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Procedural Posture

Respondents, Railroad Commission of the State of California and water company, sought rehearing of the judgment annulling the commission’s order fixing water rates applicable to petitioner customers.

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The court annulled the order of respondent Railroad Commission of the State of California that fixed rates for the water supplied by respondent water company. The court held that the water company was not a public utility, but rather a private vendor that had sold land with water rights to petitioner customers. The court further found that the distribution system was not separate from the water, for purposes of establishing fees. Upon rehearing, the court adhered to and adopted the original opinion and also clarified the finding that the water company’s contracts were for the private, not public use of the customers, and were not subject to price regulation. The water was held in private ownership, was not dedicated to public use at the time the water certificates and contracts were executed, the right to the water vested in the customers, and the water created an easement on their land. The sale of a large number of properties with water supply easements did not convert the provision of water into a public use. Further, charging the customer for the distribution of the water would impair existing contracts and constitute an unauthorized taking without just compensation.


The court, upon rehearing, adhered to the original opinion annulling the order that fixed water rates of respondents, Railroad Commission of the State of California and water company, in the case brought by petitioner customers.