Furrer v. Talent Irr. Dist.

• Decision Date: 27 February 1970
• Citation: 466 P.2d 605,90 Or.Adv.Sh. 399,258 Or. 494
• Parties: Ralph FURRER, Respondent, v. TALENT IRRIGATION DISTRICT, a quaslmunicipal corporation of the State of Oregon, Appellant.
• Court: Oregon Supreme Court

Page 605

466 P.2d 605

258 Or. 494

Ralph FURRER, Respondent, v. TALENT IRRIGATION DISTRICT, a quaslmunicipal corporation of the State of Oregon, Appellant.

Supreme Court of Oregon.

Argued and Submitted Sept. 9, 1969.

Decided Feb. 27, 1970.

Thomas C. Howser, Medford, argued the cause for appellant. With him on the briefs were Wm. E. Duhaime, and Brophy, Wilson & Duhaime, and Blackhurst & Hornecker, Medford.

A. Allan Franzke, Portland, argued the cause for respondent. With him on the brief were Mautz, Souther, Spaulding, Kinsey & Williamson and Thomas M. Triplett, Portland, and Frohnmayer, Lowery & Deatherage, Medford.

Before PERRY, C.J., and SLOAN, O'CONNELL, GOODWIN, ^* and HOLMAN, JJ.

O'CONNELL, Justice.

Defendant Talent Irrigation District is a quasi-municipal corporation organized in 1919 for the purposes of delivery of irrigation water in certain portions of the Rogue River Valley. In conjunction with several other districts, it operates canals in Jackson County from Ashland to the vicinity of Medford.

In 1960, as a part of the Talent Project of the Rogue River Basin Development Plan, work was commenced by the Federal Bureau of Reclamation to reconstruct, enlarge and extend certain canals operated by the district. Included in this work was the enlargement of the Talent middle canal and the construction of the west canal extension which lay along the west slope of the Rogue River Valley south of Bear Creek. The district contracted to pay for this construction out of operating revenue, and as part of the repayment agreement transferred title to these canals to the Federal government. Aside from some minor lining work done by district crews under contract with the bureau, the district did not take part in the construction of the canals.

In 1961 the district began operating the rebuilt middle canal and in 1963 it opened the new west canal. The district remained the sole commercial operator of the canals since their opening. The Federal government has had nothing to do with the operation of the canals except for minor inspection and repair shutdowns in 1961 and 1962. The government has retained the right to take over operation of the canals should the district's repayment ability become jeopardized.

Plaintiff Furrer is the owner of a 30-acre pear orchard located north and below the Talent canal and the west canal which run parallel, separated by a distance of about 300 feet in the area. Substantially all the property surrounding plaintiff's tract drains onto portions of his land except for the property lying to the northeast. Most of the property in the area is used for the growing of fruit trees, almost entirely pears. Generally, the soil is a heavy clay.

Although there is some evidence that plaintiff's orchard had experienced water problems in the past, it appears that generally the orchard was healthy and of reasonable commercial quality prior to 1961.

After the 1961 irrigation season commenced, plaintiff noticed evidence of a high water table in several areas of his orchard. A high water table will, over time, 'drown' the feeder roots of a pear tree and permanently injure it. Plaintiff informed the defendant that he suspected water was seeping from the new Talent canal. No particular injury to the trees had been noted by the end of 1961.

Each year the district ran water through its canals from the middle of April until the middle of September. In 1963 the west canal also went into operation. The added size of both canals resulted in increased water usage on the properties surrounding the Furrer orchard. There is evidence that Furrer, too, increased his irrigation despite the continuing indications of a high water table on his property.

After 1961 succeeding irrigation seasons produced essentially the same conditions in plaintiff's orchard. Each year additional lining was done until by 1964 substantially all of both canals were lined. From 1962 on plaintiff's pear trees began dying in the areas where the water table was highest. By 1966, when plaintiff brought this action against Talent, approximately 165 of plaintiff's trees were dead and more were dying.

Plaintiff's suit charged that the district had been negligent in running water through its canals when it knew or should have known that water would seep through the canal walls and surrounding soil to plaintiff's injury, in failing to properly line the canals or otherwise prevent seepage, and in failing to construct a run-off ditch or otherwise prevent the seepage from injuring plaintiff.

At the trial both sides introduced voluminous evidence as to the existence and size of leaks in the canal walls, as to the amount and type of irrigation used on neighboring lands and by plaintiff, as to the relationship of the local irrigation and the plaintiff's water problem, as to the necessity of continuing to irrigate a pear orchard when a high water table exists, and as to the facts of damage and the possible ways in which plaintiff might have prevented it.

The jury brought back a verdict for plaintiff in the amount of $20,000.

Defendant interposed a plea in abatement on the ground that the Talent Irrigation District was an 'agency' of the United States and therefore under 28 U.S.C.A. §§ 1345(b) and 2679(a) plaintiff was required to proceed against the United States. ¹

The trial court held that defendant was not an agency of the United States and denied the plea in abatement.

In support of its contention defendant introduced in evidence the contract entered into between defendant and the United States, acting through the Bureau of Reclamation, providing for the construction and enlargement of the Talent project by the United States. Under this contract a considerable amount of control was vested in the United States. Thus it was provided that the title to all project works was to be vested in the United States; the United States would plan and supervise the construction and repair of the canals; upon completion of the project the United States would retain the right of inspection to determine whether the works were operated in accordance with the terms of the contract; no substantial change in defendant's facilities could be made without the consent of the United States; the United States would have the right to determine the amount of assessments and toll charges under certain circumstances and to turn off water when operation and maintenance payments to the United States were in arrears. There were other provisions reserving to the United States control over the project.

On the other hand, the actual operation of the canal as a commercial enterprise for the delivery and sale of irrigation water was carried on by defendant. Thus the contract provided that subject to the government's right to take possession for purposes of construction and for other purposes specified in the contract, defendant was 'to continue to care for and operate and maintain' the works used in the distribution of irrigation water.

The trial judge concluded that the provisions of the contract reserving to the United States control over the construction and operation of the project were simply designed to protect the government's investment in the construction and repair of the irrigation system and were not intended to reserve to the United States the control over the business of distributing water to the various customers in the irrigation district. We agree with this interpretation of the contract.

An agency of the United States within the meaning of the Federal Tort Claims Act is defined in 28 U.S.C.A. § 2671, as follows:

'As used in this chapter (Chapter 171) and sections 1346(b) and 2401(b) of this title, the term--

"Federal agency' includes the executive departments and independent establishment of the United States, and corporations primarily acting as, instrumentalities or agencies of the United States but does not include any contractor with the United States.'

Under this definition the Talent Irrigation District is not a federal agency unless it is regarded as primarily acting as an instrumentality or agency of the United States.

There is no doubt that the United States had an interest in providing adequate facilities for the distribution of irrigation water in the Talent Irrigation District. That interest, however, represented the broad concern for the reclamation and permanent preservation of lands for agricultural purposes throughout the various states. The United States did not, through its participation in financing and supervising the construction of the Talent project, purport to go into the business of supplying water to farmers in the area. It seems clear that its contractual reservation of control was intended solely to secure the repayment of its investment in the project. In all other respects the Talent Irrigation District carried out the usual functions which characterize the operation of irrigation districts generally in Oregon.

Talent was created before it entered into the contract with the United States and it came into existence as an irrigation district not to carry out any of the policies of the United States but to serve the interests of the farmers in the area. Its character and function was no different than the other irrigation districts in Oregon similarly created, including those having no contract with the United States for the construction of irrigation projects. It was primarily a local organization working in furtherance of local interests. We hold that defendant was not a federal agency within the meaning of the Federal Tort Claims Act. ²

Defendant further contends that even if the district is not an agency of the United States, nevertheless the action should be abated because by the terms of the contract the United States obligated itself to pay damage claims under certain circumstances including the circumstances in the present case and therefore plaintiff's claim was directly against the United States. We do not...