Vinyard v. North Side Canal Co., Ltd.

• Decision Date: 31 March 1923
• Citation: 223 P. 1072,38 Idaho 73
• Parties: CHARLES VINYARD and W. A. THOMPSON, Appellants, v. NORTH SIDE CANAL COMPANY, LIMITED, a Corporation, and C. C. WILBURN, F. W. HASTINGS, F. E. SAYRE, H. E. HARRY, M. H. WHALEY, A. F. MCLEOD, E. W. RIEMAN, GUY SAUNDERS and D. F. RAUM, Directors of the NORTH SIDE CANAL COMPANY, LIMITED, Respondents
• Court: Idaho Supreme Court

223 P. 1072

38 Idaho 73

CHARLES VINYARD and W. A. THOMPSON, Appellants, v. NORTH SIDE CANAL COMPANY, LIMITED, a Corporation, and C. C. WILBURN, F. W. HASTINGS, F. E. SAYRE, H. E. HARRY, M. H. WHALEY, A. F. MCLEOD, E. W. RIEMAN, GUY SAUNDERS and D. F. RAUM, Directors of the NORTH SIDE CANAL COMPANY, LIMITED, Respondents

Supreme Court of Idaho

March 31, 1923

ACTION TO COMPEL DELIVERY OF WATER FOR IRRIGATION-CAREY ACT CONSTRUCTION COMPANY-OPERATING COMPANY-CAREY ACT CONTRACT-RIGHT OF CONTRACT HOLDER-DUTY OF COMPANY-ORIGINAL APPROPRIATION-RIGHT OF CONTRACT HOLDER IN SUBSEQUENT APPROPRIATION-MAINTENANCE.

1. When a Carey Act construction company contracts to deliver 1/80 of a second-foot of irrigation water per acre to a settler and contract holder, and it develops that it cannot deliver him that amount of water out of the appropriation made by it at the time the contract is made, it can be compelled to deliver him the required amount of water out of a later appropriation if the same is not required to satisfy prior rights of other water users.

2. A Carey Act holding and operating company is bound to deliver the water held by it to those who are legally entitled to it by virtue of their contracts with the construction company.

3. The contractual provision limiting the maintenance which can be charged by a Carey Act construction company while in control of the system and of the operating company is not binding on the operating company after it acquires control of the system, and passes out of the control of the construction company.

4. One who seeks to compel a Carey Act operating company to deliver water to him must pay, or offer to pay, the proper maintenance charge.

APPEAL from the District Court of the Eleventh Judicial District for Jerome County. Hon. T. Bailey Lee, Judge.

Action to compel performance of contract to deliver water for irrigation. Judgment for defendants. Affirmed.

Judgment affirmed, with costs to respondents.

Eldridge & Morgan, for Appellants.

It is the duty of the canal company to distribute according to its articles of incorporation the waters equally and ratably among its stockholders. The corporation is merely a holding company or trustee for the use and benefit of the settlers. (Hobbs v. Twin Falls Canal Co., 24 Idaho 380, 133 P 899; State v. Twin Falls Salmon River Land & Water Co., 30 Idaho 41, 166 P. 220.)

In case of ambiguity in a deed or where it admits of two constructions, it will be construed most strongly against the grantor or most favorably to the grantee. (United Thacker Coal Co. v. Red Jacket Jr. Coal Co., 232 F. 49, 146 C C. A. 241; Alabama Corn Mills Co. v. Mobile Dock Co., 200 Ala. 126, 75 So. 574; Younger v. Moore, 155 Cal. 767, 103 P. 221; Brown v. State, 5 Colo. 496; Dunn v. English, 23 N.J.L. 126; Allerton v. New York etc. R. Co., 199 N.Y. 489, 93 N.E. 270; Kentucky Diamond Min. etc. Co. v. Kentucky Transvaal Min. Co., 141 Ky. 97, Ann. Cas. 1912C, 417, 132 S.W. 397.)

"Contracts between corporations having a common directory are regarded by the courts very much with the same suspicion as contracts between individual directors and their corporations." (2 Thompson on Corporations, 2d ed., sec. 1242.)

A contract and contractual obligations will be construed against the makers instead of the settlers in this case. (6 R. C. L. 854.)

A. B. Barclay, Walters, Hodgin & Bailey and R. P. Parry, for Respondents.

The interpretation placed upon agreements by the parties may be allowed to vary the terms of the agreement only when there is some ambiguity or uncertainty; there is clearly no ambiguity or uncertainty here, and therefore such interpretation does not apply. (4 Page on Contracts, sec. 2034, p. 3515; Lesamis v. Greenberg, 225 F. 449, 140 C. C. A. 481; State v. Water Supply Co., 19 N.M. 27, 140 P. 1056, L. R. A. 1915A, 242; Pierce v. Merrill, 128 Cal. 464, 79 Am. St. 56, 61 P. 64.)

As between entrymen on a Carey Act project, there are no priorities, but the appellants here are attempting to acquire a priority over the other users because of delivery of excess water. (Sanderson v. Salmon River Canal Co., 34 Idaho 145, 199 P. 999.)

McCARTHY, J., WM. E. LEE, J. Budge, C. J., and Dunn, William A. Lee, and Wm. E. Lee, JJ., and Givens, District Judge, concur. Dunn, J., did not sit. McCarthy, C. J., and William A. Lee, J., dissent.

OPINION

McCARTHY, J.

On January 2, 1903, the state of Idaho and the Twin Falls Land & Water Company entered into a contract by which the latter was to construct an irrigation project for the irrigation of certain lands under the Carey Act (U.S. Comp. Stats., sec. 4685) by means of 3,400 second-feet of the waters of Snake River appropriated for that purpose. The lands so proposed to be irrigated were partly on the north side and partly on the south side of Snake River. Thereafter a corporation known as the North Side Twin Falls Land & Water Co. (hereinafter designated as the Construction Co.) acquired the rights of the original company and took its place as to the irrigation of lands on the north side of the river. On April 15, 1907, the state and the construction company entered into a contract by which the latter was to construct an irrigation project for the irrigation of 30,000 acres of said land on the north side of the river, known as the first segregation. It is clear that the parties originally contemplated the water should be furnished from the natural flow of the river, and not from storage water. The company was to furnish 1/80 of a cubic foot per second for each acre of land and a proportionate interest in the canal. While it retained control of the project it was to charge as maintenance not to exceed thirty-five cents per acre. On August 25, 1907, the state of Idaho and the construction company entered into a contract by which the latter was to construct an irrigation project for the irrigation of certain of the lands on the north side of the river known as the second segregation. This was to be a storage or reservoir project, the water to be stored in a reservoir to be known as Wilson Lake Reservoir. On January 2, 1909, the state of Idaho and the construction company entered into a contract by which the latter was to construct an irrigation project for the irrigation of certain other land on the north side of the river known as Segregation No. 3. This was to be a storage or reservoir project, the water to be stored in the Jerome reservoir or such other reservoirs as might be provided. The Wilson Lake and Jerome reservoirs turned out to be unsatisfactory. For this reason, on March 27, 1913, the state and the construction company entered into an agreement by which the latter was to procure to be stored at Jackson Lake reservoir, or elsewhere at its option, an amount of water in excess of 170,000 acre-feet to be used on the lands of the project in lieu of water stored in Wilson Lake or Jerome reservoir. The contract provided:

"4. It is further understood and agreed that if more than 32,000 acres are sold under what is generally known as the First Segregation, being the lands included in Segregation List No. 6, in Lincoln County, together with other lands adjacent thereto, then storage shall be provided for such additional lands sold in excess of 32,000 acres to the same extent measured at the Milner Dam as is provided for lands on what is commonly known as the Second Segregation in Lincoln County, State of Idaho, being the lands included in Segregation List No. 13, but in case 32,000 acres are not sold on said First Segregation, then any water represented by the difference between the amount sold and the total acreage of 32,000 acres may be used on other lands under the canal system. . . .

"8. It is anticipated that the said party of the second part will procure more water to be impounded at Jackson Lake than is called for by the terms of this agreement and any additional water so impounded may be used for the irrigation of other lands, or for other purposes."

More than 32,000 acres has not been sold under the first segregation. February 25, 1913, the United States and the Kuhn Irrigation and Canal Co. entered into a contract by which the latter was to pay the cost of increasing the height of the Jackson Lake Dam 17 feet, and was to receive 10,000 acre-feet below elevation "6572," and the additional amount of water which could be delivered from the reservoir on account of the said increase in the height of the dam. The 10,000 acre-feet was acquired in exchange for a right owned by the Kuhn Company, known as the Perrine right is used on the first segregation, and is not in question here, the controversy being solely as to the additional amount. The company was to pay the United States its proportionate share of the cost and expense of operating and maintaining the reservoir and delivering water therefrom. This contract was performed. On March 12, 1918, the Kuhn Irrigation and Canal Co. assigned and transferred to the construction company all its rights and interests in the said contract with the government. On March 12, 1918, the construction company assigned to the respondent North Side Canal Company (hereinafter designated as the operating company) all its rights and interests in said contract with the government, subject to the right of the second and third segregations to 170,000 acre-feet of the stored water, subject also to the right of all persons under the first segregation who had contracted with the construction company for an additional or supplemental water right, about which more will be said later. The respondent operating company is a holding, or operating, company, organized in accordance with the Carey Act and the state statutes, for the purpose of receiving title to and operating the irrigation project after...