Denver Joint Stock Land Bank v. Markham
| Decision Date | 21 October 1940 |
| Docket Number | 14527. |
| Citation | 106 Colo. 509,107 P.2d 313 |
| Parties | DENVER JOINT STOCK LAND BANK v. MARKHAM et al. |
| Court | Colorado Supreme Court |
Error to District Court, Prowers County; John L. East, Judge.
Action by L. Merrill Markham and another, as administrators with the will annexed of the estate of L. Wirt Markham, deceased, and another against the Denver Joint Stock Land Bank of Denver to recover a reasonable charge or rental for use of water delivered from a canal company's irrigation system. Judgment for plaintiffs, and defendant brings error.
Affirmed.
David J. Miller, of Greeley, and J. Donovan Stapp and Glenn A. Laughlin, both of Denver, for plaintiff in error.
Allyn Cole, of Glenwood Springs, for defendants in error.
This action was instituted by defendants in error to recover a reasonable charge or rental for the use of water delivered from the irrigation system of the Fort Lyon Canal Company under its stock certificate No. 4628 representing 72 shares of the capital stock of the company for the season of 1937. Plaintiff in error admits the use of the water, but asserts ownership of the certificate and the water rights represented thereby in itself. The sole issue therefore, is the ownership of this certificate. That its ownership was in one L. Wirt Markham until September 27 1926, is not questioned. On that date he, together with his wife, executed a deed of trust to the public trustee, for the use of plaintiff in error, conveying 348 acres of land, including the north one-half of the northeast quarter of section 19, and the north one-half of the northwest quarter of section 20, township 22 south, range 46 west of the sixth principal meridian, together with certain water rights described as follows:
Some of the facts are stipulated. From these facts it appears that the 72 shares to which reference is made in the trust deed above mentioned are not the 72 shares evidenced by certificate No. 4628, upon which the complaint is based. A brief history of this certificate is necessary to an understanding of the issue. When the real estate above described was acquired by L. Wirt Markham he also obtained one and one-half water rights, which he surrendered January 13, 1898, to the Fort Lyon Canal Company, and in lieu thereof stock certificate No. 545 was issued to him for 216 shares in the Fort Lyon Canal Company, operated as a mutual ditch company. January 31, 1908, he surrendered this certificate and there was issued as a part thereof certificate No. 1908 for 72 shares, being the same shares specifically described in the trust deed above mentioned, about which there is no dispute. The remaining 144 shares were issued to L. Wirt Markham under certificate No. 1909. This certificate was surrendered by Markham July 20, 1909, and in lieu thereof there was issued to him certificate No. 2110 for 72 shares, and certificate No. 2111 for 72 shares issued to one C. B. Spencer, not involved here. Certificate No. 2110 is the basis of this controversy. July 28, 1916, this certificate was pledged as collateral for a loan of $2,500 by L. Wirt Markham to the First National Bank of Lamar, Colorado, and a notation thereof made on the stub of the stock book of the Fort Lyon Canal Company. In 1923 this certificate was cancelled, and certificate No. 3975 was issued to Markham in lieu thereof. No release of the $2,500 loan appears on the stub, the next notation being under date of April 24, 1929, that certificate No. 3975 was collateral to a loan of $2,800, showing thereby an increase of $300 in amount over the original notation made in 1916. Thereafter, October 23, 1930, which was subsequent to the death of L. Wirt Markham, there appears a notation on the stub releasing this certificate from the loan of the bank, and the notation that on the same date it was pledged to defendant in error M. R. Sunday, who merely took over the note from the bank, there being no change in the collateral. After the death of Markham defendants in error found certificate No. 3975 in the possession of the First National Bank of Lamar as collateral to its loan of $2,800. When M. R. Sunday took over the loan from the bank October 23, 1930, he surrendered certificate No. 3975, and had issued to himself in lieu thereof certificate No. 4628, which, endorsed in blank by him, he surrendered to defendants in error upon payment by them of the loan on July 24, 1931. There it has remained ever since.
A brief reference to the loan of plaintiff in error to L. Wirt Markham should also be made. This loan was predicated upon an application by Markham to the bank in which the security offered for a loan was in part certificate No. 1908, and the 72 shares here in question were not offered. Upon receipt of this application an examination of the security offered was had and a formal written report made to plaintiff in error by its agent, which contains this language: 'The water right with this farm consists of 72 shares of Fort Lyon Canal Company water stock, and 2 1/2 rights in the Amity Canal, which is more water than is needed on this farm.' It is agreed that the bank, through its foreclosure of the trust deed, obtained the 72 shares of stock mentioned in this report. The valuation of the security offered was fixed at $67,016, exclusive of the 72 shares involved here, which at that time were pledged elsewhere. It was not considered by plaintiff in error as a part of the security offered, but other rights were considered and pledged as being more than sufficient for all purposes. The loan by the bank on the security offered was several thousand dollars less than half the value of this security as fixed by its own appraisement. By reason of default in payments the bank elected to foreclose, and a public trustee's deed was executed February 27, 1937, conveying the land and water rights as above described.
The trial court found the issues in favor of defendants in error and entered judgment accordingly. Plaintiff in error, seeking a reversal, has brought the cause here by writ of error.
Plaintiff in error contends that since the Fort Lyon Canal Company is a mutual ditch, the stock certificate for the 72 shares in question is simply a muniment of title to the water rights which are real property. In support thereof are citen Kendrick v. Twin Lakes Co., 58 Colo. 281, 282, 144 P. 884; Comstock v. Olney Springs Drainage District, 97 Colo. 416, 419, 50 P.2d 531; Beaty v. Commissioners, 101 Colo. 346, 73 P.2d 982. If we were considering facts analogous to those in the cited cases, this contention would be tenable; but such is not the situation. In the Kendrick case [58 Colo. 281, 144 P. 886], we held, 'that water rights * * * for the purpose of taxation, are included within and constitute a part of the real estate upon which the water is applied.' This case is not in point on the issue Before us. The Comstock case involved certificates representing water used upon land in a drainage district organized under chapter 36, C.L.1921. The directors of the district made the assessment on the land benefited by and under the project. The...
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