Enterprise Irr. Dist. v. Enterprise Land & Investment Co.

• Decision Date: 23 June 1931
• Citation: 137 Or. 468,300 P. 507
• Parties: ENTERPRISE IRR. DIST. v. ENTERPRISE LAND & INVESTMENT CO.
• Court: Oregon Supreme Court

300 P. 507

137 Or. 468

ENTERPRISE IRR. DIST. v. ENTERPRISE LAND & INVESTMENT CO.

Supreme Court of Oregon

June 23, 1931

In Banc.

Appeal from Circuit Court, Klamath County; Orlando M. Corkins Judge.

Suit by the Enterprise Irrigation District against the Enterprise Land & Investment Company. From an adverse decree, defendant appeals.

Reversed and remanded.

E. B. Tongue, of Hillsboro (H. C. Merryman, of Klamath Falls, on the brief), for appellant.

J. H Carnahan and C. F. Stone, both of Klamath Falls, for respondent.

RAND J.

This is a suit in equity to foreclose certain delinquent district tax certificates for assessments levied by the plaintiff district upon lands of defendant, upon which all other taxes and assessments have been paid. Plaintiff, Enterprise Irrigation District, a public corporation, was duly organized under the laws of this state for the purpose of procuring and supplying water for the irrigation of irrigable lands within the district in private ownership. It obtains the water for that purpose under a contract with the United States of America from the main canal of the Klamath reclamation project, a government project in Klamath county, Or.

A statute of this state provides that: "* * * The board [of an irrigation district] shall have the power and it shall be their duty to manage and conduct the business and affairs of the district, make and execute all necessary contracts employ and appoint such agents, officers and employees as may be required, and to prescribe their duties; establish equitable bylaws, rules and regulations for the distribution and use of water among the owners of said lands, and generally to perform all such acts as shall be necessary to fully carry out the purposes of this act; provided, that any water, the right to use of which is acquired by the district under any contract with the United States, shall be distributed and apportioned by the district in accordance with the acts of congress, and rules and regulations of the secretary of the interior, and the provisions of said contract in relation thereto. * * *" Section 48-201, Oregon Code, 1930.

The contract under which the plaintiff district procures its water for distribution to the individual users thereof from the main canal of the Klamath reclamation project recites that the contract was made and entered into "this 5th day of October, 1920, in pursuance of the Act of Congress of June 17, 1902 (32 Stat. 388), known as the Reclamation Act, and acts amendatory thereof or supplementary thereto, and in particular Section 2 of the Act of Congress approved February 21, 1911 (36 Stat. 925, 926 [43 USCA § 524]), known as the Warren Act," and it is expressly stipulated in the contract "that water supplied under the terms of this contract shall be used solely for the purpose of distribution by the District to individual water users, and such water shall be supplied only to such areas and used only in the manner prescribed by law for lands in private ownership under the Klamath project. * * *" It also expressly stipulates that "beneficial use shall be the basis and limit of all right acquired by the District hereunder and that the water herein specified to be delivered shall be supplied solely to the District lands within the limits of the District as now organized. * * *" This contract was entered into by John Barton Payne, Secretary of the Interior, on behalf of the United States, and by the president and secretary of the plaintiff district, under authority of its board of directors.

The Act of Congress of June 17, 1902, known as the Reclamation Act and referred to in the contract, provides that "no right to the use of water for land in private ownership shall be sold for a tract exceeding one hundred and sixty acres to any one landowner," (43 USCA § 431) and section 2 of the Warren Act (43 USCA § 524), to which particular reference was made in the contract, contains the following express proviso: "Provided further, That water shall not be furnished from any such reservoir or delivered through any such canal or ditch to any one landowner in excess of an amount sufficient to irrigate one hundred and sixty acres."

The act of August 9, 1912 (37 Stat. 265, 266 [43 USCA § 544]), reads as follows: "* * * Provided, That no person shall at any one time or in any manner, except as hereinafter otherwise provided, acquire, own, or hold irrigable land for which entry or water right application shall have been made under the said reclamation Act of June seventeenth, nineteen hundred and two, and Acts supplementary thereto and amendatory thereof, before final payment in full of all instalments of building and betterment charges shall have been made on account of such land in excess of one farm unit as fixed by the Secretary of the Interior as the limit of area per entry of public land or per single ownership of private land for which a water right may be purchased respectively, nor in any case in excess of one hundred and sixty acres, nor shall water be furnished under said Acts nor a water right sold or recognized for such excess; but any such excess land acquired at any time in good faith by descent, by will, or by foreclosure of any lien may be held for two years and no longer after its acquisition; and every excess holding prohibited as aforesaid shall be forfeited to the United States by proceedings instituted by the Attorney General for that purpose in any court of competent jurisdiction; and this proviso shall be recited in every patent and water-right certificate issued by the United States under the provisions of this Act."

Defendant owns within the plaintiff district approximately 365 acres of land, and outside of the district and under the Klamath project 159.9 acres of land, for the irrigation of which latter tract it has a water right not yet fully paid for. A part of the stipulated payments therefor are not yet due or payable. Of the lands within the district and belonging to the defendant, the district has assessed defendant for the irrigation thereof for not less than 260.41 acres in any one year, and during other years for quantities in excess thereof, for one of which it assessed defendant for 353.52 acres. Said assessments were made for the years commencing with 1920 and ending with the year 1927. None of said assessments have been paid, and this suit was brought to foreclose certificates of delinquency which were issued by the sheriff to plaintiff therefor.

As stated, this is not a statutory proceeding for the foreclosure of these certificates, but is a suit in equity. There were two complaints filed, an original and a supplemental complaint; to the first complaint defendant answered admitting its ownership of the lands assessed by the district and its nonpayment of the assessments levied by the district against the lands, and denying generally all other allegations of the complaint. As an affirmative defense defendant alleged all the foregoing facts and alleged that, by reason thereof, the attempted assessments levied by the district were invalid and void and constituted a cloud upon its title, and prayed to have its title quieted therefrom, and the cloud removed. It also alleged that, by reason of defendant's ownership of the 159.9 acre tract under the Klamath project and of a water right therefor not fully paid for, it was prohibited from using any water which had been obtained under said contract by the district from the United States for the irrigation of its lands within the district, and that the district likewise was prohibited, both by the provisions of the federal statutes and the express provisions of its own contract with the United States, from furnishing water to defendant for the irrigation of lands within the district. This, coupled with the denial by the defendant that the district had ever furnished any water to it for the irrigation of its lands, or that defendant had ever accepted or used any water for said purpose, would, if true, and these facts are admitted to be true by the demurrer, be a complete defense to plaintiff's right to maintain the suit and entitle defendant to equitable relief. Where a tax is not...