Grand Valley Irrigation Co. v. Lesher

1. Water Rights — Corporations—Transfer of Certificates. Where a ditch company had issued certain certificates for perpetual water rights and recognized the transfer of said certificates without requiring a surrender of the certificates or that the transfers be made on the books of the company, it waived that requirement and a subsequent purchaser of the ditch and rights of the company under a deed that expressly reserved said certificates cannot object to such transfers. 1. Water Rights — Pleading. In an action against an irrigation company, which had purchased the ditch and rights of another company, to enforce a perpetual and non assessable water right in the ditch, granted to plaintiff by defendant’s grantor, where plaintiff alleged that defendant furnished water at plaintiff’s headgate free of cost, it was no denial of that allegation, for defendant to aver in its answer that upon taking possession it. notified plaintiff that he had no right to take or use water without cost. Nor was it any defense to the action to allege the manner in which defendant obtained title, or the purpose thereof, or the cost of the ditch, or ownership, or that it had no funds, or that repairs were necessary, or that the company was not formed for the purpose of selling or renting water, or that plaintiff had never offered to pay for water; unless the title alleged was superior to, and in fact not subject to, plaintiff,s right 3. Pleading — Denial on Information and Belief A denial in the form; “This defendant has not and cannot .obtain information sufficient upon which to base a belief”, is defective in failing to state that defendant has not and cannot obtain knowledge sufficient upon which to base a belief. A denial in that form must follow the statute and deny both knowledge and information. Advantage of such non-compliance with the statute may be taken by motion, or the allegation may be treated as not tendering an issue. 4. Pleading — Negative Pregnant. In an action to quiet title to and enforce a perpetual non-assessable water right, a denial that such conveyances were executed to plaintiff “as operated to convey perpetual or non-assessable water rights” is a mere negative pregnant. 5. Water Rights — Easement in Ditch. A perpetual right to have a certain quantity of water flow through an irrigating ditch is an easement in the ditch. 6. Water Rights — Pleading—Conveyance—Easement. Where a ditch company incorporated for the purpose of building a certain ditch, and which-owned no other ditch, issued a certificate to the effect that the party to whom it was issued was the owner of a water right of a certain amount in the company and that the same was free from all dues and assessments, the certificate was a sufficient conveyance in writing of a perpetual and non-assessable water right and easement in the ditch of the company, and where the company issuing the certificate as well as its successor had ever since the issuance of such certificate delivered water to the certificate holder through his head-gate and lateral ditches, it was an interpretation of the certificate, and in an action by such certificate holder against a company, which succeeded by purchase to the ownership of the ditch and rights of the issuing company, to quiet title to such water right and easement, a complaint that alleges the foregoing facts states a cause of action. 7. Consideration — -Written Instruments — Waiver. A written instrument imports a consideration, and in an action to quiet title to a water right evidenced by a written certificate, a consideration need not be proven in the first instance. And where the plaintiff offered to show the whole transaction which resulted in the execution of the certificate, which evidence was excluded on the objection of defendant, the defendant cannot afterwards object that no consideration was shown. 8. Water Rights — Easements—Notice. Where an irrigation company purchased the ditch and rights of another company through the foreclosure of a deed of trust that expressly reserved certain perpetual and non-assessable water rights, and the county records disclosed that the articles of inco;poration of thegrant- or company provided for such water rights, and that certificates had been issued therefor, and along the line of the ditch were the headgates, ■ lateral ditches and cultivated lands of the owners of such water rights, the purchaser was charged with notice an 1 took the ditch burdened with the easement of such perpetual water rights ,

Appeal from, the District Court of Mesa County. The plaintiffs, in their amended complaint, filed on the 7th of May, 1896, allege, among other things, that the plaintiffs are the several owners of lands, lying, under the ditch of the defendant, which, since 1882 had been irrigated therefrom; that they and their grantors are, and have been during all of said time, the owners of certain perpetual, non-assessable water rights and rights to the use of water therein, and the owners of certain head gates in and along said ditch through which they take water therefrom into their respective laterals for the purpose of irrigating their said lands respectively; that in June, 1882, The Grand Valley Ditch Company had surveyed and located its line of ditch, and was actively engaged in the work of excavating and constructing or building its said irrigating ditch for the purpose of diverting the waters from the Grand river, and that the incorporators of said company were Elihu S. Oldham, William Oldham, William Cline and John F. Biggies, and that said persons were the only ones owning any stock, water rights, or other interest in the said ditch or in the said ditch company; that in 1883 The Grand River Ditch Company was organized for the purpose of constructing, maintaining and operating an irrigating ditch to be known as the Grand River Ditch, to take its water from the Grand River at or about the same place designated by The Grand Valley Ditch Company for the taking of water from the said river; that during January, 1883, a mutual agreement was entered into between The Grand River Ditch Company, and the individuals owning all the interests in The Grand Valley Ditch Company, by the terms of which said individuals surrendered and delivered up to The Grand River Ditch Company all of the rights, privileges, and franchises theretofore acquired by them, in consideration óf the said The Grand River Ditch Company granting to said four parties, and to their assigns and heirs, each, one perpetual, non-assessable water right and right to the use of water from said ditch,of 150 statute inches of water to be delivered to each of said parties and their heirs and assigns at their head-gates respectively, and into their respective laterals, forever thereafter, free and clear of any and all charges or expenses; that in pursuance of said agreement and contract, the articles of incorporation of the said The Grand River Ditch Company were duly amended so as to contain the following: “Third. The capital stock of our said company is to be divided into twenty thousand shares of ten dollars for each share, and there are to be four perpetual water rights of 150 inches for each water right.” “Eighth. The stock and water rights of said company shall be non-assessable:” that thereafter and on the 10th day of February, the said The Grand River Ditch Company, for the purpose of assuring the ownership of said water rights and the perpetual right to use water in the said ditch without cost or expense, made, executed and delivered to Elihu S. Oldham, one of the owners and incorporators of The Grand Yalley Ditch Company, an instrument in writing, as follows: “The Grand Valley Ditch Company, Colorado. Grand Yalley, Total Water Rights Four (4). Each Water Right Contains 150 inches. This is to certify that Elihu S. Oldham is entitled to and is the owner of one water right of one hundred and fifty inches in The Grand River Ditch Company, and the same is free from all dues and assessments and transferable only on the books of the company on the surrender of this certificate. In witness whereof the president and secretary have hereunto affixed their signatures this 10th day of February, A, D.1883. James W. Bucklin. Matt Arch, Secretary. President. Corporate seal of The Grand River Ditch Company.” and on the same day caused to be made, executed and delivered to William Oldham and to William Cline each an instrument in the same words and figures as the foregoing, excepting as to the names of said Oldham and Cline, and on the same day executed to John F. Biggies a certificate in the same form for one half of one water right, and that the said John F. Biggies caused to be made and delivered to one B. K. Kennedy a certificate for the other one-half of the water right of said Biggies, which said five instruments were, on the 14th of March, 1883, duly filed for record and recorded in the office of the clerk and recorder of Mesa county; that in each of the three deeds of trust executed by The Grand River Ditch Company and duly recorded, there was contained the following provision: “The four perpetual water rights created by the amended articles of incorporation, having been already sold and conveyed by the party of the first part, are in no wise affected by this conveyance;” that thereafter, in 1894, in an action to foreclose said deeds of trust, to which action neither the said Oldham, Oldham, Cline, Biggies, Kennedy, nor any of their grantees were parties, judgment was rendered and sale had thereunder, and such conveyances thereafter made as operated to convey to The Grand Valley Irrigation Company, the defendant herein, all the right, title, and interest of The Grand River Ditch Company in and to the property mentioned in said deeds of trust; that subsequently to February, 1888, conveyances were made, executed and delivered, conveying to the plaintiffs respectively certain portions of said perpetual, non-assessable water rights; that the plaintiffs and the grantors of the water rights have, since the said 10th day of February, been in the actual possession, use and enjoyment of said water rights, and that said water has been delivered to them and they have been permitted to take and draw off the same from said ditch without the payment by them or either of them to the said The Grand River Ditch Company or its successors, or to any one else, any sum of money whatever for rentals, tolls, dues, charges, or assessments, and in accordance with the agreement aforesaid between The Grand River Ditch Company and the said Oldham, Oldham, Cline, and Biggies; and praying, the defendant having threatened to shut down the head-gates of the plaintiffs, that the defendant may be required to set forth the nature of its claim, and that the defendant be forever enjoined from asserting any claim whatever in or to said water rights or water, or to either of them, adverse to the plaintiffs or either of them, and that the defendant and all persons acting under it be perpetually enjoined from in any manner interfering with the plaintiffs said water rights or head-gates, and from exercising any dominion or control over the same. To which complaint, on July 3,1896, the defendant filed its demurrer, on the ground that the complaint was uncertain, ambiguous, and unintelligible, and that the complaint did not state facts sufficient to constitute a cause of action. Which said demurrer was overruled by the court. On December 28, 1896, the defendant filed its answer. The first defense of defendant’s answer contains, among others, the following allegations: That as to whether, between the 4th day of January, 1883, and the 1st day of February 1883, a mutual agreement or arrangement was entered into by and between the said The Grand River Ditch Company and Elihu S. Oldham, William Oldham, William Cline, and John F. Biggies whereby the said Oldhams, Cline and Biggies were to surrender and deliver up to the said The Grand River Ditch Company all of the rights, privileges, and franchises theretofore acquired by them, or any part of the same and TheGrand Valley Ditch Company, in and to the said surveyed, located and partially constructed ditch or canal and the head-gate thereof, saving and reserving unto each of the said four parties, Oldhams, Cline and Biggies, and to their heirs and assigns, one perpetual and non-assessable water right for the use of water from said ditch of 150 statute inches, said 150 statute inches of water to be delivered to each of said parties, their heirs and assigns, at their head-gates respectively and into their respective laterals forever thereafter, free and clear of any and all charges, costs or expenses to the said parties or either of them, this defendant has not and cannot obtain information sufficient upon which to base a belief, and therefore denies the same. But the defendant denies that ■any arrangement or agreement was ever made with the said Oldham, Biggies or others, to deliver to them, or to their assigns or heirs, any water whatever from the canal of the plaintiff, or The Grand River Ditch Company, free of cost or expense, as alleged in said complaint. And defendant, further answering, denies that subsequently to the 10th day of February, 1883, or at any other time, conveyances were duly made, executed or delivered by the Maid Oldham, Cline and Kennedy as operated to convey to 'he plaintiffs or any of them, any portions or quantities of xmy perpetual or non-assessable water rights, as set forth n said complaint. (And defendant further denies that any transfer of any water rights, or of any of the rights of the said Oldham,or Biggies, Cline or Kennedy, was ever made upon the books of The Grand River Ditch Company; and defendant denies that any transfer or conveyance of such pretended water rights or claims of said Biggies, Oldham, Cline or Kennedy, could be made in any other manner than in and upon the books of The Grand River Ditch Company upon the surrender of the certificates set forth in said amended complaint. And defendant avers that no such transfer or transfers ever has been made.) And defendant further answering, denies that the plaintiffs or their grantors have ever been in the actual and continued possession, or use or enjoyment, of the said water rights described in said complaint, or of any water rights whatever; (but defendant alleges that, upon taking possession of and running and operating the canal mentioned in said complaint, to-wit, March 1, 1894, it notified the plaintiffs in this action they had no right to receive or obtain dr take or use waste from the canal of the plaintiffs free of costs, as was claimed by them.) * * * .And defendant denies that it obtained its title to said irrigation system, canal and property mentioned in said complaint by or through said forelosureof any of said deeds of trust mentioned in said complaint; (but avers that the defendant obtained its title to the right to flow water through said canals, and distribute the same to its stockholders, by and through deeds of conveyance made to it by its stockholders respectively; and that said stockholders conveyed to the defendant easements and rights to flow water and to have water flowed through said irrigation canal system to them according to their respective rights, as hereinafter shown and set forth. And defendant further avers that the only object in becoming a purchaser of the rights that could be conveyed by the court in such foreclosure proceedings, was to enable the owners of water rights theretofore purchased by them from the said The Grand River Ditch Company, to obtain possession of, and manage and control, the said canal system for the purpose of obtaining the water which they had already bought and paid for from said canal* free from litigation and interference by parties-claiming adverse rightó thereto.) ■ The second defense of the answer relates the history of the acquisition of the canal by the defendant, shows the capacity of the canal, the amount of appropriated water sold, the contracts made by The Grand River Ditch Company with the owners of land, the insolvency of The Grand River Ditch Company and its inability to fulfill its contracts, the cost of maintaining the canal each year, that stockholders and other owners of water rights are compelled to pay for the maintenance of the canal, that the appellant has no money and is entirely dependent upon the assessment of stockholders and water-consumers for the cost of maintaining the canal, that assessments were made during the years 1895 and 1896 and the amount thereof, that appellant is not organized for the purpose of selling water or carrying water for hire, and that the appellees have never offered to pay their just share for the maintenance of the canal and have failed and refused to pay any assessment. The plaintiffs demurred to the second and further defense of the answer, on the ground that the same did not state facts sufficient to constitute an answer or defense; and on the same day moved to strike from defendant’s answer the portions thereof which are herein enclosed by brackets, as being irrelevant, insufficient, and immaterial. On August 19, 1897, the demurrer to the second defense and the motion to strike were sustained. At the trial the defendant objected to the introduction of any evidence on the part of the plaintiffs, for the reason that the complaint did not state a cause of action; which objection was overruled. The defendant also objected to the introduction of certain instruments offered by the plaintiffs,purporting to convey certain non-assessable and perpetual water rights in The Grand River Ditch Company by assignment, and to certain deeds purporting to convey with land certain water rights and certain free inches of water, as being incompetent, irrelevant, and immaterial; which objection was overruled. At the trial, plaintiffs offered to show by the secretary of The Grand River Ditch Company the terms of the agreement entered into between the original holders of certificates and the. company, and, upon the objection of the defendant, this was excluded. Plaintiffs also offered to show that they had been permitted to use the water from the ditch without cost, by the defendant company, in the amount mentioned in the certificates respectively. This was also excluded upon defendant’s objection. Plaintiffs offered numerous deeds purporting to convey the water privileges mentioned, which were objected to by defendant, and the objection was overruled, The defendant admitted that the record of the certificates was notice, “so far as it conveys any rights, whatever those rights may be.” Also that the $200,000 trust deed was foreclosed; that the defendant company now owns the ditch through a conveyance from the purchaser at the foreclosure sale; that the Oldhams, Cline and Biggies were the incorporators of The Grand Valley Ditch Company, and constituted the board of directors, and were the only persons having any interest in the Grand Valley ditch or in the water therein. The defendant offered no testimony, A decree was rendered in favor of the plaintiffs, finding the plaintiffs to be the owners of the several water rights as set forth in the complaint; that they are entitled to the use and enjoyment thereof without payment of any dues or assessments to the defendant; that the defendant has no estate or interest in or to the water rights or either of them; that the title of the plaintiffs thereto is good and valid; and enjoining the defendant perpetually from shotting down or closing the head-gates of the plaintiffs or either of them. The defendant appealed from this decree to the court of appeals, and the case has been certified to this, court. The appellant assigns error as follows: The court erred (1) in sustaining the demurrer to the second defense; (2) in granting the motion to strike portions of the answer; (8) in overruling defendants objections to any evidence in support of the complaint; (4) in finding that water rights were conveyed to plaintiffs, which were perpetual and to be free from all dues and assessments; (5) in finding that the plaintiffs are the owners of the said water rights; (6) inadmittting the assignments and deeds mentioned in the abstract, over its objection.