Union Electric Co. v. Lovell Livestock Co.

• Decision Date: 05 February 1936
• Docket Number: 7446.
• Citation: 54 P.2d 112,101 Mont. 450
• Parties: UNION ELECTRIC CO. v. LOVELL LIVESTOCK CO.
• Court: Montana Supreme Court

54 P.2d 112

101 Mont. 450

UNION ELECTRIC CO. v. LOVELL LIVESTOCK CO.

No. 7446.

Supreme Court of Montana

February 5, 1936

Appeal from District Court, Beaverhead County; Lyman H. Bennett Judge.

Action by the Union Electric Company against the Lovell Livestock Company. Judgment for defendant, and plaintiff appeals.

Reversed and remanded, with directions.

MORRIS J., dissenting.

John Collins and H. G. Rodgers, both of Dillon, for appellant.

Gilbert Gilbert & McFadden, of Dillon, for respondent.

STEWART Justice.

This is the second appeal in a case wherein Union Electric Company, a public service corporation, owner and operator of an electric plant at Dillon, is the plaintiff, and Lovell Livestock Company, a corporation owning land adjacent to the plant, is the defendant. For a more complete statement of the case, see 93 Mont. 577, 20 P.2d 255.

The water used for generating power in the plant is discharged directly from a tailrace into a ditch on defendant's land. From thence it is conducted across the land of defendant and into what is known as the Sturgis ditch and on into the Beaverhead river. The Sturgis ditch was constructed for the purpose of conveying the waste water from the plant to the river so as to prevent the flooding of adjacent lands, particularly lands owned by one Rose Heavey, John Butala, and others. Before this ditch was constructed, the parties to this action and others were involved in litigation by reason of flooding by such waste waters. On October 31, 1917, the electric company and the Lovell Company agreed on a basis of settlement, and on that day entered into a written agreement wherein the electric company was party of the first part and the Lovell Company was party of the second part. By the terms of the agreement the electric company was required to, and did, execute a quitclaim deed conveying to the Lovell Company "all of its right, title and interest in and to all the waters of Lovell's warm springs and Brown's springs, after their discharge from its hydro-electric plant," together with the full, complete, and absolute control and use thereof. By that agreement the electric company also agreed to execute and deliver to the defendant a deed conveying to it certain land theretofore purchased by it from one George Rebich for right of way for the Sturgis ditch and upon which it was constructed.

The contractual part of the instrument was preceded by the recitation of certain reasons for making the agreement. Among these reasons it was recited that the parties desired to finally settle, adjust, and determine all differences, disputes, claims, and demands between them, with reference to all matters, things, claims, and demands that then existed and arising since the Rose Heavey litigation, and as to the future use, control, and domination of and over the waters of Lovell warm springs and Brown's springs and of the Sturgis ditch after the waters were discharged from the hydro-electric plant of the first party. It will thus be observed that very specific and plainly expressed reasons were recited as to the actuating causes for the agreement.

The contractual part of the agreement itself provided: "And as a part of the consideration of this agreement and to the end of all controversies between the parties hereto arising or existing from all past transactions since the Rose Heavey litigation, it is agreed between the parties hereto, that from this date, the party of the second part will henceforth and forever, as against the party of the first part, maintain, operate and care for the said 'Sturgis ditch' and the waters of Lovell's Warm Springs and Brown's Springs discharged and released from the hydroelectric plant of the first party to be conveyed therein, and will hold the said first party and its successors altogether harmless and free from any future costs incident to the maintenance of the said ditch and the diversion of the said waters thereby, and from all future costs, charges, trouble and damage, or litigation, by reason of or on account of the care, flow and control of said waters, excepting only such damages as may hereafter arise from negligence of the party of the first part."

This contract remained in effect, and during the winters of 1920-21 and 1921-22 the Sturgis ditch filled with snow and ice, and as a result the lands of one Butala were flooded. Thereafter, Butala instituted an action against plaintiff to recover damages. Plaintiff notified defendant of the pendency of the action, and demanded that it defend the same, but this defendant refused to do. Butala finally recovered a judgment against plaintiff, and, as a result thereof, plaintiff was compelled to pay him the sum of $882.30.

Thereafter, plaintiff brought this action against defendant under the indemnity provisions of the contract and sought, in addition to the amount of the judgment paid, the sum of $220.25 for attorneys' fees expended in the Butala action. The trial court awarded plaintiff only nominal damages, upon the theory that plaintiff and defendant were joint tort-feasors. Plaintiff appealed from the judgment to this court, where the judgment was reversed and a new trial ordered.

Before the second trial, defendant amended its answer so as to raise an issue not previously tendered, viz.: That at the time the contract was made, and prior thereto, plaintiff operated its plant in such manner that a constant flow of water was maintained in and through the Sturgis ditch; that the parties fully contemplated and intended that at all times during the life of the agreement plaintiff would continue to maintain a constant flow of water through the Sturgis ditch; that notwithstanding such understanding plaintiff ceased to use the water from Brown's springs, and otherwise changed the mode of operating its plant, and thereby prevented a continuous flow of water through the Sturgis ditch; that a continuous flow of water in the ditch was in and of itself sufficient to keep the ditch free and clear of ice and snow in the winter; that without such continuous flow of water in the ditch it was extremely burdensome and difficult for defendant to keep the ditch free of ice and snow so that there would be no flooding; and that, by virtue of these circumstances, the overflowing of the Sturgis ditch and the resulting injuries to Butala's lands were directly and proximately caused by "the failure, carelessness and concurring negligence of plaintiff." These allegations were all denied by plaintiff in its reply to the amended answer.

The cause was tried to the court sitting with a jury. At the close of the evidence both sides moved for a directed verdict. Instead of granting either motion, the court propounded certain interrogatories to the jury. In response thereto the jury answered that plaintiff's operation of its plant at the time of making the contract produced and maintained a continuous flow of water through the Sturgis ditch; that subsequent to the execution of the contract, plaintiff so changed its mode of operation as to cause a cessation of the continuous flow of the water through the ditch, and that this materially increased the burden upon defendant in keeping the ditch clear of ice and snow so that it would carry the water discharged from the plant. Thereafter, the court entered judgment for the defendant, and plaintiff prosecuted this appeal.

Plaintiff contends that the contract is clear and unambiguous, and that under the terms thereof the duty devolved upon defendant to keep the Sturgis ditch clear so that the water would pass through it and there would be no damage by flooding. Plaintiff also asserts that the affirmative matters set up in the amended answer, and the evidence adduced in support thereof, were ineffectual and inadmissible, in that they constituted an attempt to vary the terms of the written contract by parol evidence; and that the contract did not impose any duty upon plaintiff to continue using the waters of Brown's springs or to conduct its operations so as to provide a continuous flow of water through the Sturgis ditch.

Defendant insists that the contract is ambiguous and uncertain upon its face, and that parol evidence was admissible for the purpose of aiding the court in interpreting the contract with respect to the question of whether the parties thereto intended that plaintiff should continue to conduct its operations in the manner employed at the time the contract was made. Defendant argues that plaintiff was under a duty implied by the written contract to so continue its operations that a continuous stream of water would flow through the ditch, and that in failing to do so it made it virtually impossible to keep the ditch free of ice and snow, and thereby discharged defendant from the duty otherwise imposed upon it by the terms of the contract.

Defendant contends that where, as here, there is nothing expressed in the contract to the contrary, the law presumes that the parties contracted with reference to the facts as they existed at the time, citing Murphy v. Stone & Webster Engineering Corporation, 44 Mont. 146, 148, 119 P. 717, 719, Ann.Cas.1913A, 1334. We do not believe that the cited case sustains such an extreme position. The court there said: "In seeking the intention of the parties, the language used will not be so construed as to give it the effect of an admission of a fact obviously intended to be controverted, or the waiver of a right not plainly intended to be relinquished."

This court has on numerous occasions announced the rules with reference to the construction and interpretation of contracts. These cases and the rules therein announced are well summarized in Brown v. Homestake Exploration Co., 98 Mont. 305, 39 P.2d 168, 174, as follows: "In the case of McDaniel v....