Nevada Ditch Co. v. Pacific Livestock Co.

127 P. 984, 63 Or. 363, 1912 Ore. LEXIS 241

• Court: Oregon Supreme Court
• Decided: December 3, 1912
• Status: Published

Opinion

Mr. Justice McBride

delivered the opinion of the court.

1. From the above statement it is clear that the principal object of this action is to enable plaintiff, as trustee for its stockholders, to collect for their use the damages suffered by them by defendant’s wrongful diversion of water from plaintiff’s canal. Plaintiff’s theory is this:

“I was incorporated for the purpose of supplying water to my stockholders through the medium of. my canal. Therefore I am a trustee of an express trust for that purpose. Defendant has wrongfully- diverted the water which it was my duty to have furnished my consumers, and they are thereby damaged; and I, as their trustee, have a right to bring this action to collect for them such damages.”

While for some purposes a corporation, as between itself and its stockholders, may be regarded as a trustee for the purpose of protecting its stockholders, we find no case in which it has been held that it can in such an action recover damages suffered by a considerable number of stockholders not united in interest, or by a single stockholder. The cases cited by plaintiff as holding a contrary doctrine are: Farmers’ Independent Ditch Co. v. Agricultural Ditch Co. et al., 22 Colo. 513 (45 Pac. 444; 55 Am. St. Rep. 149) ; Thorpe v. Tenem Ditch Co., 1 Wash. 566 (20 Pac. 588) ; Riverside Water Co. v. Sargent, 112 Cal. 230 (44 Pac. 560). But all these cases are equitable actions, and in the states where the distinctions between legal and equitable procedure are preserved would be denominated suits in equity; and, stripped of their verbiage, they hold only this: That an irrigating corporation may invoke the equitable powers of the court to prevent diversion of water to the injury of its stockholders and water users without making them coplain-tiffs. This announces no new rule nor one that is peculiar to irrigating corporations. The case of Eaton v. Larimer & Weld Reservoir Company, 3 Colo. App. 366 (33 Pac. 278), holds directly contrary to the contention of plaintiff in this case. The court observes:

“The corporation was not farming the lands on which the crops were sown that suffered from the failure to deliver the water. They were the property of third persons who were not parties to the action in which the writ was issued, and who were not nominated in the bond on which the suit is based. To extend the right to recover to include these losses under such circumstances would surely violate the well-founded doctrine that nothing shall be allowed which is not the actual, natural, and proximate result of the wrong committed.”

2, 3. To allow the action to proceed in its present form would impose upon the defendant the burden of trying out the claims for damages varying in amount and several in their nature against an indefinite number of undisclosed persons, which damages have not apparently been liquidated as between the plaintiff and the injured water consumers. If the plaintiff has been prevented by the tort of defendant from complying with its obligations to its stockholders, and has thereby become liable to them, it would seem that the proper and orderly course would be to liquidate such damages, and, having done so, its remedy over against the defendant would be complete; but even then such damages would be special in them nature, and should be so pleaded, giving the amount claimed and recovered by each water user separately and specifically so that a defendant could prepare his defense understandingly.

It may be true, as suggested by counsel for plaintiff, that an irrigating corporation should be permitted to sue for injuries suffered in cases like the present without being subjected to the circuitous method of first liquidating its own primary liability to its water consumers, and it is evident that a statute, with proper limitations to secure certainty in the pleading and to apprise a defendant of what he would be expected to defend against, would abridge litigation and avoid a useless multiplicity of suits; but this is a matter to be submitted to the consideration of the legislative authority of the state rather than to the court, which will gladly welcome any measure tending to lessen unnecessary litigation.

The judgment of the circuit court is affirmed.

Affirmed.