The Twin Falls times. [volume] (Twin Falls, Idaho) 1905-1916, 1913-07-01
IMPORTANT SUIT
FOR THIS TRACT
Right ofiCana| Officers to Is
sue Bonds at Stake
SETTLER ENTERS FRIENDLY SUIT
TO DETERMINE. RIGHTS.
Will Do Much Toward Settling Vexa-
tOus Question of the Past Four
Years.

In the supreme court Wednesday
forenoon, argument on appeal was
heard in the case of E. r. Hobbs,
against Twin Falls Canal company
and Twin Falls Land & Water COM
pany, from the district court for the
Fifth district. The case was argued
by S. H. Hays for the appellant Twin
Falls Land & Water company, and by
A. M. Bowen, for the respondent, Twin
Falls Canal company. Matter has been
taken under advisement, and deci-
sion will probably be rendered in two
or three weeks.
This is felt to be one of the most
important cases of the kind which has
ever been presented to the supreme
court of the state. The case was start
ed by the plaintiff Hobbs, it is claimed
purely for the purpose of securing
final adjudication on what might some
time rise up like Banquo's ghost, to
vex the future managers of the canal
company. The Twin Falls Land &
Water company was made a party of
its rights as the holders of certain un-
paid water right contracts AS the
case progressed the land and water
company although named as defend
ants actually became the plaintiffs in
the case.
Hobbs original suit was for the pur-
pose of determining whether the canal
company had legal authority to mort
gage the property of the company to
secure debts or bonds. The lower court
decided that it had and the case was
appealed to the supreme court. Hobbs
and the land and water company being
the appellants.
The Twin Falls Canal company is
what is ordinarily alluded to as hold
ing and operating company, under the
states regulations in connection with
Carey act projects. When the state
land board entered into a contract
with the Twin Falls Land & Water
company, primarily to the building of
the Miner dam and the construction
of the south side bitches, the holding
or operating company, which it was
intended should take over the property
when entirely completed, was to be or
ganized with articles of incorporation
strictly fOrbidding such company go
ing into debt, issuing bonds, or mort
gaging the property of the company.
Later and prior to the actual forma-
tiOn of this holding company, and the
issuance of certificates of stock there
in, the land board with the consent
and on petition of the land and water
company agreed to change this and ex-
pressly allow the holding company to
mortgage it's property for money bor-
rowed. Articles were filed with the
latter provision included, certificates
of stock were issued, and were accept
ed by the holders of water contracts
without objection.
During the year 1911 it was deter
mined that the property of the Twin
Falls Canal company would be greatly
bettered if certain improvements were
made and 1t was decided that bonds
should be Sold Although bonds were
authorized, they have not yet been
sold, and are awaiting the decision of
the supreme court. 1t is claimed that
If the company is declared to be with
in its rights in mortgaging the prop
erty of the company, that bonds will
at once be sold and the proceeds be
used in the improvement of the prop
erty, long and poor flume being re-
placed, and the main canal in a num-
ber of places being greatly bettered.
The briefs and arguments of appel
Z lants call attention to the fact that the
canal company is not an owning but
an operating company, acting simply
as the trustee for about 1000 owners
of the system, that each of these
stockholders owns definite although
undivided part of the assets of the
company, and that his share or owner
ship cannot in the nature of things be
mortgaged or its ownership changed
except by his own act and through his
consent. 1t Is claimed that when the
lands were entered under the Carey
act, the entrymen did SO under the
contracts then in existence between
the state and the contracting COM
pany, from whom the entrymen bought
his water right. which water right is
indicated by the shares of stock issued
him in the Twin Falls Canal company.
and that any change afterwards
made in the powers of the holding
company, by which 1t became author
lied to mortgage the property repre-
scented by shares of stock in such hold
ing company, was illegal and void.
Appellant, the land and water COM
pany. also contends that even II the
canal company should have the right
to incur debt. that the mortgage cre-
ated by the issuance Of the bonds. by
the land and water company cannot
be a first mortgage. but must be sub
ject to the first mortgage held which