United States v. Shryock

162 F. 790, 1908 U.S. App. LEXIS 5192

• Court: U.S. Circuit Court for the District of Southern Ohio
• Decided: June 25, 1908
• Docket: No. 62
• Status: Published

Opinion

SATER, District Judge

(after stating the facts as above). By the terms of Act Cong. Aug. 11, 1888, c. 860, 25 Stat. 417, under which the lease was executed, the surplus water not required for navigation could be leased for power purposes only. The purpose of the act is the creation of revenue for the government and the encouragement of enterprises calling for the use of water as a means of power. The bidder was notified by the specifications, which he in his proposal states he understood, that the leasing was to be for power purposes only, and the lease expressly states that the water was to be used for running an electric power plant. Tt contemplates the construction, maintenance, and operation by the lessee of a power plant, with inlets to conduct to it water from the canal, and outlets for the flow of water to the river after it had performed its office in generating power. After the wheels were installed in his plant, the quantity of water used was to be determined from the fables prepared by the manufacturers of the wheels, or, in the absence of such wheels, by the engineer officer in charge, and, until the wheels were so installed so that the amount of water consumed could be determined, payment was to be made on the quantity of water asked for. The quantity of water asked for is the quantity named in the lease — 6,000 cubic feet per minute. Were this not so, the lessee by making no request for water would be wholly relieved from the payment of rent:, and not only would the purpose of the law be thus defeated, but the express provision of the lease that rent should be paid on the 1st day of May and the 1st day of November of each year of the 20-year term would be nullified. He could rightfully demand water for one purpose only, and that was the production of power. Inasmuch as he did not equip himself to so use it, whatever demand he may have made for water the United States could safely ignore. He did not put it in default in the performance of its contract, because he did not perform the condition precedent to his right to make a lawful demand.

Shryock claims that he had the right to demand wafer, if he chose, merely for the purpose of letting- it flow continuously through the canal, producing no power and serving no useful purpose, and that, if his demand so made was not granted, he was wholly relieved from the payment of rent. If his contention be correct, one person, by procuring all the leases for the surplus water available at any given pool formed by a dam, merely by remaining inactive, constructing no power plant and demanding" no water, would obtain a monopoly of all the water stored, and, notwithstanding- the absolute requirement as to semiannual payments of rent during each year of the term, would escape payment of all rental called for by his leases, and not only would the government thus secure no revenue, but the lessee, without cost to himself and at the expense of the government, could easily throttle competition with any plant operated by him at some other point along the river, or in the vicinity: or, by paying for the water turned into the •canal at his request, without utilizing any part of it for power purposes, he could, in an inexpensive way, debar competition, and thus defeat the purpose of the government to encourage manufacturing. If a lessee should procure one or more of the earlier leases of water from a given pool, and if the government is required on his demand to supply the water called for by his lease, regardless of its use for power purposes, he might, by paying therefor, permit the water to waste by flowing down the channel of the canal to the stoppage or impairment of the business of subsequent lessees, whenever the water so wasted reduces the depth on the established crest of dam to less than .2 of a foot, and thus partially at least defeat the purpose of the act. Shryock acquired by his lease no right to the flow of water through the canal for any other than power purposes. If he failed to equip himself to use it for such purposes, he nevertheless was obligated to pay the rent named in the lease. By the acceptance of his lease he represented himself to be about to erect and equip a power plant. For the privilege of a water right for power purposes he agreed to pay a fixed sum semiannually until his plant was installed, and thereafter such a sum as represented the value of the water furnished to him under his lease for the operation of his plant.

The representation by the United States of the depth and quantity of water stored was but an approximation, and of this he had notice. It did not guarantee him a fixed supply. If he did not construct and equip a power plant, because he believed the United States could not supply the water called for by his lease, he rested on an opinion given by an unnamed engineer of unshown experience, which he did not verify by actual test or communicate to the lessor. He did not ask for a cancellation or modification of his lease, nor did he state when his belief in the insufficiency of the water supply arose, whether within the period for which the recovery of rent is sought, or some prior period for which he had paid, nor did he attempt to reconcile his repeated demands for water with his stated belief that the supply of water would not meet the requirements of his lease. He asked for water after -the flood of 1907, near the close of the period for which a recovery of rental is sought, and at a time when the government was giving him a rebate' — was making no charge — on account of the injury to the canal banks occasioned by the flood. He paid without dissent, so far as the record discloses, the rents that accrued for his factory site, and yet his leases for it would have been as valueless as that for water, if the water supply was insufficient to operate his plant. The construction put upon the lease in the charge to the jury is the same as that above expressed. A view more liberal to the defense characterized the rulings in the introduction of evidence.

Motion overruled, and judgment for plaintiff on the verdict.