Court Opinion

ID: 5170565
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:54:21.246856+00
Date Added: 2024-06-11T08:26:04.265314
License: Public Domain

ON REHEARING.
The specific performance of such a contract would require constant supervision of the court for years unless the receiver should succeed in immediately enforcing payment from all settlers, and unless the funds so collected should prove sufficient to complete the project. (6 Pomeroy, Eq. Jur., sec.. 760; .Fry, Specific Performance, see. 48; Boss v. Union Pac. By. Go., Fed. Cas. No. 12,080, Woolw. 26; Texas & Pac. By. Co. v. City of Marshall, 136 U. S. 393, 10 Sup. Ct. 846, 34 L. ed. 385; Beck v. Allison, 56 N. Y. 366, 15 Am. Rep. 430; Alabama Western B. Co. v. State ex rel. Garber, 155 Ala. 491, 46 So. 468, 16 Ann. Cas. 485, 19 L. R. A., N. S., 1173; Farmers’ Loam, & Trust Co. v. Burbank Poiver & Water Co. (D. C.), 196 Fed. 539.)
Karl Paine and C. E. Winstead, for Intervenors, cite no authorities on rehearing.
Ira E. Barber, as Amicus Curiae.
The rulé that specific performance will not be decreed in building and construction contracts on account of the inconvenience of enforcing such decree is subject to important exceptions. (Wilson v. Furness By. Co.', L. R. 9 Eq. 28, 38, 39 L. J. Ch. 19, 21 L. T., N. S., 416, 553; Gregory v. Ingwersen, 32 N. J. Eq. 199; Stuyvesant v. Mayor etc. of New' York, 11 Paige Ch. (N. Y.) 414; Grubb v. Starkey, 90 Va. 831, 20 S. E. 784; Birchett v. Bolling, 5 Munf. (Va.) 442; Wolverhampton v. Emmons, 1 K. B. (1901) 515; Storer v. Great Western B. Co., 12 L. J. Ch. 65; 36 Cyc. 583, and cases cited, note 54.)
Equity will not refuse specific performance because a contract has several years to run. (Prospect Park & Coney Island B. Co. v. Coney Island & Brooklyn B. Co., 144 N. Y. 152, 39 N. E. 17, 26 L. R. A. 610.)
SULLIVAN, J.
A rehearing was granted in this case upon the petition of appellant Neitzel, and additional briefs and oral arguments were presented on such rehearing. Ira E. *135Barber, Esq., and N. M. Ruick, Esq., appeared as friends of the court and filed briefs.
In limine, C. C. Childs brought this action to oust the board of directors of the Murphy Land & Irrigation Co. and to have a certain mortgage, executed by said corporation to the appellant, H. R. Neitzel, canceled and held for naught, and for an accounting and for the appointment of a receiver to take charge of the property of said defendant corporation, for the purpose of conserving the same for the benefit of said corporation and its creditors and all other persons having any interest therein, and that such receiver have full management of the business of such company under the order and direction of the court.
Thereafter many of those holding contracts for water from said corporation intervened in said action and took full charge of said ease. Said intervenors filed their complaint in intervention on their own behalf and. on the behalf of all others holding water contracts issued by said corporation. The intervenors named as plaintiffs represented about 3,500 acres of land within said .project out of a total of about 6,000 acres. Extracts from the said water contract are set forth in the original opinion in this ease. Under the terms of said contract, said corporation was to complete said system and turn it over to the water contract holders on or before December 31, 1911. Said system was partially completed and some of the purchasers of water rights received water therefrom. The corporation became insolvent and was unable to complete the system.
The record shows that H. R. Neitzel was the controlling spirit of said corporation, as early, at least, as 1910. He was president of the corporation; his nephew was secretary and he and his wife and nephew were members of the board of directors of said corporation. The appellant Neitzel had full knowledge of the financial condition of. said corporation, of its insolvency, and of its inability to complete said irrigation system in accordance with the terms of said water contract. It was conceded on the argument that the correct rule was laid down by this court in its original opinion *136in this case, to the effect that the person loaning money to such a corporation, to be used in constructing its irrigation system, acquires only such rights and interests as the irrigation company has in such project and such water right contracts, and cannot collect payments on such contracts until the water has been made permanently available to the user under the terms of said contracts, not only for' one season, but for all seasons. In other words, the corporation is required to make provision for a sufficient permanent supply of water and a reasonably permanent system of reservoirs, dams and ditches of sufficient capacity to hold and convey such water to the users as per the terms of said water contracts, before the water user is required to make the deferred annual payments provided for in said contracts.
The main contention of counsel for appellant Neitzel on oral argument was in substance that the receiver could not proceed and. complete the system under the direction of the court, first, because there were no plans and specifications by which- the receiver could be guided in the completion of said system; and, se.cond, that the receiver had no funds with which to‘complete the system and had no authority under the water contracts to collect the annual payments agreed to be paid until the water had been delivered to the owners. '
There is nothing in the first contention of counsel, for the reason that the record shows the plans and specifications for the construction of said system is a part of the public records and files of the state in the state engineer’s office, which plans and specifications have been approved by the state engineer. It is alleged in the fifth paragraph of the complaint that the plans and specifications for the reservoirs, ditches, dams, etc., of said Murphy project are on file with the state engineer of the state of Idaho, and that allegation is admitted by the answer of the defendants.
As to the second contention, this court in its former opinion did not intend to hold that the receiver could proceed and collect the annual instalments agreed to be paid by the owners of such water contracts until such instalments became *137due. The court did not intend to make a new contract in regard to the payment of said instalments, but since the intervenors named in the complaint in intervention owning over half of the land within said project appeared for themselves and on behalf of all others having similar con-“ tracts and asked for the appointment of a receiver to take charge of said system and complete it and turn it over to the water users, as per the terms of said water contracts, this court took it for granted that they were all anxious to have the system completed, and that if a receiver could be appointed to take charge of said matter and could find a contractor who would be willing to go on and complete said system for the balance, or a part of the balance, owing and to become due from the water right contract holders when water was made permanently available for the irrigation of their lands, they would pay said instalments.
The trial court, as a court of equity, had the power to appoint such receiver and under its supervision complete said system. The trial court, as well as this court, recognizes the rights of appellant Neitzel and the irrigation company, and supposed they were both interested in the completion of said system in accordance with the intention of the parties, and if anything could be saved to the mortgagee or the irrigation company after the completion of said system, that would be done, and that the trial court, through its receiver, would protect the interests of all concerned under all of the facts and circumstances of the case. It was not the intention of the trial court to authorize the receiver to collect the future instalments on said water contracts before such instalments matured. But it was the intention to empower him to enforce said contracts according to their terms and conditions.
The fifth conclusion of law by the trial court is as follows: “That the receiver should be appointed by the court to take possession of the irrigation system of the defendant corporation and to manage, operate, maintain, repair and complete said irrigation system, according to the requirements of the contracts for water rights, and that such receiver should be authorized to collect from the holders of said water *138contracts the amounts due and owing thereon and to become due and owing thereon, from time to time, and all maintenance fees to be paid by said water contract holders, as in said water contracts provided.”
The conclusion and judgment of the trial court was founded upon the fact that the irrigation company is insolvent and unable to complete the system. The judgment of the district court and the decision of this court authorize the receiver to proceed and collect the instalments as they become due from the water users who have already received water and are receiving water for the irrigation of their lands in the quantity required by the terms of said contract, and do not relieve the water users from their obligations to pay the purchase price for their water rights when water is' available for them. The decision is intended to protect all parties interested in their rights, and to have said system completed, if possible, in accordance with the terms of said contracts, and it is placed in the hands of a receiver on account of the inability of the irrigation company to complete it and the unwillingness of appellant Neitzel to do so. The water right purchasers are entitled to have said system completed, if that can be done, with the funds that would become due from the water users upon making the water permanently available for the reclamation and irrigation of their lands as provided by the terms of said contracts.
We did not mean to hold in the original opinion that the annual instalments provided for by said water contracts did not become due and payable until the entire system was completed; but when the system was so far completed as to make water permanently available for any particular user for all seasons, the instalments agreed to be paid by the user would become due and payable in accordance with the terms 'of the contract. Then he has no reason to complain of lack of water for other land owners because he has water available for the irrigation of his land. However, if water has not been made available to others holding water contracts, in case the construction company is insolvent, such water right owners might be injured by the non completion *139of the system, and upon proper application a court of equity might require the payments due and to become due from the water users to whom water had been made available to be paid to a receiver to be used in the completion of such system.
While the Murphy project is not a Carey Act project, the contracts entered into with the purchasers of water rights are similar in many respects to those entered into by the purchasers of water rights under the Carey Act.
The amendment by Congress to the Carey Act, approved June 11, 1896 (29 Stats, at L., p. 435), clearly authorizes a lien to be created by the state upon such lands as are granted to the state under said act, and when created shall be valid on and against the separate legal subdivisions of the land reclaimed for the actual cost and necessary expense of reclamation, and a reasonable interest thereon from the date of reclamation until disposed of to the actual settler, and provides as follows: “And when an ample supply of water is actually furnished in a substantial ditch or canal, or by artesian wells or reservoirs, to reclaim a particular tract or tracts of such lands, then patents shall issue for the same to such state, without regard to settlement or cultivation. ’ ’ That provision for a lien contemplates an ample supply of water shall have been actually furnished in a substantial ditch or canal or by artesian wells or reservoirs to reclaim such land in order to create a lien. - That is making water permanently available to the user. Prior to that amendment by Congress to the Carey Act, the legislature of Idaho had enacted a law authorizing and granting a lien on lands and water rights for the cost of reclamation. (See Laws 1895, p. 227; see. 1629, Rev. Codes.) Said section provides, among other things, that “Any person, company or association, furnishing water for any tract of land, shall have a first and prior lien on said water right and land upon which said water is used, for all deferred payments for said water right; said lien to be in all respects prior to any and all other liens created or attempted to be created by the owner or possessor of said land,” etc. The law clearly contemplates that after water has been made permanently avail*140able for the irrigation of the land of a water right owner,all deferred payments for such water right shall become a lien on the land and the water right, and such deferred payments may be collected by the owner of such water right contracts in case a court of equity has not directed that such payments must be applied to the completion of the system, and in such a case the court may direct all such payments to be made to a receiver appointed by the court to collect the same and complete the system. In case the water contract holders pay the balance due on such contracts, or any part thereof, to the receiver, under the order of the trial court, they would be entitled to a credit on their contracts for the amount paid.
The water contracts in the case at bar make the deferred payments a lien upon the water rights and land; but such liens do not attach until the water has been made permanently available for the reclamation of the land.
It is suggested by counsel for appellant that should the receiver in this case undertake to -enforce the collections provided for by said water right contracts, he would not be able to procure the evidence of the amount due or to get possession of the original contract on which to sue, in case suit for the collection thereof was necessary. It is sufficient to say that appellant Neitzel is a party to this suit and the court has jurisdiction <5f him, and it further appears that said contracts were assigned to him, and the trial court no doubt could find a means to compel him to turn over said contracts to a receiver, if that were needed. And no doubt said contracts are all of record in the proper county recorder’s office, and it would not be difficult to establish the amount remaining unpaid thereon.
It is also suggested by counsel for appellant that the trial court has prescribed no time limit in which the receiver shall complete the system, or that there is no assurance that the system can be completed with the money remaining unpaid on the contracts for the water rights. It is sufficient to say that'a court of equity has.full power and control of this matter and will see to it that if the system can *141be completed, that it will be done as soon as practicable. The court will certainly see to it, upon proper application, that the receiver acts as promptly in this matter as is consistent with the best interests of all concerned, and will not permit him to fritter away his time and the money of the settlers in the completion of said system. The record shows that the system can be completed for about one hundred thousand dollars, the amount remaining unpaid on the contracts for water rights. When the instalments become due on such contracts, if the parties owing the same refuse to pay, the trial court may authorize the receiver to bring proper actions for the collection of the same.
Counsel for appellant contend that the court erred in directing the specific performance of the contract for the completion of said system. This objection is predicated upon the general rule that contracts for erecting buildings or doing construction work will not be enforced specifically by a court of equity. The reason for that general rule is that the enforcement of such contracts would cause the courts great inconvenience, but there is no question but that courts of equity have jurisdiction to require the specific performance of such contracts if they conclude it is necessary to do so in order to protect the rights of the parties. If a court of equity is without authority to specifically enforce the contracts in question, the water users would have no remedy whatever by which they could protect their rights. There would exist a wrong without a remedy, and that is contrary to the well-recognized maxim that equity will not suffer wrong to be without a remedy. It would be a grievous wrong to the owners of contracts for water rights to be compelled to pay for such rights and have no remedy whatever to compel the contracting party to furnish them water.
There is nothing in the record to show that the water contracts, which by their terms require the completion of said system, are not susceptible of specific performance. The record before this court shows that it will cost about one hundred thousand dollars to complete the system, but there is nothing in the record to show that the court, through *142its receiver, may not complete said system in accordance with the terms of the contract and thus protect the rights of all the parties. In ease a contract can be let for the completion of said system in accordance with the plans and specifications for less than the amount to become due on said contracts, there certainly would be no difficulty in having the system completed; but in case the amount to become.due on such contracts is not quite sufficient to complete the system, the court through its receiver may complete the system so far as it may be done with such funds, and the settlers may then be able to devise ways and means for the entire completion of the system. But there certainly will be no serious difficulty in having said system completed so far as the instalments to become due on said water contracts will pay for the same, and if the system cannot be completed so as to give some of the contract holders water, then such holders cannot be required to pay for something they do not get. The district court, as a court of equity, has full power and authority in said matter to proceed as indicated by its findings and judgment already entered in this ease and protect the rights of all the parties as far as can be done under the facts of this ease.
It must be remembered that this action was prosecuted by the intervenors on their own behalf and on behalf of all holders of water contracts. These holders not named in the complaint in intervention may become parties and be permitted to share in the fruits of this action upon complying with such reasonable conditions as the lower court may impose, and they alone can object to the right of the receiver to collect -from them. They, of course, have a right to their day in court, and if they do not come in or are not brought in, and required to comply wdth the orders of the court, the court will not require the receiver to complete the system so as to furnish them water, as originally contemplated.
We therefore adhere to the rules of law laid down in the original opinion as amplified in this opinion on rehearing. The judgment of the trial court is affirmed and the cause re*143manded for further proceedings in accordance with the views expressed in said opinions of this court. Costs are awarded to the respondent intervenors.
Ailshie, C. J., and Walters, District Judge, concur.