William Bookout owned a parcel of land on which he ran a nursery in Oceano, a community in California's San Luis Obispo County. Highway 1, owned and operated by the state Department of Transportation, ran next to and across one tip of Bookout's land.
On the other side of the highway ran a railroad track on a raised bed of land; the railroad and land were owned and operated by the Union Pacific Railroad. The Pismo Oceano Vegetable Exchange owned the land on the opposite side of the railroad.
When it rained, the water ran off Bookout's property and into a drainage channel on the railroad's parcel, through an iron pipe that discharged into a junction box on the Exchange's land.