Case Name: W. S. RANCH COMPANY, a New Mexico Corporation, Appellant, v. KAISER STEEL CORPORATION, a Nevada Corporation, Appellee
Court: United States Court of Appeals for the Tenth Circuit
Jurisdiction: United States
Decision Date: 1967-10-12
Citations: 388 F.2d 257
Docket Number: No. 9295
Parties: W. S. RANCH COMPANY, a New Mexico Corporation, Appellant, v. KAISER STEEL CORPORATION, a Nevada Corporation, Appellee.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 388
Pages: 257–267

Head Matter:
W. S. RANCH COMPANY, a New Mexico Corporation, Appellant, v. KAISER STEEL CORPORATION, a Nevada Corporation, Appellee.
No. 9295.
United States Court of Appeals Tenth Circuit.
Oct. 12, 1967.
Rehearing Denied Feb. 1, 1968.
A. K. Montgomery and Seth D. Montgomery, Santa Fe, N. M. (George W. Robertson, G. Gordon Robertson, Raton, N. M., and Richard S. Morris, Santa Fe, N. M., with them on brief), for appellant.
Paul A. Kastler, Raton, N. M., and George T. Harris, Jr., Albuquerque, N. M., for appellee.
Before MURRAH, Chief Judge, and BROWN and HICKEY, Circuit Judges.
By Special Designation.

Opinion:
MURRAH, Chief Judge.
This is an appeal from judgment of dismissal for failure to state a claim on which relief can be granted. The twofold question, presented and decided on the pleadings, is whether the New Mexico statutes grant the right of eminent domain to a private corporation for the purpose of securing water to be used in coal mining operations, and, if so, whether inverse condemnation proceedings is the sole remedy available to one whose land is so taken.
Plaintiff-appellant W. S. Ranch Company filed its Complaint in the District Court of New Mexico alleging that it is the owner and possessor of certain land on and near the Vermejo River in New Mexico; that defendant-appellee Kaiser Steel Corporation wilfully and maliciously entered upon Ranch's lands, after notice that its right to enter was disputed, drilled diversion wells and laid a pipeline to divert water from the Vermejo River to its coal mining operations adjacent to Ranch's property; and that Ranch is entitled to an injunction against further trespass and compensatory and punitive damages. Claiming the right of eminent domain, Kaiser responded with a Motion to Dismiss the Complaint supported by an" affidavit to the effect that Kaiser owns water rights approved by the New Mexico State Engineer to be used for "beneficial use" at its coal mine; that an approved place of diversion for such waters is on the Vermejo River and that the beneficial use of such waters necessitates conveying them by pipeline across Ranch's lands. Nowhere does Kaiser contend that it negotiated with Ranch for a right-of-way or that it instituted condemnation proceedings as prescribed by Sec. 22-9-1 through 22-9-21 N.M.Stat. Anno.
Kaiser claims its right to eminent domain under the following constitutional and statutory provisions:
Art. XVI, § 2 N.M.Const.
"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."
Art. XVI, § 3 N.M.Const.
"Beneficial use shall be the basis, the measure and the limit of the right to use water."
§ 75-1-3, NM.Stat.Anno., 1953 Comp. " any person, firm or corporation, may exercise the right of eminent domain, to take and acquire land right-of-way for the construction, maintenance and operation of pipe lines or other works for the storage or conveyance of water for beneficial uses."
On Motion to Dismiss and here the Ranch Company argues that if, as Kaiser contends, § 75-1-3 is construed to authorize the condemnation of private land to secure water in aid of mining operations, it must be declared unconstitutional as permitting the taking of private land for private use; that the statute can be accorded constitutional validity only if the "beneficial use" of water for which it authorizes eminent domain is determined by the ultimate or final use of the water, and that use inures to the benefit of the public — not private industry. The effect of this argument is to suggest that even though the constitutional words "beneficial use" may be construed to mean any use whatsoever except waste, when that term involves the exercise of the power of eminent domain,- it must necessarily be measured by "ultimate use" and limited to "public use".
Relying upon a number of New Mexico Supreme Court cases, Judge Bratton held that in an arid state such as New Mexico any "beneficial use" of water is a "public use", i. e. see Albuquerque Land and Irrigation Company v. Gutierrez, 10 N.M. 177, 61 P. 357; City of Albuquerque v. Garcia, 17 N.M. 445, 130 P. 118; Pueblo of Isleta v. Tondre, 18 N.M. 388, 137 P. 86; Young v. Dugger, 23 N.M. 613, 170 P. 61; State ex rel. Red River Valley Co. v. District Court of Fourth Judicial District, 39 N.M. 523, 51 P.2d 239; State ex rel. State Game Commission v. Red River Valley Co., 51 N.M. 207, 182 P.2d 421; Threlkeld v. Third Judicial District Court, 36 N.M. 350, 15 P.2d 671, 86 A.L.R. 547. He agreed with Ranch that in each of the cited cases the New Mexico court was concerned only with the ultimate use of water for irrigation and other domestic purposes, concededly a "public purpose" in New Mexico. But, he thought it decisive that "the statute [75— 1-3] places no such limit on the use of water, nor have the courts." He further reasoned that "While the grant of eminent domain may be exercised either by the State or by private persons and industry the public use which is being furthered is the distribution of the public waters of the state without which an arid state cannot develop" — not the ultimate use to which the water may be put after distribution. (Emphasis ours).
Undoubtedly, the decision in this case must necessarily have a far reaching effect. If the "beneficial use" of water is to be determined by the distribution of water among the people of New Mexico, as indeed the trial court held, then the "public benefit" must be rationalized in light of the well established fundamentals of eminent domain, for land will become subject to condemnation for purposes of diverting water to anyone whomsoever for any ultimate purpose whatsoever, public or private, save, of course, waste. On the other hand, if the "beneficial use" is to be determined by the ultimate use to which the water is put, then even though an individual or industry may secure a valid right to take water from the public sources, there can be no assurance of any means of diverting the water from its source to the place of use, and industry and growth of the state could be severely hampered. It is conceded that this precise question of industrial use of public waters has never been presented to the New Mexico courts. We must seek then to determine what that court will say when the question comes before it and to reconcile the law of eminent domain with the peculiar body of water law developed from necessity in arid states.
Both Ranch and Kaiser rely upon the same New Mexico cases as did the trial court, each contending for a different interpretation. The case law is not decisive, but as we read the cases, the court in each instance scrutinized the specific or "ultimate" use to be made of the public water. An analysis of the crucial language in each case will illuminate our conclusion.
In 1900, prior to the enactment of 75-1-3, the New Mexico courts were already facing the question of condemnation of private land for purposes of diverting water from a public source to non-riparian lands. The court in Albuquerque Land and Irrigation Co. v. Gutierrez, supra, affirmed "that the legislature has power to enact a law granting the right of eminent domain provided the property taken is for a public purpose" and "It is undoubtedly true that the diversion and distribution of water for irrigation and other domestic purposes in New Mexico, and other western States where irrigation is necessary, is a public purpose." Id. 61 P. 357 (Emphasis ours). Section 75-1-3 was enacted in 1907 and in 1913 the court first construed the statute stating, "[T]he right to condemn lands for irrigation ditches was conferred upon 'the United States, the [State] of New Mexico, or any person, firm, association or corporation.' " See City of Albuquerque v. Garcia, supra. The court evidenced its concern for the constitutional question by citing and quoting the Utah case of Nash v. Clark, 27 Utah 158, 75 P. 371, 1 L.R.A.,N.S., 208, affd. 198 U.S. 361, 25 S.Ct. 676, 49 L.Ed. 1085, to the effect that "In view of the physical and climatic conditions and in light of the history of the arid West, which shows marvelous results accomplished by irrigation, to hold that the use of water for irrigation is not in any sense a public use would give to the term 'public use' altogether too strict and narrow an interpretation, and one we do not think is contemplated by the Constitution." (Emphasis ours)
Shortly thereafter in Pueblo of Isleta v. Tondre, supra, the New Mexico court held that the terms of 75-1-3 were broad enough to confer the right of condemnation for the particular purpose of irrigar tion upon persons holding valid water rights prior to enactment of the statute. The later case of Young v. Dugger, supra, presented again the sole question "whether the right of condemnation exists in favor of private persons for the purpose of conveying water for irrigation purposes over the land of another." Id. 170 P. 61 (Emphasis ours). Relying on its previous decision in City of Albuquerque v. Garcia, supra, the court once more held that "use of water for irrigation purposes constitutes a public use."
In State ex rel. Red River Valley Co. v. District Court of Fourth Judicial District, supra, the State of New Mexico sought to condemn private land for the purpose of erecting a dam or reservoir for impounding the waters of the Canadian River. The court held that "The state may appropriate private property under its inherent power of eminent domain by legislative act . Whether the use to which the property is to be put is a public use is a judicial question . But the character of use here involved [irrigation] was long ago determined by the Supreme Court of the Territory to be a public use and never departed from by this court
Next came State ex rel. State Game Commission v. Red River Valley Company, supra. The New Mexico court was concerned first with whether certain impounded waters were public waters and, if so, whether their use for recreational purposes would be a "beneficial use". The court noted that "The invitation to enjoy these recreational activities is urgently and constantly extended by this and other states similarly situated, and millions of dollars are spent by tourists from less attractive areas who come to enjoy them." It went on to say that "We are asked to strike down the long established rules pertaining to public water ownership and uses because we have not yet been called upon to apply it to this particular beneficial use. We know of no reason why we should restrict the use of waters which belong to the public only to the uses which have, up to this time been adjudicated by our court as 'beneficial'." (Emphasis ours)
The water right cases were invoked in Threlkeld v. Third Judicial Dist. Court, 36 N.M. 350, 15 P.2d 671, 86 A.L.R. 547, in support of the asserted power of eminent domain under a statute authorizing a logging company to take private property for right-of-way purposes in accordance with the laws governing common carriers. Denying the right of eminent domain, the court went to the heart of the matter with the inquiry as to what ultimate use would be made of the right-of-way. Finding that the right-of-way was to be used in furtherance of logging operations, it concluded that such operations did not fit into the distinctive classification accorded uses of water for irrigation purposes, historically recognized as a public purpose out of "elemental necessity". Likening water to air which "must not be allowed to fall under private control", the court went on to use the language which Judge Bratton deemed significant and supportive to the effect that "Only by invoking the power of eminent domain can a state distribute its own waters as its public policy requires. A right of way taken for that purpose is in a large sense devoted to public use."
We are reluctant to disagree with a New Mexico trial judge interpreting New Mexico law, but nowhere in the cases examined can we find language to support the trial court's ruling that "the public use being furthered is the distribution of the waters ". On the contrary, our appraisal of the language in each case leaves us with the inescapable impression that the court was looking to the ultimate use of the water to determine whether that use would inure to the benefit of the general public or only a few individuals. This is apparent in the Red River Valley case where the New Mexico court considered the general economic benefit to inure to the people of New Mexico from the particular use of its waters for recreational purposes. We think the language in that case leaves no doubt that the court deemed itself impelled to examine each proposed ultimate use of the public waters and determine whether that use was of sufficient public benefit as to justify eminent domain. This "ultimate use" concept is also manifest in the United States Supreme Court's affirmance of Nash v. Clark, supra, wherein it acknowledged that many factors have bearing upon "the question whether the individual use proposed might not in fact be a public one." (Emphasis ours)
This brings us at last to our salient question whether the ultimate use of public waters in aid of coal mining is a "beneficial" or "public" use so as to confer upon Kaiser the power of eminent domain for a right-of-way to divert such water. We, of course, start with the proposition that private property can be taken only for public use and that the effect of the New Mexico decisional law is to carve out an exception to this constitutional mandate in recognition of overriding considerations born of necessity in an arid land where water is the life-blood of the community. Certainly the right of an individual to hold and enjoy property ought not be subjected to the carte blanche power of eminent domain simply because distribution of water may promote the public interest, and tend to develop the natural resources of the state." Clark v. Nash, supra. Each case must rest upon its own constitutional footing.
In some states "mining", like irrigation, is, to be sure, deemed to be public in character for the purposes of eminent domain. This is made so either by constitutional or statutory provision or court adjudication. See Inspiration Consol. Copper Co. v. New Keystone Copper Co., 16 Ariz. 257, 144 P. 277, and cases collected there. And, this in no way violates the Federal Constitution. See Clark v. Nash, supra. But, the determination of what shall constitute a "public" use is a judicial question. See State v. District Court of Fourth Judicial District, supra. The mere fact that some states permit the taking of private property in aid of "mining" is not controlling here, for the New Mexico court in Gallup American Coal Co. v. Gallup Southwestern Coal Co., 39 N.M. 344, 47 P.2d 414, considering the precise industry of coal mining, rejected the public character of the industry with the observation that "As an essential or paramount industry, in its importance to the existence and functioning of the state and to the livelihood of the people, [coal mining] does not seem to us to belong in a class with irrigation in New Mexico . We consider it rather in a class with the timber or lumbering industry which was involved in the Threl-keld case. It follows that, in so far as the statute impliedly declares a public use in the business or industry of coal mining, it is violative of the N.M. Const, art. 2, § 20." We think that case is controlling here. The court in Gallup was, to be sure, concerned with a statute other than 75-1-3. But, logic dictates that the New Mexico court would not deny the power of eminent domain in aid of coal mining under one statute, and sustain it under the statute invoked here merely because it speaks in terms of "beneficial use" of water.
We hold that Kaiser had no power to take Ranch's land by eminent domain and that the Complaint stated a claim upon which relief could be granted. In this view of the case the question of inverse condemnation becomes academic. We will, however, comment to the extent that if Kaiser had followed the intricately detailed New Mexico statutory procedure for acquiring land by condemnation, the issues presented and decided here could have been litigated in an orderly manner in the courts of New Mexico where they belong.
The judgment is reversed and the case is remanded with directions to proceed in accordance with the views herein expressed.
Before MURRAH, Chief Judge, and BROWN and HICKEY, Circuit Judges.
. It is noteworthy that the particular type of taking is not disclosed in the Gallup opinion. For all we know the court might very well have been concerned with the taking of a right-of-way to divert water in aid of coal mining.
Of the Fifth Circuit, sitting by designation.