SCHWAB V. BEAM.
SCHWAB v. BEAM et oJ. (CIrcuIt Court, D. Colorado. March 30, 1898.)
WATERS AND WATER COURSES-ABANDONMENT OF WATER RIGHTS.
A placer location ex vi termini imports an appropriation of all waters covered by it, so far as such waters are necessary fOl' working the claim, especially when the location covers both banks of the stream, and there can be no abandonment of the water as distinguished frolD the land or .of the land as distinguished from the water.
Where a patent issues for a mining claim, If the owner finds mining unprofitable,and holds the property for sale asa mill sIte, or a site for an electric power plant or some manufacturing establishment, he ,does not thereby lose the water right which he bad as a miner.
Article 16, § 6, Const. Colo., which provides that "the right to divert unappropriated waters of any natural stream for beneficial uses shall never be denied," applies only to unappropriated waters, and not to a case where, by the location of a placer claim, the water bas been appropriated.
Nothing In the constitution of Colorado, or in the law relating to Irrigation, modifieS Or changes the rule of common law that for .manufacturing, mining, or mechanical purposes each riparian owner I!lay use the waters of running streams on his own premises, allowing such waters to go down to subjacent owners In their natural channel.
Rogers, Cuthbert & Ellis, for complainant. Patterson, Richardson & Hawkins, for defendants. HALLETT, District Judge. Complainant is the owner or seven placer-mining claim on the north fork of the San Miguel river, in the county of San M: guel, called "Bo!'\ton," "Keystone," "Keystone Extension," ''Washington,'' "Colorado," "Pekin," and "San Miguel." All of the claims are traversed by the river, excepting the Keystone Extension, to which water from the river is conducted by means of R flume. The several claims were located prior to the year 1882, and patents were issued in that year to complainant's grantors. Some of the claims were worked as placers, and the waters of the river were used for that purpose prior to the year 1889. In that year the waters of the river were diverted near the east end of the Keystone placer for the purpose of hydraulic mining upon several of the claims, and work was carried on extensively in the years 1889 to 1892. From 1892 to 1897 but little was done in the way of mining, but there was always an agent in charge, and some effort was made to keep up the flume, and to use water therefrom at different times. The testimony as to what was done upon the property in those years is highly conflicting, and leads to the result that complainant and his grantors were in actual possession, and that work was not done with a view to profit or development. In the month of August, 1897, respondents located the Yukon placer in the valley of the San Miguel river, at a point somewhat south of the Pekin placer, owned by complainant. The south fork of the river unites with the north fork on the Pekin placer. The Yukon placer may touch the south fork of the river, but it does not extend to the united streams, or to the north fork, which traverses the Pekin placer from end to end. Afterwards, and in
the mvnth of September following, resvondents located a flume and water right on the north' forkof'the''Ea'riMljtUel river, about 1i miles east of the Yulionlocation;.and.n:ear'thenortheast corner of complainant's Boston is.on .the.Qen,ver pIaC r! which iS,probably owned by respopdents; , From thence the line of the flume is laid in a westerly,tlirection on the mountain side, 'slightly .fluJ;lle, an:(i, jnthe, conrse of ,the San Miguel river, above eu,d, of the Pekin placer, to a poiM 'about i;150 feet and thence across the Pekin placer and the San Miguel river to the Yukon'pl:lcer.' .course from ,east to west'i:trtraverses the Keystone and 'the Keystone Extension placers, belonging to complainant, for adistJu1ce of'abtll'it'2,50'O'feet... Xn its. southerly (;ourse across feet. Thus it appears that the Pekin placer its length is the proposed diversion of the ,waters of the San Miguel river which the complainant seeks to :iaat· the high'$tpoint on the course of complainant's 'propei'tye:dends., From thence the water is to 'oitcarried outside' of the chliIinelof rihe river, andop the Qf, t):lechapnel, over two ofc<Huplaiuant's locations; and north of three or more of them and across one of, them to a point on the Yukon placer south:olthePekin Whether the water liberated at that point' on tIle Yilkon placer would 'be available for use on complainant's San Miguel placer, which is furthest west of hil;; locations, was not stated at-the; bar, and Illay not be disclosed in the record. Sufficient.appears to, .show that the effect of respondents' diversion would beto deprive c?mplainant of water in the channel of the riveron'sii OrAis locatfonsduring some part of the yeal'.. Respondents' appr,opriation is 20;000 I)1iners' inches, Which the testimony aU tIie water 'channel of, the river at certain seasons of' 'year; although at other times there ,is much more flowing in the channel., '! Thepmposefor,which the water is to be used on the Yukon placer! is":for making ,electrfc power and ljglits,altbough it is said that'sothe, minifig lias been'd'dneby respotidents In' that locality. Many examined'to show the nature arid extent of the diversion pf'tJ1e",aters of tbeSlin ¥iguel river in the year :1-889, and subsequently by' comp'lainant'sgrantors, and whether the use of the :llumeand ditch then constructed on the property was continued by complainant 'after the year 1892. '. Respondents'counsel declared in argument that' the flume and ditch were abandoned after complainant's grantors and himself, and that the waters of the were sUbje6tJo anew appropriation in August, 1897. The court is of the opiMon that the matter of the diversion of the waters of the river by complainant's grantors in the year 1889 is not controlling; lllthough, if it were necessary to determine the fact, the court wbuld be inclined to ,find that the waters of the river were fnlly appropriated at that time, and that there is no satisfactory evidence of abandonment at' any time afterwards. A placer location ex vi termini imports ..an 'appropriation of all waters covered by it, in so far as snch waters . are necessary for working the claim. This is true especially when the location covers, both banks of the stream, because there is a reas9nable presumption that the locatorintends to work the channel and' 'the banks, wherever he may find pay dirt. A placer
SCHWAB V. BEAM:.
claim cannot be worked without water. Where wafer IS scarce, a small stream may be made to suffice. Everyone who is in any way familiar with the subject knows that the miner always prefers to have a copious supply. Where, as in this instance, the work is carried on by hydraulic force, the volume of water must be large. No doubt is entertained that the locators of the several claims now oW!ll d.by complainant intended to appropriate the waters flowing in the channel of the river as well as the channel, the banks, and all territory embraced within the locations to the business of mming, and the title to the water is the same as the title to the land. There can be no abandonment of the water as distinguished from the land, nor of the land as distinguished from the water. Each is without value when separated from the other, and therefore they cannot be legally di· vorced. It is said, however, that complainant, having found the business of mining to be unprofitable, no longer intends to work his claims, and DOW holds them for sale as a mill site, or as a Bite for an electric power plant or some manufacturing establishment. Be it so; the government has issued patents for the claims, and the title of complainant is now absolute for any purpose:to which they.mav be put. A patent for agricultural land does not limit· the use of the patentee to tilling the soil which may be conveyed by'the patent. No more is a patent for mineral land, whether lode or placer,restrietive of the use of the territory which may be conveyed. A placer claim has been used ns a town' site apparently with the approvalof the supreme court of the United States. Smelting Co. v. Kemp, 104 U. S. 636. All other uses to which land may be put must be eqllally open to the grantee after title has passed from the government. Respondents rely very much on section 6, art. 16, of the constitution of the state of Colorado, which declares: "The right to divert unappropriated waters of any natural stream for beneficial uses shall never be denied." This language, it will be observed, is applicable to the unappropriated waters of a natural stream. If, as we assume, the location of complainant's placer claims on the San Miguel river was an appropriation of the waters of that river so far as it runs through the several claims, this section cannot control the question under consideration. The waters were appropriated when the claims were located, and the owner of the claims is entitled to have them ut currere solebat, without diminution, subject to the reasonable use of other riparian owners higher up on the course of the stream. No question arises under the last clause of section 6 of the constitution of the state, cited above, because complainant and respondents are each of the manufacturing class, within the meaning of that section. Counsel for respondents sUg'l!ested in argument that electric lights were to be classed as a domestic use, but he was unable to say much in support of that construction. Clearly enough, the business of making electric lights and power is a sort of manufacture, and of the same class as mining, or other use of water power. Therefore the parties are upon an equal footing in respect to the use which they intend to make of the waters of the San Miguel river. In this connection it may be observed that washing gravel by hydrostatic press-
86 VlllDERA4 REPORTER.
urefrom the channel or bank of a river is not very far: removed from running a $tampmill by water power, or running dynamos for mak. ing electricity. is in the machinery and appliances of the several kinds of work,' but the power is the same. The use of the water of the SanMiguel river, in 1889, for hydraulic mining', was an exercise of water power very similar to that which respondents now demand for operating a power plant. Both parties stand upon placer locations, and the doctrine of first appropriation seems to support complainant's locations, as they are many years older than respondents' locations, madtl in 1891. Many authorities cited by counsel expound the law relating to the irrigation of agricultural lands in arid regions. An early advocate of the right to appropriate water for irrigating lands, as always understood and maintained in this state, the author of this opinion desires to and enforce the principle on which it stands in every case to which it may be applicable. It is believed that the chief purpose of article 16 of the constitution of the state of Colorado is to maintain and establish the wise pl'inciple of appropriation and continual use, which was fully understood by the makers of that instrument. But nothing in the constitution of the state or in the law relating to irrigation in any way modifies or changes the rules of the common law.in respect to the diversion of 'streams for manufacturing, mining, or mechanical purposes. In Colorado, as elsewhere in the United Stat-es, the law is now, as it has been at all times, that for such purposes eachiriparian owner may use the waters of running streams on his own premises, allowing such waters to go down to subjacent owners in their natural channeL The injunction will be allowed according to the prayer of the bilL
I'1'ATE NAT. BANK V. SAYWARD.
SAYWARD et al.
STATE NAT. BANK OF CLEVELAND, OHIO, (Circuit Court, D. Massachusetts. No. 756.
March 8, 1898.)
JURISDICTION-FoREIGN CORPORATION-AcTION AGAINST STOCKHOLDER.
A suit in equity may be maintained by a creditor or a corporation against a stockholder only In the courts or the state in which the corporation 1. created. In an action by a creditor of an Insolvent OhIo corporation against a stockholder to enforce his liability under the laws or Ohio, the corporation is a necessary party derendant, and a demurrer on that ground will be sustained.
ACTION AGAINST STOCKHOLDER-DEMURRER.
This was a bill in equity by the State National Bank of Cleveland, Ohio, against Samuel Sayward and others, to enforce the stockholders' liability. Russell & Putnam, for complainant. W. B. French, for defendant Geo. Linder. Chas. A. Drew, for defendant John F. Annable. Chas. D. Adams, for defendant Geo. F. Reed. COLT, Circuit Judge. This bill is brought by a creditor of an Ohio corporation against certain stockholders, residents of MassachuSetts, praying that said stockholders may be ordered to pay to the (lomplainant a sum equal to the par value of their stock, or so much thereof as may be necessary to satisfy the claim of the complainant, in accordance with the provisions of the statutes of Ohio. A bill in eqnity cannot be maintained by a creditor to enforce the liability of a stockholder in Ii corporation organized under the laws of another state. In Post v. Railroad Co., 144 Mass. 341, 345,11 N. E. 546, Chief Justice Field said:
"This court does not take jurisdiction of a suit to enforce the liability of iltockholders In a foreign corporation, not because it would be a suit to enforce a penalty, or a suit opposed to the pollcy of our laws, but because It is a suit against a foreign corporation which involves the between It and its stockholders, and In. which complete justice can only be done by the courts of the jurisdiction where the corporation was created. - - - If an assessment Is to be laid upon the members or stockholders, or a contribution enrorced from them, according to the law of the state under which the corporation Is created, the courts of that state alone can afford complete and effectual judicial rellef."
There is another ground upon which the demurrer in this case is well taken,. namely, that the Ohio corporation. is a necessary party. The supreme court of Ohio has held that in suits of this character the rorporation "ought to have been mnl1e a party." Umstead T. Buskirk, 17 Ohio St. 113, 118. Demurrel's sustained.