Emmett Irr. Dist. v. Thompson

• Decision Date: 07 October 1918
• Docket Number: 3062.
• Citation: 253 F. 316
• Parties: EMMETT IRR. DIST. et al. v. THOMPSON et al. [1]
• Court: U.S. Court of Appeals — Ninth Circuit

253 F. 316

EMMETT IRR. DIST. et al. v. THOMPSON et al. ^[1]

No. 3062.

United States Court of Appeals, Ninth Circuit.

October 7, 1918

J. M Thompson, of Caldwell, Idaho, and Fremont Wood and Dean Driscoll, both of Boise, Idaho, for appellants.

Richards & Haga and McKeen F. Morrow, all of Boise, Idaho, for appellees.

Before GILBERT, ROSS, and HUNT, Circuit Judges.

ROSS Circuit Judge.

The bonds here in suit are a part of an authorized issue of $1,100,000, par value, made by the appellant irrigation district, and, except as to numbers, amounts, and dates of maturity, are identical. Each is a coupon bond, negotiable in form, and made payable to bearer, and recites upon its face among other things, that it is one of a series of bonds aggregating $1,100,000 in amount and issued by the district by authority of an act of the Legislature of the state of Idaho entitled 'An act relating to irrigation districts to provide for the organization thereof, and to provide for the acquisition of water and other property and for the distribution of water thereby for irrigation purposes, and for other and similar purposes,' approved March 9, 1903 (Laws 1903, p. 150), together with acts amendatory thereof and supplemental thereto, and further recites as follows:

'And it is hereby certified that all things required by law to be done in and about the organization of said district and the issuance of the said bonds have been done, have happened, and have been performed, and that the issuance of this bond is duly and legally authorized by vote of the electors of said district at a special election duly called and held in accordance with the provisions of the said act and by resolution of its board of directors, and that all other acts, conditions, and things required by the laws and Constitution of the state of Idaho precedent to and in the issue and delivery of this bond have been done, have happened, and have been performed, and that said bonds are the valid, binding, and legal obligation of the said district; that all the real property included within said district is subject to the levy of an annual tax for the payment thereof.'

The record shows that the irrigation works were constructed by a company styled Canyon Canal Company, Limited, under contract with the state of Idaho, pursuant to certain provisions of the statutes of state and under the provisions of an act of Congress approved August 18, 1894 (28 Stats.Lg. 372, c. 301), and amendments thereto, known as the Carey Act (Comp. St. 1916, Sec. 4685). Those statutory provisions are specifically referred to in the opinions of this court on the former appeal of the present case (227 F. 569, 142 C.C.A. 192), and in the recent case of Twin Falls Salmon River Land & W. Co. v. Caldwell, 242 F. 177, 155 C.C.A. 17, and need not, therefore, be again set out. The canal company sold to various settlers and prospective settlers rights to water under the system for the irrigation of their respective tracts of land, liens for the purchase price of which were given both by the act of Congress and the statute of Idaho.

For the purpose of acquiring the irrigation works and water rights of the canal company, and of extending and improving the same, the appellant irrigation district, shortly after its organization, authorized the issue of bonds in the amount of $1,100,000, par value, and under and by virtue of the statutes of Idaho (Revised Codes of Idaho, Secs. 2401, 2403) instituted in the proper court of the state proceedings to have it judicially determined that the district had been legally organized, that the bonds had been properly authorized, and would be in the hands of purchasers legal and valid obligations of the district, the obvious purpose of which proceedings was to further the sale of the bonds by giving such legislative and judicial security to their purchasers. The confirmation proceedings resulted in a decree of the trial court adjudging the organization of the district and the issuance of the bonds to be regular and valid-- the decree setting out, according to the express declaration of the Supreme Court affirming it, the 'various steps taken for the organization of the district and of the issuance of said bonds. ' Emmett Irr. Dist. v. Shane, 19 Idaho, 332, 335, 336, 113 P. 444, 445.

The record shows that thereafter the district, through its board of directors, offered the whole amount of the bonds for sale, and that in response to due notice there was no bid. The canal company had sold water rights in the system to various settlers upon the lands under contracts on which there was payable to the company more than $600,000 in deferred payments, which contracts were liens both upon the lands of the settlers and their interests in the irrigation system. The canal company, in the course of building up the system, had issued bonds, notes, and other obligations, and given as security therefor a mortgage or trust deed to the American Trust & Savings Bank of Chicago on the irrigation system, including its water rights, and, as additional security, had deposited with the trustee the various water contracts it had entered into with the settlers. Some of the obligations of the canal company were due, and on others there was default in the payment of interest. There were also various existing liens upon the property for work and labor performed for, and materials furnished to, the canal company, and there was also some claim by a company called Trowbridge & Niver Company. Litigation and expense, therefore, confronted both the canal company and the district. In that condition of affairs the latter, on the 12th of September, 1911, entered into a contract with J. J. Corkill & Co., of Chicago, next referred to, prior to which, however, the district had acquired (through a holding company to which the canal company had conveyed it) the entire irrigation system.

The contract between the district and Corkill & Co., and a supplemental one between the same parties, as well as the facts in connection therewith, are, we think, after a careful examination of the record, learned...