I concur in the conclusion stated by Chief Justice Holden. But because of the importance of the questions involved, I am impelled to state the reasons for my concurrence.
A short review of the history of the participation of the United States in the reclamation of and lands in the Boise Project will afford a convenient background from which to approach the issues here to be determined.
On June 17, 1902, the Congress of the United States enacted the Act generally referred to as the Reclamation Act. For a concise statement of the reasons, aims and objects of that Act, I quote from the case of Swigart v. Baker, 229 U.S. 187,57 L. Ed. 1143:
"The official reports show that, in 1902, there were in sixteen states and territories 535,486,731 acres of public land still held by the government and subject to entry. A large part of this land was arid, and it was estimated that 35,000,000 acres could be profitably reclaimed by the *Page 555 construction of irrigation works. The cost, however, was so stupendous as to make it impossible for the development to be undertaken by private enterprise; or, if so, only at the added expense of interest and profit private persons would naturally charge. With a view, therefore, of making these and lands available for agricultural purposes by an expenditure of public money, it was proposed that the proceeds arising from the sale of all public lands in these sixteen states and territories should constitute a trust fund to be set aside for use in the construction of irrigation works — the cost of each project to be assessed against the land irrigated, and as fast as the money was paid by the owners back into the trust, it was again to be used for the construction of other works. Thus the fund, without diminution except for small and negligible sums not properly chargeable to any particular project, would be continually invested and reinvested in the reclamation of and land. See H. R. Report No. 1468, 57th Congress, 1st session.
"The general outline of this plan was approved by Congress, which, on June 17, 1902 (32 Stat. at L. 389, Chap. 1093), passed 'An Act Appropriating the Receipts from the Sale and Disposal of Public Lands in Certain States and Territories to the Construction of Irrigation Works for the Reclamation of Arid Lands.'
"The statute provided that the money arising from the sales of the public lands in these states and territories was to be known as the reclamation fund, and was to be used for the purpose of reclaiming and lands. Provision was made for preliminary surveys, and when the secretary determined that a project was practicable, he was authorized to make contracts for its construction, if there were funds available. The land capable of being irrigated was to be open only to homestead entry, and (Secs. 4-6) the secretary was then to give notice of the charges which should be made per acre and the number of instalments, not exceeding ten, in which the charges should be paid; these charges to be determined with a view of returning to the reclamation fund the estimated costs of the construction of the project, . . . and all money received from the above sources shall be paid into the reclamation fund . . ."
The Reclamation Act has been several times amended and acts supplemental thereto have been passed, some of which amendments and supplements will hereinafter be referred to. *Page 556
At the outset it should be stated, and it should be borne in mind throughout the consideration of this case, that the embarkation by the Federal Government upon the enterprise of reclaiming some of the and lands of the west was not done by virtue of its governmental functions, but solely in its proprietary powers, and in appropriating water and constructing dams and distributing systems, it has no greater power or superior rights under the law than has an individual. (TwinFalls Canal Co. v. Foote (C. C. Ida. 1911) 192 Fed. 583; Ickesv. Fox, 85 Fed. (2d) 294.)
Indeed, the Reclamation Act itself provides that,
"Nothing in this chapter shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation, or any vested right acquired thereunder, and the Secretary of the Interior, in carrying out the provisions of this chapter, shall proceed in conformity with such laws, and nothing herein shall in any way affect any right of any State or of the Federal Government or of any landowner, appropriator, or user of water in, to, or from any interstate stream or the waters thereof." (Tit. 43, U.S.C.A., Sec. 383; Burley v. U.S., 179 Fed. 1, 33 L.R.A. (N.S.) 807; Pioneer Irr. Dist. v. Am. Ditch Ass'n., 50 Idaho 732,1 P.2d 196.)
Among the projects undertaken by the government under authority of this Act is that commonly referred to as the Boise Project, in the course of the building of which the government constructed Arrow Rock dam, the Diversion dam, Deer Flat reservoir, and the distributing canals, including the completion of the New York Canal, which had theretofore been partially constructed by private initiative and capital. The Reclamation Act gives to the United States by and through its Secretary of the Interior the same, but no superior, right to appropriate the public unappropriated waters of the State of Idaho as the laws of this state give to the individual. (Sec. 372 and Sec. 383, Tit. 43, U.S.C.A.; U.S. v. West Side Irr.Co., 230 Fed. 284.)
The Secretary of the Interior, having upon the initiation of the project and under authority granted him by the Reclamation Act (Sec. 3, now Sec. 416, Tit. 43, U.S.C.A.), withdrawn from entry the public lands proposed to be irrigated, and having thereafter given notice of their reopening for entry under the limitations of the Reclamation *Page 557 Act, thereafter entered into contracts with entrymen of such lands, for the sale of water rights, the aggregate consideration for which, plus annual assessments for operation and maintenance expenses, was to repay the construction, operation and maintenance charges and costs, and to be paid in annual instalments.
Some of the lands supplied with water from the government works were embraced within irrigation districts even before the Boise Project was initiated. Large parts of the remaining lands under the project were thereafter included in irrigation districts, so that by 1926 there existed four such districts in the state of Idaho, namely, the New York Irrigation District, the Boise-Kuna Irrigation District, the Wilder Irrigation District, and the Nampa-Meridian Irrigation District, together with the Big Bend Irrigation District in the state of Oregon.
As already stated, the New York Canal had been partially constructed by private capital, and at the time I am writing about, the New York Canal Company, a corporation, was using part of it, and furnishing water through it to lands reclaimed by settlers thereon. This company, however, under the contracts hereinafter mentioned, transferred all of its rights and obligations to the New York Irrigation District and to the Boise-Kuna District. There are, however, still other lands not in any irrigation district which receive water from the Boise Project. With a small exception, not pertinent to this case, these lands remain in the same status as regards liability for construction and operation charges, as they were before the making of the said contracts and the transfer of the said works.
More than two-thirds of the lands comprised in these several districts were covered by water right contracts with the United States, so that, under the statute enacted by the Congress of the United States in 1924, commonly known as the Fact Finders Act (32 Stat. 702), and particularly under subdivisions G and I of Sec. 4 thereof (now Secs. 500, 501, Tit. 43, U.S.C.A.), and under the statutes of this state authorizing irrigation districts of this state to cooperate with the Federal Government (Tit. 42, Chap. 18, I. C. A.), the United States, in 1926, entered into contracts with each of the above mentioned districts, under which the government turned the operation, care and maintenance of the works in the Boise Project from a point about one-half mile below Diversion dam, over to the said irrigation *Page 558 districts, reserving title to such transferred works in the United States, and reserving also, not only the title, but also the maintenance, operation and care of Arrow Rock dam, Diversion dam, and all parts of said works above the said point one-half mile below Diversion dam, in the United States.
On the other hand, the said districts assumed and agreed to pay the unpaid instalments of the individual landowners, many of which instalments were delinquent, and to pay the necessary annual operation and maintenance charges, including maintenance and operation costs of the reserved part of the system. The individual landowners were released from their obligations to the United States, and their delinquent instalments, including construction, maintenance, and operation charges were levied and assessed against their respective lands in accordance with the benefits thereto, which assessments thereupon became payable to the irrigation district in which the lands are situate, and by the latter to the United States. The advantage of this transfer, and undoubtedly the actuating purpose, was to turn over to the users of water, the control of the entire system (with the exception hereinbefore stated) by and through officers and agents of their own choosing. Accordingly, the law provides that the consent of such land-owners or water users, to the entering into of such a contract by the irrigation district, has to be obtained at an election held for that purpose (Sec. 42-1808, I. C. A.)
The contracts thus entered into by and between the several irrigation districts and the United States contain the following provisions:
"37. For the purpose of giving each of the several districts receiving water through the main canal of the Arrow Rock Division of the Boise Project fair representation on the board operating said canal, a Board of Control is hereby established which shall be the operating agent of the District and also the operating agent of the other districts receiving water from said main canal which shall contract with the United States to participate in the care, operation, and maintenance of the works to be transferred hereunder, such districts being hereinafter referred to as the other contracting organizations.
"38. The said Board of Control is hereby adopted by the district as its operating agent for the purpose of caring for, operating and maintaining the said main canal and *Page 559 other works, the operation of which is hereby agreed to be transferred, and likewise shall be adopted as its operating agent by each of the organizations contracting with the United States to participate in the operation and maintenance of said main canal and other transferred works."
The contracts also specify the powers of the Board of Control shall have, specifically,
"all the powers with reference to the operation, maintenance, and control of said transferred works and delivery of water therefrom which could be exercised by the Board of Directors of the (several) districts, with reference to the operation, maintenance, and control of irrigation works and the delivery of water therefrom, including the powers applicable under state and federal laws to districts contracting with the United States." (Sec. 42, p. 49 of contract.)
In the exercise of the powers granted to the Board of Control, it is the common agent of the several districts in the project with, so far as I have been able to ascertain, one exception. I have hereinbefore pointed out that there are lands receiving water from the transferred works, which lands are not embraced within any irrigation district. As to such lands, Sec. 56 of the contract provides that,
"the collection of the construction and operation and maintenance charges shall be made by the Board of Controlas Fiscal Agent for the United States and paid over to the United States promptly after such collection."
A careful study of the contract convinces me that the creation of the Board of Control is merely a device for the unified operation of the system — nothing more. The parties in interest still are the several districts, as are the landowners, when not included in any district, and the government looks to them for the carrying out of their obligations under the contract.
The contract so entered into by and between the respondent Wilder Irrigation District and the United States, is dated April 6, 1926, and a copy thereof marked "Exhibit B" is attached to and made a part of the answer and cross-complaint of the appellants herein. Similar contracts were entered into by the other districts in the Boise Project, and the system has ever since been operated thereunder.
The primary purpose of the creation of the Boise Project, *Page 560 and the consequent construction of the Arrow Rock dam, was, of course, the storage of the high or flood waters of the Boise River watershed during the winter and spring run-off, so as to make them available for irrigation during the summer or low water season following. However, probably because of the cycle of years of extraordinary shortage of rain and snowfall through which this western part of the United States passed since the construction of the Arrow Rock dam, the storage of water by that dam impounded was, in some years, found inadequate to properly irrigate the lands served thereby. To alleviate this condition, the Secretary of the Interior, at the request of the waterusers under the Arrow Rock Division of the Boise Project, and after the proper investigation and surveys, commenced the construction of what is known as the Anderson Ranch dam on the South Fork of the Boise River. Prior to the commencement of such construction, a contract, similar in form with the contract of April 6, 1926, hereinbefore referred to, was submitted to the several Irrigation Districts, and the landowners not in irrigation districts, referred to in the early part of this opinion, for their approval and execution. The Board of Directors of the Wilder Irrigation District, on February 4, 1941, approved such contract, called and held an election by the electors of that district, on April 7, 1941, at which election the voters authorized the board to enter into the said contract. Thereafter, on May 6, 1941, the board, in accordance with the provisions of Chap. 18, Tit. 42, I. C. A., filed their petition in the District Court of the Seventh Judicial District, praying for confirmation of the proceedings had and taken. The petition came regularly on for hearing on July 29, 1941, at which time the appellants herein appeared and filed their answer and cross-complaint, objecting to the confirmation of said proceedings, and praying that the title to waters by them acquired and owned and in their cross-complaint described, be quieted as against the alleged claims and demands by the petitioners made thereon under paragraph 43 of the proposed contract.
On the 22nd day of August, 1941, the District Court made and entered its decree, confirming and approving all of the proceedings had, and declaring the proposed contract regular, valid and legal. It is from this decree that the appellants have taken their appeal to this court.
The proposed contract involved in this appeal is, as *Page 561 stated, in many respects similar in form with the contract of April 6, 1926, refers to it and adopts certain of its provisions, as well as making available the distributive works of the Arrow Rock Division for the distribution of the waters to be stored in the Anderson Ranch Reservoir, and provides for the alternate use of the two dams for the storage of water properly allotted to either; and, in short, makes the two dams and reservoirs units of the same system. Of the provisions of the contract of April 6, 1926, thus adopted, recognized, and made part of the proposed contract, are those creating the Board of Control and prescribing its powers and duties.
It is this incorporation into the proposed contract that constitutes one of the two contentions made by the appellants against the validity of the contract. It is argued that these provisions of the contracts, in effect, provide for a delegation by the Board of Directors of the several irrigation districts, of duties imposed upon them by the law. This contention is without merit. A perusal of the two contracts shows that they do not take any power away from the districts, nor grant any powers to the Board of Control, inimical to those possessed by the districts. Both contracts specifically provide that the districts levy all assessments, make all collections, in fact, have and retain all administrative powers that the law enjoins upon them. With one or two exceptions not pertinent here, the Board of Control is strictly and legally the common agent of the several districts in the project, on the one hand, and the federal government on the other, and its duties and powers are confined to the operation, control and maintenance of of the transferred works constructed by the government, and to so operate, control and maintain said works under the direction of their said respective principals.
It must be remembered that the works thus transferred are not the property of the Irrigation Districts; they are, and until paid for, remain the property of the United States. That fact alone differentiates this case from the case of Coburn v.Wilson, 23 Idaho 337, 130 P. 381, cited by appellants. The contract condemned in that case is not set forth in the court's opinion, but enough is said to show that it was an attempt by the Board of Directors to give to others the management of an integral part of the irrigation system of the district. "A contract," says the court, "entered into by the Board of Directors of an irrigation district, *Page 562 giving to a stranger the management and control of the reservoir, dam and main canal, and taking the management and control out of the district, would be ultra vires and void."
The Anderson Ranch Dam, when completed, will be merely an addition to the Arrow Rock Division of the Boise Project, and the adoption by the proposed contract of the Board of Control created by the former contract is merely to continue unified control and operation of the system constructed by the government.
A more serious objection to the validity of the proposed contract is made by the appellants by reason of the presence in that contract of Sec. 43, which reads as follows:
"It is agreed that in lieu of the water which the district is entitled to receive from the Boise River and its tributaries and the reservoirs thereon, or any part of such water, the United States, at the option of the secretary, shall have the right to substitute an equal amount of water from the Payette River or the Salmon River, or in part from the Payette and in part from the Salmon, and in the event of such substitution the secretary, upon the completion of the necessary tunnels and other works to such extent as may be necessary to convey such Payette River or Salmon River water to the Boise River immediately above the government diversion dam, for the Arrowrock Division of the Boise Project, will make, by appropriate credits, such readjustment, if any, in the charges against the district as he shall then find to be equitable in view of the changed conditions then applicable to the water supply furnished for the district, but such readjustment, if any, shall not increase the financial obligations of the district under this contract nor reduce the amount of water which the district is entitled to receive under this contract."
It is a rule of interpretation that a contract must be construed in the light of the circumstances surrounding its making.
As hereinbefore stated, the primary purpose in the construction of the Arrow Rock Dam was to capture and store some of the seasonal flood waters of the Boise watershed that annually escaped and passed on into the sea, and to make them available during the season when the normal flow of the Boise River is low and inadequate. Experience has shown, however, that Arrow Rock Dam, though of *Page 563 great benefit, is not quite adequate. There have been years when the storage waters in that reservoir were exhausted before the close of the irrigation season. To insure against a recurrence of such conditions, the government, at the request of the waterusers within the Boise Project, now proposes to construct another dam, and to create another reservoir, further up the Boise River, to capture and hold flood waters that still escape because of the lack of storage capacity of the Arrow Rock Reservoir.
Further, the experience of the past few years leaves some doubt whether waters gathered by the Boise River watershed may not again during some years in the future, be insufficient, even with the storage capacity of the new proposed Anderson Ranch Reservoir added to the capacity of the Arrow Rock Reservoir, to satisfy the needs of all of the lands within this project.
The government therefore contemplates that in order to insure an adequate supply of irrigation water at all times, it may be necessary, not only to build the Anderson Ranch Dam, but also to pierce the Sawtooth Mountains with a gigantic tunnel, and thereby tap the abundant, unappropriated waters of the Salmon and the Payette Rivers, and to add them to the waters of the Boise. It is this contingency of the future that is referred to in Sec. 43 of the proposed contract.
But it is contended that the granting of this power to the Secretary of the Interior to substitute other water for the water appropriated by the appellant waterusers and others similarly situated, is inimical to property rights of appellants and other appropriators of water out of the Boise River.
I do not construe the attacked section of the proposed contract as authorizing the Secretary of the Interior at any time to modify or in any way to affect the water rights appurtenant to any of the lands in the Wilder Irrigation District. Their right to water appropriated out of the flow of the Boise River will continue to have its present date of priority, stipulated to be 1910. The basic law of water rights in this state, that first in time is first in right, creates a vested right, protected by the Constitution (Art. XV, Sec. 3) and by statute (Sec. 41-106, I. C. A.), and, as already hereinbefore pointed out, the Reclamation Act specifically enjoins upon the Secretary of the Interior in the carrying out of the purpose of that Act, *Page 564 his duty of observing that law of our state. (Sec. 383, Tit. 43, U.S.C.A.)
The quoted paragraph of the proposed contract refers to water, not to water rights, a distinction which should be kept clearly in mind. Under the Constitution (Art. XV, Sec. 1), and under the statute (Sec. 41-101, I. C. A.), "All the waters of the state, when flowing in their natural channels * * * are declared to be the property of the state." (Walbridge v.Robinson, 22 Idaho 236, 125 P. 812, 43 L.R.A. (N.S.) 240;Ickes v. Fox, 85 Fed. (2d) 294.)
And it is only the right to the use thereof that can be acquired by appropriation. True, this right to the use of water is a property right of which the owner may not be deprived without his consent, or upon just compensation. Nevertheless, it does not comprehend the ownership of specific water; such ownership remains in the state. The appropriator's right consists merely in the right to the use of such portion of the waters of the state as he can and does put to beneficial use, and of a fixed priority with relation to other appropriators. Nor has it ever been demonstrated that there is any difference in the quality of any of the public waters of this state that affects their virtue for irrigation purposes. It can therefore give no ground for complaint if an appropriator's right is fulfilled by the delivery of water from a source other than that from which he made his appropriation. (Adams v. Salt RiverWater Users Ass'n. (Ariz.) 89 P.2d 1060 (1066).
But it is said that this is in contravention of Daniels v.Adair, 38 Idaho 130, 220 P. 107. In that case the Pattees, defendants, had a decreed right to waters out of Agency Creek. The plaintiffs, and others, subsequently constructed a ditch to conduct water from the Lemhi River into Agency Creek, joining the latter at a point below the diversion point of the defendants. Thereupon the plaintiffs sought to enjoin the defendants from using the water out of Agency Creek by virtue of their decreed right, and to compel them to use water turned into that creek through the Lemhi River ditch. This court, after adverting to the law which allows a change of point of diversion, and to the right permitting water turned into a stream to be taken out again at a lower point, says:
"In the instant case the plaintiffs do not seek relief upon this theory, but, on the contrary, seek to take decreed waters of petitioners, Pattees, diverted from Agency Creek *Page 565 above the point where the Lemhi River ditch empties into Agency Creek, and compel petitioners to accept Lemhi River water at a point below their point of diversion just so long as plaintiffs deliver 175 inches of the waters of Lemhi River into Agency Creek. Under the facts as admitted in the pleadings the power to bring about such an exchange would be beyond and in excess of the jurisdiction of the court."
That the court intended to limit its decision to the peculiar facts of the case is further evidenced by its statement that,
"It may be that under certain circumstances, where a clear case is made, an exchange of water may be brought about, but under no circumstances can it be done where the exchange would result to the detriment of prior users or result in depriving such prior users of a property right."
Clearly, the facts in that case show an attempt to compel an exchange of water right. In the case at bar, no such exchange is involved or threatened. The government merely says, in effect, "If in our effort to secure a more adequate supply of water, and in the course of a fair and equitable distribution of such greater supply, it should become necessary to satisfy the rights of any of the appropriators or users in this project with water from a new source, we want the right to do so." These waterusers are not asked to surrender or even to modify their rights; the power to change the quantity of water to which they are entitled, and the relative dates of their rights to such quantity, is not by this contract committed to the Secretary of the Interior.
Thus construed, the contract is not only consonant with the beneficient aims and purposes of the Reclamation Act, but is not in contravention of either constitutional or statutory provisions. I therefore concur in affirming the decree of the District Court.