Case Name: MIDDLE RIO GRANDE WATER USERS ASS'N v. MIDDLE RIO GRANDE CONSERVANCY DIST.
Court: Supreme Court of New Mexico
Jurisdiction: New Mexico
Decision Date: 1953-05-11
Citations: 57 N.M. 287
Docket Number: No. 5544
Parties: MIDDLE RIO GRANDE WATER USERS ASS’N v. MIDDLE RIO GRANDE CONSERVANCY DIST.
Judges: COMPTON and LUJAN, JJ., concur.
Reporter: New Mexico Reports
Volume: 57
Pages: 287–315

Head Matter:
258 P.2d 391
MIDDLE RIO GRANDE WATER USERS ASS’N v. MIDDLE RIO GRANDE CONSERVANCY DIST.
No. 5544.
Supreme Court of New Mexico.
May 11, 1953.
On Application for Approval of Amendatory Contract June 29, 1953.
A. T. Hannett, G. W. Hannett and W. S. Lindamood, Albuquerque, for appellant.
Martin A. Threet and D. A. Macpherson, Jr., Albuquerque, for appellee.

Opinion:
McGHEE, Justice.
This is an appeal from a decree holding legal a contract entered into by the United States of America and the Middle Rio Grande Conservancy District.
The appellant's statement of the case so clearly presents the issues raised below and the action of the court there that we will first copy it and then dispose of the legal questions under the points urged by them. We quote:
"The Board of Trustees of Middle Rio Grande Conservancy District, hereinafter referred to as appellee, initiated this proceeding by filing a petition for the purpose of determining the validity of a Reclamation Contract, executed September 24, 1951, between the United States of America and ap-pellee, the Middle Rio Grande Conservancy District, alleging that on the 24th of September, 1951, appellee had entered into a contract with the United States of America under and pursuant to the provisions of Chapter 148, 1939 New Mexico Session Laws, as amended, embraced in Article 31 of Chapter 77 of New Mexico Statutes Annotated, 1941, as amended, attaching to its petition a copy of the proposed contract. Appellee asked the three-judge Conservancy Court, provided for in Section 77-3120, New Mexico Statutes Annotated, 1941, to adjudicate said contract in all respects valid. The petition sets forth that by the terms of the contract the United States agrees within the limitation of the contract and to the extent funds are available to acquire through said Conservancy District at prices satisfactory to the Secretary of the Department of Interior of the United States, or his duly authorized rep-resenative, the outstanding bonds evidencing the present bonded obligation of appellee; to rehabilitate and extend the irrigation and drainage system of appellee, including El Vado Dam and reservoir; also that before undertaking any such rehabilitation work, the United States shall submit its program and plan therefor annually in advance to appellee for consultation and adyice; to. rectify the channel of the Rio Grande in the Middle Rio Grande Valley, including Española Valley and the Hot Springs area; also dredging from near the south boundary of appellee into the Elephant Butte Reservoir; provided that the features of the project above designated and their order of construction may be varied, and as thus varied, constructed in the order, all as determined by the Secretary of the Interior or his duly authorized representative.
"That under the terms of said contract, among other things, appellee's obligation for the works and benefits to be performed by the United States of America is to reimburse the United States of America to the maximum of $18,000,000 payable over a period of forty years without interest.
"Appellee also alleges on information and belief that it would be and is for the best interests of the landowners, farmers, and water users within the appellee's boundaries that this contract be approved and confirmed in all respects by the Conservancy Court ^
"In response to said petition the Court made its order setting the matter for hearing, after due notice, on the 13th of December, 1951.
"On the 12th of December, 1951, the Middle Rio Grande Water Users Association, hereinafter referred to as appellant, comprised of some 324 water users engaged in the cultivation of soil within the boundaries of appellee, in its own behalf and in behalf of others similarly situated, filed its demurrer and answer, by which appellant challenged the sufficiency of the petition for the following reasons:
"A. That the contract lacked mutuality in that it obligates the appellee to the performance of many and divers obligations without any firm obligation on the part of the United States.
"B. That Sections 77-3102, 77-3112, 77-3113, 77-3114, New Mexico Statutes Annotated, 1941, which sections are an integral part of Chapter 148, Laws of 1939, under which Act appellee claims the authority to enter into said contract, are unconstitutional and void in that said sections offend against and were passed in defiance of Sections 1, 2, 3, of Article 16 of the Constitution of the State of New Mexico for the reason that under the terms of said contract the long-established water rights under the doctrine of prior appropriation of water placed to beneficial use are ignored and, if said contract is made, executed, delivered, and enforced according to its terms, the ancient water rights of the appellant and others similarly situated will be lost to them; that said contract will deprive the owners of ancient water rights guaranteed under said sections of the Constitution of all their vested rights to the use of the waters of the Rio Grande.
"C. That said sections offend against and are violative of Section 18, Article 4 of the Constitution of the State of New Mexico in that said statutes attempt to extend by reference to its title only the Reclamation Act passed by the Congress of the United States (43 U.S.C.A. Secs. 371-670), together with any rules and regulations that have been or may hereafter be promulgated by the Secretary of the Interior thereunder in such a manner as to constitute blind legislation and divest appellant of substantive rights, and further the appellant's authority to enter into said contract, as appellant is informed and believes, is based on powers granted by the terms of Chapter 148 of the Laws of 1939, of which said sections are an integral part.
"D. .That said contract offends against and is contrary to the fundamental constitutional principle that the legislative, executive, and judicial branches of the government shall be separate and independent, and that none of the said departments of government shall invade the powers or duties of any other departments in that said contract and said legislation strips the courts of the State of New Mexico of jurisdiction to settle disputes as to water rights and as to any right under said contract, and purports to vest such jurisdiction in the executive branch of the government, to-wit, the Secretary of the Interior.
"E. That said contract and legislation under which appellee purports to act offends against the Tenth Amendment to the Constitution of the United States in that appellant is a public corporation vested with governmental function, including the power to tax and levy assessments, and that the ap-pellee is now trustee of the irrigable waters of the Rio Grande in the District for the purpose of distributing the same to the owners of water rights and has no title to the water; that the title to the water is appurtenant to the land and belongs to the landowners, and said contract attempts to transfer title to the water of. the river and the taxing power of the appellee to an executive of the federal government, to-wit, the Secretary of the Interior.
"F. That said contract and the legislation under which appellee purports to act in entering into said contract violates the Fifth and Fourteenth Amendments of the Constitution of the United States and Article 2, Sections 4 and 18 of the Constitution of the State of New Mexico, in that it deprives the appellant of the liberty of contract.
"G. That said contract will convey to the United States all rights-of-way, ditches, canals, and diversion dams which are held in trust by appellee for the use and benefit of appellant and others similarily situated against the will and without the consent of the appellant.
"H. That said contract and said statute under which appellee claims the authority to enter into the same offends the due process and equal protection and contract clauses of the United States Constitution, and is therefore void because it attempts to change the contract now made and existing between the individual landowners and the appellee by changing the number and amount of the unpaid installments and extending the time for the payment thereof over a period of forty years without the consent of the landowners.
"By the terms of appellant's answer appellant denies the allegations set forth in paragraph 4 of appellee's petition and affirmatively alleges that all of the alleged agreements on the part of the United States, by the terms of said contract, are subject to the vicissitudes of Congressional appropriations, and in event of failure on the part of the United States to make such appropriations neither the appellee nor the water users would have a remedy.
"Appellant in its answer denied the allegations set forth in paragraph 6 of the petition which alleges in effect, upon information and belief, that it would be for the best interests of the landowners, farmers, and water users that the contract be in all respects approved and confirmed.
"After hearing, the Court rendered a memorandum opinion finding the issues against the appellant and in favor of appellee. Thereafter, the appellee and appellant filed requested findings of fact and conclusions of law. The Court then made and entered its own findings and conclusions, and judgment was entered thereon in favor of appel-lee and against appellant, upholding the validity of the contract and the Acts heretofore described from which judgment the appellant has brought this appeal."
As there is no question but that a large number of landowners within the District belong to the appellant association and oppose the contract, and as the material facts are undisputed, we feel the attacks on the legality of the contract may be answered by taking up the legal matters raised, first determining the jurisdiction of the trial court in passing upon the legality and validity of the contract, and, in turn, our jurisdiction, in passing upon the appeal.
We agree with the contention of the appellee that this is a special proceeding, and the lower court was limited in its jurisdiction in passing upon the contract to a determination of whether the applicable statute, art. 31, secs. 77-3101 through 77-3124, N.M.S.A., 1941 Comp., authorizes the appellee to enter into the contract as written ; whether the appellee abused its discretion in so doing; and whether such statute is constitutional and valid. Our review is limited by the same yardstick.
The Act of Congress of May IS, 1922, 42 Stat. 541, granting authority to the Secretary of the Interior to enter into contracts with existing irrigation districts provides:
" That no contract with an irrigation district under this Act shall be binding on the United States until the proceedings on the part of the district shall have been confirmed by decree of a court of competent jurisdiction, or pending appellate action if ground for appeal be laid." 43 U.S.C.A. § 511.
Section 77-3120, 1941 Comp., so limits the jurisdiction of the Conservancy Court. See also American Falls Reservoir Dist. v. Thrall, 1924, 39 Idaho 105, 228 P. 236.
Point one relates to the duty of the Conservancy Court to pass upon certain requested findings of fact and conclusions of law. which we do not deem it necessary to discuss in disposing of the appeal.
Point two of the appellant reads:
"That the Contract Plere Sought to be Declared Valid Lacks Mutuality in that the United States is not Bound to do or Perform any Act to Carry Out the Terms of Said Contract Other Than to Take Possession, at Its Discretion, of the Property of the District and Operate it in Whole or in Part in Its Discretion Unless and Until the Congress of the United States Appropriates or Makes Available Funds for the United States to Carry Out the Improvements Mentioned and Described in Said Contract, and the District is Obligated Without any Consideration to Transfer All of Its Property and the Management Thereof to the United States. Further Said Contract cannot be Specifically Enforced by Either the District or Any Water Users, but might be Specifically Enforced by the United States."
It is true performance on the part of the United States is conditioned upon appropriations being made by the Congress to carry out the rehabilitation of the ditches and works of the District, but this is true of all government contracts. The contract provides:
"9. To the extent funds are, and may be made available therefor, the United States will within the limitations of this contract construct the Project comprising the following features :
"(a) Acquire through the District at prices satisfactory to the Contracting Officer, the outstanding bonds, evidencing the present bonded obligation of the District.
"(b) Rehabilitate and extend the irrigation and drainage system of the District including the El Vado Dam and Reservoir. Before undertaking any such rehabilitation work, the United States shall submit its program and plan therefor annually in advance thereof to the District for consultation and advice.
"(c) Rectify the channel of the Rio Grande in the Middle Rio Grande Valley, including the Española Valley and the Hot Springs area; also dredging from near the south boundary of the District into the Elephant Butte Reservoir. Provided, that the features of the project above designated and their order of construction may be varied, and as thus varied, constructed in the order, all as determined by the contracting officer.
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"12. At the termination of construction as determined by the Contracting Officer, as in Article 11 hereof provided, he shall give the District notice thereof which shall set forth (1) the actual costs of constructing features of the project described in subparagraphs (a) and (b) of Article 9; (2) the amount of such costs to be repaid by the District; (3) the credits to the District for payment to the United States of the net proceeds from collection of assessments during the construction period as provided in Article 10 hereof, and the balance thereof shall be payable by the District to the United States in forty (40) consecutive annual installments, each of which may be paid one-half thereof on February 1 and the other on August 1 of each year commencing with the year succeeding that in which such construction cost notice is given, if given prior to September 1; otherwise commencing with the second year succeeding that in which such notice is given.
"Provided that if a final determination of such costs and of the District's obligation hereunder cannot be made at the time such notice is given, said notice shall contain an estimate of such obligation, which shall determine the amount of installments payable by the District until such time as the actual obligation of the District can be deter mined and notice of such determination is given to the District, at which time any difference between the estimated and actual obligation of the District shall be spread equally as a charge or credit as the case may require over the installments maturing following the issuance of such construction cost notice."
The United States agrees to do three things:
1. To acquire and cancel the outstanding bonds of the district.
2. To rehabilitate and extend the irrigation and drainage system.
3. To rectify the Rio Grande channel, including that portion near the head of Elephant Butte Lake where so much water has lately been wasted.
The District agrees to repay the reimbursable cost of such works over a period of forty years without interest. The United States will not take over until the money is available to begin the operation. The contract contemplates performance by the United States will take many years, and it is unreasonable to require the full appropriations to be made and the money impounded in the treasury over such period of time.
The appellant says the contract contemplates dual control which is prohibited by Middle Rio. Grande Conservancy Dist. v. Chavez, 1940, 44 N.M. 240, 101 P.2d 190. The United States will not take over the operations until the contract is judicially approved and the money is available, when under the plan adopted the District will have its duties in making and collecting assessments, and the United States will be in charge of operation and construction. Such is the plan generally followed in the operation of reclamation projects, and we see nothing impractical or illegal in such plan.
The matters raised under point two must be ruled against the appellant.
The third point raised by the appellant reads:
"The Court Erred in Refusing Appellant's Conclusion of Law No. 2 Which Reads:
"That Sections 77-3102, 77-3112, 77-3113, 77-3114, New Mexico Statutes Annotated, 1941, Which Sections are an Integral Part of Chapter 148, Laws of 1939, Under Which Act the Plaintiff Claims the Authority to Enter Into Said Contract, are Unconstitutional and Void in that Said Sections Offend Against and were Passed in Defiance of Sections 1, 2, 3, of Article 16 of the Constitution of the State of New Mexico for the Following Reasons:
"(a) That Under the Terms of Said Contract the Long-Established Water Rights Under the Doctrine of Prior Appropriation of Water Placed to Ben eficial Use are Ignored and if Said Contract is Made, Executed, Delivered, and Enforced According to Its Terms, the Ancient Water Rights of Water Users, the Defendants and Others Similarly Situated Will be Lost to Them.
"(b) That the Owners of Ancient Water Rights Guaranteed Under Said Sections of the Constitution Will Be Deprived of Their Vested Rights to the use of the Waters of the Rio Grande, the Distribution of Said Waters Being Entirely Left to the Discretion, Whim, and Caprice of the Secretary of the Interior, Acting Through the Reclamation Bureau.
"(c) Further that Sections 77-3102, 77-3112, 77-3113, and 77-3114, New Mexico Statutes Annotated, 1941, Offend Against and are Violative of Section 18, Article 4 of the Constitution of the State of New Mexico in That Said Statutes Attempt To Extend By Reference to Its Title Only the Reclamation'Act Passed by the Congress of the United States (43 U.S.C.A. Secs. 371-670), Together With Any Rules and Regulations That Have Been or May Hereafter Be Promulgated by the Secretary of the Interior Thereunder in Such a Manner as to Constitute Blind Legislation and Divest Petitioners of Substantive Rights, and Further the Plaintiff's Authority to Enter into said Contract is Based on Alleged Powers Granted by the Terms of Chapter 148 of the Laws of 1939 of Which Said Sections are an Integral Part."
The substance of the statutes mentioned reads:
The District
(a) may convey to the United States land or water rights or any interest therein, either without monetary consideration therefor or in partial consideration of the privileges derived from a reclamation contract or for other consideration;
(b) may, and if so agreed in a reclamation contract shall, withhold water from lands which under the terms of the Reclamation Law (43 U.S.C. Secs. 371-611), a reclamation contract, or rules and regulations thereunder are not entitled to receive water, and from water users or the lands of water users delinquent in the payment of any assessment, toll, rental or other charge, but this remedy shall be in addition to all other remedies available for the enforcement of the reclamation contract or collection of assessments, tolls, rentals or other charges, and
(c) may accept the provisions of any existing or future act of Congress applicable to such district.
The Constitution provisions named read:
Article 16:
"§ 1. All existing rights to the use of any waters in this state for any use ful or beneficial purpose are hereby recognized and confirmed."
"§ 2. The unappropriated water of every natural stream, perennial or torrential, within the state of New Mexico, is hereby declared to belong to the public and to be subject to appropriation for beneficial use, in accordance with the laws of the state. Priority of appropriation shall give the better right."
"§ 3. Beneficial use shall be the basis, the measure and the limit of the right to the use of water." Article 4:
"§ 18. No law shall be revised or amended, or the provisions thereof extended by reference to its title only; but each section thereof as revised, amended or extended shall be set out in full."
'We will first consider the claim the adoption of the reclamation statutes by reference to the title of the Reclamation Act is violative of a.rt. 4, Sec. 18, supra. If these reclamation statutes are a necessary part of the act in which they are adopted, it must be confessed they are void, for we are firmly committed to the doctrine that only procedural law may be adopted by reference. State v. Armstrong, 1924, 31 N.M. 220, 254, 243 P. 333, and Yeo v. Tweedy, 1930, 34 N.M. 611, 286 P. 970.
As we view these statutes adopted by reference they were mere surplusage in Chapter 148, Laws of 1939, under which the contract was made. The Secretary of the Interior was necessarily limited by the Reclamation Act, and regulations made thereunder, in making the contract with the District, and when the contract was entered into, these statutes became an integral part thereof, as was the case when the Vil-, lage of Doming entered into a contract with a governmental agency for the purchase of surplus war material. Brown v. Village of Deming, 1952, 56 N.M. 302, 243 P.2d 609.
Unquestionably,- the District does not have the authority to barter away the vested water rights of the landowners who have applied them to beneficial use. The waters are appurtenant to the land and the District stores and delivers them to the users. Murphy v. Kerr, D.C., 296 F. 536, affirmed, 8 Cir., 1925, 5 F.2d 908, 41 A.L.R. 1359; Ickes v. Fox, 1937, 300 U.S. 82, 57 S.Ct. 412, 81 L.Ed. 525; Gutierrez v. Mid dle Rio Grande Conservancy Dist., 1929, 34 N.M. 346, 282 P. 1, 70 A.L.R. 1261. In the Gutierrez ca.se this Court in answer to a claim under the Conservancy Act that a vested water right could be conveyed by the District, said such statute referred only to new filings or waters developed by the District. Such an argument is here made by the District, and it says the conveyance only applies to new filings and new waters acquired by the United States, and we believe section 28 of the contract only conveys such waters. So viewed, that part of the contract is not invalid or illegal.
Clearly, the statute and that part of the contract allowing the Reclamation Service to withhold water from water users delinquent in their payments is valid and legal. Without such provision a few would pay the charges of their delinquent neighbors.
Section 29 of the contract provides for the conveyance of the works and property of the District to the United States, and this property, appellant says, is held by the District as trustee for the landowners. It is true this municipal corporation holds these properties in the final analysis for its members, but in the conveyance to the United States it is only conveying the legal title as security for the money to be spent for the benefit of the District for which charge is made. No one can doubt but that the Congress of the United States will authorize the reconveyance of all such property to the District if, as and when its debt is paid.
Section 77-2726, subparagraph 10, N.M. S.A., 1941 Comp., provides in part, the Board shall not permanently sell, lease, assign, permit, or otherwise part with the control by the District of the use of water thereof. This section was a part of ch. 45, sec. 316, Laws of 1927, and must bow to the 1939 Act giving the Board authority to convey such waters to the United States as we say for security. They are not permanently sold, but conveyed as security for the payment of the debts to accrue. We do not believe the case of Palmer v. City of Albuquerque, 1914, 19 N.M. 285, 142 P. 929, L.R.A.1915A, 1106, cited by the appellant on this question has any application to the case at bar.
We next consider the effect of sec. 77-3112, 1941 Comp., in connection with the 160-acre limitation in the Reclamation Act, and its specific acknowledgment and approval in another section of the contract. The section of the statute reads:
"Contracts made by contracting districts, or landowners within contracting districts, for the purpose of limiting and controlling the size of land holdings entitled to receive water and providing for the disposition of lands in excess of such holdings, and of providing the manner of application of proceeds in the case of sales of district lands, in conformance with the provisions of the Reclamation Law (43 U.S.C., § 371-611), are hereby authorized and declared to be in accordance with the public policy of this State." Section 32 of the contract reads:
"The irrigation water supply furnished through the project works constructed or rehabilitated in pursuance of this contract shall be delivered in accord with the excess land provisions of the Federal Reclamation laws and regulations of the Secretary promulgated thereunder; Provided, that nothing in such regulations shall interfere with any vested water right as provided in Section 8 of the Reclamation Act of June 17, 1902 (32 Stat. 388) [43 U.S. C.A. § 372, 383], and in Section 203 Title II, Flood Control Act of June 30, 1948 (62 Stat. 1171)."
The Reclamation Act, ch. 12, 43 U.S.C.A. § 371 et seq., as well as the Flood Control Act of 1948, 62,Stat. 1171, sec. 203 under topic "Rio Grande Basin", provides for the recognition of valid existing water rights, as does the 1939 Conservancy Act. In the same act, as well as in one place in the contract now being considered, the statement is made that existing vested or valid water rights are recognized, but of what avail is the title to such a water right if the owner who has more than a 160-acre right is not allowed to get water for more than 160 acres. True, if the owner was able to make a direct diversion from the river to his land he could still cultivate more than 160 acres, but with the system of diversion dams and ditches such would be an impossible task. The contract contemplates and provides for the complete overhaul and rehabilitation of all works of the District, and with a provision in the contract recognizing and approving the limitation of acreage, a protesting water user would, in our opinion, be met with a judgment of a court of competent jurisdiction validating such contract, and he would be powerless to overcome the decree. The right to sue the Secretary of the Interior for violation of vested water rights was recognized by the Supreme Court of the United States in Ickes v. Fox, supra, but such ruling has now been overruled in the later case of Larson v. Domestic & Foreign Corp., 1949, 337 U.S. 682, 69 S.Ct. 1467, 1467, 93 L.Ed. 1628, where the Supreme Court reviewed its former opinions on the right to sue a governmental official, and concluded it had allowed too many such suits. In the course of the opinion it was stated:
" Since we- must therefore resolve the conflict in doctrine [right to maintain suits against government officers] we adhere to the rule applied in the Goldberg case [Goldberg v. Daniels, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191] and to the principle which has been frequently repeated by this Court, both before and after the Goltra case [Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074]: the action of an officer of the sovereign (be it holding, taking or otherwise legally affecting the plaintiff's property) can be regarded as so 'illegal' as to permit a suit for a specific relief against the officer as an individual only if it is not within the officer's statutory powers or, if within those powers, only if the powers, or their exercise in the particular case, are constitutionally void." (Parenthetic matter supplied.)
If the Ickes case was not completely overruled by the Larson case, it was certainly severely limited as was stated in State of New Mexico v. Backer, 10 Cir., 1952, 199 F.2d 426, where the state was denied the right to maintain an action against the government agent in charge of Elephant Butte Dam who was running water out under a contract with the Elephant Butte Irrigation District. The action of the state was to protect the health of the people .of the City of Truth or Consequences from an epidemic which it was claimed would follow the draining of the lake and the killing of a great quantity of fish which would be deposited in the Rio Grande in such city.
The attempt to limit the delivery of water to those having vested lights to more than sufficient to irrigate 160 acres is, in my opinion, clearly unconstitutional, although I freely admit the right of' the United States to limit the use of new or additionally developed water to 160 acres. As the majority hold otherwise, my views on this point become my dissent on this point.
We do not regard the attack on Sec. 77-3113, 1941 Comp., as valid. In the operation of a large irrigation district those charged with the delivery of water must know the demand, and how often water must be available for the landowners. It is a matter of common knowledge in this irrigated country that certain crops require more water and more frequent irrigation than other crops, and with a fair knowledge1 of the amount of water available they will be able to handle the available supply with due regard to the needs and rights of all users. It does seem harsh and. perhaps high handed to require approval of particular crops, but, after all, the United States is preparing to put a lot of money into the District, and we feel it may require the planting of such crops as are likely to yield sufficient return to enable the landowner to pay his obligations, and to prevent the planting of such a noxious crop as Johnson grass. Limitation of acreage of crops by the Congress, and the payment of subsidies thereon have become commonplace, the heretofore rugged and individualistic cattleman being the last to succumb and secure price supports, according to the announcement of the Secretary of Agriculture made March 23, 1953.
Appellant's point four reads:
"The Court Erred in Refusing Appellant's Conclusion of Law No. 3 Which Reads:
"That Said Contract, Together with Chapter 148 of the Session Laws of 1939 Offends Against and is Contrary to the Fundamental Constitutional Principle that the Legislative, Executive, and Judicial Branches of the Government shall he Separate and Independent, and that None of Said Departments of Government Shall Invade the Powers or Duties of any Other Departments, and that Said Contract and Said Legislation Strip the Courts of the State of New Mexico of Jurisdiction to Settle Disputes as to Water Rights and as to any Right of These Defendants and Others Similarly Situated itnder Said Contract, and Purports to and Will, if Entered into, Vest Such Jurisdiction in the Executive Branch of the United States Government, To-Wit, the Secretary of the Interior."
Section 21 of the contract provides:
"Should any assessment or assessments required by the terms of this contract and levied against any tract of land or water user in the District he judicially determined to be irregular or void or the District or its officers he enjoined or restrained from making or collecting any assessment rupon said land as provided for herein, then such tract or water user shall have no right to any of the benefits of this contract and no water made available through the works constructed or rehabilitated by the United States hereunder shall be delivered to or for such tract of land or water user."
In the Arch Hurley Conservancy District case, 1948, 52 N.M. 34, 191 P.2d 338, attack was made on the contract because it was said the Secretary of the Interior had the final say as to assessments under the statutes. Mr. Justice Sadler answered this contention by showing that under the statute the Secretary could recommend the incorporation of lands within the district, and suggest the assessments to be made, but that the final say was in the members of the Conservancy Board and then the Conservancy Court, and on such basis the contract was sustained. Here, however, we have an express provision of the contract the Secretary may override the decision of the Conservancy Court, or any other court, and enforce his mandate whether legal or illegal, and regardless even of what the Supreme Court of the United States might say. In so doing he would be protected by a contract held valid by this court, and even though he ordered the District to assess for clearly illegal purposes, as was done in Ickes v. Fox, supra, the District would be helpless to protect itself, especially since the decision in the Larson case, supra. We agree that for money lawfully expended for the District, or operation and maintenance charges lawfully made, the Secretary could compel the District to make assessment; but this, under the statutes, must be made by the Conservancy District following a hearing at which the water owner may have his day in court. We hold the provision of section 21 quoted above to be illegal.
Argued under point four is also the provision of the contract making the Secretary of Interior the final arbiter of disputed facts, which the appellant says is illegal. Such a provision was held valid in United States v. Moorman, 1949, 338 U.S. 457, 70 S.Ct. 288, 94 L.Ed. 256, and it is almost universally upheld in building contracts. Ann. 54 A.L.R. 1255. In United States v. Wunderlich, 1951, 342 U.S. 98, 72 S.Ct. 154, 96 L.Ed. 113, it was held that even though the decision might be ¿rbitrary, capricious, and grossly erroneous, if made by the head of a government department under a contract saying his decision should be final and conclusive upon the parties to the contract, it could not be set aside by the courts, in the absence of fraudulent conduct, i. e., conscious wrongdoing with an intention to cheat or be dishonest.
A reading of the Wunderlich case in the Supreme Court and in the Court of Claims, 117 Ct.Cl. 92, should be enough to satisfy one such a provision is improvident, but it is not illegal.
Appellant's point five raises the question of the legality of the clause giving the Secretary of Interior the right to tax, saying such is a legislative function which may be delegated to a local agency, but not to the United States.
With that part of section 21 giving the Secretary the right to override the courts in the making of assessments held illegal, the appellant's contentions under this point become unfounded, as we will then have the situation as it existed in the Arch Hurley case (Hudson addition), where the board will consider the recommendations of the Secretary and then will make its recommendations to the Conservancy Court which will have the final decision after giving the landowner his day in court.
Under point six the appellant says the contract violates the Fifth and Fourteenth Amendments to the Constitution of the United States, and Article 2, sections 4 and 18 of the Constitution of New Mexico. The argument is the members of the appellant association are compos mentis and sui juris, and fully able to contract for themselves. We have no fault to find with this general statement, but it is too late in the day to urge the Conservancy District may not enter into a valid con- ' tract with the United States for the rehabilitation and improvement of the existing district organized many years ago for the purpose, among others, of cooperating with the United States in the irrigation and-drainage of the lands. Organized and existing as a municipal corporation, and finding its works deteriorating, with water becoming more scarce as the years go by, and unable to secure the large amount of necessary money elsewhere, the Legislature was acting within its powers when it enacted ch. 148, Laws of 1939, permitting the District to enter into a lawful contract with the United States for the improvement of the District and the increase of its water supply. The matters raised under this point must be ruled against the defendant.
The matters raised under point seven have been covered by what is stated under point three.
Point eight reads:
"The Court Erred in Refusing Appellant's Requested Conclusion of Law No. 8 for the Reason that it Offends the Due Process and Equal Protection Clause of the Constitution of the United States in that it Attempts to Change the Contract Now Made and Existing Between the Individual Landowners of the Appellee by Changing the Number and Amount of Unpaid Installments and Extending the Time for the Payment Thereof."
The appellant relies on the case of Durand v. Middle Rio Grande Conservancy Dist., 1941, 46 N.M. 138, 123 P.2d 389, to sustain this assignment, saying we there passed on this very question, and that the opinion supports the assignment.
A different question was before the Court in the Durand case. There we had before us the constitutionality of a relief act passed by the Legislature in 1940 to relieve the agricultural lands of the district not in a state of cultivation from the payment of any outstanding bonded indebtedness until July 1, 1955, Sp.Sess, ch. 1, Laws of 1940, except an annual assessment of 25 cents per acre for maintenance. After 1955 the Act provided that the deferred paym? its on uncultivated agricultural lands should be capitalized and the total thereof without interest, would be due and payable in annual installments of not- to exceed fifteen, the first of which would be due in 1955.
This Court held the relief act unconstitutional which attempted to change the method of assessment while there was an outstanding obligation of the district without the consent of the landowner, as viola-tive of the Contract Clause of the Federal Constitution.
Here the United States will pay off the present bonded indebtedness, amounting to some $7,000,000, and it will be included in the not to exceed $18,000,000 reimbursable costs (based on 1947 prices), without interest. A new method of assessment will be provided which will not, we believe, run counter to the decision in the Durand case. Section 37 of the contract provides:
" Provided, it is the intent and purpose of' both parties to this Contract that the acquisition and cancellation by the United States of the outstanding bonds, evidencing the present bonded obligations of the District, as provided in Article 9(a) of this Contract, shall be accomplished at the earliest date possible in order that:
"(a) The present method of assessment under the Conservancy Act may be discarded and the more equitable method of assessment adopted, as provided herein under the terms of the Conservancy District Reclamation Contract Act and the Federal Reclamation Law.
"(b) Savings may be made to the District and the United States by elimination of interest payments on the outstanding bonds."
Under the dire circumstances in which the District finds itself, plagued by continual threats of floods, the river bed constantly rising until the drainage ditches are no longer effective, the water supply decreasing and the Elephant Butte Water District and the State of Texas at this very time attempting to take more of the scarce water, we do not look at the new assessments, if regularly made under the supervision and control of the Conser7 vancy Court, with too critical an eye.
The matters raised under points nine and ten are elsewhere disposed of adverse to the appellants.
The contract and ch. 148, Laws of 1939, are legal and valid, except for the objectionable part of section 21 of the contract set out supra. If the section is amended to conform with our views on the subject, the contract and statute will be held legal and valid in their entireties.
The appellant will recover the costs of this appeal.
It is so ordered.