Commonwealth Trust Co. v. Smith - 266 U.S. 152 (1924)
U.S. Supreme Court
Commonwealth Trust Co. v. Smith, 266 U.S. 152 (1924)
Commonwealth Trust Company of Pittsburgh v. Smith
Argued February 29, 1924
Decided November 17, 1924
266 U.S. 152
1. On appeal from a decree dismissing a bill because of refusal to bring in additional parties, the merits are not open, but only the question whether such parties were necessary. P. 266 U. S. 159.
2. Parties are necessary who have such an interest in the matter in controversy that it cannot be determined without affecting that interest or leaving the interests of those who are before the court in a situation that might be embarrassing or inconsistent with equity. Id.
3. After a state had agreed with the Secretary of the Interior for the reclamation of certain public lands under the Carey Act, a company contracted with it to construct works and supply water to irrigate those and other lands and to sell to each settler a perpetual right to a stated quantity of water for each acre of his tract, with a proportionate interest in the works and water appropriation at a stated price per acre, no water rights to be sold in excess of the capacity of the works or available water supply, all to be of equal priority, and the company to have a lien on each water right to secure payment of the price. Afterwards, the company made contracts, all alike in tenor, with many individual settlers, each reciting that it was made in virtue of, and to be governed by, the contract between the company and the state, each granting the settler water rights and proportionate interests in the works, etc., in terms accordant with those provided by that contract, with a right to pay the price in installments during a period of years, and entitling the company to a lien on the settler's water right and land to secure payment. Thereafter, a controversy arising as to the sufficiency of the available water supply to reclaim the acreage for which water right contracts were outstanding, and the settlers for this reason defaulting in payments, the trustee for the company's bondholders sued to foreclose the lien on the land and water rights of two of them only, setting up the controversy and claiming, in disregard of the express stipulations, that the total amount of lien intended by the Carey Act must be determined by distributing the total actual outlay for the irrigation works, with reasonable interest, over all of the reclaimed lands, on an acreage basis. Held, that the suit could not be maintained in the absence of the other contract-holders (settlers) as parties. P. 159.
4. Under the Carey Act, where the water supply is adequate for part only of the acreage for which water right contracts are outstanding, some of the contracts must be eliminated before any of the lands can be deemed reclaimed or be adjudged subject to a lien for the cost of water rights. P. 266 U. S. 160.
273 F. 1 affirmed.
Appeal from a decree of the circuit court of appeals affirming a decree of the district court which dismissed a bill for want of necessary parties