The city of Los Angeles brought suit in the superior court of the county of Los Angeles against the Los Angeles Farming & Milling Company, hereinafter called the Milling Company, to quiet the title of the city to the use of the waters of the Los Angeles river. The city of Los Angeles is situated on the Los Angeles river, a non-navigable stream, rising in the San Fernando valley and mountains adjacent, and flowing from the north down to and through said city. The Milling Company is the owner of a large tract of land, about 10,000 acres, situated some 10 miles up stream, above said city, on the same river. In its complaint, the city of Los Angeles sets forth that it is the owner of the paramount right to take and use all of the water of said river, from its sources to the southern boundary of the city, so far as it is necessary to furnish a supply for the use of the city and its inhabitants; that the plaintiff in error owns its lands subject to such paramount right of the city to the use of the water, and claims adversely to the city and its estate and interest in said water right.
The defendant answered, and, among other things, set up a denial of the alleged paramount rights of the city in the waters of the Los Angeles river, and alleges that it and its predecessors had been in the exclusive possession of said lands for more than fifty years, under claim of title, using the waters of the river riparian or appurtenant to its estate; that the value of the premises was over $500,000; that its lands were some 10 miles above the city, on the river; that the title to the lands and waters in controversy was first owned by the Crown of Spain, thence passing to the Republic of Mexico, which Republic, on June 17, 1846, granted to the predecessors of the Milling Company certain lands, which included the lands in controversy; that, by the treaty between the Republic of Mexico and the United States, the sovereign rights and titles of said Republic of Mexico in said property passed to and vested in the United States; that California upon its admission to the Union, was prohibited from passing any laws disposing of the public lands of the United States, or from doing any acts whereby the title of the United States in the public lands within its limits should be impaired or questioned; that the laws of the United States were extended over California, September 29, 1850; that the Congress of the United States passed an act, approved March 3, 1851 [9 Stat. at L. 631, chap. 41], providing for the ascertainment and settlement of the land claims derived from Spain or Mexico in the state of California, and created a board of land commissioners for that purpose; that all lands, the claim to which was rejected, or had not been presented, to said board, should be held and considered as part of the public domain of the United States; that claims of towns or cities should be presented under said act; that a grant to cities or towns existing July 7, 1846, should be presumed; that the decrees and patents issued by the tribunals under said act should be conclusive between the United States and the claimant; that the claims of the predecessors in interest of the Milling Company to its lands were duly presented to the board of land commissioners, and confirmed on January 8, 1873, and the patent of the United States was issued to them; and it is alleged that said patentee thereby became vested with the rights in fee simple to said lands and all the waters therein or riparian thereto. It is alleged that this patent is res judicata of the rights of the Milling Company; that under the act of March 3, 1851, the mayor and council of the city of Los Angeles presented to the said board of land commissioners a claim for 16 square leagues of land, known as the pueblo of Los Angeles, and for the water rights of the said Los Angeles river, for the use of the pueblo; that said claim was adjudged and affirmed to be valid to the extent of 4 square leagues, and held invalid as to the remainder thereof, and that a patent was issued by the United States to the city of Los Angeles on August 9, 1866, for 4 square leagues of land.