Magruder v. Belle Fourche Val. Water Users' Ass'n.

• Decision Date: 08 December 1914
• Docket Number: 4150.
• Citation: 219 F. 72
• Parties: MAGRUDER et al. v. BELLE FOURCHE VALLEY WATER USERS' ASS'N.
• Court: U.S. Court of Appeals — Eighth Circuit

219 F. 72

MAGRUDER et al. v. BELLE FOURCHE VALLEY WATER USERS' ASS'N.

No. 4150.

United States Court of Appeals, Eighth Circuit.

December 8, 1914

Syllabus by the Court.

A corporation with which, as the representative of its shareholders, who are parties accepted by the United States as holders of water rights in a project under Reclamation Act June 17, 1902, c. 1093, 32 Stat. 388 (Comp. St. 1913, Secs 4700-4708), the United States makes a contract for the benefit of such shareholders relative to the supply of water to and the dues to be paid by the shareholders, and which covenants in the contract to collect dues for the United States and guarantees the payment thereof, is a proper party plaintiff in a suit to enjoin officers of the United States from collecting unlawful charges from the shareholders turning the water from their lands, and canceling their water rights and homestead rights because they fail to pay such charges.

The decisions of officers of an executive department of the United States of questions of law are not conclusive upon the courts. It is the function and duty of the officers of the judicial department to exercise their own judgments in the determination of questions whether or not acts of executive officers are authorized by law, even though such officers have already decided them. The questions whether or not the charges alleged to be illegal and the acts and threatened acts of executive officers depriving the shareholders of a water users' association of water and canceling their water rights and homestead rights for failure to pay such charges, are justified by law, are questions of law which a court of equity is empowered to determine in a suit of such an association against such executive officers, although the Secretary of the Interior or other executive officers have already decided them.

A suit against executive officers of the United States to enjoin them from committing acts unauthorized by or in violation of law, to the irreparable injury of the property rights of the plaintiff, is not a 'suit against the United States,' nor is it or the injunction sought objectionable, either on the ground that they interfere with the property or the possession of the property of the United States, or on the ground that they compel specific performance of its contracts.

The remedy at law which will preclude a suit in equity must be as prompt, efficient, and adequate as the remedy in equity.

The granting or dissolution of an interlocutory injunction is intrusted to the discretion of the court of original jurisdiction, not to the discretion of the appellate court.

An interlocutory injunction to maintain the existing situation may properly issue, whenever the questions of law or fact to be ultimately determined in the suit are grave and difficult and injury to the moving party will be immediate, certain, and great if it is denied, while the loss or inconvenience to the opposing party will be comparatively small if it is granted, and may be indemnified by a proper bond.

Ethelbert Ward, of Denver, Colo. (Robert P. Stewart, U.S. Atty., of Deadwood, S.D., and A. R. Honnold, of Denver, Colo., on the brief), for appellants.

Chambers Kellar, of Lead, S.D. (O. E. Farnham, of Newell, S.D., and James G. Stanley, of Lead, S.D., on the brief), for appellee.

Before SANBORN and SMITH, Circuit Judges, and TRIEBER, District Judge.

SANBORN Circuit Judge.

The appellant Frank C. Magruder is the manager of the Belle Fourche project and the appellant R. F. Walter was the project engineer and is the supervising engineer. They were defendants below, and the plaintiff was the Belle Fourche Valley Water Users' Association, a corporation organized under the laws of South Dakota to represent and act for the holders of water rights in the project, to collect the lawful dues from them, and to guarantee the payment of these dues. The Belle Fourche project is a project for the storage of water and the irrigation of land under the Reclamation Act of June 17, 1902, and the acts amendatory thereof. 32 Stat.p. 388, c. 1093. This is an appeal from an order refusing to set aside a restraining order and granting an interlocutory injunction against the defendants, forbidding them to exact from holders of water rights in the project charges alleged to be illegal, and from depriving them of the use of the water, of their rights to the water, and of their rights to their land because they failed to pay such charges.

The appellants assail the order on three grounds-- that the association is not a proper party plaintiff, that the court below had no power to grant any relief upon the facts stated in the complaint, and that on the evidence the order was erroneous. Counsel for the appellants argue that the association was not a proper party plaintiff, because it had no interest in the suit, and was not one of a numerous class having a common interest in the subject of the suit, within the meaning of rule 38 in equity (198 F. xxix, 115 C.C.A. xxix). But rule 37 in equity (198 F. xxviii, 115 C.C.A. xxviii) provides that a party with whom and in whose name a contract has been made for the benefit of another may sue in his own name without joining that other. On October 25, 1905, the United States made a contract with this association, for the benefit of those who held or should thereafter hold water rights under the Belle Fourche project, to the effect, among other things, that only those who were or should become shareholders of the association should be accepted as entrymen of homesteads on the public domain included within the project, or as applicants for rights to the use of water provided for irrigation thereunder, that the payment for water rights to be issued to the shareholders of the association should be divided into not less than 10 equal payments, the first whereof should be payable at the time of the completion of the proposed works, or within a reasonable time thereafter, that the cost thereof should be apportioned equally per acre among those acquiring such rights, that the association would collect and pay to the United States, and did guarantee the payment, of that part of the costs of the works that should be apportioned to each of its shareholders and that parties otherwise eligible might, on the designation of the Secretary of the Interior, become members of the association. In the rules and regulations promulgated by the Secretary through the Director of the United States Reclamation Service we read:

'The execution of the contract between the water users' association and the Secretary of the Interior may be regarded as the completion of the organization of the water users' association. * * * The execution of this contract formally fixes the relation of the association to the government as the representative of the water users and as a medium of communication between the water users and the government.'

It is to prevent the violation of the law applicable to the construction and execution of the foregoing contract, and the alleged irreparable injury to the shareholders of the plaintiff and to the plaintiff that may result from such violation, that this suit was instituted. The contract was made in the name of the corporation for the benefit of its shareholders, who number about 600, and the association was clearly the proper party plaintiff under rule 37 in equity, and also because, as contractor to collect and as guarantor of the payment of the lawful charges against its shareholders for the cost of the works and the use of the water, and as the holder of the first lien upon the property of these shareholders under Laws S.D. 1909, p. 155, upon their water rights respectively for the repayment of their deferred payments which it should pay, it had a vital interest in preventing the levy or collection of unlawful charges against them, or their deprivation of their water rights or their property because they failed to pay such charges.

Did the amended complaint state facts sufficient to invoke the jurisdiction and power of a court of equity to grant relief? In the discussion of this question the allegations of the complaint must be taken to be true. Material averments of the complaint were that these were the facts:

The shareholders of the plaintiff had applied for water and had been accepted as water users under the Reclamation Act, the contract of October 25, 1905, and written applications in accordance with its terms. They were either the owners of lands whose title had been vested in them, or homesteaders upon public lands irrigable under the project, and the owners of water rights for use upon such lands.

The project was conceived prior to 1905, and since that time the government has been constructing, but has never completed the works. The contract of 1905 provided that the payments for the water rights to be issued to the shareholders should be divided into not less than 10 equal payments, the first of which should be payable at the time of the completion of the works or within a reasonable time thereafter. Before these works were completed, and for each of the years 1908, 1909, and 1910, the defendants demanded of the shareholders the payment of an installment of $3 per acre of their alleged irrigable land on account of the construction of the works, and the payment of 40 cents per acre of such land on account of the operation and maintenance of the works, and before the works were completed, for each of the years 1910 and 1911, they demanded the payment of $3 per acre of their irrigable land for construction, and 60 cents per acre of such land for operation and maintenance. The lands of the shareholders on account of which these payments were demanded amounted to about 12,000 acres for the year 1908,...