Imperial Valley press., 1908-07-04
WATER RIGHTS OF SETTLERS
 SUSTAINED BY FEDERAL COURT
Idge WebOrn PrOnOunCeS c. D. Co.'s Scheme of Selling Water Stock an Illegal Device for Holding Up the Farmer---COntractS of Mutual Companies With c. D, Co. Are VOidabe.---No Five Wins.

tract rights and leaves the whole de- velopment scheme depending on the constitutional provision as to the sale of water"
 Lawyers in Fl Centro, familiar with the pleadings in the cases and with conditions in the valley, say that the decision does not affect the relations of stockholders and mutual com panies; that it deals only with the re- lations of the mutual companies to the by which the c. D. Go. controls and benefits by the sale of water stock Judge Wellborn says clearly that the c. D. Go. cannot eaxct from the land owner bonus for the privilege of buying water at the established rate but apparently that does not prevent the mutual companies from selling stock to obtain the money necessary for the construction of distributing canals. The ostensible purpose of the c. D. Co. in selling stock of the mu- tual companies was to provide for construction in the districts of ditches conveying water from the C. D. Co.'S canals to the lands of settlers, but only small part of the money ob- tained from the sale of water stock ever was applied to that work, the greater part going into the treasury of the c. D. Go. and the pockets of it's promoters.
 Sandbagging Finance.
 Stock in mutual company repre- sents nothing but the privilege of paying more money to the c. D. Go. The mutual companies issue stock, hand it over to the c. D. Co.,, and when the c. D. Go. sells the stock the mutual companies do not receive the money. Under the more recent con- tracts, mutual companies receive two- fifths of the money realized from the sale of their stock, and out of that they pay for the construction of their canals. The c. D. Co. pockets three f1fths, or $15 on every $25 share, and makes that graft a condition preced- ent to the delivery of water at 50 cents an acre foot to reclaimers of desert land
 Under Judge Wellborn's decision, which is in line with Colorado decis- ions, the farmer may build his own ditch connecting with the c. D. Co.'S hn of water at the established rate, and he cannot be held up and forced to buy water stock. His right is legal, not contractual, and may be enforced by mandamus. It is the duty of the SUI pervisors to establish the rate at a figure which will pay the c. D. Go. not. less than six nor more than eigh- teen per cent on the present value of it's system, If the rate fixed is unsatis- factory to either party, the courts may be called upon to review the ac- tion of the supervisors.
 Attorneys Explain.
 According to advices furnished by Haines & Haines to the San Diego Uni on, the decisions not only affect the district controlled by what is known as Company No. 5, but also affect every water company operating in Inn perial Valley, and there are eleven of them.
 History of the case dates back to the formation of the California De- yelopment Company, which built the canal to deliver water from the Colo rado river to settlers in Imperial Val ley. The route of the canal starts in the United States, which territory is controlled by the parent company. known as the California Development Company The route then takes course through Mexico. where sec ond company known as the Mexican Company operates. It then comes back into the United States from Continued on page 11)