## Facts

- New Liverpool Salt Co. owned land and operated salt works in the Salton Basin (Salton Sink) in California, where keeping the basin dry was necessary for its operations.
- California Development Co. undertook a project to divert water from the Colorado River into canals for irrigation in the Imperial Valley.
- Key diversion structures (including intakes) were located near the international boundary, and at least some of the intake works were situated in Mexico.
- California Development constructed and controlled the intakes used to bring river water into the canal system; the works lacked adequate control devices (such as gates) to regulate flow during high water.
- During flood conditions, an intake enlarged and allowed large volumes of Colorado River water to escape into the canal system and then into the Salton Basin, flooding New Liverpool’s land and damaging or destroying its salt works.
- New Liverpool filed a bill in equity in federal court seeking to stop the continuing flooding and to obtain monetary relief for harm already suffered.
- The district court entered a decree for New Liverpool that granted an injunction against injurious diversion and awarded damages.
- California Development appealed, arguing that a U.S. court could not enjoin conduct occurring in Mexico and challenging the court’s power to grant damages in an equity suit.

## Issues

1. Whether a United States court may enjoin a defendant within its personal jurisdiction from carrying on activities in a foreign country (Mexico) when those activities cause continuing injury to property located in the United States.
2. Whether a federal court sitting in equity, after taking jurisdiction to restrain a continuing trespass (flooding), may also award damages for past injury in the same case.
3. Whether California Development was responsible for the flooding damage where the diversion works were defectively constructed or operated without adequate means to control flow during floods.
4. Whether related entities connected to the canal system (including corporations tied to the Mexico-side works) were necessary parties whose absence required dismissal.
5. Whether an extraordinary flood relieved California Development from liability for damage that resulted from inadequately controlled diversion works.

## Decision

- The Ninth Circuit affirmed the decree granting New Liverpool injunctive relief and damages.
- The court held that a federal equity court with personal jurisdiction over California Development could restrain the company from operating diversion works in a manner that caused continuing injury to California land, even if some of the acts or structures were in Mexico.
- The court ruled that, once equity jurisdiction properly attached to stop a continuing trespass and prevent irreparable injury, the court could also award damages for injury already done to avoid multiple suits.
- The court rejected the contention that Rev. Stat. § 723 (limiting equity when there is an adequate remedy at law) barred the combined award, treating the statute as not cutting back established equity practice when legal relief alone was not as practical and efficient for the full dispute.
- The court found California Development liable because it had control of the intakes whose improper construction and lack of effective control caused flood waters to escape and inundate the Salton Basin.
- The court concluded that other corporations connected with the canal system were not necessary parties because effective relief could be granted against California Development based on its control and responsibility for the injurious works.
- The court held that the extraordinary character of the flood did not excuse liability where the damage was proximately caused by the defendant’s negligent construction and failure to control the intake works.

## Legal Principles

- A court of equity with personal jurisdiction over a defendant may issue an injunction directing the defendant to refrain from acts outside the court’s territorial boundaries when those acts cause continuing injury to persons or property within the court’s territorial jurisdiction.
- Flooding that repeatedly invades land can constitute a continuing trespass or nuisance supporting equitable jurisdiction because of the threat of ongoing and irreparable injury.
- When equity jurisdiction is properly invoked to restrain a continuing trespass, the court may also award damages for past harm as incidental relief to provide complete relief and reduce the need for multiple actions.
- Rev. Stat. § 723 does not prevent a federal equity court from granting monetary relief ancillary to equitable relief when the legal remedy alone is not as practical and efficient for resolving the whole controversy.
- A party that constructs and controls artificial diversion works is liable for foreseeable damage caused by negligent design, construction, or operation, including failure to include adequate control mechanisms for known flood conditions.
- Alleged third parties connected to related structures or nominal control are not necessary parties when the defendant before the court exercised the relevant control that caused the injury and the court can grant effective in personam relief without adjudicating foreign property rights.

## Conclusion

New Liverpool Salt Co. v. California Development Co. held that a federal court with personal jurisdiction over a U.S. irrigation company could enjoin it from operating diversion works (including works in Mexico) in a manner that caused continuing flooding of California land, and could also award damages for injury already suffered because equity had properly taken jurisdiction to stop a continuing trespass and to provide complete relief in one suit.


New Liverpool Salt Co. v. California Development Co., 172 F. 792 (9th Cir. 1909)