Hidalgo County Water Control & Improvement Dist. No. 1 v. Goodwin

14 S.W.2d 321

• Court: Court of Appeals of Texas
• Decided: February 6, 1929
• Docket: No. 8100.
• Status: Published

Opinions

The contract out of which this controversy arose is as follows, the clauses deemed material to this discussion being italicized:

"State of Texas, County of Hidalgo.

"The contract this day made and entered into between the Hidalgo County Water Control Improvement District No. 1 and E. M. Goodwin, is as follows:

"(a) It is contemplated by the said E. M. Goodwin that a water improvement district, or a water control and improvement district, shall be organized under the laws of Texas to embrace lands in Porciones 48, 49, 50, 51 and 52, in Hidalgo County, Texas, and after the incorporation of such a district, said district as so incorporated shall have the rightat its option to contract with the said Hidalgo County Water Control and Improvement District No. 1, as hereinafter set forth, and that in the event no such district should be organized under the laws of the State of Texas, then the said E. M. Goodwin at his option shall have the right to contract with the said Hidalgo County Water Control and Improvement District No. 1 upon the terms and under the conditions ashereinafter set forth.

"(b) The contract herein provided to be made between the said Hidalgo County Control Improvement District No. 1, Party of the First part, and the said E. M. Goodwin, Party of the Second part, is as follows:

"1. The said Hidalgo County Water Control Improvement District No. 1 agrees with the said E. M. Goodwin that it will furnish unto the said E. M. Goodwin, or his assigns a supply of water sufficient to properly irrigate a minimum of 5,600 acres of land in said Porciones, and a maximum amount sufficient to irrigate 25,000 acres in said Porciones, for which the said E. M. Goodwin, or his assigns, is to pay the Hidalgo County Water Control Improvement District No. 1 at the rate of $17.50 per acre as the price of a water right to be extended by the said Hidalgo County Water Control Improvement District No. 1 to the lands embraced within the Water Improvement District or Water Control and Improvement District, to be organized, or included in the irrigation system installed by the said E. M. Goodwin, and being lands out of said Porciones 48, 49, 50, 51 and 52, the payment of said $17.50 per acre to be made as follows:

"On or before nine (9) months from the _____ day of _____, 1926; it being understood, however, that it is contemplated by the E. M. Goodwin to perfect the organization of said Water Improvement or Water Control and Improvement District, and that bonds will be voted and marketed for the purpose of constructing the pumping plants and canals, and of paying for the water right hereby contracted to be conveyed, it is further agreed that in the event the said E. M. Goodwin should be unavoidably delayed in the organization of said District and the marketing of the bonds of said District, as above provided for, upon satisfactory proof to the Board of Directors of the Hidalgo County Water Control Improvement District No. 1 that fair and reasonable progress is being made in the perfection of said District and the marketing of said bonds, a reasonable extension of time for the payment of said $17.50 per acre to the Hidalgo County Water Control Improvement District No. 1, shall be granted to the said E. M. Goodwin for the purpose of perfecting the organization of said District and the marketing of said bonds by said District.

"2. In addition to said charge for said water right, the said E. M. Goodwin agrees to pay to the said District at the rate of $2.50 per acre foot for each actual delivery of water, based on the price of fuel oil at $1.75 per barrel and for each 10 cents in excess in the price of said fuel oil per barrel said District shall have the right to increase said charge at the rate of 12 cents per acre foot, during such time as the price of said fuel oil shall be in excess of $1.75 per barrel; the minimum price to be $2.50 per acre foot, unless and in the event said District shall reduce the price of the water charge to the land owners within its District to a less sum than $2.50 per acre, then and in that event the rate herein provided for to be charged to the said E. M. Goodwin, or his assigns, shall be reduced proportionately to the reduction made to the land owners within said Hidalgo County Water Control Improvement District No. 1.

"3. The said E. M. Goodwin agrees to pay for 250 acre feet of water for the first year after the said district to be organized by him, or the irrigation system to be established by him, is ready to receive water for the irrigation of said lands included therein, whether such water should be used or not, and that such fixed charge shall increase each year at the rate of 250 acre feet until the minimum yearly charge shall be for the same number of acre feet as the number of irrigable acres of land in the district to be organized or under the system to be established by the said E. M. Goodwin.

"4. Said charge for water shall be paid in advance by the said E. M. Goodwin, or his assigns to the said Hidalgo County Water Control Improvement District No. 1, on the first day of November of each year to be credited upon the amount of water that said Goodwin actually takes from the canal of the Hidalgo County Water Control Improvement District No. 1, during such year, provided, however, that all water in excess of said 250 acre feet shall be paid for in advance upon application of demand for the furnishing of said water for the irrigation of said additional land.

"5. Should the said E. M. Goodwin fail to pay unto the said District the said amount as hereinabove provided for then the said District shall have the right to shut off any water supply whatsoever until said charge is fully paid unto it with interest at the rate of ten per centum per annum from the date when such charge shall have accrued; and in case the said Goodwin should desire a greater supply of water over and above the minimum he pays for, then he shall pay cash to said District for any and all water that may be delivered to him under the terms of this contract, at the rate herein specified.

"6. A supply of water sufficient to irrigate all said lands as they become ready for irrigation shall be delivered by the said District in its canal, and the said Goodwin hereby agrees and binds himself to construct, maintain and operate at his own expense a pumping plant on said canal for the purpose of pumping water from the canal of said district, and the said Goodwin further binds himself and his assigns to install a meter at said pumping plant at his own expense, for the purpose of measuring the amount of water, the plans for the installation of said pumping plan and of said meter to be submitted to the Engineer of the District beforehand and to be approved by the said Engineer of the District. Said pumping plant and meter shall at all times be subject to inspection by the Engineer of said District, and said meter shall at all times be under the joint control of the Engineer of said District and the Engineer of the said E. M. Goodwin or his assigns, and any deficiencies therein shall be corrected and supplied by the said E. M. Goodwin, or his assigns.

"7. Should any lands be included in the District that is to be organized, which lands the said Hidalgo County Water Control Improvement District No. 1 has agreed to supply with water under a contract, or contracts heretofore made, then the said lands shall be entitled to receive a supply of water under the terms of this contract at the price and under the terms hereinbefore set forth, regardless of what may have been the original contract or contracts between this District and the said person or persons owning said lands; provided, however, that if the said Hidalgo County Water Control Improvement District No. 1 shall have heretofore contracted with any owner of land or lands that may be embraced within the limits of the District that the said Goodwin expects to be organized for a premium or price of a water right less than $17.50 per acre, as stipulated herein, the said Goodwin shall have the advantage of said price for said water rights; but, in no event shall he be entitled to receive the water actually supplied for a less-rate per acre foot than herein specified.

"8. The privileges and rights herein extended unto the said E. M. Goodwin by the terms of this contract shall be assignable by him to the said District that he expects to be organized and, when so assigned by him, shall in all respects be binding as between the said Hidalgo County Water Control Improvement District No. 1, and such District that may be organized. In the event such a District should be organized and the said E. M. Goodwin should assign unto it all of his rights and privileges under the terms thereof, then the total amount of the price hereinbefore agreed upon for the water right, that is, the right to take water from the said canal of the said Hidalgo County Water Control Improvement District No. 1 shall be paid in cash according to the terms of this contract by such District so organized.

"9. Should it be necessary that any additional permit to take waterfrom the Rio Grande River be secured in order to supply the lands to besupplied under the terms of this contract with water for irrigationpurposes, then the said Goodwin and his assigns bind themselves to secure such water permit and to convey same to Hidalgo County Water Control Improvement District Number 1. It is further agreed, however, that in the event the said E. M. Goodwin should be unable to obtain a permit from the Board of Water Engineers to take water from the Rio Grande for the irrigation of said land, the Hidalgo County Water Control Improvement District No. 1 hereby agrees to assign and transfer to the said E. M. Goodwin, or his assigns, a sufficient amount of water of the Rio Grande River, which is already owned by the said Hidalgo County Water Control Improvement District No. 1.

"10. Should there at any time be a shortage of the supply of water within the Rio Grande River, then it is distinctly understood that the lands within the territorial limits of the said Hidalgo County Water Control Improvement District No. 1 shall first be supplied with water before any water shall be supplied under the terms of this contract unto the lands hereinbefore mentioned in which event the said Hidalgo County Water Control Improvement District No. 1 shall not be liable in damages for a failure to supply a sufficient amount of water to irrigate any lands under the terms of this contract.

"11. The said Goodwin or his assigns under the terms of this contract shall report to the Board of Directors of said Hidalgo County Water Control Improvement District Number 1, the acreage to be irrigated and the character of the crops for the succeeding year on the first day of November of each year.

"The said Goodwin has this day paid unto the Hidalgo County Water Control Improvement District Number 1, the sum of Twenty-five ($25.00) Dollars in cash, and the said Hidalgo County Water Control Improvement District Number 1, hereby acknowledges the receipt of said sum of money as the consideration for this option contract.

"It is understood and agreed that this contract shall be binding upon the Hidalgo County Water Control Improvement District No. 1 and upon its successors and assigns.

"This Contract to be signed in Duplicate and each of the parties to retain a copy hereof.

In Testimony whereof the Hidalgo County Water Control Improvement District No. 1 has caused these presents to be signed by its President and countersigned by its Secretary, and the corporate seal hereunto affixed, and in testimony whereof witness the hand of the said E. M. Goodwin on this, the 26th day of June, A.D. 1926. Hidalgo Co. Water Control Im. Dist. No. 1, by Emile Monney, President, Party of the First Part. E. M. Goodwin, Party of the Second Part.

"Attest: J. W. Hardin, Secretary."

The instrument as a whole constituted a mere option by its own express provisions. In paragraph (a) it is provided, as shown above, that Goodwin, or his named assign, "Shall have the right at his or hisassign's option to contract," with the district, "as hereinafter set forth," and in paragraph (b) it is recited that "the contract herein provided to be made is as follows." The proposed contract, to be entered into at the option of defendants in error, is then set forth in eleven numbered paragraphs, at the conclusion of which it is recited that on the date of the contract Goodwin had paid plaintiff in error district the sum of $25, "as the consideration for this option contract." The intention of the parties to constitute the contract a mere option could not be more clearly or definitely expressed than in the terms employed.

It is conceded by plaintiff in error that defendants in error never exercised the option to enter into the proposed contract, and that that contract was never entered into by the parties.

Plaintiff in error has singled out paragraph 9 of the proposed contract, and asserts that, by the terms of the whole instrument, the provisions of that particular paragraph constitute an independent and absolute contract upon the part of defendants in error to do and perform the obligations therein provided for, although conceding in effect that no other provision of the proposed contract is effectual.

Plaintiff in error asserts in the alternative that, if the contract should be construed as a mere option to enter into the proposed contract as embraced in the numbered paragraphs of the instrument, then it was the intention of the parties that paragraph 9 should be an independent and binding obligation of defendants in error, notwithstanding the optional character of the contract as a whole. Plaintiff in error asserts that this intention is disclosed by the circumstances leading up to and surrounding the execution of the option agreement, as shown by parol evidence, and seeks to reform the contract so as to effectuate that intention, and to enforce specific performance of the instrument as so reformed. Much evidence was introduced under this contention, which was vigorously contested by defendants in error. There was a sharp conflict in this evidence. It was resolved against plaintiff in error by the trial judge whose finding thereon is binding upon this court.

We conclude that by its own provisions, viewed at large, the instrument clearly conferred upon defendants in error the option to enter into the proposed contract set out in the numbered paragraphs of the instrument, and that, because defendants in error elected not to exercise that option, the proposed contract was never vitalized into an obligation binding upon either party. But, even if there could arise from the language of the instrument a doubt of the optional nature of the agreement, that doubt has been effectually resolved against plaintiff in error by the findings of the trial court, fortified by ample evidence in support of those findings, which we adopt as the findings of this court.

Plaintiff in error does not contend that any of the provisions of the proposed agreement embraced within the option contract, other than those in paragraph 9, are enforceable against defendants in error, as independent and binding obligations upon the parties, although all the provisions of all the eleven paragraphs in the proposed agreement are obviously of equal dignity and force. Goodwin planned to purchase certain lands and bring them under an irrigation system to be owned and operated privately, or by a public irrigation district, but could not afford to purchase them until assured in advance, and in any event, of water rights for them. With this purpose in mind he began negotiations with plaintiff in error district, whose officials he fully informed of his plans. His object, fully disclosed to plaintiff in error, was to obtain an option to procure water from plaintiff in error district with which to irrigate the lands he proposed to purchase, so that with this option secured he could proceed with his plans with the assurance of water in any event, if not through his own direct operations, then through the exercise of this option.

The option contract in controversy resulted from these negotiations. By this contract plaintiff in error bound itself, in event of Goodwin's election thereto, to supply Goodwin or his assigns with all the water requisite to the irrigation of the lands he had then contracted for or that he might subsequently acquire in his project, within a prescribed territory, not to exceed 25,000 acres, for which water rights, if obtained from plaintiff in error by the exercise of the option granted, Goodwin or his assigns were to pay plaintiff in error district the prices and upon the terms stipulated in the proposed contract. The provisions concerning this subject comprise the first eight sections of the proposed agreement embraced in the option contract. These provisions are followed by section 9 of the proposed contract now sought by plaintiff in error district to be reformed and specifically enforced as reformed as an independent and absolute contract, notwithstanding the fact that defendants in error never elected to exercise their option to make that contract, which was in fact never entered into by the parties. No reason appears for singling out said section 9 from the eleven sections in the proposed agreement or for giving it any more force than all or either of the other ten sections. All the eleven sections are interdependent. To set out either of them and give it a different force or status from the others would serve to place the whole proposed agreement awry. This is especially true of section 9, the operation and effect of which is peculiarly dependent upon the preceding eight sections. This is apparent from the very language of section 9, as is shown by a consideration of that language. In the first eight sections provision is made that, in the event defendants in error exercise their option to enter into the proposed contract, plaintiff in error district shall supply defendants in error's 25,000 acre block of land with water with which to irrigate those lands. After the expression of this object in the first eight sections, it is provided in the ninth that, "should it be necessary that any additional permit to take water from the Rio Grande River be secured in order to supply the lands to be supplied under the terms of thiscontract with water for irrigation purposes," then the provisions in section 9 shall be effective; that is to say, that, should the necessity therefor arise by reason of operations under sections 1 to 8, Goodwin and his assigns bind themselves, as provided in section 9, to procure such permit and convey it to plaintiff in error district. In other words, by the express language of section 9 the provisions therein were to become effective only in the event defendants in error exercised their option to enter into the contract obligating plaintiff in error district to supply the water and water rights necessary to irrigate defendants in error's lands, under the provisions of sections 1 to 8 of the proposed contract, and only in the event an additional permit should be required by plaintiff in error in performing that obligation. A necessary inference from the language of section 9 is that, if this additional permit should be necessary to enable plaintiff in error district to supply the water it obligated itself in the preceding sections to supply to defendants in error, at their election, then, and only in such event, such permit should be procured and assigned to plaintiff in error district, thus co-ordinating its powers with the duties imposed upon it in sections 1 to 8, inclusive. Sections 1 to 8 formed the foundation and the only reason for section 9, and by its own terms the latter could be vitalized only by the active operation of the former. Not only is it true that defendants in error refused to exercise the clearly expressed option to enter into the proposed contract embracing sections 1 to 11, inclusive, but plaintiff in error district itself refused to enter into that part of the agreement embraced in sections 1 to 8, inclusive. And yet the whole purpose of this suit by plaintiff in error is to require defendants in error to specifically perform as to section 9. The position is wholly untenable.

Electing not to exercise his option to contract with plaintiff in error district for water rights, Goodwin applied to the state board for a permit and for appropriations out of the Rio Grande and obtained them, and with these appropriations as a basis proceeded with his plans for a district. He organized the Hidalgo County water control and improvement district No. 6, and conveyed to that district all his interest in the whole transaction. The newly created district issued the necessary bonds, built its own irrigation system, and from that system is now irrigating the lands in question under permits obtained by Goodwin from the state. Goodwin had this very plan in mind, as an alternative to the exercise of his option to make the agreement embraced in sections 1 to 8 of the option contract, throughout all his negotiations with plaintiff in error district, whose officials were fully cognizant of his plan at all times, before and after granting the option to him.

Plaintiff in error district now demands that the newly created district No. 6, one of the defendants in error, convey this permit to plaintiff in error, contending that defendants in error were obligated so to do under section 9 of the optional contract, which was never entered into.

It is apropos of this contention that we have expressed the conclusion that section 9 is inoperative, since the contract embracing that section was never entered into by the parties, and since the contingency expressly provided for in said section as a condition precedent to its vitality has never happened, and cannot be forced. Moreover, the trial court found, upon sufficient evidence, that it was the intention of the parties to give effect to the contract as written and as here construed.

Plaintiff in error contends that it had existing permits from the state to appropriate waters from the Rio Grande for the purpose of irrigating the lands purchased by Goodwin and now embraced within the bounds of defendant in error district No. 6; that, relying upon Goodwin's agreement in section 9 of the optional agreement to convey to plaintiff in error any permits he might obtain covering said lands, plaintiff in error waived its permits and appropriations, and aided Goodwin in procuring said rights; that, without such waivers and assistance, Goodwin could not have obtained said permits or appropriations; that, because of these circumstances, defendant in error is estopped to deny plaintiff in error's right to an assignment of those benefits. The trial court found that plaintiff in error did not in fact own or hold the claimed permits, and, moreover, that plaintiff in error was not deceived into waiving its rights in said appropriations, but voluntarily waived them in pursuance of its general policy to help and encourage the operation of such improvement districts as an aid to the development of that section. The evidence fully warranted this latter finding, which renders it unnecessary for this court to determine the question of whether or not plaintiff in error district in fact owned valid water appropriations covering the lands in question, at the time it waived its claims thereon.

The transcript and statement of facts cover about 1,000 typewritten pages, and the briefs of the parties nearly 600 printed pages, presenting 47 assignments of error, 37 "questions of law," and 30 propositions of law. The conclusions expressed above have the effect of disposing of all the material questions raised, rendering it unnecessary to discuss the remaining points presented, unless it be those now to be briefly mentioned. In many assignments of error complaint is made of qualification appended by the trial court to plaintiff in error's bills of exception, but the rules of pratice provide for such qualification, and those assignments are without merit. Complaint is also made of findings of fact made or refused by the trial court, but the evidence is deemed sufficient to support the findings complained of, and no error is shown in rejecting those proposed by plaintiff in error. Complaint is made of the admission of certain evidence, but no prejudicial error is shown by these complaints. Plaintiff in error also complains of the refusal of the court to grant a jury trial, but the facts recited in the judgment concerning this matter show clearly that the trial court was fully justified in his ruling.

The judgment is affirmed.