Caldwell v. Twin Falls Salmon River Land & Water Co.

• Decision Date: 29 June 1915
• Docket Number: 494.
• Parties: CALDWELL et al. v. TWIN FALLS SALMON RIVER LAND & WATER CO. et al.
• Court: U.S. District Court — District of Idaho

225 F. 584

CALDWELL et al. v. TWIN FALLS SALMON RIVER LAND & WATER CO. et al.

No. 494.

United States District Court, D. Idaho, Southern Division.

June 29, 1915

[Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted]

C. O. Longley and W. E. Golden, both of Twin Falls, Idaho, for complainants.

S. H. Hays, of Boise, Idaho, for defendant Twin Falls Salmon River Land & Water Co.

P. B. Carter, of Boise, Idaho, for Salmon River Canal Co.

Richards & Haga and McKeen Morrow, all of Boise, Idaho, for Commonwealth Trust Company of Pittsburgh and A. C. Robinson.

DIETRICH District Judge.

This controversy grows out of the construction, under the Carey Act (Act Aug. 18, 1894, c. 301, Sec. 4, 28 Stat. 422 (Comp. St. 1913, Sec. 4685)), of an irrigation system commonly known as the Salmon River project. The plaintiffs are severally in the possession of lands upon the project, and hold what are called settlers' contracts for water for the irrigation thereof; they bring this suit not only for themselves but in behalf of all other setters. The defendant Twin Falls Salmon River Land & Water Company, hereinafter called the 'Company,' is the corporation which, pursuant to the Idaho statutes, contracted with the state for the construction of the system and made agreements with the plaintiffs and others for water rights. It also issued bonds, to secure the payment of which it assigned as collateral these settlers' contracts to the defendant Robinson, and executed a trust deed on all of its interest in the system to the defendant Commonwealth Trust Company of Pittsburgh, as trustee. All of its property rights are thus hypothecated as security for the payment of its bonds, the interest upon which has for some time been in default. The defendant Salmon River Canal Company is the corporation organized as provided in the state contract and the settlers' agreements, for the purpose of ultimately taking title to, and operating, the system; as yet it is but the creature, and is under the control, of the Company.

The contract with the state was executed April 30, 1908, and the opening for entry to holders of water right agreements of 80,000 acres of land was advertised for June 1, 1908; and when this suit was commenced the Company had executed numerous agreements for water rights covering an aggregate of 73,000 acres. The gist of the plaintiffs' complaint is not that the construction work has been improperly done, but that this acreage is greatly in excess of the area for which water is available, even during years of normal run-off. For that reason, they contend, the Company has failed to comply with the terms of its agreements, and accordingly they are refusing to pay the installments due on account of the purchase price. The trustee and the collateral holder are demanding payment, and have brought several suits in foreclosure, which naturally have caused some irritation, and altogether much unrest prevails. While it is highly desirable that the controversy be fully and finally settled without delay, its immediate determination is attended with great, if not insurmountable, difficulties. The project is dependent for its water supply upon the Salmon river, a stream which, except during the flood-water period in the spring, is a creek rather than a river. And the chief feature of the project, therefore, is a reservoir, by which it was contemplated there could be stored, for use in the summer season, 180,000 acre feet. But, in determining at the present time the available supply during an average year, we are not only confronted with the uncertainties inherent in an estimate of the probable run-off of a variable stream, but we would be driven to a measure of speculation as to what the normal loss, now very great, will ultimately be from seepage in both the reservoir and the canals. And in addition to this consideration the Company is presently engaged in litigation with other claimants, who assert a superior right to divert large amounts of water from the higher reaches of the stream and its tributaries. Moreover, when it is remembered that there are no other accessible water resources, and that there is a provision in the contract putting all water-right agreements upon an equal footing regardless of the date of their execution, it will be seen that the question of an appropriate and feasible remedy is a most perplexing one, should it be held that the plaintiffs are entitled to relief.

The fundamental question is one of the meaning of the contracts. The issue here is a broad one. The plaintiffs contend that primarily they contracted for a water right of a definite amount, which incidentally carried with it ownership of an undivided interest in the system. The defendants say that only an undivided interest in the system was sold, which carried no specific amount of water, but only a divisional share, the extent of which must depend upon the ratio between the water actually available for the system and the aggregate number of contracts which the Company sees fit or is able to sell.

It is quite impracticable here to follow in detail the elaborate argument by which the defendants seek to maintain their position. It is not convincing. In the first place, it is highly improbable that settlers would have signed a contract by which they must obligate themselves to pay at the rate of $40 per acre for the mere chance of sharing with an indefinite number of others in a projected irrigation system concerning the capacity and efficiency of which they could, in the nature of things, have but little information. As is well known, those who buy water rights upon these projects are generally men of small means, without irrigation experience, widely scattered, and often residing a long distance away. They are not directly interested in the project as a whole, but they want to know what 40 or 80 or 160 acres of land will cost with an adequate water right. They have no means of determining whether a proposed reservoir will hold water, or whether the watershed is sufficient to fill it; these are matters peculiarly for the Company to investigate. Can it for a moment be supposed that even the most susceptible could be induced to sign contracts if they were informed that the Company would give no promise of a sufficient supply, no assurance of any specific quantity, no undertaking that any given amount would be available for the project as a whole, and no guaranteed limit upon the number of acres for which water rights would be sold?

Upon the other hand, as bearing upon the probability or improbability of the willingness of the Company to sell a specific right or a definite quantity, it had full confidence in the adequacy of its supply. In a printed circular setting forth the advantages of the project, we have, among others, these statements:

'Water supply of the best and in abundance. * * * The water supply * * * is obtained from the Salmon river, which has a vast drainage area in the Cassia National Forest Reserve. The water right is perfect, and there is no land susceptible of irrigation above the Salmon tract, and no water rights in contest. It carries water sufficient for the irrigation of more than 150,000 acres in normal years, and as a rule the spring run-off is far greater than the amount of water required for the irrigation of this amount of land for the full season.'

It will thus be seen that no doubt was entertained of an abundance of water, and, if it was confident of a supply sufficient in normal years for 150,000 acres, there is no apparent reason why it should not, for the purpose of selling rights for 80,000 acres, make its contracts attractive by incorporating therein an undertaking to furnish a comparatively small specific amount; with such a margin of safety there could be no substantial risk.

Now as to the contracts themselves: A printed form was prepared by the Company and offered to the public, which is the form held by the plaintiffs and all other settlers. This recites the incorporation of the Company, its execution of the state contract, the commencement of construction work, notice from the State Land Board that it (the Company) might proceed to sell or contract rights to the use of water, and thereupon it is agreed that in consideration of the payment of a certain amount of money, and the covenants on the part of the settler, the settler 'shall become entitled to . . . shares of the stock of the Salmon River Canal Company, Limited, the certificate thereof to be in form as follows':

' . . . Shares. . . . 190 . . .

'This is to certify . . . is the owner of . . . shares of the capital stock of the Salmon River Canal Company, Limited.

'This certificate entitles the owner thereof to receive one-hundredth of a cubic foot of water per acre per second of time for the following described land: . . . in accordance with the terms of the contract between the state of Idaho and the Twin Falls Salmon River Land & Water Company and this certificate also entitles the owner to a proportionate interest in the dam, canal, water rights and all other rights and franchises of the Twin Falls Salmon River Land & Water Company, based upon the number of shares finally sold in accordance with the said contract between the said company and the state of Idaho.

'Salmon River Canal Company, Limited, 'By . . . President

'Attest: . . ., Secretary.' Then follows a clause dedicating the water right to the land described, and to none other. There are numerous other provisions touching the manner and times for paying the purchase price and maintenance charges, the temporary operation of the system, and other subjects not relevant to the present inquiry. The irrigation season is defined to be from April 1st to

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