Court Opinion

ID: 3411420
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:29:17.43264+00
Date Added: 2024-06-11T13:51:15.088489
License: Public Domain

I am not in harmony with the action of the majority in setting aside the order of the commission because of its refusal to include in the *Page 23 
valuation of the property of the utility, used and useful in the public service, the value of a so-called water right which the utility claims to own. I take the position that the right to the use of the water is in Boise City and its inhabitants, and that the utility is the mere agency through which the water is diverted and distributed. The utility occupies the position of a carrier and distributor of the state's water, which the constitution dedicated to those who applied it to a beneficial use, the city of Boise and its inhabitants. The utility possesses a right, termed by the constitution a franchise, which is the right to collect compensation for supplying the water to those who use it. But the utility is not entitled to have valued as its property, water belonging to the state, the right to the use of which the constitution has dedicated to the city and its inhabitants. In my judgment, the only reasonable and logical meaning to be given the pertinent provisions of the constitution is that, on the diversion and distribution of the theretofore unappropriated public waters of this state to a city and its inhabitants, the state continues to be the owner of the water, the city and its inhabitants have the right to the use of the water, and the utility is the agency through which the water is diverted and distributed and has a franchise to collect reasonable rates or compensation for such service. (Wilterding v. Green, 4 Idaho 773, 45 P. 134; Rowland v.Kellogg Power Co., 43 Idaho 643, 253 P. 840; Denver v. Brown,56 Colo. 216, 138 P. 44.)
The Murray case, relied on by the majority, is not at all decisive of this question. In this case, the utility simply diverted a portion of the unappropriated public waters of Boise River for distribution to the city and its inhabitants, while in the Murray case, the utility owner, in order to supply the city of Pocatello and its inhabitants with additional water, purchased rights to certain waters theretofore appropriated for and devoted to private use. Murray was the owner of a private water right; it was his private property. He could not be required to devote his private property to *Page 24 
that public use without compensation, and in devoting such private property to the use of the public, this court said he was entitled to have it given its fair value. As to Hard v.Boise City Irr. Co., 9 Idaho 589, 76 P. 331, also relied on by the majority, I fail to see where it has any application whatever to the point under consideration.
The case of San Joaquin  Kings River Canal  Irr. Co. v.Stanislaus County, 233 U.S. 454, 34 Sup. Ct. 652,58 L. ed. 1041, is based on different facts and was decided under the constitution and laws of California. Our conception of a water right is not the same as California's (see Wiel on Water Rights, and Palmer v. Railroad Com., 167 Cal. 163,138 P. 997), and it is my view that the Stanislaus county decision is not controlling. It was held to be without application in Colorado (Pioneer Irr. Co. v. Board of Commrs., 236 Fed. 790). The Stanislaus county case was decided by the supreme court of the United States on the assumption that the water was private property and belonged to the utility. The following excerpt justifies this statement:
"It seems unreasonable to suppose that the Constitution meant that if a party, instead of using the water on his own land, as he may, sees fit to distribute it to others, he loses the rights that he has bought or lawfully acquired. Recurring to the fact that in every instance only a few specified individuals get the right to a supply, and that it clearly appears from the latest statement of the supreme court of California (Palmer v. Railroad Commission, 167 Cal. 163,138 P. 997) that the water when appropriated is private property, it is unreasonable to suppose that the constitutional declaration meant to compel a gift from the former owner to the users. . . . . "
That water flowing in the natural streams of this state belongs to the state and that the right to a beneficial use thereof is all that can be acquired is well settled. In the Stanislaus county case the utility owned the water. In this case, the utility has neither title to the water nor the right *Page 25 
to its use. All it has, in so far as the water is concerned, is a franchise to collect compensation for its distribution. The facts are so different as to render both the Stanislaus county case and the Murray case inapplicable. In neither of them was it held that the value of a water right should be included where the utility owned neither title to the water nor a right to its use. In the Stanislaus decision it was also said that:
" . . . . still, at the lowest, the plaintiff has the sole right to furnish the water, the owners of the irrigated lands cannot get it except through the plaintiff's help and it would be unjust not to take this fact into account in fixing the rates."
While I do not believe that decision has any bearing on this case, conceding for the sake of argument that I am in error, and that the city and its inhabitants cannot get this water without the "help" of the Capital Water Company, to take that fact into account in fixing rates does not require the addition to the company's property of the value of a water right to 2,400 inches of water. What the company has is a constitutional franchise to distribute water for compensation — and not a water right — and it would be better in every way to include a proper value for the constitutional franchise of the company than to value the so-called water right, even though franchise value ordinarily should not be included in the value of a utility for rate-making purposes.
The property of the company has been valued at $152,689.00, and the company asks an additional valuation of $295,740.00 for the claimed water right. The franchise to divert water from Boise River and distribute it to the city and its inhabitants did not cost the company anything, and the injustice of permitting it to capitalize this right and collect a return thereon is manifest. No one will question its right to earn its reasonable operating expenses and a fair return on the value of all its property, and this the decision of the commission permits. What is questioned, however, is the justice of requiring users to hereafter pay *Page 26 
the company a return on the value of a water right the company does not possess.
The majority holds that the company owns and holds a right to divert 2,400 inches of the natural flow of Boise River, with a date of priority of 1866, on which the commission is required to place a valuation and the users to pay a return. And having solemnly declared that the company owns and holds this valuable property right, the majority then proceeds to abstract the substance and value of the right, for it says: " . . . . manifestly these users cannot now be made to pay a rental for such use based upon what this right to the use of the water would now be worth. . . . " I respectfully submit that, as applied to utility valuations, this is not the law. It is elementary in valuations for rate making that the utility is entitled to have its property given its present fair value. This has been decided time and again by the supreme court of the United States, and was so held by this court in BoiseArtesian Water Co. v. Public Utilities Com., 40 Idaho 690,236 P. 525. The company either owns this right or it does not. If the company owns the right, it should be given the benefit of its present fair value, and evidence of the cost of acquiring such a right in Arrow Rock reservoir would be admissible as tending to show its reproduction value.
The Krall water right and distribution system, being no part of the property of the Capital Water Company, I am unable to understand why the commission, in a proceeding to value the property of that company, used and useful in serving its users, should be required, in this proceeding, to undertake to pass on the question of the cost of carrying the Krall water to the Krall headgate. Conceding that the contract rate for the carriage of Krall water may not be sufficient, the loss sustained by the company should not be collected from the company's users, for the cost of delivering water to the Krall headgate is not an item of expense of delivering water to the users of this utility.
The order of the commission should be affirmed. *Page 27