Commonwealth Trust Company of Pittsburg v. Smith
| Decision Date | 17 November 1924 |
| Docket Number | No. 7,7 |
| Citation | 266 U.S. 152,45 S.Ct. 26,69 L.Ed. 219 |
| Parties | COMMONWEALTH TRUST COMPANY OF PITTSBURG v. SMITH et al |
| Court | U.S. Supreme Court |
[Syllabus from pages 152-154 intentionally omitted] Messrs. Oliver O. Haga and James H. Richards, both of Boise, Idaho, for appellant.
Mr. Turner K. Hackman, of Twin Falls, Idaho, for appellees.
This suit is an incident of the partial failure of an irrigation project in the state of Idaho, called the Salmon River project, which was undertaken in accordance with the Carey Act, c. 301, § 4, 28 Stat. 422 (Comp. St. § 4685), chapter 420, 29 Stat. 434, and chapter 853, § 3, 31 Stat. 1188 (Comp. St. § 4687), and the legislation of the state accepting the conditions of that act and providing for their performance (section 2996 et seq., Comp. Stat. Idaho 1919). A statement of the situation leading to the suit will be helpful in understanding its nature and purpose.
The project comprehended (a) the donation by the United States to the state of 127,000 acres of arid public lands; (b) the reclamation of the lands through an agency of the state by means of extensive irrigation works drawing a supply of water from the Salmon river, and the disposal of the lands, with suitable water rights, to settlers in tracts of not more than 160 acres to any one person. Other lands, lying among the 127,000 acres, were included in the project, making a total of 150,000 acres.
In 1907 George F. Sprague and others, who had devised the project, submitted to the state land board a proposal to construct the necessary irrigation works and to provide the requisite supply of water. In the proposal they represented that, if it was accepted, they would organize a corporation with capital sufficient to complete the works and to put the same in operation, so as to reach and reclaim all of the 150,000 acres, that the water supply intended to be utilized was ample for the purpose, and that water rights would be sold to settlers at $40 per acre. The representation respecting the water supply was set forth with much detail in an accompanying statement by their consulting engineer.
The board, after referring the proposal to the state engineer and receiving from him a favorable report, provisionally accepted the proposal and forwarded it to the Secretary of the Interior with a request that the 127,000 acres of public lands be segregated from other public lands and that a contract be made between the United States and the state binding the United States to donate, grant, and patent the lands to the state, if and when the latter caused them to be reclaimed.
The segregation was made, and on April 10, 1908, the United States and the state entered into such a contract. It provided, among other things, that the United States should patent to the state, or to its assigns, any particular tract or tracts whenever an ample supply of water to reclaim the same was actually furnished in a substantial ditch or canal; that all persons acquiring rights to such lands from the state prior to the issue of patent by the United States should take and hold the same subject to the requirements of the Carey Act and the terms of the contract; that full compliance therewith should be a condition to obtaining a right to a patent from the United States; and that the work of reclamation should be completed within 10 years.
The state and the Twin Falls Salmon River Land & Water Company, to which Sprague and his associates had transferred their interests in the project, then entered into a contract by which that company bound itself to construct and complete the irrigation works within five years, to provide the requisite supply of water, and to sell to each settler a perpetual water right of one-hundredth of a cubic foot of water per second of time for each acre in his tract—the price of the water right to be not more than $40 an acre, and the water right to include a proportionate interest in the irrigation works and in the water appropriation and franchises pertaining to them. Other provisions in the contract were to the effect that no water rights should be sold in excess of the capacity of the works or of the available water supply; that the company should have a lien on each water right to secure payment of the purchase price; and that there should be no preference or priority among the holders of water rights, but all should be on the same plane, regardless of the order in which the rights were purchased. In still other provisions the state agreed to dispose of the lands to settlers at 50 cents an acre, and not to recognize any right in a settler unless and until he contracted with the company for a water right sufficient for the irrigation of the tract he was seeking. After completing the works and putting them in operation the company was to transfer their ownership and control to a corporate agency of the settlers, who were to hold its shares in the same proportion that they held the water rights. The moneys accruing from the sale of water rights were to belong to the construction company, and it was not to be otherwise compensated for its outlay and efforts. The contracts by which the water rights were sold to settlers were all of the same tenor. Besides declaring that they were made in virtue of the contract between the state and the company and that the rights of the parties were to be governed thereby, these contracts showed that the settler was to have a right to receive during each irrigation season one-hundredth of a cubic foot of water per second of time for each acre in the tract which he was seeking to acquire from the state, and also a proportionate interest in the irrigation works, etc.—such interest to conform to the proportional relation between the number of acres covered by his water right and the total acreage covered by all water rights sold 'in accordance with' the contract between the company and the state. The price to the settler was a definite sum calculated at the rate of $40 per acre and payable in stated installments spread over a period of 11 years. To secure payment the company was to have a lien on the water right and the land, and, if it so requested, was to be given a mortgage on the land when the settler received the legal title....
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