Okaw Drainage Dist. of Champaign and Douglas County, Ill. v. National Distillers and Chemical Corp.

• Decision Date: 20 September 1989
• Docket Number: No. 88-3174,88-3174
• Citation: 882 F.2d 1241
• Parties: OKAW DRAINAGE DISTRICT OF CHAMPAIGN AND DOUGLAS COUNTY, ILLINOIS, Plaintiff-Appellant, v. NATIONAL DISTILLERS AND CHEMICAL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1241

882 F.2d 1241

OKAW DRAINAGE DISTRICT OF CHAMPAIGN AND DOUGLAS COUNTY ILLINOIS, Plaintiff-Appellant, v. NATIONAL DISTILLERS AND CHEMICAL CORPORATION, Defendant-Appellee.

No. 88-3174.

United States Court of Appeals Seventh Circuit.

Argued May 17, 1989.

Decided Aug. 17, 1989.

Rehearing Denied Sept. 20, 1989.

Brian L. McPheters and Arnold Blockman, Hatch, Blockman, McPheters, Fehrenbacher & Lyke, Champaign, Ill., for Okaw Drainage Dist. of Champaign and Douglas County, Ill., a Mun. Corp., plaintiff-appellant.

Harlan Heller, Mattoon, Ill. and James F. Lemna, Camargo, Ill., for Nat. Distillers and Chemical Corp., a Foreign Corp., defendant-appellee.

Before WOOD, Jr. and POSNER, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

POSNER, Circuit Judge.

The Okaw Drainage District, a municipal corporation organized under the Illinois Drainage Code, Ill.Rev.Stat. ch. 42, p 1-1 et seq., brought suit against National Distillers and Chemical Corporation in an Illinois state court in 1984, seeking damages of $2 million for breach of contract and an injunction against a trespass or nuisance. National Distillers, which is not a citizen of Illinois, removed the case to federal district court. A three-day bench trial culminated in an oral decision for National Distillers. The drainage district's appeal brings before us something not often encountered by a federal appellate court in Illinois--a dispute over water rights.

The drainage district is responsible for maintaining a 14-mile stretch of the Kaskaskia River in the agricultural region of central Illinois. The region is flat, and the farmers depend on the river for drainage of their land--the drainage district's mission being, as the name implies, to maintain its stretch of the river in a condition that enables effective drainage into it. The U.S. Industrial Chemical Company (U.S.I.), a division of National Distillers, owns land along the river north of the district and has for many years been pumping millions of gallons of water per day (on average) from wells on that land into the Kaskaskia River via a channel it owns. Below the drainage district's southern boundary, where U.S.I. owns a plant for manufacturing alcohol, the company draws from the river an amount of water approximately equal to the amount it pumps in upstream, uses some of the water in the plant, and sells the rest as drinking water to nearby towns.

Of course, en route to the alcohol plant, the water pumped into the river from U.S.I.'s wells flows through the segment of the river maintained by the Okaw Drainage District. The district claims that the added flow complicates the job of maintaining the ditch (that is, the segment of the river within the drainage district), because it erodes the riverbanks, damages the drainage ditches that feed into the river from the adjacent farmland, and, by raising the level of the river, impedes drainage, the surrounding land being only slightly elevated above the river.

Many years ago, in 1951, the drainage district had made a contract with U.S.I. (actually a predecessor of U.S.I., a fact we shall suppress to simplify the opinion) which entitled U.S.I. to use the district's ditch and in exchange obligated the company both to maintain the ditch and to pay an annual fee for its use. The contract was approved by the Illinois state court in which the plaintiff filed this lawsuit, but the parties have not explored the possible bearing of this fact on the suit.

Both as originally drafted and as amended in 1965, the contract set forth U.S.I.'s maintenance obligation in great detail. Among other things, U.S.I. was to keep the bottom of the ditch clear of sandbars and undergrowth and was to eliminate, either by spraying or by clearing, all undergrowth for 15 feet on either side of the ditch. The company carried out the second obligation by spraying until the late 1970s, when restrictions imposed by the Environmental Protection Agency on the use of herbicides forced a switch to clearing. The suit alleges, and photographic evidence introduced by the drainage district appears to confirm, that U.S.I.'s dredging efforts failed to keep the ditch free from sandbars and undergrowth and that its efforts at clearing undergrowth from the banks--efforts admittedly sporadic--were to a significant extent ineffectual. In requiring U.S.I. to keep the 15-foot zone free of undergrowth, the contract had made no exception for roots and saplings of small diameter. Yet once U.S.I. switched from spraying to clearing, it often failed to clear roots and saplings smaller than three inches in diameter; and in places it allowed thick underbrush to grow right up to the water's edge.

U.S.I. in its turn presented evidence that its efforts at dredging and clearing had been adequate, and any breaches of the contract trifling. It pointed out that some of the farmers who owned the land along the river had forbidden it access to clear undergrowth. Basically it argued that it had acted reasonably in the circumstances, which had changed over the 36 years during which the contract had been in effect.

Shortly after filing this lawsuit the drainage district exercised its contractual right to terminate the contract. Upon termination (effective in 1987), U.S.I. stopped maintaining the ditch and the district took over responsibility for maintenance. U.S.I. has, however, continued to pump water into the ditch from its wells; and it is this continued use that the district sought to enjoin, contending that it is either a trespass or a nuisance, and presenting evidence that the added flow resulting from U.S.I.'s pumping water into the ditch had indeed increased the cost of maintenance. U.S.I. expresses its willingness to reimburse the district for any such increment in cost, but denies that there has as yet been any.

We must consider two separate issues: whether U.S.I. violated the contract before its termination in 1987; and whether the company's continued use of the ditch since then is in violation of the drainage district's rights under property or tort law.

Although this was a complex case, the district judge did not prepare a written opinion. Rule 52(a) of the Federal Rules of Civil Procedure, in requiring the district judge to prepare findings of fact and conclusions of law in a civil bench trial, does not prescribe any format for them and certainly does not forbid oral opinions, which frequently are the most efficient and economical method of complying with the rule. But the goals of the rule cannot be attained unless the judge's opinion, whether oral or written, indicates his resolution of conflicts in the evidence with clarity and specificity sufficient to enable the appellate judges to determine what the facts of the case are. The danger of an oral opinion in a complex case is that the judge may fail to identify and resolve these conflicts, leaving us to grope in the dark for the facts on which to base our review of the legal issues.

Most of the district judge's opinion was devoted to reviewing the parties' contentions rather than to finding the facts as such, but in the course of this review he remarked that there was indeed undergrowth within the 15-foot zone and sandbars in the ditch (as is evident from the photographic evidence and from the testimony of both parties' witnesses). He must have thought however either that these apparent violations of the contract were not even prima facie violations or that they were excused, for he said: "We have a difference of opinion as to what should have [been?] taking place, what was required to be taken place and what actions under the contract. But I do not view any of the photographs or any of the testimony as to be so clearly by a preponderance of the evidence to be in violation of that contract." He did not amplify this conclusion. He expressed impatience with the parties' inability to compromise their differences--to reach a "happy ground" as the judge put it--but did not explain why a failure to compromise should result in a judgment for the defendant; such a preference will make defendants less willing to compromise. The judge expressed some annoyance at the drainage district for asking for $2 million in damages. He plainly thought this amount excessive, but did not indicate whether he thought the district had sustained any damage. He suggested that instead of wasting their money litigating, the parties should have invested that money in cleaning up the ditch.

We are left uncertain about the judge's interpretation of the contract. Contracts--especially when sought to be enforced many years after they were drafted--do not always mean what they appear to say, the meaning of a written contract as of any other text being a function of context as well as of semantics. See, e.g., FDIC v. W.R. Grace & Co., 877 F.2d 614, 620-22 (7th Cir.1989). So the fact that U.S.I. did not comply with every duty imposed by the contract if read literally and without regard to changed circumstances does not dispose of the breach of contract issue. The parties may not have intended that U.S.I. be obligated to clear undergrowth if the farmers owning the land to be cleared objected. It seems unlikely--to say the least--that the contract required the company to commit a trespass; and there is no argument that either U.S.I. or the drainage district had an easement to cut the undergrowth on the banks. And maybe when the EPA forbade spraying--an eventuality the parties probably had not foreseen when the contract was signed, long before there was an EPA--the strict duty of eliminating all undergrowth within the 15-foot zone was modified by the doctrine of impossibility or by some other doctrine of excuse. Or maybe not--maybe U.S.I.'s obligations were strict, and it bore the risk of unforeseen change in the cost of maintaining the ditch. The district judge mentioned none of these vital issues. Nor did he comment on the drainage district's contention that contracts...