By an agreement under seal, the party of the first part agreed
that, after the making of the payments and the full performance of
the covenants as agreed to by the party of the second part, he
would convey to the party of the second part certain described
lands in California, together with a specified number of shares in
the stock of an irrigation company representing a certain pressure
of water to be delivered to the party of the second part in making
payment in full for the land. The party of the second part agreed
to pay for the land in fixed consecutive payments, and both parties
agreed that the instrument should not be construed as a conveyance,
equitable or otherwise, and that until delivery of the formal deed
or tender of all payments precedent thereto, the party of the
second part should have no title, equitable or otherwise, to the
premises.
Held:
(1) That these covenants were independent, and that the payment
or tender of payment of the purchase price for the land was a
condition precedent to the conveyance.
(2) That the party of the second part, on making the contract
payments, became entitled to receive the agreed number of shares in
the irrigation company, subject to the by-laws of such company, but
not stock which represented the title to water or water rights to
the extent of such pressure.
Page 153 U. S. 565
The Pomona Land & Water Company, defendant in error, a
corporation duly organized under the laws of the State of
California, brought this action of covenant against Henry M. Loud,
a citizen of the State of Michigan, to recover various sums of
money due upon agreements under seal, embodied in twenty contracts
and nine applications for the sale and purchase at different prices
of separate and distinct parcels of land lying and being in the
State of California, together with designated shares of stock in
certain irrigation companies.
The twenty contracts declared on in counts one to forty,
inclusive, are substantially the same in form, the difference
between them being in the dates, description of land, purchase
price, time of payment, and the number of shares of stock in the
irrigation companies. The applications declared on in counts
forty-one to forty-nine, inclusive, while relating to different
parcels of land, and varying in dates, purchase price, time of
payment, etc., are also substantially alike.
These several contracts and applications need not be separately
noticed or considered. One class is represented and illustrated in
the contract set out in the first count of the declaration, while
the other is set out according to its legal effect in the
forty-first count of the declaration. The contract declared on in
the first count is as follows:
"This agreement, made the eighth day of April, 1887, between
Pomona Land and Water Company, a corporation duly organized under
the laws of the State of California, and having its office and
principal place of business in the Town of Pomona, County of Los
Angeles, State of California, party of the first part, and H. M.
Loud, of Oscoda, Michigan, party of the second part, witnesseth
that in pursuance of a resolution of its board of directors adopted
October 25, A.D. 1883, and in consideration of twenty-five hundred
and thirty-nine dollars, paid by the party of the second part, the
party of the first part does covenant and agree that after the
making of the payments and full performance of the covenants
Page 153 U. S. 566
hereinafter expressed to be made and performed by the party of
the second part, the party of the first part will, in consideration
thereof, convey by deed of grant, bargain, and sale, to the party
of the second part, his heirs or assigns, the following described
real property, situated in the County of Los Angeles, State of
California, to-wit: Lot seventeen (17) of the northeast Pomona
tract, according to the map of said tract duly recorded in Book 5,
page 461, of Miscellaneous Records of Los Angeles County,
California, estimated to contain forty and .62 acres of land,
together with 406.2 shares of stock of the Del Monte Irrigation
Company, representing four and .062 inches of water under four-inch
pressure, measured from center of aperture, said stock to be
delivered by the party of the first part, and accepted by said
party of the second part, subject to the bylaws of the said Del
Monte Irrigation Company, when payment in full is made for the
above-described land."
"The party of the first part reserves the exclusive right of way
for laying pipes and aqueducts for conveyance of water; also the
right to enter upon said lands and make necessary excavations for
laying pipes and aqueducts, and to inspect, repair, replace, and
control the same."
"And for and in consideration of the foregoing agreement, and as
the purchase price of the above-described premises, the party of
the second part do covenant and agree to pay to the party of the
first part, its successors or assigns, the sum of ten thousand one
hundred and fifty-five dollars, United States gold coin, to be paid
in the following manner:"
$2,539 on or before delivery of this contract,
$3,808 on or before April 8, 1888,
$3,808 on or before April 8, 1889,
"and interest upon said respective sums from April 8, 1887,
until paid at the rate of eight percent per annum, payable
annually, and if not so paid at option of said company, to be added
to principal, and bear like interest."
"And the party of the second part, in consideration that
Page 153 U. S. 567
the party of the first part does hereby agree that the party of
the second part may at once enter upon, occupy, and enjoy the
above-described premises, does further covenant and agree to pay
and discharge all taxes, assessments, and water rates that may be
levied or assessed during the pendency of this agreement on the
said described premises; and, in default of the party of the second
part doing so, the party of the first part may pay the same, and,
before the final payment of purchase money, the party of the second
part hereby expressly agrees to refund all amounts so paid, with
interest from the date of such payment at the rate of one percent
per month."
"And the party of the second part further agrees that during the
pendency of this agreement, he will not commit or suffer any strip
or waste of said premises, or of any improvements now existing or
hereafter to be placed thereon, and if any default shall be made in
any of the above payments for the space of sixty days after same
shall become due, then it shall be lawful for the party of the
first part, its successors or assigns, at their option, to rescind
this agreement to convey, to reenter upon, and to repossess said
premises and all improvements existing thereon, removing the party
of the second part and all claiming under him therefrom, and it is
agreed that in such case that all payments theretofore made shall
be retained by the party of the first part as compensation and
liquidated damages for the previous use, enjoyment, and occupation
of the premises by the party of the second part, and it is hereby
expressly covenanted and agreed between the parties hereto that
this instrument is not and shall not be construed as a conveyance,
equitable or otherwise, and that until the delivery of said final
deed of conveyance or tender of all payments precedent thereto, the
party of the second part, his heirs or assigns, shall have no
title, equitable or otherwise, to said premises."
"It is further expressly agreed that time is of the essence of
this contract."
"In witness whereof, the party of the first part has caused its
corporate name and seal to be subscribed and affixed by
Page 153 U. S. 568
its president and secretary thereunto duly authorized, and the
party of the second part has hereunto set his hand and seal, this
third day of May, 1887. Executed in duplicate."
"Pomona Land and Water Company"
"By H. A. Palmer,
President"
"[Seal of the Company]"
By F. L. Palmer,
Secretary
"H. M. Loud [L.S.]"
"Sealed and delivered in the presence of --"
"B. F. Nichols"
The applications are in the following form:
"
Application for Purchase"
"Pomona, Cal., April 15th, 1887"
"Received from H. M. Loud seventy-five dollars deposit on
application for purchase of northeast quarter (N.E. 1/4) of lot
twenty-two (22), containing ten (10) acres of land, according to
map of the San Antonio tract, duly recorded in Book 3, p. 7, of Map
Records of San Bernardino County, with usual water rights
pertaining to said tract at the price of fifteen hundred dollars,
and on the following terms: seventy-five dollars cash deposit as
above. First payment, $300.00, within sixty days from date; second
payment, $562.50, on or before April 15th, 1888; third payment,
$562.50, on or before April 15th, 1889; second and third payments
to bear interest from date at the rate of eight percent per annum,
interest to be payable annually. In consideration of the premises,
I, H. M. Loud, hereby agree to purchase said property and pay for
the same at the price and on the terms above set out, and in
consideration that the Pomona Land and Water Company has withdrawn
from the market the above-described land for sixty days, so that
the said H. M. Loud may purchase the same at the above agreed on
price, in case the said H. M. Loud fails or refuses to make said
first payment, as above, within the time above mentioned, then the
deposit herein made shall be retained by the Pomona Land and Water
Company as the estimated damages suffered
Page 153 U. S. 569
and the liquidated damages received by said company on account
of the withdrawal of the land from the market as aforesaid. Time is
hereby declared to be of the essence of the fulfillment of the
obligation of the said H. M. Loud to purchase the above land under
the terms and conditions above expressed. No title, legal or
equitable, nor any right to the possession of the above-described
land, shall inure to said H. M. Loud until the Pomona Land and
Water Company shall have delivered an executed contract to him for
the same."
"H. M. Loud [Seal]"
"Thomas & Easton [Seal.]"
"F. MacPherson,
Ag't"
"Endorsed: Pomona, June 20th, 1887. Rec'd $300.00, being balance
of first payment on the within application. Pomona Land and Water
Company. F. L. Palmer, Treas."
The ninth application for the purchase of lot eleven (11) of the
northeast section of the Pomona tract differed from the rest in the
fact that only part of the first payment was made.
The declaration, after alleging the refusal and failure of the
defendant below to pay the respective sums due under the several
contracts, averred that the plaintiff had been at all times, and
was still, ready and willing, upon the making of the payments in
said contracts expressed to be made and performed by the said Henry
M. Loud, to convey, by deed of grant, bargain, and sale, to the
said Loud, his heirs or assigns, the property described in said
contracts, together with the shares of stock of the respective
irrigation companies referred to in the contracts. There was no
averment in the declaration of any tender of a conveyance or
conveyances of the lands or of the stock in the irrigation
companies, nor of any tender of any conveyance or contracts
referred to in the applications.
The record contains no plea on the part of the defendant below,
but there was served upon the plaintiff's attorney a copy of the
plea of the general issue, with notice of special matters of
defense, which the parties have treated as a pleading by the
defendant. The special matters of defense set out in the notice
were in effect as follows: that if the contracts
Page 153 U. S. 570
were made, they were obtained by fraud, and were therefore void;
that the use and value of the lands depends upon their proper
irrigation by artificial means; that to induce defendant below to
make the purchase of the lands, the plaintiff represented that it
had a good, clear title in fee to the lands; that it controlled and
possessed water and water rights, by means of shares of stock in
the Del Monte, the Palomares Irrigation Companies, and the
Irrigation Company of Pomona, to furnish ample and sufficient water
to fully and sufficiently irrigate said lands, so that each parcel
of land should have water to irrigate the same; that the plaintiff
below, knowing that defendant's only purpose in making the
contracts was to resell the lands at a profit, represented that it
had not and would not place any other lands upon the market for
sale; that defendant relied upon these representations and
statements, which proved to be false; that the plaintiff was
insolvent and irresponsible; that it did not have a good title to
the lands, but that they were heavily encumbered with mortgages,
and therefore the defendant could not convey a good title to them;
that the plaintiff land company did not possess or control
sufficient water or water rights to fully and sufficiently irrigate
the lands, and water sufficient to irrigate said lands was not
represented by means of the stock in the irrigation companies
named, and could not be furnished by said stock; that the supply of
water furnished thereby was not and could not be continuous; that
the irrigation companies had not sufficient supplies of water to
furnish such water, or to furnish it continuously or in the
quantities called for by the contracts; that the irrigation
companies were not responsible for furnishing such supply which was
not brought on or supplied to said lands; that, notwithstanding the
agreement of the plaintiff below that it would not put other lands
on the market, it at once, after the making of the contracts,
placed large quantities of land on the market, and became such a
strong competitor that the defendant was prevented from making a
sale of said lands; that to some of the lands no water was brought,
and to none was it brought in sufficient quantities to irrigate
them; that he was a stranger in California;
Page 153 U. S. 571
that he hesitated to enter into the contracts because he was
unfamiliar with the laws of the state and of the business methods
in common use by the plaintiff, and did not know the risk or the
extent of the liabilities he would incur, but that plaintiff
induced him to make such contracts, representing that they were
upon the common printed forms it had adopted, and that defendant
would not be liable under the laws of the state beyond the amount
he should pay upon the contracts, and the loss of the land in case
of failure to make payments; that plaintiff only dealt in that
manner in its land sales, and in no event would it hold, or seek to
hold, the defendant to any personal liability beyond the amount
paid; that defendant relied upon these representations in entering
into the contracts, and that this suit was in violation of such
representations and a fraud upon defendant.
As a further special defense, the defendant set up
"that the plaintiff did not on the day when the last installment
of the purchase price was made payable by the terms of said alleged
contracts, respectively, nor at any time, convey or tender a
conveyance of the land or stock described in said contracts,
respectively, or in either or any of them, to this defendant."
Upon the trial of the cause, the circuit court directed a
verdict for the plaintiff for the various sums due and unpaid under
the contracts, amounting, with interest, to $79,819.30. On motion
for a new trial, heard before the circuit justice (MR. JUSTICE
BREWER) and the district judge who tried the case (Judge Brown), it
was ordered that judgment be entered on the verdict, but that
execution should be stayed
"until thirty days after the plaintiff had deposited with the
clerk of the court, for the benefit of the vendee, all the deeds to
the lands and certificates of stock, so that defendant may have an
opportunity of examining the same, to see if the titles are perfect
and the transfers of stock are made in accordance with the laws of
the State of California."
In compliance with this order, the plaintiff below deposited
deeds for the land and certificates for the stock in the irrigation
companies in accordance with the terms of the several contracts,
but the defendant declined to accept the benefits of
Page 153 U. S. 572
the order or to receive the deeds and stock so deposited, and
prosecuted the present writ of error to reverse the judgment of the
court below.
Page 153 U. S. 574
MR. JUSTICE JACKSON delivered the opinion of the Court.
Many of the special matters set up by the defendant below were
clearly irrelevant and unavailable as defenses to the suit. Thus,
the various matters of inducement for entering into contracts, and
the alleged representations made by agents of the plaintiff prior
to their execution, and the purpose of
Page 153 U. S. 575
the defendant in making the purchases with a view to the resale
of the lands at a profit, together with his being a stranger in
California, unacquainted with the laws of that state, the business
methods in common use, or those used by the plaintiff, and his
hesitancy about entering into the contracts, his want of knowledge
as to the extent of the risk and liability he would incur thereby,
and his reliance upon representations that he would not under such
contracts, by the laws of the state, incur any liability beyond the
amounts he should pay and the loss of the lands, were matters
which, if true, could constitute no answer to the suit upon the
sealed contracts. The errors assigned to the action of the court in
excluding testimony relating to these matters are not well taken.
The deeds to Charles W. Brown and to other parties, antedating the
contracts in suit and having no connection with the lands covered
thereby, offered for the purpose of showing what constituted water
rights and water stocks; the representations of the plaintiff's
agent as to title to the land and stock, made before the execution
of the contracts; the defendant's lack of knowledge of the bylaws
of the irrigation companies; the abandonment of the lands since
1888; the transcript of the patent of the United States of January
20, 1875, to Henry Dalton and others of the San Jose ranch, without
an official seal attached, and wanting a proper certificate from
the presiding judge of the court, were incompetent to control the
terms of the written contracts or to show any defect in plaintiff's
title.
The other matters set up and relied upon, so far as the same
were material or available able as defenses to the suit, such as
fraud in obtaining the contracts from defendant, want of title in
the plaintiff to the lands and stock in the irrigation companies
representing water rights, were not supported by proof. These
irrelevant and unestablished matters of defense need not be further
discussed.
The defendant presented twenty-seven requests to charge, the
legal questions arising under which are embodied in the general
proposition, covered by the last special ground of defense, that
the plaintiff did not, when the last installment
Page 153 U. S. 576
of the purchase money matured, nor at any time, convey or tender
a conveyance of the land and stock described in the contracts in
suit, respectively, or in either or any of them, to the defendant.
This presents the real controverted question in the case, and its
determination turns upon the point whether the covenants in the
contracts are dependent or independent -- that is to say whether
the covenant upon the part of the defendant below to pay the
stipulated price for the lands purchased, or agreed to be
purchased, is a condition precedent to the performance by the
plaintiff of his covenant to convey such lands.
The contention of the plaintiff in error is that the covenants
are dependent and concurrent and that he is not bound to perform
his agreement to pay the purchase price without a tender of
performance on the part of the land company. On the contrary, the
defendant in error insists, as held by the court below, that the
covenants were independent and the plaintiff in error is bound to
pay the stipulated price as a condition precedent to its obligation
to convey or tender any conveyance of the lands described.
If the acts to be performed by the land company and the
purchaser, respectively, are dependent and concurrent, neither
party would be entitled to an action against the other without the
averment of performance or the tender of performance on his part.
If, however, the payment of the purchase price for the lands is a
condition precedent to the land company's covenant to convey, then
it is entitled to enforce payment without conveyance or tender of
conveyance, and the allegation of its readiness and willingness to
convey, upon payment of the purchase money, was sufficient.
The question whether covenants are dependent or independent must
be determined in each case upon the proper construction to be
placed on the language employed by the parties to express their
agreement. If the language is clear and unambiguous, it must be
taken according to its plain meaning as expressive of the intention
of the parties, and, under settled principles of judicial decision,
should not be controlled by the supposed inconvenience or hardship
that may follow
Page 153 U. S. 577
such construction. If parties think proper, they may agree that
the right of one to maintain an action against another shall be
conditional or dependent upon the plaintiff's performance of
covenants entered into on his part. On the other hand, they may
agree that the performance by one shall be a condition precedent to
the performance by the other. The question in each case is which
intent is disclosed by the language employed in the contract?
In this case there is no ambiguity in the language of the
contracts. The covenant and agreement of the land company is
that
"after the making of the payment and full performance of the
covenants hereinafter to be made and performed by the party of the
second part [Loud], the part of the first part [the land company]
will, in consideration thereof, convey by deed of grant, bargain,
and sale, to the party of the second part, his heirs or
assigns"
the described lands, together with the designated shares in the
irrigation companies. A subsequent clause of the contract provides
that
"this instrument is not, and shall not be construed as, a
conveyance, equitable or otherwise, and until the delivery of the
final deed of conveyance,
or tender of all payments precedent
thereto, the party of the second part, his heirs or assigns,
shall have no title, equitable or otherwise, to said premises,"
and it is further provided that time is of the essence of the
contract.
If these terms and provisions of the contracts are to be
understood in their plain and obvious meaning, they clearly express
the intention of the parties to be that the purchaser shall first
pay the purchase price of the lands contracted for before he is
entitled to demand a conveyance therefor. It is also clear that the
purchaser (the defendant below) could not have legally demanded
from the land company a deed or conveyance for the lands until
after the purchase money had been fully paid. The payment or tender
of payment of the purchase price for the land was a condition
precedent to the right to the conveyance. The authorities both in
England and in this country fully sustain this construction of the
contract. A brief reference will be made to some of the principal
cases on the subject.
Page 153 U. S. 578
In the learned note of Serjeant Williams to the early case of
Pordage v. Cole, 1 Saund. 320
a, it is said
that
"if a day be appointed for payment of money, or part of it, or
for doing any other act, and the day
is to happen, or
may happen,
before the thing which is the
consideration of the money or other act is to be performed, an
action may be brought for the money or for not doing such other act
before performance, for it appears that the party relied
upon his remedy, and did not intend to make
performance a
condition precedent, and so it is where
no time is fixed
for performance of that which is the consideration of the money or
other act."
In
Porter v. Shephard, 6 T.R. 665, involving the right
of a lessee to terminate the lease, it was held that the words
"
from and after payment of rent and performance of
covenants" constituted a condition precedent.
In the subsequent case of
Grey v. Friar, 4 H.L.C. 565,
where the opinion of the judges was asked by the House of Lords as
to whether a proviso constituted a condition precedent, the case of
Porter v. Shephard was followed, and the proviso held to
be a condition precedent.
In
Goldsborough v.
Orr, 8 Wheat. 217, it is said that where the acts
are stipulated to be done at different times, the covenants are to
be construed as independent of each other.
So in
Goodwin v. Lynn, 4 Wash.C.C. 714, the rule was
laid down that to ascertain whether covenants are dependent or
independent, the intention of the parties is to be sought for
rather in the
order of time in which the acts are to be
done than from the structure of the instruments.
In
Phillips' Constr. Co. v. Seymour, 91 U. S.
646,
91 U. S. 650,
it was said by Mr. Justice Miller, speaking for the Court, that
"where a specified thing is to be done by one party as the
consideration of the thing to be done by the other, it is
undeniably the general rule that the covenants are mutual and are
dependent if they are to be performed at the same time, and if, by
the terms or the nature of the contract, one is first to be
performed as the condition of the obligation of the other, that
which is first to be performed must be done or tendered before that
party can sustain a suit against the other. There
Page 153 U. S. 579
is no doubt that in this class of contracts, if a day is fixed
for performance, the party whose duty it is to perform or tender
performance first must do it on that day, or show his readiness and
willingness to do it, or he cannot recover in an action at law for
nonperformance by the other party."
In many cases both in England and in the United States, the rule
of construction is adopted that an agreement to pay by installments
or at different times would make the covenants independent, since
such an agreement manifests a willingness to rely on the covenants
of the other contracting party for title or performance as the
consideration for such payments; also, where the acts stipulated to
be done are to be done at different times, the covenants are
generally construed to be independent of each other.
The land company's contention as to the proper construction of
the contracts is supported by the following authorities, among
others that might be cited:
Davis v. Heady, 7 Blackford
261;
Gale v. Best, 20 Wis. 44;
Sayre v. Craig, 4
Ark. 10;
Mayers v. Rogers, 5 Ark. 417;
Hill v.
Fisher, 34 Me. 143;
Leftwich v. Coleman, 4 How.
(Miss.) 167.
The cases of
Bank of Columbia v.
Hagner, 1 Pet. 455, and
Washington
v. Ogden, 1 Black 450, are not in conflict with the
foregoing decisions and the propositions they announce. The
stipulations of the contract in the former case were not similar to
those in the case under consideration, while in
Washington v.
Ogden, the agreement was expressly made dependent on the
surrender and cancellation of a previous contract, made by the
plaintiff, for the sale of the same lands to a third party, without
which surrender the vendor could not give a good title.
Neither do the cases of
Hill v. Griggsby, 35 Cal. 658,
and
Bohall v. Diller, 41 Cal. 532, cited on behalf of the
plaintiff in error, control the present case. In
Hill v.
Griggsby, the instrument provided that the plaintiff should
convey "as soon as" the purchase money was paid. In
Bohall v.
Diller, the terms of the contract were that the plaintiff,
"upon payment of the purchase money, was to convey."
Page 153 U. S. 580
These stipulations were properly held to be dependent covenants,
and that neither party could sue without performing, or an offer to
perform, on its part. But in the case at bar, the terms of the
contract contain no stipulation that the covenants of the
respective parties are to be performed at the same time or
concurrently. On the contrary, the clearly expressed intention was
that the payment of the purchase price of the lands should precede
the performance of the land company's covenant to convey the lands
and water stocks. The consideration to be paid covered both the
lands and the stocks, and its payment was a condition precedent to
a transfer of either or both. The provision that the stock was to
be delivered by the land company and accepted by the purchaser,
subject to the bylaws of the irrigation companies, "when payment in
full is made for the above-described land" in no way changes the
proper construction of the contracts or establishes that the stock
was to be transferred concurrently with the payment for the lands.
The expression "when payment in full is made for the
above-described land" confirms the construction that the payment
was a condition precedent to the conveyance of either stock or land
or both. The purchaser had no right to a transfer of the stock
before he became entitled to a conveyance of the land.
We cannot accede to the contention of the plaintiff in error
that the contract should be so construed as to make payment of the
first installment of purchase money a condition precedent to the
covenant to convey, but that the last installment of purchase money
should be treated as dependent or concurrent with the covenant to
convey. The covenants are to be interpreted as of the date of the
execution of the contract, and as applying to each and all the
installments of purchase money alike. Covenants like those in the
case under consideration are not of a shifting character,
independent at one time and dependent at another, or independent as
to one or more installments of purchase money and dependent in
respect to others, unless there is a clearly expressed intention on
the part of the contracting parties that such should be the case.
No such intention is either expressed or implied in the language of
the
Page 153 U. S. 581
contracts in suit. The payment of all the installments of
purchase money is a condition precedent to the performance of the
land company's covenant to convey.
In respect to the nine applications for purchase declared in
counts forty-one to forty-nine, inclusive, of the declaration,
while the terms are not so clearly expressed as in the twenty
contracts already considered, it is fairly implied that the
installments of purchase money were to be paid before the land
company was under any obligation to convey.
The forty-ninth count, based upon the application to purchase
lot 11, does not stand upon any different principle from the rest.
It is true that the purchaser did not pay the first installment in
full, but the land company had the right to accept the partial
payment and treat the contract as a subsisting one, and it was so
treated by Loud, who took possession of the lot and exercised acts
of ownership over it up to 1888 at least. Under these
circumstances, he is not in a position to claim that the contract
was terminated because of his own failure to pay the first
installment in full.
It is earnestly urged on behalf of the plaintiff in error that
the contracts declared upon required the land company to deliver
stock in the irrigation companies which should represent and convey
title to water or water rights to the extent of one inch of water
under four-inch pressure, measured from center of aperture, for
each one hundred shares of stock -- in other words, that the
purchaser's contracts entitled him to water rights, as
distinguished from stock in the irrigation companies by means of
which water could be procured in the quantity designated. This
position cannot be sustained, for the contracts, by their express
terms, stipulated for the transfer of stock in the designated
irrigation companies, which stock was to be delivered and accepted
subject to the bylaws of such companies. The statements that this
stock represented so many inches of water under a certain pressure
were words of description as to the quantity of water which the
irrigation company would undertake to furnish to the owner of the
designated shares of stock.
It is urged that the stock which the land company had
Page 153 U. S. 582
transferred to Loud, and produced for his acceptance at the
trial, was not shown to have been fully paid up. This objection is
not well taken. It appears by the testimony of the secretary of the
land company that the land company delivered water until February,
1887, before the organization of the irrigation companies. It is
further shown that the land company had numerous artesian wells,
pipelines, flumes, and ditches from which water supplies were
furnished for irrigating purposes, and it further appears that
these wells, water facilities, pipelines, etc., were transferred by
the land company to the several irrigation companies, which, in
consideration thereof, delivered fully paid up stock to the land
company or to a trustee for its benefit. Certificates of this stock
were, under proper directions of the officers of the land company,
made out in the name of Loud, and produced and tendered at the
trial. There is no evidence showing that the consideration given by
the land company for the shares of stock in the irrigation
companies was in any was inadequate, so as to impair its right and
title thereto as fully paid up stock.
It is further said on behalf of the plaintiff in error that the
stock proposed to be transferred to him gave no special rights or
privileges, and constituted no easement to the lands purchased.
This is, however, a mistake. In the articles of association of each
of the irrigation companies, which were put in evidence, it is
declared
"that the purpose for which this corporation is formed is to
acquire water, water rights, flumes, ditches, aqueducts,
reservoirs, and other property that may be necessary or convenient
for the supplying of water to such person or persons or their
assigns in the Counties of Los Angeles and San Bernardino, State of
California, to whom the Pomona Land and Water Company has sold
water rights, or to whom it may hereafter sell water rights, or to
whom it may transfer water stock of this corporation, but to no
other person or persons whomsoever."
In addition to this provision in the charters of the irrigation
companies, it is provided by ยง 552, Deering's Ann.Stats. and Code
of California, relating to the right to water, to irrigate lands
sold by water or irrigating companies, that
"whenever
Page 153 U. S. 583
any corporation organized under the laws of this state furnished
water to irrigate lands which said corporation has sold, the right
to the flow and use of said water is and shall remain a perpetual
easement to the land so sold at such rates and terms as may be
established by said corporation in pursuance of law."
Those provisions are recognized and sustained by the courts of
California in
McFadden v. County of Los Angeles, 74 Cal.
571, and
Applegarth v. McQuiddy, 77 Cal. 408.
It is shown that the defendant in error had the requisite amount
of stock in the irrigation companies to perform its contracts with
the plaintiff in error, and the land company offered to prove as a
matter of fact that the stipulated quantity of water was attached
to the lands by the stock in the irrigation companies, but this
offer was withdrawn on the objection of the defendant below that it
was immaterial. The proper construction of the contracts was that
the defendant in error was to deliver stock in the designated
irrigation companies, which would attach to the land and entitle
the purchaser to the quantity of water represented by the stock,
and the stock which the land company thus held and proposed to
transfer was clearly within the terms of the contract.
There are other points of minor importance presented on behalf
of the plaintiff in error, but the controlling question in the case
turns upon the character of the covenants contained in the
contracts, and, in the view we have taken of that matter, the
defendant in error had the right to enforce the payment of the
purchase money for the lands agreed to be purchased, without first
having conveyed, or tendered a conveyance, of the lands purchased.
This question of law, depending upon the proper construction of the
contracts, was not affected by any evidence either introduced or
offered.
Our conclusion is that there is no error in the judgment of the
court below, and it is accordingly
Affirmed.
