OCR Text |
Show Attorneys' Opinion. December 13, 1904. Salt Lake Real Estate Association: Gentlemen In response to your request that we give to you our opinion upon paragraph 9 of the agreement proposed between Salt Lake City, upon one part, and the Big Cottonwood Lower Canal, a corporation, of the other part, we have this to say: We have before us the extent of the proposed agreement, as the same appears in the issue of the Salt Lake Tribune of November 24th, 1904. It appears therefrom that it is proposed to entor into an agreement by which the Big Cottonwood Lower Canal Company, (which we shall speak of as the canal company) is to sell, assign and transfer to the city all its right to the use of the canal company's com-pany's portion of the water flowing in Big Cotton- wood creek, Salt Lake County, Utah. The amount or extent of the interest of the canal company in the waters of Big Cottonwood creek is not stated in the agreement, nor is there any guarantee upon the part of the canal company as to the minimum amount of water to which it is, or in the future may become entitled. The contract in brief provides for the payment by the city to the canal company for this interest, inter-est, whatever the same may bo, by the transfer from the city to the canal company of a certain amount of water taken from another source, equal in volume to twenty-one two hundred and fortieths for-tieths (21-240) of all the water flowing in Big Cottonwood Creek between April 15th and October 15th, and one-sixtieth (1-60) of the amount ot such waters flowing in the creek between October 15th and April 15. The agreement further provides a method of determining the quantity flowing in Big Cottonwood Cotton-wood creek by means of measurements taken on the 15th day of each month from April to September, Septem-ber, which measurements shall determine the amount of water which the city is to deliver to the canal company, irrespective of the amount which the city may obtain from the creek under its purchase. The agreement further provides for the appointment of commissioners, whose duty it shall be to measure the waters flowing In Big Cottonwood creek, with a view to the determination determina-tion of the quantity to be furnished by the city to the canal company, and who shall also at any time, at the request of the canal company, make measurements of the quantity of water furnished by the city, under the agreement. The seventh and eighth paragraphs of the proposed agreement provide for the construction M at the expense of the city, at several points upon H Big Cottonwood Creek, and at the point where the M city is to deliver its water to the canal company, lM of weirs, and for the keeping of the same in re- M pair, all of which, together with the making of M the measurements, from time to time, and the M compensation of the commissioners, and the de- fenso of any and all suits which may be brought iHl against the canal company by any person, in re- flfl spect to the title of the canal company f the wa- 'H bers, shall be at the expense of the city. H The ninth paragraph of the agreement is the fl one to which you have directed our particular at- 'H tention and have requested our opinion as to the Hj legal effect of the same. This paragraph provides H that if the city shall at any time fall to deliver to H the canal company the full quantity of water H agreed upon, to-wit: 21-240ths of the entire flow H of Big Cottonwood creek, and if such default shall :H continue for a period of twelve hours, then the 'H canal company shall have the right to immediately H re-take the waters of Big Cottonwood creek which 'H are being used by the city, under the terms of the jlH agreement, and, for this purpose, shall have the H right to immediately return the waters of Big H Cottonwood, creek into their original channel and H Shall have the right to the use of the waters so H H 0l' returned into their original channel during all the H 1 n'k tImo that tho default sua11 continue, and' the right B IE" so to r0take the waters may be exercised by the Hj 1 T canal company as often as the city shall be in H i default. It is further provided that upon a failure Hi 1 I on the part of the city to deliver to the canal H f I f company the full 21-240ths of the flow of Big Hfj 1 I, Cottonwood creek for a period of six months, H i then all the rights of the city to the use of the H I waters of the Big Cottonwood creek, belonging to H i h the canal company, shall at the option of the H j canal company immediately coase and terminate, H L and the canal company shall be immediately re- J J vested with its rights to the use pf said waters as H fully and completely as though the agreement m p had never been made. H I' It is further expressly stated that tho right H i l' of the city to re-take the waters of Big Cottonwood H ! I and the right of tho canal company to terminate IE the rights of the city are declared to be cumula- Hj , tivo remedies and shall in no wise be construed H v I to deprive the canal company of any remedy at H j law or in equity which it might otherwise have H I to enforce its rights under the agreement. IH i The question submitted to us is as to whether H I under this paragraph, in the event that the city H ': I should either voluntarily, through a desire to re- H i I cede from its agreement, or for any other reason, I default in its covenants to supply to the canal I F company the quantity of water stipulated for, I i and such default should continue for a period of s ' six months, and if by reason of such default the H I canal company ishould retake and use the Big Cot- DU i I tonwood waters, the city would thereby bo ao- Hj f I solved from all further liability to the canal com- B ( f pany, or whether, on the other hand, it might In ' still be liable to a suit at law for damages on H , I account of the violated agreement, or a suit in Bfl j i I; equity to coirfpel a specific performance of its i contract. I Treating the contract as one which the parties I have the power to make, and as being validly exe-! exe-! cuted, and binding in all respects, the agreement I would sjem, upon it face, to be one by which I the canal company "grants, bargains and sells" to the city "all of the right" of the canal company com-pany "to the use of all its portion of the water flowing in Big Cottonwood creek, only however, I until the time that the party of the second part H I shall be entitled to again take and use the water as hereinafter provided upon tho "failure" of the city to keep its covenants. In form and effect this instrument seems to provide for grant upon a condition subsequent, that is to say, a transfer of the title to the waters of Big Cottonwood creek from the canal company com-pany to the city, subject to being defeated by a failure in the future on the part of the city to comply with the condition upon which it holds its title, viz., the delivery to the canal company of a volume of water at all times equivalent to 21-240th of the entire flow of the creek. The consideration con-sideration for the grant seems to be an agreement, executory in its nature, that Is to say, one to be carried out In the future. It is also a continuing agreement in that it is to be performed in each and every year for all time. This agreement takes tho form of a covenant upon the part of the city, and the faithful performance per-formance of this covenant is the condition upon which It retains the right to tho use of the Big Cottonwood waters. When this condition is broken, according to the express terms of paragraph 9, tho title reverts in the canal company, at its option. Such revesting revest-ing of the title in the grantor is in the nature of a fortfeiture. It is unodoubtedly true that forfeitures are not favored in the law, and where the court can construe the words of the conveyance as a covenant cove-nant rather than as words of condition, it will do so and by remitting the grantor to his right to recover damages for breach of the covenant will save the estate from forfeiture through the breach of the condition. But we know of no reason why by express words aptly used as they seem to be in this agree-ment, agree-ment, the same terms may not be used to measure the duty of the grantee and to limit the quality ot estate granted. In other words, we see no reason why the parties may not provide as they have provided in this agreement, that when the grantee fails in his promise to perform, his title to the thing granted as a consideration for such promise prom-ise shall fail. This view is strengthened, and any other construction con-struction of the Instrument seems to be precluded by a consideration of the final sentence of para-graph para-graph 9, which provides that the right of the canal company to retake the waters of Cottonwood creek and terminate the city's title shall be re garded as cumulative and shall not deprive It, the canal company, of any remedy in law or equity under the contract. If, therefore, the city should fail to deliver to the canal company the water which it has covenanted cove-nanted to deliver, and thereby the condition should arise giving the canal company tho right to retake the water of Cottonwood creek, its exer-else exer-else of this right would not absolve the city from its obligation to carry out its promise. A right of action would arise In favor of the canal company com-pany for damages. If actual and substantial damages dam-ages could be shown, doubtless the recovery would be substantial. In any event, nominal damages would accrue. As to whether action could be brought every year, or whether the canal company com-pany would be limited to one recovery for its entire en-tire damages, we are not now called upon to say. It is proper to say further that in all probability proba-bility the fact that the canal company had retaken the waters of Big Cottonwood creek would be considered con-sidered in mitigation of the damages suffered by it from a breach of tho city's covenant. As to whether under these circumstances the damages could be other than merely nominal, or whether they could in any event exceed the difference dif-ference in value between the waters retaken and the 21-240ths of Big Cottonwood creek, we express no opinion. If the city should fail to deliver to the canal company the water which it has covenanted to deliver, and such default should continue for a period of twelve hours, then, under the provisions of paragraph 9, the canal company would have the right to immediately retake and would be immediately im-mediately restored to the waters of Big Cottonwood Cotton-wood creek, which had beon used by the city under un-der the terms of the contract, "and shall have the right to the use of said water during all the time that said default shall continue." Under this condition of affairs, the canal company might not elect to exercise its option to revest In Itself permanently the title to the waters of Big Cottonwood Cotton-wood creek, but might continue, under this provision, pro-vision, to hold and use such waters temporarily, awaiting the time when the city would again begin be-gin to deliver water to tho canal company. Under Un-der these circumstances it would seem quite clear that the canal company would have the right to tieat the contract as still in force for every purpose pur-pose and its use of the waters of Cottonwood creek as a mitigation of the damages suffered by it from the default of the city. It could under these circumstances cir-cumstances maintain its action agalnBt the city for damages suffered by it by reason of the default de-fault of the city, treating the Big Cottonwood waters wa-ters as being still vested in the city under the grant contained in this agreemnt. If upon default of the city, continued for a period per-iod of six months, the canal company should exercise exer-cise its option to retake the waters of Big Cottonwood Cotton-wood creek, and thereby revest itself with the title thereto, we do npt believe it could thereafter maintain an action against the city for specific performance. per-formance. Its election to revest itself with the title to the waters of the creek would 'e inconsistent incon-sistent with its demand for further performance of the contract. The foregoing we think covers the matters upon which our opinion was asked. Very respectfully, HENDERSON, PIERCE, CRITOHLOW & BAR-REJTTE. |