Gould v. Maricopa Canal Co.

SLOAN, J. A rehearing was granted in this case at the last term of the court. As no opinion was filed upon the first hearing, we deem it proper to state now, with some fullness, the facts and our holding on these facts. The Maricopa Canal Company was organized under the general incorporation act of the territory during the year 1875. Its purpose, as expressed in its articles, was the carrying on and conducting of the business of supplying a portion of the Salt River Valley with water for irrigation, milling, manufacturing, and mechanical purposes. Its capital stock was divided into fifty — 443 — shares, each of which was treated by the incorporation as carrying with it a water-right privilege in the canal sufficient for the irrigation of one hundred and sixty acres of land. Prior to 1880 the canal company supplied water indiscriminately to landowners under its canal who applied for the same and paid the yearly rental therefor. In 1880 the canal company, by resolution, adopted the policy of giving preference to its shareholders and renters of the same in its yearly contracts for supplying water and of disposing of any surplus remaining to landowners who were neither shareholders nor renters of the same. After 1885 water was supplied by the company to such landowners as were owners of shares of stock and lessees of the same for particular years. Prior to 1887 no attempt was made by the company to confine the water-rights represented by the shares of stock to particular tracts of land. During that year a resolution of the company provided that the water-rights might be segregated from the shares of stock and attached to particular tracts of land. Some of the shareholders complied with this resolution, but many did not. It has been the practice of the shareholders to rent to non-shareholders, during particular seasons, their shares of stock or portions of the same, and to give orders to their lessees upon the canal company for the delivery to such lessees of the water assumed to be represented by said shares of stock. This practice was recognized by the canal company and these orders were respected by it as entitling the holders to the same rights accorded to the owners thereof. In some instances the owners of these shares of stock did not own or possess lands, and the only use made by them of the water-right privileges, assumed to belong to said shares of stock, was to rent them to non-shareholders ivho were the owners or possessors of lands. Gould, the appellant, is the owner of lands under the flow of the canal owned by the appellee, which are described as the “north one half of the southwest one fourth, and the south one half of the northwest one fourth, of section fourteen, township one north, range three east, Maricopa County.” The predecessors in interest of Gould began the irrigation of this land during the year 1869 by means of a ditch known as the “Wilson Ditch.” They continued to obtain water by this means until the purchase of the land by Gould in 1888. Gould until 1891 irrigated the — 444 — land from the same ditch. The Wilson Ditch was abandoned in 1891 for the reason that the water formerly available to it was being diverted by the Maricopa Canal and other canals having their heads farther up the river. After 1891 and until 1899, during each year, Gould obtained water in amounts ranging from sixty to seventy miner’s inches, for the irrigation of his lands from the Maricopa Canal by renting shares of stock from others, in accordance with the prevailing practice. At the beginning of each irrigating season the canal company, in accordance with its general policy and as a condition upon which he could receive water, required Gould to sign a contract stipulating, in effect, that his use of water from the company’s canal for such season should give him no right or claim to the use of water in the future; and that he waived thereby any and all right or claim which he might have by virtue of any statute, custom, or law to the use of water from the canal after the expiration of the period of time limited by the contract. In 1899 Gould applied to the Maricopa Canal Company for water for the ensuing irrigat-' ing season to the amount of eighty miner’s inches, and tendered for said amount the fixed charge established by the company for its service for said season. The canal company declined to furnish him water upon the ground that he was not the owner of a share of stock or water-right in the canal, or had not rented .a share of stock or water-right from any owner thereof for the season for which he applied. Thereupon Gould brought suit against the company for the purpose of compelling the canal company to furnish the water for which he applied. Upon these facts the trial court found that Gould, at the time he made application for water and was refused, was not entitled to water or to the service of the canal company for the following reasons: That Gould was not an appropriator of water from the Salt River; that the Maricopa Canal Company was organized for the purpose of supplying water for irrigation purposes to its own stockholders, and that all the water diverted and carried by said canal company in its canal belonged to and was the property of such stockholders and holders of its water-right deeds; that Gould was not a shareholder in the company, or the lessee of any share of stock, or the owner of any water-right deed issued by the company. Upon — 445 — the grounds mentioned the trial court declined to grant Gould any relief, and dismissed his complaint. The reasons that were given by the trial court for its action in dismissing the complaint present questions of vital importance to the appellee and other users of water in like situation. These will be considered with other questions necessarily involved in the issues. The first and most important question is as to the status of the Maricopa Canal Company as a carrier of water. The finding of the court that the canal company, by its organization, limited its purpose and business to the supplying of water for irrigation to its own shareholders is not sustained by an inspection of its articles of incorporation nor by the history of the company. The purpose of the corporation, as expressed in its articles, was “to carry on and conduct the business of supplying a portion of the valley lying upon the north side of Salt River, county of Maricopa, territory of Arizona, in the vicinity of the town of Phoenix, with water for irrigation and for milling, manufacturing, and mechanical purposes, and to this end and for this purpose to purchase, construct, build, or dig such canals, ditches, or flumes as may be necessary to convey water from Salt River, . . . and conveying said water to such point or points in the above-described valley of Salt River as may be necessary for the disposal or use of said water.” It will thus be seen that there is nothing in its articles of association which indicates that its purpose was to limit its service as a carrier of water to any particular lands, nor is it expressed that its purpose was to serve its shareholders, and not the public generally. Had the purpose of the company in its organization been to become a public agency as a carrier of water, such purpose might fairly and reasonably be inferred from the language used in the articles. The history of the company shows that from the date of its organization until 1880 it supplied any and all landowners under the flow of its canal indiscriminately who applied for such service. The organization of the company, therefor, and its early history do not sustain the holding that the company was organized for the sole purpose of serving its shareholders as the private agency of such shareholders. It is true that the incorporators of the company as well as later shareholders regarded the ownership of a share of stock as carrying with it the right to have deliv — 446 — ered, upon any lands the owner might designate from year to year, water sufficient for the irrigation of one hundred and sixty acres of land. It is also true that after 1880 and until 1885 the canal company distinguished between its shareholders and other consumers of water in fixing its rates of toll for its service. It also appears that subsequent to 1885 the company furnished water to its shareholders and to the lessees of shares of stock, whether appropriators or not, upon any land or lands which such shareholders or lessees of the same might designate, and declined to furnish water to persons not shareholders or the lessees of shares of stock, or the holders of so-called water-right deeds. In the case of Slosser v. Salt River Valley Canal Company, 7 Ariz. 376, 65 Pac. 332, we held that a canal company having a similar organization, history, and relations to its consumers of water as shown in the case of the Maricopa Canal Company, was not a mere private agency having no other duty than the' supplying by means of its canal water' for particular appropriators whose agent it was, but occupied the status of a public agency, it having undertaken the diversion and carriage of water without regard to fixed contractual relations obligating it to perform such service for particular appropriators and limiting its service to the needs of such appropriators. We further found that as such agency such canal company does not possess the right to discriminate in rendering service as a carrier of water in any other way than the law in the first instance discriminates in recognizing the right of prior appropriation; that temporary leases or orders from shareholders, whether appropriators or not, conferred upon the holders no right entitling them, by virtue thereof, to water for use upon lands not owned or possessed by said shareholders; that the practice of the company recognizing such leases as valid was not in keeping with the spirit of our water laws, and was a clear violation of expressed provisions of our statutes, for the reasons that such canal company was not itself an appropriator of water, and that neither it, therefore, nor its shareholders as such possessed any power of control or any right of disposition over the water diverted and carried, save to transport and deliver the same to appropriators entitled to it under the law of prior appropriation; that water diverted from a public stream by such canal — 447 — company did not lose its character as public water, but remained public property until actually used by such appropriator. It was further found that the recognition by the company of “floating” water-rights, as they were termed, as incident to the ownership of shares of stock, and the practice of furnishing water to the lessees of such shares of stock for particular seasons, in effect was the same as though the canal company had supplied such lessees with water without the consent of its shareholders. Applying these principles to this case, it follows that the Maricopa Canal Company from the time of its organization has been a public agency as a carrier of water. It also follows that, if the water it diverted and carried remained public property until actually used by appropriators, it was the subject of appropriation to the same extent and in the same manner as when it flowed in the channel of the Salt River. Under our statutes an appropriator of water for irrigation is one who makes an application of public water upon land he.owns or possesses. To perfect such an appropriation two things are essential,—the ownership or possession of land, and the application thereon of public water to a beneficial use. No statute, either territorial or congressional, makes the ownership of the means of diversion essential to perfect the right of appropriation. Such means may be owned by another. Since, as stated in the Slosser case, a canal company organized for the' purpose of the diversion and carriage of water for irrigation, and not being the owner of arable and irrigable land, is not an appropriator of water, it follows that the diversion of public water would be unlawful were the consumers of such water not appropriators in the fullest sense. When the canal company is not itself the appropriator1, its only warrant for its diversion of water is that it supplies appropriators. All, therefore, whom it does supply and who make use of the water thus supplied for the irrigation of their lands are the appropriators whom, by its act of diversion and carriage, it undertakes to serve. It follows, therefore, that all persons owning lands under the flow of such a canal which have been irrigated by means of water furnished by such canal became appropriators, and possessed of rights of appropriation in the order of their priority. Had Gould, therefore, not been an appropriator before obtaining water — 448 — from the Maricopa Canal, he became such at the time he first obtained it from this source and applied it upon his land. Gould and his grantors have irrigated the land in question continuously since .1869. The circumstances under which Gould changed his mode of diversion by taking water from the Maricopa Canal instead of the Wilson Ditch cannot be held to have been an interruption of his original right of appropriation. We know of no provision of law by which a right of appropriation may be thus lost. It may be lost by abandonment, or it may be lost to another by adverse user on the part of the other, continued for the period of the statute of limitations, and in no other way. Abandonment is a matter of intent as such intent may be evidenced by the declaration of the party, or as may be fairly inferred from his acts. It cannot be fairly inferred that Gould, by abandoning the use of the ditch rendered useless as a carrier of water by reason of increased diversions from Salt River by older canals, including the Maricopa Canal, and by later diversions by newer canals, intended thereby to abandon his right of appropriation. Such an inference would be unjust to him, and not warranted by the facts. The stipulation referred to in the statement of facts which Gould was required to sign as one of the conditions upon which he was permitted to obtain water from the canal is of no effect in lessening the liability of the canal company or the rights of Gould as an appropriator of water. As we have said, the water which the canal company diverted and carried was public property, and hence the canal company in its distribution could enforce only such rules and regulations as would be necessary and’proper to secure economy of use, the rights of other appropriators, and its own right to collect a reasonable charge for its service. The law fixed and determined the extent and character of the appropriation made by each consumer of water, and the canal company possessed no power by contract to place any limitation upon such appropriation or to lessen its obligation in respect thereto. To recognize the binding force of the stipulation would be to concede to the company powers which it does not possess. In the light of fuller discussion and a re-examination of the subject, we now hold, contrary to our holding in the Slosser case, that a canal company occupying relations to its — 449 — consumers of water like that of the Maricopa Canal Company may not arbitrarily discontinue its service in whole or in part. "While such a canal company, in the nature of things, cannot be a common'carrier, as that term is used in law, it is yet a quasi-public servant. By an act of Congress approved July 26, 1866, canal companies were granted rights of way for the construction of canals over the public domain. They were also given the right of eminent domain by our territorial statutes. The granting of these privileges presupposes a public use. Oury v. Goodwin, 3 Ariz. 255, 26 Pac. 377. As a quasi-public servant, having received benefits from the public, such a canal company owes a duty to conduct its business as a carrier of water in such a way as may best promote the interests of the community, when this may be done without sacrifice of any of its rights of property. The community is interested in the permanent reclamation and improvement of lands. If a right of appropriation might be made of no use to its holder through the refusal of a canal company to divert and carry the water to which such holder is entitled, and which the canal company has theretofore diverted and carried, the holding of such right of appropriation by such’ a precarious tenure would not only impair its value to the holder, but would discourage the making of improvements and the putting of the land to which it is attached to its highest and best use. To the extent, therefore, that such a canal company has diverted and carried water from a public stream, and to the extent to which this water has been applied by appropriators for the necessary irrigation of their lands, the canal company must continue this service so long as such service is required by said appropriators 'and the water is available from the common source. Should the water not be available, of course the company cannot suffer any liability to its appropriators, for the measure of its duty is its ability to comply with the reasonable demands of appropriators. In the ease of the Maricopa Canal Company it appears that its practice has been at the beginning of each irrigating season to contract with such appropriators as may desire water for the ensuing irrigating season to supply such water in consideration of the payment of its charge for such service. It was argued in the brief of counsel for the canal company that if it be held that the canal company is obliged to furnish — 450 — water to all landowners under the flow of its canal heretofore irrigated by it, whether shareholders or lessees of the same or not, the practical result would he that the canal company might be required to furnish more water than it is capable of delivering. This view of the relations of the canal company to such landowners is not to be inferred from the above holding. If applications for water be, made during any season in excess of the capacity of the canal to furnish it, the canal company would have the right, and indeed it would be its duty, to limit the contracts for the season to its capacity and to those appropriators possessing the older rights of appropriation. In making its contracts for such service it can easily guard against incurring liability to appropriators by reason of the amount of water available from the Salt Eiver being insufficient to supply their needs. Upon the authority of the Slosser ease, as modified in this decision, the judgment of the court below will be reversed, and a decree will be entered in this court establishing appellant’s rights as an appropriator of water to the extent needed for the irrigation of his lands, and requiring the appellee to deliver water to an amount not exceeding seventy miner’s inches, being the maximum amount heretofore used by him for said purpose, upon the' payment by appellant of such reasonable charge as may be established by appellee for its service and a compliance by appellant with the reasonable rules and regulations which may be established by said company in other, respects; and that said canal company be required to continue to render said service under said conditions so long as it may possess the ability so to do without injury to the rights of other appropriators having prior rights of appropriation. Kent, C. J., Doan, J., and Davis, J., concur.