Imperial Valley press., 1908-07-04
WATER RIGHTS
(Continued from page 1.

where water is distributed to users who must buy their water after pay ing for stock in a subsidiary concern. It was shown during the arguments in federal court that the parent com pany worked a double deal on water consumers by first compelling them to buy stock from a subsidiary con- cern and besides pay water rate made by the parent body and which collected the proceeds both from the sale of stock and from the water rate charged. In consequence of this, when members of the local company desired to extend or make improvements to their irrigating plants they found it necessary to assess the members in or der to meet the expense.
 Dictator Defied.
 For several years this plan of op- erating irrigating systems in the val ley went on. Ranchers were obliged to own one share of water stock in a water company for each acre irrigated
 
 The prevailing rate is 50 cents per acre foot. A number of ranchers own ing stock in Company No. finally tired of being bled by paying what they deemed an excessive rate in view of the fact that they were also com pelled to pay the price asked by the parent company for stock in their own corporation. They got together and decided to test the rights of the Cali fornia Development Company to be dictator. Company No. took steps to dispose of 65,000 shares of the unused portion of it's capital stock at a price of $1 per share for the purpose of de- voting the proceeds to the enlarge ment of it's irrigtaing system. When this action was taken the California Development Company stepped in with claim to ownership of the un- used stock of No. and brought in junction proceedings to prevent the shares from being placed on the mar ket.
 Settlers in Control.
 Judge Wellborn's decision denies the parent company the right to in terfere with the plans of it's offspring and by said decision the companies owning water stock not issued by the California Development Company or tbo NToviOan oOnoarn haUa o riobt tO dispose of same as they see fit. It practically means that the water rights of Imperial Valley are taken out of the hands of the California De- velopment Company and placed in charge of the settlers themselves.
 While the injunction prayed for by the development company was denied by Judge Wellborn, he gave the com plainant leave to amend, but it is said the company will let the matter rest where it is and fall back on the rights it asserts under the state law-that is, to charge an amount that will yield at least per cent on it's capital stock plus expenses of furnishing water.
 In the matter of resembling the con tract by which the development com pany agreed to supply water to Mo- 5 company, Judge Wellborn held that, even though the contract might be illegal, the development company can not ask for a rescission without offer ing to return to the water company proceeds already realized under the contract, amounting to $176SO for sales of water to July 1, 1906, and sales of 35,6SS shares of stock at an estimated value of $2O a share.
 Two contracts are involved, one for the payment of annual rates, and the other for the transfer in substance, to the California Development Company of the ownership of the stock of the subsidiary companies.