1. Where the existence and merits of a controversy brought into
an equity cause by a supplementary petition and decided by the
district court were adequately revealed by the record taken to the
circuit court of appeals, though the supplementary petition itself
was omitted, but the court, misled by this omission, reversed the
decree upon the ground that the matter, for lack of a pleading, was
not before the district court, it was not necessary, when the
Page 266 U. S. 86
mistake was called to its attention by a petition for a
rehearing accompanied by a transcript embodying the omitted
pleading, that it should grant a rehearing before recalling its
first decision and deciding the appeal on the merits, the term not
having elapsed and a full hearing having been had at the beginning.
P.
266 U. S.
89.
2. The laws of Idaho concerning irrigation projects under the
Act of Congress known as the Carey Act (c. 301, § 4, 28 Stat. 422)
provide that assessments for maintenance and operation, where the
operating company has not come under the control of the settlers,
shall receive the approval of the state Land Board before payment
is exacted from the settlers, making it a condition to such
approval that the Board be satisfied that the proposed expenditures
for which the assessment is made are necessary for the maintenance
and operation of the irrigation works and are proper charges
against the settlers.
Held, that an act of the Board,
purporting to approve an assessment tentatively as for maintenance,
leaving for future determination the question whether the work in
view was indeed for maintenance, or construction work for which
settlers could not be assessed, and providing that, in the latter
event, the Board would require that amounts collected be credited
on settlers' contracts for water rights or be repaid them in cash
by the company, was in effect no approval, and that settlers were
entitled to repayments of amounts collected under it by the
company. P.
266 U. S.
90.
3. As the Idaho law does not vest the state Land Board with
power to adjudicate rights to repayment of moneys thus wrongfully
collected, their adjudication in the courts is not an encroachment
on the province of the Board. P.
266 U. S. 92.
4. Concurrent findings of two lower courts that work for which
an irrigation assessment was made was construction work, and not
for maintenance,
held sustained by sufficient evidence.
Id.
272 F. 356, affirmed.
Appeal from a decree of the circuit court of appeals affirming a
decree of the district court requiring the appellant company above
named to repay to settlers on an irrigation project moneys
collected from them by assessments to defray the cost of certain
work thereon.
Page 266 U. S. 87
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This appeal presents a controversy over an assessment for
operation and maintenance of the Salmon River irrigation project in
the State of Idaho.
In 1914, eight settlers under the project, for themselves and
all others similarly situated, brought a suit in equity in the
United States district court to obtain a comprehensive adjudication
of various disputes which had arisen respecting the relative rights
and obligations of the parties interested in the project, the
court's jurisdiction being invoked because of the involution of the
construction and application of Carey Act, c. 301, § 4, 28 Stat.
422, and its amendments. The principal defendant was the company
which had contracted with the state to construct the irrigation
works and to sell necessary water rights to settlers, and another
was the company which was to operate and maintain the works when
completed, but which was as yet under the control of the
construction company. The early proceedings in the suit are
reported in 225 F. 584 and 242 F. 177.
In 1919, while that suit was still pending, the two companies,
one still under the control of the other, made and sought to
collect from the settlers an assessment of 50 cents per acre to
defray the cost of work about to be done on a section of the
irrigation works called the check basin. The assessment was made as
part of an annual maintenance charge which the settlers were to
bear, but they refused to pay because they regarded the work as
construction work, the cost of which was to be borne by the
construction company. The companies threatened to shut off the
water if payment was not made, and one of the plaintiffs in the
equity suit, for himself and all other settlers, brought an action
in a court of the state
Page 266 U. S. 88
to have the assessment annulled and to enforce delivery of the
water.
During a subsequent hearing in the equity suit, the defendants
therein, who were also defendants in the action brought in the
state court, presented to the district court a petition setting
forth the institution of that action, alleging there was such
relation between the two proceedings that their prosecution in
distinct tribunals would embarrass the parties and lead to possible
conflicts of authority, and praying for an injunction against the
prosecution of the proceeding in the state court. An informal, but
extended, discussion followed in which counsel on both sides
recognized the propriety of drawing the whole matter into the
district court. Counsel for the plaintiffs took the position that,
if the injunction was granted, there should be some provision
assuring prompt repayment to the settlers if the assessment was
collected and their objection to it afterwards was sustained by the
court. Counsel for the defendants assented to this and indicated
that the defendants, or some of them, stood ready to give a bond of
that character. Accordingly, the court, with the full acquiescence
of the parties, entered an interlocutory order (a) enjoining the
prosecution of the action in the state court, (b) requiring the
construction company within a limited time to execute a bond to
repay within 30 days all moneys collected on the assessment if the
court determined it was a construction charge to be borne by that
company, rather than a maintenance charge to be collected from the
settlers, and (c) enjoining the collection of the assessment if the
bond so required was not given. The bond was given, and the
settlers paid the assessment. Subsequently, after a due hearing,
the court rendered a decree determining that the work was
construction work, the cost of which was to be borne by the
construction company, and requiring that company to repay to the
settlers within thirty days the amounts collected from them.
Page 266 U. S. 89
The defendants appealed to the circuit court of appeals, which
at first reversed the decree, but later in the same term, on
finding that it had proceeded on a mistaken understanding of the
circumstances in which the district court came to adjudicate the
controversy, changed the reversal into a decree of affirmance. 272
F. 356. The appeal to this Court is from that decree.
1. The defendants complain that the circuit court of appeals, in
changing its decision, acted on an application for rehearing and
evidence submitted therewith without granting a rehearing.
It is true that the change in decision was prompted by an
application for rehearing, but not that any evidence was submitted
with the application. What the defendants refer to as evidence was
not such, but was a supplemental transcript containing their
petition for an injunction against the prosecution in the state
court of the action relating to the assessment. The petition had
not been included in the original transcript sent to the circuit
court of appeals, and that court, finding no pleading relating to
the controversy over the assessment, held that the district court
had no occasion to adjudicate the controversy, and accordingly
reversed its decree. When that decision was announced, the
plaintiffs obtained the supplemental transcript, and, under a prior
stipulation permitting omissions in the record to be supplied,
filed it in the circuit court of appeals with an application for
rehearing. The court then recalled its first decision and
substituted another, dealing with the merits of the controversy and
affirming the decree. The second decision was given at the same
term as the first, and therefore while the matter was still within
the court's control. An examination of the two transcripts shows
that the supplemental one served only to bring sharply to the
court's attention what already appeared in the original -- that the
controversy was laid before the district court in circumstances
Page 266 U. S. 90
which made it admissible and appropriate for the court to
proceed to its adjudication. Among other things, the original
transcript set forth at length the discussion had when the
defendants presented the petition for an injunction, and also
contained the interlocutory order made at the time and the bond
given under that order. The discussion, as set forth, disclosed the
substance and purpose of the petition, the nature of the
controversy over the assessment, and a tacit consent of the parties
that the matter be dealt with on the lines followed in the
interlocutory order and bond. The ultimate decree recited that it
was rendered after a hearing had under the order and bond. In
short, the original transcript showed such a submission of the
controversy that the absence from the record of the petition for an
injunction was not material.
In our opinion, it was quite admissible in the circumstances for
the circuit court of appeals to change its first decision and
correct the mistake therein by disposing of the merits without
granting a rehearing. The parties had been fully heard in the
beginning.
2. The defendants further complain that, in adjudging that the
moneys collected on the assessment should be repaid to the
settlers, the court failed to give proper effect to what the State
Land Board had done in the matter and encroached on the Board's
province.
By the laws of the state, the Board is invested with authority
to supervise the fulfillment of contracts for the construction of
irrigation works under the Carey Act and to accept the work when
completed. But there was no acceptance in this instance. One of the
state laws, Sess.Laws 1917, .c. 14, requires that assessments for
the operation and maintenance of such works where the operating
company has not come under the control of the settlers, which was
the case here, shall be submitted to and receive the approval of
the Board before payment is exacted. This assessment was submitted
to the Board, and the
Page 266 U. S. 91
settlers objected that it was not for operation or maintenance,
but for construction. A hearing resulted in the adoption by the
Board of a resolution declaring that it was not then prepared to
pass definitely on the matter, and would secure further data during
the approaching irrigation season on which to rest a definite
conclusion, but that it would temporarily approve the assessment as
one for maintenance. In order that the money might be collected and
the work proceed, and, if it ultimately concluded that the work was
construction work, it would require the amounts collected to be
applied as credits on the settlers' contracts for water rights or
to be repaid in cash. This was not satisfactory to the settlers, so
the matter was taken into court as before shown.
It is not necessary to consider what effect should be given to
an unqualified approval by the Board, for there was none here. In
effect, what the Board did was to say:
"We cannot determine from the data before us whether the work,
to pay for which the assessment is made, is construction work which
the construction company is bound to do, or is maintenance, the
cost of which is to be collected from the settlers, so we reserve
that question for future investigation and determination; but, to
tide the matter over, we now give the assessment a merely tentative
approval, and if we ultimately determine that the work is
construction work we shall see that the settlers receive credit on
their water right contracts for the amounts collected, or that they
are repaid."
The state law makes it a condition to giving an approval that
the Board be "satisfied" that the proposed expenditures "are
necessary for the operation and maintenance" of the irrigation
works and "are proper charges against" the settlers. This
prerequisite was plainly wanting, as is affirmatively shown by the
Board's resolution, and therefore the tentative approval, only
formally given, was in contravention of the statute, and of no
effect. The law also makes the Board's approval a condition to the
right to collect an assessment,
Page 266 U. S. 92
and of course, where the Board does not approve, it can give no
authority to collect. As the collection was made without the
prescribed approval, and therefore without right, the settlers were
entitled to repayment. The state law does not purport, nor has it
been construed, to vest the Board with power to adjudicate rights
to repayment of moneys thus wrongfully collected, so their
adjudication in the courts is not an encroachment on the province
of the Board.
3. It is also complained that the findings of fact on which the
decree rests are not in accord with the evidence. Of this, it
suffices to say that the courts below concurred in the findings,
and we think there was sufficient evidence to sustain them.
Decree affirmed.