North Side Canal Co. v. State Board of Equalization

• Decision Date: 20 December 1926
• Docket Number: No. 7350-7357.,7350-7357.
• Citation: 17 F.2d 55
• Parties: NORTH SIDE CANAL CO., Limited, v. STATE BOARD OF EQUALIZATION OF WYOMING et al. and seven other appeals.
• Court: U.S. Court of Appeals — Eighth Circuit

17 F.2d 55 (1926)

NORTH SIDE CANAL CO., Limited, v. STATE BOARD OF EQUALIZATION OF WYOMING et al. and seven other appeals.

Nos. 7350-7357.

Circuit Court of Appeals, Eighth Circuit.

December 20, 1926.

James R. Bothwell, of Twin Falls, Idaho, and C. R. Ellery, of Cheyenne, Wyo. (W. Orr Chapman, of Twin Falls, Idaho, and Kinkead, Ellery & Henderson, of Cheyenne, Wyo., on the brief), for appellant canal companies.

Ethelbert Ward, Sp. Asst. Atty. Gen. (Albert D. Walton, U. S. Atty., and Clyde M. Watts, Asst. U. S. Atty., both of Cheyenne, Wyo., and B. E. Stoutemyer, Dist. Counsel, U. S. Reclamation Service, of Boise, Idaho, on the brief), for the United States.

W. C. Mentzer, of Cheyenne, Wyo. (J. A. Christmas, of Kemmerer, Wyo., and W. W. Neilson, of Jackson, Wyo., on the brief), for appellee counties.

Ray E. Lee, of Cheyenne, Wyo. (David J. Howell, Atty. Gen., of Wyoming, on the brief), for appellee State Board of Equalization.

Before LEWIS, Circuit Judge, and MUNGER and FARIS, District Judges.

LEWIS, Circuit Judge.

These are appeals in four suits, all dismissed on final hearing, wherein the legality of certain tax levies and threatened future levies were assailed. Two of the suits were instituted by North Side Canal Company, an Idaho corporation, one being against Lincoln County, Wyoming, its tax officials and the members of the State Board of Equalization of that State; and the other against Teton County, Wyoming, its tax officials and the members of the State Board. The other two suits were instituted by Twin Falls Canal Company, an Idaho corporation, against the same parties.

The United States intervened in each of the suits, on the claim that the levies were an interference with its functions in the reclamation of its arid lands, and on dismissal of its petitions after final hearing, it has brought separate appeals.

A statement of the principal facts developed at the hearing and a summary of the pleadings will present the situation and the issues involved.

Two Carey Act projects (Act August 18, 1894, 28 Stat. 422, § 4 Comp. St. § 4685), both in Idaho, one on the north side of the Snake River and one on the south side, have been carried through. Wiel on Water Rights in the Western States (3d Ed.) c. 59, shows in general the legislative provisions made in Idaho and Wyoming, accepting the terms of the Federal statute and providing methods for initiating a complete reclamation of public lands under the Carey Act. The statutes of the two States are alike. The lands in the project on the south side of the river were segregated under the Act in 1902, and those on the north side in 1906. In the latter about 185,000 acres have been brought under cultivation by the application of water, and in the former about 205,000 acres. The State of Idaho entered into a contract with a corporation for the construction of the irrigation system for each project, as its statute accepting the terms of the Carey Act provides. These corporations, called construction companies, were required by the contract to sell to persons filing upon the segregated lands susceptible of irrigation a water right or share in the irrigation system for each acre filed upon. Each share represented a carrying capacity in the canal system for delivery of water at the rate of one-eightieth of one cubic foot per second per acre. These contracts also provided for the organization of corporations to take over and manage the systems after they had been constructed. The two managing companies, later organized, are known as operating companies. Their capital stock was on the basis of one share for each acre irrigated. They are holding and operating companies of the irrigation systems for the lands reclaimed under the two projects. They brought these suits.

While reclamation was being carried on under these two Carey Act projects a reclamation project under the Act of June 17, 1902 (32 Stat. 388 Comp. St. §§ 4700-4708), was being developed in the same vicinity in Idaho, and to obtain water therefor the United States made application to the State of Wyoming for a permit (which was granted pursuant to the statutes of that State) to construct a dam in the south fork of Snake River in Wyoming for the purpose of impounding the waters of the stream in order to hold them for the irrigation season, then to release them into the river's channel and carry them down to the lands to be irrigated in Idaho. The dam was constructed by the United States. The waters so held were entirely for the reclamation project under the Act of June 17, 1902. In connection therewith and for the purpose of diverting the impounded waters as needed onto the lands to be reclaimed, a dam was constructed in Snake River near Minidoka, Idaho, some 300 miles, as the river flows, below the Wyoming dam. The lands thus to be reclaimed were called the Minidoka project. As reclamation of the lands in the two Carey Act projects proceeded it was discovered that the water supply theretofore obtained for them was not sufficient in amount; so on February 25, 1913, the Kuhn Irrigation & Canal Company, representing and acting in behalf of the Carey Act construction companies, entered into a contract with the United States whereby it was agreed that the latter would, at the cost and expense of the Kuhn Company, raise the height of the dam in Wyoming 17 feet, thus increasing its impounding capacity 400,000 acre feet. As originally constructed the dam was capable of storing water up to the elevation of 6752, U. S. Reclamation Service Survey and U. S. Geological Survey datum. This contract referred to the dam and the stored water as the Jackson Lake Dam and the Jackson Lake Reservoir. The Kuhn Company was to be entitled to all storage water above elevation 6752, and it was agreed that the water should be turned out as required during the low water period of the irrigation season and delivered and measured to and for the company at the outlet of the reservoir. The United States retained title to the reservoir and works, and its management and control, as provided in section 6 of the Act of June 17, 1902 (Comp. St. § 4705), and section 2 of the Act of February 21, 1911 (36 Stat. 925 Comp. St. § 4739), known as the Warren Act. Water, however, was not to be turned out and delivered until the Kuhn Company had paid its proportionate share of each year's cost of maintenance and management of the reservoir, to be ascertained in a specified way, for the preceding year, and the company notified. It was further agreed that the United States would secure the protection of the water so turned out, between the reservoir and the points of intended use, and prevent its diversion by parties not entitled thereto. These services were to be included in the total annual maintenance cost, which it was agreed should be borne proportionately by the United States and the Kuhn Company. It was further agreed that the United States might deliver to the company in place of water to which it was entitled above elevation 6752, water which the United States impounded at Minidoka, to the extent of the capacity of the reservoir there, to wit, about 60,000 acre feet, and in that event one acre foot of water at the Minidoka dam should be accepted for the Carey Act projects as the equivalent of 1½ acre feet delivered at the dam in Wyoming. In addition to the storage capacity above elevation 6752, the United States agreed to allow the Kuhn Company 10,000 acre feet storage capacity in Jackson Lake Reservoir below that elevation. This concession is said in the contract to be in consideration or settlement of a suit brought by one of the Carey Act construction companies. The contract with the Kuhn Company shows that it was made in the interest of the two Carey Act projects, that the project on the south side of the Snake River should be entitled to 19/80 of the rights and benefits that might accrue under the contract, and that on the north side to 61/80. That is, the project on the south side of the river would be entitled to 95,000 acre feet of the increased storage capacity in Jackson Lake Reservoir and that on the north side of the river to the remainder thereof, to-wit, 305,000 acre feet, and also to the 10,000 acre feet below elevation 6752. The United States raised the dam at Jackson Lake Reservoir 17 feet, as agreed in the contract. The cost of its construction was something more than $800,000, which was paid by the two Carey Act construction companies. By assignments from the Kuhn Company all of the rights and benefits which it was to receive under the contract with the United States passed to the construction companies, and ultimately these rights and the two irrigation systems passed to the two operating companies which respectively manage and control the systems, for the sole use and benefit of water users whose interests are represented by the shares which they had purchased from the construction companies. The only stockholders in the two operating companies, plaintiffs-appellants, are the landowners, their shares being represented by certificates for their respective water rights in the irrigation systems, and they maintain the companies for their mutual and proportionate benefits.

The dam at Jackson Lake Reservoir was originally constructed under permit from the State of Wyoming, as heretofore said, pursuant to the laws of that State. It was raised 17 feet in height pursuant to a like permit. The application for permit to raise the dam disclosed that the additional water to be impounded was to be used on the Carey Act projects in Idaho. In 1922, and prior thereto, Jackson Lake Reservoir was in Lincoln County, Wyoming, and it assessed and levied taxes for that year against each of the operating companies, North Side Canal Company and Twin Falls Canal Company. The Legislature of Wyoming created Teton County out of a part of the territory of Lincoln County, and after 1922 Jackson Lake Reservoir has been in Teton County. That...