Court Opinion

ID: 5171850
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:57:06.722497+00
Date Added: 2024-06-11T08:26:07.461961
License: Public Domain

LEE, J.,
Specially Concurring. — Respondent is what is known as a Carey construction company, and entered into a contract with the state to construct an irrigation system to reclaim certain lands segregated by the United States to the state under the act of Congress approved August 18, 1894, and the acts supplementary and amendatory thereto. Thereafter respondent conveyed to appellants or their predecessors in interest, who are Carey entrymen, a right to the use *101of certain of the public waters of the state, which it had appropriated for the settlers under the segregation, and it agreed to construct the ditches, canals and reservoirs and other necessary diverting works to deliver such water within one-half mile of the place of intended use by entrymen, and to supervise the delivery of the water to the users thereof for five years. This contract with the entryman also conveyed to him as tenant in common with all other users a proportionate interest in such diverting works, and they were at the expiration of that time to take over and operate the same for the delivery of said water.
During the year of 1915, and while respondent company was still in charge of said system and the delivery of water, but after the expiration of the time fixed in the contract for turning it over to the settlers, appellants put in certain crops that were dependent for their proper growth, cultivation and maturity upon receiving the maximum amount of water stipulated in the agreement. Appellants allege that they were not furnished with this amount of water, and that as a consequence there was a partial failure of their crops, by reason of which they sustained damages, for which they pray judgment.
Respondent seeks to avoid liability principally upon the ground that during the year of 1915 there was an unusual shortage of water in the watershed of the Big and Little Wood Rivers, from which the water supply of this system is obtained, and that owing to such shortage, due entirely to natural causes, respondent had pursuant to the terms of the agreement delivered to the lands of appellant, and to all other lands in said project, less than the maximum, but the full proportionate share of the available water supply to which said lands were entitled. No claim is made, as I understand, that this damage for a failure to deliver the full amount -of water was because of negligence on the part of respondent, otherwise than by reason of its failure to conserve and have under its appropriation a sufficient amount of water to furnish the maximum of one-eightieth of a cubic foot per second of time during a low-water period. Appel*102lants contend that it was respondent’s duty under this agreement to furnish the maximum amount, when such amount was necessary for the proper growth of their crops. Respondent takes the position that under the agreement it was only bound to furnish the maximum amount called for by said contract, provided the same was available in the natural sources from which said water supply was obtained.
The cause was tried by the court with a jury, which found for respondent company, and the cause, is on appeal to this court from the judgment below. Appellants assign many errors, but I think the controlling question presented by the record is whether a shortage of water due to natural causes —that is, insufficient rain and snowfall — is a defense to an action by an entryman for damage to his growing crops by reason of a failure to furnish a sufficient amount of water, up to the maximum called for by the agreement, and what is the true measure of damages for such failure.
The contract between the entryman and the construction company must be construed not only with reference to its terms and the contract between the state and the company, but also in accordance with the state and federal law which has given rise to this class of agreements. Carey projects in this and adjoining arid states have been so numerous that the general plan of operation under the law for the reclamation of lands is well understood. A clear exposition of both the state and federal acts, and a construction of some of the provisions of this particular contract under consideration, is found in Hanes v. Idaho Irr. Co., 21 Ida. 512, 122 Pac. 859. Many of these projects have been successful, and of inestimable value to both the state and the settlers under them, and large areas of land have been reclaimed and caused to be made highly productive which otherwise would have remained in an arid condition. The creation of the system and visualizing it into a practical plan required the exercise of a high order of constructive ability. Necessarily, it was something of an experiment, and that errors would be made was inevitable. Some of these have resulted in serious loss to settlers under certain of these projects, and *103few, if any of them, have been profitable to the promoters. In the nature of things, the success of these reclamation projects was in a large degree dependent upon estimates, for the reason that in their inception, accurate data was not obtainable as to the dependable character of the water supply, commonly termed the “run-off” of the watershed that was to supply water to such projects. Experience has demonstrated that in almost every instance the estimate of the water supply available for the reclamation of a particular tract was too high for the occasional low-water season or drought period, which every rational person knows is possible and liable to happen in this region.' Public officers charged with the duty of making these contracts with construction companies were confronted with this situation: If they limited the sale of land under a Carey segregation to the amount of water that would be available in a year of extreme drought or low-water season, a vast amount of equally good land, and for which there was an ample supply of water under normal conditions, would have to remain in its desert state, and the cost of reclaiming the lands sold would be greatly increased to the purchaser and the surplus water during an average year would be lost. These considerations may have influenced allowing in some instances lands to be filed upon where there was not an adequate supply of water, which has entailed upon the settler a hardship that should have been avoided. It has frequently given rise to litigation, and caused much of the segregated land to be returned to the government for settlement under other of the public land laws. It is clear that entries upon these segregated lands should have been so limited that construction companies could not sell water contracts for lands in excess of the amount of water which would be available for delivery during the average ordinary year.
The question here presented is, has respondent by its contract obligated itself to furnish the maximum amount of water called for, when there has been a shortage of the available water supply caused by a lack of precipitation in the watershed supplying this system, and if the construction *104company is liable for such shortage, what is the proper measure of damages?
In the instant case, appellants contend — at least, that is the logical sequence of their position — that the measure of damages should be the difference between the value of the crops that would have been produced with a full supply of water, and that which was actually produced under the diminished supply, and that this liability is a continuing one, for which the settler will have a new cause of action upon every recurrence of the shortage. Manifestly, if this be a correct rule of law applicable to this class of contracts, it is not only conceivable, but almost a fixed certainty, that a construction company may be liable for an amount of damages in excess of the original sale price of the water right. It is suggested that construction companies of this character might have easily protected themselves against such a contingency by inserting a provision holding them harmless in ease of an abnormal shortage of precipitation, but that if they have failed to expressly limit their liability, they are without remedy, because these contracts make them liable for a delivery of the maximum amount whenever the same is needed, and that a shortage of the available water supply, although it be due to a drought of extraordinary severity, is no defense. Respondent claims that there has been no breach of the contract, that its liability is limited to furnishing the maximum amount of water stipulated in the contract only under average normal conditions, and that in the absence of any fraudulent representations as to such water supply, a shortage of water available, caused by an extreme drought, such as is alleged to have occurred in 1915, is a complete defense to the cause of action set forth in the complaint. Respondent also contends that a proper construction of this agreement brings it within the rule stated in Taylor v. Caldwell, 3 Best & S. 826, 122 Eng. Repr. (K. D. B., Book 51) 309, that where from the nature of the contract it appears that the parties must from the beginning have known that it could not be fulfilled unless when the time came for the fulfilment of the contract the particular specified thing continued to exist, so that when entering into the *105contract, they must have contemplated such existence as the foundation of what was to be done; that in the absence of any express or implied warranty that the thing shall exist, the contract is not to be construed as a positive contract, but as subject to an implied condition that the parties will be excused in case, before breach, performance becomes impossible from the perishing of the thing, without fault of the contractor.
Respondent further contends that even if it has failed to supply the maximum amount specified in the agreement, the measure of damages caused by such failure is not the loss of crops in any one low-water year or succeeding number of low-water years, but such damage is to be determined by the difference between the purchase price paid by the settler for such water right, and its diminished value by reason of such right being insufficient to supply the maximum during low-water years, the question being analogous to that presented by an action for a breach of a covenant of warranty in a deed, and that in no event can the grantor be liable in an amount in excess of the original purchase price, plus accrued interest and such costs and other damages as are directly incident to a breach of warranty, and that neither speculative damages in the way of anticipated profits nor enhanced value can be taken into account in computing such damages.
That rule is stated by Chief Justice De Grey in Flureau v. Thornhill, 2 W. Bl. 1078: “Upon a contract for a purchase, if the title proves bad and the vendor is (without fraud) incapable of making a good one, I do not think that the purchaser can be entitled to any damages for the fancied goodness of the bargain which he supposes he has lost.” To which Justice Blaekstone added: “These contracts are merely upon condition, frequently expressed but always implied, that the vendor has good title. If he has not, the return of the deposit, with interest and the costs, is all that can be expected.”
While this doctrine has been criticised as being an exception to the rule of law that a vendor who from whatever cause fails to perform his contract is bound to place the purchaser, so far as money will do so, in the position he would *106have been in if the contract had been performed, yet it has received the sanction of the great majority of the English courts, as being an exception that is founded in common justice and right, and is acknowledged to be the (English rule to-day. The principal criticism is that the rule is too broad, and does not distinguish between cases where the vendor has contracted under an honest belief that he had title, and where he contracted with a view of obtaining title for the purpose of conveying it, and failed to so obtain title. In this latter class of cases it has been modified by some of the courts. An extensive review of the authorities may be found in Morgan v. Bell, 3 Wash. 554, 28 Pac. 925, 16 L. R. A. 614, where the rule as thus stated is applied and followed.
In Staats v. Ten Eyck’s Exrs., 3 Caines (N. Y.), 111, 2 Am. Dec. 254, which is regarded as a leading case in this country, Kent, C. J., announces the rule to be: “In an action for a breach of covenants of seisin and quiet enjoyment, the measure of damages in case of eviction is the value of the land at the time of sale, represented by the consideration paid, with interest thereon from the time the plaintiff loses -the mesne profits.”
The great weight of authority, both ancient and modern, sustains this rule, that is, where the vendor has acted in good faith, without fraud, but is incapable of making a good title, the recovery of the purchaser cannot exceed the value of the land at the time of the sale, represented by the consideration paid, with interest thereon from the time that plaintiff lost the mesne profits. I see no reason why this rule is not applicable to a contract for the sale of water right of the character here described. C. S., sec. 3018, provides that the water right to all lands acquired under the provisions of chapter 136, commonly known as the Carey Act, shall attach to and become appurtenant to the land as soon as title passes from the United States to the state. While in Bennett v. Twin Falls North Side etc. Co., 27 Ida. 643, 150 Pac. 336, it is held that this statute does not make the water right an inseparable appurtenance to the land, nevertheless such a right has all the attributes of real estate, *107and the right of the entryman granted by the state by virtue of its agreement with the United States, to the particular land to which this water right is appurtenant, in effect constitutes a purchase of realty, although the title to the land is deraigned from the government, and the water right is acquired from the state.
In the majority opinion it is said that: “The principle that the performance of the contract was based upon the continuance of the subject matter is at least partially applicable,” citing Dow v. Bryant, 28 Wyo. 508, 206 Pac. 1061, and Hanes v. Idaho Irr. Co., supra. The cause was submitted to the jury upon instructions to the effect that a shortage of water during the year of 1915, due to a scarcity of the natural supply, was a defense, and the majority opinion holds that: “A diminution of the water supply on account of an extraordinary drought should be held to be a legitimate defense.”
The evidence offered by respondent that the year of 1915 was one of extraordinary drought was not seriously controverted by appellants, and in view of the cause being remanded for a retrial, the court below should not be left in doubt as to what this court intends to hold with regard to the liability of respondent under these contracts.
I think the cause should be remanded, with instructions that if necessary the parties be allowed to amend their pleadings, and that if it appears that respondent has failed to supply the maximum amount of water specified in the agreement, the measure of damages caused by such failure, when due to an extraordinary drought, is not the loss of crops in any one low-water year or number of low-water years, but such damage is to be determined by the difference between the purchase price paid by the settler for such water right, and its diminished value by reason of such right being insufficient to supply the maximum during low-water shears. Because of entertaining these views, I have extended this concurrence with the majority opinion beyond what would otherwise be justifiable.