People of Porto Rico v. Havemeyer

• Decision Date: 27 June 1932
• Docket Number: No. 2678.,2678.
• Citation: 60 F.2d 10
• Parties: PEOPLE OF PORTO RICO v. HAVEMEYER et al.
• Court: U.S. Court of Appeals — First Circuit

60 F.2d 10 (1932)

PEOPLE OF PORTO RICO v. HAVEMEYER et al.

No. 2678.

Circuit Court of Appeals, First Circuit.

June 27, 1932.

William C. Rigby, of Washington, D. C. (Fred W. Llewellyn, of Washington, D. C., Charles E. Winter, Atty. Gen., of Puerto Rico, and Blanton Winship, of Washington, D. C., on the brief), for appellant.

Francis E. Neagle, of New York City (Rounds, Dillingham, Mead & Neagle, of New York City, on the brief), for appellees.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

This is an appeal from a judgment of the federal District Court in Porto Rico of December 21, 1931, dismissing the suit at law of the plaintiff-appellant on its merits. The action was brought to recover $61,617.04 due as an alleged tax under an Act of the Porto Rican Legislature (No. 49) of July 8, 1921, entitled "An Act fixing a tax on certain lands using water from the Southern Coast Public Irrigation System, on which lands no tax whatsoever was levied under the Public Irrigation Law, and for other purposes." By agreement of the parties the case was tried by the court without a jury upon certain agreed facts and records. A general verdict or finding was made by the court in favor of the defendants, no special findings being made.

The action was brought in the District Court of San Juan. The members composing the defendants' partnership removed the case to the federal District Court on the ground of diversity of citizenship. After the case was removed the plaintiff moved to remand the same. The motion was denied and the defendants answered, setting up a number of special defenses resting on the alleged invalidity of Act No. 49. The plaintiff demurred to the special defenses and the demurrer was overruled. After trial was had and a general verdict or finding in favor of the defendants was made, judgment was entered for the defendants, and the plaintiff appealed.

The suit was brought June 24, 1930. November 13, 1930, the plaintiff filed an amended complaint, the material differences between the two complaints apparently being that, while the original one named all the persons, except one, constituting the defendants' partnership, it stated that their residences and nationality were not known, while in the amended complaint it stated the names of all the parties constituting the firm and gave their residences and citizenship, showing them all to be citizens and residents of states of the Union, except one who is a citizen of Great Britain residing in Canada.

It appears that the partnership, Russell & Co., Sucesores, S. en C., is composed of Horace Havemeyer, Frank A. Dillingham, Edward S. Paine, Edwin L. Arnold, Frank M. Welty, and H. B. Orde; that they are owners through purchase from Fortuna Estates of four tracts of land known as Haciendas Fortuna, Cristina, Luciana, and Serrano, and sublessees of two other tracts known as Haciendas Union and Placeres (title to the last two tracts being in Jose A. Poventud and others), all of which tracts of land lie along or abut upon the Jacaguas river; that each of these properties has appurtenant thereto rights to take water for irrigation purposes from the Jacaguas river by virtue of certain concessions and royal decrees of the Kingdom of Spain and by user and prescription; that for more than twenty years prior to August 26, 1914, Fortuna Estates, defendants' predecessor in title, and Poventud and others, their immediate lessors, had been taking and using water from the Jacaguas river for irrigation of these lands whenever physically possible up to the aggregate amounts of the concessions; that the water was taken from the bed of the river through intakes built and maintained by the defendants or their predecessors, and also by the Aruz pump at Maturi Pool and by the Union pump; that there were also appurtenant to these properties, by virtue of concessions and royal decrees and by user and prescription, rights to take for irrigation purposes torrential waters which may exist in the Jacaguas river without limit as to quantity, except as limited by the size and location of the torrential intakes established by virtue of the said concessions, royal decrees, user, and prescription; that in accordance with the provisions of the Public Irrigation Law approved September 18, 1908 (Laws of Porto Rico 1908, Special Session, p. 44), as amended in 1911 (Laws of Porto Rico 1911, p. 237), and by the Irrigation Law of 1913 (Laws of Porto Rico, Extraordinary Session 1913, p. 54, No. 128), the people of Porto Rico undertook the construction of a public irrigation system on the south coast of Porto Rico, and, in so doing, erected a dam for impounding and storing the waters of Jacaguas river, known as the Guayabal Dam, which extends across the bed of Jacaguas river, above the intakes which the defendants used for taking water for irrigating the tracts of land above mentioned; that the irrigation law provided that the people of Porto Rico might acquire existing water rights on the Jacaguas river in two ways: (1) By condemnation, in which case the owners would be paid in cash the fair value of their existing rights; and (2) by contracting for the relinquishment of their concessions or water rights by mutual agreement, in which case the owners would be paid not in cash but by receiving credits upon their proportional part of the expense of construction, operation, and maintenance of the system; and that, if neither of these methods was pursued, section 13 of the act of 1913 (p. 72) provided that "such land shall be entitled to receive from the irrigation system an amount of water which is the reasonable equivalent in value of the said water right or concession"; that Fortuna Estates, defendants' predecessor in title to the Haciendas Fortuna, Cristina, Luciana, and Serrano, and J. A. Poventud and others, the owners of Union and Placeres, refused to relinquish their concessions and the rights were not condemned; that, in view of this, the people of Porto Rico, as authorized by the irrigation laws, entered into negotiations with Fortuna Estates and the owners of Union and Placeres for the purpose of fixing, in accordance with section 13 and other provisions of law, the time and place at which the amounts of water, other than torrential water, which they were entitled to take for these six estates should be made available to the owners after the Guayabal Dam was completed and in operation; that, as a result of said negotiations, the people of Porto Rico, on August 26, 1914, entered into two contracts, one with Fortuna Estates and the other with J. A. Poventud and others, which contracts, so far as this controversy is concerned, are of a like nature; that by these contracts the amount of water which is the reasonable equivalent in value of the water rights or concessions pertaining to each tract was determined and that the same should be taken thereafter in regular daily amounts (the amounts agreed upon being substantially less than the amounts specified in the concessions, to wit, 3,773.81 acre feet less for the four Fortuna Estates tracts and 6,331.76 acre feet less for the two tracts, Union and Placeres); that to make up the fair equivalent additional water might be taken out of surplus waters if there were any; that, so far as Fortuna Estates was concerned, the intakes through which the water was to be furnished under the contract were intakes provided by Fortuna Estates, and, so far as the water was to be pumped from the bed of the river, it was "to be taken by pump at a pumping station heretofore established by the Fortuna Estates * * * known as the Aruz Pumping Station"; that leading from the intakes they had established canals on their properties which took the water to reservoirs, likewise established on their properties, from which they distributed such waters; that the contract as to Union and Placeres contained like provisions as to intakes and pump; that the contracts also provided that torrential waters could be taken from the river but that the government was not to be restrained from holding in the reservoir above the dam such torrential waters as it was legally entitled to restrain; that the contracts set out and specified the number of acre feet per year which each estate was entitled to receive, and it was agreed that "the quantities of water thus specified The People of Porto Rico will * * * make delivery * * * for the irrigation of said tracts."

It further appears that while the several estates have been supplied since 1915 with the water agreed upon in accordance with the terms of said contracts of August 26, 1914, neither the defendants nor their said lands have at any time been "supplied with any water for the irrigation of said lands or for other purposes from said Southern Coast Public Irrigation System except such waters as" they and their lands "were and are entitled to receive under and by virtue of the contracts of August 26, 1914"; that, as required by Act No. 49 of 1921, the Treasurer of Porto Rico has assessed against the lands in question a special tax for the fiscal years 1922-23 to 1929-30, inclusive, in amounts aggregating $49,918.56 plus interest amounting to $11,698.48, which sums have not been paid.

In the assignments of error here argued and relied upon the plaintiff complains that the court erred: (1) In failing to remand the case; (2) in holding that Act No. 49 of July 8, 1921, was void (a) as impairing the obligation of the contracts between Porto Rico and the defendants, (b) as taking private property without due process of law, (c) as violating the Organic Act which provides that taxation in Porto Rico shall be uniform, (d) as in conflict with the Treaty of Paris, (e) as violating the equal protection clause of the Organic Act, (f) in that it delegates to administrative officers the legislative function of levying taxes, and (g) in that it makes no provision for hearing or appeal before the taxes become fixed; and (3) that...