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District Court of Appeal, Third District, California.


Civ. 8273.

Decided: January 12, 1954

Floyd H. Bowers, Roseville, Thomas F. Sargent, Auburn, for appellants. P. J. Minasian, Oroville, for respondent.

Appellants commenced an action against respondent to recover damages for loss of fish alleged to have been caused by the failure of respondent to deliver a continuous supply of 10 miner's inches of water. Upon the conclusion of the introduction of evidence respondent moved for a directed verdict which motion was denied. The jury then returned a verdict for appellants against respondent irrigation district in the sum of $9,416.00. Respondent thereupon moved for judgment notwithstanding the verdict and the court granted said motion, set aside the verdict of the jury and entered judgment in favor of respondent. This appeal is from said judgment.

Appellants contend that the trial court erred in granting respondent's motion for a judgment notwithstanding the verdict, and the principal question that we must consider upon this appeal is whether or not the evidence was sufficient to support the verdict of the jury.

As was said by our Supreme Court in the case of Neel v. Mannings, Inc., 19 Cal.2d 647, at page 649, 122 P.2d 576, at page 577:

‘It appears to be the well-established law of this state that the power of the trial court to set aside a verdict and enter a contrary judgment is absolutely the same as its power to grant a nonsuit. [Citations.] Therefore, a motion for judgment non obstante veredicto may properly be granted ‘when, and only when, disregarding conflicting evidence, and giving to plaintiff's evidence all the value to which it is legally entitled, indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff.’ [Citations.]'

See, also, Megee v. Fasulis, 57 Cal.App.2d 275, 134 P.2d 815; Valentin v. La Societe Francaise, 76 Cal.App.2d 1, 172 P.2d 359.

Bearing in mind the rule just quoted we shall endeavor to give a brief summary of the evidence.

Appellants were the owners of about 20 acres of pasture land in Nevada County, California, which land was also situated in the defendant irrigation district. The actual farming of this land was done by appellants' son, M. F. Gelhaus. Appellants, however, lived on the property and were engaged in the production of trout by means of a hatchery located on a part of the land. The hatchery consisted mainly of wooden, water-fed troughs in which the trout were reared. In the fish production business of this type it is necessary that there be a dependable, continuous flow of water feeding the troughs. Prior to the year 1950 appellants' troughs were fed by natural water from a stream available to appellants. Accessible to appellants in 1950 was irrigation water of the respondent In the general locality of appellants' property respondent maintained a main irrigation canal known as the Chicago Park Ditch. Through a siphon water from this canal could be admitted into a canal known as the Sonntag ditch, also a part of the respondent irrigation system. From the Sonntag ditch appellants could receive water into their private ditch which supplied a reservoir located on appellants' land. Water from the reservoir could then be fed through a pipeline into a wooden trough containing the trout. This reservoir, when full, would hold about a two days' water supply for the feeding of the wooden troughs.

In May, 1950, one Huber, ditch tender for respondent, called upon appellants for the purpose of discussing selling irrigation water to appellants. Huber testified that he talked only with M. F. Gelhaus, son of appellants, about the water, and that he sold it to him. Appellant A. F. Gelhaus testified that Huber came to him and that he told Huber that he needed 10 miner's inches of water to run through his hatchery, and that Huber agreed to furnish him same and the contract was signed by them accordingly. M. F. Gelhaus, son of appellants, testified that on the same day of the above discussion between Huber and his father Huber came to him and asked him if he needed additional water for the farm land. M. F. Gelhaus testified that he told Huber that he did not need additional water as he would pick the water up after it had been spilled through his father's fish troughs and use it to irrigate the farm land. Huber denied having any knowledge that appellant A. F. Gelhaus was intending to use any of the water for a fish hatchery but it is clear that there is a conflict in the evidence on this point.

The contract was introduced in evidence, and a facsimile of it is here reproduced:

After the signing of this contract respondent started delivering water through the Sonntag ditch to appellants. The water was continuously taken by A. F. Gelhaus from the Sonntag ditch into his private ditch, thence into his reservoir where he fed it by pipeline into his fish troughs. As the water spilled from his fish troughs it was taken by M. F. Gelhaus for irrigation purposes as needed. After the signing of this contract, up until September, 1950, appellants made sixteen different complaints to respondent or Huber because they were not getting a sufficient head of water to make up 10 miner's inches. The lack of a 10 miner's inch head of water on these various occasions was due to various causes, and was always remedied by respondent or Huber. Then due to some cause not quite clear, during the night of September 3 and the early morning of September 4, 1950, water stopped flowing from the Sonntag ditch into appellants' ditch. Appellants, upon checking the hatchery on the morning of September 4, 1950, found that the reservoir was nearly empty, and that there was no water running in their private ditch or the Sonntag ditch. Appellants were unable to find the cause of the lack of flow of water, and had no immediate standby provisions for supplying water to their hatchery. Attempts by appellants to contact respondent or Huber so as to have them turn in water were to no avail. As a consequence of the lack of water appellants lost 130,720 trout valued at a total of $9,616.00.

Additional facts shown by the record will be detailed in the course of this opinion.

In arguing for a reversal of the judgment appellants make the following points:

1. That the contract did call for irrigation water to be used in the fish hatchery.

2. That appellant A. F. Gelhaus was a party to the written contract.

3. That the law and facts of the case require that the written contract be construed to require the furnishing of water for the production of fish.

4. That respondent is estopped from asserting that the water was not purchased for the production of fish.

Respondent in reply contends:

1. That there was no contract to furnish water for fish hatchery purposes.

2. That appellants were not a party to the written contract.

3. That the written contract was not for the benefit of appellants.

4. That the terms of the written contract cannot be varied.

5. That the liability is not an incident of the ordinary relation of water distributor and consumer.

6. That there was no showing of negligence.

7. That irrigation districts are not liable for torts.

8. That there is no estoppel.

In support of its contention that appellants were not parties to the written contract and that it was not signed by appellant A. F. Gelhaus, respondent argues that a comparison of the exemplar of appellant A. F. Gelhaus' handwriting with the handwriting on the contract shows clearly that said appellant did not sign the contract. However, the record shows the following testimony of appellant A. F. Gelhaus:

‘Mr. Bowers: I will hand you, Mr. Gelhaus, Plaintiff's exhibit Number One, marked for identification, and I will ask you what that is, please? A. That is the application that I signed my name on, for ten inches of water, and was signed by Mr. Huber.

‘Q. Was that in your presence; was it signed in your presence by Mr. Huber? A. Yes.

‘Q. On the right hand side here is your signature? A. No, that is my son's signature; mine is right here.

‘Q. Where it says: ‘Collect from?’ A. Yes, he said I had to have that on there because I was the owner of the property.'

While this testimony is denied by Huber such denial merely creates a conflict in the evidence on this point, and in the face of this conflict this court is bound by the implied finding of the jury that the contract was signed by appellant A. F. Gelhaus, at the place indicated by Huber and with the intent of both that by such signing A. F. Gelhaus became a party thereto.

Respondent contends also that there was no contract to furnish water for fish hatchery purposes. The record shows that Mr. Huber called at appellants' home on May 8, 1950, to discuss appellants' need for water. Appellant A. F. Gelhaus testified as follows to the conversation that was had:

‘Q. Will you relate that conversation, what you said and what Mr. Huber said, as far as you can remember; that each of you said?

‘A. Yes, I could. He came and asked me how much water I wanted and I said, ‘I need ten inches of water to run through my fish hatchery,’ and he said ‘Is that all the water that you need?’ and I said, ‘No, Melvin is leasing——’

‘Q. Who is Melvin?

‘A. That is my son, M. F. Gelhaus. I said, ‘He might need some more,’ and for him to go and see Melvin and he would get a check from Melvin. He said, ‘You sign the application and I will go and see him.’ He asked me how the fish were doing and I said they were doing pretty good but I had a tough winter, that is, I had ice forming on the troughs, and that I changed my nights into days and the days into nights to break the ice off, to keep the water flowing, and then he left to see Melvin. That is all that was said on the signing of the agreement on May 8th.'

After this conversation was had Mr. Huber apparently went to see M. F. Gelhaus, appellant's son, who testified as follows as to the conversation that took place:

‘A. He told me he had been down to my father about the water and my dad had told him to come over and find out if I wanted additional water; that he wanted ten inches of water for the fish hatchery. We spoke over the situation and I told him that ten inches would be enough, and I was very careful to explain to him that the water was to come down the Sonntag ditch through the reservoir and dad would make use of it first through the fish hatchery, whereupon I would pick up the spilled water and use it on my clover.’

M. F. Gelhaus also testified that he signed the application in question where the signature M. F. Gelhaus appears.

The contract itself provided for a continuous flow of ten miner's inches of water for 20 acres of pasture. The rules furnished appellants along with the contract contained various provisions two of which are pertinent here. Rule 15 provided:

‘No purchaser of any water from the District acquires any proprietary right therein by reason of such use, nor does such purchaser acquire any right to re-sell such water, or to use it for a purpose other than that for which it was applied, nor to use it on premises other than as stated at the time of making application.’

There is ample testimony in the record to support the implied finding of the jury that the ditch tender Huber, who signed the contract on behalf of respondent and accepted payment of the initial payment of $72.50, knew that the water was being purchased to run through the fish hatchery. The record shows further that after the signing of the application on May 8, 1950, and prior to the failure of water which caused the damage here involved, appellants on 16 different occasions made complaint to respondent or their ditch tender, Huber, because they were not getting a sufficient head of water to make up 10 miner's inches and that each time the situation was remedied by respondent. Huber testified:

‘Q. On these occasions when Mr. Gelhaus called you and questioned about the water being off sixteen or more or less times during the summer didn't he on each occasion tell you that he had to have water for his fish and that was the cause of his emergency? A. Yes.’

Thus it appears that there was testimony from which the jury could have inferred that respondent and Huber knew that appellants were using the irrigation water for fish hatchery purposes under claim of a contractual right to do so. There appears to be no dispute that Huber was the agent of respondent, or that Huber had authority to accept the application for water from appellants. Knowledge on the part of Huber that the water was to be used and was being used for fish hatchery purposes would seem to be imputed to respondent. ‘The general rule is that when an agent, while acting within the scope of his authority, acquires knowledge, or receives notice, of any fact material to the subject matter of the agency, his principal is charged with constructive notice of that fact.’ 2 Cal.Jur.2d Agency, sec. 160. ‘This rule applies to corporations and to the state as well as to individuals, and to an undisclosed as well as to a disclosed principal. Moreover, it seems that it is applicable to ostensible as well as to actual agency.’ 2 Cal.Jur.2d, Agency, sec. 161.

Respondent makes the contention that the contract called for irrigation water for 20 acres of pasture, not water for a fish hatchery. However, from the conduct of the parties prior to the signing of the contract as well as thereafter, the jury could have well inferred that notwithstanding the use of the word ‘pasture’ the parties contemplated that the water would be first used through the fish hatchery. The record shows that prior to 1950 appellants had attempted to get water from respondent to use for their fish hatchery but this was refused because respondent could not recover the water after use by appellants. Therefore, until 1950 appellants were not supplied water by respondent from the Sonntag ditch. Testimony shows that in 1950 respondent, through its agent Huber, finally agreed to supply water to appellants through the Sonntag ditch. Appellant testified that at the time the application for this water was signed he told Huber the water was to be used in his fish hatchery and then spilled out on the 20 acres of clover when needed. After respondent started supplying the water sixteen complaints were made up to the loss of fish in September, appellant each time of complaining telling Huber that he needed water for his fish and that this was the cause of his emergency. Respondent, through its agent Huber, answered each complaint and saw that water service was restored to appellants. Thus both the circumstances surrounding the making of the contract and the subsequent conduct of the parties tend to show that both appellants and respondent knew and contemplated that appellants would use the water for their fish hatchery. Because of the doubtful and uncertain nature of the intended use of the water from the contract, the jury could well have considered the circumstances surrounding the making of the contract and the subsequent conduct of the parties in determining what was intended by the parties by the contract. Civil Code section 1647 provides:

‘A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.’

Code of Civil Procedure section 1860 provides:

‘For the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject of the instrument, and of the parties to it, may also be shown, so that the judge be placed in the position of those whose language he is to interpret.’

While it is true that it is only where the contract is doubtful or uncertain or ambiguous that the surrounding circumstances become important in ascertaining the intent of the parties, 6 Cal.Jur., Contracts, sec. 180, it appears in the instant case that the meaning of the parties as to the intended use of the irrigation was doubtful or uncertain, and that therefore the rules of construction above stated are applicable.

The contract called for a continuous flow of 10 miner's inches of water. Appellant A. F. Gelhaus testified that on the morning of September 4th the water was not flowing in the Sonntag ditch, and that he attempted to contact respondent or Huber so as to have water service restored, but that he was unable to reach anyone, and as a result he lost his fish due to the lack of supply of water. He testified further that Superintendent Smith and Mr. Huber came to his farm the next morning, observed the loss of the fish, and ‘Mr. Huber said, ‘I knew that you were raising fish but I had no idea that you had such a big set-up; if I knew you had such a big set-up I would have checked your water twice a day the same as I do for Redman, who raises fish.’ * * * I asked if it was leaves or cones in the siphon grate or what was it because I didn't get any notice as to why the water was shut off—Mr. Smith said there was no leaves, just that the water was shut off, that was his answer.'

The written contract is a filled-in form used by respondent generally and respondent claims, necessarily, that as filled in the document includes a provision for furnishing water to irrigate 20 acres of pasture and excludes any obligation to furnish water for any other use. But the document does not expressly declare no other use is intended. All that appears on this subject is the following: ‘The Applicant requests you to supply water for Irrigation purposes. * * * Acres Irrigated: Orchard ..... Garden ....., Pasture ..20.., Forage ..... Crop Acreages ..20..’ We do not believe that the subject document compels the conclusion, as a matter of law, that the statement of use is exclusive. On the contrary, we think that on the subject now discussed the provisions as to use of water are uncertain enough to permit oral testimony in aid of interpretation, and we think further that the trial court was bound, as this court is bound, by the implied finding of the jury that the appellant was a party to the contract to furnish water to his hatchery as an included use.

Huber testified that there was plenty of water in the Chicago Park ditch to be run into the Sonntag ditch, but he made no explanation as to why the water was not running in the Sonntag ditch. Huber testified further that he had an over-supply of water in the Chicago Park ditch on the day of the loss and was spilling water there. From this evidence the jury could well have inferred that the respondent was clearly at fault in not having the water running in the Sonntag ditch, and that the failure to supply appellants with 10 miner's inches of water continuously amounted to a breach of contract causing appellants' loss.

Respondent contends that it is not liable for the loss of appellants' fish because such liability is not an incident of the ordinary relation of water distributor and consumer. It cites Niehaus Bros. Co. v. Contra Costa Water Co., 159 Cal. 305, 113 P. 375, 36 L.R.A.,N.S., 1045 and several other cases, all of which deal with the liability of a water company supplying water to fire hydrants for damages caused by a fire where the water supply at the hydrant was inadequate. We do not believe that those cases are applicable to the instant case for in such cases liability was not imposed upon the water company because, as stated by the court, liability can only arise from a private contract between the company and the consumer under which a specific purpose is undertaken by the company. However, as we have hereinbefore pointed out, respondent agreed to furnish a continuous flow of 10 miner's inches of water, knowing that said water was for appellants' fish hatchery.

Respondent contends that there was no showing of negligence on its part and that even if there was negligence it, being an irrigation district, cannot be held liable in tort. We believe that the evidence hereinbefore set forth is sufficient to support a finding that respondent was negligent in permitting the flow of water to appellants to be shut off. It does not appear that any satisfactory explanation as to why the water was shut off was given, and there was evidence which would support a finding that there was plenty of water but that it was shut off from the ditch that led to appellants' land.

However, it is clear that appellants' action was to recover damages for loss sustained by them by respondent's breach of its contract to supply appellants with a continuous flow of 10 miner's inches of water. The fact that appellants also alleged that respondent turned off the flow of water wilfully or negligently would not transform the action from an action for breach of contract to one in tort.

As was pointed out by our Supreme Court in L. B. Laboratories, Inc. v. Mitchell, 39 Cal.2d 56, at page 62, 244 P.2d 385, at page 388:

“Notwithstanding the basic distinctions between actions on contract and in tort, there are many wrongful acts that constitute a breach of duty that is not only created by contract but imposed by law as well. Thus, negligence may be conceived as being of two types: delictual negligence, which involves a breach of a duty owed to a world at large, as to the general public in driving an automobile; and contractual negligence, which consists of a breach of a primary duty owed to the injured party—a ‘polarized’ duty arising from some prior relationship between him and the tortfeasor, as in the case of a bailee or common carrier. The latter type of negligence ordinarily gives rise to an action either on contract or in tort, and the injured party may at his election waive the contract and sue in tort, or waive the tort and base his action on the contract alone.”

See, also, the recent case of Langley v. Pacific Gas & Electric Co., 41 Cal.2d 655, at page 662, 262 P.2d 846, at page 850, where the court said:

‘Defendant contends that unless the duty to give notice is expressly provided for in its contract with plaintiff, recovery cannot be had in an action on the contract but only in an action in tort for negligence. By undertaking to supply electricity to plaintiff, defendant obligated itself to exercise reasonable care toward him, and failure to exercise such care has the characteristics of both a breach of contract and a tort.’

In view of the foregoing we conclude that there was sufficient evidence to support the implied finding of the jury that respondent had contracted with appellants to supply them with a continuous flow of 10 miner's inches of water, and that due to respondent's failure to perform said contract appellants had suffered damage in the amount awarded them in the verdict. It follows that the court erred in granting respondent's motion for judgment notwithstanding the verdict.

The judgment is reversed with directions to the trial court to enter judgment on the verdict.

SCHOTTKY, Justice.

VAN DYKE, P. J., and PEEK, J., concur.