Berg v. Yakima Valley Canal Co.

• Decision Date: 09 January 1915
• Docket Number: 11297.
• Parties: BERG v. YAKIMA VALLEY CANAL CO.
• Court: Washington Supreme Court

145 P. 619

83 Wash. 451

BERG v. YAKIMA VALLEY CANAL CO.

No. 11297.

Supreme Court of Washington, En Banc.

January 9, 1915

Appeal from Superior Court, Yakima County; Thomas E. Grady, Judge.

Action by William Berg against the Yakima Valley Canal Company. From a judgment for plaintiff, defendant appeals, and plaintiff cross-appeals. Affirmed.

Englehart & Rigg, of North Yakima (A. L. Agatin of Duluth, Minn., of counsel), for appellant.

Bogle Graves, Merritt & Bogle, of Seattle, and Thomas H. Wilson, of North Yakima, for respondent.

MAIN J.

The purpose of this action was to recover damages alleged to be due to the negligence of the defendant in failing to properly maintain and keep in repair an irrigation ditch. The cause was tried to the court sitting without a jury. Judgment was entered for the plaintiff in the sum of $18,500. The defendant appeals.

The facts are substantially as follows: The defendant, Yakima Valley Canal Company, is a corporation organized and existing under the laws of the state of Washington. The object for which this corporation was formed, as set out in its articles, was to construct, maintain, and operate a canal to carry water for irrigation and domestic purposes from the Naches river in the county of Yakima to the lands owned by its stockholders situated in that county, and in township 13 range 18, E. W. M. The water was to be furnished at cost to the owners of lands upon the line of the canal or lateral branches, who should share in the cost of construction, or become owners of the corporate stock. By the amended articles of incorporation, the capital stock of the corporation was $4,200, divided into 4,200 shares of the par value of $1 per share. No dividends were to be paid upon this stock. The canal, after it was constructed, was to be maintained and kept in repair by assessments each year made upon the stockholders. The certificates of stock which were issued provided that the owner of the shares therein specified, in accordance with the articles of incorporation and the by- laws, was entitled for every share of stock to 1/4200 part of the volume of water carried by the canal, so long as the water should be used upon the land described upon the back of the certificate.

On March 31, 1909, one William Steward became the owner, by purchase from E. B. Preble, of certain lands which were under the ditch. The certificates of stock which entitled Preble to water to be used upon this land were on this date assigned to Steward, but were not transferred upon the books of the corporation until February 21, 1911. On the 27th day of November, 1909, Steward leased for a period of two years 100 acres of the land above mentioned to William Berg, the plaintiff. This lease provided that Berg would plant the land leased in apple trees of specified varieties, and would cultivate and care for the same, during the period covered by the lease, in a good and husbandlike manner. During the time covered by the lease, Berg had the right to plant the entire tract to nursery stock, provided he should not plant any nursery stock, or any other crops, nearer than three feet distant from the apple trees. The lease also provided that Berg should have the right to use a specified portion of the water from the Yakima Valley Canal Company which was then owned by Steward and covered by the certificates which had been assigned and delivered to him by Preble. Berg was a nurseryman, and immediately entered into possession of the land for the purpose of engaging in the nursery business somewhat extensively. During the spring of the year 1910 he planted approximately 70 acres of land in nursery stock. For this purpose he employed about 25 men. Berg claims that the defendant company was negligent in failing to properly maintain and take care of the irrigation ditch during the previous fall and winter, and for that reason he did not receive sufficient water during the spring of 1910 to grow the nursery stock which he had planted. By reason of the shortage of water, Berg claims damages in the sum of $73,150.

At the conclusion of the trial the court, at the request of one party and with the consent of the other, in company with a representative of each, examined the land. Other facts will be mentioned as they may become pertinent in connection with the consideration of the points urged for a reversal.

The questions to be determined are: First, the right of the plaintiff to maintain this action. Second, is the defendant company liable in damages for negligently failing to properly maintain and keep in repair the irrigation ditch? Third, does the evidence sustain the charge of negligence? And, fourth, the amount of the damages.

I. In order to reach the real question in the case without unnecessary preliminary discussion, it will be admitted, for the purposes of this opinion: (a) That the Yakima Valley Canal Company is what is known as a mutual ditch company (that is, that the company was formed for the purpose of supplying water to its stockholders only, and not to the public generally); (b) that the action must be founded either in tort or contract; (c) that the present action is not one sounding in tort; (d) that an action based upon a contract must be brought by one who is either a party or stands in a relation of privity; and (e) that Berg was not a party to the contract. If, therefore, the present action can be maintained by Berg, it is upon the ground of privity. Whether that relation existed between Berg and the canal company depends upon whether, when Berg took his lease, a right to the water passed to him as an appurtenance to the land. It will hardly be denied that, if the water right passed as an appurtenance to the land, his right to maintain the action is well founded.

In a mutual company the stock certificate represents the water right. A transfer or sale of the certificate may be made separate from the land for use on other land, and will transfer the water right. But where it has not been thus sold or transferred, the question whether the water right is appurtenant to the stockholder's land is generally a question of fact, as is also whether, on a sale or transfer of the land, the water right passes as an appurtenance. In 2 Weil, Water Rights in the Western States (3d Ed.) § 1269, speaking upon this question, the author states the rule as follows: 'So long as the company remains purely a mutual one, the certificate of stock represents the water right. A transfer or sale of the certificate is governed by much the same rules as those elsewhere considered regarding transfers of water rights. Whether the water right is appurtenant to the stockholder's land is a question of fact in each case, as is also whether, on a sale of the land, the water right passes as appurtenance. A sale of the certificate may be made separate from the land for use on other land, and will transfer the water right, here the change does not injure other existing water users by the new place of use (who alone, however, can raise the objection that they are injured); the transfer being complete when (and not until) entered on the books of the company. On the other hand, in the absence of any separate sale of the certificate or of any other evidence of any express intention to make a severance, a sale of the land on which the water is used will carry the water right and right to the certificate as an appurtenance.'

In the present case the water right, as evidenced by the certificate, was appurtenant to the land.

The amended articles of incorporation specify that:

'Each share of stock of this corporation shall constitute a water right for one acre of land, and shall, when duly issued and delivered, vest in the lawful owner thereof, his heirs and assigns, title to one forty-two hundredth (1/4200) part of the water at any time actually carried by said canal. * * *'

The by-laws of the corporation adopted by the stockholders specify the form of the certificate. The certificate provides that the owner of each certificate of stock shall be entitled to----

'one forty-two hundredth part of the volume of water carried by the canal of said corporation for each share of stock represented by this certificate, so long as he shall use said water upon the land described in the certificate upon the back hereof, and no longer, provided, however, that no water can be taken from said canal by virtue of the ownership of said stock until the certificate upon the back hereof has been filled out, signed and sealed by the secretary of this corporation.'

The land formerly owned by Preble and transferred to Steward was described upon the back of the certificates as issued to Preble and assigned and delivered to Steward at the time of the purchase of the land by him. Considering the respective provisions of the articles of incorporation, the by-laws, and the stock certificate, it is plain that it was the intention to make the water right represented by the stock appurtenant to the land.

But it is contended that, even if the water is appurtenant to the land, it did not pass to Berg under the terms of the lease in which it was provided:

'That he [Berg] will accept as the full water right for said land one-half of the water right now owned and held by said first party [Steward], to wit, one-half of one hundred shares of capital stock in the Yakima Valley Canal Company's main canal.'

For what purpose was this provision placed in the lease? Steward desired the land leased planted in apple trees. Berg agreed to plant the trees, tend, irrigate, and care for the same during the period covered by the lease. Berg had the right for his own purposes, of planting the entire tract to nursery stock, except that he should not encroach upon the apple trees closer than...