STORIES OF STANISLAUS
A Collection of Stories on the History and Achievements of Stanislaus County
Sol P. Elias
Having bid for the construction of the La Grange dam according to the specifications prepared by Luther Wagner, the engineer of the Modesto District, Mr. Gorrill modified the same in the following letter to the boards of directors of both districts:
San Francisco, June 9, 1891.
To the Board of Directors of the Turlock and the Modesto Irrigation Districts of Stanislaus county. Gentlemen: - I will proceed and build the dam across the Tuolumne river for your districts under the following terms: You to pay me cash for the work as per my bid and as the work progresses, $150,000. And for the rest of the work you are to pay me in bonds out of the first series of $400.000 of the Modesto Irrigation District and first series of the Turlock Irrigation District of $600,000 at the rate of ninety cents (90) cents on the dollar. Provided, that by the time the $150,000 worth of work has been done there has been no adverse litigation and thereafter should there be any invalidation of the bonds, I am at liberty to stop work at once.
The above proposition is based on the condition that the contract is awarded and entered into within ten days from date so as to allow me to do the work this season.
R. W. GORRILL.
The bid was jointly accepted under the modified agreement to accept bonds of both districts at the ninety per cent basis, with one change; instead of paying Gorrill $150,000 in cash, he was to receive what money the boards might have on hand after meeting all their current obligations and present liabilities and the balance then due to be paid in bonds of the districts at the agreed price of ninety cents.
Gorrill was required to provide a bond of $85,000. This contract was signed by all parties on June 23, 1891. The contract was then given to the Modesto Grange Co. for 10,000 barrels of cement of the K. B. & C. variety, with the privilege of 5,000 extra at $3.45 landed at Waterford. Gorrill gave notice at this meeting that he would require 250 barrels of cement at the dam site on July 5th and 50 barrels daily during July and a greater number during September. The cost of the dam was $550,000. Its construction was detailed in a previous chapter. Gorrill proceeded with the work of the construction of the dam immediately.
At various times during the construction of the dam, and during the early work of the building of the canals, stopped later by litigation, the district was hard pressed for money with which to carry on operations. Bonds were frequently sold but generally the contractors accepted the bonds of the district in exchange for the work. While this was not strictly in accordance with the provisions of the Wright Law this procedure was made necessary by the litigation in which the district was involved. Frequently so-called wash sales were made which showed an apparent compliance with the law. The early directors were confronted with hard financial problems touching the management of the district affairs which they solved in novel ways. They were working out the destiny of a great enterprise. In the light of subsequent events, with the tremendous handicap under which they were then laboring, they were undoubtedly justified in the practice of the expedients to which they resorted.
In 1891 sections of the main canal from the dam to the eastern boundary line of the district were constructed to J. D. McDougald, Stockton; Gray Bros., San Francisco, and to W. A. Snedeker, Los Angeles. For the next two or three years these contractors pursued their work under many disadvantages. They generally accepted the bonds in payment or bid for bonds and accepted the proceeds as payment. It was a hard struggle on part of both the contractors and the district to secure the completion of this work.
McDougald's contract was let in January, 1891. In consequence of the pendency of the case of Tregea vs. the Board of Directors of the Modesto Irrigation District in the Supreme Court of California,
(88 Cal. 334) in which the validity of the issue of the bonds of the district was involved, work was not commenced on this contract until March when the decision favorable to the district was rendered. This action was instituted by the directors of the district under the provisions of a supplemental act passed in 1889, (Statutes of 1889, page 212) to obtain a judicial confirmation by the Superior Court of the validity of $400,000 of the $800,000 bonds authorized by vote in 1887, which the directors had ordered to be issued and sold. Under this act, the Court was given power to determine the validity and legality of the organization of the district and of all matters affecting the validity of the bonds and the order for their sale, and to confirm the proceedings in whole or in part. In the Superior Court, Tregea, as a property owner and as the representative of the anti-irrigation element, contested the action and set up a number of objections to the confirmation. The Superior Count sustained the district in all the proceedings under review. Tregea then appealed to the Supreme Court. On March 19, 1891, the Supreme Court gave judgment affirming the regularity of the organization of the district and the legality and validity of its order for the issuance of bonds in the sum of $800.000 and for the sale of the $400,000. In its opinion, the Supreme Court swept aside all the technicalities and objections raised by the anti-irrigationists and again sustained the constitutionality of the Wright Law which had been previously declared in the case of Turlock Irrigation District vs. Roger M. Williams (76 Cal. 360). The other contracts were let after this decision and all proceeded with some degree of rapidity toward completion. They were all finished in 1893.
It was in 1893 that the first crisis in the affairs of the Modesto District arose, which taxed the ingenuity of the directors. It was necessary to purchase $20,000 cement to complete the dam. The district was without funds. The bonds were depressed owing to litigation. So important was the matter to the life of the district and to the success of the enterprise that the board held a public meeting to discuss the means of raising the necessary funds. Two propositions confronted the district. One was to raise the amount necessary by a special tax. The other was to persuade public spirited citizens to subscribe for the amount in bonds.
This proposition was given to directors Finely and Fulkerth to handle. At a subsequent meeting held to definitely decide which alternative the district would adopt, these directors reported that sufficient bonds had been taken by citizens to provide the cement. The following were the persons who, in this critical period, responded to the call of the district in the purchase of bonds and thereby made possible the completion of the La Grange dam; A. Hewel, F. A. Cressey, G. D. Plato, I. E. Gilbert, A. Meyer, E. B. Beard, C. R. Tillson, Dr. J. W. Remington, P. F. Morton, William Shoemaker, B. Schmidt, C. C. Wright, J. F. Tucker, J. D. Bentley, Isaac Ripperdan, A. C. Lander, Garrison Turner, Mrs. M. E. Tucker, J. D. Bentley, Wood & Turner, J. F. Kerr, Joe Davis, N. E. Leek, W. F. Coffee, Henry Voight, A. W. Root. These names constitute the first roll of honor in the annals of the Modesto Irrigation District. The public spirit of these men furnished the money to complete the dam.
The election of February 1, 1893, returned G. D. Wootten, Isaac Perkins, A. S. Fulkerth, W. H. Finley and the anti-irrigationist, R. J. McKimmon, to the directorate. A. G. Carver had died in 1891. Mr. Finley was made president of the Board. Mr. Perkins died in 1893 and J. S. Alexander was appointed to succeed him. On January 18, 1894, R. W. Gorrill notified the Directors that the dam was completed and G. D. Wootten was appointed by the board to receive possession on behalf of the district. G. R. Stoddard was appointed treasurer in 1894.
For the succeeding several years there was constant agitation by the anti-irrigation association, the filing of numerous suits in their behalf that assailed the constitutionality of the law and the regularity of proceedings taken under it. The legal department of the Defense Association, as the anti-irrigationist organizations styled itself, worked overtime in developing methods of attack against the Wright Law and the Modesto District.
The election of February 11, 1895, returned D. G. Kerr, Spencer McAllister, F. C. Davis, Samuel Gates, and W. W. Carter, as directors. Kerr was made president of the board. Samuel Gates defeated McKimmon, D. G. Kerr, a farmer of known integrity, succeeded G. D. Wootten. F. C. Davis, one of the early stalwart irrigationists, succeeded A. S. Fulkerth.
W. W. Carter, at heart a pro-irrigationist but by performance an anti son-in-law of C. C. Baker, leader of the Defense Association defeated W. H. Finley.
The election of February 3, 1897, gave the district the following directors: B. P. Hogin, Frank A. Cressey, F. C. Davis, C. C. Baker, and W. W. Carter. Aside from the return of F. A. Cressey to membership on the board of directors, it is to be noted that this election gave the board one of the most active representatives of the Defense Association in the person of C. C. Baker.
There were thus two pronounced anti-irrigationists on the board C. C. Baker and W. W. Carter, the latter being elected President. This board refused absolutely to proceed with the construction of the canals or other work. This course caused the resignation of Cressey and Carter. Taking advantage of the apathy into which the electors of the district had fallen, the anti-irrigationists seized the opportunity presented in securing the appointment of members of the Defense Association to the directorate of the district. John Adams was appointed to succeed Frank A. Cressey and L. A. Finney to succeed W. W. Carter by the Board of Supervisors. This gave the anti-irrigationists the majority of the directors of the districts - a valuable asset which they used to the detriment of the district and which ultimately spurred the irrigationists to such an extent that drastic measures were used to dislodge them. This majority refused to promote any of the district's work, approved the institution of the quo warranto suit instituted by former Director R. J. McKimmon, and refused to make any tax levy.
The election of 1899 gave a majority to the anti-irrigationists, the men elected being: T. K. Beard, F. C. Davis, irrigationists; John Adams, C. C. Baker and L. A. Finney, anti-irrigationists. This majority favored inaction the difficulties created by themselves and their election, which they construed into an endorsement of their policy, being their justification for their course. The general apathy, together with the small vote in the country divisions, favored the active minority. The Defense Association had now reached the goal of its striving. The Modesto divisions constantly returned pro-irrigation directors notwithstanding the intimidating threats of the anti-irrigationists to boycott the town.
This control of the board of directors produced a most serious condition in the district.
It was fortunate that after the organization of the Modesto District strong irrigation directors, despite opposition, were able to carry forward to completion the construction of the La Grange dam. Almost at the birth of the district the anti-irrigationists perfected a compact organization for the purpose of assailing the constitutionality of the Wright Law, of contesting every movement of the directors and of every proceeding. Though this association represented but a small minority of the voters, it was powerful enough to frustrate for many years by litigation any district progress toward consummation of the project, to finally secure control of the board of directors and for a period to prevent the district from pursuing any activity in furtherance of the purpose of its organization. It possessed extensive ramifications in the Turlock District. C. W. Eastin was its legal spokesman. By every legal artifice and scheme he harassed the officers and impeded the work of the district. The purpose of this guerrilla legal warfare was to absolutely destroy the Modesto District by involving it in such a maze of legal difficulties that its bonds would become worthless security, that no bidders would appear for any contracts, that no work would be done on the canals and that such a sentiment would be created that the people would finally decide to overthrow the entire organization and permit it to revert to private ownership.
Through its attorneys this Association appeared in the suit of Turlock District vs. Roger Williams that tested the constitutionality of the Wright Law. It entered a contest in Tregea vs. the Board of Directors of the Modesto Irrigation District. After the Supreme Court had decided this case adversely to the contentions of the anti-irrigationists, Tregea, assisted by the Defense Association, upon the pretext that a federal question was involved, carried the action to the Supreme Court of the United States. Here the case lingered for over five years. It is needless to say that the pendency of this action on appeal impeded the work of the district because of the uncertainty involved in the probable determination of the Supreme Court in its final disposition of the case.
The anti-irrigationists received considerable encouragement in their contests from the decision of Judge Erskine M. Ross in the case of Bradley vs. the Fallbrook Irrigation District, decided on July 22, 1895, (68 Fed. 948) in the Circuit Court of the United States for the Southern District of California. This action came into the United States courts because of diversity of citizenship. Bradley brought suit to enjoin the execution of a deed under the sale of property made by the collector of the district to satisfy a delinquent assessment against the property levied under the provisions of the Wright Law. The principal ground of the contest was the alleged unconstitutionality of the act involved. It was contended that the act was in conflict with the state constitution in that it violated the provisions that no person shall be deprived of his property without due process of law and that it further provided for the taking of private property for public use.
The federal court refused to be bound by the state decisions upholding the constitutionality of the Wright Law as not violative of the federal constitution nor as to whether or not the uses on behalf of which the state powers were sought to be exercised were of such a nature that they could be legally exercised. It held that the use of water for the purpose of irrigation in the manner provided by the Wright Law was not such a public use as brought the law within the constitutional prohibitions. An immediate appeal was taken to the Supreme Court of the United States. On November 16, 1896, this court overruled Judge Ross and in a sweeping and far-reaching decision forever put at rest any question of the constitutionality of the Wright Law by sustaining it in all its aspects. (Bradley vs. Fallbrook Irrigation District, 164 U. S. 112). The case of Tregea vs. the Modesto Irrigation District was dismissed because no federal question was involved, upon the authority of the Fallbrook case.
As early as 1891, the Defense Association, through its members, secured injunctions from the Superior Court of this county restraining the collection of taxes and the selling of property for delinquency. These injunctions suits continued to be filed yearly until 1895-6 when blanket injunctions were sought and issued by the Superior Court of Stanislaus county restraining the collection of any taxes at all in the district. As a consequence of these activities of the Defense Association, during the years 1897 to 1900, no tax levies were made in the district.
The result contemplated and anticipated from this course of procedure by the Defense Association necessarily followed. The work of the district absolutely ceased. There was no effort to complete fell into decay and ruin. There was a period of stagnation and industrial depression in the district as well as in the county. This serious condition created some sentiment unfavorable to the district plan of irrigation. While the pro-irrigationists were awaiting final decisions in several suits involving certain phases of the Wright Law which were expected to be favorable, the Defense Association, seeking to take advantage of the situation which its members had deliberately created, seized the opportunity to promote a plan for the disorganization of the district. It was a cunningly contrived movement.
In 1896 at a tax payers' meeting held in Modesto which was attended by a large number of people owners of land in the Modesto District resolutions were adopted favoring a scheme whereby an irrigation district could surrender its canal and works to persons who would deliver to the district all of its outstanding bonds, and permitting the district to dissolve on the payment of its outstanding indebtedness. It was declared the sense of this meeting that a law should be passed by the legislature permitting the directors of an irrigation district to call an election to refund legally outstanding bonds for others at par in exchange therefor, the latter to be payable in a term at from forty to fifty years. This was designed to nullify all bonds issued in exchange for work or materials. A constitutional amendment was suggested that none but property owners be permitted to vote on irrigation matters. These resolutions were vigorously opposed by such men as P. J. Hazen, Judge A. Hewel, John Brichman, J. R. Broughton, Frank A. Cressey, James Johnson, J. W. Davison, W. H. Hatton, L. L. Dennett, and other ardent irrigationists. They were supported by C. W. Eastin, the attorney for the Defense Association, C. C. Baker, Hiram Hughson and other members of the Defense Association. A. F. Underwood acted as chairman and Robert Miller as secretary of the meeting. The following committee was appointed to take up the matters discussed and moved with the bondholders;
Frank A. Cressey, James Johnson, J. W. Davison, irrigationists, Hiram Hughson and C. C. Baker, anti-irrigationists.
At a subsequent meeting held in Plato's Opera House in January, 1897, Frank A. Cressey reported the correspondence with the bondholders. The bondholders were willing to entertain the proposition made by the Tax Payers' meeting, if it could be legally done, and signified a willingness to surrender the bonds upon the district surrendering the legal title to all the properties held by the Modesto District together with all rights of way owned by the district and such as may be necessary to complete the system of irrigation as shown and contemplated by the engineers of the district.
The following was the committee's report:
Modesto, January 9, 1897.
Mr. Underwood, Chairman of Taxpayers Convention;
Dear Sir Your committee which was appointed to confer with the bondholders of Modesto and Turlock Districts have conferred with said bond-holders and herewith submit their propositions, and the correspondence leading up thereto, which is herewith attached, and is as follows:
Modesto, December 28, 1896.
C. F. McCarthy, San Francisco.
Dear Sir -I have been appointed as secretary of a committee representing the taxpayers of Modesto and Turlock Irrigation Districts, the objects of said committee being to ascertain, if possible, whether the bond-holders would entertain a proposition to take form the districts all of their works, realty and water rights and the districts to receive in return all of their outstanding bonds, and the taxpayers to pay up all back taxes and be relieved of all further liability.
I write to you in this matter as being a representative bondholder and one likely to know something as to what conclusions we could come to, and as Secretary of the bond-holders' meeting of San Francisco, and if such a proposition could be brought about, what legislation would be necessary. Hoping to hear from you soon, I am,
Frank A. Cressey.
San Francisco, December 31, 1896.
Frank A. Cressey, Modesto, Cal.
Dear Sir Your letter of the 28th inst. to Mr. McCarthy was referred to me as President of the Bond-holders' Association, to answer.
I had consulted with bond-holders and their representatives, holding bonds of the Modesto and Turlock Irrigation Districts, approximating $1,250,000, respecting the proposition of endeavoring to come to some arrangement and agreement with the people of those districts by which, if the same could be legally accomplished, the holders of the bonds would surrender the same to the districts upon their transferring to said bond-holders or Trustees to be appointed, valid and legal title to all properties now held by the districts, together with all rights-of-way now owned and such as may be necessary for a completion of the entire system and contemplated and shown by the engineers of the districts. The bondholders so consulted by me were unanimous in their approval of such a plan, and would agree to such an arrangement, if it could be perfected, on these lines, but as a condition precedent, they would require that all the outstanding debts of the districts should be paid (except the bonds) and that all judgments existing and suits pending should be satisfied and dismissed, and that all defaulted interest should be paid in full, and that at least 15,000 acres should be guaranteed in each district that would take water at an annual cost of $2.50 per acre.
At this point in our proceedings the State Supreme Court rendered its decision in the case of Hughson vs. Crane, and the bond-holders came to the conclusion that the interest now due would not be paid, and therefore stopped all further action on this line, with the intention of going to the federal courts for redress, but if the people of the districts wish to take the matter up, paying the interest and dismissing the suits, I am directed to proceed and aid them in obtaining any legislation, or in any other way, to assist them that will not in any manner effect the interest of the bondholders, as they now stand, and to proceed in all matters as rapidly as possible to perfect the trade, provided our attorneys are satisfied with the title that can be secured and the right of the districts to make transfers.
R. W. Gorrill
Modesto, January 5, 1897.
R. W. Gorrill, San Francisco:
Dear Sir: - Yours of the 31st received and I have submitted same to the committee, and we are willing to proceed in the matter, but we think there are two requirements which we do not think it possible for us to comply with. First, the granting of the rights-of-way; second, the securing of 15,000 acres of land in each district for water. I think that finally we could settle the rights-of-way by having the farmers sign up an agreement to give the rights-of-way, which I think in most cases could be readily secured, but the signing for the land would be a much more difficult matter as in the case of our district it means one-fifth of the entire district. The land is not yet in a condition to receive the water and at present our farmers are in such a condition financially that they have not the necessary funds to put it in shape to receive the water.
We should like to see the draft of a bill as would be satisfactory to the bond-holders for the transfer of the works and, if it is agreeable to you, we will try and make arrangements to urge its passage by the legislature now in session. There will be a public meeting of farmers next Saturday.
Frank A. Cressey.
You committee would recommend that you appoint a committee whose duty it would be to collect the necessary funds and employ a consulting attorney of known ability on constitutional law, from whom to get an opinion as to whether a law passed authorizing the people to dispose of the property of the districts would be constitutional, and if so to continue our investigation with the bond-holders, and confer with their attorneys in framing a bill to be presented to the legislature.
Your committee are of the opinion that this bill before being presented to the legislature should be approved by the bondholders and our attorneys, so that we could all (bondholders and taxpayers) go to the legislature and ask for its passage. And your committee are of the opinion that while Mr. Gorrill has asked for more than we can give in the way of water-rights and rights-of-way, that it would not be well to abandon the proposition of the sale until all means have been tried, and as you see by our second letter
we have asked for better terms and hope to get them.
It is absolutely necessary that ll the parties hereto should act in full accord, as without concert of action it will be impossible to come to any definite result.
While it was generally believed that the demands of the bondholders could not be complied with, this movement, gathering what impetus it possessed from the almost inextricable maze of difficulties created by the activities of the Defense Association, represented the one supreme effort of the anti-irrigationists to destroy the district through the force of public sentiment. The subsequent rapid march of events nullified this effort and created conditions which terminated in a compromise with the bondholders and the completion of the entire irrigation system in the Modesto District.
Transcribed by: Jeanne Sturgis Taylor.
Source: Elias, Sol P., Stories of Stanislaus A Collection of Stories on the History & Achievements of Stanislaus County. Modesto, CA. 1924.
© 2012 Jeanne Sturgis Taylor.