Hemet Land & Water Company declared, fact before the commission is that the applithe purposes of the corporation to be 'to ac- cant established and maintained a public quire by purchase and appropriation water watering trough on the town site of the and water rights and to develop water and to present city of Hemet before it issued any use, hold and enjoy the same, and of its water certificates. to acquire all other and further easements necessary for the storing, conveyance, use, sale and other disposal of such water in the county of San Diego and elsewhere in the state of California; and to construct dams, reservoirs, flumes and ditches and other conduits for the storage and distribution there of; and to supply the inhabitants of the towns in San Jacinto Valley with pure water for domestic purposes.' "It is well now, for a clear understanding of the question, to epitomize the position of these petitioners. They concede that the applicant is a public service corporation in so far as the city of Hemet is concerned and as to the amount of water which that city does or may require. They will not object to a finding that such present or future needs on behalf of the city constitute a first and preferential right to the use of the water. They insist, however, that, subject to that public use only, they have a private right in ownership by virtue of their water right certificates to the use of all water provided for in those certificates; that their rights, being private rights, are governed wholly and exclusively by their contracts. Next, as to the excess waters, the rates for which have been fixed by the applicant itself, their attitude is one substantially of indifference as to whether or not the rates to be charged for those waters shall or shall not be fixed by the commission. "The position of the commission, and of the applicant before it, is, first, that, under the facts above set forth, applicant was from the time of its creation and continuously thereafter a public service corporation, and that it had dedicated all of its waters to public use; second, that whether or not it had so dedicated its waters and properties to public use, by virtue of the laws of this state and their definition of a public utility, the applicant was such a public utility. Necessarily resulting from the upholding of either of these positions it is declared (and granting the premise the conclusion is unescapable) that all of these [3] "The petition of applicant to the Railroad Commission to fix its water rates upon the asserted ground that it was a public service corporation was based upon the allegation that the remuneration which was received by the applicant from the existing rates was wholly inadequate. In brief, the time had come when the applicant, Mr. Whittier, concluded that the duty was an onerous one, and he sought a repudiation of these contracts and water right certificates upon the ground, unquestionably sound in law, that if the corporation which entered into the contract was, at the time of entering, a public service corporation, these contracts were subject to modification at the instance of the commission. S. P. Co. v. Spring Valley Water Co., 173 Cal. 291, 159 Pac. 865, L. R. A. 1917E, 680; Limoneira v. Railroad Commission, 174 Cal. 232, 162 Pac. 1033. Certain facts in addition to those above set forth were presented to the commission. Beginning with the year 1912, in response to a general order issued by the commission to all public utilities, this applicant filed its schedule of rates, rules, and regulations for the service of water for irrigation and domestic use and did so each year thereafter. The applicant further rec-water right certificates were, in contemplaognized its own character and the jurisdiction of the commission by making an application before it for an order authorizing the sale of certain of its properties. No doubt can be entertained but that from 1912 Mr. Whittier, who, as the sole owner of these corporations, may be indifferently regarded with the water company itself as the applicant, did all that lay in his power to declare the company to be a public service corporation and to destroy the water rights of these petitioners, for which water rights he had received the sum of $438,938.60. tion of law, issued subject to the rate-fixing power of the commission, and that therefore in so fixing the rates in derogation of these contracts no right of contract is violated. [4-6] "1. Treating first of the facts above set forth as establishing or failing to establish the public service character of applicant, it may at once be said that when it engaged to supply the town site and the succeeding city of Hemet with water for municipal and domestic purposes, and proceeded to do this thing, it became a public service corporation, at least in so far as the needs, present or "The next series of facts presented to the future, of the growing city of Hemet were commission comes, first, from the testimony concerned. But, of course, it does not folof Mr. Whittier as to the 'policy' of the water low, either in law or in reason, that because company, which was to sell its water to of this it had dedicated all its water to pubevery one that wanted water.' Mr. Whittier lic use. To-day the city of Hemet requires at the time he gave this testimony was 84 but 121⁄2 per cent., or at the utmost 3 per cent., years of age. But Mr. Whittier further of those waters. It would be little short of testifies that he is giving his evidence from ridiculous to contend that upon the 97 per his recollection, and that he is quite sure cent. remaining had been imposed the same the records are better evidence, and this, of servitude. Our decisions fully recognize that amongst those purposes. is one 'to supply the 666 The to sell water for purposes of private gain and not in so doing become a public utility. Thayer v. California Development Co., 164 Cal. 117, 128 Pac. 21. Further, that a company having a single and undivided supply of water (if that circumstance be considered of consequence) may devote its properties and a part of those waters to public service and may retain a part for the advantages of private sale, and not become a public service corporation as to all by virtue of the dedication of a part. Leavitt v. Lassen Irrigation Co., 157 Cal. 83, 106 Pac. 404, 29 L. R. A. (N. S.) 213; Thayer v. California Development Co., supra; Del Mar Water, etc., Co. v. Eshleman, 167 Cal. 666, 140 Pac. 591, 948. Manifestly the applicant did not be come a public utility merely by itself fixing the rates and charges for the water which it sold, nor could its submission to the jurisdiction of the Railroad Commission and its declaration that it was a public utility in the slightest affect the previously vested rights of these petitioners. Herein this case is broadly differentiated from that of Franscioni v. Soledad Land & Water Co., 170 Cal. 221, 149 Pac. 161. In the last-named case a private corporation had been delivering 'According to the theory of the plaintiff in water for private use under contract. It this case, whenever the owner of a water suppetitioned the proper authority to fix the ply determines to and does sell it for a price agreed on between himself and the purchasers, rates to be charged for this service. The it immediately becomes subject to public use, landowners who had been receiving water and any other person to whom it can be conunder private contract acquiesced in this veniently distributed in the same manner would have the right to petition and the rates were fixed. These the water on the same terms as the purchasers, a proportionate share of rates were acted upon by all the parties in and, if the supply is limited, the first purchasinterest without question or dissent. There- ers must divide with all others who may come after the company sought to amend its arti- in and claim a share. Under that theory, where cles of incorporation and declare therein a portion of it by sales to others, he thereby a person having a surplus of water parts with that it was supplying water as a private appropriates such portion to purposes of sale corporation and not as a public water com- and dedicates it to public use. This applicapany,' and this court held that it was with-in water and convert every sale thereof into a tion of the section would destroy private rights in the power of a private corporation to dedication to public use. We do not believe that change the character of its use, with the the Constitution was intended to have such efassent of the recipients of the water under fect or that it should be so construed. Article 14, taken as a whole, shows plainly that it was private contract, that this change had been intended to regulate the use of water approso effected, and, the property having thus priated and dedicated generally for sale and become stamped with a public use, it was distribution among an indefinite number of users. It could not have been intended to denot within the power of the corporation clare that a single sale of a part of his water alone to change that use back to a private by one having more than he needs would conuse, as it undertook to do. So while a pub- vert the use into a public use in which others lic service corporation cannot out of these could share. If a single sale could not do this, other sales of like character would not accomwaters impressed with a public use sell pri- plish it. The section must be understood to vate or preferential water rights, a private apply to cases where one has appropriated wacorporation can and may. Leavitt v. Lassen ter generally, for sale, rental, or distribution, Irrigation Co., supra; Byington v. Sacra- and not to cases where sales are made to particular persons at a fixed price by ordinary mento, etc., Co., 170 Cal. 124, 148 Pac. 791. contracts of purchase and sale. To compel such Of course the purposes avowed in articles subdivision and distribution of water supplies of incorporation do not fix the character of as this construction would entail would destroy the corporation in its future activities as be the value of all water rights. In this state the water supply is so small that large areas must ing a public service corporation. Such dec- go without irrigation entirely. Such water as larations of purpose merely serve to give there is must be applied, as far as it will go, in the corporation capacity to engage in such quantities sufficient to make the lands profitably productive. The principal benefit of irrigation public service if it shall so desire. Del Mar comes from its use in growing vineyards and Water, etc., Co. v. Eshleman, 167 Cal. 666, orchards. These require a large expenditure 140 Pac. 591, 948. and a permanent water supply to make them prises know that they must be ready always to profitable. If those engaging in such enterdivide their water supply with those in the vicinity who may subsequently choose to engage "So far as weight is to be attached to the purposes of the organization of the applicant as expressed in its articles of incorporation, "This provision of the Constitution has been in force 33 years. It has never been understood that it had the effect here contended for. There have been many instances in which the owners of large tracts of land have acquired water, conducted the same to the land, and sold and conveyed the land in small tracts to actual settlers with a proportionate share of the water appurtenant to the land, coupled with an agreement to continue the water supply at a fixed annual rate. Such a disposition is essentially a matter of private contract, and it shows no intent to create a public use.' "The quotations above given relieve from the necessity of any further exposition of the matter. This applicant did carry out this declared purpose by dedicating so much of its water to public use as was or might be necessary to supply the town of Hemet. Further than that it has not gone. Further, the articles of incorporation as to the purposes declare that the corporation will acquire its water and water right by purchase and appropriation,' both methods being wholly within the purview of private ownership of such rights when acquired. It is not without significance that there is omitted therefrom the declaration of the right to acquire by condemnation, which right runs only with a public service; and of similar significance is the fact that when this applicant, in the course of its activities, needed to acquire, and did acquire, certain rights of way, it did not undertake to do so by condemnation, but effectuated its purpose by purchase. therein, such enterprises would be discouraged, | v. Soledad Land & Water Co., supra, has althe development, growth, and progress of the ready been considered. In that case there state would be much retarded, and its produc- was an acquiescence upon the part of the tive capacity greatly decreased. holders of private contracts to change in use from private to public. Here the holders of such contracts are protesting and have protested from the moment that it appeared that their contractual rights might be impaired. Limoneira, etc., v. Railroad Commission, 174 Cal. 232, 162 Pac. 1033, was a case where the company was indisputably a public service corporation, but it had entered into two agreements which were asserted to be private and beyond regulation. It has heretofore been said that such private right cannot be carved out of a public use (Leavitt v. Lassen Irrigation Co., supra), and the decision of this court upholding the jurisdiction of the Railroad Commission was based upon this ground, this court recognizing that if a new appropriation had been made by the company, waters from which appropriation were to be devoted to this private use, it might well be held that the contracts were of private character. But, so reads the decision, "There is nothing to compel the conclusion that there was any new appropriation of water to enable the utility to satisfy the requirements of these contracts.' Palermo Land & Water Co. v. Railroad Comm., 173 Cal. 380, 160 Pac. 228, is of no value to the present consideration, since the contracts there under review in themselves provided for a rate which should be 'fixed by public authority.' And, finally, it may be added upon this matter that in Copeland v. Fairview Land & Water Co., 165 Cal. 148, 131 Pac. 119, this applicant here contended, and successfully contended, against the position which it now takes, the position there taken being that it was not a public service corporation. We do not cite this as being a determinative adjudication upon the question, but it serves at least to illustrate the changeable views which the applicant has entertained of its own activities, functions, and duties. In all respects vital to this consideration these certificates are of the character of those considered in Stanislaus Water Co. v. Bachman, 152 Cal. 716, 93 Pac. 858, 15 L. R. A. (N. S.) 359. In the Thayer Case, supra, it was decided that the sale in gross by a water company of water to a mutual water company was not a dedication of such waters to public use. In Marin Water & Power Co. v. Town of Sausalito, 168 Cal. 587, 143 Pac. 767, it was decided that a sale and delivery of water by a water company to a municipality owning "Upon this branch of the case, then, the its own water system, to be sold by the muconclusion is inevitable that the applicant nicipality to its inhabitants, was not a dediwas not, as to all of its water and properties, cation of such water so sold in gross to a a public service corporation, and that these public use so that the gross rates were subpetitioners entered into their contracts with ject to municipal regulation. It is not posapplicant, both parties to each contract act- sible to see how, in the light of the princiing as of right in their private capacities. ples upon which these adjudications are restNothing in the cases relied on by respondents ed, it can be held that these private conmilitates against this conclusion. Franscioni tracts with private individuals for a private [7] "To hold that property has been dedicated to a public use is 'not a trivial thing' (San Francisco v. Grote, 120 Cal. 60, 52 Pac. 127, 41 L. R. A. 335, 65 Am. St. Rep. 155), and such dedication is never presumed 'without evidence of unequivocal intention' (Niles v. City of Los Angeles, 125 Cal. 512, 58 Pac. 190). The character of the contracts evidenced by these water right certificates, the restriction upon transfer, the fixing of the acreage quantum, the enormous sum in the aggregate paid by these petitioners for their water rights, establish beyond the need of further discussion that the parties to those contracts believed that they were dealing in their private capacities and selling and receiving water for private use. But one suggestion here is sufficient. Is it conceivable that these landowners would have given Mr. Whittier and his associates a bonus of $438,938.60 for the right to use water, which right the law had given them without the expenditure of one dollar of it? supply of water upon their private lands was er. a dedication of such waters to public use. He deals with the public; he invites and is urgent that the public should deal [8] "2. The second position adopted by re- with him. The character of his business spondents, as above outlined, is that this ap- is such that under the police power of the plicant is a public service corporation, with- state it may well be subject to regulation, out regard to the question of the dedication and in many places and instances is so reguof its properties to public use, by virtue of lated. The preservation of cleanliness, the the definitions of such public service cor- inspection of meats to see that they are porations found in our law. To begin with, wholesome, all such matters are within the the Constitution, art. 12, § 23, declares that due and reasonable regulatory powers of the every private corporation furnishing water state or nation. But these regulatory pow'either directly or indirectly to or for the ers are not called into exercise because the public is hereby declared to be a public util- butcher has devoted his property to public ity, subject to control and regulation by the service so as to make it a public utility. He Railroad Commission.' Further, this section still has the unquestioned right to fix his of the Constitution declares that 'every class prices; he still has the unquestioned right of private corporations, individuals, or as- to say that he will or will not contract with sociation of individuals, hereafter declared any member of the public. What differenby the Legislature to be public utilities, shall tiates all such activities from a true public likewise be subject to such control and reg- utility is this, and this only: That the deulation.' And, finally, this section provides votion to public use must be of such charthat the right of the Legislature to confer acter that the public generally, or that part powers upon the Railroad Commission re- of it which has been served and which has specting public utilities is plenary and unlim-accepted the service, has the right to deited by any provisions of the Constitution. mand that that service shall be conducted. Pursuant to this constitutional definition and grant of power, the Legislature in 1913 (Stats. 1913, p. 84, c. 80) declared: "Whenever any * corporation sells, leases, rents or delivers any water to any person, firm, private corporation, municipality, or any other political subdivision of the state whatsoever, except as limited by section 2 hereof, whether under contract or otherwise, such person, firm or private corporation is a public utility, and subject to the provisions of the public utilities act of this state and the jurisdiction, control and regulation of the Railroad Commission of the state of California.' "And the Public Utilities Act (Stats. 1915, p. 115) defines a water corporation in the following language: ""The term "water corporation," when used in this act, includes every corporation or person, their lessees, trustees, receivers or trustees appointed by any court whatsoever, owning, controlling, operating or managing any water system for compensation within this state.' so long as it is continued, with reasonable efficiency under reasonable charges. Public use, then, means the use by the public and by every individual member of it, as a legal right. Such is not only the accepted significance of the phrase by the great weight of authority as expounded by Mr. Lewis (Eminent Domain, sec. 164 et seq.), but is the definition repeatedly announced by this court. Thus, in Pinney & Boyle Co. v. Los Angeles Gas & Electric Co., 168 Cal. 12, 141 Pac. 620, L. R. A. 1915C, 282, Ann. Cas. 1915D, 471, explaining that it is not the use which the consumer makes of the commodity which constitutes the test as to whether or not the owner or purveyor of that commodity is a public service corporation, it is declared: "It is the duty which the purveyor or producer has undertaken to perform on behalf of and so owes to the public generally, or to any defined portion of it, as the purveyor of a commodity, or as an agency in the performance of a service, which stamps the purveyor or the agency as being a public service utility.' "It must in this be recognized that the Constitution of this state, and the Legislature in pursuance of it, has undertaken to put out of existence any and all private rights in the matter of the rental or sale of water. "To the same effect is Thayer v. California So far as our Constitution and laws are con- Development Co., supra, while in Del Mar cerned the state has done this thing. There Water Co. v. Eshleman, 167 Cal. 666, 680, stands between it and its enforcement, so 140 Pac. 591, 596, it is declared that 'even a far as this court is concerned, only the Con- constitutional declaration cannot transform stitution of the United States, which, as the supreme law of the land, is, whenever it speaks, the supreme law of this state. [9] "What is a public utility, over which the state may exercise its regulatory control without regard to the private interests which may be affected thereby? In its broadest sense everything upon which man bestows labor for purposes other than those for the benefit of his immediate family is impressed with a public use. No occupation escapes it, no merchant can avoid it, no professional man can deny it. As an a private enterprise, or a part thereof, into a public utility and thus take property for public use without condemnation and payment.' [10] "Our Constitution and our statutory definitions above quoted therefore must be construed as applying only to such properties as have in fact been devoted to a public use, and not as an effort to impress with a public use properties which have not been devoted thereto. For if the latter be the true construction of our Constitution and statutes, then manifestly in their operation fere with private property or private contractual rights by force of article 1, § 10, and of the Fourteenth Amendment of the Constitution of the United States. If the first alternative be selected, then, for reasons already given, such parts of these properties as are affected by the contracts with these petitioners have not been devoted to public use and their private contractual rights must prevail. "For these reasons the determination, conclusion, and judgment of the commission that these petitioners' contractual and vested rights are subordinate to the regulatory powers of the commission is in excess of the commission's jurisdiction, and therefore void, and in so far the decree of the commis sion is annulled." Railroad Commission, the water company should be bound by its dedication, is held in Palermo L. & W. Co. v. R. R. Comm., 173 Cal. 380, 384, 160 Pac. 228, 229, where it is said by the court in bank: 66 *It appears that in December, 1912, the Palermo Company applied to the Railroad Commission to have its rates for water established, and that the commission made its order allowing an increase in the rates theretofore in effect. Opinions and Orders of the Railroad Commission, vol. III, p. 1247. The case, therefore, falls directly within the doctrine of Franscioni v. Soledad Land & Water Co., 170 Cal. 221, 149 Pac. 161, where we held that, as against the water company, such submission to the authority of the regulating body was effective to 'change the use from a private and particular use to a public use so as to make the service and terms of delivery subject to regulation and control by public authority.' No valid distinction can be drawn between the We concur: LORIGAN, J.; MELVIN, J.; Franscioni Case and the one before us." PalRICHARDS, Judge pro tem. ermo L. & W. Co. v. Railroad Commission, supra. In the instant case the owners of property costing $657,385 to reproduce dedicate the same to a public use, and the state, through its Constitution, its laws, and its duly accredited representatives, accepts and acts upon such dedication. It is held in the main opinion that such dedication of such property is ineffectual. If it is once conceded dedicated to a public use, it follows that the WILBUR, J. I dissent. The main opinion holds that our state Constitution, and laws passed in pursuance thereof, authorizing the Railroad Commission to fix rates for the use of water, are in conflict with the federal Constitution prohibiting the impairment of contracts, and are to that extent void and of no effect. It concedes that the state has exerted to the full all its sovereign pow-that the distributing system is, or has been, ers to regulate and control the rates for the use of water, but holds the state to be impotent in the presence of the private rights to water and its distribution in this case. I concur in the main opinion in so far as it holds that the rights to water (one-eighth inch per acre) is a private right. It was so held in Thayer v. California Development Co., 164 Cal. 117, 128 Pac. 21, and the subsequent constitutional amendment and statute must be held to have been adopted in view of that decision. But the decision of the Railroad Commission does not interfere with that right. To an understanding of the case it is essential that some facts disclosed by the record be stated in addition to those set forth in the main opinion. The contracts under which the petitioners claim, in addition to securing to them a certain amount of water, require the water company to deliver such water "at such points on the pipes or conduits of the party of the first part (water company) as may be nearest the land" of the grantee. The contract thus recognizes that the distributing system being burden of the maintenance thereof, inlongs to the water company. For this sys- cluding their proportion of the expense of tem the water company has expended $447,- distribution of the water contained therein, 000, paid in by its stockholders. It has also particularly as against the public also servreceived $438,938.60 from the sale of its wa-ed thereby. The Railroad Commission finds ter, a part or all of which was expended in that the system has at all times been run at payment of current expenses. It would cost a loss. Neither the public nor the private $657,385 to reproduce the distributing system. That the water company has done all in its power to dedicate its water and its distributing system to a public use is held in the main opinion, and that, having con If we users of water have paid their proportion of the expense of maintenance. The annual loss, including depreciation, now approximates $30,000. The proportion thereof properly apportioned to the owners of water cer |