O'Connor v. North Truckee Ditch Co.

By the Court, Hawley, C. J.: In 1864 several persons, including plaintiff, organized an association for the purpose of constructing a ditch to convey water from the Truckee river to irrigate their farms along the line of the ditch. All the members assisted in the construction of the ditch at the head. When the ditch was completed to the land of the member nearest the head, he ceased work and had nothing to do with the labor or expense of constructing the ditch below his land. Similar action was taken by each of the members owning the land below. This association regulated the flow of water in the main ditch at the head, and the individual members took the water out of the main ditch through private boxes and ditches, and regulated the flow of the water into and through their private ditches. The plaintiff’s land was below the land of all the others. In 1874 the members of this association formed an incorporation under the corporate name of “ .North Truckee Ditch Company.” The object of this corporation, as stated in the certificate, was “ to own, keep in repair, enlarge, when necessary or expedient, the North Truckee Ditch, leading the waters of Truckee river from its head to our several farms and lands in Truckee Meadows, * . * * and to control and divide the use of said water for the benefit of the several stockholders in said corporation, in accordance with their interests in the stock of said corporation.” The several mem [256] bers conveyed their interest in the property, the consideration of the deed being the issuance of stock by the corporation in accordance with the interests held by the respective parties. ■ It was provided in the deed that the individuals executing it “ shall severally be .entitled to use, for irrigation, fanning- purposes and all other lawful uses, a proportion of the water conveyed in said main ditch equal to the proportion his, or their, number of shares bears to the whole number of shares of the stock of the second party,” and “ that, in case of the enlargement of said ditch, at any time, the increased amount of water conveyed shall inure to the common and equal benefit1 of all of the first parties, * * * in the proportion above designated.” The corporation issued its stock, one share for each inch of water that the members were entitled to in proportion to the number of acres of land which each shareholder owned. The ditch was thereafter, from time to time, enlarged, and in 1878 and 1879 was of sufficient capacity to carry water enough to supply the wants of all the stockholders. This action was instituted by the plaintiff, who is the owner of seventy shares of stock, to recover damages alleged to have occurred during the years 1876, 1877, 1878 and 1879, and to have been occasioned by the failure of the corporation to properly control and divide the waters flowing- in its ditch, thereby depriving him of the water to which he was entitled. The amount of damages for each year was separately alleged. He recovered judgment generally for the sum of one thousand one hundred and sixty-one dollars and costs. The defendant appeals. The testimony, relating to the alleged negligence of the corporation, as offered upon the part of the respondent, showed that some of the stockholders, above his land, had placed dams in the ditch, and diverted more water than they were entitled to, and that but for such acts he would not have been damaged. ,, Upon this state of facts appellant claims that there was a fatal variance between the case alleged in the complaint and that made out by the evidence; that the injuries complained of were occasioned by the wrongful acts of other stockholders, and that the corporation was not guilty of any negligence [257] upon its part, and hence, respondent could not recover any damages against the corporation. This argument is based upon the theory that there was no contract between the stockholders and the corporation, and that the corporation could not be held liable for the wrongful acts of the individual stockholders in appropriating to their own use more water than they were entitled to. Appellant also relies upon the fact, established by the evidence, that it was the uniform custom for each stockholder to construct, maintain and keep in repair the boxes through which he diverted water from the main ditch; that the corporation did not construct, manage or in any way interfere with these boxes, and that it was its custom not to control or divide the water between the stockholders. The respondent never assented to this custom upon the part of the corporation; but, on the contrary, at all meetings of the stockholders and trustees which he attended, and at other times and places, complained that he did not get the- amount of water which, as a stockholder, he was entitled to. The questions which must control this case are to be determined by an interpretation of the agreement, if any, existing between the stockholders and the corporation as presented by the terms of the certificate of incorporation and the conditions expressed in the trust-deed. Corporations are usually formed for the transaction of certain business which it is thought cannot be as well carried on and conducted by individual efiorts, and the powers and privileges which are given to the corporation generally express, in clear terms, the ends to be attained, and when such powers are conferred, as in the present case, for the attainment of certain defined objects, they must be strictly employed with reference to such objects. In Greene’s Brices Ultra Vires it is said that when the engagements of the promoters have been embodied in the con-stating instruments of the corporation: “It is these instruments which primarily determine, due regard being had to the rules of common law and equity, the capacity and the responsibilities of the corporation; consequently, speaking generally, [258] whatever powers and rights they give to the corporation it can enforce, and whatever obligations they throw upon it can be enforced against it.” (é82.) The stated objects of the corporation, as expressed in the certificate and the stipulations in the deed, clearly define the duties imposed upon the corporation. By the terms and conditions thereof the corporation is bound to keep the main ditch supplied with water, and to regulate and divide its use among-the several stockholders in accordance with their respective interests, and it must necessarily follow that for any neglect or failure to properly discharge its duty in this respect, it would be liable to the stockholder who is injured thereby to the extent of the damages suffered by him. Recognizing this to be its duty the trustees of the corporation, in the month of January, 1878, unanimously “ Resolved, that the trustees have gauges prepared for outlet of proper quantities of water to each stockholder, and that the trustees employ a man during the irrigating season to superintend and regulate the use of water; that every stockholder be credited each season at a value per share, to be regulated by the trustees, according to the amount owned by said stockholder, and * * * that trustees be empowered and instructed to embody the sense of this resolution in action, and use all possible means to prevent any stockholder from using more water than he owns, without paying for it.” The corporation could not, in opposition to the articles of incorporation, the trust-deed and this resolution, relieve itself from responsibility by pursuing a practice at variance therewith without the consent of all the stockholders, and any stockholder not assenting thereto would not be bound by any custom which the officers of the corporation might adopt in contravention of its agreement to protect the rights of the several stockholders. The instructions given by the court with reference to the effect to be given to the articles of incorporation and the trust-deed correctly announced the principles which must, in our opinion, govern this case, and the instructions asked by appellant, which declared a different doctrine, were properly refused. These instructions were either erroneous or clothed in such [259] language as to mislead the jury upon the controlling questions >of the case. In either view the action of the court in refusing them must he sustained. With reference to the question as to whether the plaintiff contributed to his own negligence, there is a substantial conflict in the evidence. It is enough to say that the instructions given upon tliis branch of the case fairly presented this question *to the jury, and that, in our opinion, the evidence is sufficient to sustain the verdict. The court did not err in refusing a non-suit, or in denying appellant’s motion for a new trial. The judgment of the district court is affirmed.