State ex rel. Avenius v. Tidball, District Judge

• Decision Date: 04 January 1927
• Docket Number: 1420
• Citation: 35 Wyo. 496,252 P. 499
• Parties: STATE EX REL. AVENIUS v. TIDBALL, DISTRICT JUDGE, ET AL. [*]
• Court: Wyoming Supreme Court

252 P. 499

35 Wyo. 496

STATE EX REL. AVENIUS v. TIDBALL, DISTRICT JUDGE, ET AL. ^[*]

No. 1420

Supreme Court of Wyoming

January 4, 1927

Original petition for a writ of prohibition by the State, on the relation of Rudolph Avenius, against V. J. Tidball, Judge of the District Court, Second Judicial District, and another.

W. A Muir, for plaintiff.

The lien created by the trust deed and the bonds issued thereunder, given to the Chicago Title and Trust Company, as trustee, by the Eden Irrigation and Land Company, is paramount to the receivership proceeding; the Eden Company is a private corporation; the judgment of Evers Brothers is inferior to the lien of the trust deed; the Receiver is without power to sell the property clear of the lien created by the trust deed; the court was without jurisdiction of the bondholders; Carey Act projects are controlled by the State Land Board; 770-783 C. S.; canals of this class are not common carriers, within the meaning of Art. 10, Sec. 7, of the Constitution; the Public Service Commission has no jurisdiction over Carey Act canals; a court of equity cannot appoint a Receiver to hinder the demands of creditors; 34 Cyc. 30; the Eden Company is not a quasi public corporation; Commissioner v. McCrea, (Utah) 235 P. 580; Bank v Company, 64 P. 212.

T. S Taliaferro, Jr., and Arthur-Lee Taliaferro, for defendants.

The Eden Company is a public utility and a common carrier; Art. 10, Sec. 7, Const. Water is the property of the State; Art. 8, Sec. 1, Const. Irrigation works are public utilities; 5453 C. S. The Utah case of Commissioner v. McCrea is not in point, nor is the Colorado case of Bank v. Lamar, cited by petitioner; the court had jurisdiction to order the sale of the property clear of the lien of the trust deed; 14 a C. J. 1008; Pilliod v. Ry. Co., (Ind.) 91 N.E. 829; Reilly v. Co., (N. J.) 44 A. 161; 34 Enc. L. & P. 310; Bank v. Shedd, 121 U.S. 74; 30 L.Ed. 877; Bank v. Co., (Va.) 56 S.E. 158. Service by publication conferred jurisdiction; 5736 C. S.; Snavely v. Co., (Kan.) 12 P. 522. The demurrer should be sustained.

BLUME, Chief Justice. POTTER, J., and KIMBALL, J., concur.

OPINION

BLUME, Chief Justice.

This is an original petition for a writ of prohibition. The facts in brief are as follows: The Eden Irrigation and Land Company, hereinafter called the company, is a corporation which was organized under the laws of the State of Wyoming, for the purpose of reclaiming certain lands in Sweetwater County, Wyoming, under the so-called Carey Act. The nature of such corporation will be more fully disclosed by considering the legislation in connection with that Act. Congress thereby (Compiled Statutes 1901, pages 1554 to 1556) provided for the reclamation by irrigation of desert lands situated in various states and territories. Under the provisions of the Act, the state may make an application to the Secretary of the Interior to segregate certain desert lands from the body of the public domain. For that purpose a map and plans showing the mode of the irrigation must be submitted, and, if approved, lands will be reserved and a patent therefor is ultimately issued to the state or its assigns. The legislature of this state accepted the benefits of the said Act of Congress. By section 775, W. C. S. 1920, it is provided that a company or corporation, that desires to construct irrigation works to reclaim lands under the Carey Act, must, in writing, request the Board of Land Commissioners to select the land to be reclaimed, must propose to construct the irrigation works necessary for such reclamation and state the source of the water supply, the location and dimensions of the proposed works and the price and terms at which perpetual water rights will be sold to settlers on the lands to be reclaimed. Under other sections of the statute, an application for a permit for a water right in connection with such reclamation must be filed with the State Engineer. The proposal above mentioned is investigated, and, if approved, an application is directed to be made to the Government of the United States for patents for such lands. Upon the withdrawal of the land by the Department of the Interior, the State Board of Land Commissioners may enter into a contract with said applicants submitting the proposal aforesaid, which contract must, among other things, specify the location, dimensions, character and estimate of the cost of the proposed irrigation work, and the price and the terms for which perpetual rights therein will be sold to the settlers upon said lands. The land itself is not sold or granted to the company constructing such irrigation works, but may be filed upon and occupied by individual settlers upon paying the sum of fifty cents per acre--a nominal sum to cover expenses--and upon making proof that they have acquired a perpetual water right. That right is sold to the settlers by such company, and the company, in turn, is granted a first and prior lien for any deferred payment therefor on the right itself, and upon the land for which the water is used. A more detailed account of the provisions of law relating to such companies and the Carey Act is found in the case of Canal Co. v. Hardesty M. Co., 31 Wyo. 182, 224 P. 853.

The company, aforesaid, as shown by the publicly printed document issued by the Commissioner of Public Lands of this state, acquired certain water rights in Sweetwater County, Wyoming, to irrigate approximately 28,000 acres of land set apart by the Government of the United States to the State, as contemplated by the Carey Act. Patents for this land have been issued by the United States Government to this state. Only approximately 14,000 acres of this land, however, have been filed upon by settlers, and the water rights sufficient to irrigate the remainder of the 28,000 acres aforesaid have not been disposed of and are still owned by the company, though intended, ultimately, to pass into the hands of settlers.

On the 1st of January, 1907, the company made and executed a trust deed or mortgage to the Chicago Title and Trust Company, a corporation of the State of Illinois, as trustee, upon all of the property of the company, including its water rights irrigation works and the sums of money due and owing from the various settlers for water rights sold or to be sold to them, in order to secure the payment of bonds in the principal sum of $ 700,000, such bonds being numbered from 1 to 840 inclusively. This mortgage or trust deed was duly filed of record in Sweetwater County, Wyoming, on February 20, 1907. On September 11, 1922, Evers Brothers recovered a judgment against the company in the sum of $ 5251. On the same day, presumably upon the petition of Evers Brothers, and by the consent or without objection of the company, the court appointed a receiver of the company, who qualified within a few days thereafter, took charge of all of the property of the company, and has managed it up to this time. On August 14, 1926, the receiver filed a petition for further directions by the court, and on the same day the Big Sandy Live Stock Company filed a petition of intervention in the receivership matter. Both the receiver and intervener prayed the court to make the Chicago Title and Trust Company a party to the proceeding and to authorize the sale of all of the property of the Eden Irrigation and Land Company, either at public or private sale, as might be most advantageous, and clear of the lien of the said trust deed or mortgage, and to distribute the proceeds of the sale among the bondholders and other creditors of the company. On August 31, 1926, the court made and entered an order directing the Chicago Title and Trust Company to be made a party defendant in the proceeding, and that summons be served upon it. Service of summons was duly made, as directed, on September 8, 1926. On October 14, 1926, the court entered a judgment in said matter, finding that the company is a public service corporation of the State of Wyoming; that it conveys water for power purposes and for the irrigation of lands of third parties, and for settlers on the reclamation project hereinbefore mentioned; that the irrigation works, reservoirs, canals and headgates of the company are deteriorating and out of repair; that this is resulting in irreparable damage to the property of the intervenor and other settlers on said reclamation project; that the company is no longer able to perform its contract with said settlers; that it has failed and refused, and still fails and refuses, to repair such irrigation works or to finance the irrigation company so that it may continue as a going concern; that it is hopelessly insolvent and its affairs can no longer be managed by the receiver as a going concern, and that it is necessary to sell its franchise and assets, clear of all liens and incumbrances; that the majority of the bondholders have consented to such sale; that it is to the best interests of all the parties interested to make such sale; that unless that is made, the company will forfeit its rights of way and its water rights; that the mortgage or trust deed to the Chicago Title and Trust Company is a first lien upon the property of the Eden Irrigation and Land Company, and that the bonded indebtedness secured thereby is greater than the assets of the company. The court, thereupon, directed that the property of the company be sold as a unit and as a going concern, free and clear of the lien of said mortgage or trust deed, to one George H. Ennis, in accordance with the terms of the contract already entered into, the proceeds of the sale to be subject to the terms of said lien and to be hereafter disbursed and paid over to the proper parties. The relator herein, one of the bondholders under said trust deed, appeared before...