Thayer v. Cal. Dev. Co.

This is a proceeding in mandamus, instituted in the superior court of Imperial County on December 20, 1910, to compel the California Development Company a corporation, through its receiver, to deliver to plaintiff C. E. Thayer, the wife of her coplaintiff, W. A. Thayer, out of its central main in Imperial Valley, water to irrigate her lands, upon the theory that the water therein is appropriated and held by it for sale, rental, and distribution generally to the members of that farming neighborhood. Defendants and intervener joined issue on that question. The trial court found with plaintiffs and entered judgment accordingly. These are appeals from such judgment by defendant Holabird, the receiver, and by the intervener.

The California Development Company was organized under the laws of the state of New Jersey, for the purpose, among others, of acquiring, holding, constructing, and maintaining headings, dams, ditches, etc., for collecting, storing, and conducting water and irrigating land; supplying and distributing water to and irrigating and cultivating the land of itself and of others; and of selling or letting such water or the right to use the same. On December 15,1895, it caused to be posted at a point on the Colorado River in this state, distant one thousand six hundred feet north of the point where the international boundary line between the United States and Mexico crosses said river a notice of appropriation claiming for itself and others ten thousand cubic feet flow per second of the waters of said river at that point. The notice further stated that it claimed the right to said water for the purpose of “developing power and for the irrigation of land in San Diego County, state of California, and in Lower California, Republic of Mexico. ’’ It was also stated in said notice that “we purpose carrying the water from the above described point of diversion through a canal which will run in a southwesterly direction through Lower California, Republic of Mexico, and thence into that portion of San Diego County, state of California, lying to the east of the San Jacinto Mountains and known as the ‘New River Country.’ Said canal will be 200 feet in width and will carry a depth of 10 feet of water. Its length will be 50 miles, more or less.” The detour into Mexico was rendered necessary by topographical conditions. The portion of San Diego County referred to was what is

Before January 11, 1902, said Development Company had constructed from said point on the Colorado River at which its notice of appropriation was posted, known as Hanlon’s heading, southwesterly through Mexico a distance of twenty miles, and thence northwesterly to a point on the international boundary line, a canal with the capacity sufficient to carry and deliver at said point not less than one thousand five hundred cubic feet of water per second.

Said company has never owned any of the land in Imperial Valley to which it proposed to furnish water for irrigation. Those lands are naturally arid and desert in character and without irrigation are worthless and uninhabitable, but are of great and exceptional fertility when irrigated. They are irrigable from the Colorado River and from no other source. At the date of the organization of the Development Company, such valley was unoccupied and a desert, and substantially the whole thereof was surveyed public land of either the United States or the state of California.

The plan adopted by the Development Company for its disposition of the water for irrigating such lands was substantially as follows: The company mapped out districts of territory in Imperial Valley as units of irrigation, each of which was to be occupied by a mutual water company formed under the laws of this state. These companies were to be

The Development Company caused seven of such mutual companies to be organized, known as Imperial Water Companies Nos. 1, 4, 5, 6, 7, 8 and 12, with an estimated aggregate of irrigable, land of four hundred thousand acres. Imperial Water Company No. 1 was organized by five agents of the Development Company on March 23, 1900. The district allotted to it was estimated to contain one hundred thousand acres of irrigable land, and the capital stock therefor was made one hundred thousand shares, with a par value of ten dollars per share. Among its purposes declared in its articles was one to secure a supply of water for irrigation, domestic, and other purposes and to distribute the same at cost among its stockholders only for use on the lands situated in its district, which were described therein. The by-laws were in accord with the plan already referred to, and required each share of stock to be located on land in the district, and restricted the use of water to land on which stock had been located. The stock was transferable and its place of location could be changed by the owner to any land within the district of a mutual company issuing it.

Under a contract between said Imperial Water Company No. 1 and the Development Company, all of the stock of the former, except two thousand five hundred shares, was sold by the Development Company for its own benefit, at an average of fifteen dollars per share, in consideration of which the

All of the stock of Imperial Water Company No. 1, including the two thousand five hundred shares retained by it, has been sold to individuals who have located the same upon land in the district of said company, and are cultivating the same, and the Development Company has been delivering water to such mutual company in accordance with its undertaking. The same is true as to the other mutual companies. Neither the Development Company nor its receiver has ever delivered or furnished any water for irrigation or other purposes to any land in Imperial Valley, or to any consumer of water other than under and in accordance with such agreements, except that water has been furnished under contract to the city of Imperial, a municipal corporation, and to the Holton Power Company, and all water delivered to such companies has been delivered under and in pursuance of the terms of said agreement.

Since the year 1904, said mutual corporations have not been controlled or dominated by the Development Company.

There are between fifteen thousand' and thirty thousand acres of land within the district of Imperial Water Company No. 1 in excess of the number of shares of the capital stock provided in its articles of incorporation. Plaintiff C. E. Thayer owns forty acres of such land which is in condition for cultivation and irrigation, and which she desires to irrigate and plant, but upon which no water stock has been located. This land is under the flow of the canal of the Development Company, and constitutes a part of the lands for irrigation of which the said waters were appropriated. By reason of the fact that all of the stock of said Imperial Water

On December 13, 1909, an action was commenced in the superior court of Imperial County by the Title Insurance & Trust Company, a corporation, against the Development Company and others to foreclose the mortgage held by the plaintiff therein upon the irrigation system of the Development Company, and on the same day defendant Holabird was appointed by said court receiver of said system, and has ever since been in control and management of said system.

There was, we think, enough in the evidence to sustain the conclusion of the trial court substantially to the effect that the Development Company had sufficient water to comply with the demand of Mrs. Thayer, without impairing its ability to furnish to those with whom it was under contract the water required by them.

The evidence shows that the Development Company, through its Mexican agency, furnishes water for irrigation to individual consumers in Mexico, at the rate of fifty cents for each acre foot.

The agreements between the Imperial Water Company No. 1 and the Development Company provided that all water delivered to the former is delivered at the Mexican boundary line, and the Development Company has no interest in. said water so delivered after it is delivered at said place. Said Development Company is the owner of the main canal in such district through which such water is carried.

Under the law of this state as established at the beginning, the water-right which a person gains by diversion from a stream for a beneficial use is a private right, a right subject to ownership and disposition by him, as in the case of other private property. All the decisions recognize it as such. Many of them refer to it in terms which can have no other meaning than that the right is private property. We need not cite them all. The following early cases sufficiently establish the proposition: Eddy v. Simpson, 3 Cal. 251 , [ 58 Am. Dec. 408 ] ; Irwin v. Phillips, 5 Cal. 146 , [ 63 Am. Dec. 113 ] ; Tartar v. Spring Creek Co., 5 Cal. 398 ; Conger v. Weaver, 6 Cal. 557 , [ 65 Am. Dec. 528 ] ; Hoffman v. Stone, 7 Cal. 49 ; Maeris v. Bicknell, 7 Cal. 262 , [ 68 Am. Dec. 257 ] ; Hill v. King, 8 Cal. 336 ; Kimball v. Gearhart, 12 Cal. 47 ; Ortman v. Dixon, 13 Cal. 38 ; Kidd v. Laird, 15 Cal. 180 , [ 76 Am. Dec. 472 ] ; Rupley v. Welch, 23 Cal. 455 .

By the act of Congress of July 1, 1866, [14 Stats. 251], the United States confirmed all water-rights then vested, in streams upon the public domain in California, and provided for the acquisition of similar rights therein in the future. These, of course, became private property when so acquired. (DeNecochea v. Curtis, 80 Cal. 397 , [ 20 Pac. 563 , 22 Pac. 198 ] ; Natoma Water etc. Co. v. Hancock, 101 Cal. 42 , [ 31 Pac. 112 , 35 Pac. 334 ].)

The Civil Code of 1872 recognizes and declares the same doctrine and prescribes the mode by which water-rights may be gained and protected. Section 1410 declares that “the right to the use of running water” of a stream, cañón or ravine “may be acquired by appropriation.” The succeed

Definitions of the term “public use” áre usually found in decisions involving the right of eminent domain or in those relating to public charities. A bequest to establish a home for the orphans of deceased Odd Fellows is not made to a public use. In deciding this point the court says:“ It is an essential feature of the latter (a public trust) that the beneficiaries are uncertain; a class of persons described in some general language, often fluctuating, changing in their individual members, and partaking of a quasi public character. . . . The smallest street is public, for all have an equal right to travel on it; but a way used by thousands, which may be shut against a stranger, is private.” (Troutman Co. v. De Boissiere, 66 Kan. 1 , [ 71 Pac. 286 ] ; Pennoyer v. Wadhams, 20 Or. 274 , [ 11 L. R. A. 210 , 25 Pac. 720 ] ; Burd Orphan Asylum v. School Dis., 90 Pa. St. 29 .) “The gen

In- the case of the usé of water in villages, towns, ,and cities, the right to the use usually extends to every inhabitant

In Fallbrook Irr. Dist. v. Bradley, 164 U. S. 161 , [ 41 L. Ed. 369 , 17 Sup. Ct. Rep. 56 ], the United States supreme court was considering the question whether or not the water belonging to an irrigation district organized under the California statute of 1887, and acquired for and applied to its authorized uses and purposes, was water dedicated to a public use. The circuit court had decided that it was not for public use .and that the district works were not public improvements, because the water was held for the exclusive use of the landowners of the district and not for the general public within its limits. Upon this question the supreme court on appeal said: “The fact that the use of the water is limited to the landowner is not therefore a fatal objection to this legislation. It is not essential that the entire community, or even any considerable portion thereof, should directly enjoy or participate in an improvement in order to constitute a public use. All landowners in the district hare the right to a proportionate share of the water, and no one landowner is favored above his fellows in his right to the use of the water. It is not necessary, in order that the use should be public, that every resident in the district should have the right to the use of the water. The water is not used for general, domestic, or for drinking purposes, and it is plain from the scheme of the act that the water is intended for the use of those who expect to use it ón their lands. . . . We think it clearly appears that all who by reason of their ownership of or connection with any portion of the lands would have

The decisions in this state are to the same effect. The first and leading case on the general subject is Gilmer v. Lime Point, 18 Cal. 229 , where it was held that a fort for protection against foreign invasion was a public use for which the state might authorize the condemnation of land. The court said (p. 252) : “This public use need not be á use general or common to all the people of the state alike. It may be a use in which a small portion of the public will be directly benefited, as a street in a town, a bridge or a railroad, necessarily local in its benefits andl advantages, but it must be of such a character as that the general public may, if they choose, avail themselves of it.” In Miners’ Ditch Co. v. Zellerbach, 37 Cal. 543 , 590, [ 99 Am. Dec. 300 ], the plaintiff corporation was organized to take water from the Tuba River and use the same for mining and mechanical purposes and to sell it to others for mining purposes. It does not appear that it was offered generally to the public. The court said that the corporation was under no obligation to the public to continue the business, and that it “was created for the immediate benefit of its stockholders, with no direct specific public purpose in view, as in the ease of a railroad or turnpike or canal company. The only interest the public has in the continuance of the business is the remote, general interest, which it has in the proper development of the resources of the country”; in effect, that its property was not devoted to public use. In Price v. Riverside, 56 Cal. 432 , it is said that every corporation formed under the act of 1862, [Stats. 1862, p. 540], “has impressed upon it a public trust—the duty of furnishing water, if water it has, to all those who come within the class or community for whose alleged benefit it has been created.” In McCrary v. Beaudry, 67 Cal. 120 , [ 7 Pac. 264 ], it was decided that water conducted through pipes laid in the streets by permission of the city of Los Angeles, and supplied by the owner to residences along those streets at fixed rates, was devoted to a public use, and that residents

Under the doctrines thus established, it is evident that the California Development Company has not dedicated to public use the water which it diverts from the Colorado River and that it has not offered it for sale, rental, or distribution in such a manner as to constitute a public use thereof. In its notice of appropriation it declared that it claimed the water for itself and others. It did not claim it for use by the public, nor designate the “others” to whom’ it was to be furnished. The notice stated1 that the water was claimed for the purpose of developing power and for the irrigation of lands in the “New River Country” situated in what was then San Diego County, but it did not say that it was to be used upon all said lands, nor generally upon the lands in said country. Upon each of these essential elements of a public use the most that can be said is that the notice is silent. There never was any declaration by that company that the water was to be devoted to public use or that it was to be offered generally for sale in California, or to all landowners in the New River Country, or in any district or part thereof, or even to all landowners along the lines of its ditches or the ditches of its auxiliary companies. No such offer or declaration has ever been made, nor has it ever been the custom or practice of the company, or of its auxiliary companies, to sell water in that way. The method adopted by it for the disposition of the water, and its conduct in distributing the same, have been wholly inconsistent with the idea that the water was held out for general sale or distribution, and it has been consistent only with the theory that the intention was to retain control of the water to the extent, at least, of choosing for itself the persons and corporations to whom it should be sold or delivered, and the terms and conditions omwhich such sales or deliveries should be made. It has, in fact, retained such control and it has not disposed of the water otherwise than according to this plan. For this purpose it laid out seven separate dis

We have hitherto considered the case upon the theory that all the other corporations mentioned, including the Mexican Company, are but subsidiary to and1 agents of the California Development Company for the carrying out of its plan for the distribution of its water. The effect is the same, however, if those companies should become, or be considered,

The plaintiff claims, however, that notwithstanding these decisions and the well established meaning of the phrase “public use” as shown by the other decisions cited, the meaning of the phrase is defined in section 1 of article XIV of the constitution in terms which necessarily creates a public use whenever any water is sold or distributed, regardless of the number of persons to whom it is delivered, the manner or character of the disposition made of it, or of the transfer of the right thereto. The part of the section defining the

In Merrill v. Southside I. Co., 112 Cal. 426 , [ 44 Pac. 720 ], it was held that the word “appropriation,” in section 1 aforesaid, does not refer to the act by which the water is acquired, as the taking from the stream, for example, but to the act or acts by which it is designated, set apart, and devoted to the purposes of sale, rental, or distribution. According to the theory of tiie plaintiff in this case, whenever the owner of a water supply determines to and does sell it for a price agreed on between himself and the purchasers, it immediately becomes subject to public use, and! any other person to whom it can be conveniently distributed in the same manner would have the right to a proportionate share of the water on the same terms as the purchasers, and, if the supply is limited, the first purchasers must divide with all others who may come in and claim a share. Under that theory, where a person having a surplus of water parts with a portion of it by sales to others he thereby appropriates such portion to purposes of' sale and dedicates it to public use. This application of the section would destroy private rights in water and convert every sale thereof into a dedication to public use. We do not believe that the constitution was intended to have such effect, or that it should be so construed. Article XIV taken as a whole shows plainly that it was intended to regulate the use of water appropriated and dedicated generally for sale and distribution among an indefinite number of users. It could not have been intended to declare that a single sale of a part of his water by one having more than he needs would convert the use into a public use in which others could share. . If a single sale could not do this, other sales of like character would not accomplish it. The

This provision of the constitution has been in force thirty-three years. It has never been understood that it had the effect here contended for. There have been many instances in which the owners of large tracts of land have acquired water, conducted the same to the land, and sold and conveyed the land in small tracts to actual settlers with a proportionate share of the water appurtenant to the land, coupled with an agreement to continue the water supply at a fixed annual rate. Such a disposition is essentially a matter of private contract and it shows no intent to create a public use. It has also been a frequent practice to effect the same general purpose by forming a corporation to hold the water supply and to issue stock at a fixed price entitling the holder to a share of the water at a fixed annual rate, thus making the stockholders themselves the indirect owners of the water. Many decisions of this court in various ways concern corporations of this character. Among them are the following: Richey v. East R. W. Co., 141 Cal. 221 , [ 74 Pac. 754 ] ; Estate of Thomas, 147 Cal. 236 , [ 81 Pac. 539 ] ; Southside I. Co. v. Burson, 147 Cal. 406 , [ 81 Pac. 1107 ] ; Mabb v. Stewart, 133 Cal. 556 , [ 65 Pac. 1085 ] ; s. c. 147 Cal. 417 , [ 81

This long continued understanding andl application of this section of the constitution must be deemed to be a practical construction of it contrary to the theory of plaintiff. It was not intended to declare that specific sales of water, or transfers thereof to a particular person or persons chosen at the will of the holder of the supply, or the distribution thereof by private corporations among their stockholders for an agreed price and at annual rates fixed by the corporation itself, should be considered a dedication thereof to public use.

It would follow as a matter of course that neither the Development Company, nor either of the water companies organized by it, possesses the power of eminent domain. It is not asserted that either of them has ever claimed or attempted to exercise that power. The Mexican company has received from the Mexican government a grant of that power. But the fact that that company is carrying on a public service in Mexico and has- devoted some water to public use there does not affect the water carried into the United States nor the character of the use thereof in California. Nor is the fact that it is all derived from the same source of any importance. A part of a stream, or a part of a single appropriation therefrom, may be devoted to public use and another part entirely to private use. (Leavitt v. Lassen I. Co., 157 Cal. 83 , [ 29 L. R. A. (N. S.) 213 , 106 Pac. 404 ].)

So far as any other waste of the water is concerned, it is water to which the defendants have acquired no right. Their right is measured by the quantity which is put to beneficial use, by which is meant the quantity necessary to be taken from the source to supply that use at the place of use. The taking of more would be a taking without right. But the excess, if any, has not been applied by any of the defendants to any public use in California. The plaintiff, or any person, could appropriate such excess by an independent diversion from the Colorado River, and thereby prevent defendants from taking it. Until she does so she has no more right to it than the defendants have. Doubtless she is not in a position to do this, but the defendant is not a common carrier of water and it cannot be compelled to take it from the river for the benefit of plaintiff, carry it through Mexico for her and deliver it to her in California. The case, in this aspect, is one of apparent hardship, but the courts cannot compel such service. As a matter of general policy we doubt if it is important, for it is not likely that the waste will be allowed to continue, since the defendants could readily make a profitable use of it by increasing their capital stock and) applying it to the additional lands to which it could thus be made available, without any change in their method of distribution. In any event,

The judgment is reversed.

Beatty, C. J., does not participate in the foregoing decision.

Rehearing denied.