Imperial Valley press., 1912-05-27
TEXT OF DECISION IN NO. ) VS..
CALIFORNIA DEVELOPMENT CO,
CONTINUED FROM PAGE Twol

| pany NO. | ana all right WnlCn IL nat
to receive any of the moneys whicl
would otherwise be due and payable t
the Mexican company from the sale o
stock of that company. 1t was fur
| ther agreed that the Mexican compan.
would make like assignments in thu
future of all rights which it might ac
Quire under similar contracts made
with other water companies for thu
sale of.stock of such companies, or the
proceeds to be derived therefrom.
The second of these contracts was
that of March Is, 1901, between the
Mexican company and the defendant
corporation. In this contract the pre-
viouS agreement between the complain
ant and the Mexican company was re
cited together with the further recita
and as an inducement to the covenants
of the contract that it was corpora
tion formed for the purpose Of obtain
ing water from the Mexican company
and supplying the same at cost to the
stockholders only upon certain lands
situated within certain exterior bound
aries mentioned ana described in its
articles of incorporation.
II was thereupOn agreed by the Mex
ican company to deliver annually OF
demand to the defendant company fouI
acre feet of water for each share OF
stock which might have been issued
and located upon LANDS situated with
in the boundaries OF the lands to be
supplied with water by the defendant
In consideration of this covenant the
defendant agreed that the Mexican
company should have the exclusive
right to sell the entire shares of the
capital stock of the defendant com.
pany and the Mexican company should
receive for its sole use and benefit oil
the stock of the defendant company;
that the defendant would locate all
stock sold by the Mexican company
upon the lands to be selected by the
purchasers of such company or the
order of the Mexican company at the
time of sale. 1t was further provided
that such stock should be located with
in the exterior boundaries of the lands
to be irrigated by the defendant and
described in its articles of incOrpOra-
ton
In consideration of these agreements
the defendant agreed that il would pay
the Mexican company 80 cents per an
num for each share of its stock sold
and located and that the payment
should entitle the defendant to. one
acre foot of water for each share OF
stock sold and located. 1t is further
agreed that the defendant should fave
The right TO purchase from the Mexican
company three additional acre feeJ OF
Tater per year at the rate of 30 cents
per share for each share of stock sold
and located, as provided in the con-
tract.
The third contract is that between
the complainant and defendant, dated
December "a, 1901. In this contract
there are NUMBER OF covenants,
among others, the defendant agreed
that it would issue any portion OF is
missued capital stock at any time
ilpon the order of the complainant and
that none OF its unissued capital eincf
should be issued except upOE such an
order.
1t was further provided that no stock
in the defendant corporation should be
hereafter issued, sold or disposed Of
except to persons who owned or had
acquired some equitable interest in
land lying in the territory designated
in defendants articles of incorporation
and such to be irrigated by the waters
to be furnished by the complainant. 1t
was further provided that all such
stock so to be issued sold or disposed
of would at the time OF its issue be To-
Gated upon and be made appurtenant
to specific lands lying within the pre-
scribed boundaries then owned by or
an equitable interest in which was
owned by the party to whom the stock
vas issued, and the lands upon which
such stock was located should be de-
scribed and designated in the certifi-
cate of stock issued to represent the
same; one share of stock heing appor-
toned to each acre of land.
These contracts were far short OF
transferring to the complainant the
water rights represented by unbiased
shares of the defendants capital stock.
When these contracts were made the
directors of the defendant corporation
were the mere agents of the complain
ant for the formation of the corpora
ton. The lands described in the arti-
cles of incorporation were at that time
public lands of the United
States or school lands OF the state, and
there was no irrigation system in actu-
al existence for the district. In the
agreement between the complainant
and the defendant, dated December "a,
1901, it is expressly recited that no
system of canals or distributing sys-
tens has been constructed for the de.
livery of water to the present stock
holders of the defendant company.
The work did not come within the re-
quirements of section 1416 and 1417
of the civil code, and no right had at
tached. The whole project, so far as
these lands were concerned, was a
scheme devised by the parties behind
the project to appropriate to them
selves the value of the water rights to
all irrigable land in Imperial valley.
The defendant corporation was a
mutual company formed to secure wat
er for the settlers in the district, and