Hewitt v. The Great Western Beet Sugar Co.
| Citation | 20 Idaho 235,118 P. 296 |
| Parties | HENRY HEWITT, Jr., Appellant, v. THE GREAT WESTERN BEET SUGAR COMPANY, a Corporation, et al., Respondents |
| Decision Date | 26 September 1911 |
| Court | United States State Supreme Court of Idaho |
BILL OF EXCEPTIONS-CERTIFICATE OF JUDGE-WATER RIGHTS-PRIORITY OF MORTGAGE-SUFFICIENCY OF EVIDENCE-RECEIVER'S CERTIFICATE-PRIORITY.
(Syllabus by the court.)
1. Where a bill of exceptions contains a certificate of the trial judge that the same is settled "as a true bill of exceptions in this case," such certificate is not sufficient to show that it contains all the evidence introduced at the trial or all of the evidence introduced at the trial upon the particular question involved.
2. Where there is a controversy between a mortgagee who holds a mortgage upon an irrigation canal or system and purchasers of water rights from such irrigation canal or system, as to whether the water rights and water contracts executed by the company after the making of such mortgage are affected by the mortgage or the foreclosure of the same, this court will not reverse the ruling of the trial court in admitting such water rights and contracts in evidence, where the record fails to present to this court such water rights and water contracts for review.
3. Sec 3292, Rev. Codes, provides that when payment is made upon a perpetual water right, the water right shall remain a part of the tract of land for which the same is purchased, and that the title to the use of said water can never be affected in any way by any subsequent transfer of the canal or ditch company, or by any subsequent foreclosure of any bond mortgage or other lien.
4. Sec 3292 of the Rev. Codes was intended to apply to such water rights as are described in sec. 4, art. 15 of the constitution; that is, a water right only where there has been an actual application of the water to the land for a beneficial use.
5. Whenever a water right, as defined by the constitution, is required under the provisions of Rev. Codes, sec. 3292, the owner of the tract of land where the water is applied, his heirs or assigns, shall forever be entitled to the use of the water necessary to properly irrigate the same, by complying with such reasonable regulations as may be agreed upon or as may from time to time be imposed by law, and the payment for such water right shall be a release of any bond or mortgage upon the property of the company from whom such water right is acquired, or their successors or assigns to the amount of the water right purchased and paid for; and it is the duty of the company from whom the water right is purchased to furnish the purchaser, or his assigns, a release from said mortgage, so far as the same affects said water right. By the transfer, provided by the statute, the water right became attached to the particular tract of land upon which it is used.
6. Under the provisions of sec. 4329 of the Rev. Codes, the court has the power and authority in a proper case to appoint a receiver to take charge of property and to care for and protect the same and decree the charges therefor as a prior claim and lien against the property, paramount to all mortgages or other liens or encumbrances.
7. Whereas in this case upon foreclosure of a mortgage upon property of an irrigation or canal company the mortgagee has full opportunity to contest an order made by the trial judge in the case allowing such receiver's certificates as a prior lien to the mortgage, and fails to object or show any reason why such receiver's certificates should not be allowed, and the record fails to disclose that the appellant took any steps to contest such certificates as prior liens, and in no way put their priority in issue, this court will not disturb the finding of the trial court in allowing such receiver's certificates as prior liens against such property.
APPEAL from the District Court of the Fourth Judicial District for Elmore County. Hon. Edward A. Walters, Judge.
An action to foreclose a mortgage. Cross-complaints filed. Judgment foreclosing mortgage and finding priorities for cross-complainants. Judgment affirmed.
Judgment affirmed. Costs awarded to respondents.
Richards & Haga, for Appellant.
Findings must rest exclusively on the proceedings had in the case in which such findings are made, and not on the proceedings had in an independent action to which the persons whose rights are affected were not parties. (Laughlin v. U. S. S. Co., 64 F. 25; Union Trust Co. v. Ill. M. Ry. Co., 117 U.S. 434, 6 S.Ct. 809, 29 L.Ed. 963.)
We contend that the plaintiff had never had his day in court, so far as the priority of the amount of these receiver's receipts is concerned. (Bibber-White Co. v. White River etc. Co., 115 F. 786, 53 C. C. A. 282; Farmers' L. & T. Co. v. Centralia & C. R. Co., 96 F. 636, 37 C. C. A. 528; Ferry v. Miltimore etc. Co., 71 Vt. 457, 76 Am. St. 787, 45 A. 1035.)
"A court of equity has no authority to place its receiver in charge of such property and operate the same, carrying on a general mining business, and when it turns out to be at a loss, as is likely to be the result in such cases, charge the same up as a preferred claim and lien against the property to the prejudice and loss of the holders of prior recorded liens on the same property." (Dalliba v. Winschell, 11 Idaho 364, 114 Am. St. 267, 82 P. 107.)
That the rule as applied to railroad cases has no application to private corporations seems well settled. (Fidelity Ins. & S.D. Co. v. Shenandoah I. Co., 42 F. 372; Snively v. Loomis Coal Co., 69 F. 204; Merriam v. Victory Mining Co., 37 Ore. 321, 56 P. 75, 58 P. 37, 60 P. 997; U. S. I. N. V. Corporation v. Portland Hospital, 40 Ore. 523, 64 P. 644, 67 P. 194, 56 L. R. A. 627; Baltimore B. & L. Assn. v. Alderson, 90 F. 142, 32 C. C. A. 542; Doe v. N.W. C. & T. Co., 78 F. 62; Farmers' L. & T. Co. v. Grape C. C. Co., 50 F. 481, 16 L. R. A. 603.)
Sullivan & Sullivan, for Respondent.
A receiver of a canal system, under orders of court, can issue certificates for the care, preservation and maintenance thereof, that will be prior liens to all other liens. (Dalliba v. Winschell, 11 Idaho 364, 114 Am. St. 267, 82 P. 107.)
Water companies and canal companies are of a similar public nature, and in this respect treated the same as railroads, as quasi-public corporations.
Most of those authorities which hold the strongest against permitting expenses for the carrying on of a business to be made prior liens admit that such part of the expenses as were for the care and preservation of the property can be made prior to mortgages and other liens. (Raht v. Attrill, 106 N.Y. 423, 60 Am. Rep. 456, 13 N.E. 282; International Tr. Co. v. Decker Bros., 152 F. 85, 81 C. C. A. 302, 11 L. R. A., N. S., 152; International Tr. Co. v. United Coal Co., 27 Colo. 246, 83 Am. St. 59, 60 P. 621; Hanna v. Tr. Co., 70 F. 2, 16 C. C. A. 586, 30 L. R. A. 201; High on Receivers, 4th ed., sec. 312-b; Insolvent and F. Corp. (Jones), sec. 548.)
J. G. Watts, for Respondent John F. Schoneke.
Knowing its object and giving his consent to its continuance as a going concern, the purchaser under foreclosure assumes the burdens placed upon the franchise and property by the mortgagor. (Wiel on Waters, 2d ed., p. 336; Stocker v. Nehama County, 72 Neb. 255, 100 N.W. 308.)
Wyman & Wyman, for Respondent Stoetzel.
"Where a water company is under mortgage which is afterward foreclosed, the purchaser at the foreclosure sale will usually contend that he is not bound by water right contracts made subsequent to the mortgage; but were this true, contracts for water supply would be of little security to the consumer and the courts hold the purchaser is bound by them." (Wiel on Waters, p. 336.)
The law is clear that where a mortgagee knows of the existence of any instrument or conveyance affecting the title to the property on which he is about to take a mortgage, he is placed upon notice and fails to make suitable inquiry at his peril. (27 Cyc. 1201, 1202.)
Cavanah & Blake, for Respondents Smith, Moyses and Sherman.
There is no duty imposed upon the purchaser of a water right relative to the release of the mortgage, as that matter is left entirely with the vendor of such water right and mortgagee. (Wiel on Waters, p. 336.)
On the 30th day of January, 1907, the Great Western Beet Sugar Company, a corporation organized and incorporated under the laws of the state of Washington, executed to the appellant a mortgage to secure the payment of the sum of $ 80,000, represented by various promissory notes. The mortgage covered reservoirs, ditches, canals, water rights and a large volume of property constituting an irrigation system owned by the Great Western Beet Sugar Company, and situated in Elmore county, state of Idaho.
This action was brought for the purpose of foreclosing said mortgage. The Great Western Beet Sugar Company, the mortgagor, and a large number of other parties, consisting of persons and corporations claiming judgments and liens mechanics' liens, laborers' liens, and persons who had purchased and contracted for water rights from the Great Western Beet Sugar Company,...
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