U.S. Supreme Court
Canal Company v. Hill, 82 U.S. 15 Wall. 94 94 (1872)
Canal Company v. Hill
82 U.S. (15 Wall.) 94
1. To ascertain the intent of the parties is the fundamental rule in the construction of agreements. When the substantial thing which they have in view can be gathered from the whole instrument, it will control mere formal provisions, which are intended only as a means of attaining the substance.
2. The state of things and surrounding circumstances in which an agreement is made will be looked at as a means of throwing light upon its meaning, especially for the purpose of ascertaining what is its true subject matter.
3. A grant of a right to draw from a canal so much water as will pass through an aperture of given size and given position in the side of the canal is substantially a grant of a right to take a certain quantity of water in bulk or weight. What that quantity is may be ascertained from the character and depth of the canal, the circumstances under which the water is to be drawn, and the state of things existing at the time the grant is made.
4. The grantee will be entitled to draw this quantity even though it may be necessary to have the aperture enlarged if it can be done without injury to the grantor.
The Chesapeake & Ohio Canal Company was the proprietor chanroblesvirtualawlibrary
of a canal which, at its terminus in the Georgetown, D.C., was much higher than the Potomac River, and so furnished by its surplus water a considerable water power. This power the company had for many years been in the habit of leasing out to the proprietors of various mills built not far from the side of the canal. The general form of lease used was that of a grant of the right, for a certain term of years, at a certain rent, and under certain restrictions, to draw from the canal so much water as would pass through an aperture of specified size (stated in square inches) in an iron plate fixed in the side of the canal. From this aperture the water was carried in a trunk or forebay to the premises of the lessee and discharged upon his water wheel. The rent usually charged had been $2.50 or $3 per annum for every square inch contained in the aperture agreed upon.
In January, 1864, one Hill proposing to build a paper mill to be run by water from the canal, but not yet having built it, procured from the company a lease by which they granted and agreed that he should have full right, for the term of twenty years from the first of July, 1864 (with privilege of renewal indefinitely) to draw off from the Chesapeake & Ohio Canal, at Georgetown, to be used at his property at the corner of Potomac and Water Streets (from the level between locks No. 4 and No. 5), so much water as would pass through an aperture of 200 square inches in an iron plate not exceeding half an inch in thickness, to be used solely for propelling the machinery of a paper mill and appurtenant works, but on certain conditions, viz., the aperture was to be of such height and length in the clear as to make just 200 square inches (which probably meant, as this Court assumed, that it was to be rectangular); its lower edge not to be nearer the canal bottom than two feet; it was to be plain and square through the plate, with no attachment or contrivance to increase the quantity of water to be drawn, and to have a sliding gate in front, so that the water power granted might be totally or partially stopped, as the provisions of the contract might require. The forebay, or trunk, for conducting the water through the canal bank, chanroblesvirtualawlibrary
from the aperture, was to be covered or bridged; and said forebay, aperture, and gate were to be so constructed as not to interfere with the navigation of the canal or use of the tow path, and to be of good and substantial construction, so as not to occasion any leakage, and to be constructed at the cost of the lessee, under the direction and superintendence, and subject to the approval of, the proper officer of the company, and, at like cost and under like superintendence, to be altered from time to time, as might be considered necessary by the company or its proper officer, to prevent or lessen the inconvenience to the navigation of the canal and use of the tow path. It was also stipulated that the officers and servants of the company should at all times have free access to the lessee's premises to examine and repair the embankments of the canal, and the lessee's fixtures and works connected with drawing off the water, for the purpose of seeing whether the water was wasted by leakage, or whether more water was drawn off than was granted. Hill agreed to pay for the use of the water leased an annual rent of $500 for the first ten years, and $600 for the last ten, and it was made a condition that if the rent should not be paid, or if the other stipulations should not be complied with, or if he should alter or enlarge the forebay, or trunk, or aperture, or apply the water to other uses, without the consent of the company, they might cut off the water until he should make amends or satisfaction. It was also agreed that if the water should at any time be found deficient for the uses of navigation (which was declared to be the primary purpose of the canal), the supply to the mill might be diminished or stopped as might be requisite for meeting the deficiency.
Having got his lease, Hill went to work, and, at a cost of about $40,000, erected his mill, placing it at a distance of 350 or 450 feet away from the canal -- a greater distance than were the other mills. This required a long forebay. Such a one he built, of solid masonry, giving to it, however, both less capacity and less pitch than marked those of the other mills and adopting in his mill a turbine wheel instead of the ordinary overshot. The result of the whole was that chanroblesvirtualawlibrary
he received about half the quantity of water which commonly came to the other mills, through an aperture in the canal of $200 square inches.
In this state of things, Hill agreed with the company, in May and June, 1866, that he should have a lease for such additional quantity of water power as was required for his mill, upon the usual terms, on payment of a bonus of $5 per inch for such additional quantity. Hereupon the engineer of the company and the superintendent of Hill's mill went to work to ascertain by actual experiment how much additional water was required. Their mode of operation was to raise the slide in the side of the canal through which the water flowed to the mill until a sufficient quantity to propel it flowed through. The mode in which the forebay to Hill's mill had been constructed allowed them no other mode. Accordingly, the head of water being weak, as the gauge was lifted upwards and the water flowed from towards the top of the canal, the operation brought the slide to a point only five inches below the surface of the canal, and no sufficiency of water could be had until an aperture of 700 inches -- an aperture, therefore, of 500 inches more than the one originally agreed on -- was made. This aperture was accordingly left, and the water that went through it was used by Hill.
At the next quarter day, the company required him to pay the bonus and quarter's rent upon the additional 500 inches, which he refused to do. They then were about to shut off the water when Hill filed this bill in the court below for an injunction. After answer, the court referred it to Mr. W. R. Hutton, engineer of the company, to report as a commissioner and expert upon certain matters concerner answer, the court referred it to Mr. W. R. Hutton, engineer of the company, to report as a commissioner and expert upon certain matters concerner answer, the court referred it to Mr. W. R. Hutton, engineer of the company, to report as a commissioner and expert upon certain matters concerning this and the other mills.
Mr. Hutton reported that the other mills discharged about 6 2/3 cubic feet per second for every 100 inches of aperture, while Hill's 200 discharged at only the rate of 6 1/2, though, with allowance for the location of the mill and other circumstances, he ought, through his 200 inches, to have received at least 11 cubic feet per second. chanroblesvirtualawlibrary
This question, also, was referred to him:
"How many square inches of aperture, situated at the distance of two feet from the bottom of the canal, and of the width of complainant's forebay, would furnish a flow of water equivalent in power and effect to the additional water received by the complainant under his new contract, over and above his original grant?"
Mr. Hutton reported that the additional 500 inches provided for by the contract were the equivalent of but 217 inches drawn two feet from the bottom, and under the conditions of the lease.
The court accordingly made the injunction perpetual, so long as Hill should pay rent on 217 inches.
From that decree it was that the company now appealed. chanroblesvirtualawlibrary