Tapper v. Idaho Irrigation Co.

DUNN, J. This action was brought by appellants for damages for failure of respondent to furnish water during the season of 1915 for irrigating certain lands, owned by appellants, according to contracts existing between the parties to this action. Respondent is a corporation organized for the purpose of constructing an irrigation system and providing water for the reclamation of lands in Blaine and Lincoln counties under what is commonly known as the Carey Act, and appellants are holders of four contracts entered into between the respondent on the one hand and appellants and their predecessors in interest on the other. The case was tried before a jury and a verdict returned in favor of respondents. From the judgment entered upon said verdict this appeal was taken. Numerous errors are assigned by appellants but we think the case may be disposed of in this court by a determination of one question, or possibly two. — 82 — Five segregations of land have been made under the contract between the respondent and the state of Idaho numbered respectively 9, 10, 11, 12 and 22. The land contracts involved in this action were made under what is known as the first segregation, list No. 9; but it is conceded by both parties that the contracts entered into between respondent and the state of Idaho as to lists 9, 10, 11 and 12 and the individual contracts involved herein are to be considered and construed as one contract. Subsequent to the making of the contracts covering the lands, embraced in lists 9, 10, 11 and 12 respondent entered into what is called a supplemental contract with regard to lands embraced in list No. 22. It is urged by appellants that the right of the respondent to distribute water to settlers on the lands embraced in list 22 on an equal footing with those upon lands embraced in the other four lists can be and ought to be adjudicated in this action. This question cannot be determined in this action for the reason that this issue is not presented by the pleadings herein, and for the further reason that if such issue were presented by the pleadings, not all of the parties necessary to a full determination of this question are before the court. The sole question to be determined is whether respondent bound itself to deliver the specific amount of water set out in the contracts, viz., one-eightieth of a cubic foot of water per second per acre during the irrigating season, so that in case of its default in this regard it can be held to respond in damages. The contention of appellants is that the contracts must be so interpreted, while the contention of respondent is that respondent bound itself only to deliver to appellants their proportionate part of the water that could be supplied from its appropriation in Big Wood River and Malad River, so that in case of shortage in the supply due to drougth or to other natural causes its contract would be fulfilled if appellants received their fair proportion of the available water supply. Respondent further contends that during the year 1919, 'when the alleged damage occurred, it was acting simply in the place of the holding and operating company, The Big — 83 — Wood River Reservoir and Canal Company, and that it had no responsibility with regard to the water supply except to equitably distribute it among the land owners. The contract between the respondent and the state of Idaho, entered into on the 8th day of May, 1907, which covered the lands embraced in list No. 9, contained the following provisions: “4. Appropriation of Water. “It is understood that the party of the second part is the owner of a right to divert from the Big Wood River and Malad River 3000 cubic feet per second of time of water, under permit Number 1817, issued by the State Engineer of the State of Idaho, on the 16th day of November, 1905. “And the said party of the second part agrees to furnish and deliver to the owners of shares in said reservoir and irrigation system, as specified in the other provisions of this contract, all of said appropriated waters to which the said second party may be entitled to the extent of one-eightieth (1/80) of one (1) cubic foot per second of time per acre, said water to be furnished for the reclamation of the lands included in said First Segregation, List Number 9, together with any other lands not included in said First Segregation, but which are so situated as to be susceptible of irrigation and reclamation from the canal and distribution system designed for the irrigation of the lands included in said List Number 9. “And the said second party hereby covenants and agrees that it has not done, suffered or permitted on its part any act or thing by reason whereof the appropriation so made, of the water of Big Wood River and Malad River, for the purpose of the irrigation and reclamation of lands through the system of works to be constructed hereunder, has been or in the future may be in any way impeached, clouded or impaired..... “6. Application for Lands. “The said party of the first part, through its State Board of Land Commissioners, agrees that it will not approve any application for or filing on the lands herein referred to — 84 — as the First Segregation, List Number 9, until the person or persons so applying shall furnish to the said Board a true copy of the contract entered into with the party of the second part for the purchase of sufficient shares of water rights in said reservoir and irrigation system for the irrigation of said lands, said shares of water rights to be evidenced by the stock of the Big Wood River Reservoir & Canal Company, Limited, as hereinafter provided. “The second party stipulates and agrees that to the extent of the capacity of the irrigation works and to the extent of its water rights, it will, as rapidly as lands are open for entry and settlement sell or contract to sell water rights or shares for land to be filed upon to qualified entry-men or purchasers without preference or partiality, other than that based upon priority of application; it being understood, however, that priority of- application or priority of entry or settlement shall not give any priority of right to the use of water flowing through the canal as against subsequent purchasers, but shall entitle the purchaser to a proportionate .interest only therein, the water rights having been taken for the benefit of the entire tract of land to be irrigated from the system. The priority of the -application upon the opening, days shall be determined by a system of drawing under the direction of the State Board of Land Commissioners..... “8. Price of Water Rights. “ .... But in no case shall water rights or shares be dedicated to any of the lands aforementioned or sold beyond the carrying capacity of said canal system or in excess of the appropriation of waters as hereinbefore mentioned..... “9. Transfer of Management and Possession of Canal. “It being necessary to provide a convenient method of transferring the ownership and control of said canal from the said party of the second part herein to the purchasers of said water rights in said canal and for determining their rights among themselves and between said purchasers and — 85 — the party of the second part herein, for the purpose of operating and maintaining said canal during the period of construction and afterwards and for the purpose of levying and collecting tolls, charges and assessments for the carrying on and maintaining of said canal and the management and operation thereof, it is hereby provided that as soon as said lands are ordered thrown open for settlement, a -corporation, to be known as the Big Wood River Reservoir & Canal Company, Limited, shall be formed at the expense of the party of the second part, the Articles of Incorporation of said Company to be in a form approved by the Attorney General of the State of Idaho; that the authorized capital stock of said corporation shall be One Hundred Twenty-five Thousand (125,000) shares, which amount is intended to represent one share for each acre of land which may hereafter be irrigated from said canal. The entire authorized amount of the capital stock of said corporation shall be delivered to the party of the second part herein in consideration of the covenants and agreements herein contained in order to enable it to deliver to purchasers of water rights the shares of stock representing the same. Said shares of stock, however, shall have no voting power and shall not have force and effect until they have been sold or contracted to be sold to purchasers of land under this irrigation system. “At the time of the purchase of any water right there shall be issued to the purchaser thereof one share of the capital stock of said corporation for each acre of land entered or filed upon. That the said party of the second part herein shall, in ■ case said water rights or shares of stock are not fully paid for, require the indorsement and delivery to it of said stock, and shall at the same time, require of said purchaser an agreement that until thirty-five per cent (35%) of the purchase price of said stock has been paid the said party of the second part herein shall vote said stock in such manner as it may deem proper at all meetings of the stockholders of said corporation. “But the said second party hereto nor the Big Wood River Reservoir & Canal Company, Limited, cannot in any manner control any of the said system so as to limit the — 86 — liability of the second party under the terms of this contract. “The said Big Wood River Reservoir & Canal Company, Limited, shall have the management, ownership and control, as above set out, of the said irrigation system as fast as the same is completed and turned over to it for operation by the said party of the second part, as hereinafter provided. Whenever it is certified by the Chief Engineer of the Company and the State Engineer, that certain portions of the said irrigation system are completed for the purposes of operation, the same may, with the consent of the State Land Board, be turned over to the Big Wood River Reservoir & Canal Company, Limited, for operation. Such transfer and operation, however, shall not in any manner lessen the responsibility of the said second party with reference to the terms of this contract, .... “10. Water Right Dedicated. “The certificates of shares of stock of the Big Wood River Reservoir & Canal Company, Limited, shall be made to indicate and define the interest thereby represented in the said system, to wit: A water right of one-eightieth (1/80) of a cubic foot per second for each acre and a proportionate interest in said reservoir and irrigation system, and shares based upon the number of shares ultimately sold therein. While the party of the second part shall retain control of said Big Wood River Reservoir & Canal Company, Limited, water shall be measured and be available for use within one-half mile of the place of intended use and in such quantities and at such times as the condition of the crops and weather may determine, but according to such rules and regulations, based upon a system of distribution of water to the irrigators in turn and by rotation, as will best protect and serve the interests of all the users of water from said irrigation system. It is agreed that said system of distribution by rotation shall be devised by the said party of the second part and used by the said Big Wood River Reservoir & Canal Company, Limited (in case the necessity arises), during the period while it retains the management — 87 — of said Big Wood River Reservoir & Canal Company, Limited, said system of rotation, however, to be approved by the State Engineer. The sale of the water rights to the purchaser shall be a dedication of the water to the lands to which the same is to be applied, such water right to be a part of and to relate to the water right belonging to said irrigation system. ’ ’ This contract also provided for the second, third and fourth segregations embracing lands in lists numbered 10, 11 and 12, respectively, and that a later contract should be entered into by respondent and the state of Idaho in substantially the same form as this contract, “the said contract to be considered as one contract covering the entire reservoir and irrigation system of the Idaho Irrigation Company, Limited, as shown by the plans, maps and specifications of the said system on file in the State Engineer’s office.” On August 21, 1907, the said contract covering lists 10, 11 and 12 was entered into by respondent and the state of Idaho, being in substantially the same form as the former contract except that paragraph 12 thereof reads as follows: “Said party of the second part agrees to continue to prosecute the work on said reservoir and irrigation system diligently and continuously to completion; and that there shall be no cessation of work thereon after the first year for more than sixty days without the consent of the Board; and to supply water to the lands included in the said List Number 9 on or before May 8th, 1908, and to the Lands included in Lists Numbers 10, 11 and 12 within two years from the date of this contract, and to complete the entire irrigation works within five years from this date, at which last-mentioned date the obligation to furnish the full one-eightieth (1/80) of a cubic foot per second of time of water per a«re shall be in force and effect.” The purchasers’ contracts involved in this action were in the same form and contained the following provisions, after reciting the making of the contracts above referred to between respondent and the state: “That the purchaser has made application to the company to be permitted to purchase upon the terms herein — 88 — after set forth, the rights and privileges by said contract guaranteed, to the extent hereinafter named, which said application has been accepted by the company subject to the approval of the State Board of Land Commissioners, whose approval, previous to the delivery thereof, has been by its Begister indorsed hereon; “That in consideration of the sum of Four Hundred Eighty ($480.00) Dollars cash in hand paid this day by the purchaser to the company and in consideration of the covenants and agreements hereinafter contained, it is agreed that in pursuance of the contract between the company and the State, hereinafter called the State Contract, that the purchaser shall become entitled to&emdash;160&emdash;shares of the capital stock of the Big Wood Biver Beservoir and Canal Company, Limited, the certificate thereof to be in form as follows, to-wit: “BIG WOOD BIVEB BESEBVOIB AND CANAL COMPANY, LIMITED. “&emdash;160&emdash;Shares. August 12, 1907. “This is to certify W. J. Tapper is the owner of •&emdash;160&emdash; shares of the capital stock of the Big Wood Biver Beservoir and' Canal Company, Limited. “This certificate entitles the owner thereof to receive one-eightieth of a cubic foot of water per acre per second of time for the following-described land: NE. 4 in Sec. 23, T. 3 S., B. 19 E., B. M (unsurveyed) in accordance with the terms of the contract between the State of Idaho and the Idaho Irrigation Company, Limited, and this certificate also entitles the owner to a proportionate interest in the. dam, canal, reservoirs and water rights and all other rights and franchises of the Idaho Irrigation Company,' Limited, based upon the number, of shares finally sold, in accordance with the said contract between the said company and the State of Idaho. `C “By---, “Vice-President. “Attest: “Secretary. — 89 — “Said certificate to be delivered as provided for in said State contract and under the conditions therein stated..... “And the parties hereto expressly agree as follows, to wit: “1. This agreement is made in accordance with the provisions of said contract between the State of Idaho and the company, which together with the laws of the State of Idaho, under which this agreement is made, shall be regarded as defining the rights of the respective parties. And shall regulate the provisions of the shares of stock to be issued to the purchaser by the Big Wood River Reservoir and Canal Company, Limited.” In addition to the written contracts pleaded appellants alleged that on or about the 2d day of May, 1915, they informed respondent that they desired to seed a certain amount of land to tame grasses and that at said time they were advised by M. R. Kays, who was then the acting manager of the respondent, to do so; and that appellants, believing that respondent would furnish water according to its contract and relying upon it to do so, did sow said land to tame grass and cared for the same and irrigated it in a good and husbandlike manner so long as water was available during that season and that through the failure of respondent to comply with its contract to furnish one-eightieth of a cubic foot of water per second of time per acre during said irrigating season the said crop withered and' died and became wholly valueless. “The intention of the parties is to be deduced from the language employed by them, and the terms of the contract, where unambiguous, are conclusive, in the absence of averment and proof of mistake, the question being, not what intention existed in the minds of the parties, but what intention is expressed by the language used. When a written contract is clear and unequivocal, its meaning must be determined by its contents alone; and a meaning cannot be given it other than that expressed. Hence words cannot be read into a contract which import an intent wholly unexpressed when the contract was executed. Where the contract evidences care in its preparation, it will be presumed that its — 90 — words were employed deliberately and with - intention.” (13 C. J., p. 524, sec. 485.) We are of opinion that a fair construction of the language used by the parties in these contracts leads inevitably to the conclusion that respondent bound itself to deliver the specified amount of water, namely, one-eightieth of a cubic foot of water per second of time per acre during each irrigating season. It must be borne in mind that the purpose of the state and federal government in authorizing such an enterprise as was undertaken by respondent was to reclaim the desert land embraced within the project. No contract could be entered into with respondent until it had given assurance that it had a supply of water sufficient to reclaim the land covered by the project, and when it conveyed to the purchasers by the contracts from which we have quoted it must have had in mind that it was selling to the purchaser, to the extent of one-eightieth of a cubic foot per second per acre, an amount of water on which he could rely to reclaim his land and enable him by proper methods of husbandry to profitably grow crops on the same. The language used in the contracts leaves no doubt that the respondent was attempting to assure the purchaser that he would receive the amount of water specified, nor can there be any doubt that the purchaser was justified in such belief. To adopt the view advanced by respondent that the purchaser’s contract was fulfilled when he received his proportion of whatever water supply was provided by respondent puts the purchaser in the position of having purchased a bare chance of a water supply rather than a right to a definite amount of water as expressed in the contract. Such meaning is not to be found in the language of the contracts. When the contract recited that respondent had a water right of 3,000 cubic feet per second from which water was to be conveyed within a certain distance of the purchaser’s land; that respondent agreed to furnish and deliver to the owners of shares in the reservoir and irrigation system all of the appropriated water to the extent of one-eightieth of a cubic foot of water per second per acre; that the certificates of shares of stock in the Big Wood River Reservoir and Canal Com — 91 — pany should define the interest thereby represented as a water right of one-eightieth of a cubic foot per second for each acre and a proportionate interest in said reservoir and irrigation system; that said certificates of shares as issued and delivered to appellants did so provide, and when said contract provided that at a certain date, which was prior to the time of the alleged default of respondent, “the obligation to furnish the full one-eightieth of a cubic foot per second of time of water per acre shall be in force and effect,” we fail to see any escape from the conclusion that respondent voluntarily undertook to do each year during the irrigating season the very thing specified by the contract. We are not without authority in the decisions of this court to sustain this view of the contract. In State v. Twin Falls etc. Water Co., 30 Ida. 77, 166 Pac. 32, on rehearing, the court was discussing a similar provision of the contract between the parties by which it was provided in language substantially identical with that used in this case that the purchasers should be entitled to a water right of one-hundredth of a cubic foot per second per acre, and a proportionate interest in the canal and irrigation works, based upon the number of shares ultimately sold therein, and speaking of the contention of the company in that ease, which was identical with that made by respondent in this case, the court said: “It would be an unwarranted construction to hold that by reference to the contract between the state and the Construction Company all that was intended was to state that the owner of the certificate of stock in the Salmon River Canal Company, Ltd., should be entitled only to his proportionate interest in the canals, water rights, etc., of the company based upon the number of shares finally sold to settlers. If carried to its ultimate conclusion, by such construction the settler might be deprived of any water right whatever. ’ ’ In the case of Childs v. Neitzel, 26 Ida. 116, 141 Pac. 77, this court was considering a contract substantially the same as this one. In that case the water company had failed to complete its water system and supply water to settlers — 92 — according to its contract. It had mortgaged its entire irrigation and water system to Neitzel for $150,000 and had also assigned to him the settlers’ contracts upon which there was still dne about $100,000. Neitzel was attempting to collect the balance dne on these contracts and apply it on .his mortgage. The settlers and water users _ intervened in said action and attempted to have applied on the uncompleted irrigation system the balance due upon their contracts. From a judgment in behalf of the intervenors Neitzel appealed. His counsel contended in this court that the irrigation company was the mere instrument or legal means for providing the lands with water, the cost thereof to be paid by the landowners or purchasers of water under said contract. In discussing this contention and the duty of the water company under its contract with the water purchasers this court said: “We cannot agree with counsel in that contention. The Murphy company agreed to complete said irrigation system with its dams, reservoirs and canals and turn the same over to the purchasers of water rights within a specified time, the price per acre for such water rights being stipulated in most of the contracts at $35 per acre. The Murphy company no doubt contemplated making a considerable profit for itself in the construction of said system. It was not an eleemosynary corporation or the trustee or agent of the water right purchaser for the construction of said irrigation system, but was a corporation organized for the purpose of making a profit to its stockholders from the construction of said system. If any profits had arisen to the company from the construction of said system, the purchasers of said water rights could not, under said contracts, share in them with the Murphy company. The Murphy company had employed engineers and experts to examine said irrigation project as to its feasibility, the quantity of water that could be obtained for the irrigation of said land and the cost of the construction of said system .to make the water available to the land to be irrigated, and after that was done, an estimate was made of the amount to be charged for each acre water right that would be necessary and sufficient to con — 93 — struct said system and pay a good profit to the Murphy Company. Under said water contracts it was not expected, contemplated or necessary for the purchasers of water rights to employ engineers and. other experts to make a proper estimate of the amount of water obtainable and the cost of the construction of the system, and to ascertain whether the company could place the water at feasible points near the land to be irrigated. That had been done by the Murphy company, and it sold water rights upon the representations that it had water sufficient to furnish each purchaser with the amount called for in his water contract, and also was able to construct said system and complete it. Hence the purchasers of water rights under such system had a legal right to depend upon the estimates made by the irrigation company and upon their contracts with it to the effect that the company would finish and complete the system and furnish the water according to the terms of the contract. They did not purchase under the rule caveat emptor.” It is true, as stated by respondent, that the Neitzel case did not involve a Carey Act contract, but no reason is found in that fact for holding that the language of the contract in that case has any different meaning from what such language would have in a Carey Act contract. The statements made by this court in the Neitzel case aptly describe the situation in the case at bar. Undoubtedly respondent before entering into the contracts by which it sold water rights to appellants and other settlers made a thorough investigation into the water supply upon which it was to rely in fulfilling its contract. Undoubtedly it made such an exhaustive investigation as to feel warranted in representing that it had a water supply of three thousand cubic feet per second. Such an investigation was utterly impossible for the individual purchasers and they had a right to rely upon the representation of respondent that it had such a water supply and would deliver to them annually the amount of water specified in their contracts. In discussing a similar Carey Act contract Judge Dietrich in the case of Caldwell et al. v. Twin Falls Salmon River Land & Water Co., 225 Fed. 591, said: — 94 — “The import of the instrument, standing alone, as it would be understood by an intelligent layman with no preconceived notions of its meaning, is not open to debate. It is a contract for the sale of a specific water right of one-hundredth of a second foot per acre for each acre of land described, and as an incident thereto a proportionate interest in the irrigation system. The holder of a certificate of stock, so the contract reads, is entitled ‘to receive one-hundredth of a cubic foot of water per acre’ and ‘a proportionate interest in the dam, canal, water rights, etc.’ The defendant’s contention wholly ignores the first of these coordinate clauses and limits the right granted precisely to the second, but the clauses are neither inconsistent with each other nor identical in meaning and no reason is apparent why they should not both be given effect.” This view was approved by the circuit court of appeals of the ninth circuit in the same ease. (Twin Falls Salmon River Land & Water Co. v. Caldwell, 242 Fed. 177, 193, 155 C. C. A. 17.) Among the several defenses pleaded by respondent was an extraordinary drought during the year 1915. Nowhere in the contract mentioned is any exemption from liability claimed by respondent in case of drought. It is an unqualified undertaking to furnish the definite amount of water mentioned, and the right of the purchaser to receive it is conditioned only upon his complying with his contract. Such contracts sometimes contain such an exemption, as in the case of Groefsema v. Mountain Some Co-operative Irr. Co., 33 Ida. 90, 190 Pac. 356. In that contract the irrigation company had this saving provision: “In case of shortage of water in the Company’s reservoir or canal system through an accident, drought, or scarcity in any natural stream supplying said canal, or by reason of improper diversion of water by any person, or from any cause beyond its control, the company shall not be liable for such shortage, nor for any damage caused thereby, nor shall there be, by reason thereof, any deduction from any sum agreed to be paid to the company by the purchaser.” — 95 — The fact that no such exemption from liability was placed in the contract by respondent when it might easily have done so would lead fairly to the conclusion that respondent, with the water supply that it claimed, was willing to take the chances involved in making an unqualified contract to deliver the specified amount of water mentioned each year. In the leading case of Taylor v. Caldwell, 3 B. & S. 826, 833, cited by respondent, Blackburn, J., said: ““Where there is a positive contract to do a thing, not in itself unlawful, the contractor must perform it or pay damages for not doing it, although in consequence of unforeseen accidents the performance of his contract has become unexpectedly burdensome, or even impossible.” “We understand this to be the rule applicable to such contracts as are involved in the case at bar. It is supported by many authorities, among which are: Rowe et al. v. Inhabitants of Peabody, 207 Mass. 226, 93 N. E. 604; Berg v. Erickson, 234 Fed. 817, 114 C. C. A. 415, L. R. A. 1917A, 648; The Harriman v. Emerick, 9 Wall. 161, 19 L. ed. 629; Jones v. United States, 96 U. S. 24, 24 L. ed. 644; Jacksonville etc. Ry. Co. v. Hooper et al., 160 U. S. 514, 16 Sup. Ct. 379, 40 L. ed. 515; N. P. Ry. Co. v. American Trading Co., 195 U. S. 439, 25 Sup. Ct. 84, 49 L. ed. 269; Middlesex Water Co. v. Knappmann Whiting Co., 64 N. J. L. 240, 81 Am. St. 467, 45 Atl. 692, 49 L. R. A. 572; 13 C. J. 641; 6 R. C. L. 364. The drought of 1915 did not excuse respondent from its obligation to supply appellants with the contract amount of water nor relieve it from liability to pay damages for its default in this respect. Respondent attempts to bring itself within the rule applicable to a contract which shows upon its face that the parties had in contemplation that the fulfilment of the contract should depend upon the existence of a particular person or thing at the time fixed for fulfilment. This contention is without merit. There was in this case a contract to supply a certain amount of water for irrigation. While the contract mentioned the fact that the water would be taken from certain streams, the obligation to supply the water would have remained even if the supply from said streams had — 96 — totally failed. In order to obtain the contract with the state, respondent had to give assurance of its ability to supply water to settlers in sufficient quantity to reclaim, their lands and in this way necessarily stated the source and amount of its water supply. There was no special virtue in the waters of Big Wood River or Malad River that made the fulfilment of the contract depend upon the continued existence of the supply from these streams, or that would have excused either party to the contract from performance on the ground of shortage in said streams. Respondent attempts to limit its liability to that of the holding and operating company whose duty with regard to water extended no further than to fairly distribute the supply available among the respective users. This contention cannot prevail for the'reason that the contract imposes upon it obligations entirely outside those of the holding and operating company. The fact that under the contract it had the duty of temporarily controlling the operating company could not have the effect of excusing it from the performance of the obligations of the contract entirely outside of and beyond those of the operating company. Besides, the contract contains this provision: “But the second party hereto nor the Big Wood River Reservoir and Canal Company, Limited, cannot in any manner control any of the said system so as to limit the liability of the second party under the terms of this contract.” We are of opinion that the conversation pleaded by appellants with respondent’s ' manager, M. R. Kays, if considered in connection with the written contract, adds nothing to the force thereof. If it be considered as an attempt to show an independent contract binding on respondent, it is insufficient for the reason that no consideration therefor'is shown. The views herein expressed render it unnecessary to discuss at length the errors assigned by appellants. The drought pleaded by respondent constitutes no defense to the action and the element of negligence does not enter into it. The shortage of water for the year 1915 is admitted, and if the case is tried again there remains nothing for the — 97 — court and jury to do but to hear evidence as to the damages suffered and fix the amount thereof. The trial court will thus have no difficulty on a second trial in avoiding the errors complained of. The judgment is reversed, with costs to appellants. Budge, J., concurs.