De Pauw University v. Public Service Commission of Oregon

• Decision Date: 17 December 1917
• Citation: 247 F. 183
• Parties: DE PAUW UNIVERSITY et al. v. PUBLIC SERVICE COMMISSION OF OREGON et al.
• Court: U.S. District Court — District of Oregon

247 F. 183

DE PAUW UNIVERSITY et al. v. PUBLIC SERVICE COMMISSION OF OREGON et al.

United States District Court, D. Oregon.

December 17, 1917

Carey &amp Kerr and Charles A. Hart, all of Portland, Or., for plaintiffs.

George M. Brown, Atty. Gen., and J. O. Bailey, Asst. Atty. Gen., for defendants.

BEAN District Judge.

This is a suit against the Public Service Commission of Oregon and the individual members thereof, brought by the trustees named in, and the holders of substantially all the bonds secured by, a mortgage or trust deed given by the J. F. Luse Company on its irrigation plant in Douglas county, to secure a bond issue of $100,000. The relief sought is an injunction restraining the enforcement of an order of the Commission fixing the rates to be charged by the Luse Company for water furnished its customers, on the ground that such order is void for want of jurisdiction. The suit is for hearing on a motion to dismiss the bill.

The facts appearing in the complaint and essential to the questions for decision are that in September, 1908, the Sutherlin Land & Water Company acquired by purchase approximately 38,000 acres of irrigable land in Douglas county, with the intention of subdividing and selling the same. In order to irrigate the land, it acquired about the same time, by purchase, appropriation, and otherwise, the right to divert sufficient water from the Calipooia river and other sources. It thereupon, and during the years 1908, 1909 1910, 1911, and 1912, constructed and completed an irrigation system, by which the water so appropriated and acquired was carried to and upon the lands, at a cost exceeding $100,000. From time to time, and as the work progressed on the irrigation system, the Land Company sold or contracted to sell to sundry persons various parcels of land and by the contract of sale undertook and agreed that in consideration of the payment of the purchase price and the performance of other stipulations by the purchasers that it would provide or cause to be provided in perpetuity water for domestic use by the purchasers and for the irrigation of the particular land covered by the contract during the irrigating season, upon the payment in advance by such purchasers of a certain stipulated rate therefor.

In November, 1912, the Sutherlin Land & Water Company conveyed to the J. F. Luse Company all of the land then remaining unsold and also its interest in uncompleted contracts of sale previously made, and the water rights and irrigation system and the Luse Company agreed to and did assume all the debts of the Sutherlin Company and all obligations imposed upon it with respect to providing water for the parcels of land theretofore sold. The Luse Company thereupon entered into possession of the irrigation system so conveyed, since which time it has maintained such system and expended large sums of money in the installation and maintenance thereof, and has made contracts of sale for a large number of tracts of land similar to those made by its predecessor, and has in all respects complied with the terms and provisions of the contracts and conveyances executed by it or its predecessor with respect to providing water to purchasers.

It is alleged in the complaint that at no time has the Sutherlin Land & Water Company or the J. F. Luse Company 'sold or furnished or offered to sell or furnish, or held itself out as ready to furnish water to any person whatsoever other than the owners of land purchased from one or the other of such corporations,' except that for a short time the Luse Company permitted the city of Sutherlin to use certain of the surplus waters while the city was engaged in securing a permanent supply for itself; but such arrangement was temporary and at all times subject to the demands and rights of the irrigation company and its purchasers.

In July, 1916, certain purchasers of land filed a petition with the Public Service Commission in which they alleged that the Luse Company was a public utility and that the amounts specified in their contracts of purchase, to be paid by them as a condition precedent to the right to use water was exorbitant, unreasonable, and discriminatory, and praying that the Commission enter an order setting aside and annulling such contracts and fixing and establishing rates to be paid by them.

The Land Company and the trustees named in the mortgage given by it to secure the bond issue appeared and denied that the...