free water period expired, when viewed in the light of the entire contract, require that a different interpretation be placed on the contract after the expiration of that period. It is clear that the exact question now presented was not raised or decided in the former action, but defendant contends that that action is not only a bar to this action on such points and issues as were actually raised and therein decided but also on all points and issues which could have been therein litigated, and that the issues raised in this action could have been litigated in the former action.

This contention overlooks the fact that there are two kinds of cases where the doctrine of res judicata is applied: In the one the former action is an absolute bar to the maintenance of the second; it usually bars the successful party as well as the loser; it must be between the same parties or their 1 privies; it applies not only to points and issues which are actually raised and decided therein but also to such as could have been therein adjudicated, but it only applies where the claim, demand or cause of action is the same in both cases. In such case the courts hold that the parties should litigate their entire claim, demand and cause of action, and every part, issue and ground thereof, and if one of the parties fails to raise any point or issue or to litigate any part of his claim, demand or cause of action and the matter goes to final judgment, such party may not again litigate that claim, demand or cause of action or any issue, point or part thereof which he could have but failed to litigate in the former action. On the other hand where the claims, demand or cause of action is different in the two cases then the former is res judicata of the latter only to the extent that the former actually raised and decided the same points and issues which are raised in the latter. Harding Company v.Harding, 352 Ill. 417, 186 N.E. 152, 88 A.L.R. 563, and note thereto; Outram v. Morewood, 3 East 346, 102 Eng. Reprint 630; Cromwell v. Sac County, 94 U.S. 351, 24 L. Ed. 195, 30 Am. Jur. 923; "Judgments," section 179 and 180; 38 Yale Law Journal (1928-29) 299, at 311 "Res Judicata" by Robert von Moschzisker. This distinction has been followed by this court although not expressly pointed out. Everill v. Swan, 20 Utah 56,57 P. 716; Glen Allen Mining Co. v. Park Galena MiningCo., 77 Utah 362, 296 P. 231; Leone v. Zuniga, 84 Utah 417,34 P.2d 699; Logan City v. Utah Power Light Co., 86 Utah 340,16 P.2d 1097, on rehearing, 86 Utah 354, 44 P.2d 698;State v. Erwin, 101 Utah 365, at page 422, 120 P.2d 285, at

This action does not involve the same claim, demand or cause of action that was litigated in the former action. It does involve the interpretation of the same contract, but the question to be determined in the two actions are different, the provisions governing in this case are different from 2 those governing in the former case. In fact the provisions governing this case had not become effective at the time the other case was tried, and in view of that fact there was not nor could there then have been any bona fide dispute on the interpretation of such provisions. The plaintiffs therefore could not and did not litigate, in the former action, the same claim, demand or cause of action which they allege in this action. Under such circumstances the former is no bar to the present action. Leone v. Zuniga, supra.

In construing the contract we will first consider paragraph 4 of Article II. Thereunder the city agree:

"To furnish and deliver in the water main system for the use of the company and its stockholders * * * for culinary purposes,"

a stated quantity of water per acre of water right daily, "free of expense to the company;" and under certain conditions to furnish water in excess of the quantities specified, "at the regular city water rates." Thus the city agreed absolutely to furnish the quantity specified, and conditionally to furnish the excess waters without any express limitation on the time during which such waters should be furnished. Then follows:

"said culinary water herein specified to be furnished free shall be so furnished only during the time that the territory served shall remain without the city limits and in no event for a longer period than twenty years from date hereof * * *."

This provision mentions "said culinary water herein specified to be furnished free," and then expressly limits the time during which such water shall be "so furnished." It does not, however, place any limitation on the period of time during which the specified quantity of water shall continue to be furnished. In other words it first specifies a given quantity of water which the city shall furnish the company and its stockholders free, it then expressly limits the time during which the specified quantity of water shall be furnished free, but does not provide that the specified quantity of water shall cease to be furnished. Had the contracting parties intended that the specified quantity of water should then cease to be furnished altogether, and not merely cease to be furnished free they could have very easily so provided by merely omitting the word "so." The fact that this provision expressly limits the period of time during which the specified quantity of water should be furnished free but avoids placing any limitation on the time during which such quantity of water shall continue to be furnished raises a strong implication that the parties intended that the specified quantity of water should continue to be furnished thereafter.

So that we may be able to visualize the next provision in its proper setting it will be quoted with the provision we have just discussed, which is as follows:

"said culinary water herein specified to be furnished free shall be so furnished only during the time that the territory served shall remain without the city limits and in no event for a longer period than twenty years from date hereof, after which time SAIDWATER shall be furnished at the rates and under the conditionsprovided for the use of water by the inhabitants of the city."

The italics and capitals are ours and when read separately constitute the provision on which plaintiffs rely as the basis of their claim that the contract provides for a change in the manner of delivery of the water after the end of the free water period.

Our first problem is to determine what the term "said water" which is capitalized in the above quotation refers to. The last previous mention of water in that sentence is "said culinary water herein specified to be furnished free" and there is no other water mentioned in this paragraph to which 3, 4 it could refer. Plaintiffs do not claim that it refers to any other water previously mentioned in the contract but claims that it refers to culinary water in general, that it merely provides that thereafter the city will furnish the plaintiffs with culinary water on the same conditions as to quantity as well as to other conditions that it furnishes culinary water to its own inhabitants. The use of the word "said" clearly negatives that construction, and limits it to water which has been previously mentioned, and undoubtedly refers to the quantity of water specified to be furnished free. To give this term the construction urged by plaintiff would require more than mere construction of the language used; it would require us to read into the contract the term "culinary water" where the parties have used the term "said water." That would amount to making a contract for the parties rather than construing the one they made, which is clearly not our prerogative. Thus under the terms of the contract, after the end of the free water period, the city was obligated to furnish only the same quantity of culinary water per share of water right daily as it was obligated to furnish before, but it was to be paid therefor at the same rates provided for its own inhabitants.

The contract, however, in addition to providing for a change in the cost to plaintiffs and that the same quantity of culinary water should continue to be furnished after the end of the free water period, provides that it should be furnished under the same conditions provided for the use of water by city inhabitants. Prior to this time the city did not furnish culinary water directly to the stockholders through their individual meters, but delivered the water into the water main system, and the company was required to pay to the city for all water furnished in excess of the free water. But to its own inhabitants the city furnished culinary water directly through their own individual meters, the city read the meters and billed the inhabitant for the quantity of water delivered who was required to pay therefor in accordance with the city's rules and regulations. If this provision of the contract is to have any meaning it must refer to the foregoing conditions, certainly those conditions come within the language used. We therefore hold that after the end of the free water period the city under the terms of the contract is required to furnish to the company and its stockholders the quantity of culinary water specified in accordance with the abovementioned conditions for furnishing culinary water to its own inhabitants.

A further reason which indicates an intention to deliver the water in the manner and under the conditions above stated after the end of the free water period is the fact that one of the methods of terminating that period was the annexation of the territory served to the city. If that had been done, then the stockholders who thereby would have become inhabitants of the city would have then been entitled regardless of their contract to the same service of city water as other inhabitants.

There are other provisions of the contract which contemplate that eventually, at least, the city would deliver the culinary water specified in the contract to the individual users and not merely to the company into the water main system. It is provided that the culinary water

"is to be delivered into the various sections of the system substantially in proportion to the distribution of stock as at present owned by the stockholders";

that the water used through the fire hydrants shall be chargeable to the company; and that individual meters would be installed whenever deemed necessary by the city. If the city under the contract was only required to deliver culinary water into the system and collect from the company, it would not be concerned with what part of the system the water was used or whether or not individual meters were installed, and it would be surplusage to say that part of the water should be charged to the company when all of it must be so charged.

This disposes of the questions raised in regard to culinary water. Plaintiffs contend that the trial court misconstrued the contract in regard to the quantity of irrigation water the city is required to furnish after the end of the free water period. Under paragraph 1, Article II the city agrees 5 to furnish and deliver irrigation water in stated quantities "less the quantity of culinary water hereinafter specified." Plaintiff argues that the term "quantity of water hereinafter specified" refers to the free water, and that after the end of the free water period there was no quantity of water specified to be furnished and therefore none could be deducted, and that thereafter the city was required to furnish the stated quantities without deduction. It would require a strained construction of the contract to reach the conclusion contended for even if we had held that after the end of the free water period, the city was not required to furnish the quantity of water therein specified to be furnished free after the end of the free water period, but since we have held to the contrary there is no basis whatever for plaintiffs' contention. The trial court therefore correctly held the city was only required to furnish the stated quantities less the deductions specified.

Case is reversed and remanded to the district court with directions to enter findings, conclusions and judgment in accordance with the views herein expressed. Appellants are awarded their costs.

LARSON, C.J., and TURNER, J., concur.