The California Development Company was formed in 1896 as a replacement for the defunct Colorado River Irrigation Company, which had been started a few years earlier for the purpose of planning an irrigation system for the lower Colorado Desert in California. The rich, silty soil of the area was found to be suitable for agriculture, but wells tapping groundwater brought up an inadequate supply of water for such a hot, arid region. The California Development Company took over the project of diverting Colorado River water into the Coachella and Imperial Valleys in the Salton Sink, a dry lake bed which today contains the Salton Sea, hoping to turn the desert green with agricultural fields. The first canals were being constructed by 1900 under the guidance of chief engineer George Chaffey.
The Imperial Canal was completed within two years. It received water from the Colorado River, which, by the time it had flowed to the Imperial Valley, contained massive amounts of silt. The Imperial Canal filled with silt at an alarming pace. Attempts to create a diversion around the silt blockages led to disaster, when winter flooding in 1905 tumbled the diversion canal. The whole of the Colorado River poured into the Salton Sink, forming the Salton Sea. The area was a scene of flood for two years until the canal breach was mended. As the waters dried up the Salton Sea was reduced in size, but it is still the largest lake in California.
The California Development Company was financially strained by this point, and in fact relied upon a financial loan and physical assistance from Southern Pacific Railroad to mend the broken canal. Ultimately, this "financial assistance" resulted in the Southern Pacific Company obtaining a legal judgment against the California Development Company entered in the Superior Court of California in and for the County of Los Angeles on December 30, 1909, in the amount of $1,279,865.77, an enormous sum at the time. A legal judgment had already been entered against the California Development Company in favor of the New Liverpool Salt Company on January 10, 1908, in the amount of $458,246.23, with interest to accrue from that date, to compensate the salt company for the value of its destroyed property, basing its claim upon the alleged negligent action of the California Development Company in cutting the bank of the Colorado River and thus permitting the flow of water into the former Salton Sink destroying its lands.
The costs of the broken structure, as well as from lawsuits over the disaster, made the California Development Company a lost cause. The project of irrigating the valley was assumed by the new Imperial Irrigation District in 1911.
An expansive recounting of the rise and fall of the California Development Company appears in a lengthy legal decision issued by the Supreme Court of California on October 9, 1915, entitled Title Insurance and Trust Company v. California Development Company, Southern Pacific Company, New Liverpool Salt Company, Boaz Duncan, W. H. Holabird, 171 Cal. 173, 173-222, 152 P. 542, 542-563 (1915). There are no less than eight judicial decisions involving this case that were published by the California Supreme Court between March 13, 1911, and February 13, 1919.
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