Acadia, California, Limited v. Herbert

Decision Date23 June 1960
Citation353 P.2d 294,5 Cal.Rptr. 686,54 Cal.2d 328
CourtCalifornia Supreme Court
Parties, 353 P.2d 294 ACADIA, CALIFORNIA, LTD. (a Corporation) et al., Respondents, v. Montague HERBERT, Appellant. L. A. 25140.

Harry M. Fain, Gold, Needleman & Fain and J. Howard Sturman, Beverly Hills, for appellant.

Shaw & Barnett, William W. Shaw, Riverside, Slaughter, Schlesinger & Schlecht, Warren E. Slaughter and James M. Schlecht, Palm Springs, for respondents.

GIBSON, Chief Justice.

Plaintiffs, Acadia, California, Ltd., and Anthony Burke brought this action for damages and for declaratory and injunctive relief, alleging that defendant had ceased to comply with two agreements under which he was obligated to supply them with water essential to the use of their lands and that his conduct was malicious. The jury, under instructions defining the meaning of the agreements, returned verdicts in favor of plaintiffs, awarding Acadia and Burke $5,753 and $8,000, respectively, as compensatory damages and $10,000 each as punitive damages. The court declared the rights of the parties in accord with its construction of the agreements and permanently enjoined defendant from interfering with the delivery of water under the contracts as so interpreted.

The two agreements were made in connection with sales of parts of a 40-acre tract of desert land which was uninhabitable without water. In 1946 the owners, Raymond Hatton and his wife, drilled a well and installed facilities for the pumping, storage, and distribution of water. The first agreement was made in 1949 when a portion of the tract, containing over an acre, was sold by the Hattons to predecessors of Acadia. In 1951 this parcel and the rights under the agreement were acquired by W. B. Milner and his wife, who transferred them to Acadia, a corporation wholly owned by the Milners. The second agreement was made in 1951 when a smaller parcel was purchased by plaintiff Burke. The Hattons thereafter sold the land which contained the well (apparently all of the remainder of the acreage) to defendant, who assumed their obligations under the agreements.

It was provided in the agreements that water was to be supplied at gravity to each of the grantees for a certain monthly rental in such quantities as would be required for domestie use, including watering of gardens, but not to exceed '1/50 of such water as may be available from the existing water well' or any new well to be drilled by the grantor if the existing well became inoperative. 1 One of the disputed questions is whether the quoted phrase means 1/50 of the water available from the well when operated at full capacity or when operated with the particular pump in use at the time of each agreement.

The Hattons delivered water for irrigation at gravity, but they supplied water for household purposes under pressure, using a 500-gallon pressure tank and pipe lines, and this practice was continued by defendant. Early in 1953 plaintiffs expressed dissatisfaction with defendant's delivery of water, particularly with the pressure under which household water was supplied. As a result of negotiations, an additional 500-gallon pressure tank was installed on defendant's land, and the amount of the costs paid by him was provided by Milner as a prepayment of water rentals on behalf of Acadia. When the new installation was put into use the water pressure was improved, and delivery under increased pressure was continued for approximately two years.

In March 1955, after defendant started to subdivide his property and had built three new homes which he wished to provide with water from the well, he closed the pipe through which irrigation water had been delivered to plaintiffs at gravity and installed pressure-reducing devices on the pipe lines through which household water was furnished, thereby reducing the pressure to about six pounds per square inch. The generally accepted average pressure for delivery of water for household uses is 40 to 60 pounds per square inch. A preliminary injunction was granted directing defendant to restore service as it existed prior to March 1955. Defendant violated this order and was found to be in contempt, following a determination that his conduct had been wilful.

As we have seen, one of the disputed questions concerns the method of measuring the amount of water to which plaintiffs were entitled under the agreements. In this connection the court instructed the jury that each of the plaintiffs was entitled to the quantity of water reasonably necessary for domestic use, including watering of gardens, but not to exceed '1/50 of such water as may be available from the existing water well' and that the quoted phrase meant 1/50 of the amount of water that the well could produce when operated at full capacity.

When the various provisions of the agreements are considered together, it appears that the meaning of the quoted phrase is the one adopted by the court and that there was no issue relating to construction to submit to the jury. The pump in use, the capacity of which, according to defendant, was determinative of plaintiffs' rights, is nowhere mentioned in either of the agreements, and several provisions show that, if necessary, the grantees were to be supplied with water by means other than those existing at the time of the agreements. The phrase under consideration was immediately followed by the words 'or any replacement well in lieu of the existing well as hereinafter provided for.' The agreements provided further that the grantors would install 'pipe lines, tanks and other facilities' reasonably necessary to supply the agreed amount of water, that they would operate those facilities 'so long as it is reasonably possible to procure and distribute water from the water underlying the land of the Grantors,' and that, if reasonably possible, they would drill a new well and install the necessary facilities if the existing well became inoperative. (Agreements, § (3).) Provision was also made for payment of higher water rentals by the grantees in case of increased operating expenses. (Agreements, § (4).)

Even if it be assumed that there is some ambiguity in the contracts, all evidence that could have any bearing on the construction of the phrase in question is without dispute and leads to the same conclusion as that which arises from a consideration of the provisions of the agreements. At the time the agreement was made with the predecessors of Acadia, the well was equipped with a 25-horsepower pump which could draw 300 to 400 gallons of water per minute, and when Burke purchased his property, a pump of 7 1/2 horsepower had been substituted, which had a capacity of 200 gallons per minute. The well could have produced 900 gallons of water per minute had it been operated at full capacity. When Acadia's property is fully developed, its average daily needs for water in certain months will be between nine and ten gallons per minute, and for use in peak hours a flow of 16 gallons a minute will be required. Thus, 1/50 of the total capacity of the well (18 gallons per minute) would provide Acadia with the necessary water, whereas 1/50 of the capacity of the pump in use when its contract was made (six to eight gallons per minute) would be insufficient for its needs. Development of the property of the grantees was anticipated in the agreement, and it would be unreasonable to assume that an inadequate amount of water would have been agreed to, particularly since the agreement recited that it 'is contemplated by the parties hereto that said portions of the said available water, not to exceed 1/50 thereof, will be adequate for the uses hereinabove permitted.' There is no indication or contention that the Burke agreement is to be construed differently from the Acadia agreement.

The court correctly instructed the jury that the agreements were modified so as to require defendant to deliver water for household purposes under reasonable pressure. Defendant, following the practice of the Hattons, had delivered water for those purposes under pressure for more than a year when plaintiffs became dissatisfied and entered into negotiations with defendant to increase the pressure under which the water was furnished. After a meeting of the parties at which Wright, an installer of water systems, suggested that another 500-gallon pressure tank be installed, Milner, on April 13, 1953, wrote defendant a letter reading in part: '* * * I will prepay to you up to approximately $1,000.00 of the water rentals Acadia California, Ltd. will be liable for. This is the amount which James E. Wright, Jr. estimates will be necessary to make such additions and adjustment to your existing plant to insure an adequate water supply.' After a second tank was installed and defendant was billed for the costs, he requested Milner to send a check. Milner complied, but the check was returned and further negotiations ensued. On February 6, 1954, Milner sent another check, stating that its acceptance would confirm the understanding that the delivery of water with the then...

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