Power & Irrigation Co. of Clear Lake v. Capay Ditch Co.

• Decision Date: 04 October 1915
• Docket Number: 2500.
• Citation: 226 F. 634
• Parties: POWER & IRRIGATION CO. OF CLEAR LAKE v. CAPAY DITCH CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

226 F. 634

POWER & IRRIGATION CO. OF CLEAR LAKE v. CAPAY DITCH CO. et al.

No. 2500.

United States Court of Appeals, Ninth Circuit.

October 4, 1915

This is an appeal from the judgment of the court below, dismissing the suit for lack of jurisdiction.

The bill alleges that the plaintiff was incorporated under the laws of the state of Arizona April 9, 1913, and that the defendants Capay Ditch Company, Yolo County Consolidated Water Company, and Yolo Water & Power Company are corporations of the state of California, and that each of the individual defendants is a resident and citizen of California. It then alleges that on the 13th day of November 1907, a corporation of California called Central Counties Land Company was the owner and in the possession of certain specifically described tracts of land situated in the county of Lake, state of California, aggregating 2,125 acres, which Land Company, on the day named, borrowed of and received from the defendant Capay Ditch Company three several sums of money aggregating $24,570.75, for each of which the Land Company executed to the Ditch Company its promissory note, bearing interest at the rate of 7 per cent. per annum, to secure the payment of which notes, and for that purpose only, it executed to the Ditch Company, at the same time, an instrument in writing, in form a grant, bargain, and sale deed, purporting to grant to the Ditch Company all of the said tracts of land, but containing this clause: 'This conveyance is made, executed and delivered in pursuance of a resolution of the board of directors of Central Counties Land Company duly adopted under the provisions of law and the by-laws of said corporation, authorizing and directing the president and secretary to make, execute and deliver this conveyance.'

The bill alleges not only that the parties to the instrument intended it as a mortgage only, but that the resolution of the board of directors of the Land Company so referred to in the purported deed in terms so expressly declared.

It further alleges that the Ditch Company subsequently, to wit on the 20th day of March, 1908, caused the said purported deed to be duly recorded in the records of the said county of Lake; that with full knowledge of the true nature of the said instrument on the part of the defendant Yolo County Consolidated Water Company, the defendant Ditch Company executed to it, on the 18th day of December, 1911, an instrument in writing, in form a grant, bargain, and sale deed, wherein and whereby the Ditch Company purported to convey to the Yolo County Consolidated Water Company all of the said real property; that thereafter and with the full knowledge of the defendants L. D. Stephens and Joseph Craig as to the true nature of the said purported deeds, the defendant Yolo County Consolidated Water Company executed to them an instrument in writing, in the form of a grant bargain, and sale deed, wherein and whereby it purported to convey to the said individual defendants all of the said real property, and that subsequently the said individual defendants, Stephens and Craig, executed to the defendant Yolo Water & Power Company, with full knowledge on its part as to the true nature of the said instruments, a deed in form purporting to convey to it the said real property; that prior to the said 18th day of November, 1907, the defendant J. M Adamson entered into the possession of the whole of the said described real estate as the tenant of the said Central Counties Land Company, and duly attorned to it, paying to it the rental due therefor at the rate of about $200 per annum, and regularly paid such rental for all the years preceding the year ending on or about November 30, 1911; that said Central Counties Land Company through inadvertence and oversight failed to pay its license tax to the state of California due in the year 1911, by reason of which its right to do business as a corporation became and was forfeited on the day last mentioned, whereupon all of the former directors of the said corporation became, under and by virtue of the provisions of the laws of the said state, trustees of the corporation for the benefit of its creditors and stockholders; that the defendant Adamson has continued in the possession of all the said real property, but that since the said forfeiture by the said Land Company of its charter the said Adamson has refused to pay the rental of the said property either to the said Land Company or to its trustees, and without the consent of either the Land Company or of its trustees or of its or their successors has attempted to attorn to the defendant Yolo Water & Power Company, and now claims to be in the possession of the said property as the tenant of the said last-mentioned company.

The bill further alleges, among other things, that by mesne conveyances from the trustees of the said Central Counties Land Company all of the title to the said real property has become and is now vested in the plaintiff.

It further alleges that the said Central Counties Land Company had planned to erect a dam for the purpose of impounding the flood waters of Clear Lake in the state of California, and to that end to build a dam at the outlet of that lake for the purpose of maintaining and holding flood waters of the lake at high-water mark, and that the said Land Company during its existence held the said described real estate particularly and principally for this purpose, and that the trustees of said Land Company, after it ceased to exist as a corporation, continued to hold the said lands for that purpose, all of which was at all times well known to the defendants, and to each of them; that it is the plan and purpose of the plaintiff to use the said real estate for the same purpose as was planned by the Land Company, and that the plaintiff is duly authorized by its charter to make such use thereof; that the said real estate contains a portion of the only available dam site for impounding the waters of the said Clear Lake, and that the outlet of the lake runs through the said land, and that without the use of that it would be impossible to store the flood waters of the lake, or for the plaintiff to carry out the purposes of its incorporation as to the said lake; that at the time of the execution of the said instrument by the Ditch Company purporting to convey the said real estate to the defendant Yolo County Consolidated Water Company, and at the time of the execution by the last-mentioned company of the said instrument purporting to convey the said lands to the defendants Stephens and Craig, the said defendants Ditch Company, Yolo County Consolidated Water Company, Stephens, and Craig were each and all indebted to the trustees of the said Central Counties Land Company in the sum of $15,825, the same being the balance due from them for and on account of their subscription to 633 shares of the capital stock of the said Central Counties Land Company, which stock was issued to and received by them, the par value of which was $100, but upon which said stock they had only paid into the said Central Counties Land Company $75 per share, and that at the time the said defendants Capay Ditch Company, Yolo County Consolidated Water Company, Stephens, and Craig were indebted to the said trustees of the said Central Counties Land Company in the sum of $15,825 for and on account of the balance due from them on said stock subscription, and in divers other large sums, the aggregate of which is in excess of any amount due from the said Central Counties Land Company for and on account of the said promissory notes so secured by the said deed from the said Land Company to the said defendant Capay Ditch Company, and that the amount so due from the said defendants Capay Ditch Company, Yolo County Consolidated Water Company, Stephens, and Craig to the said Central Counties Land Company and its trustees, or their successors in interest, was and has been and is more than sufficient to satisfy the demands of the said defendants, or any or either of them, for or on account of the aforesaid promissory notes; that contemporaneously with their aforesaid transfer to the plaintiff of the aforesaid lands, the said trustees of the said Central Counties Land Company also transferred to the plaintiff all of their said demands against the said defendants Capay Ditch Company, Yolo County Consolidated Water Company, L. D. Stephens, and Joseph Craig, all of which demands then remained, and still remain, due; that the defendant Yolo Water & Power Company threatens to and will, unless restrained therefrom, proceed to construct, and will construct, a dam upon the said real property, and will construct controlling works thereon, and will cause a considerable portion of the said lands to be flooded; that the plaintiff is the owner and in possession of a large portion of the frontage of the said Clear Lake, and that if such dam is built the waters of that lake will thereupon be raised and impounded, and all of the said lands of the plaintiff will be flooded. The bill further alleges that the appointment of a receiver to take charge of the said property and to collect the rentals thereof pending the litigation is necessary in order to preserve it from waste and injury, and further alleges its ability and willingness to pay such sum as may be found upon an accounting to be justly due from it for principal and interest on the said promissory notes, and prays, among other things, for the appointment of a receiver, an injunction restraining the erection of the alleged threatened dam and the flooding of the said lands, to be let into the possession of the property, for an accounting, and for general relief.

Charles S. Wheeler and John F. Bowie, both of San Francisco, Cal for appellant.

S. C Denson, John...