Twin Falls Oakley Land & Water Co. v. Martens

HUNT, Circuit Judge (after stating the facts as above). [1] We are of opinion that the defendant acquired a contract right to 1.5 acre feet of water under his contract with the water company. The fact that the right so acquired was specified in the certificate of stock does not lessen the obligation of the company to furnish the defined amount. In the light of the inducements offered to settlers it is evident that the company intended to sell, and must be held to have agreed to sell, the specific amount of water named in the certificate. The act of the company in relinquishing certain lands to the state is evidence, too, that sales made by the company, in excess of the available supply had, were improperly made. Twin Falls Salmon River Land & Water Co. v. Caldwell, 242 Fed. 177, 155 C. C. A. 17. [2] It is argued that all parts of tire contract must be construed together, and that the stock certificate, in so far as it pertained to the extent of ownership, when considered with the terms of the contract, [432] shows that there was “no deduction for a shortage coming within its terms.” It is also said that the rights claimed by the settler are under the Carey Act, and' that inasmuch as the act provides that the lands would be patented when an ample supply of water is actually furnished, the matter is placed within the jurisdiction of the Land Department of the United States, and that a contract made for water supply by the state or the settler is not binding, and that the whole question is with the Department of the Interior. But under the act -of the Legislature of Idaho accepting the Carey Act (chapter 136, tit. 26, Comp. Laws of Idaho) the state was authorized to make all necessary contracts to cause the lands to be reclaimed, and “to induce their settlement and cultivation in accordance.with and subject to the provisions” of the act. Reading the statutes together, it is plain that authority was given to the construction company toi make and execute a contract, and to assume a responsibility to the settler under which there could be agreements for deferred payments and under which the company might agree to furnish a specific quantity of water. [3] Nor is it material that the state engineer, in performing his duties, may have erred in his judgment as to the feasibility of the project. Section 1618 of the Revised Code of Idaho contemplates a report by the state engineer, not. upon a proposition of his, but upon one initiated by a proposer. Basinger v. Taylor, 30 Idaho, 289, 164 Pac. 522. It was primarily the Irrigation Company that erred in its judgment. But as it made the contracts with the settlers, who-relied upon the ability of the company to live up to its contract, and who have obligated themselves to make deferred payments, results must be reached upon a recognition of the contractual relationship. The District Court took the data for seven years of the operation of the system, and all the gross run-off, and of the estimated reservoir losses and loss sustained in distribution, and considered what .service could be expected of the system for the entire contract entitled to receive water therefrom, and taking the total acreage, and the total amount of water which experience showed may be available from year to year, and considering what had actually been supplied, concluded that the finding substantially as made by the board of the state of 'Idaho was correct, namely, that the available supply was adequate for only 21,000 acres at the rate of 1.5 acre feet. The estimates and the data upon which the District Court based its conclusions serve to-show the difficulty of arriving at perfectly satisfactory results; but our judgment is that the learned judge was fair in his deductions, and that upon the basis he adopted the defendants can only receive for their lands á fraction of the water for which they agreed to pay the amounts named in the contract, provided lands in excess of 21,000 acres are included. [4] The Land Department in Washington presumably issued its patent upon the assumption that the patented lands will get all the water. Act Cong. June 11, 1896. But there are the unpatented lands, which it is contended the state Land Board and the federal Land Office are not empowered to exclude from the right to receive water; [433] and, as already stated, the company endeavors to recognize a right of water for these unpatented lands, and continues to deliver water to them, as well as to patented lands. Many eutrymen upon those lands have improved them, and, at least until after full opportunity is afforded such entrymen for hearing, we are not ready to say that, where they have complied with the law, they are to he put in a position where all the water must go to patented lands, and that their lands may be rendered useless and their claim of vested rights ignored. AVe believe that, in a proceeding to ascertain whether patents should issue, the finding by the Land Department upon the question whether the water supply is ample is conclusive for the purpose of issuing patent; but that is far from ruling that it is conclusive upon the question whether the plaintiff construction company has provided water at the rate of 1.5 acre feet per acre as required by its contract with the settler. That is a matter which the. Land Department has not undertaken to pass upon, and could not. The Land Department in A¥ashington never has determined that the water is sufficient for a greater amount of land than approximately 21,000 acres, and the patents issued upon the applications by the state Land Board, representing lhat there was a sufficient supply of water for the lands to be included in the patent, do not mean that necessarily the United States intended a result that would, deprive the excluded lands from their ratable share in the use of water, under the terms of the contract between the company and the settler. It is correct that, generally, the lien applies only to reclaimed lands, and under Revised Codes Idaho, § 1629, the water rights to all lands acquired shall attach to and become appurtenant to the land as soon as title passed from the United States to the state. But it does not follow that a finding that there is only seven-ninths of 1.5 acre feet per acre, and that such quantity is spmewhat less than good husbandry requires, is in such conflict with the decision of the Interior Department that there is an ample supply of water, that a court of equity cannot make a decree, as between the company and the settler, which will have regard for the total acreage of 27,000 acres for which obligations exist It may be that upon further application the Interior Department will issue patent for more acres; but such possible action is much too speculative a ground upon which, in this suit, to found a decree which will deprive the improved unpatented lands of their share of water. [5] The sequel of these views is that, while the furnishing company shall have a lien on the water right and land for deferred payments for the water right until the last deferred payment is paid off and satisfied, the lien is expressly founded upon the contract for the water right, and! the right of foreclosure upon default must be “according to the terms and conditions of the contract granting and selling to the settler the water right.” Section 1629 of the» Revised Codes of Idaho. Such is the lien created by the law of the state of Idaho, acting under the authority conferred by the amendment to the Carey Act approved June 11, 1896 (29 Stat. 413-434). [434] But, as the appellant company failed to deliver a quantity of water sufficient to comply with its contract and to enable the defendant to reclaim his land, it cannot rely upon the contract as ground of fore- ' closure for the full amount of deferred payments. On the other hand, defendant has had the use of a substantial quantity of water furnished by the company since 1913, and although such quantity is less than he was entitled to have, and less than his land required for good husbandry, still it was furnished to him, and used by him according to the general provisions of the contract, and in view of his default in payments he ought not to be permitted to defeat foreclosure of the lien to an extent commensurate with the quantity of water furnished; hence a decree that, inasmuch as defendant will only'receive seven-ninths of the water agreed to be furnished, the lien should be foreclosed accordingly, and that the settler should only be required to pay seven-ninths of the contracted for price is equitable and proper. [6] We think, however, that the statute of limitations ought not to have been considered as running against any installment. The entire debt was not matured when the suit was filed; the last installment not being due until April, 1922. The statute does not run from the date of a partial default, but rather from the date the last installment becomes due. Dighton v. First Exchange Nat. Bank (Idaho) 192 Pac. 832; McCarty v. Goodsman, 39 N. D. 389, 167 N. W. 503, L. R. A. 1918F, 160; Core v. Smith, 23 Okl. 909, 102 Pac. 114; 13 Am. & Eng. Enc. of Law, 793; 27 Cyc. 1560. The rule of the decisions cited is that a provision such as thére is in the contract here involved, which provides that upon default in the payment of any of the payments specified in the contract, or of the interest thereon, the company may declare the entire amount of the principal purchase price for said water rights due and proceed to enforce any lien, is a mere option for the benefit of the mortgagee, which, unless exercised, does not set the statute in motion. The necessary computations to carry out our views should be made by the District Court, when the case is again in that court. In all material respects, except the application of the statute of limitations, we believe the theory adopted by the District Court as to the ascertainment of sums due and interest allowances was as precise as could be made with regard to the equities of the case. The order will be that the decree appealed from is set aside, and the case is remanded to the District Court, with directions to enter a new decree, modified in accord with the views of this opinion.