Stimson v. Alessandro Irrigation District

McFARLAND, J.

This action is for the amount of interest coupons which were attached to certain alleged bonds of the defendant, an irrigation district organized under an act of the legislature, approved March 7, 1887, and generally known as the “Wright Act.” (Stats. 1887, p. 29.) The court below gave judgment for defendant upon the ground that the issuance, disposition, and delivery of said bonds were without any legal authority, and that, therefore, the bonds are void. Plaintiff appeals from the judgment.

The material facts in the case, found by the court on sufficient evidence, or admitted, are these: After the organization of the respondent and the election of its board of directors, the latter took no steps towards constructing or acquiring any canals or water-works, and made no estimate of the cost thereof, until January 27,1891. At that time there was in existence a private corporation called the Bear Valley Irrigation Company, which owned some water and ditches quite a distance away from the territory of the respondent, and was engaged in furnishing water to various parties; and on said January 27th the Bear Valley Irrigation Company made a proposition to the ‘directors of respondent that, in exchange for bonds of respondent in the amount of $765,000, it would furnish respondent “51,000 [so-called] acre water-right certificates” of the Bear Valley Irrigation Company. The board voted that said proposition be “accepted for consideration as a basis on which to make said estimates.” Then, on February 3, 1891, the board passed a resolution that, “for the purpose of constructing necessary irrigating canal and works,” etc., the directors “do

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hereby estimate and determine that the amount of money necessary to be raised therefor to be the sum of $765,000.” An election was called for May 7th, at which the electors of the district should determine whether or not bonds in the amount of $765,000 should be issued, and the result was in favor of the bonds. Thereafter, on May 6,1891, the directors voted that a contract be made with the Bear Valley Irrigation Company in accordance with the proposal above mentioned; and on said day a written contract was executed between said parties, by which the directors were to deliver to the Bear Valley Irrigation Company the whole of the bonds, and the latter was to deliver to the directors the 51,0.00 acre water certificates. The bonds to the amount of the entire sum of $765,000 were written and signed, and in a few days afterward they were all delivered to the Bear Valley Irrigation Company, who at the same time delivered the water certificates to the directors. Each of these water certificates stated on its face that there was to be paid by the holder $1.39 on the first days of April and October of each year; that it was subject to certain prior contracts to furnish water with several named persons and companies; that the Bear Valley Irrigation Company guaranteed each certificate to entitle the holder “to receive one acre-foot of water per year [a water-foot being 43,500 cubic feet of water] to be supplied from--, and from no other source whatever”; that “the water called for by the certificates shall not become appurtenant to the land upon which the same may be used, but the certificates shall always be personal property,” and transferable only by surrender to the company and the issuance of new certificates. It also contained an agreement by the holder that on each certificate “there shall be paid $1.39 on the first day of April, and $1.39 on the first day of October of each year,” and that “if not paid within sixty days after the same becomes due this certificate shall become null and void at the election of this company.” There is a further statement that, “by the receipt of this certificate, the holder thereof assents to and agrees to all the above stipulations.” At the time of the execution of this contract of May 6th, the Bear Valley Irri-' gation Company did not have any ditch or pipe or conduit of any kind by which it could carry any water to the Alessandro District; the contract was wholly executory, and, at the request of said Bear Valley Irrigation Company, the bonds were