San Diego Land & Town Co. v. Jasper

• Decision Date: 26 August 1901
• Docket Number: 768.
• Citation: 110 F. 702
• Court: U.S. District Court — Southern District of California
• Parties: SAN DIEGO LAND & TOWN CO. V. JASPER et al.

110 F. 702

SAN DIEGO LAND & TOWN CO. V. JASPER et al.

No. 768.

United States Circuit Court, S.D. California.

August 26, 1901

Works &amp Lee and Works & Works, for complainant.

A. H Sweet, T. L. Lewis, and A. Haines, for defendants.

ROSS Circuit Judge.

The complainant is a corporation of the state of Maine, having succeeded to the rights of a Kansas corporation of the same name in and to the property described in the bill, the object of which is to obtain a decree annulling certain water rates established by the board of supervisors of San Diego county. To a clear understanding of the case, it is necessary to refer to certain prior suits, in which the predecessor in interest of the present complainant was involved, one of which was a suit brought against the city of National City to set aside a certain ordinance fixing the rates at which the San Diego Land & Town Company should furnish that city and its inhabitants with water for domestic purposes and purposes of irrigation. San Diego Land & Town Co. v. City of National City (C.C.) 74 F. 79. It was there shown--what is partly shown in the present record-- that the chief object of the land and town company was the acquiring of land, and the subdividing and selling of it for profit. In pursuance of that purpose the complainant did acquire large tracts in San Diego county in what is known as the 'Sweetwater Valley,' in Chula Vista, and in National City, all within the boundaries of the National Rancho, and in the Otay Valley, adjacent to that rancho on the south, and in the territory known as the 'Ex-Mission Lands,' adjacent to National City on the north, aggregating many thousands of acres. Almost all of the lands were dry, and in their natural condition were of but little value.

Principally for the purpose of adding to their value and of enabling the company to sell them to advantage, the complainant in the years 1886 and 1887 appropriated, under and by virtue of the constitution and laws of California, the waters of the stream known as the 'Sweetwater River,' and, for the purpose of impounding those waters, in order that it might distribute and sell them in connection with its lands, and likewise distribute and sell them to other landowners and individuals within their flow, for purposes of irrigation and domestic and other beneficial uses, proceeded to construct across the bed of the stream a large dam known as the 'Sweetwater Dam.' Connecting therewith the complainant constructed a system of main and lateral pipes, called 'Pipe System No 1,' from which it commenced to serve the consumers of water in February, 1888. As constructed, pipe system No. 1 covered a large territory, much the larger portion of which was owned by the company. Its Chula Vista tract, consisting of about 5,000 acres, it laid out and platted in blocks of 40 acres each, and subdivided those blocks in lots of 5 acres each, to each of which its pipes were extended. National City embraces about 3,375 acres of land, of which about 833 are laid out into 6,691 town lots, of which the complainant in January, 1887, owned 2,849, and of the remaining acreage the complainant then owned 685 acres. When the city ordinance involved in the case of San Diego Land & Town Co. v. City of National City was enacted, the complainant still owned 2,671 city lots, and owned about the same acreage within the city. The total population of National City was then about 1,300, and the aggregate number of acres then under irrigation within the city limits was about 747. The complainant's main and lateral pipes were laid in the streets of the city by virtue of a franchise granted by its authorities pursuant to the provisions of section 2 of article 14 of the constitution of the state of California, which declares:

'The right to collect rates or compensation for the use of waters supplied to any county, city and county, or town, or the inhabitants thereof, is a franchise, and cannot be exercised except by authority of and in the manner prescribed by law.'

The pipes were so laid as to reach the lots and farming lands of the company within the city, as well as the lots and farming lands of others therein, and were extended through the city to supply a portion of the lands to the north, a part of which were owned by the company and a part by third persons. The pipes of the company's system No. 1 were also so laid as to supply water to the land and its inhabitants)adjoining National City on the south, much of which land was owned by the company, and much of it by other persons. As the territory covered by the pipe system was then, and indeed yet is, very sparsely settled, it is manifest that it was laid for the purpose of attracting the purchase and settlement of the lands, and in anticipation of a future demand for the water, and was far in advance of the then demand for it. Naturally and necessarily in carrying into execution those objects a great deal of money was expended by the company. The testimony on behalf of the complainant in the National City Case was, and the testimony on behalf of the complainant in the present suit is, to the effect that in acquiring the water and reservoir system, and in putting in the dam and system of pipes necessary to supply consumers thereunder with water, the company actually expended $1,022,473.54. The company subsequently constructed another system of pipes, called 'Pipe System No. 2,' at a cost of about $65,000, for the purpose of relieving the pressure upon its system No. 1, and thereby to increase its efficiency, and to supply lands not reached by that system. From at least as early as the completion of its pipe system No. 1 the original company, by public advertisement and otherwise, offered and held its farming and orchard lands and its lots in National City for sale, representing the water of its system to be piped to and over its lands and lots, and up to December 18, 1892, represented that an abundance of water would be supplied to purchasers of such lands for their irrigation at the rate of $3.50 per acre per annum, and for city lots in ample quantity and at cheap rates. Under those representations it sold a large number of acres of farming and orchard lands in separate tracts and widely scattered, to all of which purchasers it furnished water for purposes of irrigation at the rate of $3.50 per acre per annum. And it also furnished water for purposes of irrigation to various other persons whose lands are within its flow at the same rate of $3.50 per acre per annum. But commencing with December 18, 1892, and extending to February, 1895, the company demanded of all consumers of water, other than those to whom it had furnished water for irrigation prior to that date, the sum of $50 per acre, where water is required for purposes of irrigation, in addition to the annual charge, for what it denominated a 'water right'; and thereafter it demanded $100 per acre, in addition to the annual charge, for a so-called 'water right' for irrigation purposes from all persons other than those to whom it had furnished water for those purposes prior to December 18, 1892. One of the objects of the suit against National City was the establishment of the validity of the claim of the company to exact a sum of money in addition to an annual charge as a condition on which alone the company would furnish consumers with water for irrigation purposes other than those to whom it had furnished it for such purposes prior to December 18, 1892; and the contest that arose between the consumers and the company over that charge, and the refusal of the municipal authorities of National City to allow the charge in respect to acreage property within the city limits, was one of the principal causes of that suit. This court decided against the validity of the exaction for the so-called 'water right,' and also held that the rates established by the city council were not so low as to justify the court in interfering with them on the ground that they amounted to the taking of the company's property without just compensation. On appeal to the supreme court the judgment here given was affirmed; the supreme court, however, not finding it necessary to determined the question as to the validity of the exaction for the so-called water right. 174 U.S. 739, 19 Sup.Ct. 804, 43 L.Ed. 1154. Some time after the bringing of the suit of San Diego Land & Town Co. v. City of National City, the property of that company passed into the hands of a receiver, who during the course of the administration of his trust raised the rates at which water had theretofore been furnished to the consumers for irrigation purposes from $3.50 to $7 per acre per annum; and that action on his part gave rise to the litigation involved in the suit of Lanning v. Osborne, brought in and decided by this court, and reported in 76 F. 319. In that case the validity of the exaction of money for the alleged water right as a condition precedent to the furnishing of water by the company for the purposes of irrigation was again considered, and decided by this court as before; and there was also involved and determined by this court the question as to whether the company was estopped from changing the rate, and the further question of power on the part of the company to fix a reasonable charge for the furnishing of such water in the absence of any action under the act of the legislature of the state of California approved March 12, 1885, entitled 'An act to regulate and control the sale, rental, and distribution of appropriated water in this state, other than in any city, city and county, or town therein, and to secure the rights of way for the conveyance of such water to the places of use.' St. 1885, p. 95. That decision of this court was also under review by the supreme court on an...