Russell & Co. S. en C. v. Henna

HamiltoN, Judge, delivered tbe following opinion: 1. Upon tbe argument, attention was called to tbe fact that tbe circuit court of appeals, while not determining tbe questions involved, during its opinion seemed inclined to construe, tbe words of tbe contract in a certain manner. There are only two ways of looking at this. If tbe circuit court of appeals considered that it bad enough of tbe case before it to -justify tbe construction of tbe contract in any particular way, that construction would be binding upon tbe court below and would of course be followed. In tbe case at bar, however, this does not seem to be tbe case. Tbe court above recognized that tbe contract could only be construed in tbe light of the circumstances under which it was executed and contemporaneous construction of tbe parties themselves, and these were not before that court, but wore expressly left to be adjudicated by tbe district court. Whatever tbe circuit court of appeals said, therefore, is to be considered merely as arguendo, and not as binding or intended to be binding upon this court. 2. When tbe case was before tbe court on tbe application fox preliminary injunction, attention was attracted by tbe provision in tbe contract that tbe insular government reserved tbe right to develop tbe lower part of tbe Jacaguas river. It was — 497 — conceded on the hearing, however, by both sides, as it is in the briefs, that in point of fact the irrigation department has not developed this part of the Jacaguas river. Whatever inferences may be just from the reservation of the right will be made; but the case cannot be considered upon the theory that the grant of privilege shown by the evidence in this case is affected by any such development. So far as the facts stand there are merely the two contracts, supposedly conflicting; and it is for the court to reconcile them or otherwise determine the situation of the parties, with the Jacaguas undeveloped by the irrigation authorities. The delivery of water in use is not by means of the river development named by the exception in the contract, and is not affected by it in any way. 3. The decision of the case will depend upon the proper construction more particularly of the contract set out by the plaintiff in his bill. Upon the trial he sought to bring out evidence of negotiations between his predecessor and the Irrigation Department of the insular government, with a view to throwing light upon the contract. The general'principle is that a written contract stands or falls by itself. It may be varied by parol, but in such case it becomes a new contract. Glover v. McGilvray, 63 Ala. 508. It cannot be varied in any material part by parol testimony. Bank of Mobile v. Mobile & O. R. Co. 69 Ala. 306. It used to be expressed that, where there is latent ambiguity in a contract, the circumstances under which it was made can be received in order to explain. The modern rule ha¡s been expressed more broadly to be that attending facts and circumstances connected with a contract may be shown in order to aid in its construction, but that this does not go so far as to authorize evidence of intention. Humes v. Bernstein, 12 Ala. — 498 — 554. Intention cannot be testified to as a matter of fact; it is a mental operation, and can only be got at by evidence of the surrounding circumstances, or of the acts and statements of the parties in question. This rule applies also to motive and belief. Whizenant v. State, 71 Ala. 383; Sternau v. Marx, 58 Ala. 608. Intention must be derived from the facts existing at the time of the contract, and not generally from subsequent declarations. Mobile Bldg. & L. Asso. v. Robertson, 65 Ala. 382. Thus the intention of the makers of an instrument is to be got at from the objects sought, the relations of the parties, and the general situation, the motives, and the like. Evington v. Smith, 66 Ala. 398; Watts v. Sheppard, 2 Ala. 425. In the same way negotiations leading up to a contract are held to be merged in the writing itself and therefore cannot be testified to. Any other rule would be reopening the whole transaction, and the court, instead of construing an existing contract, would be making one over again for the parties. Accordingly upon the trial it was held that negotiations between the plaintiff’s predecessor and the Irrigation Department could not be shown, and that this was particularly true as to their intentions. On the other hand, the fullest scope was allowed to evidence showing their situation before the contract was made, with a view of developing what was the motive and intention of the parties in making the contract. No reason is shown to change this view. 4. The first question coming up in all Porto Rican cases is as to the law controlling. The United States have recognized local water rules and customs. Revised Stat. § 2339, Comp. Stat. 1916, § 4647. It is well recognized that a state can divert even navigable waters for irrigation or other purposes at its will, — 499 — unless and until tbe United States deem it proper to interfere for navigation or other national purposes. United States v. Rio Grande Dam & Irrig. Co. 174 U. S. 690, 43 L. ed. 1136, 19 Sup. Ct. Rep. 710. Nor some purposes, especially for irrigation, the law recognizes that local law may grant rights to the water of a stream to other parties than the riparian owner. Gutierres v. Albuquerque Land & Irrig. Co. 188 U. S. 545, 556, 47 L. ed. 588, 593, 23 Sup. Ct. Rep. 338. It was in that case left open whether the same rule applied to a territory, but the present (like the preceding) Organic Act of Porto Bico, § 57, expressly leaves in force local laws, at least until they are expressly set aside by express legislation. There has been m> such express Federal legislation, and so the question in the case at bar is as to a local law. The local law in Porto Bico, therefore, is what is called the Law of Waters, coming down from Spanish times. This is the law of 1866, but the provisions as to irrigation go back to the times of the Moors in Spain. The law covering the present day water rights connected with the insular irrigation system is found in the Acts of 1908 and 1913, whose provisions must be carefully considered. Acts Extraordinary Session 1913, No. 128, page 54. This is a careful act of thirty-seven sections, providing for a commission to fix irrigation districts, in which the commisson shall acquire the water rights outstanding, agreeing to deliver to the concessionaire the fair equivalent in value in acre feet per annum reasonably distributed through the year. There was to be first a provisional arrangement, and afterwards permanent irrigation districts, -the commission giving due consideration to all water rights or concessions and to the results and effects of — 500 — the' operaton of the irrigation system, including lands with water rights and those without. § 7. The commission fixed the taxation to be imposed for water in connection with the irrigation fund. § 11. The right of appeal was provided for both as to relinquished lands and those not relinquished. § 13. The standard for the amount of water is 4 acre feet per acre per annum. § 18, Bonds were to be issued up to $1,000,000 to provide funds for the irrigation works and system. §§ 19-29. The contract in question is one made by the Commissioner of the Interior under § 13 of this act; and its wording, found in the statement of facts, is therefore important. Acts Extraordinary Sessions 1913, p. 72. It must be construed in connection with the provisions in the Law of Waters that “authority is necessary for use of public waters especially destined to enterprises of public or private interests” (art. 147) ; and “in any event when a public investigation is made with respect to any grant of waters, the holder of such rights shall be obliged to establish them in the manner and at the- time prescribed by the regulations.” Art. 148. “He who shall have enjoyed the use of public waters for a period of twenty years without the ■opposition on the part of the authorities or a third person shall continue-to enjoy it even though he cannot prove that he has obtáined the proper authority.” Art. 149. It has been -held that prescription as to waters, twenty years, may be set up as to the right, but that this does not carry with it any specific quantity unless that be otherwise proved. Trujillo v. Rodriguez, 22 P. R. R. 280; s. c. 147 C. C. A. 214, 233 Fed. 208. There are definite requirements in connection with public grants, but no question is made as to the right of the plaintiff under his concessions. — 501 — 5. The theory of the bill of complaint is that the right of plaintiff rests now as fully as it ever did upon certain undisputed Spanish concessions, and that the. contract was designed to and actually did only vary time and place of receipt of water, and did not affect the quantity to be received. The contract unquestionably asserts and goes upon the basis of the complete validity of plaintiff’s concessions, so much so that it aims to supply a fair equivalent for the concession waters. There is no doubt that under ¶¶-12 and 13 of the contract the people of Porto Pico recognize the concessions, and agree that, upon the ’happening of any event to end or even disturb the supply of water under the contract, the plaintiffs may exercise all their original rights, and that the contract does not at any time or for any purpose affect, modify, or change to any extent the status of the concessions. It is not, therefore, the original grant .of water belonging to the people of Porto Pico, but a regulation of the supply of water which in some shape belongs already to the plaintiff. The only time the word. “grant” is used in connection with the water is in ¶ 3, when Fortuna is “granted” the right while this agreement remains in force to take by the Aruz pump water available there in addition to the specific amounts granted in ¶ 1. The specific water is not “granted,” but is agreed to be “delivered” by the people of Porto Pico. But it is the additional water that is in question in this case, that is to «ay, that which according to the contract is granted. While the contract may be a regulation, and to some extent a regulation of the-use of water already owned, it embraces the additional element of regularity of supply, and it is difficult to see how, made as it is between the government and an individual, it can be construed otherwise than upon the principle .of — 502 — a grant. Grants are always construed in favor of tbe government. Charles River Bridge v. Warren Bridge, 11 Pet. 420, 9 L. ed. 773; Stein v. Bienville Water Supply Co. 141 U. S. 67, 80, 35 L. ed. 622, 627, 11 Sup. Ct. Rep. 892. 6. Tbe contract in question relates to concession water of certain specified quantities, and also in addition to take “by pump at tbe said Aruz pumping station water wbicb may be available there for tbe irrigation of any of its said lands to tbe extent that such taking shall not deprive any owners or users of subsisting water rights or concessions.” This does not use tbe word “excess” or “surplus,” but it would seem to be the same thing as excess or surplus waters, for it is what remains after other rights have been satisfied. Surplus water has been defined as that remaining after prior rights are complied with. Gutierres v. Albuquerque Land & Irrig. Co. 188 U. S. 545, 556, 47 L. ed. 588, 593, 23 Sup. Ct. Rep. 338. It would seem to come under § 14 (§ 3) of the act as amended, to the effect “that the Commissioner of the Interior under such rules and regulations as may be established by the Executive Council may sell or lease water controlled by the irrigation service and in excess of the water required by law on the lands . • . . for the irrigation of lands either within or without the . . district . . . and the proceeds of such sales or leases shall be applied to the decrease of annual assessments.” (Page 81.) No such rules and regulations are in evidence, but, as the Executive Council approved the contract in question, it may be supposed that these were complied with. The contract between the plaintiff and the people of Porto Rico is mutual, that is to say, Eortuna gives up temporarily the exercise of its concession rights, and the consideration there — 503 — for is that the people of Porto Bico agree to deliver to Fortuna at certain agreed times and places water the eq .¡valent in value. Neither party can change the contract to the disadvantage of the other, and both parties agree that the equivalent in'value of the water up to that time enjoyed by Fortuna under its Spanish concessions is: (1) A quantity of water specific in amount and time delivered by the irrigation authorities not wholly from, the river, but in part at least from a certain Juana Diaz canal operated by the irrigation service from the G-uayabal dam; (2) water which may be available at the Aruz pump after satisfying other of the thirteen concessions; and (3) torrential water, which is expressly stated in the contract to be reserved by Fortuna as of its former rights. Omitting, therefore, the unquestioned torrential water, the contract is for water from the dam and surplus water above existing concessions and available in the Jacaguas river, not to exceed a certain amount, which, added to the specific water in ¶ 1 amounts to the total possible quantity which Fortuna had before this contract was signed. All three hinds of water make lip the consideration in the contract, and this court has no right to determine that any less than the three named shall be the consideration. The question is, What is fairly within the three ? 7. On the other hand, the defendants’ right based upon a contract of June 28, 1917, has, so far as appears upon its face, no relation whatever to any concession. It is true Boca Chica enjoyed a concession from the Spanish government, but it was secondary to Fortuna’s concession and of less value because its water was to be cut off sooner than that of Fortuna. Defendants’ contract is 'therefore not based upon this concession, but amounts purely and simply to a purchase qf so much surplus — 504 — water from tbe irrigation authorities, to be delivered, however, at tbe Maturi canal, wbicb is about 1,000 feet higher up the river than the Aruz pump; and this would divert water which would' otherwise come on down the river bed to the Aruz pump. The plaintiff does not seem to question this sale, although it puts him at a disadvantage. His complaint is that the defendants had erected a dam across the river bed which effectually retains all the water coming down the river, diverts it to this Maturi canal, and prevents there being any water except in flood time, which is otherwise provided for, available at the Aruz pump mentioned in the plaintiffs contract. The situation, therefore, is that the conflicting Aruz and Maturi intakes relate to contract water as distinguished from concession water, but that the plaintiff’s contract water is part of the equivalent .agreed on August 26, 1914, for the temporary abandonment of plaintiff’s concession rights, while the defendant’s contract water is based upon the purchase from the irrigation authorities dated June 28, 1917. If they conflict, the earlier must control; for prior est in tempore prior est in jure. The words, “available there,” must have some meaning. If Porto Pico can take away with one hand what it gives with the other it will be making a one-sided contract, which it has forbidden its citizens to make, and will be violating the obligation of its own prior contract. P. R. Civ. Code § 1223. “The validity and fulfilment of contracts cannot be left to the will of one of the contracting parties.” P. R. Civ. Code § 1241. “In contracts, involving a valuable consideration, the prestation or promise of a thing or services by the other party is understood as a consideration for each — 505 — contracting party; in remuneratory contracts, the service or benefits remunerated, and in those of pure beneficence, the mere liberality of the benefactor.” [Compilation 1911, §§ 4829, 4347.] If the contention of the defendants is correct, the irrigation authorities could build a high dam immediately above the Aruz pump and sell all the water to other parties, or could build a wall around the Aruz pump and conduct the water lower down for sale to yet other persons. The Fortuna contract cannot have any such meaning as this, for the result would be that the words in question would have no meaning whatever which the defendants are bound to respect. It is quite true, that the Fortuna “taking shall not deprive any owners or users of subsisting water rights or concessions of the water to which such owners or users may be entitled, either by virtue of such water rights or concessions or by virtue of any agreement or agreements in regard thereto entered into or to be entered into by them with the people of Porto Rico;” but the right of Boca Chica in this cause is not by virtue of any such water right or concession, and does not come under this exception. The Boca Chica right was merely that for the purchase of surplus water under § 33 of the Irrigation- Act, and as the irrigation service had already disposed of the water in question to Fortuna, there was no surplus water left to be sold. It. follows, therefore, that the plaintiff is entitled to relief, and a permanent injunction will issue against defendants as prayed in the bill. It is so ordered.