Rutherford v. Oroville-Wyandotte Irrigation District

Petitioner instituted this mandamus proceeding on behalf of himself and others to compel respondent district to issue to petitioner a receipt in full for water delivered to his lands upon the payment theretofore of $6 per acre-foot. The controversy between respondent and the group represented by petitioner is of long standing. Various phases of this controversy have been before this court on four different occasions in recent years. (Henderson v. Oroville-Wyandotte Irr. Dist., 207 Cal. 215 [ 277 Pac. 487 ]; Dankert v. Oroville-Wyandotte Irr. Dist., 211 Cal. 87 [ 293 Pac. 785 ]; Henderson v. Oroville-Wyandotte Irr. Dist., 213 Cal. 514 [ 2 Pac. (2d) 803 ]; Rutherford v. Oroville-Wyandotte Irr. Dist., 215 Cal. 124 [ 8 Pac. (2d) 836 ].) The facts and history of the controversy have been full^ set forth in these prior cases and no useful purpose would be fulfilled by restating them in full in this opinion. So far as necessary to this opinion these facts may be summarized briefly as follows:

In 1922 respondent district purchased two public utility water companies, the Palermo Land & Water Company and the South Feather Land & Water Company. For many years prior to 1922, these companies had furnished their customers, one of whom is petitioner herein, with water. Before the purchase of the two utilities could be consummated it was necessary to secure the consent of the Railroad Commission thereto. That commission, after a full hearing, gave its consent to the purchase upon certain enumerated conditions, which conditions were approved and in fact

After the above decision had become final the directors of respondent district adopted a resolution fixing the rate for inside users for the year 1931 at $6 per acre-foot, and $10 per acre-foot for outside users. In Rutherford v. Oroville-Wyandotte Irr. Dist., supra, it was held that this was in violation of the contract. This court reaffirmed the position that it had taken in the prior case, viz.: That the district, under its contracts, must furnish water to the outside users at the same rate charged inside users.

So far as pertinent to the present controversy, the prior decisions above referred to have clearly established the following three propositions:

1. The contracts between the outside users and respondent district are valid, existing, enforceable obligations.

2. By these contracts respondent district is prohibited from charging outside users for the use of water a rate in excess of that charged inside users for the use of water.

3. The land taxes and assessments levied on the lands of inside users cannot be considered in determining whether the rates charged the two classes of users are the same. Such assessments are not a charge for the use of water but are in addition to such charge, and are chargeable only against inside users.

With these preliminary remarks we turn to the facts of the present controversy. It appears that after the decision in the Rutherford case, supra, had become final, on April 7, 1932, the directors of respondent district, by resolution, purported to fix the rates for outside and inside users for the year 1932, as follows:

1. A use charge for both outside and inside users of $6 per acre-foot for water delivered.

2. For all lands both outside and inside the district entitled to water service a stand-by or carrying charge of $2 per acre whether water is actually used or not.

By the terms of the resolution, both the use charge and stand-by charge as to outside users were made payable in advance of service, but as to those users (inside users), where the water charges constitute a prior lien on the property, the charges were not made payable until October 31st.

Petitioner contends that it is in violation of his contract with respondent district to thus impose a" stand-by charge on his lands whether water is used or not; that the contract, as interpreted by the prior decisions of this court, permits only a charge for the use of water; that the only lawful charge that can be imposed on petitioner is the “use” charge of $6 per acre; that, in any event, the resolution above mentioned discriminates against the outside users because it requires them to pay in advance while inside users are not required to pay until October 31st. Petitioner has tendered the acre-foot charge of $6 per acre for water furnished to him, and has demanded a receipt in full. Upon respondent district refusing to accept such payment and to issue a receipt in full, petitioner deposited the proper amount in a bank to respondent’s order. The answer of respondent district denies that the imposition of the stand-by charge violates the contract between the parties, or violates the previous decisions of this court.

After the answer of respondent district had been filed, the petitioner asked for and received the permission of this court to amend his petition. These amendments clarify, to a considerable extent, the problems herein presented. It is therein alleged that since 1928 respondent district has outstanding bonds of the aggregate face value of $1,054,000; that the interest rate thereon is six per cent per annum,

The answer of respondent district to these amendments is most evasive. Respondent district denies that the imposition of the stand-by charge has the effect of requiring the outside users to pay expenses properly not chargeable to them. Respondent district expressly admits passing the resolution lowering the land tax on inside users from $3 per acre to 10 cents per acre and admits, by failing to deny, most of the other allegations of the amendments to the petition.

It is our opinion that respondent district in fixing its rates for 1932, under the guise of a stand-by charge, is attempting to saddle on to the outside users, items of expense no't properly chargeable against them, and in direct violation of the prior decisions of this court. Almost the exact point here involved was decided' adversely to respondent in Henderson v. Oroville-Wyandotte Irr. Dist., supra. In that ease respondent sought to show that the decision of the

"In support of this final contention that the judgments of the trial court confiscate the property of the district, the latter refers to certain evidence given at the trial of these actions which shows, or at least tends to show, that the members of the district are paying more for their water than are the outside users. In fact, it is contended that the members of the district for less than half of the water available and delivered since the acquisition of the two utilities by this district pay more than two-thirds of the actual cost of furnishing such water to the users. This cost of water to the members of the district, however, includes the revenues from taxes and assessments paid by the members of the district in addition to the acre-foot rate charged all water users. The weak link in the district’s argument is that the revenues raised by taxes and assessments are not wholly and perhaps not at all used for the purpose of furnishing and delivering water to the users thereof. On the other hand, it clearly appears from this evidence that these revenues are largely used for the purpose of paying the interest on its bonded indebtedness and other expenses incurred by the district in extending its water system. The district comprised 24,200_ acres, only 2068 of which were receiving water at the time the district acquired the properties of the two utilities. A portion, the record fails to show just how much, of these 2068 acres within the district receiving water was under the irrigation system of the two utilities prior to the transfer. There, were 2757 acres outside the district receiving water from these two irrigation systems at the time of the transfer and after the transfer they continued to receive water from the district. As there were over 20,000 acres in the district without water at the time the district acquired the two utilities, it is apparent that in order to carry out its plans it would be necessary to expend very large sums of money

in securing additional water rights, constructing canals, ditches and laterals, and purchasing rights of way for the same. As to the advisability of making these extensions in the irrigation system of the district the outside users had no voice and with these plans they were not seriously concerned. They would receive only slight and probably no benefit from the large expenditures of money necessary to perfect an irrigation system adequate to the needs of the whole district. It was this burden—this large expense which would be necessary if the district carried out its plans to supply all of the lands of the district with water—that the outside users sought to protect themselves against when it was proposed that the district acquire the properties of the Palermo and South Feather companies. In the light of these facts, we think it may well be doubted whether the members of the district are actually paying more for their water service than those outside the district. At the time of the organization of the district it is apparent that there was considerable diversity of opinion among the landowners residing in the locality where the district was subsequently organized as to whether it was advisable to organize the district, and as to the advisability of having their lands included in the district. The result was, as we have already seen, that the plaintiffs and those whom they represent remained out of the district. Those who consented to become members and have their lands included in the district, it may well be assumed, knew of the plans of the organizers of the district to include therein a large body of land without water with the object and purpose of acquiring additional water rights, which might be brought upon and used upon these heretofore nonirrigated lands. With this knowledge they became members of the district and thereafter the district began to carry out the plans of developing a water system sufficient in capacity to irrigate as far as possible all of the lands in the district. These members of the district are, of course, liable for the expense thus incurred. They stand in an entirely different position from ■the plaintiffs who decided to remain out of the district and to receive water from the district under the plan outlined above. That those in the district are compelled to meet higher charges for water they receive than the outside users is not surprising. In fact, it must have been contemplated

by them that such would be the result if they became members of the district, and the district should put into execution the plan of extending its water system to all the irrigable lands in the district. The fact that the members of the district under these circumstances are required to pay higher charges for the water used than the outside users does not to any extent amount to a confiscation of the property of the district. The two classes of water users stand in entirely different positions regarding their respective rights to have water supplied to them by the district. There is in our opinion no merit in the contention of the district that the judgments herein confiscate the plants or property of the district.”

Applying the above ' reasoning to the facts of this case, it necessarily follows that the amount chargeable against the inside users in extending the works of the district cannot be considered in determining whether the rates charged the two classes of users are equal. Such expense is not properly a charge for the use of vrater and cannot, for that reason, be included in the charge made against outside users. Under the prior decisions of this court, inside users and outside users must be charged the same rate for the use of water. Expenses not connected with the use of water borne by the inside users cannot be used in determining whether the rates are equal. Such charges must be borne solely and entirely by the inside users who solely benefit therefrom, and are in addition to the charge to inside users for the use of water. We do not find it necessary to pass on the validity of section 55 of the Irrigation District Act, supra, purporting to permit irrigation districts to charge a stand-by charge. We are well aware of the many decisions permitting utilities to include such a charge in fixing their rates. Whether such a charge may be legally made by irri"gation districts will be determined in a proper case. Assuming the validity of that statute as applied to inside ’ users, the question remains whether such a charge may be imposed on outside users, when the charge is obviously to pay expenses already held to be not chargeable against outside users. Changing the name of the. charge cannot affect the substantive rights of the parties. By the very terms of section 55 it is specifically provided that the stand-by charge may be imposed “in lieu (either in whole or in part) of

The writ heretofore issued is made peremptory.

Seawell, J., Thompson, J., Shenk, J., Langdon, J., Preston, J., and Waste, C. J., concurred.