Rialto Irr. Dist. v. Stowell

• Decision Date: 15 October 1917
• Docket Number: 2491.
• Parties: RIALTO IRR. DIST. v. STOWELL. [1] STOWELL v. RIALTO IRR. DIST.
• Court: U.S. Court of Appeals — Ninth Circuit

246 F. 294

RIALTO IRR. DIST. v. STOWELL. ^[1]

STOWELL v. RIALTO IRR. DIST.

No. 2491.

United States Court of Appeals, Ninth Circuit.

October 15, 1917

Henry Goodcell, F. A. Leonard, Howard Surr, and Leonard & Surr, all of San Bernardino, Cal., for Rialto Irr. Dist.

J. W Swanwick, of Los Angeles, Cal., for N.W. Stowell.

See also, 246 F. 308, . . . C.C.A. . . . .

The plaintiff in error was incorporated under an act of the state of California commonly called the Wright Act, entitled 'An act to provide for the organization and government of irrigation districts, and to provide for the acquisition of water and other property, and for the distribution of water thereby for irrigation purposes,' approved March 7, 1887 (Stats. Cal. 1887, 29), to which act there were several amendments, as well as a supplemental one.

After the organization of the district, it issued bonds in the amount of $500,000, bearing date November 17, 1890, all of which were of the same tenor, and one of which is set out in full in the amended complaint filed by the present defendant in error, Stowell, July 5, 1912, his original complaint having been filed June 27, 1908, to recover $30,009 including interest, alleged to be due upon certain coupons annexed to certain of the bonds so issued, alleged to have been acquired and owned by him. By a supplemental complaint the plaintiff in the action included in his demand certain other similar coupons, increasing his demand in the aggregate to $50,577.70 including interest.

To all of the bonds were attached both interest and installment coupons, and it was upon such coupons that the plaintiff to the action sought to recover.

By its answer the defendant to the action admitted that the bonds were issued by the officers of the district, but alleged that none of them were issued for a valid or lawful consideration, that none of them were dated or made payable as required by the statute, and that all of the acts of the officers of the district in issuing the bonds were unauthorized and void, and that all of the coupons maturing four years or more before the commencement of the action were barred by a certain specified section of the statute of limitations of the state of California.

After trial before the court the latter made a general finding on the issues in favor of the plaintiff and directed judgment in his favor for $50,577.70, which judgment was accordingly entered.

Each party sued out a writ of error-- the plaintiff upon the ground that the court erred in refusing to allow him compound interest, which contention, however, he has in this court abandoned, leaving for consideration only the writ of error brought by the defendant to the action.

There are two other similar actions, it appears from the record, numbered 2492 and 2493 (246 F. 308) which, by stipulation of the parties and by order of the court, have been submitted upon the record and briefs in the present case, to abide the decision to be rendered herein.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

ROSS Circuit Judge (after stating the facts as above).

In form the bonds were 'promises to pay to the bearer' thereof:

'At the office of the treasurer of said district the sum of ($500.00) five hundred dollars in gold coin of the United States, at the dates and upon installments as follows: At the expiration of eleven years from date five (5) per cent. of said sum; at the expiration of twelve years from date six (6) per cent. of said sum; at the expiration of thirteen years from date seven (7) per cent. of said sum; at the expiration of fourteen years from date eight (8) per cent. of said sum; at the expiration of fifteen years from date nine (9) per cent. of said sum; at the expiration of sixteen years from date ten (10) per cent. of said sum; at the expiration of seventeen years from date eleven (11) per cent. of said sum; at the expiration of eighteen years from date thirteen (13) per cent. of said sum; at the expiration of nineteen years from date fifteen (15) per cent. of said sum; and at the expiration of the twentieth year from date a percentage sufficient to pay off said sum in full. Said installments are to be paid as provided in and only upon the surrender of the respective installment coupons hereto attached. And said district promises to pay interest on said principal' at a prescribed rate and at prescribed times upon the surrender of the respective interest coupons.'

Each bond also recited that:

'This bond is one of a series of bonds amounting in the aggregate to five hundred thousand dollars caused to be issued by the board of directors of said Rialto Irrigation District and pursuant to a vote of the electors of said district at an election held for that purpose on the 15th day of November 1890. The said series of which this bond is one is composed of one thousand bonds each of the denomination of five hundred dollars, and said bonds are issued by authority of, pursuant to, and after a full compliance with all the requirements of the act of the Legislature of the state of California entitled 'An act to provide for the organization and government of irrigation districts, and to provide for the acquisition of water and other property and for the distribution of water thereby for irrigation purposes,' approved March 7, 1887, and the acts amendatory thereof and supplemental thereto. The Rialto Irrigation District is composed of citrus producing lands divided into ten and twenty acre farms, irrigated by one thousand (1000) inches of water measured under a four-inch pressure, piped to each farm lot. All the said bonds and the interest thereon are to be paid by revenue derived from an annual tax upon the real property of the district, which tax is and the said bonds are by said act of the Legislature, made a lien upon all said real property.'

The bonds were signed by the corporation by its president and secretary, and its corporate seal was affixed thereto.

Section 12 of the act under which they were issued provides, among other things, that:

The board of directors of the corporation, 'and its agents and employes, shall have the right to enter upon any land in the district to make surveys, and may locate the line for any canal or canals, and the necessary branches for the same, on any of said lands which may be deemed best for such location. Said board shall also have the right to acquire, either by purchase or condemnation, all lands and waters, and other property necessary for the construction, use, supply, maintenance, repair, and improvement of said canal or canals and works, including canals and works constructed and being constructed by private owners, lands for reservoirs, for the storage of needful waters, and all necessary appurtenances. In case of purchase, the bonds of the district, hereinafter provided for, may be used at their par value in payment; and in case of condemnation, the board shall proceed, in the name of the district, under the provisions of title seven, of part three, of the Code of Civil Procedure. Said board may also construct the necessary dams, reservoirs, and works for the collection of water for said district, and do any and every lawful act necessary to be done, that sufficient water may be furnished to each landowner in said district for irrigation purposes. The use of all water required for the irrigation of the lands of any district formed under the provisions of this act, together with the rights of way for canals and ditches, sites for reservoirs, and all other property required in fully carrying out the provisions of this act, is hereby declared to be a public use, subject to the regulation and control of the state, in the manner prescribed by law.'

Section 15 of the act is as follows:

'For the purpose of constructing necessary irrigation canals and works and acquiring the necessary property and rights therefor, and otherwise carrying out the provisions of this act, the board of directors of any such district must, as soon after such district has been organized as may be practicable, estimate and determine the amount of money necessary to be raised, and shall immediately thereupon call a special election, at which shall be submitted to the electors of such district possessing the qualifications prescribed by this act, the question whether or not the bonds of said district shall be issued in the amount so determined. Notice of such election must be given by posting notices in three public places in each election precinct in said district for at least twenty days, and also by publication of such notice in some newspaper published in the county, where the office of the board of directors of such district is required to be kept, once a week for at least three successive weeks. Such notices must specify the time of holding the election, the amount of bonds proposed to be issued, and said election must be held and the result thereof determined and declared, in all respects as nearly as practicable, in conformity with the provisions of this act governing the election of officers; provided, that no informalities in conducting such an election shall invalidate the same, if the election shall have been otherwise fairly conducted. At such election the ballots shall contain the words, 'Bonds-- Yes,' or 'Bonds-- No,' or words equivalent thereto. If a majority of the votes cast are 'Bonds--Yes,' the board of directors shall immediately cause bonds in said amount to be issued; said bonds shall be payable in gold coin of the United States, in installments as follows, to wit: At the expiration of eleven years not less than five per cent. of said bonds; at the expiration of twelve years not less than six per cent.; at the expiration of thirteen years not less than seven per cent.; at the

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