Santa Ana Water Co. v. Town of San Buenaventura

• Decision Date: 29 May 1893
• Citation: 56 F. 339
• Parties: SANTA ANA WATER CO. v. TOWN OF SAN BUENAVENTURA et al.
• Court: U.S. District Court — Southern District of California

56 F. 339

SANTA ANA WATER CO. v. TOWN OF SAN BUENAVENTURA et al.

United States Circuit Court, S.D. California.

May 29, 1893

W. H Wilde and Wilson & Lamme, for complainant.

Blackstock & Shepherd and George J. Denis, for defendants.

ROSS District Judge.

The grounds of the demurrer which has been interposed to the bill in this case are--First, that the court has no jurisdiction of the subject-matter of the suit, or of the parties to it and, second, that the bill is without equity.

For the purposes of the present decision the allegations of the bill are, of course, to be taken as true. It appears therefrom that the defendant corporation is a municipal corporation created by an act of the legislature of the state of California, entitled 'An act to incorporate the town of San Buenaventura,' approved March 10, 1866, (St. 1866, p 216,) by which the officers of the town were made to consist of a board of five trustees to be elected by the qualified voters of the town, a treasurer, a clerk, a marshal, a surveyor and an attorney. It was provided by the act that the board of trustees should have power to make regulations for securing the health, cleanliness, and good order of the town to provide for the extinguishment of fires; and to supply the town with fresh water. This act was subsequently amended, but in no particular important to be noticed here.

At the time of the incorporation of the town it had no system of water supply, nor had it any such system when, on the 7th day of December, 1868, there was presented to the board of trustees a petition by Jose de Arnaz, Victor Ustassaustegui, and Francisco Molleda, asking for an exclusive privilege, for the term of 50 years, to supply the town with water for household, municipal, and irrigation purposes, and for the extinguishment of fires, upon terms and conditions upon which those parties then offered to construct a water system to supply to town with water. Upon the receipt of the petition the board of trustees, in order to better inform themselves as to the expediency of granting it, appointed three disinterested citizens of the town as commissioners 'to examine into the better way and utility of bringing water into said town,' with instructions to report to the board on the 12th day of December, 1868, in respect to the advisability of granting to the petitioners the rights and franchises asked for.

On the 12th day of December, 1868, the board of trustees met in their council chamber in the town, pursuant to adjournment, at which time and place they proceeded to examine into the matter of the petition of Arnaz and his associates. The report of the commissioners, which was favorable to the granting of the petition, was received and examined, and after due consideration of the matter the board agreed to enter into an agreement with Arnaz and his associates, granting to them the franchise, rights, and privileges, subject to the terms and conditions of a contract to be drawn and executed by the respective parties. Subsequently, and at a regular meeting of the board held in the council chamber on the 4th day of January, 1869, there was presented to the board for its consideration a written contract between the town and Arnaz and his associates, which contract was by the board examined and considered; and thereupon the board, by a resolution passed and spread upon its minutes, authorized and directed the president of the board and the clerk of the town to sign and execute the contract in the name, and as the act and deed, of the town, and at the same time and place the board also passed an ordinance, section 1 of which is as follows:

'Section 1. The board of trustees of the town of San Buenaventura grant from this date the exclusive privilege of supplying water to the said town unto Jose de Arnaz, Victor Ustassaustegui, and Francisco Molleda, for the term of fifty years, counting from this date; and the president and secretary of said board are ordered to sign a legal contract with the said interested parties, conceding to them the said privilege for the said term of fifty years, according to a resolution passed by this board, and entered on the minutes of our proceedings, the 12th day of December, A. D. 1868.'

On the same day, to wit, January 4, 1869, there was executed by and on behalf of the respective parties the contract in writing, by which Arnaz and his associates agreed to cause a dam to be built at a proper point in the San Buenaventura river, and by means of a flume, ditch, or pipe, at their option, within two years from the date of the contract, to introduce a sufficient supply of water for the use of the town, and by which the town, in consideration of the risk and expense to be incurred by Arnaz and his associates in the undertaking, granted to them, their successors and assigns, the free use of the streets and public grounds of the town for the laying of the necessary pipes, 'exclusively,' provided that Arnaz and his associates should furnish a sufficient supply of water for public use in case of fire, without charge, and for such public fountains as may be established by the authorities of the town, at such rates as may be agreed upon between the respective parties; 'also, that the parties of the first part [Arnaz and his associates] shall have the unrestrained right to establish such rates for the supply of water to private persons as they may deem expedient, provided that such rates be general.' It was further provided in and by the contract that the town should have the right, at the termination of 50 years, to purchase the works erected by Arnaz and his associates, or their assigns, at a fair valuation, and that, within the term of 1 year from the date of the contract, Arnaz and his associates should commence the erection of the necessary works, and finish the same within 2 years from the date of the contract.

Within a year after the execution of the contract, Arnaz and his associates, under and by virtue of it, constructed a dam in the San Buenaventura river, and constructed ditches leading therefrom, by means of which they diverted the water of the river, and conducted it to the town, and therein built and constructed conduits in the streets of the town, and therefrom supplied the inhabitants with water, and provided water for the use of the town, and for the extinguishment of fires, and within two years after the date of the contract completed a water system, in all things, in compliance with the provisions of the contract, and whereby they supplied water to the town for all municipal purposes, and supplied the inhabitants thereof with water for domestic use, irrigation, and all other purposes for which water is commonly used by the inhabitants of a community.

On the 15th day of January, 1870, the complainant, the Santa Ana Water Company, was incorporated under an act of the legislature of the state of California entitled 'An act for the incorporation of Water Companies,' approved April 22, 1858, (St. 1858, p. 218,) and ever since then has been, and now is, a corporation existing and doing business in California, and having its principal place of business in the town of San Buenaventura; and, to this corporation, Arnaz and his associates, on or about the 26th day of January, 1871, sold and assigned their dams, ditches, conduits, water rights and privileges, and all their right, title, and interest in and to the waterworks and system by which the town of San Buenaventura was then supplied with water, together with all the rights, privileges, and franchises obtained and held by them under and by virtue of the aforesaid contract with the town. On or about the 28th day of October, 1872, the board of trustees of the town passed an ordinance approving and ratifying the transfer of the property and rights from Arnaz and his associates to the complainant corporation, sections 1 and 2 of which ordinance are as follows:

'Section 1. All the rights and privileges heretofore granted unto the said Arnaz, Ustassaustegui, and Molleda be, and the same are hereby, continued and granted the Santa Ana Water Company, for fifty years from and after January 4, A. D. 1869. The transfer and assignment by said Arnaz, Ustassaustegui, and Molleda of said water company is hereby ratified and approved. Sec. 2. The Santa Ana Water Company is hereby granted the exclusive right and privilege of laying all such main and service pipes in and through the several streets of the town of San Buenaventura, by such means and in such manner as said water company shall elect, for the purposes set forth in the certificate of incorporation of said company, and all other lawful purposes, for the said term of years: provided, however, that the main water pipe be laid in the main street of the town of San Buenaventura on or before July 1, 1873,--and to make, hold, and maintain such aqueducts, dams, ditches, flumes, and reservoirs, for the purposes aforesaid within said town, as shall be necessary: provided, that just compensation shall be made to the owners of private property taken by said company for such public use in the manner prescribed by law, if the parties cannot agree on the value of the same; and, for the protection of the property and works of said company, no person shall, without authority from said company, cut, tap, or otherwise interfere with, any water pipes, ditch, flumes, or reservoirs of said company, or bathe or wash therein, or cut or injure any shade trees planted or to be planted near the same for protection.'

By an act of the legislature of the state of California entitled 'An act to reincorporate and extend the limits of the town of San Buenaventura, in the county of Ventura, state of California, and also to change the name of Canada street, in said town, to that...