Brewster v. Salt River Valley Water Users' Ass'n

• Decision Date: 03 November 1924
• Docket Number: Civil 2273
• Citation: 27 Ariz. 23,229 P. 929
• Parties: ARCHIE L. BREWSTER and JOHN W. SEARGEANT, Appellants, v. SALT RIVER VALLEY WATER USERS' ASSOCIATION, a Corporation, and CARRICK & MANGHAM AGUA FRIA LANDS & IRRIGATION COMPANY, a Corporation, Appellees
• Court: Arizona Supreme Court

229 P. 929

27 Ariz. 23

ARCHIE L. BREWSTER and JOHN W. SEARGEANT, Appellants, v. SALT RIVER VALLEY WATER USERS' ASSOCIATION, a Corporation, and CARRICK & MANGHAM AGUA FRIA LANDS & IRRIGATION COMPANY, a Corporation, Appellees

Civil No. 2273

Supreme Court of Arizona

November 3, 1924

APPEAL from a judgment of the Superior Court of the County of Maricopa. F. C. Struckmeyer, Judge. Affirmed.

Messrs Baughn & Walton, for Appellants.

Messrs Kibbey, Bennett, Gust & Smith, for Appellee Salt River Valley Water Users' Association.

Messrs Alexander & Christy and Mr. Hess Seaman, for Appellee Carrick & Mangham Agua Fria Lands & Irrigation Company.

OPINION

ROSS, J.

Throughout this opinion we shall refer to the Salt River Valley Water Users' Association as the Association, and to the Carrick & Mangham Agua Fria Lands & Irrigation Company as the Company. This action has for its object the restraining of the Association from proceeding in the execution of a contract entered into by it with the Company on August 25, 1921, upon the general grounds that the contract is ultra vires the powers of the Association; that the board of governors of the Association, through whom the contract was made, could not make the contract without authority of its stockholders; and that its execution would irreparably injure plaintiffs both as stockholders of the Association and as individual land owners.

The defendants, in separate answers, demurred to the complaint, on the ground that it showed upon its face a misjoinder of causes of action, in that the plaintiffs were suing as shareholders of the Association for a wrong committed against them as such, and also for alleged wrongs to them as individual land owners. They also demurred generally upon the ground that the complaint did not state facts sufficient to constitute a cause of action. It was the latter demurrer that was sustained by the lower court, and, the plaintiffs refusing and failing to amend within the time allowed by the court, judgment was entered dismissing the complaint. The appeal is from such judgment.

The demurrer admitting everything that was well pleaded, it becomes necessary for us to look into the complaint with a view of determining whether the facts therein set forth stated a cause of action. The contract, which is made an exhibit to the complaint, shows upon its face that it was entered into for a twofold purpose: (1) To unwater certain water-logged lands of the Salt River project; and (2) to utilize such waters to reclaim lands adjacent to but outside of said project, and to accomplish these purposes at as little cost and expense as possible to both the contracting parties, especially the Association. These purposes are very plainly and concisely set forth in the preamble to the contract which we here quote:

"Whereas there lies within the boundaries of the so-called Salt River project, in Maricopa county, state of Arizona, a large area of land (hereinafter in paragraph 20 more particularly described) which has become, to a large and injurious extent, saturated with water and which it is desirable for the best interests of the association and the settlers and land owners within said project to have drained and unwatered; and

"Whereas, there lies in close proximity to the lands included within said project an area of land of approximately 35,000 acres which is without irrigation and which it is proposed by the company to irrigate with water pumped from the lands within said project and from waste waters purchased from the association; and

"Whereas, it is proposed to form said 35,000 acre tract into an irrigation district under the laws of the state of Arizona to which district this contract may be assigned and to irrigate said tract through the medium of said irrigation district and to meet the cost of putting said waters on the lands of said irrigation district and of such irrigation by the sale of irrigation district bonds; and

"Whereas, in order to insure the payment of said bonds and the irrigation of said lands within said irrigation or conservancy district, it is necessary that said company and said irrigation district be assured of an adequate supply of water."

The Company in executing said contract was acting in behalf of the owners of the 35,000 acres of land proposed to be reclaimed, who, as we understand it, at the time were or since have become organized into an irrigation district, as provided by the laws of this state. We do not deem the details as to the manner of carrying out and making effective the object of the contract essential to a consideration of the points made, and for that reason do not set it out in full. Shortly, the plan as outlined by the contract may be stated to be as follows: The Association, so far as it can, gives or grants to the Company the right to enter on 48,960 acres of the saturated or water-logged lands of the Salt River project, with the privilege of installing at its own expense as many pumps as it wants, or as may be needed, for the purpose of pumping such water down to a level not deeper that fifty feet, without the consent of the Association, and with the duty imposed and assumed to dewater such area by pumping therefrom annually a minimum of 70,000 acre-feet.

It sells, or agrees to sell, to the Company, all pumps, wells, equipment, owned by it and located on said 48,960 acres, at the cost of a like installation at the time of purchase. The Company agrees to install upon said area 50 wells, including the ones bought from the Association, and more if needed to remove the minimum of 70,000 acre-feet annually, and to build all needed canals, ditches, and other works for carrying out the contract, under plans and specifications approved by the Association. Like privilege of pumping another water-logged area of 16,320 acres is conditionally given the Company, providing it should need, for beneficial use, more water than it can obtain from the larger area, or, if the Association should find it necessary to pump water for drainage purposes from said smaller area, the Company agrees to buy not to exceed 15,000 acre-feet per annum, and pay therefor, as well also for any waste water from said area, 75 cents per acre-foot. It is agreed the Company may have all the pumped and waste waters from the 48,960 acres that may flow to the ends of the canals, laterals, or ditches of the Association, or the boundaries of the Salt River project. The Association agrees to furnish the Company electric power to operate its wells and other works for the first ten years, at three-fourths of a cent per K.W.H. if available from its own power plants, and at cost if obtained from other sources, and the next twenty years at actual cost (meaning the cost of production and delivery, interest on investment, operation, maintenance and allowance for depreciation), and thereafter at the fair market value of such power.

For the water it is to get, and the pumps, wells and equipment, and the privileges granted, the Company agrees to advance or pay the Association a sum not to exceed $600,000, unless the purchase from the Association exceed $300,000, in which case the sum to be advanced shall be the costs of such equipment plus $300,000, the last sum to be used to install a 5,000 H.P. capacity steam electric plant and to be repaid the Company by the Association in furnishing power and water to that amount with interest at seven per cent.

The contract is "for the term of ninety-nine (99) years, the object of such operation being to pump and remove water from the area of land described in said paragraph 20 (48,960-acre tract) and to use said water to irrigate the said lands within the boundaries of the said irrigation district" (Company lands).

If we have omitted to state any detail that counsel may think important, it is not intentional. We do not pretend to give more than a general statement of its contents, but feel it is comprehensive enough to cover the questions presented.

The question of the Association's power to make the contract is at the threshold of all others. Originally the Association was organized by the land owners of the Salt River project to aid them to provide an adequate and dependable water supply for the irrigation of their lands, and as an agency to co-operate with the national government in acquiring reservoirs and dam sites, rights of way, ditches and canals, and in the planning and construction of their irrigation plant. After the project was completed and fully tested out as a successful going concern under the supervision and control of the national government, and, presumably after the federal authorities had satisfied themselves of the competency of the farmers holding lands in the project to manage and control it, it was in September, 1917, turned over to the Association, in whose possession and control it has ever since been. While the main object of the Association, as disclosed by its charter, was irrigation, the possibilities of hydroelectric power as a by-product was also provided for in the charter, and from being originally an incidental economy this latter feature has developed into a great source of financial profit to the Association and its stockholders. In July, 1913, doubtless that it might be certain of its right to act, its charter was amended, giving the Association authority to create, transmit, use, sell and dispose of power not only for its own purposes or objects, but for any other useful purpose and for profit.

The Association's right and power to enter into contracts with irrigation and electrical districts outside of the original project, and to furnish water and power thereto while not directly passed upon by this court, has been recognized in at least two cases. In re Auxiliary Eastern ...