Court Opinion

ID: 6902873
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:56:46.834846+00
Date Added: 2024-06-11T16:06:14.021018
License: Public Domain

Decided January 7, 1913.
On Petition for Rehearing.
(128 Pac. 997.
Mr. Justice Eakin
delivered the opinion of the court.
4, 5. The quantity of water to which the defendant corporation has title, or that is available to it, is not in issue only as it may tend to show the effect upon the corporation of the proposed sale of perpetual water rights to the extent of 2,000 inches, without possibility of income therefrom; and, although the complaint alleges that the quantity of water- appropriated was 6,000 inches, that allegation is denied by the answer, which alleges that the amount of water available is variable and unstable, and that the amount sold is uncertain, and that, when the quantity is short, it must be accepted by the-user pro rata. There is no pretense that. 6,000 inches have been diverted or used, and it is contended by plaintiffs that not more than 2,000 or 8,000 inches have been diverted; that being the capacity of the ditch. The evidence tends to show that the capacity of the ditch may be between 2,000 and 4,000 inches, but *585it is very indefinite upon that question. It is apparent that the corporation’s right is only for surplus water, after certain claims are supplied and reservations made, and it is not definite what that surplus may be, but the title thereto could only be acquired to the amount actually diverted, which cannot exceed the capacity of the ditch. It seems to be conceded that the full quantity of the water is to be expected only during freshets, and not during the full period from October 15th to May 15th, the period for which the sales were made. These matters are not in issue in the case, nor is what is said in the opinion in relation thereto an adjudication of the amount of water to which the corporation has title, but is considered by the court as a condition that has a bearing upon the returns to be expected by the corporation, in view of the sale of perpetual water rights to the extent of 2,000 inches of water.
As to the market value of the water, it appears that the directors determined the value of the rights attempted to be sold by ascertaining from the prospective purchasers what they would be willing to pay. The statements of the witnesses of the value of the rights are largely opinion evidence, rather than a statement of facts upon which an opinion could be based. As evidence of the value, we also have evidence of the cost of water by means of pumps. The cost of the corporation’s plant and the expense of maintenance and operation are elements to be taken into account in determining its value, and also the amount actually diverted by the defendant corporation must be considered in determining the cost of the water delivered; and these elements, with the other evidence, establish the fact that the terms' of the sale authorized by the resolutions of the board are unfair to the corporation, and should be authorized or ratified by the stockholders before the board has power to make sales thereunder.
*586However, as the stockholders have a right to contract with the board, we will modify the former opinion to the extent that purchasers consummated prior to the commencement of this suit other than by directors of the corporation will be allowed to stand as binding upon the corporation.
The decree will be modified to that extent.
Reversed: Modified on Rehearing.