Jacobucci v. District Court In and For Jefferson County, 26751

• Decision Date: 29 September 1975
• Docket Number: No. 26751,26751
• Citation: 189 Colo. 380,541 P.2d 667
• Parties: Victor L. JACOBUCCI et al., Petitioners, v. The DISTRICT COURT IN AND FOR the COUNTY OF JEFFERSON, State of Colorado, et al., Respondents.
• Court: Colorado Supreme Court

Page 667

541 P.2d 667

189 Colo. 380

Victor L. JACOBUCCI et al., Petitioners, v. The DISTRICT COURT IN AND FOR the COUNTY OF JEFFERSON, State of Colorado, et al., Respondents.

No. 26751.

Supreme Court of Colorado, En Banc.

Sept. 29, 1975.

As Modified on Denial of Rehearing Nov. 3, 1975.

Hoffman, Goldstein, Armour & Lonnquist, Alan A. Armour, Denver, for petitioners.

Davis, Graham & Stubbs, John M. Sayre, Jon N. Halverson, Ellen Emerson Kohler, Denver, for respondents District Court and City of Thornton.

Akolt, Dick & Akolt, John P. Akolt, Robert A. Dick, John P. Akolt, III, Denver, for respondent, The Farmers Reservoir and Irrigation Co.

Saunders, Snyder, Ross & Dickson, P.C., William J., Kirven, III, Denver, for City of Westminster.

Gaunt, Dirrim & Coover, Lysle R. Dirrim, Brighton, Moses, Wittemyer & Harrison, P.C., Raphael J. Moses, Boulder, amicus curiae, Farmers' High Line Canal and Reservoir Company and The Lower Clear Creek Ditch Co.

Preston, Altman & Parlapiano, P.C., Leo S. Altman, Pueblo, Amicus Curiae, The Bessemer Irrigating Ditch Co.

Fischer & Beatty, William H. Brown, Ward H. Fischer, Fort Collins, amicus curiae, Consolidated Ditches Company of Water District #2 and Cache la Poudre Water Users Assn.

ERICKSON, Justice.

On November 14, 1973, the City of Thornton instituted an action in eminent domain in the Jefferson County District Court against Farmers Reservoir and Irrigation Company, the City of Westminster, a shareholder in Farmers, the Treasurer of Jefferson County, the Treasurer of Boulder County, and other unknown persons claiming any interest in the proceeding. Farmers Reservoir and Irrigation Company (Farmers) is a mutual ditch company, organized pursuant to section 7--42--102 Et seq., C.R.S.1973, as a Colorado corporation.

The petitioners here are Victor L. Jacobucci, Dorothy Jacobucci, Paul Jacobucci, Mary J. Jacobucci, Jean J. Jacobucci, Albert Sack, Anne Sack, Casper Sack, Katherine Sack, and Yoxall Farms, Inc. The petitioners, all shareholders in Farmers, filed a cross-petition, pursuant to section 38--1--109, C.R.S.1973, in order to intervene as defendants in the condemnation proceedings. This motion was denied by the District Court on February 11, 1975, after the court concluded that the shareholders of Farmers were not indispensable parties to the proceeding. Thereafter, this court was petitioned, pursuant to its original jurisdiction under C.A.R. 21, to grant the petitioners relief. The petition requested an order permitting the shareholders to intervene and compelling their joinder as parties in the condemnation proceeding. We issued a rule to show cause why the relief requested should not be granted.

The respondents are the District Court, the Honorable Roscoe Pile, the City of Thornoton, Farmers, the City of Westminster, the Treasurer of Jefferson County, the Treasurer of Boulder County, and other unknown persons claiming an interest. Only the District Court, Judge Pile, and the City of Thornton appear to contest the relief which petitioners seek. We now make our rule to show cause absolute.

The issue we address in this original proceeding, which renders the other issues moot, is whether the individual shareholders of a mutual ditch company are indispensable parties in an action to condemn the shareholders' decreed water priorities. We hold that they are.

I.

Farmers, a mutual ditch company, administers an extensive water distribution system divided into four divisions. The Standley Lake Division includes a storage reservoir known as Standley Lake located in Jefferson County. The decreed water rights of this reservoir are used to irrigate approximately 15,000 acres of land situated in Jefferson, Adams, and Weld Counties. Property rights administered by the Standley Lake Division are the subject of the condemnation action which created the issues in this proceeding.

At the time of the institution of the condemnation proceeding, Farmers represented a total of 1,105 shareholders, 271 of whom owned shares allocated to the Standley Lake Division of Farmers. The 271 shareholders in the Standley Lake Division of Farmers were the only shareholders affected by the condemnation action. The petitioners are aggrieved shareholders. The properties sought to be condemned by Thornton may be categorized as follows:

(a) Decreed ditch priorities;

(b) Decreed storage priorities;

(c) Ditches and ditch rights;

(d) An interest in the Golden-Ralston Creek and Church Ditch Company and in the Church Ditch, including all stock in the Golden-Ralston Creek and Church Ditch Company, a carrier corporation owned by Farmers;

(e) The Standley Lake Dam and Reservoir;

(f) Certain contracts between Farmers and the Farmers High Line Canal and Reservoir Company;

(g) All records of Farmers relating to the other listed properties sought to be condemned.

Included in the decreed water priorities sought to be condemned is a 1936 decree for storage in Standley Lake of 32,361 acre feet of water and a conditional decree for an additional 16,699 acre feet, representing a total of 49,487 acre feet of storage, with a diversion through the Croke Canal at a rate of 944 cubic feet per second. The record title to the physical properties of the ditches, reservoir, lands, and rights-of-way stands in the name of Farmers.

II.

In order to determine whether the shareholders of Farmers are indispensable parties to the condemnation proceedings, we must define the nature of their relationship to the mutual ditch company and to the rights and properties administered by the corporation. The history behind the growth and purposes of mutual ditch companies is necessary to an analysis of the issue which is before us.

The rapid development and expansion of agriculture in the arid regions of the west led to the increased importance of irrigation. Irrigation itself, however, proved to be a great obstacle to farmers in need of irrigation water. The construction and maintenance of canals and ditches required the outlay of large sums of money. The average farmer did not have sufficient means to construct, own, or operate an irrigation ditch to convey water to his land. The most economical solution was to convey the water over a great distance through a single large main and laterals and then distribute it to consumers by means of smaller laterals. Golden Canal Co. v. Bright, 8 Colo. 144, 6 P. 142 (1884).

In response to the enormous task of supplying water to the parched farmlands, farmers banded together and formed mutual ditch companies for the express purpose of storing and conducting water for irrigation purposes. Farmer who may have previously owned ditches as tenants-in-common would transfer their ownership rights to mutual ditch companies and in return receive stock representing their water rights. This made possible the distribution of water over large areas of land, often remote from the source of supply, and increased the availability of irrigated farmland at reasonable costs. Not only was the management of the ditches and reservoirs made more efficient, but capital was made more available through the operation of these companies. See J. Long, Law of Irrigation (1st ed. 1901).

Mutual ditch companies in Colorado have been recognized as quasi-public carriers. Farmers Independent Ditch Co. v. Agricultural Ditch Co., 22 Colo. 513, 45 P. 444 (1896). Farmers is not organized for profit or hire and exists primarily for the benefit of its shareholders. Farmers is engaged in the business of storing and transporting water to shareholders who own the right to use the water. Farmers Independent Ditch Co. v. Agricultural Ditch Co., supra; cf. White v. Farmers' Highline Canal and Reservoir Co., 22 Colo. 191, 43 P. 1028 (1896); Wyatt v. Larimer and Weld Irrigation Co., 18 Colo. 298, 33 P. 144 (1893); Wheeler v. Northern Colorado Irrigation Co., 10 Colo. 582, 17 P. 487 (1887).

Mutual ditch companies like Farmers were formed expressly for the purpose of furnishing water to shareholders, not for profit or hire. See Combs v. Agricultural Ditch Co., 17 Colo. 146, 28 P. 966 (1892); C. Kinney, Irrigation & Water Rights § 1482 (2d ed. 1912). Delivery of water to the consumers is conditioned upon the payment of an annual assessment levied by the company to meet operating expenses and, if they exist, debt installments. Section 7--42--104, C.R.S.1973. These companies are not organized under the general Colorado corporation statutes, but under special legislation for ditch and reservoir companies. Section 7--42--101 Et seq., C.R.S.1973, According to Colo.Const. Art. X, Sec. 3, '(d)itches, canals and flumes owned and used by individuals or corporations for irrigating land owned by such individuals or corporations, or the individual members thereof, shall not be separately taxed so long as they shall be owned and used exclusively for such purposes.' 'Ditches, canals and flumes' have been defined so as to include headgates, dams, reservoirs, reservoir beds, the earth upon which the dam stands, and the lands surrounding the reservoirs with the improvements thereon that are an integral part of the irrigation system as a whole and necessary for its proper maintenance and operation. Cf. Logan Irrigation District v. Holt, 110 Colo. 253, 133 P.2d 530 (1943); See Shaw v. Bond, 64 Colo. 366, 171 P. 1142 (1918).

III.

The relationship between the mututal ditch corporation and its shareholders arises out of contract, implied in a subscription for stock and construed by the provisions of a charter or articles of incorporation. Supply Ditch Co. v. Elliot, 10 Colo. 327, 15 P. 691 (1887); C. Kinney, Irrigation & Water Rights § 1482 (2d ed. 1912).

The articles of incorporation or charter of a mutual ditch company sets forth the express purposes which the corporation undertakes to carry out. The corporation is not only obligated to furnish a proper proportion of water to each of its shareholders, but it is liable in damages for the failure to do so....