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District Court of Appeal, Third District, California.


Civ. 6011

Decided: July 08, 1939

Ware & Ware, of Chico, for plaintiffs, respondents and appellants. Thos. J. Straub, W.R. Dunn, and Eustace Cullinan, all of San Francisco, and Jerome D. Peters, of Chico, for defendants, respondents and appellants.

Petitions for rehearing have been filed by plaintiffs and defendants, both parties having appealed.

Appellants (plaintiffs) state that some of the language used in our opinion might be construed as holding that, as a matter of law, plaintiffs received water under and below its reasonable value, as part consideration for the stock contracts. We do not want to be understood as so deciding. That matter was and is strictly one of fact, to be determined by the trial court. These appellants also contend that what we had to say upon the measure of damages (to be applied in the event a retrial is had upon that issue), is no longer the law, section 3343 of the Civil Code having been enacted during the course of the trial. It is contended that said action is applicable to the case. We have concluded that the discussion mentioned was not necessary to the decision.

Plaintiffs contend that the court should order each party to the appeal to pay his own costs. We believe that the point is well taken. While the action was reversed, it was upon the limited issue of damages. Plaintiffs prevailed in respect to establishing a cause of action. It would therefore seem fair to order each party to pay his own costs.

Turning to the petition filed by defendant, we find nothing therein which, in our opinion, justifies any relief to it on rehearing. The railroad commission had no jurisdiction to hear and determine the issue involved here, and any attempt on the part of the commission to thus act, would be void. As we held in our opinion, there was evidence to sustain the finding that the Canal Company was not a bona fide mutual water company, but the mere creature of the Power Company,—a public utility. In effect (and in law) plaintiffs were dealing with the Power Company. The following provision of the Public Utility Act, section 73, subdivision (a), clearly confirms the view that plaintiffs pursued their remedy in the proper forum: “An action to recover for such loss, damage or injury may be brought in any court of competent jurisdiction by any corporation or person”. St.1915, p. 165.

No proceeding taken by the commission to compensate plaintiffs by concessions in water rates would deprive them of their right of action based on a tort. If plaintiffs took advantage of any such concession and any special rates, the proper course would be for the trial court to credit the difference between the amount of such special rates and the regular rates against the amount paid for the stock. If, on the acceptance of any preferential rate based upon these facts, the defendants waived their rights (as plaintiffs state), the matter is of no consequence. This is a matter for the trial court on a retrial of the issue of damages.

The question of whether or not plaintiffs knew that the representations were false when the stock was purchased was one of fact for the trial court. The evidence is conflicting on this issue—plaintiffs testified that they had no such knowledge—and such finding is final in this court.

The other points raised have to do with the measure of damages. As we have stricken from the opinion what we had to say upon that subject, the question is eliminated, and it is now a matter for the trial court, in the event of a retrial of the matter of damages.

It is ordered that the opinion be modified as specified above, and that the petitions for rehearing be denied.


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Docket No: Civ. 6011

Decided: July 08, 1939

Court: District Court of Appeal, Third District, California.

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