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suggest possible remedies in such legisla- and exclusive private rights could be action.

quired only by special Royal Privilege or General Sources of the Law :-In most an immemorial user. Pan-American countries, with the excep- Colonial Law :-While generally follow-. tion of the United. States, the sources of ing the Spanish law, the Colonial private the law of water rights are, as other phases law reserved in the King the dominion of of their laws, Spanish law. The funda

The funda- rivers in America ; but laws of the Indies mental principles of the Spanish law, as made waters, not granted to private parapplied in these countries, was further con

ties, common to all. Confusion existed in firmed or modified by the introduction into

the Colonial law and was increased by the their Colonial law of certain principles of introduction of the modern Codes based on the French law. Further modifications the French Codes; and it is only in very have been caused by local and partial rec

recent years that the law has made any ognition and adoption of principles of law marked progress toward the solution of the which are more peculiarly those of the puzzling questions left open by the Codes, United States, where the law of waters is

as to the effect of the large arbitrary powers generally founded upon that of the English of granting special concessions exercised by law. But in the United States, wide modi

dictatorial governments. fications from the English law have been

United States Law:- In the United made to suit the physical conditions pecu

States there are 20,000,000 kilowatts of liar to our country and not characteristic

water power so situated as to be comof the mother country to which the English mercially feasible for development, that is, law was adapted.

susceptible of utilization at a profit, in case Spanish Law :-Until the independence, only reasonable conditions to development Spanish law was in force in Spanish Ameri

were imposed upon the investor. Of this ca. Since then it has been modified by number only about one-fourth are actually various codes modelled largely on the Na-developed, and the other three-fourths are poleonic Codes. The Siete Partidas, the The Siete Partidas, the unnecessarily running to waste.

Of this great medieval Code, divided "things" into

wasting water-power energy 75 per cent common things (comunes);—those belong is located upon navigable streams, and is, to private persons,—and those consecrated

therefore, under the laws of the United to the service of God. Common things States, either directly or indirectly, subwere divided into (a) those common to all ject to Federal legislation. This immense living creatures, as the air, rain water, the

waste is due, primarily, to deficiencies in sea and its shores; (b) those common to Federal legislation, and to a great extent all mankind, as rivers, ports, and high- also, to defects in State legislation. ways; and (c) the common property of Federal Legislation :- In the United cities and towns to be used only by the in- States, the Federal government is one of habitants thereof, as fountains. Private expressly limited powers, all other powers rights in waters were recognized, but some of legislation and control being expressly rivers were taken to be the property of the reserved to the several States. The power King. Mill dams could be erected in public of the Congress to regulate water powers or private streams under a grant from the on navigable streams arises solely from its King. The ownership, use, and enjoyment constitutional power to "regulate comof waters which arose and died within the merce" between the States. It may, thereconfines of one estate, belonged to the own- fore, supervise water-power structures in er of the land. The theory of government-navigable streams, in order that they may al control of rights in rivers increased. not interfere with navigation. But such especially for the protection of navigation regulations and statutes have been unrea

sonably and unnecssarily restrictive of be removed and water-power development water power development, because they encouraged. place prohibitive burdens upon private in- Water Powers at Government Navigavestors, not necessary for, and not consis

tion-Dams: The Federal Government tent with, reasonable protection of naviga- sometimes builds, at its own expense, or tion interests.

in co-operation with private investors, navWater Powers on the Public Domain:- igation dams where there is an incidental Permits for development of water powers water-power development of a size in exon the public domain are granted by the

cess of that necessary to operate the navDepartment having the lands in charge, igation-dam. Where the Government has and are revocable at will They are sub-acquired all the riparian rights, such excess ject to such conditions as the Department

water power belongs to the Government may impose, not only when the permit is

and can be leased to private users on such granted, but subsequently thereto. There terms as can be obtained; and thus the inis no power to make terms and conditions

vestment-cost to the Government of navifree from unlimited uncertainties as to ten

gation improvements may be diminished.

In some instances the cost of improvement ure, and as to the burdens to be borne by the investor. Private capital has halted be

for navigation alone would be prohibitive, fore such conditions; and, out of 5,000,000

and it would also be prohibitive for water

In such cases kilowatts of water power on the public power development alone. domain which are capable of commercial

the policy is, to make a co-operative agreedevelopment, less than one-tenth has been

ment between the private investor who dedeveloped.

sires the water-power development and

the government which desires the navigaWater Powers on Navigable Streams :

tion development; and both interests are Under its power to regulate commerce, the served, at a reasonable investment-cost, by Congress, in order to protect navigation in- such co-operation. terests, has passed certain “Dam Acts”,

State Legislation - The Federal right of with reference to water-power dams on control for protection of navigation is paranavigable streams. Such structures are

mount to the right of State control of prohibited except by express consent of the

streams, and also to the rights of individCongress and under conditions imposed by uals. Subject only to this paramount Fedstatute and by the Department of War,deral right, the rights of the States and of whose approval of the structures and the

the individuals thereof to develop and use terms of the permit must be obtained. By

water powers of both navigable and unthese Acts the term of the consent cannot navigable streams, is fixed by the property exceed fifty years, and at the end of that

laws of the respective States. period the investor has no rights. The

In most States east of the Mississippi power of revocation is reserved without

River the English common law of riparian adequate protection to the private invest

rights prevails, and the private owner of ment made under the permit. There is no

the riparian land has the right to develop limit fixed as to the possible conditions and burdens which may be imposed as part of

and use the water powers appurtenant

thereto. In other States, west of the Missthe permit or which may be added thereto

issippi River, the law of riparian rights has afterwards.

been either repudiated or modified. There These acts have been prohibitive of the rule of right by prior appropriation water-power development. The present generally prevails, and the uses of water administration is proposing remedial meas- are subject to appropriation rights accordures, by which obstacles to investment willing to the law of the State.

The tendency of State legislation with due largely to the location of undeveloped reference to water powers is more and water powers at too great a distance from more that which has been noted to exist populous communities to make transmission in the case of Federal legislation. The at the present time feasible. The same private property rights of riparian owners limitations of transmission, preclude the are attempted to be confiscated by legisla- great population centers of the cities of tion which views the control, and even the Buenos Aires, Montevideo, La Plata, and ownership, of water powers within the others, from utilizing the water powers on State, as belonging to the State or to the the streams flowing into the Atlantic from public, and as public resources for the the Eastern slope of the Andes. purposes of revenue. This theory of State

In the Argentino-Uruguayan country, the legislation is also repugnant to the property great Mendoza River has a fall of 9,000 rights of individuals and has discouraged feet in a distance of 100 miles, which preinvestments of private capital in water

sents water-power possibilities unequalled power development.

anywhere in North America, except perWater Powers in South America :- haps in Alaska. There is, at the present South America, while affording magnificent time, demanded by the population and the water-power possibilities, is more sparingly industries of the surrounding country, withsupplied with oil and coal than any other in easy transmitting distance, over 200,000 of the continental land bodies of the world, kilowatts of power, which is far less than with the possible exception of Africa. This the capacity of the Mendoza. southern continent is favored with the nat- In British Guiana, the Potaro River preural resources of coal and oil to only a com- sents the highest fall of great volume in paratively insignificant degree. On the the world. The river, 300 feet wide, drops other hand, water powers are found in al- 700 feet, and the immense energy from this most every part of South America, the

cataract is wasting until increase in popuPampas country and the rainless district of lation and in industrial development shall Northern Chile being among the few ex- create a demand warranting the expense of ceptions.

the long transmission lines necessary to In Chile, there are occasionally fuel fam- bring the power to a market. ines, from lack of coal and oil fuel, causing Defects in Spanish-American Laws:loss and suffering. Nevertheless, it is the But physical obstacles and the lack of apmost favorably located country in the world preciation of the opportunities open to comfor easy and comparatively inexpensive mercial development are not the cause, in hydro-electric development. But such de- these southern countries, of the waste of velopment has been slow.

water-power energy, the utilization of In Peru, which has more coal and oil which is already commercially feasible. As resources than other South American in the United States, the first requisite for countries, the lack of transportation facili- the promotion of water-power developties makes the price of such fuel generally ment, and, therefore, for the prevention of prohibitive. There, however, the practical waste of this natural resource, is legislaopportunities for water-power development tive encouragement to private investors, are very great, and the 75,000 kilowatts al- who must furnish the capital for hydroready developed are insufficient to meet the electric development. The hazards incident present, unsupplied demand.

to such investment, even under the most In Bolivia, Ecuador, Colombia, Vene- favorable laws and regulations, are very zuela, and Paraguay, little has thus far been great. But the physical hazards may be accomplished in hydro-electric develop- overcome or diminished. Before such ment, but this retardation of development is dangers capital does not show timidity.

What capital demands in such investments rived from the utilization of water powers, is certainty of tenure, and security from is an assertion that natural water powers confiscation, sufficient to warrant depend- are intended to produce only for the pubence upon reasonable returns.

such se

lic treasury. Such a view of water-power curity can only be afforded by laws, which, resources leads to the legislative policy of at the same time that they protect the in- imposing by statute the utmost burdens terests of the public, also protect the in- possible, and even impossible burdens, upon vestments which shall be made in further private investment. Experience has demance of the public interest in the utilization onstrated that utilization of wasting water of water-power resources.

powers cannot be accomplished by their deIn none of the countries of Spanish-velopment by the public authorities; but America are the laws formulated in such

only through the capital of private investors. way as to attract private investment. The Such investors, however, rightly demand fact that there are already such investments

that security for their investment which only indicates the certainty of much greater

shall afford to them reasonable protection development in the immediate future in against confiscation and loss of their investcase unreasonable legislative hazards to ment, and against failure to receive fair investment are decreased or eliminated. returns therefrom.

Water Rights in Spanish-American There are millions of dollars of capital in Countries :-In the remaining part of this the hands of American financiers ready for paper is summarized the laws and regula- investment in water-power developments, tions of water rights in the countries of not only in the United States but in all of Argentina, Chile, Colombia, Cuba and Porto the Pan-American republics, but which are Rico. Uruguay, Venezuela, Brazil, and withheld from such investments because of Mexico.

the financial obstacles presented in these Conclusion: It is apparent that the con

various countries through an almost uniservation of water resources, through the

versal absence of a legislative policy which utilization of the wasting water powers of will allow such investments to be made with the Pan-American countries, including the

reasonable safety. United States, can only be accomplished by

ROME G. BROWN. the adoption of a legislative policy which Minneapolis, Minn. shall invite private investment in such enterprises. The universal fault with existing policies of legislation, in these matters, is, that the prospective investor, asking for a

FRAUDULENT CONVEYANCES-CLAIM

FOR TORT. grant, or concession, or permit, is viewed as one asking, for his own private benefit,

HENRY V. YOST, et al. a gift from the public. The theory is too much prevalent that, because water re- Supreme Court of Washington. Nov. 12, 1915. sources are a natural resource, they are, for that very reason, a purely public resource,

152 Pac. 714. and not by nature or by law for develop

A claimant ex delicto is a "creditor," withment in any other way than through the

in the meaning of the rule that conveyances may direct supervision of public authorities and be set aside when made to defraud the grantor's for the exclusive and direct benefit of the

creditors. public at large. But water powers are local in their very nature. The assertion of a

ELLIS, J. In February, 1911, A. H. Yost and right of benefit

J. W. Day, sheriff of Yakima countv

1912, Yost and wife were indebted to the Outlook State Bank in the amount of $3,300. On that day they executed to H. E. Schroeder, cashier of the bank, and wife, a chattel mort. gage covering their personal property, and a quitclaim to their farm near Outlook, and received from him a trust agreement, which declared that the property was deeded to Schroeder, to be held by him in trust for Mrs. Yost, and covenanted that upon demand the property would be reconveyed to her, or to whomever she should direct, for her separate estate. Subsequently Henry sued Day and Yost for the conversion of the sheep seized by them, and on February 25, 1913, the jury in that action returned a verdict in favor of Henry for the value of the sheep. Judgment upon this verdict was entered by the clerk, but no formal judgment was ever signed and entered. An execution was issued upon this judgment directed against the property of Yost, and returned by the sheriff nulla bona.

on

The defendant thereupon moved for dismissal on the ground that the plaintiff had not proved a lien against the defendants, and that he had proved no fraud. The case was reopened to permit evidence of the value of the property, and at the close of this testimony defendant renewed his motion for dismissal, which was refused. The trial judge gave a written opinion, in which he concluded that Henry had failed to prove that he was a creditor of Yost when the quitclaim deed and trust agreement were executed and delivered to Schroeder; therefore the burden was him to prove that Yost executed the deed to defraud subsequent creditors, and that, as he had failed to do so, the action should be dismissed, and a judgment of dismissal with prejudice was accordingly entered. A timely motion for new trial was made by the plaintiff and denied by the court. A motion to modify the judgment, to make the dismissal without prejudice, was likewise denied. This appeal is from the order denying the motion for a new trial, or, in the alternative, for a modification of the judgment, and from the judgment as entered.

[1, 2] The right to have conveyances made with intent to hinder, delay and defraud creditors set aside has long been recognized as a part of the common law of this state. Wagner v. Law, 3 Wash. 500, 28 Pac. 1109, 29 Pac. 927, 15 L. R. A. 784, 28 Am. St. Rep. 56. To attack the validity of a conveyance, the person asserting the fraud must be one who has been injured by the fraud; and accordingly a creditor of the debtor may so attack the convey

A conveyance made without consideration is presumptively fraudulent as to existing creditors of the grantor. However, there is no presumption that such a transfer was made with a view to defraud subsequent creditors. It becomes material, then, to determine whether Henry was a creditor of Yost and wife when the deed to Schroeder was executed.

[3, 4] It has been our uniform holding that a claimant ex delicto is a creditor, within the meaning of the rule that conveyances may be set aside when made to defraud creditors of . the grantor. Bates v. Drake, 28 Wash. 447, 68 Pac. 961; Sallaske v. Fletcher, 73 Wash. 593, 132 Pac. 648, 47 L. R. A. (N. S.) 320, Ann. Cas. 1914D, 760; Allen v. Kane, 79 Wash. 248, 140 Pac. 534. Had Henry proved that his cause of action existed when the deed was given to Schroeder, he would have established a prima facie case of fraud, and the burden then would have been on the grantor and grantee to prove the validity of the corneyance.

On July 10, 1913, Henry commenced this action against Yost and wife and Schroeder and wife. The complaint alleged the institution of the action by Henry against Yost and Day, service on and appearance of Yost, the trial of the cause, resulting in the verdict against Yost, the entry of a judgment thereon, and the absence of an appeal therefrom or modification thereof; alleged that the judgment was on account of a community obligation; alleged that the conveyance by Yost and wife to Schroeder was made with intent to defraud plaintiff in the collection of any judgment he might obtain, that the conveyance to Schroeder was made without consideration, and that Schroeder had no claim to the property, and further that Yost and wife had no other property out of which the judgment might be satisfied. Plaintiff prayed that the conveyance be declared void and the property subjected to the lien of his judgment.

Upon the trial of the cause counsel for Henry introduced, over objection, the summons, complaint, and proof of service, the verdict, the clerk's minute entry of the judgment, and the execution in the case of Henry y. Yost. Schroeder testified that the quitclaim deed was given to secure the indebtedness to the bank, since reduced to $2,835 by various payments, and that, when this was paid in full, the understanding

that Schroeder should reconvey the property to Yost. Having proved the entry of the judgment in the Henry v. Yost action, the conveyance to Schroeder, and that the claim of Henry had not been paid, the plaintiff rested.

ance.

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